| Thu 15 Mar 2007, 13:09 | | SBV/SVN - Sabvest - Reviewed Results for the Year |
|
SBV SVN
SBV
SBV/SVN - Sabvest - Reviewed Results for the Year Ended 31 December 2006
Sabvest Limited
"Sabvest" - Registration number 1987/003753/06
ISIN: ZAE000006417 - ordinary shares
ISIN: ZAE000012043 - "N" ordinary shares
Share code: SBV - ordinary shares
Share code: SVN - "N" ordinary shares
www.sabvest.com
REVIEWED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006
Highlights
Headline earnings per share increased by 147%
Dividends per share increased by 100%
Intrinsic value per share increased by 56,3%
CONDENSED BALANCE SHEET AT 31 DECEMBER 2006
31 Dec 31 Dec
2006 2005
Reviewed Audited
R`000 R`000
Non-current assets 238 554 171 868
Property, plant and equipment 1 787 1 835
Deferred tax asset 2 778 4 758
Share trust receivables 3 090 2 674
Medium-term receivables - 11 397
Investment holdings 230 899 151 204
Associates*1 175 838 140 330
Long-term investments 55 061 10 874
Current assets 57 406 17 061
Finance advances and receivables 13 721 14 841
Short-term investments 2 550 2 186
Cash balances 41 135 34
Total assets 295 960 188 929
Ordinary shareholders` equity*2 279 371 180 933
Non-current liability 3 339 49
Deferred tax liability 3 339 49
Current liabilities 13 250 7 947
Interest-bearing debt 7 615 5 279
Accounts payable 5 635 2 668
Total equity and liabilities 295 960 188 929
Net asset value per share - cents 604 391
Net tangible asset value per share - cents 596 384
Net asset value per share with
investments at directors` valuation
(intrinsic value) - cents 905 579
Number of shares in issue less
held in treasury - 000`s 46 275 46 259
*1 Includes goodwill of R3,4 million
(31 December 2005: R3,4 million)
*2 Shareholders` equity with investments at intrinsic value is
R419 million (31 December 2005: R268 million)
CONDENSED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2006
12 months 12 months
31 Dec 31 Dec
2006 2005
Reviewed Audited
R`000 R`000
Gross income from operations and
investments 108 715 41 814
Dividends received 8 498 5 485
Interest received 7 827 7 656
Income on financial instruments
and shares 37 156 2 879
Fees and sundry income 6 386 2 314
Fair value adjustment to investments 22 429 3 268
Equity accounted retained income of
associates 26 419 20 212
Direct transactional costs 4 452 -
Impairments 1 000 -
Interest paid 1 594 1 330
Net income before expenses and
exceptional items 101 669 40 484
Less: Expenditure 11 759 9 879
Operating costs 11 296 9 431
Depreciation 463 448
Exceptional items - (gains)/loss (1 256) 1 469
Net income before taxation 91 166 29 136
Taxation - deferred 5 269 (3 890)
Net income for the year attributable to
equity shareholders 85 897 33 026
Earnings per share - cents 185,6 71,4
Dividends per share* - cents 12,0 6,0
Weighted average number of shares in
issue - 000`s 46 272 46 259
Headline earnings per share - cents 182,7 74,1
Reconciliation of headline earnings
Net income for the year 85 897 33 026
Exceptional gains - group (117) (427)
Exceptional (gains)/losses - associates (1 505) 310
Losses/costs arising from former finance
operations 366 1 586
Profit on sale of fixed assets (91) (233)
Headline earnings for the year 84 550 34 262
*Dividends comprise 2 cents interim and 10 cents final - proposed after year-
end
CONDENSED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2006
12 months 12 months
31 Dec 31 Dec
2006 2005
Reviewed Audited
R`000 R`000
Cash generated by operating activities 47 783 3 536
Cash (utilised in)/generated by
investing activities (5 381) 424
Cash effects of financing activities 66 -
Cash utilised for the payment of
dividends (3 703) (1 388)
Change in cash and cash equivalents 38 765 2 572
Interest-bearing debt, less cash
balances, at beginning of year (5 245) (7 817)
Cash balances, less interest-bearing
debt, at end of year 33 520 (5 245)
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2006
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 2005 867 50 826 105 227 (5 886) 151 034
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 50 826 126 980 2 260 180 933
Net income for the year - - - 85 897 85 897
Translation of foreign
subsidiary/associates - - 2 193 - 2 193
Attributable income of
associates - - 21 870 (21 870) -
Movement in translation
and other reserves of
associates - - 14 023 - 14 023
Shares held in treasury
- written back 2 84 - - 86
Shares held in treasury (2) (56) - - (58)
Dividends paid - - - (3 703) (3 703)
Balance as at
31 December 2006 867 50 854 165 066 62 584 279 371
Contingent liabilities
The group`s contingent liabilities at 31 December 2006 are as follows:
1. Guarantees or undertakings on behalf of investees or clients R7,2
million (2005: R2 million).
2. Put options given by the company to holders of SA Bias redeemable
preference shares which have due dates from 2007 to 2009 R14 million (2005:
R18 million). This reduced to R9 million on 31 January 2007.
3. Put options given by the company to holders of SA Bias junior loans
which have due dates from 2007 to 2010 R9,2 million (2005: R9,2 million).
4. A group company has given call options with regard to the group`s
shareholding in Metrofile Holdings Limited, which are exercisable 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.
6. A group company has entered into lease agreements for premises that it
occupies. The amounts due in years 1-2 are R1 million and year 3 R0,2
million.
INVESTMENT PROFILE AT 31 DECEMBER 2006
Intrinsic/
Eco- Carry- Direc-
Number Voting nomic ing tor`s
Listed/ of interest interest value value
Unlisted shares % % R`000 R`000
INVESTMENTS IN ASSOCIATES
Flowmax
Holdings
Limited
(BVI/UK) U 40,0 40,0 24 642
Korbitec Holdings
(Pty) Limited U 16,2 16,2 2 422
SA Bias Industries
Limited U 50,0 56,2 117 146
Set Point
Technology
Holdings
Limited L 50 000 000 14,8 14,8 17 859
Sunspray Food
Ingredients
(Pty) Limited U 40,0 40,0 13 769
175 838 315 609
LONG-TERM INVESTMENTS
Datatec Limited L 500 000 16 575
Massmart Holdings
Limited L 300 000 21 060
Metrofile Holdings
Limited L 21 182 646 17 426
55 061 55 061
TOTAL investments 230 899 370 670
GROWTH INDICATORS
Annualised Annualised
Compound Compound
Growth Growth Growth
1 year 3 years 5 years
(%) (%) (%)
Headline earnings per share 146,6 54,6 49,7
Dividends per share 100,0 60,0 -
Intrinsic net asset value
per share 56,3 37,5 22,5
Ordinary share price 93,5 44,2 27,2
"N" ordinary share price 115,4 57,2 38,0
Note: The carrying value of the shares in Metrofile Holdings is stated below
market value due to the restrictions on sale until 2009.
COMMENTARY
Profile
Sabvest is an investment and finance group 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 five
groups which are accounted for as associates. Sabvest also has a long-term
portfolio of other investments which are accounted for on a fair value
basis.
In addition, Sabvest maintains finance advances and debt instrument
portfolios and undertakes corporate finance and other fee and profit earning
activities.
Financial results
Sabvest`s performance in 2006 was excellent and well ahead of projections.
Headline earnings per share increased by 147% to 183 cents per share and
dividends by 100% to 12 cents per share. Other than Set Point Technologies,
all of the group`s associates and investments performed well. Set Point
experienced a fraud in one of its divisions which affected its results.
Remedial action has been implemented and Sabvest expects that Set Point will
return to sound levels of profitability in calendar year 2007.
A substantial increase in earnings and cash flow arose from the realisation
of the group`s participations in debt instruments and in particular the loan
notes held by the group in Metrofile. Metrofile`s own restructuring was
successfully completed during the year, including a rights issue
underwritten by Sabvest.
The group recorded translation gains on its investment in Flowmax UK and on
its indirect foreign holdings through SA Bias Industries. These are
reflected in the statement of changes in equity.
Intrinsic value per share (calculated relative to stated net asset value per
share by fair valuing investments in associates as well) increased by 56% to
905 cents per share. Shareholders` funds with investments at intrinsic value
increased to R419 million.
Sabvest`s balance sheet is soundly structured and reflects a high level of
liquidity. This will enable the group to react swiftly to investment
opportunities that may arise in the period ahead.
Changes in investment holdings
During the year Sabvest:
- disposed of its interests in Midsouth Distributors (Pty) Limited and HDS
Tech Holdings (Pty) Limited;
- increased its economic interest in SA Bias Industries by a further 6%
through a share buy-back by SA Bias;
- increased its long-term investments to 300 000 ordinary shares in
Massmart Holdings Limited and 500 000 ordinary shares in Datatec Limited;
- exchanged its minority interest in Metrofile (Pty) Limited for shares in
Metrofile Holdings Limited and acquired additional shares through the
process of the rights issue, resulting in a holding of 21 182 486 shares in
Metrofile Holdings;
- received payment in full for its loan notes in Metrofile (Pty) Limited;
and
- participated in funding for the purchase of a new consumer debt book in
association with I-Com Services (Pty) Limited.
Certain of Sabvest`s associates concluded significant transactions as
follows:
- Flowmax UK acquired 75% of Hytek Limited;
- SA Bias Industries disposed of its interests in A & E Threads (Pty)
Limited and Bitrim Zips (Pty) Limited. SA Bias has also expanded its
existing presence in Asia (where it has production units in Hong Kong, China
and Sri Lanka) by opening a new production unit in India; and
Sun Spray Ingredients disposed of its Nutritional Foods Catering division.
Dividend policy
The extent of dividends is influenced by operating cash flows and receipts
from the non-core components of investments that are not earmarked for new
projects.
Dividends for the year have been increased to 12 cents per share. An interim
dividend of 2 cents per share was paid and a final dividend of 10 cents per
share has been proposed and will be paid subsequent to the financial year-
end.
Legal actions
There has been no change in the group`s assessment of the legal actions
arising from the disposal of a subsidiary in 1993 and as explained in the
2002 to 2005 annual reports. The group is proactively responding to the
various actions and hastening them, wherever possible. The group and its
legal advisors remain of the view that no losses will be incurred from these
actions.
Accounting policies
The group adopted International Financial Reporting Standards ("IFRS") for
the year ended 31 December 2005.
The condensed financial statements have been prepared in accordance with the
group`s accounting policies which comply with IFRS. The condensed financial
information has been prepared in accordance with IAS34 - Interim Financial
Reporting.
Review by the auditors
Deloitte and Touche has issued an unqualified review opinion. A copy of the
review report is available for inspection at the registered office of the
company.
Prospects
The group`s associates and investments are performing well and Set Point is
expected to resume profitability in the coming period. The group has a
number of interesting investment opportunities which will be pursued but
without competing in the current price frenzy for acquisitions in the
investment and private equity markets.
Sabvest`s 2006 results included a number of one-off profits which are not
expected to be repeated in 2007. Accordingly, although a sound performance
is expected from all of the group`s investments, Sabvest anticipates
recording lower headline earnings per share and earnings per share than in
the prior exceptional year. However, intrinsic value per share is expected
to increase and dividends per share to be maintained or increased.
Haroon Habib Christopher Seabrooke Raymond Pleaner
Chairman CEO CFO
Sandton
15 March 2007
Dividend Declaration
Notice is hereby given that a final dividend of 10 cents (2005: 6 cents) per
ordinary and "N" ordinary share for the twelve months ended 31 December 2006
has been declared payable to shareholders in accordance with the
undermentioned timetable:
Last date to trade "CUM"-dividend Wednesday, 4 April 2007
Trading "EX"-dividend commences Thursday, 5 April 2007
Record date Friday, 13 April 2007
Dividend payment date Monday, 16 April 2007
No dematerialisation or rematerialisation of share certificates will be
allowed for the period from Thursday, 5 April 2007 to Friday, 13 April 2007,
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
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited, 70
Marshall Street, Marshalltown 2001
(PO Box 61051, Marshalltown 2107)
Directors:
H Habib# (Chairman), P Coutts-Trotter (Deputy Chairman),
CS Seabrooke* (Chief Executive), NSH Hughes#, DNM Mokhobo#, GE Nel, R
Pleaner*, BJT Shongwe#
*Executive #Independent
Date: 15/03/2007 13:09:54 Produced by the JSE SENS Department.
