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SNV
SNV
SNV - Santova Limited - Audited abridged group results for the year ended 29
February 2012
SANTOVA LIMITED
(formerly Santova Logistics Limited)
Registration number 1998/018118/06
Share code: SNV
ISIN: ZAE000159711
AUDITED ABRIDGED GROUP RESULTS
for the year ended 29 February 2012
- 50,1% increase in headline earnings per share
- 49,5% increase in tangible net asset value per share
- 27,5% increase in gross billings
- 29,4% increase in profit before tax
- 19,8% return on average ordinary shareholder`s funds
Statement of financial position
2012 2011
R`000 R`000
ASSETS
Non-current assets 73 171 72 422
Plant and equipment 8 365 8 540
Intangible assets 60 356 59 990
Financial asset 522 458
Deferred taxation 3 928 3 434
Current assets 345 208 275 454
Trade receivables 320 311 248 820
Other receivables 11 046 11 789
Current tax receivable 304 784
Amounts owing from related parties 761 573
Cash and cash equivalents 12 786 13 488
Total assets 418 379 347 876
EQUITY AND LIABILITIES
Capital and reserves 123 699 103 415
Stated capital 145 195 151 204
Contingency reserve 210 181
Foreign currency translation reserve 3 000 1 068
Accumulated loss (27 053) (50 718)
Attributable to equity holders of the parent 121 352 101 735
Minority interest 2 347 1 680
Non-current liabilities 5 023 5 761
Interest-bearing borrowings 164 318
Long-term provision 1 976 2 013
Financial liabilities 2 882 3 429
Deferred taxation 1 1
Current liabilities 289 657 238 700
Trade and other payables 139 002 116 811
Current tax payable 253 593
Current portion of interest-bearing borrowings 157 151
Amounts owing to related parties 246 157
Financial liabilities 2 596 5 947
Short-term borrowings and overdrafts 138 252 108 991
Short-term provisions 9 151 6 050
Total equity and liabilities 418 379 347 876
Statement of comprehensive income
2012 2011
R`000 R`000
Turnover 167 107 144 230
Gross billings 2 605 858 2 044 439
Cost of billings (2 438 751) (1 900 209)
Other income 3 910 6 365
Depreciation and amortisation (3 776) (3 960)
Administrative expenses (127 816) (114 934)
Operating profit 39 425 31 701
Interest received 1 328 2 265
Finance costs (10 690) (10 750)
Profit before taxation 30 063 23 216
Income tax expense (7 564) (5 891)
Profit for the year 22 499 17 325
Attributable to:
Equity holders of the parent 22 079 16 964
Minority interest 420 361
Other comprehensive income
Exchange differences arising from
translation of foreign operations 2 179 188
Total comprehensive income 24 678 17 513
Attributable to:
Equity holders of the parent 24 011 16 884
Minority interest 667 629
Basic earnings per share (cents) 15,82 12,55*
Diluted basic earnings per share (cents) 15,82 12,29*
Supplementary information
2012 2011
R`000 R`000
Reconciliation between earnings and
headline earnings
Profit attributable to equity holders
of the parent 22 079 16 964
Impairment of goodwill - 1 152
Net loss on disposals of plant and equipment 289 215
Negative goodwill arising from
purchase of subsidiary - (3 868)
Impairment of loan 41 -
Taxation effects (91) (60)
Headline earnings 22 318 14 403
Shares in issue (000`s) 134 277 137 613*
Weighted average number of shares (000`s) 139 547 135 194*
Diluted number of shares (000`s) 139 547 138 049*
Shares for net asset value calculation (000`s) 134 277 137 613*
Performance per ordinary share
Headline earnings per share (cents) 15,99 10,65*
Diluted headline earnings per share (cents) 15,99 10,43*
Net asset value per share (cents) 92,12 75,15*
Tangible net asset value per share (cents) 47,17 31,56*
Statement of changes in equity
ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Foreign
currency
Stated Share Contingency translation
capital commitments reserve reserve
R`000 R`000 R`000 R`000
Balances at 28
February 2010 147 936 (2 357) 132 1 148
Total comprehensive
income - - - (80)
Transfer of
contingency reserve - - 49 -
Share commitments
arising on acquisition
of subsidiary - 5 625 - -
Issue of shares in
terms of share
commitments 3 938 (3 938) - -
Repurchase of shares
in terms of share
commitments (1 117) 1 117 - -
Balances at 28
February 2011 150 757 447 181 1 068
Total comprehensive
income - - - 1 932
Transfer of
contingency reserve - - 29 -
Issue of shares in
terms of share
commitments 750 (750) - -
Repurchase of shares
in terms of share
commitments (2 855) 2 855 - -
Repurchase of shares
in terms of odd-lot
and specific offer (281) - - -
Share commitments
arising on grant of
put options - (3 642) - -
Repurchase of shares
in terms of put
options exercised (2 700) 2 700 - -
Transfer of residual
amounts arising from
completed share
commitments - (1 615) - -
Recognition of costs
directly related to
share repurchases
in equity (471) - - -
Balances at 29
February 2012 145 200 (5) 210 3 000
ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Accumulated Minority Total
loss Total interest equity
R`000 R`000 R`000 R`000
Balances at 28 February 2010 (67 633) 79 226 1 051 80 277
Total comprehensive income 16 964 16 884 629 17 513
Transfer of contingency reserve (49) - - -
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 28 February 2011 (50 718) 101 735 1 680 103 415
Total comprehensive income 22 079 24 011 667 24 678
Transfer of contingency reserve (29) - - -
Issue of shares in terms of
share commitments - - - -
Repurchase of shares in terms
of share commitments - - - -
Repurchase of shares in terms
of odd-lot and specific offers - (281) - (281)
Share commitments arising on
grant of put options - (3 642) - (3 642)
Repurchase of shares in terms
of put options exercised - - - -
Transfer of residual amounts
arising from completed share
commitments 1 615 - - -
Recognition of costs directly
related to share repurchases
in equity - (471) - (471)
Balances at 29 February 2012 (27 053) 121 352 2 347 123 699
Statement of cash flows
2012 2011
R`000 R`000
OPERATING ACTIVITIES
Cash (utilised in)/generated from operations (1 973) 4 455
Interest received 1 328 2 265
Finance costs (10 319) (9 897)
Taxation paid (7 918) (7 671)
Net cash flows from operating activities (18 882) (10 848)
INVESTING ACTIVITIES
Plant and equipment acquired (2 238) (1 588)
Intangible assets acquired and developed (3 222) (1 750)
Proceeds on disposals of plant and equipment 2 424 738
Increase in amounts owing from related parties (188) (223)
Net cash flows on acquisition of subsidiaries (2 426) (67)
Net cash flows from investing activities (5 650) (2 890)
FINANCING ACTIVITIES
Repurchase of share capital (6 307) (1 117)
Borrowings raised 25 953 23 945
Increase in amounts owing to related parties 89 60
Net cash flows from financing activities 19 735 22 888
Net (decrease)/increase in cash and cash equivalents (4 797) 9 150
Effects of exchange rate changes on cash and cash
equivalents 935 16
Cash and cash equivalents at beginning of year 13 488 4 322
Cash and cash equivalents at end of year 9 626 13 488
Segmental analysis
South Africa Australia Europe
R`000 R`000 R`000
GEOGRAPHICAL SEGMENTS
29 February 2012
Gross billings 2 440 843 113 729 44 725
Turnover 138 300 13 429 11 907
Operating income 34 934 2 352 1 636
Interest received 1 253 2 25
Finance costs (10 093) (85) (512)
Income tax (expense)/credit (7 313) (594) 417
Profit for the year 18 781 1 675 1 566
Segment assets 322 135 14 314 11 886
Intangible assets 60 353 - 3
Deferred taxation 3 150 355 423
Total assets 385 638 14 669 12 312
Total liabilities 273 082 5 852 12 974
Depreciation and amortisation 3 072 565 77
Capital expenditure 4 812 335 185
28 February 2011
Gross billings 1 910 424 92 142 34 729
Turnover 123 679 10 861 6 736
Operating income 28 901 2 321 189
Interest received 2 206 15 1
Finance costs (10 341) (95) (314)
Income tax (expense)/credit (5 328) (818) -
Profit/(loss) for the year 15 438 1 423 (124)
Segment assets 261 057 11 902 6 112
Intangible assets 59 718 268 4
Deferred taxation 3 192 242 -
Total assets 323 967 12 412 6 116
Total liabilities 226 881 6 255 8 246
Depreciation and amortisation 3 145 717 81
Capital expenditure 3 208 378 80
Hong Kong Group
R`000 R`000
GEOGRAPHICAL SEGMENTS
29 February 2012
Gross billings 6 561 2 605 858
Turnover 3 471 167 107
Operating income 503 39 425
Interest received 48 1 328
Finance costs - (10 690)
Income tax (expense)/credit (74) (7 564)
Profit for the year 477 22 499
Segment assets 5 760 354 095
Intangible assets - 60 356
Deferred taxation - 3 928
Total assets 5 760 418 379
Total liabilities 2 772 294 680
Depreciation and amortisation 62 3 776
Capital expenditure 128 5 460
28 February 2011
Gross billings 7 144 2 044 439
Turnover 2 954 144 230
Operating income 290 31 701
Interest received 43 2 265
Finance costs - (10 750)
Income tax (expense)/credit 255 (5 891)
Profit/(loss) for the year 588 17 325
Segment assets 5 381 284 452
Intangible assets - 59 990
Deferred taxation - 3 434
Total assets 5 381 347 876
Total liabilities 3 079 244 461
Depreciation and amortisation 17 3 960
Capital expenditure 53 3 719
Freight
forwarding
and clearing Insurance Group
BUSINESS SEGMENT R`000 R`000 R`000
29 February 2012
Profit for the year 21 523 976 22 499
Total assets 413 547 4 832 418 379
Total liabilities 292 399 2 281 294 680
28 February 2011
Profit/(loss) for the year 18 090 (765) 17 325
Total assets 344 333 3 543 347 876
Total liabilities 242 493 1 968 244 461
* During the current year, the Group consolidated its shares on a 10 to 1
basis. In order to maintain comparability, these amounts have been adjusted as
if the share consolidation occurred at the beginning of the prior financial
year.
Commentary
GROUP PROFILE
Santova Limited (formerly Santova Logistics Limited) ("the Company") and its
subsidiary companies ("Santova" or "the Group"), operating out of South
Africa, Australia, Europe, United Kingdom and Hong Kong, provide integrated
"end-to-end" logistics solutions for importers/exporters and consumers
worldwide.
BUSINESS REVIEW
The Board is pleased to report that once again the year under review has been
characterised by an impressive set of results. The average annual growth of
67,6% in profit over the last four years has been achieved despite the
prevailing difficult global economic trading conditions during that period. It
is important to highlight the fact that this growth has been largely organic
in nature, particularly in the 2012 financial year. Our unrelenting focus on
an effective business model, internal operational efficiencies and the
successful acquisition of quality new clients has ensured sustainable earnings
growth over this period.
South Africa
In the face of the Eurozone crisis and weakening trade, our major operating
entities in South Africa (Impson Logistics and Santova Logistics SA) have
continued to deliver solid results. Year-on-year the operating profit from
these entities is up 36,9%, an increase from R23,3 million to R31,9 million.
Once again it is the combined result of an effective campaign of quality new
client acquisition, allied with streamlined business processes and systems,
which have resulted in improved operating margins. As long as our operations
are at the forefront of assisting clients to deal with demand volatility,
increased supply chain complexity, and the costs and risks that accompany
global supply chains, they will continue to entrench further the past
successes going forward.
Our short-term insurance business, Santova Financial Services, has effectively
navigated its way through a highly regulated and competitive market. With
regulatory reform a work in progress, compliance now demands cost and has come
at a time when many insurers face significant market pressures in the form of
a soft market cycle, dampening pricing and reducing premium volume growth.
This, together with the arrival of virtual (online) consumers, has resulted in
the industry as a whole experiencing a period of unparalleled change which
should result in a transformation of current operating models. For Santova
Financial Services, this era presents an opportunity as we could witness
disintermediation of some of the smaller short-term insurance brokers.
During the course of the year, our insurance business has undergone
improvements to core operations (specifically claims management, underwriting
and policy administration). This has resulted in greater operational
efficiency, reduced costs and increased revenue, the benefits of which have
clearly had a positive impact on earnings during the second six-month period
of the financial year. We are anticipating that this trend will continue going
forward.
Europe and United Kingdom
In spite of the impact of the ongoing European debt crisis, our operations in
both the United Kingdom and the Netherlands have made significant progress in
entrenching themselves further in the domestic market. Our decision to invest
further in these regions by establishing additional offices at both Heathrow
and Schiphol Airports has resulted in improved capability, and in particular,
enhanced client service levels.
By having a presence at these strategic locations we are able to actively
engage in the management, co-ordination of and collaboration with all
participants in the supply chain. This includes `hands-on` facilitation of
supply and demand management within and across companies and countries that we
are either associated with or within which we have a physical presence.
Furthermore, the increased impetus on the need for more sophisticated `hands-
on` services, such as international trade rules compliance and multi-modal
transport in Europe, entrenches further the added value that these operations
have to offer our clients.
Netherlands
What is encouraging is the fact that year-on-year turnover in Santova B.V.
(Netherlands) has increased by 100%, from R2,77 million to R5,54 million,
constituting significant growth in operational performance. What has curtailed
earnings in this region is the additional investment in infrastructure
necessitated by our decision to `bulk up` in anticipation of additional new
business in the year ahead.
United Kingdom
No less impressive are our operations in the United Kingdom. These operations
have emerged from a prolonged four year recessionary environment in an
admirable fashion. Turnover for the year is up to R6,37 million (2011: R3,97
million), an increase of 60,5%; this being achieved in the main through the
successful integration of an extensive quality new client base which we are
confident will be maintained going forward.
Australia and Asia
Australia
Despite one of the worst periods for the Australian retail sector in a number
of decades, our Sydney based operation has managed to retain its status as a
meaningful contributor to Group earnings. As a result of a focused campaign of
business reorganisation over the past 12 months, this operation is now well
placed to pursue a growth strategy without making wholesale changes to its
existing facilities or operational structures. This will take the form of new
markets, new geographies (Melbourne) or a combination of both whereby greater
market share, increased number of clients, greater transactional value and new
sales would be our objective.
Hong Kong and China
In so far as Hong Kong and China are concerned, our office in this region
played an increasingly important role in planning, implementing and
controlling the efficient, effective forward and reverse flow and storage of
goods, services and related information between the point of origin and the
point of consumption.
Considering that the market in this region slowed down after the third quarter
and the traditional peak season was not as prevalent, our operation still
managed to exceed budget. Whilst cautious of weaker global economic growth, we
are confident that this office will continue to excel in the year ahead. In
particular, it will be able to capitalise on the fast-developing import demand
of the South African domestic market. Just as important, however, is the
reliance of Santova`s global operational offices and their clients on our Hong
Kong office for regional cost-optimised supply chain configurations - the
financial benefit of which resides with our international offices located at
point of final consumption.
FINANCIAL REVIEW
The increase in profitability has been a key financial highlight of the 2012
financial year, and significant achievements include:
- Headline earnings per share of 15,99 cents, up 50,1% on the prior year;
- Achievement of profitability by all geographical and business segments of
the Group during the current year;
- Group net profit before tax of R30,1 million, which is up 29,5% on the prior
year;
- An 18,2% return on net assets, up from 16,8% in the prior year; and
- Continued growth in operating margin, achieving 23,6% in the current year,
up from 22% last year.
The significant improvement in profitability had the effect of increasing the
net asset value per share from 75,2 cents to 92,1 cents in the current
financial year. This was a 22,5% increase and a positive sign for
shareholders, particularly considering the year-end closing share price of 81
cents and the resultant earnings yield of 19,53% per share.
Cash and cash equivalents of the Group decreased by R4,8 million during the
current year, versus an increase of R9,2 million in the prior year. This
movement is primarily a result of the further investment of R71,5 million in
trade receivables, which in percentage terms is an increase of 28,7% and is
caused directly by the 27,5% increase in gross billings achieved during the
year.
In addition, management monitors Group cash flow on a daily basis and as at
year-end the Group had R147,7 million in total unutilised facilities
available.
The nature of the Group`s logistics business makes traditional measurement of
debt ratios within the business difficult due to the fact that the Group
incurs shipping disbursements, duties and value added taxes on behalf of
clients. The result of this on the statement of financial position is a level
of debt that appears to exceed traditional debt to equity ratios.
Management thus monitors the level of debt by comparing it to the level of
current assets and gross billings so as to ensure growth is consistent and
there are no negative movements in the current ratio. In the current financial
year short-term borrowings and overdrafts increased by 26,8%, whilst gross
billings and trade receivables both increased by 27,5% and 28,7% respectively.
In addition, there was a positive improvement in the current ratio from 2,0 to
2,2 in the current financial year.
From this it can be seen that the increase in debt is consistent with the
increased business activity and as profitability grows a larger proportion of
current assets are being financed from capital and reserves, thus lowering the
relative level of debt within the Group and increasing interest cover.
There were no significant movements in taxation, and the current year charge
increased proportionately with the increase in profitability during the year,
with a slight decrease in the effective tax rate from 25,5% to 25,2%.
OUTLOOK
The Group will be looking to take advantage of the crisis in the Eurozone by
seeking strategic acquisitions in niche markets that will enhance both our
supply chain management capability and earnings growth going forward.
A second area of focus is the renewed commitment to promoting industrial
development in South Africa and Africa in general. This combined with the
emerging new `growth poles` - particularly Sub-Saharan Africa - justifies
further investment in our ability to leverage off the opportunities in mining,
agriculture and manufacturing. After all, these opportunities are on our own
continent and Africa is the second fastest growing region in the world at
present.
Whilst we anticipate an interesting year ahead, we believe that the strategies
that have allowed us to achieve average annual growth of 67,6% in profit over
the last four years will hold us in good stead going forward.
SUBSEQUENT EVENTS
There have been no subsequent events of a material nature that have occurred
between the financial year-end and the date of this report.
BASIS OF PREPARATION
The audited abridged Group results for the year ended 29 February 2012 have
been prepared in accordance with the framework concepts and the measurement
and recognition requirements of International Financial Reporting Standards
("IFRS") of the International Accounting Standards Board("IASB"), AC 500
Standards as issued by the Accounting Practices Board and the information
required by International Accounting Standard 34: Interim Financial Reporting.
The Group`s accounting policies comply fully with IFRS; the Companies Act, No
71 of 2008, as amended; and the Listings Requirements of the JSE Limited, and
are consistent with those applied in the annual financial statements for the
year ended 28 February 2011. The Group has adopted all of the new and revised
Standards and Interpretations issued by the International Financial Reporting
Interpretations Committee of the IASB that are relevant to its operations and
effective as at 1 March 2011.
The annual financial statements have been audited in compliance with the
applicable requirements of the Companies Act, No 71 of 2008, as amended.
PREPARER OF FINANCIAL STATEMENTS
The audited abridged Group results have been prepared under the supervision of
DC Edley CA (SA), the Group Financial Director.
AUDITED BY INDEPENDENT AUDITORS
The audited abridged Group results have been derived using annual financial
statements and are consistent, in all material respects, with the Group annual
financial statements. The Company`s independent auditors, Deloitte & Touche,
have issued unmodified opinions on the 29 February 2012 Company and Group
annual financial statements and on these abridged Group results. These reports
are available for inspection at the Company`s registered office during office
hours. Any reference to future financial performance included in this
announcement, has not been reviewed or reported on by the Company`s auditors.
OTHER MATTERS
The Santova Limited (formerly Santova Logistics Limited) 2012 Annual
Integrated Report will be issued on or around 29 May 2012, both in electronic
and printed form.
DIVIDENDS
The Board has decided to review its dividend policy and will make a final
decision at the July board meeting, which decision will be conveyed to
shareholders at the annual general meeting.
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
16 May 2012
REGISTERED OFFICE AND POSTAL ADDRESS
Santova House, 88 Mahatma Gandhi Road, Durban, 4001; PO Box 6148, Durban, 4000
EXECUTIVE DIRECTORS
GH Gerber (CEO), DC Edley (GFD) (appointed 1 March 2012), GM Knight, AL van
Zyl
NON-EXECUTIVE DIRECTORS ESC Garner (Chairman)*, WA Lombard*, AD Dixon*,
S Donner *Independent
TRANSFER SECRETARIES
Computershare Investor Services (Pty) Limited, 70 Marshall Street,
Marshalltown, 2107
COMPANY SECRETARY
JA Lupton, FCIS
JSE SPONSOR
River Group
AUDITORS
Deloitte & Touche (Registered auditor SD Munro)
www.santova.com
Date: 16/05/2012 15:40:05 Produced by the JSE SENS Department.
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