All at sea

Finweek English Edition - - Companies & Markets - SHAUN HAR­RIS

IN­TERIM RE­SULTS FROM this small cap com­pany in a week or so might pro­vide po­ten­tial in­vestors with the first clear view of its op­er­a­tions. San­tova’s fi­nan­cials are dif­fi­cult to pin down: it might well be be­yond the com­pany’s con­trol but re­sults, and prior pe­riod com­par­isons, al­ways seemed fudged.

CEO Glen Ger­ber can’t com­ment be­cause San­tova is in a closed pe­riod and, again, un­der a cau­tion­ary an­nounce­ment. The lat­ter prob­a­bly re­lates to a pos­si­ble ac­qui­si­tion San­tova is ne­go­ti­at­ing. That’s its style, and it’s made a few small­ish ac­qui­si­tions in its pre­vi­ous fi­nan­cial year.

The big ac­qui­si­tion was Imp­son Lo­gis­tics in Au­gust 2006. The freight for­ward­ing and clear­ing busi­ness has be­come core to San­tova and has driven, as far as can be worked out, pretty de­cent re­cent fi­nan­cial re­sults.

The prob­lem is San­tova’s re­sults are al­ways be­ing changed and re­stated. And prior full fi­nan­cial year com­par­isons are con­founded by a pre­vi­ous 14-month re­port­ing pe­riod. That’s why up­com­ing in­ter­ims might pro­vide the first mean­ing­ful com­par­i­son – as long as there’s no fur­ther re­state­ment of fig­ures.

No doubt Ger­ber is frus­trated at changes to ac­count­ing stan­dards, largely un­der In­ter­na­tional Fi­nan­cial Re­port­ing Stan­dards (IFRS). But re­sults have also been re­stated to re­flect the “fair val­ues” of busi­nesses be­ing ac­quired and the val­u­a­tion of San­tova shares used to set­tle part of ac­qui­si­tion prices.

Also a lit­tle wor­ry­ing is the re­cent res­ig­na­tion and re­tire­ment of direc­tors. Some, such as for­mer chair­man Prince Si­fiso Zulu, are fully un­der­stand­able. He’s in­volved in a po­lice in­ves­ti­ga­tion into peo­ple killed in an ac­ci­dent al­legedly in­volv­ing his mo­tor ve­hi­cle. It’s not quite clear whether Zulu was in the car or

not. But when po­lice ar­rived to in­ves­ti­gate he stabbed him­self and jumped out of a win­dow in an ap­par­ent sui­cide at­tempt.

How­ever, the busi­ness com­mu­nity holds other re­cently de­parted direc­tors in good stand­ing. That doesn’t look good for San­tova. But its share price jumped from 4c to 6c/share when the lat­est cau­tion­ary was re­leased last Fri­day, so the mar­ket seems to like what’s go­ing on.

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