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Audited preliminary consolidated summarised results
for the year ended 31 December 2017
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
AUDITED PRELIMINARY CONSOLIDATED SUMMARISED RESULTS
for the year ended 31 December 2017
CONSOLIDATED SUMMARISED STATEMENT OF FINANCIAL POSITION
Audited Restated*2
31 Dec 31 Dec
2017 2016
R’000 R’000
Non-current assets 1 135 885 2 009 727
Property, plant and equipment 1 050 1 365
Investment holdings 1 134 835 2 008 362
Unlisted investments 652 547 1 421 820
Listed investments 332 279 474 492
Listed investments held
indirectly 150 009 112 050
Current assets 1 514 928 158 207
Finance advances and receivables 1 388 447 3 858
Offshore investment holdings 126 423 151 262
Share portfolio 101 556 –
Equity investment 24 867 23 003
Bond portfolio – 128 259
Cash balances 58 3 087
Total assets 2 650 813 2 167 934
Ordinary shareholders’ equity 2 303 945 1 659 255
Non-current liabilities 235 807 413 689
Interest-bearing debt 110 000 90 000
Deferred tax liabilities 125 807 323 689
Current liabilities 111 061 94 990
Interest-bearing debt 70 897 77 732
Offshore portfolio finance 7 685 36 577
Current portion of non-current
interest-bearing debt 30 000 30 000
Interest-bearing debt 33 212 11 155
Accounts payable and provisions 40 164 17 258
Total equity and liabilities 2 650 813 2 167 934
CONSOLIDATED SUMMARISED STATEMENT OF CASH FLOWS
for the year ended 31 December 2017
Audited Restated*2
31 Dec 31 Dec
2017 2016
R’000 R’000
Cash generated by/(utilised in)
operating activities 20 766 (2 077)
Net income for the year 688 364 4 174
Adjusted for non-cash items (641 254) 17 477
Cash flows from operations 47 110 21 651
Dividends paid (26 344) (23 728)
Cash flows from investing activities (31 848) (101 748)
These include:
Purchase of investment holdings and
offshore portfolio (240 877) (328 014)
Proceeds from sale of investment
holdings and offshore portfolio 207 675 156 450
Decrease in offshore cash
investment portfolio – 66 954
Other 1 354 2 862
Cash effects of financing activities 8 053 51 881
These include:
Increase in long-term loans 20 000 20 000
(Decrease)/increase in offshore
portfolio finance (28 892) 36 577
Interest-bearing debt 22 057 1 915
Other (5 112) (6 611)
Change in cash and cash equivalents (3 029) (51 944)
Cash balances, less current
interest-bearing debt excluding
portfolio finance, at
beginning of year 3 087 55 031
Cash balances, less RSA interest-
bearing debt, at end of year 58 3 087
CONSOLIDATED SUMMARISED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2017
Audited Restated*2
31 Dec 31 Dec
2017 2016
R’000 R’000
Gross income from operations
and investments 570 934 111 329
Dividends received 94 273 63 340
Interest received 7 117 10 980
(Loss)/income on financial
instruments and shares (22 558) 5 313
Fees and sundry income 1 362 1 147
Fair value adjustment to
investments 490 740 30 549
– Listed (44 022) (170 103)
– Listed held indirectly (67 091) 42 678
– Unlisted 601 853 157 974
Direct transactional costs (633) (518)
Impairments (1 506) –
Interest paid (15 839) (15 175)
Net income before expenses 552 956 95 636
Less: Expenditure (62 474) (24 329)
Operating costs (62 108) (23 943)
Depreciation (366) (386)
Net income before taxation 490 482 71 307
Taxation – deferred 197 882 (67 133)
– Current year 197 882 (11 422)
– Increase in CGT inclustion rate
– prior year – (55 711)
Net income for the year attributable
to equity shareholders 688 364 4 174
Translation of foreign subsidiary *1 (12 217) (15 961)
Total comprehensive income/(loss)
attributable to equity
shareholders 676 147 (11 787)
*1 This item may subsequently be classified to profit and loss.
*2 Refer to restatement of comparative information.
OTHER INFORMATION
Audited Audited
31 Dec 31 Dec
2017 2016
Net asset value per share with
investments at fair value – cents 5 085 3 646
Number of shares in issue less held
in treasury – 000’s 45 306 45 513
Earnings per share – cents 1 517,3 9,2
Weighted average number of shares
in issue – 000’s 45 368 45 600
Reconciliation of headline
(loss)/earnings (R’000)
Net income for the year 668 364 4 174
Loss on sale of property, plant
and equipment – 5
Headline earnings for the year 668 364 4 179
Headline earnings per
share – cents *3 1 517,3 9,2
*3 There are no diluting instruments.
SALIENT FEATURES
Unau- Unau- Unau- Unau-
dited dited dited dited
Com- Com- Com- Com-
Audited pound pound pound pound
growth growth growth growth growth
2017 1 3 5 10 15
Audied year years years years years
Cents % % % % %
Net asset value
per share 5 085,0 39,5 23,8 22,4 21,9 19,4
Headline earnings
per share 1 517,3 >100 50,6 37,5 30,2 26,9
Earnings per
share 1 517,3 > 100 50,2 37,5 31,2 28,7
Dividends per
share* 61,0 10,9 12,4 13,8 15,9 53,6
*Calculation excludes special dividends of 100 cents per share
paid in 2013, 2014 and 2018.
Extracted from the Audited Financial Statements*
2017 2016 2015 2014 2013
Rm Rm Rm Rm Rm
Profit after
taxation 688,3 4,2 459,9 204,6 279,8
Shareholders’
funds 2 303,9 1 659,3 1 701,4 1 233,1 1 085,0
Total assets 2 650,8 2 167,9 2 098,5 1 555,7 1 400,1
* The directors take responsibility for the correct extraction of
the information from the audited financial statements.
CONSOLIDATED SUMMARISED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2017
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
2016 856 40 155 70 475 1 589 896 1 701 382
Total
comprehen-
sive income
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
Total
comprehen-
sive profit
for the year – – (12 217) 688 364 676 147
Loss in share
trust – – (1) – (1)
Shares held in
treasury –
written back 1 12 203 – – 12 204
Shares held in
treasury (5) (17 311) – – (17 316)
Dividends paid – – – (26 344) (26 344)
Balance as at
31 December
2017 851 28 437 42 295 2 232 362 2 303 945
31 Dec 31 Dec
2017 2016
R’000 R’000
Dividends per share (proposed after
interim/year-end) – cents 61,0 55,0
Special dividends per share (proposed
after year-end) – cents 100,0 –
CONTINGENT LIABILITIES
at 31 December 2017
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 013 934
Year 2 R1 101 565
Year 3 R474 750.
3. An offshore subsidiary has guaranteed a loan of $5m on behalf
of an investee.
4. An offshore subsidiary has an investment commitment of
$33,6m.
5. A subsidiary has an investment commitment of R93m.
Investment Holdings
as at 31 December 2017
Number
of Economic Fair
Ordinary interest value
shares/units % R’000
UNLISTED INDUSTRIAL
INVESTMENTS
Classic Food Brands
(Pty) Ltd 30,0
Flexo Line Products
(Pty) Ltd 25,0
SA Bias Industries
(Pty) Ltd *1 59,9
Sunspray Food Ingredients
(Pty) Ltd *2 22,0
652 547
LISTED LONG-TERM INVESTMENTS
Brait S.E. 800 000 33 328
Metrofile
Holdings Limited 25 000 000 95 250
Net1 UEPS Technologies Inc 50 000 7 406
Rolfes Holdings Limited 10 500 000 29 295
Transaction Capital
Limited 10 000 000 167 000
332 279
LISTED LONG-TERM INVESTMENTS
HELD INDIRECTLY
Rolfes Holdings
Limited *3 22 500 000 62 775
Torre Industries
Limited *4 62 842 500 62 842
Value Capital Partners
Fund *5 200 000 24 392
150 009
Long-term investment
holdings 1 134 835
Offshore investment
holdings 126 423
Share portfolio 101 556
Bond portfolio –
Corero Network
Security Plc 22 000 000 24 867
TOTAL HOLDINGS 1 261 258
*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 direct and indirect holdings in seven 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 year Sabvest:
– purchased 30% of Classic Food Brands (Pty) Ltd and provided
loan seed capital;
– purchased 41 523 shares in Brait for R3,1m, thereby increasing
its holding to 800 000 shares;
– purchased 4,5m shares in Rolfes for R12,3m, thereby increasing
its direct and indirect holding to 33m shares representing a
20,5% economic interest in Rolfes;
– purchased 50 000 shares in Net1 for R7,4m;
– purchased 200 000 units in Value Capital Partners Fund for
R20m;
– purchased and sold 2m shares in Long4Life;
– restructured the form of its investment in Torre Industries
Limited by disposing of its Torre shareholding to Newshelf
1400 (Pty) Ltd 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;
– increased its offshore listed share portfolio to R101,5m from
RNil and reduced its offshore bond portfolio from R128,3m to
RNil;
– purchased 6,5m shares in Corero Network Securities for R6,7m
(GBP385,000), thereby increasing its interest in Corero to
22,0m shares representing 7,0% of Corero; and
– was credited with a special dividend of R1,387bn by SA Bias
Industries pursuant to the sale by SA Bias of its
International Trimmings and Labels (ITL) divisions for
approximately US$186,9m (R2,3 bn at the exchange rates at the
time) on 31 December 2017.
Subsequent to the reporting date Sabvest:
– purchased 200 000 shares in Brait for R7,6m, thereby
increasing its holding to 1m shares;
– purchased 200 000 shares in Net1 for R24,6m thereby increasing
its holding to 250 000 shares;
– purchased 4 000 000 shares in Rolfes Holdings for R12,8m
increasing its holdings to 14 500 000 shares;
– purchased 30% of Mandarin Industries Limited (BVI), the
holding company of the ITL Group internationally, for $33,6m
(R414m at the exchange rates at the time);
– received the payment of the special dividend at the year-end
by SA Bias in the amount of R1,387bn;
– purchased 30% of ITL Holdings South Africa (Pty) Ltd through
Mandarin Holdings (Pty) Ltd (RSA) for R33m and made a
preference share investment of R60m in Mandarin Holdings;
– concluded an asset swap of R300m into US dollars;
– invested the dollar equivalent of R208m ($17,4m) from the
asset swap in a bespoke offshore technology portfolio
comprising 15 large cap technology companies and one
technology fund, the details of which were advised to
shareholders on 14 February 2018;
– retained the balance of $7,3m (R92m) in cash and liquid
interest-bearing instruments abroad; and
– refocused its general offshore equity portfolio to an
increased overweight position in biotech and pharmaceutical
stocks.
FINANCIAL RESULTS
PAT increased materially to R688,3m primarily due to the increase
in valuation of SA Bias Industries and the subsequent credit
received for its special dividend. PAT was further enhanced by
the reversal of a portion of the deferred tax provisions.
PAT was negatively affected by reductions in the share prices of
the group’s RSA listed holdings other than Transaction Capital
and the Value Capital Partners Fund which performed strongly.
Operating costs increased materially due to performance linked
incentives in the current year and virtually none in the prior
year.
HEPS increased to a record 1 517,3 cents and NAV per share
increased by 39,5% to a new high of 5 085 cents per share.
Shareholders’ funds increased by 38,8% to R2,3bn.
Normal DPS for the year increased by 10,9% to 61 cents per share
and a special dividend of 100 cents per share was declared.
With regard to the accounting for the SA Bias transactions, the
increase in the value of
SA Bias arising from the sale of ITL and the subsequent decrease
arising from the special dividend have both been accounted for as
fair value adjustments to unlisted investments.
LISTED INVESTMENTS
– Brait’s share price reduced materially pursuant to concerns
relating to its interests in the UK after the Brexit vote and
in particular the weakness in the retail sector and the
effects on its investment in New Look.
– Metrofile produced stable earnings and concluded acquisitions
of Tidy Files and G4S Kenya. Its share price has been weak
most of the year.
– Net1 traded satisfactorily but its share price has been weak
due to the uncertainty surrounding its SASSA contract.
– Rolfes experienced share price weakness after restating its
published results and effecting changes in management. Its
interim results were satisfactory and its operating prospects
are good.
– Torre Industries’ share price fell materially due to poor
operating performances, particularly in the divisions affected
by weakness in the mining and industrial sectors. Its interim
results indicate that its prospects have stabilised.
– Transaction Capital continues to trade very satisfactorily. It
produced good growth for the year and its share price
strengthened in response.
– The Value Capital Partners Fund experienced a satisfactory
increase in value, driven in particular by its holdings in
Altron and Adcorp.
– The group’s offshore share portfolio performed satisfactorily
with an increase in value on average holdings for the year of
16,0% in US dollars.
– The Corero share price continues to be volatile on small
volumes.
UNLISTED INDUSTRIAL INVESTMENTS
– SA Bias Industries’ results for the year were satisfactory.
Pursuant to the sale of its ITL divisions, its business units
comprise:
– Narrowtex Group;
– Apparel Component Manufacturers;
– Flowmax Group (UK); and
– Sabias Investments (BVI).
– Sunspray traded well with profitability ahead of budget.
– Flexo Line traded below expectations due primarily to labour
issues.
– Classic Food Brands has established its start-up manufacturing
facilities and its projections for 2018 are satisfactory.
Unlisted investments are valued using the maintainable earnings
model. The earnings are calculated on an EBITDA basis and also
referenced to NOPAT, and are considered relative to current and
forward earnings. Multiples are based on transaction multiples
usual for small cap private company transactions and recent
actual transactions. Each resultant calculation is then adjusted
for net cash/debt/equivalents to determine EV.
SUBSEQUENT EVENTS
– An offshore subsidiary purchased a 30% interest in Mandarin
Industries Limited (BVI) for $33,6m (R416m);
– A subsidiary purchased a 30% in ITLSA Holdings Limited through
Mandarin Holdings (Pty) Ltd for R93m;
– A special dividend of R1,387bn from SA Bias Industries was
received in January 2018;
– Concluded an asset swap of R300m into US dollars; and
– A special dividend of a 100 cents per share was paid to
ordinary and “N” ordinary shareholders.
The above were all non-adjusted.
DIVIDENDS
Dividends are determined relative to Sabvest’s own cash flows
from investments and services, and capital receipts or special
dividends that are not earmarked for new investments.
Dividends are considered twice annually. The normal dividend has
been increased by 11% to 61 cents per share and a special
dividend of 100 cents per share has been declared. Both dividends
were declared in January 2018 and paid in February 2018.
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 a 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 IAS 34. The full annual
statements of the group set out these disclosures and are
available at the issuer’s registered offices and upon request.
Restatement of comparative information
In line with the JSE monitoring process, the group has reported
its investment in listed shares in two categories, those directly
held and those indirectly held through other vehicles. This
restatement also aligns with the disclosure of the fair value
hierarchy and had the result of correcting the classification of
listed investments held indirectly from a level 1 to a
level 2. This is still based on observable quoted share prices
and has not resulted in any change in value with the consolidated
statement of financial position or consolidated statement of
comprehensive income. Furthermore, more detailed disclosure on
the consolidated summarised statement of cash flows has been
presented.
AUDIT OPINION
The auditors, Deloitte & Touche, have issued an unmodified audit
opinion on the consolidated financial statements for the year
ended 31 December 2017. 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 2017. 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 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 in the announcement
has not been audited or reported on by the company’s auditors.
DIRECTORATE
During the year Philip Coutts-Trotter retired from the board.
Philip has been a director of Sabvest since listing and was
previously Chairman of the company. His input over the years has
been immensely valuable and we wish him well in his retirement.
Carl Coutts-Trotter also resigned during the year in order to
focus his efforts solely on the ITL transactions and subsequently
on the growth and development of SA Bias Industries of which he
is CEO. Carl’s participation has been valuable and considerable
and although he is no longer on the Board, our partnership in SA
Bias continues as will our interaction to the mutual benefit of
both groups.
KING COMPLIANCE
Sabvest’s King III compliance report is on the Sabvest website
and it expects to lodge its King IV report shortly.
PROSPECTS
The group’s major unlisted investee companies are budgeting
improved profitability in 2018. Its small investee companies are
not expected to contribute significantly to Sabvest’s results at
this stage but their prospects remain promising.
The group’s listed investee companies are performing to
expectations but it is obviously not possible to project likely
listed share prices.
We anticipate a satisfactory year in 2018.
For and on behalf of the Board
Dawn Mokhobo Christopher Seabrooke Raymond Pleaner
Chairman CEO CFO
Sandton
2 March 2018
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), 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: 02/03/2018 05:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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