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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Faces Cosmetics | LSE:FCE | London | Ordinary Share | GB00B1CKTQ32 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.175 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
Hot Features
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FOR RELEASE
31 March 2008
Faces Cosmetics plc
("Faces Cosmetics" or "the Company" or "the Group")
("branded cosmetics, skin care and anti-aging products")
RESULTS FOR INTERIM PERIOD ENDED 31 JANUARY 2008
Highlights
- Development funding of £5m received in November 2007
- Agreement reached for expansion to India
- Continued expansion in Mexico and successful store concession programme
introduced
- Area developer signed in Maryland, USA. First store opens in March 2008
- Area developer signed in Virginia, USA. First store opens April 2008.
- New franchise store opened in Kosovo in September 2007
- First Central American franchise store in Honduras in November 2007.
Introduction
I am pleased to announce the interim results of Faces Cosmetics plc
("FACES" or the "Company" or the "Group") for the six months to 31 January
2008. The Company was admitted to trading on AIM on 7 September 2006 and has,
since that time, focused on laying the foundations for its expansion in
established and international markets.
- The turnover of the group has fallen by CDN$775k (30.6%) in
comparison to the same period last year. This fall is due to the fact that
in the period to January 2007 the company owned 10 corporate stores,
whereas now only 5 remain and this move away from retail sales to
wholesale sales has reduced turnover. In addition at the same stage last
year, a number of franchise sales had been recognised, including a CDN
350k fee from the UAE franchise which contributed to a large one off sales
amount.
- On 19 October 2007 the Company announced that new development
funding amounting to £5 million had been arranged by way of a subscription
for new ordinary shares representing approximately 70.6 per cent of the
Company's enlarged issued share capital. The investor, Indivision Ventures
II is a substantial private equity fund focused on the development of
consumer brands catering to the Indian subcontinent. Indivision Ventures
II is wholly-owned by Indivision India Partners.
- The Company is developing a three-tiered marketing approach in
India in conjunction with Indivision, supported by a national
infrastructure. Indivision India Partners' has a relationship with
Pantaloon Retail (India) Limited, one of India's largest retailers. Their
investment philosophy is to partner with and invest in businesses seeking
growth capital, and who share similar growth aspirations and to invest in
businesses where there are opportunities to exploit synergies with
Pantaloon.
For further information, please contact:
Faces Cosmetics plc
Ramesh Jolly + 1 (905) 760 0110 Ext.112
Chief Executive Officer
Rupert Folkard + 1 (905) 760 0110 Ext 102
Finance Director
www.faces-cosmetics.com
City Financial Associates
Ross Andrews + 44 (0) 20 7090 7800
Faces Cosmetics plc
("Faces Cosmetics" or "the Company" or "the Group")
("branded cosmetics, skin care and anti-aging products")
RESULTS FOR INTERIM PERIOD ENDED 31 JANUARY 2008
Chairman and Chief Executive's Statement
Highlights
- Development funding of £5m received in November 2007
- Agreement reached for expansion to India
- Continued expansion in Mexico and successful store concession programme
introduced
- Area developer signed in Maryland, USA. First store opens in March 2008
- Area developer signed in Virginia, USA. First store opens April 2008.
- New franchise store opened in Kosovo in September 2007
- First Central American franchise store in Honduras in November 2007.
Introduction
I am pleased to announce the interim results of Faces Cosmetics plc
("FACES" or the "Company" or the "Group") for the six months to 31 January
2008. The Company was admitted to trading on AIM on 7 September 2006 and has,
since that time, focused on laying the foundations for its expansion in
established and international markets.
Financial Overview
Turnover
The turnover of the group has fallen by CDN$ 775k (30.6%) in
comparison to the same period last year. This fall is due to the fact that in
the period to January 2007 the company owned 10 corporate stores, whereas now
only 5 remain and this move away from retail sales to wholesale sales has
reduced turnover. In addition at the same stage last year, a number of
franchise sales had been recognised, including a CDN$ 350k fee from the UAE
franchise which contributed to a large one off sales amount.
Cost of sales and gross profit margin
The gross profit percentage has fallen from 71% for the six months
to 31 January 2007, to 64% for the same period in 2008. This reflects the
strategic move away from directly owned retail locations to a greater
proportion of franchisees supplied at wholesale prices. In addition one off
Franchise agreements were signed in the comparative period last year (e.g. UAE
franchise), which are one off sales with high margins.
Profit
The Company incurred a loss of CDN$ 623k of which CDN$ 155k was non
cash relating to warrant and option costs for the period. The net loss is in
line with the Company's projections, and the Company expects to progressively
return to profitability during the next fiscal year as its expansion
progresses. The Company has continued to invest in infrastructure costs in the
period that will allow it to successfully expand its presence and brand
recognition in the USA, Middle East, and India.
Share Options and Warrants
As a result of additional funding received by the Company, share
options and warrants were issued to Indivision, Charterhouse and Ramesh Jolly.
These have been valued in accordance with IFRS 2 and the fair value of the
options and warrants calculated using the Black Scholes model, increasing the
administration and operating costs by CDN$ 155k.
Operational Overview
Funding
On 19 October 2007 the Company announced that new development
funding amounting to £5 million had been arranged by way of a subscription for
new ordinary shares representing approximately 70.6 per cent of the Company's
enlarged issued share capital. The investor, Indivision Ventures II is a
substantial private equity fund focused on the development of consumer brands
catering to the Indian subcontinent. Indivision Ventures II is wholly-owned by
Indivision India Partners.
India
The Company is developing a three-tiered marketing approach in
India in conjunction with Indivision, supported by a national infrastructure.
Indivision India Partners' has a relationship with Pantaloon Retail
(India) Limited, one of India's largest retailers. Their investment philosophy
is to partner with and invest in businesses seeking growth capital, and who
share similar growth aspirations and to invest in businesses where there are
opportunities to exploit synergies with Pantaloon.
North America
The development of the core North American markets has continued.
The management team has been strengthened and the Company has attended the 3
major franchise trade fairs with an encouraging response from qualified
potential franchisees.
In Canada, a new franchised store was opened in Lethbridge Alberta,
Canada
In the United States, the Group has an existing presence. On 12
March 2008, the Company announced details of continued expansion with the
opening of a franchised store in Maryland, the first of a number of stores
planned by FACES for the Maryland market over the next 4 years.
The Mall in Columbia is Maryland's premier shopping, dining, and
entertainment destination, conveniently located along the Baltimore/Washington
corridor. The vibrant and diverse community of Howard County is one of the top
five most affluent counties in the United States.
In line with the Company's plans for market expansion in targeted
geographic areas, construction has begun for a new FACES store at Fair Oaks
Mall in Fairfax, Virginia. Ranked in the top 50 shopping centers by volume in
the entire country, Fair Oaks Mall is also acclaimed as the preferred family
retail destination for the affluent communities of Western Fairfax County,
which has become one of the country's fastest-growing commercial and
residential areas in metropolitan Washington, D.C. Fair Oaks is the first of a
number of locations planned for the Virginia market over the next 3 years.
Both locations are in close proximity to Washington D.C. which
hosts visitors from all over the world. The regional development of new stores
in this area will continue to expand the awareness of the FACES brand to
consumers from across the United States and international markets.
In Mexico, our Master Franchisee continues to seek appropriate
locations for freestanding retail stores. In addition the pilot programme of
FACES concessions in Sanborns host stores opened last year and has been a
success. Three additional concessions will be opened this year. The Master
Franchisee will then be seeking a rollout plan throughout the Sanborns chain
to build on the established presence of Faces in Mexico.
In Central America
The first Central American location opened in Honduras in November
2007. Located in the City Mall in San Pedro Sula, this location is situated in
the second largest city in the country and considered the economic heartland
and Industrial Capital of Honduras. The franchisee has already begun
identifying a second location to open later this calendar year.
New Product Development
The Group intends to expand its mineral powder line with SPF 25 and
water resistance, glitter eyeliner, an intensive therapeutic foot cream, and a
perfecting skin foundation line. A new line of body care products and a
mineral makeup line are to be introduced in Spring 2008.
Outlook
Funding
The availability of new funding in November 2007 will provide the
Directors not only with an opportunity to build upon Faces' existing
operations though the continued rollout of its franchise model but also
accelerate the international expansion programme.
In India, the opportunity to develop a Faces network with
Indivision Partners' assistance is an exciting prospect for the Company. The
Directors believe that the Indian market, with a middle class population of
250 million people and where women (aged between 15 years and 39 years) make
up 20 per cent of the population, with an established demand for cosmetic,
skin care and anti-aging products provides outstanding growth potential.
With the fourth largest and second fastest growing major economy in
the world, India is a key market for Faces cosmetics future expansions plans
and the Group hopes to announce further details on its strategy for the Indian
Market within the next three months.
The Company intends to form a subsidiary to oversee the rapid expansion in
India with the objective to establish a relationship with a well established
Indian retailer, opening Group-owned stores, followed by a rollout of
franchised stores throughout India.
In the USA, the Group will focus on four key strategic markets: the
Eastern Seaboard (New York/New Jersey), the West Coast (Los Angeles/San
Francisco), the Mid West (Chicago) and the Florida coast supported by the
establishment, over the next 12 to 18 months, of a limited number of
Group-owned flagship stores which can also be used as training centers for
franchisees.
This approach is intended to improve training and personnel
development, provide effective regional management and supervision, promote a
cost effective regional communications program, build trade and customer
recognition and attract new franchisees. The first step is to invest in
infrastructure and expand the existing retail network.
The Directors believe that the establishment of a company-owned
store is, in many cases, the most effective vehicle to attract new franchisees
and bring the Faces' brand, products and services to the public arena.
The Directors intend to invest in senior management appointments both at the
centre and in the key development markets to drive the planned expansion. A
marketing manager, supported by a small in-house team and third party
specialist advertising and public relations agencies to introduce a
marketing-led approach, manage budgets and ensure that a consistent brand
image is projected through all communication media.
Ramesh Jolly
Chief Executive Officer
31 March 2008
Finance Director's Report
The six month period to 31 January 2008 saw the agreement by Indivision
Ventures II to invest £5 million in the Company by way of a subscription for
125,000,000 new ordinary shares in the Company at a price of 4p per share,
representing approximately 70.6 per cent of the Company's enlarged issued
share capital.
Operating Performance
Group sales were CDN $1,755,000 and represented a decrease of 30.6 per cent
over the prior year period. This decrease resulted from the sale of five
corporate stores in anticipation of opening new corporate locations in the
USA, which are now in process, and had been expected sooner but were held off
due to delays in receipt of the funding recently received from Indivision. The
Group incurred a net loss of CDN 623,000 of which CDN $155,000 was non cash
relating to warrant and option costs for the period. The net loss is in line
with our projections, and the Group expects to return to profitability in the
next fiscal year as its expansion progresses. The Group has continued to
invest in infrastructure costs in the period that will allow it to
successfully expand its presence and brand recognition in the USA, The Middle
East and India.
Capital Movements
On 30 August 2007, the Company issued 1,000,000 shares for cash consideration
at 4.75p per share.
On 13 November 2007, the Company issued 125,000,000 shares for cash
consideration of £5,000,000, representing 70.7 per cent of the enlarged issued
share capital.
On 5 December 2007, the Company issued 1,263,157 shares as consideration for
the conversion of the loan note instrument with Delaware Investments.
Dividend
No interim dividend is proposed.
Taxation
No taxation arises in respect of the Group's trading for the period. The Group
has tax losses carries forward of over $5,000,000.
Investments
The Company has no investments other than in its operating subsidiary.
Rupert Folkard
Finance Director
31 March 2008
Review Report on Interim Financial Information for Faces Cosmetics plc
Introduction
We have been engaged by the Company to review the interim set of
financial information for the six months ended 31 January 2008 which comprises
the consolidated income statement, the consolidated balance sheet, the
consolidated statement of changes in equity, the consolidated cash flow
statement and related notes 1 to 8. We have read the other information
contained in the interim report and considered whether it contains any
apparent misstatements or material inconsistencies with the financial
information.
This report is made solely to the Company, in accordance with
International Standard on Review Engagements 2410 issued by the Auditing
Practices Board. Our work has been undertaken so that we might state to the
Company those matters we are required to state to them in an independent
review report and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than the
Company, for our review work, for this report, or for the conclusions we have
formed.
Directors' responsibilities
The interim report, including the financial information contained
therein, is the responsibility of, and has been approved by, the directors.
The directors are also responsible for preparing the interim report in
accordance with the AIM Rules of the London Stock Exchange.
As disclosed in note 2, the annual financial statements of the
Company will be prepared in accordance with IFRSs as adopted by the EU. The
interim financial statements included in this interim report have been
prepared in accordance with the accounting policies the Company intends to use
in preparing its next annual report.
Our responsibility
Our responsibility is to express to the Company a conclusion on the
interim financial statements in the interim report based on our review.
Review work performed
We conducted our review in accordance with International Standard
on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial
Information Performed by the Independent Auditor of the Entity", issued by the
Auditing Practices Board for use in the United Kingdom. A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
performed in accordance with International Standards on Auditing (UK and
Ireland) and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes
us to believe that the accompanying interim financial information is not
prepared, in all material respects, in accordance with the AIM Rules of the
London Stock Exchange.
Mazars LLP
Chartered Accountants
Tower Bridge House
St Katharine's Way
London EIW 1DD
31 March 2008
Consolidated Income Statement
For the 6 months ended 31 January 2008
6 Months 6 Months
ended ended Year ended 31
31 January 2008 31 January 2007 July
Unaudited Unaudited Audited
Notes C$'000 C$'000 C$'000
Continuing
operations
Revenue 1,755 2,530 4,433
Cost of sales (637) (737) (2,005)
Gross profit 1,118 1,793 2,428
Operating Expenses (183) (128) (247)
Share warrant (121) - (306)
expenses
Share option (34) - (93)
expenses
Share issue costs - - (463)
Administrative (1,550) (1,420) (3,623)
expenses
(Loss) / profit from 3 (770) 245 (2,304)
operations
Other Income 147 32 1
(Loss) / profit (623) 277 (2,303)
before taxation
Taxation - - (11)
(Loss) / profit (623) 277 (2,314)
after taxation
(Loss) /profit/
earnings per share -
(cents)
Basic 4 (0.003) 0.54 (0.05)
Diluted 4 (0.003) 0.34 (0.05)
Consolidated Balance Sheet
As at 31 January 2008
As at
As at As at 31 July
31 January 31 January
2008 2007 2007
Unaudited Unaudited Audited
Notes C$'000 C$'000 C$'000
Assets
Non-current assets
Notes and loans
receivable 5 142 351 494
Property, plant and
equipment 221 414 276
Intangible assets 7 763 904 842
1,126 1,669 1,612
Current assets
Inventories 6 2,675 2,900 2,428
Accounts receivable 1,212 686 625
Deposits and prepaid
expenses 116 448 124
Notes and loans
receivable 26 20 65
Bank & cash 7,485 - -
11,514 4,054 3,242
TOTAL ASSETS 12,640 5,723 4,854
Equity and liabilities
Current Liabilities
Trade and other payable 951 843 903
Bank loans and
overdrafts 100 401 837
Loans from related
parties 286 282 1,052
Current portion - long
term debt 282 190 243
1,619 1,716 3,035
Non-current liabilities
Long term debt 133 567 278
Total Liabilities 1,752 2,284 3,313
Capital and reserves
Share capital -
ordinary shares 3,625 1,092 1,092
Share capital -
preference share 646 646 646
Share premium 7,631 474 474
Share warrant reserve 387 - 272
Share option reserve 126 - 93
Merger reserve 4,248 4,248 4,248
Foreign exchange
reserve 132 - -
Retained losses (5,907) (3,021) (5,284)
Total equity
attributable to equity
holders 10,888 3,439 1,541
TOTAL EQUITY AND
LIABILITIES 12,640 5,723 4,854
Consolidated Statement of Changes in Equity
For the 6 months ended 31 January 2008
Accumulated Issued Issued Share Share Share Foreign Merger Total
losses capital capital premium warrant option currency reserve
preferred reserve reserves reserve
ordinary
C$'000 C$'000 C$'000 C$'000 C$'000 C$'000 C$'000 C$'000
Loss for the (623) (623)
financial period
Issuance of shares 2,533 7,157 9,690
Foreign exchange 132 132
reserve
Share warrants 115 115
reserve
Share options
reserve 33 33
Net change in - 132
shareholders'
equity (623) 2,533 7,157 115 33 - 9,347
Shareholders' 646 -
equity
brought forward (5,284) 1,092 474 272 93 4,248 1,541
Shareholders' (5,907) 3,625 646 7,631 387 126 132 4,248 10,888
equity at
31 January 2008
Consolidated Cash Flow Statement
For the 6 months ended 31 January 2008
6 Months 6 Months 12 Months
ended ended ended
31 January 31 January 31 July
2008 2007 2007
Unaudited Unaudited Audited
C$'000 C$'000 C$'000
Cash flows from
operating activities
Cash receipts from 1,564 1,514 3,650
customers and franchises
Cash paid to suppliers (2,540) (2,078) (5,075)
and employees
Interest (paid)/received 191 (31) (148)
Net cash from operating (785) (595) (1,573)
activities
Cash flows from
Investing activities
Product development and (102)
intangible
asset costs incurred
Purchase of property, (17) (1,654) (22)
plant and equipment
Proceeds from disposal
of property,
plant and equipment 99
Net cash used in (17) (1,654) (25)
investing activities
Cash flows from
financing activities
Ordinary shares issued 9,899 2,362 2,496
for cash
Payment of cost of (1,796)
shares issued
Proceeds from promissory -
note
Repayment of bank loans (591) 18 (194)
Repayment of advances (195) 116
Repayment of small (8)
business loan
Proceeds of other loans (5) 2834 586
Proceeds of loans from (765) (17) 782
related parties
Repayment of promissory (452)
note payable
Net cash from financing 8,538 2,452 1,530
activity
Net increase in cash and 7,736 203 (68)
cash equivalents
Cash and cash (251) (183) (183)
equivalents at the
beginning of the period
Cash and cash
equivalents at the end
of the period 7,485 20 (251)
Selected notes to the Group Financial Information
1. General Information
Faces Cosmetics plc is the parent company of a group of Canadian
branded cosmetics, skin care, anti-aging products, and spa services
businesses.
The Group has an extensive product line comprising over 1,000
individual items in 15 product categories. The Faces brand is well-known for
its diverse range of products to meet the special needs of individual
consumers taking account of a wide range of skin types, colours and pigments,
which appeal to a broad consumer audience without age barrier. In addition,
aesthetic treatments, such as facials, manicures and waxing are provided at a
number of these retail outlets.
The business mainly operates a franchise model whereby third
parties acquire the right to operate Faces Cosmetics branded retail sites
within shopping centres and other retail locations. Initially, the retail
outlets were entirely comprised of kiosks, positioned mainly in the walkways
within shopping centres, offering an extensive range of cosmetic, skin care
and anti-aging products. More recently, Faces Cosmetics has concentrated on
stores within shopping centres, some of which offer aesthetic treatments, in
addition to an extensive range of cosmetic, skin care and anti-aging products.
The Company is registered under number 05910627. The Company is
governed by its articles of association and the principal statute governing
the Company is the Companies Act 1985.
The Company's registered office is situated at 27/28 Eastcastle
Street, London, W1W 8DH.
2. Basis of Preparation
The interim financial information for the period 1 August 2007 to
31 January 2008 have been prepared on the basis of the accounting policies set
out in the July 2007 annual report and accounts.
The interim report is unaudited and does not constitute statutory
financial statements. The financial information for the period ended 31
January 2008 does not constitute statutory accounts, as defined in section 240
of the Companies Act 1985, but is based on the latest statutory accounts.
These accounts, upon which the auditors issued an unqualified opinion, have
been delivered to the Registrar of Companies. The comparative financial
information has been adjusted in order to reflect balance sheet presentational
adjustments made to the year ended 31 July 2007 financial statements.
The interim report for the six months ended 31 January 2008 was
approved by the Directors on 31 March 2008.
3. Operating loss
Operating loss is stated 6 Months ended 6 Months ended 12 Months
after charging: ended
31 January 31 January
2008 2007 31 July 2007
Unaudited Unaudited Audited
C$'000 C$'000 C$'000
Amortisation charge on 125 53 165
intangibles
Share option charge 34 - 93
4. Loss Per Share
The calculation of loss per share is based on the following loss and number of
shares:
6 Months
ended 31 January
2008
Loss for the period from continuing (623)
operations (C$000's)
Weighted average number of shares:
Basic 178,309,727
Loss per share:
Basic (0.003)
Diluted (0.003)
In accordance with IAS 33 and as the Group has reported a loss for the period,
the share options and warrants are not dilutive.
Selected notes to the Group Financial Information
5. Analysis by business segment
6 Months 6 Months 12 Months
ended ended ended
31 January 31 January 31 July
2008 2007 2007
Unaudited Unaudited Audited
C$'000 C$'000 C$'000
Revenue
North America 1,400 1,769 3,599
South America 313 273 354
Europe 42 36 57
Middle East - 452 423
Total Revenue 1,755 2,530 4,433
Operating profit
North America 928 1,793 1,799
South America 169 - 177
Europe 21 - 29
Middle East - - 423
Total operating profit 1,118 1,793 2,428
Net assets
North America 10,888 5,060 1,541
South America - - -
Europe - - -
Middle East - - -
Total segment net assets 10,888 5,060 1,541
Unallocated corporate - - -
net liabilities
Net funds - - -
Total net funds 10,888 5,060 1,541
Selected notes to the Group Financial Information
6. Inventory
6 Months 6 Months 12 Months
ended ended ended
31 January 31 January 31 July
2008 2007 2007
Unaudited Unaudited Audited
C$'000 C$'000 C$'000
Raw materials 853 875 868
Finished Goods 1,822 2,025 1,560
2,675 2,900 2,428
7. Intangible assets
31 January
2008
C$'000
Intellectual Property
Cost
At 1 August 2007 1,348
Additions 46
At 31 January 2008 1,394
Amortisation
At 1 August 2007 506
Charge for the period 125
At 31 January 2008 631
Net book value - intangibles 763
8. Copies of the announcement
Further copies of the report will be available from the Company's
website, www.faces-cosmetics.com. and from Faces Cosmetics Plc., 30 MacIntosh
Boulevard, Unit 6 Vaughan, ON L4K 4PI, Canada and from Cubitt Consulting Ltd.,
30 Coleman Street, London, London, EC2R 5AL.
END
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