| Tue 9 Nov 2010, 16:45 | | BEG - Beige Holdings Limited - Unaudited group results for the six months |
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BEG
BEG
BEG - Beige Holdings Limited - Unaudited group results for the six months
ended 30 September 2010
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 2010
Revenue up 4% to R289 million
Operating profit up 4% to R16 million
Total comprehensive income down 6% to R8 million
Cash generated up 355% to R7 million
The board presents its unaudited results for the six months ended 30 September
2010 below, together with audited results for the year ended 31 March 2010 and
unaudited results for the six months ended 30 September 2009.
Condensed consolidated statements of financial position as at 30 September
2010
Unaudited Audited Unaudited
six months 31 March six months
ended 2010 ended
30 September 30 September
2010 2009
R`000 R`000 R`000
ASSETS
Non-current assets 247 627 249 938 262 160
Property, plant and equipment 146 048 145 063 139 467
Intangible assets 89 481 90 581 105 992
Deferred income tax assets 12 098 14 294 16 701
Current assets 214 677 224 964 205 340
Inventories 89 935 88 242 86 787
Trade and other receivables 117 266 130 952 114 245
Cash and cash equivalents 7 476 5 770 4 308
Total assets 462 304 474 902 467 500
EQUITY AND LIABILITIES
Equity attributable to owners of the
company 208 278 200 215 209 783
Ordinary share capital and premium 194 893 284 367 290 056
Reserves 13 385 (84 152) (80 273)
Minority interest 2 746 2 602 -
Total equity 211 024 202 817 209 783
Non-current liabilities 33 888 35 261 70 070
Borrowings 30 394 32 317 67 886
Call option liability - - 206
Deferred income tax liabilities 3 494 2 944 1 978
Current liabilities 217 392 236 824 187 647
Trade and other payables 129 127 143 729 121 495
Borrowings 44 612 49 206 25 985
Call option liability - 696 -
Current income tax liabilities 1 138 1 893 5 425
Bank overdrafts 42 515 41 300 34 742
Total liabilities 251 280 272 085 257 717
Total equity and liabilities 462 304 474 902 467 500
Condensed consolidated statements of comprehensive income for the six months
ended 30 September 2010
Unaudited Audited Unaudited
six months 31 March six months
ended 2010 ended
30 30
September September
2010 2009
R`000 R`000 R`000
Revenue 289 291 603 803 278 893
Cost of sales (228 893) (486 943) (221 259)
Gross profit 60 398 116 860 57 634
Distribution costs (8 290) (15 329) (6 945)
Administrative expenses (35 718) (72 274) (34 917)
Operating profit 16 390 29 257 15 772
Gain on the re-measurement of call
option liability (Note 1) 696 1 666 2 156
Profit before finance costs 17 086 30 923 17 928
Finance income 408 452 165
Finance costs (6 289) (11 407) (6 856)
Profit before income tax 11 205 19 968 11 237
Income tax expense (2 998) (5 858) (2 495)
Total comprehensive income for the 8 207 14 110 8 742
period
Total comprehensive income
attributable to: 8 063 13 394 8 742
Equity holders of the company 144 716 -
Minority interest
Adjustments for headline earnings
Profit on disposal of investment after
tax - (24) -
Profit on disposal of plant and (48)
equipment after tax - -
Headline earnings 8 063 13 322 8 742
Earnings per share (cents):
- basic (Note 2 ) 0.52 0.85 0.55
- diluted (Note 2 and 3) 0.52 0.85 0.55
Additional information
Headline earnings (R`000) 8 063 13 322 8 742
Headline earnings per share (cents)
- basic (Note 2 ) 0.52 0.84 0.55
- diluted (Note 2 and 3) 0.52 0.84 0.55
Net asset value per share (cents) 13.53 13.00 13.14
Weighted average number of shares in 1 539 809 1 584 384 1 596 697
issue (`000)
Number of shares in issue (`000) 1 631 526 1 631 526 1 688 414
Treasury shares held (`000) 91 717 91 717 91 717
Notes:
1. On 13 August 2007 the company issued to its ordinary shareholders a
capitalisation award of redeemable preference shares that were
convertible into ordinary shares at the holder`s option. The preference
shares were classified as a debt instrument, amounting to R13.5 million
with an embedded call option liability amounting to R19.1 million. On
initial recognition and subsequent re-measurement the preference shares
and the embedded call option liability were measured at fair value, based
on the prevailing interest rates, the Beige share price, the conversion
ratio, and the strike price of 15 cents per ordinary share. The
preference shares were redeemed, or converted, in October 2010 and as a
result the embedded call option liability was re-measured to fair value
at balance sheet date to R0.0 million (2009: R0.2 million). As a result
a gain of R0.7 million (2009: R2.2 million) has been recorded in profit
and loss.
2. 91 716 667 (2009: 91 716 667) shares held as treasury stock have been
subtracted from the respective share totals for purposes of calculating
earnings per share information.
3. Diluted earnings per share is calculated by adjusting the weighted
average number of ordinary shares outstanding to assume conversion of all
dilutive potential ordinary shares. The company has two categories of
dilutive potential ordinary shares: convertible preference shares and
share options. Diluted earnings, and the weighted average number of
ordinary shares for 2010, have not been adjusted in this regard as the
effect of the convertible preference share conversion is anti-dilutive,
i.e. the ruling share price at 30 September 2010 is less than the
conversion strike price. For the share options, a calculation is done to
determine the number of shares that could have been acquired at fair
value (determined as the average annual market share price of the
company`s shares) based on the monetary value of the subscription rights
attached to the outstanding share options. The number of shares
calculated is compared with the number of shares that would have been
issued assuming the exercise of the share options. Diluted earnings, and
the weighted average number of ordinary shares for 2010, have not been
adjusted with regard to the share options as the effect of the share
options is anti-dilutive (2009: 1 979 212).
Group statement of changes in equity for the six months ended 30 September
2010
Ord- Ord- Ordinary Reserves Total Minor Total
inary inary share -ity equity
share treas- premium inter
capital ury est
shares
R`000 R`000 R`000 R`000 R`000 R`000 R`000
Balance at 31
March 2009 16 885 (874) 274 476 (89 015) 201 472 -- 201 472
Compre-
hensive
income
Profit for
the period
-- -- -- 8 742 8 742 -- 8 742
Total compre-
hensive
income -- -- -- 8 742 8 742 -- 8 742
Trans-actions
with owners
Treas-ury -- (43) (388) -- (431) -- (431)
shares held
by subsid-
iary
Total trans- -- (43) (388) -- (431) -- (431)
actions with
owners
Balance at 30
Sept-ember
2009
16 885 (917) 274 088 (80 273) 209 783 -- 209 783
Compre-
hensive
income
Profit for -- -- -- 4 652 4 652 716 5 368
the period
Total compre- -- -- -- 4 652 4 652 716 5 368
hensive
income
Trans-actions
with owners
Acqui-sition -- -- -- -- -- 1 886 1 886
of subsid-
iary
Cancel-lation (569) -- (5 120) (8 531) (14 -- (14
of shares 220) 220)
Total trans- (569) -- (5 120) (8 531) (14 -- (14
actions with 220) 220)
owners
Balance at 31 16 316 (917) 268 968 (84 152) 200 215 2 602 202 817
March 2010
Compre-
hensive
income
Profit for -- -- -- 8 063 8 063 144 8 207
the period
Total compre- -- -- -- 8 063 8 063 144 8 207
hensive
income
Trans-actions
with owners
Re- -- -- (89 474) 89 474 -- -- --
classificatio
n of fair
value adjust-
ment
Balance at 30 16 316 (917) 179 494 13 385 208 278 2 746 211 024
Sept-ember
2010
Note:
During the period under review, fair value adjustments of R89.5 million were
reclassified from ordinary share premium to reserves. This adjustment related
to a business combination in a prior period.
Condensed consolidated statement of cash flows for the six months ended 30
September 2010
Unaudited six Audited Unaudited six
months ended 31 March months ended
30 September 2010 30 September
2010 2009
R`000 R`000
R`000
Cash generated from operations 20 330 45 023 15 037
Net interest paid (5 881) (10 955) (5 738)
Income tax paid (1 007) (9 954) (3 694)
Net cash inflow from operating 13 442 24 114 5 605
activities
Net cash used in investing (6 434) (11 194) (4 065)
activities
Acquisition of subsidiary, net -- (2 993) --
of cash acquired
Purchases of property, plant (6 434) (8 512) (4 065)
and equipment
Proceeds from the sale of plant -- 148 --
and equipment
Proceeds from the sale of -- 163 --
investment
Cash generated for the period 7 008 12 920 1 540
Net cash used in financing (6 517) (27 776) (11 300)
activities
Decrease in borrowings (6 517) (27 776) (11 300)
Net increase/(decrease) in cash 491 (14 856) (9 760)
and cash equivalents
Cash, cash equivalents and bank
overdrafts at beginning of (35 530) (20 674) (20 674)
period
Cash, cash equivalents and bank
overdrafts at end of period (35 039) (35 530) (30 434)
Segmental analysis for the six months ended 30 September 2010
Out-
source Pack- Other Group
manufact aging
uring
R`000 R`000 R`000 R`000
Segment revenue
- Unaudited six months ended 30
September 2010
Total 244 503 59 225 -- 303 728
Intersegment revenue (10 955) (3 482) -- (14 437)
Revenue (from external customers) 233 548 55 743 -- 289 291
- Audited as at 31 March 2010
Total 501 316 121 916 -- 623 232
Intersegment revenue (10 957) (8 472) -- (19 429)
Revenue (from external customers) 490 359 113 444 -- 603 803
- Unaudited six months ended 30
September 2009
Total 234 751 61 710 -- 296 461
Intersegment revenue (15 999) (1 569) -- (17 568)
Revenue (from external customers) 218 752 60 141 -- 278 893
Segment operating profit/(loss)
- Unaudited six months ended 30 16 230 1 320 (1 160) 16 390
September 2010
- Audited as at 31 March 2010 34 036 (2 439) (2 340) 29 257
- Unaudited six months ended 30 17 435 (1 405) (258) 15 772
September 2009
COMMENTARY
The directors of Beige are pleased to announce the unaudited consolidated
group results for the six months ended 30 September 2010.
1. Nature of business
Beige is a registered holding company operating through eight
subsidiaries. The Beige group primarily operates as a contract and
packaging manufacturer, manufacturing and distributing cosmetics, soaps,
laundry soaps, packaging and allied products on behalf of brand owners
for both the local and international home and personal care industry and
is the largest fully empowered contract manufacturer in the South African
home and personal care industry.
2. Listing information
Beige is listed on the Alternative Exchange ("AltX") of the JSE Limited
under the share code: BEG. The company`s ISIN number is ZAE000034161.
3. Basis of preparation
The condensed results have been prepared in accordance with IAS 34 -
Interim Financial Reporting. The accounting policies applied are
consistent with those of the annual financial statements for the year
ended 31 March 2010, as described in those annual financial statements.
The company has not early adopted any new standards in these interim
results. These results are not reviewed or audited by
PricewaterhouseCoopers Inc.
4. Segment reporting
The chief operating decision-maker has been identified as the board of
directors. The board considers the business from a product perspective,
from which management assesses the performance of outsource manufacturing
and packaging products. Management has determined the operating segments
based on these reports.
5. Business review
During the period under review most of the operating units have performed
in line with, or slightly better than the prior comparative period. This
is significant given the difficult trading conditions that are currently
being experienced in the local and international retail trading
environment. Crystal Pack Pty Ltd ("Crystal Pack") has shown a
significant turnaround from the prior year comparative period. Beige
continues to make additional investments in infrastructure and capacity
and both the Durban and Gauteng operations have been expanded, in
expectation of the future growth in demand for the goods and services
that it provides.
These initiatives all form part of a strategic decision by the company 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
consolidated procurement.
The results of Herbal & Homeopathic (Pty) Ltd ("Herbal") have been
consolidated into the Group from October 2009.
6. Financial and operational overview
The board presents the results for the first six months of the year to 30
September 2010. These results show a increase in operating profit of 4%,
compared to the six month period ended 30 September 2009, and a 6%
decline in comprehensive income for the period, from R8.7 million to R8.2
million.
Turnover increased from R278.9 million in the comparative period to
R289.3 million for the period under review, an increase of 4%. The gross
profit margin has been maintained at 21% compared to the comparative
period, but is up compared to the gross profit margin percentage for the
full year to March 2010.
Distribution costs have increased by 19% due mainly to the inclusion of a
full six months of distribution costs for Herbal in the current period,
compared to none in the prior comparative period and general increase in
the costs of product distribution, driven by a change in product sales
mix Administration costs have been well controlled, increasing
marginally by 2%. This increase is again due to the inclusion of Herbal
for the six months in the current period, which, if excluded, would have
shown a reduction in administration costs against the comparable period.
However the focus on cost reduction and control throughout the group
continues.
The results for the period under review also include six months results
for the repack operations recently commenced on behalf of Unilever and
undertaken at two sites one in Gauteng and the other in KwaZulu-Natal.
These operations did not have any significant impact on the above
results.
Overall the group is in a much stronger position than in the comparative
period as represented by a stronger balance sheet, with tangible net
asset value increasing by 19% from that of the prior comparative period.
During the period under review a decision was taken to reclassify the
original fair value adjustment from share premium to retained income,
pursuant in part due to the voiding of the issue of shares to the vendors
of Crystal Pack. In addition, this has also lead to the reduction in
intangible assets from the prior comparative period due to the cost of
acquisition being considerably lower.
Long term borrowings reduced substantially from the prior period due to
the preference share liability moving from long term to current
liabilities as well as obligations in relation to the acquisition of
Quality Products. The long term and current borrowings have further
reduced after the year end and subsequent to the period end, the
preference shares have been redeemed or converted to ordinary shares.
Shareholders are also referred to subsequent events in this regard.
7. Prospects
The company is now entering its traditionally busier season, but the
sluggish consumer market could have an effect on the second half of the
year. The consolidation of Crystal Pack and Rap Products and the
strengthening of its management should see further synergies and cost
benefits.
8. Contingent assets
As previously announced, Beige has initiated criminal and civil legal
actions against all parties who were involved in the material
irregularities at Crystal Pack and steps to recover all amounts involved,
including costs and damages have commenced. No asset in relation to this
claim has been recognised in these results or previous results as the
claim is still in progress. Beige has assisted with the appointment and
funding of forensic auditors. As advised previously, the company has
managed to recover 56 887 561 shares from the CAVI consortium that were
issued in relation to the profit warranty but has been unable to enter
into agreements with the remaining parties to recover the remaining 18
892 490 shares.
9. Dividends
The third and final preference dividend of 8.40 cents per share was
recently announced on SENS and was paid to all preference shareholders
recorded in the preference share register of the company at the close of
business on Friday, 3 September 2010. This dividend was in respect of a
capitalisation award of redeemable, convertible, cumulative 8% preference
shares made to ordinary shareholders, prior to the issue of shares to the
vendors of Crystal Pack.
No ordinary dividends are proposed for the period.
10. Changes to the board
Ms L Gadd, previously an alternate director to Messrs V Khanyile and M
Fandeso, was appointed to the board with effect from 19 April 2010 and Mr
V Khanyile was appointed as alternate director to Ms L Gadd and Mr M
Fandeso. Mr V Khanyile resigned as alternate director on 1 September
2010.
11. Acquisitions and Disposals
During the period under review there were no acquisitions or disposals.
12. Cancellation and issue of shares
During the period under review the company has not cancelled nor issued
any shares.
13. Subsequent events
Odd lot offer
During the period under review, the directors of Beige proposed the
implementation of an odd lot offer to repurchase the ordinary shares of
odd-lot holders ("odd lot offer") in order to reduce the on-going
administration costs associated with such a significant number of odd lot
holders and to provide them with an inexpensive method of realising their
investment in Beige, where they do not have to incur transaction costs,.
A circular containing the full details of the odd-lot offer was posted to
shareholders on, or about, Wednesday 4 August 2010 and the special
resolutions relating to the implementation of the odd-lot offer were
approved at the annual general meeting of the company held on 27 August
2010. The special resolutions were registered by the Registrar of
Companies on 22 October 2010. The salient dates were announced on SENS
on 22 October 2010 and the offer closes at 12h00 on Friday, 12 November
2010.
Conversion and Redemption of the Cumulative, Non-Participating,
Convertible, Redeemable Preference Shares
Beige preference shareholders were required to elect to covert the 14 285
714 cumulative, non-participating, convertible, redeemable preference
shares ("the preference shares") issued by the Company on 13 August 2007
into ordinary shares by 12:00 on Friday, 22 October 2010, failing which
the preference shares would be automatically redeemed. Preference
shareholders elected to convert 127 305 preference shares, resulting in
the company issuing an additional 891 135 ordinary shares based on a
conversion ratio of 7 new ordinary shares for every preference share
held. Of the remaining 14 158 409 preference shares, preference
shareholders holding 10 857 480 preference shares entered into loan
agreements with the company in terms of which redemption monies due to
each of them will be held by the company on loan account and applied to
the subscription for new preference shares and/or the partial
underwriting of the proposed rights offer referred to below. Accordingly
the final cash amount paid out by the company in respect of the
redemption of the preference shares was R3 531 333.84, which amount
included an interest payment of 1.98 cents per share.
Proposed rights offer
The board has resolved to raise additional capital through the issue of
new variable rate, cumulative, non-participating, convertible, redeemable
preference shares by means of a partially underwritten rights offer of
preference shares to all ordinary shareholders. The terms of the new
preference shares were approved by shareholders at the general meeting
held on 27 August 2010. The cautionary announcement will be withdrawn as
soon as full details of the proposed rights offer have been released on
SENS.
Other than the redemption of preference shares and the proposed rights
offer, there have been no material subsequent events that require
disclosure at the date of this announcement.
By order of the Board
Monwabisi Fandeso Mark Di Nicola
Chairman Chief Executive Officer
9 November 2010
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
MP Fandeso* Chairman*; MM Di Nicola Chief Executive Officer; MC Easter
Financial Director; MM du Preez*; LI Karp*; RH Weissenberg*; L Gadd*
(* Non-executive)
Designated Advisor Transfer Office
Arcay Moela Sponsors (Proprietary) Link Market Services South Africa
Limited (Pty) Ltd
Date: 09/11/2010 16:45:01 Produced by the JSE SENS Department.
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