| Mon 5 Nov 2007, 7:55 | | SVN - Santova Logistics Ltd - Group Interim Result |
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SNV
SNV
SVN - Santova Logistics Ltd - Group Interim Results For The Six Months
Ended 31 August 2007
Santova Logistics Ltd
(formerly Spectrum Shipping Ltd)
(Registration number 1998/018118/06)
Share code: SNV & ISIN: ZAE000090650)
Group Interim Results For The Six Months Ended 31 August 2007
GROUP INCOME STATEMENT
UNAUDITED UNAUDITED AUDITED
Six months ended Six months ended 14 months ended
31 August 2007 31 August 2006 28 February 2007
R`000 R`000 R`000
Turnover 54 688 16 867 77 395
Gross billings 924 416 339 617 1 451 862
Cost of billings (869 728) (322 750) (1 374 467)
Operating income 10 437 3 847 18 788
Depreciation (1 018) (493) (1 709)
Net finance costs (6 157) (1 558) (10 696)
Profit before taxation 3 262 1 796 6 383
Income tax expense (1 111) (488) (2 330)
Profit for the period 2 151 1 308 4 053
Attributable to:
Equity holders
of the parent 2 135 1 308 4 073
Minority interest 16 - (20)
SUPPLEMENTARY INFORMATION
Reconciliation
between earnings and
headline earnings
Profit attributable to
ordinary shareholders 2 135 1 308 4 073
Profit on sale
of fixed assets (48) (35) (158)
Taxation effects 14 10 46
Headline earnings 2 101 1 283 3 961
Shares in issue (000`s) 1 341 788 1 118 400 1 122 682
Shares in issue
(excluding treasury)
(000`s) 1 278 483 1 052 400 1 059 377
Performance per
ordinary share
Earnings per share
(cents) 0,17 0,16 0,40*
Headline earnings per
share (cents) 0,16 0,15 0,39*
Diluted earnings
per share (cents) 0,17 0,16 0,40*
Diluted headline
earnings per share
(cents) 0,16 0,15 0,39*
Net asset value
per share (cents) 9,39 8,98 9,17*
Net tangible
asset value per
share (cents) 3,98 3,79 3,77*
* Restated in terms of IAS 33.
GROUP BALANCE SHEET
UNAUDITED UNAUDITED AUDITED
31 August 2007 31 August 2006 28 February 2007
R`000 R`000 R`000
ASSETS
Non-current assets 79 524 73 114 77 362
Plant and equipment 9 686 7 547 8 408
Goodwill 66 386 63 025 65 731
Other intangible assets 418 338 405
Loans receivable 689 55 503
Deferred taxation 2 345 2 149 2 315
Current assets 276 839 317 465 296 029
Trade and other
receivables 262 387 290 154 279 085
Other current assets 10 686 - 7 506
Financial assets 22 - -
Cash and cash
equivalents 3 744 27 311 9 438
Total assets 356 363 390 579 373 391
EQUITY AND LIABILITIES
Total equity 120 002 73 506 76 457
Share capital
and premium 190 413 149 186 149 041
Accumulated loss (70 444) (75 680) (72 580)
Foreign currency
translation reserve 18 - (4)
Attributable to
equity holders
of the company 119 987 73 506 76 457
Minority interest 15 - -
Non-current
liabilities 3 849 42 571 44 462
Long-term borrowings 1 594 2 671 1 022
Long-term provisions 2 255 - 2 255
Amounts owing to
related parties - 39 900 41 185
Current liabilities 232 512 274 502 252 472
Trade and other
payables 113 168 125 004 99 518
Short-term borrowings
and overdraft 114 786 146 892 148 097
Current tax payable 1 002 46 278
Current portion
of long-term liabilities 1 329 - 1 434
Financial liability - - 25
Short-term provisions 2 227 2 560 3 120
Total equity and
liabilities 356 363 390 579 373 391
GROUP CASH FLOW STATEMENT
UNAUDITED UNAUDITED AUDITED
Six months ended Six months ended 14 months ended
31 August 2007 31 August 2006 28 February 2007
R`000 R`000 R`000
Cash generated by
operations before
working capital
changes 8 913 1 301 19 577
Movements in
working capital 26 029 (16 731) (18 052)
Cash generated
by/(utilised in)
operating activities 34 942 (15 430) 1 525
Net finance costs (6 157) (1 558) (10 696)
Net cash flows
from operating
activities 28 785 (16 988) (9 171)
Net cash flows
from investing
activities (1 065) (65 324) (66 067)
Net cash flows
from financing
activities (104) 545 (2 655)
Increase/(decrease)
in cash and cash
equivalents 27 616 (81 767) (77 893)
Cash and cash
equivalents at
beginning of the
period (138 658) (37 814) (60 765)
Cash and cash
equivalents at
end of the period (111 042) (119 581) (138 658)
GROUP 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 2006 849 106 842 -
Profit for the period - - -
Minority interest allocated against the
parent - - -
Issue of share capital 222 41 916 -
Foreign currency translation adjustment - - (4)
Minority interest acquired - - -
Treasury shares (12) (830) -
Employee share incentive scheme - 54 -
Balance at 28 February 2007 1 059 147 982 (4)
Profit for the period - - -
Reversal of prior period minority interest
allocated against the parent - - -
Employee share incentive scheme - 49 -
Foreign currency translation adjustment 22
Issue of share capital 219 41 104 -
Balance at 31 August 2007 1 278 189 135 18
Attributable to equity holders of the parent
Accumulated
loss Total
R`000 R`000
Balance at 1 January 2006 (76 652) 31 039
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 - (4)
Minority interest acquired - -
Treasury shares - (842)
Employee share incentive scheme - 54
Balance at 28 February 2007 (72 580) 76 457
Profit for the period 2 135 2 135
Reversal of prior period minority interest
allocated against the parent 1 1
Employee share incentive scheme - 49
Foreign currency translation adjustment - 22
Issue of share capital - 41 323
Balance at 31 August 2007 (70 444) 119 987
Minority Total
interest equity
R`000 R`000
Balance at 1 January 2006 - 31 039
Profit for the period (20) 4 053
Minority interest allocated against the parent 1 -
Issue of share capital - 42 138
Foreign currency translation adjustment - (4)
Minority interest acquired 19 19
Treasury shares - (842)
Employee share incentive scheme - 54
Balance at 28 February 2007 - 76 457
Profit for the period 16 2 151
Reversal of prior period minority interest
allocated against the parent (1) -
Employee share incentive scheme - 49
Foreign currency translation adjustment - 22
Issue of share capital - 41 323
Balance at 31 August 2007 15 120 002
COMMENTARY
OPERATIONAL REVIEW
Acknowledging the risks and consequential costs that accompany the integration
of most acquisitions, it is encouraging to announce that the integration of
the businesses acquired during 2006 has been successful. The extent of this
challenge can perhaps best be conceptualised by considering the fact that the
number of employees of the Group increased threefold from one year to the next
as a result of these strategic acquisitions.
Whilst the performance of the Group over this period has been encouraging, it
has unfortunately been contained by the South African authorities` decision to
impose import restrictions (quota imports) from 28 September 2006 until 31
December 2008 for a vast array of textile and clothing products originating
from China. The fact that the Group has an exposure to this industry has
resulted in reduced client import activity levels from China and consequently
diminished revenue streams. This factor, combined with the decision to cease
trading with clients with high risk profiles, has impacted negatively on the
earnings of the Group for the six months under review.
What has been impressive is the ability of Leading Edge Insurance Brokers
(Pty) Ltd ("Leading Edge") to leverage off the Santova infrastructure and
build a significant marine and general insurance business within a very short
period of time. Year-on-year premiums collected have increased by more than
50% and there are no less than ten proposals with clients, implying
substantial prospective increases in annual premium income.
The logistics business in Hong Kong has also had an extremely successful start
to the year. Effectively, operational only from mid-July last year (zero-
based), the business has achieved significant earnings growth in a relatively
short period. This is an indication of the opportunities within this economic
zone from where the Group expects to benefit significantly going forward.
In so far as the ability of the Group to truly differentiate itself is
concerned, the Optimised Supply Chain Active Resource suite of software
packages ("OSCAR") has been developed even further to support our client-
centric approach. The success of OSCAR has been confirmed by the extremely
favourable response by importers and exporters in China, Hong Kong and the
United Kingdom. Considering the critical role that information
technology plays in optimising the efficiency of the supply chain, the Group
will continuously invest in the research and development of this aspect of our
business.
FINANCIAL REVIEW
During 2006, we compiled the six-month period ended August 2006 interim
results to ensure that we would have reliable comparative figures to use as a
benchmark against these 2007 results. The 2006 results exclude Impson
Logistics (Pty) Ltd ("Impson") and Leading Edge in the income statement, but
include the take-on balance sheet of Impson as at 31 August 2006.
The margin that the Group makes off our gross billings has increased by 16,5%
(net of finance costs) since the last period, which shows the results of the
change of business model coming through. This will be further enhanced as
other revenue streams come online during the remainder of the year.
The increase in net finance costs can be accounted for by two factors.
Firstly, funding costs for certain clients were not linked to the prime
interest rate. With the prime rate increasing from 11,5% to 13,5% within a
relatively short period of time, the Group had to partially absorb these
interest rate increases. The second factor resides in the cost of integrating
the two businesses. Here the debtors book was not managed as well as it should
have been and late payments by clients resulted in the Group having to absorb
the overdue interest charge not recoverable from clients. Group policy has now
been established to ensure that all clients` accounts are linked to prime,
whilst the debtors book has now been fully integrated in "one channel" under
strong management and controls.
Earnings per share and headline earnings per share are up by 6,5% and 6,9%
respectively period on period, after taking the full cost of the Durban office
move into account.
The cash and cash equivalents have improved strongly (7%) when one considers
the growth in gross billings of 172%, which has been funded by the Group`s
invoice discounting facility with Nedbank. Further emphasis has been placed on
all elements of debt collection within the Group ensuring that we turnaround
cash promptly, reducing trade and other receivables and payables balances at
period end even with the increased trade.
OUTLOOK FOR THE NEXT SIX MONTHS
In the period ahead we expect to optimise costs and service levels further,
ensuring that the structure is running optimally for the new business that is
to be introduced.
Now that the process of integrating the new acquisitions is behind us, the
focus for the next six months will be on new business development and quality
new revenue generation. Furthermore, and perhaps more importantly, the Group
will now be in a position to allocate greater resources to the development of
our United Kingdom and Hong Kong businesses, which are ideally placed to
enhance the earnings of the Group.
BASIS OF PREPARATION
The condensed interim financial statements have been prepared in accordance
with International Accounting Standard 34, Interim Financial Reporting, and
should be read in conjunction with the 28 February 2007 financial statements.
The accounting policies adopted and methods of computation are consistent with
those applied in the financial statements for the year ended 28 February 2007,
and are applied consistently throughout the Group. The Group has adopted all
of the new and revised Standards and Interpretations issued by the
International Financial Reporting Interpretations Committee of the
International Accounting Standards Board that are relevant to its operations
and effective as at 1 March 2007. International Financial Reporting Standard
7, Financial Instruments: Disclosure, effective for annual periods beginning
on or after 1 January 2007 will be addressed in the 2008 annual financial
statements.
DIVIDENDS
In line with the company`s policy, no interim dividend has been declared.
For and on behalf of the board
S Zulu GH Gerber
Chairman Chief Executive Officer
5 November 2007
REGISTERED OFFICE AND POSTAL ADDRESS
Santova House, 88 Mahatma Gandhi Road, Durban, 4001
PO Box 6148, Durban, 4000
TRANSFER SECRETARIES
Computershare Investor Services 2004 (Pty) Ltd, 70 Marshall Street,
Marshalltown, 2107
AUDITORS
Deloitte & Touche
DESIGNATED ADVISOR
River Group
EXECUTIVE DIRECTORS
SJ Chisholm (GFD), S Donner, GH Gerber (CEO), MF Impson, TR Mezher, R Singh
INDEPENDENT NON-EXECUTIVE DIRECTORS
S Zulu (Chairman), M Tembe
COMPANY SECRETARY
J A Lupton, ACIS
REGISTRATION NUMBER 1998/018118/06
SHARE CODE SNV
ISIN ZAE000090650
WEB SITE www.santova.com
Date: 05/11/2007 07:55:38 Produced by the JSE SENS Department.
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