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SABVEST LIMITED - Unaudited interim results for the six months ended 30 June 2017 and cash dividend declaration

Release Date: 31/07/2017 09:00
Code(s): SBV SVN     PDF:  
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Unaudited interim results for the six months ended 30 June 2017 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 2017
AND CASH DIVIDEND DECLARATION
CONSOLIDATED SUMMARISED STATEMENT OF FINANCIAL POSITION
as at 30 June 2017
                            Unaudited    Unaudited      Audited
                              30 June      30 June       31 Dec
                                 2017         2016         2016
                                R’000        R’000        R’000
Non-current assets          2 056 266    1 836 058    2 009 727
Property, plant and 
 equipment                      1 216        1 549        1 365
Investment holdings         2 055 050    1 834 509    2 008 362
  Unlisted investments      1 480 258    1 332 786    1 421 820
  Listed investments          574 792      501 723      586 542
Current assets                198 115      173 245      158 207
Finance advances and 
 receivables                    5 320        9 317        3 858
Offshore investment 
 holdings                     192 507      163 779      151 262
Share portfolio                81 774            –            –
Bond portfolio                 79 746      117 492      128 259
Equity portfolio               30 987       46 287       23 003
Cash balances                     288          149        3 087
Total assets                2 254 381    2 009 303    2 167 934
Ordinary shareholders’ 
 equity                     1 688 906    1 546 725    1 659 255
Non-current liability         401 411      386 033      413 689
Interest-bearing debt          70 000      100 000       90 000
Deferred tax liability        331 411      286 033      323 689
Current liabilities           164 064       76 545       94 990
Interest-bearing debt         150 656       59 417       77 732
  Offshore portfolio finance   70 600       21 670       36 577
  Current portion of 
    non-current debt           50 000            –       30 000
  Interest-bearing debt        30 056       37 747       11 155
Accounts payable and 
 provisions                    13 408       17 128       17 258
Total equity and 
 liabilities                2 254 381    2 009 303    2 167 934
Net asset value per 
 share – cents                  3 728        3 395        3 646
Number of shares in issue 
 less held in 
 treasury – 000’s              45 306       45 554       45 513
CONSOLIDATED SUMMARISED STATEMENT OF CASH FLOWS
for the six months ended 30 June 2017
                            Unaudited    Unaudited      Audited
                             6 months     6 months    12 months
                                ended        ended        ended
                              30 June      30 June       31 Dec
                                 2017         2016         2016
                                R’000        R’000        R’000
Cash flow from operating 
 activities                    28 762       (8 763)      (2 077)
Net income for the period      54 315     (127 222)       4 174
Adjusted for non-cash items   (10 989)     131 710       17 477
Cash flow from operations      43 326        4 488       21 651
Dividends paid                (14 564)     (13 251)     (23 728)
Cash flows from investing 
 activities                   (79 373)     (90 697)    (101 748)
These include:
Purchase of investment 
 holdings and offshore 
 portfolios                  (165 218)    (226 794)    (328 014)
Proceeds from sale of 
 investment holdings and 
 offshore portfolios           87 331       71 492      156 450
Decrease/(increase) in 
 offshore cash investment 
 portfolio                          –       66 954       66 954
Other                          (1 486)      (2 349)       2 862
Cash effects of financing 
 activities                    47 812       44 578       51 881
These include:
Increase in long-term loans         –            –       20 000
Increase/(decrease) in 
 offshore portfolio finance    34 023       28 507       36 577
Other                          13 789       16 071       (4 696)
Change in cash and cash 
 equivalents                   (2 799)     (54 882)     (51 944)
Cash balances, less current 
 interest-bearing debt, 
 excluding portfolio 
 finance, at beginning 
 of period                      3 087       55 031       55 031
Cash balances, less RSA 
 interest-bearing debt at 
 end of period                    288          149        3 087
CONSOLIDATED SUMMARISED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2017
                            Unaudited    Unaudited      Audited
                             6 months     6 months    12 months
                                ended        ended        ended
                              30 June      30 June       31 Dec 
                                 2017         2016         2016
                                R’000        R’000        R’000
Gross income from operations 
 and investments               83 508      (78 652)     111 329
  Dividends received           64 329       32 866       63 340
  Interest received             3 708        4 628       10 980
  (Loss)/income on financial 
    instruments and shares    (24 632)       2 961        5 313
  Fees and sundry income          722          426        1 147
  Fair value adjustment to 
   investments                 39 381     (119 533)      30 549
  –  Listed                   (13 306)    (131 962)    (127 425)
  –  Unlisted                  52 687       12 429      157 974
Direct transactional costs       (259)        (323)        (518)
Interest paid                  (7 535)      (6 631)     (15 175)
Net income/(loss) before 
 expenses and exceptional 
 items                         75 714      (85 606)      95 636
Less:      Expenditure        (13 677)     (12 139)     (24 329)
           Operating costs    (13 497)     (11 962)     (23 943)
           Depreciation          (180)        (177)        (386)
Net income/(loss) before 
 taxation                      62 037      (97 745)      71 307
Taxation – deferred            (7 722)     (29 477)     (67 133)
–  Current year                (7 722)      26 234      (11 422)
–  CGT arising from change 
    in inclusion rate               –      (55 711)     (55 711)
Net income/(loss) for the  
 period attributable to 
 equity shareholders           54 315     (127 222)       4 174
Translation of foreign 
 subsidiary *1                 (4 989)      (8 585)     (15 961)
Total comprehensive 
 income/(loss) attributable 
 to equity shareholders        49 326     (135 807)     (11 787)
Earnings/(loss) per 
 share – cents *2               119,7       (279,0)         9,2
Dividend per share 
 (proposed after 
 interim/year-end) – cents       26,0         23,0         55,0
Weighted average number of 
 shares in issue – 000’s       45 368       45 605       45 600
Headline earnings/(loss) per 
 share – cents *2               119,7       (279,0)         9,2
Reconciliation of headline 
 earnings   
Net income for the period      54 315     (127 222)       4 174
Loss on sale of property, 
 plant and equipment                –            –            5
Headline earnings for the 
 period                        54 315     (127 222)       4 179
*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 2017
                                      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 
 2016           856     40 155     70 475  1 589 896  1 701 382
Total compre-
 hensive loss 
 for the period   –          –    (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
Total compre-
 hensive income 
 for the period   –          –     (4 989)    54 315     49 326
Loss in share 
 trust – 
 written back     –          –          1          –          1
Shares held in 
 treasury – 
 written back     1     12 203          –          –     12 204
Shares held in 
 treasury        (5)   (17 311)         –          –    (17 316)
Dividends paid    –          –          –    (14 564)   (14 564)
Balance as at 
 30 June 2017   851     28 437     49 525  1 610 093  1 688 906
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      R972 338
    Year 2    R1 056 163
    Year 3    R1 044 450
INVESTMENT HOLDINGS
as at 30 June 2017
                            Number of       Eco- 
                             Ordinary      nomic           Fair
                               shares/  interest          value
                                units          %          R’000
UNLISTED INDUSTRIAL 
 INVESTMENTS
Classic Food Products 
 (Pty) Ltd                                  25,0
Flexo Line Products 
 (Pty) Ltd                                  25,0
SA Bias Industries 
 (Pty) Ltd *1                               59,9
Sunspray Food Ingredients 
 (Pty) Ltd *2                               22,0
                                                      1 480 258
LISTED LONG-TERM 
 INVESTMENTS 
Brait S.E.                    800 000                    48 416
Long4Life Limited           2 000 000                    12 200
Metrofile Holdings 
 Limited                   25 000 000                   117 500
Rolfes Holdings Limited     6 000 000                    28 140
Rolfes Holdings 
 Limited *3                22 500 000                   105 525
Torre Industries 
 Limited *4                62 842 500                    93 635
Transaction Capital 
 Limited                   10 000 000                   147 500
Value Capital 
 Partners Fund *5             200 000                    21 876
                                                        574 792
Long-term investment 
 holdings                                             2 055 050
Offshore investment 
 holdings                                               192 507
  Share portfolio                                        81 774
  Bond portfolio                                         79 746
  Corero Network 
   Security Plc             20 500 000                   30 987
TOTAL HOLDINGS                                        2 247 557
*1 Voting interest 49%.
*2 Held indirectly through ordinary shares in 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.
*4 Held indirectly through ordinary shares in Newshelf 1400 (Pty) 
   Ltd.
*5 Value Active PFP H4 Fund invested in listed equities presently 
   primarily in Allied Electronics Corporation Limited and Adcorp 
   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 four unlisted industrial 
groups, long-term holdings in eight listed investments and equity 
funds, and offshore share and bond portfolios, all accounted for 
on a fair value basis. In addition, Sabvest invests in debt 
instruments and portfolios and undertakes other fee and profit 
earning activities from time to time.
CHANGES IN INVESTMENT HOLDINGS
During the period Sabvest:
–  purchased 25% of Classic Food Products (Pty) Limited;
–  purchased 41 523 shares in Brait for R3,1m, thereby increasing 
   its holding to 800 000 shares;
–  purchased 2m shares in Long4Life Limited for R13m;
–  purchased 200 000 units in Value Capital Partners Fund for 
   R20m;
–  restructured the form of its investment in Torre Industries 
   Limited by disposing of its Torre shareholding to Newshelf 
   1400 (Pty) Limited in exchange for ordinary shares in Newshelf 
   with the result that it holds 48,67% of Newshelf, representing 
   a look-through holding in Torre of 62 842 500 shares;
–  purchased 82 372 Sabvest ordinary shares and 125 056 Sabvest 
   “N” shares for R5,1m and which are presently held as treasury 
   shares in a subsidiary;
–  increased its offshore share portfolio to R81,7m from RNil and 
   reduced its offshore bond portfolio from R128,3m at the year-
   end reporting date to R79,7m;
–  purchased 5m shares in Corero Network Securities for R4,5m 
   (GBP264,190), thereby increasing its interest in Corero to 
   20,5m shares representing 6,5% of Corero.
FINANCIAL RESULTS
PAT increased to R49,3m from a loss of R135,8m in the comparable 
six-month period. This is stated after accounting for a loss of 
R24,9m arising from the restructuring of the shareholding in 
Torre. HEPS for the period increased to 119,7 cents from a loss 
of 279 cents in the prior period.  
NAV per share increased to 3 728 cents per share, being a 2% 
increase over NAV at the financial year-end and a 9,8% increase 
over the NAV at the previous interim reporting date.  
Shareholders’ funds increased to R1,688bn. 
The deferred tax liability has been calculated on the basis that 
gains on the sale of all investments will be subject to CGT in 
RSA, after the utilisation of any remaining assessed losses.
The group’s balance sheet is well structured with interest-
bearing debt at conservative levels.
The group’s cash flows remain strong and the interim dividend has 
accordingly been increased by 13% to 26 cents per share.
LISTED INVESTMENTS
–  Brait’s share price reduced due to concerns arising from the 
   Brexit vote, the weakness of sterling and poor trading 
   conditions in the retail sector in the UK which has affected 
   its investment in New Look.
–  Sabvest has made an initial investment in Long4Life, the new 
   lifestyle orientated investment group headed by Brian Joffe 
   and Kevin Hedderwick.
–  Metrofile produced slightly lower growth in earnings than in 
   prior years but continues to be cash generative and 
   acquisitive.
–  Rolfes produced good results in a difficult market.
–  Torre’s share price weakened materially due to the under-
   performance of most of the divisions in the sectors it 
   services. We remain confident of Torre’s medium-term 
   performance.
–  Transaction Capital continues to trade well and ahead of 
   projections.
–  Sabvest has made an initial investment of R20m in the Value 
   Capital Partners Fund formed by Antony Ball and Sam Sithole 
   and which will be primarily focused on listed equities, 
   currently mostly Altron and Adcorp.
–  The Corero share price continues to be volatile on small 
   volumes. Corero continues to expand its customer base and 
   prospects remain satisfactory.
–  The group’s offshore share portfolio comprises 22 large cap 
   international shares with a primary focus on the IT and 
   biotech sectors, and performed satisfactorily in the six-month 
   period. The group’s offshore bond portfolio comprised 16 fixed 
   date redeemable bonds 2018 – 2022 with a target average rating 
   of BB, and three bond/loan funds, which performed 
   satisfactorily for the six-month period. The bond and share 
   portfolios are listed on Sabvest’s website. Both portfolios 
   are geared.
UNLISTED INDUSTRIAL INVESTMENTS
–  SA Bias Industries comprises the following business units – 
   International Trimmings and Labels Group (“ITL”), Narrowtex 
   Group, Apparel Components, Flowmax Group and Sabias 
   Investments.
   The results for the period have been satisfactory 
   notwithstanding the effects of the stronger rand on rand-
   translated foreign earnings. Trading in South Africa is 
   challenging while offshore it remains satisfactory.
–  Sunspray continues to trade satisfactorily.
–  Flexo Line is trading to expectations although slightly below 
   acquisition forecasts.
–  Classic Food Products has completed the installation of its 
   production facilities which will come on line before the end 
   of Q3.
Unlisted investments continue to be valued using the maintainable 
earnings model (NOPAT) adjusted for net cash/debt. The earnings 
multiples utilised for existing investments were unchanged from 
prior periods. The investment in Classic Food Products is carried 
at cost pending commencement of operations.
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 interim dividend has 
been increased by 13% to 26 cents per share (2016: 23 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 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 BOARD POSITIONS 
As advised on SENS on 19 January 2017, Mr Philip Coutts-Trotter 
retired as Non-Executive Chairman and a member of Board 
committees on 15 May 2017 but continues as a Non-Executive 
Director. Mrs Dawn Mokhobo has been appointed as independent Non-
Executive Chairman and Mr Bheki Shongwe as independent Non-
Executive Deputy Chairman.
PROSPECTS 
The group’s unlisted investee companies are trading 
satisfactorily which should continue to reflect in improved 
valuations.
The group’s listed investee companies are trading to 
expectations. However, future movements in share prices are 
obviously uncertain as are the resultant valuations.
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
Dawn Mokhobo         Christopher Seabrooke       Raymond Pleaner
Chairman             CEO                         CFO
Sandton
31 July 2017 
CASH DIVIDEND DECLARATION
Notice is hereby given that an interim gross dividend of 26 cents 
(2016: 23 cents) per ordinary and “N” ordinary share for the six 
months ended 30 June 2017 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 20% 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 
20,8 cents per ordinary and “N” ordinary share to non-exempt 
shareholders.
Last date to trade “CUM” dividend        Tuesday, 22 August 2017
Trading “EX” dividend commences       Wednesday, 23 August  2017
Record date                               Friday, 25 August 2017
Dividend payment date                    Monday, 28 August  2017
No dematerialisation or rematerialisation of share certificates 
will be allowed during the period Wednesday, 23 August 2017 to 
Friday, 25 August 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:  
DNM Mokhobo# (Chairman), BJT Shongwe# (Deputy Chairman), 
CS Seabrooke* (Chief Executive), CP Coutts-Trotter, 
P Coutts-Trotter, NSH Hughes# (Lead Independent Director), 
R Pleaner* 
*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: 31/07/2017 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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