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Santova Limited Group Interim Results for the six months ended 31 August 2013
SANTOVA LIMITED
Registration number 1998/018118/06
Share code SNV
ISIN ZAE000159711
GROUP INTERIM RESULTS
for the six months ended 31 August 2013
30,5%
INCREASE IN NORMALISED
HEADLINE EARNINGS PER SHARE
44,5%
INCREASE IN TANGIBLE
NET ASSET VALUE PER SHARE
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 August 31 August 28 February
2013 2012 2013
R'000 R'000 R'000
Gross billings 1 463 985 1 199 379 2 640 037
Turnover 102 884 80 322 178 790
Other income 8 950 3 751 8 535
Depreciation and amortisation (1 554) (1 551) (3 070)
Administrative expenses (86 896) (63 802) (143 221)
Operating profit 23 384 18 720 41 034
Interest received 1 554 683 2 014
Finance costs (7 207) (4 191) (9 239)
Profit before taxation 17 731 15 212 33 809
Income tax expense (3 786) (3 914) (8 712)
Profit for the period/year 13 945 11 298 25 097
Attributable to:
Equity holders of the parent 13 879 11 124 24 688
Minority interest 66 174 409
Other comprehensive income
Exchange differences arising
from translation of foreign operations 13 011 1 684 (945)
Total comprehensive income 26 956 12 982 24 152
Attributable to:
Equity holders of the parent 26 834 12 635 23 473
Minority interest 122 347 679
Basic earnings per share (cents) 10,17 8,12 18,06
Diluted basic earnings per share (cents) 10,07 8,12 18,00
Dividends per share (cents) 2,50
SUPPLEMENTARY INFORMATION
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 August 31 August 28 February
2013 2012 2013
R'000 R'000 R'000
Reconciliation between earnings
and headline earnings
Profit attributable to equity holders of the parent 13 879 11 124 24 688
Net loss on disposals of plant and equipment 70 20 171
Fair value remeasurement of goodwill 3 131
Derecognition of financial liability (713) (713)
Taxation effects (19) (6) (49)
Minority interest (1)
Headline earnings 17 061 10 425 24 096
Fair value gain on remeasurement
of financial liability (5 171)
Recognition of financial liability due to
lease termination agreement 1 665
Normalised headline earnings 13 555 10 425 24 096
Shares in issue (000's) 136 459 136 459 136 459
Weighted average number of shares (000's) 136 459 136 987 136 725
Diluted number of shares (000's) 137 760 136 987 137 165
Shares for net asset value calculation (000's) 136 459 136 459 136 459
Performance per ordinary share
Headline earnings per share (cents) 12,50 7,61 17,62
Diluted headline earnings per share (cents) 12,38 7,61 17,57
Normalised headline earnings per share (cents) 9,93 7,61 17,62
Net asset value per share (cents) 125,85 100,16 108,43
Tangible net asset value per share (cents) 40,33 55,44 27,91
CONDENSED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
31 August 31 August 28 February
2013 2012 2013
R'000 R'000 R'000
ASSETS
Non-current assets 130 062 72 508 122 247
Plant and equipment 9 921 8 080 8 308
Intangible assets 116 694 61 028 109 883
Financial asset 529 625 522
Deferred taxation 2 918 2 775 3 534
Current assets 490 179 361 016 436 369
Trade receivables 406 738 332 050 368 931
Other receivables 39 509 4 804 36 764
Current tax receivable 1 852 510 1 129
Amounts owing from related parties 797
Cash and cash equivalents 42 080 22 855 29 545
Total assets 620 241 433 524 558 616
EQUITY AND LIABILITIES
Capital and reserves 171 734 136 678 147 963
Non-current liabilities 35 486 4 922 49 516
Interest-bearing borrowings 31 783 1 648 37 402
Long-term provision 1 966 1 976 1 966
Financial liabilities 1 737 1 280 10 148
Deferred taxation 18
Current liabilities 413 021 291 924 361 137
Trade and other payables 219 397 184 429 199 664
Current tax payable 6 325 1 421 3 650
Current portion of interest-bearing borrowings 7 638 354 3 430
Amounts owing to related parties 195 240 167
Financial liabilities 14 591 5 293
Short-term borrowings and overdraft 154 305 99 460 137 829
Short-term provisions 10 570 6 020 11 104
Total equity and liabilities 620 241 433 524 558 616
CONDENSED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
31 August 31 August 28 February
2013 2012 2013
R'000 R'000 R'000
Capital and reserves
Balance at beginning of period/year 147 963 123 699 123 699
Total comprehensive income 26 956 12 982 24 152
Issue of shares in terms of share commitments (3)
Equity reserves arising from grant of
equity-settled share options 225 115
Recognition of costs directly related to share
issues capitalised to equity (3)
Dividends paid (3 410)
Balance at end of period/year 171 734 136 678 147 963
Comprising:
Stated capital 145 533 145 192 145 307
Foreign currency translation reserve 14 741 4 511 1 785
Accumulated profit/(loss) 8 312 (15 719) (2 155)
Attributable to equity holders of the parent 168 586 133 984 144 937
Minority interest 3 148 2 694 3 026
Capital and reserves 171 734 136 678 147 963
CONDENSED STATEMENT OF CASH FLOW
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 August 31 August 28 February
2013 2012 2013
R'000 R'000 R'000
Cash generated from operations 7 660 56 202 30 655
Interest received 1 554 683 2 014
Finance costs (6 975) (4 156) (9 087)
Taxation paid (1 219) (1 783) (8 827)
Net cash flows from operating activities 1 020 50 946 14 755
Cash outflows from the acquisition
of subsidiaries (2 502) (35 738)
Cash utilised in other investing activities (3 393) (1 114) (2 332)
Net cash flows from investing activities (3 393) (3 616) (38 070)
Net cash flows from financing activities 12 689 (35 226) 41 217
Net increase in cash and cash equivalents 10 316 12 104 17 902
Effects of exchange rate changes on
cash and cash equivalents 3 224 799 1 012
Cash and cash equivalents at beginning
of period/year 28 540 9 626 9 626
Cash and cash equivalents at end
of period/year 42 080 22 529 28 540
CONDENSED SEGMENTAL ANALYSIS
Foreign
South Africa Operations Group
GEOGRAPHICAL SEGMENT R'000 R'000 R'000
31 August 2013
Turnover 65 692 37 192 102 884
Operating income 15 757 7 627 23 384
Profit for the period 8 503 5 442 13 945
Total assets 525 847 94 394 620 241
Total liabilities 390 588 57 919 448 507
Depreciation and amortisation 1 134 420 1 554
Capital expenditure 3 397 74 3 471
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
Capital expenditure 854 223 1 077
Logistics
Services Insurance Group
BUSINESS SEGMENT R'000 R'000 R'000
31 August 2013
Profit for the period 12 543 1 402 13 945
Total assets 614 679 5 562 620 241
Total liabilities 447 234 1 273 448 507
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
OPERATIONAL REVIEW
The Group has continued its trend of generating consistent sound earnings growth, despite a challenging
economic environment and a significant drop off in trade volumes that occurred in the first quarter of the
current financial year.
The period under review witnessed no new acquisitions and was one primarily focused internally on:
- bedding down and integrating W.M. Shipping into the Group;
- developing and enhancing further our offshore capabilities, particularly in the Netherlands;
- launching Santova Express, a new international courier service; and
- 'refining' and formalising the Group's marketing strategies and initiatives.
In terms of the Group's stated strategies, the offshore operations continue to grow and become significant
earnings contributors to the Group. The current financial year will see the inclusion of a full year's trading
results from W.M. Shipping following last year's successful acquisition in the United Kingdom. In addition to
this is a rejuvenated performance from the Netherlands following the take-on of a specialised logistics team
late last year and the recent restructuring of the operational structures. All in all, this sees the contribution
from foreign operations to the Group's results increasing from 19% to 39% during this period.
In South Africa the Group continues to experience intense competition within the logistics sector which has
resulted in margins and profits coming under pressure. To counteract this, the Group has focused intensely
during the period on refining and formalising its marketing procedures, and has invested in new resources
and skills within the Supply Chain Management division. This highly specialised division works side by side
with the core logistics divisions to provide sophisticated supply chain analysis and solutions to our
customers, ensuring high levels of customer retention and growth opportunities going forward.
The in-house development and implementation of Santova Express during the current period is an exciting
step in further expanding the Group's product offering and creating future revenue streams. Santova Express
is the Group's new international courier service that provides international express delivery on demand,
carrying out door-to-door delivery of freight, parcels and documents of a time-sensitive nature. Santova
Express utilises the Group's existing in-house IT capabilities and extensive international representation to
provide our clients with a reliable, cost effective courier solution.
The financial services division produced excellent results during the period under review and has become a
mature business and a meaningful contributor to the Group, showing growth of 75% on normalised earnings
from the prior period. The division is in the process of expanding its license categories and its product
offering to clients, which will ensure its continued growth path going forward.
GROUP FINANCIAL REVIEW
For the six months to 31 August 2013 the Santova Group achieved headline earnings per share of
12,50 cents and basic earnings per share of 10,17 cents, an increase of 64,3% and 25,2% respectively over
the prior period.
Both headline and basic earnings per share have been significantly impacted by the once-off inclusion in
profit, in terms of IFRS, of a fair value gain of R5,2 million on the subsequent re-measurement of a portion
of the contingent purchase consideration payable in respect of the acquisition of W.M. Shipping Limited and
the resultant fair value loss of R3,1 million on the subsequent re-measurement of goodwill related to the
acquisition. In terms of the Headline Earnings Circular 2/2013, the once-off fair value gain is specifically
included in headline earnings per share and the fair value loss is specifically excluded, which causes headline
earnings growth to be artificially inflated.
In addition, as detailed in the subsequent events note in the 2013 Annual Integrated Report, the Group is
required, in terms of IFRS, to recognise the remaining obligations following the termination of the lease for
the premises previously occupied by Santova Logistics South Africa (Pty) Limited as a financial liability. The
total net impact of raising this financial liability in the current period is a pre-tax expense of R3 million, of which
R2,3 million can be viewed as the once-off exceptional amount on a comparative basis with the related
expense in the prior period.
Therefore, a more appropriate basis for the measurement of the actual performance by Santova in this period
from on-going operations is the computation of 'normalised' headline earnings per share, which eliminates
the effect of these once-off items. The result is 'normalised' headline earnings per share of 9,93 cents, an
increase of 30,5% over the headline earnings per share reported in the prior comparative period.
This increase in normalised headline earnings is primarily as a result of:
- the first time inclusion of six months' trading results from the acquisition of W.M. Shipping in the interim
reporting period, resulting in a contribution of R4,9 million to profit before tax; and
- strong performances from both the Netherlands and Hong Kong regions resulting in additional
contributions of R2,9 million and R1 million to net profit before tax respectively compared to the prior
period.
The effect of these strong earnings and the weakening of the rand, which resulted in significant foreign
exchange profits from the translation of the Group's foreign assets, led to a 16,1% increase in net asset value
per share from 108,43 cents in February 2013 to 125,85 cents.
OUTLOOK FOR THE NEXT SIX MONTHS
Following a relatively slow start to the year, trade volumes appear to have recovered their lost territory which
is a positive indicator for the second six months. This, coupled with the initiatives implemented and
investments made by the Group in the first six months, places the Group in a very good position to continue
to achieve its target of consistent earnings growth.
BASIS OF PREPARATION
The condensed consolidated financial information for the six months ended 31 August 2013 has been
prepared and presented in accordance with the framework concepts and the measurement and recognition
requirements of International Financial Reporting Standards ("IFRS"), the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee, and Financial Reporting Pronouncements as issued by the
Financial Reporting Standards Council, the listings requirements of the JSE Limited, the information as required
by IAS 34: Interim Financial Reporting, and the requirements of the South African Companies Act 71 of 2008.
These condensed consolidated interim results have not been audited by the Group's auditors.
For and on behalf of the Board,
GH Gerber DC Edley
Chief Executive Officer Group Financial Director 30 October 2013
INTERNATIONAL LOGISTICS SOLUTIONS
Santova Limited is a public company listed on the main board of
the Johannesburg Stock Exchange, with offices throughout
South Africa and in Hong Kong,
Australia, the Netherlands and the United Kingdom,
as well as strategic partners throughout the world.
Santova provides INTEGRATED END-TO-END LOGISTICS
SOLUTIONS that ensure the seamless flow of products into the
market place for importers, exporters and consumers worldwide,
by assuming RESPONSIBILITY FOR THE ENTIRE SUPPLY CHAIN,
from supplier to consumer.
Santova offers a UNIQUE CLIENT-CENTRIC APPROACH, which
provides SUPPLY CHAIN OPTIMISATION SOLUTIONS, through
industry-leading strategic logistics management practices and
VIRTUAL SUPPLY CHAIN MANAGEMENT, through the use of
the Group's in-house developed intelligent management
information system, OSCAR®.
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), AL van Zyl
INDEPENDENT NON-EXECUTIVE DIRECTORS
ESC Garner (Chairman), AD Dixon, WA Lombard
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
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