| Thu 26 Jun 2008, 9:00 | | POY - Poynting Holdings Limited - Abridged Prospectus |
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JSE
POY
POY - Poynting Holdings Limited - Abridged Prospectus
POYNTING HOLDINGS LIMITED
(Formerly Poynting Innovations (Proprietary) Limited)
Incorporated in the Republic of South Africa
(Registration number 1997/011142/06)
Share code: POY & ISIN: ZAE000121299
("Poynting" or "the company")
ABRIDGED PROSPECTUS
Relating to:
- the listing of the ordinary shares of Poynting on the Alternative
Exchange ("AltX") of JSE Limited; and
- an offer by the company for the subscription of 20 million ordinary
shares in the share capital of Poynting at an issue price of between 100
cents and 122 cents per ordinary share;
This abridged prospectus is not an invitation to the general public to
subscribe for or to purchase ordinary shares in Poynting, but is issued in
compliance with the Listings Requirements of JSE Limited ("JSE") only, and
relates to a private placement of Poynting ordinary shares by way of an offer
by the company for subscription of 20 000 000 ordinary shares in the issued
share capital of the company at an issue price of between 100 cents and 122
cents per ordinary share thereby raising between R20 million and R24.4
million before expenses dependant on the final price determined by the book
builder (hereinafter, "the private placement") and the subsequent listing of
the ordinary shares of Poynting on the AltX of the JSE.
The information in this abridged prospectus has been extracted from a full
prospectus issued by Poynting on 26 June 2008 ("the detailed prospectus"),
which is available as set out in paragraph 10 below. At the date of listing,
the authorised share capital of Poynting will comprise 2 000 000 000 ordinary
shares having a par value of 0.005 cent each, of which, after the private
placement of 20 000 000 ordinary shares at between 100 cents and 122 cents
per share, 90 000 000 will be in issue.
1. BACKGROUND AND HISTORY
Poynting has its roots as an electromagnetic consulting business, first
established by Dr Andries Fourie in 1990 at Wits University under the
name Givati Fourie and Associates. In 1997, Givati Fourie and Associates
underwent a restructure. As part of this restructure, Poynting was
incorporated on 11 July 1997 with the name CCG 042 Investments
(Proprietary) Limited to conduct business as designers and manufacturers
of antennas including, inter alia, Radio Frequency Identification tag
design and antenna production.
With effect from 18 August 1998, Poynting acquired an 83% shareholding
in EM Simulations (Proprietary) Limited, the software development
subsidiary of Poynting, from Derek Nitch, and issued shares in Poynting
as settlement of the purchase consideration payable in respect thereof.
EM Simulations (Proprietary) Limited was incorporated on 21 June 1993,
and on 18 August 1998, EM Simulations (Proprietary) Limited changed its
name to Poynting Software (Proprietary) Limited. Juergen Dresel joined
Andries and Derek shortly thereafter and became a shareholder of
Poynting.
In 2001, Poynting Antennas, a wholly-owned subsidiary of Poynting, was
formed and Poynting moved to its current premises in Wynberg, Sandton.
Poynting Antennas was initially financed by the shareholders of Poynting
and a start-up loan of R1.5 million for working capital from the
Industrial Development Corporation, which loan has subsequently been
repaid. Products and antennas have been subsequently developed with the
further aid of various Government grants.
In late 2004, Poynting Antennas divided its activities into two
divisions: The Commercial Antenna Division, which manufactures low cost
antennas for wireless and cellular end-user antenna applications, and
the Defence and Specialised Antenna Division, which focuses on
Electronic Warfare antennas mainly for direct or indirect export to
international defence customers.
On 15 August 2007, Poynting Direct was incorporated with the name
Cascade Avenue Trading 90 (Proprietary) Limited. This wholly-owned
subsidiary of Poynting trades under the name "Poynting Direct" and
operates physical and online retail stores for the sale of Poynting`s
products which it distributes to end-users and smaller trade customers
in South Africa. Poynting Direct commenced business in 2007,
establishing its first physical store in Pretoria. This proved to be
extremely successful and additional stores were opened in Wynberg
(Johannesburg) and Cape Town.
Poynting Europe, which is a customer of Poynting, was incorporated in
Germany by a German holding company, having been established in October
2007, for the dedicated distribution of both Commercial and Defence
products in Europe. Poynting currently does not hold any shares in
Poynting Europe but is presently negotiating the acquisition of a 49%
stake in Poynting Europe at a date to be determined after the listing,
and subject to exchange control approval being obtained.
On 12 June 2008, Poynting changed its name from Poynting Innovations
(Proprietary) Limited to Poynting Holdings (Proprietary) Limited and was
converted from a private company to a public company known as Poynting
Holdings Limited. The group currently employs over 160 people.
2. RATIONALE FOR LISTING
Poynting intends to list on the AltX as a strategic step that will allow
the company to raise capital in support of its vision to expand both
within and beyond South Africa.
The purpose of the placement and the listing are:
- to raise funds in order to finance the anticipated growth in
working capital required to meet the needs of the buoyant markets
within which the group operates;
- to fund future growth which requires the development of new and the
expansion of existing sales channels;
- to fund the development of new products;
- to allow for additional investment in research and development
infrastructure, and increase production capacity; and
- to enhance Poynting`s company profile and increase its brand
recognition.
3. PROSPECTS
The directors of Poynting are of the opinion that Poynting has exciting
prospects, both locally and internationally for the following reasons:
The most significant market driver for Poynting is the increased use of
wireless technologies for broadband internet connections. This swing in
the market is attributable to the ease of establishing a wireless
internet link, the lowering cost of wireless data and equipment, and the
global standards which drive available infrastructure for this
application. Another strong technology driver is the increased use of
"machine-to-machine" communication using cellular technologies. The cost
of cellular modules (the electronics at the heart of a cell phone) is
continuously declining allowing more applications to be viable.
The Defence and Specialised Antenna Division will continue its
partnering with a number of significant system houses locally and
internationally in order to design antennas to fit the requirements of
its customers. It will also diversify its offering by providing custom
designs as well as a portfolio of standard designs which have specific
performance benefits to customers developing Electronic Warfare systems.
The global trends of increasing the use of wireless technologies for
broadband internet, the cost of electronics falling rapidly and
importance of "machine-to-machine" communication going forward, present
strong local and international growth prospectus for Poynting.
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 Between 100 and
(cents) 122
Par value per ordinary share 0.005
(cents)
Premium per ordinary share (cents) 99.995 to
121.995
Number of ordinary shares offered 20 000 000
by the company for subscription in
terms of the private placement
Issue consideration to be received R20 million to
by the company before expenses R24.4 million
4.1.2 The opening and closing dates of the private placement are as follows:
Opening date of the private Thursday, 26 June
placement at 09:00 on 2008
Last date for indications of Friday, 27 June
interest from the applicants for 2008
the purposes of the book build by
10:00 on
Closing date of private placement Friday, 27 June
at 12:00 on 2008
Anticipated listing date on AltX Wednesday, 9 July
at commencement of trade on 2008
5. SUMMARY OF THE HISTORICAL AND FORECAST INCOME STATEMENTS
The summarised historical and forecast financial information of Poynting 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 historical and forecast financial
information is contained in the detailed prospectus referred to in paragraph
10 below and has been reported on by the reporting accountants. Such reports
will be contained in the detailed prospectus and will also be available for
inspection.
Extracts from the historical and forecast income statements
Audited Forecast Forecast
2007 2008 2009
R`000 R`000 R`000
Revenue 43 926 58 081 102 100
Cost of sales 20 033 25 408 52 180
Gross profit 23 893 32 673 49 920
Other income 1 316 957 340
Operating costs (22 539) (23 429) (31 105)
Operating profit 2 670 10 201 19 155
Interest income 27 - 580
Finance costs (710) (688) (410)
Profit before taxation 1 987 9 513 19 325
Taxation (479) (236) (320)
Profit after taxation 1 508 9 277 19 005
Weighted average number of 4 945 368 25 730 245 87 300 000
ordinary share in issue
Earnings per ordinary share 30.49 36.05 21.77
(cents)
Pro forma number of ordinary 67 300 000 67 300 000 87 300 000
shares in issue on which
earnings are based
Pro forma earnings per 2.24 13.78 21.77
ordinary share (cents)
Notes:
1. The pro forma weighted average number of ordinary shares in issue as at
30 June 2007 is based on the increase in and sub-division of the
ordinary shares in issue into 70 000 000 ordinary shares in issue as set
out in paragraph 21.3 of the detailed prospectus less 2 700 000 ordinary
shares issued to the Poynting Empowerment Trust as set out in Annexure 9
of the detailed prospectus, which are eliminated on consolidation as a
result of them being treasury shares.
2. The main assumptions on which the forecast income statements are based
are set out in paragraph 11.2 of the detailed prospectus.
3. The above income statement takes into account the effects of the
anticipated issue of ordinary shares detailed in paragraph 11.3 of the
detailed prospectus.
4. Surplus cash will be applied to the organic growth of the business in
the short-term and therefore no dividends are planned for the forecast
period.
5. Poynting Europe is currently treated as a customer and revenue is
recognised as soon as the goods are sold to Poynting Europe.
6. Taxation is provided for on the assumption that all research and
development expenditure is 150% tax deductable in accordance with
current legislation.
7. Normal growth in current sales will be 30% for 2009.
8. The sale agreement with two large customers materialises as agreed
during 2009.
9. Poynting Europe sales materialise as per Poynting Europe forecasts.
10. The current sales achieved per branch in Poynting Direct continues.
11. 30% operational cost increase will be sufficient for the anticipated
revenue growth.
6. DIRECTORS
The full names, ages, qualifications and designations of the directors are as
follows:
Director Age Qualification Designation
Coenraad Petrus 52 B.Sc. Eng (Elec) Non-executive
Bester B.Sc.Eng (Elec). Chairman
Hons.
MBA, OPM
Andries Petrus 46 B.Sc.Eng (Elec), Chief Executive
Cronje Fourie PhD Officer
Sayed Omar Mullah 32 Completed audit Financial
articles Director
Juergen Dresel* 40 Diplo.Ing., Managing Director
M.Sc.Eng (Elec)
Thomas David Abbott 32 B.Sc.Eng (Elec) Executive
Director
Michael Keith Hill^ 47 CA(SA). Non-executive
Bcom(Hons), CTA Director
HDip Tax
Mark Pierre 41 Executive
Haarhoff Director
Zuko Ntsele 35 BSc.(Medicine) Non-executive
Kubukeli^ Hons. PhD Director
Ancell Claire Nitch 36 B.Com Sales Director
Derek Colin Nitch 43 B.Sc.Eng. Chief Technical
(Elec), PhD Officer
Anthony Selikow 39 B.Sc. Eng (Elec) Chief Operation
Hons. Officer
^ Member of the Audit Committee
* German
The business address of the directors is 33 Thora Crescent, Wynberg, Sandton,
2090.
All directors are South African citizens, except Juergen Dresel who is
German.
6. SHARE CAPITAL
The authorised and issued share capital of Poynting before and after the
private placement is set out below:
Rand
Authorised
2 000 million ordinary shares of 0.005 cent 100 000
each
Issued, before the private placement
70 million ordinary shares of 0.005 cent 3 500
each
Share premium 8 177 206
Issued, after the private placement
90 million ordinary shares of 0.005 cent 4 500
each
Share premium 26 500 206
26 504 706
8. MAJOR SHAREHOLDERS
Save as set out in the table below, there are no shareholders who were
directly and/or indirectly beneficially interested in 5% or more of the
issued ordinary share capital of Poynting at the last practicable date
and who will, as far as the directors of Poynting are aware, hold 5% or
more of the issued ordinary share capital of Poynting following the
private placement:
Name of shareholder Percentage Percentage Number of
held held after shares
before private after
private placement private
placement placement
Andries Petrus Cronje 50.42 39.21 35 291 560
Fourie Trust1
Derek Nitch2 19.28 14.99 13 492 596
Juergen Dresel2 17.32 13.47 12 122 169
Total 87.02 67.67 60 906 325
Note:
1. Andries Fourie, a director, is a beneficiary of the Andries Petrus
Cronje Fourie Trust.
2. Directors
9. LISTING ON THE JSE
Subject to the required spread of public shareholders to meet the
Listings Requirements of the JSE being achieved, as well as achieving a
minimum capital balance of R2 million, the JSE has granted Poynting a
listing in respect of 90 000 000 ordinary shares on AltX under the
abbreviated name "Poynting", JSE code "POY" and ISIN ZAE000121299, with
effect from the commencement of business on Wednesday, 9 July 2008.
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 Poynting, the
Designated Adviser and the transfer secretaries, details of which are
set out in below:
- Poynting, 33 Thora Crescent, Wynberg, Sandton, 2090;
- 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 (Proprietary) Limited, Ground
Floor, 70 Marshall Street, Johannesburg, 2001.
Johannesburg
26 June 2008
Designated Adviser
Merchant Sponsors (Proprietary) Limited
Corporate adviser and bookrunner
Merchantec (Proprietary) Limited
Auditors and independent reporting accountants
KPMG Inc.
Attorneys
Fluxmans Inc.
Date: 26/06/2008 09:00:01 Produced by the JSE SENS Department.
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