SANTOVA SANTOVA Investor Presentation 18 th May 2016 Innovative - PowerPoint PPT Presentation

SANTOVA SANTOVA Investor Presentation 18 th May 2016 Innovative Solutions. Endless Possibilities

AGENDA The year in perspective The logistics industry and the current economic climate Focus on a ‘counter-cyclical’ strategy and business model Internationalising and diversifying Santova Financial highlights Strategic pillars of ongoing development and management Focus and future strategy

To be a recognised brand in global trade solutions through strategic international offices and leading intellectual capital.

The year in perspective Ability to mitigate these factors Clear growth Strong execution strategy structure ‘Counter- Strategy of cyclical Industry challenges diversification business model’ • Geographic regions • Growth . Industry faced with flat global economic growth • Currencies • Innovation • Industries • Efficiency- . Intense competition, new entrants in the domestic market • Diversified services effectiveness . Diminishing margins, price ‘wars’ . Stagnating or reducing trade volumes . Ongoing over-capacity in ocean and airfreight . Consolidations through mergers and acquisitions The result is resilience and sustainable year-on-year growth

EFFECT OF GLOBAL Offshore Listed Companies ECONOMIES Movement in share price over the last 5 years on the industry 05.04.2016 Santova share 20.5 19.7 24.5 86.2 R4.01 Transport & Logistics Industry Average price to earning ratio is more than 20 in the 1. Quarter 2016 05.06.2011 Santova share R.80 11.6 Challenging 7 years for the industry

South African Listed Companies Movement in share price over the last 5 years 05.04.2016 Santova share R4.01 11.7 7.9 10.6 9.5 18.6 All share ex resources PE 19 Transport PE 24 05.06.2011 Santova share R.80 11.6 Challenging 5 years for the industry – more so than their offshore counterparts

Global Presence Market change and complexity is driving 327 employees opportunity for Santova 20 offices worldwide In response, 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) These market conditions are considered favourable for Santova: 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  “Loyalty is fast becoming second to value add or ‘cost savings’” “Greater collaboration : multi-partner sharing of activities , including warehousing, transportation (“asset utilisation”)” The opportunity: Santova is non-asset based and independent

Our strategy and business model has supported our drive for sustainable year-on-year growth Revenue R279m 24.3% Net Profit Before Tax R67m Increase In Cash On Hand 29.9% 176% R124m Normalised HEPS 34.28 cents Increase In Reserves And 33.2% Capital 68% R386m Operating Margin 25.4 % 5.39% “A strong focus on balanced growth, irrespective of market conditions”

7 years of year-on-year growth NET PROFIT BEFORE TAX Revenue R'000 R'000 66736 278 655 51 386 224 235 201 879 40 014 33 470 165 633 29 756 152 115 132 872 23 216 87 728 6 853 2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016 NET ASSET VALUE PER SHARE NORMALISED HEPS Cents Cents 34.29 25.73 21.65 17.66 15.99 245 10.65 169 145 108 92 3.08 75 64 2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016

Internationalising and diversifying Santova

DIVERSIFICATION actual Restated including Tradeway Group R’000 Geographical and currency 12month period ending 31st March 2016 R'000 Actual Restated Profit before tax by country Profit before tax by country Onshore Onshore Offshore 63% 45% 37% Offshore 55% 37% 45% 34% 23% 30m 30m 28% 28m 23% 10% 8% 19m 19m 15m -3% 1% -3% 1% 7m 7m -2m -2m 384k 384k SOUTH AFRICA UNITED HOLLAND AUSTRALIA GERMANY HONG KONG SOUTH AFRICA *1 UNITED KINGDOM *2 HOLLAND AUSTRALIA GERMANY HONG KONG *1 KINGDOM *2 *1 Includes Santova Financial Services *2 Includes Tradeway Group for 12 months (Turnover R46m, Net Profit before tax R19m) *2 Includes Tradeway Group (3 months) Excludes Santova Logistics (Mauritius) Excludes Santova Logistics (Mauritius)

Logistic Services Geographical segments Profit after tax R’000 38% 18 271 28% 24% 13 287 11 426 11% 5 092 AFRICA ASIA PACIFIC UNITED KINGDOM EUROPE

NET GROWTH YEAR ON YEAR PROFIT BEFORE TAX (R15M) 106% 72% 8m 7.8m 10% Including all SA 70% divisions (16% Logistics only) 2.6m 2.8m 0% -83% -1.4m -1.8m South Africa *1 United Kingdom Holland Australia Germany Hong Kong *2

TOP 20 CLIENT REVENUE 29 FEBRUARY 2016 GROSS REVENUE COMPANY NAME INDUSTRY DESCRIPTION % 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

Business Model: Offshore vs. Onshore Return on capital employed Debtors book Estimate based on what the business requires to function as a % of Groups total debtors book 75% 198% 451m 103% 15% 3% 2% 1% 4% 47% 38% 92m 26% 25m 18m 11m 0% 4m SOUTH AFRICA AUSTRALIA UNITED HOLLAND GERMANY *4 HONG KONG SOUTH AFRICA AUSTRALIA UNITED HOLLAND GERMANY *4 HONG KONG *1 KINGDOM *2 *1 KINGDOM *2 Number of shipments per staff Net revenue per staff Monthly Annual 58 60 39 2.8m 33 2.4m 19 1.6m 13 755k 690k 730k SOUTH AFRICA AUSTRALIA UNITED HOLLAND GERMANY *4 HONG KONG SOUTH AFRICA AUSTRALIA UNITED HOLLAND GERMANY *4 HONG KONG *1 KINGDOM *2 *1 KINGDOM *2

Financial highlights

2016 FINANCIAL OVERVIEW • Continuation of 7 year trend in growth of profit and assets • Strong performance from certain offshore subsidiaries • Solid growth of SA logistics profitability despite economy • Increased operating margins due to efficiencies • Investment in new ‘start up’ territories – Germany, Ghana, Mauritius • Transformed balance sheet • Assets exceeding R1 billion • 176% increase in cash on hand • Substantial strengthening in capital and reserves • Significant reduction in gearing

GROUP PROFITABILITY 2016 2015 % R'000 R'000 Gross Billings 3,797,890 3,462,792 10% South Africa 2,717,174 2,838,582 -4% Impact of economy on freight volumes in SA Foreign 987,880 624,210 58% Tradeway 92,836 - 100% Tradeway included for 3 months Revenue 278,655 224,235 24% South Africa 140,326 132,439 6% Foreign 124,451 91,796 36% Tradeway 13,878 - 100% Tradeway included for 3 months % Margin 7.3% 6.5% 0.9% South Africa 5.2% 4.7% 0.5% Results of focus on higher yielding airfreight project shipments and supplier consolidation and rate renegotiations Foreign 12.8% 14.7% -1.9% Impacted by a decline in freight rates in the UK 13% excl Tradeway, 3% in SA Logistics operations and 6% in Administration expenses 215,022 182,742 18% foreign operations in local currency % Operating margin 25.4% 24.1% 1.3% Boosted by margin gains and overhead efficiencies Increased profitability and higher corporate tax rates in % Effective tax rate 25.2% 23.7% 1.5% Netherlands 25%, Australia 30% and SA 28%

SOURCE OF PROFITABILITY 2016 % R'000 Source of Growth in profit for the year Organic growth 11,553 75% Currency depreciation 2,085 14% Contribution from acquisitions 1,712 11% Tradeway for 3 months net of transaction and financing costs Total growth in profit for the year 15,350 100% Regional source of growth in profit for the year Group -272 -2% Financial Services 934 6% Logistic Services 17,333 113% Netherlands 7,928 52% South Africa 4,648 30% Tradeway 2,935 19% Australia 2,760 18% UK 901 6% HK -1,839 -12% Impact of the reduction in volumes from one major SA Listed client Start Up Phase Operations -2,645 -17% Mauritius -294 -2% Results of CAPEX into new offices, equipment and systems Ghana -928 -6% Investment in registering and licencing a new division in Tema Germany -1,423 -9% Investment in opening up new Hamburg sea freight branch Total growth in profit for the year 15,350 100%