| Tue 15 Jan 2008, 17:01 | | BEE - Beget Holdings - Reviewed results for the 6 months ended |
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BEE
BEE
BEE - Beget Holdings - Reviewed results for the 6 months ended
31 October 2007
BEGET HOLDINGS LIMITED
Incorporated in the Republic of South Africa
Registration number: 2002/011635/06
Share code: BEE & ISIN number: ZAE000044111
("Beget" or "the company")
REVIEWED RESULTS FOR THE 6 MONTHS ENDED 31 OCTOBER 2007
Balance sheet at 31 October 2007
Reviewed Reviewed Audited
6 Months 6 Months 12 Months
31-Oct-07 31-Oct-06 30-Apr-07
R`000 R`000 R`000
ASSETS
Non-current assets 1,632 13,772 1,862
Investments 0 0 0
Other fixed assets 0 0
Intangible assets 1,007 12,887 1,190
Shareholders loans 74 0 74
Property, Plant & Equipment 550 885 597
Current assets 4,643 4,041 2,000
Inventories 620 1,568 1,027
Trade and other receivables 3,624 2,473 973
Cash and cash equivalents 399 0 1
TOTAL ASSETS 6,275 17,813 3,862
EQUITY and LIABILITIES
Capital and Reserves -11,671 1,472 -15,026
Share capital 27,625 26,069 27,625
Distributable reserve -39,296 -24,597 -42,651
Non-Current liabilities 13,167 3,985 4,867
Shareholders loans 2,428 2,116 2,824
Deferred Income 3,269 1,608 1,808
Long term liabilities 267 261 235
Other financial liabilities 7,203 0
Current liabilities 4,779 12,356 14,021
Trade and other payables 2,333 5,664 7,845
Other financial liabilities 1,190 4,664 3,576
Current portion of borrowings 0 46 53
Tax 0 12 12
Deferred revenue 866 693 929
Bank overdraft 253 676 734
Provisions 138 601 873
TOTAL LIABILITIES 6,275 17,813 3,862
Net asset value per share
(cents) -0.021 0.003 -0.027
INCOME STATEMENT
for the 6 months ending 31 October 2007
Reviewed Reviewed Audited
6 Months 6 Months 12 months
31-Oct- 07 31-Oct-06 30-Apr-07
R`000 R`000 R`000
Gross Revenue 12,738 8,002 13,277
Cost of sales -5,442 -2,777 -5,880
Gross profit /(loss) 7,295 5,225 7,397
Operating Expenses -3,197 -6,320 -12,345
EBITDA 4,099 -1,095 -4,948
Depreciation and amortization -248 -12,707
Operating profit /(loss) 3,851 -1,095 -17,654
Net Finance costs -761 -753 -2,247
Profit/ (loss) before taxation 3,090 -1,848 -19,901
Taxation 0 0 0
Profit/ (loss) after taxation 3,090 -1,848 -19,901
Minority interest 0 0 0
Earnings attributable to
ordinary shareholders 3,090 -1,848 -19,901
Weighted average shares in
issue (`000) 556,959 508,413 556,959
Earnings per share (cents) 0.55 -0.36 -3.91
Headline earnings per share 0.55 -0.36 -1.68
(cents)
RECONCILIATION BETWEEN EARNINGS AND HEADLINE EARNINGS
Earnings 3,090 -1,848 -19,901
Impairment - - 11,353
Headline earnings 3,090 -1,848 -8,548
STATEMENT OF CHANGES IN EQUITY
for the 6 months ending 31 October 2007
Share Share Cumulative Total
capital premium Profit/loss
Balance at 01 January 724 - -
2005 13,599,213 14,534,309 934,372
Net loss for the period - -
8,215,391 8,215,391
Issue of share capital 248
11,725,335 11,725,583
Reduction of share -8 - -
capital 981,127 981,135
Balance at 30 April 2006 964 -
24,343,421 22,749,700 1,594,685
Issue of share capital 150
3,451,850 3,452,000
Share issue expenses - -
171,000 171,000
Loss for the year - -
19,901,214 19,901,214
Balance at 30 April 2007 1,114 - -
27,795,271 42,650,914 15,025,529
Issue of share capital
Share issue expenses
Adjustment prior year
264,489
Profit for the 6 months
3,089,941 3,089,941
Balance at 31 October 1,114 - -
2007 27,795,271 39,296,484 11,935,588
CASH FLOW STATEMENT
for the 6 months ending 31 October 2007
Reviewed Reviewed Audited
6 months 6 months 12 months
31-Oct- 31-Oct- 30-Apr-07
07 06
R`000 R`000 R`000
Cash from operational activities - 981
4,634 165
Cash from investment activities -17 - -302
283
Cash flows from financing 1,231
activities 5,531 124
(Decrease)/Increase in cash and
cash equivalents -52
879 5
Cash at the beginning of the - - -681
period 733 681
Cash at the end of the period - -733
146 676
NOTES
BASIS OF PREPARATION
The interim financial statements for the six months ended 30 October 2007
("the period") have been prepared in accordance with IFRS (International
Financial Reporting Standards) and IAS 34 - Interim Financial Reporting and
in the manner required by the Companies Act of South Africa.
The accounting policies applied in the preparation of the interim financial
statements are consistent with those applied in the previous comparable 6
months ended 30 October 2006 as well as annual financial statements for the
12 months ended 30 April 2007.
REVIEW REPORT OF THE INDEPENDENT AUDITORS OF BEGET
The interim financial statements were reviewed by PKF (PTA) INC. Their
review report is available for inspection at the company`s registered
offices.
The financial statements have been prepared on a going concern basis that
assumes the company will continue to operate in the following twelve
months. A subsidiary in the group, Beget Solutions (Pty) Ltd, as well as
Beget Holdings Limited has incurred substantial losses resulting in
negative cash flows and the inability to pay its creditors on due dates.
The going concern status of this subsidiary is subject to the successful
implementation of a turnaround strategy, securing new business and the
ability to generate sufficient cash flows in the ordinary course of
business in order to meet its operating and other commitments. The
company`s income statements does show a profit for the six months ended 31
October 2007. This is mainly due to a royalty agreement signed in 2007.
This agreement is only applicable to the 2008 financial year end. There are
however, still some matters that indicate the existence of a material
uncertainty on 31 October 2007, which may cast significant doubt about the
subsidiary`s and group`s ability to continue as a going concern.
In accordance with our responsibilities in terms of Sections 44(2) and
44(3) of the Auditing Profession Act, we report that a reportable
irregularity arose during the 30 April 2007 audit, out of Beget Solutions
(Pty) Ltd, a subsidiary company, trading whilst factually insolvent. The
financial losses of Beget Solutions (Pty) Ltd had a significant impact on
the group financial statements, which is now also trading factually
insolvent. None of the companies in the group were able to make value added
tax payments as required by the Value Added Tax Act, and pay as you earn,
unemployment insurance fund and skills development contributions as
required by the Income Tax Act, due to severe cash flow constraints. Since
30 April 2007, an agreement has been reached between Beget and SARS that
these outstanding payments can be deferred and paid in installments over a
certain period. Provisions for these amounts have been accounted for in the
balance sheet as at 31 October 2007.
GROUP PROFILE
Beget is an IT and telecoms group specializing in the development of
applications on the GPRS technology platform. This enables the transmission
of data using the cell phone network at a fraction of the cost of fixed and
radio telephony.
The group further provides and integrates other GSM based services like SMS
(Short Message Services) and LBS (Location Based Services).
COMMENTARY ON RESULTS
The financial results reflected revenues of R13 million for the 6 months
period with a profit of R3 million. The improvement in the profitability is
partly as a result of the royalty agreement with SMM Telematics (Pty) Ltd
in 2007. About 60% of the operating profits were derived from that BEE
royalty transaction. The development with associated costs of this
biometric vehicle tracking device is now complete and net royalty revenue
from 2,500 of the total order of 5,000 tracking devices is reflected in
these interim financials. The balance of the profit was generated from
Beget`s own Biometric and SMS products.
The circular detailing our BEE transaction was posted to shareholders on
the 21 December 2007 and the General Meeting will be held on 18 January
2008.
OPERATIONAL REVIEW
The group now has three divisions:
* Web based Biometric with GPRS including:
* Access control
* Time & Attendance
* Payroll
* Web based SMS`s
* Bulk SMS`s
* MMS
* Web based LBS (Location Based Services)
* SMSOS
* Data base management with LBS
The main focus is on the development of our own sales distribution arm and
the utilisation of Business Partners to market our products directly to
their own customer base. This has started to produce positive results.
PROSPECTS
With the foundation of the business now transformed and a range of products
that is stable and exceptionally well tested, Beget is set for solid
growth.
The board is confident of an operating profit in 2008.
* With the BEE transaction awaiting shareholders approval , Beget
is able to tender on large projects
* Royalty income is being received
* Retail sales process is in place and all marketing tools
activated
CHANGES TO THE BOARD OF DIRECTORS
T Mogashoa appointed as acting chairman from 1 June 2007
H Potgieter appointed as director from 28 September 2007
D Hawkins appointed as director from 28 September 2007
J Coetzee resigned as director on 28 September 2007
DECLARATION OF DIVIDEND
In line with the group policy no dividend has been declared for the period.
BEE Transaction
The revised financial effects of the BEE transaction are presented below.
These financial effects are the same as those presented in the circular to
shareholders dated and posted to shareholders on 21 December 2007.
Shareholders should note that these financial effects are based on Beget`s
30 April 2007 year end results and not on the interim results presented
above.
FINANCIAL EFFECTS
The pro forma financial effects of the transaction, based on the audited
results of Beget for the 12 months ended 30 April 2007 are set out in the
table below. The pro forma financial effects have been prepared for
illustrative purposes only to provide information on how the transaction
may have impacted on the results and financial position of Beget.
Preparation of the pro forma financial effects is the responsibility of the
directors. Because of their nature, the pro forma financial effects may not
fairly present Beget`s financial position after the transaction or on
future earnings.
Before the After the % change
Transaction(1 Transaction
) - Pro
forma(3)
Earnings (cents per -3.91 -3.85(2) 1.53
share)
Headline earnings -1.68 -2.26(2) -34.52
(cents per share)
Net asset value (cents -2.70 -1.09(4&5) 59.63
per share)
Net tangible asset -2.91 -1.24(4&5) 57.39
value (cents per
share)
Weighted average 508,559 712,809
number of shares in
issue (000)
Number of shares in 556,959 761,209
issue (000)
Notes:
1 Based on the audited year end results of Beget for the period ended 30
April 2007.
2 The earnings and headline earnings were calculated on the assumption
that the transaction was effected from 1 May 2006 taking into account the
royalty fee which will amount to R7, 200,000 in respect of the 5,000 unit
order. Any further orders will attract additional royalty income.
3 There was no calculation done for income tax as the company has a
calculated assessed loss of R19, 901,214 for the financial year ended 30
April 2007. The total Beget ordinary shares to be issued in terms of the
transaction, being 196,000,000 to SMM and 8,250,000 to Edelstein Bosman
making a total of 204,250,000 shares.
4 The following has been accounted for in the balance sheet:
a) Provision for transaction expenses of R452,674;
b) In terms of IFRS 2, the 204,250,000 shares to be issued at par
are accounted for at fair value, being the weighted average of
the market price 30 days prior to the transaction date, i.e. 7
cents per share. The effect results in cash of R408.50 and share
premium of R14, 297, 091, 50.
c) In terms of AC503 - Accounting for BEE Transactions, the
difference between the fair value of the equity instruments
granted and the fair value of the cash and other assets received,
i.e. the BEE equity credentials, represents an intangible item
that does not meet the definition of an intangible asset and,
therefore, does not qualify for recognition as an intangible
asset. The difference of R14, 297,091 is therefore expensed.
5 The net asset value per share and the net tangible asset value
per share were calculated on the assumption that the transaction
was effective at 30 April 2007.
On behalf of the Board
15 January 2008
AH Potgieter - CEO
Directors: T. Mogashoa (*) (Chairman); AH Potgieter (CEO); CJ van Coller
(*), H. Potgieter, D Hawkins (*non-executive)
Registered Office: 85 Durham Street, Clubview, CENTURION (PO Box 13983,
Clubview, 0014)
Transfer Secretaries: Link Marketing Services South Africa (Pty) Ltd, 11
Diagonal Street, Johannesburg, 2001 (PO Box 4844, Johannesburg, 2000)
Company Secretary: Secricover Network CC, 685B Verdi Street, Erasmuskloof,
0048 (PO Box 11699, Erasmuskloof, 0048)
Date: 15/01/2008 17:01:45 Produced by the JSE SENS Department.
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