| Wed 15 Aug 2007, 14:41 | | SKY - Sea Kay - Abridged Pre-Listing Statement |
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JSE
SEA
SKY - Sea Kay - Abridged Pre-Listing Statement
SEA KAY HOLDINGS LIMITED
(formerly Pilvest CO 1 (Proprietary) Limited)
(Registration number 2006/004967/06)
JSE code: SKY ISIN: ZAE000102380
("Sea Kay" or "the Company" or "the Group")
ABRIDGED PRE-LISTING STATEMENT
issued in terms of the Listings Requirements of the JSE Limited ("JSE")
relating to a private placing by way of an offer for subscription of 47 948 790
ordinary shares of R0.0000003333334 each at an issue price of R1.00 each ("the
placing") in order to raise R47.9 million.
The Pre-Listing Statement is not an invitation to the public to subscribe for
ordinary shares in Sea Kay, but is issued in compliance with the Listings
Requirements of the JSE for the purposes of providing the public with
information regarding Sea Kay. The placing is open to invited applicants only.
Applications in terms of the private placing are subject to a minimum
subscription of R100 000 per invited single addressee acting as principal.
Subject to the attainment of the required spread of shareholders in terms of
the Listings Requirements of the JSE, the JSE has approved the listing of 477
530 895 ordinary shares on the Main Board of the JSE List in the "Industrials -
Construction and Materials - Heavy Construction" sector, under the abbreviated
name "SeaKay" with effect from the commencement of business on Thursday, 16
August 2007.
The ordinary shares offered in terms of the Pre-Listing Statement will rank
pari passu with the existing ordinary shares in the Company. After the private
placing, the authorised share capital of the Company of R1 000 will comprise 3
000 000 000 ordinary shares of R0.0000003333334 each and the issued share
capital of the Company will be R159 comprising 477 520 895 ordinary shares of
R0.0000003333334 each and share premium of R151 million (after setting off
listing expenses of approximately R3 million).
The Sea Kay shares will only be traded in electronic form and, as such, all
shareholders who elect to receive certificated shares will have to
dematerialise their certificated shares should they wish to trade therein.
Information relating to the Company
Nature of business:
The Company was incorporated in the Republic of South Africa on 20 February
2006 as Pilvest CO 1 (Proprietary) Limited (registration number
2006/004967/07). On 20 July 2007, the Company was converted into a public
company and changed its name to Sea Kay Holdings Limited.
Sea Kay is a dynamic South African construction and development group that has
delivered consistent growth through leadership, innovation and quality since
1998. The Group operates mainly as a mass housing construction company
providing low cost, affordable and bonded mass housing to a client mix
including the South African Government in terms of its Reconstruction and
Development Programme, banks, mines, property development companies and private
clients. While focused on mass housing, the Company also undertakes the
building of schools and local clinics in the communities in which it operates.
The business derives its name from the initials of its founder, Corne Kruger,
who is now the Chief Executive of the Group.
Sea Kay acquired Sea Kay Engineering Services (Proprietary) Limited ("Sea Kay
Engineering") and Seriso 474 (Proprietary) Limited ("Sedibeng Bricks")
(collectively, "the subsidiaries") in terms of a restructure process, partly on
a share-for-share basis with certain of the original shareholders of those
subsidiaries effectively receiving shares in Sea Kay in lieu of their shares in
the respective subsidiaries and the exiting shareholders receiving a cash
purchase price
Sea Kay Engineering commenced activities at Sedibeng in the Vaal Triangle and
subsequently expanded its operations to include Mpumalanga, North West, Western
Cape, Free State and Gauteng. Regional offices have been established in
Johannesburg and more recently in Cape Town.
Sea Kay Engineering produces a range of its own construction materials in order
to secure consistent and reliable procurement. Sea Kay Engineering has the
capacity to provide the following services:
- project planning and Environmental Impact Assessment processes;
- professional town planning and urban design;
- land-rehabilitation;
- design and installation of bulk and township internal civil services;
- construction and beneficiary administration; and
- material procurement.
During 2003/4, Sea Kay Engineering transformed into a BEE compliant company,
expanded its top management and developed into a main contractor role having
obtained a number of substantial projects. Since then, important management
systems and procedures have been put in place and Sea Kay Engineering has
become a leading company in the industry.
Sea Kay Engineering has a proven track record of excellent quality
construction, which is objectively recorded by the following factors:
- An "8GB" rating was awarded to Sea Kay Engineering by the Construction
Industry Development Board of South Africa;
- Sea Kay Engineering has received a number of industry awards on
prominent projects in which it has participated;
- Sea Kay Engineering has been selected and remains a member on the
Executive Council of the Gauteng Department of Housing`s priority panel of
construction companies. The three companies (of the four originally appointed
during 2003) are automatically awarded projects of an urgent nature because of
the procurement processes previously employed to create the panel for the said
projects and because of the constant urgent nature of such priority projects.
The material supply chain plays a critical role in the timeous delivery of mass
housing projects. In order to obviate delays arising from shortages of key
materials, an investment was made in fully automated ready-mix concrete,
plaster and mortar batch plants. In keeping with this strategy, Sedibeng Bricks
was formed, which principally manufactures cement bricks for the Group`s
construction activities but is also supported by external sales.
Sea Kay is a 45% and senior partner in the Ibuyile Development Consortium
("Ibuyile"). Ibuyile was formed in January 2005 with the submission of a
proposal for the N2 Gateway ministerial pilot project. This project, approved
at Cabinet level, is aimed at creating sustainable settlements to replace the
squatter camps along the borders of the N2 highway from Macassar to District
Six in the City of Cape Town
Purpose of the placing and the listing:
The purpose of the placing is to raise R47.9 million for:
- working capital purposes;
- capital expenditure; and
- acquisitions.
The purpose of the listing is to:
- widen the investor base;
- enhance investor and general public awareness of Sea Kay;
- provide Sea Kay with a future source from which capital can be raised,
if required, to facilitate ongoing expansion; and
- afford applicants, as well as employees through the Sea Kay Share
Purchase Scheme, the opportunity to participate directly in the equity and
future growth of Sea Kay.
Prospects:
Locally, a number of Government-led initiatives, such as the full-scale
implementation of the new "Breaking New Ground" housing subsidy model should
inevitably result in increased demand for the services provided by the Group.
The civil engineering industry is showing exceptional promise, boosted by
Government`s announcement of capital expenditure of R372 billion over the next
three to five years. This includes R109 billion allocated to provinces, R82
billion to municipalities, R123 billion to public enterprises and R92 billion
to Eskom. Market indications are that growth in the civil engineering sector
will be in excess of 13% per annum (source: South African Civil Engineering
Contractors). In this regard, the National Department of Housing has been
allocated a budget of R12.5 billion for the period 2009/2010, i.e. the market
in which Sea Kay operates.
The directors believe that there are opportunities and excellent prospects for
Sea Kay to extend its growth phase beyond the current increased construction
growth fuelled by the aforementioned large projects and events as follows:
- its core business is in the mass housing market, which market is
enjoying significant growth;
- the establishment of Sea Kay`s reputation for quality and delivery of
mass housing; and
- many of the larger construction companies are heavily engaged in major
civil engineering projects resulting in "regular" construction projects
being awarded to smaller companies such as Sea Kay.
These opportunities will result in fewer tenders being submitted but additional
work being obtained by Sea Kay with a consequential increase in profit margins.
Information relating to the directors:
Details of the directors, all of whom are South African other than Mr. MH Lomas
who is British, are as follows:
Name Age Function Business address
Executive
Corne Kruger 37 Group CEO 7 Patton Road, Duncanville
Vereeniging, 1930
Pieter van der Schyf 45 Executive director 7 Patton Road, Duncanville
Vereeniging, 1930
Karin van der Vyver 41 Group Financial Director 7 Patton Road, Duncanville
Vereeniging, 1930
Non-executive
Michael Harry Lomas 60 Independent Non-executive 37 Wentworth Close
Chairman Wentworth Village,
Bryanston 2102
Herman Samtseu Philip 48 Non-executive director 6A Sandown Valley Crescent
Mashaba Sandton, 2196
Benjamin Webber 43 Independent Non-executive 100 Nagington Road
Marais director Wadeville, Germiston, 1401
Consolidated pro forma, estimated and forecast financial information:
The following table contains the summarised consolidated pro forma financial
information for the six months ended 31 December 2006, the estimated financial
results for the year ended 30 June 2007 and the profit forecast for the year
ending 30 June 2008 in respect of Sea Kay:
Pro forma Estimate Forecast
Six months Year ended Year
ended 30 June ending
31 December 2007 30 June
R`000 2006 (Note 1) 2008
Revenue 126 156 218 231 584 846
Profit before interest and taxation 13 932 50 370 90 407
Interest paid (2 148) (2 108) (3 991)
Profit before taxation 11 784 48 262 86 416
Taxation (468) (16 946) (25 060)
Profit after taxation 11 316 31 316 61 356
Financial statistics
Attributable income (R`000) 11 316 31 316 61 356
Weighted average shares in issue
(`000) - 326 653 471 723
Shares in issue (`000) 424 531 424 531 477 531
Earnings per ordinary share (cents) 2.67 9.58 13.00
Headline earnings per ordinary
share (cents) 2.67 9.58 13.00
Price: earnings ratio on offer
price (times) 10.43 7.69
Earnings yield on offer price (%) 9.58 13.00
Note 1:
The effective date of the acquisition by Sea Kay of the subsidiaries was 1
January 2007. Before this date, Sea Kay was dormant. Accordingly the estimate
for the year ended 30 June 2007 only includes trading results for a six month
period ended on that date.
For illustrative purposes and in order to provide an indication of a full
year`s trading, the table below sets out indicative results of Sea Kay for the
year ended 30 June 2007 on the assumption that the acquisition of the
subsidiaries was effective from the commencement of the accounting period (ie 1
July 2006) and that all shares were issued on the same date:
Attributable income (R`000) 42 633
Number of shares in issue at year end (`000) 424 531
Earnings per ordinary share (cents) 10.04
Headline earnings per ordinary share (cents) 10.04
Price: earnings ratio on offer price (times) 9.96
Earnings yield on offer price (%) 10.04
Dividend policy:
Sea Kay intends to adopt a competitive dividend policy, which should reflect
its growth, long-term earnings and cash flow, while maintaining an appropriate
dividend cover. There is, however, no assurance that a dividend will be paid
and any dividend proposed by the Board in respect of any financial period will
be dependent upon the operating results, financial position, investment
strategy, capital requirements and other factors. It is currently anticipated
that the cash available and cash generated by the business will be invested in
the continued growth of the Group`s activities.
Details of the placing and salient dates and times:
Number of placing shares 47 948 790
Price per placing share R1.00
Total amount to be raised before listing expenses R47 948 790
2007
Opening date of the private placing (09:00) Friday, 10 August
Closing date of the private placing (12:00) Monday, 13 August
Anticipated listing date Thursday, 16 August
Safe custody accounts at CSDP`s or brokers updated
in respect
of dematerialised holders on or about Thursday, 16 August
Posting of share certificates in respect of
certificated holders
on or about Thursday, 16 August
If applicable, any refund of any placing application
monies by Thursday, 16 August
Copies of the Pre-Listing Statement
Copies of the Pre-Listing Statement, in English, may be obtained during
business hours from:
- the Company, 7 Patton Road, Duncanville, Vereeniging;
- Ernst & Young Sponsors (Proprietary) Limited, Wanderers Office Park, 52
Corlett Drive, Illovo;
- Pillar Capital (Proprietary) Limited, 2nd Floor, Herdbuoys McCann-
Ericson Building, 4 Kikuyu Road, Sunninghill; and
- the transfer secretaries, Link Market Services South Africa
(Proprietary) Limited, 11 Diagonal Street, Johannesburg.
In addition, the Pre-Listing Statement is available in electronic form on Sea
Kay`s website (www.seakay.co.za).
Johannesburg
8 August 2007
Corporate advisers
Ernst & Young
Advisory Services Ltd
(Registration nuber 2006/018260/06)
Pillar Capital (PTY) LTD
Sponsor
Ernst & Young
Sponsors (Pty) Ltd
(Registration number 2000/031843/07)
Independent reporting
accountants and auditors
SAB&T inc.
Chartered Accountants (S.A)
Legal adviser
TW FERGUSON
Commercial, Tax & Legal Services
Limited assurance provider
Horwath Leveton Boner
Chartered Accountants (SA)
Date: 08/08/2007 17:15:02 Produced by the JSE SENS Department.
