placecol inside nh · financial highlights largest franchisor in the health and beauty industry in...

enPlacécol Holdings Limited (Reg. No. 2003/025374/06)Placécol Boulevard, Samrand Avenue, Kosmosdal, Extension 4, Centurion, 0046P. O. Box 8833, Centurion, 0046Head Office: +27 12 621 3300 - Fax: +27 12 621 3338/9Customer Care: 0861 11 22 22 - www.placecol.com

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Table of Contents

Page

Vision, Mission, Values and Goals 2

Financial Highlights 3

Group Structure 5

Placécol at a Glance 6

Industry Overview 9

Board of Directors 11

Chairman’s Report 13

Chief Executive Officer’s Report 15

Corporate Governance Report 17

Financial Statements 22

Shareholder Analysis 81

Shareholders’ Diary 82

Share Information 82

Notice of Annual General Meeting 83

Form of Proxy Attached

Administration 95

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Vision, Mission, Values and Goals

Vision

To become an employer and supplier of choice through a proud, passionate workforce supplying products recognised fortheir value and excellence.

Mission

• To research, develop and supply affordable and effective skin care products that create sustainable excitement tocustomers, staff and shareholders.

• To develop and perform unique skin care treatments that will contribute to the beauty and well being of our customers.

• To develop and equip a workforce that will share in the success and prosperity of the company.

• To continually expand the Placécol concept and modus operandi, nationally and globally.

• To perform our duties adhering to high moral values while respecting people and our environment.

Values

• Cares for, uplift and develops its workforce.

• Treats people with dignity and respect.

• Ethical and honest financial management.

• Contributes to the spiritual and physical wellbeing of others.

• Acknowledge the source of our success and gives honour to our Creator.

Goals

• To recognise and reward our workforce.

• To remunerate our employees well above the market average.

• To assist in and to give our employees the opportunity to become spiritually wealthy.

• To be financially healthy.

• To tithe and to make generous offerings to the Kingdom of God.

• To become nationally and globally recognised for our financial achievements and excellence.

Financial Highlights

Largest franchisor in the health and beauty industry in South Africa with 106 beauty outlets

Revenue up 69% to R115.3 million (2007: R68.2 million(1))

EBITDA up 67% to R13.9 million (2007: R8.3 million(1))

Headline earnings up 204% to R7.6 million (2007: R2.5 million(1))

Adjusted headline earnings per share up 125% to 7.2 cents (2007: 3.2 cents(1))

Note 1: The 2007 figures are pro forma unaudited figures for 12 months ended 28 February 2007 as the holding companywas only incorporated for 3 months.

Graphs

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2007 2008 2007 2008 2007 2008

REVENUE

Adjusted HEPS

115 286

13 949

68 173

8 337

0

20,000

40,000

60,000

80,000

100,000

120,000

3.2

7.2

0

2

4

6

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EBITDA

(R’000) (cents)

Revenue and EBITDA

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Segmental analysis

Milestones

2008 100 Placécol Beauty Centre and DNB store target mark exceeded

2007 Listing of Placécol on AltX of the JSE

Acquisition of Dream Nails

2006 Received approval as a franchisor

Reached 10 Placécol franchised beauty outlets

Salonquip commenced trading

2005 The Placécol Beauty Institute, a division of Placécol Cosmetics, was opened

2004 Opened first Placécol beauty outlet

Brands

Supply chain and support

(80%)

(20%)

Brands


(56%)

(44%)

PBT – 2007 PBT – 2008

Brands


(86%)

(14%)

Brands


(74%)

(26%)

Revenue – 2007 Revenue – 2008

Group Structure

The Group conducts its businesses through the following divisions:

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Placécol at a Glance

Placécol is a well-established manufacturer and retailer of skin care products and services. The Group was established11 years ago when Wessel de Wet (CEO) and Charles Moolman (Chairman) acquired the Placécol product formulationsfrom a pharmacist in Ermelo.

The continued growth of the Group has resulted in Placécol establishing a vertically integrated business from its ownproduct supply through its manufacturing facility (“CW Pharmaceuticals”), incorporating its own Placécol Beauty Institutein order to gain access to qualified beauty therapists to starting its own equipment supply through Salonquip in order togain access to unique skin care and beauty equipment.

Placécol’s main objective is to provide good quality effective skin care solutions and skin care treatments to the market ataffordable prices.The Group has grown from strength to strength and operate the business through three wholly-ownedsubsidiaries, namely Placécol Cosmetics, CW Pharmaceuticals and Dream Nails & Body (“DNB”).

Placécol Cosmetics

Placécol Cosmetics provides a holistic, one stop offering to the health and beauty industry.

The establishment of the three business units within Placécol Cosmetics not only provide Placécol with self sufficiency, buthas also resulted in the creation of its own recognisable brand which continues to assist Placécol in securing a uniqueposition in the health and beauty industry.

What makes Placécol’s offering unique and different from other skin care providers is the use of Soft Laser and otherspecialised beauty equipment by qualified beauty therapists, combined with the use of the Placécol skin care product range,which provides the client with an immediate and visible improvement of the skin.

Placécol has managed to grow the footprint of its own brands aggressively in an extremely competitive environment.Placécol’s national distribution network at 29 February 2008 was:

Distribution channel Approx number of outlets

Pharmacies 200

Edgars 96

Placécol Beauty Centres and DNB outlets 106

Foschini 14

416

The three business units within Placécol Cosmetics are:

Placécol Beauty Centres (“PBC”)

A standard PBC is approximately 65 square metres in area and is located in both strip malls as well as large retail malls.Typically, a PBC would be manned by three or four assistants and would provide the following services:

• Placécol soft laser treatments;

• Placécol intensive facial treatments;

• Body massages;

• Pedicures, manicures, tints and waxes;

• Placécol scar repair treatments;

• Placécol beauty care products;

• Placécol fragrances;

• Placécol nutraceutical supplements; and

• Placécol specialised branded retail products.

The advantage of PBC’s strategy is that they not only expand the geographical footprint for Placécol’s product sales butthat they also increase the Group’s earnings through franchise fees and royalties.

Having managed the erection and opening of over 50 PBC’s, the Group has acquired additional intellectual properties inits ability to select sites and the ability to supply ready to operate stores which include therapists trained at the PlacécolBeauty Institute as well as equipment supplied by Salonquip.

In addition, the Placécol Beauty Institute provides the owners and managers of these PBC’s with a comprehensive two-week training course. Finding sites has become easier as developers now automatically alert Placécol of potential sites.

Placécol Beauty Institute

To meet the continuous demand for qualified beauty therapists, Placécol established the fully accredited Placécol BeautyInstitute in 2005.The facility has an enrolment capacity of more than 200 students who on completion of their two-yearcourse are eligible to write the internationally-recognised ITEC and SAAHSP diploma exams.

It is an ultra-modern facility where tuition is provided by the best and most experienced lecturers available in the industry.The institute is also used to train qualified therapists to make them conversant in the use of Placécol equipment and salestechniques and also to ensure that they have the required product and business knowledge.

Placécol is one of the largest employers of beauty therapists in the country.

Salonquip

As a result of the Group’s existing utilisation of equipment and consumption of consumables, Placécol is one of the largestpurchasers of salon equipment in the beauty industry.

To maximise the critical mass, the Group sources and imports its requirements directly through Salonquip, which offers thefollowing benefits:

• sources and supplies all equipment, consumables, computers and software (ensure standardisation throughoutthe Group);

• sales to other salons in South Africa;

• ability to offer the industry a “One-Stop” concept;

• provide products manufactured by CW Pharmaceuticals to both beauty salons; and

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• provide “ready to operate” salons (having already built and installed numerous PBC salons, Placécol will be one of theleaders in the design and installation of beauty salons in the industry).

CW Pharmaceuticals

CW Pharmaceuticals manufactures high quality, well-researched skin care product range which is used uniquely inconjunction with soft laser technology.The manufacture of high value, low volume third party contract manufacture workis also conducted by CW Pharmaceuticals in order to utilise the available manufacturing capacity.

The current production at the manufacturing facility is approximately 50 000 to 70 000 units per month, excludingpromotional packs.

The manufacturing facility has its own in-house laboratory and all products are manufactured under stringent batch controlsutilising mainly internationally developed ingredients.

Before new products are launched, clinical trials are performed.Tests are conducted by an accredited laboratory followingapproved testing procedures.The clinical trials are performed over a period of time where intensive monitoring takes placeon volunteers.

The following tests are performed:

• SPF testing using an international testing standard to determine the SPF value of products; and

• sensitivity testing to determine the irritation factor of products.

Specialised clinical trials conducted may include the testing of skin lightening effects of products, which will be tested onfacial or hand areas over a given time period in order to monitor the evenness of skin pigmentation.

CW Pharmaceuticals has the capacity and ability to manufacture all the skin care products in the Placécol range includingcreams, serums and lotions. CW Pharmaceuticals has CTFA and Coschem membership.

Dream Nails & Body

Dream Nails & Body (“DNB”) conducts business as a franchisor of DNB salons with a national franchise network, at 29 February 2008 of over 53 franchise outlets. Since the acquisition of Dream Nails in July 2007, Placécol has revampedthe brand to be more contemporary and also extended the service offering to a holistic service offering, including bodyand facial treatments.

DNB also offers accredited training for nail technicians.

DNB retails quality nail products to its own franchises and other nail salons throughout South Africa and Africa through itsexclusive five-year NSI distributorship agreement.

Industry Overview

Summary

The South African cosmetics industry is competitive and sophisticated.The sector has recently recorded its fastest growthsince the country’s first democratic election in 1994, which marked the end of Apartheid. Industry sources claim that theSouth African cosmetic and toiletries industry grew by approximately 45% during the last two years. Currently it has anestimated value of over $3.4 billion (R24 billion) and it is predicted that it will grow by 15% to 20% in the coming year(2008). As a consequence of the end of Apartheid and the lifting of sanctions, a considerable number of multi-nationalscame into the South African market for the first time in the last decade, bringing new brands and increasing competitionto the local market. On the high-end of the consumer market, there is a trend towards premium products, especially thosewith anti-aging properties. At the same time, with the growth of the middle class and increased spending power acrossmany socio-economic groups, there is now demand for affordable but reliable quality ethnic skin care and hair products.

Market demand

South Africa has a population of approximately 44 million people of which the adult population is over 29 million,14.7 million are adult females and 14.04 million are adult males. Consumer demand for cosmetics and toiletry products hascreated a robust local industry and manufactures are emphasising more and more products specifically geared for local skinand hair types.The industry is set to grow continuously for the next five years, particularly in the following market segments:cosmetics, sun care products, hair care and treatment products (particularly hair pieces and wigs) and specialised facialcreams for the ethnic skin/hair market.

According to industry sources, there are over 15 million potential consumers in the ethnic hair (maintenance) market alone.

There continues to be a growing interest in international brands, but for the most part, imported products remainunaffordable for most South Africans. Consequently, price rather than brand loyalty is still the biggest deciding factor amonglower income consumers. There is therefore a demand for cost-effective but quality products. New entrants (especiallythose not known to local consumers) are usually most successful with a significant advertising budget, adequate salespromotions and strategic pricing to ensure successful market entry. Cosmetic, toiletries and fragrances imported into SouthAfrica cater primarily for the local market, but increasingly, cosmetic companies are expanding their business to the greaterSADC (Southern African Development Community) region. The SADC comprises: Angola, Botswana, Lesotho, Namibia,Mozambique, Malawi, Mauritius, Democratic Republic of Congo,Tanzania, Swaziland, Seychelles and Zimbabwe.The SADChas a population of over 180 million people and countries such as Zambia (5.3%) and Angola (16.3%) are showing rapidGDP growth.

Market data

The United States currently faces a cosmetic and toiletry trade deficit with South Africa. Cosmetic imports from the UnitedStates grew by almost 15% for the period 2006 – 2007, while South African exports to the United States for the sameperiod increased by 47%. According to the South African Department of Customs, the United Kingdom is the largestexporter of cosmetics and toiletries to South Africa (in value terms), followed by Germany, France and the United States.Imports are also growing from the East.

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Best prospects

Listed below are some of the products presenting best prospects for the country:

• Anti-aging beauty products;

• Hair color and maintenance (after care) products for ethnic hair ;

• Hair care maintenance products for hair pieces (wigs);

• Ethnic skin care products; and

• Spa products.

Spa products are mentioned since the South African Spa and Beauty Salon industries have experienced a one thousandfour hundred percent growth rate over the past two years, with more than 140 spa venues presently in operation (fromthe original ten spas a few years ago) countrywide, offering half-day, full-day and evening spa facilities to consumers.Theselocations offer luxury treatment options to middle and high-income consumers and especially to corporations who offerincentive packages to their employees.

Key suppliers

The principle United States and international cosmetic brands available to the South African market include: L’Oreal,Colgate-Palmolive, Estee Lauder, Revlon, Reckitt Benckiser, Wella, Ladine, Unilever, Maybelline, Sally Hansen, Clinique,Max Factor, Elizabeth Arden,Avon and Gatineau. High-profile local cosmetic manufacturers include: Dermaxime, specialisingin anti-aging treatments and SDK Agencies, a contract colour cosmetics manufacturer.

Direct selling has become popular in South Africa in the last decade. The following cosmetic Houses who sell directlythrough beauty consultants and agents offer a full spectrum of beauty and personal care products: Annique, Environ, AvroyShlain, Nimue and Virgin Cosmetics (recently launched in South Africa).

Market entry

For international companies to enter the South African cosmetics and toiletry market it is imperative to find a localrepresentative, distributor or agent. South African industry is extremely brand and supplier loyal, and the quickest road tosuccess in the market is teaming up with a well established and widely networked local partner.

Market issues and obstacles

There are no major issues or obstacles regarding importation of toiletries, cosmetics or fragrances into South Africa.However, if cosmetics, hair care or skin care products claim medicinal ingredients, they will need to be registered with theMedicines Control Council of South Africa (MCC). According to industry sources, the process can be tedious, long andcomplicated.The South African cosmetics industry also battles a steady influx of counterfeit “fine” fragrances and cosmeticsfrom the East and neighbouring countries. In an effort to minimise counterfeit trading, the local Cosmetics, Toiletry andFragrance Association (CTFA) established the “Association Against Counterfeit Goods” in April 2006.

The Association is tasked with ensuring the tracking, confiscation and destroying of counterfeit fine fragrances and cosmetics.

Summary

The South African cosmetics industry is lucrative and there still exists huge potential for growth.

Source: Cosmetics and Toiletries Market in South Africa Research Report (International Business Strategies) February 2008 and the Cosmetics, Toiletry and

Fragrance Association presentation.

Board of Directors

Charles Moolman (Executive Chairperson and Pharmaceutical Director), BPharm [52]

Charles was born in Ermelo, matriculated in 1974 and distinguished himself as a leader in the areas of sport, culture andmanagement. He completed a BPharm degree at the University of Potchefstroom and fulfilled a leadership role inPharmaceutical Students’ Federations in South Africa. He managed Pharmachem Pharmacy in Ermelo in a partnership since1984 and became sole owner in 1990. During this time he was actively involved in the retail pharmacy industry, registeredwith the South African Pharmacy Board and Pharmaceutical Society. During this period he served in various leadership rolesin the community and was a pivotal player in the forming of the Ermelo Development Forum in 1992, where he also actedas chairman. He was elected as a councillor of the Ermelo Town Council in 1995 and resigned in 1999 when he relocatedto Centurion.

Together with Wessel de Wet, he founded Placécol Cosmetics in 1997 and is responsible for the research and development,manufacturing and training aspects of the Placécol brand and range of products, as well as the management of some of theaffiliated companies in the Placécol Group.

Wessel de Wet (Chief Executive Officer), BCom [51]

After completing his BCom degree,Wessel managed a family agriculture business in Ermelo. His uncompromising levels ofexcellence and the setting of high standards enabled the business to expand and become recognised as one of the leadingagricultural produce suppliers in the region at that time.

In 1997 in pursuit of greater challenges, he joined forces with a good personal friend, Charles Moolman, to acquire therights to an exciting new skin care concept, Placécol. Under their leadership the original Placécol Cosmetics has evolvedinto one of South Africa’s pivotal skin care groups.

Demonstrating the ability to choose and motivate exceptional achievers, many of whom have brought with them uniqueexpertise and industry intellectual knowledge, Placécol has been able to provide affordable and effective skin caretreatments and has grown rapidly from a small regional player to one of South Africa’s leading skin care companies, creatinga national and respected brand in the market with minimal investment by the shareholders.

A visionary who is able to identify opportunities and quickly implement strategies,Wessel, with his colleague, has managedto establish a diverse and vertically integrated group that is well-positioned to take advantage of the many strategicadvantages that is has created for itself in many segments of the skin care market including, manufacturing, productdevelopment and formulation, supplying skin care products and services on a national basis, supplying internationallyaccredited beauty therapists and also participating in the national retail market through its own chain of self-owned andfranchised stores.

Richard du Toit (Chief Financial Officer), FCMA [58]

Richard commenced his working career at the South African Reserve Bank and thereafter pursued a career in financialmanagement which culminated in his appointment as divisional financial director of Nampak’s Plastics Division.Thereafterhe was promoted to divisional managing director and was also appointed to the Board of their UK subsidiary. Richard hasextensive experience in “right sizing” an organisation and has also been involved with many acquisitions including a publiccompany in the UK and the sale of a company in Australia. He has been a shareholder of Placécol since 2002.

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Susan du Toit (Independent Non-Executive Director), CA(SA) {appointed 1 August 2008} [35]

Susan is a Chartered Accountant (SA) and has held a number of positions within Ernst & Young culminating in the positionof Audit Partner and Team Leader for a group of audit partners as well as being the lead audit partner on a number of JSE-listed companies. Susan has also been appointed Chairman of the company’s Audit and Risk Committee. Susan iscurrently a home executive.

Constance (Connie) Nkosi (Independent Non-Executive Director), MBA (Wits Business School), BA inPsychology and a diploma in Management in the Service Industry from the Wharton School of Business in theUSA {appointed 25 August 2008} [62]

Connie was appointed to the board of directors in August 2008. She brings a wealth of experience as a business strategistand BEE policy advisor. She is one of the founding members of the Black Management Forum and serves on the boards ofPick n Pay Limited, Spescom Limited and Protech Khuthele Holdings Limited as a non-executive director. Connie is alsoExecutive Chair for Lidonga Group Holdings.

Chairman’s Report

Introduction

Placécol continues to distinguish itself as one of the leading cosmetics companies in South African through its verticallyintegrated business model. From its own product supply through the CW Pharmaceuticals manufacturing facility, trainingbeauty therapists through its own Placécol Beauty Institute, supplying salon equipment through Salonquip and owning androlling out Placécol and Dream Nail & Body (DNB) franchises, Placécol is definitely unique in its product and serviceoffering.

The year under review was an exciting, but challenging one for Placécol.We managed to exceed the targeted 100 Placécolbeauty outlet mark and we believe that, as the largest franchisor in the health and beauty industry in South Africa, we arewell-placed to grow our brands.

Financial overview

The company showed excellent growth, despite the fact that trading conditions were more challenging in the second partof the year. Revenue grew by 69% to R115.3 million compared to the previous year. Operating profit of R11.5 million (2007: R8.3 million) and an operating profit margin of 10.0% (2007: 12.2%) was achieved. Adjusted headline earnings pershare rose by a more than satisfactory 125% to 7.2 cents per share.

We experienced good trading conditions in the first half of the year and, at the interim results, we envisaged that theforecast, as set out in the prospectus at listing, would be met. Unfortunately, the second half of the year was morechallenging due to unscheduled load shedding by Eskom in January 2008, which negatively affected the retail environment.The rising interest rate environment has also dampened consumer spend and we believe, although not a material influenceon our consumer base, we do believe that continued interest rate increases will have some impact on our results goingforward.

In the year under review, the Placécol salon base grew from to 32 salons to 53 salons, reflecting an increase of 66%.Theacceptance and desirability of the brand are also evident in the demand to own a Placécol Beauty Centre. In 2007 therewere only three franchisees and, by the end of February 2008, there were 19 franchisees.

Through the DNB acquisition, we acquired a further 44 stores which have since been expanded to 53 stores, giving thePlacécol Group a total of 106 beauty outlets nationwide at 29 February 2008 and a commanding position as the largestnational salon chain and the largest franchisor in the health and beauty industry in South Africa.

Directorate

On 6 May 2008, Mr K N MacKinnon resigned as a director to pursue his own interests. Kenny was a valued member of thePlacécol management team and we wish him well.

I would also like to thank Evelyn Chimombe-Munyoro and Thembisa Dingaan, who both resigned effective 1 August 2008,for their valuable contribution to the Board as Non-Executive Directors. I then welcome Susan du Toit and Connie Nkosi,as Independent Non-Executive Directors to our Board, effective 1 and 25 August 2008, respectively, and trust that, withtheir experience, they will make a meaningful contribution to our Board.

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Prospects

We expect the challenging market conditions to continue in the year ahead. Consumers tend to target their spending atwell-known and trusted brands in difficult times and at the same time ensure that they receive value for their money.ThePlacécol and DNB brand names are becoming well-known. The brand strength and leading market share enjoyed byPlacécol, together with the aggressive beauty outlet roll-out strategy of the Group, we believe would ensure good growthopportunities for Placécol in the years ahead.

The unique model of vertical integration will also ensure that we can better contain price increases and ensure thatefficiency benefits are passed on to our customers.

We are also constantly researching new products through CW Pharmaceuticals as well as investigating synergisticacquisition opportunities if and when presented to Placécol.

Appreciation

Achieving a solid performance in a difficult trading environment is testament to the calibre and tenacity of our managementteam and our franchisees and on behalf of the Board I extend to them our deepest thanks.

In recognition of the loyal support of our customers and their endorsement of our products, we will continue to strive forexcellence in fulfilling their needs with our world-class offerings.

To my colleagues on the Board for their expert guidance of the Group, please accept my personal thanks.

Charles MoolmanExecutive Chairman

Chief Executive Officer’s Report

Review of the Group’s performance

The core business of Placécol is the manufacturing and distribution of Placécol branded skin care products, as well as theprovision of skin care and nail care treatments through qualified therapists. The Group’s products are distributed to over300 outlets which include 106 Placécol and DNB (previously Dream Nails) company owned and franchised outlets at29 February 2008. For the 2008 year, the Group continued its drive to grow its geographical footprint and this has beenachieved through the roll out of beauty outlets in new territorial areas, with the additional benefit on increased productand equipment sales.

Management is pleased to announce that excellent growth was achieved despite tough trading conditions resulting fromunscheduled load shedding by Eskom in January 2008. Our customers are also affected by higher interest rates, spirallingfood inflation and high fuel prices, but to date, this has not had a major impact on the sales figures coming from the beautyoutlets.We believe that a woman will always want to look her best.

Revenue increased by 69% to R115.3 million (2007: R68.2 million) mainly due to increased franchise activities (28 newbeauty outlets were opened in 2008), an increase in product sales (distribute to over 300 retail and beauty outlets, includingPlacécol’s own outlets) and an increase in revenue from the manufacturing arm of Placécol, CW Pharmaceuticals.Subsequent to the acquisition of Dream Nails by Placécol, the Dream Nails salons were revamped into the morecontemporary and aptly renamed DNB franchises. Placécol, at 29 February 2008, had 106 beauty outlets of which19 Placécol salons are franchised (2007: three franchised salons), 34 Placécol salons are owned and the balance of 53 salonsare represented by DNB salons.

In respect of the Placécol franchise business model, Placécol earns an initial upfront profit on the sale of a beauty outletand then thereafter, royalties and the sale of Placécol products to the beauty outlets are received on a monthly basis.

Gross profit increased by 34% to R81.3 million (2007: R60.8 million), however as a result of the Group’s product mixtowards franchise activities, the overall gross profit margin decreased by 21% to 70.5% (2007: 89.2%). Operating costsincreased by 33% to R69.8 million (2007: R52.5 million) which can be attributed to the opening of new Placécol and DNBbeauty outlets as company owned stores which are later sold to appropriate franchisees.

Earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 67%, to R13.9 million (2007:R8.3 million). EBITDA margins decreased marginally to 12.1% (2007: 12.2%) for the 2008 financial year.

Profit attributable to ordinary shareholders increased by 204% to R7.6 million (2007: R2.5 million). Adjusted headlineearnings per share increased by 125% to 7.2 cents (2007: 3.2 cents).

Inventories increased to R23.3 million, of which R12.1 million relates to company-owned stores available for sale asfranchises. Included in trade receivables is an amount of by R3.8 million which relates to franchise debtors, where thefinancing from external funders is in the process of being finalised.

Corporate actions

Placécol acquired the entire issued share capital of, and all shareholder claims on loan account against, Dream Nails fromthe Dream Nails vendors with effect from 1 July 2007, in terms of the Dream Nails Sale Agreement for a consideration ofR11 406 697. Dream Nail’s revenue, included in the results presented was R13 910 622, and a profit after tax of R533 250was generated.The goodwill acquired on the acquisition was R11 695 374.

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Prospects

We are excited about the year ahead as Placécol has some new product developments in the pipeline. We are currentlyworking on a revolutionary new skin care treatment product range, SkinPHD, to support medical practitioners, the plannedlaunch of which is August 2008.

We are also very pleased to announce that Placécol is assisting Buhle Cosmetics, a BEE group, to launch an up-market salonfranchise (Stylique) for people with skin of colour. CW Pharmaceuticals will continue to manufacture the products and theGroup will facilitate the training and the roll-out of the Stylique franchise concept.

Placécol is also planning to open 26 additional Placécol and DNB beauty outlets to meet the target of 200 outlets by 2010.

CW Pharmaceuticals has gained recognition as a developer and formulator of new products and is continuously attractingnew contract manufacturing customers to enhance overall economies of scale.

To counteract difficult trading conditions we will continue to ensure that our brands remain contemporary, our productsinnovative and our service offerings good value for money.

Subsequent year-end event

As detailed in paragraph 28.1 of the prospectus, the February 2008 profit after tax for the Placécol Group of companiesin terms of the original Group restructuring, excluding Nomic 136 (Pty) Limited, trading as Dream Nails and NSI Africa,was less than R9.2 million and the company will therefore repurchase 11 893 332 Placécol ordinary shares issued toCharles Moolman,Wessel de Wet, Richard du Toit, Jan Heystek and Allan Findlay Brown (“the vendors”) on a pro rata basisfor the aggregate sum of R1.00 per share, subject to shareholders’ approvals as set out in the notice of the annualgeneral meeting.

Dividend policy

It is the intention of the company to reconsider its dividend policy once the Group has achieved mature growth andperiodically thereafter to take account of prevailing circumstances and future cash requirements. Initially all earningsgenerated by the Group will be utilised to fund future growth and development.

Appreciation

It is the hard work and loyalty of every Placécol employee that allows us to deliver solid results. For this I thank each of youand wish you well for the year ahead.

Wessel de WetChief Executive Officer

Corporate Governance Report

Introduction

The journey from being an entrepreneurial, privately owned business to becoming a listed, public entity has brought withit many governance and other challenges. Since the company’s listing late last year to the date of this publication, the Board,with the assistance of management and the Designated Adviser, had to address a list of actions required to ensure that thecompany meets the expectations of the market place as far as its governance processes, procedures and structures areconcerned. It was evident from the start that this is an ongoing process and that a quick fix approach would not add muchvalue, if any, to the long-term objective of creating shareholder value and ensuring a sustainable business. Several meetingswere held with the company’s Designated Adviser during the financial year to discuss the company’s strategy and actionplan in respect of compliance and governance requirements.

With this in mind, the Board of Directors of Placécol aspires to not only comply with the minimum corporate governancestandards, but to improve on these standards where possible. A business culture being based on the principles of fairness,honesty and transparency has always been part of the Placécol way of doing business. For this reason the Board of Directorsfully subscribes to the Code of Corporate Practices and Conduct (“the Code”) as contained in the King Report onCorporate Governance for South Africa 2002 (“King II”) and is working towards identifying and implementing thosegovernance recommendations that would add real value to the business and all its stakeholders.

Board of Directors

The past year since the company’s listing has seen a number of changes to the Board of Directors. At year-end the Boardconsisted of two Non-Executive and three Executive Directors. After year-end, the following Directors resigned:

• Ms Evelyn Chimombe-Munyoro;

• Ms Thembisa Dingaan; and

• Mr Kenny MacKinnon.

Following the year-end, the Board appointed Ms Susan du Toit and Ms Connie Nkosi as Independent Non-ExecutiveDirectors.

The Board is chaired by an Executive Chairman, Mr Charles Moolman.

The Board Charter as adopted and underwritten by the Board sets out the primary functions of the Board as being to:

• retain full and effective control of the Group;

• review and approve corporate strategy;

• approve and oversee major capital expenditure, acquisitions and disposals;

• review and approve annual budgets and business plans;

• monitor operational performance and management;

• determine the Group’s purpose and values;

• ensure that the Group complies with sound codes of business behaviour;

• ensure that appropriate control systems are in place for the proper management of risk, financial control and compliancewith all laws and regulations;

• appoint the Chief Executive Officer and ensure proper succession planning for executive management;

• regularly identify and monitor key risk areas and the management thereof;

• oversee the company’s disclosure and communication process.

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Following the listing of the company in August 2007, the Board only met once prior to the end of the financial year.Quarterly Board meetings have now been included in the Board’s annual calendar. In addition to the above the Boardapproved a specific governance work plan to ensure that all governance issues are considered and appropriately dealt within an annual cycle.

Executive Directors’ service contracts may be terminated with one to three month’s notice.The daily management of theGroup’s affairs is the responsibility of the Chief Executive Officer. In addition to the annual work plan, an approvalsframework was also adopted during the year setting out the respective responsibilities and levels of authority of the Boardand executive management.

All Directors have access to the advice and services of the Company Secretary. In appropriate circumstance they may seekindependent professional advice about the affairs of the company and the exercise of their functions as Directors at thecompany’s expense. The Director concerned would initially discuss and clear the matter with the Chairman or theCompany Secretary unless this would be inappropriate. The Company Secretary has vast experience in the companysecretarial and governance field and is actively involved in assisting the Board in its governance initiatives.

An orientation and induction programme for Directors is in place. Directors have unrestricted access to companyinformation and records. A policy dealing with conflicts of interests has been adopted and a register of Directors’declarations of interest is retained.

At the time of publishing the annual report, the Board composition was as follows:

Independent Non-Executive Directors

• Ms Susan du Toit.

• Ms Connie Nkosi.

Executive Directors

• Mr Charles Moolman (Executive Chairman).

• Mr Wessel de Wet (Chief Executive Officer).

• Mr Richard du Toit (Chief Financial Officer).

Additional information regarding our Directors can be found on the following pages of the annual report:

• short curricula vitae, – pages 11 and 12;

• remuneration – note 23 on page 59; and

• shareholding – note 8 on page 30.

Non-Executive Directors are expected to contribute an unfettered and independent view on matters considered by theBoard. All Directors have the requisite knowledge and experience required to properly execute their duties and allparticipate actively in Board meetings.

The Chairman is not independent as recommended by the Code, but in light of the company’s current strategic positionthe Board was of the opinion that Mr Moolman was best suited to assume the role as Chairman for the foreseeable future.This decision will be reconsidered on a regular basis.

The Board’s governance procedures and processes are continuously being reviewed and a number of specific policies arein the process of being adopted by the Board, expanding on the content of the Board Charter in the following areas:

• communication on behalf of the company and the Board; and

• trading in the company’s shares.

The Board acknowledges its responsibility for ensuring the preparation of the annual financial statements in accordance withthe International Financial Reporting Standards and for ensuring the maintenance of adequate accounting records andeffective systems of internal control. The annual financial statements are prepared from the accounting records based onthe consistent use of appropriate accounting policies supported by reasonable and prudent judgements and estimates thatfairly present the state of affairs.

Details the attendance of Directors at the Board meetings during the financial year and since listing in August 2007 are asfollows:

5 October 2007

Non-Executive Directors

E Chimombe-Munyoro A

T Dingaan P

Executive Directors

C Moolman P

K MacKinnon P

W de Wet P

R du Toit P

A = Absent P = Present in person

Board committees

The Board has appointed and is in the process of appointing the committees below. Each committee will have agreed termsof reference as approved by the Board that addresses issues such as composition, duties, responsibilities and scope ofauthority.

Audit and Risk Committee

Following the changes to the composition of the Board, the composition of the Audit and Risk Committee also needed tobe reconsidered to not only align it with the recommendations of the Code, but also with the requirements of theCorporate Laws Amendment Act of 2006. At the time of publishing the annual report, the composition of the Audit andRisk Committee was as follows:

• Ms Susan du Toit (Chairman); and

• Ms Connie Nkosi.

The Board is satisfied that both these members meet the definition of Non-Executive Directors, acting independently, asdefined in the said Act.

Terms of reference for the Audit and Risk Committee were adopted during the period under review, the intention beingto ensure compliance with both governance recommendations and statutory requirements. As indicated by the name ofthe committee, the duties of the committee were agreed in order to also provide assistance to the Board in its responsibilityfor the risk management process.The terms of reference set out the committee’s responsibility in respect of the followingareas:

• the external auditors, audit process and annual financial statements;

• internal audit;

• risk management; and

• organisational integrity and ethics.

The committee is responsible for facilitating the relationship with the external auditors and for monitoring the non-auditservices provided by the external auditors.The external auditors have direct access to the chairman of the committee andattend all meetings of the committee.The chairman of the committee is expected to attend the annual general meeting inorder to answer any questions that shareholders may have relevant to the committee’s areas of responsibility.

19

20

The Board is satisfied that the committee has been equipped to properly fulfil its duties going forward.

Attendance at the meetings of the committee during the period under review was as follows:

Audit and Risk Committee meetings since listing to 29 February 2008:

Member 5 October 2007

E Chimombe-Munyoro A

T Dingaan P

A = Absent P = Present in person

Human Resources and Nomination Committee

The Board is in the process of establishing a Human Resources and Nomination Committee.

The committee will be primarily responsible for assisting the Board in formulating remuneration and other employmentpolicies and to structure appropriate remuneration packages for Executive Directors, based on industry standards and thebest interests of all parties concerned. Going forward the committee will also assist the Board in the nomination of newBoard candidates and ensuring regular assessment of Board performances.

The Chief Executive Officer attends the meetings by invitation. The Chief Executive Officer will be recused when hisremuneration and benefits are discussed and will not participate in such deliberations.

Company Secretary

Ms Pretorius resigned as Company Secretary during the period under review and was replaced by iThemba Governanceand Statutory Solutions (Pty) Limited, represented by Ms Annamarie van der Merwe. Ms van der Merwe has more than17 years’ experience as Company Secretary and corporate lawyer in the listed environment. She is also a member of theKing Committee and a member of the task team responsible for writing the chapter on Boards and Directors.

Closed periods

The company complies with the JSE Listings Requirements as far as closed periods are concerned and a specific policy isin the process of being approved to address the procedures in respect of trading in the company’s shares by Directors ofthe listed entity and its major subsidiaries as well as their associates. Closed periods extend from 31 August and28/29 February, being the commencement of interim and year-end reporting dates up to the date of announcement of theresults and include any other period during which the company is trading under cautionary announcement.

Risk management

The Board of Directors accepts its responsibility for the total process of risk. For this purpose the Audit and Risk Committeehas been specifically tasked to assist the Board in fulfilling its duties and responsibilities in this regard. The company is inthe process of strengthening its risk management process. The internal control environment has been improved by theintroduction of formalised financial and accounting policies.The scope of monthly financial reviews of business units’ resultsagainst budget and the prior year has been expanded.

A formal process of business risk assessments will be undertaken from time to time to highlight further control actions tobe taken. With the assistance of the Audit and Risk Committee, the company’s major risks will be identified and appropriateaction plans agreed to terminate, transfer or limit these risks will be implemented where reasonably possible.

Going concern

The annual financial statements set out in this annual report have been prepared in accordance with International FinancialReporting Standards.They are based on appropriate accounting policies that have been consistently applied.

Having reviewed the company’s financial projections, the Directors believe that the Group will continue as a going concernfor the foreseeable future.

Ethics

The vision and mission of the company confirms the honest and open business culture driven by management. A writtenCode of Ethics, codifying this business approach and addressing the different aspects of the business will be prepared andsigned off by the Board of Directors in due course.

Stakeholder communication

The Board recognises its duty to present a balanced and understandable assessment of the company’s position in reportingto stakeholders. Proactive communication with stakeholders addresses material matters of significant interest toshareowners, other stakeholders and the financial and investment community. The quality of information is based on theguidelines of promptness, relevance, transparency and substance over form.

Investor road shows, presentations and formal announcements are all used to communicate with the market. Shareownersare also encouraged to attend the company’s annual general meeting and to make use of this opportunity to engage withthe Directors on matters concerning the affairs of the Group.

Social responsibility

The company has for a number of years been supporting students, with a specific focus on previously disadvantagedstudents, with bursaries and loans to enable them to complete the two-year Health and Skin Care Diploma. Studentsthereafter work at the Placécol Beauty Centres as beauty therapists for a period of time.

In addition to the above the company also drives the “Millionaire Club” project which enables female managers of PlacécolBeauty Centres who have proved their abilities, to acquire ownership of a beauty centre franchise. Assistance is provided,not only as far as funding of the transaction is concerned, but Placécol Cosmetics also provides mentoring to the newowners to ensure that the beauty centre is well-managed and grown into a successful business venture. In this way, womenof all races are given an opportunity to own and grow their own businesses.

21

22

Financial Statements

Contents

Page

Report of the Independent Auditors 23

Directors’ Responsibilities and Approval 25

Certification by Company Secretary 26

Audit and Risk Committee Report 27

Directors’ Report 28

Balance Sheet 32

Income Statement 33

Statement of Changes in Equity 34

Cash Flow Statement 35

Accounting Policies 36

Notes to the Financial Statements 44

The company’s annual financial statements 69 – 80

23

Report of the Independent Auditors

To the shareholders of Placécol Holdings Limited and its subsidiaries

We have audited the accompanying Group and company annual financial statements of Placécol Holdings Limited, whichcomprise the Directors’ report, the balance sheet at 29 February 2008, the income statement, the statement of changes inequity and cash flow statement for the year then ended, a summary of significant accounting policies and other explanatorynotes, as set out on pages 36 to 80.

Directors’ responsibility for the financial statements

The Group’s Directors are responsible for the preparation and fair presentation of these annual financial statements inaccordance with International Financial Reporting Standards, and in the manner required by the Companies Act of SouthAfrica, 1973. This responsibility includes: designing, implementing and maintaining internal controls relevant to thepreparation and fair presentation of annual financial statements that are free from material misstatement, whether due tofraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonablein the circumstances.

Auditors’ responsibility

Our responsibility is to express an opinion on these annual financial statements based on our audit.We conducted our auditin accordance with International Standards on Auditing.These standards require that we comply with ethical requirementsand plan and perform the audit to obtain reasonable assurance whether the annual financial statements are free frommaterial misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual financialstatements.The procedures selected depend on the auditors’ judgement, including the assessment of the risks of materialmisstatement of the annual financial statements, whether due to fraud or error. In making those risk assessments, theauditors consider internal controls relevant to the entity’s preparation and fair presentation of the annual financialstatements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as wellas evaluating the overall presentation of the annual financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

24

Opinion

In our opinion, the annual financial statements present fairly, in all material respects, the financial position of the Group andthe company at 29 February 2008, and of its financial performance and its cash flows for the year then ended in accordancewith International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa, 1973.

RSM Betty & Dickson (Tshwane)Registered AuditorsPer Paul den BoerPartner

Suite 1, 267 Waterkloof RoadBrooklyn, 0181

4 September 2008

25

Directors’ Responsibilities and Approval

The Directors are required by the Companies Act of South Africa, 1973, to maintain adequate accounting records and areresponsible for the content and integrity of the annual financial statements and related financial information included in thisannual report. It is their responsibility to ensure that the annual financial statements fairly present the state of affairs of theGroup at the end of the financial year and the results of its operations and cash flows for the period then ended, inconformity with International Financial Reporting Standards.The external auditors are engaged to express an independentopinion on the annual financial statements.

The annual financial statements are prepared in accordance with International Financial Reporting Standards and are basedupon appropriate accounting policies consistently applied and supported by reasonable and prudent judgments andestimates.

The Directors acknowledge that they are ultimately responsible for the system of internal financial controls established bythe Group and place considerable importance on maintaining a strong control environment. To enable the Directors tomeet these responsibilities, the Board sets standards for internal control aimed at reducing the risk of error or loss in a cost-effective manner.The standards include the proper delegation of responsibilities within a clearly defined framework, effectiveaccounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls aremonitored throughout the Group and all employees are required to maintain the highest ethical standards in ensuring theGroup’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of riskmanagement in the Group is on identifying, assessing, managing and monitoring all known forms of risk across the Group.

While operating risk cannot be fully eliminated, the Group endeavours to minimise it by ensuring that appropriateinfrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures andconstraints.

The Directors are of the opinion, based on the information and explanations given by management, that the system ofinternal control provides reasonable assurance that the financial records may be relied on for the preparation of the annualfinancial statements. However, any system of internal financial control can provide only reasonable, and not absolute,assurance against material misstatement or loss.

The Directors have reviewed the Group’s cash flow forecast for the year to 29 February 2009 and, in the light of this reviewand the current financial position, they are satisfied that the Group has or had access to adequate resources to continue inoperational existence for the foreseeable future. Although the Board is primarily responsible for the financial affairs of theGroup, they are supported by the Group’s external auditors.

The external auditors are responsible for independently reviewing and reporting on the Group’s annual financial statements.The annual financial statements have been examined by the Group’s external auditors and their report is presented on pages 23 and 24.

The annual financial statements set out on pages 28 to 80, which have been prepared on the going concern basis, wereapproved by the Board on 29 August 2008 and were signed on its behalf by:

Charles Moolman Wessel de WetExecutive Chairman Chief Executive Officer

26

Certification by Company Secretary

In terms of section 268 (G) of the Companies Act, 61 of 1973 (“Act”), as amended, I certify that, to the best of myknowledge and belief, the company has, in respect of the financial year reported upon, lodged with the Registrar ofCompanies all returns required of a public company in terms of the Act and that all such returns are true, correct and upto date.

iThemba Governance and Statutory Solutions (Pty) LimitedCompany Secretary

8 September 2008

27

Audit and Risk Committee Report

The Corporate Laws Amendment Act, 24 of 2006 (“CLAA”), came into effect on 14 December 2007. In compliance with the CLAA, an Audit and Risk Committee was appointed by the Board of Directors. This committee comprises ofMs Susan du Toit (Chairman) and Ms Connie Nkosi as well as a representative of the company’s Designated Adviser asrequired by the JSE Listings Requirements.

The duties of the Audit and Risk Committee’s terms of reference are summarised on pages 19 and 20 of the CorporateGovernance Report and the Audit and Risk Committee will carry out the following functions:

• nominate the appointment of RSM Betty & Dickson (Tshwane) as the registered independent auditor after satisfyingitself through enquiry that RSM Betty & Dickson (Tshwane) is independent as defined in terms of the CLAA;

• determine the fees to be paid to RSM Betty & Dickson (Tshwane) and their terms of engagement;

• ensure that the appointment of RSM Betty & Dickson (Tshwane) complied with the CLAA and any other legislationrelating to the appointment of auditors;

• approve a non-audit services policy which determines the nature and extent of any non-audit services which RSM Betty& Dickson (Tshwane) may provide to the company; and

• pre-approve any proposed contract with RSM Betty & Dickson (Tshwane) for the provision of non-audit services to thecompany.

The Audit and Risk Committee has satisfied itself through enquiry that RSM Betty & Dickson (Tshwane) and Mr Paul denBoer, the designated auditor, are independent of the company.

The Audit and Risk Committee recommended the annual financial statements for the year ended 29 February 2008 forapproval to the Board. The Board has subsequently approved the annual financial statements which will be open fordiscussion at the forthcoming annual general meeting.

Audit and Risk Committee Chairman8 September 2008

28

Directors’ Report

The Directors submit their report for the year ended 29 February 2008.

1. REVIEW OF ACTIVITIES

Main business and operations

The Group is engaged in marketing and distribution of its own branded skin care product ranges, the training of beautytherapists and the offering of additional services and equipment through a combination of owned, franchised and otherretail outlets and operates principally in South Africa.

The operating results and state of affairs of the Group are fully set out in the attached annual financial statements anddo not in our opinion require any further comment. Due to the acquisition having taken place on 1 December 2006,the operating results for the previous year are stated for three months only.

Net profit of the Group was R8 622 358 (2007: profit R828 919), after taxation of R3 683 616 (2007: R491 738).

2. DIRECTORS’ RESPONSIBILITIES

The responsiblities of the Directors are detailed on page 25 of this annual report.

3. GOING CONCERN

The Group annual financial statements have been prepared on the basis of accounting policies applicable to a goingconcern.This basis presumes that the funds will be available to finance future operations and that the realisation of assetsand settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

The Board has performed a formal review of the Group’s ability to continue trading as a going concern in theforeseeable future and, based on this review, considers that the presentation of the annual financial statements on thisbasis as appropriate.There are no pending or threatened legal or arbitration proceedings which have had or may havea material effect on the financial position of the Group.

4. POST BALANCE SHEET EVENTS

The following changes to the Board of Directors occurred after year-end:

Appointments

S M du Toit (Appointed 1 August 2008)*

C Nkosi (Appointed 25 August 2008)*

Resignations

K N MacKinnon (Resigned 6 May 2008)**

T Dingaan (Resigned 1 August 2008)*

C E Chimombe-Munyoro (Resigned 1 August 2008)** Non-Executive Director** Executive Director

The following changes to the company’s issued share capital will occur after year-end:

The 2 400 000 ordinary shares issued to the Placécol Holdings Share Incentive Scheme will be cancelled.

11 893 332 Placécol ordinary shares will be repurchased by the company, subject to shareholders‘ approval as set outin the notice of annual general meeting.

The Directors are not aware of any other matters or circumstances arising since the end of the financial year.

29

5. AUTHORISED AND ISSUED SHARE CAPITAL

There were no changes in the authorised share capital of the company during the year under review.

The following changes were made in the issued share capital of the company during the year under review.

• 6 104 976 ordinary shares of 0.01 cent each were issued at par value plus a total premium of R6 104 366 as partof the purchase consideration in the acquisition of Nomic 136 (Pty) Ltd trading as Dream Nails and Body.

• 20 000 000 ordinary shares of 0.01 cent each were issued at par value plus a total premium of R19 998 000 via aprivate placement.

The purpose of the private placement was to:

– raise capital and allow the Group to accelerate its organic and acquisitive growth;

– enhance investor awareness of Placécol, its activities and specialised skills;

– broaden Placécol’s shareholder base;

– afford selected investors the opportunity to participate directly in the income stream of Placécol, as well as in thefuture capital growth of its assets.

The company listed on the AltX subsequent to the private placement.

• 2 400 000 ordinary shares of 0.01 cents each were issued at par value to the Placécol Share Incentive Scheme plusa total premium of R2 399 760.

All authorised shares have been placed under the control of the Directors until the next annual general meeting, atwhich the Directors propose that the authority be granted to them to control the unissued shares and to issue newshares for cash.

6. DIVIDENDS

No dividends were declared or paid to shareholders during the year.

7. DIRECTORS

The Directors of the company during the year and to the date of this annual report are as follows:

Name

W J de Wet*

C W Moolman*

R A du Toit*

K N Mackinnon (Resigned 6 May 2008)*

T Dingaan (Resigned 1 August 2008)**

C E Chimombe-Munyoro (Resigned 1 August 2008)**

S M du Toit (Appointed 1 August 2008)**

C Nkosi (Appointed 25 August 2008)**

* Executive Director** Non-Executive Director

30

8. DIRECTORS’ INTERESTS

At 29 February 2008, the Directors’ interest in the company’s share capital was as follows:

Beneficial Total % Director Direct Indirect Held

Charles Moolman 25 593 857 – 25 593 857 19.3

Wessel de Wet 27 593 857 – 27 593 857 20.8

Richard du Toit 10 772 697 – 10 772 697 8.1

63 960 411 – 63 960 411 48.2

There were no changes to the Directors’ shareholding in the company between 29 February 2008 and the date ofthis annual report.

No comparatives are presented as the company listed on 21 August 2007.

9. SIGNIFICANT SHAREHOLDERS

Details of significant shareholders are included on page 81 of this annual report.

10. INTERESTS OF DIRECTORS IN CONTRACTS

Other than the interests disclosed in note 28 to the notes of the annual financial statements, no Director has any otherinterest in any transactions of significance with the company or any of its subsidiaries.

11. LITIGATION

There are no arbitration proceedings, including any such proceedings that are pending or threatened, of which Placécolis aware that may have, or have had during the 12 months preceding the date of the annual report a material effecton the financial position of the Group.

12. SEGMENT REPORT

In order to give a better understanding to shareholders, the Group discloses the segmental analysis as per note 30 tothe annual financial statements.

The Group thus has no discernible geographical segment.

13. BORROWING LIMITATIONS

In terms of the articles of association of the company, the Directors may exercise all the powers of the company toborrow money, as they consider appropriate.

14. INTEREST IN SUBSIDIARIES

Details of the Group’s investment in subsidiaries are set out in note 32 of the annual financial statements.

15. NON-CURRENT ASSETS

During the year, the Group acquired property, plant and equipment as set out in note 3 of the annual financialstatements.

31

16. COMPANY SECRETARY

As at balance sheet date the Company Secretary was L T Pretorius (resigned 11 July 2008).

Business address Placécol BoulevardSamrand AvenueKosmosdal, Extension 4Centurion0046

Postal address PO Box 8833Centurion0046

At the date of the annual financial statements the Company Secretary was iThemba Governance and StatutorySolutions (Pty) Limited (appointed 14 July 2008).

Business address Monument Office ParkBlock 3, Suite 32279 Steenbok Avenue, Monument Park

Postal address PO Box 4896Rietvalleirand0174

17. SPECIAL RESOLUTIONS

At the annual general meeting of the shareholders to be held on 2 October 2008, it is proposed that:

• The directors of the company have authority until the next annual general meeting of the company, to procure thatthe company or any subsidiaries of the company acquire shares of the company, subject to the ListingsRequirements of the JSE Limited, in other words, to afford the directors of the company or any subsidiaries thereofa general authority to effect a repurchase of the company’s shares on the JSE Limited.

• In terms of the prospectus, the February 2008 profit after tax for the Placécol Group of companies excludingNomic 136 (Pty) Limited, trading as Dream Nails and NSI South Africa (“Dream Nails” or “DNB”) was less thanR9.2 million and the company will therefore repurchase 11 893 332 Placécol ordinary shares from the vendors ona pro rata basis for the aggregate sum of R1.00.

18. INTEREST IN SUBSIDIARIES

Details of the company’s subsidiaries are shown in note 32 to the annual financial statements.

19. AUDITORS

RSM Betty and Dickson (Tswane) will continue in office in accordance with section 270(2) of the Companies Act.

8 September 2008

32

Placécol Holdings Limited and its Subsidiaries

Balance Sheet AT 29 FEBRUARY 2008

Notes 2008 2007R R

ASSETS

Non-current assets 34 471 805 24 940 297

Property, plant and equipment 3 8 017 812 14 339 247Intangible assets 4 21 009 601 8 097 441Finance lease receivables 5 69 176 –Deferred tax asset 14 2 140 925 898 594Other financial assets 6 3 234 291 1 605 015

Current assets 54 610 053 24 900 108

Inventories 7 23 197 880 4 669 388Loans to directors 8 187 805 204 845Other financial assets 6 2 319 090 419 872Finance lease receivables 5 32 355 –Trade and other receivables 9 17 941 195 12 168 647Cash and cash equivalents 10 10 931 728 7 437 356

Total assets 89 081 858 49 840 405

EQUITY AND LIABILITIES

Equity 56 902 135 24 182 290

Share capital 11 47 450 858 23 353 371Retained income 9 451 277 828 919

Liabilities 32 179 723 25 658 115

Non-current liabilities 10 604 039 5 554 254

Other financial liabilities 12 8 923 524 3 673 959Finance lease obligation 13 663 218 834 764Operating lease liability 1 004 237 965 887Deferred tax 14 13 060 79 644

Current liabilities 21 575 684 20 103 861

Other financial liabilities 12 4 003 366 3 793 706Current tax payable 5 013 954 1 493 534Finance lease obligation 13 174 585 176 120Operating lease liability – 154 861Trade and other payables 15 10 282 840 10 099 116Income received in advance 16 2 100 939 3 051 941Bank overdraft 10 – 1 334 583

Total equity and liabilities 89 081 858 49 840 405

Net asset value per share (cents) 45.3 –Net tangible asset value per share (cents) 29.1 –

33


Income Statement FOR THE YEAR ENDED 29 FEBRUARY 2008

3 monthsNotes 2008 2007

R R

Revenue 115 285 983 20 568 213Cost of sales (33 987 857) (2 398 241)

Gross profit 81 298 126 18 169 972Operating expenses 17 & 18 (69 790 010) (16 046 053)

Operating profit 11 508 116 2 123 919Other income 1 256 100 –Investment income 19 984 528 71 674Finance costs 20 (1 442 770) (874 936)

Profit before taxation 12 305 974 1 320 657Taxation 21 (3 683 616) (491 738)

Profit for the period 8 622 358 828 919

Earnings per shares (cents) 22 7.3 0.9Headline earnings per share (cents) 22 6.5 0.9Adjusted earnings per share (cents) 22 8.1 1.0Adjusted headline earnings per share (cents) 22 7.2 1.0

34


Statement of Changes in Equity FOR THE YEAR ENDED 29 FEBRUARY 2008

Figures in Rand Share Share Total share Retained Totalcapital premium capital income equity

Balance at 1 March 2006 100 – 100 – 100Changes in equity – – – – –Profit for the year – – – 828 919 828 919Issue of shares 10 300 26 489 600 26 499 900 – 26 499 900Issue costs written off – (1 124 763) (1 124 763) – (1 124 763)

Total changes 10 300 25 364 837 25 375 137 828 919 26 204 056

Balance at 1 March 2007 10 400 25 364 837 25 375 237 828 919 26 204 156Changes in equity – – – – –Profit for the year – – – 8 622 358 8 622 358Issue of shares 2 850 28 502 126 28 504 976 – 28 504 976Issue costs written off – (2 007 489) (2 007 489) – (2 007 489)Treasury shares held (240) (2 399 760) (2 400 000) – (2 400 000)

Total changes 2 610 24 094 877 24 097 487 8 622 358 32 719 845

Balance at 29 February 2008 13 010 49 459 714 49 472 724 9 451 277 58 924 001

35


Cash Flow Statement FOR THE YEAR ENDED 29 FEBRUARY 2008

Notes 2008 2007R R

Cash flows from operating activitiesCash receipts from customers 107 712 795 12 369 384Cash paid to suppliers and employees (120 769 599) (10 906 834)

Cash (used in) generated from operations 24 (13 056 804) 1 462 550Interest income 808 337 45 525Finance costs (1 442 770) (874 936)Tax paid 25 (2 360 147) –

Net cash from operating activities (16 051 384) 633 139

Cash flows from investing activitiesPurchase of property, plant and equipment 3 (1 796 812) (826 261)Investment in intangible assets (1 040 358) –Sale of property, plant and equipment 6 541 176 –Sale of intangible assets 1 700 000 –Acquisition of businesses 26 (5 553 082) (830 776)Receipts from loans advanced 17 040 –Loans advanced 458 361 605 623Proceeds on disposal of business units – 1 018 559

Net cash from investing activities 326 325 (32 855)

Cash flows from financing activitiesProceeds from shares issued 17 992 511 9 672 748Proceeds from other financial liabilities 2 561 503 –Repayment of interest bearing borrowings – (4 170 359)

Net cash from financing activities 20 554 014 5 502 389

Total cash movement for the period 4 828 955 6 102 673Cash at the beginning of the period 6 102 773 100

Total cash at end of the period 10 931 728 6 102 773

36


Accounting Policies

1. PRESENTATION OF ANNUAL FINANCIAL STATEMENTS

The annual financial statements have been prepared in accordance with International Financial Reporting Standards(IFRS) and the Companies Act of South Africa, 1973. The annual financial statements have been prepared onthe historical cost basis, except for the measurement of certain financial instruments at fair value, and incorporate theprincipal accounting policies set out below.

The accounting policies of the Group and company are consistent with those adopted in the previous year, exceptwhere new accounting policies were adopted for the first time, more fully disclosed in note 2.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates.It also requires management to exercise judgement in the process of applying the Group’s accounting policies. Theareas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significantto the financial statements are disclosed in note 1.1.

1.1 Critical accounting estimates and significant judgements

The preparation of the financial statements in conformity with IFRS requires management to make estimates andjudgements and form assumptions that affect the reported amounts of the assets and liabilities, the reportedrevenue and costs during the periods presented therein, and the disclosure of contingent liabilities at the dateof the financial statements. Estimates and judgements are continually evaluated and are based on historicalexperience and other factors, including expectations of future events that are to be believed to be reasonableunder the circumstances.

The Group makes estimates and assumptions concerning the future and the resulting accounting estimates willby definition, seldom equal the related actual results. The estimates, assumptions and judgements that have asignificant risk of causing a material adjustment to the financial results or the financial position reported in futureperiods are discussed below:

Impairment of trade and other receivables

Trade and other receivables are impaired when there is objective evidence that the Group will not be able tocollect all of the amounts due under the original terms of the invoice.

Impairment testing

The Group reviews and tests the carrying value of assets when events or changes in circumstances suggest thatthe carrying amount may not be recoverable. Assets are grouped at the lowest level for which identifiable cashflows are largely independent of cash flows of other assets and liabilities. If there are indications that impairmentmay have occurred, estimates are prepared of expected future cash flows for each group of assets. Expectedfuture cash used to determine the value in use of tangible assets are inherently uncertain and could easily bemanaged over time.They are significantly affected by a number of factors including i.e. production estimates andsupply and demand, together with economic factors such as exchange rates, inflation and interest rates.

Property, plant and equipment

Management has made certain estimations with regards to the determination of estimated useful lives andresidual values of property, plant and equipment, as discussed further in notes 1.3 and 3.

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1.2 Basis of consolidation

The consolidated financial statements incorporate the financial statements of the company and entitiescontrolled by the company. Control is achieved where the company has the power to govern the financialoperating policies of an investee entity so as to obtain benefits from its activities. In assessing control, potentialvoting rights that are presently exercisable or convertible are taken into account.

On acquisition, the Group recognises the subsidiary’s identifiable assets, liabilities and contingent liabilities at fairvalue, except for assets classified as held-for-sale, which are recognised at fair value less costs to sell.

The results of subsidiaries acquired or disposed of during the period are included in the consolidated incomestatement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

The purchase method of accounting is used to account for the acquisition of subsidiaries of the Group.

The cost of an investment in a subsidiary is the aggregate of:

• the fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instrumentsissued by the company; plus

• any costs directly attributable to the purchase of a subsidiary.

The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assetsacquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the Group’s share of thenet assets of the subsidiary acquired, the difference is recognised directly in the income statement. Onadjustment to the cost of a business combination, contingent or future events are included in the combinationif the adjustment is probable and can be measured reliably.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accountingpolicies used into line with those used by the Group.

All intra-group transactions, balances, income and expenses and the unrealised profits on transactions betweengroup companies are eliminated on consolidation.

Investments in subsidiary companies are accounted for at cost in the company financial statements. Theinvestments in subsidiaries are assessed for impairment on an annual basis and impairment losses are accountedfor in the income statement in the period in which they arise.

1.3 Property, plant and equipment

The cost of an item of property, plant and equipment is recognised as an asset when:

• it is probable that future economic benefits associated with the item will flow to the company; and

• the cost of the item can be measured reliably.

Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costsincurred subsequently to add to or, replace part thereof. If a replacement cost is recognised in the carryingamount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised.

Day to day expenses incurred on property, plant and equipment is expensed directly in profit or loss for theperiod. Major maintenance that meets the recognition criteria is recognised.

Property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses.

Depreciation commences when an asset is available for use. Depreciation is charged so as to write off thedepreciable amount of items to their residual values, over their estimated useful lives, using a method that reflectsthe pattern in which the asset’s future economic benefits are expected to be consumed by the company.

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Where an item comprises major components with different useful lives, the components are accounted for asseparate items of property plant and equipment and depreciated over the estimated useful lives.

Methods of depreciation, useful lives and residual values are annually reviewed.The following methods and usefullives were applied during the year, except for land which is not-depreciable:

Item Method Useful life

Land and buildings Straight line 60 years

Plant and equipment Straight line 5 to 8 years

Furniture, fittings and office equipment Straight line 6 to 10 years

Motor vehicles Straight line 5 to 7 years

Computer equipment Straight line 3 to 6 years

Books Straight line 4 years

The depreciation charge for each period is recognised in profit or loss.

Derecognition occurs when an item of property, plant and equipment is disposed of, or when it is no longerexpected to generate any further economic benefits.

The gain or loss arising from the derecognition of an item of property, plant and equipment is included in theprofit or loss when the item is derecognised. The gain or loss arising from the derecognition of an item ofproperty, plant and equipment is determined as the difference between the net disposal proceeds and thecarrying amount of the item.

When a decision is made by the Directors that an item of property, plant and equipment will be disposed of,and the requirements of IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations, are met, thenthose assets will be presented separately on the face of the balance sheet.The assets will be measured at thelower of carrying amount and fair value less costs to sell, and depreciation on such assets shall cease.

1.4 Goodwill

Goodwill is initially measured at cost, being the excess of the business combination over the Group’s interest ofthe net fair value of the identifiable assets, liabilities and contingent liabilities.

Subsequently goodwill, acquired in a business combination, is carried at cost less any accumulated impairment.Goodwill is not amortised.

The excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilitiesover the cost of the business combination is immediately recognised in profit or loss.

1.5 Impairment of assets

The Group assesses at each balance sheet date whether there is any indication that an asset may be impaired.If such an indication exists, the company estimates the recoverable amount of the asset.

Irrespective of whether there is any indication of impairment, the company also:

• tests intangible assets with an indefinate useful life or intangible assets not yet available for use for impairmentannually, by comparing its carrying amount with its recoverable amount. This impairment test is performedannually at the same time every year.

• tests goodwill acquired in a business combination for impairment annually.

39


If there is any indication that an asset may be impaired, the recoverable amount is estimated for the individualasset. If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount ofthe cash-generating unit to which the asset belongs is determined.

The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs to sell and itsvalue in use.The value in use is the present value of the future cash flows expected to be derived from an assetor cash-generating unit.

If the recoverable amount is less than its carrying amount, the carrying amount of the asset is reduced to itsrecoverable amount.That reduction is an impairment loss.

An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognisedimmediately in profit or loss. Any impairment loss of a revalued asset is treated as a revaluation decrease.

Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the cash-generating units, or groups of cash-generating units, or groups of cash-generating units, that are expected tobenefit from the synergies of the combination.

An impairment loss is recognised for cash-generating units if the recoverable amount of the unit is less than thecarrying amount of the unit.The impairment loss is allocated to reduce the carrying amount of the assets of theunit in the following order:

• first, to reduce the carrying amount of any goodwill allocated to the cash-generating unit, and

• then to the other assets of the unit, pro rata on the basis of the carrying amount of each asset in the unit.

If an impairment loss is subsequently reversed, the carrying amount of the asset is increased to the revisedestimate of its recoverable amount, but limited to the carrying amount that would have been determined had noimpairment loss been recognised in prior years. A reversal of an impairment loss is recognised on profit or loss.

The Group assesses at each reporting date whether there is any indication that an impairment loss recognisedin prior periods for assets other than goodwill, may no longer exist or may have decreased. If any such indicationexists, the recoverable amounts of those assets are estimated.

The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment lossdoes not exceed the carrying amount that would have been determined had no impairment loss beenrecognised for the asset in previous years.

A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation otherthan goodwill is recognised immediately in profit or loss. Any reversal of an impairment loss of a revalued assetis treated as a revaluation increase.

1.6 Financial instruments

Initial recognition

The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, afinancial liability or an equity instrument in accordance with the substance of the contractual arrangement.

Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomesparty to the contractual provisions of the instrument.

Financial assets and financial liabilities are recognised initially at fair value. In the case of financial assets or liabilitiesnot classified at fair value through profit and loss, transaction costs directly attributable to the acquisition or issueof the financial instrument are added to the fair value.

An asset that is subsequently measured at cost or amortised cost is recognised initially at its fair value on thetrade date.

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Subsequent measurement

After initial recognition financial assets are measured as follows:

• Loans and receivables and held-to-maturity investments are measured at amortised cost less any impairmentlosses recognised to reflect irrecoverable amounts.

• Financial assets classified as available-for-sale or at fair value through profit or loss, including derivatives, aremeasured at fair values. Fair value, for this purpose, is market value if listed, or a value arrived at by usingappropriate valuation models, if unlisted.

Investment equity instruments that do not have a quoted market price in an active market and whose fair valuecannot be reliably measured, are measured at cost.

After initial recognition financial liabilities are measured as follows:

• Financial liabilities at fair value through profit or loss, including derivatives that are liabilities, are measured atfair value.

• Other financial liabilities are measured at amortised cost using the effective interest method.

Gains and losses

A gain or loss arising from a change in a financial asset or financial liability is recognised as follows:

• Where financial assets and financial liabilities are carried at amortised cost, a gain or loss is recognised in profit orloss through the amortisation process and when the financial asset or financial liability is derecognised or impaired.

• A gain or loss on a financial asset or financial liability classified at fair value through profit or loss is recognisedin profit or loss.

• A gain or loss on an available-for-sale financial asset is recognised directly in equity, through the statement ofchanges in equity, until the financial asset is derecognised, at which time the cumulative gain or loss previouslyrecognised in equity is recognised in profit or loss.

The particular recognition methods adopted are disclosed in the individual policies stated below:

Loans and receivables

Trade and other receivables are classified as loans and receivables and are carried at amortised cost less anyimpairment. Impairment is determined on a specific basis, whereby each asset is individually evaluated forimpairment indicators.Write-downs of these assets are expensed in profit or loss.

Cash and cash equivalents

Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash.Cash and cash equivalents are measured at fair value.

Borrowings

Borrowings are classified as other financial liabilities and measured at amortised cost and comprise original debtless principal payments and amortisation.

Directors’ and manager’s loans

These financial instruments are carried at amortised cost.

Trade and other payables

Trade and other payables are classified as current financial liabilities.

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1.7 Taxation

Current taxation assets and liabilities

Current taxation for current and prior periods is, to the extent unpaid, recognised as a liability. If the amountalready paid in respect of current and prior periods exceeds the amount due for those periods, the excess isrecognised as an asset.

Current taxation assets and liabilities for the current and prior periods are measured at the amount expectedto be recovered from or paid to the tax authorities, using the tax rates that have been enacted or substantivelyenacted by the balance sheet date.

Deferred taxation assets and liabilities

Deferred taxation is provided using a balance sheet liability method on all temporary differences between thecarrying amounts for financial reporting purposes and the amounts used for taxation purposes.

A deferred taxation liability is recognised for all taxable temporary differences, unless specifically exempt.

A deferred taxation liability is recognised for all taxable temporary differences, except to the extent that thedeffered taxation liability arises from:

• the initial recognition of goodwill; or

• goodwill for which amortisation is not deductible for tax purposes; or

• the initial recognition of an asset or liability in a transaction which:

– is not a business combination;

– at the time of the transaction affects neither accounting profit nor taxable profit/(taxable loss).

A deferred taxation liability is recognised for all taxable temporary differences associated with investments insubsidiaries, except where the Group is able to control the reversal of the temporary difference and it isprobable that the temporary difference will not reverse in the foreseeable future.

A deferred taxation asset is recognised for all deductible temporary differences to the extent that it is probablethat taxable profit will be available against which the deductible temporary difference can be utilised, unless thedeferred tax asset arises from the initial recognition of an asset or liability in a transaction that is not a businesscombination, and at the time of the transaction, affects neither accounting profit nor taxable profit/(taxation loss).

A deferred taxation asset is recognised for all deductible temporary differences arising from investments insubsidiaries, to the extent that it is probable that the temporary difference will reverse in the foreseeable future,and taxationable profit will be available against which the temporary difference can be utilised.

A deferred taxation asset is recognised for the carry forward of unused taxation losses and unused credits tothe extent that it is probable that future taxationable profit will be available against which the unused taxationlosses and unused credits can be utilised.

Deferred taxation assets and liabilities are measured at the taxation rates that are expected to apply to theperiod when the asset is realised or the liability is settled, based on taxation rates that have been enacted orsubstantively enacted by the balance sheet date.

Taxation expenses

Current and deferred taxes are recognised as income or an expense and included in profit or loss for the period,except to the extent that tax arises from:

• a transaction or event which is recognised, in the same or a different period, directly in equity, or

• a business combination.

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1.8 Inventories

Inventories are measured at the lower of cost and net realisable value.

The cost of inventories comprises of all costs of purchase, costs of conversion and other costs incurred inbringing the inventories to their present location and condition.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs ofcompletion and the estimated costs necessary to make the sale.

The cost of inventories of items that are not ordinarily interchangeable and goods or services produced andsegregated for specific projects is assigned using specific identification of the individual costs.

The cost of inventories is assigned using the first-in, first-out (FIFO) formula.The same cost formula is used forall inventories having a similar nature and use to the company.

When inventories are sold, the carrying amount of those inventories is recognised as an expense in the periodin which the related revenue is recognised.

1.9 Leases as lessee

Leases are classified as finance leases whenever the terms of the lease transfer substantially all of the risks andrewards of ownership to the lessee. All other leases are classified as operating leases.

Finance leases are recognised as assets and liabilities in the balance sheet at amounts equal to the fair value ofthe leased property or, if lower, the present value of the minimum lease payments. Any initial direct costs areadded to the amount recognised as an asset.

The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicitin the lease.

The lease payments are apportioned between the finance charge and reduction of the outstanding liability.Finance costs represent the difference between the total leasing commitments and the fair value of the assetsacquired. Finance costs are charged to profit or loss over the term of the lease and at interest rates applicableto the lease on the remaining balance of the outstanding liability.

Any contingent rents are expensed in the period they are incurred.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term.

1.10 Revenue

Revenue from sale of goods is recognised when all the following conditions have been satisfied:

• the Group has transferred to the buyer the significant risks and rewards of ownership of the goods, normallybeing the date the goods are delivered;

• the Group retains neither continuing managerial involvement to the degree usually associated with ownershipnor effective control over the goods sold;

• the amount of revenue can be measured reliably

• it is probable that the economic benefits associated with the transaction will flow to the Group; and

• the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Revenue is measured at the fair value of the consideration received or receivable and represents the amountsreceivable for goods and services provided in the normal course of business, net of trade discounts and volumerebates, and Value Added Taxation.

Interest is recognised in profit or loss, using the effective interest rate method.

Royalties are recognised on the accrual basis in accordance with the substance of the relevant agreements.

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1.11 Cost of sales

When inventories are sold, the carrying amount of those inventories is recognised as an expense in the periodin which the related revenue is recognised.The amount of any write-down of inventories to net realisable valueand all losses of inventories are recognised as an expense in the period the write down or loss occurs.The amount of any reversal of any write-down of inventories, arising from an increase in the net realisable value,is recognised as a reduction in the amount of inventories recognised as an expense in the period in which thereversal occurs.

The related cost of providing services recognised as revenue in the current period is included in cost of sales.

1.12 Translation of foreign currencies

Foreign currency transactions

A foreign currency transaction is recorded on initial recognition in Rand, by applying to the foreign currencyamount, the spot exchange rate between the functional currency and the foreign currency.

At each balance sheet date:

• foreign currency monetary items are translated using the closing rate;

• non-monetary items that are measured in terms of historical cost in a foreign currency are translated usingthe exchange rate at the date of the transaction; and

• non-monetary items that are measured at fair value in a foreign currency are translated using the exchangerates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items at rates different from those at which theywere translated on initial recognition during the period or in previous annual financial statements are recognisedin profit or loss in the period in which they arise.

Cash flows arising from transactions in a foreign currency are recorded in Rand by applying to the foreigncurrency amount the exchange rate between the Rand and the foreign currency at the date of the cash flow.

1.13 Employee benefits

Short-term employee benefits

The cost of short-term employee benefits is recognised in the period in which the service is rendered and notdiscounted.

The expected cost of compensated absences is recognised as an expense as the employee renders service.

The expected cost of bonus payments is recognised as an expense when there is a legal or constructiveobligation to make such payments as a result of past performance.

1.14 Borrowing costs

Borrowing costs are recognised as an expense in the period in which they are incurred.

1.15 Related parties

Related party transactions are transactions which result in a transfer of resources, services or obligationsbetween related parties, regardless of whether a price is charged. Related parties refer to entities which theGroup directly or indirectly through one or more intermediaries controls or is controlled by or is under commoncontrol.These include the holding company, subsidiaries and fellow subsidiaries.

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1.16 Intangible assets

Intangible assets acquired are measured on initial recognition at cost.The cost of intangible assets acquired in abusiness combination is fair value as at the date of acquisition. Following initial recognition, intangible assets arecarried at cost less any accumulated impairment losses. Internally generated intangible assets, excluding capitaliseddevelopment costs, are not capitalised and expenditure is reflected in profit or loss in the year in which theexpenditure is incurred.

The useful lives of intangible assets are assessed to be either finite or indefinite.

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairmentwhenever there is a indication that the intangible asset may be impaired. The amortisation period and theamortisation method for an intangible asset with a finite useful life is reviewed at least at each financial year end.Changes in the expected useful life or the expected pattern of consumption of future economic benefitsembodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and aretreated as changes in accounting estimates.

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cashgenerating unit level. Such intangible assets are not amortised.

Research and development costs

Research costs are expensed as incurred. Development expenditure on an individual project is recognised as anintangible asset when the Group can demonstrate the technical feasibility of completing the intangible asset sothat it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how theasset will generate future economic benefits, the availability of resources to complete the asset and the abilityto measure reliably the expenditure during development.

Following initial recognition of the development expenditure as an asset, the cost model is applied requiring theasset to be carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisationof the asset begins when development is complete and the asset is available for use. It is amortised over theperiod of expected future benefit. During the period of development, the asset is tested for impairment annually.

Notes to the Financial Statements

2. ADOPTION OF NEW PRONOUNCEMENTS

In the current year, the Group has adopted:

• IFRS 7 Financial Instruments: Disclosures (effective for annual reporting periods beginning on or after 1 January 2007);and

• Consequential amendments to IAS 1 Presentation of Financial Statements.

The impact of the adoption of IFRS 7 and the changes to IAS 1 has been to expand the disclosures provided in thesefinancial statements regarding the group’s financial instruments and management of capital.

Four interpretations issued by the International Financial Reporting Interpretations Committee are effective for thecurrent period. These are:

• IFRIC 7 Applying the Restatement Approach under IAS 29, Financial Reporting in Hyperinflationary Economies;

45


• IFRIC 8 Scope of IFRS 2;

• IFRIC 9 Reassessment of Embedded Derivatives;

• IFRIC 10 Interim Financial Reporting and Impairment; and

• IFRIC 11 IFRS 2 Group and Treasury Share Transactions.

The adoption of these interpretations has not led to any changes in the group’s accounting policies.

The group has not yet applied the following new standards, interpretations and amendments that have been issuedbut are not yet effective:

Standard Effective date*

IFRS 8 Operating Segments 1 January 2009

IAS 23 (Revised) Borrowing Costs 1 January 2009

IFRIC 12 Service Concession Arrangements* 1 January 2008

IFRIC 13 Customer Loyalty Programmes 1 July 2008

IFRIC 14/IAS 19 The limit on Defined Benefit Assets Minimum Funding Requirements 1 January 2008

AC 503 Accounting for Black Empowerment Transactions 1 July 2008

IAS 1 (AC101) Presentation of Financial Statements ** 1 January 2009

IFRS 3 (Revised) Business Combinations 1 July 2009

IAS 10 Events After the Reporting Period 1 January 2009

IAS 16 Property, Plant & Equipment 1 January 2009

IAS 18 Revenue 1 January 2009

IAS 19 Employee Benefits 1 January 2009

IAS 20 Accounting for Government Grants and Disclosure for Government Assistance 1 January 2009

IAS 27 Consolidated and Separate Financial Statements* 1 January 2009

IAS 32 (Amended) Financial Instruments 1 January 2009

IAS 34 Interim Financial Reporting 1 January 2009

IAS 36 Impairment of Assets 1 January 2009

IAS 38 Intangible Assets 1 January 2009

IAS 39 Financial Instruments: Recognition and Measurement 1 January 2009

IFRS 7 Financial Instruments: Disclosures 1 January 2009

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors 1 January 2009

* Effective for years commencing on or after the indicated date.

** Available for early adoption for 31 December 2007 year-ends.

The entity will adopt the above standards, interpretations and amendments on their effective dates. Managementexpects that the adoption of the standards listed above will have no material impact on the financial statements in theperiod of initial application.

Management is currently in the process of assessing the impact of the new and revised standards.

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3. PROPERTY, PLANT & EQUIPMENT

2008 2007

Cost/ Accumulated Carrying Cost/ Accumulated Carrying

Valuation depreciation value Valuation depreciation value

Land and buildings 1 443 958 (24 167) 1 419 791 1 450 000 (6 042) 1 443 958

Improvements on leasehold properties 161 887 (31 478) 130 409 – – –

Plant and equipment 6 681 786 (3 761 989) 2 919 797 12 378 173 (3 324 438) 9 053 735

Motor vehicles 2 837 124 (639 387) 2 197 737 1 990 229 (510 485) 1 479 744

Furniture, fittings and office equipment 1 403 921 (684 201) 719 720 2 489 407 (880 822) 1 608 585

Computer equipment 1 343 957 (713 599) 630 358 1 410 165 (656 940) 753 225

13 872 633 (5 854 821) 8 017 812 19 717 974 (5 378 727) 14 339 247

Reconciliation of property, plant and equipment – 2008

Additions

through

Opening business

balance Disposals Additions combinations Depreciation Total

Land and buildings 1 443 958 – – – (24 167) 1 419 791

Improvements on leasehold properties – – 17 987 143 900 (31 478) 130 409

Plant and equipment 9 053 735 (4 996 323) 423 039 – (1 560 654) 2 919 797

Motor vehicles 1 479 744 (461 423) 697 359 710 692 (228 635) 2 197 737

Furniture, fittings and office equipment 1 608 585 (841 432) 108 147 82 726 (238 306) 719 720

Computer equipment 753 225 (378 861) 550 280 63 425 (357 711) 630 358

14 339 247 (6 678 039) 1 796 812 1 000 743 (2 440 951) 8 017 812

Reconciliation of property, plant and equipment – 2007

Additions

through

Opening business

balance Disposals Additions combinations Depreciation Total

Land and buildings – – – 1 450 000 (6 042) 1 443 958

Improvements on leasehold properties – – – – – –

Plant and equipment – (675 947) 674 518 9 467 094 (411 930) 9 053 735

Motor vehicles – – – 1 527 803 (48 059) 1 479 744

Furniture, fittings and office equipment – (32 784) 92 465 1 653 997 (105 093) 1 608 585

Computer equipment – (50 131) 59 278 871 256 (127 178) 753 225

– (758 862) 826 261 14 970 150 (698 302) 14 339 247

Pledged as security

Certain property, plant and equipment with a carrying value of R4 752 456 (2007: R7 991 498) is encumbered tosecure the borrowings set out in note 12 and 13.

A register containing the information required by paragraph 22(3) of Schedule 4 of the Companies Act is available forinspection at the registered office of the company.

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4. INTANGIBLE ASSETS

2008 2008 2008 2007 2007 2007Products Goodwill Total Products Goodwill Total

Opening balance – 8 097 441 8 097 441 – – –

Additions 596 458 12 315 702 12 912 160 – 10 119 307 10 119 307

Adjustments to purchase price – – – – (2 021 866) (2 021 866)

Closing balance 596 458 20 413 143 21 009 601 – 8 097 441 8 097 441

Products

All the Group’s products have been assessed as definite life intangible assets.

The products were launched after the financial year-end from which date they will be amortised over their useful lives.

Goodwill

Goodwill additions relate to acquisition of Nomic 136 Trading (Pty) Limited.

For further details on this acquisition refer to note 26.

Impairment reviews of goodwill and indefinite life intangible assets

Significant goodwill carrying amounts and the cash-generating units to which they relate are detailed below:

Units Calculated Carry amount

Dream Nails business Brands revenue stream 11 695 374

Placécol Brands revenue stream 8 212 195

Salon Quip Supply chain revenue stream 505 574

20 413 143

The recoverable amounts of goodwill identified above have been determined on the basis of value-in-use calculations.

Value-in-use calculations use cash flow projections based on 2008 financial year budgets, approved by managementextrapolated at between 8% and 10% depending on the cash-generating unit for a further five years and wasdiscounted using a weighted average cost of capital of 14.6%.

Key assumptions used in value-in-use calculations include budgeted margins and budgeted franchise revenue streams.Such assumptions are based on historical results adjusted for anticipated future growth. These assumptions are areflection of management’s past experience in the market in which these units operate.

Based on the above assumptions, management’s calculations of recoverable amounts were greater than the carryingamounts. Management believes that any reasonable possible change in any of its key assumptions would not cause theaggregate carrying amounts to exceed aggregate recoverable amounts.

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2008 2007

5. FINANCE LEASE RECEIVABLES

Gross investment in the lease due

– within one year 32 355 –

– in second to fifth year inclusive 96 665 –

129 020 –Less: Unearned finance income (27 489) –

101 531 –

Present value of minimum lease payments due

– within one year 32 355 –

– in second to fifth year inclusive 69 176 –

101 531 –

Non-current assets

At amortised cost 69 176 –

Current assets

Payable within one year at amortised cost 32 355 –

101 531 –

6. OTHER FINANCIAL ASSETS

Loans and receivables

Long-term loans 3 058 445 –

The unsecured loans bears interest at prime and are repayable within the next 24 months.

Salon Quip (Pty) Ltd – 239 242

The unsecured loans bears interest at prime and there were no fixed terms of repayment.

Student loans 1 783 650 1 605 015

The student loans carry interest at prime and are repayable within 3 years after completion of studies.

Loans to managers – 180 630

The unsecured loans bear interest at prime and there were no fixed terms of repayment.

4 842 095 2 024 887

Instalment Sale Agreements

Assets under instalment sale agreements bear interest at an average interest rate of 18% per annum repayable in monthly instalments ranging from R2 412 to R4 903. 711 286 –

5 553 381 2 024 887

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2008 2007

Non-current assets

At amortised cost 3 234 291 1 605 015

Current assets

Payable within one year at amortised cost 2 319 090 419 872

5 553 381 2 024 887

There is no material difference between the fair value of loans made and their book value.

7. INVENTORIES

Consumables 13 611 180 445

Finished goods 4 813 880 1 777 569

Raw materials 4 024 680 2 711 374

Equipment held for sale 2 222 964 –

Stores held for sale 12 122 745 –

23 197 880 4 669 388

Inventories amounting to R7 685 852 were pledged as security for instalment sale agreements. (refer note 12)

8. LOANS TO DIRECTORS

W J de Wet

Balance at beginning of the year 204 845 –

Additions through business combinations – 54 133

Portion paid (17 040) –

Advances – 150 712

187 805 204 845

The loan to the director is unsecured and interest free with no fixed terms of repayment.

There is no material difference between the fair value of the loan to the director and its book value.

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2008 2007

9. TRADE AND OTHER RECEIVABLES

Trade receivables 16 905 819 11 251 928

Impairment of trade receivables (702 110) (52 000)

Net trade receivables 16 203 709 11 199 928

Deposits 184 553 –

Other receivables 619 852 968 719

Prepayments 376 379 –

Staff loans 38 495 –Value added taxation 518 207 –

17 941 195 12 168 647

Trade and other receivables pledged as security

Trade receivables to the value of R16 203 709 (2007: R9 531 239) were pledged as security for the Group’s overdraft facilities of R3 000 000 (2007: R1 870 000). At year end the total overdraft of the Group amounted to Rnil (2007: R1 334 583).

Trade receivables are non-interest bearing and are generally on 30-day terms.

Trade and other receivables which are less than 3 months past due are not considered to be impaired. At 29 February 2008, R 6 910 570 (2007: R1 633 918) were past due but not impaired.

Credit quality of trade and other receivables

The table below illustrates the trade receivables ageing analysis:

Neither past due, nor impaired 9 293 139 9 566 010

Past due and not impaired 6 910 570 1 633 918

Past due and impaired 702 110 52 000

16 905 819 11 251 928

Ageing of past due and not impaired is as follows:

30 – 60 days 2 172 103 –

60 – 90 days 1 801 877 942 133

90 – 120 days 983 247 103 369

120 + days 1 953 343 588 417

Total 6 910 570 1 633 919

As at 29 February 2008, trade receivables at nominal value of R702 110 (2007: R52 000) were impaired.

Movements in the provision for impairment of receivables were as follows:

51


2008 2007

Trade and other receivables impaired

Impairment of trade receivables:

Balance at 1 March 52 000 28 823Provision for the year 1 036 257 91 281Utilised in the year (388 194) (68 991)Reversed in the year on collection of receivables 2 047 887

Balance at 29 February 702 110 52 000

The maximum exposure to credit risk at the reporting date is the fair value of each class of trade receivable mentioned above.

10. CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of:

Bank balances and cash on hand 10 931 728 7 437 356Bank overdraft – (1 334 583)

10 931 728 6 102 773

Current assets 10 931 728 7 437 356Current liabilities – (1 334 583)

10 931 728 6 102 773

Cash at the banks earns interest at floating rates based on daily bank deposit rates.The fair value of cash and short-term deposits is R10 931 728 (2007: R7 437 356).

The Group has overdraft facilities to the total of R3 000 000 (2007: R1 870 000) which are secured by a general session of debtors, and unlimited surety ship by Mr W J de Wet, Mr C W Moolman, Placécol Holdings, CW Pharmaceuticals (Pty) Ltd, Salon quip (Pty) Ltd, Placécol Skin Care Clinic (Pty) Ltd, Placécol Properties (Pty) Ltd, Nomic 136 (Pty) Ltd and Placécol Beauty Centre Franchise (Pty) ltd.

The total amount of undrawn facilities available for future operating activities and commitments 3 000 000 535 417

There is no material difference between the fair value of cash and cash equivalents and their book value.

52


2008 2007

11. SHARE CAPITAL

Authorised

500 000 000 Ordinary shares of 0.01 cents each 50 000 50 000

Issued

Ordinary 13 010 10 400

Share premium 47 437 848 23 342 971

Balance at the beginning of the year 23 342 971 –Premium on shares issued 28 502 126 26 489 600Less: Shares issue expenses written off (2 007 489) (1 124 763)Less:Treasury shares held (2 399 760) –Less: Adjustment to purchase price (note 11.1) – (2 021 866)

47 450 858 23 353 371

Reconciliation of number of shares issued:

Reported as at 1 March 2007 104 000 000 100Subdivision of R1 shares into 0.01c shares – 999 900Issue of shares – ordinary shares 28 504 976 103 000 000

132 504 976 104 000 000Treasury shares held (2 400 000) –

130 104 976 104 000 000

Unissued ordinary shares are under the control of the Directors in terms of a resolution of members passed at thelast annual general meeting.This authority remains in force until the next annual general meeting.

11.1 In terms of the prospectus, the February 2008 profit after tax for the Placécol Group of companies excludingNomic 136 (Pty) Limited, trading as Dream Nails and NSI South Africa (“Dream Nails” or “DNB”) was less thanR9,2 million and the company will therefore repurchase 11 893 332 Placécol ordinary shares from the vendorson a pro rata basis for the aggregate sum of R1.00 subsequent to year-end and subject to shareholders’ approvalas set out in the notice of the annual general meeting.

The 2 400 000 ordinary shares issued to the Placécol Holdings Share Incentive Scheme will be cancelled afteryear-end.

53


2008 2007

12. OTHER FINANCIAL LIABILITIES

Held at amortised cost

ABSA Mortgage bonds 1 369 127 1 426 971

Absa Mortgage bonds bearing interest at an average effective rate of 11.89% (2007: 10.48%) per annum.The current monthly instalment is R15 804 (2007: R14 315).These loans are secured by land and buildings with a book value of R1 419 791 (2007: R1 443 958) as per note 3.

Instalment sale agreements

Liabilities under instalment sale agreements bear interest at effective interest rates ranging from 16.36% (2007: average effective rate of 13.16%) per annum.The current monthly instalment is R506 622 (2007: R258 632),and these agreements are generally payable over a period of 48 to 60 months.The loans are secured by property plant and equipment with a book value of R2 586 478(2007: R5 595 738) as per note 3, and by inventory with a carry value of R7 685 852 (2007 RNill). 8 057 762 5 030 295

ABSA term loans

Term loans bear interest at an average effective interest at prime per annum.The current monthly instalment is R120 354 (2007: R72 920), and these term loans are repayable over a period of 24 to 36 months.The loans are secured by unlimited surety ship by Mr W J de Wet, Mr C W Moolman, Placécol Holdings,C W Pharmaceuticals (Pty) Ltd, Salon quip (Pty) Ltd, Placécol Skin Care Clinic (Pty) Ltd, Placécol Properties (Pty) Ltd, Nomic 136 (Pty) Ltd and Placécol Beauty Centre Franchise (Pty) Ltd. 3 500 000 855 445

Loans from directors

The loans are unsecured and interest free. – 154 954

12 926 889 7 467 665

Non-current liabilities


Current liabilities


12 926 890 7 467 665

There is no material difference between the fair value of loans received and their book value.

54


2008 2007

13. FINANCE LEASE OBLIGATION

Minimum lease payments due

– within one year 324 073 327 024

– in second to fifth year inclusive 809 535 1 096 485

1 133 608 1 423 509Less: future finance charges (295 805) (412 625)

Present value of minimum lease payments 837 803 1 010 884

Present value of minimum lease payments due

– within one year 174 585 176 120

– in second to fifth year inclusive 663 218 834 764

837 803 1 010 884


At amortised cost 663 218 834 764

Current liabilities

Payable within one year at amortised cost 174 585 176 120

837 803 1 010 884

The average lease term is 5 years (2007: 5 years) and the average effective borrowing rate is 16.34% (2007: 14%).Interest rates are linked to prime at the contract date. All leases have fixed terms of repayment and no arrangementshave been entered into for contingent rent.

The Group’s obligations under finance leases are secured by the lessor’s charge over the leased assets to the value ofR746 187 (2007 R951 802). Refer note 3.

There is no material difference between the fair value of finance lease obligations and their book value.

55


2008 2007

14. DEFERRED TAXATION ASSET/(LIABILITY)

Accelerated capital allowances for taxation purposes (363 238) (424 575)

Assets under finance lease 28 680 (21 714)

Provisions for leave pay and – impairment of trade receivables 276 030 78 471

Operating lease accruals 425 638 177 327

Taxation losses available for set off against future Taxationable income – 44 960

Recoverable through future use of assets – (103 918)

Other temporary differences 1 760 755 1 068 399

2 127 865 818 950

Reconciliation of deferred taxation asset/(liability)

At beginning of the year 818 950 –

Reduction due to rate change (11 361) –

Additions through business combinations – (42 637)

Originating temporary differences on tangible fixed assets 61 337 (142 887)

Originating temporary differences on provision 197 558 24 231

Originating temporary differences on operating lease accruals 248 310 141 098

Originating temporary differences on finance leases 50 394 (36 965)

Assessed loss (44 960) 30 236

Future use of land and buildings 103 918 14 934

Other originating temporary differences 703 719 830 940

2 127 865 818 950

Non-current asset 2 140 925 898 594Non-current liability (13 060) (79 644)

2 127 865 818 950

15. TRADE AND OTHER PAYABLES

Trade payables 7 236 732 6 793 266

Deposits 212 273 476 200

Accrued leave pay 367 296 280 562

Other creditors 1 365 073 2 057 940

Value-added Tax 1 101 466 491 148

10 282 840 10 099 116

The book value of trade payables, amounts received in advance, sundry payables and accrued expenses isconsidered to be in line with their fair value at balance sheet date.

56


2008 2007

16. INCOME RECEIVED IN ADVANCE

Students of the Institute were invoiced during the month of January 2008 for their tuition and class fees for the entire year, being January 2008 to November 2008.Of the total invoiced amount, R2,100,939 relates to the months of March 2008 to November 2008. 2 100 939 3 051 941

17. OPERATING PROFIT

Operating profit for the year is stated after accounting for the following:Operating lease chargesPremises 2 935 418 1 691 970Equipment 323 294 203 053Client Manager Software 134 163 123 986

3 392 875 2 019 009

Loss on sale of property, plant and equipment 136 863 5 558Amortisation on intangible assets – 8 804Depreciation on property, plant and equipment 2 440 951 698 302Employee cost 38 034 465 8 419 529Fair value adjustments 201 724 156 962Loss on foreign exchange 76 023 –

Number of employees at year end 409 388

18. AUDITORS’ REMUNERATION

– Audit fees paid 586 396 67 260

19. INVESTMENT INCOME

Interest incomeBank 605 573 67 499Receiver of Revenue – 4 175Long-term Loans 361 659 –Installment sale agreements 17 296 –

984 528 71 674

20. FINANCE COST

Installment sale agreements 645 424 502 088Finance leases 150 225 73 987Bank 430 570 147 020Term loans 167 993 138 979 Other interest paid 48 558 12 862

1 442 770 874 936

57


2008 2007

21. TAXATION

Major components of the taxation expense/(income)

Current

Local income taxation 4 992 531 1 353 325

Deferred

Deferred taxation (1 308 915) (861 587)

3 683 616 491 738

Reconciliation of the taxation expense

Reconciliation between applicable taxation rate and average effective taxation rate.Applicable taxation rate 29.0% 29.0%Capital gains taxation (1.5%) 0%Disallowable charges 3.3% 0.3%Assessed losses utilised (1.0%) 0%Assessed loss not recognised 0.0% 8.0%Changes in rate of taxation 0.1% 0.0%

29.9% 37.3%

58


2008 2007

22. EARNINGS PER SHARE

Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the company by the weighted average number of ordinary shares outstanding during the year.

The following reflects the income and share data used in the basic earnings per share computations:

Earnings attributable to ordinary equity holders for basic earnings 8 622 358 828 919

Reconciliation of headline earnings:

Earnings attributable to ordinary equity holders for basic earnings 8 622 358 828 919

Adjusted for:

Loss on sale of property, plant and equipment 97 172 1 000

Profit on sale of intellectual property (1 073 966) –

Headline earnings 7 645 564 829 919

Weighted average number of ordinary shares at year-end for basic earnings per share calculation 118 349 658 94 355 556

Adjusted weighted average number of ordinary shares for basic earnings per share calculation as a result of 11 893 332 Placécol ordinary shares repurchased by the company 106 456 326 82 462 224

Earnings per share (cents) 7.3 0.9

Headline earnings per share (cents) 6.5 0.9

Adjusted earnings per share (cents) 8.1 1.0

Adjusted headline earnings per share (cents) 7.2 1.0

The 2 400 000 ordinary shares issued to the Placécol Holdings Share Incentive Scheme have been treated as “treasury”shares.The headline earnings per share calculations are not reflected, as the shares in the Share Incentive Scheme willbe cancelled subsequent to the 2008 year end.

The profit on sale of intellectual property, includes inter alia product formulations of the Stylique brand sold to BuhleCosmetics (Pty) Limited.

59


23. DIRECTORS’ EMOLUMENTS

No loans were made to directors during the year under review.There were no material transactions with directors,other than the following.

2008 Retirementfunds and

Directors medical aidfees Salary contributions Bonus Total

Executive directors

W J de Wet – 1 237 466 42 162 – 1 279 628 C W Moolman – 1 182 082 37 608 – 1 219 690K N Mckinon – 756 576 – – 756 576R A du Toit – 738 000 – – 738 000

– 3 914 124 79 770 – 3 993 894

Non-executive directors

T Dingaan 12 120 – – – 12 120

12 120 – – – 12 120

2007 Retirementfunds and

Directors medical aidfees Salary contributions Bonus Total

Executive directors

W J de Wet – 211 500 6 500 – 218 000C W Moolman – 221 000 – – 221 000R A du Toit – 110 000 5 750 – 115 750K N Mckinon – 157 500 8 500 – 166 000

– 700 000 20 750 – 720 750

60


2008 2007

24. CASH GENERATED FROM OPERATIONS

Profit before taxation 12 305 974 1 320 657

Adjustments for:

Depreciation and amortisation 2 440 951 707 106Loss/(profit) on sale of assets 136 863 –Loss/(profit) on sale of intangible assets (1 256 100) –Interest received (984 528) (71 674)Finance cost 1 442 770 874 936Fair value adjustments 201 724 156 962Movements in operating lease liabilities (116 510) 206 589Movement in income received in advance (951 002) 3 051 941

Changes in working capital

Inventories (16 135 011) (252 847)Trade and other receivables (3 667 287) (1 266 084)Student loans and client financing (3 905 903)Trade and other payables (2 568 745) (2 450 435)Student loans – (814 601)

(13 056 804) 1 462 550

25. TAXATION (PAID)/REFUNDED

Balance at beginning of the period (1 493 534) –Additions through business combinations (888 036) (140 209)Current taxation for the period recognised in income statement (3 683 616) (491 738)Adjustment for deferred taxation (1 308 915) (861 587)Balance at end of period 5 013 954 1 493 534

(2 360 147) –

61


2008 2007

26. ACQUISITIONS OF BUSINESSES

Fair value of net assets acquired

Non-current assets 1 054 159 15 956 554Current assets excluding cash and cash equivalents 4 653 344 16 859 993Cash and cash equivalents (136 607) (830 776)Non-current liabilities (2 724 641) (15 997 420)Current liabilities (3 640 505) (10 405 269)

Total net assets acquired (794 250) 5 583 082Goodwill on acquisition 12 315 702 8 097 441

11 521 452 13 680 523

Consideration paid

Equity 6 104 976 13 680 523Cash and cash equivalents 5 416 475 –

11 521 451 13 680 523

Net cash outflow on acquisition

Consideration paid 5 416 475 –Overdrafts/(Cash and cash equivalents) acquired 136 607 830 776

5 553 082 830 776

62


2008 2007

27. COMMITMENTS AND CONTINGENCIES

Operating leases – as lessee (expense)

Minimum lease payments due • within one year 9 038 749 6 510 929 • in second to fifth year 24 850 535 11 763 055

33 889 284 18 273 984

Operating lease payments represents rentals payable by the Group for certain of its office properties and outlets. Leases are negotiated for an average term of three years. No contingent rent is payable. Premises are sublet to franchisees who’s lease payments within one year amounts R589 689 and in second to fifth year R7 334 393.

Tax consequences of undistributed reserves

STC on remaining reserves 859 207 92 102

Surety

ABSA Bank hold unlimited suretyships for credit facilities granted to the Group, supplied by:

Placécol Cosmetics (Pty) LtdPlacécol Skincare Clinic (Pty) LtdCW Pharmaceuticals (Pty) LtdNomic 136 (Pty) LtdPlacécol Properties (Pty) LtdSalonquip (Pty) LtdPlacécol Beauty Centre (Pty) LtdPlacécol Holdings Limited

Litigation

A claim of R345 498 was instituted against a subsidiary. The directors are confident that the claim will not succeed.Legal costs are estimated at R30 000.

63


28. RELATED PARTIES

Relationships Related party

Company with common directors Xenon Technologies (Pty) LtdMooldew CCElroi Investments (Pty) LtdSalonquip (Pty) ltd

Directors of the company W J de WetC W MoolmanR A du Toit

2008 2007

Related party balances

Loan accounts – owing (to)/by related parties

W J de Wet 187 805 204 845C W Moolman – (19 489)J H Heystek – 89 894J T Strydom – 90 736A F Brown – (135 343)

Trade receivables regarding related parties

Salonquip (Pty) Ltd – 800 000

Related party transactions

Interest paid to/(received from) related partiesW J de Wet – 21 817

Rent paid to/(received from) related parties

Elroi Investments (Pty) Ltd 1 676 794 159 517Xenon Technologies (Pty) Ltd 1 130 344 257 519

Compensation paid to senior management

J G Strydom 518 976 –

29. RISK MANAGEMENT

The Group is exposed to credit, liquidity and market risks from the use of financial instruments in the normal courseof its business.

This notes presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policiesand processes for measuring and managing risk, and the Group’s management of capital. Further quantitativedisclosures are included through these annual financial statements.

The Board of Directors has the overall responsibility for the establishment and oversight of the Group’s riskmanagement framework.

The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to setappropriate risks limits and controls, and to monitor risks and adherence to limits. These policies and systems arereviewed regularly to reflect changes in market conditions and activities.

The following table summarises the carrying amount of financial assets and liabilities recorded 29 February 2008 byIAS 39 category:

64


2008 2007R R

FINANCIAL ASSETS

Cash and cash equivalents 10 931 728 7 638 475Financial assets at fair value through the income statement – –Available for sale investments 146 633 –Loans and receivables 58 215 711 29 155 903Held-to-maturity investments 812 818 53 415

70 106 890 36 847 793

FINANCIAL LIABILITIES

At fair value through profit and loss – 63 511

Measured at amortised cost: – –• Borrowings 43 337 097 23 022 321 • Trade payables 20 982 633 18 544 719

64 319 730 41 630 551

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Groupmanages liquidity risk by ensuring that sufficient liquidity is available to meet its liabilities when due.This is done throughongoing review of future commitments and cash flow forecasts.

The table below analysis the Group’s financial liabilities into relevant maturity groupings based on the remaining periodat the balance sheet to the contractual maturity date.The amounts disclosed in the table are the contractual undisclosedcash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

As at 29 February 2008 Less than Between 2 andone year 5 years

Secured borrowings 7 358 630 15 413 992Unsecured borrowings 1 518 211 –Bank 1 558 478 –Taxation 98 811 –Trade and other payables 28 516 198 –

39 050 328 15 413 992

As at 29 February 2007 Less than Between 2 andone year 5 years

Secured borrowings 4 990 712 4 818 672Unsecured borrowings 279 242 –Bank 2 028 578 –Trade and other payables 12 553 190 –

19 851 722 4 818 672

The carrying amount of the financial liabilities is considered to be in line with the fair value at balance sheet date.

65


At present the Group does expect to pay all liabilities at their contractual maturity. In order to meet such cashcommitments the Group expects the operating activity to generate sufficient cash inflows. In addition, the Group holdsfinancial assets for which there is a liquid market and that are readily available to meet liquidity needs.

At the balance sheet date there were undrawn borrowing facilities of R3 000 000 available for operating activities andto settle capital commitments.The Group maintains substantial borrowing facilities to ensure that it can manage to fundits budgeted operations and take advantage of expansion opportunities as they arise.

The Finance Director provides the Board with monthly schedules showing maturity of the financial liabilities and unusedborrowing facilities to assist the Board in monitoring liquidity risk.

Interest rate risk

Financial assets and financial liabilities that are sensitive to interest rate risk are cash equivalents, bank overdrafts, loansreceivable and payable.The interest applicable to these financial instruments are on a floating basis in line with thosecurrently available in the market.

Sensitivity analysis

A hypothetical increase in interest rates by 100 basis points, with all other variables remaining constant, would decreaseprofit after tax by R83 568 (2007: R104 402).

The analysis has been performed for floating interest rate financial liabilities and cash.The impact for a charge in interestrates on floating interest rate financial liabilities has been assessed in terms of changing of their cash flows and thereforein terms of the impact on net expenses.

The Group does not have any fair value sensitivity in respect of fixed rate instruments as at the reporting date.

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meetits contractual obligations and arises principally from the Group’s trade receivables, loans made and cash and cashequivalents.

The Group only deposits cash with major banks with high quality credit standing and limits exposure to any onecounter-party.

Trade receivables comprise a widespread customer base. Management evaluated credit risk relating to customers onan ongoing basis and utilisation of credit limits is regularly monitored. Credit guaranteed insurance is purchase whendeemed appropriate. Refer to note 9 for details on the quality and provision for impairment of trade receivables.

The maximum exposure to credit risk is represented by the carrying value of each financial asset in the balance sheet.

The allowance for impairments represents an estimate of incurred losses in respect of trade debtors.The componentsof this allowance relates to individual significant exposures, and a collective loss component in respect of losses thathave been incurred but not yet identified, bases on historical trends and current economic conditions.

Fair values

Fair values vs carrying amounts.

Cash and short-term investments

The carrying amount approximates fair value because of the short maturity of those instruments.

66


Trade and other receivables/payables

The fair value of trade and other receivables/payables, is estimated at its carrying value as these instruments are short-term in nature and thus carrying amount approximates fair value.

Capital management

The Board’s policy is to maintain a strong capital base so as top maintain investor, creditor and market confidence tosustain the future development of the business. The Board of Directors monitors the return on capital, which theGroup defines as total capital reserves, and the level of dividends to ordinary shareholders.

There were no changes in the Group’s approach to capital management during the year.

Refer to note 11 for a quantitive summary of authorised and issued capital.

30. SEGMENT INFORMATION

For management purposes, the Group is organised into business units based on their products and services, and hastwo reportable operating segments as follows:

The Brand segment which handles the sales and marketing of skincare and nail products through a combination of it’sown retail outlets, franchises and third party outlets such as pharmacies and large retail chain stores as well as the salesof beauty centre franchises.

The Supply Chain and Support segment which handles the manufacturing and distribution of skin care products, thesupply and installation of industry specific equipment, the training of beauty therapists, as well as administrative services.

Management monitors the operating results of its business units separately for the purpose of making decisions aboutresource allocation and performance assessment.

Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with thirdparties.

67

Year ended 29 February 2008 Supply Adjustmentschain and and

Brands support eliminations Consolidated

Revenue

Third party 84 869 187 30 416 796 – 115 285 983Inter-segment 27 647 875 9 182 416 (36 830 291) –

Total revenue 112 517 062 39 599 212 (36 830 291) 115 285 983

Results

Depreciation andamortisation 1 874 144 562 854 3 953 2 440 951Segment profit 8 576 298 6 799 772 (3 070 096) 12 305 974

Assets and liabilities

Capital expenditure 1 422 493 499 636 (125 318) 1 796 811Operating assets 62 308 431 75 715 911 (48 942 484) 89 081 858Operating liabilities 44 423 832 20 963 499 (33 207 607) 32 179 724

1. Inter-segment revenues are eliminated on consolidation.

2. Capital expenditure consists of additions of property, plant and equipment, intangible assets and investment properties.

Year ended 29 February 2007 Supply Adjustmentschain and and

Brands support eliminations Consolidated

Revenue

Third party 17 688 663 2 879 550 – 20 568 213Inter-segment 3 837 000 2 456 000 (6 293 000) –

Total revenue 21 525 663 5 335 550 (6 293 000) 20 568 213

Results

Depreciation andamortisation 664 680 42 426 – 707 106Segment profit 1 030 112 290 545 – 1 320 657

Assets and liabilities

Capital expenditure 14 299 396 1 497 015 – 15 796 411Operating assets 44 654 178 5 186 227 – 49 840 405Operating liabilities 23 092 304 2 565 812 – 25 658 115

1. Inter-segment revenues are eliminated on consolidation.

2. Capital expenditure consists of additions of property, plant and equipment, intangible assets and investment properties.

Geographic information

The Group operates in one geographical segment.


68

31. COMPARATIVE FIGURES

The prior reporting period was for 3 months, therefore comparative amounts are not comparable to the currentbalances.

The comparative figures were adjusted pertaining to the cost of a business combination which was contingent of futureperformance of the Group, as more fully disclosed in note 11.1.

The effect of the adjustment was a reduction of share premium and goodwill of R2 021 866.

32. SCHEDULE OF INVESTMENTS IN SUBSIDIARIES

Name Main Share Interest Shares Amounts owing by/

Business capital (to) subsidiaries

2008 2007 2008 2007 2008 2007

R % % R R R R

Direct

Placécol Cosmetics

(Pty) Ltd 2 1 002 000 100% 100% 13 795 277 13 680 523 5 197 255 1 267 147

Nomic 136 (Pty) Ltd

(Dreamnails) 3 120 100% 11 406 697 35 276 –

CW Pharmaceuticals

(Pty) Ltd 1 102 100% 100% 102 102 (117 319) –

Indirect

Placécol Skin Care Clinic

(Pty) Ltd 6 100 100% 100% 73 764 4 620 635

Placécol Beauty Centre

Franchise (Pty) Ltd 3 120 100% 100% 8 220 746 –

Placécol Properties

(Pty) Ltd 4 100 100% 100% 2 523 704 –

Salonquip (Pty) Ltd 5 950 100% 33 746 ≠–

25 202 076 13 680 625 15 967 172 5 887 782

Main business

1. Product manufacturing

2. Distribution

3. Franchisor

4. Property holding

5. Supporting services

6. Outlet establishments


69

Placécol Holdings Limited

Balance Sheet AT 29 FEBRUARY 2008

Notes 2008 2007R R

Non-current assets 25 202 076 13 680 625

Investments in subsidiaries 5 25 202 076 13 680 625

Current assets 25 214 778 10 009 178

Loans to group companies 6 16 050 745 5 887 782Trade and other receivables 7 4 950 30 098Cash and cash equivalents 3 9 159 083 4 091 298

TOTAL ASSETS 50 416 854 23 689 803

EQUITY 47 685 829 23 345 142

Share capital 4 47 450 858 23 353 371Retained income 234 971 (8 229)

LIABILITIES 2 731 025 344 661

NON-CURRENT LIABILITIES 1 425 518 –

Other financial liabilities 9 1 425 518 –

CURRENT LIABILITIES 1 305 507 344 661

Loans from group companies 6 83 573 –Other financial liabilities 9 574 482 –Current tax payable 294 350 –Trade and other payables 8 353 102 344 661

TOTAL EQUITY AND LIABILITIES 50 416 854 23 689 803

70


Income Statement FOR THE YEAR ENDED 29 FEBRUARY 2008

Notes 2008 2007R R

Other income 1 050 –Operating expenses (719 245) (50 296)

Operating loss 11 (718 195) (50 296)Investment revenue 12 1 256 310 42 067Finance costs (565) –

Profit/(Loss) before taxation 537 550 (8 229)Taxation 13 (294 350) –

Profit/ (Loss) for the period 243 200 (8 229)

71


Statement of Changes in Equity FOR THE YEAR ENDED 29 FEBRUARY 2008

Figures in Rand Share Share Total share Retained Totalcapital premium capital income equity

Balance at 1 March 2006 100 – 100 100Changes in equity – –Profit for the year – (8 229) (8 229)Issue of shares 10 300 26 489 600 26 499 900 26 499 900Adjustment as result of share repurchase (2 021 866) (2 021 866) (2 021 866)Issue costs written off (1 124 763) (1 124 763) (1 124 763)

Total changes 10 300 23 342 971 23 353 271 (8 229) 23 345 042

Balance at 1 March 2007 10 400 23 342 971 23 353 371 (8 229) 23 345 142Changes in equity – –Profit for the year – 243 200 243 200Dividend declared – – –Issue of shares 2 850 28 502 126 28 504 976 28 504 976Issue costs written off (2 007 489) (2 007 489) (2 007 489)Treasury shares held (240) (2 399 760) (2 400 000) (2 400 000)

Total changes 2 610 24 094 877 24 097 487 243 200 24 340 687

Balance at 29 February 2008 13 010 47 437 848 47 450 858 234 971 47 685 829

72


Cash Flow Statement FOR THE YEAR ENDED 29 FEBRUARY 2008

Notes 2008 2007R R

Cash flows from operating activitiesCash (utilised)/generated from operations 14 (684 606) 264 268Interest income 1 256 310 42 067Interest paid (565) –

Net cash from operating activities 571 139 306 335

CASH FLOWS FROM INVESTING ACTIVITIESInvestments in subsidiaries (5 416 475) (103)Net amounts paid to group companies (10 079 390) (5 887 782)

Net cash from investing activities (15 495 865) (5 887 885)

CASH FLOWS FROM FINANCING ACTIVITIESLoans received 2 000 000 –Proceeds on share issue 17 992 511 9 672 748

Net cash from financing activities 19 992 511 9 272 748

Total cash moved for the period 5 067 785 4 091 198Cash at the beginning of the period 4 091 298 100

Total cash at end of the period 3 9 159 083 4 091 298

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Accounting Policies

1. ACCOUNTING POLICIES

Please refer to the group accounting policies on pages 36 to 44

2. INVESTMENTS IN SUBSIDIARIES

Investments in subsidiaries are carried at cost less any accumulated impairment.

The cost of an investment in a subsidiary is the aggregrate of:

– the fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issuedby the company; plus

– any costs directly attributable to the purchase of the subsidiary.

An adjustment to the cost of a business combination contingent on future events is included in the cost of thecombination if the adjustment is probable and can be measured reliably.

Loans to/from group companies

These include loans to and from holding companies, fellow subsidiaries, subsidiaries and sub-subsidiaries.

Loans to group companies are classified as loans and receivables. Loans from group companies are classified as financialliabilities.

3. CASH AND CASH EQUIVALENTS

2008 2007

Cash and cash equivalents consist of:

Bank balances 9 159 083 4 091 298

There is no material difference between the fair value of cash and cash equivalents and their book value.

4. SHARE CAPITAL

Please refer to Group note 11 on page 52.

5. INVESTMENTS IN SUBSIDIARIES

Please refer to group note 32 on page 68.

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6. LOANS TO/(FROM) GROUP COMPANIES

Subsidiaries

Placécol Skin Care Clinic (Pty) Ltd 73 764 4 620 635

Placécol Beauty Centre Franchise (Pty) Ltd 8 220 746 –

Placécol Properties (Pty) Ltd 2 523 704 –

The unsecured loan bears interest at 10.5% and no fixed terms of repayment have been agreed upon.

Placécol Cosmetics (Pty) Ltd 5 197 255 1 267 147

Dreamnails/Nomic 136 (Pty) Ltd 35 276 –

Salonquip (Pty) Ltd 33 746 –

CW Phamaceuticals (Pty) Ltd (117 319) –

The unsecured loan bears no interest and no fixed terms of repayment have been agreed upon.

15 967 172 5 887 782

Non-current assets – –

Current assets 16 050 745 5 887 782

Current liabilities (83 573) –

15 967 172 5 887 782

Credit quality of loans to group companies

No credit rating of loans to and from group companies has been performed.

Fair value of loans to and from group companies

There is no material difference between the fair value of property, plant and equipment and their book value.

Loans to group companies past due but not impaired

All loans to group companies have no fixed terms of repayment and are therefore not past due. No loans to groupcompanies have been impaired in the current year.

The maximum exposure to credit risk at the reporting date is the fair value of each class of loan mentioned above.The company does not hold any collateral as security.

2008 2007

7. TRADE AND OTHER RECEIVABLES

Sundry Debtors 4 950 30 098

Trade and receivables pledged as security

Trade receivables were pledged as security for overdraft facilities of R nil (2007: R nil) of the company.

At year end the overdraft amounted to RNil – (2007: R Nil)

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2008 2007

Credit quality of trade and other receivables

The table below illustrates the trade receivables ageing analysis:

The aging of trade receivables at the reporting date was:

Neither past due, nor impaired 4 950 30 098

Past due and not impaired – –

Past due and impaired – –

4 950 30 098

It is the policy of the company to allow for 30 day payment terms.

Ageing of past due but not impaired is as follows:

30 – 60 days 4 950 30 098

60 – 90 days – –

90 – 120 days – –

120+ days

Total 4 950 30 098

The maximum exposure to credit risk at the reporting date is the fair value of each class of trade receivable mentioned above.

8. TRADE AND OTHER PAYABLES

Trade payables 353 102 344 661

The book value of trade payables, amounts received in advance, sundry payables and accrued expenses is considered to be in line with their fair value at balance sheet date.

9. OTHER FINANCIAL LIABILITIES

At fair value through profit or loss

Held at amortised cost

ABSA Bank term loans 2 000 000 –

Term loan bearing interest at 14.295% per annum, repayable in monthly installments of R68 641.The loan is repayable over 36 months and the first installment is payable on 1 May 2008. Secured by suretyship per note 17on page 56.


At amortised cost 1 425 518 –

Current liabilities

At amortised cost 574 482 –

2 000 000 –

There is no material difference between the fair value of loans received and their book value.

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10. DIRECTORS’ EMOLUMENTS

Please refer to Group note 23 on page 59 for full details of directors emoluments.

2008 2007

11. OPERATING LOSS

Operating loss for the year is stated after accounting for the following:

Employee costs 12 120 50 259

12. INVESTMENT REVENUE

Interest revenue

Loans to group company 815 151 –

Bank 441 159 42 067

1 256 310 42 067

13. TAXATION

Major components of the tax expense

Current

Local income tax 294 350 –

Deferred

Deferred tax – –

294 350 –

Reconciliation of the tax expense

Reconciliation between applicable tax rate and average effective tax rate.

Applicable tax rate 29.0% –

Assessed loss utilised (0.4%) –

Disallowable charges 26.2% –

54.8% –

14. CASH GENERATED FROM OPERATIONS

Operating profit (718 195) (50 296)

Changes in working capital

Trade and other receivables 25 148 (30 097)

Trade and other payables 8 441 344 661

(684 606) 264 268

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2008 2007

15. AUDITORS REMUNERATION

Fees 193 488 –

Other services 119 918 –

Tax and secretarial services – –

313 406 –

16. RELATED PARTIES

The Company has a related-party relationship with its subsidiaries (refer to Group note 32)

Directors W J De Wet

C W Moolman

R A Du Toit

T Dingaan (resigned 1 August 2008)

C E Chimombe-Munyoro (resigned 1 August 2008)

S M du Toit (appointed 1 August 2008)

C Nkosi (appointed 25 August)

Interest paid to (received from) related parties

The company received interest from subsidiaries 815 151 –

Compensation paid to directors

T Dingaan 12 120 –

17. CONTINGENCIES

Tax consequences of undistributed reserves

STC on remaining reserves 26 108 –

Suretyships

Unlimited suretyships given to ABSA Bank Limited on behalf of:

Placécol Cosmetics (Pty) Ltd

Placécol Skincare Clinic (Pty) Ltd

CW Pharmaceuticals (Pty) Ltd

Nomic 136 (Pty) Ltd

Placécol Properties (Pty) Ltd

Salonquip (Pty) Ltd

Placécol Beauty Centre (Pty) Ltd

18. FINANCIAL INSTRUMENTS: INFORMATION ON FINANCIAL RISKS

The company is exposed to credit, liquidity and market risks from the use of financial instruments in the normal courseof its business.

This note presents information about the company’s exposure to each of the above risks, the company’s objectives,policies and processes for measuring and managing risk, and the company’s management of capital. Further quantitativedisclosures are included throughout these financial statements.

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The board of directors has the overall responsibility for the establishment and oversight of the company’s riskmanagement framework.

The company’s risk management policies are established to identify and analyse the risks faced by the company, to setappropriate risk limits and controls, and to monitor risks and adherence to limits. These policies and systems arereviewed regularly to reflect changes in market conditions and activities.

The following table summarises the carrying amount of financial assets and liabilities recorded at 29 February 2008 byIAS 39 category:

2008 2007

Financial assets

Cash and cash equivalents 9 159 083 4 091 298

Financial assets at fair value through the income statement – –

Available for sale investments – –

Loans and receivables:Trade and other receivables 16 055 695 5 917 880

Held-to-maturity investments – –

Balance at 29 February 2008 25 214 778 10 009 178

Financial liabilities

At fair value through the income statement – –

Measured at amortised cost:

– Borrowings 2 083 573 –

– Trade and other payables 353 102 344 661

Measured at amortised cost:

Balance at 29 February 2008 2 436 675 344 661

Liquidity Risk

The company manages liquidity risk by ensuring that sufficient liquidity is available to meet its liabilities when due.

This is done through ongoing review of future commitments and cash flow forecasts.

The table below analyses the company’s financial liabilities into relevant maturity groupings based on the remainingperiod at the balance sheet to the contractual maturity date.The amounts disclosed in the table are the contractualundiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting isnot significant.

As at 29 February 2008 Less than Between 2 one year and 5 years

Secured borrowings 574 482 1 425 518

Unsecured borrowings – –

Trade and other payables 353 102 –

927 584 1 425 518

As at 28 February 2007

Secured borrowings – –

Unsecured borrowings – –

Trade and other payables 344 661 –

344 661 –

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The carrying amount of the financial liabilities is considered to be in line with the fair value at balance sheet date.

At present the company does expect to pay all liabilities at their contractual maturity. In order to meet such cashcommitments the company expects the operating activity to generate sufficient cash inflows. In addition, the companyholds financial assets for which there is a liquid market and that are readily available to meet liquidity needs.

At the balance sheet there were undrawn borrowing facilities of RNil, available for operating activities and to settlecapital commitments.The company maintains substantial borrowing facilities to ensure that it can manage to fund itsbudgeted operations and take advantage of expansion opportunities as they arise. The finance director providesthe board with a monthly schedule showing the maturity of financial liabilities and unused borrowing facilities to assistthe board in monitoring liquidity risk.

Interest rate risk

Financial assets and liabilities that are sensitive to interest rate risk are cash and cash equivalents, bank overdrafts, loansreceivable and payable.The interest applicable to these financial instruments are on a floating basis in line with thosecurrently available in the market.

Sensitivity analysis

A hypothetical increase in interest rates by 100 basis points, with all other variables remaining constant, would decrease profit after tax by R27,396 (2007: R421), The analysis is prepared assuming the amount of liability outstanding at the balance sheet date was outstanding for the whole year.

The Group’s sensitivity to interest rates has increased during the current period mainly due to the increase in variablerate debt instruments and the increase in interest rates.

The analysis has been performed for floating interest rate financial liabilities and cash.The impact of a change in interestrates on floating interest rate financial liabilities has been assessed in terms of changing of their cash flows and thereforein terms of the impact on net expenses.

The company does not have any fair value sensitivity in respect of fixed rate instruments as at reporting date.

Credit risk

Credit risk is the risk of financial loss to the company if a customer or counterparty to a financial instrument fails tomeet its contractual obligations and arises principally from the company’s trade receivables, loans made and cash andcash equivalents.

The company only deposits cash with major banks with high quality credit standing and limits exposure to any onecounter-party.

Trade receivables relates to other debtors as the company do not trade in goods or services. Refer to note 9 for detailson the quality of trade receivables.

Financial assets exposed to credit risk at year end were as follows:

2008 2007

Other financial assets – –

Trade and other receivables 4 950 30 098

Cash and cash equivalents 9 159 083 4 091 298

The company is exposed to a number of guarantees for the overdraft facilities of Group companies and for guaranteesissued in favour of ABSA Bank Limited.

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Fair values

Fair values versus carrying amounts:

Cash and short-term investments:

The carrying amount approximates fair value because of the short maturity of those instruments.

Trade and other receivables/ payables:

The fair value of trade and other receivables/ payables, is estimated at its carrying value as these instruments are short-term in nature and thus carrying amount approximates fair value.

Capital management

The board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence tosustain the future development of the business. The board of directors monitors the return on capital, which thecompany defines as total capital and reserves, and the level of dividends to ordinary shareholders.

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Shareholder Analysis

Register date: 29 February 2008Issued share capital: 132 504 976

Number of Number of SHAREHOLDER SPREAD shareholders Percentage shares Percentage

1 – 1 000 shares 17 4.50 10 231 0.011 001 – 10 000 shares 121 32.01 706 648 0.5310 001 – 100 000 shares 169 44.71 6 688 919 5.05100 001 – 1 000 000 shares 53 14.02 17 365 866 13.111 000 001 shares and over 18 4.76 107 733 312 81.30

378 100.00 132 504 976 100.00

Number of Number of DISTRIBUTION OF SHAREHOLDERS shareholders Percentage shares Percentage

Broker 2 0.53 1 355 000 1.02Close Corporations 13 3.44 13 183 561 9.95Endowment Funds 1 0.26 192 000 0.14Individuals 314 82.80 82 426 257 62.20Medical Aid Schemes 1 0.26 275 800 0.21Mutual Funds 1 0.26 2 900 000 2.19Nominees and Trusts 16 4.23 8 011 488 6.05Other Corporations 5 1.32 2 171 035 1.64Pension Funds 1 0.26 1 875 000 1.42Private Companies 22 5.82 11 464 835 8.65Public Companies 1 0.26 6 250 000 4.72Share Incentive Scheme 1 0.26 2 400 000 1.81

378 100.00 132 504 976 100.00

PUBLIC/NON-PUBLIC Number of Number of SHAREHOLDERS shareholdings Percentage shares Percentage

Non-Public Shareholders 7 1.85 67 133 409 50.66Directors of the company 6 1.59 64 733 409 48.85Share Trust 1 0.26 2 400 000 1.81

Public Shareholders 371 98.15 65 371 567 49.34

378 100.00 132 504 976 100.00

Beneficial shareholders holding of 3% or more Number of shares Percentage

Mizzentop Investments CC 10 176 681 7.68I Capital (Pty) Limited 6 341 835 4.79Liberty Life Assurance of Africa Limited 6 250 000 4.72Dreamway Business Trust 5 494 478 4.15

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Shareholders’ Diary

Financial year-end 29 February 2008

Reports and financial announcements

Reviewed results announcement 6 June 2008

Audited results announcement 8 September 2008

Annual Report 8 September 2008

Interim Report November 2008

Annual General Meeting 2 October 2008

Share Information

At 29 February 2008

Closing price (cents) 50

High for the period since listing (cents) 84

Low for the period since listing (cents) 47

Volume of shares traded during the period since listing 28 456 612

Value of shares traded for the period since listing (Rand) 16 187 644

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Placécol Holdings Limited(Registration number 2003/025374/06)

(Incorporated in the Republic of South Africa)JSE code: PLC ISIN: ZAE000102307

(“the company”)

Notice of Annual General Meeting

This notice of annual general meeting contains important information relating to specific repurchasesand an amendment to the company’s Articles of Association, as follows:

• the specific repurchase and cancellation of 11 893 332 ordinary shares from the original vendors ofPlacécol Cosmetics (Proprietary) Limited as detailed in special resolution number 1;

• the specific repurchase and cancellation of the 2 400 000 shares issued to the Placécol Holdings ShareIncentive Scheme as these shares have not been issued as detailed in special resolution number 2; and

• an amendment to the company’s articles of association to allow the company a nine month period inwhich to hold its annual general meeting.

If you are in any doubt as to what action to take in regard to this notice, please consult your CentralSecurities Depository Participant (“CSDP”), broker, banker, accountant, attorney or other professionaladviser immediately and refer to the instructions set out at the conclusion of this notice.

Notice is hereby given that the annual general meeting of the company’s shareholders will be held in the boardroom atPlacécol, Placécol Boulevard, Samrand on Thursday, 2 October 2008 at 10:00 for the purpose of considering, and if deemedfit, passing with or without modification, the resolutions set out below in the manner required by the Companies Act No 61of 1973, as amended (the “Act”):

1. Ordinary resolution 1:Adoption of the annual financial statements

“RESOLVED THAT the annual financial statements of the company for the year ended 29 February 2008, togetherwith the directors’ report and the report of the auditors be and are hereby received and adopted.”

2. Ordinary resolution 2: Re-election of directors

“RESOLVED THAT the following directors of the company who retire by rotation in accordance with the provisionsof the company’s articles of association and, being eligible make themselves available for re-election, be re-elected:

2.1 Mr Charles William Moolman

2.2 Mr Wessel Johannes de Wet

2.3 Mr. Richard Arthur du Toit

2.4 Ms Susanna Maria du Toit

2.5 Ms. Constance Nkosi

Abbreviated curricula vitae of the directors offering themselves for re-election are set out on pages 11 and 12 of thisannual report.

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3. Ordinary resolution 3: Re-appointment of auditors

“RESOLVED THAT RSM Betty & Dickson (Tshwane), be re-appointed as the independent auditors of the companyand that the directors be and are hereby authorised to determine the auditors’ remuneration for the past year.”

4. Ordinary resolution 4: Ratification of Non-Executive Directors’ fees

“RESOLVED THAT the Non-Executive Directors’ fees (reflected on page 59) for the past financial year be and arehereby ratified.”

5. Ordinary resolution 5:To place the unissued shares under the directors’ control

“RESOLVED THAT the authorised but unissued share capital of the company, from time to time, be placed under thecontrol of the directors of the company until the next annual general meeting with the authority to allot and issue upto a maximum of 50% of the issued share capital of the company at their discretion, subject to sections 221 and 222of the Act and the Listings Requirements of the JSE Limited.”

6. Ordinary resolution 6: General authority to issue shares for cash

“RESOLVED THAT, pursuant to the articles of association of the company, the directors of the company be and arehereby authorised, until the next annual general meeting of the company (when this authority shall lapse unless it isrenewed at that annual general meeting, provided that it shall not extend beyond 15 months from the date of thisresolution), to allot and issue ordinary shares for cash subject to the Listings Requirements of the JSE Limited (“JSE”)and the Act, on the following conditions:

(a) the allotment and issue of ordinary shares for cash shall be made only to persons qualifying as public shareholdersand not to related parties, all as defined in the Listings Requirements of the JSE;

(b) the ordinary shares which are the subject of general issues for cash:

• shall not in the aggregate in any one financial year of the company (commencing 1 March 2008) exceed 50%of the company’s relevant number of ordinary shares in issue of that class (taking into account the dilutioneffect, in the year of issue of options/convertible securities, by including the number of any shares that may beissued in the future arising out of the issue of such options/convertible securities);

• of a particular class, will be aggregated with any shares that are compulsorily convertible into shares of thatclass, and, in the case of the issue of compulsorily convertible shares, aggregated with the shares of that classinto which they are compulsorily convertible; and

• shall be based on the number of ordinary shares of that class in issue added to those that may be issued infuture (arising from the conversion of options/convertible securities), at the date of such application, less anyshares of the class issued, or to be issued in future arising from options/convertible securities issued during thecurrent financial year, plus any shares of that class, to be issued pursuant to a rights issue which has beenannounced, is irrevocable and is fully underwritten or an acquisition (which has had final terms announced) maybe included as though they were ordinary shares in issue at the date of application;

(c) the maximum discount at which ordinary shares may be issued for cash is 10% of the weighted average tradedprice of such ordinary shares over the 30 business days prior to the date that the price of the issue is agreedbetween the company and the party/ies subscribing for the ordinary shares;

(d) after the company has issued ordinary shares for cash in terms of an approved general issue for cash representing,on a cumulative basis within a financial year, 5% or more of the number of ordinary shares in issue prior to thatissue, the company shall publish an announcement containing full details of such issue/s (including the number of

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ordinary shares issued, the average discount to the weighted average traded price of the shares over the 30 daysprior to the date that the price of the issue is agreed in writing between the issuer and the party/ies subscribingfor the ordinary shares and the effects of the issue on the net asset value per share, net tangible asset value pershare, earnings per share, headline earnings per share and, if applicable, diluted earnings and headline earningsper share); and

(e) the securities which are the subject of the issue for cash must be of a class already in issue, or where this is notthe case, must be limited to such securities or rights as are convertible into a class already in issue.”

Note: In terms of the Listings Requirements of the JSE, a 75% majority of the votes cast by shareholders present or represented by proxy (excluding

the Designated Adviser and the controlling shareholders together with their associates) at the annual general meeting must be cast in favour

of ordinary resolution 6 for it to be approved.

SPECIAL BUSINESS

1. Special resolution number 1: Specific authority to repurchase and cancel 11 893 332 shares

“RESOLVED in terms of section 85 of the Companies Act No. 61 of 1973, as amended, and the memorandum andarticles of association of the company that, subject to the Listings Requirements of the JSE Limited, specific approvalbe and is hereby given to the company to repurchase from the following shareholders and/or directors of the company,the following ordinary shares of 0.01c (one hundredth of a cent) each in the issued capital of the company (“shares”)(“the shareholders’ repurchase”):

Number % of % of of shares current company’s

Name of shareholder repurchased shareholding share capital

Charles William Moolman* 4 788 059 18.7 3.6

Wessel Johannes de Wet* 4 788 059 17.4 3.6

Richard Arthur du Toit* 1 795 522 16.7 1.4

Jan Heystek 57 144 13.2 **

Allan Findlay Brown 464 548 13.2 **

11 893 332

* Directors

** Below 1%

for an aggregate purchase consideration of R1.00 (one Rand) and to cancel such shares, the repurchase to take effectafter the issue of the company’s interim financial results for the six months ended 31 August 2008.The repurchase is inaccordance with the provisions of clause 9 of the Sale of Shares and Cession of Claims Agreement entered into betweenPlacécol Cosmetics (Proprietary) Limited, the abovementioned parties (“the vendors”) and the company, details ofwhich were fully described in the company’s Prospectus dated 10 August 2007 and an extract of which is set out below:

‘It was agreed that, in the event that the February 2008 consolidated net profit after tax (“PAT”) as determined inaccordance with the provisions of the agreement is less than R9.2 million, the company shall repurchase from thevendors, pro rata to their share, 535 306 of the Placécol shares issued to them in accordance with the provisionsof the agreement for every R50 000 or part thereof by which the February 2008 PAT is less than R9.2 million inconsideration for which repurchase the company will pay the vendors the aggregate sum of R1.00.’

A copy of the aforementioned agreement is available for inspection at the registered office of the company from dateof this notice until the date of the annual general meeting.”

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The reason for special resolution number 1 relates to the agreement detailed in special resolution number 1,which stated that if the February 2008 PAT for the Placécol Group of companies in terms of the original grouprestructuring was less than R9,2 million, the company would repurchase 11 893 332 Placécol ordinary shares issuedto Charles William Moolman, Wessel Johannes de Wet, Richard Arthur du Toit, Jan Heystek and Allan Findlay Brown(“the related parties”) on a pro rata basis for the aggregate sum of R1.00 and to obtain shareholders’ approval inrespect thereof.

The effect of special resolution number 1 is that approval is given by the shareholders of the company for thespecific repurchase of 11 893 332 ordinary shares of 0.01c each in the company to be effected upon the terms setout in special resolution number 1, in pursuance of which, the authorised share capital of the company willbe 500 000 000 ordinary shares of 0.01c each and the issued capital of the company will be 120 611 644 ordinaryshares of 0.01c each.

Voting and quorum

The related parties and any of their associates will be taken into account in determining a quorum for the annualgeneral meeting.

Special resolution number 1 is subject to at least 75% of the votes cast by the company’s ordinary shareholders, presentin person or represented by proxy at the annual general meeting, being cast in favour thereof, excluding the relatedparties and any of their associates.

2. Special resolution number 2: Specific authority to repurchase and cancel 2 400 000 shares

“RESOLVED in terms of section 85 of the Companies Act No. 61 of 1973, as amended, and the memorandum andarticles of association of the company that, subject to the Listings Requirements of the JSE Limited, specific approvalbe and is hereby given to the company to cancel the 2 400 000 shares issued to the Placécol Holdings Share IncentiveScheme (“the share trust repurchase”) at 100 cents each for an aggregate purchase consideration of R2 400 000, suchcancellation to take effect after the issue of the company’s interim financial results for the six months ended31 August 2008”:

The reason for special resolution number 2 is to obtain shareholders’ approval for the cancellation of the2 400 000 shares issued to the Placécol Holdings Share Incentive Scheme at R1.00 each as these shares were neverallocated to prospective participants and the pricing thereof is now substantially higher than the company’s currentshare price on the JSE Limited.

The effect of special resolution number 2 is that approval is given by the shareholders of the company for thecancellation of 2 400 000 ordinary shares of 0.01c each in the company to be effected upon the terms set out inspecial resolution number 2 and the consequential settlement of the company’s loan to the Placécol Holdings ShareIncentive Scheme, in pursuance of which, the authorised share capital of the company will be 500 000 000 ordinaryshares of 0.01c each and the issued capital of the company will be 118 211 644 ordinary shares of 0.01c each.

(Special resolutions numbers 1 and 2 are defined as “the specific repurchases”).

3. Special resolution number 3: General authority to repurchase shares

“RESOLVED THAT the company approves, as a general approval contemplated in section 85 of the Act, the acquisitionby the company (or by a subsidiary of the company) of ordinary shares issued of the company on such terms andconditions and in such amounts as the directors of the company may decide, but subject always to the provisions ofthe Act and the Listings Requirements of the JSE Limited (“JSE”), which general authority shall endure until the nextannual general meeting of the company (when this approval shall lapse unless it is renewed at that annual generalmeeting, provided that it shall not extend beyond 15 months from the date of registration of this special resolution),subject to the following limitations:

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• the repurchase of securities is implemented through the order book of the JSE trading system, without any priorunderstanding or arrangement between the company and the counterparty;

• the company is so authorised by its articles of association;

• the general repurchase is limited to a maximum of 20% in aggregate of the company’s issued share capital in anyone financial year ;

• the general repurchase by the subsidiaries of the company is limited to a maximum of 10% in aggregate of thecompany’s issued share capital in any one financial year ;

• the repurchase is not made at a price greater than 10% above the weighted average of the market value for thesecurities for the five business days immediately preceding the date on which the transaction was effected;

• the repurchase does not take place during a prohibited period as defined in paragraph 3.67 of the ListingsRequirements of the JSE unless there is a repurchase programme in place and the dates and quantities of shares tobe repurchased during the prohibited period are fixed and full details thereof have been disclosed in anannouncement over SENS prior to commencement of the prohibited period;

• the company publishes an announcement after it or its subsidiaries have cumulatively acquired 3% of the numberof ordinary shares in issue at the time that the shareholders’ authority for the purchase is granted and for each 3%in aggregate of the initial number acquired thereafter ;

• the company remains in compliance with the Listings Requirements of the JSE concerning shareholder spread aftersuch repurchase;

• the company appoints only one agent to effect any repurchases on its behalf;

• the company may not enter the Market to proceed with the repurchase of its securities until the company’sDesignated Adviser has confirmed the adequacy of the company’s working capital for the purpose of undertakinga repurchase of securities in writing to the JSE.”

Special resolution number 3 is subject to at least 75% of the votes cast by the company’s ordinary shareholders, presentin person or represented by proxy at the annual general meeting, being cast in favour thereof.

The reason for and effect of special resolution number 3 is to authorise the company and its subsidiaries, byway of a general authority, to repurchase the company’s issued ordinary shares on the terms and conditions and inamounts to be determined by the directors of the company, subject to certain statutory provisions and the ListingsRequirements of the JSE.

Directors’ statement regarding the utilisation of the authority sought

The directors of the company have no specific intention to effect the provisions of special resolution number 3, butwill, however, continually review the company’s position, having regard to the prevailing circumstances and marketconditions, in considering whether to effect the provisions of this special resolution.

Directors’ opinion relating to the repurchase of shares

After considering the aggregate effect of the specific repurchase and the maximum repurchase in terms of specialresolutions numbers 1, 2 and 3, the directors of the company are of the opinion that for a period of 12 months fromthe date of this notice of annual general meeting:

• the company and the Group will be able, in the ordinary course of business to repay their debts;

• the assets of the company and the Group will be in excess of the liabilities of the company and the Group, theassets and liabilities being recognised and measured in accordance with the accounting policies used in the latestaudited annual group financial statements;

• the share capital and reserves of the company and the Group will be adequate for ordinary business purposes;

• the working capital of the company and the Group will be adequate for ordinary business purposes.

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4. Special resolution 4:Amendment to articles of association

“RESOLVED THAT, subject to the registration of this special resolution, article 63 of the company’s articles ofassociation be and is hereby deleted in its entirety and replaced with effect from 1 August 2008 with the following:

“ The company shall in each year hold an annual general meeting, provided that not more than fifteen months shallelapse between the date of one annual general meeting and that of the next. An annual general meeting shall beheld within nine months after the expiration of the financial year of the company.The directors may, whenever theythink fit, convene a general meeting which is not an annual general meeting, and a general meeting shall be convenedon the requisition of members as provided in section 181 of the Act.”

The reason for and effect of special resolution number 4 is to amend the company’s articles of associationto allow the company a nine months period in which to hold the annual general meeting as provided for in terms ofsection 179 (1)(b)(ii) of the Companies Act of 1973.

OTHER DISCLOSURES IN TERMS OF PARAGRAPHS 11.23 AND 11.26 OF THE LISTINGSREQUIREMENTS OF THE JSE

The following additional information, some of which may appear elsewhere in the annual report of which this notice formspart, is provided in terms of the Listings Requirements of the JSE for purposes of special resolutions numbers 1, 2 and 3:

• Directors – pages 11 and 12;

• Major beneficial shareholders – page 81;

• Directors’ interests in ordinary shares – note 8 on page 30; and

• Share capital of the company – note 11 on page 52.

Litigation statement

The directors of the company whose names appear on page 29 of the annual report of which this notice forms part, arenot aware of any legal or arbitration proceedings including proceedings that are pending or threatened, that may have orhad in the recent past (being at least the previous 12 months) a material effect on the Group’s financial position.

Directors’ responsibility statement

The directors whose names appear on page 29 of the annual report, collectively and individually accept full responsibilityfor the accuracy of the information set out in the notice of annual general meeting and the relevant disclosures in the annualreport and certify that, to the best of their knowledge and belief, there are no facts that have been omitted which wouldmake any statement false or misleading, all reasonable enquiries to ascertain such facts have been made and the specialresolutions contain all information required by the Act and the Listings Requirements of the JSE.

Material changes

Other than the facts and developments reported on in the annual report, there have been no material changes in the affairsor financial position of the company and its subsidiaries since the date of signature of the audit report and up to the dateof this notice.

Preliminary and issue expenses

Preliminary expenses amounting to R2.6 million in respect of the company’s listing on AltX were incurred during the pastthree years. It is not expected that any material expenses will be incurred relative to the repurchase of shares detailed inspecial resolutions numbers 1, 2 and 3.

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Pro forma financial effects of the specific repurchases

The unaudited pro forma financial effects of the specific repurchases, for which the directors are responsible, are providedfor illustrative purposes only to show the effect of the specific repurchases on earnings and headline earnings per share asif the specific repurchases had taken effect on 1 March 2007 and on net asset value and net tangible asset value per shareas if the specific repurchases had taken effect on 29 February 2008. Because of their nature, the unaudited pro forma financialeffects may not give a fair presentation of the group’s financial position and performance.The unaudited pro forma financialeffects have been compiled from the audited consolidated financial statements for the year ended 29 February 2008 andare presented in a manner consistent with the format and accounting policies adopted by the company and have beenadjusted as described in the notes below:

Audited UnauditedBefore the After the

specific specificNotes repurchases repurchases %

Earnings per share (cents) 2 7.3 8.1 11.0

Headline earnings per share (cents) 2 6.5 7.2 10.8

Net asset value per share (cents) 3 45.3 48.1 6.2

Net tangible asset value per share (cents) 3 29.1 30.4 4.5

Weighted average number of shares in issue (000’s) 118 350 106 456

Shares in issue at end of period (000’s) 1 & 4 130 105 118 211

Notes:

1. The “Audited Before the specific repurchases” column reflects the audited results of the company for the year ended 29 February 2008. The2 400 000 shares issued to the Placécol Holdings Share Incentive Scheme were excluded when calculating the earnings, headline earnings, net assetvalue and net tangible asset value per share as they were treated as treasury shares at that time.

2. Earnings and headline earnings per share effects are based on the following assumptions and information:

– the specific repurchases were effective on 1 March 2007; and

– there is no effect in respect of the share trust repurchase as these shares were taken into account as set out in note 1.

3. Net asset value and tangible net asset value per share effects are based on the following assumptions and information:

– the specific repurchases were effective on 29 February 2008;

– the share capital will be reduced by R2.4 million, being the price of the shares repurchased and cancelled in respect of the Placécol HoldingsShare Incentive Scheme and the company’s loan to the Placécol Holdings Share Incentive Scheme will be set-off against the share capital issued;

– no material costs relate to the specific repurchases; and

– the share repurchase results in a reduction of R2 021 866 in goodwill and share premium.This amount has been calculated in accordance withIFRS 3 (Business Combinations). Goodwill reduced from R22 435 009 to R20 413 143 and share premium reduced from R49 459 714 toR47 437 848.The reduction is as a result of the cancellation of 11 893 332 shares at an issue price of 17 cents per share as per the original grouprestructuring set out in the company’s Prospectus dated 10 August 2007.

4 The actual number of shares in issue will decrease by 14 293 332 as a result of the specific repurchases.

In terms of the JSE Listings Requirements, RSM Betty & Dickson (Tshwane) have prepared an independent reportingaccountants’ report on the pro forma financial effects of the specific repurchases, which report is annexed to this annualreport. The independent reporting accountants’ report contains their consent to the inclusion of their name and, whereapplicable, report in the form and context in which it appears in the annual report, behind the notice of annual generalmeeting, which consent has not been withdrawn prior to the date of this notice of annual general meeting.

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Shareholders’ instructions – Voting and proxies

DEMATERIALISED SHAREHOLDERS OTHER THAN WITH OWN-NAME REGISTRATION:

You are entitled to attend or be represented by proxy at the annual general meeting.You must NOT, however, completethe attached form of proxy.You must advise your CSDP or broker timeously if you wish to attend or be represented atthe annual general meeting.

If your CSDP or broker does not contact you, you are advised to contact your CSDP or broker and provide them withyour voting instructions. If your CSDP or broker does not obtain instructions from you, they will be obliged to act in termsof the mandate entered into between yourselves.

If you wish to attend or be represented at the annual general meeting, your CSDP or broker will be required to issue thenecessary Letter of Representation to you to enable you to attend or to be represented at the annual general meeting.

CERTIFICATED SHAREHOLDERS AND SHAREHOLDERS WHO HOLD SHARES IN OWN-NAMEREGISTRATION IN DEMATERIALISED FORM:

You are entitled to attend or be represented by proxy at the annual general meeting. However, if your shares are heldthrough a nominee or broker, you must inform that nominee or broker of your intention to attend the annual generalmeeting and obtain the necessary Letter of Representation from that nominee or broker or provide your nominee orbroker with your voting instructions should you not be able to attend the annual general meeting in person.

If you are unable to attend the annual general meeting, but wish to be represented thereat, you must complete and returnthe attached form of proxy, in accordance with the instructions contained therein, to be received by the transfer secretariesby no later than 10:00 on Tuesday, 30 September 2008.

In terms of the JSE Listings Requirements, any shares held by the Placécol Holdings Share Incentive Scheme will not havetheir votes at the annual general meeting taken into account in determining the results of the resolutions tabled at theannual general meeting.

Additional forms of proxy may also be obtained on request from the company’s registered office.The completed forms ofproxy must be deposited at, posted or faxed to the transfer secretaries at the address set out on page 95, to be receivedby no later than 10:00 on Tuesday, 30 September 2008. Any member who completes and lodges a form of proxy willnevertheless be entitled to attend and vote in person at the annual general meeting should the member subsequentlydecide to do so.

On a show of hands, every shareholder of the company present in person or represented by proxy shall have one voteonly. On a poll, every shareholder of the company present in person or represented by proxy shall have one vote for everyshare held in the company by such shareholder.

By order of the board

iThemba Governance and Statutory Solutions (Pty) LimitedCompany Secretary

8 September 2008

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Independent reporting accountants’ report on the pro formafinancial effects of the cancellation of certain shares

“The DirectorsPlacécol Holdings LimitedPO Box 8833Centurion, 0046

1 September 2008

Dear Sirs

INDEPENDENT REPORTING ACCOUNTANTS’ LIMITED ASSURANCE REPORT ON THEPRO FORMA FINANCIAL EFFECTS OF THE CANCELLATION OF 14 293 332 ORDINARY SHARESBY PLACÉCOL HOLDINGS LIMITED (“PLACÉCOL HOLDINGS”)

INTRODUCTION

We have performed our limited assurance engagement in respect of the pro forma financial effects as set out in the noticeof annual general meeting, to be dated on or about 8 September 2008 (“the notice”), to be issued to Placécol Holdingsordinary shareholders in connection with the cancellation by Placécol Holdings of a total of 14 293 332 ordinary shares(“the proposed Transaction”), which is included in the notice, to which this report is attached.

The pro forma financial effects have been compiled from the audited consolidated financial statements of Placécol Holdingsfor the year ended 29 February 2008 and have been prepared in accordance with the JSE Listings Requirements, forillustrative purposes only, to provide information about how the proposed Transaction might have affected the reportedhistorical information presented, had the proposed Transaction been undertaken at the commencement of the period orat the date of the pro forma financial effects being reported on. Because of their nature, the unaudited pro forma financialeffects of the proposed Transaction may not fairly present Placécol Holdings financial position.

DIRECTORS’ RESPONSIBILITIES

The Directors are responsible for the compilation, contents and presentation of the pro forma financial effects contained in thenotice and for the financial information from which they have been prepared.Their responsibility includes determining that:

• the pro forma financial effects have been properly compiled on the basis stated;

• the basis is consistent with the accounting policies of Placécol Holdings;

• the pro forma adjustments are appropriate for the purposes of the pro forma financial effects disclosed in terms of theJSE Listings Requirements.

REPORTING ACCOUNTANTS’ RESPONSIBILITY

Our responsibility is to express our limited assurance conclusion on the pro forma financial effects included in the notice.We conducted our assurance engagement in accordance with the International Standard on Assurance Engagementsapplicable to Assurance Engagements Other Than Audits or Reviews of Historical Financial Information and the Guideon Pro forma Financial Information issued by SAICA.This standard requires us to obtain sufficient appropriate evidence onwhich to base our conclusion.

We do not accept any responsibility for any reports previously given by us on any financial information used in thecompilation of the pro forma financial effects, beyond that owed to those to whom those reports were addressed by us atthe dates of their issue.

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SOURCES OF INFORMATION AND SCOPE OF WORK PERFORMED

Our procedures consisted primarily of comparing the unadjusted financial information with the source documents,considering the pro forma adjustments in light of the accounting policies of Placécol Holdings, considering the evidencesupporting the pro forma adjustments and discussing the adjusted pro forma financial effects with the directors ofPlacécol Holdings in respect of the proposed Transaction.

In arriving at our conclusion, we have relied upon financial information prepared by the directors of Placécol Holdings andother information from various public, financial and industry sources.

While our work performed has involved an analysis of the historical published audited financial information and otherinformation provided to us, our assurance engagement does not constitute an audit or review of any of the underlyingfinancial information conducted in accordance with International Standards on Auditing or International Standards onReview Engagements and, accordingly, we do not express an audit or review opinion.

In a limited assurance engagement, the evidence-gathering procedures are more limited than for a reasonable assuranceengagement and therefore less assurance is obtained than in a reasonable assurance engagement.We believe our evidenceobtained is sufficient and appropriate to provide a basis for our conclusion.

CONCLUSION

Based on our examination of the evidence obtained, nothing has come to our attention, which causes us to believe that, interms of paragraphs 8.17 and 8.30 of the JSE Listings Requirements:

• the pro forma financial effects have not been properly compiled on the basis stated;

• such basis is inconsistent with the accounting policies of Placécol Holdings;

• the adjustments are not appropriate for the purposes of the pro forma financial effects as disclosed.

CONSENT

This report on the pro forma financial effects of the proposed Transaction is included in the notice solely for the informationof the shareholders of Placécol Holdings. We consent to the inclusion of this report on the pro forma financial effects ofthe proposed Transaction and the references thereto, in the notice to Placécol Holdings ordinary shareholders in the formand context in which they appear and confirm that our consent will not be withdrawn prior to the date of the notice toPlacécol Holdings ordinary shareholders other than in writing.

Yours faithfully

RSM Betty & Dickson (Tshwane)Registered AuditorsPer Paul den BoerPartner

Suite 1267 Waterkloof RoadBrooklyn, 0181”

Placécol Holdings Limited(Registration number 2003/025374/06)

(Incorporated in the Republic of South Africa)JSE code: PLC ISIN: ZAE000102307

(“the company”)

Form of Proxy

For use by the holders of the company’s certificated ordinary shares (“certificated shareholder”) and/or dematerialised ordinary shares held througha Central Securities Depository Participant (“CSDP”) or broker who have selected own name registration (“own name dematerialised shareholders”) atthe annual general meeting of the company to be held in the boardroom at Placécol, Placécol Boulevard, Samrand on Thursday, 2 October 2008 at 10:00and at any adjournment thereof.

Not for the use by holders of the company’s dematerialised ordinary shares who are not own name dematerialised shareholders. Such shareholders mustcontact their CSDP or broker timeously if they wish to attend and vote at the annual general meeting and request that they be issued with the necessaryLetter of Representation to do so, or provide the CSDP or broker timeously with their voting instructions should they not wish to attend the annualgeneral meeting in order for the CSDP or broker to vote thereat in accordance with their instructions.

I/We (full name)

of (address)

being the registered owner/s of ordinary shares in the company, hereby appoint:

1. or failing him/her,

2. or failing him/her,

3. the chairperson of the annual general meeting,

as my/our proxy to act for me/us and on my/our behalf at the annual general meeting which will be held for the purpose of considering and, if deemedfit, passing, with or without modification, the ordinary and special resolutions to be proposed thereat and at any adjournment thereof; and to vote forand/or against such resolutions and/or abstain from voting in respect of the ordinary shares registered in my/our name(s), in accordance with the followinginstructions:

Number of votes

For* Against* Abstain*

1. Ordinary resolution number 1: Adoption of the annual financial statements

2. Ordinary resolution number 2: Re-election of directors

2.1 C W Moolman

2.2 W S de Wet

2.3 R A du Toit

2.4 S M du Toit

2.5 C Nkosi

3. Ordinary resolution number 3: Re-appointment of auditors

4. Ordinary resolution number 4: Ratification of Non-Executive Directors’ fees

5. Ordinary resolution number 5:To place unissued shares under the directors’ control

6. Ordinary resolution number 6: General authority to issue shares for cash

7. Special resolution number 1: Specific authority to repurchase 11 893 332 shares

8. Special resolution number 2: Specific authority to repurchase 2 400 000 shares

9. Special resolution number 3: General authority to repurchase shares

10. Special resolution number 4: Amendment to the articles of association

* Please indicate with an “X” in the appropriate spaces below how you wish your votes to be cast unless otherwise instructed, my/our proxy may vote as he/she thinks fit.

Signed this day of 2008

Signature

Assisted by (if applicable)

Please read the notes on the reverse.

I

Notes to the form of proxy:

1. This form of proxy is to be completed only by those members who are:

(a) holding shares in certificated form; or

(b) recorded in the sub-register in electronic form in their “own name”.

2. Members who have dematerialised their shares and wish to attend the annual general meeting must contact their CSDP or broker who will furnishthem with the necessary Letter of Representation to attend the annual general meeting, or they must instruct their CSDP or broker as to how theywish to vote in this regard.This must be done in terms of the agreement entered into between the members and their CSDP or broker.

3. Each member is entitled to appoint one or more proxies (who need not be a member(s) of the company) to attend, speak and, on a poll, vote inplace of that member at the annual general meeting.

4. A member may insert the name of a proxy or the names of two alternative proxies of the member’s choice in the space provided, with or withoutdeleting “the chairperson of the annual general meeting”.The person whose name stands first on this form of proxy and who is present at the annualgeneral meeting will be entitled to act as proxy to the exclusion of those whose names follow.

5. A member’s instructions to the proxy must be indicated by the insertion of the relevant number of votes exercisable by that member inthe appropriate box provided. Failure to comply with the above will be deemed to authorise the chairperson of the annual general meeting, if thechairperson is the authorised proxy, to vote in favour of the ordinary and special resolutions at the annual general meeting, or any other proxy tovote or to abstain from voting at the annual general meeting as he/she deems fit, in respect of all the member’s votes exercisable thereat.

6. A member or his/her proxy is entitled but not obliged to vote in respect of all the ordinary shares held by such member.The total number of votesfor or against the ordinary and special resolutions and in respect of which any abstention is recorded may not exceed the total number of sharesheld by such member.

7. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this formof proxy, unless previously recorded by the company’s transfer secretaries or waived by the chairperson of the annual general meeting.

8. The chairperson of the annual general meeting may accept or reject any form of proxy which is completed and/or received, other than in accordancewith these instructions and notes, provided that the chairperson shall not accept a proxy unless the chairperson is satisfied as to the manner in whicha member wishes to vote.

9. Any alterations or corrections to this form of proxy must be initialled by the relevant signatory(ies).

10. The completion and lodging of this form of proxy does not preclude the relevant member from attending the annual general meeting and speakingand voting in person to the exclusion of any proxy appointed by the member.

11. A minor must be assisted by his/her parent/guardian unless the relevant documents establishing his/her legal capacity are produced or have beenregistered by the company’s transfer secretaries.

12. Where there are joint holders of any shares, only that holder whose name appears first in the register in respect of such shares need sign this formof proxy.

13. Forms of proxy must be lodged at, posted to Computershare Investor Services (Pty) Limited, at Ground Floor, 70 Marshall Street, Johannesburg, 2001,(PO Box 61051, Marshalltown, 2107), to reach the company by no later than 10:00 on Tuesday, 30 September 2008.

95

Administration

Full name Placécol Holdings Limited

Registration number 2003/025374/06

JSE abbreviated name Placécol

JSE code PLC

ISIN ZAE000102307

Sector AltX

Exchange Alternative Exchange

Founded 2003

Listed on the JSE 21 August 2007

Website www.placecol.com

Business address

Placécol BoulevardSamrandGauteng, 2001Telephone : (012) 621 3300Facsimile: (012) 621 3338

Company Secretary and registered office

iThemba Governance and Statutory Solutions (Pty) LimitedPlacécol BoulevardSamrandGauteng, 2001(PO Box 8833, Centurion, 0046)Telephone : (012) 621 3300Facsimile: (012) 621 3338

Transfer secretaries

Computershare Investor Services (Pty) Limited(Registration number 2004/003647/07)Ground Floor70 Marshall StreetJohannesburg, 2001(PO Box 61051, Marshalltown, 2107)Telephone: (011) 370 5000Facsimile: (011) 688 5210

Attorneys

Fluxmans Inc(Registration number 2000/024775/21)11 Biermann AvenueRosebank, 2196(Private Bag X41, Saxonwold, 2132)

Designated Adviser

Vunani Corporate Finance39 First RoadHyde Park, 2196(PO Box 411216, Craighall, 2024)Telephone: (011) 447 2951Facsimile: (011) 447 1929

Auditors

RSM Betty & Dickson (Tshwane)(Practice number 901520A)Suite 1, 267 Waterkloof RoadBrooklyn, 0181(Private Bag X22, Brooklyn Square, 0075)

Commercial banker

ABSA Limited(Registration number 1951/000009/06)3rd Floor100 Main StreetJohannesburg, 2001(PO Box 61558, Marshalltown, 2107)

96

PRINTED BY INCE (PTY) LTD Ref. W2CF06125

enPlacécol Holdings Limited (Reg. No. 2003/025374/06)Placécol Boulevard, Samrand Avenue, Kosmosdal, Extension 4, Centurion, 0046P. O. Box 8833, Centurion, 0046Head Office: +27 12 621 3300 - Fax: +27 12 621 3338/9Customer Care: 0861 11 22 22 - www.placecol.com

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