Sabvest’s shares rise despite cut in dividend for the first time in 20 years

THE SHARE price of Sabvest Capital (Sabcap) leapt by more than 14 percent on the JSE yesterday morning, despite the investment group reducing its dividend for the year to the end of December for the first time in 20 years as it decided to preserve cash due to the lingering Covid-19 threat, as well as for share buyback programmes.

The share closed 9.07 percent higher at R38.

Sabcap has interests in nine unlisted investments and three listed investments. Its listed investments include a 1.6 percent stake in Transaction Capital, 11.1 percent in Metrofile Holdings, and 7.3 percent in Corero Network Security, a cyber-security group listed on the London Stock Exchange.

Sabcap’s unlisted investments include a 44.8 percent stake in Apex Partners, a 25 percent interest in Classic Food Brands, and a 10 percent interest in Masimong Group Holdings.

The group declared a final dividend of 15 cents a share, down from 39c last year, bringing the total dividend to 25c compared with a total dividend of 75c declared a year earlier.

“In order to conserve liquidity in case of further negative Covid-19 developments, and to facilitate share buybacks, the board has resolved to reduce the dividend for the financial year for the first time in 20 years,” the group said.

Sabcap was listed on the JSE in May last year as part of a restructuring in which it acquired 100 percent of the ordinary and N ordinary shares of Sabvest Limited, which had been listed on the JSE since 1988, in exchange for a single class of Sabcap ordinary shares.

Sabcap reported a 12 percent increase in net asset value per share to 7 444c, compared with the restated 6 648c last year, despite trading in an environment dominated by Covid-19.

“This is a better result than was anticipated at the interim date due to the recovery in trading by most of the group’s investees,” Sabcap said.

Its profit after tax declined by 23.23 percent to R293.18 million as a result of a deferred tax charge of R101m, compared with a deferred tax credit in the prior year.

Headline earnings per share fell 23 percent to 708.5c, while earnings per share also declined 23 percent to 708.4c.

Looking ahead, the group said it was confident that most of its investee companies have returned to 2019 levels of trading or higher, which would reflect in the results for the 2021 calendar year.