Wrap Text
Abridged Pre-listing statement
Cartrack Holdings Limited
(Incorporated in the Republic South Africa)
(Registration number 2005/036316/06)
JSE share code: CTK
ISIN: ZAE000198305
(“Cartrack” or the “Company”)
The pre-listing statement of Cartrack dated 21 November 2014 (“Pre-listing Statement”) is not an invitation to the public to
subscribe for ordinary shares in the issued share capital of Cartrack (“Shares”).
The Pre-listing Statement is issued in compliance with the Listings Requirements of the JSE Limited (“Listings Requirements”) for
the purpose of providing information regarding the listing of Cartrack on the Main Board of the securities exchange of the JSE
Limited (“Listing”) and the private placement to eligible investors (“Eligible Investors”) by way of an offer for subscription (“Private
Placement” or “Offer”) for between 60,000,000 (representing 20% of Cartrack's issued share capital once issued) and 141,000,000
(representing 47% of Cartrack's issued share capital once issued) Shares (“Offer Shares”).
The proceeds received by Cartrack pursuant to the Private Placement will be applied for the full and final settlement of the
aggregate repurchase price owing by Cartrack to Onecell Holdings Proprietary Limited (“Onecell”) (being a company controlled by
the Company’s founder) pursuant to the buyback agreement entered into between Cartrack and Onecell on 24 October 2014 in
order to facilitate the Listing. Accordingly, no proceeds will remain with the Company.
For a single addressee acting as principal, applications can only be made at an aggregate acquisition cost of not less than
R1,000,000 (one million Rand).
This abridged Pre-listing Statement contains the salient features of the Company, the Listing and the Private Placement and as such
is not comprehensive. For a full appreciation of the Company, the Listing and the Private Placement, the Pre-listing Statement
should be read in its entirety.
1. INTRODUCTION
The JSE has, subject to the shareholder spread obligations in terms of the Listings Requirements being obtained, granted
Cartrack a listing of up to 300,000,000 Shares in the “Support Services” sector of the Main Board of the JSE under the
abbreviated name “Cartrack” under share code: CTK and ISIN: ZAE000198305, with effect from the commencement of trading
on Thursday, 11 December 2014.
The financial year-end of the Company is 28 February each calendar year.
2. VISION AND MISSION
Cartrack’s vision is to achieve global industry leadership in the telematics industry including fleet management (“FM”), stolen
vehicle recovery (“SVR”) and insurance telematics (collectively, “Telematics”).
Cartrack’s mission is to provide its clients and partners with real-time actionable business intelligence based on advanced
technology, first rate information systems, leading service and reliability.
3. NATURE OF BUSINESS, OPERATING GEOGRAPHIES AND PROSPECTS
3.1 Introduction
Since being founded in South Africa in 2001, Cartrack has evolved into a leading provider of FM, SVR and insurance
telematics. The business incorporates global asset tracking, monitoring and recovery services together with the provision
of FM information systems from a platform of innovative Telematics technologies.
Whilst its principal operations are situated in South Africa, Cartrack has embarked on an expansion drive into the rest of
Africa, Europe and Asia.
Initially, Cartrack focused on SVR services, which led to the Cartrack system being developed and implemented for the
Sub-Saharan African market where vehicle theft was, and remains, amongst the highest in the world.
In 2007, with the rapid development and convergence of telecommunication services, Cartrack expanded the scope of its
offering to include full Telematics services, in particular FM. Data management information, such as fuel consumption and
driver behavior, amongst others, is designed to maximise operational efficiencies to improve fuel economy, reduce labour
costs, extend fleet vehicle life cycles and optimise customer service.
As at 31 August 2014, Cartrack employed 1,197 permanent staff members globally.
3.2 Key investment highlights
3.2.1 Proven track record of profitability and strong financial metrics
Cartrack has a proven track record since inception and in particular over the past 7 year period. The track
record is demonstrated by Cartrack having achieved an average compound annual growth rate for the 2012 to
2014 financial year reporting period in revenue and net profit after tax of 19% and 21%, respectively. Revenue
is generated through product sales and subscription fees from over 386,000 units worldwide of which
approximately 305,000 are currently in South Africa (as at 31 August 2014).
Cartrack achieves amongst the leading gross profit, earnings before interest, tax, depreciation and amortization
(“EBITDA”) and profit before tax (“PBT”) margins relative to its South African listed peers, being 81.4%, 33.7%
and 32.2%, respectively.
3.2.2 Commitment by founding shareholder and depth and experience of management
Cartrack has a well-established and experienced senior management team led by the Company’s founder
(being Isaias J. Calisto, Company Global Chief Executive Officer). To augment the ongoing commitment to the
Company, Cartrack’s founder, through Onecell, has entered into a lock-up agreement to retain a controlling
interest in Cartrack post the Listing for a period of 2 years.
3.2.3 History of strong cash flow generation and cash conversion with low financial leverage and strong
dividends
Cartrack’s EBITDA margins and PBT margins, coupled with low capital expenditure requirements, has ensured
high levels of cash conversion which has consistently been approximately 90% over the last 2 year period. The
strong cash flow generation and conversion, provides the Company with the requisite platform to fund
expansion, as well as the ability and flexibility to return cash to shareholders in the form of dividends.
In line with Cartrack’s strong levels of cash conversion, Cartrack intends to maintain a dividend payout ratio in
excess of 70% post the Listing.
3.2.4 Platform for growth
Cartrack has a combination of well established businesses, both locally and internationally, and a growing
footprint in selected African, Asian and European countries. The Company is well-positioned to take advantage
of the vastly underdeveloped Telematics market in these territories, given Cartrack’s successful track record in
organic expansion.
3.2.5 Favourable industry dynamics
Demand for Telematics services are driven by the size of the global vehicle fleets (including both commercial
and passenger vehicles). With the size of the global vehicle fleet currently estimated at 1.1 billion vehicles and
forecasted to grow to 2.3 billion vehicles by the year 2035, Cartrack is favorably positioned in a burgeoning
industry.
In addition, current global commercial telematics subscriptions are expected to treble by 2019 relative to current
levels.
3.3 Key strengths
Cartrack believes that the following strengths contribute to its success and distinguish it from its competitors:
- Scalable approach
Cartrack has positioned itself to cater for the mainstream Telematics market and does not intend to position itself in
low volume niche markets. This approach has allowed Cartrack to achieve economies of scale across its business
with a focus on growing its footprint without compromising on service delivery, reliability and margin generation.
- Audited 94% stolen vehicle recovery success rate and warranty
In South Africa, Cartrack boasts an audited SVR success rate of 94%. Demonstrating its confidence in, and
dedication to the functioning of its technology platform, Cartrack currently provides a warranty to SVR customers of
up to R150,000.
- Low fixed infrastructure cost and maximum reach
Cartrack maximises its geographical reach within each territory by utilising mobile certified installation teams,
thereby creating a large footprint for Cartrack’s expansive branch network. Infrastructure requirements are
minimised by utilising cloud-based computing services which are managed centrally by a team of technology
specialists.
- Focus and investment in technology
Cartrack’s research and development is a key element to its success and is a differentiator that allows the Company
to successfully expand globally. Cartrack’s research and development activities are performed in-house which
underpins the ability to rapidly adapt to market requirements while mitigating against any royalty or licensing
constraints.
- International footprint and expansion
Cartrack has an international business footprint with operations in Africa, Asia and Europe. This geographic
diversification and expansion affords Cartrack with the ability to benefit from growth and income diversification.
Cartrack currently has a presence in 18 countries and has further international growth plans with the Asian market
as a prominent focus for the Company.
4. GROWTH STRATEGY AND PROSPECTS
- International Growth
Globally, the awareness of the benefits of Telematics coupled with decreasing data and Telematics charges has facilitated
increased usage of Telematics services. Cartrack plans to follow this global trend.
- Technological advancement
The advancement of Telematics technology in terms of functionality, miniaturisation and power management allows
Cartrack to introduce innovative new technologies and increase market penetration of existing Telematics services. In
addition, cost reductions and increases in product features both drive and meet increased customer demand.
- Industry and organic growth
The rapid convergence of mobile technology, and the benefits of real-time communication, provide numerous new market
opportunities and expedite cost reductions which promote the adoption of Telematics offerings.
5. SIGNIFICANT FEATURES
Significant features of Cartrack include:
- forecasted annual turnover of R848 million and profit before tax of R285 million for the year ending 28 February 2015
(FY2015);
- audited annual turnover of R637 million and profit before tax of R240 million for the year ended 28 February 2014
(FY2014);
- net profit margins of 26.4% for FY2014 and 24.0% forecasted for FY2015;
- 74% of Cartrack’s turnover is recurring annuity revenue with a client base of 386,581 units (31 August 2014), with 429,529
units forecasted for FY2015;
- 24% of Cartrack’s turnover is earned in foreign currencies;
- ownership of an advanced technology platform and substantial research and development capabilities;
- all intellectual property relating to its mainstream products and services have been developed in-house with no associated
royalties payable;
- presence in 18 countries with extensive global expansion plans; and
- audited recovery success rate of 94% for clients’ vehicles stolen in South Africa.
6. SALIENT FINANCIAL INFORMATION AND SUBSCRIBER BASE
Cartrack’s revenue, EBITDA and net profit after tax for the years ended 28 February 2012, 2013, 2014 and forecasted for the
year ending 28 February 2015 are set out below:
Financial year Financial year Financial year Reviewed
CAGR
to February to February to February Forecast
2012 2013 2014 2015 2012 – 2014
R’m R’m R’m R’m %
Revenue 448.4 495.8 637.0 847.7 19.2
EBITDA 169.3 193.5 247.8 323.2 21.0
Net profit after tax 114.7 137.7 168.0 203.7 21.0
Cartrack’s historic and forecast subscription unit growth is illustrated below:
Historic Forecast
Feb 2011 Feb 2012 Feb 2013 Feb 2014 Aug 2014 Feb 2015
Total 209,680 246,348 295,104 348,231 386,581 429,539
SVR 143,442 150,532 167,332 182,657 190,687 202,813
FM 66,238 95,816 127,772 165,574 195,894 226,716
7. DIRECTORS
The names, ages, position and business addresses of the directors of Cartrack are set out in the table below:
Full name (age) Position Nationality Business address Date Appointed
Isaias Calisto (“Zak”) (48) Global Chief South African Cartrack Corner 1 July 2008
Executive Officer 11 Keyes Road
Rosebank
Johannesburg
2196
John Edmeston (60) Global Chief Financial South African Cartrack Corner 2 July 2014
Officer and Deputy 11 Keyes Road
Global Chief Rosebank
Executive Officer Johannesburg
2196
David Brown (59) Independent South African Cartrack Corner 13 October 2014
Chairman 11 Keyes Road
Rosebank
Johannesburg
2196
Thebe Ikalafeng (48) Independent non- South African Cartrack Corner 13 October 2014
executive Director 11 Keyes Road
Rosebank
Johannesburg
2196
Kim White (38) Independent non- South African Cartrack Corner 13 October 2014
executive Director 11 Keyes Road
Rosebank
Johannesburg
2196
8. DETAILS OF THE PRIVATE PLACEMENT
The Offer comprises an offer by the Company for the Private Placement by way of a subscription for the Offer Shares as
follows:
Offer price range per Share R10.00 to R15.00
Number of Shares to be offered 60,000,000 to 141,000,000
The Offer is conditional on the minimum subscription that must be realised by the Company in order to enable it to ensure that
the Company has, once the Offer is completed, such number and composition of shareholders as will enable it to meet the
minimum free-float and shareholder spread requirements as prescribed by the Listings Requirements and acceptable to the JSE
being realised and the Listing of all of the Shares on the JSE, failing which the Offer and any acceptance thereof shall not take
effect and no person shall have any claim whatsoever against Cartrack, Investec Bank Limited or any other person as a result of
the failure of any such condition.
9. IMPORTANT DATES AND TIMES
Key action Date
Opening date of the Offer (09h00) Monday, 24 November 2014
Closing date of the Offer (12h00) Friday, 5 December 2014
Successful applicants advised of allocations by (12h00) Monday, 8 December 2014
Offer Price and results of the Offer announced on SENS Monday, 8 December 2014
Last date for Successful Applicants to make payment for their
Wednesday, 10 December 2014
allocated Shares (12h00)
Shares listed on the JSE (09h00) Thursday, 11 December 2014
Accounts at CSDPs and brokers credited with the shares on Thursday, 11 December 2014
All dates and times shown in this Abridged Pre-Listing Statement are South African dates and times.
10. COPIES OF THE PRE-LISTING STATEMENT
The Pre-listing Statement is only available in English and copies may be attained during normal business hours from 08:30 to
17:00 for 14 days from the date of issue of the Pre-Listing Statement from Cartrack and Investec as follows:
- Cartrack, Cartrack Corner, 11 Keyes Road, Rosebank 2196, Johannesburg, South Africa;
- Computershare Investor Services Proprietary Limited, Ground Floor, 70 Marshall Street, Johannesburg, 2001, South
Africa; and
- The Corporate Finance division of Investec Bank Limited, 2nd Floor, 100 Grayston Drive, Sandown, Sandton, 2196,
South Africa.
The Pre-listing Statement may also be obtained on Cartrack’s website (www.cartrack.co.za)
21 November 2014
Johannesburg
Investment Bank, Bookrunner and Sponsor
Investec Bank Limited
Legal Advisor
ENSAfrica
Communication Advisor
Aprio
Reporting Accountants and Auditors
Grant Thornton
Transfer Secretaries
Computershare
DISCLAIMER:
This Abridged Pre-listing Statement does not constitute an offer of securities in any jurisdiction. The securities contemplated in
the Private Placement have not been, and will not be, registered under the US Securities Act of 1933, as amended (the “US
Securities Act”) or under the securities legislation of any state or territory or jurisdiction of the United States or any other
jurisdiction and may not be offered, sold, transferred or delivered, directly or indirectly, in or into the United States except
pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act and in
compliance with any applicable securities laws of any states or other jurisdiction of the United States. There will be no public
offering in the United States. Cartrack is not registered and will not be registered under the US Investment Company Act of
1940, as amended, and related rules. This document does not constitute or form part of any offer or invitation to sell, or any
solicitation of any offer to purchase nor shall it (or any part of it) or the fact of its distribution, form the basis of, or be relied on in
connection with, any contract therefore. Any proposed listing and distribution of this document and other information in
connection with a potential listing may be restricted by law in certain jurisdictions, and persons into whose possession any
document or other information referred to herein comes should inform themselves about and observe any such restriction. Any
failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.
This Abridged Pre-listing Statement does not constitute an offer of securities to the public in the United Kingdom. This
communication is directed only at (i) persons who are outside the United Kingdom to whom this communication may lawfully be
made or distributed; or (ii) persons who have professional experience in matters relating to investments falling within Article
19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”); or (iii) high net worth
entities falling within Article 49(2) of the Order; or (iv) other persons to whom it may lawfully be communicated (all such persons
together being referred to as “relevant persons”). Any investment activity to which this communication relates will only be
available to, and will only be engaged with, relevant persons. Any person who is not a relevant person should not act or rely on
this document or any of its contents.
Any offer of securities to the public that may be deemed to be made pursuant to this communication in any EEA Member State
that has implemented Directive 2003/71/EC (together with any applicable implementing measures in any Member State, the
“Prospectus Directive”) is only addressed to qualified investors (as contemplated in Article 2(1)(e) of the Prospectus Directive)
in that Member State within the meaning of the Prospectus Directive.
This Abridged Pre-listing Statement, and the information contained herein, is not being made available in, and may not (in whole
or in part) be released, published, distributed or sent, into the United States, Canada, Australia or Japan or in any other
jurisdiction where it is unlawful to do so.
This Abridged Pre-listing Statement is not a prospectus and the Offer referred to herein will not be open to the public. This
Abridged Pre-listing Statement and the Offer does not constitute an offer to the public for the sale of, or subscription for, or the
solicitation of an offer to buy or subscribe for, shares as defined in the Companies Act No. 71 of 2008 (the “Act”) or otherwise,
and will not be distributed to any person in South Africa in any manner which could be construed as an offer to the public in
terms of the Act.
This Abridged Pre-listing Statement may include statements that are, or may be deemed to be,“forward-looking statements”.
These forward-looking statements may be identified by the use offorward-looking terminology, including the terms “believes”,
“estimates”, “plans”, “projects”, “anticipates”, “expects”, “intends”, “may”, “will” or “should” or, in each case, their negative or
other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or
intentions. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements
reflect the Company’s current view with respect to future events and are subject to risks relating to future events and other risks,
uncertainties and assumptions relating to the Company’s business, results of operations, financial position, liquidity, prospects,
growth and strategies. Forward-looking statements speak only as of the date they are made.
The Company, any other member of the Cartrack group, Investec, any of their respective affiliates and associated companies,
any of their respective directors, officers, employees, legal and other advisers or agents expressly disclaims any obligation or
undertaking to update, review or revise any forward looking statement contained in this Abridged Pre-listing Statement whether
as a result of new information, future developments or otherwise. In particular, no representation or warranty is given as to the
achievement or reasonableness of, and no reliance should be placed on, any projections, targets, estimates or forecasts
contained in this announcement and nothing in this announcement is or should be relied on as a promise or representation as to
the future.
Neither the Company nor any other member of the Cartrack group, Investec, nor any of their respective affiliates and associated
companies, nor any of their respective directors, officers, employees, legal and other advisers or agents nor any other person
accepts any responsibility or liability whatsoever for/or makes any representation or warranty, express or implied, as to the truth,
accuracy or completeness of the information in this Abridged Pre-listing Statement (or whether any information has been
omitted from the Abridged Pre-listing Statement) or any other information relating to the Company, its subsidiaries or associated
companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss
howsoever arising from any use of the Abridged Pre-listing Statement or its contents or otherwise arising in connection
therewith.
Investec is acting exclusively for Cartrack and no-one else in connection with the Offer. They will not regard any other person as
their respective clients in relation to the Offer and will not be responsible to anyone other than Cartrack for providing the
protections afforded to their respective clients, nor for providing advice in relation to the Offer, the contents of this Abridged Pre-
listing statement or any transaction, arrangement or other matter referred to herein.
In connection with the Offer, Investec and any of their respective affiliates, acting as investors for their own accounts, may
subscribe for or purchase shares and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own
accounts in such shares and other securities of Cartrack or related investments in connection with the Offer or otherwise.
Accordingly, references in the Pre-listing Statement to the shares being issued, offered, subscribed, acquired, placed or
otherwise dealt in should be read as including any issue or offer to, or subscription, acquisition, placing or dealing by Investec
and any of their respective affiliates acting as investors for their own accounts.
Date: 21/11/2014 03:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.