| Mon 6 Mar 2006, 12:08 | | Esor Limited - Abridged Prospectus |
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JSE
JSE
Esor Limited - Abridged Prospectus
Esor Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1994/000732/06)
(JSE code: ESR & ISIN: ZAE000078408)
("Esor" or "the company")
This abridged prospectus is not an invitation to the public to subscribe
for shares in Esor, but is issued in compliance with the Listings
Requirements of the JSE for information purposes only. The information
in this abridged prospectus has been extracted from a full prospectus
issued by Esor on 2 March 2006 ("the detailed prospectus"), which is
available as set in paragraph 8. At the date of listing the authorised
share capital of Esor comprises 500 million ordinary shares with a par
value of 0.1 cent each, of which, after a private placement of 20
million ordinary shares at 100 cents per share ("the placement"), 120
million shares will be in issue.
ABRIDGED PROSPECTUS
Listing of Esor ordinary shares ("shares") on JSE Limited ("the JSE").
1. INCORPORATION AND HISTORY
1.1 Esor was incorporated on 8 February 1994. The company"s
business was originally founded in 1976 when its predecessor,
Esor Ground Engineering (Pty) Ltd, was incorporated to
undertake jacked tunnelling contracts. In 1994 some of the
original shareholders bought out the business from Esor Ground
Engineering (Pty) Ltd and Esor (Pty) Ltd was born. The
company converted to a public company on 22nd December 2005.
1.2 The company soon diversified into other fields of geotechnical
engineering, which gave it a far greater access into a broader
market. These included diverse techniques such as auger
boring, piling, diaphragm walling, lateral support, ground
anchoring, structural shotcreting, grouting, shaft sinking,
percussion drilling, tunnelling, dewatering, marine works,
bridge footings, bridges, environmental remediation and other
specialist civil engineering work. This allowed the company
to increase its offering and revenue generating capability and
to become more involved in comprehensive building construction
projects.
1.3 The expansion of the company"s offering allowed it to complete
pipe jacking and tunnelling projects for the Mozambique Sasol
gasline, tunnels under the Vaal river and the half tunnel of
Chapman"s Peak among others. Prominent piling and lateral
support projects that the company has completed include the
International Convention Centre, the Gateway Shopping Centre,
Constitution Hill and the Michelangelo Towers. Esor have also
constructed the Ushaka Pier in Durban and conducted various
projects that include the South African Petroleum Refineries
remediation project in Durban.
1.4 As one of the larger independent geotechnical engineering
companies in South Africa, Esor focuses on underground
construction on civil engineering and construction projects.
The company"s customers include the large construction firms,
parastatals, local government and corporations involved in
construction projects. Esor will either partner in a
consortium or act as the primary contractor for underground
construction projects.
2. NATURE OF THE COMPANY"S BUSINESS AND INDUSTRY
2.1 Esor is one of the larger independent geotechnical engineering
companies in South Africa. The company provides its services
to customers in the construction industry, executing projects
for parastatals, local government and corporations either as
partners in a consortium or as the primary contractor for
underground construction projects.
2.2 Esor"s executive directors are the major shareholders of the
company, with each of the directors having spent more than 20
years in the business. The company operates from its premises
in Durban and Germiston, executing projects in South Africa
and the Southern African Development Countries. The company
has a work force of more than 220 people of which 70% are
black. Most of the work force has spent more than 10 years
with the company.
2.3 With annual revenues totalling R 100 million for the year
ended 28 February 2005, the company"s different focus areas
contribute equally to its revenue.
2.4 The company"s business can be divided into the following
areas:
2.4.1 Pipe Jacking
Pipejacking or jacked tunnelling of pipes and
culverts formed Esor"s main line of business when
the company started out 30 years ago. Pipejacking
contributes approximately a third of Esor"s total
revenue.
2.4.2 Piling
Piling projects precede construction work on large
projects such as new building projects, new plants
and extensions to mines. The company also maintains
the expertise to complete marine projects, having
recently completed Ushaka Pier in Durban. Piling
also contributes approximately a third of the
company"s total revenue.
2.4.3 Lateral Support
Lateral support projects account for a third of the
company"s total revenue.
2.4.4 Environmental Remediation
Esor"s in-house capabilities have allowed the
company to complete a number of unique projects for
its customers. The extraction of contaminated water
from an area, in which a petrol pipe line leaked, is
an ongoing project which has drawn international
attention.
2.5 The business focus of Esor as described above has no
government protection or any investment encouragement law that
may affect the business.
3. PROSPECTS
3.1 Esor focuses on geotechnical engineering projects that form
part of civil engineering and non-residential construction
projects. Government announcements have indicated the intent
to initiate infrastructural projects of more than R 370
billion over the next three to five years. Such projects form
part of Gross Fixed Capital Formation ("GFCF"), which has
shown a growth rate of 9% since 2003, which resulted in a GFCF
to GDP ratio of 16.5% in 2004. It is government"s intent to
increase this ratio to 25% by 2014.
3.2 Private sector investment in non-residential projects has
increased in the past three years, as evident in the
construction boom. It is anticipated that non-residential
construction projects will continue in the next three to five
years, albeit at a slower growth rate.
3.3 Esor"s principal clients are governmental departments,
parastatals, local government and large corporates involved in
the development of non-residential buildings. The company has
experienced an average growth rate of more than 10% in revenue
over the past 8 years. The company is currently involved with
a number of projects such as the new international pier at
Johannesburg International Airport, and will soon be starting
on projects such as the pipejacking on the Berg River project
and piling at the Imbali Lake Apartments in Zimbali and the
Bay Head Cold Storage.
4. SUMMARY OF HISTORICAL AND FORECAST INCOME STATEMENTS
The historical and forecast financial information of Esor and its
subsidiaries for the financial year ended 28 February 2005, years
ending 28 February 2006 and 28 February 2007, the preparation of
which is the responsibility of the directors, are set out below.
The forecast financial information is contained in the detailed
prospectus referred to in paragraph 4.1 below and has been reviewed
and reported upon by the reporting accountants. Such report will be
contained in the detailed prospectus and will also be available for
inspection.
4.1 Extracts from the historical and forecast income statements
Audited Forecast Forecast
28 February 28 February 28 February
2005 2006 2007
R"000 R"000 R"000
Revenue (Rand) 100 062 117 289 130 191
Gross profit 17 419 24 552 27 848
Other income 276 1 177 300
Operating expenses (7 876) (7 024) (7 221)
EBITDA 9 819 18 705 20 926
Depreciation (1 962) (1 895) (1 790)
Profit before interest 7 857 16 810 19 136
and taxation
Net interest (paid) / 363 (50) 1 950
received
Profit before taxation 8 220 16 760 21 086
Taxation (2 532) (4 860) (6 114)
Earnings attributable 5 688 11 899 14 971
to ordinary
shareholders
Adjustments for
headline earnings:
Profit on sale of land (96) (794) -
and buildings
Headline earnings 5 593 11 106 14 971
attributable to
ordinary shareholders
Pro foma weighted 100 000 000 100 000 000 120 000 000
average shares in issue
(1)
Pro foma earnings per 5.69 11,90 12,48
share (cents)
Pro foma headline 5.59 11,11 12,48
earnings per share
(cents)
Pro foma dividend per - - -
share (cents)
Notes:
1. The (unaudited) pro forma weighted average number of shares in
issue is used in order to reflect the effect of the share placing
on the earnings per share calculations. Pro forma calculation for
28 February 2005 is based on the conversion of the original 102
ordinary shares in issue to 100 000 000 on the last practicable
date.
5. DIRECTORS, COMPANY SECRETARY AND REGISTERED OFFICE
5.1 Full names, nationalities, ages, business addresses and
functions of the board of directors of Esor:
Director Occupation Business address
Age
Bernard Krone 52 Chief 130 Aberdare Drive,
Executive Phoenix Industrial
Officer Park, Durban, 4051
Michael Laurence 57 Director 130 Aberdare Drive,
Barber Phoenix Industrial
Park, Durban, 4051
Arthur Maurice 54 Director 130 Aberdare Drive,
Field* Phoenix Industrial
Park, Durban, 4051
Mauro Lino 50 Financial 130 Aberdare Drive,
Trevisani** director Phoenix Industrial
Park, Durban, 4051
Ian Gordon 60 Non-Executive 130 Aberdare Drive,
Jefferiss+ * Director Phoenix Industrial
Park, Durban, 4051
David Murray 69 Non-Executive 130 Aberdare Drive,
Thompson + Director Phoenix Industrial
Park, Durban, 4051
(+ Non-executive)
(* British)
(** Italian)
5.2 Company secretary and registered office are:
ML Trevisani CA (SA)
130 Aberdare Drive
Phoenix Industrial Park
Durban, 4051
(PO Box 40096, Red Hill, 4071)
6. THE PLACEMENT
6.1 Salient features
6.1.1 The salient features of the private placement are as
follows:
Offer price per ordinary share 100
(cents)
Par value per ordinary share (cents) 0.1
Premium per ordinary share (cents) 99.9
Number of ordinary shares offered in 20 000 000
terms of private placement
Issue consideration before expenses R20 million
6.1.2 The opening and closing dates of the private
placement are as follows:
Opening date of the private placement Monday,
at 09:00 on 6 March 2006
Closing date of private placement at Wednesday,
12:00 on 8 March 2006
Anticipated listing date Tuesday,
on ALTx on 14 March 2006
Safe custody accounts at CSDP or
broker updated in respect of
dematerialised shareholders on or Tuesday,
about 14 March 2006
Posting of share certificates in Tuesday,
respect of certificated shareholders 14 March 2006
on or about
Refund of surplus private placement Wednesday,
application monies received (where 15 March 2006
applicable) on
Note:
These dates are subject to change at the discretion of the
company. Any changes will be released on SENS.
6.2 Esor holds irrevocable undertakings from various selected
investors to subscribe for 20 000 000 shares in terms of the
private placement, amounting to 100% of the private placement
shares.
6.3 The private placement of 20 000 000 ordinary shares have been
fully allocated to the investors who have given irrevocable
undertakings as set out in paragraph 6.2 above.
6.4 The placement has not been underwritten and is not subject to
a minimum subscription, being achieved.
7. LISTING ON THE JSE
The JSE has approved the listing of 120 million shares on the ALTx
with effect from the commencement of business on Tuesday, 14 March
2006. The shares will trade under the abbreviated name "Esor" and
the JSE code "ESR".
8. 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
the registered offices of Esor, Exchange Sponsors (Pty) Limited and
the transfer secretaries, details of which are set out below:
- the registered office of the company - 130 Aberdare Drive,
Phoenix Industrial Park, Durban, 4051
- the offices of Exchange Sponsors (Pty) Limited - 39 First
Road, Hyde Park, 2196;
- the offices of Computershare Investor Services 2004 (Pty)
Limited - Ground Floor, 70 Marshall Street, Johannesburg,
2001;
- the web-site of Esor at www.esor.co.za.
Johannesburg
6 March 2006
Designated Adviser
Exchange Sponsors (Pty) Limited
Auditors and reporting accountants
RSM Hills Howard
Limited Assurance Provider
KPMG Inc
Attorneys
Cox Yeats Attorneys
www.esor.co.za
Warning: The listing of ordinary shares in the company is on ALTx.
Investors are advised of the risks of investing in a company listed on
ALTx. Investors are advised that the JSE does not guarantee the
viability or the success of a company listed on ALTx. In terms of the
Listings Requirements, the company is obliged to appoint and retain a
Designated Adviser, which is required to, inter alia, attend all board
meetings held by the company to ensure that all the 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 arrangements 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 the prospect of an appropriate offer
to minority shareholders.
Date: 06/03/2006 12:08:07 PM Produced by the JSE SENS Department
