santova · 2016/8/31 · agenda group profile the industry and context within which santova is...
TRANSCRIPT
SANTOVA
Investor Presentation1st November 2016
Agenda
Group profile
The industry and context within which Santova is
trading
Quality diversified international client base
Strategic focus: current and future
Financial highlights
- Annual results Feb 2016
- Interim results Aug 2016
KEY DIFFERENTIATORS
“A specialist provider of innovative global trade solutions,
managing a global network of interconnected activities for multinational organisations from origin to point-of-consumption”
ADVANCED SCM SOLUTIONS Partnership Value based
CUSTOMS CLEARING AND FORWARDING Contractual Fixed and variable
CUSTOM CLEARING Commodity Transaction based
Advanced SCM services
Value add services
Basic services
LEAD LOGISTICS PROVIDER Contractual
Risk sharing
Lead logistics
Evo
lvin
g ca
pab
ility
2006 20162003 2009 2012
Phase 1
Phase 2
Phase 3
Phase 4
Focused cost reduction Transaction based One dimensional
Enhanced capabilities Broader service offering Management of independent
functions Price driven Own services or outsourced to
suppliers Not independent
Project management Contract management Service provider integration Single point of contact Predominantly independent
facilitator Providing some services whilst
outsourcing or contracting others
New organisational structures Strategic global relationships Knowledge – information
based End-to-end supply chain
expertise Advanced technology and
software packages Adaptable, flexible and
collaborative engagement Shared risk and reward Independent, represents client Raises management fee for
services – ‘gain share’ model
Business Model2003 - 2016
Domesticstructured, predictable
engagement
Globalentrepreneurial,
innovative engagement
“Multi-dimensional’
Australia
Ghana
Italy
Kenya
GermanyFrankfurtHamburg
NetherlandsSchiphol
Rotterdam
United Kingdom
LondonTamworth
ManchesterLeeds
FelixstoweEssex
Mauritius
South AfricaJohannesburg
DurbanCape Town
Port ElizabethPietermaritzburg
Hong Kong
China
Revenue
R25m
Revenue
R54m
Revenue
R59m
Revenue
R177m
OfficesOffshore 15
South Africa 6
3,990 clients3,735 shareholders321 employees
New United
States of America
Global Offices & Trade Lanes
“Duplicating earnings on both
sides of the ocean”
Market and industry specific challenges
Industry faced with flat global economic growth
Intense competition, new entrants in the domestic market
Diminishing margins, price ‘wars’
Stagnating or reducing trade volumes
Ongoing over-capacity in ocean and airfreight
Consolidations through mergers and acquisitions
Changing Global Trading Conditions
Companies have been forced to:
Enter new markets
Identify more cost effective sources of supply
Manage multiple supply chains
Attain a sound understanding of the intricacies of
offshore markets
Adjust to changing sourcing locations and points
of sale
Entertain smaller and more frequent purchase
orders (E-commerce)
The Opportunity
Tailor-made solutions: divergent customer/supplier expectations
Nimble and flexible in dealing with customers’ requirements globally
Constitute an end-to-end “one-stop-shop” service
Offer clients global strategic locations (infrastructure) and local knowledge
Next generation ICT: efficiency, effectiveness and end-to-end SC visibility
Market demand for innovative solutions or ‘alternative ways’ of ‘doing the same thing’ or ‘doing something’ different.
“Loyalty is fast becoming second to innovation, value add and greater efficiency and effectiveness”
TOP 20 CLIENT REVENUE 29 FEBRUARY 2016
COMPANY NAME INDUSTRY DESCRIPTION GROSS REVENUE
2016 %
SANTOVA LOGISTICS SA CHEMICALS 12 401 825 4.5%
SANTOVA LOGISTICS SA APPAREL 11 784 606 4.2%
SANTOVA AUSTRALIA PHARMACEUTICALS 3 311 323 1.2%
TRADEWAY SHIPPING TEXTILE RECLAIMERS & PROCESSORS 3 260 183 1.2%
WMS MINING 3 201 121 1.1%
SANTOVA BV SALES PROMOTION 2 886 650 1.0%
SANTOVA LOGISTICS SA PAPER 2 483 081 0.9%
SANTOVA AUSTRALIA FOOD, BEVERAGE 2 448 805 0.9%
SANTOVA LOGISTICS SA APPAREL 2 370 557 0.9%
SANTOVA UK GARMENT 2 314 864 0.8%
SANTOVA LOGISTICS SA ELECTRONIC SECURITY SOLUTIONS 2 188 067 0.8%
SANTOVA LOGISTICS SA ELECTRICAL COMPONENTS SUPPLIERS 2 033 612 0.7%
WMS MINTING 1 979 625 0.7%
TRADEWAY SHIPPING TEXTILE RECYCLING 1 918 210 0.7%
SANTOVA LOGISTICS SA FOOD, BEVERAGE 1 869 527 0.7%
SANTOVA AUSTRALIA PHARMACEUTICALS 1 852 222 0.7%
SANTOVA BV MUSHROOM TECHNOLOGY 1 705 404 0.6%
MASTERFREIGHT WATCHES & JEWELLRY 1 666 035 0.6%
SANTOVA LOGISTICS SA RETAIL FOOTWEAR 1 635 290 0.6%
TRADEWAY SHIPPING TEXTILE RECYCLING 1 633 712 0.6%
TOTAL TOP 20% 64 944 720 23.3%
TOTAL GROUP 278 654 341
Offshore
Growth Innovation
Efficiency –Effectiveness
Diversification
Strategic Management FocusCurrent and Future
Organic growth
Acquisitions
+ ‘Bolt-on’s’
+ Strategic
Information communication technology
Workflow process design
Free flow of intellectual capital ‘Group think’
Centralisation and decentralisation
Geographical (offshore/onshore)
Currency
Service/product
Industry
Next generation ICT
Business model (knowledge intensive)
Core ideology – culture, values, purpose
Application – execution structure
Never satisfied,
always asking the
question?
Clear Growth Strategy &
Strong Execution Structure
Resilience: Counter – cyclical business model
Mitigating Challenging Market Conditions
24.3%
29.9%
33.2%
5.39%
RevenueR 279m
Net Profit Before TaxR 67m
Normalised HEPS34.28 cents
Operating Margin25.4%
2010 2011 2012 2013 2014 2015 2016
6,853
23,21629,756
33,47040,014
51,386
66736
NET PROFIT BEFORE TAXR'000
2010 2011 2012 2013 2014 2015 2016
3.08
10.65
15.9917.66
21.6525.73
34.29
NORMALISED HEPSCents
2010 2011 2012 2013 2014 2015 2016
64 75 92 108145
169
245
NET ASSET VALUE PER SHARECents
2010 2011 2012 2013 2014 2015 2016
87,728132,872 152,115 165,633
201,879224,235
278,655
RevenueR'000
Annual Results Feb 2016
Onshore45%
Offshore55%
Netherlands 28% United Kingdom 23% Australia, Germany, Hong Kong 10%
Strategy: Offshore vs. Onshore
SOUTH AFRICA *1
AUSTRALIA UNITED KINGDOM *2
HOLLAND GERMANY *4 HONG KONG
26%47%
198%
103%
0%38%
Return on capital employedEstimate based on what the business requires to function
SOUTH AFRICA *1
AUSTRALIA UNITED KINGDOM *2
HOLLAND GERMANY *4 HONG KONG
451m
18m92m
25m 11m 4m
Debtors bookas a % of Groups total debtors book
75%
15%4% 2% 1%3%
SOUTH AFRICA *1
AUSTRALIA UNITED KINGDOM *2
HOLLAND GERMANY *4 HONG KONG
13
58
33 3919
60
Number of shipments per staffMonthly
SOUTH AFRICA *1
AUSTRALIA UNITED KINGDOM *2
HOLLAND GERMANY *4 HONG KONG
690k
2.8m
1.6m
2.4m
755k 730k
Net revenue per staffAnnual
*1 Includes Santova Financial Services *2 Includes Tradeway Group (3 months) Excludes Santova Logistics (Mauritius)
INTERIMSCOMMENTARY
32%
33%
18%
2.4%
RevenueR 160m
Net Profit Before TaxR 40m
Normalised HEPS18.40 cents
Operating Margin28.4%
Positive factors
Resilience: diversification and a ‘differentiated’ business model
Acquisition and inclusion of Tradeway Group
Strong contributions from the Netherlands, Australia and Hong Kong
Offshore growth strategy a hedge against the depreciating Rand.
In the context of the market, more specifically the industry, a ‘strong
performance by the South African operations.
Focus area’s
‘Grass roots’ operations in Germany, Mauritius and Ghana.
WM Shipping (UK), the Caribbean and Middle East Trade lane
South African operations in the context of a challenging economic environment
FINANCIAL PERFORMANCEFOR THE SIX MONTH PERIOD ENDING 31ST AUGUST 2016
2017 INTERIM GROUP PROFITABILITY
Aug-16 Aug-15
6 Mths 6 Mths
R'000 R'000 %
Gross Billings 2 000 612 1 686 696 19% Combination impact of subdued growth in SA plus take on of Tradeway
Revenue 159 772 120 910 32%
% Revenue/Billings Margin 8,0% 7,2% 0,8% Margins maintained in SA and strengthened by take on of Tradeway
Other Income 10 755 4 658 131% Significant currency gains as a result of hedging GBP exposures
Administration expenses (123 056) (92 182) 34% Inflation related growth in SA plus Tradeway and currency growth
% Operating margin 28,4% 26,0% 2,4% Boosted by Tradeway margins - 60% higher than those achieved in SA
Finance costs (4 977) (1 096) 354% Take on of new R60 million 5 year loan to finance Tradeway acquisition
Profit for the Period 29 663 22 996 29%
Exchange rates - Average
ZAR/GBP 20,55 18,82 9%
ZAR/USD 14,75 12,26 20%
Other Comprehensive Income (40 898) 17 951 (328%) Impact of R3.18 reduction in GBP/ZAR on translation of foreign balance sheets
Normalised headline earnings per share 18,40 15,63 18%
WANOS 157 317 136 383 15% Capital raising and vendor placements in 2015 as part of the Tradeway acquisition
2017 INTERIM FINANCIAL POSITION
Aug-16 Aug-15 Move Feb-16
R'000 R'000 % R'000
Intangible assets 200 850 134 715 49% 222 881 Impact since year end of R3.18 reduction in GBP/ZAR on translation of foreign goodwill
Trade receivables 535 783 465 721 15% 590 133 Growth relative to 19% billings growth and improved debtor management
- Debtor Days 49,3 50,8 (1,5) 56,8 Reflective of the sound credit quality of the book
Cash on hand 100 664 61 699 63% 123 657 Reduction since year end due to debt repayment and further payments for Tradeway
TOTAL ASSETS 930 287 728 787 28% 1 023 165
Capital and Reserves 367 726 265 134 39% 386 415 Reduction since year end due to FOREX losses on translation of offshore balance sheets
Financial Liabilities 32 284 709 4453% 49 134 Tradeway warranty payments
Medium Term Debt - 5 Year 66 643 22 849 192% 75 663 New R60 million amortising 5 year loan to fund Tradeway
Short Term Debt - ID Facility 213 166 234 809 (9)% 262 918 Funding of South African receivables book
Trade Payables 224 123 184 853 21% 216 154 Principally SARS in SA
- Creditor Days 22,4 21,7 0,7 21,0
Debt/Equity Ratio 49% 74% (25)% 56%
Exchange rates - Closing
ZAR/GBP 19,07 20,44 (1) 22,25 R3.18 reduction since year end impacting on translation of foreign balance sheets
2017 INTERIM CASH FLOWS
2016 2015 Move
% R'000 R'000 %
Cash Flow
Cash generated from operations 36 255 31 367 16%
Applied to:
Interest & Debt Repayments (13 698) (5 123) 167% Additional interest and repayments of the new R60 mill loan
Acquisitions (12 410) (1 100) 1028% 'Top up' payment to sellers of Tradeway in March 2016
Taxation (9 349) (5 750) 63% Improved profitability from prior period
Dividends (8 654) (5 800) 49%
Other (1 667) (4 468) (63)%
Translation Differences (15 509) 7 684 (302)% Impact of R3.18 reduction in GBP/ZAR on translation
Net Decrease in Cash/Bank OD's (25 032) 16 810
2017 INTERIM SEGMENTAL ANALYSIS
SEGMENTsAfrica Asia Pacific
Europe and United
Kingdom
Financial
Services Head Office GROUP
R'000 R'000 R'000 R'000 R'000 R'000
31 August 2016
Revenue 65 242 15 581 73 785 5 651 (487) 159 772
- Growth on prior period 8% 37% 68% 14% (339)% 32%
Operating profit 13 989 5 067 18 529 2 207 5 550 45 342
Profit for the period 9 097 3 819 14 238 2 024 485 29 663
- Growth on prior period (8)% 64% 64% 15% 27% 29%
31 August 2015 R'000 R'000 R'000 R'000 R'000 R'000
Revenue 60 633 11 408 44 039 4 941 (111) 120 910
Operating profit 14 237 3 358 10 861 1 979 1 020 31 455
Profit for the period 9 866 2 329 8 664 1 756 381 22 996
LOGISTICS SERVICES
A specialist provider of innovative global trade solutions
Santova’ s diversification in terms of geographies, currencies, industries, products
and services enables it to manage a global network of interconnected activities for
multinational organisations from origin to point-of-consumption.
Thank you