South Africa: Capespan management shake up
With PSG, Bidvest and Irish fruit marketing company Total Produce Plc emerging as major shareholders at Capespan, it’s not farfetched for shareholders to believe there is a great growth story about to unfold at the Bellville-based company.
Most shareholders suspect Capespan is slowly positioning itself as a major player in the higher-margin logistics business, though the latest annual report seems to go out of its way not to court the goodwill of the market by underplaying the prospects of all operations.
The operational review comprises a handful of pages, compared with the swathes dedicated to issues like product sustainability and social sustainability.
Vunani Securities small-cap analyst Anthony Clark agrees the Capespan "glossies" are short on operational detail and long on soft issues.
"Existing shareholders would be better served by greater clarity on transactions [like assets sold] and more comment on the transformation of the fruit and logistics divisions, that appeared to have delivered little growth in the past financial year after one-off profits are stripped out."
Though the annual operational reviews don’t make compelling or insightful reading, a deeper dig into the annual report presents evidence that recently appointed MD Johan Dique is making his mark at Capespan. Dique has become a legend in agri business circles after his smart turnaround of Senwes, which he hauled back from the brink in 2001 and shaped into one of the most formidable agri businesses in SA.
Gut feel is that Dique wants to remain low key while getting to grips with Capespan, probably a prudent tactic considering he may be facing a deeply ingrained co-operative culture at senior management level.
However, in the past financial year, permanent staff head count was reduced from 1393 to 1234, while at the same time average revenue per staff member improved to R2,5m (previously R2,3m) and operating profit per staff member to R89832 (R81842).
Any lingering doubts about Dique swinging hard at Capespan ’s cost line should have been erased by the fact that head office staff was reduced from 55 to 21 during the 2011 financial year.
Further reinforcing that a new broom sweeps clean, Dique’s annual review notes that a "revised strategy" called for the appointment of senior managers "in all the key positions with the right qualities and experience in order to take the group forward."
Included in this management shake-up were leadership changes at key subsidiaries — notably Goldspan in Japan, Metspan in Hong Kong, Capespan in the UK and Fisher Capespan in Montreal, as well as Capespan Exports and FPT (Fresh Produce Terminals) in SA.
The reduced HQ contingent presumably informed the decision to sell the company’s Parc du Cap head office, a development listed as a post-balance sheet event in the annual report.
No price tag was disclosed for the sale of the head office as the transaction was subject to suspensive conditions. The deal looks done and dusted, though. Dique said at the time of writing the annual review that all conditions had been met, including the lease of one floor of the building to accommodate Capespan Exports and the relocation of the small Capespan corporate office.
The proceeds from the head office sale probably won’t have a meaningful influence on Capespan’s 2012 interim numbers, save to reinforce an already stout balance sheet. But the property transaction is perhaps the most tangible gesture of Dique’s determination to sharpen returns, and perhaps gear Capespan up for corporate activity.
Source: www.fm.co.za
