Wrap Text
Reviewed group condensed interim financial results for the six months ended 31 August 2012
IMBALIE BEAUTY LIMITED
(formerly Skinwell Holdings Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2003/025374/06)
JSE code: ILE
ISIN: ZAE000165239
("Imbalie Beauty” or “the company" or “the group”)
REVIEWED GROUP CONDENSED INTERIM FINANCIAL RESULTS
FOR THE SIX MONTHS ENDED 31 AUGUST 2012
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
% Reviewed Reviewed Audited
Change 6 months 6 months 12 months
August 2012 August 2011 February 2012
R’000 R’000 R’000
Revenue 14.1 34 916 30 599 61 888
Cost of sales (20.9) (12 629) (10 445) (19 469)
Gross profit 10.6 22 287 20 154 42 419
Other income 51.2 647 428 705
Operating expenses (7.9) (19 519) (18 086) (38 362)
Earnings before interest,
taxation, depreciation and
amortisation 36.8 3 415 2 496 4 762
Depreciation and amortisation 7.8 (412) (447) (856)
Profit before interest and
taxation 46.6 3 003 2 049 3 906
Investment revenue (90.5) 57 297 403
Finance costs (24.3) (778) (626) (1 214)
Profit before taxation 32.7 2 282 1 720 3 095
Taxation (25.8) (687) (546) (559)
Total comprehensive income
attributable to ordinary
shareholders 35.9 1 595 1 174 2 536
Reconciliation of headline
earnings:
Profit attributable to ordinary
shareholders 35.9 1 595 1 174 2 536
Adjusted for:
Loss on disposal of non-
current assets - - (19)
Headline earnings attributable 35.9 1 595 1 174 2 517
to ordinary shareholders
Number of ordinary shares in issue
on which earnings per share are
based
? weighted and diluted
average 295 870 463 236 172 773 236 172 773
Earnings per share (cents) 0.5 0.5 1.07
Headline earnings per share (cents) 0.5 0.5 1.07
Fully diluted earnings per share
(cents) 0.5 0.5 1.07
Fully diluted headline earnings per
share (cents) 0.5 0.5 1.07
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Reviewed Reviewed Audited
August 2012 August 2011 February 2012
R’000 R’000 R’000
ASSETS
Non-current assets 38 878 25 218 24 131
Property, plant and equipment 4 622 5 418 4 857
Goodwill and intangible assets 22 267 7 274 7 343
Other financial assets 1 536 1 215 780
Deferred taxation 10 453 11 311 11 151
Current assets 24 979 23 105 23 710
Inventories 13 592 12 815 12 659
Other financial assets 2 774 4 890 2 200
Current tax receivable 86 86 86
Trade and other receivables 8 339 5 148 8 612
Cash and cash equivalents 188 166 153
Total assets 63 857 48 323 47 841
EQUITY AND LIABILITIES
Equity 41 110 20 653 22 015
Share capital 67 330 49 830 49 830
Retained earnings (26 220) (29 177) (27 815)
Non-current liabilities 8 948 6 837 3 786
Other financial liabilities 8 948 6 607 3 775
Deferred taxation - - 11
Operating lease liability - 230 -
Current liabilities 13 799 20 833 22 040
Shareholders’ loans - 5 035 5 218
Trade and other payables 5 944 6 515 5 724
Other financial liabilities 3 540 4 882 5 813
Current tax payable 186 577 375
Finance and operating lease liabilities 240 - 218
Bank overdraft 3 889 3 824 4 692
Total equity and liabilities 63 857 48 323 47 841
Number of shares in issue at period
end 345 547 773 236 172 773 236 172 773
Net asset value per share (cents) 11.9 8.7 9.3
Net tangible asset value per share
(cents) 5.5 5.7 6.2
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Reviewed Reviewed Audited
6 months 6 months 12 months
August 2012 August 2011 February 2012
R’000 R’000 R’000
Balance at beginning of period 22 015 19 479 19 479
Changes in equity 17 500 - -
Total comprehensive income for the period 1 595 1 174 2 536
Balance at end of period 41 110 20 653 22 015
CONDENSED GROUP STATEMENT OF CASH FLOWS
Reviewed Reviewed Audited
6 months 6 months 12 months
August 2012 August 2011 February 2012
R’000 R’000 R’000
Cash flows from operating activities 2 089 (1 412) (3 764)
Cash flows (used)/from investing activities (16 444) (803) 2 384
Cash flows from financing activities 15 193 2 767 1 051
Net increase/(decrease) in cash and cash
equivalents 838 552 (329)
Cash and cash equivalents at beginning of
period (4 539) (4 210) (4 210)
Cash and cash equivalents at end of
period (3 701) (3 658) (4 539)
SEGMENTAL REPORTING
The group determines and presents operating segments based on the information that is
internally provided to the Chief Executive Officer, who is the chief operating decision maker.
A segment is a distinguishable component of the group that is engaged either in providing
related products or services (business segment), or 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 Standard on Segment reporting will not be implemented as Imbalie Beauty has only one
segment.
OVERVIEW
The directors of Imbalie Beauty are pleased to present the reviewed interim results for the six
months ended 31 August 2012 (“interim period”). The group entered a new phase during its
interim period with the acquisition of the Perfect 10 franchise group, taking the salon chain to
150 franchised and corporate beauty salons nationally, ensuring that it remains the largest
franchisor in the beauty industry. Imbalie Beauty is mainly a franchisor that markets and
distributes its own and independent health and beauty brands to its own distribution footprint of
150 owned and franchised beauty salons, large retailers, independent beauty salons and
selected pharmacies.
The announcement of the acquisition was made simultaneously to Skinwell Holdings launching
its new name and brand, namely “Imbalie Beauty”.
During the interim period a clear strategy was defined to differentiate our main salon brands
between each other. The group’s vision is to be the largest and most desirable Beauty
Franchise Group. It has three main salon brands being Placecol Skin Care Clinics, Dream
Nails Beauty Salons and Perfect 10 Nail and Body Studios.
The following were focal points during the interim period:
1. Successful incorporation of the Perfect 10 Nail and Body Studios into the group.
2. Modernised, fresh look for our current franchises in terms of “Project Facelift”.
3. Expanded consumer driven focus through the introduction of the Placecol Care Loyalty
Programme.
4. Strong innovation drive with the introduction of state of the art hair removal and skin
rejuvenation technology into the Placecol Skin Care Clinics.
5. The strengthening of the Imbalie Beauty Training Academy to provide business and
beauty training for franchisees and their staff and the establishment of a Learnership
Programme for nail technicians.
6. Systemisation of our Perfect 10 Nail and Body Studios.
System-wide sales revenue (including gift cards), for the six months ended 31 August 2012,
grew by 63% to R99.1 million (2011: R60.8 million) through the group’s franchise and corporate
store system incorporating Placecol Skin Care Clinics, Dream Nails Beauty salons, World of
Beauty and Perfect 10 Nails & Body Studios. Beauty care remains very important to South
African consumers, however consumers remain cautious and price-sensitive and will continue
to be prudent in the years ahead.
FINANCIAL RESULTS
Group revenue increased by 14.1% to R34.9 million (2011: R30.6 million) during the interim
period as a result of the Perfect 10 acquisition, effective marketing and increased royalty
income earned. Gross profit increased by 10.6% to R22.3 million (2011: R20.2 million) and
gross profit margins decreased by 2% to 64% (2011: 66%), due to the sell through of new
brands and promotional offerings distributed by the group to beauty salons, which attract lower
margins.
Operating expenses increased by 7.9% to R19.5 million (2011: R18.1 million), due to once off
expenses relating to the integration of the Perfect 10 acquisition and the name change to
Imbalie Beauty Limited. Overhead structures were strengthened during the interim period, but
will be monitored closely to ensure cost effectiveness for the remainder of the financial year.
This will be an ongoing process.
Corporate stores available for resale to the value of R5.7 million are included in inventories. It
remains a primary focus point of management to sell these stores to franchisees in order to
strengthen the cash flow of the group, the profitability of our corporate stores improved during
the interim period. The group had no material capital commitments for the purchase of
property, plant and equipment as at 31 August 2012.
The balance sheet was strengthened with the Perfect 10 acquisition. To fund the acquisition
the company completed a general issue of shares for cash whereby 109 375 000 ordinary
shares were placed with a number of independent public shareholders at a price of 16 cents
per share raising R17,5 million.
The company furthermore entered into a loan agreement, whereby the company secured a R5
million three year term loan at an interest cost of 8% per annum. The total amount raised of
R22,5 million was utilised to settle the purchase consideration, repayment of other long-term
liabilities and to strengthen the company’s balance sheet.
PROSPECTS
The group has many new franchise opportunities, but will remain prudent when opening new
stores to ensure that a sustainable group is created. The Imbalie Beauty group will continue to
seek growth opportunities in line with our vision to be the largest beauty franchisor in South
Africa.
The group will continue to focus on training their staff members, providing post development
training to all salons to ensure standardisation and service excellence levels across the various
brands.
Notwithstanding positive financial results, Imbalie Beauty remains focused on training,
marketing and innovation as well as growing the number of franchised outlets over the next
financial period with the main objective of ensuring sustainable franchisee profitability.
DIRECTORATE
Hilda Lunderstedt (B.Sc (Pharm)) was appointed as the Non-executive Chairman of the Board
on 3 May 2012.
Hilda Lunderstedt has over 10 years’ experience in the health and wellness industry. Hilda’s
strong entrepreneurial skills and flair will add to the current expertise within our growing
organisation. Her initial focus will be on enhancing Imbalie Beauty’s current marketing and
sales strategy, ensuring a customer-centric approach that is in line with market trends.
Theo Schoeman stepped down as the Independent Chairman and assumed the role of Lead
Independent Non-Executive Director.
BASIS OF PREPARATION
The reviewed condensed interim financial results have been prepared in accordance with IAS
34 (Interim Financial Reporting) the AC500 Standards, the Listings Requirements of the JSE
Limited and the requirements of the South African Companies Act.
The accounting policies used to prepare these condensed interim financial results are
consistent with those applied in the prior interim period and previous year-end, and are in
accordance with International Financial Reporting Standards.
These condensed group interim financial statements were prepared by Melinda Malan,
CA(SA).
POST BALANCE SHEET EVENTS
There are no subsequent events to report on.
STATEMENT ON GOING CONCERN
The financial statements have been prepared on the going-concern basis as the directors have
every reason to believe that the company has adequate resources in place to continue in
operation for the foreseeable future.
AUDITORS' REVIEW
The auditors, Nexia SAB&T, have reviewed these condensed group interim financial results for
the period ended 31 August 2012. A copy of their unqualified review opinion is available for
inspection at the company's registered office.
DIVIDEND POLICY
No dividend has been declared for the interim period.
APPRECIATION
The directors would like to thank our staff for their extended efforts and our partners for their
support during the period.
By order of the Board
12 November 2012
Esna Colyn Melinda Malan
Chief Executive Officer Financial Director
CORPORATE INFORMATION
Non-executive directors: HA Lunderstedt (Chairman); TJ Schoeman* (Lead Independent); GSJ
van Nieuwenhuizen*; MM Patel* (Chairman of Audit Committee); WP van der Merwe
* Independent
Executive directors: E Colyn (Chief Executive Officer); M Malan (Financial Director)
Registration number: 2003/025374/06
Registered address: Imbalie Beauty Boulevard, Samrand Avenue, Kosmosdal X4, Centurion
0157
Postal address: PO Box 8833, Centurion, 0046
Company secretary: Ithemba Governance and Statutory Solutions (Pty) Limited
Telephone: (012) 621 3300
Facsimile: (012) 621 3369
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited
Designated Adviser: Grindrod Bank Limited
Date: 12/11/2012 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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