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BOOK RUNNER
All communication, inquires and requests for information relating to the IPO of Hascol Petroleum
Limited should be addressed to:
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INFORMATION BRIEF
DISCLAIMER
This Information Brief (IB) has been prepared by AKD Securities Limited (AKDS) Avais Hyder Liaquat
Nauman Chartered Accountants (AHLN) (hereinafter referred to as Joint Lead Managers & Arrangers).
The information provided and opinions herein have been compiled or arrived at based upon information
obtained from Hascol Petroleum Limited (HPL or the Company) documents and / or
communications and / or other sources believed to reliable in good faith. Although, the information has
been verified, to the extent possible, we make no expressed or implied representation or warranty as to
its accuracy, completeness or correctness.
The information is not meant to be a substitute for the recipients personal judgment. All such
information, representation and opinions contained in these documents assume certain economic
conditions and industry developments and constitute only current scenarios. The recipient of this
information is cautioned to exercise his / her own independent judgment and analysis at all times.
This IB includes certain statements, estimates, analysis and projections with respect to the anticipated
future performance of HPL. Such statement, estimates and analysis reflect certain assumptions
concerning the anticipated result, which assumption and / or anticipated results may or may not prove
to be correct. Neither the Joint Lead Managers, nor any of their affiliates have independently verified
these estimates, analysis and projections and accordingly they do not express any opinion or provide
any form of assurance with regard to such estimates, analysis and projections.
The Joint Lead Managers expressly disclaim any and all liability that may be based on any errors or
omissions from, or mistake in assumptions with respect to any information, estimates, analysis or
projections contained in this IB or any other written or oral communication transmitted to any potential
investor in the course of its evaluation of the possible investment.
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INFORMATION BRIEF
Table of Contents
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INFORMATION BRIEF
SECTION I
TRANSACTION OVERVIEW
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INFORMATION BRIEF
Transaction Overview
The purpose of this Information Brief (IB) is to solicit the interest of potential institutional and
individual investors for participation in the Initial Public Offering of Hascol Petroleum Limited (HPL or
the Company).
The Company intends to issue 25 million Ordinary Shares (27.59% of post-IPO Paid-up Capital) through
an Initial Public Offering via the Book Building process at a Floor Price of PKR 20.00 per share. Moreover,
a total of 18.75 million Ordinary Shares (75% of the Issue) will be issued in the Book Building portion and
subsequently 6.25 million Ordinary Shares (25% of the Issue) will be issued in the General Public portion
at the Strike Price determined via Book Building.
HPL was incorporated in Pakistan as a Private Limited Company on March 28, 2001 and was converted in
to a Public Unlisted Company on September 12, 2007. The principal business of HPL is distribution and
marketing of petroleum products along with blending and marketing of foreign branded lubricants
"FUCHS". The Company obtained its oil marketing license from the Ministry of Petroleum & Natural
Resources in 2005 while the commercial operations were initiated in September 2005.
The purpose of this Initial Public Offering is to utilize the raised proceeds in completion of a storage
facility at Machike in the province of Punjab. Further to this, the proceeds would also be used for the
construction and commissioning of 50 retail fuel outlets.
It is also pertinent to highlight that prior to the IPO a pool of strategic investors have purchased
3,875,000 Ordinary Shares of HPL (5.91% of the existing total paid-up capital) from a few existing
shareholders of HPL at PKR 25.00 per share that is at a 25% premium over the floor price of PKR 20.00
per share. This clearly portrays the level of confidence that investors have on HPLs growth trajectory.
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INFORMATION BRIEF
SECTION II
OMC SECTOR DYNAMICS
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INFORMATION BRIEF
Following are the current market shares of all OMCs operating in Pakistan:
Oil marketing companies have three primary drivers of earnings which include product inventory and
resulting inventory Net Realizable Value (NRV) adjustments, marketing margins and overall sales
volumes. While marketing margins are regulated and NRV adjustments on inventory are a function of
international oil prices, OMC strategy to increase core earnings focuses on increasing volume and
expanding market share.
While OMC volumes have increased at tepid 5-year CAGR of 1.6%, earnings have posted a volatile trend
with a CAGR of 2.3%. Earnings volatility is largely due to: 1) NRV adjustments on inventory due to
changes in crude oil and refined product prices, 2) PKR depreciation with SBP rebuffing FX cover for oil
marketing companies since 2009, 3) higher financial charges due to working capital requirements to
finance circular debt and buildup in receivables and 4) interest income/expense on delayed payments
due to circular debt.
Pakistan's oil & gas landscape is divided between up, mid and downstream sectors within the regulatory
ambit of the Ministry of Petroleum and Natural Resources. Pakistan's oil marketing and distribution
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INFORMATION BRIEF
however is undergoing a deregulation phase within the backdrop of increasing volume demand and
higher reliance on imported products. Consumption of petroleum products has increased at a 1% CAGR
over the last 10 years, led by expanding rural incomes and per-capita incomes. This is despite
cannibalization with the trend in shift to Compressed Natural Gas (CNG) as a transport fuel up till
FY12, which has reversed of late with a severe shortage of natural gas in the country.
Pakistan's oil demand is expected to rise by approximately 7% during the current fiscal year (2013-14)
ending June 30, 2014 on year-on-year basis. The demand would touch 21 million tons against 19 to 20
million tons, on the back of closure of CNG stations and resolution of circular debt problem.
Over the last few years, POL products demand rose by an average 3%to4% per year, but if the country's
growth rate managed to remain between 5% - 6% during this year along with the closure of CNG
stations in Punjab then the subsequent increase in demand of petroleum products is likely increase
rapidly.
The country is a huge oil guzzler as more than 80% of the total demand is either imported in the form of
Crude or Refined products. The product slate is dominated by 9 million tons of Fuel Oil (including 4.5
million tons produced locally) followed by High Speed Diesel with total consumption of 7.5 million tons
(including 4 million tons of imported products). With the shortage of CNG in the market the Motor
Gasoline (Petrol) market has almost doubled from 1.2 million tons to 2 million tons.
With domestic refining capacity at 13.15mn tons per annum, Pakistan produces approximately 9.5mn
tons while annual consumption is close to 20mn tons per year. The deficit is primarily for fuel oil, high
speed diesel and more recently motor gasoline.
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INFORMATION BRIEF
increasing core earnings by volumetric growth that eventually boasts their respective market share and
profitability.
In order to stimulate foreign investment, marketing margins for OMCs were revised from an initial
0.51%-2.17% to 3% for all regulated products. Margins were further enhanced to 3.5% in July 2002 and
Pakistan's 2nd largest volume generating product HSD (accounts for 35% of total petroleum products
consumption today) was de-regulated at the principal stage in view of the domestic production deficit.
OMCs were allowed to import HSD and set the retail level price of the product with prices uniform
across the country through a system known as Inland Freight Equalization Margin (IFEM) evenly
spreading the distribution and transport costs of the products across the country onto end retail prices.
During 2002 to 2008, petroleum product pricing included ex-refinery prices based on import parity, with
dealer and distributor margins and taxes taking prices to the ex-depot level. Prices were independently
regulated by the Oil and Gas Regulatory Authority (OGRA). Post 2008, within the backdrop of firmly
high oil prices, the GoP reinstated the reform process to further deregulate the sector.
Marketing margins were changed from a percentage to an absolute basis in 2010 leading to a reduction
in product distribution margins by 20%-25% across the regulated product range. In 2011, the GoP
revised upwards margins on premium motor gasoline and HSD by 32% and 30%, respectively, to
improve core profitability of downstream marketing within the backdrop of circular debt exposure and
PkR depreciation. Imports of premium motor gasoline were deregulated at the principal stage i.e.
allowing OMCs to set the ex-refinery and ex-depot price based on actual product imports excluding
gallop tenders while the GoP continued to monitor HSD prices at the ex-refinery level for refiners. In
2012, the GoP for the first time deregulated HSD prices at the ex-refinery level bringing them in-line
with actual OMC import prices as set by Pakistan State Oil Company Limited (state owned and is the
largest oil marketing company in Pakistan). Currently, margins on HSD and MS are being considered for
an upward revision by the GoP given inflationary pressures amid repeated requests by the industry.
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INFORMATION BRIEF
SECTION III
HASCOL PETROLEUM LIMITED
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INFORMATION BRIEF
As at December 31, 2013 HPLs investment in its fixed assets amounted to PKR 2,315 million while the
Company operates through 210 retail fuel stations wide-spread across Pakistan. Further to this, HPL has
constructed and commissioned a state of the art storage installation at Shikarpur while another purpose
built installation is currently being constructed at Machike.
HPLs product mix includes petroleum products such as Motor Spirits (MS), Furnace Oil (HSFO), High
Speed Diesel (HSD), Jet A-1, Liquid Petroleum Gas (LPG), Super Kerosene Oil (SKO) and Lubricants.
The Company is currently offering Petrol, Diesel under the Companys own brand name as Tiger Super
and Rocket Diesel and lubricants under the brand name of FUCHS.
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INFORMATION BRIEF
The Code of Corporate Governance applicable to listed companies is fully in place at the Company and
the following Management Committees and Board Committees actively function towards the
sustainability and growth of HPL:
Product Line:
HPLs product mix includes petroleum products such as Motor Spirits (MS), Furnace Oil (HSFO), High
Speed Diesel (HSD), Jet A-1, Liquid Petroleum Gas (LPG), Super Kerosene Oil (SKO) and Lubricants.
The success of an OMC is dependent on how well its supply chain has been established. The presence of
storage facility at each discharge point of Pak Arab Pipe Line Company System is a necessity. HPL has
very successfully developed supply depots, either through its own sources or through third party
arrangements.
Supply chain is a lifeline of any industry throughout the world. It plays an essential role in ensuring that
the right products are available at the right places at all times; specially, in the country like Pakistan
where the gap between supply and demand is continuously widening.
Storage Facilities:
HPL has developed state-of-the-art storage facilities at
strategic locations that fully cover its retail network. Out of
the 5 functional facilities, the Shikarpur storage facility is fully
owned and operated by HPL while Machike storage facility
would be the second facility to be owned by HPL.
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INFORMATION BRIEF
The existing storage facilities currently operating under the banner of HPL including the under
construction Machike Facility are as follows:
Unit in MT
Serial Facility Ownership Capacity
1 Port Qasim Long-term agreement - VTT Port Qasim (Pvt.) Ltd. 32,400
2 Kemari Long-term agreement - Al-Raheem Trading 12,150
3 Kemari Import Terminal Long Term Lease Agreement with Al-Abbas Group 15,000
4 Shikarpur HPL Owned 6,500
5 Machike HPL Owned (Under Construction) 6,500
6 Amangarh Long-term lease agreement - an option to buy 1,500
In order to further enhance its capacity the Company is in the process of acquiring a land at Mehmood
Kot, Punjab adjacent to Pak-Arab Refinery Limited. This will facilitate the Company to cover its supply in
the Southern Punjab envelope.
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INFORMATION BRIEF
HPL all the tank lorries are registered in HPL state of the art
ERP system JD Edwards to control the logistics data and
product movement and time log, as well. The cartage
contractors have to provide the tank lorries as per demand
of HPL Cartage Agreements.
IT Infrastructure:
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INFORMATION BRIEF
All of HPL regional offices, Installations & depots are connected online for the Video Conferencing with
HPL management at Head office.
Hascol has built its own state-of-the-art data center for the centralized and safe storage of Company's
valuable data with inside and outside firewalls to ensure data security and safety.
Retail Outlets:
HPL has a large network of retail outlets in all corners of the country. With over 210 retail outlets in all
four provinces of the country HPL has invested more than PKR 2 billion in their expansion venture
through dealers and its own investment.
Attached to the retail outlets HPL is also operating a network of convenient store with a brand name
"Hasmart". HPL have 42 Hasmart, 40 Tyre - Care and 15 Express Wash nationwide to cater the needs of
its customers.
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INFORMATION BRIEF
HPL has a sole strategic agreement with FUCHS international to manufactures/import, distribute and sell
FUCHS branded lubricating oils and greases in Pakistan. A company that combines tradition with
progress is best poised to meet the challenges of the future.
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INFORMATION BRIEF
(PKR in millions)
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INFORMATION BRIEF
Key Agreements:
The principal purpose of the Issue is to inject additional equity into the Company mainly for utilization in
the completion of Machike Storage Facility in Punjab and for setting up new retail outlets all across
Pakistan. As per the Companys plans, out of the total equity raised via issuance of 25 million shares at
PKR 20/- per share:
PKR 200mn will be utilized for capital expenditure on the completion of Machike Storage
Facility which includes purchase of pipelines, gensets, pumps, electrical equipment etc.
PKR 100mn will be utilized for the setting up and commissioning of new / under
construction retail fuel stations
The remaining proceeds will be utilized for working capital requirements of the Company
Future Prospects:
Pakistan economy is in a growth mode and energy is a very essential ingredient, more trucks will move
across the country for trade and there will be more cars and motorcycles on the road.
The expected growth rate of the of the economy is between 3% to 4% and the in efficiency of state
owned OMC will create a space for new market entrant with thin cost structure, efficient supply chain
management and good corporate governance.
HPL has doubled its sales volume and profitability on year to year basis. During the last three years this
growth has resulted in a market share from 1% to 2.4% up to October 2013 (Source OCAC Report), from
2014 and onwards within 2 years the company has a target to achieve a volumes of 1,000,000 MT with a
market share of 5%.
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INFORMATION BRIEF
This growth will be achieved by HPL backed by the following strategic steps:
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INFORMATION BRIEF
SECTION IV
PROFILE OF DIRECTORS
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INFORMATION BRIEF
Profile of Directors
He established Hascombe Limited, which started trading in Crude Oil and Petroleum Products.
Hascombe bought petroleum product from Middle Eastern sources and sold to international trading
companies like Shell and Elf. Hascombe was also a major supplier of petroleum products to Pakistan
during 1991 till 1996.
In 2005 Hascol was granted an oil marketing license by the government of Pakistan in Pakistan. Hascol
has established a network of 200 Petrol Pumps all across Pakistan including Azad Jamu and Kashmir.
Mr. Mumtaz Hasan Khan is currently also serving as Chairman of Sigma Motors (Sole distributor of Land
Rover vehicles in Pakistan).He is a Trustee of the Foundation of Museum of Modern Art (FOMMA)
located in Karachi and the member of the Expert Energy Group which prepared Pakistans first
Integrated Energy Plan in 2009.
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INFORMATION BRIEF
Mr. Rahmatullah is credited with being the founding member of PAPCO (Pak Arab Pipeline Company
limited). He has also served as the Director General of Civil Aviation Authority, Chairman of the Oil and
Gas Development Authority, Chairman of LEADs. Since 2005 he has been chairman of the Pakistan
Refinery Limited. He is currently serving on the Board of Director of Faysal Bank Limited, Society of
Sustainable Development, and Resource Development Committee for the Agha Khan Hospital. He is also
the Group Founding Member of the Pakistan Human Development Fund and a member of National
Commission of Government Reform and Member of the Pakistan stone Development Company. He is
the Chairman of Pakistan Refinery Limited and Non-Executive Director of Faysal Bank Limited.
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INFORMATION BRIEF
Mr. Liaquat Ali is a member of one of the leading Chartered Accountant firm Avais Hyder Liaquat
Nauman Chartered Accountants (AHLN). AHLN is a member of RSM international which is the 7th largest
network of accounting and consulting firms in the world[1]. AHLN has offices in Lahore, Karachi,
Peshawar, Faislabad, Islamabad, Quetta and Kabul (Afghanistan). He is also a member of the benevolent
fund committee of ICAP.
Mr. Butt is a Chartered Accountant and holds a Bachelor Degree in Commerce from the University of
Karachi. He received his fellowship from the Institute of Chartered Accountants of Pakistan in 2004. He
also serves as non-executive director on the boards of Pakistan Refinery Limited, TRG Pakistan Limited
and Sigma Motors Limited.
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INFORMATION BRIEF
SECTION V
INVESTMENT RATIONALE
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INFORMATION BRIEF
Investment Rationale
Growth Story: HPL has taken a time span of approximately 8 years to turn itself into a fully developed
OMC. The sponsors of the Company have mostly invested the capital from their own resources and have
now made the company capable running as a profitable and sustainable entity which can clearly be seen
through the financial highlights of the Company.
The construction of back-end (storages) and front-end (retail outlets) facilities has been a game changer
for HPL as the functionality of these facilities have brought the Companys sales volumes at an optimum
level and further volumes can be generated as well. In addition to this, the local and the international
brands such as FUCHS AG attached to the Company now carries significant business value and today HPL
is known for its quality products and services.
The below given table shows average throughput of OMCs in liters for the period from July to
September 2013 which clearly depicts the growth potential that HPL has in order to increase its market
share backed by an efficient and strategically placed storage network:
Internationally Renowned Lubricant Provider: The Company has a strategic agreement with Fuchs
Lubricants, one of the largest global manufacturers of lubricants based out of Fuchs Petrolub AG with its
headquarters in Mannheim, Germany. This agreement allows HPL to manufacture, import, distribute
and sell branded lubricating oils and greases in Pakistan.
Share Premium: A pool of strategic investors have recently purchased 3,875,000 Ordinary Shares of HPL
(5.91% of the existing total paid-up capital) from existing shareholders of HPL at PKR 25.00 per share
that is at a 25% premium over the floor price of PKR 20.00 per share. This clearly portrays the level of
confidence that investors have on HPLs growth trajectory.
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INFORMATION BRIEF
Fuel Supply Arrangements: HPL has established fuel supply arrangements, with all domestic refineries
including Pak-Arab Refinery, Attock Refinery, Pakistan Refinery Limited, Byco Petroleum Pakistan
Limited and National Refinery. Apart from the fuel supply arrangements, HPL has developed a well-
managed supply chain structure through which its products are transferred to all parts of the country.
The Company has also entered into the import market and has imported 3 cargos of Fuel Oil and Motor
Gasoline during the current year. The Company has also set up a fully integrated import supply chain at
both Kemari and Port Qasim.
Shield Against Circular Debt: HPL has carried a very defensive commercial sales strategy during the past
3 years due to the rising issue of circular debt pertaining to the Oil & Gas and Power sectors of Pakistan.
As an antidote to this risk, HPL has always secured its receivables from commercial sales to IPPs and
other debt burdened institutions through irrevocable financial instruments. As a result of these prudent
measures HPL has remained unharmed by the risk of circular debt and the resultant liquidity crunch
faced by most OMCs.
Strategically Placed Storage Facilities: The Company, under agreements with other OMCs, uses 5
different storage facilities that are strategically located in different oil supply hubs of the country. Apart
from this, HPL has recently commissioned its own storage Facility in Shikarpur, Sindh which is currently
being fully utilized by the Company while HPL will also commission another storage facility at Machike in
Punjab this year. The operational support of these purpose built state-of-the-art storage facilities will
provide significant volumetric growth in the sales of High Speed Diesel & Motor Spirit. With the shortage
of CNG in the country during the last 3 years the country-wide volume of Motor Gasoline has doubled.
HPL has hired a storage facility at Kemari on long-term basis to manage the imported products and
imported its first cargo in December 2013. The import facilities for fuel oil, motor gasoline and High
Speed Diesel have placed the Company strategically in a very strong position for the security of its
supplies.
Sponsor Profile & Management Prowess: The main sponsor of HPL, Mr. Mumtaz Hasan Khan, has an
experience of over 50 years in the Oil industry and has been associated with reputable brand names
such as Burmah Shell. Over the years HPL has gathered a team of well experienced team of individuals
who have significant expertise in the oil industry. The Company has a strong emphasis on recruiting and
retaining the best professionals who play the pivotal role in this business model. The Management has a
cumulative experience of 175 years pertaining to the Oil Marketing industry.
Recent Growth Track-Record: From 2010 onwards the Company has roughly doubled its sales volumes
at year on year basis. This growth has resulted in an increase of market share from 1.00% to 2.50% up to
October 2013. (Source: OCAC Oil Report)
Year Sales of HPL
2010 PKR 9,202,000,000
2011 PKR 19,583,000,000
2012 PKR 29,775,000,000
2013 PKR 57,441,000,000
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INFORMATION BRIEF
The current network of the Company has the capacity to further enhance the sales volumes after
completion of the Machike Storage Facility based in Punjab.
Growing Retail Network: The Company has a wide-spread network of 210 retail outlets across Pakistan
through which POL products are sold. The company plans to add 50 more retail outlets by the end of
this year, moreover the Company plans to add 91 fuel stations by the end of 2016 which would further
boast HPLs sales of HSD and MS. The province-wise break-up of HPLs 210 operational retail outlets is as
follows:
Avg. Monthly
Motor Fuels
Province No. of Sites Sale / Site
Quantity (Liters)
Punjab 101 111,619,392 92,095.21
Sindh 70 130,574,793 155,446.18
Khyber Pakhtun Khua 26 4,833,402 15,491.67
Baluchistan 07 3,596,000 42,809.52
Azad Jammu Kashmir 06 914,000 12,694.44
210 251,537,587 318,537
Attractive Floor Price: The floor price of PKR 20.00 per share represents an attractive discount of
64.70% on CY13 P/E Multiple of HPL i.e. 3.35 times versus the P/E Multiple of KSE-100 Index i.e. 9.49
times (Source: Bloomberg).
Moreover, we have also undertaken relative valuation based on comparison of HPL with leading oil
marketing companies of the country. For relative valuation we have considered Attock Petroleum
Limited, Pakistan State Oil & Shell Pakistan Limited. The following table highlights the financial highlights
and trading multiples of the above mentioned OMCs in comparison with HPL:
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INFORMATION BRIEF
The floor price of PKR 20.00 per share represents an attractive discount of 56.49% based on CY13 P/E
Multiple of HPL of 3.35 times versus the Average P/E Multiple of the above mentioned OMCs of 7.70
times. Based on the above given peer comparison, HPL has an estimated value of PKR 45.94 when
viewed in line with the average P/E of 7.70x for PSO & APL.
Furthermore, when comparing the CY13 P/B Multiple of HPL of 0.91 times with the Average P/B Multiple
of the above mentioned OMCs of 2.14 times, the P/B Multiple presents a discount of 57.48%. Based on
the average P/B of 2.14x for the above mentioned OMCs the projected value of HPL is estimated to be
PKR 47.17.
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INFORMATION BRIEF
SECTION VI
MANAGEMENT PROJECTIONS
&
VALUATIONS
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INFORMATION BRIEF
Management Projections
HASCOL PETROLEUM LIMITED
PROJECTED BALANCE SHEETS
Balance Sheets
Amount in PKR '000
2013 (A) 2014 (E) 2015 (E) 2016 (E) 2017 (E) 2018 (E)
Non Current Assets
Property, plant and equipment 2,308,238 2,587,971 2,922,970 3,193,316 3,119,369 3,026,241
Intangible assets 7,054 5,643 4,515 3,612 2,889 2,311
Long term deposits 32,372 25,898 20,718 16,574 13,260 10,608
Long term investment - - - - - -
Deferred taxation - net 354,491 319,042 287,138 258,424 232,582 209,323
2,702,155 2,938,554 3,235,340 3,471,927 3,368,099 3,248,484
Current Assets
Stock-in-trade 3,177,692 3,578,063 4,674,853 5,846,939 6,001,056 8,298,955
Trade debts 2,088,097 2,736,166 3,739,883 4,872,449 5,648,053 7,054,112
Loans and advances 464,647 441,415 419,344 398,377 378,458 359,535
Trade deposits and short term prepayments 40,585 44,644 49,108 58,929 70,715 84,858
Sales tax receivable 54 - - - - -
Other receivables 35,674 41,025 47,179 54,256 62,394 71,753
Bank balances 864,680 1,264,161 1,131,186 1,540,853 2,818,562 3,398,769
6,671,429 8,105,473 10,061,552 12,771,802 14,979,239 19,267,982
TOTAL ASSETS 9,373,584 11,044,027 13,296,892 16,243,729 18,347,339 22,516,466
Non Current Liabilities
Liability against assets subject to Finance Lease 73,685 - 20,520 18,399 16,813 4,508
Deferred Liability - Gratuity 50,174 57,700 66,355 76,308 87,755 100,918
Long Term Loan - Summit Bank (150) - - - - - -
Long Term Loan - PAIR (100) 58,333 25,000 - - - -
Long Term Loan FWBL - (200) 163,636 90,909 (0) - - -
Long Term Loan - PAIR (150) - 139,286 85,714 42,857 - -
Long Term Deposits 90,872 99,959 109,955 120,951 133,046 146,350
436,701 412,854 282,545 258,515 237,613 251,776
Current Liabilities
Current Portion of Liabilities Against Assets Subject to Finance Lease 46,987 31,482 - - - -
Finance Under M ark-up Arrangements 493,013 197,205 138,044 96,631 67,641 47,349
PAIR - (100) 41,667 - - - - -
HBL - (70) 70,000 - - - - -
PAIR - (350) - 145,833 145,833 175,000 175,000 175,000
Commercial Paper (75) 75,000 - - - - -
Commercial Paper (150) - 150,000 150,000 150,000 150,000 150,000
Trade & Other Payables 6,368,590 7,126,809 8,595,955 10,457,467 11,363,365 14,088,308
Accrued Interest 16,569 18,226 20,048 22,053 24,259 26,685
Sales Tax Payable - - - - - -
Provision for Taxation 381,362 407,479 455,107 379,015 337,495 368,977
Total Current Liabilities 7,493,188 8,077,035 9,504,988 11,280,166 12,117,761 14,856,318
TOTAL LIABILITIES 7,929,889 8,489,889 9,787,532 11,538,681 12,355,374 15,108,094
Shareholders' Equity
Share Capital 656,000 656,000 906,000 906,000 906,000 906,000
Further issue at Rs 10/ share (25m shares) - 250,000
Share premium - Old 3,300 3,300 3,300 3,300 3,300 3,300
Share premium of Rs 10/ share (25 m shares) - 250,000 250,000 250,000 250,000 250,000
Accumulated profits 426,019 1,038,712 1,996,185 3,194,123 4,483,290 5,901,949
Surplus on revaluation on fixed assets 358,376 356,125 353,875 351,624 349,374 347,123
1,443,695 2,554,138 3,509,360 4,705,048 5,991,964 7,408,372
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INFORMATION BRIEF
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INFORMATION BRIEF
Valuation Snapshot
Weighted Average Cost of Capital
Risk Free Rate 11.50% 5 - Year PIB Rate
M arket Risk Premium 6.00% Standard Convention by Consensus Analyst
Beta 1.07 Average OM C Beta (PSO & SHELL)
Cost of Equity 17.92% Ke = Rf + (Rm-Rf)Beta
Terminal Growth Rate 2.00% Sustainable Growth Rate
Tax Rate 35.00% Corporate Tax Rate
Cost of Debt 13.50% 1 - Year KIBOR + 3.00%
Debt to Equity 21.67% Debt to Equity Ratio
WACC 15.94% Weighted Average Cost of Capital
Terminal Value
Terminal Growth Rate 2.00%
Terminal WACC 15.94%
Estimated Terminal Free Cash Flow (PKR) 626,296
Terminal Value (FY2018) (PKR) 4,493,335
Terminal Value (Current) (PKR) 2,145,032
DCF Valuation
NPV of Forecasts (PKR) 1,615,652
NPV of Terminal Value (PKR) 2,145,032
Enterprise Value / Cashflow Generated 3,760,684
Less: Net Debt (Net Cash as at December 31, 2013) (157,642)
Equity Value (PKR) 3,603,042
No of Shares 90,600,000
Per Share Equity Value (PKR) 39.77
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