| Wed 31 Oct 2007, 12:35 | | BEG - Beige Holdings - Unaudited Group Results For |
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BEG
BEG
BEG - Beige Holdings - Unaudited Group Results For The Six Months
Ended 30 September 2007
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")
UNAUDITED GROUP RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2007
- Revenue up 67%
- Operating profit up 67%
- Headline earnings up 86%
- Headline earnings per share up 39%
Group Balance Sheets
Unaudited Audited Unaudited
six months as at six months
ended 31 March ended
30 2007 30
September R`000 September
2007 2006
R`000 R`000
ASSETS
Non-current assets 172 790 76 041 66 773
Property, plant and 59 812 23 495 15 174
equipment
Intangible assets 107 315 45 921 44 692
Deferred taxation 5 663 6 625 6 907
Current assets 187 680 130 223 99 502
Inventories 53 944 34 831 27 249
Trade and other receivables 86 534 61 043 40 176
Secured loans -- 7 812 6 960
Cash and cash equivalents 47 202 26 537 25 117
Total assets 360 470 206 264 166 275
EQUITY AND LIABILITIES
Capital and reserves 173 562 70 360 58 808
Share capital 18 525 7 862 7 854
Share premium 320 659 123 127 123 074
Share-based payments reserve 1 132 459 --
Accumulated loss (166 754) (61 088) (72 120)
Non-current liabilities 47 932 31 405 23 230
Long-term liabilities 47 932 31 405 23 230
Current liabilities 138 976 104 499 84 237
Accounts payable and 96 979 85 131 63 109
provisions
Current portion of long-term 10 389 7 516 10 816
liabilities
Taxation 11 532 7 689 6 439
Bank overdraft 20 076 4 163 3 873
Total equity and liabilities 360 470 206 264 166 275
Ordinary shares in issue
(000`s)
At period end (Note 1) 1 842 582 771 865 593 513
At period end including -- 785 382
shares to be issued for --
purchase of 50% of Quality
Products
Fully diluted (Note 1 & 2) 1 883 549 838 199 814 382
Net asset value per share
information
Net asset value per share 9.42 9.12 9.98
(cents)
Net tangible asset value per 3.60 3.17 2.40
share (cents)
Net asset value per share -- -- 7.53
(cents) including shares
issued for purchase of 50%
of Quality Products
Net tangible asset value per -- -- 1.81
share (cents) including
shares issued for purchase
of 50% of Quality Products
Fully diluted net asset 9.21 8.39 7.26
value per share (cents)
Fully diluted net tangible 3.52 2.92 1.74
asset value per share
(cents)
Group Income Statements
Unaudited Audited Unaudited
six months year ended six months
ended 31 March ended
30 2007 30
September R`000 September
2007 2006
R`000 R`000
Revenue 189 153 273 209 113 599
Cost of sales (145 969) (223 223) (86 705)
Gross profit 43 184 49 986 26 894
Operating expenses (29 295) (27 093) (18 592)
Operating profit before 13 889 22 893 8 302
goodwill impairment
Goodwill impairment (116 884) -- --
Operating profit/(loss) (102 995) 22 893 8 302
after goodwill impairment
Investment income 2 402 2 226 592
Net profit/(loss) from (100 593) 25 119 8 894
operations before finance
charges
Finance charges (1 227) (949) (300)
Net profit/(loss) before (101 820) 24 170 8 594
taxation
Taxation (3 846) (7 110) (2 566)
Net profit/(loss) for the (105 666) 17 060 6 028
period
Calculation of headline
earnings
Net profit/(loss) for the (105 666) 17 061 6 028
period
Profit on disposal of plant -- 25 --
and equipment
Goodwill impairment - (116 884) -- --
Crystal Pack Pty (Ltd)
Headline earnings for the 11 218 17 036 6 028
period
Earnings per share
information
Weighted average shares in 1 051 034 771 065 785 382
issue (000`s) (Note 1)
Fully diluted weighted 1 092 001 837 399 814 382
shares in issue (000`s) 1 883 549 838 199 814 382
(Note 1 & 2)
Fully diluted shares in
issue (000`s) (Note 1 & 2)
Attributable earnings/(loss) (10.05) 2.21 0.77
per ordinary share (cents)
Headline earnings per share 1.07 2.21 0.77
(cents)
Fully diluted attributable (9.68) 2.04 0.74
earnings/(loss) per ordinary
share (cents)
Fully diluted weighted 1.03 2.03 0.74
headline earnings per share 0.60 2.03 0.74
(cents)
Fully diluted headline
earnings per share (cents)
(Note 3)
Notes
1. 10 000 000 shares held as treasury stock have been subtracted from the
respective share totals for purposes of calculating earnings per share
information.
2. Fully diluted net asset value per share information has been incorporated
to show the potential effect of full dilution for 21 900 102 options held
by directors and senior management to subscribe for new shares at 7.5
cents per share and to Thebe to subscribe for 19 066 854 new shares at
12.5 cents, subject to Thebe Medicare Pty Ltd ("Thebe") introducing R25
million of new turnover to Beige before 30 March 2008. The directors and
senior management options, which were approved by shareholders at the
general meeting held on 13 November 2006, were granted with effect from
01 April 2006 and expire on 31 March 2011.
3. Subject to the achievement of Crystal Pack earnings warranty 260 354 992
shares are held in escrow.
Abridged Group Cash Flow Statements
Unaudited Audited Unaudited
six as at six
months 31 March months
ended 2007 ended
30 R`000 30
September September
2007 2006
R`000 R`000
Net cash (outflow)/ inflow (12 800) 26 896 27 238
from operating activities
Net cash outflow from (214 982) (56 898) (42 736)
investing activities
Net cash inflow from 232 534 54 153 38 519
financing activities
Net increase in cash and 4 752 24 151 23 021
cash equivalents
Bank balance at beginning of 22 374 (1 777) (1 777)
period
Bank balance at end of 27 126 22 374 21 244
period
Group Statement of Changes in Equity
Share Share Share- Accumulated Total
capital premium based loss
payment
R`000 R`000 reserve R`000 R`000
R`000
Balance at 31 March 5 756 107 853 -- (78 148) 35 461
2006
Shares issued 2 106 15 274 459 -- 17 839
Profit for the year -- -- -- 17 060 17 060
Balance at 31 March 7 862 123 127 459 (61 088) 70 360
2007
1 041 634 034 shares 10 415 93 667 104 082
issued
5 700 018 staff 57 371 428
share options
exercised
19 066 584 Thebe 191 1 334 1 525
options exercised
Share based payments 673 673
Preference shares (15 000) (15 000)
issued
Fair valuation of 117 160 117 160
Crystal Pack share
issue
Loss for the period -- -- -- (105 666) (105 666)
Balance at 30 18 525 320 659 1 132 (166 754) 173 562
September 2007
COMMENTARY
The directors of Beige are pleased to announce the group results for the
period ended 30 September 2007. These unaudited results show the consolidated
position of Beige, post the acquisition of Crystal Pack (Proprietary) Limited
("Crystal Pack"), which has been consolidated with effect from 01 July 2007.
Beige is now the largest fully empowered contract manufacturer in the South
African personal care industry.
The abridged results have been prepared in accordance with IAS 34 - Interim
Financial Reporting. 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").
1. Group review
Beige is a registered holding company operating through nine
subsidiaries. The Beige group primarily operates as a contract
manufacturer, manufacturing and distributing cosmetics, soaps, laundry
soaps and allied products on behalf of brand owners for both the local
and international home and personal care industry, but has recently
diversified its operations through the acquisition of a plastics
manufacturing business to complement its contract manufacturing
operations. Beige is listed on the Alternative Exchange ("AltX") of the
JSE Limited.
During the period, the Group finalised an agreement with the Candur
Active Value Investments (Pty) Ltd consortium ("CAVI") for the
acquisition of Crystal Pack and secured a long term exclusive
manufacturing agreement with Incolabs, which was part of the ongoing
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 and the achievement of greater pricing power and
allied benefits resulting from bulk procurement. It is anticipated that
the second phase of the implementation of the manufacturing agreement
with Incolabs will start in January 2008 and the full benefits of the
acquisition will only be realised from January 2008.
2. Financial and operational overview
The board is pleased with the results for the first six months of the
year, which shows the continuing success of the acquisition strategy
underway at Beige. Ignoring the anomalous charge to the income statement
relating to the impairment of Crystal Pack in accordance with IFRS 3 -
Business Combinations, which is more fully explained below, the figures
for the six months to 30 September 2007 all reflect a substantial
increase throughout. The highlights of these results include an increase
in operating profit of 67%, compared to the six month period ended 30
September 2006 and a 39% growth in headline earnings per share, from a
profit of 0.77 cents to a profit of 1.07 cents.
Turnover increased from R113 599 000 in the comparative period to R189
153 000 for the period under review, an increase of 67%. Although the
gross profit margin shows a marginal decrease from 23.8% to 22.8% in the
comparative period, this is largely attributable to the long-term
contracts entered into by the group, which contracts provide for a lower
margin than those normally achieved in the short to medium run contracts.
The long term contracts typically provide for minimum volumes of
production.
Overall the group is in a much stronger position than in the comparative
period as represented by a stronger balance sheet and the continuing
positive cash flow position.
During the period, shareholders approved the acquisition of Crystal Pack,
which is now a 100% held subsidiary of Beige. The company manufactures
injection moulded and injection stretch blow moulded rigid bottle
containers for the beverage, personal care and allied industries. The
company supplies plastic bottles and closures into this sector in HDPE,
PVC and PET, primarily to markets in Gauteng and Kwa-Zulu Natal.
The effective date of this acquisition is 01 January 2007 as per the
acquisition agreements, but conditions precedent were only completed in
mid-June 2007. Crystal Pack has therefore been consolidated in the
interim results from 01 July 2007, with the loss incurred to 30 June 2007
being adjusted against the purchase price. For the three months from 01
July 2007 to 30 September 2007 the company incurred a loss before tax of
R434 000. Had the Crystal Pack results been consolidated from 1 April
2007 to 30 September 2007 the company would have contributed a profit of
R1 511 000 to the group.
The acquisition had the following effect on the Group`s assets and
liabilities on acquisition date:
Pre- Fair value Recognised
acquisition adjustments values on
carrying R`000 acquisition
amounts R`000
R`000
Property, plant and 36,661 36,661
equipment
Intangibles 4,018 4,018
Inventories 7,490 7,490
Trade and other 11,422 11,422
receivables
Cash resources 27 27
Deferred taxation (888) (888)
Long-term liabilities (3,348) (3,348)
Trade and other (14,271) (4,473) (18,744)
payables
Current portion of (3,692) (3,692)
long term liabilities
Bank overdraft (9,058) (9,058)
Net identifiable 28,361 (4,473) 23,888
assets and liabilities
Goodwill on 54,494
acquisition
Consideration paid for 78,382
by the issue of 781
064 976 ordinary
shares in Beige
Holdings Limited at 10
cents per share
adjusted for losses of
R276 000 from
effective date to
acquisition date
The goodwill recognised on the acquisition is attributable mainly to the
intellectual property skills and technical know-how of the acquired
business`s workforce and the existing customer contractual relationships
that exist in the business.
International Financial Reporting Standard (IFRS) effects in the current
reporting period
IFRS 3 Business Combinations requires the fair value of the acquisition
of Crystal Pack at the acquisition date to be determined by the market
price of the shares issued. On this basis the fair value of the
acquisition at 30 June 2007 is R195 266 000 based on a share price of 25
cents per share. The goodwill on acquisition is therefore deemed to be
R171 378 000.
The fair value of the Crystal Pack investment in terms of IFRS 39 at 30
September 2007 is R78 382 000. The effect of this fair valuation is an
impairment of the goodwill of R116 884 000 which has been charged to the
income statement in the current period. This impairment has been
excluded from the calculation of headline earnings.
Other IFRS impacts on the earnings for the six months include a charge of
R443 000 to straight line the Groups property operating lease payments
over the term of the leases and a charge for employee share option costs
of R673 000.
3. Prospects
The group has excellent prospects for strong, sustained growth in
earnings. With the acquisition of Crystal Pack, the company has
vertically integrated into the packing aspect of its industry and expects
synergies and cost benefits to flow in due course. The Star contract,
which formed part of the Crystal Pack acquisition, has been performing
well. The second phase of the Star contract is forecast for
implementation from January 2008. The Beige group intends to continue a
careful acquisition strategy, as evidenced by its recently announced
acquisition of Amcos from Bowler Metcalf Limited. This acquisition is
still subject to Competition Commission approval.
4. Acquisitions and issue of shares
On 31 May 2007, Beige acquired all the ordinary shares in Crystal Pack
from the CAVI consortium for a purchase consideration of R78 538 164 to
be settled by the issue of 776 748 309 new ordinary Beige shares and the
transfer of 4 316 667 treasury shares to the vendor at an issue price of
10 cents per share. Of these shares, 257 751 443 shares are held in
escrow, pending the achievement of warranted earnings before interest and
taxation of R13 million, which shares will be released on a pro rata
basis.
At the same time, shareholders approved the option to subscribe for
264 885 725 new Beige shares to Thebe, in order for Thebe to maintain its
empowerment shareholding in excess of 25%. Thebe exercised its option to
subscribe for the shares, which were issued on 13 August 2007.
Staff and Thebe share options
During the period 5 700 018 staff share options were exercised at 7.5
cents in terms of the company`s share option scheme and Thebe exercised
its options of 19 066 584 at 8 cents.
5. Special resolutions
Special resolutions passed during the period under review were as
follows:
- Increase in authorised share capital to 2 500 000 000 shares;
- The creation of 14 285 714 cumulative, non-participating,
convertible, redeemable preference shares of 1 cent each to
facilitate the preference share capitalisation award; and
- The alteration of the Memorandum of Association to facilitate the
above.
6. Subsequent events
There were no significant events subsequent to the end of the period
under review.
7. Director appointments
Pursuant to the acquisition of Crystal Pack, Mr M F ten Hope and Mr G T
Anderson were appointed to the board with effect from 31 May 2007, and J
A Noble and Dr P J Gubb resigned from the board on 4 July 2007. JH
Rawlings and IL Stromin retired from the board with effect from 15 June
2007.
8. Dividends and capitalisation awards
No dividend has been declared for the period ended 30 September 2007. A
capitalisation award of R15 million, comprising 7 preference for every
55.03271 ordinary shares held, was made to shareholders, with a cash
alternative of 1.90796 cents per share. The preference shares were listed
on the Alternative Exchange on 13 August 2007 and bear a coupon rate of
8%. The preference shares are redeemable for cash after 3 years and 1
day or are convertible into ordinary shares in Beige, at the election of
the preference shareholder, in the ratio of 7 new Beige shares for every
1 preference share held.
By order of the Board
Yaseen Bhayat Mark Di Nicola
Chairman Chief Executive Officer
31 October 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
Y Bhayat* Chairman*; MM Di Nicola Chief Executive Officer; MC Easter Financial
Director; GT Anderson, J Black*#; MM du Preez*; LI Karp*; MF ten Hope* RH
Weissenberg*
(* Non-executive) (# British)
Designated Advisor
Arcay Moela Sponsors (Proprietary) Limited
Transfer Office
Link Market Services South Africa (Pty) Ltd
Date: 31/10/2007 12:35:36 Produced by the JSE SENS Department.
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