| Tue 25 Nov 2008, 7:33 | | BEG - Beige - Trading update for the six months ended 30 September 2008 advice |
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BEG
BEG
BEG - Beige - Trading update for the six months ended 30 September 2008, advice
of probable restatement of prior year results and renewal of cautionary
announcement
BEIGE HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/006871/06)
("Beige" or "the company")
ISIN Code: ZAE 000034161 Share code: BEG
TRADING UPDATE FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2008, ADVICE OF PROBABLE
RESTATEMENT OF PRIOR YEAR RESULTS AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
Introduction
Shareholders are advised that the company will be restating its prior year
earnings as further detailed below. The current and prior period results have
been negatively impacted by accounting irregularities at a recently acquired
subsidiary accounting for approximately 10% of the group`s turnover.
Notwithstanding this setback, headline earnings in Rand value are expected to
improve by between 55% and 65% to approximately R16 million compared to the
anticipated restated headline earnings in the prior comparative period of
approximately R9.9 million. The improvement over the original published prior
comparative period headline earnings of R11.2 million is expected to be between
40% and 45%. Headline earnings per share are expected to remain in line with
expected restated headline earnings per share but will reduce from the prior
period published headline earnings per share by approximately 11%.
Shareholders are referred to further information and the detailed trading update
below.
Crystal Pack (Proprietary) Limited ("Crystal Pack") - probable restatement of
prior year results
Shareholders are advised that the board of directors has uncovered material
accounting irregularities at Crystal Pack, a wholly-owned subsidiary of Beige.
Suspicions were raised in September 2008 and Beige immediately commissioned a
forensic audit into Crystal Pack`s financial affairs. Crystal Pack was acquired
by Beige from the CAVI consortium from 1 July 2007 and was subject to profit and
other warranties for the year to 31 March 2008.
The forensic audit revealed irregularities, which Beige is of the opinion
constitutes serious manipulation of financial accounts from both prior to the
Crystal Pack acquisition date, and during the warranty period. The matter has
been referred to the National Prosecuting Authorities.
Beige is currently working with its external auditors to assess the impact on
the accounts of Beige for the year ended 31 March 2008 and the period ended 30
September 2009. The financial effects of the irregularities above will mostly
affect the financial results of the prior year ended 31 March 2008 and these
results will consequently be restated.
The cumulative effect of the accounting irregularities after taxation is
estimated at R5.5 million with approximately R1.2 million impacting on the six
months ended 30 September 2008. The prior year profit before taxation impact is
estimated at R4.3 million, of which R1.3 million will affect the prior year six
month comparative figure.
Beige does not expect any further material adjustments to the above numbers.
The board of Beige have taken the following steps:
1. The dismissal of the Crystal Pack executives implicated;
2. The initiation of legal action against parties who have been involved;
3. Preliminary steps to recover any amounts involved and damages; and
4. Replacement of Crystal Pack former executives by competent, experienced
individuals.
The board has also identified possible irregular trades in Beige shares
conducted by some of the parties concerned above. The requisite declarations to
the JSE and surveillance authorities have been made, who shall be investigating
the matter.
Shareholders, and all parties affected by these issues, will be kept up to date
on developments and are assured the matter shall be brought to conclusion as
quickly as possible.
Trading update
In terms of the Listings Requirements of the JSE Limited ("the JSE"), listed
companies are required to publish a trading statement as soon as they become
reasonably certain that the financial results for the next period to be reported
on will be more than 20% different from those of the previous corresponding
period.
Despite the accounting irregularities and subsequent accounting adjustments and
provisions, Beige expect to report an improvement in both earnings and headline
earnings in Rand value for the comparative period, both before and after the
required restatement mentioned above.
Attributable earnings in Rand value are expected to improve by between 110% and
120% to approximately R16 million. This is compared to both the original
published loss of R105.6 million and the restated loss of R107 million in the
prior comparative period (after a goodwill impairment of R116.9 million relating
to Crystal Pack in the prior year). Earnings per share is similarly expected to
increase to 0.95 cents per share by between 110% and 120% for both measures of
comparison of (5.73) cents per share and (5.81) cents per share respectively.
Headline earnings in Rand value are expected to improve to approximately R16
million by between 55% and 65% compared to the restated headline earnings of
R9.9 million in the prior comparative period, whilst the improvement over the
original published prior comparative period headline earnings of R11.2 million
are expected to be between 40% and 45%.
Headline earnings per share of 0.95 cents per share is expected to remain in
line with the expected restated prior comparative period number of 0.94 cents
per share but is expected to reflect a decline of approximately 11% compared to
the prior period published results of 1.07 cents per share.
The financial information on which this trading statement is based has not been
reviewed nor reported on by the company`s auditors.
The group has performed remarkably well overall and interim results are expected
to be published within a couple of days.
Renewal of cautionary announcement
Further to the cautionary announcement published on SENS on 10 November 2008,
shareholders are advised to continue exercising caution when dealing in the
company`s securities until such time as the company`s interim results, inclusive
of the prior period restatement, are published on SENS.
On behalf of the board
Johannesburg
24 November 2008
Designated Advisor
Arcay Moela Sponsors (Proprietary)
Limited
Date: 25/11/2008 07:33:01 Produced by the JSE SENS Department.
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