Listing presentation Nov 2007
ARB Listing Main Board Electronic & Electrical Equipment sector Tuesday, 20 November 2007 R336 million to R371 million: New capital R168m to R185.5m + Vendor placement R168m to R185.5m Private placement of 70 million shares at between 480 cents and 530 cents per share Historic PE of 11.4 12.6 to June 07 Historic PE (pro forma) of 12.3 13.6 to June 07 Forward PE of 10.5 11.6 to June 08 2
Indicative Timetable November Mon Tue Wed Thu Fri Sat Sun 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Abridged Prospectus on SENS Fri 2 Nov Private placement opens 09h00 Mon 5 Nov Private placement closes 12h00 Wed 7 Nov Private placement results published on SENS Thurs 8 Nov Final allocation of private placement shares Fri 9 Nov Listing & settlement 09h00 Tues 20 Nov 3
Group Overview
Milestones 1980 Founded by lan onald urke in Richards Bay 1988 Opens Durban branch 2000 Acquires Pietermaritzburg branch 2001 Relocates to new head office in Prospecton 2002 Opens Johannesburg branch 2003 Opens Cape Town branch 2004 Opens East London branch 2005 2006 Black-owned Batsomi Power (Pty) Limited acquires 26% of ARB Electrical Wholesalers Gauteng operation moves to newly-built 13 000m² premises in Alrode 2007 ARB to list on JSE 5
Rationale for Listing Expand ARB s geographic footprint Fund organic growth by expanding the national branch network Fund expansion into new target industries Raise capital and have the flexibility of listed shares for acquisitions and other growth opportunities Create value for shareholders by leveraging ARB s established presence in the market Facilitate further empowerment initiatives Attract and retain intellectual capital through the incentive of meaningful equity participation 6
Operations
Group Structure 100% 74% Batsomi Power (Pty) Ltd 26% IT Solutions (Pty) Ltd. Incorporating: Branch Network Durban Pietermaritzburg Johannesburg Cape Town East London Richards Bay 8
Geographic Footprint Johannesburg Pietermaritzburg Richards Bay Durban (Head Office) Cape Town East London 9
Nature of Business South Africa s fastest growing black-empowered independent electrical wholesaler Supplies locally manufactured power cables, overhead line transmission and general electrical contracting materials Stocks and distributes essential materials for electrification in construction and mining industries 10
ARB Products A complete range of power and instrumentation cables Overhead line hardware, insulators and transformers (including mini-subs) Aluminium overhead line conductors and aerial bundled conductors General electrical contracting materials 11
12 Brands supplied by ARB
Some Major Customers Large & Heavy Industry Parastatals Richards Bay Minerals 13
Some Major Customers Construction Industry Electrical Contractors 14
People
Board of Directors Executive Directors Craig Robertson (B.Compt) (39) CEO 15 years Billy Neasham (B.Com, CA(SA)) (50) FD 7 years Non-Executive Directors Alan Burke (53) Founder Chairman 27 years Jacob Modise (B.Com, B.Acc, CA(SA), MBA) (41) Dumisani Muhlwa (B.Com, CA(SA)) (35) Independent Non-Executive Simon Downes (B.Com, CA(SA), FCMA, MBA) (49) 16
Exco - ARB Electrical Wholesalers Craig Robertson (B.Compt) (39) CEO 15 years Billy Neasham (B.Com, CA(SA)) (50) FD 7 years Clinton Cockerell (48) Director 20 years Bruce Sloley (52) Director 24 years Jason Burke (28) Director 10 years Cumulative years service: 76 with ARB (103 incl. Alan Burke) 17
Senior Management Durban Pietermaritzburg Johannesburg Cape Town East London Richards Bay Vinod Singh (35) (15*) Sales Chris Cooper (36) (9*) Cable Sales Ricardo McGregor (30) (3*) Branch Manager Neville Puttergill (33) (2*) Branch Manager Des Eyden (55) (7*) Beran Sewath (42) (6*) Branch Manager Carl Franz (29) (10*) Branch Manager Shannon Bester B.Com CA (SA) (27) (1*) Finance & Admin Cliff Dovey (53) Mervyn Pillai (37) Glenn Allanson (47) Pauline Seaman (37) Zanele Njova (33) (16*) Projects (18*) Purchasing (18*) Logistics (3*)Transmission Lines (1*) Bus. Develop. Divisional Director Cumulative years service: 109 Divisional Manager Average age: 38 * Years service with ARB 18
BEE
Black Economic Empowerment Batsomi Power (Pty) Ltd 26% 26% BEE acquired in Nov 2005 Black positions held: 33% of directors >25% of executive management >75% of staff 20
Corporate Social Investment
Corporate Social Investment ARB donates & supports: Underprivileged schools Orphanages Shelters AIDS organisations Save the Children Fund Abused Kids Crisis Centre 22
Financial Overview
Abridged Income Statement R'000 Reviewed 2005 Audited 2006 Audited 2007 Pro Forma 2007 Forecast 2008 Gross revenue 417,916 607,955 1,047,642 1,047,642 1,315,293 Gross income 81,582 134,982 238,771 238,771 282,406 GP% 20% 22% 23% 23% 21% Operating profit 42,962 85,781 193,084 193,084 195,587 OP% 10% 14% 18% 18% 15% Profit before tax 38,422 79,082 180,905 194,500 191,366 Profit after tax 23,550 55,696 127,630 137,282 133,837 Profit attributable to ordinary shareholders 14,837 47,478 101,603 109,313 101,440 Headline earnings attributable to ordinary shareholders Pro forma weighted average number of shares in issue ('000) 14,837 44,318 84,193 91,903 101,440 200,000 200,000 200,000 235,000 221,235 HEPS (cents) 7.4 22.2 42.1 39.1 45.9 24
Revenue & Operating Profit Revenue Operating Profit Rm Rm 1400 1200 1000 800 1,048 1,315 250 200 150 Operating margin* 16.1% 169 14.9% 196 600 400 200 418 608 100 50 10.3% 43 13.4% 81 0 2005 2006 2007 2008F 0 2005 2006 2007 2008F * Normalised 25
Headline Earnings 120 Rm 100 101 80 84 60 40 44 20 0 15 2005 2006 2007 2008F 26
Rm ASSETS Abridged Balance Sheet Audited 2006 Audited 2007 Pro Forma 2007 Non-current assets 39,239 79,684 79,684 Current assets 280,136 409,376 478,486 TOTAL ASSETS 319,375 489,060 558,170 EQUITY AND LIABILITIES Equity and reserves 91,364 218,993 397,293 Non-current liabilities 38,814 48,650 8,580 Current liabilities 189,197 221,417 152,297 TOTAL LIABILITIES 319,375 489,060 558,170 Pro forma number of shares in issue ('000) 200,000 200,000 235,000 Net asset value per share (cents) 45.7 109.5 169.1 Net tangible asset value per share (cents) 45.7 109.5 169.1 27
Dividend Policy Single annual dividend Up to a maximum of 33% x NPAT (taking into account distributable reserves and cash available for distribution) 28
Private Placement
Pricing Considerations Bottom Range Top Range Offer for subscription No. of shares Price per share Total Offer for sale No. of shares Price per share Total 35 000 000 480 cents R168 million 35 000 000 480 cents R168 million 35 000 000 530 cents R185.5 million 35 000 000 530 cents R185.5 million Historic PE 11.4 12.6 Historic PE (pro forma) 12.3 13.6 Forward PE 10.5 11.6 Price to NTAV (post new money) 2.8 3.1 30
Application of New Capital Settlement of debt R110.5 million Capex and working capital R30.0 million Strategic growth R37.8 million Listing costs R7.2 million Total R185.5 million* * Assuming a placement price of R5.30 per share 31
Free Float & Tradability 70% 30% Public / Institutions Directors, management and staff 32
Prospects
Prospects Industry President Thabo Mbeki committed in 2005 to bring electricity to all by 2012 Eskom to spend R1 trillion over the next 20 years R250 billion over 5 years Government committed to an investment in infrastructure of R410 billion 34
Construction Economy GFCF to increase from 18% to 25% of GDP by 2014 30 28 26 24 22 20 18 16 14 12 10 Fixed investment as % of GDP % Group Five forecast 1981 1986 1991 1996 2001 2006 2011 15 12 9 6 3 0 Growth in SA s construction sector YoY % 13.3 11.9 11.1 6.9 5.8 2002 2003 2004 2005 2006 35 * Source: BER, Group Five * Source: Stats SA
Public Sector R410 billion committed to infrastructure spend over next 3 years 150 R billion 120 90 60 30 0 2003/4 2004/5 2005/6 2006/7 2007/8 2008/9 2009/10 36 Source: Stats SA
Planned Government Spending % Increase past 3 years vs. next 3 years Sports (Stadiums) 1200.0 Police 150.1 Rail (Spoornet, Gautrain) 130.4 Electricity (Eskom) Ports Housing (Developments) Health (Hospitals, Clinics) Justice (Courts) Roads (Provincial, Municipal) Water Education (School buildings) Sanitation Total 97.2 89.6 83.5 71.9 57.6 55.3 53.7 49.6 44.8 83.1 37 Source: National Treasury
Prospects ARB Continue penetrating mining industry - new focus for the group Expand into sub-saharan Africa (new mines in the pipeline in Zambia, Angola, the DRC, Mozambique, Madagascar and Botswana) Expand national branch network organically and through acquisition Expand into new but strategically aligned businesses 38
Conclusion
Conclusion 27 year track record of growth Unprecedented growth opportunities for target sectors Strong, dynamic and experienced management team owner managed Limited sell down by existing shareholders Strong BEE credentials in place 40
Q&A
ARB Listing Main Board Electronic & Electrical Equipment sector Tuesday, 20 November 2007 R336 million to R371 million: New capital R168m to R185.5m + Vendor placement R168m to R185.5m Private placement of 70 million shares at between 480 cents and 530 cents per share Historic PE of 11.4 12.6 to June 07 Historic PE (pro forma) of 12.3 13.6 to June 07 Forward PE of 10.5 11.6 to June 08 42