Samstel Nigeria Ltd.Investor prospectus

WHO WE ARE

• SAMSTEL NIG. Limited is an indigenous company incorporated on the 18th of April, 1989. The company began operation as a buyer of Agricultural produce (LBA- Licensed Buying Agent) and distributor of agro-allied chemicals on September, 2010

• The company has her head office in Lagos and coordinates the agricultural produces business from a branch office in Ile-Oluji, Ondo State

OBJECTIVES

To be a leading Agricultural produce buyer in Nigeria

To grow our bottom-line by continuously improving our operational processes and staff competence to the benefit of our shareholders and investors

To set the pace for supply chain management in the agricultural sector of Nigeria and West Africa

WHAT WE DOWe specialize in the trading of agricultural cash products and distribution of agro-allied chemicals

COCOA

PALM KERNEL

AGRO-ALLIEDCHEMICALS

OUR PEDIGREEManagement

Team with over20 years inAgricultural

produceTrading

Major Clients – SARO, KIRANIL,

OLAM, ICPL

Large Supply Network

With Over 50 Agents And

Farmers

Operating For More

Than 3 Years

Standard Business Process

ADVANCE PAYMENT MODEL

SEE & BUY MODEL

OUR BUSINESS MODELIn SAMSTEL NIG. Ltd we run an HYBRID business model, combining both the ADVANCE PAYMENT modeland the SEE & BUY model

MODEL DESCRIPTION PROS CONS

• Credit line/Advance Payment from Exporter to LBA to supply at an agreed price within a specified period

• LBA disburses the received funds as an Advance payment to Agents to supply Cocoa/agricultural produce in order to meet the supply deadline

• Agents buys the produce from the farmers with the received funds from the LBA

• The LBA buys from an Agent or farmer directly with his funds at an agreed price.

• The LBA negotiates for a profitable price with the Exporter or Local processor based on an informed knowledge of his cost price

• Access to more working capital to buy more products with an increased profit margin

• The LBA is not under pressure to meet supply deadlines.

• More attention is paid to the actual management of the business.

• More bargaining Power

• Eroded capital base due to bad credits (defaulter)

• Lesser attention is paid to business management rather the company pursues credit recovery

• The LBA is always under pressure to meet supply deadlines

• Very capital intensive

We Operate an HYBRID business Model

VALUE CHAIN & KEY SUCCESS FACTORS

Key Success Factors

•Adherence to produce buying guidelines

•Efficient operating Processes

•Outlined Credit Management Process

•Huge Capital base

•Competent staff and management team

• Controlled Credit-Line

• Improved and sustained Government assistance

• … • …• Adherence to production best practice

• Good negotiating skills

• Adherence to production best practice

OPERATIONAL PROCESS FLOW

• 1.1 Informs the Manager/Accounting officer of intention to sell produce

• 1.2 Request for the buying price

• 2.1 Agree terms of trade

• 2.2 Confirm quantity of produce to be supplied

• 2.3 Fill the agreement form and sign

• 3.1 Supply the produce to the warehouse or arrange with the Operations manager for pick up, if agreed at initiation

• 3.2 Pick-up produce from Agents store if agreed at initiation

• 4.1 Offload the produce into the warehouse

• 4.2 Take the weight of the produce and fill the weight register

• 4.3 Take the necessary quality parameters (Moisture content etc)

• 4.4 Check for contaminants and defects (Moulds, Slatin Mould)

• 5.1 Confirm that the necessary discounting was done

• 5.2 Verify the agreed price from the agreement form

• 5.3 Recommend for approval & payment

• 5.4 Confirm that the CO recommended for Payment

• 5.5 Make payment via EFT, Cheque or Cash.

• 5.6 Issue receipt and receipt tally sheet

• 6.1 Market produce to Exporter/Local processors/foreign processor

• 6.2 Negotiate a profitable selling price with the Exporter/Local processor

• 6.3 Sign agreement with Exporters/Local processor

• 7.1 Grading of produce to exporter’s specification

• 7.2 Process the produce until it meets the required specification

• 7.3 Grade, Package and Evacuate to Exporter

• 8.1 Collect payment on delivery of produce

ANNUAL PROFIT & LOSS PROJECTIONSAMSTEL NIG. LIMITED ANNUAL PROFIT & LOSS PROJECTION

42,74840,93139,40438,15037,15136,39535,87535,58621,28721,22521,16421,105

40,33938,83737,60336,61935,87635,36435,08035,02120,94620,88720,82820,770

2,1331,8181,5261,25599975552028965626059

JuneMayApril DecemberNovemberOctoberSeptemberAugustJuly MarchFebruaryJanuary

276276276276276276276276276276276276

UNIT (TONNES)

SALES ('000)

DIRECT COST OF SALES ('000)

GROSS MARGIN ('000)

Operating Expenses ('000)

Interest Expenses

Taxes incurred

Net Profit ('000)

67 67.19 67.38 67.57 112.97 113.16 114.08 115.73 118.13 121.3 125.28 130.13

335 335.94 337.83 340.66 564.86 795.66 1,031.05 1,274.69 1,530.32 1,801.81 2,093.21 2,408.84

Expenses

LIGHT CROP SEASON MAIN CROP SEASON

START-UP WORKING CAPITALAVG. BUYING PRICE

7000000315,000.00

FINANCIALSNET PROFIT_NET TONNE

130.1125.3121.3118.1115.7114.1113.2113.0

67.667.467.267.0

2,133.2

1,817.5

1,254.71,254.7

999.0

755.4520.0

289.265.062.260.359.3

April MarchJuneMay July August September October NovemberDecember FenruaryJanuary

Net profit (‘000)Unit (Tonnes)

HIGHLIGHTS:•ROI (Return On Investment) is 24% .•A risk based approach to Credit Line Access during Peak period – implementing the HYBRID business model. •The monthly profit is re-invested into the business

CAPITAL INVESTMENT 8,800,000.00

PROJECTED NET PROFIT 2,133,000.00

RETURN ON INVESTMENT % (ROI) 24%