| Fri 3 Nov 2006, 17:18 | | Tiger Automotive Limited - Abridged pre-listing st |
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TIW
TIW
Tiger Automotive Limited - Abridged pre-listing statement
TIGER AUTOMOTIVE LIMITED
(Formerly Fluxrab Investment 142 (Proprietary) Limited)
Incorporated in the Republic of South Africa
Date of Incorporation: 5 December 2005
Registration number 2005/042651/06
("TAL" or "the company")
Share code: TAL & ISIN ZAE000087482
ABRIDGED PRE-LISTING STATEMENT
1. INTRODUCTION
This abridged pre-listing statement is not an invitation to the public to
subscribe for shares in TAL, but is issued in compliance with the
Listings Requirements of the JSE Limited ("JSE") for the purpose of
providing information to the public on TAL. The information set out
below has been extracted from the TAL pre-listing statement dated 6
November 2006 ("the pre-listing statement"), which together with the
circular and annual financial statements issued to shareholders of Tiger
Wheels Limited ("Tiwheel"), will be posted to Tiwheel shareholders on
Monday, 6 November 2006. The pre-listing statement should be read in its
entirety for a full and proper appreciation of TAL and its business.
The JSE has agreed to the listing of the entire issued share capital of
TAL ("the listing") in the "Speciality Retailers" sector of the JSE list
under the abbreviated name TAL with effect from the commencement of trade
on Monday, 11 December 2006.
2. BACKGROUND TO THE LISTING OF TAL
On 11 July 2006 Tiwheel announced that it had resolved to restructure the
Tiwheel group by effecting an unbundling of its entire shareholding in
its Southern African retail business Tiger Wheel & Tyre (Proprietary)
Limited ("Tiger Wheel and Tyre"), and its wholesale wheel and tyre
businesses in the United Kingdom and South Africa (collectively referred
to as the "TAL businesses") and by listing these as a separate entity on
the JSE prior to June 2007. It was further resolved that Tiwheel would
continue as a focussed global wheel manufacturing business.
The Tiwheel board of directors has therefore resolved, subject to the
conditions precedent which are set out in the Tiwheel announcement of
this date ("the conditions precedent"), to distribute 59 601 505 TAL
shares ("the TAL distribution shares") to Tiwheel shareholders and to
separately list the TAL distribution shares on the JSE.
3. BACKGROUND TO THE TAL BUSINESS
Tiger Wheel and Tyre, the wholly-owned retail arm of Tiwheel, had its
humble beginnings nearly 40 years ago in modest and cramped premises in
unfashionable Vrededorp, Johannesburg. It was from there, in 1967, that
the first painstakingly and laboriously handmade custom wheels were sold
to car enthusiasts - thus establishing what, in effect, was the original
forerunner of today"s classic Tiger Wheel and Tyre retail shop.
The "shopfront" end of the wheel manufacturing and sales micro business
later evolved into a more formalised, and subsequently branded, store
which retailed, and later also wholesaled, aftermarket wheels and tyres
into the late 1970"s. In the early 1980s, retail and wholesale were
separated into two divisions.
Today Tiger Wheel and Tyre has a network of 48 specialised and focused
retail aftermarket wheel and tyre stores which spans South Africa and
also reaches into Namibia and Botswana. The bulk of the stores, 34 in
total, are Tiger Wheel and Tyre-owned and operate as single business
units, while the balance are owner-operated and -financed franchised
stores. The company is widely acknowledged as the market leader in this
specialised and focussed field. An additional strength of this business
has been its ability to locate and develop its own sites, many of which
are owned by the company.
Yokohama SA (Proprietary) Limited ("Yokohama SA"), the local wholesale
operation - which continues to grow in sales and market share - supplies
after-market wheels and replacement tyres to a large footprint of
independent wheel and tyre distributors in Southern Africa. Furthermore,
an international division, housed under the Yokohama SA umbrella,
supplies TSW branded aftermarket wheels to wholesale distributors in some
30 countries around the world. Yokohama SA is the owner of the TSW brand
for the whole world, excluding North and South America.
Yokohama High Performance Tyres Limited ("YHPT") is the 51 per cent-owned
business, based in the United Kingdom, which wholesales Yokohama tyres
and TSW aftermarket wheels to retailers in that country.
Currently the TSW-branded aftermarket wheels distributed locally and
internationally by Yokohama SA are sourced from licensed designers and
manufacturers located predominantly in Asia.
4. RATIONALE FOR THE UNBUNDLING AND LISTING OF TAL
The rationale for the separate listing of the TAL businesses includes the
following:
* The TAL businesses, comprising the retail and wholesale trading
operations of the Tiwheel group have now grown and matured to a size
that warrants its own listing on the JSE.
* As the 74 per cent Tiwheel-owned German-based wheel manufacturing
operations (including Tiwheel"s South African Babelegi factory)("the
ATS businesses")are now almost entirely dedicated to the original
equipment manufacturing business, while the TAL businesses" trading
activities are concentrated on the after-market and source their
products outside of the group, the historical, and once carefully
nurtured, vertical integration and inter-dependence of the two
Tiwheel arms is no longer relevant or necessary.
* The TAL and ATS businesses have been managed as two separate
entities - each with their own Chief Executive - for some time.
* The highly technical and technology-charged manufacturing ATS
businesses and the intensely consumer marketing-orientated TAL
businesses are vastly different in nature, and therefore demand
specifically tailored management and workforce skills and expertise.
They have very different capital requirements and need boards of
directors with different skills and strategic inputs.
* The Unbundling provides existing and potential shareholders in the
group with a separate listed investment in an international
automotive component manufacturing business, with Rand-hedge
attributes, on the one hand, and another in a clearly defined,
predominantly South African, consumer-driven business, on the other.
* Tiwheel believes that to list the two entities separately will
unlock shareholder value and allow greater investor flexibility and
thus benefit the shareholders who have supported the company, in
both good and tough times, over the years.
5. PROSPECTS
The unbundled, separately listed and focussed TAL will be strongly placed
to take full advantage of future market opportunities in South Africa,
which currently accounts for 80 per cent of its revenue.
To start with, based on the current economy and motor industry forecasts,
the country"s passenger vehicle park is set to double in just the next
five years. Taking into account the growth opportunities this will
present, and in order to optimise on them, TAL firmly believes that, in
the medium term, it has the potential to double its current number of
owned and franchised retail stores. At the same time, an independent TAL
will actively seek to develop additional, synergistic, dimensions to its
South African business - by way of mergers, acquisitions and greenfield
projects.
Management and IT systems will be bulked up to ensure the smooth
implementation of this anticipated expansion, which will be financed by
TAL"s own cash resources - totalling about R80-million at the time of
listing - and, where necessary and appropriate, by the issue of new
equity.
In addition, plans are in place to significantly grow TAL"s wholesale
trading footprint in South Africa. In the UK, there is reasonable
potential for TAL to benefit from the stated agenda of its Japanese
partner, Yokohama Rubber Company ("YRC"), to grow market share in the
European markets. YRC has recently announced plans to establish
additional tyre production plants in developing countries.
Taking the combination of these factors into account, the board of
directors of TAL believes that the company will provide satisfactory
growth and returns to shareholders after its listing on the JSE.
6. TAL GROUP STRUCTURE AFTER THE UNBUNDLING
SENS: For a diagrammatic explanation of the structure under which
Tiger Automotive Limited will operate please refer to the press
announcement published on 6 November 2006.
7. AUTHORISED AND ISSUED SHARE CAPITAL
On Monday, 11 December 2006, the proposed date of listing of TAL, the
authorised share capital of TAL will comprise 200,000,000 ordinary shares
with a par value of one cent each, of which 59,601,505 shares will be in
issue. All TAL shares will be of the same class and will rank pari passu
in every respect. There will be no conversion or exchange rights
attached to TAL shares.
8. PRO FORMA FINANCIAL INFORMATION
Pro forma historical financial information of the TAL businesses
The pro-forma historical financial information of TAL has been extracted
from the Tiwheel audited consolidated financial statements for the three
financial years ended 30 June 2006. In preparing the pro-forma historical
financial information it has been assumed that TAL acquired the TAL
businesses in terms of the unbundling with effect from 1 July 2003 from
Tiwheel at each business" net asset value at that date. The pro forma
historical financial information of TAL is set out in Annexure 1 of the
pre-listing statement and has been reported on by PKF (JHB) Inc, the
independent reporting accountants, whose report is set out in Annexure 2
of the pre-listing statement.
The pro forma financial information is the responsibility of the
directors of TAL, has been prepared for illustrative purposes only and
due to their nature may not fairly present TAL"s financial position,
changes in equity, results of operations or cash flows.
PRO-FORMA BALANCE SHEETS
at 30 June
2006 2005 2004
Notes R"000 R"000 R"000
ASSETS
Non-current assets 59,205 55,803 51,938
Property, plant and 1 45,166 40,958 35,789
equipment
Financial assets 3 4,509 5,676 9,419
Deferred tax assets 4 9,530 9,169 6,730
Current assets 369,101 260,406 217,933
Inventories 5 133,394 117,863 104,933
Trade and other 6 144,192 121,843 112,113
receivables
Financial assets held 68,768 - -
for trade
Cash and cash 22,673 20,633 -
equivalents
Taxation receivable 74 67 887
Total assets 428,306 316,209 269,871
EQUITY AND LIABILITIES
Capital and reserves
Share capital and 7 153,916 87,787 10,544
reserves
Minority interests 17,647 14,297 13,207
Total equity 171,563 102,084 23,751
Non-current 21,399 19,770 24,719
liabilities
Interest bearing 8 - - 2,654
liabilities
Operating lease 10 17,947 13,109 10,799
liability
Financial liabilities 9 1,673 5,382 10,355
Deferred income 301 - -
Deferred tax 4 1,478 1,279 911
liabilities
Current liabilities 235,344 194,355 221,401
Trade and other 11 201,991 162,560 171,318
payables
Provisions 12 19,322 17,377 10,082
Interest bearing 8 - - 9,618
liabilities
Short-term borrowings 13 6,476 690 19,420
Taxation owing 7,555 13,728 10,963
Total equity and 428,306 316,209 269,871
liabilities
Net asset value per 258 147 18
share (cents)
Net tangible asset 258 147 18
value per share
(cents)
PRO-FORMA INCOME STATEMENTS
for the years ended 30 June
2006 2005 2004
Notes R"000 R"000 R"000
Revenue 14 954,196 854,057 750,494
Operating profit 15 92,783 75,483 52,626
Net financing income / (5,130) 2,056 (1,788)
(cost)
Profit before taxation 87,653 77,539 50,838
Taxation 16 (23,716) (23,024) (15,015
)
Profit after taxation 63,937 54,515 35,823
Minority interests (1,709) (798) (402)
Earnings attributable to 62,228 53,717 35,421
ordinary shareholders
Adjusted for:
Loss on disposal of - - 1,517
investments
Impairment of - 824 -
property, plant and
equipment
Headline earnings 62,228 54,541 36,938
EPS (cents) 104,4 90,1 59,4
HEPS (cents) 104,4 91,5 62,0
DEPS (cents) 103,3 90,5 61,4
DIRECTORS OF TAL
The full names, ages, addresses and profiles of the proposed directors or
TAL, who will take up their appointments post the listing, are set out
below.
Executive directors
Keith W. Rivers Group managing director
(58)
Business address Cnr Old Pretoria Road and K101 Midrand
Experience After starting off as a salesman in the Tiger
Wheels motorcycle division in 1977, Keith was
appointed to the Board of Tiger Wheels Ltd in
1982 as Executive Director representing
motorcycle products. In 1984 he took over the
responsibility of the Wholesale Wheel and Tyre
distribution and in 1986 was appointed Managing
Director of Tiger Wheels Natal (Pty) Ltd where
he initiated the development of the Tiger Wheel
& Tyre brand and store concept. In 1987 Keith
was appointed Managing Director of Tiger Wheel
& Tyre (Pty) Ltd, being responsible for
expanding the Tiger Wheel & Tyre network. In
2000 he was appointed CEO of Tiger Wheel & Tyre
(Pty) Ltd and Yokohama Southern Africa (Pty)
Ltd, both positions that he currently holds.
Jozua J.G. Loots Group financial director
(43)
Business address Cnr Old Pretoria Road and K101
Midrand
Qualifications BCom, BCompt Hons, CA (SA), SEP, CFA
Experience After qualifying as a chartered accountant in
1987, Josh joined his family"s construction and
property development business in 1990. In 1996
he joined Tiger Wheel & Tyre (Pty) Limited as
franchise and development manager. In 1997 he
was promoted to operations director and in 2000
to managing director. In May 2001, Josh moved
out of retail to corporate head office with his
appointment as group financial director. By
completing the required examinations in 2004
Josh earned the right to use the Chartered
Financial Analyst designation. In addition to
leading the group"s new business development
and corporate finance ventures, Josh"s
responsibilities include communicating with
analysts, stockbrokers and investors as well as
all corporate governance functions.
Alex F Taplin (34) Executive director
Business address Cnr Old Pretoria Road and K101
Midrand
Experience Alex was recruited by Tiger Wheel & Tyre (Pty)
Ltd from the retail motor industry in 1998 as a
Trainee Manager and in 1999 progressed to
Manager Tiger Wheel & Tyre Fourways and
subsequently appointed Manager Tiger Wheel &
Tyre Sandton. In 2001 Alex was promoted to
Tiger Wheel & Tyre Regional Manager, West
Region. In January 2003 Alex was appointed to
the Tiger Wheel & Tyre Board as Operations
Director and in October 2006 he was appointed
Managing Director Tiger Wheel & Tyre (Pty) Ltd.
Ray N Meyers (46) Executive director
Business address Cnr Old Pretoria Road and K101
Midrand
Experience Ray joined Tiger Wheels in 1981 as a sales
representative, after which he moved into
internal sales and in 1985 was appointed as
Sales Manager for Tiger"s Wholesale Division.
In 1989 Ray initiated the Wheels Export
Division and was appointed Export Director for
TSW in 1990. Upon the Tiger Wheels Group
acquiring Yokohama Southern Africa (Pty) Ltd in
1997, Ray was appointed Sales and Marketing
Director and in 2001 he was appointed Managing
Director of Yokohama Southern Africa (Pty) Ltd.
In 2005 he was also appointed Managing Director
of TSW International, both positions that he
currently holds.
Non-Executive
directors
Edward I. Keizan Non-executive chairman
(61)
Business address Cnr Old Pretoria Road and K101
Midrand
Experience After serving accounting articles and studying
at Wits University, Eddie entered the motor
component business in various sales positions.
He bought into Tiger Wheels (with prize money
from winning a motor sport championship in
1972) when it was a very small business and has
been the executive chairman and driving force
of the group since then. He attended the
Owners" and Presidents" Management Programme at
Harvard Business School from 1987 to 1990.
Eddie was a motor sport competitor having
participated in various forms of motor sport
from saloon cars to Formula 1 and the winner of
many championships from 1969 - 1979.
Phillip Vallet (60) Deputy chairman and chairman of the board of
directors
Business address 11 Biermann Avenue Rosebank
Qualifications BA LLB
Experience Phillip qualified with a BA LLB from University
of Witwatersrand in 1971 and was admitted as an
attorney in 1972. Phillip was appointed a
senior partner of Raphaely-Weiner prior to its
merger with Fluxmans in 1990. In 1997, he was
appointed senior partner of the merged firm and
on its incorporation in 2004 was appointed CEO.
He is presently the deputy chairman of Super
Group Limited having served previously as its
chairman. Phillip is also a director of Caxton
and CTP Printing and Publishing Limited and
Spescom Limited. Phillip is cited in Chambers
Global (The World"s Leading Lawyers for
Business - Client"s Guide) as "one of the
leading commercial lawyers in South Africa".
Phil has been Tiwheel"s corporate attorney for
26 years.
Martin B Glatt (60) Non-executive director
Business address Sasfin Place, 13 - 15 Scott Street
Waverley
Qualifications BCom, MBL
Experience Martin has had broad experience in a number of
operating businesses culminating in a career of
executive or non-executive directorships in
more than 10 public listed companies.
Previously non- executive chairman, Martin now
acts only as a non-executive director. Other
business directorships include chairmanship of
a listed South African bank, Sas?n Holdings
Limited.
Brian Joffe (59) Non-executive director
Business address Bidvest House, 18 Crescent drive
Melrose Arch
Qualifications CA(SA)
Experience Directorships include non-executive director of
EnviroServ Holdings Limited and of numerous
Bidvest Companies. Since founding Bid
Corporation Limited in 1988, Brian served as
executive chairman until his appointment as
chief executive in 2004. He has over 30 years"
local and international commercial experience.
He was one of the Sunday Times top businessmen
in 1992 and is a past recipient of the Jewish
Business Achiever of the Year award. Brian was
voted South Africa"s Top Manager of the Year in
2002 in the corporate Research Foundation"s
publication "South Africa"s Leading Managers"
and was selected as South Africa"s candidate
for the coveted "Ernst & Young Entrepreneur of
the Year" award 2003.
Independent Non-Executive Directors
Ian M Groves (61) Independent non-executive director
Business address Commerce Square, 39 Rivonia Road
Cnr Helling Road, Sandton
Qualifications CA(SA)
Experience After qualifying as a chartered accountant in
1968, Michael spent a short time in the
financial service sector whereafter he pursued
a career in the shipping industry. From 1980 to
1999 he worked for the Grindrod Group,
initially as managing director of Unicorn Lines
(Pty) Limited and then as managing director of
Grindrod Limited from 1986 when the company was
listed on the JSE. He is currently also a non-
executive director of Grindrod Limited,
Marriott Holdings Limited, Marriott Merchant
Bank Limited, Marriott Property Fund Managers
(Pty) Limited and Value Group Limited. Mike is
also a past President of SA Shipowners
Association.
Alternate Director
Sybrand G.
Pretorius (58)
Business Address McCarthy Centre, 203 North Ridge Road
Durban, 4001
Qualifications M Com Business Economics
Experience Brand has 30 years" experience in the motor
industry (manufacturing and retail) and is a
member of various advisory boards. He is chief
executive of McCarthy Limited, a board member
of the Marketing Federation of Southern Africa,
the National Business Initiative and the
president of the South African Retail Motor
Industry Association. Brand is also a director
of numerous McCarthy subsidiaries and
Bidfreight.
The board has undertaken to appoint additional independent non-executive
directors, who will take up their appointments post the unbundling and
listing and whose appointment will be ratified at the next annual general
meeting of TAL in terms of the company"s articles.
7. Documentation
Copies of the pre-listing statement will be posted to the ordinary
shareholders of Tiger Wheels Limited on 6 November 2006 and can also be
obtained, during normal business hours from Monday, 6 November 2006 to
Tuesday, 28 November 2006 from the registered offices of the company at
Cnr Old Pretoria Road and K101, Midrand.
Midrand
3 November 2006
Corporate Advisor and Sponsor
SASFIN CAPITAL
A DIVISION OF SASFIN BANK LIMITED
Auditors and Reporting Accountants
PKF (JHB) Incorporated
Legal Advisors
Fluxmans Inc.
Date: 03/11/2006 05:20:09 PM Produced by the JSE SENS Department
