Presentation on theme: "TM. INVESTOR PRESENTATION AND INFORMATION DOCUMENT."— Presentation transcript:
INVESTOR PRESENTATION AND INFORMATION DOCUMENT
Executive Summary Cardinal is an investment holding company focused on the acquisition, trading and development of strategic investment opportunities; The company focuses on investments in the petroleum and related real estate sectors; The strategic objective of the company is to acquire and develop a diverse portfolio of petroleum storage, wholesale depots and retail outlets, together with related real estate assets in various locations throughout South Africa, enabling it to deliver a national footprint of wholesale petroleum supply to customers under one brand; The long term vision of the company is to incorporate LNG (gas) and water related assets to its’ portfolio of investments; Cardinal’s business model is designed to offer investors an opportunity to achieve capital growth and regular, reliable income from the petroleum sector; Managements’ core focus is to consistently deliver above average returns to its investors; Cardinal will deliver a combination of security, cash flow, growth and liquidity to its investors;
Business activities: Management’s focus is to source and acquire investment and development opportunities in wholesale depots, retail sites, storage, truck-stops and the real estate associated with these activities; Cardinal’s wholly-owned subsidiary, CPTC, focuses on the trading of liquid product only. This includes petrol, diesel, lubricants, anti-freeze, gas and water; A division of CPTC will deliver an electronic trading platform to market, and a customer / supplier transaction enablement platform; Cardinal’s unique value proposition is based on the liquidity and strong revenue flows arising out of fuel trading, coupled with the security arising out of fixed assets; Management are confident that there are no JSE listed competitors offering investors the benefits of such a combination; Management are fully committed to delivering absolute value to their stakeholders; SEGMENT 1 – OUR MODEL
Rationale: Petroleum is a finite product with seemingly infinite demand. It is a necessity and diesel is the product which drives the South African economy; Investors are seeking high quality returns globally; Cardinal management believes that its investment portfolio will escalate substantially in capital value, and provide a safe haven for investors seeking a low to moderate risk investment environment, security, longevity of investment, and consistent cash flows. Real estate provides the comfort and security of tangible net asset value, underpinning the trading cash flows and the investment model; To put the size of the market and the viability of Cardinal’s model into perspective, according to the Department of Energy’s consumption statistics, more than 27bn litres of liquid fuel energy was consumed in South Africa between the period January – December 2012 (see table on slide 6 for breakdown of this consumption); Of total consumption, approximately 42% was attributable to diesel sales; Cardinal’s model focuses on the diesel market, but does not exclude petrol, gas, lubricants, bitumen, HFO, and marine, bunker and aviation fuel;
2012 JANUARY TO DECEMBER SA FUEL SALES VOLUME / CONSUMPTION VOLUME IN LITRES Product nameQ1- January to MarchQ2 - April to JuneQ3 - July to SeptemberQ4 - October to DecemberGrand Total Petrol (All grades) Diesel (All grades) Jet Fuel Paraffin LPG Furnace Oil Aviation Gasoline Grand Total NOTE: Paraffin sales includes illuminating paraffin and power paraffin Table of consumption
Petrol/Diesel Consumption Growth Ratio
SECURE PAYMENT TECHNOLOGY IN ASSOCIATION WITH BANKS SHAREHOLDERS CARDINAL PETROLEUM HOLDINGS LIMITED SECURE PAYMENT TECHNOLOGY IN ASSOCIATION WITH BANKS CARDINAL PETROLEUM TRADING COMPANY PETROLEUM RELATED ASSETS (WHOLESALE DEPOTS, STORAGE, TRUCK-STOPS) DISTRIBUTION NETWORK INVESTMENT IN SUBSIDIARY INTEREST PREF SHARE / DEBENTURE HOLDERS PREF SHARE / DEBENTURE HOLDERS 5YR, CONVERTIBLE REDEEMABLE DEBENTURES WITH A FIXED RATE OF 9.00% RELATIONSHIP FLOW CHART CUSTOMER NETWORK
Ethics statement – our shareholders come first! Cardinal shareholders are winners! Our task is to serve those winners, our shareholders, with integrity, respect and transparency; In your relationship with Cardinal, we have an entrenched shareholder relationship philosophy which is based on a core value system of four principles. These are what we believe our stakeholders are looking for in a relationship with us: Security of capital:“Is my money safe?” Good quality cash flow:“Will I receive income?” Increase in investment value:“Will my investment grow?” A pre-determined and simple exit strategy:“When can I get my money back?”
Our value philosophy: Preserving and building wealth for our stakeholders is FIRST in mind! We recognise and believe that: Wealth is not easily created; Our first priority is the security of stakeholder interests – the preservation of value; Inflation erodes wealth – therefore we seek to grow value; Growth by acquisition is finite – organic growth is true growth; Value is not necessarily reflected in price; We invest in people, locations, and with proof of market demand;
Key individuals - Non-Executive Directors: Independent Non-Executive Chairman: Abel is a highly competent futurist and financial sector expert with extensive experience spanning more than two decades in the professions of retirement fund administration, asset management, regulation and policy development. Abel has held a number of high profile executive and leadership roles, including: Chief Executive Officer, Eskom Pension and Provident Fund; Managing Director, Metropolitan Asset Managers Ltd; Executive Director, Metropolitan Holdings Ltd; Chief Executive Officer, Metropolitan Employee Benefits. He has invaluable policy and regulatory experience having served as a board member of the Financial Services Board (FSB) for seven years, five of which he served as Deputy Chairperson. He has served as Principal Officer and administrator of the Mineworkers Provident Fund, two terms as Chairman of the Institute of Retirement Funds and has served on the Boards of the Financial Planning Institute (FPI) and Savings Institute of South Africa. Abel brings immeasurable skills and expertise to Cardinal, and with his key areas of focus being futures studies, policy and regulation, shareholders are assured of receiving absolute best practices from the Company in relation to corporate governance, investor and shareholder protection, and regulatory compliance. Abel’s years of leadership experience is of great benefit to the Board of Directors of the Company which has adopted an all-inclusive and consultative standard of implementing its’ strategic direction. Abel Sithole - MPhil (Futures Studies), University of Stellenbosch; MBA, Wits Business School; Chartered Financial Planner (CFP) - Fellow of the Institute of Life and Pension Advisors (FILPA); Professional Development Programme (PDP) City University of New York, USA; B.A (Mathematics & English), Lawrence University, Wisconsin, USA; Abel is Deputy Director of the Institute for Futures Research (IFR) at the University of Stellenbosch. He currently serves as Chairman of the Financial Services Board (‘FSB’).
Key individuals - Non-Executive Directors: Non-Executive Director: Zwelibanzi Sapula - B.Eng. (Chem.Eng; MBA (UCT) Zweli completed his Undergraduate degree in Chemical Engineering at the University of Pretoria in 2000, following which he obtained diverse experience as a plant and research engineer and business analyst. He completed an MBA while working for BP Southern Africa, during which time he fulfilled numerous roles including Refinery Economist and Supply Strategist Sub Saharan Africa. Zweli joined Barclays Capital UK PLC, and later transferred to work in South Africa for Absa Capital. The capital markets experience took him to the position of Head: Venture Capital Fund - National Empowerment Fund. He is an Alternate Director of SA Metals Equity Pty. Ltd.
Granwell Smith - B.A, B Ed, HDE, LLM (Intl Trade Law) Granwell is a legal professional who began his professional career as a teacher and lecturer before qualifying as an attorney. He was Contracts Manager in the procurement division of multi-national, Sasol Oil (Pty) Ltd. He thereafter advanced to Sasol Ltd where he headed up the Employment Equity and Accelerated Leadership Development Centre for Excellence for the Sasol Group of Companies. Granwell has experience with Mediation and Conflict Resolution, as well as Company and Property Law. His specialist pursuit is International Trade Law, in particular with International Trade Agreements. Granwell is currently heading the office of the Disabled People Inclusion Institute in Cape Town, an organisation seeking to create a world-class synchronous disability sector enabling all South Africans with a disability to have access to equal opportunity. Key individuals - Non-Executive Directors: Non-Executive Director:
Ken Morison – B.Com ACA CA (SA) After completing his articles, Ken went on to become the Group Financial Director for TrenTyre (Pty) Ltd, a wholly owned subsidiary of NYSE listed Good Year Tyre & Rubber Co. He is a Member of the South African Institute of Chartered Accountants (SAICA) and the Institute of Chartered Accountants of England & Wales. Ken is responsible for financial systems, management and reporting of Cardinal and its’ subsidiaries, ensuring profitability, and overseeing forecasts and viability of transactions introduced to Cardinal. Ken currently holds positions in a number of property owning companies, is a Director of Continuiti Real Estate Asset Management (Pty) Ltd, and a member of Merkurius Capital Solutions CC. Key individuals - Executive Directors: Chief Financial Officer:
Daryl Ducasse CCPP (UPE) With 24 years of commercial property experience in marketing, trading, transaction advisory, finance and banking, Daryl is dedicated to the creation and preservation of shareholder wealth. He is an active equities, warrants and futures trader, with a keen focus on energy and resources counters. Daryl is responsible for overseeing and driving the implementation of Cardinal’s strategy, transactions and growth. He serves on the board of Continuiti Real Estate Asset Management (Pty) Ltd, and is a member of Merkurius Capital Solutions CC, a private client advisory firm. Key individuals - Executive Directors: Chief Executive Officer:
JSE ACCREDITED SPONSOR:QUESTCO JSE ACCREDITED AUDITOR & REPORTING ACCOUNTANTS: MAZARS ATTORNEYS:NORTON ROSE FULBRIGHT COMPANY SECRETARY:STATUCOR SHARE TRANSFER SECRETARY:LINK MARKET SERVICES BANKERS:STANDARD BANK BRAND & COMMUNICATIONS:GREYMATTER & FINCH
Key short & mid term objectives SEGMENT 3 – OBJECTIVES
Identify and reach agreement in respect of primary acquisitions; List on main board of JSE and / or SEM; Introduce capital for primary acquisitions, product trading, and key developments; Consolidate;
Drive profitability; Grow asset base; Source strategic B³E² partner; Grow cash reserves; Develop strategic sites for long term growth; Deliver consistent performance; Ensure security of capital;
Our investment philosophy delivers a unique value proposition to market
Cardinal employs liquidity arising from a high demand product and service to growth and distributions; It underpins this liquidity with tangible net asset value from real estate; In a low interest rate environment, investors are chasing returns. To the investor with a moderate risk appetite, the Cardinal offering provides: A unique investment formula; Security of capital; A reliable source of income; Capital growth; Liquidity; There is an ability to leverage value by separating asset classes in transactions; Real estate portfolio can be securitised in future; Exit strategy clearly defined;
Our four basic investment criteria:
Is the business sustainable? Does it provide security of capital? Does it deliver consistent cash flow? Does it have reasonable prospects for capital growth?
How is growth achieved? Developments - truck-stops, storage, wholesale depots; Increasing customer base and sales; Diversification and product creation; Pricing; Economies of scale;
Total capital raising objective: R’s Target: 2,300,000,000 Product trading: 300,000, % Storage development: 350,000, % Truck-stop developments: 280,000, % Acquisition of wholesale operations: 600,000, % Acquisition of retail operations: 380,000, % Land site & assembly: 200,000, % Provision for interest: 170,000, % Overheads: 20,000, %
Composition of capital CLASSR’sTERMDIV %INT %SECURITYTYPE ORDINARY SHARES R2.3bn-12.50% forecast -SHARES ORDINARY
The merits of our offering SEGMENT 5 – PROPOSAL
The quantum of capital required to have an effective position in the industry is significant; This capital can be raised far more successfully in a listed environment; Obtaining a broad shareholder spread is important, and this is not usually obtained in the private equity environment; Empowering individuals – communities, management, employees – is far more effective when their interests can be sold by way of a recognised exchange, rather than by attempting to sell minority interests in an unlisted private company; There is little competition with the same model; Developing a national footprint under one brand would represent much progress after decades of control in the markets by the major suppliers; Our model delivers a far better return on investment and assets than comparable instruments;
Our commitment – absolute value SEGMENT 6 – VALUE COMMITMENT
What is ‘absolute value’ ? “In order for us to deliver security and returns to our stakeholders, absolute value is very simply, to us, pure value - the ability for us to price the qualities of sustainability and consequential future earnings potential from the opportunity, which are generated from a specific product with high demand, in a dominant location, operated by experienced management, and situated on a trade route which has demonstrated huge historic growth, with realistic future growth”. We are not acquiring an opportunity because its is cheaper than others…..we are not chasing high returns with consequential risk. We have considered the financial history of the company in relation to its future earnings growth and believe that the fundamentals exist for value in a reasonable risk investment environment.” in·vest [in-vest] verb (used with object)1.to put (money) to use, by purchase or expenditure, in something offering potential profitable returns, as interest, income, or appreciation in value. in·vest·ment [in-vest-muhnt] noun1.the investing of money or capital in order to gain profitable returns as interest, income, or appreciation in value.
Mission & core value statements SEGMENT 7 – DECLARATIONS
Mission statement:to be an investment holding company focused on petroleum & related real estate assets – a national footprint assembled under one brand; Purpose:to deliver consistent lifestyle enhancing returns and value to our stakeholders; Vision:to contribute meaningfully to the needs of our stakeholders, staff, families, community and society at large; Core values:to deliver exceptional customer service, conduct our business in an ethical and transparent manner, and do what we know to be right – always; Ethics statement:act now - act with integrity; Goal:to invest in assets that have characteristics of sustainable demand, security of capital, good quality cash flow, and capital growth ;