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Group Interim Results for the six months ended 31 August 2012
SANTOVA LIMITED
Registration number 1998/018118/06
Share code SNV
ISIN ZAE000159711
GROUP INTERIM RESULTS
for the six months ended 31 August 2012
18,2% increase in basic earnings per share
43,6% increase in tangible net asset value per share
486,5% increase in net operating cash inflows to R50,9 million
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 August 31 August 29 February
2012 2011 2012
R'000 R'000 R'000
Gross billings 1 199 379 1 144 366 2 605 858
Turnover 80 322 81 330 167 107
Other income 3 751 1 399 3 910
Depreciation and amortisation (1 551) (1 953) (3 776)
Administrative expenses (63 802) (62 987) (127 816)
Operating profit 18 720 17 789 39 425
Interest received 683 595 1 328
Finance costs (4 191) (4 918) (10 690)
Profit before taxation 15 212 13 466 30 063
Income tax expense (3 914) (3 746) (7 564)
Profit for the period/year 11 298 9 720 22 499
Attributable to:
Equity holders of the parent 11 124 9 639 22 079
Minority interest 174 81 420
Other comprehensive income
Exchange differences arising from translation
of foreign operations 1 684 887 2 179
Total comprehensive income 12 982 10 607 24 678
Attributable to:
Equity holders of the parent 12 635 10 427 24 011
Minority interest 347 180 667
Basic earnings per share (cents) 8,12 6,87 15,82
Diluted basic earnings per share (cents) 8,12 6,87 15,82
SUPPLEMENTARY INFORMATION
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 August 31 August 29 February
2012 2011 2012
R000 R000 R000
Reconciliation between earnings and
headline earnings
Profit attributable to equity holders of the parent 11 124 9 639 22 079
Net loss on disposals of plant and equipment 20 85 314
Impairment of loan 41
Derecognition of financial liability (713)
Taxation effects (6) (24) (91)
Minority interest (25)
Headline earnings 10 425 9 700 22 318
Shares in issue (000's) 136 459 137 258 134 277
Weighted average number of shares (000's) 136 987 140 383 139 547
Diluted number of shares (000's) 136 987 140 383 139 547
Shares for net asset value calculation (000's) 136 459 140 383 134 277
Performance per ordinary share
Headline earnings per share (cents) 7,61 6,91 15,99
Diluted headline earnings per share (cents) 7,61 6,91 15,99
Net asset value per share (cents) 100,16 81,22 92,12
Tangible net asset per share (cents) 55,44 38,61 47,17
CONDENSED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 August 31 August 29 February
2012 2011 2012
R'000 R'000 R'000
Profit before taxation 15 212 13 466 30 063
Adjustments for non-cash flow items 4 191 6 178 13 420
Changes in working capital 36 799 (4 419) (45 456)
Interest received 683 595 1 328
Finance costs (4 156) (4 093) (10 319)
Taxation paid (1 783) (3 041) (7 918)
Net cash flows from operating activities 50 946 8 686 (18 882)
Cash outflows from the acquisition of subsidiaries (2 502) (2 620) (2 426)
Cash utilised in other investing activities (1 114) (1 725) (3 224)
Net cash flows from investing activities (3 616) (4 345) (5 650)
Net cash flows from financing activities (35 226) (11 697) 19 735
Net increase/(decrease) in cash and cash equivalents 12 104 (7 356) (4 797)
Effects of exchange rate changes on cash and
cash equivalents 799 403 935
Cash and cash equivalents at beginning of
period/year 9 626 13 488 13 488
Cash and cash equivalents at end of period/year 22 529 6 535 9 626
CONDENSED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
31 August 31 August 29 February
2012 2011 2012
R'000 R'000 R'000
Capital and reserves:
Balance at beginning of period/year 123 699 103 415 103 415
Total comprehensive income 12 982 10 607 24 678
Issue of shares in terms of share commitments (3)
Repurchase of shares in terms of odd-lot
and specific offer (281)
Share commitments arising on grant of put options (3 642)
Recognition of costs directly related to share
buybacks in equity (471)
Balance at end of period/year 136 678 114 022 123 699
Comprising:
Stated capital 145 192 148 652 145 200
Share commitments 2 552 (5)
Contingency reserve 189 210
Foreign currency translation reserve 4 511 1 856 3 000
Accumulated loss (15 719) (41 087) (27 053)
Attributable to equity holders of the parent 133 984 112 162 121 352
Minority interest 2 694 1 860 2 347
Capital and reserves 136 678 114 022 123 699
CONDENSED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
31 August 31 August 29 February
2012 2011 2012
R'000 R'000 R'000
ASSETS
Non-current assets 72 508 71 676 73 171
Plant and equipment 8 080 8 641 8 365
Intangible assets 61 028 59 817 60 356
Financial asset 625 552 522
Deferred taxation 2 775 2 666 3 928
Current assets 361 016 334 835 345 208
Trade receivables 332 050 311 004 320 311
Other receivables 4 804 16 043 11 046
Current tax receivable 510 676 304
Amounts owing from related parties 797 577 761
Cash and cash equivalents 22 855 6 535 12 786
Total assets 433 524 406 511 418 379
EQUITY AND LIABILITIES
Capital and reserves 136 678 114 022 123 699
Non-current liabilities 4 922 3 081 5 023
Interest-bearing borrowings 1 648 217 164
Long-term provision 1 976 2 013 1 976
Financial liabilities 1 280 850 2 882
Deferred taxation 18 1 1
Current liabilities 291 924 289 408 289 657
Trade and other payables 184 429 177 666 139 002
Current tax payable 1 421 421 253
Current portion of interest-bearing borrowings 354 175 157
Amounts owing to related parties 240 142 246
Financial liabilities 3 548 2 596
Short-term borrowings and overdraft 99 460 100 241 138 252
Short-term provisions 6 020 7 215 9 151
Total equity and liabilities 433 524 406 511 418 379
CONDENSED SEGMENTAL ANALYSIS
South Foreign
Africa Operations Group
R'000 R'000 R'000
GEOGRAPHICAL SEGMENT
31 August 2012
Turnover 63 917 16 405 80 322
Operating income 15 776 2 944 18 720
Profit for the period 9 157 2 141 11 298
Total assets 399 070 34 454 433 524
Total liabilities 274 980 21 866 296 846
Depreciation and amortisation 1 345 206 1 551
Finance costs 4 055 136 4 191
31 August 2011
Turnover 68 864 12 466 81 330
Operating income 16 195 1 594 17 789
Profit for the period 8 732 988 9 720
Total assets 374 581 31 930 406 511
Total liabilities 268 281 24 208 292 489
Depreciation and amortisation 1 496 457 1 953
Finance costs 4 727 191 4 918
Logistics
Services Insurance Group
R'000 R'000 R'000
BUSINESS SEGMENT
31 August 2012
Profit for the period 9 880 1 418 11 298
Total assets 430 368 3 156 433 524
Total liabilities 295 561 1 285 296 846
31 August 2011
Profit for the period 9 608 112 9 720
Total assets 403 270 3 241 406 511
Total liabilities 290 935 1 554 292 489
COMMENTARY
GROUP PROFILE
The Santova Group provides sophisticated integrated logistics solutions for clients worldwide,
operating from offices throughout South Africa and internationally in Australia, Netherlands, United
Kingdom and Hong Kong.
The Group's business strategy is to assume responsibility for the entire supply chain function from
supplier to point of consumption and it does so through a highly client centric approach; by
providing clients with detailed supply chain analysis and offering virtual supply chain management
through the use of OSCAR, a unique logistics software solution developed by the Group. OSCAR
interfaces directly with client systems providing real-time information, electronic documentation,
process automation and business intelligence tools.
OPERATIONAL REVIEW
In the context of South Africa, and the world in general, exhibiting signs of either negligible or
negative levels of growth, the Group has made good progress.
The fragile economic conditions in Europe and the slowdown in Asia have reverberated elsewhere
in the world. Following the relatively timid pace set in the second half of 2011, trade flows in the
first six months of 2012 have remained sluggish. This is further supported by the World Bank's
Global Economic Prospects (GEP) 2012 report which has revised the GDP for developed nations
downwards to 1,4% in 2012 from a previous estimate of 2,7%, with the Eurozone in particular
contracting to minus 0,3%.
In spite of this, Santova's offshore operations have achieved impressive earnings growth of 117%
year-on-year. This growth has been predominantly driven by sound organic growth through new
business development in both the United Kingdom and the Eurozone. We believe that these
operations are well set to continue on their path to becoming more significant contributors to Group
profits going forward.
The Group's South African operations have also performed well; this is in spite of lower commodity
(mining) volumes shipped and the substantially reduced trade volumes of certain clients that were
previously meaningful contributors to Group revenue. Furthermore, considering the fact that
approximately one third of South Africa's trade is with the Eurozone, a lacklustre growth/demand
both internationally and domestically has not made matters easy for the Group over the first six
months of this financial year.
GROUP FINANCIAL REVIEW
For the six months to 31 August 2012, Santova achieved basic earnings per share of 8,12 cents
and headline earnings per share of 7,61 cents, an increase of 18,2% and 10,1% respectively over
the same period last year.
This result is a positive performance, particularly in light of the following:
- Trade volumes in South Africa, from where the Group traditionally generates the majority of its
profits, were heavily impacted by the weakening of the Rand;
- Weak trading conditions in local and international markets; and
- Lower operating margins as a result of continued pressure from under-pricing by competitors.
The impact of these factors resulted in growth of Group gross billings of only 4,8% for the period
and a decrease in Group turnover for the period of 1,2%.
The primary contributors to this solid Group earnings growth despite the constrained South African
revenue growth were:
- Stronger revenue growth and improved profitability in the Group's foreign subsidiaries, primarily
in the United Kingdom, as they continue to grow and mature;
- A strong control of overhead costs resulting in an increase of only 1,2% in administrative
expenses, which had the effect of improving the Group's operating margin from 21,9% to
23,3% period on period;
- A 164% growth in other income from the derecognition of the financial liability in Santova
Financial Services, improved foreign exchange margins and increases in various cost
recoveries;
- Reduced finance costs as a result of the Group having been cash flow positive during the
period, combined with a lowering of the prime interest rate in South Africa; and
- A slight improvement in the effective tax rate from 27,8% to 25,7%.
The effect of this consistent earnings growth continues to strengthen the Group's balance sheet
and to increase the value of ordinary shareholders' interest. This is primarily evidenced by the
23,3% increase in net asset value per share to 100,16 cents, and the 43,6% increase in tangible
net asset value per share to 55,44 cents.
The overall structure of the Group's balance sheet and the level of debt remain consistent with the
current trading levels and comparable to that of prior periods. This is demonstrated by the Group's
major asset, being its trade debtors, having grown 6,8% in value period on period, which is
consistent with the 4,8% increase in Group billings and the current ratio which remains consistent
at 1,76 versus 1,74 in the prior period.
On a positive note the Group generated net cash of R12,1 million in the period versus net outflows
reported in the prior period and prior financial year end. This is reflective of the improved profitability
in the foreign subsidiaries increasing cash on hand and the softer billings growth, which translated
into a lower funding requirement for trade debtors.
SUBSEQUENT EVENTS
The following corporate events have occurred or been announced between the financial period end
and the date of this report:
- On 31 August 2012, the Company issued a cautionary announcement to shareholders in
respect of negotiations, which if successful could have a material effect on the share price.
These negotiations are on-going and the Company issued a renewal of the cautionary
announcement to shareholders on 12 October 2012.
- The Company announced an internal reorganisation on 11 October 2012, whereby its two South
African logistics trading entities, namely Santova Logistics SA (Pty) Limited and Impson Logistics
(Pty) Limited, would be merged into one operational entity. The rationale for this reorganisation is
to improve operational efficiencies and service delivery to clients. The reorganisation will be
effected by means of Impson Logistics (Pty) Limited acquiring the assets, liabilities and staff of
Santova Logistics SA (Pty) Limited on a going concern basis, at net book value.
- In line with this restructure, the name of Impson Logistics (Pty) Limited has been formally
changed to Santova Logistics (Pty) Limited, so as to strengthen the Santova brand and create
one consistent name in the Group throughout its local and foreign offices.
OUTLOOK FOR THE NEXT SIX MONTHS
Whilst the six-month outlook for the key components of trade activity both globally and in South
Africa point towards a fragile economy, we believe that we are well placed as a business to engage
and work through any challenges that may confront us.
Significant progress is expected to be achieved on expanding and integrating the South African
logistics operations into one operating unit so that efficiencies and resultant effectiveness can be
capitalised upon. This strategic integration, including the name change of "Impson Logistics" to
"Santova Logistics", is an acknowledgement of the size, strength, and diversity of the entire
Santova Group, making "Santova" the cornerstone of our branding worldwide.
BASIS OF PREPARATION
The unaudited condensed Group interim results for the six months ended 31 August 2012 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 29 February 2012.
DIVIDENDS
Following the Annual General Meeting on 24 July 2012, the Board announced a change to the
Company's dividend policy, whereby it will commence paying dividends.
The new dividend policy will come into effect in respect of the 2013 financial year. The Board will
continue to review the appropriateness of the dividend policy and it may be amended from time to
time.
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 DC Edley
Chief Executive Officer Group Financial Director
30 October 2012
Registration number 1998/018118/06
Share code SNV
ISIN ZAE000159711
REGISTERED OFFICE Santova House, 88 Mahatma Gandhi Road, Durban, 4001
POSTAL ADDRESS PO Box 6148, Durban, 4000
EXECUTIVE DIRECTORS GH Gerber (CEO), DC Edley (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
JSE SPONSOR River Group
AUDITORS Deloitte & Touche
www.santova.com
Durban
31 October 2012
JSE Sponsor
River Group
Date: 31/10/2012 07:16:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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