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Sabvest - Unaudited interim results for the six months ended 30 June 2005
Sabvest Limited
(`Sabvest`)
Registration number 1987/003753/06
ISIN: ZAE000006417 - ordinary shares
Share code: SBV - ordinary shares
ISIN: ZAE000006417 - `N` ordinary shares Share code: SVN - `N` ordinary shares
`Sabvest`
Unaudited interim results for the six months ended 30 June 2005
Balance sheet at 30 June 2005
Restated Restated SA GAAP
Unaudited Unaudited Unaudited Audited
30 June 2005 30 June 2004 31 Dec 2004 31 Dec 2004
R`000 R`000 R`000 R`000
Non-current assets 162 528 132 268 135 335 134 294
Fixed assets 1 884 2 238 2 106 1 910
Deferred taxation 4 724 724 868 868
Share Trust debtors 2 493 2 135 2 312 2 312
Medium-term
receivables 12 551 - - -
Investment holdings 140 876 127 171 130 049 129 204
Listed 17 418 19 175 14 840 14 970
Unlisted 123 458 107 996 115 209 114 234
Current assets 13 126 16 887 22 305 22 305
Finance advances and
receivables 10 694 16 297 22 216 22 216
Short-term portfolio 2 409 - - -
Cash balances 23 590 89 89
Total assets 175 654 149 155 157 640 156 599
Ordinary
shareholders`equity 162 298 137 231 148 213 147 271
Non-current liability 49 49 49 -
Deferred taxation 49 49 49 -
Current liabilities 13 307 11 875 9 378 9 328
Interest-bearing debt 10 338 9 893 7 906 7 906
Accounts payable 2 969 1 982 1 472 1 422
Total equity and
liabilities 175 654 149 155 157 640 156 599
Net asset value per
share - cents 351 297 320 318
Net tangible asset
value per share
- cents 343 289 313 311
Net asset value per
Share with listed
investments
at market value - cents 380 300 342 342
Net asset value per
Share with investments
at directors` valuation
- cents 482 376 447 447
Number of shares in
Issue less held in
treasury - 000`s 46 259 46 259 46 259 46 259
*Includes goodwill of R3,4 million (2004: R3,5million), (December 2004: R3,4
million)
Income statement for the six months ended 30 June 2005
Restated Restated SA GAAP
Unaudited Unaudited Unaudited Audited
6 months 6 months Year ended Year ended
ended ended
30 June 30 June 31 Dec 31 Dec
2005 2004 2004 2004
R`000 R`000 R`000 R`000
Gross income from
operations
and investments 16 623 13 599 34 423 33 622
Dividends received 3 757 2 595 3 500 3 500
Interest received 3 889 2 594 5 021 5 021
Fees and sundry income 1 281 1 067 2 378 2 378
Fair value adjustment
to investments 995 - - -
Other income on
financial instruments
and shares 1 087 - - -
Share of equity
accounted
retained income 5 614 7 343 23 524 22 723
Interest paid 787 713 1 425 1 425
Net income from
operations
and investments 15 836 12 886 32 998 32 197
Less: Expenditure 4 915 4 453 8 462 8 443
Operating costs 4 690 4 249 7 991 7 941
Depreciation 225 204 471 502
Net income before
exceptional items 10 921 8 433 24 536 23 754
Exceptional gains
- group - - 761 761
Exceptional (losses)
/gains - associates (415) 968 (1 049) (1 049)
Net (losses/costs)/gains
arising from former
finance operations (3) (42) (641) (641)
Amortisation of goodwill - (117) (234) (234)
Net income before
taxation 10 503 9 242 23 373 22 591
Taxation - deferred (3 856) - (145) (145)
Net income for the
period 14 359 9 242 23 518 22 736
Headline earnings per
share - cents*1 31,4 18,6 51,6 49,9
Earnings per share
- cents 31,0 20,3 51,3 49,6
Dividends per share
- cents - - 3,0 3,0
Weighted average number
of shares in issue
- 000`s 46 259 45 426 45 845 45 845
Reconciliation of
headline earnings
Net income for the year 14 359 9 242 23 518 22 736
Headline earnings
adjustment*2 153 (809) 143 143
Headline earnings for
the period 14 512 8 433 23 661 22 879
*1 There are no diluting instruments
*2 The headline earnings adjustment is calculated as the total of both
exceptional items and the profit/(loss) on the sale of fixed assets
Summarised cash flow statement
Restated Restated SA GAAP
Unaudited Unaudited Unaudited Audited
6 months 6 months Year ended Year ended
ended ended
30 June 30 June 31 Dec 31 Dec
2005 2004 2004 2004
R`000 R`000 R`000 R`000
Cash generated by/
(utilised in) operating
activities 2 507 363 (1 981) (1 981)
Cash utilised in investing
activities (3 617) (5 181) (1 351) (1 351)
Cash effects of financing
activities - 2 061 2 061 2 061
Cash utilised for the
Payment of dividends (1 388) (1 353) (1 353) (1 353)
Change in cash and cash
equivalents (2 498) (4 110) (2 624) (2 624)
Interest-bearing debt, less
cash balances, at beginning
of period (7 817) (5 193) (5 193) (5 193)
Interest-bearing debt,
Less cash balances,
at end of period (10 315) (9 303) (7 817) (7 817)
Statement of changes in equity for the six months ended 30 June 2005
Non-
Share Share distribu- Distribu-
table table
capital premium reserve reserve Total
R`000 R`000 R`000 R`000 R`000
Balance as at
1 January 2004
- as
previously
reported 862 48 806 88 829 (7 002) 131 495
IFRS
adjustments - - - 116 116
IFRS
adjustments
- associates - - 44 - 44
Balance as at
1 January 2004
- as restated 862 48 806 88 873 (6 886) 131 655
Shares held in
treasury -
written back 7 2 104 - - 2 111
Shares held in
treasury (2) (84) - 36 (50)
Dividends paid - - - (1 353) (1 353)
Translation of
foreign
subsidiary/
associates - - (967) - (967)
Attributable
income
of associates - - 20 588 (20 588) -
As previously
reported - - 19 787 (19 787) -
IFRS and lease
adjustments - - 801 (801) -
Movement in
translation
reserves
of associates - - (6 701) - (6 701)
Net income for
the year - - - 23 518 23 518
As previously
reported - - - 22 736 22 736
IFRS and lease
adjustments - - - 782 782
Balance as at
31 December 2004 867 50 826 101 793 (5 273)148 213
Dividends paid - - - (1 388) (1 388)
Translation of
foreign
subsidiary/
associates - - 1 027 - 1 027
Attributable
income
of associates - - 5 199 (5 199) -
Movement in
translation
reserves
of associates - - 87 - 87
Net income for
the period - - - 14 359 14 359
Balance as at
30 June 2005 867 50 826 108 106 2 499 162 298
Effects of the transition to IFRS and the implementation of the revised
interpretation of IAS17
30 June 31 Dec
2004 2004
R`000 R`000
1. Assets and equity
1.1 Ordinary shareholders equity
As previously reported 136 643 147 271
IFRS adjustments to opening reserves
- 01/01/2004 116 116
Adjustment to associates` opening reserves
- 01/01/2004 44 44
Adjustments to net income for the period 428 782
Restated 137 231 148 213
1.2 Deferred taxation liability
As previously reported - -
IFRS adjustments to opening reserves
- 01/01/2004 49 49
Restated 49 49
1.3 Accounts payable
As previously reported 1 975 1 422
Operating lease adjustment (IAS17) 7 50
Restated 1 982 1 472
1.4 Fixed assets
As previously reported 2 055 1 910
IFRS depreciation adjustments to opening
reserves - 01/01/2004 165 165
IFRS depreciation adjustments for the period 18 31
Restated 2 238 2 106
1.5 Investments
As previously reported 126 710 129 204
Adjustments in respect of associates
opening reserves - 01/01/2004 44 44
Adjustment in respect of share of
retained income of associates 417 801
Restated 127 171 130 049
6 months Year
ended ended
30 June 31 Dec
2004 2004
R`000 R`000
2. Net income for the period
As previously reported 8 814 22 736
IFRS adjustments - depreciation 18 31
Operating lease adjustment (IAS17) (7) (50)
Share of equity accounted income of
associates 417 801
Restated 9 242 23 518
Commentary
Profile
Sabvest is an investment holding company which was listed in 1988. Its ordinary
and `N` ordinary shares are quoted in the Financial - Investment Companies
sector of the JSE Limited.
Sabvest has significant minority or joint controlling interests in seven groups
on all of whose boards it is represented and which are accounted for as
associates.
These are:
Sabvest Industrial
Nutritional Foods (Pty) Limited - 40,0%
SA Bias Industries Limited - 50,0%
Set Point Technology Holdings Limited* - 18%
Sabvest Distribution and Services
Flowmax Holdings Limited - 40,0%
HDS Tech Holdings (Pty) Limited - 30,0%
Korbitec Holdings (Pty) Limited - 17,0%
Midsouth Distributors (Pty) Limited - 30,0%
*JSE listed
Sabvest also has a long-term portfolio of smaller investments which are
accounted for on a fair value basis.
These include:
Sabvest Portfolio
Datatec Limited - 150 000 shares
Metrofile (Pty) Limited - 5%
SA Bias Industries Limited - 2 million preference shares
The finance book comprises short and medium term lending mostly arising from its
investment strategies. Its major medium term receivables are Metrofile B 2005 -
2009 loans, and Metrofile C 2009 loans which are carried at a discount to face
value. Sabvest also provides participation funding for the purchase of debt
portfolios through The Pioneer Trust, on whose board of trustees Sabvest is
represented.
Financial results
Headline earnings per share increased by 69% to 31,4 cents. A large portion of
the increase arose from an adjustment to deferred tax. Excluding this adjustment
HEPS would have increased by 24% to 23 cents.
Sabvest`s associates performed in line with expectations, although the results
of SA Bias Industries were adversely affected by substantially higher world yarn
prices. Enhanced profitability was achieved by the group`s portfolio and lending
books.
Shareholders` funds with investments at directors` valuation were R223 million
and NAV per share calculated on the same basis increased to 482 cents. Sabvest`s
balance sheet remains soundly structured with gearing under 10%.
Changes in Investment Holdings
In the first half of the year Sabvest:
*acquired 5% of Metrofile (Pty) Limited and 150 000 ordinary share in Datatec
Limited for its long-term portfolio;
*funded the holding of B and C redeemable convertible loan debt in Metrofile
(Pty) Limited; and
*participated in funding for the purchase of a consumer debt book through The
Pioneer Trust.
Certain of Sabvest`s associates concluded significant transactions as follows:
*Set Point Technologies acquired Seran Engineering, which is a service company
that supplies rolling stock, underground vacuuming systems and components to the
mining industry.
*Nutritional Foods acquired Ovipro (Pty) Limited, which is a leading
manufacturer of frozen and spray dried egg products.
Dividend policy
Dividend payments are considered annually and may vary or be waived depending on
the group`s cash requirements. The extent of dividends will be influenced by
operating cash flows and receipts from the non-core components of investments
and finance advances that are not earmarked for new projects.
Legal actions
There has been no change in the group`s assessment of the legal actions referred
to in the 2002 - 2004 annual reports. Although the group does not anticipate any
losses arising from these, the length of time being taken to bring these matters
to conclusion continues to be prejudicial to Sabvest as the uncertainty
precludes a number of corporate opportunities available to the group.
Accordingly the group will institute its own actions and incur the necessary
costs to procure an earlier resolution of these matters.
Accounting policies and IFRS
The abridged financial statements have been prepared in terms of International
Financial Reporting Standards (IFRS) expected to be applicable at 31 December
2005 and complies with IAS34 - interim financial reporting. Provisional IFRS
adjustments have been made to the results of associates which may be subject to
change when the associates report at their financial year ends. Their timetables
and year ends are different to those of Sabvest in most cases.
The annual financial statements of Sabvest for the year ended 31 December 2004
were prepared in accordance with South African Statements of Generally Accepted
Accounting Practice (SA GAAP). SA GAAP differs in some areas from IFRS.
Accordingly certain accounting policy changes and reclassifications were
implemented to comply with IFRS. Comparative figures in respect of 2004 have
been restated to reflect these adjustments.
Sabvest`s transition date is 1 January 2004. The group`s opening IFRS balance
sheet at that date has been restated to reflect all existing IFRS statements
expected to be applicable at 31 December 2005.
Sabvest has elected to take optional exemptions from full retrospective
application as allowed by IFRS1 in respect of the designation of financial
assets and financial liabilities. The group reclassified various available for
sale investments as financial assets at fair value through profit and loss. This
had no effect on net profit for the current or prior periods.
The following new accounting policies were applied for IFRS reporting:
*goodwill is tested annually for impairment and carried at cost less accumulated
impairment losses;
*assets that have an indefinite useful life are not subject to amortisation and
are tested annually for impairment;
*there are currently no share options in issue. However, should these be granted
in the future, their fair value will be recognised as an employee benefits
expense with a corresponding increase to share based payments reserve in equity
over the vesting period. The expenses will be adjusted at the end of each
reporting period to reflect actual and expected levels of vesting. The proceeds
received net of any directly attributable transaction costs will be credited to
share capital and share premium when the options are exercised; and
*provisional adjustments, subject to year-end audit, have been made to
accounting for associates.
In addition Sabvest has implemented the effects of the revised interpretation of
IFRS17 - `Leases` in Sabvest and provisionally relative to the accounts of its
associates.
Prospects
Sabvest expects an improvement in headline earnings per share for the year but
not to the extent achieved in the first six months.
For and on behalf of the Board
Haroon Habib Christopher Seabrooke Raymond Pleaner
Chairman Chief Executive CFO
14 September 2005
Sandton
Registered address: 4 Commerce Square, 39 Rivonia Road, Sandhurst, Sandton 2196
* Communications: Postal address: PO Box 78677, Sandton 2146, Republic of South
Africa * Communications: Telephone: (011) 268 2400 * Fax: (011) 268 2422 *
e-mail: ho@sabvest.com * Website: www.sabvest.com * Transfer secretaries:
Computershare Investor Services 2004 (Pty) Limited, 70 Marshall Street,
Marshalltown 2001. (PO Box 61051, Marshalltown 2107)
Directors: H Habib*2 (Chairman), P Coutts-Trotter (Deputy Chairman), CS
Seabrooke*1 (Chief Executive), NSH Hughes*2, GE Nel, R Pleaner*1, *1Executive
*2 Independent
ISIN: ZAE000006417 - ordinary shares * ISIN: ZAE 000012043 - `N` ordinary
shares * Share code: SBV - ordinary shares * Share code: SVN - `N` ordinary
shares
Date: 14/09/2005 11:52:20 AM
Produced by the JSE SENS Department
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