Wrap Text
Reviewed Interim Results for the period ended 31 August 2016
IMBALIE BEAUTY 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 2016
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Reviewed Reviewed Audited
6 months 6 months 12 months
August 2016 August 2015 February 2016
R’000 R’000 R’000
Revenue 48 889 48 012 101 111
Cost of sales (21 868) (21 593) (41 906)
Gross profit 27 021 26 419 59 205
Other income 1 229 1 097 2 799
Operating expenses (35 070) (26 746) (62 039)
(Loss)/Earnings before
interest, taxation, depreciation
and amortisation (6 820) 770 (35)
Depreciation and amortisation (725) (514) (1 144)
(Loss)/Profit before interest
and taxation (7 545) 256 (1 179)
Investment revenue 19 - 1
Finance costs (937) (388) (343)
Loss before taxation (8 463) (132) (1 521)
Taxation 2 369 37 395
Loss for the period (6 094) (95) (1 126)
Other comprehensive income
Revaluation surplus - - (78)
Total comprehensive loss for
the year (6 094) (95) (1 204)
Attributable to:
Equity holders of the company (6 094) (95) (1 204)
Loss per share attributable to equity
holders of the company (Note 1):
Basic loss per share (cents) (0.97) (0.03) (0.29)
Headline loss per share (cents) (0.97) (0.03) (0.29)
Diluted loss per share (cents) (0.97) (0.03) (0.29)
Diluted headline loss per share (cents) (0.97) (0.03) (0.29)
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Reviewed Reviewed Audited
August 2016 August 2015 February 2016
R’000 R’000 R’000
ASSETS
Non-current assets 45 841 38 920 41 694
Property, plant and equipment 3 170 3 834 2 544
Goodwill 6 809 6 809 6 809
Intangible assets 22 367 17 958 20 555
Other financial assets 509 - 0
Deferred taxation 12 986 10 319 11 786
Current assets 52 118 41 848 56 161
Inventories 33 543 27 353 36 375
Other financial assets 631 386 884
Trade and other receivables 17 665 13 753 14 551
Cash and cash equivalents 279 356 4 351
Non-current assets held for sale 1 900
Total assets 97 959 80 768 99 755
EQUITY AND LIABILITIES
Equity 64 947 41 604 71 414
Share capital 98 058 67 330 98 250
Reserves - 407 329
Retained earnings (33 111) (26 133) (27 165)
Non-current liabilities 8 114 4 409 7 804
Other financial liabilities 8 114 4 409 6 718
Deferred taxation - - 1 086
Current liabilities 24 898 34 755 20 537
Trade and other payables 11 112 13 003 14 357
Other financial liabilities 8 107 17 468 4 882
Deposits and franchise fees received in
advance - 1 192 719
Operating lease liabilities 604 397 578
Bank overdraft 5 075 2 695 1
Total equity and liabilities 97 959 80 768 99 755
Number of shares in issue at period
end 629 872 558 345 547 773 629 872 558
Net asset value per share (cents) 15.55 23.37 11.34
Net tangible asset value per share
(cents) 5.68 4.87 6.99
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Reviewed Reviewed Audited
6 months 6 months 12 months
August 2016 August 2015 February 2016
R’000 R’000 R’000
Balance at beginning of period 71 414 41 699 41 699
Loss for the period (6 094) (95) (1 126)
Fair value adjustment (373) - (78)
Total comprehensive loss for the period (6 467) (95) (1 204)
General issue of shares - - 11 806
Rights issue - - 19113
Total issue of shares - - 30 919
Balance at end of period 64 947 41 604 71 414
CONDENSED GROUP STATEMENT OF CASH FLOWS
Reviewed Reviewed Audited
6 months 6 months 12 months
August 2016 August 2015 February 2016
R’000 R’000 R’000
Cash flows utilised from operating
activities (12 520) (1 666) (12 943)
Cash flows utilised in investing activities (1 298) (5 203) (5 733)
Cash flows generated from financing
activities 4 671 8 028 26 525
Net (decrease) / increase in cash and
cash equivalents 9 147) 1 159 7 849
Cash and cash equivalents at beginning of
period 4 351 (3 498) (3 498)
Cash and cash equivalents at end of
period (4 796) (2 339) 4 351
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 with branches in Africa.
The Standard on Segment reporting will not be implemented as Imbalie Beauty has only one
segment.
Notes to the financial information
1. Reconciliation of headline earnings
Reviewed Reviewed Audited
6 months 6 months 12 months
August 2016 August 2015 February 2016
R’000 R’000 R’000
Loss attributable to ordinary
shareholders (6 094) (95) (1 126)
Adjusted for:
Loss on sale of property, plant and
equipment - - 11
Tax effect on loss on sale of property,
plant and equipment - - (3)
Headline loss attributable to ordinary
shareholders (6 094) (95) (1 118)
Weighted average shares in issue 629 872 558 345 547 773 389 600 268
Weighted average diluted shares in
issue 629 872 558 345 547 773 389 600 268
Basic loss per share (cents) (0.97) (0.03) (0.29)
Diluted loss per share (cents) (0.97) (0.03) (0.29)
Headline loss per share (cents) (0.97) (0.03) (0.29)
Diluted headline loss per share (cents) (0.97) (0.03) (0.29)
OVERVIEW
The directors of Imbalie Beauty hereby present the reviewed interim results for the six months
ended 31 August 2016 (“interim period”). 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.
Turnover increased slightly on the prior period despite the fact that the Group discontinued to
supply its Placecol brand to a large retail group in August 2015. The continued growth was
assisted by the acquisition of the brands in Prana Products (Pty) Limited on 1 June 2015 and
the successful launch of the Skinderm skin care brand exclusively into its Perfect 10 franchise
footprint. Market conditions continued to be challenging for the Group during the interim period
with less consumers visiting the Group’s beauty salons, however total ticket value continued to
increase during the interim period.
The following are projects that the Imbalie Beauty Group embarked on, with costs incurred
during the interim period which will not be incurred during the latter part of the financial year:
1. Successfully relocated its head office to Woodmead at the end of February 2016 with costs
savings envisaged to be achieved over the medium to long-term. A bond to the amount of
R8.5 million was approved to acquire the building and deposits to the amount of
R4.7 million were paid by the Group towards the building. It is expected that the building
will be transferred and registered in the name of the Group on 10 December 2016. The
building was purchased for R13.2 million, revalued for R13.5 million (by an independent
valuator) with a replacement value of R17.0 million.
2. Outsourced its distribution centre, the Group still had duplicated costs in distribution during
the interim period of R650k, which will not re-occur in the second half of the year.
3. Acquisition of the “Scinderm” skin care brand (a medical doctor skin care brand) and the
relaunch of the brand exclusively into the Perfect 10 salon group under “Skinderm”, a retail
skin care brand. The working capital and marketing requirements to launch the brand
amounted to more than R2.0 million. This step was required to finally position the Perfect
10 salon brand to offer an exclusive, high quality, accessible skin care brand to its end
consumers.
4. Launch of the Imbalie Training Academy which recently received both ITEC and SETA
accreditations. The Group will going forward now benefit significantly from these
accreditations. Collaboration agreements have been implemented with Eduloan to facilitate
funding for students.
5. During the interim period the Group regrouped its sales force to be more effective and
efficient during tough trading conditions. Cost incurred by the Group in its sales force and
marketing team during the interim period which will not occur in the second half of the year
amounted to R1.5 million.
6. The group invested into the opening of the two new Placecol Aesthetic Clinics to elevate
the Placecol brand. The Group embarked on a collaboration agreement with a doctors
group to assist the Group with the final implementation of all business protocols.
Normalised earnings for the Group were as follows:
Notes 6 Months
above ended 31
August
2016
R’000
Loss before taxation, interest and depreciation and
amortisation (6 820)
Impairment of the Group’s corporate salons as a result of an 4 000
increase in losses incurred by these salons during the interim
period
Outsource of the Warehouse and Distribution Function Note 2 650
New Imbalie Training Academy Note 4 381
Improvement in the effectiveness of the Area Managers (sales
team) and marketing team Note 5 1 556
Opening of two new Placecol Aesthetic Clinics Note 6 612
Normalised profit before taxation, interest and depreciation and
amortisation 379
Imbalie Beauty is proud to announce that the Group received the following awards and
nominations during the interim period and subsequent to the interim period as follows:
- Pharmaceutical and Cosmetic Review Awards
- Placecol Illuminé voted overall winning skin care range in 2016
- Placecol Illuminé voted top skin care range in 2016
- Best of Pretoria Awards
- Placecol voted as best place to buy beauty products in Pretoria in October 2016.
- Placecol voted as best beauty mecca in Pretoria in October 2016.
- Placecol Skin Care Clinic Silver Oaks voted as best beauty salon in Pretoria in
October 2016.
- Placecol Skin Care Clinic The Grove voted as best nail salon in Pretoria in October
2016.
- Best of Bloemfontein Awards
- Placecol voted as best place to buy beauty products in Bloemfontein in October 2016.
- Placecol voted as best beauty mecca in Bloemfontein in October 2016
- Placecol Skin Care Clinic Victorian Square voted as best nail salon in Bloemfontein in
October 2016.
The support structures implemented over the last couple of years continues to be 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 26 corporate outlets at 31 August 2016, which are included under
inventories. Subsequent to the interim period four corporate salons were sold. 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 1.8% to R48.9 million (2015: R48.0 million) during the interim
period due to the introduction of the Skinderm brand into the Perfect 10 franchise footprint and
an increase in the re-sale of franchised salons in comparison to the prior period. Gross profit
increased by 2.3% to R 27.0 million (2015: R26.4 million) and gross profit margins increased
by 0.3% to 55.3% (2015: 55.0%), mainly due to the Group opening less franchise salons during
the interim period, which attracts 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 31.5% to R35.1 million (2015: R26.7 million) as a result of:
- R4 million was impaired against the value of Group’s corporate salons included under
inventories, as a result of an increase in the losses made by these salons during the
interim period;
- the costs associated with the opening of the two new Aesthetic Clinics;
- duplicated costs incurred with the initial outsourcing of the Distribution Centre;
- marketing and launch costs of the Skinderm brand; and
- the opening of the Imbalie Training Academy.
It remains a primary focus point of management to sell these corporate owned salons to new
franchisees in order to strengthen the cash flow of the Group. The cost effectiveness of
overhead structures will be closely monitored for the remainder of the financial year.
The increase in intangible assets in the Summary Statement of Financial Position to
R22.4 million relate to development of the “Skinderm” skin care range and the successful
development of 34 modular courses in the Imbalie Beauty Training academy.
Trade and other receivable increased during the interim period mainly as a result of deposits to
the amount of R4.7 million paid towards the purchase of the new head office in Woodmead.
PROSPECTS
Imbalie Beauty remains optimistic about the future, following the upgrade of its skin care
product ranges and its salon brands, with specific mention to the Perfect 10 salon brand. The
Group will continue to focus on the continued opening of more successful beauty salons, with
four secured new salons in the pipeline for January 2017.
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 embarked on strategic developments to improve our service offerings to our
salons through technology.
Statements contained in this announcement, regarding the prospects of the Group, have not
been reviewed or audited by the Group’s external auditors.
BASIS OF PREPARATION
The reviewed group condensed interim financial results 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 reviewed group condensed interim 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 reviewed group condensed interim financial results are consistent with those applied to the
Group summary financial results for the year ended 28 February 2016.
These reviewed group condensed interim financial results incorporate the financial results of
the Company and its subsidiaries.
The preparation of the reviewed group condensed interim financial results 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 reviewed group condensed interim financial results, and
for ensuring that the financial and other information have been correctly extracted from the
reviewed group condensed interim financial results.
POST BALANCE SHEET EVENTS
The Group entered into agreements to purchase 23 Saddle Drive, Woodmead Office Park for
the amount of R13.2 million, the transfer of the property is expected to take place on
10 December 2016.
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 CONCLUSION
The auditors, Nexia SAB&T, have reviewed these group condensed interim financial results for
the period ended 31 August 2016. A copy of their unmodified review report 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 management team, staff for their extended efforts and our
clients, strategic partners and suppliers for their support during the period.
By order of the Board
30 November 2016
Esna Colyn Wessel 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: 30/11/2016 05:12:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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