| Tue 18 May 2004, 14:54 | | udited Results For The Year Ended 29 February 2004 |
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Beige - Audited Results For The Year Ended 29 February 2004;
And Withdrawal Of Cautionary Announcement
Beige Holdings Limited
Registration No: 1997/006871/06
Share code: BEG ISIN code: ZAE000034161
("Beige" or "the company")
AUDITED RESULTS FOR THE YEAR ENDED 29 FEBRUARY 2004 AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
Group Income Statements
Audited for Unaudited Audited for
the year for the 6 the year
ended months ended ended
29 February 31 August 28 February
2004 2003 2003
R"000 R"000 R"000
Revenue 69 519 34 078 65 728
Cost of sales (47 194) (20 013) (37 409)
Gross profit 22 325 14 065 28 319
Operating expenses (19 406) (12 829) (20 480)
Depreciation (632) (283) (552)
Operating profit 2 287 953 7 287
Other income 26 27 120
Net profit from activities 2 313 980 7 407
before finance charges and tax
Finance charges (224) (16) (541)
Net profit before taxation 2 089 964 6 866
Taxation 137 (336) 972
Net profit for the period 2 226 628 7 838
Calculation of headline R"000 R"000 R"000
earnings
Net profit for the period 2 226 628 7 838
Adjustments for:
Recovery of restraint -- -- (2 142)
undertaking payment (87) -- --
Write Back of unidentified (750) -- --
deposits
Capital Profit
Liquidation dividend -- (1 175)
Profit on settlement of
royalty agreement with PI -- -- (103)
Product (Proprietary) Limited
(The Like Silk brands)
Amortisation of goodwill 1 516 604 1 209
Negative goodwill recognised (63) (32) (64)
in the income statement
Profit on disposal and (75) -- 11
impairment of plant and
equipment
2 767 1 200 5 574
Tax effect of adjustments -- - 31
Headline earnings for the 2 767 1 200 5 605
period
Ordinary shares in issue
(000"s)
- Weighted 272 126 261 881 198 037
- Fully diluted (Note 1) 311 442 309 131 254 037
Earnings per share information
Attributable earnings per 0,82 0,24 3,96
ordinary share (cents)
Headline earnings per share 1,02 0,46 2,83
(cents)
Fully diluted attributable 0,72 0,20 3,09
earnings per share (cents)
Fully diluted headline 0,89 0,39 2,21
earnings per share (cents)
Notes
1. Fully diluted earnings per share information is reflected showing the
potential effect of full dilution for 26 000 000 options held by Beige
directors and an ex-employee as well as the 13 316 213 shares to be issued
to Craig van Zeil in relation to the acquisition of the remaining 49% of
Get Fresh.
Group Balance Sheets
Audited as Unaudited as Audited as
at at at
29 February 31 August 28 February
2004 2003 2003
R"000 R"000 R"000
ASSETS
Non-current assets 9 198 6 406 6 663
Plant, equipment and vehicles 3 546 2 082 1 471
Investment - intangibles 2 189 1 277 1 849
Deferred taxation 3 463 3 047 3 343
Current assets 28 766 30 786 24 889
Inventories 12 715 11 667 9 192
Accounts receivable - trade 12 691 17 029 12 410
- other 2 497 1 369 2 499
Taxation prepaid 67 531 46
Cash resources 796 190 742
Total assets 37 964 37 192 31 552
EQUITY AND LIABILITIES
Capital and reserves 25 471 22 798 19 920
Shareholders" funds 25 471 22 798 19 920
Non-current liabilities 963 332 2 490
Long-term liabilities 963 332 2 490
Current liabilities 11 530 14 062 9 142
Accounts payable - trade 8 567 10 917 6 712
- other -- 547 -
Current portion of long-term 324 10 147
liabilities
Taxation 215 37 129
Bank overdraft 2 424 2 551 2 154
Total equity and liabilities 37 964 37 192 31 552
Ordinary shares in issue
(000"s)
At period end 282 099 282 099 243 375
At period end including shares 295 415
issued for purchase of 49%
minority
Fully diluted (Note 1) 321 415 329 349 308 099
Net asset value per share
information
Net asset value per share 9,03 8,08 8,18
(cents)
Net tangible asset value per 8,25 7,63 7,43
share (cents)
Net asset value per share
(cents) including shares 8,62 n/a n/a
issued for purchase of 49%
minority
Net tangible asset value per
share (cents) ) including 7,88 n/a n/a
shares issued for purchase of
49% minority
Fully diluted net asset value 7,92 6,92 6,47
per share (cents)
Fully diluted net tangible 7,24 6,53 5,87
asset value per share (cents)
Notes
1. Fully diluted net asset value per share information is reflected showing
the potential effect of full dilution for 26 000 000 options held by
directors and an ex-employee as well as the 13 316 213 shares to be issued
to Craig van Zeil in relation to the acquisition of the remaining 49% of
Get Fresh.
Abridged Group Cash Flow Statement
Audited for Unaudited Audited for
the year for the the
ended 6 months year ended
29 February ended 28 February
2004 31 August 2003
R"000 2003 R"000
R"000
Net cash inflow/(outflow) from 2 434 (774) (8 286)
operating activities
Net cash inflow/(outflow) from (4 880) (257) (958)
investing activities
Net cash inflow from financing 2 230 82 8 037
activities
Net decrease in cash and cash (216) (949) (1 207)
equivalents
(Bank overdraft)/cash and cash (1 412) (1 412) (205)
equivalents at beginning of
period
Bank overdraft at end of (1 628) (2 361) (1 412)
period
Group Statement of Changes in Equity
Share Share Accumulated Other Total
Capital premium loss
R"000 R"000 R"000 (R"000) R"000
Balance at 28 951 86 590 (82 804) - 4 737
February 2002
Issue of shares for 238 1 188 - - 1 426
Dudley"s acquisition
Issue of share for 149 744 - - 893
Get Fresh acquisition
Issue of shares for 1 096 4 385 - - 5 481
rights offer
Cost of issue of - (1 153) - - (1 153)
shares
Increase in purchase - - -
price of Dudley"s 698 698
acquisition to be
settled in shares
after year end
Profit for the year - - 7 838 - 7 838
Balance at 28 2 434 91 754 (74 966) 698 19 920
February 2003
Issue of 8 723 850 87 611 - (698) -
shares for Dudley"s
acquisition
Issue of 30 000 000 300 1 950 - - 2 250
shares for conversion
of loans
Profit for period - - 2 226 - 2 226
49% of Get Fresh - - - (257) - (257)
net liability assumed
Issue of shares after - - - 1 332 1 332
year end for 49% of
Get Fresh
Balance at 29 2 821 94 315 (72 997) 1 332 25 471
February 2004
COMMENTARY
The directors of Beige announce the annual results for the year ended 29
February 2004. The accounting policies adopted for purposes of this annual
report comply, and have been consistently applied in all material respects, with
South African Statements of Generally Accepted Accounting Practice (GAAP). The
results have been audited by Nexia Levitt Kirson whose unqualified report is
available for inspection at the registered office of the company.
Results
On the face of it, results for the year ended 29 February 2004 were poor, with
the Group reporting attributable earnings of R2,226 million (2003: R7,838) and
headline earnings of R2, 767 million (2003: R5,6 million). Revenue increased by
5,8% to R69,5 million, whilst operating profit, excluding exceptional items,
declined to R2,2 million compared to R7,2 million for the corresponding period
last year. The latter decline resulted primarily from a drop in gross margin
year on year of R6 million, with the average gross profit percentage dropping
from 43% to 32%. This is as a result of a combination of factors, more notably
the adverse effect of the strengthening of the Rand on export margins, increased
competition at the lower-end of the soap market, significant increases in
freight costs, as well as increased labour costs. In addition, initial quality
problems were experienced on certain export products after the relocation of the
Get Fresh factory. These have since been resolved. Operating costs have been
well controlled with a decline year on year. These results must be seen against
a backdrop of a major restructuring and repositioning of the Group, which bore
fruit only towards the end of the period under review.
Group review
Beige is a contract manufacturing company that manufactures and distributes
cosmetics, soaps, laundry soaps and allied products for bath and body care for
the South African and international markets. Over the past few years, management
has concentrated on laying strong foundations without compromising Beige"s
entrepreneurial spirit.
During the year, the Group focused on bedding down structural and operational
changes, which also involved factory relocations and the establishment of a
centralised local and international marketing department. International sales
volumes did increase by 40% year on year, but the strengthening Rand squeezed
margins and also led to some unexpected exchange losses. These factors, combined
with the direct and indirect costs of reorganisation, contributed to the
reported decline in profit.
The continued investment in the Group"s marketing drive has yielded results,
with new deals and export opportunities flowing through at a satisfactory rate.
The Group developed new product lines for prominent consumer groups, in addition
to securing a number of significant local and international contracts, more
notably the five year manufacturing contract with Tura International LLC, a
subsidiary of Lornamead, shortly after year-end.
With effect from 01 March 2003, Beige exercised its option to purchase the
remaining 49% shareholding in Get Fresh from Craig van Zeil. Craig was appointed
as the Group"s International Sales and Marketing Director. His appointment
resulted in a substantial increase in export sales volumes for the Group"s
subsidiaries.
In June 2003, Dudley"s acquired additional plant and equipment and moved into
bigger premises. At the same time, the Get Fresh soap manufacturing operations
were absorbed into Speciality Formulas and the manufacture of its specialised
body products into the Dudley"s operation. This has resulted in increased cost
efficiencies, and the larger premises provided for a substantial increase in
capacity.
During the year under review, loans from Arcay Group Limited (Arcay) were
converted into equity following the exercise of options held by Arcay, resulting
in the further strengthening of Beige"s balance sheet.
Subsequent to year-end, the auditors confirmed that Craig van Zeil, the vendor
of Get Fresh, substantially achieved the profit warranty, as per the signed
agreement, despite the strengthening of the Rand and foreign exchange losses.
Pursuant thereto, 13 316 213 additional shares have been issued to Craig van
Zeil, for the remaining 49% of Get Fresh, at 10 cents per share, resulting in a
total cost of acquisition of R1 536 848, inclusive of the initial cash portion
paid of R205 227.
Dividends
No dividend has been declared for the year ended 29 February 2004.
Prospects
The Group moves into the new financial year with a strong order book. The
domestic market is showing positive growth, while exports are expected to
increase by 20% to 30% during the forthcoming year. The increase in export
opportunities to the northern hemisphere will balance out the small cyclical
fluctuations to which the Group is exposed and even out workflow over the year.
Additional equipment purchases are scheduled for the forthcoming year, in order
to further increase capacity, subsequent to the Group securing a large
international contract. To improve productivity further, the Group is assessing
the feasibility of moving all subsidiaries into one manufacturing facility.
In the coming year, Beige is expecting a significant increase in profits.
Management"s focus will be on managing production schedules and bedding down
current and new contracts while improving the Group"s margins, by maintaining
its levels of effectiveness while raising its levels of efficiency. Beige will
also continue to develop its relationships with existing clients.
Board appointments and changes
On 18 July 2003, Gordon Pinches and Norman le Roux were appointed as alternate
Directors to Ian Stromin and John Rawlings respectively. Subsequent to year end,
Mark Di Nicola was appointed Chief Executive Officer, while John Rawlings was
appointed Chairman. Kevin de Villiers will remain on the Board as a Non-
executive Director.
Withdrawal of cautionary announcement
The cautionary announcement published in relation to the trading update is now
withdrawn.
By order of the Board
Kevin de Villiers John Rawlings
Chairman Chief Executive Officer
18 May 2004
Johannesburg
Company Secretary and Registered Office
Arcay Client Support (Pty) Ltd
(Registration number 1998/025284/07)
Arcay House II, Number 3 Anerley Road, Parktown, 2193
PO Box 62397, Marshalltown, 2107
Directors
KDD de Villiers* Chairman, JH Rawlings** Chief Executive
Officer, IL Stromin, LI Karp*, MK von Berg, C van Zeil, MM Di
Nicola, GH Pinches#, NP le Roux#
(*Non-executive **American #Alternate)
Designated Advisor Transfer Office
Arcay Group Limited Ultra Registrar
Date: 18/05/2004 02:40:08 PM Produced by the JSE SENS Department
