| Wed 25 Jul 2007, 16:31 | | SFB - Stefanutti & Bressan - Abridged Prospectus |
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JSE
SFB
SFB - Stefanutti & Bressan - Abridged Prospectus
Stefanutti & Bressan Holdings Limited
(formerly Stefanutti & Bressan Civils (Pty) Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1996/003767/06)
Share code: SFB & ISIN: ZAE000101903
("Stefanutti & Bressan" or "the company" or "the group")
- an offer for subscription of a maximum of 35 000 000 new ordinary shares
in the share capital of Stefanutti & Bressan at a subscription price of
between 1 000 cents and 1 200 cents per share;
- an offer for sale by certain existing shareholders of Stefanutti &
Bressan of a maximum of 11 500 000 ordinary shares in the share capital of
Stefanutti & Bressan at a purchase price of between 1 000 cents and 1 200
cents per share; and
- the subsequent listing of the shares of Stefanutti & Bressan on the JSE
Limited ("JSE").
This abridged prospectus is not an invitation to the general public to
subscribe for or purchase shares in Stefanutti & Bressan. The private
placement is made to invited institutional and retail investors and selected
private clients only.
1. INTRODUCTION
The JSE has formally approved the listing of a maximum of 154 189 200 shares,
with a par value of 0,00025 cent each, in the share capital of Stefanutti &
Bressan on the JSE with effect from commencement of business on Friday, 3
August 2007 in the "Construction & Materials - Heavy Construction" sector of
the JSE lists, subject to the achievement of the required spread of public
shareholders. The shares will trade under the abbreviated name "S&B", with the
share code "SFB" and ISIN ZAE000101903.
A total amount of R465 million, before expenses, will be raised through the
private placement to qualifying investors. The proceeds of the private
placement will first be applied to the offer for subscription (R350 million)
which will allow the company to grow its market share through funding organic
growth, facilitating the working capital requirements of the existing business
as well as facilitating potential acquisition opportunities. Thereafter, the
proceeds of the private placement will be applied to the offer for sale (R115
million), which will allow existing shareholders to partially realise
approximately 10.5% of their current investment in the company and similarly
to facilitate the shareholder spread required by the Listings Requirements of
the JSE ("Listings Requirements").
2. INCORPORATION AND HISTORY
Stefanutti & Bressan was founded in 1971 in KwaZulu-Natal by Biagino
Stefanutti and Ivo Bressan. Stefanutti & Bressan is a civil engineering and
building construction business, with operations spanning the construction of
industrial and petro-chemical plants, power stations, mines, dams, bridges,
roads, water and effluent treatment plants and township infrastructure, all
building work and geotechnical (including piling) works.
The company has grown from a small Durban-based business to a leader in its
industry with permanent offices and workshops in Johannesburg, Durban,
Swaziland and Cape Town employing some 5 500 employees. The group also
operates in Botswana and Mozambique. Management believes that the success of
the business lies in its ability to execute strategic planning over a present
and forward looking horizon and share its skilled engineering resources
effectively throughout sub-Saharan Africa.
Over the last 36 years the company has progressed from initially executing
projects on a labour-only sub-contract basis to independently taking on major
projects under its own auspices throughout sub-Saharan Africa.
Stefanutti & Bressan is capable of undertaking a range of operations from
multi-million Rand projects to small contracts relating to such works as
industrial maintenance.
After operating in KwaZulu-Natal and Swaziland for 25 years, Stefanutti &
Bressan established a full operating office in Johannesburg in 1996 and
embarked on specialised power station cooling tower construction. The cooling
towers at Eskom`s Majuba Power Station are an excellent example of the
expertise and resources available within the group.
Within four years the Johannesburg operation had grown to become the group`s
largest operation. Its main focus is on petro-chemical and industrial plants,
power stations, mine infrastructure, bridges, dams, waterproofing and
rehabilitation of civil structures.
Stefanutti & Bressan is today one of the largest civil engineering and
building contractors in KwaZulu-Natal, active in the petro-chemical, paper,
aluminum, ports, motor vehicle and general industries. The company is also
involved in all general and specialised building work in the province.
Stefanutti & Bressan has further completed large expansion projects in
Botswana on diamond and nickel mines, roadworks and recently, a large water
and effluent treatment facility in Francistown. Each project is run
independently with certain equipment and material and limited skills sourced
from Johannesburg.
In Swaziland, Stefanutti & Bressan has been active in the industrial market
including the construction of warehouses and concrete silos using the slipform
principle for Swazi Sugar Association specifically, concrete structures at
paper mills, dams, roadways, township drainage and road infrastructure and
geotechnical work in the form of lateral support and road cuttings. Stefanutti
& Bressan is equally active in Swaziland`s building sector including
hospitals, clinics, schools and improvements to the King`s Palace.
Stefanutti & Bressan`s engineering skills are epitomised in the Fulton
award-winning bridge that spans the Tugela River in Kwazulu-Natal, one of the
company`s award-winning structures. Attention to detail, extensive planning
and exceptional quality have been integral in establishing the company as a
recognised leader in its field.
The company acquired 100% of the issued share capital of Environmental, Civil
and Mining Projects (Pty) Limited ("ECMP") with effect from 2 April 2007.
3. NATURE OF BUSINESS
Stefanutti & Bressan`s business activities cover a large spectrum of the
construction industry. There is no Government protection and any investment
encouragement law affecting the businesses. The various services are
structured into five key focus areas:
3.1 Concrete structures
This involves the construction of reinforced concrete works for mining,
industrial and chemical plants, power stations, storage silos, marine works,
effluent and water treatment plants:
Mining
Stefanutti & Bressan has a long association with the gold, diamond, platinum,
iron and manganese mining industries. Surface mining projects have included
ore crusher plants, flotation plants, tippler bins, patented pre-cast concrete
systems for lining of incline/decline shafts, mill foundations and thickener
tanks.
Power stations
Stefanutti & Bressan (Gauteng) is a leading specialist in cooling tower
construction for power stations, e.g. the Majuba Power Station near
Standerton, Eskom`s only power station not linked to a specific mine.
Silos
Stefanutti & Bressan has capacity to build high volume storage facilities. The
group now has more than 20 years` experience in silo construction.
Waterworks, effluent and pipelines
The group facilitates efficient conveyance, storage and distribution of water
to assist in urban development, and particularly in Southern Africa in the
upliftment of rural communities.
Concrete rehabilitation
A large percentage of the division`s revenue is generated by this niche
capability.
Services include structural repairs, dam raising, and bridge and structure
jacking.
Bridges
The company is a leading specialist in the construction of bridges and related
structures. It is one of a handful of companies in the industry with the
technical expertise to design and construct incremental launch bridges.
3.2 Building
This division is responsible for the construction of industrial buildings
including factories and warehouses, commercial buildings including office
parks and shopping malls.
3.3 Roads and earthworks
This division focuses on the construction of roads, bulk earthworks, landfill
sites, river protection, terraces for new developments and municipal services.
3.4 Piling and geotechnical
The division specialises in geotechnical surveys, lateral support, rock
anchoring, shotcrete and the installation of concrete piles.
3.5 Mine residue facilities and opencast mining - ECMP
This division specialises in the design, construction and management of mine
residue disposal facilities and opencast mining.
4. PROSPECTS
The civil engineering and construction sector has been enjoying significant
growth in recent years. There is an increasing demand for roads, railways,
ports, reliable energy and telecommunication services. This is further
strengthened by robust demand in the resources and commodities sector.
The supply of skills to build and manage new infrastructure has not kept pace
with this increase in demand. Stefanutti & Bressan has benefited from this and
expects this trend to continue. A number of factors drive this growth: GFCF
(Gross Fixed Capital Formation) will rise from its present level of 18% of GDP
to about 25% of GDP by 2014; public sector infrastructure spending is budgeted
to exceed R150 billion in 2009/2010; private sector expenditure continues to
exceed this on an annual basis.
Stefanutti & Bressan has undertaken a number of significant projects for the
key players in the GFCF cycle. Clients have included blue-chips, parastatals
and the public sector: Anglo Gold Ashanti, Anglo Platinum, Assmang, Eskom,
City of Johannesburg, City of Tswane, Impala Platinum, Johannesburg Roads
Agency, Kumba Resources, Mittal South Africa, SANRAL, Sappi and Sasol.
Stefanutti & Bressan`s committed order book amounts to R2.3 billion for the
2008 financial year and a further R0.6 billion secured for the year
thereafter.
It has been shortlisted on a further R0.8 billion of tenders.
A listing facilitates Stefanutti & Bressan`s continued participation in this
growth. It raises the profile of the group, assists in retaining and
attracting key staff and provides access to capital to fund both organic and
acquisitive growth.
5. DIRECTORS` DETAILS
The full names, ages, business addresses and functions of the directors are
set out below:
Full name and age Business address Function
Executive directors
Biagino Stefanutti (59) Cnr Zuurfontein and Chairman
Orangerivier Drive,
Protec Park,
Kempton Park,
Johannesburg
Willem Meyburgh (53) Cnr Zuurfontein and Chief Executive
Oranjerivier Drive, Officer
Protec Park,
Kempton Park,
Johannesburg
Dermot Gregory Quinn (55) 14 Circuit Road, Financial
Westmead, Durban Director
Non-executive directors
Nomhle Jacqueline
Mbali Gcabashe 82 Dennis Road, CEO of BlueIQ
Atholl, Investment Holdings
Canca^ (41) Johannesburg
Kevin Roy Eborall (62) 47 Smits Road, Dunkeld, Consultant
Johannesburg
Lemane Bridgman Sithole (43) 57 Buckingham Avenue, Businessman
Craighall,
Johannesburg
Mafika Edmund Mkwanazi^ (53) 74 Saddlebrook Estate,
Kyalami, Midrand Director of
Companies
Alternate director to
Lemane Bridgman Sithole
Joseph Fizelle (36) 57 Buckingham Avenue,
Craighall, Businessman
Johannesburg
^Independent.
All of the directors are South African citizens, with the exception of Dermot
Quinn and Joseph Fizelle, who are Irish.
6. SHARE CAPITAL
6.1 Authorised and issued share capital
The authorised and issued share capital of Stefanutti & Bressan, before and
after the private placement and Section 90 distribution implemented prior to
the listing, is set out below:
Authorised R
400 000 000 shares of 0,00025 cent each 1 000
Issued, before the private placement
119 189 200 shares of 0,00025 cent each 297,97
Share premium 147 945 000
Issued, after the private placement (assuming a
private placement price of 1 000 cents per share).
154 189 200 shares of 0,00025 cent each 385,47
Share premium 487 945 000
All the authorised and issued shares are of the same class and rank pari passu
in every respect. Subject to the minimum capital amount of R465 million being
raised and the shareholder spread requirements of the JSE Listings
Requirements being achieved, the entire share capital of Stefanutti & Bressan
will be listed on the JSE on Friday, 3 August 2007. The shares will be issued
in dematerialised form.
7. Dividends
There will be no dividend declared in respect of the financial year ending 29
February 2008. However, in the financial year ending 28 February 2009, a final
dividend will be paid and thereafter the company`s dividend policy will be to
distribute bi-annually, an interim and final dividend, up to a maximum of
one-third of net profit after tax, taking into account distributable reserves
and cash available for distribution.
8. PROFIT FORECAST
The consolidated profit forecast of the group for the year ending 29 February
2008, the preparation of which is the responsibility of the directors, is set
out below. The forecast should be read in conjunction with the independent
reporting accountants` report thereon.
The unaudited consolidated profit forecast of Stefanutti and Bressan for the
year ending 29 February 2008, the preparation of which is the responsibility
of the directors, is set out below. The forecast has been examined by the
reporting accountants and should be read in conjunction with their report
thereon.
Audited for the year Profit forecast for the year
R`000 ended 28 February 2007 ending 29 February 2008(1)
Contract revenue(1) 1 688 652 2 507 833
Contract costs (1 505 787) (2 208 898)
Gross profit 182 865 298 935
Other income 6 053 2 300
Operating costs(2) (88 585) (135 168)
Operating profit 100 333 166 067
Cost of BEE
credentials (30 000) -
Investment income(5) 12 779 13 754
Finance costs (7 822) (18 796)
Profit before
taxation 75 290 161 025
Taxation (38 041) (45 166)
Net profit for year 37 249 115 859
Pro forma earnings
per share (cents) 34,2 83,2
Pro forma headline
earnings per share (cents) 34,2 83,2
Pro forma headline
earnings per share
excluding BEE costs (cents) 61,7 83,2
Weighted average
number of shares in issue
(fully diluted) 108 882 934 139 326 186
Notes:
1. Forecast revenue is based on existing contracts that have not yet been
completed and an estimate of revenue from contracts that the company has a
high probability of being awarded. Forecast growth is much in line with
historical performance to date and the company`s past successes in key client
and contract acquisition. The high growth rate forecasted reflects the
position the company in its business life cycle as well as the high growth
rate expected in the construction sector in the medium term.
2. The expenditure was forecast on a line-by-line basis and it reflects the
current budgeted expenditure. No material changes are anticipated in the
trading margins as all new contracts must meet minimum hurdles.
3. Should any performance forecast from current contracts or any potential
contracts not materialise, the financial results for the periods referred to
above may differ from those forecast and those variations may be material.
4. ECMP is not included in the 2007 audited results as the acquisition was
only effective from 2 April 2007.
5. In accordance with IFRS 3: Business Combinations, the effective date of
the ECMP acquisition is 2 April 2007 and hence the forecast only includes 11
months of ECMP. No other acquisitions have been included in the profit
forecast.
6. Investment income does not take into account interest earned on cash
raised from private placement.
7. No dividend will be declared in 2008.
8. The accounting policies applied in the forecasts are consistent with
those applied by the company during the past financial year.
9. THE PRIVATE PLACEMENT
A total amount of R350 million, before expenses, will be raised by the issue
of a maximum of 35 000 000 new shares by the company for cash, and a total
amount R115 million, before expenses raised from the sale of a maximum of 11
500 000 shares by the existing shareholders for cash, to qualifying investors.
The proceeds received in terms of the private placement will first be applied
to the offer for subscription and thereafter to the offer for sale.
The purpose of the private placement and the listing are to:
- raise capital and to have the flexibility of listed shares to allow the
company to take advantage of growth opportunities in the construction sector.
The proceeds of the private placement will be utilised to acquire targeted
businesses, to finance the acquisition of ECMP and for other capital
expenditure and working capital requirements;
- enhance investor and general public awareness of Stefanutti & Bressan,
its activities and specialised skills;
- attract and retain intellectual capital through the incentive of
meaningful equity participation;
- broaden Stefanutti & Bressan`s shareholder base and to obtain the spread
of shareholders required for the listing of Stefanutti & Bressan`s shares on
the JSE; and
- afford qualifying investors the opportunity to participate directly in
the income streams earned by Stefanutti & Bressan, as well as in the future
capital growth of its assets.
10. SALIENT DATES AND TIMES
The offer opens at 16:00 on Wednesday, 25 July 2007 and is expected to close
at 12:00 on Thursday, 26 July 2007.
2007
Opening date of the private placement at 16:00 on Wednesday, 25 July
Abridged prospectus released on SENS on Wednesday,25 July
Expected closing date of the private placement at
12:00 on Thursday,25 July
Private placement price released on SENS on Thursday,26 July
Final allocation of the private placement shares on Thursday,26 July
Private placement price published in the press on Friday,27 July
Settlement and anticipated listing date of
Stefanutti & Bressan and commencement of dealings
on the JSE at 09:00 on Friday, 3 August
Note:
The above dates and times are subject to change. Any such change will be
released on SENS and published in the press.
11. COPIES OF PROSPECTUS
This abridged prospectus is a summary of the full prospectus and has been
prepared and issued in relation to the private placement and the listing of
Stefanutti & Bressan. It contains the salient features of the prospectus,
dated 25 July 2007, which should be read in its entirety for a full
appreciation thereof.
Copies of the full prospectus may be obtained during office hours at the
registered office of the company: MRM Office Park, 10 Village Road, Kloof,
3610 and the office of the bookrunner, corporate advisor and sponsor of
Stefanutti & Bressan, Bridge Capital Advisors (Pty) Limited, 2nd Floor, 27
Fricker Road, Illovo Boulevard, Illovo, 2196.
Kloof, KwaZulu-Natal
25 July 2007
Bookrunner, corporate advisor and sponsor
BRIDGE CAPITAL
Reporting accountants
and auditors
Moores Rowland
Corporate Finance
Attorneys
Webber Wentzel Bowens
Date: 25/07/2007 16:31:47 Produced by the JSE SENS Department.
