| Mon 12 Jun 2006, 9:09 | | Taste Holdings Limited - Abridged Prospectus |
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JSE
TAS
Taste Holdings Limited - Abridged Prospectus
Taste Holdings Limited
(Previously known as "Scooters Pizza (Pty) Limited")
(Incorporated in the Republic of South Africa)
(Registration number 2000/002239/06)
(JSE code: TAS & ISIN: ZAE000081162)
("Taste" or "the company")
ABRIDGED PROSPECTUS
This abridged prospectus is not an invitation to the public to subscribe for
shares in Taste, but is issued in compliance with the Listings Requirements of
the JSE for information purposes only. The information in this abridged
prospectus has been extracted from a full prospectus issued by Taste on 7 June
2006 ("the detailed prospectus"), which is available as set in paragraph 8. At
the date of listing the authorised share capital of Taste comprises 500 million
ordinary shares with a par value of 0.001 cent each, of which, after a private
placement of 25 million ordinary shares at 90 cents per share ("the placement"),
125 million shares will be in issue
Listing of Taste ordinary shares ("shares") on JSE Limited ("the JSE").
1. INCORPORATION AND HISTORY
1.1 Scooters Pizza was incorporated on 7 February 2000 and the first
Scooters Pizza outlet was opened in Westville, Durban, in September
2000. The Scooters Pizza brand has entrenched itself as the preferred
pizza delivery and take-away brand in approximately 75% of the areas
in which it operates and the brand has doubled its market share of the
pizza market to approximately 9% in 2005. The Scooters Pizza brand
has won many awards and has become the 2nd largest pizza delivery
chain in the country in only five years.
1.2 On 1 April 2005 the group acquired its second brand, MAXI"S, in
respect of its multi-brand strategy. MAXI"S was founded in 1993 and
opened its first franchise in 1994. MAXI"S is a family orientated
restaurant chain with an emphasis on quality, service and value for
money. It is highly regarded by emerging consumers due to its
expansive menu and value for money offering.
1.3 The original team that started Scooters Pizza is still at the helm of
the group as are all the senior management in marketing, operations
and development.
1.4 The Managing Director of MAXI"S and its core operational team have
also been retained since the acquisition in 2005.
1.5 On 11 May 2006 Scooters Pizza was converted to a public holding
company and the Scooters Pizza name was changed to Taste Holdings
Limited on 11 May 2006.
2. NATURE OF THE COMPANY"S BUSINESS AND INDUSTRY
2.1 Taste is a consumer-brand holding company and the group"s primary
business is the franchising of trademarks, either group owned or
licenced, to QSR and fast-food franchisees.
2.2 The growth of restaurants or outlets of the group is driven by
franchisee ownership, thereby reducing the capital requirements and
focusing the brand holders on building Brand Equity through franchise
control, supply chain consistency and aggressive marketing.
2.3 The group is therefore involved in the establishment of new
businesses, marketing and advertising the brands and operational
control of the franchised restaurants in the QSR and fast-food pizza
sectors to ensure consistency and compliance across the chains.
2.4 The following is an analysis of the group"s historic and forecast
franchise network and system-wide sales:
Actual Actual 28 Forecast Forecast 29
28 February February 28 February February
2005 2006 2007 2008
Number of Scooters 64 82 97 109
Pizza outlets
Number of MAXI"S 28 38 53 73
outlets
Combined number of 92 120 150 182
outlets
Growth (%) n/a 30 25 21
System-wide sales for 91 145 199 244
Scooters Pizza (R"m)
System-wide sales for 79 96 144 211
MAXI"S (R"m)
Combined system-wide 170 241 343 455
sales (R"m)
Growth (%) n/a 42 42 33
3. PROSPECTS
3.1 The group embarked on a multi-brand strategy in October 2004, which
materialised in the acquisition of MAXI"S in April 2005 with the
objective of developing its own brands into dominant market positions.
Owning multiple brands allows significant economies of scale across
multiple departments, shared best practice and improves critical mass
in key areas such as distribution and back office functions.
3.2 A medium-term strategy of the group is the vertical integration of the
supply chain which will provide a secondary revenue stream for the
group. Control or ownership of the supply chain through vertical
integration brings the following benefits:
- consistency in the quality of the products;
- the fulfilment of the demand of existing and new stores; and
- the protection of margins at store level.
3.3 The current brands are well-positioned as aspirational, value-based
brands and thereby are well-positioned to continue capitalising on the
economic strength of the emerging middle class. Furthermore, the
proliferation of property developments will continue to drive new
store growth.
3.4 Both the Scooters Pizza and MAXI"S brands have the potential to
increase their footprint substantially within South Africa. Research
utilising competitor penetration, demographic data and trade densities
within existing stores has indicated that 160 full service Scooters
Pizza outlets and approximately 200 MAXI"S outlets can be opened,
without cannibalisation of existing outlets.
3.5 There are significant opportunities that will arise during the build
up to the 2010 World Cup Soccer.
3.6 The overall objective of the group is to become one of the largest
food franchise companies in Africa with over 600 outlets by 2010,
driven by both organic and acquisitive growth.
3.7 Black Economic Empowerment
3.7.1 FASA has recently commenced the process of setting up the
BEE guidelines and scorecard for the franchise industry. In
order to secure sites in high traffic areas such as
airports, harbours and shopping centres, townships and
downtown outlets as well as government concessions, BEE
credentials at franchisee level are important.
3.7.2 The group facilitated the implementation of a R7.9 million
loan in October 2003 from the IDC to assist potential
franchisees in establishing outlets. An IDC facility of
R21.5 million over the next 24 months has also been
negotiated of which 75% of these funds will be earmarked for
black franchisees. The value of this funding translates
into approximately 10 stores for each brand, respectively.
The group also has pre-approved wholesale finance for
franchisees from The Standard Bank of South Africa Limited
and ABSA Bank Limited.
3.7.3 Currently approximately 20% of the group"s franchises are
owned by HDSA"s.
4. SUMMARY OF HISTORICAL AND FORECAST INCOME STATEMENTS
4.1 The summarised historical and forecast financial information of Taste
and its subsidiaries for the financial year ended 28 February 2006,
years ending 28 February 2007 and 29 February 2008, the preparation of
which is the responsibility of the directors, are set out below. The
results must be read in conjunction with the independent reporting
accountants" report thereon reproduced in Annexure 3 and Annexure 4 of
the detailed prospectus.
Extracts from the historical and forecast income statements
Audited Forecast Forecast
28 February 28 February 29 February
2006 2007 2008
R"000 R"000 R"000
Revenue 19 785 27 780 31 861
Gross profit 18 769 26 642 31 861
Other income 1 577 675 -
Operating costs (14 240) (14 958) (14 917)
Non-recurring (1 296) (1 000) -
advertising spend
EBITDA 4 810 11 359 16 944
Depreciation (392) (505) (134)
Profit before 4 418 10 854 16 810
interest and taxation
Net interest (545) 204 (257)
(paid)/received
Profit before 3 873 11 058 16 553
taxation
Taxation (1 025) (3 207) (4 800)
Profit after taxation 2 848 7 851 11 753
Minority interests (1) - -
Earnings attributable 2 847 7 851 11 753
to ordinary
shareholders
Reconciliation of
headline earnings:
Profit attributable 2 847 7 851 11 753
to ordinary
shareholders
Restructuring costs 313 - -
Profit on sale of (190) (479) -
fixed assets
Headline earnings 2 970 7 372 11 753
Pro forma weighted 100 000 000 117 260 274 125 000 000
average shares in
issue on which
earnings are based
(1)
Pro forma earnings 2.8 6.7 9.4
per share (cents)
Pro forma headline 3.0 6.3 9.4
earnings per share
(cents)
Notes:
1. The pro forma calculation for 28 February 2006 is based on the
conversion of 64 110 ordinary shares in issue to 100 000 000
ordinary shares in issue on the last practicable date. The
actual number of shares in issue, earnings per share and headline
earnings per share calculations are set out in Annexure 2 of the
detailed prospectus.
2. The assumptions upon which the forecast income statements are
based are set out in paragraph 13.2 of the detailed prospectus.
Revenues from franchising operations grew 165% from 2005 to 2006.
This growth was driven by a combination of:
- an increase in year-on-year growth of existing store sales
in the Scooters Pizza brand of 22%;
- the successful acquisition and integration of MAXI"S;
- the opening of 18 new Scooters Pizza outlets in 2006,
compared to 12 the previous year; and
- the opening of 10 new MAXI"S outlets in a nine month period
since acquisition.
5. DIRECTORS, COMPANY SECRETARY AND REGISTERED OFFICE
5.1 Full names, ages, business addresses and functions of the board of
directors of Taste
Director Age Function Business address
Ramsay L"Amy Daly 63 Non-executive 32 Flanders Drive,
* Chairperson Mount Edgecombe
KwaZulu-Natal, 4300
Carlo Ferdinando 32 Chief 288 Main Avenue,
Gonzaga Executive Ferndale, Randburg,
Officer 2194
Duncan John 40 Chief 288 Main Avenue,
Crosson Financial Ferndale, Randburg,
Officer 2194
Luigi Gonzaga 62 Director 96 St Johns Avenue,
Pinetown, 3610
Louis Stephanus 46 Franchise 288 Main Avenue,
Minnaar Director Ferndale, Randburg,
2194
Trevor Doyle 48 Non-executive 1474 South Coast Road,
Edwards * Director Mobeni, KwaZulu-Natal,
4060
Kevin Utian * 37 Non-executive Ground Floor, 25 Rudd
Director Road, Illovo, 2196
Jay Bayne Currie * 32 Non-executive Massmart House, 16
Director Peltier Drive,
Sunninghill, 2052
* Non-executive
All of the directors are South African citizens.
5.2 Company secretary and registered office are:
Duncan John Crosson (BCompt. Hons)
2nd Floor, The Wanderers, The Campus
57 Sloane Street
Bryanston, 2191
(PO Box 7833, Sandton City, 2146)
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) 90
Par value per ordinary share (cents) 0.001
Premium per ordinary share (cents) 89.999
Number of ordinary shares offered in 25 000 000
terms of private placement
Issue consideration before expenses R22.5 million
6.1.2. The opening and closing dates of the private placement
are as follows:
Opening date of the private placement Monday, 12 June
at 09:00 on 2006
Closing date of private placement at Wednesday, 14
12:00 on June 2006
Anticipated listing date on ALTx at Wednesday, 21
commencement of trade on June 2006
Safe custody accounts at CSDP or broker Wednesday, 21
updated in respect of dematerialised June 2006
shareholders on or about
Posting of share certificates in Wednesday, 21
respect of certificated shareholders on June 2006
or about
Refund of surplus private placement Thursday, 22 June
application monies received (where 2006
applicable) on
Note:
These dates are subject to change at the discretion of the company.
Any changes will be released on SENS.
6.2 Taste holds irrevocable undertakings from various selected investors
to subscribe for 25 000 000 shares in terms of the private placement,
amounting to 100% of the private placement shares.
6.3 The private placement of 25 000 000 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 125 million shares on ALTx with effect from
the commencement of business on Wednesday, 21 June 2006. The shares will
trade under the abbreviated name "Taste" and the JSE code "TAS" and ISIN
ZAE000081162.
8. COPIES OF THE PROSPECTUS
Copies of the prospectus, in English, may be obtained, during business
hours, prior to the closing of the private placement, from the registered
offices of Taste, Exchange Sponsors (Pty) Limited and the transfer
secretaries, details of which are set out below:
- the registered office of the company - 2nd Floor, The Wanderers, The
Campus, 57 Sloane Street, Bryanston, 2191
- 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;
- the web-site of Taste at www.tasteholdings.co.za.
Johannesburg
12 June 2006
Designated Adviser
Exchange Sponsors (Pty) Limited
Auditors and reporting accountants
BDO Spencer Steward (Jhb) Inc.
Attorneys
Routledges Inc.
Intellectual property attorneys
Bouwers Inc.
www.tasteholdings.co.za
Warning: The listing of ordinary shares in the company is on ALTx. Investors
are advised of the risks of investing in a company listed on ALTx. Investors are
advised that the JSE does not guarantee the viability or the success of a
company listed on ALTx. In terms of the Listings Requirements, the company is
obliged to appoint and retain a Designated Adviser, which is required to, inter
alia, attend all board meetings held by the company to ensure that all the
Listings Requirements and applicable regulations are complied with, approve the
Financial Director of the company and guide the company in a competent,
professional and impartial manner. If the company fails to retain a Designated
Adviser, it must make arrangements to appoint a new Designated Adviser within 10
business days, failing which the company faces suspension of trading of its
securities. If a Designated Adviser is not appointed within 30 days of its
suspension, the company faces the termination of its listing without the
prospect of an appropriate offer to minority shareholders.
Date: 12/06/2006 09:09:18 AM Produced by the JSE SENS Department
