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JSE
BWI
BWI - B & W Instrumentation and Electrical Limited - Abridged prospectus
B & W INSTRUMENTATION AND ELECTRICAL LIMITED
Incorporated in the Republic of South Africa
(Registration number 2001/008548/06)
Share code: BWI ISIN: ZAE000098687
("B&W" or "the company")
ABRDIDGED PROSPECTUS
This abridged prospectus is not an invitation to the general public to
subscribe for or to purchase ordinary shares in B&W, but is issued in
compliance with the Listings Requirements of JSE Limited ("JSE") only, and
relates to a private placement of B&W ordinary shares by way of an offer by
the company for subscription of 30 000 000 ordinary shares in the issued
share capital of the company at an issue price of 100 cents per ordinary
share thereby raising R30 million before expenses and an offer for sale of
30 000 000 ordinary shares in the issued share capital of the company by
the existing shareholders at a price of 100 cents per ordinary share
(collectively hereinafter, "the private placement") and the subsequent
listing of the ordinary shares of B&W on the Alternative Exchange ("ALTX")
of the JSE.
The information in this abridged prospectus has been extracted from a full
prospectus issued by B&W on 27 June 2007 ("the detailed prospectus"), which
is available as set out in paragraph 10 below. At the date of listing, the
authorised share capital of B&W will comprise 500 000 000 ordinary shares
having a par value of 0.001 cent each, of which, after the private
placement of 30 000 000 ordinary shares at 100 cents per share, 200 000 000
will be in issue.
1 BACKGROUND AND HISTORY
B&W is an electrical and instrumentation construction company which has
operated in the Elecrtical and Instrumentation ("E&I") construction
industry for more than 33 years. Prior to becoming a public company on 8
May 2007, B&W was the largest privately-owned E&I construction company in
South Africa and has executed contracts for numerous blue-chip clients in
the mining and process industries. B&W provides specialist construction
services to a variety of sectors including the industrial utilities,
mining, chemical, oil and gas and food and beverage industries. A
strategic decision has been taken to develop its capabilities in the
nuclear power construction sector.
The company`s business was originally established in Cape Town in 1973,
servicing the limited process industry. In 1982, the company established a
branch office in Alberton, Gauteng, to enable it to properly service the
expansion drive of one of its major clients. This branch developed into the
main operation of the company, from where all contract operations were, and
still are, carried out.
B&W subsequently expanded its range of clients to include those in the
general process and mining industries, while also developing an
instrumentation construction capability, which was closely allied to its
electrical erection work. In 1998 B&W became one of the first South African
construction companies to work in this field in remote areas of Africa,
enabling it to secure numerous other contracts outside of South Africa. B&W
has consistently grown its turnover, profitability and head count
significantly and has increased its ability to handle complex contracts.
2 RATIONALE FOR LISTING
B&W intends to list on the ALTx as a strategic step that will allow the
company to raise capital in support of its vision of remaining the most
competent E&I construction company in South Africa. A listing will provide
the company with capital to accelerate its growth and skills development to
develop a nuclear power construction capability. B&W provides the industry
with specialist construction services, which it markets through customers
and engineering houses in South Africa, elsewhere in Africa, and is
currently investigating the possibility of commencing operations in the
Gulf States. In order to do this, the company uses its state of the art
technological capability, the vast experience that it has gained over the
years over a diverse range of projects and the strategic marketing
techniques it has employed throughout South Africa and the rest of Africa.
3 PROSPECTS
B&W has exciting prospects, both locally and internationally.
3.1 Local market
The E&I construction industry in the sectors currently serviced by B&W is
expected to experience further expansion. A strategic decision has been
taken by the directors to develop the company`s capabilities in the nuclear
power construction sector.
There is a large increase in anticipated spending by the private sector,
primarily in mining and downstream refining processes as well as in the oil
and the gas industries, the cement, sugar and other process industries.
Government`s "use it or lose it" policy relating to mining rights has had
the effect that an increasing number of mining houses in South Africa are
in the process of developing mining prospects.
There is a substantial rise in planned spend by public corporations on
power generation, electricity distribution, sea ports, airports, rail and
harbours. Almost R400 billion is earmarked for infrastructure over a five-
year period, the bulk of which will fall in the public sector.
By maintaining its current share of these expanding markets and by managing
them for margin, B&W should achieve significantly higher contributions and
improved profitability.
3.2 International market
Numerous second-tier mining houses are prospecting and developing mines in
many regions in Africa, particularly in Zambia, Angola, the DRC,
Mozambique, Madagascar and Sierra Leone. In addition, Namibia, Angola,
Nigeria and countries bordering the Gulf of Guinea have identified large
reserves of oil and gas both onshore and offshore. Power generation plants
are planned for Namibia, Botswana, Mozambique, Uganda and along the Congo
River in the DRC.
South African construction firms, by virtue of their geographical proximity
and relationships, are well placed to offer an economical service to these
countries. By capturing a share of these identified markets, B&W should
significantly increase both turnover and margin.
4 THE PRIVATE PLACEMENT
4.1 Salient features
4.1.1 The salient features of the private placement are as follows:
Offer price per ordinary share (cents) 100
Par value per ordinary share (cents) 0.001
Premium per ordinary share (cents) 99.999
Number of ordinary shares offered by the 30 000 000
company for subscription in terms of the
private placement
Issue consideration to be received by the R30 million
company before expenses
Number of ordinary shares offered for sale by 30 000 000
the vendors in terms of the private placement
Total consideration to be received by the R30 million
vendors
4.1.2 The opening and closing dates of the private placement are as follows:
Opening date of the private placement at 09:00 Wednesday,
on 27 June 2007
Closing date of private placement at 12:00 on Friday, 29 June 2007
Anticipated listing date on ALTX at Thursday,
commencement of trade on 5 July 2007
5 SUMMARY OF THE HISTORICAL AND FORECAST INCOME STATEMENTS
The summarised historical and forecast financial information of B&W for the
financial year ended 31 August 2006 and the financial years ending 31
August 2007 and 31 August 2008, the preparation of which is the
responsibility of the directors, is set out below. The forecast financial
information is contained in the detailed prospectus referred to in
paragraph 10 below and has been reviewed and reported on by the reporting
accountants. Such report will be contained in the detailed prospectus and
will also be available for inspection.
5.1 Extracts from the historical and forecast income statements
Audited Forecast Forecast
2006 2007 2008
R`000 R`000 R`000
Revenue 163 622 270 000 336 000
Cost of sales 139 312 221 400 275 520
Gross profit 24 310 48 600 60 480
Other income 69 2 011 2 450
Operating costs 15 033 18 700 20 910
Operating profit 9 346 31 911 42 020
Net finance (costs)/income (541) 885 4 623
Profit before taxation 8 805 32 796 46 643
Taxation 2 983 9 511 13 526
Profit after taxation 5 822 23 285 33 117
Pro forma weighted average 170 000 175 000 200 000
ordinary shares in issue 000 000 000
Pro forma earnings per
ordinary share (cents) 3.4 13.3 16.5
Pro forma dividends per
ordinary share (cents) 1.1 3.3 4.1
Notes:
1. The pro forma weighted average number of ordinary shares in issue as
at 31 August 2006 is based on the increase in and sub-division of the
ordinary shares in issue into 170 000 000 ordinary shares in issue as
set out in paragraph 18.3 of the detailed prospectus.
2. The main assumptions on which the forecast income statements are based
are set out in paragraph 11.2 of the detailed prospectus.
3. The above income statement takes into account the effects of the
anticipated issue of ordinary shares detailed in paragraph 11.3 of the
detailed prospectus.
4. The dividend policy of B&W going forward will be to maintain a
dividend cover of 4.
6 DIRECTORS
The full names, ages, qualifications and designations of the directors are
as follows:
Director Age Qualification Designation
Leonard John Barrow 62 Pr Eng, PrCPM, Chairman
BSc(mech eng), BCom,
FSAI (mech)E
Brian Harold Harley 50 PrCPM, MBA, Managing
Dip(busman) NTC6 Director
Daniel Johannes 43 BCom(Acc) Financial
Evert Director
Gert Martinus 46 NTC4 Proposals
Jurgens Breedt Director
Thomas Lombard 53 - Project
Director
Cornelius Jacobus 43 NTC3 Alternate
Minnie Director
Yolisa Unati 37 Independent
Mabandla BA, PRISA, APM non-executive
Director
Kenneth Eric Nel 62 PrCert Eng, MAP, PrC Marketing
Director
Dean Stuart Nevay 37 PrCM, BCom, N Dip Planning
Elec. Eng (L/C), Director
Certified PROFIBUS
Engineer, ISO9001:
2000
James Douglas 71 Independent
Oosthuizen8 CA(SA) non-executive
Director
Hendrik Johannes 43 N6 Alternate
Rall Director
Gary William Robert 42 PrCM, NHD (Building Commercial
Swanepoel Science) Director
Velaphi Samuel 47 - Director
Vilakazi
Wolfgang 64 Independent
Wassermeier8 - non-executive
Director
8 Member of the Audit Committee
The business address of the directors is 42, Fourth Avenue, Alberton North,
Gauteng, 1450.
All directors are South African citizens.
7 SHARE CAPITAL
The authorised and issued share capital of B&W, taking into account the
private placement and listing costs as set out in paragraph 13.1 of the
detailed prospectus, which are to be offset against the share premium, are
set out below:
Rand
Authorised
8 million 6% Redeemable Non Cumulative Preference 8 000 000
Shares of R1 each
500 million ordinary shares of 0.001 cent each 5 000
Issued, before the private placement
8 million 6% Redeemable Non Cumulative Preference 8 000 000
Shares of R1 each
170 million ordinary shares of 0.001 cent each 1 700
Share premium 3 099 950
Issued, after the private placement
8 million 6% Redeemable Non Cumulative Preference 8 000 000
Shares of R1 each
(to be redeemed after listing)
200 million ordinary shares of 0.001 cent each 2 000
Share premium 31 233 650
31 235 650
8 MAJOR SHAREHOLDER
There are no shareholders, other than the vendors, some of whom are
directors, who were, directly and indirectly beneficially interested in 5%
or more of the issued ordinary share capital of B&W at the last practicable
date and who will, as far as the directors of B&W are aware, hold 5% or
more of the issued ordinary share capital of B&W following the private
placement, as set out below:
Percentage Percentage Number of
held before held after shares after
Name of shareholder private private private
placement placement placement
The B&W Employee 10 7 14 000 000
Trust
L J Barrow* 30 21 42 000 000
B H Harley* 10 7 14 000 000
G M J Breedt* 10 7 14 000 000
T Lombard* 10 7 14 000 000
K E Nel* 10 7 14 000 000
D S Nevay* 10 7 14 000 000
G W R Swanepoel* 10 7 00 000
* Director
9 LISTING ON THE JSE
Subject to the required spread of public shareholders in terms of the
Listings Requirements being obtained pursuant to the private placement, the
JSE has granted B&W a listing in respect of 200 000 000 ordinary shares on
ALTX under the abbreviated name "B&W", share code "BWI" and ISIN
ZAE000098687, with effect from the commencement of business on Thursday, 5
July 2007.
10 COPIES OF THE PROSPECTUS
Copies of the prospectus, in English, may be obtained during business
hours, for a period of 21 days from the date of issue of the detailed
prospectus, being 27 June 2007, from B&W, the Designated Adviser and
the transfer secretaries, details of which are set out in below:
- B&W, 42 Fourth Avenue, Alberton North, Gauteng, 1450;
- Merchant Sponsors (Proprietary) Limited, 2nd Floor, North Block, Hyde
Park Office Tower, Corner 6th Road and Jan Smuts Avenue, Hyde Park,
Johannesburg, 2196;
- Computershare Investor Services 2004 (Proprietary) Limited, Ground
Floor, 70 Marshall Street, Johannesburg, 2001.
Johannesburg
27 June 2007
Designated Adviser
Merchant Sponsors (Proprietary) Limited
Corporate adviser
Merchantec (Proprietary) Limited
Auditors and independent reporting accountants
Carrim, Maritz & Associates South Africa Inc.
Limited assurance provider
Grant Thornton
Attorneys
Fluxmans Inc.
Date: 27/06/2007 07:00:00 Produced by the JSE SENS Department.
