Santova Ltd

Investor presentation 17 May 2018

▪ Vision & purpose

▪ Geographical footprint

▪ Group profile

▪ Business model

▪ Clients

▪ Overview 2018

▪ A changed world

▪ Future strategy

▪ An investment case

▪ Financial analysis

Agenda

Providing, managing and controlling a global

network of interconnected

activities

for multinational organisations from origin to point-of-

consumption

Vision

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

intellectual capital

Driving our clients to achieve a competitive advantage through innovative international trade

solutions

▪ ‘Listening’ to the market.

▪ Staying relevant through self-induced change, adaptation and innovation.

▪ Differentiating from the industry through people, intellectual capital, and

effective application.

International offices

7 Countries

Total 19 Offices

South Africa 6Holland 2

Germany 2Australia 1

Hong Kong 1Mauritius 1

United Kingdom 6

Total number of staff329

International Trade Solutions

7 Business Units

• Advanced supply chain solutions.

• Business intelligence.

• Logistics services.

• Client sourcing and procurement management services.

• Global project management.

• Express or time sensitive courier services.

• Financial services.

Intellectual capital

• Needs analysis, solution design, and application.

• Business optimisation through sophisticated services, workflow processes and unique software packages.

• Global knowledge and expertise (‘know-how’).

Information Technology

• Differentiation through systems driven business intelligence.

• Big data predictive analytics to artificial intelligence and robotics.

• Scalability, converting non-profitable services into profitable ones.

• Blockchain technology, a ‘shared economy’, collaboration.

Group profileD

r i v e

r s

Strong Culture

• Entrepreneurial dynamic leadership.

• Quality people.

• Unwavering values and philosophies.

Client distribution

Total number of clients

4,934

Region Net Revenue% of Top

26

% Return

vs SA

South Africa R44 704 099 61% -

Europe R13 612 181 19% 676%

United Kingdom R7 099 278 10% 194%

Asia Paciifc R7 897 980 11% 631%

Total Top 26 R73 313 539 100,00%

Client Industry Region% of

Group revenue

1 Clothing/Textiles South Africa 4,95%

2 Clothing Exports United Kingdom 1,22%

3 Air-conditioning South Africa 1,13%

4 Motor vehicle South Africa 1,00%

5 Biometrics/Security South Africa 0,98%

6 Pharmaceuticals Australia 0,91%

7 Promotions Netherlands 0,89%

8 Paper South Africa 0,87%

9 Technology Distributor South Africa 0,85%

10 Pet food & animal nutritionNetherlands 0,84%

11 Wholesale South Africa 0,78%

12 Chemicals Germany 0,77%

13 Food South Africa 0,77%

14 Agent Netherlands 0,64%

15 Fresh Produce Australia 0,58%

16 Luxury Goods Germany 0,58%

17 Clothing United Kingdom 0,53%

18 Seed South Africa 0,52%

19 Pharmaceuticals Australia 0,48%

20 Technology South Africa 0,44%

21 Wind Energy South Africa 0,43%

22 Clothing South Africa 0,43%

23 Pharmaceuticals Australia 0,43%

24 Chemicals South Africa 0,43%

25 Gaming Netherlands 0,42%

26 Coins United Kingdom 0,40%

Top 26 Total 22,27%

Overview2018

Resilient Performance

Good progress despite strong

headwinds

Exciting opportunities, Santova founded in and ‘thrives’ on a climate of disruption.

Unprecedented change, driven by technology and changed consumer buying patterns.

Remained focused and disciplined in deploying strategic growth initiatives.

Performance of the Group has been organic.

Exciting times, 8th year of successive growth, despite the strengthening Rand and struggling South

African economy.

GBP to USD

USD to ZAR

GBP to ZAR

Currency Headwinds

RAND vs USD / GBP

GBP vs USD

Our Economic MoatSustainable Earnings Growth + Resilience

▪ Currency hedge.

▪ Geographical diversity.

▪ Diverse industries.

▪ Global client spread.

▪ Multiple revenue streams.

▪ Multiple complementary business units.

▪ A complex, sophisticated business model.

▪ Leveraging of next generation technology.

▪ Highly relevant, founded on future needs.

▪ Globalisation, unlimited growing market.

Most importantly, a strong entrepreneurial culture

underpinned by sound values and strong leadership.

Global operations • Strengthening Rand and state of the SA economy.

• Industry, ‘commoditised’ pricing, lower margins.

• Assisting clients in differentiating, innovative service levels, has enhanced Santova’ s brand.

South Africa

• Merged- WM Shipping Limited and Santova Logistics.

• Eliminated duplication of administrative structures.

• A consolidation of the capabilities and know - how or core competencies of both businesses.

• Shared buy rates and networks worldwide.

• Sophisticated business model now ‘rolled-out’.

United Kingdom

• High rate of new client sign-on.

• The European economy has improved significantly.

Europe

• Strong growth being achieved.

• Upturn in manufacturing, and global trade.

• Improved buy rates and higher freight rates 2017.

Asia Pacific

OFFSHORE

60% GROUP CONTRIBUTION

ASIA PACIFIC 14%

UNITED KINGDOM 19%

EUROPE 26%

AFRICA 41%

Effective LeadershipQuality of our People

Our culture and values.

Leveraging of Agents &

AssociationsTransferability of intellectual capital

TradeNav®/CargowiseCompleted and being deployed,

transforming into the cloud-age

Management of Client

Sourcing & ProcurementOffering ‘real value’ to client

InnovationWillingness to embrace the future,

through revolutionary or evolutionary

practices

Santova Graduate ProgramNext layer of skills, abilities and

leadership

Santova ExpressLeveraging of digitalisation and the

movement of smaller packages

Stabilised UK OperationsWM Shipping

Group

Purchasing

PowerGenerally

improved buy-

rates

Achievements 2017

Customer Expectations

Application of Intelligent

Technology

CompetitiveNew Entrants

New Business Models

Customer expectations

▪ New shopping patterns, digital consumer.

▪ Devices (laptop 34%, desktop 30%, smartphone 24%), data and social networks

▪ Customised products, ‘consumer centric structures’.

▪ Consumers are ‘shipper-agnostic’: they don’t care who delivers their goods, as long as

they get them reliably, quickly and at low or no delivery cost.

▪ Pay a premium for value add services, such as faster delivery for high-value items.

▪ Growing interest in the ‘sharing economy’, collaboration and ‘crowd sharing’ solutions.

Intelligent Application of Technology

▪ Cloud technology is enabling platform solutions, facilitating the ‘virtual movement of goods.

▪ Blockchain technology fosters automation and efficiency between supply chain partners.

▪ Provides scalability, as well as standardised and harmonised processes.

▪ 3-D printing, manufacture close to point of consumption.

▪ Converting low margin shipments into more profitable shipments.

▪ Instantaneous, agile pricing providing a fast and simple booking process.

New Business Models

▪ Looking to carve out the more lucrative elements of the value chain.

▪ Exploiting digital technology or new ‘sharing’ business models.

▪ Asset light and no cumbersome traditional systems weighing them down.

▪ Interactive benchmarking of freight rates, including immediate, agile pricing.

▪ Supplier’s bid for loads, and/or matching shippers with available capacity.

▪ Linking via interface (API) directly to a large number of carriers.

▪ Individual apps in the freight, parcel or last-mile space.

Not all smooth sailing!

. Each company has its own labelling system, may not reflect its own brand.

. Accountability, and a lack of consistency make collaboration more difficult.

. Circumvention (“partner integrity”).

. Inconsistencies in processes and IT systems, lagging industry IT DNA.

. Cybersecurity an issue as we shift to new data standards and greater data sharing.

Increased M&A, joint ventures, and alliances as a way to achieve collaboration.

Competitive New Entrants

▪ Online retailers expand their own logistics offerings, reduce their dependence on LSPs.

▪ Suppliers (shipping lines, transporters, banks) are also entering the logistics business.

▪ Technology and software suppliers also now offering logistics services.

▪ Manufacturing, introducing 3-D printing.

All the above are driving for:

. Transparent fee structures.

. Digitised trade documents.

. Event-based dashboards and 24/7 track and trace tools.

Future strategy

▪ Application and leveraging off

technology.

▪ Santova Express: Small

parcels business.

▪ Strategic acquisitions.

The cost to transport a container in the benchmark Asia-to-Europe route rose to $965 in May, up 55% from a

year earlier.

At the port of Singapore, which the industry uses to gauge

trade flows, container volume rose 5% in the first quarter

from a year earlier.

The % of idle ships is was 3.5% in the first three months of

2017, compared with 6.5% in the previous quarter.

The top 20 operators by capacity posted combined net

losses in 2016 of $5 billion. Since then, the big players

have merged or formed alliances and most are

expected to swing to a profit this year.

Much improved international trading

environment

80%55%

Application and leveraging

off digital technology

➢ Cloud technology is offering platform solutions, allowing the ‘virtual flow of goods’.

➢ Blockchain technology, greater automation between supply chain partners.

➢ Scalability, standardised and harmonised processes, competitive pricing and higher margins, greater efficiencies and effectiveness.

➢ New services or product offerings, including small parcels and e-commerce.

➢ Enabling ‘shared business models’, collaboration throughout the supply chain.

The opportunitySmall packages/parcels

Digitisation has changed how people

communicate, smartphones and

billions of devices are now

interconnected.

Global parcel volumes have increased

48% from 44 billion parcels in 2014 to 65

billion in 2016, estimated to continue to

rise at a rate of 17 - 28 % each year until

2021.

Of the 13 countries analysed:

• United States remains the largest market in terms of spend.

• China grew 52 % in one year.

• Germany, B2C represented 58 % of all parcels in Germany (largest in Europe).

• In the United Kingdom, parcel volume increased by 12 % to 2.5 billion.

• Australia experienced double-digit growth in parcel volume.

Parcels and

express was

by far the key

growth driver in

2016, with

revenue up

€5.6bn.

* 56% - Alibaba, Amazon or eBay.

* 62% - Free delivery.

* 34% - Purchased from China.

* 82% - Under 2kg.

* 40% - Fit into mail box.

* 70% - Full delivery cost upfront

Knowing landed cost and

live tracking of parcel is important.

GLOBAL POSTAL INDUSTRY 2016Europe, North & South America and the Asia-Pacific region48 postal operations and 28,892 consumers participated in

survey

Strategic Acquisitions

▪ Scale matters, expanding global representation and building niched capabilities.

▪ Target zones: South East Asia, United Kingdom, Europe and The United States.

▪ Acquiring clients, networks, markets and niche specific intellectual capital.

▪ Transforming 3PL’s into a sophisticated end-to-end SCM business model.

▪ Expanding current service offering to include a broader range of Group services.

▪ Industry remains averse to change, a reluctance to embrace automation due to:

. financial constraints.

. the rate at which technology is changing.

. the acute shortage of specialised skills or ‘know-how’.

ADVANCED SCM SERVICES

▪ Strategic global partnerships

▪ New organisational structures

▪ Knowledge – information based

▪ Next generation technology and

software packages

▪ Adaptable, flexible and

collaborative engagement

▪ Shared risk and reward, gain

share models

▪ Demand driven material

requirements planning (DDRP)

CUSTOMS CLEARING,

FORWARDING &

LOGISTICS

▪ Contractual

▪ Not independent

▪ Price driven

▪ Own services and

outsourced

BASIC SERVICES

▪ One dimensional

▪ ‘Commoditised’

▪ Transaction based

CUSTOMS

CLEARING,

FORWARDING &

LOGISTICS (3PL)

CUSTOMS

CLEARING or,

WAREHOUSING or

TRANSPORT

LEAD LOGISTICS PROVIDER

▪ Contractual

▪ Management of

suppliers

▪ Contract management

▪ Integrator of services

▪ Risk sharing

▪ Independent facilitator

▪ Workflow processes

▪ Fleet mix optimisation

▪ Demand driven

LEAD LOGISTICS

PROVIDER (4PL)

Evo

lvin

g c

ap

ab

ilit

y

2006 20152003 2009 2012

Level 1

Level 2

Level 3

Business model

Domestic

structured,

predictable

engagement

Globalentrepreneurial

innovative

engagement

Increasingly complex engagement

2018

BUSINESS ENGINEERING

Level 4

Automated

engagement

Consultative

engagement

Transactional products

(Call centre clients)

Integrated solutions

(High personal engagement)

Protect profit margins / Diverse global earnings / Barriers to entry / Strong client retention

Target companies

The industryAn investment case

▪ Consistent growing market▪ Innovation abound▪ Growing demand

A good time to invest in logistic companies.

▪ Consistent Market, yet growing. Ever-growing e-commerce and small parcel trade.

. Changing consumer landscape, fast, reliable, low cost yet flexible services.

. Technological ‘disruption’, demand for new products and services

▪ Innovative Opportunities . New entrants can innovate and differentiate, generating even greater profitability.

. The industry is old fashioned, has a very low degree of digital DNA.

. Industry is fragmented and has limited capital and know-how.

. Industry is open to a totally new perspective.

▪ Increasing Demand . Globalisation, continued growth in cross border trade.

. Customised product and variable sourcing and distribution nodes are leading

to a boom in logistics investment.

INVESTING IN THE LOGISTICS SECTOR

Global Venture Capital Investments

Global venture capital investment in logistic technologies has exponentially risensince 2014.

▪ $ 5.3 bn allocated in 2016, 315 venture deals, 70% in early-stage investment.

Financial Analysis

2018 Operating

Context

• External Factors

• Income Statement

- Average exchange rates - below 2017

• Balance Sheet

- Closing exchange rates – limited impact

• UK Economy – Brexit – positive/negative impacts

• SA Economy – some improvement post Dec 2017

• Recovery in Shipping Rates – impact on margins

• Internal Factors

• No acquisitions current or preceding year

• Declining corporate income tax rates internationally

• Accelerated long term debt repayment

• Acquisition of 25% minority stake in Australia

• Ongoing investments in infrastructure and talent

• Improved ‘buy rates’ – impact on margins

Operating Context – FOREX

2017

2018

2018 2017 Movement

R'000 R'000 %

AVERAGE EXCHANGE RATES

Primary Reporting Currencies

- GBP/ZAR 17.15 18.92 (9.4)%

Direct impact on translation of foreign profits- EUR/ZAR 15.11 15.71 (3.9)%

- AUD/ZAR 10.10 10.71 (5.7)%

- HKD/ZAR 1.68 1.84 (8.8)%

Primary Transactional Currencies

- USD/ZAR 13.07 14.26 (8.3)% Indirect impact on South African revenues

AVERAGE DECREASE (7.2)%

CLOSING EXCHANGE RATES

Primary Investment Currencies

- GBP/ZAR 16.26 16.19 0.5%Direct impact on OCI and Equity

- EUR/ZAR 14.35 13.80 4.0%

2018 Income Statement - Analysis

2018 2017 Movement

R'000 R'000 %

BILLINGS 4 123 540 4 073 868 1.2%

REVENUE 329 277 315 415 4.4%

Other income 14 362 22 765 (37)%

Depreciation and amortisation (3 355) (5 921) (43)%

Administrative expenses (239 628) (235 476) 2%

Operating profit 100 656 96 783 4%

Interest received 279 427 (35)%

Finance costs (5 998) (9 187) (35)%

Profit before taxation 94 937 88 023 8%

Income tax (23 670) (23 403) 1%

Profit for the year 71 267 64 620 10%

Attributable to:

Equity holders 71 252 62 791 13%

Non-controlling interests 15 1 829 (99)%

Other comprehensive income

Exchange differences on translation (3 933) (78 840) (95)%

Currency

Adjusted

4.1%

8.6%

(34)%

(42)%

6%

8%

(31)%

(35)%

Currency 12%

Impact 4%

(5)% 15%

(99)%

Leverage

Points

1 Organic revenue growth - outstripping

inflationary increases in costs

1 Organic revenue growth - outstripping

inflationary increases in costs

2 Ongoing repayment of acquisition financing

3 Benefits of lower international tax rates

4 Purchase of 25% minority interest in Australia

Key ratios:

- Billings/revenue margin 8.0% 7.7% 0.3%

- Operating margin 30.6% 30.7% -0.1%

- Effective tax rate 24.9% 26.6% -1.7%

- Headline earnings per share (cents) 44.84 39.89 12.4% Net sum = 12.4% Growth in HEPS

2018 Source of Profitability - Analysis

FIN SERV HO

AFRICAASIA

PACIFICUK EUROPE

SOUTH

AFRICA

SOUTH

AFRICATOTAL

R'000 R'000 R'000 R'000 R'000 R'000 R'000

REVENUE

2018 138 937 31 635 76 453 73 499 9 861 (1 108) 329 277

2017 134 020 31 728 72 897 68 032 9 500 (762) 315 415

4% 0% 5% 8% 4% 45% 4%

LOCAL CURRENCY 4% 7% 16% 12%

PROFIT FOR THE PERIOD

2018 29 799 10 599 13 668 19 425 3 738 (5 962) 34 660

2017 20 456 10 292 12 809 19 777 3 742 (2 456) 27 154

46% 3% 7% -2% 0% 143% 28%

LOCAL CURRENCY 46% 11% 18% 2%

LOGISTICS SERVICES

HIGHLIGHTS

- Significant investment in improved infrastructure in Tradeway Leeds office and Australia

- Significant investment in talent in BV and Aus primarily Sales, Supply Chain and Graduates

- Turnaround in WM Shipping UK - return to profitability

- Very strong performances in local currency from:

- Hong Kong 95% increase in profit

- Tradeway UK 33% increase in profit

- South Africa 33% increase in profit

- Germany 2061% increase in profit

2018 Balance Sheet - Analysis

Source 2018 2017 Move

of Funding R'000 R'000 %

ASSETS

Trade & other receivables 641 518 590 574 9% 25% Increase in Feb Billings in SA R51.2 mil.

Intangible assets 181 411 178 494 2% Further TradeNav development costs

Cash and cash equivalents 108 371 91 780 18%

Property, plant and equipment 20 379 18 540 10% Investment in infrastructure in UK and Aus

Taxation 8 331 10 352 (20)%

Financial assets 4 366 6 332 (31)%

964 376 896 072 8%

EQUITY AND LIABILITIES

Capital and reserves 43% 416 172 365 567 14%

Liabilities

Trade and other payables 21% 202 540 205 710 (2)%

ST Borrowings and overdrafts 27% 265 097 228 380 16% Primary funding mechanism in SA - ID Facility

LT Interest-bearing borrowings 36 600 57 093 (36)% R39 mil 2013 MT Loan now fully repaid

Financial liabilities 17 350 15 135 15% Final Tradeway warranty payment in Mar 18

Short-term provisions 18 087 17 808 2%

Taxation 7 246 4 954 46%

Long-term provisions 1 284 1 425 (10)%

964 376 896 072 8%

KEY RATIOS: - Debtor days 51 48 (3) Impact 25% increase in Feb Billings in SA

- Creditor days 19 20 (1)

- Debt to equity ratio 46.5% 53.0% 7% R39 mil 2013 MT Loan now fully repaid

- NAV per share 2.61 2.32 13%

SA Foreign

R'000 R'000

498 926 142 592

78% 22%

265 097 -

100%

Trade Receivables - Credit Quality Analysis

2018 2017 Movement

R'000 % R'000 % %

Trade receivables 579 376 100% 539 111 100% 7.5%

- South Africa 470 790 81% 425 561 79% 10.6% Credit insured for 85% - 90%

- Offshore 108 586 19% 113 550 21% (4.4)%

Key ratios:

Debtor days 51.3 48.3 3.0 Impact 25% increase in Feb Billings in SA

Impairment provisions

- Total amount 5 714 10 666 (46.4)%

- Percentage of Trade receivables 0.99% 1.98% (50.1)%

Impairments written off

- Total amount (net of recoveries) 990 224 342.1%

- Percentage of Trade receivables 0.17% 0.04% 311.4%

Ageing of Trade Receivables

- Total amount >60 days past terms 9 445 7 967 18.6%

- Percentage >60 days past terms 1.63% 1.48% 10.3%

2018 Cash Flow & Funding – Analysis

2018 2017 Movement

R'000 R'000 %

OPERATING ACTIVITIES

Net cash flows from operating activities 67 760 56 474 20%

INVESTING ACTIVITIES

CAPEX (7 974) (3 999) 99% Investment in infrastructure & TradeNav development

Acquisition of subsidiaries - (24 077) (100)% Tradeway warranty payments

Acquisition of minority interest (11 271) - 100% 25% Santova Australia

FINANCING ACTIVITIES

LT Borrowings repaid (20 771) (18 885) 10% Accelerated repayment of two 5 yr. Medium Term Loans

Share issued & purchased (1 077) (360) 199%

Dividends paid (6 035) (8 654) (30)% Lower amount due to Scrip Dividend in 2017

TRANSLATION

FOREX Impact (4 033) (31 619) (87)%

CASH AT YEAR END 108 371 91 772 18%

.

Total cash on hand: 108 371 91 772

- South Africa 12 448 11% 7 639 63%

- Offshore 95 923 89% 84 133 14%

FUNDING FACILITIES

Total available facilities 429 462 451 056 Reduction due to repayment of 5yr. MT Loans

Total unutilised facilities 127 922 165 583 Additional R56 million in facilities not taken up

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 youQuestions and discussion?