| Mon 16 Jul 2007, 12:20 | | KGH - Kagisano - Abridged Prospectus |
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JSE
KAGIS
KGH - Kagisano - Abridged Prospectus
Kagisano Group Holdings Limited - Abridged Prospectus
This abridged prospectus is not an invitation to the public to subscribe for
shares in Kagisano, but is issued in compliance with the Listings Requirements
of the JSE for information purposes only. The information in this abridged
prospectus has been extracted from a full prospectus issued by Kagisano on 16
July 2007 ("the detailed prospectus"), which is available as set out in
paragraph 8. At the date of listing the authorised share capital of Kagisano
comprises 500 million ordinary shares with a par value of 0.0001 cent each, of
which, after a private placement of Kagisano ordinary shares by way of an offer
by the company for the subscription of 15 million ordinary shares at an issue
price of 300 cents per ordinary share in the share capital of Kagisano thereby
raising R45 million before expenses and an offer for sale of 10 million ordinary
shares by the existing shareholder at a price of 300 cents per ordinary share
(together, "the private placement"), 118 million shares will be in issue.
Kagisano Group Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2002/003827/06)
(JSE code: KGH & ISIN: ZAE000098448)
("Kagisano" or "the company")
ABRIDGED PROSPECTUS
Listing of Kagisano ordinary shares ("shares") on JSE Limited ("the JSE").
1. INCORPORATION AND HISTORY
Date of incorporation: 1 March 2002
1.1 The origins of Kagisano can be traced back to 1996 when the current
directors and senior management under leadership of Eugene van Niekerk
established a financing company that focused on the provision of short-term
loans. Kagisano Group Holdings (Pty) Ltd. was founded in 2002, with the
company`s offering focusing on the provision of medium-term loans. A
thorough understanding of the market environment allowed the company to
expand its product offering, using its national network of more than 110
branded outlets supported by a staff contingent of more than 500.
1.2 Through its understanding of market requirements, the company expanded its
current product range to include loans, insurance and cellular phone
contracts. The company`s business model focuses on the delivery of
Everyday Financial Services to its customer base of Living Standards
Measure ("LSM") 4 to 7 category employees through its product range.
1.3 Kagisano`s success can be attributed to a strategy of innovation based on
technology, using its centralised Information Technology management systems
and a state-of-the-art call centre that improved cost effectiveness. The
company regards its national network of branded outlets as the critical
interface with its customers, and aims to expand it into under-serviced
areas throughout the country.
1.4 Kagisano converted to a public company on 29 June 2007.
2. NATURE OF THE COMPANY`S BUSINESS AND INDUSTRY
2.1 Kagisano is a financial services enterprise that targets the financial
needs of clients in the LSM 4 to 7 bands with a broad range of Everyday
Financial Services products to its customers, which include:
Credit products
- Cellular products
- Insurance products
- Employee benefits
- Other financial solutions
The product range is also offered as a solution to companies, resulting in
a synergistic cooperation with the employer, which benefits the company
employee.
2.2 The company deals primarily with customers through its national network of
more than 110 branded outlets which is supported by its in-house call
centre and website.
2.3 Kagisano`s target market of clients is in the LSM 4 to 7 band, a target
market not effectively serviced by the prominent market players in the
financial services industry, due to their focus on the higher income
brackets.
2.4 Since its inception, Kagisano has elected to comply with the regulations of
its industry, adhering initially to the requirements of the Micro Finance
Regulatory Council ("MFRC") and the Financial Services Board ("FSB") and
more recently providing product and solutions compliant with the National
Credit Act ("NCA").
2.5 The following companies within Kagisano are registered as authorised Credit
and Financial Services Providers with the following institutions:
- Kagisano Financial Services 2 - FSB
- Kagisano Financial Services - MFRC and National Credit Regulator ("NCR")
3. PROSPECTUS
3.1 The total credit market of South Africa is a R 500 billion industry.
Short-
dated credit is around R100-billion, with overdrafts and credit card debt
representing R60 billion. The total credit costs of this industry result
in about R25 billion in service charges.
3.2 By 2006, as a result of the growth of the middle class, it had grown by
more than 800 000. This contributed to the increase in the size of South
Africa`s LSM 7 market, thereby increasing the size of Kagisano`s target
market. The implementation of the National Credit Act may expand the size
of the market segment utilising Kagisano`s products.
3.3 It is envisaged that the implementation of the NCA will introduce a
consolidation period for the micro lending industry. Smaller enterprises
will either have their profit margins reduced or eliminated, resulting in
growth potential for larger enterprises with the infrastructure to support
the requirements of the National Credit Act.
3.4 Since the establishment of the MFRC, Kagisano has complied with the
regulatory requirements. With the evolution of the MFRC into the NCR,
companies such as Kagisano have continuously upgraded their operations and
management systems to comply with newly formulated requirements. Its
management systems also operate along the National Credit Act guidelines,
with the company`s back office and management systems capable of assessing
new applications reliably as stipulated by the Act.
3.5 In order to capitalise on its penetration of the target market, the company
seeks to expand its product range with Everyday Financial products that
will satisfy the needs of its typical customer. Product expansion will be
conducted with various industry players, in order to ensure that best-of-
breed products are provided to the Kagisano target market.
4. SUMMARY OF HISTORICAL AND FORECAST INCOME STATEMENTS
4.1 The forecast financial information of Kagisano for 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 results must be read
in conjunction with the independent reporting accountants` report thereon
included in the detailed prospectus.
4.2 The table below sets out the historical income statements of Kagisano for
the years ended 30 Jun 2004, 30 June 2005, 31 August 2006 and the forecast
income statements of Kagisano for the years ending 31 August 2007 and 31
August 2008.
Extracts from the historical and forecast income statements
Reviewed Reviewed Adjusted Reviewed Forecast Forecast
for for audited Interim for for
12 12 for results 12 months 12 months
months months 12 months for
(3) (3) (2) 6 months
Year ended 30 June 30 June 31 August 28 31 August 31 August
2004 2005 2006 February 2007 2008
R`000 R`000 R`000 2007 R`000 R`000
R`000
Revenue 29 093 88 144 153 532 100 850 226 674 287 983
Gross
profit 29 093 87 657 144 014 90 556 195 377 213 319
Other
income 1 1 584 1 186 1 007 - -
Operating
costs (24 014) (67 684) (101 260) (63 381) (138 033) (144 887)
EBITDA 5 080 21 715 43 940 28 182 57 344 68 432
Investment
revenue 359 159 185 123 - -
Depreciatio
n and
amortisatio (163) (493) (1 271) - (3 034) (3 137)
n
Finance
costs (3 282) (6 423) (6 980) (3 650) (9 571) (12 000)
Profit
before
taxation 1 994 14 800 35 874 24 655 44 739 53 295
Taxation (418) (4 718) (11 572) (8 519) (14 340) (14 735)
Earnings
attribu-
table to
ordinary
share-
holders 1 576 10 082 24 302 16 136 30 399 38 560
Pro forma weighted 100 000 000 100 000 000 100 000 000
average shares in
issue
Pro forma earnings 1.58 10.08 24.30
per share (cents)
Pro forma diluted 100 000 000 100 000 000 100 000 000
weighted average
shares in issue
Pro forma diluted 1.58 10.08 24.30
earnings per share
(cents)
Continued
Pro forma weighted 100 000 000 101 884 932 116 000 000
average shares in
issue
Pro forma earnings 16.14 29.84 33.24
per share (cents)
Pro forma diluted 100 000 000 102 383 562 118 000 000
weighted average
shares in issue
Pro forma diluted 16.14 29.69 32.68
earnings per share
(cents)
Notes
1. The unaudited pro forma weighted average number of shares in issue is
used to reflect the effect of the share capital restructuring (i.e.
the conversion of the original 1 000 authorised shares to 100 000 000
shares at the last practical date, 2 000 000 shares for the share
incentive scheme, 1 000 000 shares for costs in lieu of fees and the
further private placement of 15 000 000 shares on the earnings per
share calculations).
2 The consolidated financial information for the year ended 31 August
2006 has been adjusted to reflect a 12 month comparative as the
previous reporting period constituted a 14 month period. (Results for
the full 14 month period are reflected in the detailed prospectus).
3. The consolidated financial information for the years ended 30 June
2004 and 30 June 2005 were audited by Ashton CA Inc. (Practice number
902124) and reviewed by Deloitte & Touche as set out in the detailed
prospectus.
4. The assumptions upon which the forecast income statements are based
are set out in the detailed prospectus.
5. Shares issued to the share trust are currently treated as treasury
shares and will therefore have a dilution effect on the earnings per
share should these share options be allocated and exercised.
5. DIRECTORS, COMPANY SECRETARY AND REGISTERED OFFICE
Full names, ages, business addresses and functions of the board of
directors of Kagisano
Director Age Function Business address
E van Niekerk 34 Chief Eco Fusion 4,
Executive Block B, Witch
Officer Hazel Street,
Highveld,
Centurion
E Grobbelaar 27 Chief Eco Fusion 4,
Financial Block B, Witch
Officer Hazel Street,
Highveld,
Centurion
W Bornman 38 Executive Eco Fusion 4,
Director Block B, Witch
Hazel Street,
Highveld,
Centurion
D A Bosman* 52 Non-executive 220 Lange Street,
Director New Muckleneuk,
0181
G A F van Niekerk* 61 Non-executive Eco Fusion 4,
Director Block B, Witch
Hazel Street,
Highveld,
Centurion
R L Hendricks* 34 Non-executive Suite 102, Two
Director Oceans House,
Surrey Place,
Mouille Point,
Cape Town
* Non-executive
All directors are South African citizens.
5.1 Company secretary and registered office are:
Morestat Corporate Services (Pty) Limited
(Registration number 2000/015549/07)
24A 18th Street
Corner of Hazelwood Road & 18th Street
Menlo Park, Pretoria 0081
(PO Box 30387, Sunnyside 0032)
Telephone: (012) 676 7411
Facsimile: (012) 661 5867
6. THE PLACEMENT
6.1 Salient features
6.1.1 The salient features of the private placement are as follows:
Offer price per ordinary share 300
(cents)
Par value per ordinary share (cents) 0.0001
Premium per ordinary share (cents) 299.99
Number of ordinary shares offered by 15 000 000
the company for subscription in
terms of the private placement
Issue consideration to be received R45 million
by the company before expenses
Number of ordinary shares offered 10 000 000
for sale by the existing shareholder
in terms of the private placement
Total consideration to be received R30 million
by the existing shareholder
The opening and closing dates of the private placement are
as follows:
Opening date of the private Monday, 16 July 2007
placement at 09:00 on
Closing date of private placement at Tuesday, 17 July 2007
12:00 on
Anticipated listing date on ALTx at Tuesday, 24 July 2007
commencement of trade on
Note:
These dates are subject to change at the discretion of the company. Any
changes will be released on SENS.
6.2 Kagisano holds irrevocable undertakings from various selected investors to
subscribe for 15 000 000 shares in terms of the private placement,
amounting to 100% of the private placement shares.
6.3 The private placement of 15 000 000 ordinary shares have been fully
allocated to the investors who have given irrevocable undertakings as set
out in paragraph 6.2 above.
6.4 The placement has not been underwritten and is not subject to a minimum
subscription, being achieved.
7. 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 approved the listing of 118 million shares on ALTx with effect from
the commencement of business on Tuesday, 24 July 2007. The shares will
trade under the abbreviated name "Kagisano" and the JSE code "KGH" and ISIN
ZAE000098448.
8. COPIES OF THE PROSPECTUS
Copies of the prospectus, in English, may be obtained, during business
hours, from Monday, 16 July 2007, from the registered offices of Kagisano,
Exchange Sponsors (Pty) Limited and the transfer secretaries, details of
which are set out below:
- the registered office of the company - Eco Fusion 4, Block B, Witch
Hazel -Street, Highveld, Centurion, 0046
- the offices of Exchange Sponsors (Pty) Limited - 39 First Road, Hyde
Park, 2196;
- the offices of Computershare Investor Services 2004 (Pty) Limited -
Ground Floor, 70 Marshall Street, Johannesburg, 2001.
Johannesburg
16 July 2007
Designated Adviser
Exchange Sponsors (Pty) Limited
Auditors and reporting accountants and Limited Assurance Provider
Deloitte & Touche
Attorneys
Edelstein -Bosman Inc.
Date: 16/07/2007 12:20:01 Produced by the JSE SENS Department.
