LemmingInvestor
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Kleeneze plc, the home catalogue and hamper business has been in a bit of slumber since our inaugural write up on November 2003 at 150p, I certainly had greater expectations than became apparent. They hardly nudge to 158p. However, the company is bubbling again and not a day to soon, a recent high point in the share price of 191p hardly seems worth the wait given other opportunities that have been uncovered by us in the same period, but that's part of sifting the market for future stars. That's that and this is this so back to Kleeneze eh.
If we are looking for blame or lack of activity in KLZ we can attribute much to the woes of the share price since November 2003 to the companies Achilles heel, DMG, the company's display marketing business. Thankfully DMG was jettisoned in July 2004. As part of group restructuring and a change in strategy KLZ acquired two shopping channels which the company believe will add synergy, better still both acquisitions were cash deals rather using the company's own shares, thus diluting existing shares.
KLZ have entered in to a joint venture with JML in what the company describes as “show and tell” TV; utilising the company's existing catalogue of products via SKY`s 659 channel straight in to people homes. At present the programs are pre-recorded, this will change by March as the re-launch will be live. KLZ currently have a 50% stake in what will be rebranded Eezee TV. Annual sales are c£2m. KLZ said it expects to invest c£4m in this venture over the next two years.
KLZ acquired IWantOneofThose.com, a gadget to gifts internet shopping channel. In the year to March IWOOT had sales of £7m with operating profits of just £0.1m. However, KLZ obviously expects greater things for IWOOT, in fact Rolandson estimates that IWOOT is already the No1 player in the market with a share of 19.3%, just ahead of nearest rival Firebox.com who have around 18%. KLZ expects to pay between £6m to £10m in three instalment over the next two years, these instalments will be payable via guaranteed loans which carry no interest; as part of the deal payments deferred consideration based on the IWOOT`s performance.
Advantages
Clearly there is great scope for cross selling web and TV sales, also utilising the company's existing catalogue via both channels as well as upgrading the catalogue which are delivered to peoples doors by self employed vendors who for there part are paid a 21% commission on each sale, these commissions can rise to 40% or even 50% according to each representatives success as they recruit new reps themselves, each adds to there own percentage of sales. ...think of it a pyramid chain which is of course a crucial incentive to KLZ`s reps.
Europe
KLZ are planning an European wide expansion program starting with the launched into the Netherlands (Holland) and are planning to expand into other European countries soon. The company is quick to point out that Holland is 3 time the size of Ireland, assuming a small army of reps, c 3000 annual turnover could generate £15m. In fact the comapny are claiming a successful launch in Holland; "The launch of our Dutch business has been a success and we have already recruited 1500 distributors since September," the company said in a statement. Chairman Sir Clive Thompson said: "We are excited by the contribution that our investments in internet and television shopping will make to the group. "The complementary nature of these distribution channels and our networks will significantly increase our product range as well as our market penetration and geographic coverage."
December 12 2004 the comapny said it had returned to pre-tax profitability, posting a profit of £4.3 million for the six months to October 31, reversing from a loss of £9.2m over the same period last year.
The first-half turnaround accompanied a 4.9 per cent increase in sales from existing operations to £79.3m, helped by the acquisitions of some assets from costume jewellery company Cabouchon and I Want One of Those.com.
Now the share over-hang has cleared from ISIS and Foreign colonial mergers funds we should see a positive trend continue.
Kleeneze
If we are looking for blame or lack of activity in KLZ we can attribute much to the woes of the share price since November 2003 to the companies Achilles heel, DMG, the company's display marketing business. Thankfully DMG was jettisoned in July 2004. As part of group restructuring and a change in strategy KLZ acquired two shopping channels which the company believe will add synergy, better still both acquisitions were cash deals rather using the company's own shares, thus diluting existing shares.
KLZ have entered in to a joint venture with JML in what the company describes as “show and tell” TV; utilising the company's existing catalogue of products via SKY`s 659 channel straight in to people homes. At present the programs are pre-recorded, this will change by March as the re-launch will be live. KLZ currently have a 50% stake in what will be rebranded Eezee TV. Annual sales are c£2m. KLZ said it expects to invest c£4m in this venture over the next two years.
KLZ acquired IWantOneofThose.com, a gadget to gifts internet shopping channel. In the year to March IWOOT had sales of £7m with operating profits of just £0.1m. However, KLZ obviously expects greater things for IWOOT, in fact Rolandson estimates that IWOOT is already the No1 player in the market with a share of 19.3%, just ahead of nearest rival Firebox.com who have around 18%. KLZ expects to pay between £6m to £10m in three instalment over the next two years, these instalments will be payable via guaranteed loans which carry no interest; as part of the deal payments deferred consideration based on the IWOOT`s performance.
Advantages
Clearly there is great scope for cross selling web and TV sales, also utilising the company's existing catalogue via both channels as well as upgrading the catalogue which are delivered to peoples doors by self employed vendors who for there part are paid a 21% commission on each sale, these commissions can rise to 40% or even 50% according to each representatives success as they recruit new reps themselves, each adds to there own percentage of sales. ...think of it a pyramid chain which is of course a crucial incentive to KLZ`s reps.
Europe
KLZ are planning an European wide expansion program starting with the launched into the Netherlands (Holland) and are planning to expand into other European countries soon. The company is quick to point out that Holland is 3 time the size of Ireland, assuming a small army of reps, c 3000 annual turnover could generate £15m. In fact the comapny are claiming a successful launch in Holland; "The launch of our Dutch business has been a success and we have already recruited 1500 distributors since September," the company said in a statement. Chairman Sir Clive Thompson said: "We are excited by the contribution that our investments in internet and television shopping will make to the group. "The complementary nature of these distribution channels and our networks will significantly increase our product range as well as our market penetration and geographic coverage."
December 12 2004 the comapny said it had returned to pre-tax profitability, posting a profit of £4.3 million for the six months to October 31, reversing from a loss of £9.2m over the same period last year.
The first-half turnaround accompanied a 4.9 per cent increase in sales from existing operations to £79.3m, helped by the acquisitions of some assets from costume jewellery company Cabouchon and I Want One of Those.com.
Now the share over-hang has cleared from ISIS and Foreign colonial mergers funds we should see a positive trend continue.
Kleeneze
