| Tue 16 Oct 2007, 12:01 | | BSS - BSI (SA) Limited - Abridged Prospectus |
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JSE
BSS
BSS - BSI (SA) Limited - Abridged Prospectus
BSI (SA) Limited
(Incorporated in the Republic of South Africa)
(Registration number 2001/023164/06)
(JSE code: BSS ISIN: ZAE000107371)
("BSI" or "the company")
Listing of BSI ordinary shares ("shares") on the JSE.
ABRIDGED PROSPECTUS
This abridged prospectus is not an invitation to the public to subscribe for
shares in BSI (SA) Limited ("BSI"), but is issued in compliance with the
Listings Requirements ("Listings Requirements") of the JSE Limited ("JSE") for
information purposes only. The information in this abridged prospectus has been
extracted from a full prospectus issued by BSI on 15 October 2007 ("the detailed
prospectus"), which is available as set out in paragraph 8. At the date of
listing the authorised share capital of BSI comprises 1 billion ordinary shares
with a par value of 0.001 cent each, of which, after a private placement of BSI
ordinary shares by way of an offer by the company for the subscription of
100 000 000 ordinary shares at an issue price of 100 cents per ordinary share in
the share capital of BSI thereby raising R100 million before expenses and an
offer for sale of 57 600 000 ordinary shares by the existing shareholders at a
price of 100 cents per ordinary share (together, "the private placement"), 719
854 996 ordinary shares will be in issue.
1. INCORPORATION AND HISTORY
1.1 Discount Steel CC was founded by William Battershill and incorporated as a
close corporation on 1 May 1985. The company supplied steel through two
divisions into KwaZulu-Natal (KZN stockists) and the rest of South Africa
(bulk trading). On 1 August 2003 two new companies were created to serve
these different markets, in the KwaZulu-Natal area, Discount Steel KZN
(Pty) Limited ("Discount Steel KZN") and in the rest of South Africa,
Discount Steel Trading (Pty) Limited ("Discount Steel Trading"). On 28
September 2001 Discount Steel CC changed its name to BSI (SA) (Pty) Limited
and at the same time converted to a private company. BSI which is
currently the holding company of the group converted to a public company on
14 September 2007.
1.2 In 1989 the group started its property division through Red Chip Investment
(Pty) Limited ("Red Chip") which was extended further with the acquisition
of Doddleprops 6 (Pty) Limited ("Doddleprops 6") in 2002.
1.3 Garrison Steel CC ("Garrison Steel"), which was incorporated as a close
corporation, and converted to a private company on 21 September 2001
provides a Just in Time ("JIT") service to the Gauteng client base and is
part of the stockist operation.
1.4 LA Braziers (Pty) Limited was acquired in June 1996, and changed its name
to Newcolab (Pty) Limited ("Newcolab") on 2 January 2003. Newcolab handles
the trading of prime steel products for the group. Discount Steel Trading,
the other company in the trading division, and Newcolab both provide a bulk
supply service to larger clients, mainly in the Gauteng region with a few
outlets in KwaZulu-Natal and the Western Cape.
1.5 Both Shearcut Precision Steel (Pty) Limited which was incorporated on
27 November 1995 and Shearcut (Pty) Limited, which was incorporated on 21
February 2005, form part of the processing division of the group.
1.6 Discount Steel Africa (Pty) Limited was started in 1997 with Grant
Mackenzie and Paul Arnott as executive directors. The company was
initially formed to serve BSI`s agents in Zambia and the Democratic
Republic of the Congo ("DRC"), however negotiations culminated in the
purchase of the Zambian and Congo agencies with effect from 1 April 2007.
1.7 On 1 April 2007 the group began the restructure process to convert all
subsidiaries and associated companies within the BSI group into wholly
owned subsidiaries. In this process the minority shareholders within the
subsidiary companies were converted into shareholders within the holding
company, BSI. The restructure also included purchasing the two Discount
Steel agencies that were not previously held by the holding company.
Through the restructure BSI became the holding company of Garrison Steel,
Discount Steel KZN, Discount Steel Africa, Discount Steel Zambia and
Doddleprops 6.
1.8 Today the group has seven operations focussing on being stockists,
processors, traders and exporters of steel products in South Africa, Zambia
and the DRC, with warehousing and offices covering in excess of 15 000
square metres.
2. NATURE OF THE COMPANY`S BUSINESS
2.1 The BSI group of companies operates in the steel and associated industries
with strategically located operations in South Africa, DRC and Zambia to
service the southern African markets.
2.2 The BSI group is involved in four distinct activities as follows :
- processing: providing a primary processing service to the BSI
marketing businesses;
- stockist: providing a JIT service to localised clients;
- trading: bulk sales to larger end users; and
- exports.
2.3 The main products that the group trades in are flat products i.e. hot
rolled, cold rolled, galvanised and plate, long products i.e. light and
medium mill sections, tubing and structural steel sections.
2.4 The South African operations focus principally on the manufacturing
industries, whilst the Zambian and DRC operations are largely focussed
towards the mining industry.
3. PROSPECTS
In the opinion of the directors of the company, based on experience and
market information available, the prospects of the group are as follows:
3.1 Expansion into new sectors
The strategy of BSI is to grow the business aggressively in the existing
and new market sectors. Specific new market sectors which BSI will explore
in the near future are mining in South Africa, structural steel and the
automotive industries.
3.2 Geographical expansion
BSI has the flexibility and foresight to adapt to ever changing business
markets. BSI has already identified certain strategic markets that the
group will enter once the timing is appropriate. These markets will be
maximised within the current geographical areas already supported by the
group.
3.3 Product expansion
By developing a superior knowledge of customers, processes and needs, BSI
creates and delivers innovative products and services that build
sustainable working relationships based on mutual trust and confidence.
Specific product-based growth for the next two years includes plate,
structural beams and medium mill sections.
3.4 Acquisitions
Additional growth and profits will be attained through the purchase of
other steel distribution operations where synergies can be exploited to
maximum effect.
4. SUMMARY OF HISTORICAL AND FORECAST INCOME STATEMENTS
The summarised historical and forecast financial information of BSI for the
financial year ended 31 March 2007, the financial years ending
31 March 2008 and 31 March 2009, the preparation of which is the
responsibility of the directors, are set out below. This financial
information must be read in conjunction with the independent reporting
accountants` report thereon reproduced in Annexures 3, 4 and 6 as set out
in the detailed prospectus.
Extracts from the historical and forecast income statements
Pro forma Forecast Forecast
31 March 31 March 31 March
2007(2) 2008 2009
R`000 R`000 R`000
Revenue 944 647 1 216 774 1 475 223
Gross profit 147 568 207 198 237 637
Other income 6 767 19 985 20 582
Other costs (85 089) (93 325) (112 795)
EBITDA 69 246 133 858 145 424
Depreciation (2 213) (3 099) (3 664)
Profit before interest and 67 033 130 759 141 760
taxation
Profit on disposal of non- 1 911 - -
current assets
Fair value adjustment on 1 688 - -
investment property
Interest received 1 230 2 202 2 202
Interest paid (15 984) (19 144) (19 331)
Profit before taxation 55 879 113 817 124 631
Taxation (15 159) (33 726) (29 822)
Earnings attributable to 40 719 80 091 94 809
ordinary shareholders
Profit on disposal of non- (1 911) - -
current assets
Fair value adjustment on (1 688) - -
investment property
Headline earnings attributable 37 120 80 091 94 809
to ordinary shareholders
Pro forma weighted average 616 854 663 970 064 719 854 996
shares in issue on which 996
earnings are based (1)
Pro forma earnings per share 6.6 12.1 13.2
(cents)
Pro forma headline earnings per 6.0 12.1 13.2
share (cents)
Notes:
1. The pro forma weighted average number of shares in issue for 31 March
2007 is based on the sub-division and increase of the ordinary shares
in issue into 616 854 996 ordinary shares in issue on the last
practicable date as set out in paragraph 24.3 of the detailed
prospectus.
2. This historical pro forma financial information for 31 March 2007 is
an extract from the unaudited pro forma financial information after
the consolidation column as set out in Annexure 5 of the detailed
prospectus.
3. The assumptions upon which the forecast income statements are based
are set out in paragraph 12.1.3 of the detailed prospectus.
5. DIRECTORS, COMPANY secretary and registered office
5.1 Full names, ages, functions and business addresses of the board of
directors of BSI;
Director Age Function Business address
BSI
William Lionel 47 Chief Eden Park Drive,
Battershill Executive Murrayfield Park,
Officer Mkondeni;
(Chairperson) Pietermaritzburg,
3201
Grant Donald Guy 42 Chief 10 Quality Street,
Mackenzie Operating Isando,
Officer Johannesburg, 2001
James Rowland 43 Group Eden Park Drive,
Waller Financial Murrayfield Park,
Director Mkondeni;
Pietermaritzburg,
3201
Nigel George Payne 47 Non-executive 17 Westbrooke
* Director Drive, Sandton,
2196
Ethan Gilbert Dube 48 Non-executive Vunani House,
* Director Freestone Park,
135 Patricia Road
Sandown, Sandton,
2196
* Non executive
All directors are South African citizens.
5.2 Company secretary and registered office are:
S Hackett, B. Com.
Eden Park Drive,
Murrayfield Park, Mkondeni
Pietermaritzburg, 3201
(PO Box 101096, Scottsville, 3209)
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 (cents) 100
Par value per ordinary share (cents) 0.001
Premium per ordinary share (cents) 99.999
Number of ordinary shares offered by the 100 000 000
company for subscription
Issue consideration to be received by the R100 million
company before expenses
Number of ordinary shares offered for sale by 57 600 000
the selling shareholders
Total consideration to be received by the R57.6 million
selling shareholders
6.1.2 The opening and closing dates of the private placement are as follows:
Opening date of the private placement Tuesday, 16 October 2007
(09:00)
Closing date of private placement Wednesday, 17 October 2007
(12:00)
Proposed listing date on ALTx (09:00) Wednesday, 24 October 2007
Note:
These dates are subject to change at the discretion of the company. Any
changes will be released on SENS.
6.2 BSI holds irrevocable undertakings from various selected investors to
subscribe for 157 600 000 shares in terms of the private placement,
amounting to 100% of the private placement shares.
6.3 The private placement of 157 600 000 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 719 854 996 shares on ALTx with effect from
the commencement of business on Wednesday, 24 October 2007. The shares
will trade under the abbreviated name "BSI" and the JSE code "BSS" and ISIN
ZAE000107371.
8. COPIES OF THE PROSPECTUS
Copies of the prospectus, in English, may be obtained, during business
hours, from Tuesday, 16 October 2007, from the registered offices of BSI,
Exchange Sponsors (Pty) Limited and the transfer secretaries, details of
which are set out below:
- the registered office of the company - Eden Park Drive, Murrayfield
Park, Mkondeni, Pietermaritzburg, 3201;
- 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
17 October 2007
Designated Adviser
Exchange Sponsors (Pty) Limited
Auditors and reporting accountants
BDO Spencer Steward (Midlands) Inc and BDO Spencer Steward (Johannesburg) Inc
Attorneys
Venn Nemeth and Hart Attorneys
Date: 16/10/2007 12:01:37 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
