BDM
BDM - Buildmax - Abridged Revised Listings Particulars, Financial Effects And
Withdrawal Of Cautionary
BUILDMAX LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1995/012209/06)
JSE code: BDM & ISIN: ZAE000011250
("Buildmax" or "the company")
ABRIDGED REVISED LISTINGS PARTICULARS, FINANCIAL EFFECTS AND WITHDRAWAL OF
CAUTIONARY
These abridged revised listing particulars are not an invitation to the public
to subscribe for or purchase shares in Buildmax and are issued in compliance
with the Listings Requirements of the JSE for information purposes only. The
information in these abridged revised listings particulars has been extracted
from the revised listings particulars issued by Buildmax on 5 March 2008, copies
of which may be obtained from the registered offices of Buildmax being Davey
Street, Germiston South, 1401 until Friday, 28 March 2008. These abridged
revised listings particulars have been prepared on the basis that the
transactions as described below have been implemented.
1. INCORPORATION AND HISTORY
Buildmax was incorporated as a private company on 14 November 1995 and
converted to a public company and listed on the main board of the JSE in
the "Building and Construction Materials" sector during 1996.
In November 2007 Buildmax concluded the acquisitions of the Buildco group
and in February 2008 concluded the acquisition of Diesel Power Open Cast
Mining (Proprietary) Limited ("Diesel Power"). These acquisitions resulted
in the creation of the enlarged Buildmax group.
2. NATURE OF THE BUSINESS
The Buildmax group comprises two strategic business units:
- Equipment and Services; and
- Construction Materials.
The Equipment and Services unit is active in the opencast contract coal
mining and construction industry. The Construction Materials unit of the
Buildmax group provides materials to the construction industry. Both the
opencast coal mining and the construction industries are high growth
industries which stand to benefit from government's and the private
sectors' infrastructure spend as well as the continued demand for coal.
Each business unit consists of the following divisions:
Equipment & Services Construction Materials
Opencast Coal Equipment Aggregates & Bricks & Building
Mining, Sales & Quarries Blocks Materials
Earthworks & Rental
Rehabilitation
Based on the forecast to 28 February 2009, Equipment and Services accounts
for 57% and 72% of Buildmax's revenue and EBITDA respectively with
Construction Materials accounting for the balance.
Equipment and Services
Equipment and Services comprises Diesel Power and Vukuza Earth Works
(Proprietary) Limited ("Vukuza"), providing opencast coal mining, civils
and bulk earthworks, rehabilitation and equipment hire and sale. The
operations are approved and registered contractors to all the major mining
and construction groups in South Africa.
Diesel Power is one of the largest opencast mining and earthmoving
contractors in the country and operates four main divisions: opencast
mining, civils/bulk earthworks, equipment hire and rehabilitation. Diesel
Power's fleet comprises approximately 440 mining and earth moving vehicles.
The opencast mining fleet operates from Witbank, in the heart of South
Africa's coal mining region, and the civils fleet operates from a workshop
in Gauteng. Diesel Power, which was established in the mid 1980's will
continue to be operated by its current managing director and founder Mike
Watson who has more than 25 years' experience in the opencast mining and
bulk earthworks industries and who is a major shareholder in Buildmax.
Vukuza operates predominantly in Mpumulanga with a fleet of over 160 mining
and earthmoving vehicles. Originally established as a plant hire business
in 1978, Vukuza's opencast mining, equipment hire and rehabilitation
business will continue to be run by founder and previous owner Fred
Sprenzel, who has managed the business for more than 20 years and who is a
major shareholder in Buildmax.
The redressing of South Africa's historic underinvestment in power
generation offers sustainable growth opportunity over the long term.
Eskom's immediate demand for coal to meet their existing requirements,
raise coal reserves, cope with increased demand from re-commissioning of
mothballed power stations and the increased needs of industrial consumers,
will continue to drive local activity. In addition a number of new power
stations will be built over the next 20 years, the majority of which will
be coal fired.
These factors and the continued high level demand for coal and commodities
globally will drive growth in coal and other mining activities. However,
the shortage of equipment, skills and suppliers is a constraint to growth
in both large mining and construction companies. As a leading purchaser of
equipment in South Africa for the past 20 years and an established provider
of equipment and services, the group is ideally positioned.
Construction Materials
Buildmax Aggregates and Quarries
Buildmax Aggregates and Quarries comprises the group's quarrying activities
and distribution operations for sand, aggregate and building supplies
trading through Crushco (Proprietary) Limited ("Crushco"), Benoni Sand and
Buildware (Proprietary) Limited ("BSB"), Wit Deep Sand and Stone
(Proprietary) Limited ("Wit Deep"), Alfa Sand Works (Proprietary) Limited
("Alfa"), Verlesha Investments (Proprietary) Limited ("Verlesha") and
Mystic Blue Trading 135 (Proprietary) Limited ("Mystic Blue"). Together
with Vukuza, these entities have operated as a group for in excess of 15
years.
The division operates a fleet of over 100 trucks through Wit Deep,
established in 1939, and BSB, established in 1973. These businesses are
amongst the largest sand, aggregate and building supplies distributors in
Gauteng.
Crushco was established in the 1990's and operates one of the largest river
sand quarries in Gauteng. Located in Ekurhuleni it supplies large
quantities of sand and stone products to major contractors as well as
wholesale merchants including Wit Deep and BSB.
Situated near Bronkhorstspruit, east of Pretoria, the Verlesha quarries,
which are operated by Alfa, produce washed and sifted sand.
These businesses are long-established, with proven track records and a
strong brand presence in their respective markets. The businesses will
continue to be managed by the previous owners Sid Sidersky, Eric Dorner and
Fred Sprenzel, each of whom has more than 25 years' industry experience and
all of whom will become significant shareholders in Buildmax.
Mystic Blue holds prospecting rights for sand on various properties
situated throughout Gauteng. Drilling results have been positive and Mystic
Blue is in the process of submitting applications for mining rights.
Buildmax Bricks and Blocks
Buildmax Bricks and Blocks comprise Watson Concrete ("Watson"), Buildmax's
existing brick and block manufacturing operation, the business of Cast
Industries (Proprietary) Limited ("Cast") and Columbia DBL (Proprietary)
Limited ("Columbia").
Buildmax Bricks and Blocks operates 15 plants with a total output of 60 000
tonnes per month (approximately 20 million Brick Equivalent Units per
month) producing a wide range of cement products, including pavers, masonry
blocks and bricks, retaining wall blocks, kerbs and other pre-cast
products.
Columbia is the largest cement brick manufacturer in the Western Cape.
Operating 9 plants and employing over 300 people it accounts for a
significant share of the concrete masonry market in the Western Cape.
Cast, established in 1979, is one of the largest producers of kerbs and
cement paving blocks in Gauteng and has recently installed one of the most
sophisticated plants in the country. Watson, situated in Gauteng and
established in 1948 is a manufacturer and supplier of concrete masonry,
face blocks, bricks and other pre-cast products.
The businesses making up Buildmax Bricks and Blocks are well established
businesses which are recognised as market leaders. The division is managed
by Gysbert Kappers who has more than 15 years' experience at Columbia and
who is on the board of the Concrete Manufacturers' Association ("CMA").
Gysbert is a significant shareholder of Buildmax. Cast will continue to be
managed by its previous owner Garth Gregory (the current president of the
CMA) who has more than 30 years' experience and who will provide valuable
technical and mechanical guidance to the division. Gordon Fernandez, who
has been with the business for more than 20 years will continue to manage
Watson.
Buildmax Building Materials
Buildmax Building Materials comprises the existing rainwater goods and
timber operations of Buildmax and will continue to be operated by its
current management, Nelia Jansen and Johan Vorster.
The rainwater goods operations are conducted through:
- S Burde, South Africa's leading manufacturer and distributor since
1946 of galvanised rainwater products including gutters, down pipes,
flashing, ridging, water tanks and other accessories. It services the
Gauteng, Mpumulanga, North West, Limpopo and Eastern Cape markets;
- Kensmark, which produces specialised sheet metal products and roofing
accessories for the same markets as are serviced by S Burde; and
- Watertite, which specialises in the manufacture, supply and on-site
installation of made-to-measure seamless gutters and rainwater systems
for the domestic market. A mobile fleet enables the business to
service the greater Western and Eastern Cape.
Buildmax's timber operations are conducted by Ticktin, which since 1935 has
manufactured and distributed a wide range of timber and machine moulded
products to timber merchants throughout the Western Cape.
4. PROFIT FORECAST
With effect from the 2008 financial year, the Buildmax Group has changed
its year end from 31 March to 28 February. Set out below is the profit
forecast of the Buildmax group for the years ending 29 February 2008 and
28 February 2009. The forecast for the year ending 28 February 2009
presents a more accurate reflection of the prospects of the group as it is
compiled on the basis that the Buildmax group including the acquisitions
have traded for a full 12 month period. The forecast to February 2008
reflects the existing Buildmax business trading for an 11 month period.
Forecast for Forecast for
the the
11 month year ending
period 28 February
ending 2009
29 February
2008
(R 000's) (R 000's)
113 916
Revenue 1 703 473
Cost of sales (85 780) (1 065 551)
Gross profit 28 136 637 922
Administration and other (20 665) (146 428)
expenses
EBITDA 7 471 491 494
Depreciation (1 998) (118 485)
Profit from operations 5 473 373 009
Net finance costs 856 (94 325)
Profit before taxation 6 329 278 684
Taxation (1 832) (78 032)
Net profit after taxation 4 497 200 652
Headline earnings 4 497 200 652
Attributable to:
Equity holders of the holding 4 497 200 152
company
Minority interest - 500
4 497 200 652
Number of shares in issue and to 41 805
be issued (`000) 893 575
Earnings per share (cents) 10.8 22.5
Headline earnings per share 10.8 22.5
(cents)
Growth in earnings and headline 108%
earnings per share
The forecast income statements have been prepared by way of performing
detailed forecasts of each of the underlying subsidiaries utilising the
following material assumptions:
2008
- Buildmax changed its year end to February, therefore results reflect
an eleven month trading period to 29 February 2008; and
- the businesses continued to trade based on historic terms and
conditions.
2009
- All acquisitions are effective for the full financial year.
- Capital raising is effective from 1 March 2008.
- The present level of interest rates will remain substantially
unchanged and are assumed at a prime overdraft rate of 14,5%.
- Capital raising on listing will be R270 000 000. This cash will be
used to settle some interest bearing facilities as well as settle
liabilities due to vendors.
- No further acquisitions will take place during the period.
- The businesses continue to trade based on historic terms and
conditions.
- Expenses are based on historical costs adjusted to take into account -
the expansion of each business unit, inflation, head office costs and
listing costs.
- No infrastructure savings or group rationalisations have been taken
into account in forecasting expenditure.
- The allocation between goodwill and identifiable intangible assets as
a result of the excess of the cost of the acquisitions over the fair
value of the net tangible assets acquired will be valued in terms of
IFRS 3 in the first reporting period subsequent to the acquisition.
Therefore, no amortisation has been included in the forecast.
- Tax has been provided for at a rate of 28%.
5. DIRECTORS
On implementation of the transactions the board of directors of Buildmax
will comprise:
Director Address
Colin Wood (Independent 3A Tessa Lane, Northcliff, Johannesburg,
Non-executive) 2195
Colin Brayshaw Unit 6, 1st Floor, 3 Melrose Boulevard,
(Independent Non- Melrose Arch, Melrose North, 2196
executive)
Bulelani Ngcuka (Non- 21 Impala Road, Building 2, Ground Floor,
executive) Chislehurston, Sandton
David Lamola Davey Street, Germiston South, 1401
(Independent Non-
executive)
Mark Matisonn 6A Sandown Valley Crescent, Sandton
(Non-executive)
Raymond Munitz 1st Floor, 2 Arnold Road, Rosebank, 2196
(Non-executive)
Paul Joseph de Klerk Unit 19, 1st Floor, East Cambridge Office
(Chief Executive Park, 5 Bauhinia Street, Highveld
Officer) Technopark, Centurion
Hermanus Philippus Unit 19, 1st Floor, East Cambridge Office
Fourie Park, 5 Bauhinia Street, Highveld
(Chief Financial Technopark, Centurion
Officer)
All of the directors are South African.
6. THE CAPITAL RAISING
In terms of the capital raising:
- Buildmax intends raising between R270 000 000 and R370 000 000 by the
issue of Buildmax shares to selected investors in terms of an offer to
a BEE consortium (the "BEE specific issue"), an offer for subscription
to selected institutions, corporations and individuals (the
"subscription offer") and an additional issue to the extent there is
sufficient demand (the "additional issue"); and
- to the extent that there is sufficient demand, certain Buildmax
shareholders intend selling up to R100 000 000 worth of Buildmax
shares (the "sale offer").
The subscription offer involves the issue by Buildmax of Buildmax shares to
selected investors at the subscription price of between R1.80 and R2.20 per
Buildmax share.
The BEE specific issue involves the issue of up to 40 million Buildmax
shares to a black economic empowerment consortium led by Vuwa at a price
equivalent to 85% of the subscription price. The BEE specific issue is
still subject to the conclusion of certain agreements between Vuwa and its
debt funder. Any amount not raised in terms of the BEE specific issue will
be raised in terms of the subscription offer.
The minimum amount that must be raised by the company in terms of the
subscription offer and the BEE specific issue is R270 000 000. To the
extent that investors make application for more than the minimum amount (at
the price at which the minimum amount is raised) the additional
applications will be allocated as follows:
- the first R50 000 000 will be issued by Buildmax as part of the
additional issue to selected investors at the subscription price if
Buildmax so elects;
- the second R50 000 000 will be sold by certain Buildmax shareholders
to selected investors at the subscription price in terms of the sale
offer (if such shareholders so elect);
- the next R100 000 000 will be allocated equally between the additional
issue (if Buildmax so elects) and the sale offer (if such shareholders
so elect).
The BEE specific issue, the subscription offer and the additional issue are
being implemented in terms of a specific authority to issue shares for
cash.
Capital raised
The capital raising will be used to:
- discharge a portion of the cash consideration relating to the Diesel
Power acquisition;
- reduce interest-bearing debt in the group and fund organic growth; and
- introduce additional empowerment and appropriate institutional
shareholders into the group.
6. IMPORTANT DATES AND TIMES
2008
Opening date of the offer (09:00) Wednesday, 5 March
Closing date of the offer (12:00)1 Wednesday, 26 March
Notification of allotments Thursday, 27 March
Receive payment from placees Monday, 31 March
Listing of additional shares Wednesday, 2 April
Placees' accounts at CSDP or broker Wednesday, 2 April
updated and debited in respect of
dematerialised shareholders
(1) Applicants must receive shares in dematerialised form and must advise their
CSDP or broker of their acceptance of the offers in the manner and cut-off
time stipulated by their CSDP or broker (as the closing date applicable to
them will be a date earlier than the official closing date).
(2) These dates and times are subject to amendment. Any such amendment will be
released on SENS and published in the press.
7. LISTING ON THE JSE
Subject to the implementation of the acquisition of Buildco and Diesel
Power and the implementation of the capital raising, the JSE has approved
the listing of a maximum of 922 911 504 Buildmax shares (assuming that
R302 000 000 is raised in terms of the subscription offer and the
additional issue at R1.80 and R68 000 000 in terms of the BEE issue is
raised at 85% of R1.80) with effect from the commencement of business on
Wednesday, 2 April 2008.
8. PRO FORMA FINANCIAL EFFECTS
The unaudited pro forma financial effects for which the board of Buildmax
is responsible are presented for illustrative purposes only and may not
fairly present Buildmax's financial position, changes in equity, results of
operations or cash flows following implementation of the Buildco
acquisition, the Diesel Power acquisition and the capital raising.
The table below sets out the unaudited pro forma financial effects of the
Buildco acquisition based on the interim published financial results of
Buildmax for the six months ended 30 September 2007 ("Buildmax's interim
results").
Before the After the
transaction transaction
(cents) (cents) %
change
Earnings per share (EPS) 8,40 8,95 7
Headline earnings per share 5,84 6,17 6
(HEPS)
Net asset value per share (NAV) 118,91 143,61 21
Net tangible asset value per 118,91 14,12 (88)
share (NTAV)
Notes / Assumptions
The "Before" column reflects the EPS, HEPS, NAV and NTAV as disclosed in
Buildmax's interim results.
- The "After" column reflects what the NAV and NTAV would have been at
30 September 2007 had the Buildco acquisition taken place on 30
September 2007 and what the EPS and HEPS would have been had the
Buildco acquisition taken place on 1 April 2007.
- The calculation in the "After" column is based on 702 302 800 Buildmax
shares in issue.
- Taxation has been provided for at 29%.
- The allocation between goodwill and identifiable intangible assets as
a result of the excess of the cost of the acquisitions over the fair
value of the net tangible assets acquired will be valued in terms of
IFRS 3 in the first reporting period subsequent to the acquisition.
The table below sets out the unaudited pro forma financial effects of the
Diesel Power acquisition and the capital raising based on Buildmax's
interim results.
Before the After the
transaction transaction
(cents) (cents) % change
Earnings per share (EPS) 8,40 19,05 127
Headline earnings per share 5,84 20,19 246
(HEPS)
Net asset value per share (NAV) 118,91 188,74 59
Net tangible asset value per 118,91 52,05 (56)
share (NTAV)
Notes / Assumptions
- The "Before" column reflects the EPS, HEPS, NAV and NTAV as disclosed
in Buildmax's interim results.
- The "After" column reflects what the NAV and NTAV would have been at
30 September 2007 had the Diesel Power acquisition and the capital
raising taken place on 30 September 2007 and what the EPS and HEPS
would have been had the Diesel Power acquisition and the capital
raising taken place on 1 April 2007.
- The calculation in the "After" column is based on 233 077 749 Buildmax
shares in issue.
- Taxation has been provided for at 29%.
- The company will issue 40 000 000 ordinary shares in terms of the BEE
specific issue at R1,70 per ordinary share, and 101 000 000 ordinary
shares in terms of the private placement at R2,00 per ordinary share.
- The proceeds of the placement, net of costs, were received on 1 April
2007 and that the aforementioned costs were set off against the
company's share premium.
- A portion of the cash raised is utilized to settle the bank overdraft,
interest bearing debt and cash consideration payable, as applicable,
at 1 April 2007. Interest on the net overdraft has been provided for
at 13.25%.
- The allocation between goodwill and identifiable intangible assets as
a result of the excess of the cost of the acquisitions over the fair
value of the net tangible assets acquired will be valued in terms of
IFRS 3 in the first reporting period subsequent to the acquisition.
9. WITHDRAWAL OF CAUTIONARY
In light of this announcement, shareholders are no longer required to
exercise caution in their dealing in Buildmax shares.
Johannesburg
5 March 2008
Corporate and legal advisors and sponsor
Java Capital (Proprietary) Limited
Auditors and reporting accountants
PKF (Jhb) Inc.
Reporting accountants
Greenwoods Chartered Accountants
Previous auditors to Buildmax
Meagher Moynihan
Investor and corporate relations
Envisage Investor and Corporate Relations
Legal advisor in respect of Mineral Regulations
Werksmans Inc.
Competent person
Venmyn Rand (Proprietary) Limited
Date: 05/03/2008 08:30:01 Produced by the JSE SENS Department.
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