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SNV - Santova Logistics Limited - Group interim results for the six months ended
31 August 2011
SANTOVA LOGISTICS LIMITED
REGISTRATION NUMBER 1998/018118/06
SHARE CODE: SNV
ISIN: ZAE000090650
GROUP INTERIM RESULTS for the six months ended 31 August 2011
UP 64,1% headline earnings per share
UP 14,9% turnover
UP 60,4% tangible net asset value per share
UP 176,7% cash generated from operations
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 August 31 August 28 February
2011 2010 2011
R`000 R`000 R`000
Turnover 81 330 70 759 144 230
Gross billings 1 144 366 995 487 2 044 439
Cost of billings (1 063 036) (924 728) (1 900 209)
Other income 1 399 4 921 6 365
Depreciation and amortisation (1 953) (1 906) (3 960)
Administrative expenses (62 987) (57 382) (114 934)
Operating income 17 789 16 392 31 701
Interest received 595 1 120 2 265
Finance costs (4 918) (5 166) (10 750)
Profit before taxation 13 466 12 346 23 216
Income tax expense (3 746) (2 758) (5 891)
Profit for the period/year 9 720 9 588 17 325
Attributable to:
Equity holders of the parent 9 639 9 313 16 964
Minority interest 81 275 361
Other comprehensive income
Exchange differences from
translation of foreign operations 887 (954) 188
Total comprehensive income
for the period/year 10 607 8 634 17 513
Attributable to:
Equity holders of the parent 10 427 8 359 16 884
Minority interest 180 275 629
Basic earnings per share (cents) 0,69 0,72 1,25
Diluted earnings per share (cents) 0,69 0,69 1,23
SUPPLEMENTARY INFORMATION
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 August 31 August 28 February
2011 2010 2011
R`000 R`000 R`000
Reconciliation between earnings
and headline earnings
Profit attributable to equity
holders of the parent 9 639 9 313 16 964
Impairment of goodwill - - 1 152
Net loss on disposals of plant
and equipment 85 48 215
Negative goodwill arising from purchase
of subsidiary - (3 868) (3 868)
Taxation effects (24) (14) (60)
Headline earnings 9 700 5 479 14 403
Shares in issue (000`s) 1 372 578 1 376 127 1 376 127
Weighted average number of shares
(000`s) 1 403 828 1 301 369 1 351 944
Diluted number of shares (000`s) 1 403 828 1 344 193 1 380 493
Shares for net asset value
calculation (000`s) 1 403 828 1 403 828 1 403 828
Performance per ordinary share
Basic headline earnings per share
(cents) 0,69 0,42 1,07
Diluted headline earnings per
share (cents) 0,69 0,41 1,04
Net asset value per share (cents) 8,12 6,73 7,37
Tangible net asset value per share
(cents) 3,86 2,41 3,09
CONDENSED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 August 31 August 28 February
2011 2010 2011
R`000 R`000 R`000
Cash generated from operations before
working capital changes 19 644 14 479 32 825
Changes in working capital (4 419) (34 317) (28 370)
Cash generated from / (utilised in)
operations 15 225 (19 838) 4 455
Interest received 595 1 120 2 265
Finance costs (4 093) (4 393) (9 897)
Taxation paid (3 041) (3 047) (7 671)
Net cash flows from operating
activities 8 686 (26 158) (10 848)
Cash utilised in other
investing activities (1 725) (514) (2 823)
Cash (outflow)/inflow from
the acquisition of subsidiaries (2 620) 1 230 (67)
Net cash flows from investing
activities (4 345) 716 (2 890)
Net cash flows from financing
activities (11 697) 39 346 22 888
Net (decrease)/increase in cash
and cash equivalents (7 356) 13 904 9 150
Effects of exchange rate changes
on cash and cash equivalents 403 (806) 16
Cash and cash equivalents at
beginning of period/year 13 488 4 322 4 322
Cash and cash equivalents at end
of period/year 6 535 17 420 13 488
CONDENSED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
31 August 31 August 28 February
2011 2010 2011
R`000 R`000 R`000
ASSETS
Non-current assets 71 676 75 481 72 422
Plant and equipment 8 641 9 172 8 540
Intangible assets 59 817 60 749 59 990
Financial asset 552 578 458
Deferred taxation 2 666 4 982 3 434
Current assets 334 835 320 042 275 454
Trade receivables 311 004 284 593 248 820
Other receivables 16 043 17 632 11 789
Current tax receivable 676 207 784
Amounts owing from related parties 577 190 573
Cash and cash equivalents 6 535 17 420 13 488
Total assets 406 511 395 523 347 876
EQUITY AND LIABILITIES
Capital and reserves 114 022 94 536 103 415
Share capital and premium 151 204 151 204 151 204
Contingency reserve 189 154 181
Foreign currency translation reserve 1 856 194 1 068
Accumulated loss (41 087) (58 342) (50 718)
Attributable to equity holders of
the parent 112 162 93 210 101 735
Minority interest 1 860 1 326 1 680
Non-current liabilities 3 081 6 693 5 761
Interest-bearing borrowings 217 508 318
Long-term provision 2 013 2 136 2 013
Financial liabilities 850 4 034 3 429
Deferred taxation 1 15 1
Current liabilities 289 408 294 294 238 700
Trade and other payables 177 666 152 684 116 811
Current tax payable 421 3 054 593
Current portion of interest-bearing
borrowings 175 94 151
Amounts owing to related parties 142 77 157
Current portion of financial
liabilities 3 548 6 009 5 947
Short-term borrowings 100 241 126 529 108 991
Short-term provisions 7 215 5 847 6 050
Total equity and liabilities 406 511 395 523 347 876
CONDENSED SEGMENTAL ANALYSIS
South Hong
Africa Australia Europe Kong Group
GEOGRAPHICAL SEGMENTS R`000 R`000 R`000 R`000 R`000
31 August 2011
Turnover (external) 68 864 6 078 4 726 1 662 81 330
Operating income 16 195 759 580 255 17 789
Interest received 568 1 3 23 595
Finance costs (4 727) (36) (155) - (4 918)
Income tax expense (3 304) (404) - (38) (3 746)
Net profit 8 732 320 428 240 9 720
Segment assets 312 309 15 279 9 667 6 773 344 028
Intangible assets 59 813 - 4 - 59 817
Deferred taxation 2 459 207 - - 2 666
Total assets 374 581 15 486 9 671 6 773 406 511
Total liabilities 268 281 8 615 11 395 4 198 292 489
Depreciation and
amortisation 1 496 397 31 29 1 953
Capital expenditure 1 292 241 26 119 1 678
31 August 2010
Turnover (external) 60 876 5 449 3 149 1 285 70 759
Operating income 14 503 1 438 179 272 16 392
Interest received 1 088 11 - 21 1 120
Finance costs (4 997) (35) (134) - (5 166)
Income tax expense (2 248) (449) - (61) (2 758)
Net profit 8 346 965 45 232 9 588
Segment assets 308 797 11 836 4 182 4 977 329 792
Intangible assets 60 247 497 5 - 60 749
Deferred taxation 4 577 405 - - 4 982
Total assets 373 621 12 738 4 187 4 977 395 523
Total liabilities 284 515 7 464 6 083 2 925 300 987
Depreciation and
amortisation 1 523 338 37 8 1 906
Capital expenditure 560 228 78 42 908
Freight
forwarding
and
clearing Insurance Group
BUSINESS SEGMENTS R`000 R`000 R`000
31 August 2011
Net profit 9 608 112 9 720
Total assets 403 270 3 241 406 511
Total liabilities 290 935 1 554 292 489
31 August 2010
Net profit 9 375 213 9 588
Total assets 390 640 4 883 395 523
Total liabilities 298 658 2 329 300 987
CONDENSED STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders of the parent
Share
Share Share commit-
capital premium ments
R`000 R`000 R`000
Balances at 28 February 2010 1 256 146 680 (2 357)
Total comprehensive income - - -
Transfer of contingency reserve - - -
Share commitments arising on acquisition
of subsidiary - - 5 625
Issue of shares in terms of share
commitments 131 3 807 (3 938)
Repurchase of shares in terms of share
commitments (11) (1 106) 1 117
Balances at 31 August 2010 1 376 149 381 447
Total comprehensive income - - -
Transfer of contingency reserve - - -
Balances at 28 February 2011 1 376 149 381 447
Total comprehensive income - - -
Transfer of contingency reserve - - -
Issue of shares in terms of share
commitments 25 725 (750)
Repurchase of shares in terms of share
commitments (29) (2 826) 2 855
Balances at 31 August 2011 1 372 147 280 2 552
Foreign
currency Accu-
Other translation mulated
reserves reserve loss
R`000 R`000 R`000
Balances at 28 February 2010 132 1 148 (67 633)
Total comprehensive income - (954) 9 313
Transfer of contingency reserve 22 - (22)
Share commitments arising on acquisition
of subsidiary - - -
Issue of shares in terms of share
commitments - - -
Repurchase of shares in terms of share
commitments - - -
Balances at 31 August 2010 154 194 (58 342)
Total comprehensive income - 874 7 651
Transfer of contingency reserve 27 - (27)
Balances at 28 February 2011 181 1 068 (50 718)
Total comprehensive income - 788 9 639
Transfer of contingency reserve 8 - (8)
Issue of shares in terms of share
commitments - - -
Repurchase of shares in terms of share
commitments - - -
Balances at 31 August 2011 189 1 856 (41 087)
Minority Total
Total interest equity
R`000 R`000 R`000
Balances at 28 February 2010 79 226 1 051 80 277
Total comprehensive income 8 359 275 8 634
Transfer of contingency reserve - - -
Share commitments arising on acquisition
of subsidiary 5 625 - 5 625
Issue of shares in terms of share
commitments - - -
Repurchase of shares in terms of share
commitments - - -
Balances at 31 August 2010 93 210 1 326 94 536
Total comprehensive income 8 525 354 8 879
Transfer of contingency reserve - - -
Balances at 28 February 2011 101 735 1 680 103 415
Total comprehensive income 10 427 180 10 607
Transfer of contingency reserve - - -
Issue of shares in terms of share
commitments - - -
Repurchase of shares in terms of share
commitments - - -
Balances at 31 August 2011 112 162 1 860 114 022
COMMENTARY
GROUP PROFILE
Santova Logistics Limited ("the Company" or "Santova Logistics") and its
subsidiary companies ("Santova" or "the Group"), operating out of South Africa,
Australia, Europe (the Netherlands and United Kingdom), and Hong Kong, provide
integrated "end-to-end" logistics solutions for importers/exporters and
consumers worldwide.
OPERATIONAL REVIEW
The Santova Group is on an exciting growth path. This is reinforced by an
impressive performance for the period under review, where headline earnings of
R9 700 026 are 77,0% up on the previous period`s figure of R5 478 892. Despite
the Rand being firmer against the Dollar during this period, compared to the
same period last year, the turnover of the Group improved by 14,9% from R70 759
490 to R81 329 988.
As far as the operational cost structure of the Group is concerned, the period-
on-period increase in administrative expenses was 9,8%, which supports our
strategy of investing further in intellectual capital and infrastructure. This
has allowed us to explore untapped opportunities that should result in both
financial and strategic gains - an essential `antidote` in any turbulent
economic climate.
Adjusting for the negative goodwill arising out of the acquisition of Santova
Logistics South Africa (Pty) Limited ("Santova Logistics SA") in 2010, it is
pleasing to report an increase in the operating margin of the Group from 17,7%
to 21,9%. This 23,6% improvement has been achieved despite the industry
experiencing continued margin squeeze. This has been made possible through
focused new business development of niched clientele, as well as the benefits of
greater efficiencies through streamlined workflow processes and systems.
South Africa
Despite the financial turmoil in Europe and the USA, our South African based
operations have performed remarkably well, particularly as such growth is purely
organic. Adjusting for the negative goodwill, the period-on-period net profit
after tax growth for the segment was up 95,0%, an increase from R4 476 977 to
R8 732 433. This growth can be attributed to successful new client acquisition
and a greater number of projects undertaken for a number of our larger corporate
clientele, who are participating in the infrastructural development of South
Africa.
Whilst business and consumer confidence has declined, we must recognise that at
the same time the National Ports Authority has reported that the volume of cargo
handled in August 2011 is one of the highest ever recorded for the South African
port system. Total cargo handled at all ports amounted to 23,028 million tonnes
in August 2011 versus 21,061 million tonnes in August 2010. Containerised cargo,
on the other hand, was slightly lower at 404 723 TEUs (Twenty-foot Equivalent
Units) for August 2011 as opposed to 415 978 TEUs for the same month last year.
Taking cognisance of the general consensus that GDP is expected to be in the
region of 3,6% for 2011, we believe we can continue to leverage off the changing
economic climate and entrench ourselves further in niched sectors of the South
African economy. These sectors relate specifically to those businesses that have
commodities or products that are resilient to `slowdowns` in the international
economy.
International
The European debt crisis has had an impact on our offshore operations,
particularly in the United Kingdom, the Netherlands and Australia where margins
and reduced trade volumes have had an adverse impact on the profitability of
these businesses. However, these businesses have taken the initiative and made
strategic decisions, which should result in a much improved performance for the
second six-month period. As opposed to cost reduction measures, the Group has
taken the bold decision to invest further in these operations, particularly the
Netherlands and the United Kingdom where untapped opportunities await the Group.
FINANCIAL REVIEW
Santova achieved an earnings per share ("EPS") of 0,69 cent, a 4,1% decrease
from 31 August 2010`s EPS of 0,72 cent. Adjusting for negative goodwill this
represents a 64,1% increase on the adjusted 31 August 2010 EPS of 0,42 cent.
This is evidenced by the impressive increase in headline earnings of 77,0%,
mentioned above, resulting in an increase of 64,1% in headline EPS from 0,42
cent to 0,69 cent, despite the difficult trading environment.
Operationally, after adjusting for the negative goodwill, there has been a 42,0%
improvement in operating income, increasing from R12 524 195 to R17 789 244.
This is the result of organic growth arising from quality clients, enhanced
efficiencies and improved buying power. The movement of net margin from 12,0% to
16,6%, represents a 38,2% improvement on the previous period and further
supports the progress made in Group operational efficiency. Profit for the
period was R9 720 200 compared to last period`s R5 719 392, a 70,0% increase.
We have strengthened our balance sheet through these difficult times by ensuring
strict compliance with our policies and procedures. Net asset value per share
increased by 20,6% to 8,12 cents and tangible net asset value per share
increased by 60,4% to 3,86 cents, predominately due to the reinvestment of
profits earned over the last 12 months.
A strong focus on working capital management throughout the Group has allowed us
to generate cash from operations. The cash generated from operating activities
during this period was utilised to reduce various short term borrowings and to
invest further in the Group. The Group is trading well within its long and
short-
term facilities afforded to us by our respective financiers.
During the period, the following share movements took place in the issued share
capital of the Company:
- On 5 July 2011, 25 000 000 ordinary shares were allotted to AL van Zyl for the
purchase of Santova Logistics SA; and
- On 31 August 2011, the Company repurchased the final tranche of 28 549 440
ordinary shares from the Camilla Coleman Trust, in terms of the repurchase
agreement approved by shareholders on 23 September 2008.
MF Impson resigned as an executive director of Santova Logistics and Impson
Logistics (Pty) Limited effective 31 August 2011.
SUBSEQUENT EVENTS
The following corporate actions, as detailed in the circular to shareholders
dated 7 September 2011, were approved at the general meeting held on 6 October
2011 and the respective resolutions are in the process of being registered with
the Companies and Intellectual Property Commission:
- The proposed specific buy-back of shares from a related party, MF Impson;
- An odd lot and specific offer to minority shareholders;
- The restructuring of Santova Logistics` authorised and issued share capital by
consolidating its authorised and issued share capital on the basis of 10 to 1 by
the consolidation of every 10 shares with a par value of 0,1 cent each into 1
share with a par value of 1,0 cent each;
- A conversion of par value shares to shares of no par value;
- An increase in authorised share capital; and
- The change of name of the company to Santova Limited.
There were no other subsequent events of a material nature that occurred between
the financial period end and the date of this report.
OUTLOOK FOR THE NEXT SIX MONTHS
Although economic recovery this year remains slow, we are looking forward to
building on our successful annual average growth. Our strategic business model,
which enabled such growth, will continue to hold us in good stead. The renewed
commitment, by government and business, to promoting industrial development in
South Africa and Africa in general, will no doubt offer niched entrepreneurial
businesses such as Santova the opportunities that are necessary to excel in a
flat-to-moderate economy.
BASIS OF PREPARATION
The unaudited condensed Group interim results for the six months ended 31 August
2011 have been prepared in accordance with International Financial Reporting
Standards ("IFRS"), AC 500 standards as issued by the Accounting Practices Board
and the information required by International Accounting Standard 34: Interim
Financial Reporting. The Group`s accounting policies comply fully with IFRS; the
Companies Act, No 71 of 2008, as amended; and the Listings Requirements of the
JSE Limited, and are consistent with those applied in the annual financial
statements for the year ended 28 February 2011.
DIVIDENDS
During the Company`s development years the Board believes that it is appropriate
to re-invest earnings, therefore no dividend has been paid by the Company thus
far and none has been declared for the current financial period.
APPRECIATION
The Board would like to express its sincere appreciation to all management and
staff for their efforts during the period.
For and on behalf of the Board,
GH Gerber SJ Chisholm
Chief Executive Officer Group Financial Director
1 November 2011
REGISTERED OFFICE AND POSTAL ADDRESS
Santova House, 88 Mahatma Gandhi Road, Durban, 4001; PO Box 6148, Durban, 4000
EXECUTIVE DIRECTORS
GH Gerber (CEO), SJ Chisholm (GFD), GM Knight, AL van Zyl
NON-EXECUTIVE DIRECTORS
ESC Garner (Chairman)*, AD Dixon*, WA Lombard*, S Donner (*Independent)
TRANSFER SECRETARIES
Computershare Investor Services (Pty) Limited, 70 Marshall Street,
Marshalltown, 2107
COMPANY SECRETARY
JA Lupton, FCIS
DESIGNATED AND CORPORATE ADVISOR
River Group
AUDITORS
Deloitte & Touche
WEBSITE
www.santova.com
Date: 02/11/2011 07:05:01 Supplied by www.sharenet.co.za
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