| Thu 15 Nov 2007, 17:30 | | HQT - Headquarters Holdings Limited - Abridged Pro |
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JSE
HQT
HQT - Headquarters Holdings Limited - Abridged Prospectus
Headquarters Holdings Limited
(Formerly Stadco Investments (Proprietary) Limited)
(Incorporated in the Republic of South Africa)
(Registration Number 1956/001055/06)
Share code: HQT & ISIN: ZAE000110102
("Headquarters" 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 and to raising
a minimum of R20 million in terms of the public offer as set out in 5
below, the JSE Limited ("JSE") has formally approved the listing of
Headquarters on the Alternative Exchange ("Altx") from the commencement
of trade on Friday, 7 December 2007 under the abbreviated name
"Headqtrs", share code "HQT" and ISIN ZAE000110102.
2. INCORPORATION AND HISTORY
Headquarters was incorporated in South Africa under the name "Stadco
Investments (Proprietary) Limited" on 5.May.1956.
The company converted to a public company under registration number
1956/001055/06 on 11 September 2007 and changed its name to
"Headquarters Holdings Limited" on the same date.
On 11 September 2007 the shareholders of Global Warming and Shoe HQ,
respectively sold 100% of their shareholding in Global Warming and Shoe
HQ to Headquarters, in exchange for shares in Headquarters.
Prior to the acquisition of Global Warming and Shoe HQ on 11 September
2007, the company was dormant and had no official history, financial or
otherwise.
3. OVERVIEW OF THE HEADQUARTERS
Headquarters is the holding company of Global Warming and Shoe HQ.
Global Warming is an import and distribution business that specialises
in mens and ladies fashion footwear. Global Warming commenced trading
in November 2000 and achieved a turnover of R23 million in its first
full financial year of trading. Subsequently the business grew at a
good rate with turnover reaching R80 million in the financial year
ending 28 February 2007. The directors project a turnover of R104
million for the financial year ending 28 February 2008.
Global Warming supplies mens and ladies fashion footwear to independent
retailers, mini chain stores (more than five stores) and major chain
stores. The footwear is sourced predominantly from China and partially
from India and Thailand.
Shoe HQ is a mega retailer of fashion footwear and accessories at an
affordable price. Shoe HQ commenced trading in May 2002 as a factory
shop outlet for Global Warming and achieved a turnover of R1 million in
its first full financial year of trading. By May 2004 the one factory
shop had grown into six factory shops and the turnover had increased to
just over R7 million. During the period between May 2004 and February
2007 the original factory shops were closed and five new large retail
stores were opened and by February 2007 the turnover had increase to
approximately R34 million.
The Shoe HQ retail stores are typically between 800m? and 1400m? and
sell large volumes of footwear. All footwear is sourced from local
wholesalers and importers, including Global Warming.
4. RATIONALE
The main purpose of the public offer is to enlarge Headquarters capital
base to facilitate the repayment of expensive debt, planned
diversification and expansion of its Global Warming and Shoe HQ
businesses. Headquarters anticipates raising R30 million which will be
applied as follows:
* Debt repayment - R20 million (recapitalizing the
balance sheet by settling
expensive trade finance
liabilities);
* Expansion capital - R3.5 million (expanding the capacity
and product ranges within Global
Warming and the role out of further
Shoe HQ stores);
* Acquisitions - up to R5 million (to assist in
funding new acquisitions together
with bank debt and the issue of new
shares); and
* Share issue expenses - R1,5 million.
The listing will also raise the company`s profile with its customer base.
5. PUBLIC OFFER
The salient features of the public offer are as follows:
Offer price per share R1
Number of ordinary shares offered in 30,000,000
terms of the public offer
Issue consideration R30,000,000
Opening date of the public offer on Thursday, 15 November 2007
Closing date of the public offer at 12:00 Monday, 3 December 2007
on
Listing of Headquarters on Altx at 09:00 Friday, 7 December 2007
on
The directors of Headquarters reserve the right to accept or reject,
either in whole or in part, any public offer applications should the
terms contained in this prospectus and the instructions above not be
properly complied with.
The allocation of the public offer shares, based on irrevocable
undertakings to subscribe for such shares as received from applicants,
and Headquarters acceptance of such undertakings will be done on a fair
and equitable basis in order to be as close as possible to a
proportionate basis, based on the number of shares applied for by
applicants, subject to JSE shareholder spread requirements being met,
promoting the liquidity of the shares once listed on Altx and
considering the potential shareholder base that the board wishes to
achieve. In this regard preference will be given to applicants that
submit their applications first.
The full terms and conditions of the public offer are set out in the
prospectus to be made available to members of the public in terms of
paragraph 10 below.
6. PROSPECTS
The directors believe that the prospects of Headquarters are favourable
for the reasons set out below:
Global Warming
* There is an approximate six month period between placement of
orders with Global Warming and receipt of income. Local banks
have refused to grant financing to Global Warming due to this
six month time lag. This has forced Global Warming to make
use of off-shore high interest rate trade facilities that
erode a great deal (75%) of the profit out of Global Warming.
The company will use a portion of the funding received from
the capital raising to settle these off-shore facilities.
Settling these off-shore facilities will increase the profit
of Global Warming dramatically;
* Global Warming intends pursuing additional large chain
accounts once sufficient funds are in place;
* Global Warming is actively seeking to expand the business
nationally in terms of new brands and ranges that will
further entrench its position as a major footwear
distributor;
* the Global Warming directors and management have decades of
combined footwear experience;
* The company has invested heavily in IT systems and its well
trained staff ensure that it has a leading edge in delivering
the correct product on time to the customer;
Shoe HQ
* Shoe HQ operates a cash business in the living standards
measure category that has good disposable income;
* Shoe HQ is actively seeking new retail sites to expand into
new areas in terms of national footprint that will contribute
to its growing success and entrench its position;
* Shoe HQ`s competitive edge is based on various tangible and
intangible strategic retail efficiencies; and
* Shoe HQ`s product range is continuingly diversifying and
expanding. Shoe HQ has developed invaluable relationships
with importers and manufacturers and has the unique advantage
of being able to source product directly from manufacturers.
The details as to Headquarters` prospects are more fully set out in the
prospectus to be made available to members of the public in terms of
paragraph 10 below.
7. DIRECTORS
The full names, ages, business address and occupations of the directors
of Headquarters are outlined below:
Full name Age Occupation Business Address
James Allon 48 Independent non- 12 Parade Crescent
Balfour Downie executive chairman Constantia
7806
Christopher Faure 43 Chief executive 102 Capricorn Boulevard
officer of Capricorn Park
Headquarters and Prince George Drive
managing director Muizenberg
of Global Warming 7945
David Arthur Irish 37 Financial director 102 Capricorn Boulevard
of Headquarters Capricorn Park
and of Global Prince George Drive
Warming Muizenberg
7945
Gregory Edward 43 Executive director 102 Capricorn Boulevard
Charles Paton of Headquarters Capricorn Park
and product Prince George Drive
director of Global Muizenberg
Warming 7945
Robert Howard 38 Executive director 1st Floor Softline
Stoller of Headquarters House
and sales 16 Commerce Crescent
director of Global Eastgate Ext 12
Warming Sandton
2090
Roy Edward Seath 60 Independent non- 9 Pagasvlei Road
Lishman executive director Constantia
7806
Hyman Leon 64 Non-executive 9th Floor
Margolis director 2 Long Street
Cape Town
8001
8. SHARE CAPITAL
The authorised and issued share capital of Headquarters is set out
below:
Number of Shares Share Capital
R
Authorised
Ordinary shares of R0.02 per 200,000,000 4,000,000
share
Issued before the public offer
Ordinary shares of R0.02 per 70,000,000 1,400,000
share
Issued after the public offer
Ordinary shares of R0.02 per 100,000,000 2, 000,000
share
The share premium of Headquarters prior to listing was NIL. Assuming
the public offer is fully subscribed the share premium of Headquarters
on listing will be R29,400,000. Assuming that the minimum subscription
of R20 million is raised in terms of the public offer, the share
premium of Headquarters on listing will be R19,600,000. Share listing
expenses will be written off against share premium.
9. FINANCIAL INFORMATION
Set out below is an extract from the pro forma historical consolidated
income statement of Headquarters for the 12 month period ending 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. The forecast financial information
should be read in conjunction with the independent reporting
accountants reports thereon set out in the prospectus to be made
available to members of the public in terms of paragraph 10 below:
Pro Forma Forecast Forecast
Year ended Year ended Year ended
February 2007 February 2008 February 2009
REVENUE 102,233,797 146,105,455 196,319,199
Less: Cost of sales (58,205,535) (82,190,298) (110,151,726)
Gross profit 44,028,262 63,915,157 86,167,473
Other income 15,949 390,000 365,000
Operating expenses (36,246,428) (47,552,935) (63,541,641)
OPERATING PROFIT 7,797,783 16,752,222 22,990,832
INVESTMENT REVENUE 1,146,409 2,972,000 3,328,000
FINANCE COSTS (5,070,113) (3,788,820) (1,145,120)
PROFIT before 3,874,079 15,935,402 25,173,712
taxation
TAXATION (1,743,729) (4,621,267) (7,300,376)
PROFIT after taxation 2,130,350 11,314,135 17,873,336
Ordinary dividends (1,860,000)? (4,000,000)3
OPENING retained 752,602 1,022,952 12,337,087
earnings
RETAINED EARNINGS 1,022,952 12,337,087 26,210,423
Weighted number of
shares in issue 70,000,000 100,000,000 100,000,000
Number of shares in 70,000,000 100,000,000 100,000,000
issue
Earnings per share 3,04 11,31 17,87
(cents)
Headline earnings per
share (cents) 3,19 11,31 17,87
Dividend per share 2,662 4,003
(cents)
Earnings yield at 100
cents per share issue 3.04% 11.31% 17.87%
price (%)
Price:Earnings ratio
at 100 cents per 32.89 8.84 5.59
share issue price
NOTES:
Capital raising proceeds, the related increase in the number of
shares in issue and interest earned via the public offer have been
included in the above forecasts.
A final dividend for year ending February 2007 of 2,66 cents per
share was declared on 28 February 2007.
For illustrative purposes, dividends relating to 2009 have been
included in the forecasted figures as having been paid before 28
February 2009, although these would only be declared and paid in the
following year.
The historic Price:Earnings ratio is not a fair reflection given
that 75% of the earnings are eroded by finance costs.
10. COPIES OF THE PROSPECTUS
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, and which will
be issued today, Thursday, 15 November 2007.
Prospective applicants are encouraged to read the prospectus in its
entirety for a full appreciation thereof.
Copies of the full prospectus are available, in English, during office
hours from Headquarters at 102 Capricorn Boulevard, Capricorn Park,
Prince George Drive, Muizenberg, Cape Town 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
Headquarter`s website at www.headquartersltd.co.za.
Any queries regarding the public offer should be directed to David Tosi
of PSG Capital who can be contacted on 021 887 9602.
15 November 2007
Cape Town
PSG Capital(Pty)Limited : Designated and Corporate Adviser
Grant Thornton Chratered Accountants : Auditors Reporting and
Accountants
Hofmeyr Herbstein & Gihwala Inc. : Attorneys
Date: 15/11/2007 17:30:01 Produced by the JSE SENS Department.
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