Acquisition Targets Adjusted
As a result of delayed regulatory approval of the qualifying transaction and due to global capital market volatility, management has adjusted its acquisition targets for fiscal year 2008. Based on acquisition activity to date, management is revising its acquisition target to $20M for 2008.
For the 12 month period following the closing of the qualifying transaction, management anticipates completing $42M in acquisitions as per the original business plan. The company believes it will meet its targets for franchise development.
Management's Comments on the Industry
The demand for the outsourcing of shredding and recycling services, as offered by the company, continues to increase in double digits. With industry insiders reporting that only 37% of USA companies having outsourced these services, future prospects for industry growth remains strong. With tighter regulatory requirements, an increasing number of convictions and fines and a growing awareness of the need to both shred and recycle, the company is optimistic about its short, intermediate and long term development plans.
The company is well positioned to capitalize on this growth opportunity as PROSHRED pioneered the mobile document destruction industry in Canada two decades ago, has achieved a solid foothold in the US market and is recognized as an North American industry leader as a member of the National Association of Information Destruction and having achieved the ISO 9001:2000 certification.
- Redishred Capital Corp.'s royalty and fee revenue for the second quarter was $211,832 CDN for the period of April 1, 2008 to June 30, 2008. Royalty and fee revenues are generated by franchises of the PROSHRED franchise system and are originally denominated in US Dollars.
- Same location sales in our PROSHRED franchise system for the period of April 1, 2008 to June 30, 2008 were $2,235,432, an increase of 81.2% from the same period in 2007.
- Same locations sales in our PROSHRED franchise system for the period of Jan 1, 2008 to June 30, 2008 were $3,661,652, an increase of 93.6% from the same period in 2007
- The Arlington, VA franchise location commenced operations in the second quarter
Management's Comments on the Quarter
During the second quarter of 2008, the company's new management team began executing on its strategic business plan which has been designed to deliver intermediate and long term growth in both sales and earnings, through acquisitions, joint ventures as well as its traditional franchising platform. Notwithstanding the fact that management was focused on completing a number of structural modifications to support future growth, the company's franchise network and sales continued to grow.
John Prittie, President and CEO of Redishred Capital Corp. and PROSHRED was very pleased to announce the opening of its latest franchise location in Northern Virginia during Q2 and notes "this location is very strategic in that it helps solidify our position in the north east USA". Mr. Prittie also noted that "there is a very high level of interest in PROSHRED's franchise program due to the growth in the industry and the number of new franchise candidates looking for 'business-to-business' franchise opportunities". The company is currently evaluating a number of franchise applications and continues to be active in the International Franchise Association. Concurrent to our franchising activities the company is currently identifying and evaluating a number of acquisition targets with the aim to open 40 corporate locations across the United States over the next 5 years.
As previously noted above, "there is a real opportunity to grow our business organically and it is very exciting to see that our same store system sales grew at an outstanding 81% in the 2nd quarter of fiscal year 2008 when compared to the same period in 2007", noted Mr. Prittie. "The Q2 result exceeded our expectation, and clearly demonstrates that there is an increasing awareness and need to destroy confidential information and recycle shredded material, as promoted by PROSHRED's direct selling and marketing programs."
Mr. Prittie also stated, "I would like to personally thank all PROSHRED franchisees and National Support Centre staff for their hard work in attaining this tremendous result. I am looking forward to continued growth in our sales and market share through franchising, joint ventures and acquisitions in the last half of fiscal year 2008". -- www.cnxmarketlink.com
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