| Wed 16 May 2007, 13:07 | | SNV - Santova - Abridged results for the fourteen |
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SNV
SNV
SNV - Santova - Abridged results for the fourteen months ended 28 February 2007
SANTOVA LOGISTICS LIMITED GROUP
Previously Spectrum Shipping Limited
REGISTRATION NUMBER 1998/018118/06
SHARE CODE: SNV
ISIN: ZAE000090650
ABRIDGED RESULTS
for the fourteen months ended 28 February 2007
INCOME STATEMENT
Audited Audited
Fourteen months Twelve months
ended ended
28 February 31 December
2007 2005
Group Group
R`000 R`000
Turnover 77 395 31 009
Gross billings 1 451 862 552 436
Cost of billings (1 374 467) (521 427)
Operating income 18 788 6 629
Depreciation and amortisation (1 709) (927)
Net finance costs (10 696) (3 532)
Profit before taxation 6 383 2 170
Income tax expense (2 330) (787)
Profit for the period 4 053 1 383
Attributable to:
Equity holders of the parent 4 073 1 383
Minority interests (20) -
Shares in issue (000`s) 1 059 377 849 000
Earnings per share (cents) 0,44 0,16
Headline earnings per share (cents) 0,43 0,16
Diluted earnings per share (cents) 0,35 0,15
Net asset value per share (cents) 8,21 3,66
Net tangible asset value per share (cents) 1,11 3,62
Reconciliation between
earnings and headline earnings
Profit attributable to ordinary
shareholders 4 073 1 383
Profit on disposals of plant and equipment (158) (54)
Taxation effects 46 16
Headline earnings 3 961 1 345
BALANCE SHEET
Audited Audited
28 February 31 December
2007 2005
Group Group
R`000 R`000
ASSETS
Non-current assets 77 363 5 724
Property, plant and equipment 8 408 1 759
Intangible assets 66 136 265
Deferred taxation 2 315 2 678
Loans receivable 504 1 022
Current assets 296 028 145 369
Trade receivables 279 085 117 067
Other current assets 7 505 8 152
Cash and cash equivalents 9 438 20 150
Total assets 373 391 151 093
EQUITY AND LIABILITIES
Capital and reserves 76 458 31 039
Share capital 149 041 107 691
Foreign currency translation reserve (3) -
Accumulated loss (72 580) (76 652)
Attributable to equity holders of the company 76 458 31 039
Minority interest - -
Non-current liabilities 44 462 2 397
Amounts owing to related parties 41 185 -
Interest-bearing borrowings 1 022 -
Long-term provision 2 255 2 397
Current liabilities 252 471 117 657
Current tax payable 278 -
Trade and other payables 99 518 36 468
Current portion of amounts owing
to related parties 643 -
Current portion of borrowings 791 -
Financial liability 25 -
Short-term borrowings and overdraft 148 096 80 916
Short-term provisions 3 120 273
Total equity and liabilities 373 391 151 093
CASH FLOW STATEMENT
Audited Audited
Fourteen months Twelve months
ended ended
28 February 31 December
2007 2005
Group Group
R`000 R`000
Cash generated by operations before
working capital changes 21 355 6 387
Changes in working capital (18 052) (23 100)
Cash generated by/(utilised in)
operating activities 3 303 (16 713)
Net finance costs (10 696) (3 532)
Taxation paid (1 778) -
Net cash flows from operating activities (9 171) (20 245)
Net cash outflows from investing
activities (787) (598)
Cash outflows on acquisition of
subsidiaries (65 280) -
Net cash flows from financing activities (2 654) (1 151)
Net decrease in cash and cash equivalents (77 892) (21 994)
Cash and cash equivalents at the beginning
of the period (60 766) (38 772)
Cash and cash equivalents at the end
of the period (138 658) (60 766)
STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders of the parent
Foreign
currency
Share Share translation
capital premium reserve
R`000 R`000 R`000
Balance at 1 January 2005 brought
forward 850 106 945 -
Net profit for the period - - -
Treasury shares (1) (119) -
Employee share incentive scheme - 16 -
Balance at 31 December 2005 849 106 842 -
Net profit for the period - - -
Minority interest allocated against the
parent - - -
Issue of share capital 222 41 916 -
Foreign currency translation adjustment - - (3)
Minority interest acquired - - -
Treasury shares (12) (830) -
Employee share incentive scheme - 54 -
Balance at 28 February 2007 1 059 147 982 (3)
Attributable to equity holders of the parent
Accumulated
loss Total
R`000 R`000
Balance at 1 January 2005 brought forward (78 035) 29 760
Net profit for the period 1 383 1 383
Treasury shares - (120)
Employee share incentive scheme - 16
Balance at 31 December 2005 (76 652) 31 039
Net profit for the period 4 073 4 073
Minority interest allocated against the parent (1) (1)
Issue of share capital - 42 138
Foreign currency translation adjustment - (3)
Minority interest acquired - -
Treasury shares - (842)
Employee share incentive scheme - 54
Balance at 28 February 2007 (72 580) 76 458
Minority Total
interest equity
R`000 R`000
Balance at 1 January 2005 brought forward - 29 760
Net profit for the period - 1 383
Treasury shares - (120)
Employee share incentive scheme - 16
Balance at 31 December 2005 - 31 039
Net profit for the period (20) 4 053
Minority interest allocated against the parent 1 -
Issue of share capital - 42 138
Foreign currency translation adjustment - (3)
Minority interest acquired 19 19
Treasury shares - (842)
Employee share incentive scheme - 54
Balance at 28 February 2007 - 76 458
COMMENTARY
The period under review is a significant one in that it constitutes a milestone
as far as the achievement of the board`s strategic vision for the Santova Group
is concerned. Not only were the results encouraging, but we were able to make a
number of acquisitions and expand organically into certain logistics-related
activities, resulting in the Group`s evolution into a group of companies
clearly capable of supporting and sustaining that strategic vision. The
culmination of these achievements and the steps taken in prior years to build
the supply chain, has seen the emergence of the Group as it exists today, a
truly international "end-to-end" supply chain logistics provider.
The name "Spectrum" has always been problematic for the Company as there are
numerous companies by that name registered in South Africa, Hong Kong and the
United States of America. The decision was therefore taken to change the name
of the company to Santova Logistics Limited, a name more representative of the
activities of the Group. Santova Logistics has become the holding company of
the Group, with the subsidiary companies encompassing the various component
parts of the supply chain.
PERFORMANCE
Whilst there are challenges that accompany a continually developing business,
the period under review has been both an exciting and successful one for the
Group. Notwithstanding the fact that levels of export (general goods) have
diminished and the Rand/Dollar exchange rate has remained unfavourable, the
quality of the Group`s earnings has continued to improve through its various
operational activities. A significant contributor to this trend has been the
ability to "bulk" the volumes of goods now managed to achieve economies of
scale and this has resulted in enhanced earnings for the Group.
ACQUISITIONS AND NEW DEVELOPMENTS
Impson Logistics (Proprietary) Limited - 24 August 2006
Acknowledging the dynamics of the present day logistics industry, which is
driven by innovation, systematic acquisition, integration of capabilities and
know-how, the shareholders of Impson and the then Spectrum Shipping boldly made
the decision to integrate the core competencies of both organisations.
Impson, a highly successful logistics business with offices throughout South
Africa, brought with it the infrastructure, skills and expertise that are
essential for the success of the Group in moving to the next level of the
growth curve. Spectrum brought with it the vision for an expanded international
supply chain logistics group with an international structure already in place
and intelligent IT solutions that complemented those within Impson. The merging
of the two companies has brought stability and enhanced profitability to the
Group as a whole, reducing the adverse effects that seasonal trends have
traditionally had on the operating results of the Group. The integration of the
customs clearing and forwarding operations of the two companies on a national
level has now been achieved and will operate under the name of Impson Logistics
(Pty) Ltd in South Africa.
Mogal International Limited (United Kingdom) - 13 March 2007
To better manage and control the entire supply chain of clients between South
Africa, Hong Kong, mainland China and the United Kingdom, the Group established
a presence in the United Kingdom by acquiring 100% of the issued share capital
of Mogal International Ltd. Based in West Horndon, this 30-year-old business is
well positioned to service the Group`s existing clients, whilst actively
participating in the further development of its capability into the United
Kingdom, East Asia and Africa.
Santova Logistics Limited (Hong Kong) - 6 March 2006
In view of the growing trend for global markets, and particularly South Africa,
to become substantial importers of manufactured goods from mainland China, the
decision was taken to establish offices in Hong Kong and mainland China. Whilst
Santova Logistics Ltd (Hong Kong) is 100% held by Santova Logistics, the 15
representative offices in mainland China constitute a joint venture, through
Santova Patent Logistics Co. Ltd, between Santova Logistics Ltd (Hong Kong)
and Patent International Logistics (Shenzhen) Co. Ltd.
Founded in 1994, Patent International is a Class A forwarding company with no
less than 450 employees strategically situated in offices in most ports
throughout China. The overriding benefit for our clients is that they can now
seek comprehensive supply chain solutions from a single partner who has a
thorough understanding of the entire supply chain.
Leading Edge Insurance Brokers (Proprietary) Limited - 11 September 2006
To complement our "one stop" value-added logistics solutions supply chain, the
acquisition of Leading Edge Insurance Brokers (Pty) Ltd enables the Group to
provide "in-house" rather than outsourced international insurance services.
Considering the growth in the number of new clients in terms of the quantum of
goods shipped and the opening of new offices in the United Kingdom, Hong Kong
and China, the opportunity to leverage off this infrastructure and build a
marine and general insurance business is an exciting prospect. To date,
initiatives are already underway to structure and implement an international
capability that will enable the Group to penetrate new offshore markets.
e-OSCI Logistics (Proprietary) Limited - 11 April 2006
Recognising the critical role that information technology plays in optimising
the efficiency of the supply chain, the Group established e-OSCI Logistics
(Pty) Ltd ("Optimised Supply Chain Integration") and acquired all the rights
and title to OSCAR ("Optimised Supply Chain Active Resource" suite of software
packages), a registered patent-trademark, from Current Solutions CC.
This has resulted in the Group being able to provide clients with unrivalled
electronic tools to manage and optimise their supply chains. This is effected
through internet-based "track and trace" visual access capabilities that
facilitate real-time information on shipment data, inventory controls and
client-specific report generation, enabling efficient communication and control
throughout the supply chain. The open architectural design of OSCAR allows our
international offices, agents and clients (the participants in the supply
chain) visibility to manage the process collectively and effectively.
The business is well resourced with its own highly qualified IT and logistics
specialists who focus on customising solutions to meet client needs. This
ability to offer specialist IT support through staff that know and understand
logistics processes places Santova in a unique position in the market.
LOOKING FORWARD
The last six months of the financial year have been extremely challenging in
that the process of integrating the South African customs clearing and
forwarding business (Spectrum-Impson) under Impson has placed an enormous
demand on the resources and infrastructure of the Group. This has been
compounded by the fact that during the same period the Group has experienced
record activity levels, has acquired Leading Edge Insurance Brokers (Pty) Ltd
and Mogal International Ltd (United Kingdom), and opened offices in Hong Kong.
Nevertheless, despite the strain placed on resources of the Group, the
systematic integration of these businesses has been more than encouraging; the
process has highlighted the character and ability of our people to accommodate
the change process and development synonymous with our strategy.
What was embarked upon in 2006 must now be settled down and the synergies
within the broader group of companies realised. This will involve reviewing the
structure, leadership and culture of our organisation in order to provide the
fundamental long-term means for institutionalising the Group`s strategy so that
it permeates the very day-to-day life of the Group.
Fundamental to achieving and sustaining intra-organisational synergy, the Group
will focus on the following going forward:
Integrating, re-engineering and at the same time eliminating any duplication
in infrastructure, systems, physical resources and work flow processes.
Leveraging off highly skilled and experienced people, particularly the
management of Impson, who will facilitate the emergence of new strategies
through collective acceptance of these new ideas and exploited opportunities -
thus improving the Group`s competitiveness through a vastly improved learning
curve.
Improving earnings and sales stability, with a view to eliminating the
seasonal instability that the Group had experienced historically between the
months of January and April each year.
Acquiring and leveraging off new markets, distribution channels and niched
services, effectively supplementing the business portfolios of the businesses
with best practice, fast tracking effective organic growth of the business.
Attaining critical mass and thereby benefiting from economies of scale to
improve the cost efficiency of the Group. This will apply in the main to
freight volumes (sea, air, road and rail), marine insurance and warehousing
facilities.
Closely aligned to the benefits of "optimised size", the "bulked" or
consolidated volume of goods shipped by route will be materially enhanced,
which bodes well for our South African offices and those of Hong Kong, mainland
China and the United Kingdom, presenting an opportunity for serious growth and
development of the international business.
Consistent with our strategy, we will continue to consider opportunities to
acquire businesses that are strategic or "value enhancing" to our long-term
strategy. Furthermore, there is growing evidence to suggest that whilst
competition in the freight forwarding and supply chain logistics industry is
intense, it is becoming increasingly difficult to compete if you are a smaller
"domestic bound" service provider with limited service offerings. This will no
doubt lead to further industry consolidations, thereby opening the door to new
opportunities for entrepreneurial players in the industry.
FINANCIAL REVIEW
The change of year-end from December to February, to facilitate year-end
formalities in a quieter period of the year, together with the emergence of
additional subsidiaries at a variety of dates throughout the period, has made
the comparison of our Group results with prior periods difficult to say the
least. Add to this the transfer of operational business from Santova Logistics
into Impson, effectively transforming Santova Logistics into a "holding
company", has made the comparison of our Company results with prior periods
virtually impossible. Not only have the income statement and cash flow been
affected but, with the change of year-end from December to February, our
balance sheet looks rather different, not only for the Group but for Santova
Logistics as well. This in the main resulting from our normally high trade
month December now being compared to February, a historically lower trade
month. Another point to note on the year-end change is that our interim period
will now be August as opposed to June each year, for which comparatives have
been prepared.
With the transfer of business into Impson we have lost, for the short-term, the
ability to compare vital operational statistics to prior periods, whilst we
build comparable data.
Even though the effective date of the acquisitions of Impson, Leading Edge and
Mogal was 1 March 2006, we have only been able to incorporate their results
from the date of effective transfer of "control" as governed by IFRS and
detailed in IFRS 3; in the case of Mogal, this was after the period-end. The
full effect of the newly acquired subsidiaries will only be seen in the results
through the coming year, with the most significant difference being the strong
earnings of Impson during the first quarter of the calendar year, a
historically quieter period for Santova Logistics.
The Group has evolved into a larger player in the industry, the effects of
which are significantly enhanced funding requirements, which our banking
facilities are more than adequate to fulfil. The Group cash and cash
equivalents have moved in line with the combined trade receivables as have
gross billings of the entities for the full period, as if Impson had been
consolidated from 1 March 2006. Our combined trade receivables have reached
R280 million, just over R165 million up on last year and this has seen a
corresponding increase in cash and cash equivalents; with trade payables
growing to R100 million, an increase of just over R63 million. The income
statement is not as easily compared to the above as Impson was only
incorporated into the Group results from 31 August 2006. An indicator of
performance, the EPS, has improved strongly from 0,16 to 0,44 cents for the
Group, indicating the positive effect of the earnings of the subsidiaries on
the results.
The effective tax rate for the Group at 37% for 2007 is greater than the normal
tax rate of 29%, due in main to the secondary tax on companies raised on
dividends by Impson, authorised and paid, prior to their consolidation into the
Group. Santova Logistics is still benefiting from the cash flow effects of its
assessed loss position. In this regard, the board draws attention to the
accumulated loss which was incurred prior to the "reverse listing" of the
business in 2002. The profitable results of the business of Santova Logistics
have been fully disclosed and in no way resulted in the accumulated loss as
reflected in the balance sheet, at inception of the "reverse listing".
ACKNOWLEDGEMENT AND APPRECIATION
Santova`s staff complement has grown from 90 to more than 280 in the last
fourteen months. The character and enthusiasm that has been displayed by all
staff during this period of extraordinary growth has been admirable. It is
indeed an honour to be part of such a team. We would like to extend our sincere
appreciation and thanks to them for being who they are and for the support and
dedication that has been so freely forthcoming.
We would also like to thank our executive management for the support, guidance
and unwavering passion in getting us to where we are today. It has been a
challenging journey that certainly would not have been possible without the
unity and commitment displayed by them as leaders of the business.
The fact that we are now an international company embarking on "unchartered
territories" opens up a whole area of new and exciting opportunities for us
all. It is vital that we all continue growing as individuals, whilst always
striving to create and maintain an environment of enjoyment, encouragement and
support to facilitate the vision of what we as one team have set out to
achieve.
On a final note, our appreciation goes to our clients, suppliers, business
associates and shareholders for their encouragement and support during this
exciting era. Considering the prospects for the year ahead, there is no doubt
that, as a team, we will grasp every opportunity with the entrepreneurial flare
and tenacity that will take us to where we want to be.
ACCOUNTING POLICIES
The abridged financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS).
OTHER MATTERS
The annual report is expected to be released by no later than 15 June 2007 both
in electronic and printed form. An unqualified audit report is available for
inspection at the Company`s registered office.
DIVIDENDS
In accordance with the board`s desire to reinvest earnings, no dividend has
been declared for the financial period.
For and on behalf of the board
S ZULU GH GERBER
Chairman Chief Executive Officer
16 May 2007
REGISTERED OFFICE AND POSTAL ADDRESS
Santova House, 88 Mahatma Gandhi Road, Durban. PO Box 6148, Durban, 4000
TRANSFER SECRETARIES
Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street, Marshalltown, 2107
DESIGNATED ADVISORS
River Group
AUDITORS
Marwick & Company Inc.
EXECUTIVE DIRECTORS
SJ Chisholm (GFD), S Donner, GH Gerber (CEO), MF Impson , TR Mezher, R Singh
NON-EXECUTIVE DIRECTORS
S Zulu (Chairman), M Tembe
COMPANY SECRETARY
JA Lupton, ACIS
SANTOVA LOGISTICS LIMITED GROUP
Previously Spectrum Shipping Limited
REGISTRATION NUMBER 1998/018118/06
SHARE CODE SNV
ISIN ZAE000090650
www.santova.com
Date: 16/05/2007 13:07:01 Produced by the JSE SENS Department.
