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SNV - Santova Logistics - Audited Abridged Group Results For The Year Ended
28 February 2009
SANTOVA LOGISTICS LTD
REGISTRATION NUMBER 1998/018118/06
SHARE CODE: SNV & ISIN: ZAE000090650
AUDITED ABRIDGED GROUP RESULTS
for the year ended 28 February 2009
GROUP INCOME STATEMENT
28 February 29 February
2009 2008
R`000 R`000
Turnover 118 229 108 243
Gross billings 1 885 240 1 956 021
Cost of billings (1 767 011) (1 847 778)
Other income 3 582 3 954
Administrative expenses (93 573) (88 502)
Operating income 28 238 23 695
Depreciation and amortisation (1 963) (2 563)
Interest received 3 397 4 454
Finance costs (18 585) (17 550)
Profit before taxation 11 087 8 036
Income tax expense (3 227) (1 965)
Profit for the year 7 860 6 071
Attributable to:
Equity holders of the parent 7 794 6 026
Minority interest 66 45
Basic earnings per share (cents) 0,63 0,45
Diluted earnings per share (cents) 0,62 0,45
SUPPLEMENTARY INFORMATION
Reconciliation between earnings and
headline earnings
Profit attributable to shareholders
of Santova 7 794 6 026
Loss/(profit) on disposals of plant
and equipment 232 (14)
Variation of restraint of trade
agreement (4 323) -
Cost of variation of restraint of
trade agreement 4 323 -
Taxation effects 343 4
Headline earnings 8 369 6 016
Shares in issue (000`s) 1 297 356 1 366 788
Weighted average number of shares (000`s) 1 235 843 1 335 522
Diluted number of shares (000`s) 1 257 873 1 335 522
Shares for net asset value
calculation (000`s) 1 200 856 1 329 990
Performance per ordinary share
Basic headline earnings per share (cents) 0,68 0,45
Diluted headline earnings per share (cents) 0,67 0,45
Net asset value per share (cents) 6,19 5,82
Tangible net asset per share (cents) 4,03 3,64
CONDENSED GROUP CASH FLOW STATEMENT
28 February 29 February
2009 2008
R`000 R`000
Cash generated by operations before working
capital changes 28 431 23 570
Changes in working capital 35 095 8 174
Cash generated from operating activities 63 526 31 744
Interest received 3 397 4 454
Finance costs (18 585) (17 550)
Taxation paid (3 380) (1 824)
Net cash flows from operating activities 44 958 16 824
Net cash flows from investing activities (3 321) (2 510)
Net cash flows from financing activities (41 453) (16 407)
Net increase/(decrease) in cash and cash
equivalents 184 (2 093)
Effects of exchange rate changes on cash and
cash equivalents 488 30
Cash and cash equivalents at the beginning of
the year 5 910 7 973
Cash and cash equivalents at the end of the year 6 582 5 910
GROUP BALANCE SHEET
28 February 29 February
2009 2008
R`000 R`000
ASSETS
Non-current assets 38 876 43 502
Plant and equipment 8 710 9 498
Intangible assets 25 948 29 029
Financial assets 164 -
Deferred taxation 4 054 4 975
Current assets 219 717 286 789
Trade receivables 203 158 263 110
Other receivables 4 959 13 855
Current tax receivable 605 -
Amounts owing from related parties 4 413 3 871
Financial assets - 43
Cash and cash equivalents 6 582 5 910
Total assets 258 593 330 291
EQUITY AND LIABILITIES
Capital and reserves 74 366 77 438
Share capital and premium 145 112 156 401
Foreign currency translation reserve 529 41
Accumulated loss (71 275) (79 043)
Attributable to equity holders of the parent 74 366 77 399
Minority interest - 39
Non-current liabilities 5 361 2 658
Interest bearing borrowings 79 446
Financial liabilities 3 030 -
Long-term provision 2 252 2 212
Current liabilities 178 866 250 195
Trade and other payables 78 294 112 480
Current tax payable 471 940
Amounts owing to related parties 156 120
Current portion of interest bearing borrowings 379 772
Financial liabilities 1 092 -
Short-term borrowings and overdraft 95 488 133 330
Short-term provisions 2 986 2 553
Total equity and liabilities 258 593 330 291
GROUP SEGMENTAL ANALYSIS
United
South Africa Far East Kingdom Group
GEOGRAPHICAL SEGMENTS R`000 R`000 R`000 R`000
28 February 2009
Gross billings 1 850 867 5 482 28 891 1 885 240
Turnover (external) 109 651 2 378 6 200 118 229
Net profit/(loss)
before interest and tax 26 733 616 (1 074) 26 275
Interest received 3 367 30 - 3 397
Finance costs (18 423) (42) (120) (18 585)
Income tax
(expense)/credit (2 675) (98) (454) (3 227)
Net profit/(loss) for
the year 9 002 506 (1 648) 7 860
Segment assets 224 111 3 560 920 228 591
Intangible assets 25 293 - 655 25 948
Deferred taxation 4 054 - - 4 054
Total assets 253 458 3 560 1 575 258 593
Total liabilities 180 364 1 767 2 096 184 227
Depreciation and
amortisation 1 874 20 69 1 963
Capital expenditure 2 831 20 8 2 859
29 February 2008
Gross billings 1 928 652 4 590 22 779 1 956 021
Turnover (external) 101 091 2 389 4 763 108 243
Net profit/(loss)
before interest and tax 21 267 1 184 (1 319) 21 132
Interest received 4 429 17 8 4 454
Finance costs (17 416) (61) (73) (17 550)
Income tax
(expense)/credit (2 206) (213) 454 (1 965)
Net profit/(loss) for
the year 6 074 927 (930) 6 071
Segment assets 286 348 3 625 6 314 296 287
Intangible assets 28 374 - 655 29 029
Deferred taxation 4 521 - 454 4 975
Total assets 319 243 3 625 7 423 330 291
Total liabilities 244 406 2 720 5 727 252 853
Depreciation and
amortisation 2 488 13 62 2 563
Capital expenditure 3 268 3 410 3 681
Freight forwarding
and clearing Insurance Group
BUSINESS SEGMENTS R`000 R`000 R`000
28 February 2009
Net profit for the year 7 220 640 7 860
Total assets 256 678 1 915 258 593
Total liabilities 183 627 600 184 227
29 February 2008
Net profit for the year 5 530 541 6 071
Total assets 326 098 4 193 330 291
Total liabilities 251 775 1 078 252 853
GROUP STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders of the parent
Share Share Treasury Treasury
capital premium share capital share premium
R`000 R`000 R`000 R`000
Balances at
28 February 2007 1 123 133 160 (11) (805)
Net profit for the
year - - - -
Minority interest
adjustment - - - -
Reversal of
minority interest
allocated against
the parent - - - -
Issue of share
capital 244 25 125 (25) (2 974)
Foreign currency
translation
adjustment - - - -
Shares repurchased - - (9) (712)
Balances at
29 February 2008 1 367 158 285 (45) (4 491)
Net profit for the
year - - - -
Issue of share
capital 8 1 277 - -
Equity recognised
on share
commitments - - - -
Shares returned in
terms of variation
of restraint of
trade agreement (47) (4 620) - -
Repurchase of
shares in terms of
share commitments (31) (3 102) - -
Share commitments
lapsed - - - -
Purchase of
remaining interest
in subsidiary - - - -
Foreign currency
translation
adjustment - - - -
Shares returned in
terms of employee
share scheme - - - (15)
Minority interest
allocated against
equity of the
parent - - - -
Balances at
28 February 2009 1 297 151 840 (45) (4 506)
Attributable to equity holders of the parent
Foreign
currency
Share translation Accumulated
commitments reserve loss Total
R`000 R`000 R`000 R`000
Balances at
28 February 2007 22 928 (3) (85 070) 71 322
Net profit for the
year - - 6 026 6 026
Minority interest
adjustment - - - -
Reversal of
minority interest
allocated against
the parent - - 1 1
Issue of share
capital (21 643) - - 727
Foreign currency
translation
adjustment - 44 - 44
Shares repurchased - - - (721)
Balances at
29 February 2008 1 285 41 (79 043) 77 399
Net profit for the
year - - 7 794 7 794
Issue of share
capital (1 285) - - -
Equity recognised
on share
commitments (13 831) - - (13 831)
Shares returned in
terms of variation
of restraint of
trade agreement - - - (4 667)
Repurchase of
shares in terms of
share commitments 3 133 - - -
Share commitments
lapsed 7 224 - - 7 224
Purchase of
remaining interest
in subsidiary - - - -
Foreign currency
translation
adjustment - 488 - 488
Shares returned in
terms of employee
share scheme - - - (15)
Minority interest
allocated against
equity of the
parent - - (26) (26)
Balances at
28 February 2009 (3 474) 529 (71 275) 74 366
Minority Total
interest equity
R`000 R`000
Balances at 28 February 2007 - 71 322
Net profit for the year 45 6 071
Minority interest adjustment (5) (5)
Reversal of minority interest allocated against the
parent (1) -
Issue of share capital - 727
Foreign currency translation adjustment - 44
Shares repurchased - (721)
Balances at 29 February 2008 39 77 438
Net profit for the year 66 7 860
Issue of share capital - -
Equity recognised on share commitments - (13 831)
Shares returned in terms of variation of restraint of
trade agreement - (4 667)
Repurchase of shares in terms of share commitments - -
Share commitments lapsed - 7 224
Purchase of remaining interest in subsidiary (131) (131)
Foreign currency translation adjustment - 488
Shares returned in terms of employee share scheme - (15)
Minority interest allocated against equity of the
parent 26 -
Balances at 28 February 2009 - 74 366
COMMENTARY
GROUP PROFILE
Santova Logistics Limited ("Santova Logistics" or "Company") and its subsidiary
companies ("Santova" or "Group"), operating out of South Africa, the United
Kingdom, Hong Kong and China, provide integrated "end-to-end" logistics
solutions for importers/exporters and consumers worldwide.
OPERATIONAL REVIEW
Santova continued to show impressive progress despite global economic
conditions which progressively deteriorated throughout the 2009 financial year.
Our strategic initiatives, supported by a fundamentally sound business model
and operational excellence, enabled us to achieve our goal of sustainable
growth through progressive systematic development of the capabilities of the
Group.
Whilst the 2008 financial year was characterised by a buoyant economy, the
Group recognised at an early stage in 2008 the challenges that lay ahead and
successfully managed the rapid declines in trade. Profits for the year and
basic earnings per share as at 28 February 2009 were R7 793 771 (2008: R6 025
910) and 0,63 cents (2008: 0,45 cents), increases of 29,3% and 39,8%
respectively. This was achieved through both operational efficiencies and
organic growth of the business, which was made possible through focused
integrated supply chain solutions for clients seeking greater efficiencies in
the landed cost of their products.
In recent weeks and months, however, we have witnessed an economic downturn of
unexpected rapidity and severity - the full extent and duration of which still
remains uncertain. Fortunately, being a non-asset based supply chain logistics
business, our expenses are variable and can to a large extent be adjusted
according to activity levels.
Since the end of January 2008, we have introduced several cost reduction
measures which have been designed to hedge us against this slowdown in economic
activity.
In addition to the cost reduction measures mentioned above, we are also being
proactive and innovative in regard to the services offered to our existing
clients. This, together with the continued pursuit of high quality new clients,
will allow us to improve our overall financial performance and ultimately drive
shareholder value.
South Africa - Impson Logistics (Pty) Ltd ("Impson")
Impson, our South African based supply chain logistics business, has been
extremely successful in exploring ways to streamline the supply chain of
clients. It has become increasingly obvious that in an environment of
diminishing returns clients are more receptive to either outsourcing their
logistics or turning to process definition. The latter constitutes a unique and
dynamic methodology which is applied in the process of supply chain
optimisation - involving a detailed analysis of every conceivable aspect of the
supply chain whilst also clearly defining roles, structures, systems, work flow
processes and standards of delivery. The Company`s suite of software packages
designed for this purpose, OSCAR TM, continues to be an important tool in the
acquisition and retention of clients and one which is being enhanced and
developed on an ongoing basis.
This South African operation continues to provide a hub of development and
support for the Group worldwide.
South Africa - Leading Edge Insurance Brokers (Pty) Ltd ("Leading Edge")
The insurance business of the Group has once again delivered pleasing results.
This is in spite of one of the underwriters renegotiating downward the broker
commission payable on a significant portion of the short-term insurance book.
Had it not been for this renegotiated rate, this business for fiscal 2009 would
have shown earnings growth of approximately 50,0% and not the 18,2% it actually
achieved. Marine insurance revenue, which accrues to the Group and not to
Leading Edge itself, has also made a significant contribution to Group
earnings. The year ahead looks even more promising as the business and its
people integrate and leverage off the daily operational activities and
clientele of Impson.
At the end of the financial year the Company acquired the remaining 10% of the
equity of Leading Edge, making it a wholly owned subsidiary.
Australia
In line with our growth strategy, we are proud to confirm that subsequent to
the year end we successfully acquired McGregor Customs Pty Ltd ("McGregor"),
an Australian (Sydney) registered company, specialising in customs brokerage,
trade facilitation and international freight forwarding. McGregor is licensed
by the Australian Customs Service and is accredited by the Australian
Quarantine and Inspection Service. The company was founded in 1988 and has
established a quality diverse client base, the majority of its clients having
been with the company for many years.
The acquisition is a strategic one as it enables the Group to leverage off a
captive client base since clients of Santova`s who import from China/Hong Kong
to South Africa and have a presence in Australia tend to also ship the same
goods from China/Hong Kong to Australia. This represents a significant
opportunity for Santova to "unlock" meaningful value for the Group in
Australia, particularly with Santova having its own office in Hong Kong and
representative offices in China.
Hong Kong
Santova Logistics Ltd, Hong Kong, ("Santova Hong Kong") has continued to play a
vital role in leveraging off new markets, distribution channels and niche
services, effectively supplementing the operations of South Africa, the United
Kingdom and more recently Australia. This office, together with Santova Patent
Logistics Co., Ltd, offers our global clients 20 strategically situated offices
in close proximity to most ports throughout China. To a greater extent, our
capability of facilitating, controlling and managing end-to-end comprehensive
supply chain logistics at source - mainland China - is proving to be a valuable
asset to the Group.
Santova Hong Kong offers a world class warehouse and consolidation hub facility
situated alongside the Meiguan Freeway in Shenzhen, China. The facility is
conveniently located, close to Yantian, Chiwan, Shekou, Huanggang - China`s
largest inland port - and Shenzhen international airport. The facility includes
all warehouse related services which are fully integrated to OSCAR TM, enabling
clients real-time access to their virtual warehouse.
United Kingdom
By the second quarter in 2008, the United Kingdom ("UK") was officially in
recession and the Pound Sterling had dropped by more than 30,0% against other
major currencies. All sectors of the economy continue to struggle and by the
end of 2009 the UK economy is expected to have contracted by 3,2%. With
consumer confidence, the housing market, international trade, employment and
manufacturing either at the lowest point, or dropping faster than ever
previously recorded, Santova`s UK operations notably underperformed for the
year under review.
Initiatives have been introduced which have resulted in a significant reduction
in operational costs. We should see further beneficial operational efficiency
and improved earnings performance going forward, particularly as the UK
operation starts to build off the client base of the other components of the
Group.
Outlook for fiscal 2010
Whilst we can be proud about our progress in the financial year ended 28
February 2009, the outlook for the 2010 financial year is indeed daunting. Up
until November/December 2008, South Africans had believed themselves to be
relatively sheltered from the global economic crisis. However, all evidence now
suggests that the downward drag of the global recession on South Africa is
worse than expected.
As our then Minister of Finance Trevor Manuel pointed out in his speech on 11
February 2009, "what has started off as a financial crisis may well become a
second great depression". He commented further that the International Monetary
Fund has forecast global growth in 2009 down by no less than five times and
highlights that whilst the USA and most of Europe are in recession, China`s
gross domestic product ("GDP") has fallen to its lowest level since 1990. South
Africa`s GDP experienced its first quarterly contraction (fourth quarter 2008)
since the third quarter of 1998, and the biggest contraction since the fourth
quarter of 1992, when South Africa`s GDP declined by 3,5%. Furthermore,
national statistics have highlighted that the year-on-year movement - January
2008 versus January 2009 - in South African National Ports activity is 28% down
for Twenty-foot Equivalent Units ("TEUs") landed and 34% down for TEUs shipped.
Santova`s answer to this is simple. Despite the "economic hard times", we need
to be even more decisive and strategic in our decision-making and actions. This
will allow us to take advantage of the downturn so that when the cycle turns,
we emerge even stronger. We view the challenge as an opportunity rather than as
a problem. The future is not inevitable; the future will be determined by the
choices we make today.
As anticipated at the time of the release of our interim results for 31 August
2008, the effects of the recessionary environment have refocused the attention
of companies on effective supply chain management. The goals of sustainable
profit and growth are significant challenges in such an environment and supply
chain optimisation is fundamental to achieving this end. This is supported by
the fact that approximately 50% of consumer product spend is required to cover
the post-manufacturing cost of goods. Furthermore, the World Bank`s Logistics
Performance Index, published early last year, ranked South Africa in 24th place
out of 154 countries. In terms of logistics expenditure, however, South Africa
ranked 124th out of 150. The need for companies to evaluate their high internal
logistics costs, therefore, is an obvious opportunity for our Group, and one on
which we will continue to capitalise.
Whilst we acknowledge the challenges that lie ahead, we will remain an
energetic entrepreneurial business committed to capitalising on our unique
culture or "Santova Spirit" - "it is because of who we are that we will
navigate to achieve the impossible".
FINANCIAL REVIEW
Overview of fiscal 2009 performance
The Group`s performance as reflected in this preliminary report shows that good
progress was made in achieving the strategic growth objectives of the Group.
Net asset value has increased from 5,82 cents per share to 6,19 cents per
share, a 6,4% increase; whilst the tangible net asset value has moved from 3,64
cents per share to 4,03 cents per share, a 10,9% increase. The condensed Group
cash flow statement includes borrowings repaid of R38,6 million, despite the
increased trade undertaken by the Group during the year.
During the year, the following share movements took place:
- 8 568 981 shares issued on 30 May 2008 to the previous owners of Leading
Edge;
- 57 838 186 shares repurchased from the previous owners of Impson on
23 September 2008; and
- 20 162 987 shares repurchased from the previous owners of Impson on
13 November 2008.
Of the 219 666 667 shares the shareholders of Santova Logistics agreed to
repurchase at the 23 September 2008 Santova Logistics annual general meeting,
as a specific authority, 78 001 173 were either exercised or repurchased during
the year; 90 773 014 lapsed, as the Group pre-tax profit target of R10,8
million was achieved; and 50 892 480 remain outstanding.
Subsequent events
Subsequent to year end the Group acquired McGregors, an Australian registered
company, specialising in customs brokerage, trade facilitation and
international freight forwarding. The purchase consideration amounted to
R12 710 001 (AUD1 930 000), consisting of 61 200 014 Santova Logistics ordinary
shares (subject to profit warranties), cash in the amounts of R6 250 000
(AUD980 000) paid on 28 April 2009 and R1 564 000 (AUD230 000) paid on various
dates. Shortly thereafter, on 1 May 2009, Santova Logistics Pty Ltd sold 25% of
McGregors to Patent International Co., Ltd, a company registered in Hong Kong,
for R3 281 000 (AUD482 500) in cash. This acquisition gives the Group a
presence in Australia.
We are unable to disclose further information in relation to this acquisition,
as required in terms of IFRS3, due to the timing of the acquisition.
No other events of a material nature have occurred between the financial year
end and the date of this report.
BASIS OF PREPARATION
The audited abridged Group results have been prepared using accounting policies
that comply with International Financial Reporting Standards. The accounting
policies adopted and methods of computation are consistent with those applied
in the financial statements for the year ended 29 February 2008 and are applied
consistently throughout the Group. The Group has adopted all of the new and
revised Standards and Interpretations issued by the International Financial
Reporting Interpretations Committee of the IASB that are relevant to its
operations and effective as at 1 March 2008.
The abridged Group results comply with International Accounting Standard 34 -
Interim Financial Reporting as well as with Schedule 4 of the South African
Companies Act, 1973, and the disclosure requirements of the JSE Listings
Requirements.
AUDITED BY INDEPENDENT AUDITOR
These abridged group results have been derived from the Group annual financial
statements and are consistent in all material respects, with the Group annual
financial statements.
The Company`s independent auditor, Deloitte & Touche, have issued unmodified
opinions on the 28 February 2009 Company and Group annual financial statements
and on these abridged Group results.
These reports are available for inspection at the Company`s registered office
during office hours.
OTHER MATTERS
The Santova Logistics Limited 2009 annual report will be issued on or around
29 May 2009, both in electronic and printed form.
DIVIDENDS
In line with the Company`s policy, no dividend has been declared for the year.
ACKNOWLEDGEMENTS
The Board would like to express its appreciation to all management and staff
for their efforts during the year.
For and on behalf of the Board,
GH Gerber SJ Chisholm
Chief Executive Officer Group Financial Director
14 May 2009
REGISTRATION NUMBER 1998/018118/06
SHARE CODE SNV ISIN ZAE000090650
WEBSITE www.santova.com
REGISTERED OFFICE AND POSTAL ADDRESS: Santova House,
88 Mahatma Gandhi Road,
Durban, 4001;
PO Box 6148,
Durban, 4000
INDEPENDENT NON-EXECUTIVE DIRECTORS: ESC Garner (Chairman), WA Lombard, M Tembe
EXECUTIVE DIRECTORS: GH Gerber (CEO), SJ Chisholm (GFD), S Donner, MF Impson,
GM Knight
TRANSFER SECRETARIES: Computershare Investor Services (Pty) Limited,
70 Marshall Street, Marshalltown, 2107
COMPANY SECRETARY: JA Lupton, ACIS
DESIGNATED ADVISOR: River Group
AUDITOR: Deloitte & Touche
Date: 14/05/2009 08:00:01 Supplied by www.sharenet.co.za
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