| Thu 30 Jun 2011, 11:56 | | BEG - Beige Holdings Limited - Reviewed consolidated results for the year ended |
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BEG
BEG
BEG - Beige Holdings Limited - Reviewed consolidated results for the year ended
31 March 2011 and declaration of maiden ordinary cash dividend
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")
REVIEWED CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 MARCH 2011
AND DECLARATION OF MAIDEN ORDINARY CASH DIVIDEND
Condensed Consolidated Statement of Financial Position as at 31 March 2011
Reviewed Audited
31 March 2011 31 March 2010
R`000 R`000
ASSETS
Non-current assets 260 454 249 938
Property, plant and equipment 156 589 145 063
Intangible assets 88 205 90 581
Other receivables 410 --
Deferred income tax assets 15 250 14 294
Current assets 192 516 224 964
Inventories 82 726 88 242
Trade and other receivables 105 274 130 952
Cash and cash equivalents 4 516 5 770
Total assets 452 970 474 902
EQUITY AND LIABILITIES
Equity attributable to equity holders 221 533 200 215
of the company
Ordinary share capital 15 396 15 399
Ordinary share premium 179 570 268 968
Other reserves 18 442 10 842
Retained earnings/(loss) 8 125 (94 994)
Non-controlling interest 2 261 2 602
Total equity 223 794 202 817
Non-current liabilities 34 025 35 261
Borrowings 25 829 32 317
Deferred income tax liabilities 8 196 2 944
Current liabilities 195 151 236 824
Trade and other payables 128 095 143 729
Borrowings 28 239 49 206
Call option liability -- 696
Current income tax liabilities 1 109 1 893
Bank overdrafts 37 708 41 300
Total liabilities 229 176 272 085
Total equity and liabilities 452 970 474 902
Ordinary shares (000`s)
In issue (Note 1) 1 539 510 1 539 810
Diluted (Note 2) 1 539 510 1 539 810
Net asset value per share information
(net of non-controlling interest)
Net asset value per share (cents) 14.39 13.00
Net tangible asset value per share 8.66 6.20
(cents)
Diluted net asset value per share 14.39 13.00
(cents)
Diluted net tangible asset value per 8.66 6.20
share (cents)
Condensed Consolidated Statement of Comprehensive Income for the year ended 31
March 2011
Reviewed Audited
31 March 31 March 2010
2011 R`000
R`000
Revenue 594 687 603 803
Cost of sales (485 537) (486 943)
Gross profit 109 150 116 860
Distribution costs (17 510) (15 329)
Administrative expenses (65 715) (72 274)
Operating profit 25 925 29 257
Gain on the re-measurement of call option 696 1 666
liability
Profit before finance costs 26 621 30 923
Finance income 1 041 452
Finance costs (10 651) (11 407)
Profit before income tax 17 011 19 968
Income tax expense (3 707) (5 858)
Profit for the year 13 304 14 110
Other comprehensive income:
Gain on property valuation 9 287 --
Income tax relating to components of other (1 687) --
comprehensive income
Other comprehensive income for the year, 7 600 --
net of tax
Total comprehensive income for the year 20 904 14 110
Total comprehensive income attributable to:
Equity holders of the company 21 245 13 394
Non-controlling interest (341) 716
20 904 14 110
Profit for the year 13 304 14 110
Non-controlling interest 341 (716)
Total comprehensive income for the year 13 645 13 394
attributable to equity holders of the
company
Headline earnings adjustments:
Profit on sale of property, plant and -- (48)
equipment after tax
Profit on sale of investment after tax -- (24)
Headline earnings for the year attributable 13 645 13 322
to equity holders of the company
Ordinary shares (000`s) 1 539 742 1 584 384
Weighted average shares in issue (Note 1)
Diluted (Note 2) 1 539 742 1 584 384
Earnings per share information
Earnings per share (cents) 0.89 0.85
Headline earnings per share (cents) 0.89 0.84
Diluted earnings per share (cents) 0.89 0.85
Diluted headline earnings per share (cents) 0.89 0.84
Notes
1 92 311 517 (2010: 91 716 667) shares held as treasury stock have been
subtracted from the respective share totals for purposes of calculating
earnings per share information.
2. 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 one category of dilutive
potential ordinary shares being share options. 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 2011, have not been
adjusted with regard to the share options as the effect of the share
options is anti-dilutive. These share options were exercisable up to and
including 31 March 2011 and have therefore subsequently expired post year
end.
Condensed Consolidated Statement of Cash Flows for the year ended 31 March 2011
Reviewed Audited
31 March 2011 31 March 2010
R`000 R`000
Cash flows from operating activities:
Net cash generated from operating 45 135 24 114
activities
Cash flows from investing activities:
Net cash used in investing activities (13 794) (11 194)
Cash flows from financing activities:
Net cash used in financing activities (29 003) (27 776)
Net increase/(decrease) in cash, cash 2 338 (14 856)
equivalents and bank overdrafts
Cash, cash equivalents and bank (35 530) (20 674)
overdrafts at the beginning of the year
Cash, cash equivalents and bank (33 192) (35 530)
overdrafts at the end of the year
Condensed Consolidated Statement of Changes in Equity for the year ended 31
March 2011
Ordinar Ordinary Ordinar Other Retain Total Non- Total
y share treasury y share reserv ed control
capital shares premium es (loss) ling
/ R`000 interes R`000
R`000 R`000 R`000 R`000 earnin t
gs
R`000 R`000
Balance
at 31 16 885 (874) 274 476 10 842 (99 201 472 -- 201
March 857) 472
2009
Comprehen
sive
income
Profit -- -- -- -- 13 394 13 394 716 14 110
for the
year
Total
comprehen -- -- -- --
sive 13 394 13 394 716 14 110
income
Transacti
ons with
owners
Acquisiti -- 1 886 1 886
on of -- -- -- -- --
subsidiar
y
Cancellat (569) -- (5 120) -- (8 (14 -- (14
ion of 531) 220) 220)
shares
Treasury -- (43) (388) -- (431) -- (431)
shares --
held by
subsidiar
y
Total (14 1 886 (12
transacti (569) (43) (5 508) -- (8 651) 765)
ons with 531)
owners
Balance (94 200 215 2 602 202
at 31 16 316 (917) 268 968 10 842 994) 817
March
2010
Comprehen
sive
income
Profit/(l -- -- -- -- 13 645 13 645 (341) 13 304
oss) for
the year
Other
comprehen
sive
income
Gain on -- -- -- 7 600 -- 7 600 -- 7 600
property
revaluati
on
Total -- -- -- 7 600 -- 7 600 -- 7 600
other
comprehen
sive
income
Total -- -- -- 7 600 13 645 21 245 (341) 20 904
comprehen
sive
income/(l
oss)
Transacti
ons with
owners
Reclassif -- -- (89 -- 89 474 -- -- --
ication 474)
of fair
value
adjustmen
t (Note
1)
Share (6) -- (24) -- -- (30) -- (30)
buyback
(Note 2)
Treasury -- (6) (24) -- -- (30) -- (30)
shares
acquired
by
subsidiar
y (Note
2)
Share -- -- (1) -- -- (1) -- (1)
issue
costs
(Note 2)
Conversio 9 -- 125 -- -- 134 -- 134
n of
preferenc
e shares
(Note 2)
Total 3 (6) (89 -- 89 474 73 -- 73
transacti 398)
ons with
owners
Balance 16 319 (923) 179 570 18 442 8 125 221 533 2 261 223
at 31 794
March
2011
Notes
1 Reclassification of fair value adjustment previously included in share
premium in respect of Crystal Pack in order to reflect the statutory share
premium.
2 Refer to note 11 in the commentary.
Condensed Consolidated Outsource
Segmental Analysis Manufactur Packaging Other Group
ing R`000 R`000 R`000
R`000
Revenue
- reviewed as at 31 March 490 874 103 813 -- 594 687
2011
- audited as at 31 March 490 359 113 444 -- 603 803
2010
Operating profit/(loss)
- reviewed as at 31 March 21 768 3 235 922 25 925
2011
- audited as at 31 March 34 036 (2 439) (2 340) 29 257
2010
Net finance costs
- reviewed as at 31 March (5 872) (1 691) (2 047) (9 610)
2011
- audited as at 31 March (5 566) (2 649) (2 740) (10 955)
2010
Profit/(loss) before tax
- reviewed as at 31 March 15 895 1 544 (428) 17 011
2011
- audited as at 31 March 28 470 (5 087) (3 415) 19 968
2010
Total assets
- reviewed as at 31 March 328 230 123 031 1 709 452 970
2011
- audited as at 31 March 352 603 120 262 2 037 474 902
2010
Total liabilities
- reviewed as at 31 March 140 786 42 660 45 730 229 176
2011
- audited as at 31 March 173 163 44 934 53 988 272 085
2010
Additional information
Reviewed Audited
Year ended Year ended
31 March 2011 31 March 2010
R`000 R`000
Amortisation of intangible assets 2 376 2 376
Depreciation of property, plant 11 557 9 766
and equipment
Purchase of property, plant and 13 794 8 512
equipment
Sale of property, plant and -- 148
equipment
Sale of investment -- 163
Operating lease commitments 23 433 57 358
Commitments to purchase property, 33 250 --
plant and equipment (Refer to note
13 in the commentary)
COMMENTARY
The directors of Beige and its subsidiaries are pleased to announce the reviewed
results for the year ended 31 March 2011. These results show the consolidated
position of Beige.
1 Nature of business
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 ZAE 000034161.
3 Basis of preparation
The condensed consolidated financial statements for the year ended 31 March
2011 were prepared in accordance with IAS 34: Interim Financial Reporting,
Section 8.57 of the Listing Requirements of the Johannesburg Stock Exchange
("the JSE"), and the requirements of the Companies Act of South Africa.
The principal accounting policies used in the preparation of the results
for the year ended 31 March 2011 are consistent with those applied for the
year ended 31 March 2010. During the year, the Group adopted all the IFRS
and interpretations being effective and deemed applicable to the Group.
None of these had a material impact on the results of the Group.
4 Reviewed results
PricewaterhouseCoopers Inc, the Group`s independent auditors, have reviewed
the condensed consolidated financial information for the year ended 31
March 2011, that comprise the condensed consolidated statement of financial
position at 31 March 2011, the condensed consolidated statement of
comprehensive income, the condensed consolidated statement of changes in
equity, and the condensed consolidated statement of cash flows for the year
then ended, and have expressed an unqualified and unmodified review opinion
on these condensed consolidated financial statements. A copy of the review
opinion is available for inspection at the company`s registered office.
5 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.
6 Business review
During the year under review, most of the operating units have performed in
line with or slightly better than expected in the economic climate,
maintaining similar revenue levels to the prior comparative period although
margin pressure was experienced. The Durban operation had a continued
increase in demand through new customers but declines in demand from
existing customers as well as unpredictable demand levels during this
period. The Chloorkop operation has continued to show substantially
improved operational and financial results, whilst Crystal Pack has shown a
significant improvement from the prior year comparative period. Herbal &
Homeopathic has been included for a full year following the acquisition of
a controlling interest in the business with effect from October 2009.
During the year under review, Beige opened two repacking facilities through
which it repacks damaged goods on behalf of an international brand owner.
These facilities, based in Pietermaritzburg and Johannesburg, have already
contributed profit to the Group on start up and are expected to become more
profitable in future years as operations grow.
In addition, Beige has continued to make additional investments in
infrastructure and capacity, and both the Durban and Johannesburg
operations have been expanded.
The Group is experiencing a gradual return to growth in demand for certain
of the goods and services that it provides, although the year showed a
continued substitution of luxury products for more affordable products by
consumers.
The Board is pleased to report that following a BBBEE Audit Rating by
Empowerdex, the Group has once again been awarded an "AA" rating level
(Level 3 contributor) in terms of the Department of Trade and Industry`s
Code of Good Practice.
7 Financial and operational overview
The results for the year ended 31 March 2011 reflect the continued
difficult trading environment in the home and personal care markets.
Turnover has been largely maintained, with a marginal decline of 1.5%
against the comparative year.
Gross profit margin declined from 19.4% in the prior year to 18.4% this
year. This decline can be attributed to the product mix changes to more
affordable products as well as a move from the traditional long production
runs to just-in-time short production runs for large customers. This
directly impacted operating profit which is down 11.4% on the prior year.
Operating margins decreased from 4.8% in the prior year to 4.4%, which was
primarily as a result of the lower gross profit. This reduction in
operating profit has been mitigated to some extent by the 9.1% reduction in
administration costs compared to the prior year, achieved due to effective
cost control within the Group, which should benefit the Group going
forward.
Distribution costs have increased by 14.2% due to product mix changes and
the general increases in the costs of product distribution.
Reduction in net finance costs to R9.6 million (2010: R11.0 million) was
due to the continuing lower interest rate environment and a decrease in
Group borrowings, partly attributable to the redemption of the preference
shares and improved management of working capital.
The effective tax rate is affected by permanent differences due to the
dividends on preference shares not being deductible for tax and other
allowable permanent tax deductions.
The other comprehensive income for the year arises on the fair value
revaluation, net of tax, of the existing Chloorkop property. Subsequent to
year end, Beige entered into a joint venture agreement in terms of a sale
and leaseback of the Chloorkop property, for a consideration amounting to
R42.8 million. In terms of the accounting policies of the Group the after
tax fair value adjustment of R7.6 million has been accounted for in other
comprehensive income
Cash generated from operations improved substantially from R24.1 million to
R45.1 million, which further demonstrates the improvement in working
capital management throughout the Group. The Group also increased its
investment in plant and equipment during the year by R13.8 million from
R8.5 million in the prior year. Repayment of borrowings of R29.0 million
has increased marginally compared to R27.8 million in the prior year.
Borrowings reduced substantially from the prior period partly due to the
preference shares being redeemed or converted into ordinary shares during
the period, other than those preference shareholders who had committed to
underwrite the rights offer, and the final repayment of obligations in
relation to the acquisition of Quality Products.
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 21.6% from that of the prior comparative period.
8 Prospects
The Group expects to see an increased recovery in demand for its products
and a return by consumers to luxury products as the economy recovers.
Improved performance in the coming year is expected with further
integration of Group facilities planned and the strengthening of management
at these facilities. Beige has started to unlock synergies and cost
benefits.
9 Contingent assets
As announced in prior years, 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 are ongoing. 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 some of the members of the CAVI consortium,
that were issued in relation to the profit warranty, but to date, has been
unable to enter into agreements with the remaining parties to recover the
remaining 18 892 490 profit warranty shares. These shares were
subsequently sold by the remaining parties.
10 Dividends
The third and final preference dividend of 8.40 cents per share 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.
The board is pleased to declare a maiden ordinary cash dividend of 0.15
cents per ordinary share in respect of the year ended 31 March 2011. The
ordinary cash dividend will be payable to shareholders recorded in the
share register of the Company at the close of business on Friday, 22 July
2011 and the directors confirm that the company will satisfy the solvency
and liquidity test immediately after completing the distribution.
Salient dates:
2011
Last day to trade "cum" the cash dividend ("LDT"): Friday, 15 July
Date trading commences "ex" the cash dividend: Monday, 18 July
Record date for payment of the cash dividend: Friday, 22 July
Date of payment of the cash dividend: Monday, 25 July
Share certificates may not be dematerialised or rematerialised between Monday,
18 July 2011 and Friday, 22 July 2011 both dates inclusive.
11 Cancellation and issue of shares
(i) Odd Lot Offer
During the year under review, the company and its subsidiaries repurchased
1 190 814 shares in terms of an odd lot offer to shareholders holding 5 000
or less shares in the capital of the company. 594 850 of these shares were
purchased by a wholly-owned subsidiary of the company, and are held as
treasury shares, whilst the remaining 595 964 shares were cancelled.
(ii) Conversion and Redemption of Preference shares
Preference shareholders holding 127 305 preference shares elected to
convert their preference shares into ordinary shares, resulting in the
company issuing 891 135 ordinary shares at 15 cents per share, based on a
conversion ratio of seven new ordinary shares for every one preference
share held. The remaining 14 158 409 preference shares were redeemed by
the company with effect from 25 October 2010 at a price of R1.0698, which
amount included interest of 1.98 cents per share.
12 Changes to the board
Mr M Fandeso, the Chairman of the Board, has been designated as Independent
Non-executive Chairman with immediate effect following his resignation from
Thebe Investment Corporation (Pty) Ltd. 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 an
alternate director on 1 September 2010. Mr James Alderslade, alternate
director to Mr Monwabisi Fandeso, resigned from the board with effect from
10 November 2010.
13 Subsequent events
(i) Restructure of Property Interests and Property Acquisition
Following the year end, Beige entered into a joint venture agreement with
True Group Limited which joint venture will purchase Beige`s existing
property at Chloorkop Extension 1 from a Beige subsidiary for a purchase
consideration of R42.8 million and as well as the property occupied by
Beige`s Durban-based Quality Products factory at 174 Chamberlain Road,
Jacobs, Durban from Metboard Properties Limited for a purchase
consideration of R33.3 million. The transaction will result in the
existing Chloorkop property debt being repaid, whilst new property funding
has been secured by the joint venture. The rationale for the transaction
is to enable Beige to own its factory premises via the joint venture, as
opposed to leasing those properties where large investments in
infrastructure and plant and equipment have and will continue to be made.
This strategy is expected to maximize the utilisation of the company`s
existing assets, avoid the losses, disruption and costs associated with a
large scale factory move and ensure sustainable production for its
customers. In addition, the restructure will result in release of
approximately R9.5 million in cash to the Beige Group, which cash will be
used for working capital and expansion purposes. The restructure and
acquisition is expected to be effective from 1 August 2011, once the
transfers of the properties are effected through the Deeds Office and other
suspensive conditions have been fulfilled.
(ii) Rights Offer
Subsequent to year end, Beige issued 25 000 000 new variable rate,
cumulative, non-participating, convertible, redeemable preference shares
("preference share(s)") at an issue price of R1.00 per preference share.
The preference shares were issued pursuant to a partially underwritten
rights offer to ordinary shareholders of 25 000 000 preference shares in
the ratio of 1.53203 preference shares for every 100 Beige ordinary shares.
The rights offer was oversubscribed by 30%.
By order of the Board
Monwabisi Fandeso Mark Di Nicola
Chairman Chief Executive Officer
30 June 2011
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*#; MM Di Nicola Chief Executive Officer; MC Easter
Financial Director; MM du Preez*; L Gadd*; LI Karp*#; RH
Weissenberg*#
(* Non-executive)
(# Independent)
Designated Advisor Transfer Office
Arcay Moela Sponsors (Pty) Ltd Link Market Services South
Auditors Africa (Pty) Ltd
PricewaterhouseCoopers Inc
Date: 30/06/2011 11:56:01 Produced by the JSE SENS Department.
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