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Audited group condensed financial results for the year ended 28 February 2014
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
AUDITED GROUP CONDENSED FINANCIAL RESULTS
FOR THE YEAR ENDED 28 FEBRUARY 2014
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
February 2014 February 2013
R’000 R’000
Revenue 87 381 71 487
Cost of sales (34 238) (27 653)
Gross profit 53 143 43 834
Other income 1 121 1 363
Operating expenses (49 786) (40 237)
Earnings before interest, taxation, depreciation and
amortisation 4 478 4 960
Depreciation and amortization (854) (933)
Profit before interest and taxation 3 624 4 027
Investment revenue 39 70
Finance costs (912) (1 080)
Profit before taxation 2 751 3 017
Taxation (558) (1 032)
Profit for the year 2 193 1 985
Revaluation surplus net of taxation - 163
Total comprehensive income for the year attributable
to ordinary shareholders 2 193 2 148
Reconciliation of headline earnings:
Profit for the year 2 193 1 985
Adjusted for:
Loss on sale of property, plant and equipment 144 7
Headline earnings attributable to ordinary
shareholders 2 337 1 992
Number of ordinary shares in issue on which earnings
per share are based
- weighted and diluted average 345 547 773 345 547 773
Earnings per share (cents) 0.63 0.57
Headline earnings per share (cents) 0.68 0.58
Diluted earnings per share (cents) 0.63 0.57
Diluted headline earnings per share (cents) 0.68 0.58
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Audited Audited
February 2014 February 2013
R’000 R’000
ASSETS
Non-current assets 36 108 37 705
Property, plant and equipment 3 793 4 380
Goodwill 6 809 6 809
Intangible assets 15 757 15 610
Other financial assets - 770
Deferred taxation 9 749 10 136
Current assets 32 137 28 061
Inventories 19 789 15 562
Other financial assets 1 390 2 118
Current tax receivable 86 86
Trade and other receivables 10 575 9 960
Cash and cash equivalents 297 335
Total assets 68 245 65 766
EQUITY AND LIABILITIES
Equity 43 856 41 663
Share capital 67 330 67 330
Revaluation reserve 163 163
Accumulated loss (23 637) (25 830)
Non-current liabilities 5 893 8 461
Other financial liabilities 5 657 8 396
Deferred taxation 236 65
Current liabilities 18 496 15 642
Trade and other payables 9 615 8 217
Other financial liabilities 4 212 3 269
Current tax payable - 9
Operating lease liabilities 369 222
Bank overdraft 4 300 3 925
Total equity and liabilities 68 245 65 766
Number of ordinary shares in issue at year-end 345 547 773 345 547 773
Net asset value per share (cents) 12.69 12.06
Net tangible asset value per share (cents) 6.16 5.57
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Total Revalua-
Share Share share tion Accumulated Total
capital premium capital reserve loss equity
R’000 R’000 R’000 R’000 R’000 R’000
Balance 1 March 2013 17 524 49 806 67 330 163 (25 830) 41 663
Profit for the year - - - - 2193 2 193
Total comprehensive income
for the year 2 193 2 193
Balance 28 February 2014 17 524 49 806 67 330 163 (23 637) 43 856
CONDENSED GROUP STATEMENT OF CASH FLOWS
Audited Audited
February February
2014 2013
R’000 R’000
Cash flows from operating activities 498 1 881
Cash flows from/(used in) investing activities 885 (901)
Cash flows (in)/from financing activities (1 796) (31)
Net (decrease)/increase in cash and cash
equivalents (413) 949
Cash and cash equivalents at beginning of the year (3 590) (4 539)
Cash and cash equivalents at end of the year (4 003) (3 590)
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.
OVERVIEW
The directors of Imbalie Beauty herewith present the audited annual financial results for the
year ended 28 February 2014 (“the 2014 year” or “2014”). Imbalie Beauty is a franchisor,
distributor and service provider of beauty offerings and products. Imbalie Beauty has both its
own distribution footprint and a franchised distribution footprint, which together total 153
beauty salons nationally. In addition, Imbalie Beauty’s products are distributed through other
large retailers, independent salons and pharmacies.
Imbalie Beauty is a multiple brand owner, owning the following franchise salon chains,
Placecol Skin Care Clinics; Dream Nails Beauty Salons; and Perfect 10 Nail and Body
Studios.
The year under review was primarily a year where Imbalie Beauty has focused on its existing
salon footprint and continued to strengthen the support structures for its franchisees.
Imbalie Beauty’s focus remained on the implementation of systems and procedures in the
Group. Imbalie Beauty is committed to offer great support to its franchisees, which will
ensure long-term sustainability.
Imbalie Beauty invested and improved in its support structures during 2014 to sustain and
support the growth planned for the roll out of new salons in 2014/2015, in areas such as:
- Training: Imbalie Beauty offers business and beauty training to its franchisees and their
employees, with six full time trainers employed by the Group. The Imbalie Beauty
Training Academy trains on average 200 franchisees, managers, beauticians and nail
technicians per month;
- Customer Care: a newly established Customer Care Division, with an emphasis on being
a customer centric organisation;
- Marketing: strengthening of the marketing team, with a strong focus on Search Engine
Optimisation platforms;
- Franchise Business Development: to make sure that the franchise business grows
significantly during 2015;
- Franchise Portal: commencement of the implementation of an Imbalie Beauty franchise
portal to improve communication and efficiencies between the franchisor and
franchisees;
- Product Innovation: launch of cutting edge products, such as mobile applications;
- New Product Development: the commencement of a project in June 2013 to upgrade the
existing product formulations and packaging of the Placecol skin care range, a 34 year
old brand, with the re-launch of the Placecol Core range towards the latter part of the
financial year; and
- Project Management: to date the Group has facilitated and completed the renovations of
more than 60 beauty salons within its franchise and own salon footprint.
Imbalie Beauty is proud to announce that the Group received the following awards and
nominations:
- FASA Awards
Winner Franchisee of the Year Category: Perfect 10 Ballito, KwaZulu-Natal
Finalist in Franchisor of the Year Category: Dream Nails Beauty
- Elle Awards
Best product: Placecol AHA Exfoliating Cream
- Woman & Home Awards
Best product: Placecol Stimugenating Mask
Best Product: Empro Eyebrow Liner
The Group experienced an increase in system-wide sales revenue (including gift cards) for
the 2014 year of 14% to R251 million (2013: R220 million) in respect of its Placecol Skin
Care Clinics, Dream Nails Beauty salons and Perfect 10 Nail & Body studios.
The Group owned 24 corporate outlets at year-end. Management will continue to focus on
selling these outlets to potential owner operator franchisees.
FINANCIAL RESULTS
Group revenue increased by 22.2% to R87.4 million (2013: R71.5 million) during the year as
a result of increased marketing, the sale of high technology equipment and increased royalty
income earned from the existing and newly opened outlets in the Group. Gross profit
increased by 21.2% to R53.1 million (2013: R43.8 million) and gross profit margins
decreased by 0.5% to 60.8% (2013: 61.3%), due to currency weakening which had a
negative effect on gross profit margins.
Operating expenses increased by 23.7% to R49.8 million (2013: R40.2 million), as a result of
increased marketing and advertising efforts, which grew by 26% compared to the prior
period and the repurchase of franchised stores from non-complying franchisees, which
resulted in an increase in turnover, salaries and rent.
The most notable highlights of 2014 year were:
- The increase in Group revenue by 22.2%;
- The positive impact experienced with the revamping and rebranding of salons, which
resulted in an increase in system-wide sales of 14%.
The group’s growth in earnings and headline earnings were modest, as a direct result of the
increase in operating expenses, from the previous year. Earnings per share increased to
0.63 cents (2013: 0.57 cents), however headline earnings per share increased to 0.68 cents
(2013: 0.58 cents).
Corporate outlets to the value of R10 million which are available for resale are included in
inventories. 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 28 February 2014.
BASIS OF PREPARATION OF THE AUDITED RESULTS
The audited consolidated annual financial statements results have been prepared by
Melinda Malan CA (SA) in accordance with the recognition and measurement criteria of
International Financial Reporting Standards “IFRS”, the SAICA Financial Reporting Guides
as issued by the Accounting Practices Committee and Financial Pronouncements as issued
by the Financial Reporting Standards Council, the presentation and disclosure requirements
of IAS 34 - Interim Financial Reporting, the Listings Requirements of the JSE Limited and
the requirements of the South African Companies Act. The condensed consolidated
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.
All financial information presented in South African Rand has been rounded to the nearest
thousand.
The accounting policies and method of measurement and recognition applied in preparation
of the audited Group annual financial results are consistent with those applied in the Group's
annual financial results for the year ended 28 February 2013, and are in accordance with
International Financial Reporting Standards.
These condensed Group annual financial results incorporate the financial results of the
company and its subsidiaries.
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 have adequate resources in place to continue in operation for the
foreseeable future.
AUDIT OPINION
The auditors, Nexia SAB&T, have audited the consolidated annual financial statements for
the year ended 28 February 2014. The auditors’ unmodified audit report is available for
inspection at the company's registered office.
SUBSEQUENT EVENTS
There are no material subsequent events to report on.
PROSPECTS
Imbalie Beauty foresees a bright future with the opening of more successful beauty salons,
which will create more job opportunities in South Africa. Imbalie Beauty has a strong
pipeline for the opening of new beauty salons in 2015.
Imbalie Beauty is on a continuous journey to innovate, offer better marketing, pricing and
support structures to its franchisees. New technology will be implemented during 2015 into
the Group to improve overall efficiencies and communication between the franchisor and
franchisees.
Statements contained in this announcement, regarding the prospects of the group, have not
been reviewed or audited by the Group’s external auditors.
CHANGES TO THE BOARD OF DIRECTORS
GSJ Van Nieuwenhuizen resigned as a director of the Company on 6 February 2014. Ms P
Tladi was appointed as a director of the board on 1 April 2014. Ms Tladi was also appointed
as member of the Audit Committee and as chairman of the Risk Committee.
DIVIDEND POLICY
The Group will not pay a dividend for the 2014 year.
APPRECIATION
The directors would like to thank our management team and staff for their extended efforts
and our clients for their support during the year.
By order of the Board
28 May 2014
E Colyn M Malan
Chief Executive Officer Financial Director
CORPORATE INFORMATION
Non-executive directors: HA Lunderstedt (Chairman); T J Schoeman* (Lead Independent); P
Tladi*; M M Patel* (Chairman of Audit Committee); W P van der Merwe
* Independent
Executive directors: E Colyn; M Malan
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: 28/05/2014 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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