| Fri 27 Oct 2006, 12:36 | | Afrimat Limited - Abridged prospectus |
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JSE
AFT
Afrimat Limited - Abridged prospectus
Afrimat Limited
(formerly Clidet No.679 (Pty) Limited)
(Incorporated in the Republic of South Africa)
Registration number 2006/022534/06)
Share code: AFT & ISIN: ZAE000086302
("Afrimat" or "the company" or "the group")
Abridged Prospectus
PRIVATE PLACEMENT OF UP TO 25 000 000 AFRIMAT SHARES AT A PRICE
OF 500 CENTS PER SHARE
The JSE Limited ("the JSE") has granted Afrimat a listing in respect of a
maximum of 124 299 497 ordinary shares in the "Construction & Materials"
sector of the JSE with effect from the commencement of trade on Tuesday, 7
November 2006, subject to the JSE receiving confirmation that the company has
achieved the required spread of shareholders as prescribed by the JSE Listings
Requirements.
BACKGROUND
Afrimat is a black-empowered group supplying building materials to the
building and construction industries. The group has a strong brand presence,
with operations that are market dominant in the Eastern and Western Cape,
northern KwaZulu-Natal, eastern Free State and Namibia. Its primary products
are:
aggregate stone products;
ready-mix concrete;
building blocks and bricks; and
moulded concrete products.
The Afrimat group was recently formed through the merger of two specialist
companies, founded in 1965 and 1963, respectively, namely Lancaster Group
(Pty) Limited ("Lancaster") and Prima Quarries (Pty) Limited ("Prima"). Both
groups are similar in nature as regards their businesses, but operate in
different geographical regions. It is the intention of the group to maintain
the separate brandings of Lancaster and Prima for some time going forward. The
rationale for the merger is to exploit the synergies of the operations and to
expand the group"s product and geographical diversity.
Both Lancaster and Prima have similar cultures and a historical integration of
management teams: Andries van Heerden, Afrimat"s CEO, was previously the
managing director of Prima until January 2005 when he left and formed the
consortium that acquired Lancaster. Three of van Heerden"s fellow Prima board
members serve on the Afrimat board, including Prima chairman Francois du Toit,
managing director Peter Corbin and Loyiso Dotwana.
Lancaster is dominant in quarrying and the supply of concrete blocks and
bricks in northern KwaZulu-Natal and eastern Free State. Prima mainly supplies
aggregates to the Cape construction and road building industries and has
smaller ready-mix and pre-cast operations. Prima also has a quarry and mobile
crushing plant in Namibia. The group has 18 quarries, 12 ready-mix concrete
plants and 8 pre-cast factories. In addition, it has 4 mobile crushing plants
and a mobile ready-mix plant, offering greater geographical flexibility.
Afrimat complements its supply of building materials with expertise in
drilling and blasting. It services the open-cast mining industry and the
general construction industry with trench blasting using its fleet of
earthmoving equipment and hydraulic rigs. The group also owns 120 ready-mix,
tipper and delivery trucks and 110 earthmoving machines. Its customer base
ranges from small cash-paying clients to large multinational construction
corporations and parastatals, including Spoornet.
The group"s substantial BEE ownership is critical to it"s prospects. The BEE
ownership, ahead of Mining Charter compliance, is necessary to maintain the
quarries" mining licences and to enable the group to participate in and secure
national and provincial Government contracts. The BEE equity ownership is held
by Kwezi Mining (Pty) Limited and Mega Oils (Pty) Limited, with further
participation by a BEE share trust.
RATIONALE FOR LISTING
Afrimat"s listing objectives are to:expand its asset base through selective
acquisitions, both domestically and in other parts of Africa, in order to
entrench an already significant footprint in South and Southern Africa;
create value for shareholders by leveraging the established presence and
significant experience of Lancaster and Prima; create value for and incentivise
management and staff through the implementation of an employee share incentive
scheme; facilitate further empowerment initiatives through the establishment of
the Afrimat Limited BEE Incentive Scheme; and strengthen the group"s financial
position through the raising of funds pre-listing in the form of the private
placement.
PROSPECTS
Positive industry conditions are driving solid growth prospects for Afrimat.
The non-residential, low-cost residential and civil engineering sectors of the
building industry continue to flourish, driving increasing demand for
aggregates, ready-mix concrete and bricks and blocks. This growth is
underpinned by Government spend on infrastructure and low-cost housing,
estimated to reach R400 billion in the medium term, Spoornet and Eskom
upgrades and infrastructure projects and to a lesser extent events such as the
2010 Soccer World Cup.
THE PRIVATE PLACEMENT
The private placement is made up of an offer for subscription of 15 000 000
new ordinary shares at an issue price of 500 cents per share ("the offer for
subscription") and an offer for sale by the existing shareholders of 10 000
000 ordinary shares at a sale price of 500 cents per share ("the offer for
sale"). Therefore, a total amount of R125 million will be raised through the
private placement to individuals, corporations and institutions. The proceeds
received from the private placement will first be applied to the offer for
subscription and thereafter to the offer for sale. The proceeds from the offer
for subscription will allow the company to grow its market share in the
aggregates, pre-cast and ready-mix concrete businesses, through funding
organic growth and facilitating the working capital requirements of the
existing businesses, as well as facilitating potential acquisition
opportunities. The proceeds from the offer for sale will allow existing
shareholders to realise approximately 10% of their current investments in the
company.
No offer will be made to the general public. The private placement will be
made to selected applicants only. The placement will not be underwritten and
is not subject to a minimum subscription being achieved.
The salient features of the private placement are as follows:
Offer/Sale price per ordinary share (cents) 500
Par value per ordinary share (cents) 1
Premium per ordinary share (cents) 499
Number of ordinary shares offered for subscription
in terms of private placement 15 000 000
Total consideration received by the company
before expenses R75 million
Number of ordinary shares offered for sale in terms
of the private placement 10 000 000
Total consideration received by the existing shareholders R50 million
The opening and closing dates of the private placement are as follows:
Opening date of the private placement
at 09:00 on Monday, 30 October 2006
Closing date of the private placement
at 12:00 on Wednesday, 1 November 2006
Anticipated listing date on the JSE at
09:00 on Tuesday, 7 November 2006
FINANCIAL INFORMATION
The pro forma historical and forecast financial information of Afrimat and its
subsidiaries for the financial years ended 29 February 2004, 28 February 2005
and 28 February 2006 and the year ending 28 February 2007, the preparation of
which is the responsibility of the directors, is set out below.
Aggregated Pro forma before Annualised
Years ended the private forecast
placement
Year ended Year ending
29 February 28 February 28 February 28 February
R"000 2004 2005 2006 2007 1
Revenue 215 703 296 666 413 443 471 354
Growth 37.5% 39.4% 14.0%
Operating profit 37 114 61 272 80 953 93 940
Operating margin 17.2% 20.7% 19.6% 19.9%
Profit before tax 36 319 60 705 74 806 87 954
Profit for the
year after minorities 23 586 40 370 46 082 63 604
Net profit margin 10.9% 13.6% 11.1% 13.5%
Pro forma shares
in issue 109 299 497 109 299 497 109 299 497 124 299 497
Pro forma
headline earnings
per share (cents) 21.5 36.9 42.7 50.5
Note:
1. The forecast for the year ending 28 February 2007 included 12 months"
results of both Lancaster and Prima. However, the actual results that will be
reported will include 12 months" results of Prima and the results of Lancaster
for the four month period from the date of listing to 28 February 2007 in
order to comply with IFRS 3-Business Combinations.
DIRECTORS
The full names, nationalities, ages, functions and business addresses of the
directors are set out below:
Name Age Function Business address
Marthinus Wilhelmus 54 Chairperson 349 Penquin Crescent,
von Wielligh*# Wierdapark, 0149
Andries Johannes 40 Chief Executive 15 Bloekom Street,
van Heerden Officer Vryheid, 3400
Peter Geoffrey Corbin 58 Executive director 3 Sennet Street,
Worcester, 6850
Loyiso Dotwana* 43 Civil engineer and 102 Park Drive, Port
director of companies Elizabeth, 6001
Francois du Toit* 60 Co-founder of Prima and 3 Sennet Street,
executive director of Worcester, 6850
Prima
Monty Kaplan*# 77 Director of companies PO Box 7677,
Roggebaai, 8012
Gillian Nonhlanhla 37 Accountant and director P O Box 49095,
Jiyane* of companies East End, 4018
Hendrik Johannes 62 Financial Director 3 Sennet Street,
Erasmus van Wyk Worcester, 6850
*Non-executive
#Independent
All of the directors are South African citizens.
SHARE CAPITAL
Authorised and issued share capital
The authorised and issued share capital of Afrimat before and after the
private placement is set out below:
R"000
Authorised
1 000 000 000 ordinary shares of 1 cent each 10 000
Issued, before the private placement
109 299 497 ordinary shares of 1 cent each 1 093
Share premium 176 014
Issued, after the private placement(1)
124 299 497 ordinary shares of 1 cent each 1 243
Share premium 250 864
Note:
1. Based on the assumption that 15 000 000 ordinary shares are issued at
500 cents per share in terms of the private placement.
Major shareholders
The following shareholders are beneficially interested in 5% or more of
Afrimat"s issued share capital after the private placement:
Name of shareholder Number of shares Percentage held
Frans du Toit Trust 22 529 297 18.1
Mega Oils (Pty) Limited 18 632 104 15.0
Korum Trust 11 143 038 9.0
Kwezi Mining (Pty) Limited 7 852 750 6.3
COPIES OF THE PROSPECTUS
An English copy of this prospectus, dated 27 October 2006, was registered by
the Registrar of Companies on 25 October 2006 in terms of section 155(1) of
the Companies Act, 1973 (Act 61 of 1973), as amended.
Copies of the prospectus may be obtained during business hours from the
registered office of Afrimat (1 Bryanston Drive, Bryanston, Johannesburg), the
offices of Bridge Capital Advisors (Pty) Limited (1st Floor, Building 22A,
Woodlands, Woodlands Drive, Woodmead), the transfer secretaries (Computershare
Investor Services 2004 (Pty) Limited, Ground Floor, 70 Marshall Street,
Johannesburg) and the reporting accountants (Moores Rowland, 27th Floor, 1
Thibault Square, Cape Town).
Johannesburg
27 October 2006
Sponsor and corporate advisor
Bridge Capital
Auditors and reporting accountants
Moores Rowland
Chartered Accountants (SA)
Attorneys
Cliffe Dekker
Date: 27/10/2006 12:36:09 PM Produced by the JSE SENS Department
