Nov 2007 - Listing presentation

Document Sample
Nov 2007 - Listing presentation Powered By Docstoc
					Listing presentation   Nov 2007
                        ARB Listing
     Main Board “Electronic & Electrical Equipment” sector
        Tuesday, 20 November 2007
       R336 million to R371 million:

              New capital                Vendor placement
                                  +
          R168m to R185.5m               R168m to R185.5m

       Private placement of 70 million shares at between
        480 cents and 530 cents per share
       Historic PE of 11.4 – 12.6 to June 07
       Historic PE (pro forma) of 12.3 – 13.6 to June 07
       Forward PE of 10.5 – 11.6 to June 08


2
           Indicative Timetable
                               November
                  Mon   Tue   Wed   Thu   Fri   Sat   Sun

                                     1    2     3     4

                   5    6     7     8     9     10    11

                  12    13    14    15    16    17    18

                  19    20    21    22    23    24    25

                  26    27    28    29    30

    Abridged Prospectus on SENS                             Fri      2 Nov
    Private placement opens 09h00                           Mon      5 Nov
    Private placement closes 12h00                          Wed      7 Nov
    Private placement results published on SENS             Thurs    8 Nov
    Final allocation of private placement shares            Fri      9 Nov
    Listing & settlement 09h00                              Tues    20 Nov




3
Group Overview
                      Milestones
    1980   Founded by   lan     onald   urke in Richards Bay
    1988   Opens Durban branch
    2000   Acquires Pietermaritzburg branch
    2001   Relocates to new head office in Prospecton
    2002   Opens Johannesburg branch
    2003   Opens Cape Town branch
    2004   Opens East London branch
           Black-owned Batsomi Power (Pty) Limited
    2005
           acquires 26% of ARB Electrical Wholesalers
           Gauteng operation moves to newly-built
    2006
           13 000m² premises in Alrode
    2007   ARB to list on JSE


5
             Rationale for Listing
     Expand ARB’s geographic footprint
     Fund organic growth by expanding the national
      branch network
     Fund expansion into new target industries
     Raise capital and have the flexibility of listed shares
      for acquisitions and other growth opportunities
     Create value for shareholders by leveraging
      ARB’s established presence in the market
     Facilitate further empowerment initiatives
     Attract and retain intellectual capital through the
      incentive of meaningful equity participation


6
Operations
                            Group Structure


                                                               Batsomi Power
                                                               (Pty) Ltd
                                             74%
             100%
                                                                    26%
    IT Solutions (Pty)
           Ltd.
      Incorporating:




                                     Branch Network



                         Johannes-    Cape    East     Pieter-      Richards
     Durban
                           burg       Town   London   maritzburg      Bay


8
                Geographic Footprint



                             Johannesburg



                                                   Richards Bay
                          Pietermaritzburg
                                              Durban
                                              (Head Office)



    Cape Town
                                East London



9
           Nature of Business


     South Africa’s fastest growing black-empowered
            independent electrical wholesaler

       Supplies locally manufactured power cables,
     overhead line transmission and general electrical
                   contracting materials

        Stocks and distributes essential materials
          for electrification in construction and
                     mining industries

10
     ARB Products



     A complete range     Aluminium
        of power and     overhead line
      instrumentation   conductors and
            cables       aerial bundled
                          conductors

      Overhead line
         hardware,      General electrical
      insulators and      contracting
       transformers        materials
         (including
         mini-subs)




11
     Brands supplied by ARB




12
     Some Major Customers
          Large & Heavy Industry




                                   Richards Bay
                                   Minerals


               Parastatals



13
     Some Major Customers
          Construction Industry




          Electrical Contractors




14
People
     Board of Directors
                    Executive Directors

     Craig Robertson (B.Compt) (39) – CEO – 15 years


     Billy Neasham (B.Com, CA(SA)) (50) – FD – 7 years

                 Non-Executive Directors

     Alan Burke (53) – Founder – Chairman – 27 years


      Jacob Modise (B.Com, B.Acc, CA(SA), MBA) (41)


          Dumisani Muhlwa (B.Com, CA(SA)) (35)


                Independent Non-Executive

     Simon Downes (B.Com, CA(SA), FCMA, MBA) (49)


16
     Exco - ARB Electrical Wholesalers

               Craig Robertson (B.Compt) (39) – CEO – 15 years



               Billy Neasham (B.Com, CA(SA)) (50) – FD – 7 years



                  Clinton Cockerell (48) – Director – 20 years



                     Bruce Sloley (52) – Director – 24 years



                     Jason Burke (28) – Director – 10 years


          Cumulative years service: 76 with ARB (103 incl. Alan Burke)

17
                          Senior Management
                        Johannes-        Cape                East         Pieter-       Richards
      Durban
                          burg           Town               London       maritzburg       Bay
                                         Ricardo              Neville                  Beran Sewath
     Vinod Singh        Chris Cooper    McGregor            Puttergill   Des Eyden        (42) (6*)
      (35) (15*)          (36) (9*)      (30) (3*)           (33) (2*)    (55) (7*)       Branch
        Sales            Cable Sales     Branch               Branch                     Manager
                                        Manager             Manager
                          Carl Franz
                           (29) (10*)
                            Branch
                           Manager

     Shannon Bester B.Com CA (SA) (27) (1*) Finance & Admin
     Cliff Dovey (53)                     (16*) Projects
     Mervyn Pillai (37)                   (18*) Purchasing
     Glenn Allanson (47)                  (18*) Logistics
     Pauline Seaman (37)                  (3*)Transmission Lines
     Zanele Njova (33)                    (1*) Bus. Develop.
                                                                             Divisional Director
      Cumulative years service: 109                                         Divisional Manager
      Average age:               38                                       * Years service with ARB
18
BEE
     Black Economic Empowerment


        Batsomi Power   26%
        (Pty) Ltd



         26% BEE acquired in Nov 2005
         Black positions held:
            − 33% of directors
            − >25% of executive management
            − >75% of staff


20
Corporate Social Investment
       Corporate Social Investment
     ARB donates & supports:

      Underprivileged schools
      Orphanages
      Shelters
      AIDS organisations
      Save the Children Fund
      Abused Kids Crisis Centre

22
Financial Overview
              Abridged Income Statement
                                                    Reviewed    Audited    Audited     Pro Forma    Forecast
     R'000                                            2005       2006       2007          2007        2008
     Gross revenue                                    417,916    607,955   1,047,642    1,047,642   1,315,293

     Gross income                                      81,582    134,982    238,771      238,771      282,406

     GP%                                                 20%        22%        23%          23%          21%

     Operating profit                                  42,962     85,781    193,084      193,084      195,587

     OP%                                                 10%        14%        18%          18%          15%

     Profit before tax                                 38,422     79,082    180,905      194,500      191,366

     Profit after tax                                  23,550     55,696    127,630      137,282      133,837

     Profit attributable to ordinary shareholders      14,837     47,478    101,603      109,313      101,440

     Headline earnings attributable to ordinary        14,837     44,318     84,193       91,903      101,440
     shareholders
     Pro forma weighted average number of             200,000    200,000    200,000      235,000      221,235
     shares in issue ('000)

     HEPS (cents)                                         7.4       22.2        42.1         39.1        45.9


24
               Revenue & Operating Profit

                       Revenue                               Operating Profit
            Rm                                         Rm
     1400                                        250
                                                                Operating margin*
                                         1,315                                       14.9%
     1200
                                                 200                         16.1%
     1000                                                                             196
                                 1,048
      800                                        150                         169

      600                                                           13.4%
                                                 100
                           608
      400                                               10.3%       81
               418                                50
      200
                                                        43
        0                                          0
              2005     2006      2007    2008F         2005        2006      2007    2008F


            * Normalised

25
                Headline Earnings
           Rm
     120


     100
                                     101

     80
                            84

     60


     40
                      44

     20

                15
      0
            2005     2006   2007    2008F

26
            Abridged Balance Sheet
                                                  Audited     Audited     Pro Forma
     Rm                                            2006        2007          2007
     ASSETS
      Non-current assets                             39,239      79,684       79,684

      Current assets                                280,136     409,376      478,486
     TOTAL ASSETS                                   319,375     489,060      558,170

     EQUITY AND LIABILITIES
      Equity and reserves                            91,364     218,993      397,293
      Non-current liabilities                        38,814      48,650        8,580
      Current liabilities                           189,197     221,417      152,297
     TOTAL LIABILITIES                              319,375     489,060      558,170

     Pro forma number of shares in issue ('000)     200,000     200,000      235,000

     Net asset value per share (cents)                 45.7       109.5        169.1

     Net tangible asset value per share (cents)        45.7       109.5        169.1

27
        Dividend Policy


            Single annual dividend




      Up to a maximum of 33% x NPAT
     (taking into account distributable reserves
         and cash available for distribution)




28
Private Placement
            Pricing Considerations
                                      Bottom Range     Top Range
     Offer for subscription
      No. of shares                    35 000 000       35 000 000
      Price per share                   480 cents        530 cents
      Total                           R168 million   R185.5 million
     Offer for sale
      No. of shares                    35 000 000       35 000 000
      Price per share                   480 cents        530 cents
      Total                           R168 million   R185.5 million
     Historic PE                               11.4            12.6
     Historic PE (pro forma)                   12.3            13.6
     Forward PE                                10.5             11.6
     Price to NTAV (post new money)             2.8              3.1




30
         Application of New Capital

          Settlement of debt                           R110.5 million


          Capex and working capital                      R30.0 million


          Strategic growth                               R37.8 million


          Listing costs                                   R7.2 million


          Total                                        R185.5 million*



     * Assuming a placement price of R5.30 per share


31
        Free Float & Tradability

                             Public /
                             Institutions

                       30%

             70%




     Directors, management and staff




32
Prospects
                    Prospects
                           Industry

      President Thabo Mbeki committed in 2005
      to “bring electricity to all” by 2012
      Eskom to spend R1 trillion over the next 20 years
         − R250 billion over 5 years
      Government committed to an investment in
      infrastructure of R410 billion




34
                    Construction Economy
          GFCF to increase from 18% to 25% of GDP by 2014

              Fixed investment as % of GDP          Growth in SA’s construction sector

          %                                         YoY %
     30                                        15
     28
                       Group Five forecast
     26                                        12                                  13.3

     24                                                                     11.9
                                                                     11.1
     22                                         9
     20
     18                                         6            6.9
     16                                             5.8
     14                                         3
     12
     10                                         0
      1981     1986 1991 1996 2001 2006 2011        2002    2003     2004   2005   2006

35        * Source: BER, Group Five                 * Source: Stats SA
                          Public Sector
          R410 billion committed to infrastructure spend
                         over next 3 years
             R billion
      150


      120


        90


        60


        30


         0
              2003/4     2004/5   2005/6   2006/7   2007/8   2008/9   2009/10


36   Source: Stats SA
     Planned Government Spending
                                      % Increase past 3 years vs. next 3 years

                Sports (Stadiums)                                                            1200.0

                             Police                                                  150.1

         Rail (Spoornet, Gautrain)                                           130.4

               Electricity (Eskom)                                    97.2

                              Ports                                 89.6

         Housing (Developments)                                 83.5

        Health (Hospitals, Clinics)                          71.9

                  Justice (Courts)                     57.6

     Roads (Provincial, Municipal)                    55.3

                             Water                    53.7

     Education (School buildings)                    49.6

                         Sanitation                44.8

                              Total                             83.1


37    Source: National Treasury
                    Prospects
                             ARB

      Continue penetrating mining industry
      - new focus for the group
      Expand into sub-Saharan Africa
      (new mines in the pipeline in Zambia,
       Angola, the DRC, Mozambique,
       Madagascar and Botswana)
      Expand national branch network
      organically and through acquisition
      Expand into new but strategically aligned
      businesses

38
Conclusion
              Conclusion

           27 year track record of growth

       Unprecedented growth opportunities
               for target sectors
         Strong, dynamic and experienced
        management team – owner managed

     Limited sell down by existing shareholders

          Strong BEE credentials in place


40
Q&A
                         ARB Listing
      Main Board “Electronic & Electrical Equipment” sector
         Tuesday, 20 November 2007
        R336 million to R371 million:

               New capital                Vendor placement
                                   +
           R168m to R185.5m               R168m to R185.5m

        Private placement of 70 million shares at between
         480 cents and 530 cents per share
        Historic PE of 11.4 – 12.6 to June 07
        Historic PE (pro forma) of 12.3 – 13.6 to June 07
        Forward PE of 10.5 – 11.6 to June 08


42

				
DOCUMENT INFO