| Thu 26 Jul 2007, 17:00 | | IQG - Iquad - Abridged Prospectus |
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JSE
IQUAD
IQG - Iquad - Abridged Prospectus
IQuad Group Limited
(Incorporated in the Republic of South Africa)
(Previously Indevco Holdings (Proprietary) Limited)
(Registration Number 2004/025177/06)
Share code: IQG & ISIN: ZAE000101622
("IQuad" or "the company")
ABRIDGED PROSPECTUS
1. INTRODUCTION
PSG Capital (Pty) Limited is authorised to announce that, subject to the
necessary public shareholders spread being achieved in terms of the
private placing as set out in 5 below, the JSE Limited ("JSE") has
formally approved the listing of IQuad on the Alternative Exchange
("Altx") from the commencement of trade on Wednesday, 8 August 2007 under
the abbreviated name "IQuad", share code "IQG" and ISIN ZAE000101622.
2. BACKGROUND
In 2001, management at PSG Treasury Outsourcing believed there was an
opportunity to create a group of "specialist service companies", and
approached the majority shareholder in the Indevco group, regarding a
possible merger of the entities. In March 2005, a consortium consisting
of then PSG Capital Limited (now part of Paladin Capital Limited
("Paladin")), Arch Equity Limited (now Thembeka Capital Limited) and
certain members of management acquired the majority stake in the Indevco
group.
The Indevco group of companies was merged with PSG Treasury Outsourcing
in March 2006, to form the IQuad group.
3. OVERVIEW OF THE IQUAD GROUP
3.1 The IQuad group`s various niche SBU`s provide services to a wide range of
companies. These services can best be grouped as follows:
- Government Investment Incentives & Subsidies:
Includes accessing various government incentives, processing of
rebates offered in respect of certain government programmes for
clients, and facilitating the trade of export credits in respect of
such programmes;
- Treasury Risk Management & Economic Research:
Includes the management and administration of foreign exchange risk
for importers/exporters and provision of real time independent
market research on South African financial markets;
- Business Optimisation & Development Solutions:
Includes provision of business improvement solution through
integrated management solutions, implementation of turn-around
strategies for clients` businesses, training and leadership
assessments; and
- Specialist Audit & Verification Services:
Includes BEE verification services to companies by evaluating their
compliance with the Department of Trade and Industry`s ("DTI")
recently promulgated Codes of Good Practice ("Codes"), as well as
performing customs audits for the purposes of certain government
programmes.
3.2 The IQuad group structure is fully set out in the prospectus which will
be made available to all participants in the private placing as set out
in paragraph 9 below.
4. RATIONALE
4.1 The main purpose of the listing of IQuad on Altx is to:
- raise the profile of the company amongst members of the general
public, investors and target markets on a national basis when
seeking out new business opportunities;
- facilitate direct investment in the IQuad group;
- raise future capital for potential acquisition and growth
opportunities;
- allow for the utilisation of shares in facilitating acquisitions;
- unlock value for IQuad shareholders and create value for future
shareholders; and
- attract and incentivise quality employees.
5. PRIVATE PLACING
5.1 The salient features of the private placing of IQuad shares is set out
below:
Maximum number of ordinary shares offered by 2 000 000
the company to select BEE parties ("first
private placing")
Maximum number of ordinary shares offered by 4 000 000
the company to select non-BEE parties
("second private placing")
Maximum number of ordinary shares offered by 2 000 000
Paladin to all select parties, to the extent
that second private placing is
oversubscribed ("third private placing")
("first, second and third private placing"
collectively referred to as the "private
placing"
Offer price per share in terms of the first R5.40
private placing
Offer price per share in terms of the R6.00
second and third private placing
Total issue consideration in terms of the R34 800 000
private placing
Opening date of the private Monday, 30 July 2007
placing at 09:00 on
Closing date of the private Thursday, 2 August 2007
placing at 12:00 on
5.2. No offer will be made to the public in respect of the private placing.
The private placing is open to select applicants only.
5.3 In amplification of the above, the first private placing is only open to
select BEE parties, while the second private placing is only open to
other select investors who do not qualify as BEE parties.
5.4 To the extent that the first private placing may not be fully subscribed,
such first private placing shares shall be made available as part of and
in addition to the second private placing shares.
5.5 Applicants in respect of the first private placing should note that the
company may require BEE status verification and reserves the right to
require any such applicant, if successful in its application, to enter
into a BEE subscription agreement.
6. PROSPECTS
6.1 The prospects for the IQuad group can be summarised as follows:
- The services industry, and more specifically the outsourcing
industry, is anticipated to continue growing at an above average
rate;
- Mature IQuad SBU`s will grow largely through organic growth;
IQuad does and will continue to pursue greenfield initiatives and
diversifying acquisitions, where appropriate;
- One such greenfield is already well resourced to take advantage of
government`s implementation of BEE and the Codes;
- IQuad is actively pursuing the acquisition of new businesses which
appear to be a "fit" in terms of its vision, strategies and long
term goals;
- It will also pursue new mutually beneficial strategic alliances with
other service companies, where appropriate;
- Private placing proceeds will be utilised for acquisitions,
resourcing greenfield initiatives and increasing the delivery
capacity of the IQuad group;
- IQuad`s brand, although a young one, will benefit from the Altx
listing and will grow with the company`s raised profile.
6.2 Full details as to IQuad`s future prospects are more fully set out in the
prospectus which will be made available to all participants in the
private placing as set out in paragraph 9 below.
7. DIRECTORS
7.1 The full names, ages, business addresses and occupations of the directors
of IQuad are outlined below:
Full name Age Occupation Business Address
Trevor Bertram 45 Chief 5 Mangold Street
Hayter Executive Newton Park
Officer Port Elizabeth,
6045
Alfred Anthony 43 Non- 64 York Road
Da Costa executive North End
Chairman Port Elizabeth,
6000
David Murray 39 Executive 5 Mangold Street
Edwards director Newton Park
Port Elizabeth,
6045
Frans Johannes 35 Financial 5 Mangold Street
Botha director Newton Park
Port Elizabeth,
6045
James Mortimer 43 Executive Unit 11
Whittle (1) director Somerset Park
Umhlanga, 4320
Pierre Malan 40 Non- 1st Floor
executive Ou Kollege
director 35 Kerk Street
Stellenbosch,
7600
Andre Geldenhuys 36 Non- 1st Floor
executive Ou Kollege
director 35 Kerk Street
Stellenbosch,
7600
Shameema Cassiem 36 Non- 1st Floor
executive Inanda
director 6 Dorp Street
Stellenbosch,
7600
Notes
(1) Alternate director to Mr DM Edwards.
(2) All directors are South African citizens.
8. FINANCIAL INFORMATION
Set out below is an extract from the historic income statement of IQuad
for the financial year ended 28 February 2007 and the forecast income
statements for the financial periods ending 29 February 2008 and 28
February 2009, the preparation of which is the responsibility of the
directors. The forecast financial information should be read in
conjunction with those assumptions, and the independent reporting
accountants` report on such forecast financial information, as set out in
the prospectus to be made available to all participants in the private
placing in terms of paragraph 9 below:
Actual Forecast Forecast
Year Year Year
ended ending ending
February February February
2007 2008 2009
R`000 R`000 R`000
REVENUE 47 636 52 900 62 209
Other operating 17 38 42
income
Operating expenses (29 046) (32 518) (36 962)
OPERATING PROFIT 18 607 20 420 25 289
INTEREST RECEIVED 566 588 647
INCOME from - 1 152 1 081
Associated companies
INTEREST PAID (1 163) (299) (151)
PROFIT before 18 010 21 861 26 866
taxation
TAXATION (4 459) (6 617) (7 984)
PROFIT after taxation 13 551 15 244 18 882
Attributable to:
MINORITY INTEREST (716) (754) (874)
ORDINARY SHAREHOLDERS 12 835 14 490 18 008
Ordinary dividends (2 064) (5 404) (6 767)
OPENING retained 3 741 14 512 23 598
earnings
RETAINED EARNINGS 14 512 23 598 34 839
Weighted number of 22 872 22 937 22 937
shares in issue
(`000)
Number of shares in 22 937 22 937 22 937
issue (`000)
Earnings per share 56.1 63.2 78.5
(cents)
Headline earnings per 56.0 63.2 78.5
share (cents)
Dividend per share 9.00 23.56 29.50
(cents) (2) (3)
Notes
(1) Capital raising proceeds, the related increase in the number of
shares in issue and interest earned via the private placing have not
been included in the above forecasts.
(2) A final dividend of 11 cents per share for year ended February 2007
was declared on 3 April 2007.
(3) For illustrative purposes, dividends relating to 2008 and 2009 have
been included in the forecast figures as having been paid before 28
February, although these would only be declared and paid in the
following year.
9. COPIES OF THE PROSPECTUS
9.1 This abridged prospectus is intended only as a summary of the full
prospectus which has been prepared and issued in terms of the JSE
Listings Requirements and registered by the Registrar of Companies in
terms of the Companies Act 61 (61 of 1973) as amended on Wednesday, 25
July 2007, and which will be posted to all participants in the private
placing on Friday, 27 July 2007. Participants are encouraged to read the
prospectus in its entirety for a full appreciation thereof.
9.2 Copies of the full prospectus are available, in English, during office
hours from IQuad at 5 Mangold Street, Newton Park, Port Elizabeth, or PSG
Capital at 1st Floor, Ou Kollege, 35 Kerk Street, Stellenbosch or
Building 8, Woodmead Estate, 1 Woodmead Drive, Woodmead, or can be
downloaded from IQuad`s website at www.iquad.co.za.
26 July 2007
Port Elizabeth
PSG Capital (Proprietary) Limited : Joint Sponsor and Corporate Adviser
BDO Questco (Proprietary) Limited : Lead Sponsor for the transaction
Hofmeyr Herbstein & Gihwala Inc. : Attorneys
PKF (PE) Inc. : Reporting Accountants and Auditors
Date: 26/07/2007 17:00:01 Produced by the JSE SENS Department.
