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INFORMATION MEMORANDUM

2018

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Products and services

The mandate of the company is to market and distribute petroleum products that include

Diesel, Petrol, lubricants and LPGs.

Petrotrade’s core business is to sell Diesel and Petrol products to customers in liquid and

coupon form. The target market is mainly Parastatals and Government sector.

On the lubricants side, Petrotrade has been selling Engen products for the past 4 years.

However, the company introduced its own branded lubricants in August 2017. The product

is sold to motorists through our retail sites and to bulk customers through personal selling.

The company is currently selling Gas at two sites namely Warren Park and Rusape. We also

managed to roll out the project to an additional five sites which are Plumtree, Matshobana,

Gweru, Karoi and Chinhoyi and should be commissioned before end of January 2018.

In order to ensure efficient delivery of our customer’s products Petrotrade has a fully

functional Transport Division which boasts of a fleet of 7 horses and 9 tankers, 2 UD and a

T- 35 truck. The tankers are used for transporting the Company’s fuel and customers’

product from depots to sites. Most of the maintenance and repair work is done in-house at

the Company’s workshop.

Commercial Department

Customers and customer relationship

Petrotrade has two broad categories of customer’s i.e. Bulkand Retail each commanding

40% and 60% respectively. The bulk customers are those that buy 5000 litres of fuel and

above. The company mainly targets Parastatals, Government departments and Private

Companies for its bulk and coupon sales. Petrotrade extends credit facilities to its key

account customers with a consumption rate of 1m litres and above per month. The

marketing team does the key account management and customer visits on a daily basis.

After sales follow ups are done on a weekly basis. Customer complaints are resolved within

the stipulated time.

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In addition to the bulk and coupon sales the company distributes its products through the

retail network of own and dealer sites.

Market segments

The Commercial department serves various sectors that include Agriculture, Mining,

Manufacturing, Transport, Government departments, Parastatals and Oil Companies.

Government departments and Parastatals constitute 80% of the total bulk sales.

Competitive overview

Petrotrade competes with other players that are in the fuel industry.Currently competitors

are competing on price, product availability, distribution network, quality service, branding,

promotions (advertising, sales promotion and personal selling) and Social and formal

bonding with customers. As such Petrotrade has taken a step further by installing fuel

storage tanks at customer premises as a way to retain or lock them.

Other players have merged to gain financial muscle while some have entered into fuel

supply agreements with strategic partners so as to source cheaper fuel. Most of the oil

companies are offering competitive prices and flexible payment terms.

Sales and Communication

2017 FUEL SALES FIGURES

BULK 33 344 910

COUPONS 19 199 254

RETAIL 50 390 355

TOTAL SALES 102 934 519

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2017 LUBRICANTS SALES

Lubes 111 172

TOTAL SALES 111 172

Communication systems

Account statements are send to all credit customers upon request and at the end of

the month.

Customers are regularly advised on any developments e.g. prices changes or

blending ratios.

After sales follow ups are done on a weekly basis.

Customer satisfaction surveys are carried out on a quarterly basis.

Retail Department

STRATEGY AND BUSINESS MODEL

Petrotrade uses three models in the retail department Company Owned and Company

Operated Sites (COCO). These are service stations which are duly owned by Petrotrade and

operated by Petrotrade. Currently we have sixteen COCO sites

Dealer Owned and Company Operated Sites

These are service stations which are not owned by Petrotrade. Most of them Petrotrade will

be leasing from their owners. However, they are operated by Petrotrade staff. Currently we

have eight such sites which include:

Chivhu

Bulawayo

Nyika

Gokwe

Kadoma

Mutoko

Mhandamabwe

Chipinge

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Dealer Owned and Dealer Operated Sites

These are owned by different individuals and operated by the same. They can be referred to

Petrotrade’s distributors. Petrotrade advances fuel to such sites on consignment basis. The

company has twenty nine (29) DODO sites.

Third party redemption sites

Petrotrade has entered into agreements with other service stations and other major players

in the industry who redeem Petrotrade coupons. This is more of infrastructure sharing.

Companies like Puma, Glow, Zuva, Comoil, Maps have selected sites which redeem

Petrotrade’s coupons. Due to the fuel shortages, these sites have downsized to thirty from

fifty five

MARKET SEGMENTS

Petrotrade Service stations serve all markets especially the corporates that buy and redeem

coupons at the service stations.

Markets/ Sectors served

Agriculture

Mining

Manufacturing

Services Industry

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COMPETITIVE OVERVIEW

Company Product Range

Distribution network

Service Quality

Pricing Policy

Strengths Weaknesses

TOTAL (16.61%)

Fuel Lubricants JET A1,

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Price leader- TOTAL charges the highest prices

Excellent service Very reliable product availability Strategically located and well branded

sites.

Internationally recognised and established brand

Vast years of experience in the business Loyal customer base Perception that TOTAL sells higher

quality product

Established links with key bulk customers e.g. mines, Airlines

Very innovative - smart card

Prices rather too high

PUMA (12.80%)

Fuel LPG Avgas Lubricants

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Price Follower. Moves with market trends

Wide retail network Very reliable product availability Solid financial base Reliable transport section Diversified product portfolio Strong strategic alliance with Sakunda

and Trafigura

Rigid price structures Low focus on bulk sales

ZUVA (9.73%)

Fuel LPG Lubricants

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Price leader-similar prices with TOTAL

Strategically located and well branded sites.

Good convenient shops Strong strategic alliance with Glencore

Stock-outs at some sites Perennial ownership challenges

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Company Product Range

Distribution network

Service Quality

Pricing Policy

Strengths Weaknesses

ENGEN (8.36%)

Fuel Lubricants

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Price Follower. Moves with market trends

Internationally recognised brand Widely spread and strategic sites Very reliable product availability

Good site ambience Strong brand name of lubes

Foreign controlled Poorly marketed after name

change from Caltex

Petrotrade (8.17%)

Fuel Lubricants

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Price Follower. Moves with market trends

Government ownership Stability Strong asset base .

Unstrategic distribution network

Too much red tape (SPB Requirement)

Lack of upstream partnerships.

Rating service Key:

8-10 excellent

6-7 satisfactory

5 mediocre

3-4 below average

1-2 poor

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Managements and employees

Petrotrade has total staff compliment of 98 permanent staff, 4 contract staff and 9 students

on attachment. There is an additional 138 sub contracted staff working as fuel injectors and

general hands.

Management Staff

Godfrey Ncube -Operations Manager/Acting CEO

He holds an MBA and Post Graduate Diploma in Security and Risk Management. Has more

than 13 years’ experience in the oil industry

Dakarai Mukuku – Finance and Management Accountant/Acting Finance Manager

He holds full CIS and MBA and has more than 13 years’ experience in the oil industry

Sibambaniso Kundai- Legal and Corporate Services Manager

She holds a Bachelor of Laws degree and has 12 years legal practice experience. She is

currently studying with The Institute of Chartered Secretaries of Zimbabwe. She is the Legal

and Corporate Services Manager.

Elisha Bokoro- Audit Manager

Head Internal Audit, Risk Analyst and Fraud Examiner, 11 years’ experience in the oil

industry, a banker.

Hedwig Mauwa- Commercial Marketing Manager

She heads the Commercial Marketing Department and has over 15 years’ experience in sales

and marketing, ten of which have been in the petroleum industry. She is a holder of IMM

(BBA) Marketing Degree and an MBA.

Joe Kumbirai Karambakuwa –Human Resource and Administration Manager

He is the Head of Human Resource and Administration and has been in the petroleum

industry for the past 11 years. He is a holder of a BSc Hons Degree in Politics and

Administration, MSc in Strategic Management and an Executive Certificate in The Consulting

Process from Maastricht School of Management in the Netherlands.

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Emilda Kasinama - Retail Marketing Manager

She holds a Bachelor of Commerce in Marketing and is the Retail Manager. She has 13 years

marketing experience, 10 of which have been in the petroleum industry.

OPERATIONS BUSINESS PROCESS

Petrotrade has standard operating procedures put in place to govern every operationing

business process in the following areas:

HR & Admin

Retail

Commercial Marketing

Finance

Legal and corporate services

Transport

Information & Technology

Workshop

Maintenance

Procurement

Facilities and premises:

Petrotrade has the following facilities and premises

Head Office

17 service stations

8 Fuel transportation Trucks

Workshop

Legal, Regulatory and Environmental

Petrotrade is a private company wholly owned by the Government of Zimbabwe and

incorporated in terms of the Companies Act. The Zimbabwe Regulatory Authority is the

industry regulator.

The Company is governed by a plethora of Statutes and attendant Regulations in its day to

day operations, inter alia,-

a) Constitution of Zimbabwe;

b) Public Finance Management Act;

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c) Petroleum Act;

d) Energy Regulatory Act;

e) Environmental Management Act;

f) Public Procurement and Disposal of Public Assets Act and Regulations;

g) Trade Measures Act;

h) Factories and Works Act;

i) Arbitration Act;

j) Labour Act;

k) Official Secrets Act;

l) Prevention of Corruption Act;

m) NSSA Act;

n) Income Tax Act;

o) Joint Venture Act;

p) Finance Act and all the other relevant Acts in the Land

Financial Performance

Below are financial performance details for Petrotrade:

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STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR YEAR STATED BELOW:

year 2011 2012 2013 2014 2015 2016

Turnover

75,977,673

130,204,577

162,988,195

137,568,008

110,701,937

106,066,130

Cost of Sales

(70,885,322)

(122,451,455)

(153,682,264)

(128,225,192)

(101,588,978)

(97,929,657)

Gross Profit

5,092,351

7,753,122

9,305,931

9,342,816

9,112,959

8,136,473

Other operating income

1,236,710

2,132,051

2,470,849

2,409,906

869,035

699,648

Operating Expenses

(5,429,745)

(7,843,798)

(8,584,705)

(9,781,988)

(9,491,332)

(7,652,233)

Operating Profit

899,316

2,041,375

3,192,075

1,970,734

490,662

1,183,888

Impairment loss/fair value

adjustments

(251,072)

(170,259)

Net Financing Income

-

-

-

-

1,280,822

824,869

Net Financing costs

(487,066)

(132,431)

(245,528)

(317,767)

-

-

Profit before taxation

412,250

1,908,944

2,946,547

1,652,967

1,520,412

1,838,498

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Taxation

(123,704)

(555,278)

(830,459)

(701,749)

(770,791)

(605,620)

Profit after taxation

288,546

1,353,666

2,116,088

951,218

749,621

1,232,878

Other Comprehensive

income

-

-

-

(261,434)

1,047,364

1,194,220

Total comprehensive

income

288,546

1,353,666

2,116,088

689,784

1,796,985

2,427,098

Financial

Ratios

Net profit margin(Profit

before tax) 0.5% 1.5% 1.8% 1.2% 1.4% 1.7%

Operating Expenditure

/Total Revenue 7% 6% 5% 7% 9% 7%

Salaries/total revenue 4% 3% 2% 3% 4% 4%

Cost of sales/ Turnover 93% 94% 94% 93% 92% 92%

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2016

106,066,130

(97,929,657)

8,136,473

699,648

(7,652,233)

1,183,888

(170,259)

824,869