| Thu 14 Jun 2007, 12:41 | | BEG - Beige - Audited Results For The Year Ended 3 |
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BEG
BEG
BEG - Beige - Audited Results For The Year Ended 31 March 2007, Postponement
Of Capitalisation Award Dates And Renewal Of Cautionary Announcement
Beige Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration No: 1997/006871/06)
Share code: BEG & ISIN code: ZAE000034161
("Beige" or "the company")
AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2007, POSTPONEMENT OF
CAPITALISATION AWARD DATES AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
Group Balance Sheets
Audited Audited
31 Mar 2007 13-months
R`000 ended
31 Mar 2006
R`000
ASSETS
Non-current assets 76 041 20 095
Plant, equipment and equipment 23 495 7 405
Intangible assets 45 921 2 756
Investment in associate -- 4 605
companies
Deferred taxation 6 625 5 329
Current assets 130 223 34 527
Inventories 34 831 12 327
Trade and other receivables 61 043 12 488
Loans to associate company -- 3 712
Secured loans 7 812 4 100
Cash and cash equivalents 26 537 1 900
Total assets 206 264 54 622
EQUITY AND LIABILITIES
Capital and reserves 70 360 35 461
Share capital 7 862 5 756
Share premium 123 127 107 853
Non-distributable reserves 458 --
Accumulated loss (61 087) (78 148)
Non-current liabilities
Long-term liabilities 31 405 1 177
Current liabilities 104 499 17 984
Provisions 5 148 617
Trade and other payables 79 983 12 617
Current portion of long-term 7 516 970
liabilities
Taxation 7 689 103
Bank overdraft 4 163 3 677
Total equity and liabilities 206 264 54 622
Ordinary shares in issue 771 065 574 465
(000`s)
Net asset value per share 9.13 6.17
(cents)
Tangible net asset value per 3.17 5.69
share (cents)
Fully diluted shares (000`s) 838 199 574 465
Fully diluted net asset value 8.39 6.17
per share (cents)
Fully diluted net tangible 2.92 5.69
asset value per share (cents)
Notes
1. Fully diluted net asset value per share information reflected shows the
potential effect of full dilution for 21 000 132 options held by directors and
key executive staff to subscribe for new shares at 7.5 cents each and 19 066
584 options held by Thebe to subscribe for new shares at 8 cents each. Key
executives exercised options in relation to 800 016 shares on 31 March 2007 at
7.5 cents per share. The balance of the options expire on 31 March 2011.
Group Income Statements
Audited Audited
Year ended 13 months ended
31 Mar 2007 31 Mar 2006
R`000 R`000
Revenue 273 209 83 958
Cost of sales (223 223) (67 516)
Gross profit 49 986 16 442
Operating expenses (27 092) (20 980)
Operating profit/(loss) 22 894 (4 538)
Investment income 2 226 165
Income from associate -- 3 675
company
Net profit/(loss) from 25 120 (698)
operations before finance
charges
Finance charges (949) (774)
Net profit/(loss) before 24 171 (1 472)
taxation
Taxation (7 110) 1 797
Net profit for the 17 061 325
year/period
Calculation of headline
earnings
Net profit for the period 17 061 325
Adjustments for:
Profit on disposal of plant 25 --
and equipment
Headline earnings 17 086 325
Ordinary shares in issue
Weighted average 771 065 386 390
Fully diluted 838 199 386 390
Attributable earnings per 2.21 0.08
ordinary share (cents)
Headline earnings per 2.22 0.08
ordinary share (cents)
Fully diluted attributable 2.04 0.08
earnings per ordinary share
(cents)
Fully diluted headline 2.04 0.08
earnings per ordinary share
(cents)
Notes
1. The 14 316 667 treasury shares held by Zizmax Investments (Pty) Ltd, a
subsidiary of Beige, have been excluded from the number of shares in issue for
purposes of calculating earnings and headline earnings per share information.
Abridged Group Cash Flow Statements
Audited
Audited 13-months ended
31 March 31 March 2006
2007 R`000
R`000
Net cash inflow from 26 896 2 930
operating activities
Net cash outflow from (56 898) (8 534)
investing activities
Net cash inflow from 54 153 6 322
financing activities
Cash & cash equivalents at (1 777) (2 495)
beginning of year
Cash and cash equivalents at 22 374 (1 777)
end of year
Group Statement of Changes in Equity
Share Share Non- Accumulated Total
Capital premium distribut loss
R`000 R`000 able R`000 R`000
Reserve
Balance at 28 2 951 95 575 -- (78 473) 20 053
February 2005
13 334 334 133 867 -- -- 1 000
shares issued
@ 7.5 cents
each in part
payment of
purchase of
Arcfin
Trading 46
(Pty) Ltd
13 680 000 137 684 -- -- 821
issued @ 6
cents each to
Arcay Client
Support (Pty)
Ltd in
settlement of
debt
21 440 000 215 1 393 -- -- 1 608
shares issued
@ 7.5 cents
each in
respect of
directors
option
exercised
1 700 000 17 102 -- -- 119
shares issued
at 7 cents
each in part
payment of
purchase of
Arcfin
Trading 46
(Pty) Ltd
2 000 000 20 100 -- -- 120
shares at
issued at 6
cents each in
part payment
of Arcfin
Trading (Pty)
Ltd
228 305 833 2 283 9 132 -- -- 11 415
shares @ 5
cents each in
respect of
rights offer
Profit for -- -- -- 325 325
the period
Balance at 31 5 756 107 853 -- (78 148) 35 461
March 2006
191 868 195 1 919 13 431 -- -- 15 349
shares issued
at 8 cents
each for
Thebe swop up
17 908 865 179 1 791 -- -- 1 970
shares issued
at 11 cents
each for
Mothebe swop
up
Share-based 8 52 -- 60
payment to
staff at 7.5
cents each
Share option -- -- 458 -- 458
costs
Profit for -- -- -- 17 061 17 061
the period
Balance at 31 7 862 123 127 458 (61 087) 70 360
March 2007
COMMENTARY
The directors of Beige are pleased to announce the results for the year ended
31 March 2007. These results show the consolidated position of Beige, post
the acquisition of the remaining 60% shareholding in Quality Products (Pty)
Ltd ("Quality Products"), with effect from 01 April 2006, from Thebe Medicare
(Pty) Ltd ("Thebe") and Mothebe Investments (Pty) Ltd ("Mothebe"), both of
whom elected to swap the shares held by them in Quality Products into Beige,
resulting in Beige becoming the largest fully empowered contract manufacturer
in the personal care industry.
The accounting policies adopted for purposes of this report comply, and have
been consistently applied in all material respects, with International
Financial Reporting Standards ("IFRS"). The same accounting policies and
methods of computation have been followed as compared to the 13-month period
ended 31 March 2006. Shareholders are advised that the company changed its
year end to 31 March during the prior reporting period.
The results have been audited by Nexia Levitt Kirson and their unqualified
audit opinion is available for inspection at the registered office of the
company.
1. Group review
Beige is a contract manufacturing company that manufactures and
distributes cosmetics, soaps, laundry soaps and allied products for the
bath and body care for the South African and international markets. The
business operations are undertaken by clearly focused subsidiaries,
located in Gauteng and Kwa-Zulu Natal.
During the year, the Group acquired the remaining 60% of Quality
Products, concluded a Black Economic Empowerment agreement with Thebe,
continued the focus on further improvements at Chloorkop manufacturing
facility and entered into an agreement for the acquisition of Crystal
Pack (Proprietary) Limited ("Crystal Pack"), which acquisition was
approved by shareholders post year end. These initiatives all form part
of a strategic decision by management to grow market share in a
controlled fashion and to obtain critical mass at the factories. The
long term benefits of this growth strategy include the optimisation of
available production capacity, improvements in efficiency and the
achievement of greater benefits resulting from bulk procurement.
2. Financial and operational overview
The growth and development of Beige has been dramatic in the year under
review and the board is pleased with the results, which reflect the
continued implementation of the organic and acquisitive growth strategy
underway at Beige. The figures for the year ended 31 March 2007 reflect
a substantial increase throughout, due to the 100% consolidation of the
results of Quality Products with effect from 01 April 2006. The
highlights of these results include the substantial increase in net
profit after tax, compared to the 13-month period ended 31 March 2007,
from a small profit of R325 000 to R17 million and the 235% growth in
earnings and headline earnings per share, from 0.08 cents to earnings and
headline earnings of 2.21 and 2.22 cents respectively. Shareholders are,
however, reminded that at the reporting date for the comparative period,
Beige only held a 40% interest in Quality Products, which was accordingly
only equity accounted for.
Revenue increased substantially from R83 million in the comparative
period to R273 million for the year under review, an increase of 225%.
The gross profit margin of 18.3% (2006: 19.5%) is acceptable in the
contract manufacturing industry, where the margins vary depending on the
length of the contracts. The longer term contracts, however, typically
provide for more constant volumes of production at lower margins.
Overall the group is in a much stronger position than in the comparative
period as represented by a stronger balance sheet and the positive cash
flow position.
3. Prospects
The acquisition of Crystal Pack has continued to accelerate Beige`s
stated objective of becoming the market leader in the contract
manufacturing and packing industry. This provides for the
diversification of Beige`s product portfolio via a backward integration
through the inclusion of the rigids plastics manufacturing business of
Crystal Pack. The acquisition provides Beige with the ability to
gainfully and profitably employ the spare manufacturing capacity at the
Midrand and Durban factories at an accelerated rate and improves
economies of scale, enabling Beige to provide a more complete
manufacturing and packaging solution for its customers.
The acquisition of the remaining interest in Quality Products provided
the group with excellent on-going prospects for strong, sustained growth
in earnings. In addition to the enhanced value it has brought to the
Group, the structuring of the acquisition of the remaining 60%
shareholding, enabled the Group to broaden its empowerment credentials
and forge a closer relationship with Thebe, the oldest broad-based
empowerment company in South Africa.
The industry remains dynamic and the Group will continue to explore all
opportunities which will enhance its capability and utilise any excess
capacity that may arise. The growth in, and consolidation of, the
business over the past year, has laid a strong foundation for the company
to continue to deliver growth, stability and sustainability for the year
ahead and Beige remains committed to its vision of being a leading, truly
South African, globally competitive outsource manufacturer.
As a consequence of the Crystal Pack deal, there are now substantially
more shares in issue. However, as a result of the phased integration of
the Crystal Pack business, contributions are only expected to be fully on-
stream in the closing months of the current financial year. Although this
augers well for the financial year ending 31 March 2009, it will have a
significant moderating effect on the growth in earnings per share in the
current financial year. As a result, the board expects, at best, a
modest increase in the earnings per share this year.
Given that Beige has established itself as the leading contract
manufacturer, has much higher levels of liquidity, coupled with stable
and increasing sales and profit levels, the board will, in all
probability, consider paying dividends in future financial years.
4 Acquisitions and issue of shares
On 26 September 2006, it was announced on SENS that Beige had concluded
an agreement with Mothebe in terms of which Beige would acquire Mothebe`s
10% minus one share shareholding in Quality Products for a purchase
consideration of R2 969 975. The purchase consideration was settled by
the issue of 17 908 865 Beige shares to Mothebe. The agreement resulted
in Beige holding a 50% minus one share shareholding in Quality Products
prior to the approval by shareholders of the Thebe transaction and in
Mothebe holding a 3% interest in the company.
On 13 November 2006, shareholders approved the empowerment transaction
entered into with Thebe incorporating the acquisition by Beige of the
remaining 50% plus one share shareholding in Quality Products. The
purchase price of R15 349 456 was settled by the issue of 191 868 195
shares in Beige.
The agreement entered into with Anton Botha for the purchase of the Eco-
Pure business from Value Chemicals was amended during the year under
review. The amendment was entered into in order to simplify the terms of
the agterskot payment in the original agreement and provided for Beige to
settle the additional payment due in respect of the profit warranty in
cash rather than through the issue of additional shares. In accordance
with the amended agreement, Beige paid R1 300 000 to Anton Botha during
the year under review.
On 31 March 2007, key executive staff subscribed for a total of 800 016
shares at 7.5 cents per share. These shares formed part of the share
options awarded to directors and key executive staff, the granting of
which options were approved by shareholders at the general meeting held
on 13 November 2006.
5. Subsequent events and Competition Commission Approval of Crystal Pack
acquisition
On 31 May 2007, shareholders approved the acquisition by Beige of Crystal
Pack for a purchase consideration of R78 106 497 to be settled by the
issue of 781 064 976 ordinary Beige shares. At the same general meeting,
shareholders approved the issue of 264 885 725 shares to Thebe in order
to restore Thebe`s shareholding in Beige to 25% following the
implementation of the Crystal Pack acquisition. Shareholders are advised
that the Competition Commission has given its unconditional approval for
the acquisition, that the conditions precedent to the acquisition have
all been fulfilled and that the Capitalisation Award of preference shares
to existing shareholders may now proceed, subject to the provisions of
paragraph 9 below.
6. Offer to Minority Shareholders
As the implementation of the Crystal Pack acquisition will result in the
vendors jointly holding more than 35% of the issued share capital of
Beige, a mandatory offer to the minority shareholders of Beige will be
made at 10 cents per share. A circular containing full details of the
mandatory offer will be posted to Beige shareholders within 30 days of
this results announcement.
7. Director appointments and resignations
Mr MM du Preez was appointed to the board with effect from 31 May 2006,
whilst Messrs Y Bhayat and J Black were appointed to the board with
effect from 13 November 2006, following the approval by shareholders of
the empowerment transaction entered into with Thebe and incorporating the
acquisition by Beige of the remaining 50% plus one share shareholding in
Quality Products and Mr M Easter was appointed as Financial Director with
effect from 07 January 2007. Messrs M ten Hope and G Anderson were
appointed to the board post year end, following the approval by
shareholders of the acquisition of Crystal Pack.
John Rawlings, the chairman of Beige and Ian Stromin, the managing
director of Argo Soap and Chemicals (Pty) Ltd will retire from the
company with effect from 15 June 2007. The board wishes to thank them
for their involvement in the resurrection of Beige and for their steady
support and guidance of the company over the past 6 years. Yaseen Bhayat
has been appointed as non-executive chairman with immediate effect.
8. Dividends
No dividend has been declared for the year ended 31 March 2007.
9. Postponement of Dates in respect of Capitalisation Award
In order to equalise the R15 million value differential between Beige and
Crystal Pack, Beige will proceed with a Capitalisation Award to the value
of R15 million to the benefit of shareholders registered as such in the
Beige Register at the Record Date, but to the exclusion of the Vendors of
Crystal Pack. The Capitalisation Award will be in the form of fully
paid preference shares, although shareholders may elect to receive a cash
payment alternative in respect of part or all of their shareholding,
being a cash payment of 1.90796 cents per ordinary share in respect of
which such cash payment alternative is elected. Shareholders who do not
elect to receive the cash payment alternative will automatically receive
the number of preference shares which they are entitled to by virtue of
their shareholding on the Record Date.
Shareholders are advised that, as a result of the public sector strike,
the company is unable to register the special resolutions required in
order to amend the memorandum of association to provide for the creation
of preference shares to be issued in terms of the Capitalisation Award
and to increase the authorised share capital in order to provide for the
issue of shares to the vendors and the specific issue of shares for cash
to Thebe. The final dates for the implementation of the Capitalisation
Award and the said issues of shares will be announced on SENS as soon as
such resolutions have been registered.
10. Renewal of cautionary
Shareholders are referred to the Cautionary Announcement released on SENS
on 04 May 2007 and are advised that negotiations are still in progress
which, if successfully concluded, may have a material effect on the price
at which the company`s securities trade on the JSE Limited. Shareholders
are accordingly advised to continue to exercise caution when dealing in
the company`s securities until a full announcement in this regard is
made.
By order of the Board
John Rawlings Mark Di Nicola
Chairman Chief Executive Officer
14 June 2007
Johannesburg
Company Secretary and Registered Office
Arcay Client Support (Pty) Ltd (Registration number
1998/025284/07)
Arcay House, Number 3 Anerley Road, Parktown, 2193
PO Box 62397, Marshalltown, 2107
Directors
JH Rawlings Chairman*#; MM Di Nicola Chief Executive Officer;
MC Easter Financial Director; IL Stromin; Y Bhayat*; J Black*;
MM du Preez*; Dr PJD Gubb*; LI Karp*; J Noble*; RH
Weissenberg*
(* Non-executive # American)
Designated Advisor Transfer Office
Arcay Moela Sponsors (Pty) Ltd Link Market Services South
Africa (Pty) Ltd
Date: 14/06/2007 12:41:01 Produced by the JSE SENS Department.
