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Unaudited interim results for the six months ended 30 June 2016 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 2016
and cash dividend declaration
CONSOLIDATED SUMMARISED STATEMENT OF FINANCIAL POSITION
as at 30 June 2016
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2016 2015 2015
R’000 R’000 R’000
Non-current assets 1 836 058 1 490 146 1 896 073
Property, plant and
equipment 1 549 1 516 1 369
Investment holdings 1 834 509 1 488 630 1 894 704
Unlisted investments 1 332 786 946 509 1 297 894
Listed investments 501 723 542 121 596 810
Current assets 173 245 191 843 202 427
Finance advances and
receivables 9 317 10 316 7 319
Offshore investment
holdings 163 779 140 476 140 077
Share portfolio – 92 641 –
Bond portfolio 117 492 26 390 26 452
Equity investment 46 287 21 445 46 671
Offshore cash investment
portfolio – – 66 954
Cash balances 149 41 051 55 031
Total assets 2 009 303 1 681 989 2 098 500
Ordinary shareholders’
equity 1 546 725 1 371 543 1 701 382
Non-current liability 386 033 258 770 356 556
Interest-bearing debt 100 000 60 000 100 000
Deferred tax liability 286 033 198 770 256 556
Current liabilities 76 545 51 676 40 562
Interest-bearing debt 59 417 36 279 9 240
Offshore portfolio
finance 21 670 29 248 –
Local interest-bearing
debt 37 747 7 031 9 240
Accounts payable and
provisions 17 128 15 397 31 322
Total equity and
liabilities 2 009 303 1 681 989 2 098 500
Net asset value per
share – cents 3 395 2 997 3 719
Number of shares in issue
less held in share trust/
treasury – 000’s 45 554 45 769 45 748
CONSOLIDATED SUMMARISED STATEMENT OF CASH FLOWS
for the six months ended 30 June 2016
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 Dec
2016 2015 2015
R’000 R’000 R’000
Cash generated by operating
activities 4 488 13 643 62 099
Cash (utilised in)/generated
by investing activities (90 697) 76 438 39 267
Cash effects of
financing activities * 44 578 (39 739) (20 402)
Cash utilised for the payment
of dividends (13 251) (11 482) (21 093)
Change in cash and cash
equivalents (54 882) 38 860 59 871
Cash balances, less current
interest-bearing debt,
excluding portfolio finance,
at beginning of period 55 031 (4 840) (4 840)
Cash balances, less RSA
short-term interest-bearing
debt at end of period 149 34 020 55 031
* Financing activities comprise movements in long-term debt and
portfolio finance.
CONSOLIDATED SUMMARISED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2016
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 Dec
2016 2015 2015
R’000 R’000 R’000
Gross income from operations
and investments (78 652) 188 239 590 256
Dividends received 32 866 26 311 91 585
Interest received 4 628 2 318 5 062
Income on financial
instruments and shares 2 961 43 253 57 312
Fees and sundry income 426 2 566 2 920
Fair value adjustment to
investments (119 533) 113 791 433 377
Direct transactional costs (328) (405) (525)
Impairments 5 12 17
Interest paid (6 631) (3 326) (7 445)
Net (loss)/income before
expenses and exceptional
items (85 606) 184 520 582 303
Less: Expenditure (12 139) (13 570) (43 689)
Operating costs (11 962) (13 433) (43 392)
Depreciation (177) (137) (297)
Net (loss)/income before
taxation (97 745) 170 950 538 614
Taxation – deferred (29 477) (20 911) (78 697)
– Current year 26 234 (20 911) (78 697)
– CGT arising from change in
inclusion rate (55 711) – –
Net (loss)/income for the
period attributable to
equity shareholders (127 222) 150 039 459 917
Translation of foreign
subsidiary *1 (8 585) 4 850 35 079
Total comprehensive
(loss)/income attributable
to equity shareholders (135 807) 154 889 494 996
(Loss)/earnings per
share – cents (279,0) 327,5 1 003,9
Interim dividend per share
(proposed after reporting
date) – cents 23,0 21,0 50,0
Weighted average number of
shares in issue – 000’s 45 603 45 820 45 815
Headline (loss)/earnings per
share – cents *2 (279,0) 327,5 1 003,9
Reconciliation of headline
earnings
Net (loss)/income for
the period (127 222) 150 039 459 917
(Profit)/loss on sale
of property, plant and
equipment – – –
Headline earnings for
the period (127 222) 150 039 459 917
*1 This item may subsequently be classified to profit and loss.
*2 There are no diluting instruments.
CONSOLIDATED SUMMARISED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2016
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
2015 856 45 748 35 397 1 151 072 1 233 073
Total com–
prehensive
income for
the period – – 35 079 459 917 494 996
Loss in
share trust – – (1) – (1)
Shares held
in treasury – (5 593) – – (5 593)
Dividends paid – – – (21 093) (21 093)
Balance as at
31 December
2015 856 40 155 70 475 1 589 896 1 701 382
Total compre–
hensive income
for the period – – (8 585) (127 222) (135 807)
Loss in share
trust – written
back – – 1 – 1
Loss in share
trust – – (1) – (1)
Shares held in
treasury –
written back – 5 593 – – 5 593
Shares held in
treasury – (11 192) – – (11 192)
Dividends paid – – – (13 251) (13 251)
Balance as at
30 June
2016 856 34 556 61 890 1 449 423 1 546 725
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 057 000.
INVESTMENT HOLDINGS
as at 30 June 2016
Economic Fair
interest value
% R’000
UNLISTED INVESTMENTS
Masimong Chemicals (Pty) Ltd *1
SA Bias Industries (Pty) Ltd *2 58,2
Sunspray Food Ingredients (Pty) Ltd *3 22,0
1 332 786
*1 Participating preference shares linked to the performance
of 22,5m shares in Rolfes Holdings Limited
*2 Voting interest 49%
*3 Held through Famdeen Investments (Pty) Ltd
LISTED INVESTMENTS Ordinary shares
Brait S.E. 758 477 106 149
Datatec Limited 500 000 21 925
Metrofile Holdings Limited 25 000 000 120 000
Rolfes Holdings Limited 3 575 000 10 689
Torre Industries Limited 61 816 355 127 960
Transaction Capital Limited 10 000 000 115 000
501 723
Long-term investment holdings 1 834 509
Offshore investment holdings 163 779
Share portfolio –
Bond portfolio 117 492
Corero Network Security Plc 13 120 000 46 287
TOTAL HOLDINGS 1 998 288
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 and one unlisted investment group, long-term holdings in
seven listed investments, and offshore share, bond and cash
portfolios, 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 period Sabvest:
– purchased 500 000 shares in Datatec Limited for R21,8m;
– purchased 5 000 000 shares in Metrofile Holdings Limited for
R20,4m;
– received a further 796 360 Torre shares valued at R2,1m as a
dividend in specie thereby increasing its holding to
61 816 355 shares which represents a 12% interest in Torre;
– purchased 6 285 Sabvest ordinary shares and 188 299 Sabvest
“N” ordinary shares for R5,6m and which are presently held as
treasury shares in a subsidiary;
– purchased 575 000 shares in Rolfes Holdings Limited for R1,7m
thereby increasing its holding to 3 575 000 shares;
– purchased additional participating preference shares of R23,5m
in Masimong Chemicals (Pty) Limited, the value of which is
directly linked to the performance of 7,5m ordinary shares in
Rolfes Holdings Limited thereby increasing its holding in
preference shares in an amount linked to the performance of
22,5m Rolfes shares; and
– increased its offshore bond portfolio by R91m to R117,5m.
FINANCIAL RESULTS
In 2015 Sabvest achieved record results of R459m PAT and 1 003
cents HEPS, driven by high listed share prices and the conversion
of unlisted investment valuations at the weak Rand exchange rate.
At the interim reporting date the share prices of a number of the
group’s listed investments had reduced materially, Torre and
Brait in particular, and the Rand was stronger than at the year-
end.
In addition, the CGT rate applicable to companies was increased
which required an adjustment to the deferred tax liability for
prior years.
As a result Sabvest recorded a loss of R127m and a HEPS loss of
279 cents. This in turn resulted in a reduction in NAV per share
to 3 395 cents per share for the six-month period.
However, although NAV per share reduced in the six-month period,
it increased by 13% over the twelve months since the previous
interim reporting date.
The group’s cash flows remain strong and the interim dividend has
accordingly been increased by 9,5% to 23 cents per share.
The statement of financial position is conservatively geared.
Subsequent to the interim reporting date, medium-term debt has
been increased by R20m and short-term debt reduced accordingly.
LISTED INVESTMENTS
– Brait’s share price reduced pursuant to the Brexit vote in the
UK and the resulting weakness of sterling. The underlying
investments held by Brait continue to perform satisfactorily.
– Metrofile continues to perform steadily.
– Torre’s share price weakened materially due to the poor
performance of most of its divisions in the sectors it
services in South Africa. We remain confident of Torre’s
medium-term performance.
– Transaction Capital continues to trade well.
– Datatec had a difficult year in 2015/2016, but we are
confident of its performance in the periods ahead.
– Rolfes produced strong interim results and its share price
performance has been steady. Sabvest now has direct and
indirect interests in 17% of Rolfes shares in issue.
– Corero Network Security continues to win contracts for its new
generation SmartWall product in its DDOS focused cyber
security segment. It should be noted that although Corero is
UK listed, its revenues are dollar based.
– The group’s offshore portfolio performed satisfactorily. The
holdings at the reporting date comprised 24 bonds as listed on
Sabvest’s website. The bond portfolio is focused on an average
BB rating, mostly emerging market issuers, fixed date
redeemables, dollar denominated or dollar hedged and with
maturities of up to five years. For the first time in many
years the portfolio does not contain any listed equity
investments (other than Corero).
UNLISTED INVESTMENTS
– SA Bias Industries’ results for the period were steady and in
line with the prior year. The results were aided by the
inclusion of 100% of Flowmax Holdings Limited (prior period
60%).
– Sunspray traded satisfactorily with profitability ahead of the
prior year.
Unlisted investments continue to be valued using the maintainable
earnings model (NOPAT) adjusted for net cash/debt. The multiples
were unchanged from prior periods.
The value of Masimong Chemicals preference shares is based on the
Rolfes shares to which they are linked.
DEFERRED TAXATION
Due to the change in the CGT rate, the deferred tax liability was
increased by R55,7m relative to prior years. The level of
unrealised fair value adjustments exceeds the assessed losses in
subsidiaries and deferred tax is 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 9,5% to 23 cents per share (2015: 21 cents per
share).
RELATED PARTIES
Related party transactions exist between subsidiaries and the
holding company, fellow subsidiaries and investee 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 the framework concepts and the
recognition and measurement criteria of International Financial
Reporting Standards (IFRS) and comply with the minimum disclosure
requirements of International Accounting Standard 34: Interim
Financial Reporting as issued by the International Accounting
Practices Committee and Financial Pronouncements issued by the
Financial Reporting Standards Council, the JSE Listings
Requirements and the requirements of the Companies Act of South
Africa.
They have been prepared on the historical cost basis except for
financial instruments and investments which are measured at fair
value. The significant accounting policies and methods of
computation are consistent in all material aspects to those
applied in the previous financial year. The significant
accounting policies are available for inspection at the group’s
registered office. There has been no material change in judgments
or estimates of the amounts reported in prior reporting periods.
The preparation of these unaudited condensed interim financial
statements was supervised by the Chief Financial Officer,
R Pleaner CA (SA).
CHANGES TO COMPANY SECRETARY
Ms Paige Atkins resigned as company secretary and Levitt Kirson
Management Services CC have been appointed as company secretary,
both effective 1 June 2016.
PROSPECTS
The group’s unlisted investee companies are trading
satisfactorily but economic conditions continue to be weak and
their earnings are expected to be under pressure in the second
half of the year.
The group’s listed investee companies are trading to
expectations. However, conditions in the industrial and mining
sectors in South Africa continue to weaken. Future movements in
share prices are obviously uncertain but in our view share prices
will weaken further in the second half of the year.
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 Raymond Pleaner
Chairman CEO CFO
Sandton
29 July 2016
CASH DIVIDEND DECLARATION
Notice is hereby given that an interim gross dividend of 23 cents
(2015: 21 cents) per ordinary and “N” ordinary share for the six
months ended 30 June 2016 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
19,55 cents per ordinary and “N” ordinary share to non-exempt
shareholders.
Last date to trade “CUM” dividend Tuesday, 16 August 2016
Trading “EX” dividend commences Wednesday, 17 August 2016
Record date Friday, 19 August 2016
Dividend payment date Monday, 22 August 2016
No dematerialisation or rematerialisation of share certificates
will be allowed during the period Wednesday, 17 August 2016 to
Friday, 19 August 2016, 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), 1 Merchant Place, Corner of Fredman Drive and Rivonia
Road, Sandton 2196
www.sabvest.com
Date: 29/07/2016 07:32:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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