| Thu 30 Mar 2006, 12:55 | | Sabvest Limited - Reviewed results for the year en |
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Sabvest Limited - Reviewed results for the year ended 31 December 2005
Sabvest Limited
Registration number 1987/003753/06
ISIN number: ZAE000006417 - ordinary shares
ISIN number: ZAE000012043 - "N" ordinary shares
Share code: SBV - ordinary shares
Share code: SVN - "N" ordinary shares
("Sabvest")
Reviewed results for the year ended 31 December 2005
Balance sheet at 31 December 2005
31 Dec 31 Dec
2005 2004
Reviewed Restated
R"000 R"000
Non-current assets 169 194 135 482
Property, plant and equipment 1 835 2 106
Deferred tax asset 4 758 868
Share trust receivables 2 674 2 312
Medium-term receivables 11 397 -
Investment holdings 148 530 130 196
Associates* 137 656 122 267
Long-term 10 874 7 929
Current assets 17 061 22 305
Finance advances and receivables 14 841 22 216
Short-term investments 2 186 -
Cash balances 34 89
Total assets 186 255 157 787
Ordinary shareholders" equity 178 259 148 360
Non-current liability 49 49
Deferred tax liability 49 49
Current liabilities 7 947 9 378
Interest-bearing debt 5 279 7 906
Accounts payable 2 668 1 472
Total equity and liabilities 186 255 157 787
Net asset value per share - cents 385 321
Net tangible asset value per share - cents 378 313
Net asset value per share with listed investments
in associates at market value - cents 438 345
Net asset value per share with investments in
associates at directors" valuation
(intrinsic value) - cents 579 447
Number of shares in issue less held in
treasury - 000"s 46 259 46 259
*Includes goodwill of R3,4 million (31 December 2004: R3,4 million)
Income statement for the year ended 31 December 2005
12 months 12 months
31 Dec 31 Dec
2005 2004
Reviewed Restated
R"000 R"000
Gross income from operations and investments 41 814 34 510
Dividends received 5 485 3 500
Interest received 7 656 4 932
Income on financial instruments and shares 2 879 -
Fees and sundry income 2 314 2 378
Fair value adjustment to investments 3 268 -
Equity accounted retained income of associates 20 212 23 700
Interest paid 1 330 1 425
Net income from operations and investments 40 484 33 085
Less: Expenditure 11 348 9 625
Operating costs 9 431 7 991
Exceptional items 1 469 1 163
Depreciation 448 471
Net income before taxation 29 136 23 460
Taxation - deferred (3 890) (145)
Net income for the year attributable to
equity shareholders 33 026 23 605
Earnings per share - cents 71,4 51,5
Dividends per share (proposed after year-end)
- cents 6,0 3,0
Weighted average number of shares in issue - 000"s 46 259 45 845
Headline earnings per share - cents 74,1 51,8
Reconciliation of headline earnings
Net income for the year 33 026 23 605
Gains on disposal of investments (427) (761)
Exceptional losses - associates 310 29
Losses/costs arising from former
finance operations 1 586 641
Amortisation of goodwill - 234
Profit on sale of property, plant and equipment (233) -
Headline earnings for the year 34 262 23 748
*1 There are no diluting instruments
Summarised cash flow statement for the year ended 31 December 2005
12 months 12 months
31 Dec 31 Dec
2005 2004
Reviewed Restated
R"000 R"000
Cash generated by/(utilised in) operating
activities 3 536 (1 981)
Cash generated by/(utilised in) investing
activities 424 (1 351)
Cash effects of financing activities - 2 061
Cash utilised for the payment of dividends (1 388) (1 353)
Change in cash and cash equivalents 2 572 (2 624)
Interest-bearing debt, less cash balances,
at beginning of year (7 817) (5 193)
Interest-bearing debt, less cash balances,
at end of year (5 245) (7 817)
Statement of changes in equity for the year ended 31 December 2005
Non-distri- Distri-
Share Share utable butable
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 -
property, plant and
equipment/deferred taxation
liability - - - 116 116
IFRS adjustments -
associates - - 633 - 633
Restatements - - (5) (524) (529)
Balance as at
1 January 2004 - restated 862 48 806 89 457 (7 410) 131 715
Net income for the year - - - 23 605 23 605
As previously reported - - - 22 736 22 736
IFRS transition and
adjustments - - - 869 869
Translation of foreign
subsidiary/associates - - (967) - (967)
Attributable income of
associates - - 20 764 (20 764) -
As previously reported - - 19 787 (19 787) -
IFRS adjustments - - 1 326 (1 326) -
Restatement - IAS17 - - (349) 349 -
Movement in translation and
other reserves of associates - - (6 701) - (6 701)
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)
Balance as at
31 December 2004 867 50 826 102 553 (5 886) 148 360
Net income for the year - - - 33 026 33 026
Translation of foreign
subsidiary/associates - - 211 - 211
Attributable income of
associates - - 19 902 (19 902) -
Movement in translation and
other reserves of associates - - 1 640 (3 590) (1 950)
Dividends paid - - - (1 388) (1 388)
Balance as at
31 December 2005 867 50 826 124 306 2 260 178 259
Contingent liabilities
The group"s contingent liabilities at 31 December 2005 to that of 31 December
2004 are as follows:
1. Guarantees or undertakings on behalf of investees or clients R2 million
(2004: R4,1 million).
2. Put options given by the company to holders of SA Bias redeemable
preference shares which have due dates from 2006 to 2009 R18 million (2004:
R19,5 million).
3. Put options given by the company to holders of SA Bias junior loans which
have due dates from 2006 to 2010 R9,2 million (2004: Rnil).
4. A group company has given call options and has been given put options with
regard to the group"s shareholding in Metrofile (Pty) Limited, which are
exercisable by either party under certain circumstances until 2009.
5. The group has rights and obligations in terms of shareholder or purchase
and sale agreements relating to its present or former investments.
IFRS adjustments
31 Dec 2004
R"000
1. ASSETS AND EQUITY
1.1 Non-distributable reserve
As previously reported 100 948
IFRS adjustments to opening reserves - associates 633
IFRS adjustments for the year - associates 1 326
Restated for IFRS adjustments 102 907
1.2 Distributable reserves
As previously reported (5 370)
IFRS adjustments to opening reserves 116
IFRS adjustments for the year 31
Restated for IFRS adjustments (5 223)
1.3 Property, plant and equipment
As previously reported 1 910
IFRS adjustments to opening reserves 165
IFRS adjustments for the year 31
Restated for IFRS adjustments 2 106
1.4 Investment holdings
As previously reported 129 204
IFRS adjustments to opening reserves - associates 633
IFRS adjustments for the year - associates 1 326
Restated for IFRS adjustments 131 163
2. NET INCOME FOR THE YEAR
As previously reported 22 736
IFRS adjustments - depreciation 31
IFRS adjustments for the year - associates 1 326
Restated for IFRS adjustments 24 093
Effect on earnings per share (increase) - cents 2,9
RESTATEMENTS
1. Operating leases
Leases are recognised as an expense on a straight-line basis over the term of
the lease as a result of Circular 7/2005 issued by SAICA. Previously, lease
expenses were recognised on a basis which reflected the cash flows during that
period. Comparative figures have been restated.
2. Loan write off
Correction to understatement of a loss on disposal of an associate in a prior
year. Comparative figures have been restated.
The aggregate effect of the above restatements is as follows:
2005 2004
R"000 R"000
Opening retained income
Gross restatement (1 061) (549)
Tax effect 49 25
Net restatement (1 012) (524)
Income statement
Gross restatement (398) (512)
Tax effect 5 24
Net restatement (393) (488)
Effect on earnings per share (decrease) - cents (0,8) (1,1)
Asset profile at 31 December 2005
Date Number Carrying
first Listed/ of Economic value
invested Unlisted shares interest R"000
ASSOCIATES 137 656
SABVEST INDUSTRIAL 131 129
Flowmax Holdings
Limited (BVI/UK) 1997 U 40,0% 15 519
Nutritional Foods
(Pty) Limited 1989 U 40,0% 13 668
SA Bias Industries Limited 1988 U 50,0% 84 175
Set Point Technology
Holdings Limited 2000 L 50 000 000 16,3% 17 767
SABVEST DISTRIBUTION
AND SERVICES 6 527
HDS TechHoldings (Pty)
Limited 2004 U 30,0% -
Korbitec Holdings
(Pty) Limited 1999 U 17,0% 4 427
Midsouth Distributors
(Pty) Limited 1997 U 30,0% 2 100
INVESTMENTS 13 060
LONG-TERM INVESTMENTS 10 874
Datatec Limited 2005 L 150 000 3 000
Massmart Holdings Limited 2005 L 75 000 3 874
Metrofile (Pty) Limited 2005 U 5,0% 2 000
SA Bias Industries Limited
- Preference shares 2 000
SHORT-TERM INVESTMENTS 2 186
TOTAL INVESTMENTS PER BALANCE SHEET 150 716
Finance advances and receivables 14 841
Share trust receivables 2 674
Medium-term receivables 11 397
Cash on hand 34
Deferred tax asset 4 758
Property, plant and equipment 1 835
TOTAL ASSETS 186 255
Profile
Sabvest is an investment holding company which was listed in 1988. Its ordinary
and "N" ordinary shares are quoted in the Financials - Equity Investment
Instruments 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. Sabvest also has portfolios of smaller investments which are
accounted for on a fair value basis. The group"s holdings are set out in the
Asset Profile in this report.
Financial results
Headline earnings per share increased by 43% to 74,1 cents. A portion of the
increase arose from an adjustment to deferred tax. Excluding this adjustment
HEPS would have increased by 27% to 66,0 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 and restructuring costs in its UK production unit. Enhanced profitability
was achieved by the group"s portfolio and lending books and in particular its
purchase of Metrofile 2009 loan notes at a discount to face value.
Shareholders" funds with investments in associates at directors" valuation were
R268 million and intrinsic value per share calculated on the same basis
increased by 30% to 579 cents per share.
Sabvest"s balance sheet remains soundly structured with gearing under 5%.
Changes in investment holdings
During the year Sabvest:
* Acquired 5% of Metrofile (Pty) Limited, 150 000 ordinary shares in Datatec
Limited and 75 000 shares in Massmart Holdings 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. It also acquired Gopro which is a supplier of wheels, buffers,
axles and skip guides to the mining industry; and
* Nutritional Foods acquired Ovipro (Pty) Limited, which is a leading
manufacturer of frozen and spray dried egg products.
Subsequent to the year-end Sabvest has:
* Increased its interest in Datatec Limited by a further 50 000 ordinary shares;
* Disposed of its preference shares in SA Bias and its short-term portfolio; and
* Committed funding for the purchase of additional debtors books by The Pioneer
Trust.
In addition, Flowmax Holdings has acquired 75% of Hytek Limited in the UK.
Dividends
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.
Dividends declared relating to 2005 have been increased by 100% to 6 cents per
share.
Legal actions
There has been no change in the group"s assessment of the legal actions referred
to in the 2004 annual report. 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) applicable at 31 December 2005.
The abridged financial information has been prepared in accordance with IAS34 -
Interim Financial Reporting.
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 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.
The following new accounting policies were applied for IFRS reporting :
* Goodwill is tested annually for impairments and carried at costs less
accumulated impairment losses;
* Assets that had 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 reserved
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.
* The group has elected to measure certain individual items of property at fair
value at the date of transition to IFRS, where fair value is deemed to be cost
at that date.
In addition leases are recognised as an expense on a straight-line basis over
the term of the lease as a result of Circular 7/2005 issued by SAICA.
Review by the auditors
The auditors, Deloitte, have issued an unqualified review opinion. A copy of the
review report is available for inspection at the registered office of the
company.
Prospects
The adoption of IFRS by Sabvest will result in greater volatility in headline
earnings per share. Nevertheless Sabvest expects a satisfactory performance in
2006 in terms of earnings, cash flow and intrinsic value per share.
Haroon Habib Christopher Seabrooke Raymond Pleaner
Chairman Chief Executive CFO
Sandton
30 March 2006
Dividend Declaration
Notice is hereby given that a dividend of 6 cents (2004: 3 cents) per ordinary
and "N" ordinary share for the twelve months ended
31 December 2005 has been declared payable to shareholders in accordance with
the undermentioned timetable:
Last date to trade "CUM"-dividend Thursday, 20 April 2006
Trading "EX"-dividend commences Friday, 21 April 2006
Record date Friday, 28 April 2006
Dividend payment date Tuesday, 2 May 2006
No dematerialisation or rematerialisation of share certificates will be allowed
for the period from Friday, 21 April 2006 to Friday, 28 April 2006, both days
inclusive.
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 * 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), DNM Mokhobo* (2), GE Nel,
R Pleaner* (1), BJT Shongwe* (2) * (1) Executive * (2) Independent
Date: 30/03/2006 12:55:20 PM Produced by the JSE SENS Department
