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Unaudited interim results for the six months ended 30 June 2015 and cash dividend declaration
SABVEST LIMITED
Incorporated in the Republic of South Africa
Registration number 1987/003753/06
“Sabvest” or “the group” or “the company”
ISIN: ZAE000006417 – ordinary shares
ISIN: ZAE 000012043 – “N” ordinary shares
Share code: SBV – ordinary shares
Share code: SVN – “N” ordinary shares
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2015
AND CASH DIVIDEND DECLARATION
HIGHLIGHTS
Headline earnings per share 327,5 cents +309%
Interim dividend per share 21,0 cents +17%
Net Asset Value per share 2 997 cents +24%
CONSOLIDATED SUMMARISED STATEMENT OF FINANCIAL POSITION
as at 30 June 2015
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2015 2014 2014
R’000 R’000 R’000
Non-current assets 1 490 146 1 220 312 1 380 032
Property, plant and
equipment 1 516 1 636 1 529
Investment holdings 1 488 630 1 218 676 1 378 503
Unlisted investments 946 509 940 600 1 070 973
Listed investments 542 121 278 076 307 530
Current assets 191 843 148 581 175 714
Finance advances and
receivables 10 316 12 716 11 545
Offshore investment
holdings 140 476 113 283 164 018
Share portfolio 92 641 – 99 813
Bond portfolio 26 390 88 780 40 958
Equity investment 21 445 24 503 23 247
Cash balances 41 051 22 582 151
Total assets 1 681 989 1 368 893 1 555 746
Ordinary shareholders’
equity 1 371 543 1 111 814 1 233 073
Non-current liability 258 770 209 636 237 859
Interest-bearing debt 60 000 40 000 60 000
Deferred tax liability 198 770 169 636 177 859
Current liabilities 51 676 47 443 84 814
Interest-bearing debt 36 279 38 120 69 040
Offshore portfolio
finance 29 248 11 053 64 049
Offshore loans payable – 7 322 –
Other interest-bearing
debt 7 031 19 745 4 991
Accounts payable and
provisions 15 397 9 323 15 774
Total equity and
liabilities 1 681 989 1 368 893 1 555 746
Net asset value per
share – cents 2 997 2 419 2 683
Number of shares in issue
less held in share trust/
treasury – 000’s 45 769 45 965 45 960
CONSOLIDATED SUMMARISED STATEMENT OF CASH FLOWS
for the six months ended 30 June 2015
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 Dec
2015 2014 2014
R’000 R’000 R’000
Cash generated by operating
activities 13 643 16 519 19 713
Cash generated by investing
activities 76 438 59 176 37 102
Cash effects of financing
activities * (39 739) (49 064) 16 378
Cash utilised for the payment
of dividends (11 482) (10 123) (64 362)
Change in cash and cash
equivalents 38 860 16 508 8 831
Cash balances, less current
interest-bearing debt,
excluding portfolio
finance, at beginning
of period (4 840) (13 671) (13 671)
Cash balances, less RSA
short-term interest-bearing
debt at end of period 34 020 2 837 (4 840)
* Financing activities comprise movements in long-term debt and
portfolio finance.
CONSOLIDATED SUMMARISED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2015
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 Dec
2015 2014 2014
R’000 R’000 R’000
Gross income from operations
and investments 188 239 48 039 246 857
Dividends received 26 311 31 634 47 114
Interest received 2 318 3 047 5 425
Income on financial
instruments and shares 43 253 6 269 17 972
Fees and sundry income 2 566 2 053 2 461
Fair value adjustment to
investments 113 791 5 036 173 885
Direct transactional costs (405) (610) (1 066)
Impairments 12 25 35
Interest paid (3 326) (3 573) (7 328)
Net income before expenses
and exceptional items 184 520 43 881 238 498
Less: Expenditure (13 570) (12 990) (31 732)
Operating costs (13 433) (12 875) (31 453)
Depreciation (137) (115) (279)
Net income before taxation 170 950 30 891 206 766
Taxation – deferred (20 911) 6 063 (2 160)
Net income for the period
attributable to equity
shareholders 150 039 36 954 204 606
Translation of foreign
subsidiary *1 4 850 1 131 9 211
Total comprehensive income
attributable to equity
shareholders 154 889 38 085 213 817
Earnings per share – cents 327,5 80,4 445,0
Interim dividend per share
(proposed after reporting
date) – cents 21,0 18,0 43,0
Special dividend per share
(proposed after reporting
date) – cents – 100,0 100,0
Weighted average number of
shares in issue – 000’s 45 820 45 977 45 975
Headline earnings per
share – cents 327,5 80,0 444,7
Reconciliation of headline
earnings
Net income for the period 150 039 36 954 204 606
(Profit)/loss on sale of
property, plant and
equipment – (170) (170)
Headline earnings for the
period 150 039 36 784 204 436
*1 This item may subsequently be classified to profit and loss.
CONSOLIDATED SUMMARISED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2015
Non-
distri- Disti-
Share Share butable butable
capital premium reserve reserve Total
R’000 R’000 R’000 R’000 R’000
Balance as at
1 January
2014 856 47 140 26 187 1 010 828 1 085 011
Total
comprehensive
income for
the period – – 9 211 204 606 213 817
Loss in share
trust – – (1) – (1)
Shares held in
treasury –
written back 8 3 411 – – 3 419
Shares held in
treasury –
cancelled (8) (4 771) – – (4 779)
Shares held in
share trust –
written back 3 2 778 – – 2 781
Shares held in
share trust –
cancelled (3) (2 810) – – (2 813)
Dividends paid – – – (64 362) (64 362)
Balance as at
31 December
2014 856 45 748 35 397 1 151 072 1 233 073
Total
comprehensive
income for
the period – – 4 850 150 039 154 889
Loss in share
trust – written
back – – 1 – 1
Loss in share
trust – – (1) – (1)
Shares held in
treasury – (4 937) – – (4 937)
Dividends paid – – – (11 482) (11 482)
Balance as at
30 June 2015 856 40 811 40 247 1 289 629 1 371 543
Contingent liabilities
1. The group has rights and obligations in terms of shareholder
and purchase and sale agreements relating to its present and
former investments.
2. Commitments for the lease of premises are as follows:
Year 1 R1 066 000
Year 2 R1 057 000
INVESTMENT HOLDINGS
as at 30 June 2015
Economic Fair
interest value
% R’000
Unlisted investments
SA Bias Industries (Pty) Ltd *1 58,2
Sunspray Food Ingredients (Pty) Ltd *2 22,0
946 509
*1 Voting interest 49%
*2 Held through Famdeen Investments (Pty) Ltd
Listed investments Ordinary shares
Brait S.E. 1 000 000 123 300
Metrofile Holdings Limited 20 000 000 90 800
Torre Industries Limited 61 019 995 279 471
Transaction Capital Limited 5 000 000 48 550
542 121
Long-term investment holdings 1 488 630
Offshore investment holdings 140 476
Share portfolio 92 641
Bond portfolio 26 390
Corero Network Security Plc 8 320 000 21 445
TOTAL HOLDINGS 1 629 106
COMMENTARY
PROFILE
Sabvest is an investment group which has been listed on the JSE
since 1988. Its ordinary and “N” ordinary shares are quoted in
the Equity Investment Instruments sector.
Sabvest has significant interests in two unlisted industrial
groups, long-term holdings in five listed investments and an
offshore share and bond portfolio, all accounted for on a fair
value basis. In addition, Sabvest makes finance advances,
participates in debt instrument portfolios and undertakes other
fee and profit earning activities from time to time.
Changes in investment holdings
During the interim reporting period Sabvest:
– Sold 200 000 shares in Datatec Limited realising R13,3m;
– Sold its 49,9% interest in Set Point Group (Pty) Ltd (“Set
Point”) to Torre Industries Limited (“Torre”) in exchange for
37m Torre shares which had a fair value of R159m at the
transaction date, and which resulted in a gain on the sale of
R36,3m relative to the carrying value at 31 December 2014;
– Purchased a further 1,027m Torre shares for R4,6m thereby
increasing its holding to 61m shares which represents a 12%
interest in Torre;
– Purchased a further 2m shares in Transaction Capital Limited
for R16,9m thereby increasing its holding to 5m shares;
– Reduced its holding in the business of Sunspray Food
Ingredients (Pty) Limited from 48% to 22% in a new structure
in which Shalamuka Capital, RMB Corvest and management are co-
invested with Sabvest and which reduction of interest resulted
in a net amount of R48,5m being received by Sabvest;
– Purchased 3 000 Sabvest ordinary shares and 187 664 Sabvest
“N” ordinary shares for R4,9m and which are presently held as
treasury shares in a subsidiary; and
– Reduced its offshore share and bond portfolio to R119m.
Subsequent to the reporting date Sabvest:
– Purchased an initial long-term holding of 60 000 shares in the
listed Greenyard Foods NV Group for $1m. Pursuant to its
acquisition of the Univeg Group, Greenyard Foods is the
largest distributor of fresh, frozen and canned fruit and
vegetables in the European Union. It is controlled by the
Deprez family in Belgium and three of its other large
shareholders and directors are well known to Sabvest;
– Made a new investment commitment of R45m in RSA which is
projected to become unconditional in Q-4 2015; and
– Has committed to acquire an additional 4,1m shares in Corero
Network Security for GBP410k (R7,7m) thereby increasing its
holding to 12,42m shares representing 7,3% of Corero.
FINANCIAL RESULTS
Headline earnings per share increased by 309% to 327 cents per
share relative to the prior interim reporting period. The growth
arose from the gain on sale of Set Point, the strong share price
increases of Brait, Torre and Transaction Capital, good returns
in the offshore portfolios and a steady performance by SA Bias
Industries. It should be seen in the context of the below budget
performance in the 2014 interim reporting period and is therefore
not an indicator of expected HEPS for the 2015 year as a whole.
NAV per share increased by 24% year-on-year to 2 997 cents
relative to NAV at the 2014 interim reporting date,
notwithstanding the payment of a special dividend of 100 cents
per share in August 2014.
DPS for the interim period increased by 17% to 21 cents per share
as explained more fully in the Dividend section below.
Shareholders’ Funds increased to R1,37bn and net total interest-
bearing debt remains at conservative levels of R26m in RSA and
R29m offshore.
LISTED INVESTMENTS
– Brait’s share price increased materially pursuant to its
realisation of its interest in Pepkor, new investments in
Virgin Active and New Look and a strong price performance from
its current holdings in Steinhoff.
– Metrofile produced its usual steady performance but its share
price was weaker than expected in the period.
– Torre’s share price continues to strengthen as it successfully
implements its strategies for the development of a new
industrial group in RSA and Africa. This was given additional
impetus during the period by its acquisitions of Elephant
Lifting and Set Point Group and its raising of additional
capital through placements with Safika and Mineworkers
Investment Company.
– Transaction Capital continues to trade well since its
reorganisation and payment of special dividends at the end of
2013. It produced good interim results with the share price
strengthening in response.
– Corero Network Security has launched its new generation
SmartWall product in its DDOS (distributed denial of service)
focused cyber security segment. It is in proof of concept
trials with numerous major vendors. Its share price has been
weak during this period.
– The group’s offshore share and bond portfolio performed
satisfactorily with US dollar returns of 5,8% for the six
months (11,6% annualised) notwithstanding lower levels of
gearing. The holdings at the reporting date comprised 19
shares and 4 bonds as listed on Sabvest’s website. The
portfolio is overweight in IT and biotech.
UNLISTED INVESTMENTS
– SA Bias Industries results for the period were steady and up
on the prior period. Its International Trimmings division
concluded its acquisition of a 76% interest in Overheer
Systems Inc, an RFID tech company (radio frequency
identification technology) in Canada, and the establishment
and growth of its new operating units in Vietnam, India and
Bangladesh are proceeding to plan. It is also in discussions
to increase its 60% interest in the UK based Flowmax Group.
Its Narrowtex businesses traded satisfactorily but
experienced subdued demand in export markets.
– Sunspray traded well with profitability ahead of budget.
Unlisted investments continue to be valued using the maintainable
earnings model, adjusted for net cash/debt. The multiples were
unchanged from prior periods.
DEFERRED TAXATION
During the period, the level of unrealised fair value adjustments
in certain of the group’s subsidiaries exceeded the assessed
losses in those subsidiaries for the first time. Deferred
taxation on increases in unrealised gains in those subsidiaries
is accordingly now being raised.
DIVIDENDS
Dividends are determined relative to Sabvest’s own cash flows
from investments and services and capital receipts that are not
earmarked for new investments.
Dividends are considered twice annually. The interim dividend has
been increased by 17% to 21 cents per share (2014: 18 cents per
share).
STC credits were utilised for all previous normal and special
dividends with the result that those were not subject to DWT.
That dispensation expired at the end of March 2015 and all
dividends since that date are subject to DWT unless the recipient
is exempt.
RELATED PARTIES
Related party transactions exist between subsidiaries and the
holding company, fellow subsidiaries and associated companies,
and comprise fees, dividends and income.
Transactions with directors relate to fees and monies lent to the
group by individuals and companies controlled by the directors.
ACCOUNTING POLICIES
The unaudited condensed interim financial statements have been
prepared in accordance with International Financial Reporting
Standards (IFRS) and comply with IAS 34, Interim Financial
Reporting, the SAICA Financial Reporting Guides issued by the
Accounting Practices Committee and Financial Pronouncements
issued by the Financial Reporting Standards Council, the JSE
Limited Listings Requirements as well as the requirements of the
Companies Act of South Africa and have been supervised by the
CFO, Mr R Pleaner. The accounting policies used are consistent
with those applied to the audited financial statements for the
year ended 31 December 2014.
DIRECTORATE
There have been no changes during the period.
KING III COMPLIANCE
The Compliance Report on Sabvest’s website has been updated
pursuant to the release of the annual report for the 2014
financial year.
PROSPECTS
The group’s unlisted investee companies are trading
satisfactorily.
The group’s listed investee companies are trading to expectations
but the future movements in share prices are obviously uncertain.
Overall we anticipate a satisfactory year for the group.
Forecast information contained in this announcement has not been
reviewed and reported on by the group’s external auditors.
For and on behalf of the Board
Philip Coutts-Trotter Christopher Seabrooke
Chairman CEO
Raymond Pleaner
CFO
Sandton
29 July 2015
INTERIM CASH DIVIDEND DECLARATION
Notice is hereby given that an interim gross cash dividend of 21
cents (2014: 18 cents) per ordinary and “N” ordinary share for
the six months ended 30 June 2015 has been declared out of income
reserves.
The issued share capital of the company at the declaration date
is 17 076 804 ordinary and 28 883 000 “N” ordinary shares. The
income tax number of the company is 9375/105/716.
Withholding tax on dividends at a rate of 15% will be deducted
for all shareholders who are not exempt in terms of the
legislation. This will result in an interim net cash dividend of
17,85 cents per ordinary and “N” ordinary share to non-exempt
shareholders.
Last date to trade “CUM” dividend Friday, 14 August 2015
Trading “EX” dividend commences Monday, 17 August 2015
Record date Friday, 21 August 2015
Dividend payment date Monday, 24 August 2015
No dematerialisation or rematerialisation of share certificates
will be allowed during the period Monday, 17 August 2015 to
Friday, 21 August 2015, both days inclusive.
SABVEST LIMITED
Registered address: 4 Commerce Square, 39 Rivonia Road,
Sandhurst, Sandton 2196
Communications: Postal address: PO Box 78677, Sandton 2146,
Republic of South Africa
Telephone: (011) 268 2400
Fax: (011) 268 2422
e-mail: ho@sabvest.com
Transfer secretaries: Computershare Investor Services (Pty) Ltd,
70 Marshall Street, Marshalltown 2001 (PO Box 61051, Marshalltown
2107)
Directors: P Coutts-Trotter (Chairman), DNM Mokhobo# (Deputy
Chairman), CS Seabrooke* (Chief Executive), CP Coutts-Trotter,
NSH Hughes# (Lead Independent Director), R Pleaner*, BJT Shongwe#
*Executive #Independent
Sponsor: Rand Merchant Bank (A division of FirstRand Bank
Limited)
www.sabvest.com
Date: 29/07/2015 10:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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