| Tue 9 Oct 2007, 8:38 | | PLC - Placecol- Reviewed financial results for the |
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PLC
PLC
PLC - Placecol- Reviewed financial results for the six months ended
31 August 2007
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")
Highlights
* Largest franchisor in the health and beauty industry in South Africa
* Revenue up 108%
* Attributable earnings up over 100%
* Earnings per share increase up over 100%
* Headline earnings per share increase up over 100%
* Net tangible asset value per share up 66%
* Listing on ALTx on 21 August 2007
REVIEWED GROUP INTERIM RESULTS
FOR THE SIX MONTHS ENDED 31 AUGUST 2007
Abridged income statements
Reviewed Pro forma
6 months Unaudited
31 August 2007 6 months
R`000 31 August 2006
R`000
Revenue 63 287 30 472
Cost of sales (22 579) (2 130)
Gross profit 40 708 28 342
Administration expenses (31 167) (25 827)
Earnings before interest, tax, 9 541 2 515
depreciation and amortisation
("EBITDA")
Depreciation (1 786) (1 292)
Profit before interest and 7 755 1 223
taxation
Net interest paid (453) (527)
Profit before taxation 7 302 696
Taxation (2 147) (202)
Profit after taxation 5 155 494
Minority interests - -
Profit attributable to ordinary 5 155 494
shareholders
Reconciliation of headline
earnings:
Profit attributable to ordinary 5 155 494
shareholders
Adjusted for fair value -
adjustments
Headline earnings attributable 5 155 494
to ordinary shareholders
Weighted average shares in 106 023 311 90 000 000
issue on which earnings are
based
Fully diluted weighted average 106 089 064 90 000 000
shares in issue on which
earnings are based
Shares in issue at period end 132 504 976 90 000 000
Earnings per share (cents) 4.9 0.5
Headline earnings per share 4.9 0.5
(cents)
Fully diluted earnings per 4.9 0.5
share (cents)
Fully diluted headline earnings 4.9 0.5
per share (cents)
Notes:
1 The pro forma weighted average number of shares in issue for 31 August 2006
is based on the sub-division and increase of the ordinary shares in issue
into 90 000 000 ordinary shares in issue on the last practicable date as
set out in the detailed prospectus dated 10 August 2007 ("the detailed
prospectus").
2 Placecol acquired the entire issued share capital of Nomic 136 (Pty)
Limited, trading as Dream Nails ("Dream Nails acquisition") with effect
from 1 July 2007 as set out in the detailed prospectus.
Abridged balance sheets
Reviewed Audited
31 August 2007 28 February 2007
R`000 R`000
ASSETS
Non-current assets 37 594 26 962
Property, plant and 12 130 14 339
equipment
Intangible assets 22 421 10 119
Deferred taxation 1 182 899
Loans receivable 1 861 1 605
Current assets 53 328 24 951
Inventories 11 468 4 670
Trade and other receivables 23 604 12 844
Bank and cash 18 256 7 437
Total assets 90 922 51 913
EQUITY AND LIABILITIES
Equity 55 844 26 204
Ordinary shareholders` 55 844 26 204
equity
Non-current liabilities 6 687 5 605
Financial liabilities 6 609 5 525
Deferred taxation 78 80
Current liabilities 28 391 20 104
Trade and other payables 15 861 10 099
Financial liabilities 4 940 4 125
Taxation 4 361 1 494
Deferred income 1 179 3 052
Bank overdraft 2 050 1 334
Total equity and liabilities 90 922 51 913
Number of shares in issue 130 104 976 104 000 000
Fully diluted shares in 132 504 976 104 000 000
issue at period end (1)
Net asset value per share 42.9 25.2
(cents)
Net tangible asset value per 25.7 15.5
share (cents)
Notes:
1 The 2 400 000 ordinary shares issued to the Placecol Holdings Share
Incentive Scheme have been treated as "treasury" shares.
Abridged statement of changes in equity
Reviewed Audited
6 months 28 February 2007
ended R`000
31 August 2007
R`000
Balance at beginning of 26 204 -
period
Net profit for the period 5 155 829
Issue of share capital 24 485 25 375
Balance at end of period 55 844 26 204
Abridged cash flow statement
Reviewed Pro forma
6 months Unaudited
31 August 2007 6 months
R`000 31 August 2006
R`000
Cash flows from operating (3 490) (919)
activities
Cash flow from investing (10 260) (4 006)
activities
Cash flow from financing 23 853 3 617
activities
Net increase in cash and cash 10 103 (1 308)
equivalents
Cash and cash equivalents at 6 103 (577)
beginning of period
Cash and cash equivalents at 16 206 (1 885)
end of period
Abridged segment report
Reviewed Pro forma
6 months Unaudited
30 June 2007 6 months
R`000 30 June 2006
R`000
Gross revenue
Beauty and Skincare 47 729 30 472
Franchise 15 558 -
63 287 30 472
Profit before interest and
taxation
Beauty and Skincare 2 958 1 223
Franchise 4 797 -
7 755 1 223
Depreciation
Beauty and Skincare 1 771 1 292
Franchise 15 -
1 786 1 292
No geographical segments are reported as the company operates mainly in South
Africa and the international operations do not meet the thresholds for
reportable segments as per IAS 14.
OVERVIEW
The directors of Placecol are pleased to present the reviewed interim financial
results for the six months ended 31 August 2007 ("the interim period").
Placecol listed on the Alternative Exchange ("ALTX") of the JSE Limited ("the
JSE"), on 21 August 2007. The accelerated benefit from the constantly growing
store base increased earnings by ten-fold to R5.2 million.
As set out in the detailed prospectus Placecol acquired Dream Nails, a franchise
business with 44 franchises with effect from the 1 July 2007. This allowed the
Placecol group to increase its national geographical footprint to more than 85
owned and franchised beauty outlets, making it one of the leading manufacturers
and suppliers of skincare, nailcare and beauty products to the health and beauty
industry. The full benefits of the Dream Nails acquisition will only be
realised during the next financial period.
During the interim period under review Placecol focused on the aggressive roll
out of franchises to enhance the overall profit margins of the group which
proved to be very successful with 12 new franchises being established. Unlike
other franchise companies whose earnings are largely dependent on a royalty and
the profit on the sale of a store, Placecol receives in addition an equivalent
benefit from product sales which are manufactured by the group.
At the current rate of opening stores, it is expected that the number of owned
and franchised stores will exceed 100 by year end of 29 February 2008.
FINANCIAL RESULTS
Group revenue increased by 108% to R63.3 million (2006: R30.5 million).
Gross profit increased to R40.7 million for the interim period, 44% higher than
the comparative interim period. Gross profit margins decreased during the
interim period as a result of more stores being sold through the franchise
division, which are much higher in value but have a lower gross profit margin
than cosmetic product sales. EBITDA increased to R9.5 million (2006: R2.5
million) and EBITDA margins increased to 15.1% (2006: 8.3%) due to the fact the
overhead cost structure has flattened with most of the fixed cost structures
being implemented in the comparative interim period and in addition a more
franchised based business model is being rolled out, which reduces
administrative expenditure.
Headline earnings and profit attributable to ordinary shareholders of
R5.2 million were achieved against R0.5 million for the comparative interim
period.
BUSINESS COMBINATIONS
Placecol acquired the entire issued share capital of, and all shareholders`
claims on loan account against, from the Dream Nails vendors with effect from
1 July 2007 for an aggregate consideration in the sum of R12 209 952, which
consideration was discharged by Placecol partly by cash and the issue of
Placecol ordinary shares at an issue price of R1.00 per Placecol ordinary share.
PROSPECTS
In light of favourable market conditions and the number of stores available to
franchise, with the added benefit of a full six months trading for the second
half from the Dream Nails acquisition and the benefits of the 2009 student
enrollment at the Placecol Beauty Institute, the directors remain confident that
the Placecol group will achieve its profit forecast as set out in the detailed
prospectus. The second half of the financial reporting period is also
traditionally stronger than the first half.
The Placecol group has embarked on a strategic programme over the next six
months to convert all Dream Nails franchised beauty outlets to include body
treatments in their range of services. At the same time a strategic focus will
also be to increase the retail of beauty products at Dream Nails franchised
beauty outlets, which will be manufactured within the Placecol group. In
addition certain advanced equipment focusing on body treatments will be supplied
by Salonquip (Pty) Limited, one of the subsidiaries in the Placecol group, to
the Dream Nails franchised beauty outlets.
During the next 12 to 18 months the Placecol group will also establish its
cosmeceuticals business which will capture a segment of one of the fastest
growing industries in the world and in this regard will liaise directly with
medical doctors and dermatologists.
SHARE CAPITAL
Prior to the date of listing on ALTX, an offer was made to the group`s employees
to acquire shares in the company through the Share Incentive Trust. The
2 400 000 shares have been treated as "treasury" shares in the share capital of
the company and deducted from equity.
DIVIDEND POLICY
It is the intention of the company to reconsider its dividend policy once the
group has achieved mature growth and periodically thereafter to take account of
prevailing circumstances and future cash requirements. Initially all earnings
generated by the group will be utilised to fund future growth and development.
BASIS OF PREPARATION
The interim results have been prepared in accordance with IAS 34 (Interim
Financial Reporting). The accounting policies used to prepare these interim
financial statements are consistent with those applied in the prior interim
period and at previous year-end and are in accordance with International
Financial Reporting Standards.
These consolidated interim financial statements incorporate the financial
statements of the company, its subsidiaries and special purpose entities that,
in substance, are controlled by the group. Results of subsidiaries are included
from the effective date of acquisition or up to the effective date of disposal.
All significant transactions and balances between group enterprises are
eliminated on consolidation.
This announcement has been prepared in accordance with the Listings Requirements
of the JSE Limited.
AUDITORS` REVIEW
The auditors, RSM Betty & Dickson (Tshwane), have reviewed these interim
results. A copy of their unqualified review opinion is available for inspection
at the company`s registered office.
By order of the Board
9 October 2007
W J de Wet R A du Toit
Chief Executive Officer Chief Financial Officer
CORPORATE INFORMATION
Non executive directors: C E Chimombe-Munyoro, T Dingaan
Executive directors: C W Moolman (Chairperson), W J De Wet (CEO); R A du Toit
(CFO); K N MacKinnon
Registration number: 2003/025374/06
Registered address: Placecol Boulevard, Samrand Avenue, Kosmosdal X4, Centurion
0157
Postal address: PO Box 8833, Centurion, 0046
Company secretary: L T Pretorius
Telephone: (012) 621 3300
Facsimile: (012) 621 3338
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited
Designated Adviser: Exchange Sponsors (Pty) Limited
Date: 09/10/2007 08:38:47 Produced by the JSE SENS Department.
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