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Audited preliminary consolidated summarised results for the year ended 31 December 2016 & 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: ZAE000012043 – “N” ordinary shares
Share code: SBV – ordinary shares
Share code: SVN – “N” ordinary shares
AUDITED PRELIMINARY CONSOLIDATED SUMMARISED RESULTS FOR THE YEAR
ENDED 31 DECEMBER 2016 AND CASH DIVIDEND DECLARATION
CONSOLIDATED SUMMARISED STATEMENT OF FINANCIAL POSITION
as at 31 December 2016
Reclassified*1
31 Dec 31 Dec
2016 2015
Audited Audited
R’000 R’000
Non-current assets 2 009 727 1 896 073
Property, plant and equipment 1 365 1 369
Investment holdings 2 008 362 1 894 704
Unlisted investments 1 421 820 1 252 040
Listed investments 586 542 642 664
Current assets 158 207 202 427
Finance advances and receivables 3 858 7 319
Offshore investment holdings 151 262 140 077
Share portfolio – –
Equity investment 23 003 46 671
Bond portfolio 128 259 26 452
Offshore cash investment portfolio – 66 954
Cash balances 3 087 55 031
Local 3 087 55 031
Total assets 2 167 934 2 098 500
Ordinary shareholders’ equity 1 659 255 1 701 382
Non-current liabilities 413 689 356 556
Interest-bearing debt 90 000 100 000
Deferred tax liabilities 323 689 256 556
Current liabilities 94 990 40 562
Interest-bearing debt 77 732 9 240
Offshore portfolio finance 36 577 –
Current portion of
interest-bearing debt 30 000 –
Local other interest-bearing debt 11 155 9 240
Accounts payable 17 258 31 322
Total equity and liabilities 2 167 934 2 098 500
Net asset value per share with
investments at fair value – cents 3 646 3 719
Number of shares in issue less held
in treasury – 000’s 45 513 45 748
CONSOLIDATED SUMMARISED STATEMENT OF CASH FLOWS
for the year ended 31 December 2016
31 Dec 31 Dec
2016 2015
Audited Audited
R’000 R’000
Cash generated by operating
activities 21 651 62 099
Cash (utilised in)/generated by
investing activities (101 748) 39 267
Cash effects of financing
activities * 51 881 (20 402)
Cash utilised for the payment of
dividends (23 728) (21 093)
Change in cash and cash equivalents (51 944) 59 871
Cash balances, less current
interest-bearing debt excluding
portfolio finance, at beginning
of year 55 031 (4 840)
Cash balances, less RSA
interest-bearing debt, at end
of year 3 087 55 031
* Financing activities comprise movements in long-term debt and
portfolio finance.
CONSOLIDATED SUMMARISED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2016
31 Dec 31 Dec
2016 2015
Audited Audited
R’000 R’000
Gross income from operations
and investments 111 329 590 256
Dividends received 63 340 91 585
Interest received 10 980 5 062
Income on financial instruments
and shares 5 313 57 312
Fees and sundry income 1 147 2 920
Fair value adjustments to
investments 30 549 433 377
– Listed (127 425) 82 753
– Unlisted 157 974 350 624
Direct transactional costs (518) (508)
Interest paid (15 175) (7 445)
Net income before expenses 95 636 582 303
Less: Expenditure (24 329) (43 689)
Operating costs (23 943) (43 392)
Depreciation (386) (297)
Net income before taxation 71 307 538 614
Taxation – deferred (67 133) (78 697)
– current year (11 422) (78 697)
– CGT arising from change in
inclusion rate (55 711) –
Net income for the year attributable
to equity shareholders 4 174 459 917
Translation of foreign
subsidiary *2 (15 961) 35 079
Total comprehensive (loss)/income
attributable to equity shareholders (11 787) 494 996
Earnings per share – cents 9,2 1 003,9
Dividends per share (proposed after
interim/year-end) – cents 55,0 50,0
Weighted average number of shares
in issue – 000’s 45 600 45 815
Headline earnings per share – cents *3 9,2 1 003,9
Reconciliation of headline earnings
Net income for the year 4 174 459 917
Loss on sale of property, plant
and equipment 5 –
Headline earnings for the year 4 179 459 917
*1 There has been a reclassification relating to listed and
unlisted investments. This is with regard to 15 million Rolfes
shares held indirectly through participating preference shares
held in Masimong Chemicals (Pty) Ltd.
*2 This item may subsequently be classified to profit and loss.
*3 There are no diluting instruments.
CONSOLIDATED SUMMARISED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2016
Non-
distri- Distri-
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
comprehensive
income for
the year – – 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 comprehen-
sive loss for
the year – – (15 961) 4 174 (11 787)
Loss in share
trust – – (1) – (1)
Shares held in
treasury – written
back – 5 593 – – 5 593
Shares held in
treasury (1) (12 203) – – (12 204)
Dividends paid – – – (23 728) (23 728)
Balance as at
31 December
2016 855 33 545 54 513 1 570 342 1 659 255
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 R481 000.
3. An offshore subsidiary has provided a guarantee of $250 000
on behalf of an investee.
INVESTMENT HOLDINGS
as at 31 December 2016
Economic Fair
interest value
% R’000
INVESTMENTS
Unlisted
Flexo Line Products (Pty) Ltd 25,0
SA Bias Industries (Pty) Ltd *1 58,2
Sunspray Food Ingredients (Pty) Ltd *2 22,0
1 421 820
Listed Ordinary shares
Brait S.E. 758 477 66 412
Metrofile Holdings Limited 25 000 000 124 750
Rolfes Holdings Limited 6 000 000 29 880
Rolfes Holdings Limited *3 22 500 000 112 050
Torre Industries Limited 62 200 000 108 850
Transaction Capital Limited 10 000 000 144 600
586 542
Long-term investment holdings 2 008 362
Offshore investment holdings 151 262
Share portfolio –
Bond portfolio 128 259
Corero Network Security Plc 15 500 000 23 003
TOTAL HOLDINGS 2 159 624
*1 Voting interest 49%.
*2 Held through Famdeen Investments (Pty) Ltd.
*3 Held indirectly through participating preference shares in
Masimong Chemicals (Pty) Ltd linked to the performance of
22,5m shares in Rolfes Holdings Limited.
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 three unlisted industrial
groups, long-term holdings in five JSE 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 year Sabvest:
– purchased 5m shares in Metrofile for R20,4m, thereby
increasing its holding to 25m shares representing a 5,5%
interest in Metrofile;
– purchased 1,2m shares in Torre Industries for R2,8m, thereby
increasing its holding to 62,2m shares representing a 12%
interest in Torre;
– purchased 3m shares in Rolfes Holdings for R10,8m, thereby
increasing its direct holding in Rolfes to 6m shares;
– purchased additional participating preference shares of R23,5m
in Masimong Chemicals, the value of which is directly linked
to the performance of 7,5m ordinary shares in Rolfes Holdings,
thereby increasing its holding in preference shares to an
amount linked to the performance of 22,5m Rolfes shares,
which, together with the 6m Rolfes shares referred to above,
constitute direct and indirect interests of 17,5% in Rolfes;
– purchased and sold 500 000 shares in Datatec;
– purchased 2,38m shares in Corero Network Security for R3,6m
(GB213 000), thereby increasing its interest in Corero to
15,5m shares representing an interest of 7,6% in Corero;
– increased its offshore bond portfolio to R128m;
– purchased 25% of Flexo Line Products (Pty) Ltd; and
– purchased 9 455 Sabvest ordinary shares and 225 526 Sabvest
“N” ordinary shares for R6,6m, and which are presently held as
treasury shares in a subsidiary.
Subsequent to the reporting date Sabvest:
– has contracted to purchase 26% of Classic Food Products (Pty)
Ltd;
– has reduced its offshore bond portfolio by R46,9m ($3,4m) to
R81,3m ($5,9m); and
– has re-opened its offshore share portfolio in an amount of
R59,5m ($4,5m).
FINANCIAL RESULTS
PAT decreased by 99% and headline earnings per share decreased by
99% to 9 cents per share.
The results for 2016 have been affected by negative fair value
adjustments in the listed share portfolio arising from falls in
the share prices of Sabvest’s holdings in Brait, Corero and Torre
during the year, and by a one-off increase in the deferred tax
liability on fair value adjustments relating to prior years due
to the increase in the enacted rate of CGT.
All of the group’s unlisted investments and its listed
investments in Metrofile, Rolfes and Transaction Capital
performed satisfactorily.
NAV per share decreased by 2% to 3 646 cents per share.
Shareholders’ funds decreased by 2% to R1,659bn.
DPS for the year increased by 10% to 55 cents per share.
LISTED INVESTMENTS
– Brait’s share price reduced materially pursuant to concerns
relating to its interests in the United Kingdom after the
Brexit vote and in particular the uncertain outlook for
sterling and the weakness in the retail sector and the effects
on its investment in New Look.
– Metrofile produced slightly lower growth in earnings than in
prior years. Its share price was stable during the period.
– Torre Industries’ share price fell materially due to poor
operating performances across the group and in particular in
the divisions affected by weakness in the mining and
industrial sectors. Prospects are satisfactory once activity
in these sectors improves.
– Rolfes Holdings produced excellent results ahead of
expectations and its share price increased materially.
– Transaction Capital continues to trade very satisfactorily and
in line with expectations. It produced good growth for the
year and its share price strengthened in response.
– The group’s geared offshore bond portfolio performed
satisfactorily with US dollar returns of 9,4% for the year.
The portfolio comprised 29 fixed date redeemable bonds 2018 –
2022 with an average rating of BB.
– The group’s offshore share portfolio was re-opened after the
year-end in an initial amount of $4,5m. It comprises a spread
of large cap shares but primarily focused on the IT and
biotech sectors. The bond and share portfolios are listed on
Sabvest’s website.
– The Corero share price continues to be volatile on small
volumes and reduced materially during the year. Corero
continues to extend its customer base and prospects remain
satisfactory.
UNLISTED INDUSTRIAL INVESTMENTS
– SA Bias Industries’ results for the year showed satisfactory
growth assisted by its increased interest from 60% to 100% in
the UK based Flowmax Group, effective 31 December 2015. Its
business units comprise:
–– International Trimmings & Labels Group (ITL);
–– Narrowtex Group;
–– Apparel Components;
–– Flowmax Group; and
–– Sabias Investments.
– Sunspray traded well with profitability ahead of budget.
– Flexo Line is trading to expectations since its acquisition in
October 2016. Flexo Line is a manufacturing business that
specialises in high quality injection moulded plastic products
primarily for the spice industry locally and internationally.
– Subsequent to the year-end Sabvest has contracted to acquire
26% of Classic Food Products (Pty) Ltd which is a Durban based
producer of fresh and packaged food products to the retail and
food distribution centres, and its production facilities are
also Halaal accredited.
Unlisted investments continue to be valued using the maintainable
earnings model (NOPAT) adjusted for net cash/debt. The earnings
multiples utilised were unchanged from prior periods. The
investment in Flexo Line will be carried at cost for the first
twelve months.
SUBSEQUENT EVENTS
There were no subsequent events.
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 dividend has been
increased by 10% to 55 cents per share (2016: 50 cents per
share).
Shareholders are referred to the final cash dividend declaration
included in this report.
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 audited consolidated summarised 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 Standards Board (IASB), the SAICA Financial Reporting
Guides issued by the 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
judgements or estimates of the amounts reported in prior
reporting periods. The preparation of these preliminary
consolidated summarised financial statements and the consolidated
financial statements were supervised by the Chief Financial
Officer, R Pleaner CA (SA).
This announcement does not include the information required
pursuant to paragraph 16A(j) of IAS34. The full annual financial
statements of the group, set out these disclosures and are
available at the issuer’s registered offices.
AUDIT OPINION
The auditors, Deloitte & Touche, have issued an unmodified audit
opinion on the consolidated financial statements for the year
ended 31 December 2016. Their audit was conducted in accordance
with the International Standards of Auditing. The audited
preliminary consolidated summarised results presented have been
derived from the audited consolidated financial statements for
the year ended 31 December 2016. The auditors, Deloitte & Touche,
have issued an unmodified opinion of the preliminary consolidated
summarised financial information. The auditors’ report does not
necessarily cover all of the information contained in this
announcement. Shareholders are therefore advised that in order to
obtain a full understanding of the nature of the auditors’ work
they should obtain a copy of that report with the accompanying
financial information from the registered office of the company.
A copy of the full consolidated financial statements including
the audit report and report on this preliminary consolidated
summarised information are available for inspection at the
company’s registered office.
Any reference to future financial information included in the
announcement has not been reviewed or reported on by the
company’s auditors.
DIRECTORATE
There were no changes during the period.
Changes within the existing directorate were advised to
shareholders on SENS on 19 January 2017 and will be effective on
15 May 2017.
KING III COMPLIANCE
Sabvest’s compliance report has been updated on the Sabvest
website.
PROSPECTS
The group’s unlisted investee companies are budgeting for
improved profitability in 2017.
Most of the group’s listed investee companies are performing to
expectations except for those trading in the industrial and
mining sectors in Africa where performance is difficult to
project. It is obviously not possible to project likely listed
share prices.
Overall we anticipate a satisfactory year in 2017.
For and on behalf of the Board
Philip Coutts-Trotter Christopher Seabrooke Raymond Pleaner
Chairman CEO CFO
Sandton
28 February 2017
CASH DIVIDEND DECLARATION
Notice is hereby given that a final gross dividend of 32 cents
(2015: 29 cents) per ordinary and “N” ordinary share, out of
income reserves, for the twelve months ended 31 December 2016 has
been declared.
The issued share capital 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 20% will be deduced for
all shareholders who are not exempt in terms of the legislation.
This will result in a final net cash dividend of 25,6 cents per
ordinary and “N” ordinary share to non-exempt shareholders.
Last date to trade “CUM” dividend Monday, 20 March 2017
Trading “EX” dividend commences Wednesday, 22 March 2017
Record date Friday, 24 March 2017
Dividend payment date Monday, 27 March 2017
No dematerialisation or rematerialisation of share certificates
will be allowed during the period Wednesday, 22 March 2017 to
Friday, 24 March 2017, 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,
Rosebank Towers, 15 Biermann Avenue, Rosebank 2196 (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: 28/02/2017 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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