Post on 14-Jan-2022
Santova
Specialist Supply Chain Solutions
Opportunities And Future Strategy
Strategic Initiatives
Performance In The Context of The Logistics Industry
Introduction To Santova Group
Annual Financial Results Analysis 2014
Statement of Purpose
“ Businesses want more authority over operational costs.” The application of an effective supply chain management
strategy that targets silo optimization without sacrificing end-to-end visibility and control.
Innovative global supply chain solutions that result in clients
achieving and sustaining competitive differentiation.
Client – centric, recognise that our clients’ needs are unique.
In tune with constantly changing
trends and dynamics in the market place.
Ensure flexibility, innovation and
delivery on assurances.
GROUP STRUCTURE
Santova Ltd (South Africa)
Santova Logistics (South Africa)
Santova NVOCC
(South Africa)
Santova Financial Services
(South Africa)
Supply Chain Management Advisory
Services (International Division)
Santova Logistics
(Hong Kong)
Santova Patent Logistics
Offices (Mainland China)
Santova Logistics
(United Kingdom)
W.M. Shipping (United Kingdom)
Santova Logistics
(Netherlands)
Santova Express (South Africa)
Schiphol Rotterdam Heathrow Brentwood
In addition to our Own Santova Offices, our International
Network of exclusive partners Spans 5 Continents with over 450 offices
Durban, Johannesburg, Cape Town, Port Elizabeth,
Pietermaritzburg, Sasolburg
Santova Logistics
(Australia)
Felixtowe
Birmingham
Bristol
Specialist Supply Chain Solutions
Customs & Excise Clearing
Freight Forwarding
Quality Control
Warehousing & Distribution
Inventory Management
Supply Chain Management
Services
IT Systems & Integration
Insurance Procurement &
Packaging Financial Services
INTEGRATED STRATEGIC LOGISTICS MANAGEMENT
SOLUTIONS
TRADITIONAL CLEARING & FORWARDING BUSINESS MODEL
Intelligent Solution “Solution Based”
Commodity “Rate Based”
Warehousing & Delivery
Customs & Excise Clearing
Freight Forwarding
High Visibility Staff Dependent
Low Visibility Low Risk Reduced Total
Supply Chain Cost
Co
mp
on
en
ts
Imp
act
High Risk Process and Technology Driven
Management of independent functions
Assembling, integrating and managing activities into key supply chain processes rather than managing individual functions.
INTERNATIONAL SUPPLY CHAIN LOGISTICS BUSINESS
Domestic Multiple Geographies
[Client Logo] Private and Confidential
Supply Chain Management Landscape
Information Flow EDI Transparency Measurement Statistics Reports Real-Time Visibility Process Automation
Performance Management
Raw Materials Supplier Manufacturer Retailer Consumer
Goods Goods Goods Goods
Reverse Logistics
Reverse Logistics
TYP
ICA
L C
HA
LLEN
GES
TY
PIC
AL
OP
PO
RTU
NIT
IES
• Strategic Sourcing • Quality Controls at
Source • Price Tagging at
Source
• Supplier Performance Management
• Integrated Available to Promise (ATP)
• Consolidations
• Production Planning • S&OP • WMS Management • Supply Chain Audit • Cross docking
• Inventory Optimisation • Distribution Network
Optimisation • Optimal Channel Selection • VAS at source
• Demand Planning • Accurate
Forecasting
• Inferior Quality • Stock Availability • Cash Flows • High Logistics Costs
• Short Shipments • Late Deliveries • Poor Communication
• Limited Visibility • Excess Inventory • Insufficient Inventory • Slow Response
• Expensive Distribution • Lack of Agility • High barrier to new
market entry
• Demand Variability • POS Data Accuracy
SCM
TO
OLK
IT • Channel Strategy Development
• Supplier Scorecards/Metrics • Supply Chain Risk Mitigation • Defining & Structuring Managed
Services or KPI’s
• Inventory Management/Optimisation • Distribution Network Planning • Cost to Serve Analysis • Fleet Mix Modelling & Optimisation
• Business Process Definition and Re-engineering
• Demand Driven Planning • Business Case Development • Project Management
Ensuring Supply Chain Strategy is aligned to Business Strategy
0.00
5.00
10.00
15.00
20.00
25.00
2.90
12.29
15.82
18.00
22.12
Ce
nts
2010 - 2014
Diluted Basic Earnings Per Share
2010 2011 2012 2013 2014
0.00
2.00
4.00
6.00
8.00
10.00
6.02 5.07
7.48
9.68
7.35 7.90
Mu
ltip
le
2009 - 2014
Price Earnings Ratio
2009 2010 2011 2012 2013 2014
0
10,000
20,000
30,000
40,000
50,000
6,853
23,216
30,063
33,809
40,014
Mill
ion
s
2010 - 2014
Profit Before Tax
2010 2011 2012 2013 2014
SANTOVA PERFORMANCE OVER TIME
0.00
5.00
10.00
15.00
20.00
25.00
12.70
22.10
23.80 23.10 24.20
Pe
rce
nta
ge
2010 - 2014
Operating Profit Margin (%)
2010 2011 2012 2013 2014
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
61.90
66.00 73.70
92.12
108.20
145.00
Ce
nts
2009 - 2014
Net Asset Value Per Share
2009 2010 2011 2012 2013 2014Market Capitalisation R 241 698 600 vs.
Underlying value of offshore subsidiaries
United Kingdom Private Company Price Index 3Q 2013
Current pre-tax PE ratio (Enterprise Value/EBITDA) is 12.1 for ‘trade buyers’
of private companies and 9.1 for ‘private equity buyers’.
0
5000
10000
15000
20000
17087
7722
2148 3052 777 M
illio
ns
Global Offices
Profit After Tax Feb 2014
South Africa United Kingdom Hong Kong Europe Australia
5
25% 7% 10% 3%
-100%
-50%
0%
50%
100%
150%
200%
250%
5% 62%
204%
81%
-52% Pe
rce
nta
ge
Global Offices
Year on Year Growth Profit After Tax Feb 2013 vs. Feb 2014
South Africa United Kingdom Hong Kong Europe Australia
Excluding costs of UK acquisition 26%
0
200
400
69
297 358
218
130 Tho
usa
nd
s
Global Offices
Return Per Employee Profit After Tax Per Employee Feb
2014
South Africa United Kingdom Hong Kong Europe Australia
Costs of listing and acquisitions have an effect
CONTRIBUTION BY GEOGRAPHY
South Africa 56% Offshore 44%
Gross Margin (%) (Turnover/Gross Billings) South Africa United Kingdom Netherlands Hong Kong Australia
4,7% 16,1% 14,7% 18,8% 10,6%
South Africa 5% Offshore 56%
385,896
1,220,659
3,179,056
1,085,017 1,405,980
1,707,644
995,067
2,092,847
6,111,746
8,187,509
1,431,180 1,787,390
8,724,659
5,971,047
17,643,718
3,575,608
3,718,864
7,520,780
3,878,947
14,762,601
11,580,675
1,756,393
7,618,841
8,093,052
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000
20,000,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Un
its
MAR 2012 - FEB 2014
SHARE TRADE VOLUMES
Trade Volumes
Linear (Trade Volumes)
Management and staff 20,2% Total number of shareholders 1 433 No. of shareholders holding 58% of the Company 23 No. of shareholders holding 82% of the Company 136
Liquidity – until 2013 shares were tightly held Limited publicity – low profile Bottom of the growth curve – “Small cap vulnerability” Limited understanding of the Business Model
0
100
200
30 80 81
106
172
Ce
nts
Financial Year End
Closing Share Price At Year End
2010 2011 2012 2013 2014
Unique characteristics; A non-asset based business ‘favouring’ a variable cost structure;
In a relatively short period of time established strategic offices globally;
Transformed during a ‘flat’ 6 year economic cycle into sophisticated business model whilst at
the same time generating significant year-on-year growth in earnings, internationally.
IT and supply chain capability is enabling Santova to compete on a ‘playing field’ that is typically ‘reserved’ for multi-national ICONS;
The unique business model makes it difficult if not impossible to compare Santova to any other
South African listed logistics business;
SANTOVA and THE INDUSTRY
FINANCIAL HIGHLIGHTS
22.1% increase in total Billings to R3.221 billion
Operating Margin increased from 23.1% to
24.2%
26.9% increase in Operating Income to
R51.8 million
40.6% increase in HEPS from 17.62 to 24.77
cents per share
34.2% increase in NAV from 108.4 to 145.5
cents per share
Final dividend of 3.25 cents declared – a 30%
increase
INFLUENCING FACTORS
Internal/Technical
• No acquisitions or disposals during the year
• IFRS 10 Deconsolidation of Guardrisk Cell Captive
• Inclusion of WM Shipping for a full 12 months
• Completion of 1st WM Shipping warranty period
• Rejuvenated performances from Hong Kong and Netherlands
• Continued strong contribution from Financial Services
• Consolidation and centralisation of certain divisions
External/Market
• FOREX - the weakening of the rand
• The Economy in SA and the effect on trade volumes – low GDP growth
• Significant competition and pressure on margins particularly in SA
FOREX EFFECT
13
14
15
16
17
18
19
• In SA majority on revenue is invoiced in Rands but underlying calculation is based on the imported cost of goods and transport in US$
• Decline in trade volumes as importers react to weaker rand
IMPACT Opposing Effects on
Revenue
ZAR/GBP
2013 2014 Move %
USD
Closing 8.84 10.79 1.95 22%
Average 8.36 9.97 1.61 19%
GBP 2013 2014
Closing 13.37 17.98 4.61 34%
Average 13.26 15.74 2.48 19%
REVENUE ANALYSIS
86% 14%
65% 35%
TOTAL
Fin Serv HO Logistics HK UK Neth Aus Rand
BILLINGS
2013 8,658 1,680 2,395,175 28,015 98,077 85,634 123,241 2,637,920
2014 8,967 2,635 2,757,269 29,048 203,981 179,668 115,969 3,221,519
4% 57% 15% 4% 108% 110% -6% 22%
SOUTH AFRICA OFFSHORE
2013 100% -2% 5.1% 13.7% 18.0% 15.5% 11.5% 6.7%
2014 100% -1% 4.7% 18.8% 16.1% 14.7% 10.6% 6.7%
- 1.0% -0.4% 5.0% -1.9% -0.8% -1.0% -
REVENUE/BILLINGS MARGIN
REVENUE
2013 8,658 -33 121,260 3,846 17,632 13,283 14,194 176,651
2014 8,967 -24 129,410 5,447 32,802 26,457 12,250 214,357
4% 0% 7% 42% 86% 99% -14% 21%
OPERATING MARGIN ANALYSIS
TOTAL
Fin Serv HO Logistics HK UK Neth Aus Rand
SOUTH AFRICA OFFSHORE
2013 924 1,675 4,773 320 377 685 542 9,296
2014 74 5,211 6,399 702 535 1,756 441 15,118
-92% 211% 34% 119% 42% 156% -19% 63%
2013 6,396 19,670 80,635 3,399 10,951 11,340 11,568 142,067
2014 5,378 28,617 81,336 3,107 22,087 23,354 10,867 174,228
-16% 45% 1% -9% 102% 106% -6% 23%
2013 2,667 -18,511 43,903 882 6,918 2,535 2,904 40,810
2014 3,629 -24,366 52,851 2,541 10,803 4,709 1,619 51,772
36% 32% 20% 188% 56% 86% -44% 27%
2013 31% 36% 23% 39% 19% 20% 23.1%
2014 40% 41% 47% 33% 18% 13% 24.2%
10% 5% 24% -6% -1% -7% 1.1%
OTHER INCOME
ADMIN EXPENSES
OPERATING PROFIT
OPERATING MARGIN
EARNINGS RECONCILIATION
2014 2013 %
Cents Cents
Reported - Basic earnings per share 22.42 18.06 24.1%
Reported - Headline earnings per share 24.76 17.62 40.5%
Approximate - Normalised Headline earnings per share 22.85 17.07 33.9%
2014 2013
Earnings Reconciliation R'000 R'000
Reported – Basic Earnings 30,587 24,688
Impairment of goodwill 3,131 -
Loss on disposals of plant and equipment 85 122
Derecognition of Financial Liability - (713)
Reported - Headline Earnings 33,803 24,097
Fair Value Gain on Remeasurement of Financial Liability (5,171)
Recognition of Financial Liability due to Lease Termination 584
Forex Loss on Revaluation of Financial Liability 1,979 (753)
Approximate - Normalised Headline earnings 31,195 23,344
FINANCIAL POSITION - Key movements
Influencing Factors
• 22.1% Increase in Billings
Results
• 30% or R111.8 mil increase in Trade Receivables from R369 mil to R481 mil
• Funded by: – 11% Increase in Trade Payables
– 51% increase in Short Term Borrowings
• 34% or R4.61 increase in closing ZAR/GBP exchange rate
• R14 mil increase in Intangible assets to R123.9 mil
• R22.5 mil increase in Foreign Currency Translation Reserve
CORRELATION Cash flow inverse relationship
Billing/Debtors/Borrowing/Cash Flow
2014 2013 2012 2011 2010 2009 2008
Cash Flow
Borrowings
Debtors
Billings
CASH FLOW AND FUNDING
Cash on hand increased 31% from R28.1 million to R36.8 million at year end of which 75% is held offshore – trend will continue/offshore operations are cash generators.
Cash utilised in operating activities totalled R27 million versus net cash generated of R29.1 million in the prior year, this is consistent with:
Working capital requirements as a result of 22.1% increase in billings in 2014 versus 1.3% in 2013.
The credit terms provided to clients versus those granted from SARS.
In order to fund this growth the Group increased local facilities from R249 million to R300 million during the current year.
Group has in total R131 million unutilised financing facilities at year end.
CREDIT QUALITY
Credit Collection remains a core competency of the Group
Centrally managed at Head Office and South African Book is 85%-90% insured via credit underwriters
2014 2013 2012 2011 2010 2009 Avg
Trade receivables 434,600 326,314 250,922 196,709 170,937 203,846
Provision for impairments 2,266 993 1,447 2,447 2,858 2,970
0.5% 0.3% 0.6% 1.2% 1.7% 1.5% 1.0%
Amounts Written Off 53 345 372 770 324 530
0.01% 0.11% 0.15% 0.39% 0.19% 0.26% 0.2%
Past Due - More than 30 days 7,997 7,412 8,693 5,622 16,423 12,163
2% 2% 3% 3% 10% 6% 4%
SANTOVA LOGISTICS (SOUTH AFRICA) TRADE AND OTHER RECEIVABLES
FINANCING REVENUE
2014 2014 Interest Effec 2013 2013 Interest Effec
TOTAL Financing Inc/(Exp) % TOTAL Financing Inc/(Exp) %
ASSETS
Trade receivables 480,738 328,191 25,489 8.6% 368,931 262,694 17,159 7.3%
LIABILITIES
ST Borrowings (208,321) (208,321) (12,030) 7.0% (137,829) (136,146) (8,282) 6.6%
NET MARGIN 13,459 1.6% 8,877 0.7%
2014 2014
TOTAL Financing
Revenue 214,357 21,232
Other income 15,118
Depn & Amort (3,476)
Admin Exps (174,228)
Operating profit 51,771 21,232
Interest received 4,559 4,257
Finance costs (16,316) (12,030)
Profit before tax 40,014 13,459
2014 2013 2012
% Financing Financing
36% 15,560 15,121
15,560 15,121
166% 1,599 899
45% (8,282) (8,132)
52% 8,877 7,888
VALUE ADDED
VALUE ADDED STATEMENT 2014 2014
for the year ended 28 February 2014 Billings Basis Revenue Basis
R'000 % R'000 %
Billings to Clients 3,242,212
Revenue from Clients 236,026
Paid to Suppliers and Agents 868,145 49,762
Value Created 2,374,067 186,264
Value Distributed
Employees 110,311 5% 110,311 59%
Government/Regulators 2,197,474 93% 9,671 5%
Financial Institutions 20,723 1% 20,723 11%
IT Service Providers 7,092 0% 7,092 4%
Shareholders 3,411 0% 3,411 2%
Asset replacement 7,681 0% 7,681 4%
Profits retained for future 27,375 1% 27,375 15%
2,374,067 100% 186,264 100%
Globalisation Santova is capitalising on globalisation, “new ideas, new opportunities, network”, across geographies and cultures.
Client Centricity We have unique customer-value focused relationship management structures in place, managing and controlling the relationships.
Diversification We duplicate revenue streams, across businesses, geographies and currencies, “Critical mass, bulking, improved margins”.
Strategic Growth Strategy Continuously balancing growth through organic growth and acquisitions - America’s, Europe, West and East Africa.
End-To-End Global Supply Chain Management Solutions We have a presence across multiple geographies and cultures, assembling, integrating and managing activities into key supply chain
processes rather than managing individual functions.
Information Technology We have intelligent supply chain software packages and are advancing in mobile technologies – tablets and smartphones.
Multiple Businesses The Group constitutes multiple business units and has numerous new business opportunities, “businesses within business”.
Internal Optimisation Year in and year out we continue to evolve into a leaner cost structure and process optimisation without losing operational efficiency
Talent – Intellectual Capital We invest in and develop the right talent. Multiple disciplines, an innovative aptitude and skills across all components in the supply chain.
Proximity To Source And Market We focus on greater proximity to source, ensuring market intelligence, ‘intimacy’, agility and flexibility - Value added services at source.
The world is moving from regional economies (‘clusters’) to a networked and digital economy (globalised). New global business models Innovative e-commerce Interconnectivity between interdependent markets Complex worldwide networks.
90% of respondents believe that ‘new business models require supply chain innovation’. 91% of respondents to GE’s Global Innovation Barometer 2013 agreed that innovation is a strategic priority for
their companies. “
“51% felt that their supply chain and logistics functions don’t innovate regularly enough, often due to company culture, lack of skills and fear of change.
GE’s Innovation barometer labels this ‘Innovation Vertigo’ or ‘an uneasiness with the pace of change and confusion over the best path forward’.
Barloworld’s Supplychainforesight 2013 Survey GE’ s Global Innovation Barometer 2013
It’s not simply about moving goods from one point to another, its now about a high degree of know-
how and comprehensive logistics resources
Proximity And Specialised Services: international foot print a necessity
Decentralisation is becoming a common strategy for locating resources closer to demand and supply – kitting, global direct-ship, pack for store, built-to-order, merge in transit and cross docking solutions are growing.
Cash Flows: e-commerce driven efficiencies Order-to-delivery and order-to-cash cycles are affecting the client’s cash flows
Supply Chain The Differentiator: demanding sophistication, top management attention
It is no longer companies that are competing with one another, it is the supply chains of which they are part of that are now competing.
End-to-End Control: sophisticated software packages and expertise
Most importers and exporters do not have sufficient control over the entire supply chain from door to door, nor the
in-house expertise to manage the process. The application of the appropriate metrics is a challenge.
Internationalisation: competitive forces encouraging global mobility
Clients moving into new markets for the first time - worldwide sourcing and selling in multiple markets. Requiring operations and logistics solutions across geographies and an understanding of the intricacies of offshore markets.
Competitors: barriers to entry
Domestic based logistics companies face difficulties in adopting Information communication technology systems and applications due to the lack of human and financial resources