| Wed 24 Nov 2010, 7:30 | | SNV - Santova Logistics - Unaudited group interim results for the six months |
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SNV
SNV - Santova Logistics - Unaudited group interim results for the six months
ended 31 August 2010
SANTOVA LOGISTICS LIMITED
REGISTRATION NUMBER: 1998/018118/06
SHARE CODE: SNV
ISIN: ZAE000090650
Unaudited GROUP INTERIM RESULTS for the six months ended 31 August 2010
STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 August 31 August 28 February
2010 2009 2010
R`000 R`000 R`000
Turnover 70 759 45 888 98 038
Gross billings 995 487 677 233 1 493 371
Cost of billings (924 728) (631 345) (1 395 333)
Other income 4 921 1 091 1 924
Depreciation and amortisation (1 906) (1 109) (2 669)
Administrative expenses (57 382) (41 098) (84 875)
Operating income 16 392 4 772 12 418
Interest received 1 120 2 146 3 648
Finance costs (5 166) (5 247) (9 213)
Profit before taxation 12 346 1 671 6 853
Income tax expense (2 758) (1 027) (2 666)
Profit for the period/year 9 588 644 4 187
Attributable to:
Equity holders of the parent 9 313 463 3 748
Minority interest 275 181 439
Other comprehensive income
Exchange differences from
translating foreign operations (954) (418) 619
Total comprehensive income for
the period/year 8 634 226 4 806
Attributable to:
Equity holders of the parent 8 359 45 4 367
Minority interest 275 181 439
Basic earnings per share (cents) 0,72 0,04 0,30
Diluted earnings per share (cents) 0,69 0,04 0,29
SUPPLEMENTARY INFORMATION
Reconciliation between earnings and
headline earnings
Profit attributable to equity
holders of the parent 9 313 463 3 748
Net loss on disposals of plant
and equipment 48 69 67
Negative goodwill arising from
purchase of subsidiary (3 869) - -
Profit on disposal of investment - (18) -
Finance cost of financial liability - 466 -
Taxation effects (13) (150) (19)
Headline earnings 5 479 830 3 796
Shares in issue (000`s) 1 376 127 1 347 384 1 256 049
Weighted average number of shares
(000`s) 1 301 369 1 201 190 1 231 457
Diluted number of shares (000`s) 1 344 193 1 240 911 1 291 038
Shares for net asset value
calculation (000`s) 1 403 828 1 262 056 1 216 328
Performance per ordinary share
Basic headline earnings per share
(cents) 0,42 0,07 0,31
Diluted headline earnings per
share (cents) 0,41 0,07 0,29
Net asset value per share (cents) 6,73 6,35 6,60
Tangible net asset value per
share (cents) 2,41 3,67 3,35
CONDENSED STATEMENT OF CASH FLOW
Cash generated from operations
before working capital changes 14 479 5 958 14 605
Changes in working capital (34 317) (191) 31 096
Cash (utilised)/generated from
operations (19 838) 5 767 45 701
Interest received 1 120 2 146 3 634
Finance costs (4 393) (4 782) (8 430)
Taxation paid (3 047) (461) (1 423)
Net cash flows from operating
activities (26 158) 2 670 39 482
Cash generated from other investing
activities (514) (597) (2 548)
Cash inflow/(outflows) from
acquisition of subsidiaries 1 230 (5 765) (8 428)
Cash inflow from disposal of investment - 2 976 2 975
Net cash flows from investing activities 716 (3 386) (8 001)
Net cash flows from financing
activities 39 346 996 (34 121)
Net increase/(decrease) in cash
and cash equivalents 13 904 280 (2 640)
Effects of exchange rate changes
on cash and cash equivalents (806) (151) 380
Cash and cash equivalents at
beginning of period/year 4 322 6 582 6 582
Cash and cash equivalents at end
of period/year 17 420 6 711 4 322
STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
31 August 31 August 28 February
2010 2009 2010
R`000 R`000 R`000
ASSETS
Non-current assets 75 481 46 082 52 297
Plant and equipment 9 172 8 529 8 942
Intangible assets 60 749 33 783 39 527
Financial asset 578 164 579
Deferred taxation 4 982 3 606 3 249
Current assets 320 042 218 116 188 465
Trade receivables 284 593 199 068 176 576
Other receivables 17 632 7 190 6 911
Current tax receivable 207 687 622
Amounts owing from related parties 190 4 460 34
Cash and cash equivalents 17 420 6 711 4 322
Total assets 395 523 264 198 240 762
EQUITY AND LIABILITIES
Capital and reserves 94 536 80 126 80 277
Share capital and premium 151 204 150 008 145 579
Contingency reserve 154 - 132
Foreign currency translation reserve 194 111 1 148
Accumulated loss (58 342) (70 786) (67 633)
Attributable to equity holders of the
parent 93 210 79 333 79 226
Minority interest 1 326 793 1 051
Non-current liabilities 6 693 5 627 6 772
Interest-bearing borrowings 508 320 416
Long-term provision 2 136 2 252 2 136
Financial liabilities 4 034 3 055 4 206
Deferred taxation 15 - 14
Current liabilities 294 294 178 445 153 713
Trade and other payables 152 684 75 294 84 458
Current tax payable 3 054 912 796
Amounts owing to related parties 77 102 97
Current portion of interest-bearing
borrowings 94 466 321
Financial liability 6 009 1 538 3 485
Short-term borrowings and overdraft 126 529 97 903 62 591
Short-term provisions 5 847 2 230 1 965
Total equity and liabilities 395 523 264 198 240 762
CONDENSED SEGMENTAL ANALYSIS
South Africa Hong Kong Australia
GEOGRAPHICAL SEGMENTS R`000 R`000 R`000
31 August 2010
Turnover (external) 60 876 1 285 5 449
Operating income/(loss) 14 503 272 1 438
Interest received 1 088 21 11
Finance costs (4 997) - (35)
Income tax expense (2 248) (61) (449)
Net profit/(loss) 8 346 232 965
Segment assets 308 797 4 977 11 836
Intangible assets 60 247 - 497
Deferred taxation 4 577 - 405
Total assets 373 621 4 977 12 738
Total liabilities 284 515 2 925 7 464
Depreciation and amortisation 1 523 8 338
Capital expenditure 560 42 228
31 August 2009
Turnover (external) 39 160 1 134 3 866
Operating income/(loss) 3 946 257 956
Interest received 2 125 8 13
Finance costs (4 802) - (370)
Income tax expense (626) (33) (368)
Net profit/(loss) 643 232 231
Segment assets 204 261 2 743 17 616
Intangible assets 33 783 - -
Deferred taxation 3 469 - 137
Total assets 241 513 2 743 17 753
Total liabilities 167 878 1 133 12 035
Depreciation and amortisation 979 11 92
Capital expenditure 1 324 20 72
Europe* Group
GEOGRAPHICAL SEGMENTS R`000 R`000
31 August 2010
Turnover (external) 3 149 70 759
Operating income/(loss) 179 16 392
Interest received - 1 120
Finance costs (134) (5 166)
Income tax expense - (2 758)
Net profit/(loss) 45 9 588
Segment assets 4 182 329 792
Intangible assets 5 60 749
Deferred taxation - 4 982
Total assets 4 187 395 523
Total liabilities 6 083 300 987
Depreciation and amortisation 37 1 906
Capital expenditure 78 908
31 August 2009
Turnover (external) 1 728 45 888
Operating income/(loss) (387) 4 772
Interest received - 2 146
Finance costs (75) (5 247)
Income tax expense - (1 027)
Net profit/(loss) (462) 644
Segment assets 2 189 226 809
Intangible assets - 33 783
Deferred taxation - 3 606
Total assets 2 189 264 198
Total liabilities 3 026 184 072
Depreciation and amortisation 27 1 109
Capital expenditure - 1 416
Freight forwarding
and clearing Insurance Group
BUSINESS SEGMENTS R`000 R`000 R`000
31 August 2010
Net profit 9 375 213 9 588
Total assets 390 640 4 883 395 523
Total liabilities 298 658 2 329 300 987
31 August 2009
Net profit 618 26 644
Total assets 262 014 2 184 264 198
Total liabilities 183 229 843 184 072
* Includes the Netherlands and United Kingdom.
STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders of the parent
Share Share Treasury Treasury
capital premium share capital share premium
R`000 R`000 R`000 R`000
Balances at 28
February 2009 1 297 151 840 (45) (4 506)
Total comprehensive income - - - -
Reversal of minority
interest allocated
against parent - - - -
Issue of share capital 61 4 835 - -
Repurchase of shares in
terms of share commitments(11) (1 106) - -
Minority interest arising
from 25,0% sale of
subsidiary - - - -
Balances at 31 August
2009 1 347 155 569 (45) (4 506)
Total comprehensive income - - - -
Transfer of contingency
reserve - - - -
Repurchase of unallocated
shares in Share Trust (45) (4 506) 45 4 506
Repurchase of shares
previously allocated
to beneficiaries in
Share Trust (46) (4 383) - -
Balances at 28
February 2010 1 256 146 680 - -
Total comprehensive income - - - -
Transfer of contingency
reserve - - - -
Share commitments arising
on acquisition of subsidiary - - - -
Issue of shares in
terms of share commitments 131 3 806 - -
Repurchase of shares in
terms of share commitments(11) (1 106) - -
Balances at 31 August
2010 1 376 149 380 - -
Attributable to equity holders of the parent
Foreign
currency
Share Other translation Accumulated
commitments reserves reserve loss
R`000 R`000 R`000 R`000
Balances at 28
February 2009 (3 474) - 529 (71 275)
Total comprehensive income - - (418) 463
Reversal of minority interest
allocated against parent - - - 26
Issue of share capital - - - -
Repurchase of shares in
terms of share commitments 1 117 - - -
Minority interest arising
from 25,0% sale of subsidiary - - - -
Balances at 31 August 2009(2 357) - 111 (70 786)
Total comprehensive income - - 1 037 3 285
Transfer of contingency reserve - 132 - (132)
Repurchase of unallocated
shares in Share Trust - - - -
Repurchase of shares previously
allocated to beneficiaries in
Share Trust - - - -
Balances at 28
February 2010 (2 357) 132 1 148 (67 633)
Total comprehensive income - - (954) 9 313
Transfer of contingency reserve - 22 - (22)
Share commitments
arising on acquisition
of subsidiary 5 625 - - -
Issue of shares in terms
of share commitments (3 937) - - -
Repurchase of shares in
terms of share commitments 1 117 - - -
Balances at 31 August 2010 448 154 194 (58 342)
Minority Total
Total interest equity
R`000 R`000 R`000
Balances at 28 February 2009 74 366 - 74 366
Total comprehensive income 45 181 226
Reversal of minority interest allocated
against parent 26 (26) -
Issue of share capital 4 896 - 4 896
Repurchase of shares in terms of
share commitments - - -
Minority interest arising from 25,0% sale
of subsidiary - 638 638
Balances at 31 August 2009 79 333 793 80 126
Total comprehensive income 4 322 258 4 580
Transfer of contingency reserve - - -
Repurchase of unallocated shares in Share Trust - - -
Repurchase of shares previously allocated
to beneficiaries in Share Trust (4 429) - (4 429)
Balances at 28 February 2010 79 226 1 051 80 277
Total comprehensive income 8 359 275 8 634
Transfer of contingency reserve - - -
Share commitments arising on acquisition
of subsidiary 5 625 - 5 625
Issue of shares in terms of share commitments - - -
Repurchase of shares in terms of share commitments - - -
Balances at 31 August 2010 93 210 1 326 94 536
COMMENTARY
GROUP PROFILE
Santova Logistics Limited ("Company"/"Santova Logistics") and its subsidiary
companies ("Santova"/"Group"), operating out of South Africa, Australia, China,
Hong Kong, the Netherlands and the United Kingdom, provide integrated "end-to-
end" logistics solutions for importers and exporters.
OPERATIONAL REVIEW
Santova has effectively managed and capitalised on what are considered difficult
economic times for the industry as a whole - internationally. The decisiveness
with which our strategic principles have been effectively institutionalised
during this difficult period has resulted in an impressive performance by the
Group. This performance is despite the strength of the Rand, which has had a
material effect by limiting the true potential earnings of the Group during the
period under review. What has been encouraging is that all offices and business
units internationally have contributed to this impressive performance.
In comparison to the first six month period of the previous financial year,
headline earnings per share have increased from 0,07 to 0,42 cent per share, an
increase of 509,3%. Furthermore, what is significant is the substantial
improvement in the trading margin (operating income over turnover) of the Group
which has increased from 10,4% to 23,2%, an increase of 122,7%. Improving the
trading margins of the Group has been and still is a strategic focal point for
the Group going forward. The improved performance is consistent with our
strategy and has been achieved through organic growth, strategic acquisition and
improved operational efficiencies within the Group.
Insofar as organic growth is concerned, the Group has effectively embraced the
slow-growth economic environment and focused on supply chain solutions that
effectively result in the ultimate enhancement of the competitive advantage of
our client base. Our unique suite of supply chain technology software and
systems ("OSCAR") have enabled our clients to better manage the supply chain on
a real-time basis, consequently ensuring greater efficiencies, synchronisation
and improved cash flows. Hence the tendency for the market to embrace such
services has been more prevalent, thereby assisting the Group in its endeavours
to acquire new clients and business. In essence, companies are opting to be
better placed to realise the measureable value of an effective end-to-end supply
chain logistics model.
Another contributing factor with regard to the improved results is undoubtedly
the fact that trading conditions have been considerably better in recent months
than they were for the same period last year, and this has resulted in greater
levels of activity and improved revenues.
The acquisition of Aviocean (Pty) Ltd ("Aviocean"), effective 1 March 2010, has
contributed significantly to the performance of the Group over this period.
Aviocean is a highly successful logistics business and brings with it the
infrastructure, skills and expertise that have assisted the Group in developing
its business further.
The operational efficiencies within the Group have been significantly advanced.
There has been effective integration, re-engineering and at the same time the
elimination of any duplication in infrastructure, systems, physical resources
and workflow processes. In fact, the very nature of OSCAR`s open architectural
design has allowed our international offices, agents and clients the visibility
needed to manage the process collectively and effectively. The ability of these
systems to generate reports and analyse workflow processes and output has also
enabled participants in the supply chain to immediately identify and address any
inefficiencies that may prevail, allowing the synergies within the broader group
of companies to be realised.
Finally, the benefits of economies of scale as a result of an increase in
critical mass have also improved the cost efficiency of the Group. This applies
particularly to freight volumes (sea, air, road and rail), marine insurance and
warehousing facilities. By expediting the collaboration between business units
and throughout the Group, the Group`s growth and profitability has certainly
been fast-tracked.
FINANCIAL REVIEW
Overview of 2010 performance
Santova has generated a profit for the period of R9 587 885, resulting in
earnings per share of 0,72 cent and headline earnings per share of 0,42 cent,
despite the difficult trading environment.
Operationally, excluding the negative goodwill from the Aviocean acquisition,
there has been an improvement in operating income of 162,4%, due in the main to
the 54,2% increase in turnover, improved efficiencies in controlling our
expenses and greater buying power. This has resulted in a movement of net margin
(profit before taxation over turnover) from 3,6% to 12,0%, a 228,9% improvement
on the last period. Profit for the period, excluding negative goodwill, amounts
to R5 719 392 up from last period`s R644 149, a 787,9% improvement. The low
effective income tax rate of 22,3% for the current period is largely due to the
negative goodwill figure recognised in our profits from the acquisition of
subsidiary referred to below, which is an IFRS3 adjustment and not subject to
taxation.
We have managed to maintain our balance sheet strength through these difficult
times by ensuring strict compliance with our provisioning policies, specifically
our doubtful debt provisioning policy. Net asset value per share increased by
6,1% to 6,73 cents, with the 34,5% decrease in tangible net asset value per
share to 2,41 cents, predominantly due to the goodwill acquired in the Aviocean
acquisition referred to below.
With the increase in trading activity, compared to 31 August 2009, one can see
the resultant increase in cash utilisation by our operations over this period.
The cash utilised by operations during this period was sourced from our various
invoice discounting facilities and profits retained by the Group, with a
resultant increase in cash and cash equivalents for the period. The Group is
trading well within our long and short-term financing facilities afforded to us
by our respective bankers.
Acquisition of subsidiary
On 1 March 2010, the Group acquired the entire issued share capital of Aviocean,
a South African registered company specialising in customs brokerage, trade
facilitation and international freight forwarding and clearing. The acquisition
was concluded for a purchase consideration of R20 625 000. The purchase
consideration consists of R10 500 000 cash paid on 19 May 2010; R3 937 500 from
the issue of 131 250 000 Santova Logistics ordinary shares on 9 June 2010;
contingent considerations of R2 000 000 in cash and R750 000 from the issue of
25 000 000 Santova Logistics ordinary shares on achieving the first profit
warranty at the end of the 28 February 2011 financial year; and contingent
considerations of R2 500 000 in cash and R937 500 from the issue of 31 250 000
Santova Logistics ordinary shares on achieving the second profit warrant at the
end of the 28 February 2012 financial year.
The fair value of the purchase consideration at the acquisition date was R19 952
529, computed using a discount rate of 9,5%. The fair value of the assets
acquired amounted to R23 821 022, resulting in negative goodwill of R3 868 493
at acquisition. The acquisition gives the Group a greater presence in Gauteng,
South Africa.
Period under review
On 31 August 2010, the Company repurchased a further 11 171 520 shares from the
Camilla Coleman Trust in terms of the repurchase agreement approved by
shareholders on 23 September 2008; 28 549 440 shares remain outstanding at
period end. On 9 June 2010, 131 250 000 shares were issued in terms of the share
sale contract referred to in the acquisition of subsidiary above.
Subsequent events
There have been no material subsequent events since 31 August 2010 that have not
been referred to elsewhere in this report.
OUTLOOK FOR THE NEXT SIX MONTHS
Whilst we appreciate our progress and remain cognisant of the uncertain economic
climate that prevails, we are confident of sustainable growth and profitability
going forward. We believe this will be achieved through an intense continued
focus on our core competencies and strategic initiatives that to date have
ensured such progress.
BASIS OF PREPARATION
The unaudited condensed interim financial statements have been prepared using
accounting policies that comply with International Financial Reporting
Standards, as issued by the International Accounting Standards Board ("IASB"),
and should be read in conjunction with the 28 February 2010 annual 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 2010 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 Interpretation Committee of the IASB that are
relevant to its operations and effective as at 1 March 2010.
These Group interim results comply with International Accounting Standard 34 -
Interim Financial Reporting, Schedule 4 of the South African Companies Act,
1973, and the disclosure requirements of the JSE Listings Requirements.
DIVIDENDS
In line with the Company`s policy, no dividend has been declared for the
period.
ACKNOWLEDGEMENTS
The board would like to express its appreciation to all management and staff for
their efforts during the period.
For and on behalf of the board
GH Gerber SJ Chisholm
Chief Executive Officer Group Financial Director
24 November 2010
WEBSITE: www.santova.com
REGISTERED OFFICE AND POSTAL ADDRESS Santova House, 88 Mahatma Gandhi Road,
Durban, 4001; PO Box 6148, Durban, 4000
EXECUTIVE DIRECTORS GH Gerber (CEO), SJ Chisholm (GFD), MF Impson, GM Knight
NON-EXECUTIVE DIRECTORS ESC Garner (Chairman)*, WA Lombard*, S Donner
*Independent
TRANSFER SECRETARIES Computershare Investor Services (Pty) Limited,
70 Marshall Street, Marshalltown, 2107
COMPANY SECRETARY JA Lupton, FCIS
DESIGNATED AND CORPORATE ADVISORS River Group
AUDITORS Deloitte & Touche
Date: 24/11/2010 07:30:00 Produced by the JSE SENS Department.
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