Wrap Text
Provisional Group summarised audited financial results for the year ended 29 February 2016
IMBALIE BEAUTY LIMITED
"Imbalie Beauty” or “the Company” or “the Group”
(Incorporated in the Republic of South Africa)
(Registration number 2003/025374/06)
JSE code: ILE
ISIN: ZAE000165239
Strategic Highlights and Achievements
- More than 150 beauty salons nationally
- FASA award winner “Franchisee of the Year Category” April 2016: Placecol Elardus
Park
- Launch of the Imbalie Training Academy in Woodmead, offering 34 modular courses in
beauty and wellness
- Outsourcing of the Group’s distribution
- Relocation of the Imbalie Beauty head office to Woodmead
- Launch of two new Placecol Aesthetic Clinic concept stores in Woodlands, Pretoria
and Clearwater, Johannesburg
- Launch of the new Perfect 10 concept store in Cresta Crossing and Mall of Africa,
Johannesburg
PROVISIONAL GROUP SUMMARISED AUDITED FINANCIAL RESULTS
FOR THE YEAR ENDED 29 FEBRUARY 2016
GROUP SUMMARY STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
February 2016 February 2015
R’000 R’000
Revenue 101 111 91 886
Cost of sales (41 906) (38 347)
Gross profit 59 205 53 539
Other income 2 799 1 976
Operating expenses (62 039) (56 686)
Loss before interest, taxation, depreciation and
amortisation (35) (1 171)
Depreciation and amortisation (1 144) (1 073)
Loss before interest and taxation (1 179) (2 244)
Investment revenue 1 1
Finance costs (343) (984)
Loss before taxation (1 521) (3 227)
Taxation 395 826
Loss for the year (1 126) (2 401)
Revaluation surplus net of taxation (78) 244
Total comprehensive loss for the year (1 204) (2 157)
Attributable to:
Equity holders of the company (1 204) (2 157)
Loss per share attributable to equity holders of the
company (Note 1):
Basic loss per share (cents) (0.29) (0.69)
Headline loss per share (cents) (0.29) (0.68)
Diluted loss per share (cents) (0.29) (0.69)
Diluted headline loss per share (cents) (0.29) (0.68)
GROUP SUMMARY STATEMENT OF FINANCIAL POSITION
Audited Audited
February 2016 February 2015
R’000 R’000
ASSETS
Non-current assets 41 694 38 401
Property, plant and equipment 2 544 3 961
Goodwill 6 809 6 809
Intangible assets 20 555 17 003
Other financial assets 69
Deferred taxation 11 786 10 559
Current assets 56 161 35 555
Inventories 36 375 19 247
Other financial assets 884 4 367
Trade and other receivables 14 551 11 714
Cash and cash equivalents 4 351 227
Non-current assets held for sale 1 900 -
Total assets 99 755 73 956
EQUITY AND LIABILITIES
Equity 71 414 41 699
Share capital 98 250 67 330
Revaluation reserve 329 407
Accumulated loss (27 165) (26 038)
Non-current liabilities 7 804 12 599
Other financial liabilities 6 718 12 323
Deferred taxation 1 086 276
Current liabilities 20 537 19 658
Trade and other payables 14 357 11 076
Other financial liabilities 4 882 3 671
Deposits and franchise fees received in advance 719 1 003
Operating lease liabilities 578 183
Bank overdraft 1 3 725
Total equity and liabilities 99 755 73 956
Number of ordinary shares in issue at year-end 629 872 558 345 547 773
Net asset value per share (cents) 11.34 12.07
Net tangible asset value per share (cents) 6.99 5.18
GROUP SUMMARY STATEMENT OF CHANGES IN EQUITY
Total Revalua-
Share Share share tion Accumulated Total
capital premium capitalR’0 reserve loss equity
R’000 R’000 00 R’000 R’000 R’000
Balance 1 March 2015 17 524 49 806 67 330 407 (26 038) 41 699
Loss for the year - - - - (1 126) (1 126)
Fair value adjustment - - - (78) - (78)
Total comprehensive
Loss for the year - - - (78) (1 126) (1 204)
General issue of shares 11 806 11 806 11 806
Rights issue 22 714 (3 601) 19 113 19 113
Total issue of shares 34 520 (3 601) 30 919 30 919
Balance 28 February 2016 52 044 46 205 98 249 329 (27 164) 71 414
GROUP SUMMARY STATEMENT OF CASH FLOWS
Audited
Audited February
February 2016 2015
R’000 R’000
Cash flows generated from operating activities (12 943) 598
Cash flows utilised in investing activities (5 733) (6 218)
Cash flows generated/(utilised in) from financing
activities 26 525 6 125
Net increase/(decrease) in cash and cash
equivalents 7 849 505
Cash and cash equivalents at beginning of the year (3 498) (4 003)
Cash and cash equivalents at end of the year 4 351 (3 498)
SEGMENTAL REPORTING
IFRS 8 requires an entity to report financial and descriptive information about its reportable
segments, which are operating segments or aggregations of operating segments that meet
specific criteria. Operating segments are components of an entity about which separate
financial information is available that is evaluated regularly by the chief operating decision
maker.
Therefore, the Group determines and presents its operating segments based on the
information that is internally provided to the Chief Executive Officer, who is the chief
operating decision maker.
Furthermore, a segment is a distinguishable component of the group that is engaged either
in providing related products or services (business segment), in providing products or
services within a particular economic environment (geographical segment), which is subject
to risks and returns that are different from those of the other segments.
The Group does not have different operating segments. The business is conducted in South
Africa and is managed at a central head office with no branches. The Group is managed as
one operating unit.
All revenues from external customers originate in South Africa, or from operations in South
Africa.
Notes to the financial information
1. Reconciliation of headline earnings
Audited Audited
February 2016 February 2015
R’000 R’000
Loss attributable to ordinary shareholders (1 126) (2 401)
Adjusted for:
Loss on sale of property, plant and equipment 11 61
Tax effect on loss on sale of property, plant and
equipment (3) (17)
Headline loss attributable to ordinary shareholders (1 118) (2 357)
Weighted average shares in issue 389 600 268 345 547 773
Weighted average diluted shares in issue 389 600 268 345 547 773
Basic loss per share (cents) (0.29) (0.69)
Diluted loss per share (cents) (0.29) (0.69)
Headline loss per share (cents) (0.29) (0.68)
Diluted headline loss per share (cents) (0.29) (0.68)
OVERVIEW
The directors of Imbalie Beauty herewith present the Group annual financial results for the
year ended 29 February 2016 (“the 2016 year” or “2016”). Imbalie Beauty is a franchisor,
brand owner, service provider and more recently an educator of beauty and wellness
offerings and products. Imbalie Beauty has its own and franchise salon footprint (“salon
footprint”) through the following franchise salon chains, Placecol Skin Care Clinics; Dream
Nails Beauty Salons and Perfect 10 Nail and Body Studios.
Despite the fact that the Group discontinued trading and reduced its exposure to less than
R0.5 million to a large retailer that encountered difficult trading conditions, the Group still
managed to increase revenue by 10.1% to R101.1 million. The continued growth is mainly
as a result of the highly sought after brands acquired by Imbalie Beauty through the Prana
Products (Pty) Limited (“Prana Products”) acquisition in June 2015, being launched into the
Imbalie Beauty salon footprint. This strategy coupled with the Group’s exit from the large
retailer, assisted beauty salons to diversify their revenue streams and making the salons
more resilient in tough trading conditions.
The Imbalie Beauty Group successfully relocated its head office to Woodmead at the end of
February 2016 with significant costs saving to be achieved over the medium to long-term.
The Group simultaneously took the strategic decision to outsource its distribution function to
assist the management team to focus on sales, marketing and education, the core drivers of
the business.
Imbalie Beauty is proud to announce that the Group received the following awards and
nominations during 2016 and subsequent to year end as follows:
- FASA Awards
Winner Franchisee of the Year Category April 2016: Placecol 10 Elardus Park
Finalist in Franchisor of the Year Category April 2016: Perfect 10 Highveld Mall
- Elle Awards
Best product: Placecol Illuminé Firming Masque
- Woman & Home Awards
Best product: Placecol Hydro Firm Mask
Best Product: BIOEFFECT EGF Serum
- Beeld Awards
Placecol voted as the favourite beauty salon by readers of Beeld in May 2015
- Best of Bloemfontein Awards
Placecol Skin Care Clinic Victorian Square voted as best nail salon in Bloemfontein in
October 2015.
- Best of Pretoria Awards
Placecol products voted as best pampering and beauty products in Pretoria in October
2015.
Placecol Skin Care Clinic Silver Oaks voted as best beauty salon in Pretoria in October
2015.
Placecol Skin Care Clinic Silver Oaks voted as best nail salon in Pretoria in October
2015.
As part of the Group’s journey to vertically integrate its products and offerings as a measure
to successfully standardise the Group the following positive achievements were made by
Imbalie Beauty:
- Launch of the Imbalie Training Academy in Woodmead, offering 34 modular courses
in beauty and wellness to continuously uplift, empower and transform our work force
to become the most sought after and the best in the industry.
- On the back of the very successful launch of the upgraded Placecol skin care range
into the market place, now considered to be the best skin care range in South Africa,
the Group developed its own state of the art skin care range, “Skinderm” which will
be launched into its Perfect 10 salon footprint.
The support structures implemented over the last couple of years are now adequate to
provide great support to the Group’s salon footprint and technology will furthermore be used
to take this support for franchisees to the next level, which is ultimately required for
sustainability.
The Group owned 24 corporate outlets at year-end, which are included under inventories.
Management will continue to focus on selling these outlets to potential owner-operator
franchisees and currently have four potential transactions in the pipeline.
FINANCIAL RESULTS
Group revenue increased by 10.1% to R101.1 million (2015: R91.8 million) during the year
due to the organic growth of the Group’s own brands, increase in the number of corporate
beauty salons and the introduction of Prana Products brands into the Group’s salon
footprint. Gross profit has increased by 10.6% to R59.2 million (2015: R53.5 million) and
gross profit margins increased marginally to 58.6% (2015: 58.3%), due to the Group
commencing distribution of various brands and consumable type products to its franchise
footprint that attract lower margins. It is the strategy of the Group over the short to medium
term to distribute all approved brands within salons to its franchisees in order to standardise
a quality product offering to consumers.
Operating expenses increased by 9.3% to R62.0 million (2015: R56.7 million), as a result of
anof an increase in the number of corporate owned salons repurchased from
franchiseesfrom franchisees. The Group incurred once-off foreign currency losses to the
amount of R0.5 million due to the weakening Rand during the latter part of the financial year.
Loss per share decreased to a loss of 0.29 cents (2015: loss of 0.69 cents) and the headline
loss per share was 0.29 cents (2015: loss 0.68 cents).
The increase in intangible assets in the Summary Statement of Financial Position to
R20.5 million relate to the following:
- acquisitions of Prana Products to the amount of R1.6 million;
- upgrade of the over 40’s Placecol Illumine skin care range to the amount of
R1.0 million;
- acquisition of the Scinderm/Skinderm skin care range (an existing skin care range
supplied mainly to dermatologists to visibly address pigmentation concerns) to the
amount of R0.8 million. It is expected that the Skinderm range will be launched into
the Perfect 10 salon footprint during 2016; and
- the balance of the amount relates to the refreshing of the “Perfect 10” and the
“Placecol Aesthetic Clinic” look and feel.
Inventory increased to R36.4 million of which R19.9 million relates to the Groups’ own
beauty salons. R4.2 million of the amount constitutes the establishment cost of the two new
Placecol Aesthetic Clinics, which includes beauty equipment to perform aesthetic beauty
treatments. Product inventories distributed to beauty salons increased by R4.2 million due
to the acquisition of new product brands.
Corporate outlets to the value of R19.9 million are included in inventories on the Statement
of Financial Position, which are available for resale. It remains a priority for management to
sell these outlets to franchisees in order to strengthen the cash flow of the Group.
The Group had no material capital commitments for the purchase of property, plant and
equipment as at 29 February 2016.
BASIS OF PREPARATION
The Group summary financial results for the year ended 29 February 2016 included in this
announcement have been prepared in accordance with the recognition and measurement
criteria of International Financial Reporting Standards (“IFRS”), and have been prepared in
accordance with the presentation and disclosure requirements of IAS 34 Interim Financial
Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee, and Financial Pronouncements as issued by the Financial Reporting Standards
Council, the Listings Requirements of the JSE Limited, and the requirements of the South
African Companies Act.
The Group summary financial results are prepared in accordance with the going concern
principle under the historical cost basis as modified by the fair value accounting of certain
assets and liabilities where required or permitted by IFRS.
The accounting policies and method of measurement and recognition applied in preparation
of the Group summary financial results are consistent with those applied to the Group
summary financial results for the year ended 28 February 2015.
These Group summary financial results incorporate the financial results of the company and
its subsidiaries.
This summarised report is extracted from audited information, but is not itself audited. The
annual financial statements were audited by Nexia SAB&T, who expressed an unmodified
opinion thereon. The audited annual financial statements and the auditor’s report thereon
are available for inspection at the Company’s registered office.
The preparation of the Group summary financial results for the year ended 29 February 2016
was supervised by Imbalie Beauty’s Financial Director, Wessel van der Merwe, CA (S.A.).
The directors take full responsibility for the preparation of the Group summary financial
results for the year ended 29 February 2016, and for ensuring that the financial and other
information have been correctly extracted from the audited consolidated annual financial
statements for the year ended 29 February 2016.
STATEMENT OF GOING CONCERN
The financial results have been prepared on the going concern basis as the directors are of
the view that the Group has adequate resources in place to continue in operation for the
foreseeable future.
SUBSEQUENT EVENTS
The Group entered into agreements to sell both, Carnegie and Sandolien properties for the
amount of R2.0 million due to the fact that the Group relocated its head office to Woodmead
and these properties were used to house students in the Centurion area for training
purposes. The transfer of both properties weretransfer of both properties was concluded 9
March 2016 and 26 May 2016. As the above transfers were not completed prior to year-end,
both properties were classified as non-current assets held for sale in terms of IFRS 5 - Non-
current assets held for sale.
PROSPECTS
Imbalie Beauty remains optimistic about the future, following the continued strengthening of
its management team in Education and Marketing. The Group will continue to focus on the
continued opening of more successful beauty salons.
Imbalie Beauty remains steadfast on it journey to transform and empower women working in
our Group, upgrading its existing product offering and to innovate, offer better marketing,
pricing and support structures to its franchisees.
The Group has recently secured export orders for its high quality brands and it is the
intention of the Group to grow the exports division over the next couple of years.
Statements contained in this announcement, regarding the prospects of the Group, have not
been reviewed or audited by the Group’s external auditors.
DIVIDEND POLICY
The Group will not pay a dividend for the 2016 year.
CONTINGENCIES
The directors are not aware of any material contingent liability which existed at the reporting
date and up to the date of this report requiring disclosure.
SHARE CAPITAL
The company concluded a general issue and rights issue of shares during the year. The
rights issue was concluded on 29 February 2016 in terms of the JSE Listings Requirements.
The total rights offered by Imbalie Beauty was 208 333 333, the total number of rights shares
issued was 189 284 785, rights not taken up and cancelled were 19 048 548 Imbalie Beauty
shares. The general issue of shares resulted in 95 040 000 new Imbalie Beauty shares.
Imbalie Beauty shares issued during the year were as follows:
28 February 2016 29 February 2015
Opening balance 345 547 773 345 547 773
General issue of shares 95 040 000 -
Rights issue 189 284 785 -
629 872 558 345 547 773
ACQUISITIONS
Placecol Fresh Beauty (Pty) Limited, a 100% subsidiary of Imbalie Beauty acquired the
business of Prana Products with effect from 1 June 2015.
The main product brands of Prana Products which were incorporated into the Imbalie Beauty
salon footprint were as follows:
1. Beaute Pacifique, one of Prana's key brands in the Prana stable is a dermaceutical
which has been developed by Flemming Christenson – scientific engineer and
scientist in Denmark. Measurement of results is a cornerstone of the Beaute
Pacifique concept.
2. Bodyography Professional Cosmetics, a leading source of products for some of
today's biggest names in makeup artistry.
3. Beauty Blender, a make-up tool created by celebrity makeup artist Rea Ann Silva.
Fair value of the assets acquired and liabilities assumed are as follows:
2016
R
Stock 508 000
Cash 100 000
Intangible assets 1 606 400
Total identifiable net assets 2 214 400
Purchase consideration 2 214 000
FINANCIAL INSTRUMENTS - FAIR VALUES AND RISK MANAGEMENT
Fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which
the inputs to the fair value measurements are observable and the significance of the inputs
to the fair value measurement in its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or
liabilities that the entity can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are
observable for the asset or liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
The Group only carries land and buildings and non-current assets held for sale at revalued
amounts.
Assets measured at fair Carrying amounts Fair value
value
28 February 29 February 28 February 29 February
2015 2016 2015 2016
Land and buildings 1 500 000 - 2 000 000 -
Non-current assets held - 1 500 000 - 1 900 000
for sale
1 500 000 1 500 000 2 000 000 1 900 000
Assets measured at fair Balance Transfer in/out of Closing balance
value account balance
Land and buildings 1 900 000 (1 900 000) -
(Level 3)
Non-current assets held - 1 900 000 1 900 000
for sale (Level 3)
Type Valuation technique
Non-current assets held for sale The fair value of non-current assets held for sale is
determined by comparable sales method
Land and buildings The fair value of land and buildings is determined by
applying the discounted cash flow valuation
technique, which incorporates the determination of
discount rate containing an appropriate risk
premium.
CHANGES
Trifecta Capital Services (Pty) Ltd has been appointed as the new registrar and transfer
agent of Imbalie Beauty with effect from 3 May 2016.
Arenkwe Governance Services has been appointed by Imbalie Beauty as Company
Secretary with effect from 1 June 2016.
APPRECIATION
The directors would like to thank our management team, staff for their extended efforts and
our clients, strategic partners and suppliers for their support during the year.
By order of the Board
31 May 2016
E Colyn W P van Der Merwe
Chief Executive Officer Financial and Corporate Strategy Director
CORPORATE INFORMATION
Non-executive directors: M M Patel* (Chairman); T J Schoeman;* P Tladi* *Independent
Executive directors: E Colyn; W P van der Merwe; D Wolfendale
Registration number: 2003/025374/06
Registered address: Imbalie Beauty Boulevard, 23 Saddle Drive, Woodmead, 2191
Postal address: PO Box 8833, Centurion, 0046
Company secretary: Arenkwe Governance Services CC
Telephone: (011) 086 9800
Transfer secretaries: Trifecta Capital Investor Service (Pty) Limited
Designated Adviser: Exchange Sponsors (2008) (Pty) Limited
Date: 31/05/2016 05:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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