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Quarterly Progress Report
PEMBURY LIFESTYLE GROUP LIMITED
Incorporated in the Republic of South Africa
(Registration number 2013/205899/06)
Share code: PEM ISIN: ZAE000222949
(“Pembury” or “the Company”)
QUARTERLY PROGRESS REPORT
In terms of paragraph 1.11(c) of the JSE Listings Requirements pertaining to the continuing obligations of
suspended companies, shareholders are hereby provided with a quarterly progress report on the current
state of affairs of the Company.
Shareholders are referred to the update announcement released on SENS on 1 October 2020, which
referred to previous announcements. As set out in the Announcements (and using the terms defined
therein unless otherwise stated) shareholders were advised, inter alia, that the Board had accepted an offer
from Verityhurst to enter into a Share Subscription Agreement in terms of which Verityhurst Proprietary
Limited (“Verityhurst”) has agreed to subscribe for 180 000 000 Subscription Shares for cash at a
subscription price of 10.5 cents per share for a total consideration of R18 900 000, subject to certain
suspensive conditions, which included the listing of the Subscription Shares on the JSE within five business
days of the lifting of the suspension of trading in the Company’s shares (“Listing of Shares”). The final
number of shares to be listed will only be determined on the basis of the quantum of the funds received and
liabilities settled and the final pricing as determined by the JSE. The other suspensive conditions have
been met.
Prior to the Listing of Shares, the funds flow into the Company by way of a loan, which loan is interest free.
The loan funding can also comprise of the acquisition of existing creditor claims, which will be capitalized in
due course as part of the Listing of Shares. To date, the Company has received R2m directly and third-
party creditors, namely the former auditors, amounting to R800 000 have been settled. This agreement
has lapsed and new terms will need to be agreed in January 2021. Shareholders are referred to the
cautionary announcement last issued on 17 December 2020 for further details.
As previously announced, the JSE advised that:
- given that the Company was suspended on 1 July 2020, the Subscription Price pertaining to the
subscription of the Subscription Shares by Verityhurst was subject to discussions with the JSE in
terms of the Company’s general authority; and
- in so far as paragraph 9.7 of the Listings Requirements of the JSE is concerned and to which the
disposal of the PLG Retirement Villages is subject, the JSE has, via the Designated Advisor,
engaged with the Company in order to reach a determination of the categorisation of such disposal
prior to signature of the disposal agreement.
The JSE has subsequently advised that the Company must approach the JSE with a formal ruling request,
which request will be submitted in due course.
Unfortunately, the loan funding has not flowed in from Verityhurst as quickly as was expected. However, it
should be noted that the Company has subsequently been approached by two other parties, which may be
willing to step into the position of Verityhurst, either in whole or jointly. Both parties would be value adding
to PLG.
Shareholders are reminded that the Board has been restructured as previously announced and the Board
will seek to identify a suitable candidate to fulfil the role of the Chief Executive Officer once the Company
has been turned around, which appointment may be aligned with new potential investor/s.
An arrangement is being made for the new auditors to recommence with finalising the audit for the year
ended 31 December 2019, which process will commence after the Company has provided IFRS reviewed
Annual Financial Statements to the new auditors. An independent IFRS reviewer has been appointed by
the Company and the review of the subsidiary Annual Financial Statements has been substantially
finalised.
The aim is to have the audited results and Annual Report finalised in January or February 2021 due to the
auditor’s offices being closed for the Festive Season. The Company will also be required to publish its
interim results for the 6 months ended 30 June 2020. Thereafter, application will be made to the JSE for the
lifting of the suspension of trade in the Company’s securities.
In the interim, various initiatives have been undertaken to start turning around the Company, some of which
are detailed below:
- The losses of the retirement villages are no longer being incurred by the group. These amounted to
more than R700 000 per month.
- Costs have been cut, where possible, primarily at head office, and the head office has been
relocated to one of the schools, with a current saving of over R200 000 per month. Furthermore,
legal costs have been substantially reduced and the Company is seeking amicable solutions, where
possible. Key appointments have been made at an HR and Marketing/IT level, both of which have
been positive. All contracts are being reviewed for possible savings.
- Settlement agreements have been entered into, where possible, and previous settlement
agreements which had not been fully complied with are being caught up or renegotiated.
- The Company has approached certain key creditors, with a view to settling a portion of their debt in
shares. These discussions have been taking time and the Board appreciates the patience and
ongoing support of such creditors.
- The property in Limpopo has been acquired, with transfer being finalised in October 2020.
- The old “leavers” debtors’ book, amounting to more than R10m, has been handed over to a
professional debt collection agency during November 2020, which collection will be at no cost to the
Company. The first proceeds were received in December 2020. The Company is also in the
process of handing over 120-day accounts unless parents have approached the school and made
arrangements.
- The brand name PLG has been dropped from the schools and a new brand will be adopted in due
course, probably in association with a new investor or investors.
- Collection rates have started to improve and the Board and staff is grateful to the loyal parents,
children and staff over this difficult period.
- Schools fees have not been increased for the 2021 school year and monthly fees have been spread
over 12 months to assist both parents and the Company, as December was typically a very difficult
month from a cash flow perspective.
- Repairs and maintenance at certain of the properties have commenced within the current cash flow
constraints, particularly with a view to improving the boarding facilities. Capital projects will
commence once the various settlement agreements come to an end, older creditors have been
settled and free cash flow improves.
- The schools appear to have retained most of the pupils since the Board changes in the second half
of the year and is still receiving applications on a daily basis for 2021. The quality of the education
remains good and turnover of staff at the schools appears to have stabilised.
- The Company is also looking at property funding as it has extremely low gearing of R1.6m of bond
finance against a property portfolio in excess of R100m. This property funding may come from
existing shareholders or the new interested investors as opposed to banks, although the Company
has been approached in December 2020 by one of the big four banks to offer bond finance. This is
now being explored.
- The Board is engaging with experienced entrepreneurs to introduce online learning into the group
during 2021.
Whilst a number of claims and surprises keep appearing, these are less frequent and are being managed
as they arise. Certain liabilities are disputed or are not those of the holding company and its remaining
subsidiaries, but the Company or the group have been cited. It is expected that all these matters will be
settled in due course.
Shareholders are reminded that the Company remains under cautionary until further announcements have
been made.
Johannesburg
31 December 2020
Designated Adviser
Merchantec Capital
Date: 31-12-2020 11:28:00
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