| Mon 19 Nov 2007, 17:20 | | TWP - TWP Holdings Limited - Abridged pre-listing |
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JSE
TWP
TWP - TWP Holdings Limited - Abridged pre-listing statement
TWP Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2003/025640/06)
Share code on the JSE: TWP ISIN: ZAE000110763
("TWP Holdings" or "the Company")
ABRIDGED PRE-LISTING STATEMENT
This abridged pre-listing statement is not an invitation to the public to
subscribe for ordinary shares nor is it an offer for sale of shares but has been
prepared in terms of the Listings Requirements of the JSE limited ("JSE") for
the purpose of providing information with regard to TWP Holdings.
The JSE has granted a listing to TWP Holdings in the Heavy Construction sector
under the abbreviated name "TWP", share code: TWP, ISIN ZAE000110763, with
effect from the commencement of business on Monday, 26 November 2007. The
listing of TWP Holdings is by way of introduction.
1 Introduction to TWP Holdings
TWP Holdings is a holding company and houses the operating subsidiaries;
including TWP Consulting (Proprietary) Limited, Bokamoso Consulting
(Proprietary) Limited, TWP Finance (Proprietary) Limited, TRG Trading
(Proprietary) Limited, TWP Environmental Services (Proprietary) Limited,
Effluent Technologies (Proprietary) Limited, TWP Australia (Proprietary)
Limited, the joint ventures; TWP Matomo Process Plant (Proprietary)
Limited, Vhumbanani Projects (Proprietary) Limited, Kopano (Proprietary)
Limited as well as a start up operation in Turkey (collectively referred to
as the "Group" or "TWP").
TWP is a professional solutions supplier to the mining industry with a service
offering that includes:
* project management;
* construction and construction management
* engineering design
* process engineering
* safety management;
* mine design and planning;
* environmental services;
* ore body assessment; and
* underground mining services;
TWP was founded in Johannesburg in 1982 and operated as a partnership until it
was registered as a company on the 14th October 2003. Over time the business
became increasingly aligned with clients in the mining industry, providing both
engineering skills and project management.
The Group currently has approximately 1 000 staff that are skilled in the
engineering field or a support profession and are involved in managing some of
the largest and most prestigious projects in the industry in Africa, the
Americas and Australasia.
TWP`s core business is engineering design, procurement and construction
management, typically referred to as EPCM. The projects that the Group is
currently involved in are valued in excess of R50bn and this excludes the
smaller ongoing capital or "stay in business" projects.
TWP has grown at a rapid rate and expects this trend to continue into the
future. The Group has and continues to be involved in projects for most minerals
including platinum, gold, diamonds, nickel, copper chrome, cobalt and coal.
2 Purpose of listing on the JSE
In pursuing its intended vision and mission, the proposed listing will allow the
Company to achieve the following:
* raise TWP`s profile leading to new business opportunities;
* raise capital in order to finance the Group`s organic and acquisitive
expansion;
* unlock some value for the original shareholders of TWP Holdings ("original
shareholders") and create value for all shareholders going forward;
* enable an employee share incentive scheme to be created; and
facilitate a Black Economic Empowerment ("BEE") transaction.
3 Key Strengths
TWP has many strengths, key among these are;
* the unique ability to offer a start to finish service for any minerals
related project, from geological survey through to mine and plant
construction and operation;
* excellent project management systems and business processes;
* strong management;
* a loyal repeat client base;
* highly qualified, young, motivated workforce;
* reputation as an "employer of choice"; and
* the strongest group of safety professionals in the industry.
4 Objectives and strategy
Since 1982 the Group has grown entirely organically, facilitated by internal
staff development and training. This organic growth, which has served the
business well, has traditionally been funded internally with little access to
external funding institutions. Additional funding will enable the Group to
capitalise on opportunities that may otherwise have been lost. New skills,
offices and countries can be added to TWP`s already impressive portfolio as it
positions itself to take on its competitors globally.
Raising capital provides TWP with the opportunity to fast track its growth via
acquisitive means as well. Excellent acquisition targets exist within the
industry, which the Group aims to pursue with strategic acquisitions aimed at
broadening the depth and breadth of TWP`s service offering. At this stage
discussions have commenced with several parties and agreements could possibly be
concluded in the near future.
5 Prospects
The Company`s future growth prospects on the global stage are enormous and
clients actively seek out TWP to assist them throughout the world. Clients are
increasingly seeking a single point of contact and are unwilling or unable to
manage a diverse professional team. This positions TWP Holdings well for growth
locally and on a global basis, evident from the current exciting ventures both
in Africa and globally.
6 The Private Placing
During November 2007, TWP Holdings raised capital from selected institutional
and retail investors ("Private Placing"). Through the Private Placing on 6
November 2007, TWP Holdings accepted irrevocable applications from investors to
subscribe for 27 746 973 TWP Holdings ordinary shares at a price of R15.69 per
TWP Holdings ordinary share ("private placing price") totalling R435 350 006
which includes the placing of shares by the original shareholders detailed
below. The private placing price was determined through a bookbuild done by
Nedbank Capital, a division of Nedbank Limited ("Nedbank Capital") where a range
of between R12.97 to R15.69 was presented to prospective investors.
The original shareholders who previously held 100% of the TWP Holdings ordinary
shares in issue have placed a total of 15 000 000 TWP Holdings ordinary shares
totalling R235 350 000. The original shareholders have agreed not to sell the
remaining TWP Holdings ordinary shares indirectly held by them through trusts
for a period of at least 12 months after the listing. These shareholders will be
limited to disposing a maximum of 10% of their shareholding after the initial 12
months but before the end of 24 months. The original shareholders are free to
trade in their shares after the 24 month period.
7 BEE transaction
A BEE Transaction has recently been completed with Vunani Group (Proprietary)
Limited ("Vunani Group") where Vunani Group, through a wholly owned subsidiary,
has acquired 16% of the issued share capital of TWP Holdings from the original
shareholders at the private placing price. Vunani Group is locked in for 3 years
during which period they may not sell their TWP Holdings ordinary shares. Vunani
Group has obtained funding from a third party in order to acquire the TWP
Holdings ordinary shares. Should Vunani Group default on its funding terms, its
funders will have a right to access and dispose of the TWP Holdings ordinary
shares. The Chief Executive Officer of Vunani Capital, Ethan Dube has been
appointed to the TWP Holdings board of directors as Non-executive Chairman.
The original shareholders have agreed not to sell the remaining TWP Holdings
ordinary shares held by them for a period of at least 12 months after listing.
These shareholders will be limited to disposing a maximum of 10% of their
shareholding after the initial 12 months but before the end of 24 months. Vunani
Group has a pre-emptive right to purchase any of these TWP Holdings ordinary
shares sold by the original shareholders after 12 months at the 10 day volume
weighted average price of TWP Holdings ordinary shares as at the date of the
sale of such ordinary shares.
After 24 months, Vunani Group will acquire such number of TWP Holdings ordinary
shares in order to achieve an aggregate shareholding of 25.1% of the issued
share capital of TWP Holdings. This is envisaged to be effected either by way of
a pro rata ordinary share buyback from all ordinary shareholders or a fresh
issue of ordinary shares. Both of the above would be implemented at a 5%
discount to the 10 day volume weighted average price of TWP Holdings ordinary
shares as at the 24 month anniversary date to the listing. The requisite
shareholder approval, if required, will be obtained prior to implementation.
8 Forecast financial information of TWP Holdings
The profit forecast of TWP Holdings for the years ending 29 February 2008 and 28
February 2009 is set out below. The profit forecast for TWP Holdings has been
examined by PricewaterhouseCoopers Inc. and their reporting accountants report
thereon is included in the pre-listing statement.
The directors of TWP Holdings are responsible for the preparation of the
forecasted financial information as set out in the table below.
Forecast for the
year ending 29 Forecast for the
February 2008 Rm year ending 28
February 2009
Rm
Revenue 659.15 1037.35
Costs of sales (432.58) (657.70)
Gross profit 226.57 379.64
Operating Costs (93.56) (139.76)
Operating profit 133.01 239.88
Sundry Revenue 9.38 -
Interest Paid (0.73) (0.20)
Interest Received 4.57 16.09
Net profit before taxation 146.23 255.77
Taxation (41.05) (74.17)
Net profit for the year 105.19 181.60
Attributable:
Equity shareholders 101.95 177.64
Minority interest 3.24 3.96
Weighted average number of 103,718 112,747
shares in issue (`000)
Earnings per share (cents) 98 158
Headline earnings per 91 158
share (cents)
The forecasts incorporate the following material assumptions in respect of
revenue and expenses that can be influenced by the directors of TWP Holdings:
* The proceeds received from the listing in November 2007 will be R200
million. The proceeds will firstly be utilised to settle current debt
commitments and the cost of listing amounting to approximately R36 million.
The remaining cash reserves will earn interest at a call account rate of
9.5% until 28 February 2008.
* The costs related to the listing will be off-set against the share premium
account and will thus not impact the profitability of the company.
* While it is the intention of management to pursue acquisition opportunities
over the forecast period, given the level of uncertainty attached to
securing such opportunities, management has assumed that the remaining cash
resources will continue to earn interest at a rate of 9.5% until 28
February 2009.
* Management does not envisage paying any dividend over the forecast period
as cash will be utilised to secure investment opportunities and finance the
growth of the business.
* The forecasts further include revenue which will be derived from the
following start-up operations based on feasibility studies, current
contracts in place and tenders:
* TWP Eurasia Investments;
* TWP Eurasia;
* TRG Trading;
* TWP Australia; and
* Effluent Technologies which has forecast a contracted revenue of R25
million in 2009.
* Revenue is predominantly derived from consulting fees for EPCM work
provided to companies.
* In determining revenue from future projects management has assumed that
EPCM work will be approximately 10%-15% of the total project value,
depending on project type.
* Forecast revenue thus includes two components, work which is contracted for
and work which management considers there is a high probability that they
will be awarded based on their unique product offering, specialist skill
set and reputation as a result of prior work done on similar projects or
work that they are currently performing for these clients.
* Work performed by TWP is broadly done in two phases - feasibility and
execution. Where TWP is currently contracted to perform the feasibility
work, it has been assumed that they will continue to be allocated work for
the execution phase work. The execution phase by nature generally demands
higher man hours.
* Thus the revenue forecasts are prepared assuming an increasing staff
component to meet the growing demand for EPCM work that will be awarded to.
Staff costs are generally on-charged to clients on a cost plus basis.
* Margins are derived assuming margins achieved for August 2007 will be
maintained for the forecast period.
* Staff includes a mix of permanent and contract staff. Management has
assumed base staff costs based on average actual costs as at August 2007.
Staff costs are assumed to increase in line with inflation and to an extent
by increasing demand for skilled labour resources. Whilst it is
acknowledged there will be an increased demand for additional skills to
meet the forecast revenue, it is assumed the required resourcing will be
available in market.
* The August 2007 overhead costs were used as a basis for determining future
overheads. Where relevant overhead costs were considered relative to growth
in staff numbers and thus increased proportionately. Overhead costs are
further linked to inflation.
9 Directors
The full names, ages, qualifications, nationalities, business addresses and
occupations of the directors of TWP Holdings are set out below:
Directors Business address Director since Function
Executive
Nigel John The Atrium 1 December 2004 Chief Executive
Townshend (51) 7th Avenue & Officer
PrEng, BSc(Hons), Rustenburg Road
MSAICE, FSAIMM, Melville
CEng, AMI, Gauteng, 2092
StructE, PMP,
PCPM
British
Steven Dewsbery The Atrium 1 December 2004 Group Financial
(54) 7th Avenue & Director
Bacc, CA(SA), Rustenburg Road
CA(Canada) Melville
British Gauteng, 2092
Non-executive
Ethan Dube (48) Vunani House 8 November 2007 Chairman
BA Arts, MSc Freestone Park
(Statistics), MBA 135 Patricia
South African Road
Sandton, 2196
Allyson Lawless 26 Weltevreden 1 November 2007 Independent Non
(55) Road Executive
MSc, DIC, CEng, Northcliff Director
PrEng, FIStructE, Gauteng, 2195
FSAICE
South African
Ndyebo Henry 7 Mispel Street 1 November 2007 Independent Non
Makupula (52) Belville Executive
BA (Law), LLB, Western Cape, Director
LLM (Marine) 7779
South African
10 Share capital of TWP Holdings
At the listing date the authorised share capital of TWP Holdings will comprise
300 000 000 ordinary shares with a par value of 0.1 cent each. The Company will
have an issued share capital of R112 747 comprising 112 746 973 ordinary shares
with a par value of 0.1 cent each and a share premium of R183 987 253. The
shares issued and sold in the Private Placing rank pari passu in all respects
with the existing TWP Holdings` shares.
11 Pre-listing statement
An electronic version of the pre-listing statement is available for download
from the companies website www.twp.co.za from Monday, 19 November 2007. The pre-
listing statement will be issued on Tuesday, 20 November 2007. Copies of this
pre-listing statement are only available in English and may be obtained during
normal business hours from the date of issue until Monday, 10 December 2007 from
the registered office of TWP Holdings and the office of the investment bank and
sponsor at the addresses detailed below:
TWP Holdings The Atrium,
7th Avenue & Rustenburg Road
Melville
Gauteng, 2092
Nedbank Capital Block F 3rd Floor135 Rivonia Road
Sandown
Gauteng, 2196
12 Salient dates and times
2007*
Publication of abridged pre- Monday, 19 November
listing statement on SENS on
Publication of pre-listing Tuesday, 20 November
statement
Listing of the ordinary shares on Monday, 26 November
commencement of trade on
*All dates and times are subject to change and any changes will be published in
the press and on SENS.
Melville
19 November 2007
Investment Bank, Attorneys Independent reporting
sponsor and bookrunner accountants and
auditors
NEDBANK TLi INCORPORATED PRICEWATERHOUSECOOPERS
INC
Date: 19/11/2007 17:20:01 Produced by the JSE SENS Department.
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