|
Santova on the acquisition path
Date: 19 October 2018 Category: Stock Market Share price at time of writing: R3.30 |
|
Related Topics |
|
We take a quick look at the announcement made by small listed logistics company Santova, in which it agreed to acquire another small logistics firm based in the UK.
|
About Santova
So what exactly does Santova do? Well below more details regarding Santova the business and the sectors and industries they are involved in. Note the below was obtained from their website.
Santova is a specialist international trade solutions business listed on the South Africa stock exchange with offices throughout South Africa, Mauritius, Australia, Germany, Netherlands, United Kingdom, Hong Kong and Mainland China. The Groups strategy is to continually develop and invest in key differentiators that set it apart from its competitors. This is achieved by offering select clients comprehensive supply chain solutions that enable them to achieve competitive advantage through multi-dimensional innovative global supply chain solutions.
As companies continue seeking worldwide sourcing and distributing products in multiple markets, they require extensive sophisticated operational and logistics solutions across geographies. Through being extremely client-centric in its approach, Santova is able to capitalise on its international offices, systems and processes and leverage off a borderless and integrated world economy which is driven by globalisation and technological advancements.
Supply Chain Solutions
The design, planning, implementation, coordinating, controlling and monitoring of the integration and management of interdependent supply chain activities and global intellectual capital with the objective of enhancing further differentiation from competitors through the alignment of business strategy with supply chain optimisation.
Business Intelligence
We empower our clients by unlocking supply chain data and facilitating transparency through unrivalled electronic tools which enables the strategic optimisation of the businesses supply chain. Our ‘virtual’ client–centric information systems accommodate client specific requests and adaptations to the software which allow interface with client systems. The result being global end-to-end inventory/order management and data interchange which offers a lot more than ‘typical’ track and trace services.
Logistic Services
The planning, coordinating implementation, and controlling the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers’ requirements.
Client Sourcing and Procurement Management Services
At the request of our client, we assist in the sourcing and procurement of goods, services or works from an external source. Our focus would be that they are procured at the best possible cost to meet the needs of the client in terms of quality and quantity, time, and location.
Express or Time Sensitive Courier Services
Santova Express is uniquely ‘client-centric’ in its offering and fulfils international express delivery requests on-demand, carrying out door-to-door delivery of goods, including attending to all formalities when delivering across international borders.
Financial Services Risk solutions (short term insurance solutions) range from captive insurance products, profit share facilities, risk transfer and risk management programs to self-insurance funded facilities. This would cover commercial, domestic, marine and structured specialist once-off insurance products.
Santova is a specialist international trade solutions business listed on the South Africa stock exchange with offices throughout South Africa, Mauritius, Australia, Germany, Netherlands, United Kingdom, Hong Kong and Mainland China. The Groups strategy is to continually develop and invest in key differentiators that set it apart from its competitors. This is achieved by offering select clients comprehensive supply chain solutions that enable them to achieve competitive advantage through multi-dimensional innovative global supply chain solutions.
As companies continue seeking worldwide sourcing and distributing products in multiple markets, they require extensive sophisticated operational and logistics solutions across geographies. Through being extremely client-centric in its approach, Santova is able to capitalise on its international offices, systems and processes and leverage off a borderless and integrated world economy which is driven by globalisation and technological advancements.
Supply Chain Solutions
The design, planning, implementation, coordinating, controlling and monitoring of the integration and management of interdependent supply chain activities and global intellectual capital with the objective of enhancing further differentiation from competitors through the alignment of business strategy with supply chain optimisation.
Business Intelligence
We empower our clients by unlocking supply chain data and facilitating transparency through unrivalled electronic tools which enables the strategic optimisation of the businesses supply chain. Our ‘virtual’ client–centric information systems accommodate client specific requests and adaptations to the software which allow interface with client systems. The result being global end-to-end inventory/order management and data interchange which offers a lot more than ‘typical’ track and trace services.
Logistic Services
The planning, coordinating implementation, and controlling the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers’ requirements.
Client Sourcing and Procurement Management Services
At the request of our client, we assist in the sourcing and procurement of goods, services or works from an external source. Our focus would be that they are procured at the best possible cost to meet the needs of the client in terms of quality and quantity, time, and location.
Express or Time Sensitive Courier Services
Santova Express is uniquely ‘client-centric’ in its offering and fulfils international express delivery requests on-demand, carrying out door-to-door delivery of goods, including attending to all formalities when delivering across international borders.
Financial Services Risk solutions (short term insurance solutions) range from captive insurance products, profit share facilities, risk transfer and risk management programs to self-insurance funded facilities. This would cover commercial, domestic, marine and structured specialist once-off insurance products.
Below the Stock exchange news service (SENS) brought out by Santova.
INTRODUCTION
Further to the cautionary announcement published on SENS on 16 July 2018 and the further renewals published on 2 August 2018 and 14 September 2018, the Board of Santova is pleased to announce that subject to the conditions precedent set out below, Santova has acquired 100% of SAI Logistics Limited (“SAI Logistics”) for an amount of GBP3,195,754 with effect 1 October 2018. VENDORS OF SAI LOGISTICS Santova has acquired 100% of the issued share capital of SAI Logistics from Simon Phillips and Andrew Hart. Simon Phillips currently holds a majority stake of 98% in SAI Logistics and is the current managing director and original founder of the business. Simon Phillips will continue to serve as managing director of the company, post the acquisition, for a minimum agreed 3-year period. DESCRIPTION OF THE BUSINESS SAI Logistics is a company incorporated and registered in accordance with the laws of England and Wales and was founded in 2007, which operates as an international freight forwarding agent and operator of a bonded warehouse based in Milton Keynes, United Kingdom.
RATIONALE FOR THE ACQUISTION
Santova’s strategy is to continuously expand its international presence through the acquisition of well-established logistics businesses along key international trade routes and in major international trading geographies. The acquisition of SAI Logistics will further enhance the Group’s current capabilities in the United Kingdom and internationally. This is characterised by the following: * SAI ‘s strong brand within the United Kingdom specialising in sea and air imports along the niche trade route from India to the United Kingdom; * India is forecast to be the world’s 3rd largest economy by 2030 which makes the world’s second most populous nation an extremely attractive market for world trade and the sourcing of products; * SAI’s long established and entrenched relationship with key suppliers and agents in India that can be leveraged to the benefit of shipments from India to the rest of world, particularly in those geographies where Santova has its own offices; * A 2,800 square meter HMRC approved bonded warehouse facility that provides storage and other value-add services such a pick, pack, labelling and e-commerce; * This warehouse facility is situated in Milton Keynes, a major logistics centre, strategically located between London and Birmingham, and will be the Group’s first such facility in the United Kingdom, which can be utilised to the benefit of the Group’s existing operations and client base throughout the United Kingdom; * A long standing stable client base within a niche business that benefits from higher operating margins through the consolidation of cargo and the added value warehousing services; * Long serving, experienced management and staff with strong client relationships; and * A history of consistent profitability and a strengthening financial position.
CONSIDERATION PAYABLE
On fulfilment of the conditions precedent, Santova will settle the purchase price payable for SAI Logistics in the form of cash to be paid as follows: * GBP 1,438,090 payable in cash on the date of completion which takes place 5 business days after the last of the conditions precedent have either been waived or satisfied; * An amount of GBP 575,235 payable in cash within 90 days of the completion of each of the first and second 12-month anniversaries of the effective date, subject to the fulfilment of the profit warranty; and * An amount of GBP 607,194 payable in cash within 90 days of the completion of the third 12-month anniversary of the effective date, subject to the fulfilment of the profit warranty. The profit warranty requires SAI Logistics to achieve a minimum net profit before tax of GBP 595,919 per annum or not less than GBP 1,787,757 in aggregate for the three warranty periods, failing which the purchase price will be proportionately reduced. The purchase price payable for the acquisition of SAI Logistics will be paid in cash and will be funded by Santova through a combination of internal cash reserves and a new R75 million medium term loan facility, which has been approved by the Group’s primary transactional bankers for general acquisition purposes.
CONDITIONS PRECEDENT
The completion of acquisition is subject to the fulfilment of the following remaining conditions precedent: * The effective date accounts as at 30 September 2018 being prepared and finalised prior to completion which demonstrate a warranted minimum adjusted net profit before tax for the previous 12 months of GBP 595,919. * The obtaining of any third party, regulatory, tax or other consents or approvals required for completion; and * There being no breach of warranties or any material adverse events occurring prior to completion.
VALUE OF THE NET ASSETS AND PROFITS ATTRIBUTABLE TO THE NET ASSETS BEING ACQUIRED
The final value of the net assets of SAI Logistics that are being acquired will be determined as per effective date accounts as at 30 September 2018 which are still to be prepared and finalised prior to completion. However, these are expected to be an amount of approximately GBP 701,031. The value of the profits attributable to net assets of SAI Logistics that are being acquired are warranted to be GBP595,919 before taxation for each of the 3 financial years post effective date.
ARTICLES OF ASSOCIATION OF SAI LOGISTICS LIMITED
Santova has confirmed that the Articles of Association of SAI Logistics Limited contain no provisions that would frustrate Santova in any way from compliance with its obligations in terms of the Listings Requirements and furthermore do not contain any provisions that will relieve Santova from compliance with the Listings Requirements. CATEGORISATION OF THE ACQUISITION This transaction is a category 2 transaction as defined by the JSE Listings Requirements and as such does not require specific Shareholder approval
WITHDRAWAL OF CAUTIONARY
Shareholders are advised that the cautionary announcement dated 16 July 2018 and subsequent renewals thereof on 2 August 2018 and 14 September 2018 are hereby withdrawn and shareholders are no longer advised to exercise caution when dealing in Santova shares.
19 October 2018 Durban Sponsor and Corporate Advisor River Group
End SENS
INTRODUCTION
Further to the cautionary announcement published on SENS on 16 July 2018 and the further renewals published on 2 August 2018 and 14 September 2018, the Board of Santova is pleased to announce that subject to the conditions precedent set out below, Santova has acquired 100% of SAI Logistics Limited (“SAI Logistics”) for an amount of GBP3,195,754 with effect 1 October 2018. VENDORS OF SAI LOGISTICS Santova has acquired 100% of the issued share capital of SAI Logistics from Simon Phillips and Andrew Hart. Simon Phillips currently holds a majority stake of 98% in SAI Logistics and is the current managing director and original founder of the business. Simon Phillips will continue to serve as managing director of the company, post the acquisition, for a minimum agreed 3-year period. DESCRIPTION OF THE BUSINESS SAI Logistics is a company incorporated and registered in accordance with the laws of England and Wales and was founded in 2007, which operates as an international freight forwarding agent and operator of a bonded warehouse based in Milton Keynes, United Kingdom.
RATIONALE FOR THE ACQUISTION
Santova’s strategy is to continuously expand its international presence through the acquisition of well-established logistics businesses along key international trade routes and in major international trading geographies. The acquisition of SAI Logistics will further enhance the Group’s current capabilities in the United Kingdom and internationally. This is characterised by the following: * SAI ‘s strong brand within the United Kingdom specialising in sea and air imports along the niche trade route from India to the United Kingdom; * India is forecast to be the world’s 3rd largest economy by 2030 which makes the world’s second most populous nation an extremely attractive market for world trade and the sourcing of products; * SAI’s long established and entrenched relationship with key suppliers and agents in India that can be leveraged to the benefit of shipments from India to the rest of world, particularly in those geographies where Santova has its own offices; * A 2,800 square meter HMRC approved bonded warehouse facility that provides storage and other value-add services such a pick, pack, labelling and e-commerce; * This warehouse facility is situated in Milton Keynes, a major logistics centre, strategically located between London and Birmingham, and will be the Group’s first such facility in the United Kingdom, which can be utilised to the benefit of the Group’s existing operations and client base throughout the United Kingdom; * A long standing stable client base within a niche business that benefits from higher operating margins through the consolidation of cargo and the added value warehousing services; * Long serving, experienced management and staff with strong client relationships; and * A history of consistent profitability and a strengthening financial position.
CONSIDERATION PAYABLE
On fulfilment of the conditions precedent, Santova will settle the purchase price payable for SAI Logistics in the form of cash to be paid as follows: * GBP 1,438,090 payable in cash on the date of completion which takes place 5 business days after the last of the conditions precedent have either been waived or satisfied; * An amount of GBP 575,235 payable in cash within 90 days of the completion of each of the first and second 12-month anniversaries of the effective date, subject to the fulfilment of the profit warranty; and * An amount of GBP 607,194 payable in cash within 90 days of the completion of the third 12-month anniversary of the effective date, subject to the fulfilment of the profit warranty. The profit warranty requires SAI Logistics to achieve a minimum net profit before tax of GBP 595,919 per annum or not less than GBP 1,787,757 in aggregate for the three warranty periods, failing which the purchase price will be proportionately reduced. The purchase price payable for the acquisition of SAI Logistics will be paid in cash and will be funded by Santova through a combination of internal cash reserves and a new R75 million medium term loan facility, which has been approved by the Group’s primary transactional bankers for general acquisition purposes.
CONDITIONS PRECEDENT
The completion of acquisition is subject to the fulfilment of the following remaining conditions precedent: * The effective date accounts as at 30 September 2018 being prepared and finalised prior to completion which demonstrate a warranted minimum adjusted net profit before tax for the previous 12 months of GBP 595,919. * The obtaining of any third party, regulatory, tax or other consents or approvals required for completion; and * There being no breach of warranties or any material adverse events occurring prior to completion.
VALUE OF THE NET ASSETS AND PROFITS ATTRIBUTABLE TO THE NET ASSETS BEING ACQUIRED
The final value of the net assets of SAI Logistics that are being acquired will be determined as per effective date accounts as at 30 September 2018 which are still to be prepared and finalised prior to completion. However, these are expected to be an amount of approximately GBP 701,031. The value of the profits attributable to net assets of SAI Logistics that are being acquired are warranted to be GBP595,919 before taxation for each of the 3 financial years post effective date.
ARTICLES OF ASSOCIATION OF SAI LOGISTICS LIMITED
Santova has confirmed that the Articles of Association of SAI Logistics Limited contain no provisions that would frustrate Santova in any way from compliance with its obligations in terms of the Listings Requirements and furthermore do not contain any provisions that will relieve Santova from compliance with the Listings Requirements. CATEGORISATION OF THE ACQUISITION This transaction is a category 2 transaction as defined by the JSE Listings Requirements and as such does not require specific Shareholder approval
WITHDRAWAL OF CAUTIONARY
Shareholders are advised that the cautionary announcement dated 16 July 2018 and subsequent renewals thereof on 2 August 2018 and 14 September 2018 are hereby withdrawn and shareholders are no longer advised to exercise caution when dealing in Santova shares.
19 October 2018 Durban Sponsor and Corporate Advisor River Group
End SENS
Always nice to see smaller South Africa companies branch out and actively looking for new markets beyond South Africa. All the best to them with this acquisition.