| Mon 29 Oct 2007, 7:15 | | SFH - S A French Limited - Abridged Prospectus |
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JSE
SAF.
SFH - S A French Limited - Abridged Prospectus
S A FRENCH LIMITED
Incorporated in the Republic of South Africa
(Registration number 1982/009174/06)
Share code: SFH & ISIN: ZAE000108890
("SA French" or "the company")
ABRIDGED PROSPECTUS
Relating to a private placement of shares by way of:
- an offer by the company for the subscription of 50 million ordinary shares
in the share capital of SA French at an issue price of 100 cents per
ordinary share;
- an offer for sale by an existing shareholder of SA French, of 10 million
ordinary shares in the issued share capital of the company at a price of
100 cents per ordinary share (collectively hereinafter, "the private
placement"); and
- the subsequent listing of the ordinary shares of SA French on the
Alternative Exchange ("AltX") of JSE Limited.
This abridged prospectus is not an invitation to the general public to
subscribe for or to purchase ordinary shares in SA French, but is issued in
compliance with the Listings Requirements of JSE Limited ("JSE") only. The
private placement is made to selected institutions, corporations and
individuals only.
The information in this abridged prospectus has been extracted from a full
prospectus issued by SA French on 29 October 2007 ("the detailed
prospectus"), copies of which are available as set out in paragraph 10
below. At the date of listing, the authorised share capital of SA French
will comprise 500 million ordinary shares having a par value of 1 cent
each. After the private placement and at the date of the listing, the
issued share capital of SA French will consist of 165 million ordinary
shares of 1 cent each.
1. BACKGROUND AND HISTORY
SA French is an independent South African company which has been the
supplier, in South Africa, of tower cranes manufactured by Potain since its
incorporation in 1982. Potain is the world`s leading tower crane
manufacturer and an integral contributor to the success of the Manitowoc
Crane Group, which is listed on the New York Stock Exchange.
The company has diversified into the supply and service of a range of
complementary material handling products from some of Europe`s leading
manufacturers. It holds distribution rights to Merlo telescopic handlers
and self loading concrete mixers, Torgar material and passenger hoists and
Ausa dumpers and rough terrain forklifts. A recent addition to the products
being represented by the company is the Ormig `pick and carry` machine.
SA French has a 25-year record in sales, service and hire of equipment
throughout Southern Africa. The company is able to distinguish itself from
its competitors by providing service support for all of the equipment that
it supplies. It does this by carrying a full range of spare parts as well
as having trained service technicians with the expertise to repair and
service machines, thus reducing downtime and providing its clients with the
support they have come to expect from the company.
In order to consistently meet the specific needs of its clients, SA French
maintains an in-house engineering capability, for repairs and modifications
to the equipment that it supplies. An example of this is its design of
tower crane anchors, the modification of dumper skips and the conversion of
materials hoists to accommodate passengers.
SA French`s current plans include the expansion of its inventory in order
to service the booming Southern African mining, power generation and
construction markets and to reduce the current 12-month lead time for new
stock.
The material handling industry is currently experiencing significant
growth, largely due to the buoyant conditions within the construction,
power generation and mining industries of Southern Africa. This is being
driven by a number of factors, inter alia, significant Government
investment in infrastructure, the global demand for natural resources,
together with the effect of Governments` "use it or lose it" mineral rights
policy.
A listing on AltX will improve SA French`s ability to further its strategy
of providing a professional service economically, timeously and with
consistency, which is key to its proven growth record.
2. RATIONALE FOR LISTING
SA French intends to list on the AltX as a strategic step that will allow
the company to grow its market share by funding additional inventory and
staff, facilitating the working capital requirements of the existing
business as well as facilitating potential acquisition opportunities of
synergistic lifting businesses.
3. PROSPECTS
The directors of SA French are of the opinion that the company has exciting
prospects within Southern Africa, for the following reasons:
There is currently substantial planned spending by public corporations in
the heavy civils sector which includes power generation, electricity
distribution, sea ports, airports, as well as rail and harbours. Over R400
billion is earmarked for infrastructural development over a five-year
period, the bulk of which will reside within the Government sector, in
corporations such as Eskom and Transnet, both operating under severe time
constraints. In order to finish projects timeously, larger, more complex,
more efficient and more expensive cranes are typically required to carry
out the work. The resulting increased price implications feed positively
into SA French`s bottom line.
In addition to the requirement for larger cranes for the accelerated
completion of projects, and in line with the aforementioned boom in the
heavy civils sector, SA French is experiencing a further boost in terms of
the market`s requirement for larger, more complex cranes, as projects
become bigger and more complex themselves. The directors of SA French have
ensured that the company is well positioned to supply contractors who have
a growing desire to build bigger, taller buildings, using bigger, more
specialised cranes.
There is also a substantial increase in anticipated spending by the private
sector, primarily in mining and downstream refining processes. It is
reported that Sasol is planning a new coal-to-liquids refinery.
Government`s `use it or lose it` policy relating to mineral rights has had
the effect that a number of mining houses in Southern Africa are in the
process of developing new mining prospects.
By maintaining its current market share in the construction and mining
sector, while increasing its involvement in the civil engineering projects,
and managing margin as well as volume, SA French should achieve
significantly higher contributions while simultaneously improving its
bottom line.
4. THE PRIVATE PLACEMENT
4.1 Salient features
4.1.1 The salient features of the private placement are as follows:
Offer price per ordinary share (cents) 100
Par value per ordinary share (cent) 1
Premium per ordinary share (cents) 99
Number of ordinary shares offered by the 50 000 000
company for subscription in terms of the
private placement
Issue consideration to be received by the R50 million
company before expenses
Number of ordinary shares offered for 10 000 000
sale by the vendor in terms of the
private placement
Total consideration to be received by the R10 million
vendor
4.1.2 The opening and closing dates of the private placement are as follows:
2007
Opening date of the private placement at Monday, 29 October
09:00 on
Closing date of private placement at Tuesday, 30 October
09:00 on
Anticipated listing date on AltX at Wednesday, 7 November
commencement of trade on
5. SUMMARY OF THE HISTORICAL AND FORECAST INCOME STATEMENTS
The summarised historical and forecast financial information of SA French
for the financial year ended 30 June 2007 and the financial years ending 30
June 2008 and 30 June 2009, the preparation of which is the responsibility
of the directors, is set out below. The forecast financial information is
contained in the detailed prospectus referred to in paragraph 10 below and
has been reviewed and reported on by the reporting accountants. Such report
is contained in the detailed prospectus and will be available for
inspection.
Extracts from the historical and forecast group income statements
Audited Forecast Forecast
2007 2008 2009
R`000 R`000 R`000
Revenue 120 970 190 554 265 513
Cost of sales (90 487) (143 203) (199 061)
Gross profit 30 483 47 351 66 452
Other income 3 998 - -
Operating costs (14 115) (17 671) (22 866)
Operating profit 20 366 29 680 43 586
Investment revenue 146 2 600 3 800
Gain on acquisition of 33 - -
reserves in subsidiary
Finance costs (1 254) (1 549) (1 698)
Profit before taxation 19 291 30 731 45 688
Taxation (6 605) (8 912) (13 249)
Profit for year 12 686 21 819 32 439
Pro forma weighted average 115 000 000 148 333 333 165 000 000
ordinary shares in issue
Pro forma weighted average 11.0 14.7 19.7
earnings per ordinary share
(cents)
Pro forma ordinary shares in 115 000 000 165 000 000 165 000 000
issue
Pro forma dividends per 8.7 2.6 3.9
ordinary share (cents)
Notes:
1. The pro forma weighted average number of ordinary shares in issue at 30
June 2007 is based on the increase in and the sub-division of the ordinary
shares in issue into 115 000 000 ordinary shares in issue as set out in
paragraph 21.3 of the detailed prospectus.
2. The assumptions on which the forecast group income statements are based are
set out in paragraph 11.2 of the detailed prospectus.
3. The above forecast group income statement takes into account the effects of
the anticipated issue of ordinary shares detailed in paragraph 21 of the
detailed prospectus.
4. The anticipated dividend policy of SA French will initially be to maintain
a dividend cover of 5.
6. DIRECTORS
The full names, ages, qualifications and designations of the directors are
as follows:
Name Age Qualification Designation
Quentin Cecil 55 Prof Eng Executive
Alexander van Breda Technician, Chairman
CPFA
Warwick van Breda 27 LLB, LLM Operations
Director
Johannes Christiaan 49 Hons B Compt, Financial
Prinsloo CTA Director
Jabulani Doctor Xaba 35 LMI (ECSA) Executive
Director
Whyti Mmetja Matlala 29 - Executive
Director
John Michael Poluta 35 CA(SA) Non-executive
Director
Leetile Benjamin 34 B Com Non-executive
Mophatlane Director
The business address of the executive directors is 131 Fitter Road,
Spartan, 1619.
The business address of the non-executive directors is 57 Buckingham
Avenue, Craighall Park, 2196.
All directors are South African citizens.
7. SHARE CAPITAL
The authorised and issued share capital of SA French, taking into account
the private placement and listing costs as set out in paragraph 13.1 of the
detailed prospectus, which are to be offset against the share premium, are
set out below:
Rand
Authorised
500 million ordinary shares of 1 cent each 5 000 000
Issued, before the private placement
115 million ordinary shares of 1 cent each 1 150 000
Share premium -
Issued, after the private placement
165 million ordinary shares of 1 cent each 1 650 000
Share premium 47 294 000
48 944 000
8. MAJOR SHAREHOLDERS
Other than directors there are no shareholders, save as set out in the
table below, who were, directly and/or indirectly beneficially interested
in 5% or more of the issued ordinary share capital of SA French at the last
practicable date and who will, as far as the directors of SA French are
aware, hold 5% or more of the issued ordinary share capital of SA French
following the private placement:
Percentage Percentage Number of
held before held after shares
Name of shareholder private private after
placement placement private
placement
The SA French Group 68 40 66 200 000
Trust*
The SAF Economic 9 6 10 350 000
Empowerment Trust
Mowana Investments 23 16 26 450 000
(Proprietary) Limited
* Directors
9. LISTING ON THE JSE
Subject to the achievement of the required spread of public shareholders in
terms of the Listings Requirements of the JSE being obtained pursuant to
the private placement, the JSE has granted a listing of 165 000 000
ordinary shares in the share capital of SA French on AltX. It is
anticipated that the listing of the ordinary shares of SA French will
become effective from commencement of business on Wednesday, 7 November
2007. The shares will trade under the abbreviated name "SA French", with
the share code "SFH" and ISIN ZAE000108890.
10. COPIES OF THE PROSPECTUS
Copies of the prospectus, in English, may be obtained during business
hours, prior to the closing of the private placement from SA French, the
Designated Adviser and the transfer secretaries, details of which are set
out in below:
- SA French, 131 Fitter Road, Spartan, 1619;
- Merchant Sponsors (Proprietary) Limited, 2nd Floor, North Block, Hyde
Park Office Tower, Corner 6th Road and Jan Smuts Avenue, Hyde Park,
Johannesburg, 2196;
- Computershare Investor Services 2004 (Proprietary) Limited, Ground
Floor, 70 Marshall Street, Johannesburg, 2001.
Johannesburg
29 October 2007
Designated Adviser
Merchant Sponsors (Proprietary) Limited
Corporate adviser
Merchantec (Proprietary) Limited
Auditors and independent reporting accountants
Anderson Rochussen van der Bijl Inc.
Limited assurance provider
Grant Thornton
Attorneys
Fluxmans Inc.
Date: 29/10/2007 07:15:05 Produced by the JSE SENS Department.
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