Iplayco Corp Ltd (CVE:IPC), the children's play equipment group, has taken a step towards realising triple-digit percentage growth in its European sales within the next two years, as it announced acquisitions of assets from three companies.
The deals are with strongly branded Italy-based companies Play Way (PW) and The Play Company (TPC).
The former has developed nearly 50 franchises of children's entertainment centers under the Play Planet banner throughout Italy.
Also included is an intellectual property (IP) agreement with TPC and a distribution agreement for the supply of play equipment with TPC and its wholly owned subsidiary Play Mart Co (PMC).
When finalised, Iplayco will own the IP rights to the Play Mart and Play Planet brands, as well as the Play Planet line of business.
A significant step..
"This represents a significant step in our growth strategy for Europe," said a delighted Scott Forbes, Iplayco's chief executive and president.
"Play Mart is an industry leading brand, with a strong reputation for innovative designs, quality and durability.
"Its customer base and expertise in franchising is very attractive to Iplayco.
"The Play Mart and Iplayco brands of play equipment are complementary and together are expected to significantly increase our sales in Europe.
"With these transactions, we are also realigning our global supply chain to reduce costs and time to market.
"Our North American operations will continue to supply customers in the Americas and worldwide, our Asian operations will focus on supplying customers in the Asia-Pacific region, and customers in Europe, Middle East and Africa (the EMA region) will soon benefit from our manufacturing and distribution operations in Europe.
"Iplayco's market has always been global, and soon we will have the capabilities to supply our customers from three different continents."
For the purchases, Iplayco will pay €450,000, or around C$662,000 and 15% of pre-tax profit for the next five years from its European operations, comprised of newly incorporated, and wholly owned entities Play Planet in Italy and Play Mart International EOOD in Bulgaria.
A sharp rise in quarterly sales and new agreements
Sales in the three months to the end of June rose to C$5.51mln from C$4.61mln in the same period of last year. Management had expected sales to be on a par with the preceding quarter's out-turn of C$3.67mln, so the out-performance was substantial.
Sales to related party Billy Beez, the indoor play barns operator, accounted for 31% of sales by Iplayco's manufacturing operations in the fiscal third quarter, down from 41% in the corresponding period of 2016.
The period marked the third quarter of Iplayco's financial year and took sales for the first nine months of the year up to C$16.41mln, versus C$11.54mln in the same period a year earlier.
Net income of C$438,936 in the quarter was also better than expected, and marked a sharp increase from C$98,610 in the same period of 2016.
New sales deals
The firm's results came on the heels of news of four new sales agreements,
These deals are worth $3.58mln to Iplayco and cover the provision of large indoor playgrounds to customers in the USA, Guatemala, Qatar and South Korea.
It all looks promising for the group.