| Tue 14 Aug 2007, 12:00 | | PLC - Placecol Holdings Limited - Abridged Prospec |
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PLC
PLC - Placecol Holdings Limited - Abridged Prospectus
Placecol Holdings Limited
(formerly Zelpy 2170 (Pty) Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2003/025374/06)
(JSE code: PLC & ISIN: ZAE000102307)
("Placecol" or "the company")
ABRIDGED PROSPECTUS
This abridged prospectus is not an invitation to the public to subscribe for
shares in Placecol Holdings Limited ("Placecol"), but is issued in compliance
with the Listings Requirements ("Listings Requirements") of the JSE Limited
("JSE") for information purposes only. The information in this abridged
prospectus has been extracted from a full prospectus issued by Placecol on 10
August 2007 ("the detailed prospectus"), which is available as set out in
paragraph 8. At the date of listing the authorised share capital of Placecol
comprises 500 million ordinary shares with a par value of 0.01 cent each, of
which, after a private placement of Placecol ordinary shares by way of an offer
by the company for the subscription of 20 000 000 ordinary shares at an issue
price of 100 cents per ordinary share in the share capital of Placecol thereby
raising R20 million before expenses and an offer for sale of 20 000 000 ordinary
shares by the selling shareholders at a price of 60 cents per ordinary share
(together, "the private placement"), 130 104 976 ordinary shares will be in
issue.
ABRIDGED PROSPECTUS
Listing of Placecol ordinary shares ("shares") on the JSE.
1 INCORPORATION AND HISTORY
1.1 Placecol Holdings Limited ("Placecol") was incorporated as a private
company on 10 October 2003 with the name Zelpy 2170 (Pty) Limited and was
converted to a public company on 12 January 2007, on which date the company
also changed its name to Placecol Holdings Limited.
1.2 The Placecol product range currently manufactured, distributed and marketed
by Placecol Cosmetics (Pty) Limited ("Placecol Cosmetics") was originally
formulated by a pharmacist in Ermelo in 1980.
1.3 The group was established 10 years ago when Wessel de Wet and Charles
Moolman acquired these product formulations with their main objective being
to provide good quality effective skincare solutions to the market at
affordable prices.
1.4 Subsequent to the acquisition of the product formulations, the group
commenced manufacturing its own products through Mooldew, which was
incorporated on 3 April 1997 with the name CW Pharmaceuticals CC and which
changed its name to Mooldew CC on 12 December 2006.
1.5 Placecol Cosmetics was incorporated as a private company on 19 February
2002 and engaged in the marketing and distribution of Placecol branded
skincare products and providing laser skincare therapy in conjunction with
the use of these Placecol branded products. In 2003 Placecol Cosmetics was
invited to become a supplier to Edgars.
1.6 In 2004 Placecol Cosmetics opened its first Placecol Beauty Centre ("PBC")
and has since expanded to open 41 PBC outlets, 10 of which have been
franchised.
1.7 The Placecol Beauty Institute, a division of Placecol Cosmetics, was opened
in 2005, with an enrolment capacity of more than 200 students. Upon
completion of the two year course, offered by the Placecol Beauty
Institute, students are eligible to write the internationally recognised
International Therapy Examining Council ("ITEC") and South African Health
and Skincare Professionals ("SAAHSP") diploma exams.
1.8 Salonquip (Pty) Limited ("Salonquip"), a provider of equipment to salons,
was incorporated on 31 October 2005, commenced trading in 2006 in order to
supply the existing PBC outlets.
1.9 Placecol Cosmetics received approval to franchise its PBC`s in 2006 and has
since then franchised 10 PBC outlets, through its wholly-owned subsidiary
Placecol Franchise, which was incorporated on 13 June 2006.
1.10 CW Pharmaceuticals was incorporated on 23 August 2000 with the name Value
Part Traders 8 (Pty) Limited and changed its name to Segodi Fun World (Pty)
Limited on 7 December 2000 and again to CW Pharmaceuticals (Pty) Limited on
12 January 2007.
1.11 In terms of the group restructuring, Placecol acquired the entire issued
share capital of Placecol Cosmetics, the entire issued share capital of CW
Pharmaceuticals, CW Pharmaceuticals acquired the CW Pharmaceuticals
business conducted by Mooldew and Placecol Cosmetics acquired 30% of the
entire issued share capital of Placecol Skin Care from the vendors as set
out in Annexure 9 of the detailed prospectus, with effect from 1 December
2006.
1.12 With effect from 1 July 2007 Placecol acquired the entire share capital of
and all shareholder claims on loan account against Dream Nails, from the
Dream Nails vendors as detailed in paragraph 28.3 and Annexure 9 of the
detailed prospectus. The first Dream Nails franchise was established in
January 1985 by the founder of Dream Nails, Nora Barnard, who is still
involved in the Dream Nails operations and has since grown to 44 Dream
Nails franchised outlets.
2 NATURE OF THE COMPANY`S BUSINESS AND INDUSTRY
2.1 The following provides a summary of the nature of business of Placecol`s
three wholly-owned subsidiaries:
2.1.1 Placecol Cosmetics and its subsidiaries
2.1.2 Placecol Cosmetics provides a holistic, one stop offering to the
health and beauty industry. The continued growth of the group has
resulted in Placecol establishing its own product supply through its
manufacturing facility, establishing its own beauty institute in order
to gain access to qualified beauty therapists and establishing its own
equipment supply through Salonquip in order to gain access to unique
skincare and beauty equipment.
2.1.3 The establishment of these strategic business units not only provides
Placecol with self sufficiency, but has also resulted in the creation
of its own recognisable brand which will assist Placecol in securing a
unique position in the health and beauty industry.
2.1.4 Placecol Cosmetics has managed to grow the footprint of its own brands
aggressively in an extremely competitive environment, through the
following:
- Placecol Skin Care handles the sales and marketing of skincare and
nail products through a combination of its own retail outlets,
franchises and third party outlets such as pharmacies, Edgars and
Foschini;
- the establishment of a Placecol Beauty Institute where students can
obtain internationally accredited qualifications as beauty therapists.
The Placecol Beauty Institute has an enrolment capacity of more than
200 students per year who, on completion of their two year course, are
eligible to write the internationally recognised ITEC and SAAHSP
diplomas;
- Placecol Franchise which actively markets and sells franchised
Placecol Beauty Centres; and
- Salonquip, which supplies equipment to meet the needs of its own PBC`s
and other beauty salons.
2.1.5 What makes Placecol`s offering unique and different from other
skincare providers is the use of Soft Laser and other specialised
beauty equipment by qualified beauty therapists, combined with the use
of the Placecol skincare product range, which provides the client with
an immediate and visible improvement of the skin.
2.1.6 The products offered by the Placecol Cosmetics are now available in
more than 300 outlets, with Edgars and Foschini being Placecol`s most
prestigious clients.
2.2 CW Pharmaceuticals
2.2.1 CW Pharmaceuticals manufactures a high quality, well researched
skincare product range which is used uniquely in conjunction with soft
laser technology.
2.2.2 The manufacture of high value, low volume third party contract
manufacture work in order to utilise the available manufacturing
capacity.
2.3 Dream Nails
2.3.1 Dream Nails conducts business as a franchisor of Dream Nails salons in
the main with a national franchise network of over 44 franchise
outlets.
2.3.2 Dream Nails also offers accredited training for nail technicians.
2.3.3 Dream Nails retails quality nail products to its own franchises and
other nail salons throughout South Africa and the Middle East through
its exclusive five year NSI distributorship agreement.
3 PROSPECTS
In the opinion of the directors of the group, based on experience and
market information available:
3.1 Building brand equity through the geographical growth of the group`s
footprint
3.1.1 The group has a national presence in more than 300 outlets, being a
combination of owned, franchised and other retail outlets such as
pharmacies, Edgars and Foschini. To obtain maximum product sales and
high quality service, the group embarked on a strategy of having its
own outlets though a combination of owned and franchised retail
outlets, thereby reducing the capital requirements of the group and
focusing on building brand equity.
3.1.2 The following is the group`s geographical footprint of owned and
franchised outlets:
Placecol Placecol Dream Total Percentage
Geographical number number of Nails number representation
region of owned franchised number of of in South
outlets outlets franchised outlets Africa
outlets
Gauteng 14 6 27 47 55
Western Cape 5 - 9 14 17
Free Sate 3 1 2 6 7
North West 1 2 1 4 5
KwaZulu- 2 - 2 4 5
Natal
Mpumalanga 1 1 2 4 5
Eastern Cape 3 - - 3 3
Northern 1 - 1 2 2
Cape
Limpopo 1 - - 1 1
31 10 44 85 100
3.1.3 It is clear that the group has significant national growth potential
through ownership of more owned or franchised outlets, especially in
the Western Cape and KwaZulu-Natal, by increasing brand recognition in
these provinces. It is a strategy to accelerate the growth of the
existing brands through the acquisition and conversion of independent
beauty outlets and smaller beauty chains.
3.1.4 It is estimated that the group`s national footprint will exceed 100
owned and franchised outlets at 29 February 2008.
3.2 Product expansion and diversification
3.2.1 An increase in the critical mass of stores will create the opportunity
and relative captive market within which to sell new equipment and to
introduce new products, as well as services as follows:
- specialised body treatments and products;
- non-surgical face and body lifts with supporting home care product
treatments; and
- nutraceutical products which promote healthier skins from within.
3.2.2 The intellectual capacity which the group possesses to formulate,
manufacture and to train individuals on new products and services,
positions the group favourably to create a new franchise chain in the
health and beauty industry focusing on the BEE market.
3.3 Owning of multiple brands
The proposed acquisition of multiple brands over the medium term will allow
significant economies of scale across multiple departments, shared best
practice and will improve critical mass in key areas such as research,
manufacturing, distribution, retail bargaining power and back office
functions. Placecol entered into the Dream Nails Sale Agreement in July
2007 as part of its vision to become a multiple brand owner.
3.4 BEE
FASA has commenced the process of setting up the BEE guidelines and
scorecard for the franchise industry. It is anticipated that in order to
secure sites in high traffic areas, BEE credentials at franchisee level
will be important.
4 SUMMARY OF HISTORICAL AND FORECAST INCOME STATEMENTS
The summarised historical and forecast financial information of Placecol
for the financial year ended 28 February 2007, the financial years ending
29 February 2008 and 28 February 2009, the preparation of which is the
responsibility of the directors, are set out below. This financial
information must be read in conjunction with the independent reporting
accountants` report thereon reproduced in Annexures 3, 5 and 8 of the
detailed prospectus.
4.1 Extracts from the historical and forecast income statements
Pro forma Forecast Forecast
28 February 29 February 28 February
2007(2) 2008 2009
R`000 R`000 R`000
Revenue 83 107 112 612 146 487
Gross profit 68 268 91 896 112 314
Other income 10 29 -
Operating costs (57 033) (71 184) (86 726)
EBITDA 11 245 20 741 25 588
Depreciation (3 027) (3 238) (2 577)
Profit before 8 218 17 503 23 011
interest and taxation
Net interest (paid) / (1 160) (155) 394
received
Fair value (157) - -
adjustments
Profit before 6 901 17 348 23 405
taxation
Taxation (2 157) (5 030) (6 788)
Earnings attributable 4 744 12 318 16 617
to ordinary
shareholders
Reconciliation of
headline earnings:
Profit attributable 4 744 12 318 16 617
to ordinary
shareholders
Profit on disposal of 1 - -
non-current assets
Fair value 157 - -
adjustments
Headline earnings 4 902 12 318 16 617
attributable to
ordinary shareholders
Pro forma weighted 97 178 949 118 652 466 130 104 976
average shares in
issue on which
earnings are based
(3)
Pro forma earnings 4.9 10.4 12.8
per share (cents)
(8.11 (k))
Pro forma headline 5.0 10.4 12.8
earnings per share
(cents) (8.11 (k))
(8.34)
Notes:
1 The pro forma weighted average number of shares in issue for 28 February
2007 is based on the sub-division and increase of the ordinary shares into
90 000 000 ordinary shares, the weighted number of ordinary shares issued
in terms of the recent capital raising and the issue of shares to the Dream
Nails vendors on the last practicable date as set out in paragraph 24.3.2
of the detailed prospectus.
2 The historical pro forma financial information for 28 February 2007 is an
extract from the unaudited pro forma financial information after the group
restructuring, recent capital raising and the acquisition of Dream Nails
column as set out in Annexure 7 of the detailed prospectus.
3 The assumptions upon which the forecast income statements are based are set
out in paragraph 12.1.3 of the detailed prospectus.
5 DIRECTORS, COMPANY SECRETARY AND REGISTERED OFFICE
5.1 Full names, ages, functions and business addresses of the board of
directors of Placecol
Director Age Function Business address
Charles William 50 Chairperson Samrand Avenue,
Moolman and Kosmosdal X4,
Pharmaceutic Centurion, 0157
al Director
Wessel Johannes 49 Chief Samrand Avenue,
de Wet Executive Kosmosdal X4,
Officer Centurion, 0157
Richard Arthur du 56 Chief Samrand Avenue,
Toit Financial Kosmosdal X4,
Officer Centurion, 0157
Kenneth Neil 46 Director 11B Riley Road,
MacKinnon Eastwood Office
("Kenny") Park, Bedfordview,
2007
Chipo Evelyn 34 Non- Vunani House
Chimombe-Munyoro executive Freestone Park, 135
("Evelyn") * Director Patricia Road,
Sandown, Sandton,
2196
Thembisa Dingaan 34 Non- 27 The Bernardino,
* executive Barbet Street,
Director Khyber Rock,
Woodmead, 2157,
Sandton
* Non-executive
All directors are South African citizens.
5.2 Company secretary and registered office are:
LT Pretorius BCom (Hons) (Acc Sci), CA(SA)
Samrand Avenue
Kosmosdal X4
Centurion, 0157
(P O Box 8833, Centurion, 0046)
6 THE PLACEMENT
6.1 Salient features
6.1.1 The salient features of the private placement are as follows:
Offer price per ordinary share (cents) 100
Par value per ordinary share (cents) 0.01
Premium per ordinary share (cents) 99.99
Number of ordinary shares offered by the 20 000 000
company for subscription in terms of the
private placement
Issue consideration to be received by the R20 million
company before expenses
Number of ordinary shares offered for sale by 20 000 000
the selling shareholders in terms of the
private placement
Total consideration to be received by the R12 million
selling shareholders
6.1.2 The opening and closing dates of the private placement are as follows:
Opening date of the private placement (09:00) Tuesday, 14 August 2007
Closing date of private placement (12:00) Tuesday, 14 August 2007
Proposed listing date on ALTx (09:00) Tuesday, 21 August 2007
Note:
These dates and times are subject to change at the discretion of the company.
Any changes will be released on SENS.
6.2 Placecol holds irrevocable undertakings from various selected investors to
subscribe for 40 000 000 shares in terms of the private placement,
amounting to 100% of the private placement shares.
6.3 The private placement of 40 000 000 ordinary shares have been fully
allocated to the investors who have given irrevocable undertakings as set
out in paragraph 6.2 above.
6.4 The placement has not been underwritten and is not subject to a minimum
subscription, being achieved.
7 LISTING ON THE JSE
Subject to the required spread of public shareholders in terms of the
Listings Requirements being obtained pursuant to the private placement, the
JSE has approved the listing of 130 104 976 shares on ALTx with effect from
the commencement of business on Tuesday, 21 August 2007. The shares will
trade under the abbreviated name "Placecol" and the JSE code "PLC" and
ISIN: ZAE000102307.
8 COPIES OF THE PROSPECTUS
Copies of the prospectus, in English, may be obtained, during business
hours, from Tuesday, 14 August 2007, from the registered offices of
Placecol, Exchange Sponsors (Pty) Limited and the transfer secretaries,
details of which are set out below:
- the registered office of the company - Samrand Avenue, Kosmosdal X4,
Centurion, 0157;
- the offices of Exchange Sponsors (Pty) Limited - 39 First Road, Hyde
Park, 2196;
- the offices of Computershare Investor Services 2004 (Pty) Limited -
Ground Floor, 70 Marshall Street, Johannesburg, 2001.
Johannesburg
14 August 2007
Designated Adviser
Exchange Sponsors (Pty) Limited
Auditors and reporting accountants
RSM Betty & Dickson (Tshwane)
Attorneys
Fluxmans Inc.
Date: 14/08/2007 12:00:02 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
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implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
