Jan 2016
SUMMARISED BUSINESS PLAN
Strictly Private & Confidential
Tadvest Limited – Growth Through Diversity 2
Table of Contents
Table of Contents ...... 3 1. Corporate Data ...... 5 2. Executive Summary ...... 6 3. Definitions ...... 8 4. Corporate Information ...... 12 4.1. Vision, Mission and Corporate Values ...... 12 4.2. Corporate structure at Listing Date ...... 12 4.3. Corporate structure after initial acquisitions upon NSX Listing ...... 13 5. Organisational Structure and Corporate Governance ...... 13 5.1. Organisational Chart ...... 13 5.2. External Service Providers ...... 13 5.3. Board Responsibilities ...... 14 5.4. Board Composition ...... 14 5.5. Committee Structures ...... 14 6. Investment Objectives and Operations Strategy ...... 16 6.1. Introduction ...... 16 6.2. Competitive Advantage of Tadvest ...... 16 6.3. Investment Philosophy and Exit Strategies ...... 17 6.4. Diversification of Portfolio ...... 17 6.5. Target Sectors ...... 18 6.6. Investment Jurisdictions ...... 24 6.7. SWOT Analysis ...... 27 7. Rationale for Dual-Listed Structure ...... 28 8. Risks ...... 29 8.1. Capital and Portfolio Risk ...... 29 8.2. Currency Risk ...... 29 8.3. Stock Market Risk ...... 29 8.4. Liquidity Risk ...... 29 8.5. Leverage and Financing Risk ...... 30 8.6. Global Political, Economic and Financial Risk ...... 30 8.7. Regulatory Change May Affect the Company ...... 31 8.8. Forward looking statements ...... 31 8.9. Tadvest SPA not signed or uneffective ...... 31 8.10. Failure to raise capital and meet the financial forecasts ...... 31 9. Description of Assets and Financial Forecasts ...... 32 9.1. Asset Held by Tadvest Limited (As at SEM Listing) ...... 33
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9.2. Assets Held by Tadvest SA (Pty) Ltd (As at SEM Listing) ...... 39 9.3. Assets currently under consideration for acquisition in early 2016 ...... 51 9.4. Three year financial forecasted results ...... 53 9.5. Expected Financial Statements as at SEM listing ...... 57 9.6. Financial Requirements...... 59 10. Management – Experienced Team with Deep Industry Knowledge ...... 60 10.1. Board of Directors ...... 60 10.2. Contracted Management Team – Key Personnel ...... 64 11. Contact Details ...... 65 Annexure A: Group Structure as at SEM listing date ...... 66 Annexure B: Group Structure as at NSX listing date ...... 67
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1. Corporate Data
Registered Office Company Secretary, Registrar and Transfer Secretary Unit 12B, 12th Floor Raffles Tower Safyr Wealth Services Ltd 19 Cybercity Ebene 72201 Unit 12B, 12th Floor Raffles Tower Mauritius 19 Cybercity Ebene 72201 (postal address same as physical address) Mauritius (postal address same as physical address)
Mauritian Bankers SEM Authorised Representatives Barclays Bank Mauritius Limited Safyr Wealth Services Ltd Company No. 68913 Unit 12B, 12th Floor Raffles Tower 1st Floor Barclays House 19 Cybercity Ebene 72201 68-68A Cybercity Ebene Mauritius Mauritius Business Registration No.: C10068913 Mr. Ian Chambers (postal address same as physical address) Director of the Company 8 Residence des Aloes Royal Road, Tamarin Riviere Noire, Mauritius
South Africa Corporate Advisors SEM Sponsoring Broker Bravura Capital (Pty) Limited LCF Securities Ltd 23 Fricker Road, Illovo, Suite 108, 1st Floor, Moka Business Centre, Johannesburg Mont Ory Road, Moka South Africa Mauritius (postal address same as physical address)
Auditor Legal Advisor as to Mauritian Law Lancasters Eversheds (registered as a Law Firm in Mauritius) Lavoquer St 2nd Floor, Barkly Wharf Port Louis Port Louis Mauritius (postal address same as physical address) (postal address same as physical address)
Independent Financial Adviser Mauritian Company Administrator BDO & Co Safyr Wealth Services Ltd 10, Frere Felix De Valois Street, (same address as above) P.O. Box 799, Port Louis Mauritius (postal address same as physical address) South African Legal Advisor Hogan Lovells South Africa 22 Fredman Drive, Sandton Johannesburg 2196
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2. Executive Summary
Tadvest Limited (“the Company”) was established in Mauritius on the 5th of November 2014 as a company holding a Category One Global Business Licence (“GBL1”). The Company was initially registered under the name of Tad Holdings LTD and was later renamed Tadvest Limited.
The Company is an investment holding company with a current portfolio of assets that is focused primarily in the real estate sector although it holds investments in the agriculture and industrial sectors and intends to diversify in the renewable and healthcare sectors. Assets held directly by the Company include property assets in South Africa, an Australian aerospace company and a South Africa printing company specialising in high-end printing, barcoding and labelling solutions which has also entered into a recent joint venture with an innovative 3-D printing company in South Africa. These assets were acquired by Tadvest on 5 December 2014.
In addition, once the current restructuring activities in South Africa are completed, the Company will hold a 14.66% investment in Tadvest South Africa (“Tadvest SA”), a South African investment holding company with substantial investments in listed and unlisted property assets as well as investments in the food and agricultural sectors. The restructure was completed on the 15th of December 2015.
The Company meets the definition of an Investment Entity as stiupulated under section 27 of the International Financial Reporting Standard ("IFRS") 10, Consolidated Financial Statements and is therefore dispensed from the need to present consolidated financial statements.
Based on the financial model of this business plan and a ZAR/USD exchange rate of ZAR 16.79, the estimated Net Asset Value of the Company upon listing on the Stock Exchange of Mauritius Ltd (“SEM”) is anticipated to be approximately $,11,900,000. This provides the initial foundation upon which a substantial, diversified investment holding company is intended to be built.
This listed platform provides a vehicle which takes advantage of the business-friendly infrastructure in Mauritius. Investor confidence in the region and an efficient tax regime (especially when investing in Africa) create an environment in which the Company can flourish. The SEM is recognized as a member of the World Federation of Exchanges and has Her Majesty’s Revenue and Customs (“HMRC”) approval in the United Kingdom, thus the shares will qualify for investment by institutional investors which is important for long-term capital raising activities.
In order to enhance its ability to undertake acquisitions both within and beyond the Common Monetary Area (“CMA”), as well as to raise capital both within and beyond the CMA, the Company intends to obtain a secondary listing on the Namibian Stock Exchange (“NSX”) immediately after listing on the SEM. The resultant capital allocation flexibility, as well as the ability to attract investors from within and beyond the CMA, will allow the Company to build a global investment portfolio off the foundation that has already been built primarily in South Africa. Although the objective of the initial listing is not to raise new capital or create liquidity for existing shareholders, the longer-term acquisitive strategy will more than likely result in capital raising activities in the short- to medium-term in order to fund new opportunities.
The NSX is the desired exchange for the secondary listing as Namibia is part of the CMA and an NSX listing is more cost effective than a listing on the Johannesburg Stock Exchange (“JSE”), an important consideration in the infancy of an investment holding company. The NSX offers lower costs of compliance, lower corporate action thresholds and higher flexibility in general.
To assist in achieving economies of scale, the Company has entered into a share purchase agreement (“Tadvest SPA’”) with Matrix NSX Proprietary Limited (“Matrix NSX”) as well as CRH Investments Proprietary Limited (“CRH”). Under this agreement, the Company will purchase the shares held by Matrix NSX and CRH in Tadvest SA and will issue shares off the NSX register as consideration. The Tadvest SPA is conditional upon the listings on both the SEM and the NSX being achieved, in line with Exchange Control Regulations in the CMA. The expected Net Asset Value upon issue of the shares off the NSX will be approximately $ 34,400,000 at which point it is expected that Tadvest Limited will hold 100% of Tadvest SA.
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Going forward, the dual-listed platform will be leveraged to diversify the existing asset portfolio, with the particular goal of reducing property exposure over time. This will be achieved through the ethos of excellence, commitment and enthusiasm that is shared by the management team and strategic partners. New growth opportunities will be pursued with the objective of sustainable long-term value creation through both income yield and capital growth.
The Company will continue to focus on best-in-class assets across various industries. Although there will be further investments in cutting-edge commercial, industrial and retail properties, the portfolio will be expanded to include investments in sectors such as industrials, fast-moving consumer goods, healthcare, agriculture and potentially renewable energy.
The experienced management team has targeted growth in the net asset value from the current estimated net asset value upon NSX listing of USD 34.4 million to USD 43.2 million in the next 3 – 5 years. This growth is expected to be achieved through a combination of incubation and optimisation of existing assets as well as through strategic acquisitions.
The Company is expected to receive regular distributions from its cash generative investments which it will aggregate before making provision for expenses and working capital. The Company will then assess current investment opportunities and make discretionary investments aimed at creating value, after which any excess funds will be declared as a dividend to investors on an annual basis. The declaration of dividends will be subject to the discretion of the Board of Directors of Tadvest. Given the fact that the business intends expanding, capital is likely to be held within the business for the purpose of expansion.
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3. Definitions
“Abbeymead” Abbeymead Enterprises Limited (Registration number HE116949), a company incorporated in accordance with the company laws of the British Virgin Isles
“Abman” Abman (Proprietary) Limited (Registration number2006/030375/07), a private company incorporated in accordance with the laws of South Africa
“Abman SLA” Service level agreement entered into between Tadvest and Abman in terms of which Abman will provide specific investment services to Tadvest
“Abland” Abland (Proprietary) Limited (Registration number 1996/013517/07), a private company incorporated in accordance with the laws of South Africa
“Abreal” Abreal (Proprietary) Limited (registration number 1991/004365/07), a private company incorporated in accordance with the laws of South Africa
“ADT” Alex Dahm Trust , a Mauritian trust of which Safyr acts as trustee and Alex Dahm, a Swiss national, is one of the principal beneficiaries
“AIT” Abcon Incentive Trust (IT number 11042/99), a South African trust with South African beneficiaries
“AltX” AltX is an alternative public equity exchange for small and medium-sized companies in South Africa operated in parallel with and wholly owned by the JSE Securities Exchange
“Board” Board of directors of Tadvest
“Broadacres Retreat” Broadacres Retreat (Proprietary) Limited (Registration number 2007/012860/07), a private company incorporated in accordance with the laws of South Africa
“Bronpro” Bronpro Processors (Proprietary) Limited (Registration number 1997/001603/07), a private company incorporated in accordance with the laws of South African
“Cedar Land” Holding 128 & 129 Chartwell Agricultural Holdings Registration Division JQ, Province of Gauteng
“Chilli on Top” Portion 37 (a portion of Portion 3) of the farm Rietfontein 2, Registration Division IR, Province of Gauteng, linked to which Tadvest Commercial holds a loan as well as a receivable from Pivotal in the form of a top-up payment determined at a future date
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“Common Monetary Area” or “CMA” A monetary union made up of Swaziland, South Africa, and Lesotho, enacted in 1986 (superseded by the Multilateral Monetary Union, which was formed when Namibia joined the Common Monetary Area in 1992) and where member nations work together to establish mutually favorable exchange rates and foreign exchange regulations
“Constantia Centre” 980 Constantia Kloof Ext. 18 William Nicol Road North Constantia Kloof, Roodepoort Gauteng Province
“Country Mushrooms” Country Mushrooms (Proprietary) Limited (Registration number 2001/021424/07), a private company incorporated in accordance with the laws of South Africa
“CRH” CRH Investments (Proprietary) Limited (Registration number 1946/021713/07), a private company incorporated in accordance with the laws of South Africa
“GBL1” a category 1 Global Business License issued under the Financial Services Act 2007
“GLA” gross lettable area being the total area of a property that can be leased to a tenant
“Hertford Office Park” Hertford Development situated on Portion 128 of the Farm Waterval 5, Registration Division IR, Province of Gauteng
“HMRC” Her Majesty’s Revenue and Customs, a non-ministerial department of the UK Government responsible for the collection of taxes, the payment of some forms of state support, and the administration of regulatory regimes including the national minimum wage
“Hoedspruit Fruit Processors” Hoedspruit Fruit Processors (Proprietary) Limited (Registration number 2006/002634/07), a private company incorporated in accordance with the laws of South African
“JSE” the Johannesburg Stock Exchange, being the exchange operated by the JSE Limited (Registration number 2005/022939/06), licensed as an exchange under the Financial Markets Act (Act 19 of 2012), and a public company registered and incorporated in terms of the laws of South Africa
“Kemtek” Kemtek Imaging Systems (Proprietary) Limited (Registration number 1988/003319/06), a private company incorporated in accordance with the laws of South Africa
“Lightsource Trust” Lightsource Trust (IT number IT3436/2003), a New Zealand trust of which Turnstone Group acts as trustee and Tadvest is the sole beneficiary
“Matrix NSX” Matrix NSX (Proprietary) Limited (Registration number 2015/294151/07), a private company incorporated in accordance with the laws of South Africa
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“Namibian Stock Exchange” or “NSX” the Namibian Stock Exchange established under the laws of Namibia, licensed by Namfisa and governed by the Stock Exchange Control Act 1985 of Namibia
“Pivotal” The Pivotal Fund Limited (Registration number 2005/030215/06), a public company registered and incorporated in terms of the laws of South Africa and listed on the JSE
“Pod Fund” or “Epping” Erf 32599 Cape Town, in the City of Cape Town Division Cape, Province of the Western Cape, linked to which Tadvest Commercial holds Preference shares in the POD Property Fund Proprietary Limited (Registration number 2013/212348/07), a private company incorporated in accordance with the laws of South Africa, which will convert to ordinary shares when the project loan to value ratio reaches 60%
“Rosebank Towers” Erf 32 and Portion 1 of Erf 32 Rosebank, located at 15 Biermann Avenue, Rosebank
“Sable Homes” Sable Homes (Proprietary) Limited (Registration number 1993/004921/07), a private company incorporated in accordance with the laws of South Africa and with which Tadvest Residential has a relationship to develop residential properties
“Safyr” Safyr Wealth Services Limited (Registration number 118772), Safyr is licensed by the Mauritius Financial Services Commission to provide a comprehensive range of financial and fiduciary services to international businesses
“Sentinel” or “Centurion Junction Office Park” Portion 157 and 1 of the Farm Lyttelton 381, Registration Division JR, Province of Gauteng , which is under consideration for possible acquisition in early 2016l.
“Setpoint Industrial Park” Erf 8 of Westlake View Extension 11, Avalon Road Modderfontein Johannesburg Gauteng Province
“Stellenpark” or “Exact Trade” Portions 61 and 62 of the farm Blaauwklip, No. 510, Division of Stellenbosch, Province of the Western Cape in which Exact Trade 144 (Proprietary) Limited (Registration number 2004/030039/07), a private company incorporated in accordance with the laws of South Africa
“Stock Exchange of Mauritius” or “SEM” the Stock Exchange of Mauritius Ltd established under the repealed Stock Exchange Act 1988 and now governed by the Securities Act 2005 of Mauritius
“Sweet Sensations” Sweet Sensation 89 (Proprietary) Limited (Registration number 2006/002325/07), a private company incorporated in accordance with the laws of South Africa
“Tadvest” or “the Company” Tadvest Limited (Registration number 126446 C1/GBL), a company incorporated in accordance with the laws of Mauritius and holding a GBL1 licence
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“Tadvest Commercial” Tadvest Commercial (Proprietary) Limited (Registration number 2009/013010/07), a private company incorporated in accordance with the laws of South Africa
“Tadvest Group” Tadvest Limited and all its subsidiaries, divisions, associates and joint ventures
“Tadvest Industrial” Tadvest Industrial (Proprietary) Limited (Registration number 1990/003968/07), a private company incorporated in accordance with the laws of South Africa
“Tadvest Residential” Tadvest Residential (Proprietary) Limited (Registration number 1994/006105/07), a private company incorporated in accordance with the laws of South Africa
“Tadvest SA” Tadvest South Africa (Proprietary) Limited (Registration number 2015/051534/07), a private company incorporated in accordance with the laws of South Africa
“Tadvest SPA” Share purchase agreement entered into between Matrix NSX, CRH and Tadvest in which Tadvest will purchase the shares held by Matrix NSX and CRH in Tadvest SA and will issue shares off the NSX share register as consideration
“Topshell” Topshell (Proprietary) Limited (Registration number 2004/017993/07), a private company incorporated in accordance with the laws of South Africa
“Topshell Agri-Park” Portion 128 of Farm Welmoed Estate No 468 in Municipality and Division Stellenbosch, Western Cape Province
“Trakka Corp” Trakka Corporation (Proprietary) Limited (Registration number ABN 87067833612), a private company incorporated in accordance with the laws of Australia
“Waterfall Ridge” or “Allandale Commercial” Portion 28 of Holding 74, Halfway House Estate
“West End Office Park” Holding 231 and 232 Lyttleton Agriculture Holdings Extension 1, linked to A-preference shares in Pivotal which will convert to ordinary shares when the project loan to value ratio reaches 60%, which is under consideration for possible acquisition in early 2016
“ZAR” The currency abbreviation for the South African rand (ZAR), the currency for South Africa.
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4. Corporate Information
4.1. Vision, Mission and Corporate Values
4.1.1. Vision
To emerge as a leading diversified investment holding company by focusing on businesses with high growth potential in Africa and across the world.
4.1.2. Mission
To create sustainable growth for our shareholders by building up and investing into a diversified portfolio of businesses. We facilitate this desired growth through the experience and track record of our principal investors as well as through partnering with businesses whose core values are closely aligned with ours.
4.1.3. Corporate Values
Return on Values
Tadvest believes that the return on investment is directly linked to the values of a particular business. The commitment to fostering corporate values influences growth and delivers significant long term value to shareholders, partners and employees.
Integrity and the practice of good corporate governance
Emphasis on integrity and the practice of good corporate governance is key to building a sustainable business and is achieved by adhering to the highest ethical standards. Professional integrity in all financial and business matters is essential to building and maintaining relationships.
Genuine Partnership
We believe in establishing strong partnerships with local and foreign businesses to serve as a platform for each business to reach its full potential.
4.2. Corporate structure at Listing Date
ADT is the sole shareholder in Tadvest Limited as at the Listing Date on the SEM.
The corporate structure upon the listing on SEM reflects a 14.66% holding by the Company in Tadvest SA. The Group structure upon the SEM listing is included in Annexure A.
The assets of Tadvest SA are structured in three specific business pillars depending on the nature of the underlying assets:
Tadvest Residential; Tadvest Industrial; and Tadvest Commercial
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4.3. Corporate structure after initial acquisitions upon NSX Listing
In terms of the Tadvest SPA, the Company will acquire the shares held by Matrix NSX and CRH in Tadvest SA upon the listing on the NSX and will issue Tadvest shares as consideration.
The acquisition currency will be a fresh issue of shares off the NSX register to Matrix NSX and CRH, resulting in ADT Trust diluting from 100% in Tadvest to approximately 36.09% (depending on the USD:ZAR currency exchange rate). The Group structure after the NSX listing and initial acquisitions is included in Annexure B.
5. Organisational Structure and Corporate Governance
5.1. Organisational Chart
5.2. External Service Providers
All decisions of Tadvest as to investment strategy and the implementation of investment strategy, including decisions as to particular investments and divestments, will be made by the Board (subject to regulatory requirements and the Company’s constitutional documents). These include decisions relating to:
The type of investments to be targeted by Tadvest and the structure of such investments; The broader strategy regarding funding of investments, as well as specifics of the funding arrangements in respect of any particular investment; The way in which Tadvest shall operate, including staffing requirements and outsourcing arrangements; Approvals of investments or disinvestments; Appointment and incentivisation of key executives; and Appointment of key service providers
However, given Tadvest’s relatively small executive team, the Company will utilise the services of external service providers to assist with certain functions.
Safyr Wealth Services (“SWS”) is Part of the SAFYR Group of Companies and is a licensed management and trustee company by the Financial Services Commission. SWS provides a comprehensive range of financial and fiduciary services to international businesses wishing to use the Mauritius jurisdiction as a platform for their growth plans. SWS services a wide variety of client base ranging from family offices and multi family offices to corporates, investment banks, serial-entrepreneurs and multinational companies, primarily focused on the African continent.
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Abman, a South African company, has been appointed under the Abman SLA to source information in relation to investment opportunities and provide information in relation to the Tadvest portfolio. In this capacity, Abman will be primarily responsible for providing information and recommendations to Tadvest in relation to the identification, negotiation and implementation of all transactions to be consummated by Tadvest in accordance with the investment objectives, parameters and policies of Tadvest. Abman also provides the following services; financial reporting, financial analysis of the portfolio companies and secretarial duties within the South African environment and facilitates property management, development & investment of the portfolio companies. Abman provides similar services to Property Developers and Investment holding companies within South Africa.
The management team of Abman has considerable expertise in property and structured finance within South Africa and abroad. Further details of key staff members within Abman can be found in section 10.2 of this business plan.
5.3. Board Responsibilities
Although the Company makes use of external service providers as detailed above, the Board of the Company is responsible for the management of the Company as well as strategic decision making and implementation.
This responsibility includes the following:
Determining the type of investments the Company will target (jurisdictions, required returns etc.); Funding of investments (debt / equity ratio, sourcing of equity etc.); Execution of investments and disposals; and Operational decisions related to the Company (staffing requirements, outsourcing arrangements etc.)
Abman will initially be mandated under the Abman SLA to provide the services as detailed in 5.2, but the Board will ultimately be responsible for the assessment of Abman’s performance and suggestions as well as the undertaking of potential acquisitions. Abman will present to the Board as required when potential acquisitions or divestitures have been identified.
In executing its overall fiduciary duty, the Board will appoint committees as detailed in paragraph 5.5.
5.4. Board Composition
For the Board composition, their relevant experience and qualifications please refer to paragraph 10.1.
5.5. Committee Structures
Committees of the Board assist in governance of the Company through focusing on specifically mandated tasks and responsibilities; however, the Board is the focal point of the corporate governance system and is ultimately accountable and responsible for the performance and affairs of the company.
Delegating authority to Board committees or management does not in any way mitigate or dissipate the discharge by the Board and its directors of their duties and responsibilities. Board committees are merely a mechanism to assist the Board and its directors in giving detailed attention to specific areas of their duties and responsibilities in a more comprehensive evaluation of specified issues. Being smaller, committees can go into greater detail and deal with complex issues where the full Board might not have sufficient time.
Board committees should be subject to regular evaluation by the Board to ascertain their performance and effectiveness. Disclosure of material information on the Board committees including their composition, terms of reference, number of meetings held etc should be dealt with in the annual report and the Chairperson of such committees should be in attendance at the Company’s shareholder meetings.
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5.5.1. The Audit and Risk Committee
Terms of Reference
The Audit and Risk Committee will focus on:
the functioning of the internal control system; the functioning of the internal audit department; the risk areas of the Company’s operations to be covered in the scope of the internal and external audits; the reliability and accuracy of the financial information provided to management and other users of financial information; whether the Company should continue to use the services of the current external and internal auditors; any accounting or auditing concerns identified as a result of the internal or external audits; the Company’s compliance with legal and regulatory provisions, its constitution, code of conduct, by- laws and the rules established by the Board; the scope and results of the external audit and its cost effectiveness, as well as the independence and objectivity of the external auditors; and the nature and extent of non-audit services provided by the external auditors , where applicable.
Shareholders, on request, will be able to obtain a copy of the current Terms of Reference of the Audit and Risk Committee at the registered office of the Company.
The Audit and Risk Committee will be composed entirely of non-executive directors. The Company will aspire to have a majority of the Audit and Risk Committee as independent non-executive directors although this is not a requirement. All members of the Audit Committee have financial awareness.
5.5.2. The Corporate Governance Committee
Terms of Reference
The Corporate Governance Committee’s role is to ensure that the reporting requirements on corporate governance, whether in the annual report or on an ongoing basis are in accordance with the broad principles of the King Code on Corporate Governance.
In addition to the above responsibility, the Corporate Governance Committee will have responsibilities specific to remuneration policies, which will include making recommendations with regard to:
determining, agreeing and developing the Company’s general policy on executive and senior management remuneration; determining specific remuneration packages for executive directors of the Company, including but not limited to basic salary, benefits in kind, any annual bonuses, performance-based incentives, share incentives, pensions and other benefits; determining any criteria necessary to measure the performance of executive directors in discharging their functions and responsibilities; and determining the level of non-executive and independent non-executive fees to be recommended to the shareholders at the Meeting of Shareholders.
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Additional responsibilities include responsibility for Board and senior executive nominations, in terms of which the committee should:
ascertain whether potential new directors are fit and proper and are not disqualified from being directors (prior to their appointment, their backgrounds should be investigated thoroughly); ensure that the potential new director is fully cognisant of what is expected from a director, in general, and from him or her in particular; ensure that the right balance of skills, expertise and independence is maintained; ensure that there is a clearly defined and transparent procedure for shareholders to recommend potential candidates; ensure that potential candidates are free from material conflicts of interest and are not likely to simply act in the interests of a major shareholder, substantial creditor or significant supplier of the company. This is of particular importance when a candidate has been nominated by virtue of a shareholders’ agreement, or other such agreement. In any case, candidates so nominated cannot be considered independent; and ensure that those directors who, in the opinion of the Board, have either acted in accordance with the instructions of a third party or have not discharged their duties as directors to the satisfaction of the Board, are not to be nominated for re-election.
The Corporate Governance Committee will be composed entirely of non-executive directors. The Company will aspire to have a majority of the Audit Committee as independent non-executive directors although this is not a requirement.
6. Investment Objectives and Operations Strategy
6.1. Introduction
The Company is an investment holding company with the primary objective of investing in attractive, high yielding and cash flow generative assets that provide investors with a combination of capital and income growth. Although the majority of the initial assets are in the real estate sector with attractive yields and capital growth, the strategy of the Company is to diversify the portfolio and reduce the property sector-specific risk within the investment portfolio, thereby enhancing risk-weighted returns for investors.
Although Tadvest itself is a new company, the underlying existing portfolio has evolved over 25 years through the investment activities of Alexander Dahm (Director and shareholder of Tadvest), David Savage (Abman Advisor and Director of Tadvest) and Thys Neser (Abman Advisor). Please refer to sections 10.1 and 10.2 for profiles.
6.2. Competitive Advantage of Tadvest
The Company will seek to invest in businesses that possess and demonstate competitive advantages in the relevant sectors and industries in which they operate. More details on the Company’s investment philosophy can be found in section 6.3.
The Company itself enjoys several competitive advantages which are expected to play a pivotal role in positioning the Company as a diversified investment holding company with a portfolio of high quality investments and an enviable reputation in the medium term.
Some of the competitive strengths of the Company include:
Existing portfolio of various best-in-class properties, a significant stake in listed property shares as well as a small basket of diversified investments in several sectors, creating a strong foundation for future
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growth as well as capital raising activities (details on the various assets can be found in section 9); Excellent track record of delivery in identifying, acquiring and exiting investments in a manner that creates value for the various stakeholders (although Tadvest is a new company, there is a 25 year track record linked to the founding members); Well-entrenched relationships with numerous business people, primarily in South Africa and Australia but also in Europe and America, resulting in a wide network through which opportunities can be sourced and executed; Cost and time efficiency in the identification and execution of opportunities due to certain services being outsourced (see section 5.2)
A dual-listed structure is expected to enhance the competitive strengths that are already in existence. As the Company will obtain access to a wide range of investors, it will be able to build a listed company profile and will be able to execute investments globally using Mauritius as a base.
6.3. Investment Philosophy and Exit Strategies
The investment philosophy of the Company is to identify assets with the following broad criteria:
A skilled and experienced management team with integrity and excellent work ethic; Strong business fundamentals and a proven track record; High projected growth emanating from a combination of operations in attractive sectors (strong demand and high barriers to entry) and relative competitive advantages within those sectors; and Synergies with other investments within the portfolio.
The overall approach is to partner with the existing management team of the business that is the target of investment by the Company, thereby reducing risk and creating long-term relationships which are expected to generate high returns for shareholders. The Company considers itself to be a longer term investor in general.
Current market conditions require an agile response to volatile conditions and the dual-listed structure with associated capital allocation flexibility provides an excellent platform for the Company to take advantage of global opportunities that meet the broad investment criteria.
In terms of the exit strategy for investments, the Company does not intend to hold its investments indefinitely. The Company will review all assets on a regular basis for continued inclusion in the portfolio based on overall investment strategy. The Company does not have a specific time horizon within which it must exit investments.
The current exit strategies pertain mainly to the various property investments in the portfolio and are as follows:
Certain structures are in place whereby undivided shares in specific properties vest when the underlying property appreciates to the point that the loan-to-value of the property is 60%. This vesting will trigger the conversion of the preference shares to listed ordinary shares in Pivotal Fund (JSE:PIV) (“Pivotal”) which are liquid or the Pod Fund Proprietary Limited. Certain direct holdings in property developments will be sold to listed partners, other real estate investors or funds once these assets have reached commercial viability. Equity stakes within investees will be assessed on a regular basis and if the Board decides that an asset has matured or that the asset is not in line with the Company’s strategy, a willing buyer will be sought in the market.
6.4. Diversification of Portfolio
The investment philosophy will be applied in diversifying the asset base, taking into account the following:
Prevailing market conditions and capital market expectations; Investment jurisdictions;
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Sector exposure and knowledge; and Asset-specific fundamental economic factors.
Diversification will be achieved gradually and the Company will not make investments purely for the sake of achieving such diversification. An investment opportunity will need to be attractive both when considered in isolation as well as when considered in the context of the broader portfolio. Diversification will therefore be a controlled and steady process.
The expected diversification as a percentage of net asset value (“NAV”) is indicated below, however this is merely a broad guideline:
Period % of NAV attributable to property % of NAV attributable to Non- assets property related assets 1-3 Years 80% 20% 3-5 Years 70% 30% 5-10 Years 55% 45%
6.5. Target Sectors
6.5.1. Property
Tadvest currently holds and intends to hold property investments that have been built up in various forms over a number of years, including:
Stakes in listed equity holding in Pivotal; and An unlisted portfolio held both directly in the Company and through Tadvest SA.
The listed property market in South Africa has performed exceptionally well. Long-term performance has been substantially better than the JSE All Share Index and recent performance has also been highly positive. The sector has been a hive of activity in terms of capital raising activities and acquisitions.
Source: SA REIT Association Monthly Chartbook July 2015
Pivotal, in which the Company holds a significant equity interest through Tadvest SA, is a JSE-listed property investment company with a focus on A-grade properties particularly in the retail and commercial sectors. Pivotal re-invests income into value-enhancing upgrades, acquisitions and developments.
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Pivotal enjoys a healthy pipeline of investment opportunities through relationships with developers and a deferred consideration mechanism that allows the development partners to share in risk and reward in relation to a particular development.
Pivotal is not a Real Estate Investment Trust (“REIT”) and does not pay dividends, however the fund has outperformed the JSE All Share Index considerably since listing late in 2014. Pivotal has however not been immune to recent pressure on the broader market. The year to date performance of 22.18% (Capital IQ, 20 August 2015) does however provide further evidence of the attractiveness of listed property in South Africa as a target investment sector.
Source: Capital IQ, 20 August 2015
The Company also holds and intends to consolidate its holding in several unlisted property investments, either directly or through other investments. Details of these properties can be found later in the business plan, however the investments represent an overall commitment to best-in-class developments which have proven to be highly profitable in recent years.
As already noted, the Company will seek to diversify away from property, partially through realising equity value in the assets currently in the portfolio as well as in the assets which will be acquired upon the NSX Listing. This realisation will be through a combination of “monetising” (increasing the loan to value on the properties) certain property assets and utilising rent income and other cash inflows to invest into new assets.
The Company will look to sell these properties when they reach commercial viability, unless these assets are within one of the property funds. The proceeds from the sale will be reinvested in future developments as appropriate. It is therefore highly likely, based on the extremely successful track record in this sector, that the Company will retain significant exposure to property going forward and will take advantage of opportunities as they arise, while remaining conscious of the broader diversification strategy.
These property opportunities are likely to arise in the unlisted and listed environments. In addition, new investment jurisdictions such as Australia, America and Europe have been targeted and the Company has formed a partnership with a property investment fund or developer with a presence in each of these countries. Retail and commercial opportunities will both be considered based on the specific circumstances at the time.
6.5.2. Food and agriculture
The Company currently holds and intends to consolidate its investments in the agricultural sector in South Africa, specifically in the mushroom and fruit sectors. This exposure will effectively be increased upon the NSX Listing as the investments are held through Tadvest SA and the Company will buy out the other shareholders in Tadvest SA upon this listing.
Agriculture is the foundation of developing economies and South Africa needs to ensure a healthy agricultural industry that contributes to gross domestic product (GDP) and society as a whole. (WWF, Agriculture: Facts and Trends South Africa)
As with many emerging economies, agriculture is thus a vital sector in South Africa and indeed the rest of Africa as well.
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With only 12% of South Africa suitable for the production of rain-fed crops and 3% considered truly fertile land, South Africa falls short of other countries, such as India, where arable land covers 53% of the country. (WWF, Agriculture: Facts and Trends South Africa)
Fertile land is thus a significant asset in the South African environment and South Africa is renowned as a strong agricultural player with the agricultural sector contributing significantly to GDP and exports.
There is strong evidence that economies of scale are critical to success in the South African environment. Although now somewhat out of date, but still representing the latest available data, the Census of Commercial Agriculture 2008 reflected a 31% decline in the number of farmers since 1993, resulting in the industry being left with fewer than 40,000 farms. Gross Farm Income (GFI) over the same period however increased by more than 300%, driving net farm income per farm unit to a level that is five times higher than it was in 1993. This is a direct result of the economies of scale that minimised cost growth at the same time as driving revenue growth.
This bodes well for larger investors such as Tadvest who can take advantage of opportunities in the industry caused by the various challenges. The significant barriers to entry in the industry are also positive for those who currently have strong positions.
In Country Mushrooms, Tadvest Limited intends to hold a 62% stake (post the acquisitions upon NSX Listing) in a market-leading producer of mushrooms with sound production techniques and its own logistics capability. In Sweet Sensations, Tadvest Limited intends to hold a 47.5% stake (post the acquisitions upon NSX Listing) in a fruit processing operation located in Nelspruit which has excellent supply chain management and a proven track- record.
These assets provide a strong platform for further investment in this sector and will also enable the Company to obtain a foothold in the export market. The Company will look to grow organically as well as through bolt-on acquisitions in this space.
Although Africa is a broad investment jurisdiction as discussed later on in the business plan, agriculture in particular is expected to present numerous opportunities across the continent. South Africa has the strongest position in sub-Saharan Africa in terms of food security which indicates that there is substantial room for growth in other African countries. The Mauritian-based structure of Tadvest puts the company in an excellent position to execute African investments. The relative food security of sub-Saharan African countries is demonstrated in the table below:
Source: PWC Agribusiness Insights Survey 2014/2015: “Africa – are you in for the ride?”
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6.5.3. Industrials
The Company currently holds and intends to consolidate its investments in the industrial sector that comprise businesses focused on:
Container storage; Self-storage via a fund; Printing services and equipment (including 3-D printing); and Aerospace lighting (Australia).
The Company will look to further the relationship with partners in Australia who have been aggressively expanding into the industrial and manufacturing sector.
Expansion of the self-storage venture in South Africa is also under consideration, particularly as a result of the current South African environment of increasing density in residential and commercial developments. The cost of land and the cost of living are driving these developments and this is resulting in commercial offices and residential homes having less storage space. The demand for storage is thus expected to increase and the Company aims to take advantage of this through a cost-efficient, user-friendly solution with excellent security. South Africa will also provide a good base for future expansion to Africa.
A further industrial investment of interest is 3-D printing, which is expected to become ever more relevant in global manufacturing processes:
“The technology for 3-D printing, also known as additive manufacturing, has existed in some form since the 1980s. However, the technology has not been capable enough or cost-effective for most end-product or high- volume commercial manufacturing. Expectations are running high that these shortcomings are about to change.” (source: PwC Technology Forecast 2014 Issue 2: The future of 3-D printing: “Moving beyond prototyping to finished products”)
In a survey undertaken by PwC and ZPryme, it was found that over two-thirds of companies surveyed were already using 3-D printing in some form:
Through the investment in Kemtek, a South African company, the Company is well-positioned to take advantage of the excitement around 3-D printing. Although this investment is a small proportion of the broader Tadvest portfolio, analysis by Canalys, a market research firm, anticipates that the “global market for 3-D printers and services will grow from $2.5 billion in 2013 to $16.2 billion in 2018, a CAGR of 45.7%” (source: PwC Technology Forecast 2014 Issue 2: The future of 3-D printing: “Moving beyond prototyping to finished products”).
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Kemtek entered into an agreement in 2014/2015 whereby the 3-D printing knowledge of Rapid 3D, a South African company started in 2004 that focuses on technical solutions for 3-D printing, and Build Volume, a South African company that focuses on the supply and aftermarket services for consumer 3-D printers, would be combined with the logistics and support infrastructure of Kemtek through a new subsidiary, Rapid 3-D JV.
6.5.4. Renewable energy
The Company does not currently have any direct exposure to the renewable energy sector, however this has been earmarked as a sector for possible investments in coming years.
South Africa in particular is facing an energy crisis and government’s plans for meeting electricity demand were outlined in the Integrated Resource Plan for Electricity (IRP) of 2010. The plan contains long-term electricity demand projections as well as details of how this demand should be met in terms of generation source, capacity, timing and cost.
Renewable energy is a major focus for the long-term sustainability of South Africa’s power sources, as demonstrated in the table below:
Source: WWF Technical Report 2014 – Climate Change and Energy – Renewable Energy Vision 2030 – South Africa
The Renewable Energy Independent Power Producer Procurement Programme (REIPPP), introduced in 2011, has been successful in delivering clean energy to the grid. This has positioned South Africa as an attractive destination for investment:
Source: WWF Technical Report 2014 – Climate Change and Energy – Renewable Energy Vision 2030 – South Africa
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In addition to the long-term attraction of renewable energy, many South Africans are currently considering alternative power sources in order to minimise their reliance on the national grid which is facing major supply constraints.
The Company will consider investment opportunities in this sector on an ad-hoc basis. Such opportunities may not be limited to South Africa although it is likely that this will be the main source of opportunities in this sector in the near future.
6.5.5. Healthcare
The Company does not currently have any direct exposure to the healthcare sector, however this has been earmarked as a sector for possible investments in coming years.
The Company will actively seek strong partners who are specialists in this industry, especially in the primary care, sub-acute and day care clinics. We view this as a strong growth sector due to the high costs of hospitals, the convenience factor and the ever increasing costs of the private health care sector (including medical aids).
In addition to the opportunity identified in South Africa, the Company feels that there is a very strong need for these services throughout the developing countries in Africa where healthcare infrastructure still has numerous gaps.
Europe also represents an opportunity, due to the increase in the average age of the population and the funding gap between the retirement age and mortality age. This places significant strain on the European economies, which may lead to budget cuts in certain sectors and ultimately an increase in demand for private healthcare due to the potentially poor service delivery in the public sector.
“Ageing population: The population aged 65 and over in the World Health Organisation European Region is projected to rise to 224 million by 2050. While individual countries are still at different stages in this development, this figure represents a doubling in the ratio of elderly people to those of current working ages. Sustaining this ageing population requires an increasing focus on prolonging and achieving equity in good health and wellbeing throughout the life course. But elderly people also increasingly require a package of long-term care that is partly delivered by healthcare and partly by social services, presenting a particular challenge for health system.” Source: The Future of Healthcare in Europe- London’s Global University
Average pensionable age in OECD countries by sex, 1950-2050
Source: National officials, OECD calculations and Turner (2007).
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Life expectancy after pensionable age by sex, 1960-2050
Source: Data on pensionable ages over time from Table 1.2. Historical data on life expectancy are taken from the OECD Health database 1960-95. Recent data and projections of life expectancy in the future based on the United Nations Population Division database, World Population Prospects – The 2008 Revision.
The Company will look to invest in this sector based on the aforementioned fundamental attractiveness thereof, but will look to achieve this through actively seeking partnerships with other companies and investors to pursue these initiatives.
6.6. Investment Jurisdictions
A key feature of the dual-listed platform is that the Company has the flexibility to raise capital from within and beyond the CMA as well as the ability to invest that capital within and beyond the CMA.
The Company has existing strong relationships in certain jurisdictions and these relationships will be leveraged to drive growth in the short- to medium-term. These relationships are primarily in Africa, with secondary relationships in Australia, America and Europe, among other jurisdictions.
The Company has taken a strategic decision to place greater emphasis on sectors rather than jurisdictions, however the nature of the existing portfolio, as well as existing relationships held by the Company, make it likely that Africa will be the primary jurisdiction for investment. The business plan will thus focus on Africa as a jurisdiction for investment, as other jurisdictions will be considered by the Company on an ad-hoc basis.
6.6.1. Africa
The global investment and business community has recognised Africa as an excellent growth opportunity, however not an opportunity that is without risk. Country-specific knowledge and experience is considered to be crucial to any successful investment in Africa and the Company will therefore leverage existing relationships as far as possible. Whilst Africa is often thought of as a single investment destination, the reality is that the various regions within Africa offer unique investment propositions.
Encouragingly, major African economies have demonstrated reduced reliance on specific sectors, which assists in reducing risk in the region for investors to some extent. However, recent pressure on commodity prices and African currencies has reinforced the fact that investment into Africa should be undertaken prudently, particularly as hedging opportunities are often limited.
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Source: Riscura Bright Africa 2015 – The story of Investment in Africa
The need for food, energy and consumer products in Africa will be driven by African population growth that is currently more than double that of the world population:
Source: Riscura Bright Africa 2015 – The story of Investment in Africa
Research has demonstrated that valuations in Africa relative to developed markets seem to vary considerably across sectors. This creates interesting opportunities for investors in the region:
Source: Riscura Bright Africa 2015 – The story of Investment in Africa
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Contrary to valuation multiples, research has shown that dividend yields track the S&P 500 quite closely on a sector-by-sector basis with only a couple of sectors differing significantly from the developed market.
Source: Riscura Bright Africa 2015 – The story of Investment in Africa
An investment platform that assists in executing investments throughout the continent is becoming increasingly more important, as South Africa is losing its dominant position on the continent from a private equity perspective:
Source: Riscura Bright Africa 2015 – The story of Investment in Africa
As previously noted, the Company has identified several sectors for further investment. Energy and industrials remain popular sectors for investment in Africa with healthcare regularly demonstrating activity as well:
Source: Riscura Bright Africa 2015 – The story of Investment in Africa
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Historically, African multiples have been lower than in developed markets. The major difference to developed markets is in the proportion of debt used to fund acquisitions, as many markets are relatively undeveloped in terms of raising debt capital. Unlike property assets, African investments often do not rely on leverage to generate high returns:
Source: Riscura Bright Africa 2015 – The story of Investment in Africa
Overall, Africa provides numerous opportunities for investors. The Company will look to combine its existing relationships with the dual-listed platform to raise and deploy capital into new investments in the target sectors and potentially other sectors on an opportunistic basis.
Over time, the Company will build its network of private equity and fund managers and will grow into a diversified investment holding entity.
6.7. SWOT Analysis
Strengths Weaknesses
Solid base of assets with strong future growth potential Concentrated asset exposure in South Africa
Company is newly incorporated and still needs to build Strong management and experienced Board of Directors its brand
Significant exposure to property sector as a result of Diversification achieved through the existing asset base limited diversification to date
Opportunities Threats
Solid base in South Africa and Mauritius to enter the Slowing economic growth in South Africa and volatility African and global markets through partnerships and of the currency against developed market currencies relationships in Africa, America, Europe and Australia (especially the United States Dollar)
Opportunity to divest from property assets and grow the Regulations to oversee private equity and investment private equity exposure of the Company in other sectors entities in general
Dual-listed structure will provide the Company with the Capital raisings may not be as well supported by opportunity to raise capital through different channels investors in the early stage of the Company as they and have access to a wider platform of investors would be at a later stage
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7. Rationale for Dual-Listed Structure
Mauritius is recognised as a business-friendly environment and the Company is Mauritian-resident with a number of investments in South Africa and Australia. As discussed previously, the long-term strategy of the Company is to diversify the current portfolio and invest in various global jurisdictions in coming years.
A listing on the SEM and a subsequent inward-listing on the NSX will have the following benefits:
As the Company grows, capital can be raised both within and beyond the CMA, with CMA residents holding their shares on the NSX register and non-CMA residents holding their shares on the SEM register; and Investments can be executed both within and beyond the CMA as the Company will enjoy full capital allocation flexibility as a result of the dual-listed structure
This structure therefore provides the platform for capital to be raised in a single entity and deployed worldwide using the current portfolio as a base of which to raise capital and demonstrate a successful track record. Strategic acquisitions may be undertaken using share swaps, vendor consideration placements, cash purchases or a combination thereof, thereby creating a consolidated portfolio of investments and achieving the strategic goals of diversification and high returns through income yield and capital growth.
The possible use of regional subsidiaries in various jurisdictions in future years may be driven by natural hedging opportunities (currency and interest rate risk) as well as overall tax efficiency to avoid double taxation of profits. In addition, the ability to raise debt in future in different jurisdictions may also result in a capital structure that maximises returns to shareholders while taking advantage of the natural hedges.
In order to comply with CMA Exchange Control Regulations, the inward listing on a recognised exchange within the CMA is required. For this purpose, the NSX has been chosen for the following reasons:
The Company is still in its infancy and has not yet achieved economies of scale, thus overall South African analyst scrutiny at this stage may not be in the best interests of the Company, particularly as the shares will initially be held among a small group of investors; The NSX has provided an initial view that the SEM listing rules will be acceptable to the NSX and thus the Company will have a significantly lower compliance burden in terms of continuing obligations than if it was listed on the SEM and either the JSE or the AltX in South Africa (this applies to corporate actions as well).
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8. Risks
A number of risk factors may affect the results of operations, financial conditions and prospects of the Company. The risk factors described below are considered by the Board to be material, however these factors should not be regarded as a complete and comprehensive statement of all potential risks and uncertainties.
Additional risks not presently known to the Board or that the Board currently considers immaterial may also adversely impact the Company’s business operations. The Company will make use of business insurance to mitigate risks where the risks are believed to be severe enough to warrant such insurance and where such insurance is available.
8.1. Capital and Portfolio Risk
The acquisition of assets, whether listed or unlisted securities or direct holdings in properties, carries the investment risk of a loss of capital and there can be no assurance that the Company will not incur losses. Returns generated from the investments of the Company may not adequately compensate shareholders for the business and financial risks taken. An investor should be aware that it may lose all or part of its investment in the Company. Many unforeseeable events, including actions by various government agencies and domestic and international economic and political developments may cause sharp market fluctuations which could adversely affect the Company’s portfolios and performance both in the short and long term.
The Company will address and mitigate those risks through extensive macro- and micro-economic analysis, applying both a top-down and a bottom-up approach to the investment opportunities available to the Company.
Together with the management team, and with the advisory services and support of Abman, the Company will perform the necessary due diligences required to make informed investment decisions. Systematic and non- systematic risks will however always be present when investing in proprietary positions in assets and therefore the risk cannot ever be completely removed. In exchange for this risk, the Company will invest only in opportunities which offer a return in excess of the determined cost of capital for the project/asset.
8.2. Currency Risk
As the Company has a global growth strategy, certain investments that the Company may execute will be located in foreign jurisdictions and will be denominated in currencies other than USD. For those investors whose base or home currency is not the same as the relevant foreign currency, there is a risk of currency losses if the foreign currency depreciates against the investors’ base currency.
8.3. Stock Market Risk
Investments made by the Company could decrease in value as a result of a decline in global stock markets.
8.4. Liquidity Risk
In addition to making listed investments, the Company shall invest in securities for which no liquid market exists. The risk of non-marketability of such securities may result in the market prices, if any, for such securities tending to be volatile and possibly not readily ascertainable. The Company may not be able to sell the securities when it desires to do so or to realise what it perceives to be their fair value in the event of a sale.
The sale of restricted and illiquid securities often requires more time and results in higher brokerage charges or dealer discounts and other selling expenses than does the sale of securities eligible for trading on national securities exchanges or in the over-the-counter markets. The Company may not be able to readily dispose of
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such illiquid investments and, in some cases, may be contractually prohibited from disposing of such investments for a specified period of time. In addition, in certain circumstances, governmental or regulatory approvals may be required for the Company to dispose of an investment. Restricted securities may sell at a price lower than similar securities that are not subject to restrictions on resale.
Further, direct property is a relatively illiquid investment and long lead times are sometimes required to divest from direct property holdings. This may affect the liquidity of the Company and the ability to repay investors, if required.
Land for development has no income return during the development stage and may be a drain on cash resources.
The majority of the Company’s investments are still maturing and for this reason still require additional capital investment, which increases the probability of dividends not being distributed by investees. The Company will therefore actively monitor its cash flow position to ensure all working capital requirements are met throughout the Tadvest Group and that the Company has sufficient funds to act on new potential investments.
8.5. Leverage and Financing Risk
The capital of the Company may be leveraged so as to achieve a higher rate of return. Accordingly, the Company may pledge its securities in order to borrow additional funds for investment purposes. While leverage presents opportunities for increasing the total return of the Company, it has the effect of potentially increasing losses as well. Accordingly, any event which adversely affects the value of an investment by the Company would be magnified to the extent that the Company is leveraged. The cumulative effect of the use of leverage by the Company in a market that moves adversely to the Company’s investments could result in a substantial loss which would be greater than if the company were not leveraged.
Whilst the gearing of the Company provides significant upside for ordinary shareholders, the management and directors are responsible for the Company as a whole and to make sure that the Company is not at risk of ceasing to be a going concern and to approach business activities in a responsible and ethical manner. In line with common practice, the Company will aim to keep the debt/equity ratios on property investments as high as practically possible in order to drive equity returns.
The debt/equity ratios on other equity investments will be assessed on a case by case basis. This assessment will be driven by analysing the cost of equity versus the cost of debt. Debt to equity ratios will therefore be monitored constantly, particularly with regard to the effects that they have on the profitability of the Company. This includes managing the debt levels of the businesses within agreed covenants with funding providers. Excessive risks will not be taken in this regard and an internal control process will be implemented to ensure that the business does not carry excessive financial risk.
8.6. Global Political, Economic and Financial Risk
As the Company will invest globally, it will be exposed to adverse political, economic and financial events in several jurisdictions. The value of the investments could decline as a result of economic developments such as poor or negative economic growth, poor balance of payments data, high interest rates or rising inflation. A similar situation would prevail due to political instability in certain jurisdictions. The Company will take reasonable steps to mitigate these risks, including risk insurance cover where appropriate.
The Company will place significant value on investments alongside relationships with parties who are trustworthy, have a great management team and have a market reputation for dealing fairly and being able to manage risks appropriately. The Company will not invest into areas with significant geopolitical risk or where the Board believes that the risk outweighs the potential returns. Internal controls will be stressed throughout the decision making process. Regulatory requirements (SEM Listing Requirements) will require the Company to obtain shareholder authorisation for certain corporate actions, which will need to be approved by such shareholders by way of general or special resolutions prior to executing the corporate action.
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8.7. Regulatory Change May Affect the Company
Legal or regulatory change may affect the Company and impose potential limits on the Company’s flexibility in implementing its strategy. Any change to landlord and tenant, planning, trust, tax (including stamp duty, VAT, transfer duty and stamp duty land tax) or other laws and regulations relating to the areas in which the Company operates may have an adverse effect on the Company.
The levels of, and relief from, taxation may change, adversely affecting the financial prospects of the Company and/or the returns to shareholders. The Company is subject to the tax authorities within the jurisdictions it operates and taxes and tax dispensations accorded to the Company may change over time.
The nature and amount of tax payable is dependent on the availability of relief under tax treaties in a number of jurisdictions and is subject to changes to the tax laws or practice in any other tax jurisdiction affecting the Company.
Any change in the terms of tax treaties or any changes in tax law, interpretation or practice could increase the amount of tax payable by the Company and could affect the value of the investments held by the company or affect its ability to achieve its investment objective and alter the post-tax returns to shareholders. The level of dividends the Company is able to pay would also be likely to be adversely affected.
Investment decisions take into account gross and net of tax returns. The tax consequences are always taken into account in making an investment, however this is not the sole or main purpose of entering into any transaction/investment. Tax regulations will have to be complied with and impacts thereof will have to be monitored on a consistent basis. Tax authorities will normally release public review proposals to tax law changes open to public for review, when such changes will have significant impacts on the market, investments or the economy. Our internal controls will include the monitoring of proposed amendments and the effects that it would have on the Company portfolio, so that pro-active, as opposed to reactive, decisions can be made in this regard.
8.8. Forward looking statements
This document contains certain statements that are forward looking. By their very nature, forward looking statements involve certain risk and uncertainty because they relate to events and depend on circumstances that may occur in the future, some of which are, or may be, beyond the Company's control. No assurance can be given that the future results or development covered by such forward looking statements will be achieved. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by such forward looking statements.
8.9. Tadvest SPA not signed or uneffective
In the unlikely event whereby the Tadvest SA SPA cannot be implemented, the company would not be able to acquire the remaining share capital of Tadvest SA. However the company would still continue to implement its investment strategy on the back and with the support of its strategic partners and existing pipeline of assets. 8.10. Failure to raise capital and meet the financial forecasts
The financial forecasts set out in the Business Plan were conservative and have not taken into consideration any further acquisition apart the remaining share capital of Tadvest SA. Moreover, the private placement on the NSX providing the funds to acquire the remaining share capital of Tadvest SA should be fully subscribed, and in the unlikely event whereby insufficient funds were raised, the company would either envisage using complementary bank lending to still achieve the acquisition, or would eventually decline the opportunity.
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9. Description of Assets and Financial Forecasts
Tadvest is an Investment Holding company which invests in a diverse range of assets with the goal of value creation. These assets or companies fall mainly under the categories of industrials, consumer goods, commercial and residential property. As a strategic partner, Tadvest aims to guide these companies to sustainable growth with its years of experience as well as constantly searching for new business opportunities to grow the portfolio.
Tadvest Limited will hold 14.66% of Tadvest SA as at the time of SEM listing which will then increase to 100% at listing on the NSX.
At the time of SEM listing, it is envisaged that Tadvest Limited will hold the following Investments:
Kemtek Imaging Systems Holding Limited (14.28%) Trakka through Light Source Trust (20%) CK 1 Abbeymead Preference Shares (30.15%) Broadacres Retreat (Pty) Ltd (9.5%) Tadvest SA (Pty) Ltd (14.66%)
Tadvest SA (Pty) Ltd shall consist of the following Investments which are summarized in point 9.2 of the Business Plan: Tadvest Industrial (Pty) Ltd: Cedar Road Storage (100%) Topshell (Pty) Ltd (50%) Topshell Agripark (100%) Pivotal Shares Sweet Sensation To be renamed Fruitvest (47.5%)
Tadvest Commercial (Pty) Ltd: Rosebank Towers (9.88%) Exact Trade (32.925%) Set Point Development (100%) Epping (Held through POD Preference Shares (10.98%)) Waterfall Ridge (17.78%) Hertford Office Park Development (33.33%) Country Mushrooms (Pty) Ltd (62%) Abreal (50%) Chilli on Top (29.63%)
Tadvest Residential (Pty) Ltd: Sable Homes Investments (Pty) Ltd (50%) Sable Homes Investments 2 (Pty) Ltd (50%)
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9.1. Asset Held by Tadvest Limited (As at SEM Listing)
9.1.1. Kemtek Imaging Systems
Full Name Kemtek Imaging Systems Holding Limited Position in Tadvest Group 14.28% held by Tadvest Limited Website www.kemtek.co.za Acquisition Date 5 December 2014
Kemtek Imaging Systems Holding Limited (“Kemtek”) provides high-end printing, barcoding and labelling solutions. They began trading in 1988 and operate from their head office in Johannesburg, with full service branches located in Pretoria, Durban, Port Elizabeth and Cape Town. Export sales to Africa and the Indian Ocean Islands are handled through their Johannesburg and Pretoria branches, as well as being assisted by distributors and subsidiaries in various African countries. Kemtek has recently entered the 3D printing industry through their new venture Rapid 3D. Rapid 3D specialises in 3D printers for the manufacturing sector. Together they aim to become market leaders in this exciting new industry in the coming years.
As a supplier of specialized printers and operating parts as well as scanners and labellers, Kemtek understands the importance of service delivery. They focus on customer relationships and their highly trained staff strive to protect their position as market leaders in the printing industry.
Management and Directors:
Leon Kruger, Chief Executive Officer Qualification: B.COM, CAIB (SA), CFP and MBA A highly experienced and commercially astute CEO/COO with over 20yrs professional services experience in South Africa’s leading banking and legal firms. Has a strong analytical and strategic approach and utilises a collaborative and accountable management style to engage with key stakeholders and empower business operations at all levels.
Gavin van Rensburg, Managing Director Gavin qualified as a photo lithographer in 1980 and has since been in the printing industry. Gavin joined Kemtek in 1995 to take on the Screen and Kodak agencies and has worked his way up through the years to Managing Director of the Group.
Mark Broude, Executive Director (Chief Operating Officer) Mark Broude manages the Auto ID and Office Products Divisions. Mark joined Kemtek in 2003 as a General Sales Manager and has since progressed in the business from this position. Mark has a wealth of knowledge in the sales industry and has over 30 years of work experience. Mark is also on the Board of Directors for the newly formed Rapid 3D company, being the latest venture of Kemtek into the 3D market (commercial and consumer market).
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Donovan De Abreu, Group Financial Manager Donovan De Abreu qualified as a CA (SA) in 2011. Since qualifying as a CA (SA) he has gained 5 years post article experience in Aviation, Retail and most recently the Printing sector. Donovan is also on the Board of Directors for the newly formed Rapid 3D company, being the latest venture of Kemtek into the 3D market (commercial and consumer market).
Board of Directors for Kemtek:
NAME POSITION EXECUTIVE/NON- EXECUTIVE Dave Savage Chairman Non-Exec Leon Kruger CEO Exec Gavin van Rensburg Director Exec Mark Broude COO Exec Vivian Rudaizky Director Exec (Retiring) Isaiah Joffe Director Non-Exec (Retiring) Peter Samuel Rudaizky Director Non-Exec Thys Neser Director Non-Exec
Key Financial Numbers:
As per the below figures, Kemtek has seen a steady growth in revenue year on year and is currently in line with the budgeted figures for the 2015 financial year (August year-end)..
Numbers denominated in ZAR August 2012 August 2013 August 2014 August 2015 Audited Accounts Audited Accounts Audited Accounts Budgeted Accounts EBIT 21,760,983 18,805,227 12,159,477 25,072,322 Net Profit after Tax 13,861,754 10,078,544 6,030,808 14,452,072
Future growth prospects are expected to originate in the next few years from an increased footprint in the digital printing market, as well as further investment into 3D printing, with specific focus on the consumer market.
9.1.2. Trakka
Full Name Trakka Corporation Pty Ltd Position in Tadvest Group 20% held by Tadvest Limited via Lightsource Trust Website www.trakkacorp.com Acquisition Date 5 December 2014
Trakka is a privately held Australian aerospace company, whose primary focus is to design, manufacture and market, high-powered searchlight solutions for airborne, marine and land-based operations internationally. Trakka is headquartered in Melbourne, with sales and service facilities in Europe, the Americas, Africa, the Middle East and Asia. Trakka offers a comprehensive portfolio of searchlight products, accessories and spare
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parts for civil and military operators. Its searchlight systems are used by ground and airborne law enforcement, security forces, as well as search and rescue agencies to strengthen their capability to achieve mission objectives in order to offer clients a complete surveillance and search package. Trakka has joined forces with SWE Systems, a Swedish based company dedicated to airborne HD camera solutions. SWE Systems offer in house design and development of specialised airborne camera systems, with a strong focus on broadcast, powerline and surveillance capabilities.
Key Financial Numbers:
Trakka is still in the research and development phase and for this reason the historic information before the 2015 financial year will not be a true indicator of the potential of the Company. The Company has made great advances in the specialised lighting sector and foresee the benefits of this coming to fruition in the 2016/7 and 2018 financial years.
Future growth prospects are expected to originate from expansion into new markets such as Asia, and through strategic acquisitions of businesses that play into the overall Trakka corporate growth strategy. The most recent talks have been with a camera specialist in Sweden, this would be ultimately the goal of the company to combine the high end lighting and camera packages.
Trakka Corp (Pty) Ltd Numbers denominated in AUD June 2012 June 2013 June 2014 Audited Accounts Audited Accounts Audited Accounts EBIT -3,902,946 -6,106,844 -4,468,476 Net Profit after Tax -2,957,392 -5,028,005 -3,502,387
Trakka Corp (Pty) Ltd Numbers denominated in ZAR June 2012 June 2013 June 2014 Audited Accounts Audited Accounts Audited Accounts Converted AUD to ZAR at average 7.9877 9.0568 9.5136 annual exchange rate EBIT -31,175,562 -55,308,465 -42,511,293 Net Profit after Tax -26,622,760 -45,537,636 -33,320,309
Management and Directors:
Moss Ngoasheng, Director In 1987, he completed a B.Soc Sci Honours – Industrial Sociology (First Class) at the University of Natal, Durban, after which he studied at the Institute of Development Studies at the University of Sussex in Brighton, England, gaining an MPhil Development Studies (First Class). He has been a consultant to the World Bank and National Housing Forum (South Africa) on aspects of economic policy in South Africa. He has lectured on sociology at the University of Natal in Durban and was research Assistant fellow at the university’s Departments of Sociology and Town and Regional Planning. He has also been a visiting assistant director in the Department of Economic History at the University of Cape Town. When democracy came to South Africa Moss served from 1995 to 2000 as economic advisor in the Presidency. He also served on the African National Congress’ (ANC’s) economic policy unit for a number of years. He is a member of the board of Dimension Data Middle East and Africa, South African Breweries, Ntsimbintle Mining (Pty) Ltd, Mokala Manganese Mining (Pty) Ltd, Wingate Group Holdings (Pty) Ltd and Business Leadership South Africa.
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Edwin Daniels, Joint Managing Director Mr. Daniels has served as a director of numerous public and private companies. He was a director of Waco International, a US-based multinational scaffolding and building products company that was ultimately listed; a director of Retail Apparel Group, a high-growth women’s multi-unit fashion chain, CFO of Village Roadshow’s entertainment and cinema divisions; CEO of the Village Entertainment Property Trust, the only entertainment REIT listed on the ASX (“Australian Stock Exchange”), and was the internal advisor to a prominent family office in Melbourne, Australia, with a broad range of property, private equity and venture capital investments and holdings. Since 2009 Daniels has overseen the development of the Gencor Group, the family office managed together with Rudaizky.
Peter Rudaizky, Joint Managing Director Mr. Rudaizky has extensive entrepreneurial and operational expertise in manufacturing and distribution, and has been instrumental in the successful establishment and development of a portfolio of personal business assets in South Africa, the US and Australia, including Kemtek Imaging Systems Ltd (South Africa), Kemtek Imaging Systems P/L (Australia), and Edgecraft Corporation (USA). Peter serves on his own family company’s board where he has been instrumental in its growth and in its diversification into the property sector. He has also represented the same prominent family office in Melbourne, Australia managing the operations of a group of their innovative technology driven businesses that provided security related products and services to law enforcement, military and homeland security. Since 2009 Rudaizky has overseen the development of the Gencor Group, the family office managed together with Daniels.
Daniel Kiehl, Vice President, Global Operations Mr. Kiehl was instrumental in developing and executing the overall operating strategy for Gyrocam Systems, LLC, a manufacturer of gyro-stabilized camera systems. Mr. Kiehl navigated the organization through explosive expansion which included: increasing thru-put from 5 units a year to over 60 units a month, opening new facilities, tripling employment and executing an Enterprise Resource Planning (ERP) conversion. The results of these efforts were directly responsible for numerous follow-on government delivery orders. Innovative supply chain negotiations led to a substantial reduction in capital required to support the industry’s quickest order cycle while significantly reducing the cost basis by more than 40%. Mr. Kiehl developed and initiated detailed companywide robust processes which produced the highest readiness rates for the program office. These combined strategies and implementations resulted in an acquisition by a Fortune 100 company.
Willy Bagg, Chief Financial Officer Mr. Bagg is an experienced financial executive with entrepreneurial, general management and financial experience gained through working in a variety of industries in South Africa, the USA and Australia. Prior to Trakka, he was a Director at a company that specialised in providing unique working capital financing facilities to companies. Concurrently he served as Managing Director of Oxford Asia Pacific Investments, a boutique private equity Investment Company and was also a non-executive director of a company providing training, organisational and people development services. His Australian experience also includes working in specialised forensic accounting and business advisory organisations and senior management positions in manufacturing and distribution businesses. During a 15-year career in the United States, Mr. Bagg was first a Management Consultant in the Los Angeles office of Price Waterhouse and then Chief Financial Officer for Waco International, a listed manufacturer and distributor of building products. Willy is a Chartered Accountant who also has also has significant teaching experience having lectured in both undergraduate and extension programs in Finance in the USA.
Dave Krejsa, Global Service Manager Mr. Krejsa has a background in Mechanical Engineering and has spent his career working “hands on” in practical applications of his craft. Over the past 25 years, Mr. Krejsa has worked on new platform development teams in addition to developing service centres. In his most recent role prior to Trakka, Mr. Krejsa developed the comprehensive processes for aftermarket service for Gyrocam Systems, LLC, a manufacturer of gyro-stabilized camera systems, which during Mr. Krejsa’s tenure had annual revenues of nearly $200mm. Mr. Krejsa built the service operation from the ground floor up and developed an industry best readiness rate and incredible service cycle time of less than 48 hours. His insight to determining root cause failures and problem solving was key in developing easy to understand processes and troubleshooting trees to quickly resolve faults and quickly turn customer issues.
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Shawn Mitschelen, CEO, Trakka USA LLC and Director of Federal Government Programs Mr. Mitschelen’s has an Associate Degree in Electronics Technology and a Bachelor of Science in Business Administration and Management. He has eleven years of experience as a Production Manager for Boeing/Hughes Aircraft. During his tenure with Boeing, he managed dual-capability production lines manufacturing searchlight systems for law enforcement, military, search and rescue, and also solar simulation equipment for small-scale and multi-million dollar aerospace projects worldwide. He has co-authored patents for new searchlight design and solar simulation equipment (patent awarded).
Mr. Mitschelen also has twelve years of experience as Director of Marketing and Sales of searchlights and solar simulation systems worldwide. He was a recipient of the Boeing Technical Excellence Award and completed several courses at Boeing Management School including Production/Project Management, Production Management/Process Efficiency, ITAR Restrictions, and Import/Export Compliance.
Cliff Schidlewski, Engineering Manager Mr. Schidlewski’s background is in Electronic Engineering. He has over 25 years of engineering experience and has both designed and managed teams developing products from concept to production (including environmental qualification and regulatory compliance) for harsh environments including rolling stock, defense and aerospace. Mr. Schidlewski’s background in working through the complexities of aerospace regulations and compliance has been extremely beneficial to his role at Trakka and he has been instrumental in managing the certification process for Trakka’s System.
9.1.3. Constantia Centre
Full Name Constantia Centre GRA 6,000 m2 Net Rental R100 p/m2 Capitalisation Rate 8% - 9% Position in Tadvest Group 30.15% held by Tadvest Limited through Abbeymead Enterprises Acquisition Date 5 December 2014
This single-tenanted 6000 m2 development, comprises one building with Tadvest owning a 30.15% undivided share in this building. This building has been custom designed for data recovery and other facilities for Standard Bank.
This asset was held under a bare dominium, which expired with the lease at the end of April 2015. This asset will therefore remain in the portfolio as a short term hold with the view to actively seek a buyer. The asset management team is in the process of concluding the lease negotiations with the tenant. The Company is currently negotiating the sale of this Property with a potential buyer.
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9.1.4. Broadacres Retreat
Broadacres Retreat is a residential development in Broadacres, Fourways. The development consists of 2 and 3 bedroom duplex units and apartments. The development will be completed in the next 2 to 3 years. Phase 3 of this development is currently being marketed, with Phase 1 and 2 already complete.
Full Name Broadacres Retreat Proprietary Limited Estimated Phases of Development Three Phases Position in Tadvest Group 27.5% equity share held by Tadvest Residential and 9.5% equity share held by Tadvest Limited Acquisition Date 5 December 2014
The development is still capital intensive due to the cost of servicing the land. Once the development is fully developed, the profits will be distributed to shareholders for investment into new residential developments.
Management and Directors:
GBJ Bowes B Compt (Unisa), CA(SA) Gavin qualified in 1995 as a chartered accountant completing his articles with audit firm Selby and Company. He then spent three years as financial manager in a family company. He joined Sable Holdings Limited in 1998 as financial manager, gaining experience in property investment and development in all property sectors. He also served as Managing Director at Sable Holdings for a period.
PH Nash B Comm (Wits) Paul has over 30 years of experience in the property industry. Paul is currently the Non-executive chairman of Sable Holdings Limited, a property specialist Company.
Dave Savage – refer to brief CV under 10.1 Thys Neser – refer to brief CV under 10.2
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9.2. Assets Held by Tadvest SA (Pty) Ltd (As at SEM Listing)
9.2.1. Cedar Land
Full Name Cedar Land Land Area 60,000m2 Position in Tadvest Group 100% undivided share held by Tadvest Industrial Acquisition Date Existing Asset in Tadvest Industrial
This property is situated on Cedar Rd, Chartwell, Johannesburg. This site, made up of two plots of land, has a prime location situated across from the entrance of Dainfern and Steyn City. As Tadvest Industrial will look to be the seed investor of Storvest, this was a strategic acquisition. We have recently commenced with our feasibility studies, but are hoping to achieve a first year yield/return of 12.5% to 13.5%, with a 20% IRR in year 5 of the project. The land has been maintained at cost over the forecasted period 2016 to 2018.
9.2.2. Topshell
Full Name Topshell Proprietary Limited Position in Tadvest Group 50% held by Tadvest Industrial Website www.topshell.co.za Acquisition date Existing asset in Tadvest Industrial
In 2005, Stellenbosch based entrepreneur, Deon van der Merwe founded Topshell Container and Toilet Hire, a company that rents container-based site offices, stores and chemical toilets, with the construction industry as its anchor customer. Topshell not only converts containers into storage units but also designs and manufactures custom built living and storage solutions on site to meet customers’ needs. Although the primary market is still the construction industry, Topshell has expanded its offering to cover accommodation, business to business, individual and domestic storage.
Topshell Rental provides a site rental service to primarily the construction industry, but also to anyone who needs a site office, secure site store or chemical toilets.
Topshell Life comprises of container-based living pods. Each luxury unit is fully equipped and custom built to client specifications. Unit sizes are available in standard 6 metre and 12 metre container lengths.
Topshell Self-Storage provides storage space for general goods or vehicles at Topshell Park, Stellenbosch.
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Management and Directors:
Deon van der Merwe (Managing Director) Deon is a qualified mechanical engineer who spent 11 years with Denel performing R&D and project management. He then worked as an operations manager for a mining company for 5 years before he founded Topshell in 2005. Deon is supported on the board of directors by Dave Savage and Thys Neser, both with extensive business development knowledge.
Dave Savage (Non-Executive Director) – refer to brief CV under 10.1 Thys Neser (Non-Executive Director) – refer to brief CV under 10.2
Key Financial Numbers: Numbers denominated in ZAR February 2013 February 2014 February 2015 Audited Accounts Audited Accounts Unaudited Accounts EBIT 862,099 2,603,092 1,475,756 Net Profit after Tax 219,162 1,428,280 361,210
Topshell will look to expand into further self-storage opportunities in Epping and Stellenbosch (Both situated in the Western Cape, South Africa). They are also busy with self-storage negotiations in Fisantekraal, Cape Town. Topshell will also look to grow the business to Gauteng by Q1 2016. This will provide them with a greater market for their products as well as give them more accessibility to the Northern parts of South Africa and our neighbouring countries. This is an exciting company with good growth prospects. Topshell also has strategic value as we will look to use containers in certain of our self-storage developments. Topshell is therefore considered to be a long term hold at this point in time.
9.2.3. Sweet Sensations (To be renamed Fruitvest)
Full Name Sweet Sensation 89 (Pty) Ltd Bronpro Processors (Pty) Ltd Hoedspruit Fruit Processors (Pty) Ltd Position in Tadvest Group 47.5% held by Tadvest Industrial Website www.bronpro.co.za Acquisition Date Existing Asset in Tadvest Industrial
Sweet Sensation is a holding company of two fruit processing plants in the Lowveld area. Hoedspruit Fruit Processors are situated in Hoedspruit and focusses mainly on the production of frozen mango concentrate and purees as well as mango atchar. Bronpro, based in Nelspruit, produces high quality aseptically packed mango and guava purees and concentrates. They also manufacture concentrated and high quality formulated juices and nectars for use by industry to produce quality single strength beverages. Sweet Sensations has evolved from a small scale manufacturer of frozen and preserved guava and mango pulps to a South African market leader in the manufacture of Aseptic subtropical pulps and concentrates. Sweet Sensations intends to change its name in future to Fruitvest.
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Management and Directors:
The Sweet Sensations Group consists of two underlying companies being Bronpro Processors and Hoedspruit Fruit Processors. The Sweet Sensations Group is currently undergoing a group restructure. The Board will consist of 4 members, who will be made up from the following executive and non-executive Directors. The Board composition is still to be formalized.
Rick Basson, Managing Director - Bronpro Rick completed his BSC degree in Food sciences and has been in the Fruit production business for more than 15 years. Rick has a vast knowledge of this industry, especially dealing with aseptically packed purees and concentrate.
Neels De Kock, Managing Director - HFP Neels obtained a Bachelors in Commerce at the University of Pretoria and has spent over 15 years in the fruit production industry. Neels also brings a wealth of knowledge and experience to the table.
Daan De Kock Daan Qualified as a CA (SA) in 1996 and started his own practice in 1997. Daan has been involved with Bronpro since 2003 and since 2006 with HFP. Daan has an in-depth knowledge of the Group and the markets locally and internationally.
The executive team is supported by the following non-executive board members: Jaap Beyers, Chris Steyn and Thys Neser. Between these board members, they have a wealth of knowledge with all of them entrepreneurs in their own right. They have also all been involved in the fruit processing industry for more than 10 years.
The prospects of the business are as follows:
Hoedspruit Fruit Processors:
Addition of a cooling warehouse to increase potential storage space of the facility, which should enable the business to improve stock capacity and increase sales throughout the year.
Bronpro:
Expansion of the macadamia nut plantations to cater for the growing demand in the market and to diversify the product offering. Upgrading of facilities to improve efficiencies. Investment in socio-economic projects to uplift the neighbouring communities. Expanded product offering.
9.2.4. Country Mushrooms
Full Name Country Mushrooms Proprietary Limited Position in Tadvest Group 62% held by Tadvest Commercial Website www.countrymushrooms.co.za
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Country Mushrooms was established in 1986 on the Wattlewood farm in the Bapsfontein area. With quality mushrooms being the core of their business, Country Mushrooms go to extreme lengths to constantly produce the freshest mushrooms on the market. Through the addition of the Aalwyne farm and the introduction of innovative technology and improved cultivation methods, the production output on the two farms has been increased to a current average of 50 tons per week. This production output constitutes 85% white and 15% brown mushrooms, of which 90% is sold fresh and 10% is processed in brine. Both farms have their own pack houses where all mushrooms are packed before delivery. With a fleet of vehicles, Country Mushrooms is able to deliver anywhere in Gauteng and surrounding areas on a daily basis.
Management and Directors:
Nichol Muller, Managing Director Nichol Muller studied as a Millwright and has 20 years’ work experience. He has spent 17 years in mushroom production and management.
Morris Gilbert, Director of Marketing, Sales and Distribution Morris Gilbert obtained his Agricultural diploma and has over 30 years work experience and has spent the majority of his years in mushroom production and marketing.
Jan Engelbrecht, Director of Finance, Human Resources, Information Tech & Administration Jan Engelbrecht obtained his Bachelors and honours degree in Commerce and has over 40 years’ experience in finance, administration and Information Technology.
The senior management and directors are supported on the Board by Thys Neser (Chairman and Non-Executive Director) and Giep Stander (Non-Executive Director) a CA (SA) with over 40 years’ experience in public practise and this industry.
The senior team is supported by well qualified mid- and junior-management teams. These employees have a wealth of experience and play a pivotal role in the success of Country Mushrooms. The company currently employs 216 personnel.
Key Financial Numbers: Numbers denominated in ZAR September 2012 September 2013 September 2014 Audited Accounts Unaudited Accounts Unaudited Accounts EBIT 6,250,298 4,274,374 2,300,858 Net Profit 4,884,688 3,193,737 1,215,025
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9.2.5. Abreal
Full Name Abreal Proprietary Limited Position in Tadvest Group 50% held by Tadvest Commercial Website www.abreal.co.za
Abreal is a property management company focusing on Commercial, Industrial and Retail properties. They also have a number of service offerings (divisions) that focus on vacant land management, marketing and smaller refurbishment projects. The other shareholders of Abreal are Pivotal (25%) and Abland (25%). Both these shareholders add a wealth of knowledge and expertise to this company. Abreal in turn plays a very strategic role for Pivotal and Abland and provides them with the in-house tools to effectively and efficiently run their portfolio of properties.
Management and Directors:
Danie De Goede, Managing Director Danie de Goede qualified in 1993 through the Central University of Technology in HR/IR Management. In addition to this, he completed other law curriculums and 1 year Advanced Certificate In Shopping Centre Leadership and Estate Agency Board Exam.
Salomie Peters, Financial Executive Salomie is a Chartered Accountant, having qualified in 2007 and is a member of the South African Institute of Chartered Accountants, and additionally, obtained a post-graduate diploma in Advanced Project Management at the University of Pretoria.
Danie and Salomie are joined on the Board by the following non-executive Directors: Dave Savage, Aaron Suckerman, Thys Neser and Jackie van Niekerk.
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Key Financial Numbers: Numbers denominated in ZAR February 2013 February 2014 February 2015 Audited Accounts Audited Accounts Unaudited Accounts Net Profit/(Loss) after 1,205,125 (710,560) (440,280) Tax NP/ Net (Loss)% 5% -3% -1%
Abreal is actively seeking opportunities to manage property assets in Africa and to expand their property portfolio in South Africa. Abreal has recently acquired a stake in a Zimbabwean Property manager with the hope to accelerate their expansion in Africa. At this point in time however, Abreal is expected to remain a cost centre.
Abreal is currently improving their service offering by incorporating the following companies:
Abreal Projects – Tenant Fit outs and minor renovations Abnormal – Full bouquet of marketing services Abreal Urban – vacant land & nodal management
9.2.6. Commercial Property Assets
As one of Tadvest’s strategic partners, Abland is a market leader in the development of commercial and industrial property in South Africa. Abland strives to create best-in-class, sustainable developments which meet their clients’ exact requirements both as investors and occupiers.
Abland continues to be a trend-setter and innovator, responsibly developing property assets which enhance clients’ and investors’ businesses. Building on the cornerstones of excellence, commitment and enthusiasm, Abland tirelessly pursues new growth opportunities for sustainable long-term value creation through cutting- edge commercial, industrial and retail property development.
Abland has also formed a strategic partnership with The Pivotal Fund Limited (JSE (SJ): PIV) as well as The Pod Property Fund. Projects with a market value of ZAR 200million or less will be considered for Pod, other larger projects will be in partnership with the Pivotal Fund. These fund structures are designed to allow investors that have identified or initiated a development to participate in these funds, while retaining the benefit from the initial capital growth of the project. This is achieved by ring-fencing the development until it is commercially viable (the criteria for which will be agreed up front between Pivotal/Pod and the investors).
Before commercial viability is achieved, development and financial risk and reward in respect of the development remain with the relevant investors. Once a development becomes commercially viable, the ring fencing falls away and the investors’ interest converts from an interest in the underlying development to an interest in the broader Pod Property Fund portfolio (including the development).
Pod will acquire undeveloped land (or land in the process of development) from a vendor or vendors for a cash price equivalent to its value.
The cash price will be financed by the issue by Pod/Pivotal Fund of a particular series of preference shares relating to the property in question (typically to the vendors, although not necessarily so).
The preference shares will compulsorily convert into ordinary shares on commercial viability.
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9.2.6.1. Waterfall Ridge (Allandale Commercial)
The mixed-use development site is located on the corner of Pretorius and Harry Galaun Roads, directly opposite the Mall of Africa entrance. The 16 hectares is earmarked for a precinct development with proposed developments that include dealerships for Audi, BMW, Jaguar, Land Rover and a free-standing Pick ’n Pay with complementary retail and motor-related retail. The area will be upgraded with new roads and landscaping that will enhance and integrate the different elements in the precinct.
The acquisition of the land was a strategic acquisition to further strengthen the node around the Allandale precinct.
Full Name Waterfall Ridge (Allandale Commercial) Land Size 147 051m² Position in Tadvest Group 17.78% undivided share held by Tadvest Commercial
9.2.6.2. Hertford Office Park
Full Name Hertford Office Park GRA 53,772 m2 Average Net Rental R149.85 p/m2 Capitalisation Rate 8% - 9.5% Position in Tadvest Group 33.33% undivided share held by Tadvest Commercial
Tadvest intends to hold 33.33% interest in Hertford Office Park which is ideally located on the corner of Allandale and Bekker Road opposite the Mall of Africa development. The park comprises of approximately 58 000m² of bulk made up of four completed buildings and a fifth building (Building E) of 3 880m2 under construction. The balance of the bulk will be developed on demand. The buildings provide space for smaller or larger users and the park further offers sufficient parking and security. The Waterfall Ridge acquisition together with the Hertford development will form a part of the core developments of the greater Allandale Precinct.
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9.2.6.3. Rosebank Towers – Under Construction
Full Name Rosebank Towers GRA 25,016 m2 Average Net Rental ZAR 179 p/ m2 Captalisation Rate 8% - 9% Position in Tadvest Group 9.88% undivided share held by Tadvest Commercial Website www.rosebanktowers.co.za
Rosebank Towers is situated in the heart of the ever-growing business hub of Rosebank, located opposite the Firs and across the road from the exclusive Hyatt Hotel. The site provides the perfect location for a head office of a local company or a multinational tenant. The redevelopment will consist of 18,665 m2 of premium office space.
The site is within walking distance of the Mall of Rosebank and The Zone Shopping Centre, both of which host numerous world-class amenities. The building will be the tallest in the area at fourteen storeys, adding to the development’s visibility and identity. The Gautrain station and the new Bus Rapid Transport System are within walking distance to the site. The M1 highway is also located within 5 minutes from the site.
One of the main partners in this development will be Redefine Property Fund. At this point in time the strategy will therefore be to hold the property until it reaches commercial viability. Once we reach this point we will consider selling this property to one of the partners or a property fund.
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9.2.6.4. Setpoint Industrial Park
Full Name Setpoint Industrial Park Current GRA 8,160 m2 Average Monthly Net Rental ZAR 54.41 p/m2 Capitalisation rate 8% - 9% Position in Tadvest Group 100% undivided share held by Tadvest Commercial
This property is situated in Modderfontein, Johannesburg. This development was completed in May 2014 and is let by the Setpoint Group. There is a 10 year triple net lease in place, which will expire in 2024. Due to certain needs from the tenant we are in the process ofexpanding the facility to include their laboratories. The extension is due for completion in December 2015 and will add an additional 1,222m2 to the facility. The current lease, as well as the lease on the extension will be extended up until 31 December 2025.
9.2.6.5. Chilli on Top – Under Construction
Full Name Chilli on Top GRA 5,114 m2 Average Net Rental ZAR 109 p/m2 Market Capitalisation 7.5% - 8.5% Position in Tadvest Group Loan and “Top up” payment with Pivotal. Top-up will be based on 29.6% of NAV on Top-up date (when 60% LTV is reached)
Chilli on Top is Abland’s latest venture in the Sunninghill, Sandton area. It is situated opposite Chilli Lane Shopping Centre on the Rivonia Road Extension. This development will be 5, 114 m2 and include both motor and lifestyle tenants, as well as a convenient fast food drive-through. Opening date has been set for third quarter of 2015.
Chilli on Top has been sold to the Pivotal Fund for a number of ordinary shares and the rest on loan account. Pivotal will also make an additional “Top-up” payment once the property has reached commercial viability. The Top-up payment will be determined by the market value of the property once commercial viability is reached.
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9.2.6.6. Epping – Pod Fund Preference Shares
Full Name Epping - Lafarge Shareholding 10.97% Estimated Phases of Development 4 GRA 22,175 m2 Average Net Rental ZAR 54.16 p/m2 Capitalisation Rate 9% - 10.5% Position in Tadvest Group Preference shares held in the Pod Fund Limited – to convert to ordinary shares
The Epping development lies within the Epping Industrial Park near Gunners Circle. This 4 phase development of which 2 phases have already been completed is fully let to Lafarge and Pearl Trading. The development will have a 22,175 m2 GLA in total. This development has been sold to the Pod Fund in return for preference shares.
9.2.6.7. Stellenpark
Full Name Stellenpark Return 10.5% Position in Tadvest Group 32.29% equity share held by Tadvest Commercial http://www.abland.co.za/development/stellenbosch-stellenpark-business-park/
Stellenpark lies on the R44 at the southern edge of Stellenbosch, 5km from the CBD and all its amenities. It can be found directly opposite the prestigious De Zalze Golf Estate and next to the Stellenbosch Square Shopping Centre. The building has been designed in the traditional Cape vernacular, keeping true to over 300 years of architectural history that has helped make Stellenbosch famous.
This upmarket development comprises of 10 double-storey buildings offering approximately 4600 m2 of prime A- grade office space set in an attractively landscaped environment with views across vineyards and the surrounding Stellenbosch and Helderberg mountain ranges. These prime grade offices are being sold off as sectional titles units.
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9.2.6.8. Topshell Agri-Park
Full Name Topshell Agri-Park GRA 30,683 m2 Position in Tadvest Group 100% held by Tadvest Industrial
This 116,391 m2 park is earmarked for office and industrial development. Development is due to commence in the first quarter of 2016. The aim will be to develop a mix used development that will cater for Offices and Industrial Facilities. The Feasibility for this Project is still to be finalised.
9.2.7. Residential Property Assets
From a residential property perspective, Tadvest works closely with Sable Homes to seek out and develop contemporary living units. Current developments include cluster homes, serviced land, apartments, building packages, retirement estates and golf estates.
Sable Homes has a reputation for innovation, superior quality and reliability - important attributes in the property development market. Established in 1993, Sable Homes is today one of South Africa's leading residential property developers.
The company's focus is always on quality. It has gained the trust and respect of thousands of homebuyers and investors through the constant application of the highest standards to its development and property management activities, and has an unsurpassed reputation for reliability in a highly competitive market.
9.2.7.1. Heron Banks
Heron Banks Golf and River Estate is situated on the Free State bank of the Vaal River. The development includes an 18-hole Danie Obermeyer-designed golf course, boating centre, walking trails, stands and sectional title units. This development is marketed and managed by Sable Homes. Tadvest’s investment is expected to be realized through the sale of stands and sectional title units over the next 3-5years.
9.2.8. Listed Equity Portfolio
Tadvest is a significant investor in The Pivotal Fund Limited and will retain this Investment for future strategic expansion. The current holding in Pivotal is about 2.5 %, with the view to increase this to 5%. Tadvest will look to expand their equity portfolio to include other listed companies; the core of the portfolio will be Blue Chip companies with a limited exposure to Small Cap and AltX companies that meet our Investment criteria. The medium to long term plan will be to expand the listed equity portfolio of Tadvest to offshore listed funds and companies.
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For a full list of the company’s directors and the latest annual results one can refer to the company’s website www.pivotalfund.co.za.
Financial Highlights:
Net asset value per share increased by 25.3% to R18.40 Listed on the main board of the JSE on 8 December ’14 Transactions to the value of R6.4 billion concluded Portfolio increased to 40 properties valued at R9.3 billion Strategic development pipeline of 445 000m² Developments measuring 48 000m² completed Reduced weighted average cost of debt from 10.2% to 9.4%
Source: http://www.pivotalfund.co.za/
Current Board of Directors – Executive Directors:
Jackie van Niekerk (Jacqueline Rouxanne van Niekerk) Qualification: BCom Accounting Position Chief: Executive Officer Experience: Jackie studied BCom Accounting at the University of Pretoria. She has ten years of property experience in all property industries and disciplines. She joined Pivotal in 2009 as asset manager, where she gained experience in property management, investment and development in all property sectors. Jackie was elected to the Board and appointed as Chief Executive Officer in June 2013.
Aaron Suckerman Qualification: Bcom (Acc), ACCA UK Position: Financial director Experience: Aaron has held various senior finance positions in the United Kingdom before returning to South Africa. He has experience in corporate, property management and finance as financial manager at Redefine Properties Limited. Aaron has also held the position of financial director at Fountainhead Property Trust.
Dave Savage – refer to brief CV under 10.1
For a list of the Non-Executive Directors please refer to the Company’s website www.pivotalfund.co.za.
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9.3. Assets currently under consideration for acquisition in early 2016
9.3.1. Centurion Junction (Sentinel land)
Full Name Centurion Junction (Sentinel land) GRA 43,340 m² Average Net Rental ZAR 155.98/m² Capitalisation Rate 8% - 9% Position in Tadvest Group 12.5% held through Tadvest Commercial
The Sentinel Land is expected to be acquired by Tadvest Commercial during 2016. Note that the acquisition of the Sentinel Land has not been included in the financial forecasts, as the date of acquisition has not yet been determined.
Centurion Junction is located on the corner of Gerrad & Von Willich directly opposite the Centurion Gautrain Station and in close proximity of Centurion CBD and Centurion mall. The Sentinel Office Park will comprise of approximately 43,340 m² of rentable office space when completed. The Gautrain has increased the accessibility & visibility of Centurion Junction.
Centurion Junction will form part of the greater West End Node. Centurion Junction will form part of the greater West-end node and for this reason the Sentinel land was sold to Pivotal.
9.3.2. West End Office Park – Pivotal A Preference Shares
Full Name West End Office Park GRA 35,457 m² Average Net Rental ZAR 145 p/m2 Capitalisation Rate 8% - 9% Position in Tadvest Group 12.5% held through A-Preference shares intended to be held by Tadvest Limited in the Pivotal Fund Limited – to convert to ordinary shares
West End Office Park is expected to be acquired by Tadvest Limited during 2016. The acquisition currency is expected to be an issue of shares off the NSX register to Matrix NSX and CRH. Note that the acquisition of West End has not been included in the financial forecasts, as the date of acquisition has not yet been determined.
This 27 000m2 A-grade office park development, will provide excellent security, easily accessible from the highways and major routes and is situated within walking distance of the Centurion Gautrain station and Centurion Mall. The first building in the park of 3 720m² is under construction and occupation will commence June 2015.
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West End Office Park is held as a secured pipeline through the West End Trust with the result that the relevant series of the A preference shares convert into ordinary shares with effect from the third anniversary of the rental commencement date, provided that the West End Trust has achieved a 60% loan to value at that date.
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9.4. Three year financial forecasted results
9.4.1. Statement of Comprehensive Income
TADVEST LIMITED Statement of Comprehensive Income USD USD USD Forecasted Forecasted Forecasted 31/12/2016 31/12/2017 31/12/2018 ('000) ('000) ('000)
Fair Value Adjustments1 4,100 6,260 5,603 Operating expenses2 (365) (380) (395) Operating profit 3,735 5,880 5,208
Finance income - - - Profit for the year 3,735 5,880 5,208
Other comprehensive loss for the period3 (2,728) (2,920) (3,143) Total comprehensive profit for the year 1,007 2,960 2,065
1 The forecasted negative Fair Value adjustment in 2015 is due to the current weakness in the ZAR/USD exchange rate which depreciated from ZAR13.82:USD1 as at 1 November 2015 to ZAR15.5419:USD1 as at 31 December 2015. The ZAR depreciation in the current period counteracts the fair value appreciation of the South African assets and results in a fair value loss on the Statement of Comprehensive Income in the current period.
2 Operating Expenses were determined based on current operating budgets.It is forecasted that these expenses would remain constant throughout the forecasted period as administrative costs are expected to be minimal due to majority of the assets currently sitting in Tadvest SA. This is expected to result in the administrative burden of these assets to be carried by Tadvest SA for the forecasted period. This is likely to change, after the forecasted period, as Tadvest Limited becomes more invested in assets held outside of South Africa. We applied a year-on-year inflationary increase in Operating Expenses of 4% from the 2016 period onwards.
3 Other Comprehensive Loss consists of the foreign exchange translation losses. The exchange rate was USD1.00:ZAR15.5419 as at the end of December 2015, after which it was forecasted that the exchange rate will deteriorate 8% year on year. No exchange loss was forecasted for the 2015 period as there was no base period and exchange rate losses from date of acquisition were taken into account upon the determination of the fair value of these assets.
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9.4.2. Statement of Financial Position
TADVEST LIMITED Statement of Financial Position USD USD USD Forecasted Forecasted Forecasted 31/12/2016 31/12/2017 31/12/2018 ('000) ('000) ('000)
Assets Non-current assets Investments held at Fair Value 35,393 38,800 41,321 Loans Receivable - - - 35,393 38,800 41,321 Current assets Cash and cash equivalents 2,822 2,376 1,920 2,822 2,376 1,920 Total assets 38,215 41,176 43,241
Equity and liabilities Equity Share capital 38,779 38,779 38,779 FCTR Reserves (2,728) (5,647) (8,791) Retained earnings/ Reserves 2,164 8,044 13,253 38,215 41,176 43,241 Total equity and liabilities 38,215 41,176 43,241
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9.4.3. Statement of Changes in Equity
TADVEST LIMITED
Statement of Changes in Equity USD USD USD Forecasted Forecasted Forecasted 31/12/2016 31/12/2017 31/12/2018 ('000) ('000) ('000)
Share Capital Balance as at 5 November 2014 38,779 38,779 38,779 Issued during the period - - - Balance as at 31 December 38,779 38,779 38,779
Retained Earnings & Other Reserves Balance as at 1 January (1,571) 2,164 8,044 Profit for the period 3,735 5,880 5,208 Balance as at 31 December 2,164 8,044 13,253
FCTR Reserve Balance as at 1 January - (2,728) (5,648) Other Comprehensive loss (2,728) (2,919) (3,143) Balance as at 31 December (2,728) (5,647) (8,791)
Total Equity as at 31 December 38,215 41,176 43,241
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9.4.4. Key assumptions utilized in forecasting financial results
Key Assumption Justification 1. Cost of debt will increase by It is forecasted that interest rates will increase over the 2015/2016 period 100 basis points over the and peak in 2016 at a prime of 10.5%, which is 100 basis points higher forecasted period. than the current rates. We assume, based on the current economic environment and the current forecasts, that interest rates will increase by a further 100 basis points from its current levels and reach the peak of the current interest rate hiking cycle in 2016. We are also taking a conservative approach by assuming that interest rates will remain at its peak levels over the period of the forecast. Although a few specific development phases have fixed interest rates on its facilities, it is assumed that all future projects will be funded using variable interest rate facilities at prime rate. 2. The South African Rand (ZAR) A significant portion of Tadvest Limited's current asset portfolio consists will weaken against the US of South African based assets, Tadvest Limited's performance is subject to Dollar (USD) over the the ZAR/USD exchange rates. The current economic outlook regarding the forecasted period. ZAR/USD is filled with uncertainty and therefore a conservative approach relating to the forecast of ZAR/USD movement is justified. We forecasted that the ZAR would depreciate against the USD by 8% per annum which would result in a lower growth in USD terms. Currently there is no currency hedging in place. It should also be noted that risk is limited to financial reporting as all funding is obtained from South African institutions which would not result in material exchange rate losses for the South African assets. 3. Capitalisation rates remain Capitalisation rates have been kept constant throughout the period. constant throughout the Tadvest mainly invests in A Grade Office space and has limited exposure period. to lower grade properties. The Investment property was forecasted using conservative capitalization rates compared to the Capitalisation rates used by the independent valuer. 4. Dividends are unlikely to be The Company is expected to receive regular distributions from its cash declared during the generative investments which it will aggregate before making provision forecasted period. for expenses and working capital. The Company will then assess current investment opportunities and make discretionary investments aimed at creating value, after which any excess funds will be declared as a dividend to investors on an annual basis. The declaration of dividends will be subject to the discretion of the Board of Directors of Tadvest. Given the fact that the business intends on expanding, capital is likely to be held within the business for the purpose of expansion. 5. All assets are valued at fair All Investments are considered to be at fair market value throughout the value. forecasted period. 6. Investments are assumed to All investments are assumed to be held throughout the forecasted period, be held throughout the with the exception of residential investments and Stellenpark forecasted period. Development, which are expected to realise throughout the forecasted period. 7. Base Exchange Rate as at 14 The base ZAR/USD exchange rate for the financial forecast was December 2015 at ZAR determined using the spot rate as at 31 December 2015. The Rate was 15.5419/USD obtained from: http://www.oanda.com/currency/historical-rates/ 8. No long term vacancy factors No long term vacancy factors have been applied to the properties under are applied to the properties development in the forecasted period. The lack of adjustment is under development justifiable based on the quality of the Investment Property held. All major developments are situated in well managed nodes and it is expected that the buildings will be fully tenanted upon completion. As the forecasted period only covers 3 years, it is considered that any long term vacancy factors would not have a material effect on the forecasted values.
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9.5. Expected Financial Statements as at SEM listing
9.5.1. Statement of Financial Position
TADVEST LIMITED Statement of Financial Position USD Forecasted (As at December 2015) ('000) Assets Non-current assets Investments held at Fair Value 10,616 Loans Receivable 2,322 12,938 Current assets Cash and cash equivalents (29) (29) Total assets 12,909 Equity and liabilities Equity Share capital 15,196 Retained earnings/ Reserves (2,287) 12,909 Total equity and liabilities 12,909
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9.5.2. Statement of Comprehensive Income
TADVEST LIMITED Statement of Comprehensive Income USD Forecasted (As at November 2015) ('000)
Fair Value/Exchange Rate Adjustments1 (2,154) Operating expenses (244) Operating profit (2,398)
Finance income 111 Profit for the year (2,287)
Total comprehensive profit for the year (2,287)
1 Note that the Fair Value adjustment is expected to mainly be driven by the ZAR/USD exchange rate as the ZAR/USD deteriorated significantly from December 2014 (ZAR11.68:USD1.00) to December 2015.(ZAR15.5419:USD1.00) which will negatively affect the value of the assets in USD terms. Note that the fair value adjustments relate to the assets currently held by Tadvest Limited before the additional shares in Tadvest SA is acquired.
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9.6. Financial Requirements
9.6.1. Short and medium term funding needs
Short Term Funding Needs (0-12months):
The Company will not require additional funding to fund its operations within the following 12 months as it will have sufficient liquidity due to the realization of Residential assets within the next 12 months. External Funding may be required to fund property developments; however these facilities are secured over the property under development.
Medium Term Funding needs (2-5 years):
The Company intends to fund expansion through the reaslisation of Residential & Commercial assets and through reserves generated by Investment Income. It is not expected that external funding will be required in the medium term to fund operations. External Funding may be required to fund property developments; however these facilities are secured over the property under development.
9.6.2. Forecasted Growth per Asset Class
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10. Management – Experienced Team with Deep Industry Knowledge
10.1. Board of Directors
DIRECTORS OF TADVEST BACKGROUND
ALEXANDER DAHM Position: Non-Executive Director
Experience and qualification: B’oek. FH, Zeurich, (Business Economist).
Since 1987, Alexander Leonardus Dahm is an Independent Consultant, providing trade related services, formation, establishment and administration of legal entities, procurement of goods, handling of documentation and the financing of the trade. He is also a consultant to a corporate group in South Africa as well as a Shareholder and Director of a computer company in South Africa. Alexander Leonardus Dahm is also involved in property development in various properties in Italy, South Africa and Switzerland as well as in the management of a property portfolio and various new upcoming property developments. He is also actively involved on the board of several entities.
DAVID SAVAGE Position: Non-Executive Director
Experience and qualification: Dave has 27 years’ experience in the property industry, 25 years of which have been dedicated to the growth of the Abcon Group. Dave has been involved in all aspects of Abland becoming a national property development company active in all industry sectors. He was also integrally involved in the formation and listing of the Pivotal Fund. Dave currently serves as CEO of the Abcon group of companies. In addition, he serves on the Board of Fountainhead Property Trust.
IAN CHAMBERS Position: Non-Executive Director
Experience and qualification: B Comm, H Dip Tax, CFP
Ian Chambers is the founder of Ian Chambers Consulting and is an international tax expert having headed tax department of Routleges and Structured and Project Finance department of Credit Agricole Indosuez. Ian was also a tax partner of FHS in South Africa.Ian is the author and co-author of several tax books and is regarded as one of the best tax advisers in the Region.
DEVA MARIANEN Position: Executive Director
Experience and qualification:
Deva Marianen has several years of experience in financial services and is the founder and the Chief Executive Officer of the SAFYR Group. Deva specialises in capital markets with a strong focus on private equity and has consequently acted as advisor to several large institutions and family offices. He has built expertise in the understanding of business environment of several countries within the African continent. Deva is an economist and a chartered secretary and administrator.
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DIRECTORS OF TADVEST BACKGROUND
LEON VAN DE MOORTELE Position: Independent Non-Executive Director
Experience and qualification:
After completing his articles at PwC, Leon moved to the Global Risk Management Services within PwC, where he became the Senior Manager in charge of Data Management. In 2004, he moved to Solenta Aviation where he became Group Finance Director. Leon currently serves as Chief Financial Officer of the Delta Africa Property Fund.
The table below lists the companies and partnerships of which each director of the company is currently a director or partner as well as the companies and partnerships of which each director of the company was a director or partner over the five years preceding the Listing Particulars: Directors Directorships * currently held Directorships * held in the past five years Alexander Tadvest Limited, Tadvest SA (Pty) Ltd Afintra AG, APM AG, Leonardus Cympran Gludt AG, DC Dahm Trade and Finance AG, EDM Escomex AG, ICT Traf GmbH, MC Klim-tek AG, MGF Marmor and Finanz AG, Drytech Group AG Heidiland , Zoom Media AG, MG Micro Galva GmbH, TTD The Trading Desk (PTY) Ltd, Michael N Trading AG, Zoom Media AG, Infiniti Capital AG, Swiss D Holding AG, TTG Technoloy Transfer GmbH, All Sponsoring and Racing GmbH, ALS Computer (PTY) Ltd
Ian Chambers Human Resources Africa Limited, ICC Options Chambers Pinet (Pty) International Ltee, Ian Chambers Consulting Limited, FHS Consulting Ltd, Freese Investments Ltd, Villa Laetitia (Pty) Limited, FHS Personal Limited, Sable Holdings Limited, York Street Wealth (Pty) Limited, Properties Limited, One Twenty Eight Villas Tadvest SA (Pty) Ltd Valriche Limited, Twenty Six Villas Valriche Limited, Nyati Company Limited, Harbour Place Limited, Britannia Investments Limited, Bel Ombre Investments Ltd, Centre de Reparation de Camion d’Approvisionnement Limitee, Matkovich Golf Design and Consulting Ltd
Deva Marianen Safyr Wealth Services Ltd, Sws Nominees Ltd, Global Diversified Fund Sai Services Ltd, Safyr Capital Partners Ltd, PCC, Truworths (Mauritius) Safyr Group Holdings Ltd, Boustead Investment (Pty) Ltd, NinetyEast Fund Fund Pcc Services Ltd, NinetyEast Corporate (Mauritius) Limited, NinetyEast Trustees (Mauritius) Limited
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Directors Directorships * currently held Directorships * held in the past five years Dave Savage TJRPH Investments, Stoneridge Office Park Diversified Property Fund, Owners Association, Pod Asset Managers, Pangbourne Properties, Mnandi Home Owners Association, Storvest, Abland Foundation, Angel Thorn Tree Homeowners Association, Pod Investment Properties, Property Fund, K2015034716 (South Africa), Bellandia Investments, CRH Investments, Nitapat Metals And Campus on Rigel, Technical Sales, Alloverprops, Landab, Canterbury Homeowners Fountainhead Property Trust Management, Association, Cranleigh Fernow Projects, Kemtek Imaging Systems Homeowners Association, Holdings, Old Abland, Abland Cape, Abland Di Files and Boxmakers, Investments, Landgro Developments, Abreal, FuelCo, IlizaElitsha Asset Sabdev, Mercland, Sable Homes Investments, Management, Intercare Sable Estates, Sable Homes Investments 2, Sub-Acute Hospital Sable Homes, Abland Investments 97, Sabreal, Hazeldean, Kya Sands Abdev No 20, Sable Retreat, Vierfontein Business Park Owners Properties, Portion 3-4 of Erf 5495 Bryanston, Association, Pacific Breeze Sabland, Abdev No 24, Portion 209 Witkoppen, Trading 91, Rivonia Ext 4, S Kya Business Park, Oilgro, Portions 103-4 and D Properties, Shelfpack Waterval, Abdev No 46, Abland, Sunward Park 004 Erf 3559, Ptn 2-5495 Bryanston, Heledev No 6, Ptn 3 Erf 85 Illovo, Ptn 113 Weltevreden, Heledev No 10, Kya Sands Business Park Owners Association, Lynmor Trading Company, Heledev No 13, Abland Gauteng, The Wonderers Office Park, Abland Manapa Development, Pivotman, Lightside Investments, Demerara Consultants, The Wonderers Office Park Owner's Association, Duelco Investments 79, Fairway Office Park Owners Association, Kingloth Properties, Ptyprops 98, Wykwet 28, Constantia Valley Office Park Owners Association, Sable Construction, Meso Outdoor, Sable Homes North, Abland Manapa Construction Vip, Tijger Vallei 2 Properties, Hazeldean Retreat, Tijger Vallei 1, Abland Manapa Investments, Autumn Star Trading 74, Casadobe Props 72, Blackrock Offices, Topshell, Exact-Trade 144, Portion 3 of Erf 163 Hillcrest, Ballywood Properties 2, Iliza Elitsha Property Investment, Iliza Elitsha Investments, The Pivotal Fund, Iliza Elitsha Project Management, Intercare Infinity Hazeldean, Rzt Zelpy 4689, Iliza Elitsha Joint Venture Company, Somerset West Autopark, Okalang East, Okalang West, Abfin, Dinegro Holdings, Abland Siyakha, Pacific Breeze Trading 578, Oukraal Developments (Rf), Broadacres Retreat, Rzt Zelpy 5352, Hazeldean Office Park Owners Association, Ptn 3 of Holding 21, Abman, Pivotal Goldfields Mall, Abland Coastal, Abreal Projects, Abshelf 01, Abland Africa, Abshelf 03, Abshelf 04
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Directors Directorships * currently held Directorships * held in the past five years Leon van de Delta Africa Property Holdings Limited, Delta Solenta Investment Moortele International Mauritius Limited, DIF Co Holdings (Pty) Ltd, Solenta Limited,HM&K Properties Limited, SAL Aviation (Pty) Ltd,Solenta Investment Holdings Limited, Zimpeto Aviation Workshop (Pty) Investment Holdings Limited, Zimpeto Ltd, Solenta Aviation Imobiliaria Limitada, Pettiford Properties (Pty) Training Academy (Pty) Ltd Ltd and Van de Moortele Properties (Pty) Ltd and federal Holdings (Pty) Ltd
*directorships in subsidiaries of the above-mentioned companies and Mauritian Global Business companies have been excluded
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10.2. Contracted Management Team – Key Personnel
ABMAN BACKGROUND
CHRIS NESER Position: Managing Director – Abman | Chartered Accountant
Experience and qualification: B.Acc (CA)
Chris qualified as a CA(SA) in 2013.His areas of expertise lie in internal and external auditing as well as asset management and restructuring. Chris’ internal and external audit experience includes Prime Hedge Funds and Pension & Provident Funds.
GIDEON VAN PLETZEN Position: Financial Manager – Abman | Chartered Accountant
Experience and qualification: B.Acc (CA)
Gideon qualified to register as a CA(SA) in 2014.His areas of expertise lie in external auditing as well as financial reporting. Gideon’s external audit experience includes Listed Property Funds and Mining.
DAVID SAVAGE Position: Advisor – Abman | BSc (Building)
Experience and qualification:
Dave has 27 years’ experience in the property industry, 25 years of which have been dedicated to the growth of the Abcon Group. Dave has been involved in all aspects of Abland becoming a national property development company active in all industry sectors. He was also integrally involved in the formation and listing of the Pivotal Fund. Dave currently serves as CEO of the Abcon group of companies. In addition, he serves on the Board of Fountainhead Property Trust.
THYS NESER Position: Advisor - Abman | Building Management / MBA
Experience and qualification:
Thys has been involved with the Abcon group of companies since 1981 and is currently Executive Chairman for the various companies within the group. He is active in the residential and commercial property field as well as in other business ventures.
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11. Contact Details
For further information, please contact:
CONTACT PERSON EMAIL TELEPHONE
Chris Neser (Abman) [email protected] Tel: +27 11 510 9962 Gideon van Pletzen (Abman) [email protected] Tel: +27 11 510 9962 Deva Marianen (Safyr) [email protected] Tel: +230 467 7025 Bryan Gujjalu(Safyr) [email protected] Tel: +230 467 7025 Tel: +27 11 459 5029 Robert Peche (Bravura) [email protected] Tel: +27 71 877 9023 Tel: +27 11 459 5052 Melanie De Nysschen (Bravura) [email protected] Tel: +27 82 465 8969 Brian van Rensburg (PSG) [email protected] Tel: +26 46 137 8900
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Annexure A: Group Structure as at SEM listing date
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Annexure B: Group Structure as at NSX listing date
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