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Audited preliminary consolidated summarised results for year ended 31 December 2018 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
AUDITED PRELIMINARY CONSOLIDATED SUMMARISED RESULTS
for the year ended 31 December 2018
AND CASH DIVIDEND DECLARATION
CONSOLIDATED SUMMARISED STATEMENT OF FINANCIAL POSITION
as at 31 December 2018
Audited Audited
31 Dec 31 Dec
2018 2017
R’000 R’000
Non-current assets 2 367 060 1 135 885
Property, plant and equipment 2 688 1 050
Investment holdings 2 364 372 1 134 835
Unlisted investments 1 707 546 652 547
Listed investments 566 699 332 279
Listed investments held indirectly 90 127 150 009
Current assets 452 538 1 514 928
Finance advances and receivables 34 987 1 388 447
Listed investments held indirectly
(held-for-sale) 65 985 –
Listed share portfolio – 101 556
Equity investment – 24 867
Bond portfolio 101 993 –
Cash balances 249 573 58
Total assets 2 819 598 2 650 813
Ordinary shareholders’ equity 2 446 148 2 303 945
Non-current liabilities 277 109 235 807
Interest-bearing debt 100 000 110 000
Deferred tax liabilities 177 109 125 807
Current liabilities 96 341 111 061
Interest-bearing debt 66 176 70 897
Equity/bond portfolio finance – 7 685
Current portion of non-current
interest-bearing debt 40 000 30 000
Interest-bearing debt 26 176 33 212
Accounts payable and provisions 30 165 40 164
Total equity and liabilities 2 819 598 2 650 813
CONSOLIDATED SUMMARISED STATEMENT OF CASH FLOWS
for the year ended 31 December 2018
Audited Audited
31 Dec 31 Dec
2018 2017
R’000 R’000
Cash (utilised in)/generated by
operating activities (52 477) 20 766
Net income for the year 238 083 688 364
Adjusted for non-cash items (214 909) (641 254)
Cash flows from operations 23 174 47 110
Dividends paid – ordinary (30 345) (26 344)
– special (45 306) –
Cash flows from investing
activities 438 465 (31 848)
These include:
Purchase of investment holdings and
offshore portfolio (1 557 661) (240 877)
Proceeds from sale of investment
holdings and offshore portfolio 643 431 207 675
Proceeds from sale of fixed assets 300 –
Proceeds of special dividend 1 387 500 –
Other (35 105) 1 354
Cash effects of financing
activities (136 473) 8 053
These include:
Increase in long-term loans – 20 000
Interest-bearing debt (7 036) 22 057
Decrease in offshore portfolio
finance (7 685) (28 892)
Purchase of company shares (120 609) –
Other (1 143) (5 112)
Change in cash and cash equivalents 249 515 (3 029)
Cash and cash equivalents at
beginning of year 58 3 087
Cash and cash equivalents at
end of year 249 573 58
CONSOLIDATED SUMMARISED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2018
Restated*2
Audited Audited
31 Dec 31 Dec
2018 2017
R’000 R’000
Gross income from operations
and investments 364 351 570 934
Dividends received 53 557 94 273
Interest received 27 758 7 117
Foreign exchange gain 21 681 –
Income/(loss) on financial
investments and shares 68 405 (22 558)
Fees and sundry income 2 047 1 362
Fair value adjustment to
investments 190 903 490 740
– Listed (89 653) (44 022)
– Listed investments held
indirectly 6 103 (67 091)
– Unlisted 274 453 601 853
Transactional costs (11 877) (633)
Impairments written
back/(impairments) 851 (1 506)
Fair value loss on initial
recognition of interest-free loans (3 907) –
Interest paid (16 752) (15 839)
Net income before expenses and
exceptional items 332 666 552 956
Less: Expenditure (43 281) (62 474)
Operating costs – fixed *2 (27 222) (26 323)
Operating costs – variable *2 (15 487) (35 785)
Depreciation (572) (366)
Net income before taxation 289 385 490 482
Taxation – deferred (51 302) 197 882
Net income for the year attributable
to equity shareholders 238 083 688 364
Translation of foreign subsidiary *1 101 523 (12 217)
Total comprehensive income
attributable to equity
shareholders 339 606 676 147
*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
2018 2017
Net asset value per share with
investments at fair value – cents 5 852 5 085
Number of shares in issue less
held in treasury – 000’s 41 802 45 306
Earnings per share – cents 531,3 1 517,3
Weighted average number of shares
in issue – 000’s 44 813 45 368
Reconciliation of headline
earnings (R’000)
Net income for the year 238 083 668 364
Profit on sale of property, plant
and equipment (155) –
Headline earnings for the year 237 928 668 364
Headline earnings per
share – cents *3 530,9 1 517,3
*3 There are no diluting instruments.
SALIENT FEATURES
EXTRACTED FROM THE AUDITED FINANCIAL STATEMENTS*
% Audited Audited
Increase/ 2018 2017
(decrease) Cents Cents
Net asset value per share 15,1 5 852 5 085
Dividends per share 11,5 68 61
Special dividends per share – 100 –
Headline earnings per share (65,0) 530,9 1 517,3
Earnings per share (65,0) 531,3 1 517,3
Audited Audited Audited
2016 2015 2014
Cents Cents Cents
Net asset value per
share 3 646 3 719 2 683
Dividends per share 55 50 43
Special dividends per share – – 100
Headline earnings per share 9,2 1 003,9 444,7
Earnings per share 9,2 1 003,9 445,0
%
Increase/ 2018 2017
(decrease) Rm Rm
Profit after taxation (65,4) 238,1 688,3
Total comprehensive income (49,8) 339,6 676,1
Shareholders’ funds 6,2 2 446,1 2 303,9
2016 2015 2014
Rm Rm Rm
Profit after taxation 4,2 459,9 204,6
Total comprehensive
income (11,8) 495,0 213,8
Shareholders’ funds 1 659,2 1 701,3 1 233,1
* 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 2018
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 31 December
2016 855 33 545 54 513 1 570 342 1 659 255
Total compre-
hensive 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
Total compre-
hensive profit
for the year – – 101 523 238 083 339 606
Shares held in
treasury –
written back 5 17 311 – – 17 316
Shares cancelled (5) (45 748) – (93 315) (139 068)
Dividends paid – – – (75 651) (75 651)
Balance as at
31 December
2018 851 – 143 818 2 301 479 2 446 148
31 Dec 31 Dec
2018 2017
R’000 R’000
Dividends per share (proposed after
interim/year-end) – cents 68,0 61,0
Special dividends per share (proposed
after year-end) – cents – 100,0
CONTINGENT LIABILITIES
at 31 December 2018
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 101 565
Year 2 R474 750
3. Guarantees for the bank borrowings of two investees utilised
at the year-end in amounts totalling R165,8m (utilisation by
investees at 31 December 2018, R139m).
INVESTMENT HOLDINGS
as at 31 December 2018
Number
of Economic Fair
Ordinary interest value
shares/units % R’000
UNLISTED INVESTMENTS
Classic Food
Brands (Pty) Ltd 25,0 25 762
DNI-4PL Contracts
(Pty) Ltd *1 7,6 159 714
Flexo Line Products
(Pty) Ltd 47,5 24 572
ITL Holdings Group *2 30,0 704 968
SA Bias Industries
(Pty) Ltd *3 59,9 738 700
Sunspray Food Ingredients
(Pty) Ltd *4 28,2 53 831
1 707 547
LISTED INVESTMENTS
Brait S.E. 4 000 000 120 000
Corero Network
Security Plc (UK) 28 000 000 64 129
Metrofile Holdings
Limited 46 500 000 117 645
Net1 UEPS
Technologies Inc 300 000 15 075
Rolfes Holdings Limited 27 500 000 79 750
Transaction Capital
Limited 10 000 000 170 100
566 699
LISTED INVESTMENTS
HELD INDIRECTLY
Rolfes Holdings
Limited *5 22 500 000 65 250
Value Capital Partners
Fund *6 200 000 24 877
90 127
Non-current investment holdings 2 364 373
Current investments 167 968
– Listed bond portfolio 101 983
– Listed investments held-for-sale 65 985
TOTAL HOLDINGS 2 532 341
*1 Effective interest of 7,59% in DNI through 35,72% of JAA
Holdings which owns 21,24% of DNI.
*2 ITL Holdings Limited Jersey held through Mandarin Industries
Limited BVI and ITL Holdings SA (Pty) Ltd held through
Mandarin Holdings (Pty) Ltd.
*3 Voting interest 49%.
*4 Held indirectly through ordinary shares in Famdeen
Investments (Pty) Ltd.
*5 Held indirectly through participating preference shares in
Masimong Chemicals (Pty) Ltd linked to the performance of
22,5m shares in Rolfes Holdings Limited.
*6 Value Active PFP H4 Fund invested in listed equities
presently primarily in Altron, Sun International and PPC.
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 Investments Instruments sector.
Sabvest has significant interests in six unlisted groups, long-
term direct and indirect holdings in seven listed investments and
equity funds, and an offshore bond portfolio, all accounted for
on a fair value basis. In addition, Sabvest invests in debt
instruments and portfolios and undertakes other fee, finance and
profit-earning activities from time to time.
CHANGES IN INVESTMENT HOLDINGS
During the period Sabvest:
– increased its interest to 47,5% and provided loan funding to
Flexo Line Products (Pty) Ltd;
– purchased 30% of Mandarin Industries Limited (BVI) which owns
100% of the ITL Group (International Trimmings & Labels)
internationally for $33,6m (R398,5m);
– purchased effective 30% and provided funding to ITL Holdings
RSA indirectly through Mandarin Holdings (Pty) Ltd (RSA) for
R93m, of which R90m is a preference share in Mandarin with a
coupon of 11% redeemable 39 months from issue;
– increased its interest in Sunspray Food Ingredients (Pty) Ltd
from 22% to 28% as a result of a share buy-back from a
retiring shareholder for R9,2m;
– purchased 35,72% of JAA Holdings (Pty) Ltd (JAA) which owns
21,24% of DNI 4PL Contracts (Pty) Ltd (DNI) resulting in
Sabvest having a look-through interest of 7,59% in DNI for
R159,7m;
– purchased 3,2m shares in Brait for R128,5m thereby increasing
its holding to 4m shares;
– purchased 21,5m shares in Metrofile Holdings for R69,6m
thereby increasing its holding to 46,5m shares, representing
11,3% of Metrofile;
– purchased 250 000 shares in Net1 UEPS Technologies Inc for
R30m thereby increasing its holding to 300 000 shares;
– purchased 17m Rolfes shares for R53,5m thereby increasing
its direct and indirect holdings in Rolfes to 50m shares,
representing a 31% economic interest in Rolfes;
– purchased 6m shares in Corero Network Security Plc for
GBP443 000 (R7,9m) thereby increasing its holding to 28m
shares, representing a 6,6% interest in Corero;
– invested $17,5m in a bespoke offshore technology portfolio
in February which was realised in full in August;
– invested $7m in an offshore bond ETF;
– disposed of its offshore general equity portfolio in
September for $7,9m (R116,9m) which is currently held in
cash in US dollars;
– repurchased 1 271 Sabvest ordinary shares and 3 502 602
Sabvest ‘N’ shares for R121,7m and cancelled all the
treasury shares held, with the result that at the year end
16 975 293 ordinary shares and 24 826 919 ‘N’ ordinary
shares remained in issue;
Subsequent to the reporting date:
– on 30 January 2019 JAA increased its interest in DNI to
34,92%, partially funded by the issue of new JAA shares,
which diluted Sabvest’s interest in JAA to 28,4% but
increased its look-through interest in DNI to 9,92%;
– effective on 1 March 2019 Sabvest purchased a 10% interest
in Masimong Group Holdings (Pty) Ltd, the major investments
of which are 25% of Seriti Resources (Pty) Ltd (which owns
90% of Seriti Coal), 49% of Lephalale Coal Mines (Pty) Ltd
and 18,1% of Mouton Holdings (Pty) Ltd (which owns 100% of
Mouton Citrus and 65% of Carmien Tea);
– disposed of its offshore bond portfolio of $7,3m, the
proceeds of which are currently held in cash.
FINANCIAL RESULTS
PAT reduced to R238,1m which Sabvest regards as a more normalised
level relative to the exceptional and record results in 2017.
PAT was, however, 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 reduced due mainly to performance linked
incentives in the current year based on a lower level of PAT.
Pursuant to the reduction in PAT, HEPS reduced to 530,9 cents.
NAV per share increased by 15,1% to a new high of 5 852 cents per
share and shareholders’ funds increased to R2 446,1m,
notwithstanding the payment of a special dividend of 100 cents
per share. The increase in NAV per share was aided by the
material share buyback during the year and the resulting 41,8m
shares in issue at the reporting date (2017: 45,4m).
LISTED INVESTMENTS
– Brait’s share price reduced materially pursuant to concerns
relating to its interests in the UK with the Brexit
uncertainty, the weakness in the retail sector and the
effects of the recapitalisation initiatives in New Look.
– The Corero share price continues to be volatile on small
volumes but strategically its new relationship with Juniper
Networks holds considerable promise.
– Metrofile’s earnings have been below expectations and its share
price has been weak most of the year.
– Net1 has suffered difficult trading conditions in its post
SASSA contract period and its share price has been weak
accordingly.
– Rolfes is trading well and has good prospects but has
experienced a sideways share price performance.
– Torre Industries has paid a special dividend and its
shareholders, including Sabvest, have accepted an offer for
the company. The investment is accordingly held for sale.
– Transaction Capital continues to trade very satisfactorily.
It produced good growth for the year and its share price
continues to strengthen.
– The Value Capital Partners Fund experienced a satisfactory
increase in value driven in particular by its holding in
Altron.
– The group’s offshore, technology and general portfolios were
sold in Q3 with a satisfactory gain on sale, both in terms of
performance and currency.
UNLISTED INDUSTRIAL INVESTMENTS
– Classic Food Brands has established its start-up manufacturing
facilities, has reached profitability and has material growth
prospects.
– DNI is growing strongly with profitability ahead of
projections.
– Flexo Line Products traded below expectations due primarily to
labour and management issues. Both have been resolved and the
company is now trading at improved levels of profitability;
– ITL traded well notwithstanding a competitive market place.
Its customer base continues to grow in line with expectations,
its comprehensive RFID solution is gaining traction both in
South Africa and internationally, it has concluded agreements
to increase its interest from 50% to 100% in ITL Bangladesh
and its new ITL Ethiopian operation will come on line shortly
to service certain new US retail accreditations.
– SA Bias Industries’ results were mixed. Flowmax in the UK
traded satisfactorily despite disruptions caused by Brexit,
Narrowtex and Apparel Components in South Africa experienced
challenging local market conditions.
– Sunspray is trading well with profitability ahead of budget.
Unlisted investments are valued using the maintainable earnings
model. Current earnings are calculated on an EBITDA basis and
also referenced to NOPAT and are moderated if appropriate
relative to forward earnings projections.
EBITDA multiples are based on transaction multiples usual for
small/medium cap private companies and are in the range of 4 to 6
times. The ITL Group multiple is at a higher level of 9,25 times
but which is below the 2018 acquisition multiple. Each resulting
calculation is then adjusted for net cash/debt/equivalents to
determine net EV.
FUTURE INVESTMENTS
Sabvest remains focused on unlisted investments but will also
hold some listed investments where it is represented on the board
and has influence to execute particular strategies. It will use
its surplus cash and debt capacity if appropriate. It may also
issue new shares but only if the value exchange in the capital
allocation decision is compelling.
PARTNERSHIP PRINCIPLE
Sabvest has currently and will in the future usually only invest
alongside a family, operating or financial partner. This is
presently the case in all of its unlisted investments and most of
its listed investments.
CAPITAL RESTRUCTURE
The group is in discussions which may lead to proposals to
shareholders to simplify the group’s dual share structure.
Shareholders will be advised as these progress.
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 dividends for
the twelve months have been increased by 11% to 68 cents per
share.
A special dividend of 100 cents per share was 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 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 other than the adoption of
IFRS 9 and IFRS 15 during the current year.
The group has adopted the revised or amended accounting standards
issued by the International Accounting Standards Board (IASB) and
the IFRS Interpretations Committee (IFRIC) which were effective
and applicable to the group from 1 January 2018. The application
of these changes, had no impact on the group’s financial results
for the year other than IFRS 9. In respect of IFRS 9, the loans
of which the interest were non-market-related, were discounted at
a market-related rate to determine a fair value at initial
recognition during the current 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 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 financial
statements of the group set out these disclosures and are
available on the issuer’s website, at the issuer’s registered
offices and upon request.
RESTATEMENT OF COMPARATIVE INFORMATION
The group has enhanced its disclosure of total operating costs by
separating fixed and variable costs to enable shareholders to
assess the variability of costs. This has not resulted in any
changes to the total amounts reflected in the statements of
financial position and comprehensive income.
AUDIT OPINION
The auditors, Deloitte & Touche, have issued an unmodified audit
opinion on the consolidated financial statements for the year
ended 31 December 2018. Their audit was conducted in accordance
with the International Standard of Auditing. The audited
preliminary consolidated summarised results presented have been
derived from the audited consolidated financial statements for
the year ended 31 December 2018. 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.
DIRECTORATE
As advised in the interim results, Ms Lindiwe Mthimunye-Bakoro,
M.Com, H.Dip Tax Law, CA(SA) joined the board as an independent
non-executive director on 5 June 2018 and is a member of all
board committees.
Mr BJT Shongwe has joined the social and ethics committee.
On 1 January 2019 Mr Leon Rood , B.Com, LLB joined Sabvest as an
executive director.
KING IV COMPLIANCE
Sabvest’s King IV compliance report is on the Sabvest website and
will be updated in the 2018 integrated annual report.
PROSPECTS
All of the group’s unlisted investee companies are budgeting
improved profitability in 2019.
In the listed portfolio, Corero, Rolfes, Transaction Capital and
Value Capital Partners are performing to expectations but it is
obviously not possible to project likely listed share prices. In
certain of the investees actions are being taken with the
intention of unlocking value appropriately.
We anticipate a satisfactory year in 2019.
References to future financial information in this announcement
have not been reviewed or reported on by the group’s auditors.
For and on behalf of the Board
Dawn Mokhobo Christopher Seabrooke Raymond Pleaner
Chairman CEO CFO
Sandton
13 March 2019
CASH DIVIDEND DECLARATION
Notice is hereby given that a final dividend of 36 cents (2017:
35 cents) per ordinary and ‘N’ ordinary share for the year ended
31 December 2018 has been declared out of income reserves making
a total of 68 cents for the year (2017: 61 cents).
The issued share capital of the company at the declaration date
is 16 975 293 ordinary and 24 826 919 ‘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 a final net cash dividend of
28,8 cents per ordinary and ‘N’ ordinary share to non-exempt
shareholders.
Last date to trade “CUM” dividend Tuesday, 2 April 2019
Trading “EX” dividend commences Wednesday, 3 April 2019
Record date Friday, 5 April 2019
Dividend payment date Monday, 8 April 2019
No dematerialisation or rematerialisation of share certificates
will be allowed during the period Wednesday, 3 April 2019 to
Friday, 5 April 2019, 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), NSH Hughes# (Lead Independent
Director), L Mthimunye-Bakoro#, R Pleaner*, L Rood*^
*Executive #Independent ^Appointed 1 January 2019
Sponsor:
Rand Merchant Bank (A division of FirstRand Bank Limited), 1
Merchant Place, Corner of Fredman Drive and Rivonia Road, Sandton
2196
Company secretary:
Levitt Kirson Business Services (Pty) Ltd
www.sabvest.com
Date: 13/03/2019 05:29:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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