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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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