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JSE
DYNA
DTH - DVT - Private placing and listing of DVT on the Alternative Exchange
of The JSE Limited
DYNAMIC VISUAL TECHNOLOGIES HOLDINGS LIMITED
(Formerly Dingekile Investments (Proprietary) Limited)
(Incorporated in the Republic of South Africa)
(Registration Number 2004/016984/06)
Share code: DTH & ISIN: ZAE000109070
("DVT" or "the company")
Private Placing And Listing Of DVT On The Alternative Exchange Of The JSE
Limited
This abridged prospectus is not an invitation to the public to subscribe
for shares in DVT. It is issued in compliance with the Listings
Requirements of the JSE Limited ("JSE") for the purpose of providing
information to the public and investors with regard to DVT.
1. INTRODUCTION AND HISTORY
1.1 PSG Capital (Pty) Limited ("PSG Capital") has been authorised to
announce that, subject to the achievement of the required spread of
public shareholders, the JSE has formally approved the listing of 50
000 000 ordinary shares, with a par value of 0,5 cents each, in the
share capital of DVT on the Alternative Exchange ("Altx") of the JSE
from the commencement of trade on Tuesday, 6 November 2007. The
shares will trade under the abbreviated name "DVT", with share code
"DTH" and ISIN ZAE000109070.
1.2. An amount of R12,5 million before expenses will be raised by DVT in
terms of an offer for subscription of 12 500 000 DVT shares at a
subscription price of 100 cents per share ("the offer for
subscription") and R3,3 million will be realised by DVT vendors in an
offer for sale of 3 300 000 DVT shares at a sale price of 100 cents
per share ("the offer for sale") (collectively, "the private
placing"). Further details relating to the private placing are
contained in paragraph 8 below.
1.3 DVT was formed in 1999 by Chris Wilkins and Clive Hubbard and has
posted annual profits in each consecutive year since inception,
performing profitably through some of the most challenging times in
the IT industry resulting in a focused, efficient and resilient
business.
1.4. DVT was incorporated in South Africa under the name "Dingekile
Investments (Proprietary) Limited" on 18 June 2004. The company
changed its name to "Dynamic Visual Technologies Holdings
(Proprietary) Limited" on 18 April 2005 and converted to a public
company under registration number 2004/016984/06 on 26 July 2007.
2. Overview of DVT
2.1 DVT is an empowered software and services business, specialising in
the delivery of tailor-made software solutions using a combination of
frameworks and components, packaged software and custom development,
primarily based on the Microsoft platform. DVT is strategically
committed to Microsoft and is a Microsoft Gold certified partner.
2.2 DVT employs over 110 mostly technical staff members and operates from
offices in both Johannesburg and Cape Town. As an owner-managed
business, the current shareholders are directly involved in all
aspects of the business and personally supervise major projects.
2.3 DVT`s core offerings are grouped as follows:
2.3.1 business solutions: solutions for CRM, BPM, content management
and time management, including Radical, DVT`s flagship software
product for a variety of CRM applications;
2.3.2 custom solutions - project-based, tailor-made software solutions
using frameworks and components;
2.3.3 professional services - specific software-related consulting and
contracting services; and
2.3.4 specialist services - complementary or specific software
development-based services such as technology renewal and
systems integration.
2.4 DVT primarily provides solutions to the corporate and SME markets in
South Africa primarily in the Financial Services, Retail, Business
Services and Telecommunications sectors. A key characteristic of the
target market is the need to manage financial and client information
and processes.
3. BEE profile
3.1 Cornastone Technology Investments (Proprietary) Limited became the
largest shareholder in DVT when it initially acquired 28,7% of DVT
for a purchase price of R4,5 million with effect from 1 October 2006.
3.2 Cornastone is a black-owned company founded by Lufuno Nevhutalu and
Hamilton Ratshefola with an extensive track record of delivering
business value to stakeholders. BMI-T Forge Ahead and Black IT Forum
honoured both Lufuno and Hamilton as part of the top 20 black IT
professionals in South Africa in 1999.
4. Prospects
4.1 Strong organic growth will be achievable for a number of years given
buoyant market conditions, solid industry credentials, track record
and the depth and breadth of management experience.
4.2 Microsoft has over 4 500 partners in South Africa. Most are small,
only offering niche Microsoft solutions and products. There are also
a handful of very large, often international systems integrators
offering a range of different technologies and products. There is,
however, a significant absence of medium-sized Microsoft partners
offering comprehensive solutions using the full suite of Microsoft
technologies and products. These circumstances in the local market
offer DVT an opportunity to establish itself as a major force as a
medium-sized Microsoft partner.
4.3 Once DVT has achieved its medium-term goal of offering end-to-end
Microsoft solutions, the strategy will expand to include
diversification into related and complementary technology and service
areas. DVT currently deploys a business model that generates a large
portion of revenue from project- or engagement-based activities.
Management intends to extend this partnership model into strategic
relationships with key clients so that a higher percentage of revenue
is generated from long-term service level agreements.
4.4 A natural extension of a custom software development business is the
creation of useful IP in the form of packaged and licensable software
products. DVT owns a number of such products and is poised to
exploit its technological expertise and vertical industry experience
by increasing recurring and annuity based licence revenue associated
with selling these products. The initial focus will be in the CRM
and Loyalty / Incentive management domains where DVT has an
established client base and track record. There is considerable
opportunity in both the local and international markets for products
that have a proven track record within an existing client base.
4.5 In the short and probably medium-term, DVT expects local market
demand to fuel positive growth in all areas of the business. Over
the next 5 years, increased global demand for off-shore software and
services will continue to grow the global outsourcing market. If
South Africa continues to grow and develop into an international
outsourcing destination, DVT will be well-positioned to exploit the
global demand for software solutions and products.
5. DIRECTORS
5.1. The full names, ages, occupations and business address of the
directors of DVT are set out below:
Full name Age Occupation Business Address
Hamilton 41 Non-executive The Ambridge Office
Ratshefola Chairman Park
Vrede Avenue
Bryanston 2021
Derek Malcolm 41 Non-executive Marlborough Gate
Hughes Director Hyde Lane
Hyde Park 2196
Graham Fowler 37 Financial Marlborough Gate
Director Hyde Lane
Hyde Park 2196
Jackson Mamogale 38 Non-executive The Ambridge Office
Director Park
Vrede Avenue
Bryanston 2021
Christopher John 45 Chief Annexure A
Wilkins Executive Longkloof Studios
Officer Darters Road
Cape Town 8001
5.2 All directors are South African citizens.
5.3 The directors of DVT:
- have considered all statements of fact and opinion in the
prospectus;
- accept, collectively and individually, full responsibility for
the accuracy of such statements; and
- certify that, to the best of their knowledge and belief, there
are no omissions of facts or considerations which would make any
statements of fact or opinion contained in the prospectus false
or misleading and that all reasonable enquiries to ascertain
such facts have been made and that this prospectus contains all
information required by law and the JSE Listings Requirements.
6. SHARE CAPITAL AND DIVIDENDS
6.1. Authorised and issued share capital
6.1.1 The authorised and issued share capital of DVT is set out below:
Number of Share
Shares Capital
Authorised
Ordinary shares of 0,5 cents 200 000 000 1 000 000
per share
Issued before the private
placing
Ordinary shares of 0,5 cents 35 505 928 177 529
per share
Issued after the private
placing
Ordinary shares of 0,5 cents 50 000 000 250 000
per share
6.1.2 The share premium of DVT prior to listing was R4 254 253 and on
listing will be R14 145 668.
6.2 Dividends
Given the growth profile and strategy of DVT, it is anticipated that
earnings generated by the group will be re-invested to fund future
growth and development. It is the intention of the company to
periodically consider this dividend policy and to take account of
prevailing circumstances and future cash requirements in determining
whether it would be appropriate to pay a dividend in respect of a
particular financial reporting period. It is intended that once a
more predictable and sustainable cash flow trend is evident,
dividends will become payable. In the interim, surplus cash may be
applied by the company to repurchase shares if appropriate.
7. Extracts Of Historical AND Forecast Financial Information
Set out below is an extract from the historic income statement of DVT for
the financial year ended 28 February 2007 and the forecast income
statements for the financial periods ending 28 February 2008 and 2009, the
preparation of which is the responsibility of the directors.
YEAR PRO FORECAST FORECAST
ENDED/ENDING 28 FORMA(1) 2008 2009
FEBRUARY HISTORIC R`000 R`000
2007
R`000
REVENUE 44 473 58 481 76 026
COST OF SALES (1 687) (2 558) (3 326)
GROSS PROFIT 42 786 55 923 72 700
OTHER INCOME 87 29 37
OPERATING (36 528) (47 551) (61 114)
EXPENSES
OPERATING PROFIT 6 345 8 401 11 623
DEPRECIATION AND (1 655) (520) (600)
AMORTISATION
IMPAIRMENT OF (460) - -
ASSETS
NET INTEREST 13 425 1 048
(PAID)/RECEIVED(
3)
PROFIT BEFORE 4 243 8 306 12 071
TAXATION
TAXATION (1 361) (2 436) (3 501)
ATTRIBUTABLE 2 882 5 870 8 570
PROFIT
WEIGHTED NUMBER 37 500(2) 40 337(2) 50 000(2)
OF SHARES IN
ISSUE (`000)
EARNINGS PER 7,7 14,6 17,1
SHARE (CENTS)
HEADLINE 8,9 14,6 17,1
EARNINGS PER
SHARE (CENTS)
PRICE:EARNINGS 11,2 6,9 5,8
RATIO AT 100
CENTS PER SHARE
ISSUE PRICE
(TIMES)
PRICE:EARNINGS 10,6(4)
RATIO (EXCLUDING
THE EFFECT OF
THE SHARE
INCENTIVE TRUST)
AT 100 CENTS PER
SHARE ISSUE
PRICE (TIMES)
NOTES
(1) EXTRACTED FROM THE PRO FORMA FINANCIAL INFORMATION (AFTER THE
RESTRUCTURING, CAPITALISATION AND SIT ISSUE) AS SET OUT IN FURTHER
DETAIL IN THE PROSPECTUS FOR PURPOSES OF BETTER COMPARISON WITH
FORECAST RESULTS.
(2) THE ACTUAL NUMBER OF ORDINARY SHARES IN ISSUE AT 28 FEBRUARY 2007 WAS
274 964. SUBSEQUENT TO 28 FEBRUARY 2007, THE COMPANY ISSUED AN
ADDITIONAL 39 694 077 ORDINARY SHARES IN TERMS OF THE RESTRUCTURING
AND CAPITALISATION, BOUGHT BACK AND CANCELLED 4 494 072 ORDINARY
SHARES AND ISSUED A FURTHER 1 994 072 ORDINARY SHARES TO THE STAFF
SHARE INCENTIVE TRUST. THE 1 994 072 ORDINARY SHARES IN TERMS OF THE
SHARE INCENTIVE TRUST ISSUE ARE ASSUMED TO HAVE BEEN IN ISSUE FOR THE
FULL 12-MONTH PERIOD ENDED 28 FEBRUARY 2007, BUT ARE WEIGHTED FOR A 4-
MONTH PERIOD IN RESPECT OF 2008. THE 12 500 000 ORDINARY SHARES
ISSUED IN TERMS OF THE PRIVATE PLACING ARE WEIGHTED FOR A 4-MONTH
PERIOD IN RESPECT OF 2008 AND INCLUDED IN FULL FOR 2009.
(3) INTEREST EARNED AT 7% PER ANNUM ON THE PRIVATE PLACING PROCEEDS HAS
BEEN INCLUDED IN THE ABOVE FORECAST. THIS IS A CONSERVATIVE
ASSUMPTION AS EARNINGS FROM POTENTIAL FUTURE ACQUISITIONS HAVE NOT
BEEN INCLUDED IN THE ABOVE FORECASTS. IT IS EXPECTED THAT THE
CAPITAL RAISING PROCEEDS WILL GENERATE EARNINGS IN EXCESS OF THE
INTEREST EARNED IN RESPECT OF THE 2009 FORECAST.
(4) BASED ON R3,34 MILLION HEADLINE EARNINGS AND 35 505 928 ORDINARY
SHARES IN ISSUE.
8. THE PRIVATE PLACING
8.1 The salient features of the private placing are as follows:
- Offer price per share (cents) 100
- Number of ordinary shares offered in 12 500 000
terms of the offer for subscription
- Number of ordinary shares offered in 3 300 000
terms of the offer for sale
- Issue consideration R12,5
million
- Sale consideration R3,3
million
- Opening date of the private Tuesday, 30
placing at 09:00 on October 2007
- Closing date of the private Thursday, 1
placing at 12:00 on November 2007
4.3 Funds raised from the private placing will be used primarily for the
funding of one or two key acquisitions. Exploratory discussions are
under way with two key target companies. These acquisitions will
complement and extend the existing solutions and services offered by
DVT, gain access to new client bases and increase the total resource
pool available to the business. The balance of the funds will be
used to develop an upgrade of Radical and to provide working capital
for organic growth.
4.4 No offer will be made to the public in respect of the private
placing. The private placing is open to select applicants only.
8.2 No offer will be made to the public in respect of the sale of DVT
shares. The private placing is open to select applicants only.
9. COPIES OF THE PROSPECTUS
9.1 This abridged prospectus is a summary of the full prospectus and has
been prepared and issued in relation to the private placing and the
listing of DVT on Altx. It contains the salient features of the
prospectus dated 29 October 2007, which should be read in its
entirety for a full appreciation thereof.
9.2 Copies of the full prospectus, in English, may be obtained during
office hours at the following addresses:
9.2.1 the registered office of the company: 2201 Absa Centre, 2
Riebeeck Street, Cape Town 8001; and
9.2.2 the office of the designated and corporate adviser of DVT, PSG
Capital: Building 8, Woodmead Estate, 1 Woodmead Drive,
Woodmead 2198.
Johannesburg
29 October 2007
Designated and Corporate Legal Adviser
Adviser
PSG Capital (Pty) Ltd Jarvis Attorneys
Auditors and Joint Reporting Joint Reporting Accountants
Accountants
Greenwoods Chartered Deloitte & Touche
Accountants
Date: 29/10/2007 13:00:01 Produced by the JSE SENS Department.
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