| Fri 3 Feb 2006, 10:48 | | Acc-Ross Holdings Limited - Abridged Prospectus an |
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Acc-Ross Holdings Limited - Abridged Prospectus and Listing
ACC-ROSS HOLDINGS LIMITED
(Formerly Le-Sel Holdings Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2000/000059/06)
("the company" or "Acc-Ross")
ISIN Code: ZAE000077335 & Share code: ACC
ABRIDGED PROSPECTUS AND LISTING
Introduction
The prospectus to which this announcement relates has been prepared in terms of
the Listings Requirements of the JSE Limited ("the JSE"), relating to a private
placing by way of an offer for subscription of 326 000 000 ordinary shares of
R0.0001 each in the share capital of Acc-Ross at an issue price of R1.00 per
share, and is not an offer to the general public to subscribe for shares. The
directors" reserve the right to reduce the allocation of applicants on an
equitable basis. The shares offered in terms of the prospectus will rank pari
passu with the existing ordinary shares in Acc-Ross.
Assuming that the private placement is fully subscribed, at the date of closing
of the offer, Acc-Ross"s capital will comprise 2 000 000 000 authorised ordinary
shares and 1 091 641 000 issued ordinary shares of R0.0001 each. There is no
minimum subscription which needs to be raised by the issue of shares in terms of
the prospectus and hence this placement has not been underwritten. The JSE have
approved the listing of the above shares on Monday, 13 February 2006, subject to
the company achieving the spread of shareholders required in terms of the JSE
Listing Requirements relating to AltX.
An English copy of the prospectus was registered by the Registrar of Companies
on 30 January 2006 in terms of section 155(1) of the Companies Act, 1973 (Act 61
of 1973), as amended.
Background, incorporation and nature of business
Acc-Ross was registered and incorporated as a private company in the Republic of
South Africa on 14 January 2000 under the name Arcfin Trading 45 (Proprietary)
Limited. The company changed its name to Le-Sel Holdings Limited and was
converted to a public company on 04 October 2000. Being a shelf company, the
company was dormant and conducted no business from incorporation until control
was acquired by the shareholders of Accretio Holdings (Proprietary) Limited
("Accretio Holdings") during February 2005 through the acquisition of Accretio
Holdings. The company previously had no subsidiaries.
The company first entered into negotiations to acquire Gardener Ross Holdings
Limited ("Gardener Ross Holdings") during March 2005, which agreement was signed
on 15 August 2005 and effected on 31 August 2005. The company then changed its
name to Acc-Ross Holdings Limited on 16 November 2005.
Accretio Holdings
Accretio Holdings" assets constitute 100% of Accretio Property Developments
(Proprietary) Limited ("APD"). The assets of APD will, assuming that Acc-Ross
raises the full R326 000 000 in terms of the prospectus, comprise:
- 100% of the shareholding in Eagle Creek Investments 74 (Proprietary)
Limited, which will develop the Lizard Point Resort Development;
- 100% of the shareholding in Tauve Developments (Proprietary) Limited
("Tauve"), which in turn owns 100% of the shareholding in Redlex 89
(Proprietary) Limited ("Redlex"), which will develop Brooklyn Stone, and
which further owns 85% of the shareholding in Seven Seasons Trading 60
(Proprietary) Limited ("Seven Seasons"), which will develop Royal Palms;
- 100% of the shareholding in Northern Jungle Trading 17 (Proprietary)
Limited ("Northern Jungle"), which will develop The Ponds;
- 80% of the shareholding in GR Equity (Proprietary) Limited ("GRE"), which
will develop Blue Horizon Bay;
- 50% of Rock Ridge Resort through a joint venture with Smilin" Thru Chalets
(Proprietary) Limited ("Smilin" Thru");
- 100% of the shareholding in Comuine Golf Estate Limitada ("Comuine Golf
Estate"), which will develop the Comuine Coastal Resort in Mozambique.
Lizard Point (Phase 1 of existing project included in the projections)
APD owns 100% of the shareholding in ECI which will develop the Lizard Point
Resort Development, estimated by directors to be a R4,5 billion development over
8 years. The land was acquired in 2004 for a purchase consideration of R11,5
million, which has been settled in full. All professional fees have been
carried by the company to date through funds raised from the sale of debentures.
Lizard Point is a 700 hectare resort development situated at the mouth of the
Wilge river and on the banks of the Vaal Dam next to Orangeville, Free State
Province and currently has a land value of R170 million, with phase 1 of the
project to be funded by project finance. Accordingly, the project does not
require funds raised from the listing.
The project achieved its ROD from the environment authorities on 01 November
2005 and APD began with detailed design of the Lizard Point Resort Development
in November 2005 and is planning to break ground in February 2006. The first
phase of the development comprises an 18 hole championship links golf course
which will be co-designed by Retief Goosen and DDV Design Group, with 513
Residential One, freehold stands and 135 cluster units. Phase 1 was officially
launched in August 2005 and pre-sales of stands to the value of R80 million had
been achieved to date. Phase 1 has been included in the profit forecast for the
year ending 28 February 2007.
Phases 2 and 3 comprise the development of residential units and the waterfront
area, which consists of a commercial hotel, retail restaurants, cinemas,
entertainment and the boutique hotel and timeshare component.
The 4th phase will comprise a second 18 hole signature parklands golf course
with 315 Residential One, freehold stands and 621 Residential Two sites. Other
products in the development include boat storage and launching facilities, the
golf driving range, tennis courts, the 2 club houses for the golf courses and
the island with the resort pools and sundowner bars.
An independent valuation of R50 million has been obtained on Phase 1 of Lizard
Point, a summary of which is included in the prospectus.
Brooklyn Stone (existing project included in the projections)
APD owns 100% of the shareholding in Tauve which in turn owns 100% of the
shareholding in Redlex, which will develop Brooklyn Stone Luxury Apartments, the
first ultra luxury apartment development in the exclusive suburb of Brooklyn,
Pretoria. The development comprises up to 40 units, all of which have been pre-
sold at the initial launch of the developments. Pre-sales amounted to
approximately R120 million. The land was acquired for a purchase consideration
of R6,5 million, which has been settled in full. A third party-funder, namely
Pieter Venter, has a 30% profit share in the project"s net profit after tax,
which has been factored into the projections.
The development is to be fully financed by either Imperial Bank Limited or
Investec Bank Limited depending on commercial terms which are currently under
negotiation and expected to be finalised shortly and, accordingly, does not
require funding from the proceeds of the offer. Construction is set to commence
at the beginning of 2006. The project is expected to be completed by December
2006.
Royal Palms (existing project included in the projections)
APD owns 100% of the shareholding in Tauve which in turn owns 85% of the
shareholding in Seven Seasons, which will develop Royal Palms, located in
Plettenberg Bay, with uninterrupted views over Plettenberg Bay and Keurbooms.
Phase 1 of the development comprises 17 upmarket residential stands, as well as
the original estate Manor House, recently valued at R15 million. It is planned
that the Manor House will be converted into a boutique hotel and wellness
centre.
Phase 2 of the development will comprise of a further 14 proposed residential
stands.
The land was acquired for a purchase consideration of R12,5 million, for which
guarantees had been provided. The transfer of the land is in process. All
professional fees have been carried by the company to date through own funding.
The development is to be funded by Investec Bank Limited, with funding already
approved and documentation lodged with attorneys, and the development commenced
during January 2006, with finalisation of Phase 1 in November 2006 and Phase 2
during 2007. Accordingly, the project does not require funds raised from the
listing.
The Ponds (planned project, forming part of the projections)
APD owns 100% of the shareholding in Northern Jungle, which will develop The
Ponds Lifestyle Estate, through the acquisition of a number of individual stands
from independent land owners, subject to the funds being raised in terms of the
prospectus. The Ponds is a residential golf estate in Muldersdrift on the West
Rand, comprising 900 Residential One stands and 350 Residential Two stands. The
project is in the middle of a development corridor, identified by the Moghale
local municipality, and is well located in an area experiencing very high growth
and demand for residential property of the nature being offered by the Ponds.
Negotiations have been finalised with all individual landowners, the project
planned for more than two years and all the relevant design and specialist
studies have been completed. The estate incorporates a proposed golf course to
be designed by DDV Design Group. The residential component and golf course is
approximately 179 hectares.
The Ponds also comprises a private school and a convenience shopping area. The
Environmental Impact Assessment has been completed and submitted for approval.
It is anticipated that the Development Framework Application will be brought and
heard in February/March 2006 in order to secure the appropriate rights to the
development.
Capital raised from the listing will be utilised to pay for the land, with
transfer expected at the end of February 2006. Subject to payment for the land,
Accretio Holdings will begin development in May 2006. A suitable financier to
the project will be identified once the development rights have been formally
granted. In the event that funds are not raised in terms of this private
placement, banks will be approached to secure the necessary acquisition finance.
A non-refundable deposit of R480 000 has been paid in relation to this project.
Blue Horizon Bay (existing project, forming part of the projections)
APD owns 80% of the shareholding in GRE, which will develop Blue Horizon Bay Eco
Estate, on a near pristine stretch of land, in order to create an environmental
friendly, upmarket estate that will protect and reinstate the natural
environment on a sustainable basis. The property of 76 hectares is located in
an extremely sought-after area of coastal land, between Port Elizabeth and
Jeffreys Bay.
Being a very low density development, less than 150 homes will be accommodated
on the land, leaving ample open space to allow small game to roam freely. The
development brief is to retain and enhance as much of the natural environment as
possible. The roads, other infrastructure finishes and architectural themes
will be selected to take a secondary role to the natural environment. No
internal fences or plot boundary walls will be allowed. The majority of the
homes that will be built will have uninterrupted ocean views.
Blue Horizon Bay Eco-Estate is one of the first estates of its kind in the area,
potentially setting the standard for other eco-estates to follow. Every
possible precaution will be taken during the design and development of the
project to minimise negative environmental impact. Comprehensive studies of the
existing flora and fauna, the soil conditions and land use have been done and
will continue to play a critical role in the development.
Planned community facilities include a clubhouse with swimming pool, tennis
courts and a "Village Green" area for sporting activities. The scope of works
for the development includes 95 single or double storey houses on freehold
stands and some areas as Sectional Title, appropriate architectural theme,
secure boundary fence and gatehouse, internal roads and footpaths, common
facilities including clubhouse, village green, sports fields, and staff
accommodation. It is the intention to introduce suitable small game to roam
through the estate. Dams, bird viewing hides and coastal view points will also
be created, and all alien invader species will be removed.
The land was purchased for R550 000 three years ago and transfer has been
effected. The Environmental Impact Assessment has been prepared and submitted
for approval. The township application is in the process of formulation.
Twelve months have been estimated for the construction of the development
infrastructure, currently planned to commence during May 2006.
No funding is being raised for this project from the private placement and banks
will be approached to finance the project in the normal manner once ROD has been
received.
Rock Ridge Resort (existing project forming part of the projections)
APD owns a 50% stake in Rock Ridge Golf and Fly-fishing Resort through a joint
venture agreement with Smilin" Thru. Rock Ridge is being developed on a lush and
hilly terrain, not far from Parys on the banks of the Vaal River, just over an
hour"s drive from Johannesburg.
The developers want to bring to South Africa, and in particular the residents of
Johannesburg and Pretoria and their surrounding areas, a unique and exclusive
world class, self contained, eco-friendly resort providing golf, fly fishing,
sports and other recreational facilities, and a proposed health spa and hotel.
All the necessary development rights have been secured for the residential and
fractional ownership component of the development, as well as the construction
of a golf course. The hotel and wellness centre, with complimentary resort
facilities, are planned in phase 2. Phase 3 will comprise a game reserve area
of approximately 1 000 hectares with corporate lodges.
The project is located on the Vaal River, with close proximity to Gauteng.
There will be 315 stands, with an experienced team of professional consultants
managing the development.
The scope of works for Phase 1 of the development includes an 18 hole
championship golf course designed to United States Golf Association ("USGA")
specifications, a clubhouse with conferencing and banquet facilities and a pro-
shop, all with views over the golf course to the surrounding mountain ranges, a
sports centre, incorporating a squash court, two tennis course, bowls and a
swimming pool, entrance gatehouse and workshop facility for estate and golf
course maintenance, extensive water features and general estate landscaping and
the infrastructure for 315 residential stands and construction of the perimeter
boundary walling.
The project duration will cover an estimated 18 months, culminating in the
opening of the Golf Course in 2007. Should insufficient funds be raised for
this project as part of the offer, then banks will be approached in the normal
manner to fund the project.
Comuine Coastal Resort, Vilanculos, Mozambique (existing project forming part of
the projections)
APD owns 100% of the shareholding in Comuine Golf Estate, which will develop the
Comuine Coastal Resort in Vilanculos, Mozambique. The Comuine Coastal Resort is
located approximately 700 kilometres north of Maputo on the coast, opposite
Bazaruto Island and 10 kilometres from the Vilanculos international airport.
The resort will incorporate a golf course designed by Retief Goosen in
association with DDV Design Group and will comprise 415 residential and
fractional ownership units with an additional 125 timeshare opportunities, all
integrated into the natural bush and having access to the Resort"s 1.6
kilometres of unspoiled white beaches lined with natural growing palm trees.
The resort will also incorporate a number of dam facilities on the golf course,
the golf course clubhouse and halfway house, provisions for boat storage, a
world class hotel and wellness centre, workshop facilities and a driving range,
jetties for boat launching and yacht docking, beachfront restaurants and a scuba
diving centre, entrance parking and local community and cultural villages.
The property earmarked for the development has been secured through the relevant
authorities in Mozambique and all the required development rights have been
obtained. All necessary approvals from the South African Exchange Control
authorities have been obtained, with the project being approved for Foreign
Direct Investment. Negotiations are far advanced for securing casino rights to
the resorts. It is the intention to try to introduce dedicated flights to the
resort from Lanseria Airport, on a daily basis, once the development is
complete. Negotiations have commenced with international cruise liners to
incorporate Comuine Resort in their travel packages as a stopover destination.
The land was acquired in terms of a 99 year lease and there is therefore no
purchase consideration. All professional fees have been carried by the company
to date through own funding. The capital raised from the listing will be used
toward continuing professional fees, design fees, construction of the golf
course and bringing essential bulk services to the development site. The
Industrial Development Corporation has been approached to provide financing for
the hotel and leisure component of the development and it is hoped to have
negotiations completed shortly. Marketing of the Comuine Resort commenced in
December 2005. In the event that the company does not raise sufficient capital
from the offer for funding of its initial phase, this phase and the remainder of
the project will be funded through normal bank funding.
Gardener Ross
Gardener Ross was acquired by Acc-Ross for a purchase consideration of R162,5
million, which was settled by the issue of 260 000 000 new shares in Acc-Ross at
62,5 cents per share. Gardener Ross, which previously held a 40% direct
shareholding in Golf and Country Estate, has acquired an additional 50% held by
GRIF for a purchase consideration of R20 million, payable through either funds
raised from the placement of shares in terms of the prospectus or from proceeds
realised from the sale of Debentures held by Gardener Ross Holdings ("the
Debentures").
Gardener Ross holds, assuming that Acc-Ross raises the full R326 million in
terms of the prospectus, the following investments:
90% of the shareholding in Gardener Ross Golf and Country Estate (Proprietary)
Limited (Golf and Country Estate");
the Debentures;
10% in Nondela Drakensburg Mountain Estate (Proprietary) Limited ("Nondela");
100% of the shareholding in Eagle Creek Investments 257 (Proprietary) Limited
("Eagle Creek"), which holds 60% in Zeranza 50 (Proprietary) Limited
("Zeranza"); and
100% of the shareholding in Chestnut Hill Investments 111 (Proprietary) Limited,
which will develop Welvergenoegd;
Golf and Country Estate (existing project included in the projections)
Golf and Country Estate comprises an Ernie Els signature golf course and a
housing development comprising 1 153 full title stands, situated in Centurion,
Gauteng. The land was acquired in 2003 for a purchase consideration of R12
million. The individual stands are to be sold, whilst the golf course,
clubhouse and all other developments will remain the property of Golf and
Country Estate.
Golf and Country Estate has already pre-sold Phase 1 in its entirety, amounting
to pre-sales of approximately R157 million after elimination of sales to
Zeranza, for which 10% deposits and finance approvals have been received. Phase
1 was proclaimed in September 2005 and transfer of the stands commenced in
October 2005, which will convert the pre-sales to recognised turnover for the
year ending 28 February 2006.
Phase 2 sales are in progress and approximately 80% of the stands have been sold
as at the last practicable date. Proclamation and transfer is expected during
the course of 2006. Pre-sales for Phase 3 will be launched before the end of
the year, with proclamation expected towards the end of 2006 and transfer in
early 2007.
Golf and Country Estate, per its projected budgets, projects a total profit
after tax from the entire development upon sale of all stands, of approximately
R200 million.
Golf and Country Estate is fully financed by Investec Bank Limited, which has
provided a total facility of R334 million for the project. The project finance
is a rolling facility, attracting interest at prime less 0.5% and a profit share
of 20% of the pre-tax profit. The necessary ROD and Environmental Impact Report
approval was obtained in 2004 and construction commenced in September 2004. The
development is currently ahead of schedule with 12 golf holes having been
completed. The project is expected to be completed in the next 15 months.
The Golf and Country Estate project development management is being undertaken
by Devco Africa (Proprietary) Limited, which owns the remaining 10% in Golf and
Country Estate, and has developed and is currently developing numerous property
projects throughout South Africa.
An independent valuation of R235 million has been obtained for Golf and Country
Estate, a summary of which is included in the prospectus.
Debentures (existing asset, not forming part of the projections)
Gardener Ross owns 29 Debentures, each of which represents ownership of a
fairway stand on the Golf and Country Estate development or are redeemable for
R650 000 cash, which represents a liability to Golf and Country Estate. The
Debentures have a current market valuation of R38 million based on stands sales
currently being achieved.
Nondela (not forming part of the projections)
Gardener Ross has been invited to participate in a golf and leisure development
project in the Drakensberg foothills, in which it intends to acquire a 10%
equity stake. In the meantime, the 10% shareholding has been secured for
Gardener Ross for a consideration of R4 million, payable by Gardener Ross out of
proceeds from the listing. In the event that bank funding is not secured by the
owners of Nondela by the time funds are raised in terms of the prospectus,
Gardener Ross may negotiate to acquire an additional 30% from the Nondela
vendor.
Nondela will be an Ernie Els designed golf course and holiday estate, which
estate is, per initial project budgets, estimated to net a profit of around R400
000 000 before tax. This is regarded as a strategic investment by Gardener Ross
and is expected to provide dividend income in 2008.
Eagle Creek (planned project, forming part of the projections)
On 15 August 2005, Gardener Ross entered into an agreement for the acquisition
of 100% of Eagle Creek for a purchase consideration of R15 million, payable in
cash. Eagle Creek has a 60% vested interest in the Cluster Homes Development of
Golf and Country Estate through its 60% shareholding in Zeranza.
The Cluster Homes Development comprises the exclusive right relating to the
development of 164 cluster units, which development is expected to commence in
early 2006 and is expected to be completed during 2007. The estimated profit
before taxation of the entire development over 2 years is R50 million before
taxation, based on an average cost of development of R2,4 million each. Eagle
Creek expects to show a profit of R24 million for the year ending 28 February
2007.
In the event that the funds are not raised for the acquisition of Eagle Creek,
alternative funding will be sought to secure the project, failing which the
agreement may be set aside.
Welvergenoegd (not forming part of the projections)
On 15 August 2005, Gardener Ross entered into an agreement for the acquisition
of 100% of Chestnut Hill for a purchase consideration of R20 million, with a
further R28 million payable in respect of the balance of the purchase price for
the land. Chestnut Hill, also known as the Welvergenoegd Golf and Leisure
Estate, acquired the farm Welvergenoegd for a purchase consideration of R6.25
million during 2004, which purchase consideration will be repaid as part of the
R28 million.
Welvergenoegd is a planned signature golf and leisure development situated
outside Durbanville in the Cape and water rights have been secured through part
funding of the Durbanville water pipeline. The ROD is expected to be received
in 2006, and it is anticipated that the development will commence during 2007
and be completed within 36 months thereafter. The estimated profit before
taxation of the entire development over 4 years is R400 million. Projections
have not been included for this project due to the fact that the project is
still at an early stage and Environmental Impact Assessments still need to be
submitted.
In the event that the funds are not raised for the acquisition of Welvergenoegd,
alternative funding to secure the project will be sought, failing which the
agreement will lapse. However, the payment of the land is only due within 2
years, which could enable the company to pay R20 million initially and fund the
balance through other financiers or pay it in 2 years time.
Profit forecasts
The Acc-Ross profit forecasts for the years ending 28 February 2006 and 28
February 2007, are set out below and should be read in conjunction with the
independent reporting accountant"s report in Annexure 7 of the prospectus.
The forecasts of Acc-Ross incorporate the following projects:
- 90% of Golf and Country Estate;
- 100% of ECI, in which Phase 1 of Lizard Point is being developed;
- 100% of Eagle Creek, owning 60% of Zeranza;
- 100% of Comuine, comprising Phase 1 at Vilanculos;
- 100% of Northern Jungle, comprising The Ponds development;
- 50% of Rock Ridge, Phase 1;
- 80% of GR Equity, in which Blue Horizon Bay is being developed;
- 100% of Tauve, which owns:
- 85% of Seven Seasons, in which Royal Palms is being developed; and
- 100% of Redlex, in which Brooklyn Stone is being developed.
The forecasts set out below are based on the assumption that the private placing
of 326 000 000 shares in terms of the prospectus is fully subscribed:
Notes 28 February 2006 28 February 2007
R R
Revenue 2 157 548 140 1 226 525 909
Cost of sales 3, 8 (91 486 275) (824 159 344)
Gross profit 66 061 865 402 366 565
Interest earned 2 707 --
Operating expenses 3 (34 243 205) (75 094 371)
Impairment of goodwill 4 (25 484 428) (70 609 721)
Donation to empowerment fund - (2 706 181)
Operating profit before 6 336 939 253 956 292
interest
Finance costs 5 32 993 888 82 736 297
(Loss)/profit before taxation (26 656 949) 171 219 995
Taxation 8 478 768 65 678 952
Secondary Tax on Companies 1 662 500 4 708 041
(Loss)/profit after taxation (28 798 217) 100 833 002
Minority interest in 2 850 448 28 199 634
subsidiaries
Preference dividends 6 13 300 000 --
(Loss)/profit attributable to (44 948 665) 72 633 368
ordinary shareholders
Ordinary dividends - proposed 7 -- 37 664 328
Fully diluted shares (`000"s) 1 091 641 000 1 091 641 000
(Loss)/earnings per share (4.1) 6.6
(cents)
Headline (loss)/earnings per (1.8) 13.1
share (cents)
Dividend per share - proposed -- 3.4
(cents)
Notes
1. The profit forecasts in column 1 and 2 are based on the assumption that the
listing on the JSE and the full capital raising of R326 000 000 are
achieved prior to 28 February 2006.
2. The revenue for 2006 and 2007 is based on the sales of stands in the
various developments with specific starting dates.
3. Cost of sales comprises land development costs, adjusted for stock on hand,
and operating costs mainly relating to projects, with 2006 relating to
Phase 1 of Golf and Country Estate and 2007 as detailed in the segmental
analysis in Annexure 8A. For 2006, operating costs comprise marketing
costs of R20.7 million, professional endorsement fees of R7 million with
the balance relating to head office and project administration costs.
Operating costs for 2007 comprise marketing costs of R37.1 million,
commissions of R24.6 million with the balance relating to head office and
project administration costs.
4. The goodwill amount of R130 181 601 is impaired in relation to stand sales
over the next three years as follows:
* 2006 - R 25 484 428
* 2007 - R 70 609 721
* 2008 - R 34 087 452
5. Finance costs include a 20% profit share in favour of Investec Bank Limited
on the Golf and Country Estate project.
6. The 18.75% preference dividend payable on the Gardener Ross preference
shares.
7. A proposed dividend distribution of 25% on profit after tax, but before
goodwill impairment is assumed in the second year, with STC being assumed
at 12.5%.
8. Included in cost of sales are the following fair value adjustment amounts
attributable to stand sales in Golf and Country Estate; 2006: R23 699 413
and a resultant deferred tax credit of R6 872 830, 2007: R65 663 978 and a
resultant deferred tax credit of R19 042 554.
9. It is assumed that there will be no major changes in the economic
environment nor will interest rates fluctuate materially.
10. It is assumed that there will be no changes in legislation affecting the
company.
11. Comuine Coastal Resort, Mozambique, enjoys a ten year income tax break from
Mozambican authorities.
Projected revenue is mainly from Golf and Country Estate in financial year 2006
as a result of pre-sales from Phase 1 of R157 million (net of sales to Zeranza),
having been proclaimed during September and being transferred to individual
owners from October 2005.
With regard to projections for 2007, it should be noted that Phase 2 of Golf and
Country Estate is already 80% pre-sold with proclamation and transfers expected
in early 2006. Sales and transfers of Phase 3 of Golf and Country Estate have
been projected at 60%. Phase 3 pre-sales are to be launched in early 2006 with
proclamation expected in the latter half of 2006 and transfers in early 2007
with the total Phase 3 sales estimated to be in excess of R400 million.
In addition, a profit forecast has been included in the prospectus based on the
assumption that no proceeds are raised from the offer, and is detailed below:
28 February 2006 28 February 2007
R R
Revenue 157 548 140 846 692 159
Cost of sales (91 486 275) (583 296 775)
Gross profit 66 061 865 263 395 384
Interest earned 2 794 617 913
Operating expenses (33 194 372) (63 520 928)
Impairment of goodwill (25 484 428) (70 609 721)
Donation to empowerment fund - (696 094)
Operating (loss)/profit before 7 385 859 129 186 554
interest
Finance costs 31 522 278 59 598 353
(Loss)/profit before taxation (24 136 419) 69 588 201
Taxation 1 249 722 42 440 536
Secondary Tax on Companies 1 662 500 4 717 418
(Loss)/Profit after taxation and (27 008 641) 22 430 247
before dividends
Minority interest in subsidiaries 3 224 943 8 362 677
Preference dividends 13 300 000 13 300 000
(Loss)/profit attributable to (43 533 584) 767 570
ordinary shareholders
Proposed ordinary dividend 24 439 347
Fully diluted shares (`000"s) 765 641 000 765 641 000
(Loss)/earnings per share (cents) (5.7) 0.1
Headline (loss)/earnings per share (2.3) 9.3
(cents)
Dividend per share - proposed -- 3.1
(cents)
As each development operates as a stand alone project and is self funded, no
provision has been made for non-sale of stands in any instance. The costs per
project are budgeted in fixed costs and there is a very large profit margin in
each development, based on historic sale of sites on similar developments in
South Africa. The forecast is, in many cases, not dependant on the acceptance
of the individual estates in the market place as most of the estates have
already met with exceptional pre-development sales, which have already made the
developments secure, profitable exercises.
Authorised and issued share capital
The authorised and issued share capital of Acc-Ross, before and after the offer,
is set out below. The share capital of the company has been calculated before
setting off the estimated expenses against share premium.
R"000
Authorised, before the offer
2 000 000 000 ordinary shares of R0.0001 each 200
Issued, before the offer
765 641 000 ordinary shares of R0.0001 each 77
Share premium 174 973
To be issued
326 000 000 ordinary shares of R0.0001 each 33
Share premium 325 967
Issued, after the offer
1 091 641 000 ordinary shares of R0.0001 each 110
Share premium 500 940
Directors of Acc-Ross
The full name, ages, addresses and occupations of the directors of Acc-Ross are
set out below:
Name (Age) Address Occupation
Arthur Buti 16 Tiati Road Businessman
Mashiatshidi* (45) Sunninghill
(Chairman) Johannesburg
Johannes Jacobus Verster 556 Skukuza Avenue Advocate and
(33) Faerie Glen businessman
(Chief Executive Pretoria
Officer)
Nolene Owen (29) Unit 7A, Persequor Close Chartered Accountant
(Financial Director) 49 de Havilland Crescent (SA)
Persequor Technopark
Pretoria
Khehla Samuel Mthembu* 4 High Rd Businessman
(51) Orchards
Johannesburg
Nakedi Mathews Phosa* 4 Karee Street Businessman
(53) White River
Ephraim Matsisele Sono* 16 12th Avenue Businessman
(50) Houghton
Johannesburg
(Unless otherwise indicated all directors are South African citizens.) * Non-
executive
Purpose of the offer
In terms of the placement, investors will be offered the opportunity to
subscribe for ordinary shares.
The purpose of the offer is to:
1. raise the necessary acquisition funding, totalling R104,2 million, to
finance the company"s:
* acquisition of 100% of the issued share capital of Eagle Creek from
the Eagle Creek vendors for R15 million, which owns 60% of Zeranza;
* acquisition of 100% of the issued share capital of Chestnut Hill from
the Chestnut Hill vendors and settlement of liabilities for R48
million;
* acquisition of 21 smallholdings in the Muldersdrift area from a
variety of independent land owners at prices ranging from R1 million
to R4 million, totalling a combined consideration of R41,2 million, in
order to facilitate The Ponds development;
2. raise the necessary funding, totalling R34,5 million, in order to
facilitate the settlement of outstanding liabilities in respect of the
purchase of:
* a 50% shareholding in Golf and Country Estate from GRIF for R20
million;
* a 10% shareholding in Nondela from the Nondela vendors for R4 million;
* an additional 50% shareholding in Tauve from the Tauve vendor for R6,5
million; and
* a 25% shareholding in Peel Pickering from the Peel Pickering vendors
for R4 million;
raise the necessary development finance of R40 million to facilitate the
development of the land at the Rock Ridge development on a 50/50 joint venture
and pro rata profit share basis with Smilin" Thru, and securing 55 exclusive use
stands in the development for sale and/or development by APD;
raise the necessary funding to facilitate the payment of professional fees and
development of the golf course component and bulk infrastructure at the Comuine
Golf Estate development in an amount of R20 million;
provide the group with additional funding of R45,3 million to enable it to
maximise investment opportunities and to provide ongoing working capital
requirements of approximately R20 million over the next 18 months;
provide for the redemption of the Gardener Ross preference shares, cumulative of
dividend to 28 February 2006, for the amount of approximately R82 million;
afford selected participants the opportunity to potentially participate directly
in the equity and future growth of Acc-Ross.
In the event that funding is not raised, certain of the projects will be delayed
and alternative funding will need to be secured for these projects. Certain
liabilities, such as the liability of R20 million incurred following the
acquisition of the 50% shareholding in Golf and Country Estate from GRIF, which,
should it not be met through funds raised by the private placement in terms of
the prospectus, will be settled by Gardener Ross through the sale of the
Debentures.
Salient dates
Opening date of the offer at 09h00 Wednesday, 01 February 2006
Closing date of the offer at 12h00 Wednesday, 08 February 2006
Date of listing at 09h00 Monday, 13 February 2006
Note: The dates and times provided for in the prospectus are subject to
amendment. Any such amendment will be published on SENS.
Copies of the prospectus
Copies of the prospectus will be available for inspection at the registered
office (Number 3 Anerley Road, Parktown, Johannesburg) and the business office
(Unit 7A Persequor Close, 49 de Havilland Crescent, Persequor Technopark,
Pretoria) of the company during normal business hours from Wednesday, 01
February 2006 up to and including Monday, 13 February 2006.
In accordance with AltX Listings Requirements, shareholders are advised of the
risks of investing in a company listed on AltX and that the JSE does not
guarantee the viability or the success of a company listing on AltX. In terms of
JSE Listings Requirements a Designated Adviser has to be retained by the
company. The Designated Adviser is required to, inter alia, attend all board
meetings held by the company to ensure that all JSE Listings Requirements and
applicable regulations are complied with, approve the financial director of the
company and guide the company in a competent, professional and impartial manner.
If the company fails to retain a Designated Adviser it must make arrangement to
appoint a new Designated Adviser within 10 business days, failing which the
company faces suspension of trading of its securities. If a Designated Adviser
is not appointed within 30 days of its suspension, the company faces the
termination of its listing without an offer to minorities.
Designated Adviser Reporting Accountants Attorneys
Arcay Corporate Services Ernst & Young Webber Wentzel Bowens
Auditors and Reporting Stockbrokers Auditors and Reporting
Accountants to Accretio Watermark Securities Accountants to Gardener
Holdings and Acc-Ross Ross
ACT Audit Solutions Inc JA Visagie & Co
Date of issue: 31 January 2006
Date: 03/02/2006 10:48:23 AM Produced by the JSE SENS Department
