| Mon 24 Oct 2011, 10:27 | | SKW - Skinwell Holdings Limited - Reviewed condensed interim financial |
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SKW
SKW
SKW - Skinwell Holdings Limited - Reviewed condensed interim financial
results for the six months ended 31 August 2011
SKINWELL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2003/025374/06)
JSE code: SKW
ISIN: ZAE000135893
("Skinwell" or "the company" or "the group")
REVIEWED CONDENSED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED
31 AUGUST 2011
Condensed Group Statement of Comprehensive Income
Reviewed Reviewed Audited
6 months 6 months 12 months
August August February
2011 2010 2011
R`000 R`000 R`000
Revenue 30 599 26 649 56 572
Cost of sales (10 445) (7 427) (16 830)
Gross profit 20 154 19 222 39 742
Other income 428 1 326 2 298
Operating expenses (18 086) (20 532) (40 774)
Earnings before interest, 2 496 16 1 266
tax, depreciation and
amortisation
Depreciation and (447) (386) (921)
amortisation
Operating profit/(loss) 2 049 (370) 345
Investment revenue 297 479 974
Finance costs (626) (1 210) (2 210)
Profit/(Loss) before 1 720 (1 101) (891)
taxation
Taxation (546) 836 379
Profit/(Loss) attributable 1 174 (265) (512)
to ordinary shareholders
Total comprehensive 1 174 (265) (512)
income/(loss) attributable
to ordinary shareholders
Reconciliation of headline
earnings/(loss):
Profit/(Loss) attributable 1 174 (265) (512)
to ordinary shareholders
Adjusted for:
Loss on disposal of non- - 47 150
current assets
Headline earnings/(loss) 1 174 (218) (362)
attributable to ordinary
shareholders
Weighted average shares in 236 172 236 172 236 172
issue 773 773 773
Fully diluted weighted 236 172 236 172 236 172
average shares in issue 773 773 773
Earnings/(Loss) per share 0.5 (0.1) (0.2)
(cents)
Headline earnings/(loss) 0.5 (0.1) (0.2)
per share (cents)
Fully diluted 0.5 (0.1) (0.2)
earnings/(loss) per share
(cents)
Fully diluted headline 0.5 (0.1) (0.2)
earnings/(loss) per share
(cents)
Condensed Group Statement of Financial Position
Reviewed Reviewed Audited
August August February
2011 2010 2011
R`000 R`000 R`000
ASSETS
Non-current assets 25 218 28 834 26 090
Property, plant and 5 418 6 016 5 515
equipment
Goodwill and intangible 7 274 7 264 7 282
assets
Other financial assets 1 215 3 241 1 436
Deferred tax 11 311 12 313 11 857
Current assets 23 105 26 377 22 211
Inventories 12 815 13 605 11 680
Other financial assets 4 890 5 077 4 207
Current tax receivable 86 165 86
Trade and other receivables 5 148 7 169 6 144
Cash and cash equivalents 166 361 94
Total assets 48 323 55 211 48 301
EQUITY AND LIABILITIES
Equity 20 653 19 727 19 479
Share capital 49 830 49 830 49 830
Retained earnings (29 177) (30 103) (30 351)
Non-current liabilities 6 837 5 470 4 292
Other financial liabilities 6 607 5 157 4 292
Finance lease obligation - 30 -
Operating lease liability 230 283 -
Current liabilities 20 833 30 014 24 530
Loans from shareholders 5 035 2 472 3 216
Other financial liabilities 4 882 7 743 6 133
Current tax payable 577 988 795
Finance and operating lease - 247 352
obligations
Trade and other payables 6 515 13 760 9 730
Bank overdraft 3 824 4 804 4 304
Total equity and 48 323 55 211 48 301
liabilities
Number of shares in issue 236 172 236 172 236 172 773
at period end 773 773
Net asset value per share 8.7 8.4 8.2
(cents)
Net tangible asset value 5.7 5.3 5.2
per share (cents)
Condensed Group Statement of Changes in Equity
Reviewed Reviewed Audited
6 months 6 months 12 months
August August February
2011 2010 2011
R`000 R`000 R`000
Balance at beginning of 19 479 19 992 19 991
period
Total comprehensive 1 174 (265) (512)
income/(loss) for the period
Balance at end of period 20 653 19 727 19 479
Condensed Group Statement of Cash Flows
Reviewed Reviewed Audited
6 months 6 months 12 months
August August February
2011 2010 2011
R`000 R`000 R`000
Cash flows from operating (1 412) (2 210) (2 448)
activities
Cash flows from investing (803) 2 377 4 742
activities
Cash flows from financing 2 767 258 (1 636)
activities
Net increase in cash and cash 552 425 658
equivalents
Cash and cash equivalents at (4 210) (4 868) (4 868)
beginning of period
Cash and cash equivalents at (3 658) (4 443) (4 210)
end of period
Group Segment Report
Reviewed Reviewed Audited
6 months 6 months 12 months
August August February
2011 2010 2011
R`000 R`000 R`000
Revenue
Brands 30 599 27 189 56 572
Inter-segment - (540) -
30 599 26 649 56 572
Segment profit/(loss)
Brands 1 174 (265) (512)
1 174 (265) (512)
Depreciation and amortisation
Brands 447 464 921
Adjustments and eliminations - (78) -
447 386 921
OVERVIEW
The directors of Skinwell are pleased to present the reviewed
interim results for the six months ended 31 August 2011
("interim period"). The group has been restored to
profitability, which is mainly attributable to the better
performance achieved by our franchised beauty salons and ongoing
measures to control the overheads of the group. The
profitability of our franchised outlets was improved through the
introduction of new standardised service offerings and the
launch of new innovative products. Skinwell remains the largest
franchisor in the beauty industry with almost 100 beauty salons
nationally.
Skinwell`s main focus will always be to increase the
profitability of our underlying beauty salons through
innovation, marketing and training activities. In this regard
significant spending was allocated to enhance and improve our
training during the interim period. This will assist Skinwell
to achieve its mission, which is to make a positive change in
the world through self-improvement, self-empowerment and
increasing the self-esteem of our customers.
System-wide sales revenue (including gift cards), for the six
months ended 31 August 2011, grew by 15.8% to R60.8 million
(2010: R52.5 million) through the group`s franchise and
corporate store system incorporating the Placecol, Dreamnails &
Body (DNB) and World of Beauty salons. 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. Consumers are continuously trading down and
searching for promotional offerings.
In May 2011 the group introduced a new innovative Dr Gobac anti-
ageing beauty treatment into its beauty salons and has
introduced a second skin care range in terms of the group`s
exclusive distribution agreement with Dr Gobac Cosmeceuticals.
Subsequent to the interim period new innovative products and
services relating to eyebrow shaping were introduced into our
beauty salons. This was another step by Skinwell to diversify
its product and service offerings in its salons with the
introduction of new cutting edge technology brands.
Cash flow remained under pressure during the interim period as a
result of the introduction of new brands into the distribution
channel of the group and the increase in working capital
requirements due to the growth during the interim period, which
necessitated additional funding through shareholders` loans. An
improvement in cash flow is envisaged during the latter part of
the financial year as a result of the festive season which
normally results in an upturn in the beauty industry.
FINANCIAL RESULTS
Group revenue increased by 15% to R30.6 million (2010: R26.6 million)
during the interim period as a result of increased marketing, the
introduction of new brands and increased royalty income earned. Gross
profit increased by 5.2% to R20.2 million (2010: R19.2 million) and
gross profit margins decreased by 8% to 66% (2010: 72%), due to the
introduction of new brands and promotional offerings distributed by the
group to beauty salons, which attract lower margins.
Operating expenses decreased by 12% to R18.1 million (2010: R20.5
million), however marketing and advertising activities grew 88%
compared to the previous interim period. The cost savings are mainly
as a result of effective overhead structures implemented which will be
monitored closely to further enhance cost savings. This will be an
ongoing process.
Corporate stores available for resale to the value of R6.1 million are
included in inventories. It will be a primary focus point of
management to sell these stores to franchisees in order to strengthen
the cash flow of the group. Subsequent to the interim period two of
these outlets were sold to new franchise owners. The group had no
material capital commitments for the purchase of property, plant and
equipment as at 31 August 2011.
PROSPECTS
The core focus will continue to be to vigorously train our staff
members, providing post development training to all salons to ensure
standardisation and service excellence levels across the various
brands. Our detailed research has been completed on our loyalty
programme which will now be piloted in 9 stores across South Africa
before final implementation and roll out.
The group has strengthened its marketing division and is of the opinion
that it will render the required returns to take Skinwell to the next
level. Notwithstanding positive financial results, Skinwell 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 to ensure sustainable franchisee profitability.
DIRECTORATE
There were no changes in directors during the interim period.
BASIS OF PREPARATION
The reviewed condensed interim financial results have been
prepared in accordance with IAS 34 (Interim Financial
Reporting), 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.
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, SAB&T, have reviewed these condensed interim
financial results for the period ended 31 August 2011. 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 clients for their support during the period.
By order of the Board
24 October 2011
Esna Colyn Melinda Jacobs
Chief Executive Officer Financial Director
CORPORATE INFORMATION
Non-executive directors: T J Schoeman* (Chairman); G S J van
Nieuwenhuizen*; M M Patel* (Chairman of Audit Committee); W P van
der Merwe
* Independent
Executive directors: E Colyn (Chief Executive Officer); M Jacobs
(Financial Director)
Registration number: 2003/025374/06
Registered address: Placecol 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: 24/10/2011 10:27:00 Produced by the JSE SENS Department.
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