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Preliminary group results for the year ended 28 February 2014
SANTOVA LIMITED
REGISTRATION NUMBER 1998/018118/06
SHARE CODE SNV
ISIN ZAE000159711
PRELIMINARY GROUP RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2014
- 40,6% increase in headline earnings per share
- 34,2% increase in net asset value per share
- 30% increase in ordinary dividend to 3,25 cps
HEADLINE EARNINGS PER SHARE
10,65 - 2011
15,99 - 2012
17,62 - 2013
24,77 - 2014
NET ASSET VALUE PER SHARE
75,15 - 2011
92,12 - 2012
108,43 - 2013
145,47 - 2014
COMMENTARY
GROUP PROFILE
Santova is a non-asset based third party ("3PL") and fourth party ("4PL") logistics service provider of
innovative global supply chain solutions, operating from offices throughout South Africa and internationally
in Australia, Netherlands, United Kingdom and Hong Kong.
Santova is an integrator that assembles the intellectual capital and technology of the Group, together with
the logistics resources and capabilities of specialised external logistics providers, to design, develop and
execute comprehensive supply chain solutions for customers.
BUSINESS REVIEW
It is pleasing to announce yet another set of commendable results despite the lack of any significant
corporate transactions or activities during the period. The period was characterised by senior management
being primarily focused on the internal processes and structures within the Group, working with all regions
to enhance customer engagement, local management structures, supply chain capabilities and overhead
cost structures. The end result was a strong overall performance that was balanced by sound organic growth
and cost control in the South African region, and significantly improved performances from a number of the
offshore subsidiaries.
The key events during the period that had a material impact on the Group's financial results are as follows:
- The weakening of the South African rand that had an impact on revenue and the translation of foreign
operations;
- The inclusion of a full 12 months' results from W.M. Shipping Limited in the United Kingdom, following its
acquisition in late November 2012 and the conclusion of the first warranty period on 31 August 2013;
- The centralisation of certain administrative functions across the South African operations leading to
significant efficiencies, offset by an increased level of local competition that resulted in pressure on
margins and revenue;
- The entrenchment of the new operational team taken on in the Netherlands in the prior period and the
investment in new business development capability resulted in a significant improvement in revenues and
profitability in that entity;
- A further investment in the Group's supply chain capabilities through the appointment of supply chain
specialists has seen the division play a significant role in the fulfilment of the Group's strategy;
- The focus on value add services at source in China and Hong Kong together with enhanced efficiencies
reducing operational costs has significantly improved revenue margins, resulting in a meaningful increase
in contribution from this region; and
- A maturing of the Santova Financial Services business which saw an increase in revenue accompanied by
a realigned cost structure resulting in a strong impact on its contribution to the Group.
PROFITABILITY
On a consolidated basis the Group increased basic earnings attributable to ordinary shareholders by 23,9%
from R24,7 million in the prior year, to R30,6 million in the current year.
This was driven primarily by a 22,1% increase in billings to clients coupled with the Group maintaining its
turnover to billings margin of 6,7% from the prior year. This led to an almost equivalent increase in actual
revenue to the Group of 21,3% from R176,7 million in the prior year to R214,4 million in the current year.
This resulted in an increase of headline earnings per share (HEPS) to 24,77 cents, which is 40,6% up on the
previous year's figure of 17,62 cents.
OUTLOOK
In the year ahead the Group will seek to leverage off the challenges and complexities that are accompanying
the rapid globalisation of companies across the world. By doing so, whilst not losing sight of our core
competencies, we believe that we can continue to deliver sustainable earnings growth and value to our
stakeholders.
BASIS OF PREPARATION
The summarised consolidated financial statements for the year ended 28 February 2014 have been prepared
and presented in accordance with the framework concepts and the measurement and recognition
requirements of IFRS, the SAICA Financial Reporting Guidelines 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 for preliminary reports, the information required by
IAS 34: Interim Financial Reporting, and the requirements of the South African Companies Act, No 71 of 2008.
The Group values its financial assets and liabilities on the basis of the principles contained in IFRS 13:
Fair Value Measurement. The full disclosure as required by IFRS 13 and IFRS 7 is contained in the Annual Financial
Statements, a copy of which is available from the registered office of the Company.
ADOPTION OF IFRS 10: CONSOLIDATED FINANCIAL STATEMENTS
The Group has adopted IFRS 10: Consolidated Financial Statements for the first time during the current
reporting period. As a result, the investment by Santova Logistics (Proprietary) Limited in a cell captive
operated by Guardrisk Insurance Company Limited no longer qualifies for consolidation.
IFRS 10 provides a single consolidation model that identifies control as the basis for consolidation with
specific criteria that to qualify for consolidation the assets of the investee must be ringfenced in the event of
the liquidation of both the investor and investee. Due to the fact that the assets of a cell captive are not
legally ringfenced in the event of the liquidation of the investee, cell captives no longer qualify for
consolidation.
As a result the fair value of the Group's investment in the cell captive is recognised as a financial asset in the
current reporting period, with changes in the fair value being recognised in profit or loss for the year. As
required by the provisions of IFRS 10 the prior year amounts have been restated to reflect the effect of the
retrospective adoption of this standard. IFRS 10 does not require the presentation of reporting periods other
than the annual period immediately preceding the date of initial application of this IFRS.
The Board do not consider the impact of this restatement on the Group's Annual Financial Statements to be
material as there is no effect on profit for the year or total capital and reserves in the current or prior reporting
periods.
Due to the Board's assessment of the immateriality of the restatement and the fact that the transitional
provisions of IFRS 10 do not require the presentation of reporting periods, other than the annual period
immediately preceding the date of initial application of this IFRS, a third statement of financial position has
not been included in terms of IAS 1:40A.
The impact of this restatement on the 2013 financial results can be summarised as follows:
As previously
reported Adjustment Restated
R'000 R'000 R'000
Profit for the year 25 097 - 25 097
Total assets 558 616 (531) 558 085
Total liabilities 410 653 (531) 410 122
Capital and reserves 147 963 - 147 963
AUDIT OPINION
These summarised consolidated financial statements have been derived from the Group financial statements
and the auditors, Deloitte & Touche, expressed an unmodified opinion thereon. A copy of their audit report
on the Group's financial statements and summarised consolidated financial statements is available for
inspection at the Company's registered office. The auditor's report does not necessarily cover all of the
information contained in this announcement. Shareholders are therefore advised that in order to obtain a full
understanding of the nature of the auditor's work they should obtain a copy of that report together with the
accompanying financial information from the registered office of the Company or the Company's website.
DIRECTORATE
The following changes took place in the composition of the Board during the current reporting period:
- Stanley Donner resigned as a non-executive director on 1 July 2013; and
- Ernest Ngubo was appointed as an independent non-executive director on 19 February 2014.
APPRECIATION
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 DC Edley
Chief Executive Officer Group Financial Director
15 May 2014
DIVIDEND DECLARATION
Notice is hereby given that the directors have declared a final gross dividend of 3,25 cents per ordinary share,
payable out of income for the year ended 28 February 2014.
In terms of South African Dividends Tax, the following additional information is disclosed:
Local dividend withholding tax rate 15%
STC credits available for set-off Nil
Net local dividend payable to shareholders who are
not exempt from dividends tax 2,7625 cents per ordinary share
Total number of ordinary shares in issue 136 459 408
Company income tax reference number 9077/274/84/4P
The following salient dates will apply to the dividend payment:
Last day to trade cum-dividend Friday, 18 July 2014
Shares commence trading ex-dividend Monday, 21 July 2014
Record date Friday, 25 July 2014
Dividend payment date Monday, 28 July 2014
Share certificates may not be dematerialised or rematerialised between Friday, 18 July 2014 and Friday,
25 July 2014, both dates inclusive.
By order of the Board
J Lupton
Company Secretary
15 May 2014
Shareholders are further advised that the presentation to investment analysts is available on the Company’s website.
SUMMARISED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
Audited Audited
28 February 28 February
2014 2013*
R'000 R'000
Gross billings 3 221 519 2 637 920
Revenue 214 357 176 651
Other income 15 118 9 296
Depreciation and amortisation (3 476) (3 070)
Administrative expenses (174 228) (142 067)
Operating profit 51 771 40 810
Interest received 4 559 1 899
Finance costs (16 316) (9 239)
Profit before taxation 40 014 33 470
Income tax expense (9 228) (8 373)
Profit for the year 30 786 25 097
Attributable to:
Equity holders of the parent 30 587 24 688
Minority interest 199 409
Other comprehensive income
Items that will not be reclassified subsequently
to profit or loss
- Exchange differences arising from translation of foreign
operations 22 743 (945)
Items that may be reclassified subsequently to profit or loss - -
Total comprehensive income 53 529 24 152
Attributable to:
Equity holders of the parent 53 122 23 473
Minority interest 407 679
Basic earnings per share (cents) 22,42 18,06
Diluted basic earnings per share (cents) 22,12 18,00
Dividends per share (cents) 3,25 2,50
SUPPLEMENTARY INFORMATION
Audited Audited
28 February 28 February
2014 2013
R'000 R'000
Reconciliation between earnings and headline earnings
Profit attributable to equity holders of the parent 30 587 24 688
Net loss on disposals of plant and equipment 94 171
Loss on fair value remeasurement of goodwill 3 131 -
Derecognition of financial liability - (713)
Taxation effects (18) (49)
Minority Interest 9 (1)
Headline earnings 33 803 24 096
Shares in issue (000's) 136 459 136 459
Weighted average number of shares (000's) 136 459 136 725
Diluted weighted average number of shares (000's) 138 285 137 165
Shares for net asset value calculation (000's) 136 459 136 459
Performance per ordinary share
Headline earnings per share (cents) 24,77 17,62
Diluted headline earnings per share (cents) 24,45 17,57
Net asset value per share (cents) 145,47 108,43
Tangible net asset value per share (cents) 54,66 27,91
SUMMARISED STATEMENT OF FINANCIAL POSITION
Audited Audited
28 February 28 February
2014 2013*
R'000 R'000
ASSETS
Non-current assets 141 418 123 183
Plant and equipment 8 940 8 308
Intangible assets 123 927 109 883
Financial assets 3 175 1 458
Deferred taxation 5 376 3 534
Current assets 555 123 434 902
Trade receivables 480 738 368 931
Other receivables 36 627 36 758
Current tax receivable 915 1 129
Cash and cash equivalents 36 843 28 084
Total assets 696 541 558 085
EQUITY AND LIABILITIES
Capital and reserves 198 510 147 963
Non-current liabilities 30 080 49 516
Interest-bearing borrowings 27 967 37 402
Long-term provision 1 777 1 966
Financial liabilities 336 10 148
Current liabilities 467 951 360 606
Trade and other payables 220 750 199 357
Current tax payable 4 180 3 426
Current portion of interest-bearing borrowings 7 947 3 430
Amounts owing to related parties 204 167
Financial liabilities 9 709 5 293
Short-term borrowings and overdraft 208 321 137 829
Short-term provisions 16 840 11 104
Total equity and liabilities 696 541 558 085
SUMMARISED STATEMENT OF CHANGES IN EQUITY
Audited Audited
28 February 28 February
2014 2013
R'000 R'000
Capital and reserves
Balance at beginning of year 147 963 123 699
Total comprehensive income 53 529 24 152
Employee share option scheme 429 115
Share issue expenses directly through equity - (3)
Dividends paid (3 411) -
Balance at end of year 198 510 147 963
Comprising:
Stated capital 145 757 145 307
Foreign currency translation reserve 24 320 1 785
Accumulated profit/(loss) 25 000 (2 155)
Attributable to equity holders of the parent 195 077 144 937
Minority interest 3 433 3 026
Capital and reserves 198 510 147 963
SUMMARISED STATEMENT OF CASH FLOW
Audited Audited
28 February 28 February
2014 2013*
R'000 R'000
Profit before taxation 40 014 33 470
Adjustments for non-cash flow items 17 527 10 060
Changes in working capital (84 547) (14 434)
Interest received 4 559 1 899
Finance costs (15 959) (9 086)
Taxation paid (10 102) (8 515)
Net cash flows from operating activities (48 508) 13 394
Cash outflows from the acquisition of subsidiaries (6 277) (35 738)
Cash utilised in other investing activities (3 912) (2 332)
Net cash flows from investing activities (10 189) (38 070)
Net cash flows from financing activities 63 205 41 217
Net increase in cash and cash equivalents 4 508 16 541
Effects of exchange rate changes on cash and cash
equivalents 5 257 1 012
Cash and cash equivalents at beginning of year 27 078 9 525
Cash and cash equivalents at end of year 36 843 27 078
Cash and cash equivalents is made up as follows:
Cash and cash equivalents 36 843 28 083
Less: Bank overdrafts - (1 005)
Cash and cash equivalents at end of year 36 843 27 078
SUMMARISED SEGMENTAL ANALYSIS
South Foreign
Africa Operations Group
GEOGRAPHICAL SEGMENT R'000 R'000 R'000
28 February 2014
Revenue 137 401 76 956 214 357
Operating profit 33 948 17 823 51 771
Profit for the year 17 087 13 699 30 786
Total assets 601 331 95 210 696 541
Total liabilities 441 801 56 230 498 031
Depreciation and amortisation 2 592 884 3 476
Capital expenditure 3 947 258 4 205
28 February 2013*
Revenue 127 696 48 955 176 651
Operating profit 28 654 12 156 40 810
Profit for the year 16 329 8 768 25 097
Total assets 482 413 75 672 558 085
Total liabilities 360 115 50 007 410 122
Depreciation and amortisation 2 496 574 3 070
Capital expenditure 2 440 1 195 3 635
Logistics Financial
Services Services Group
BUSINESS SEGMENT R'000 R'000 R'000
28 February 2014
Profit for the year 27 522 3 264 30 786
Total assets 691 935 4 606 696 541
Total liabilities 496 417 1 614 498 031
28 February 2013
Profit for the year 22 626 2 471 25 097
Total assets 553 034 5 051 558 085
Total liabilities 409 509 613 410 122
* Restated due to the adoption of IFRS 10: Consolidated Financial Statements
SOUTH AFRICA | UNITED KINGDOM | HONG KONG | NETHERLANDS | AUSTRALIA | CHINA
Innovative Global Supply Chain Solutions
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, EM Ngubo
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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