| Mon 16 May 2005, 14:42 | | RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2005 |
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Beige - Audited Results For The Year Ended 28 February 2005, Renewal Of
Cautionary Announcement And Change To The Board Of Directors
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`)
AUDITED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2005, RENEWAL OF CAUTIONARY
ANNOUNCEMENT AND CHANGE TO THE BOARD OF DIRECTORS
Group Income Statements
Audited for Unaudited for Audited for
the year the 6 months the year
ended ended ended
28 February 31 August 2004 29 February
2005 R`000 2004
R`000 R`000
Revenue 77 049 41 802 69 519
Cost of sales (58 734) (27 822) (47 194)
Gross profit 18 315 13 980 22 325
Operating expenses (22 225) (15 059) (19 406)
Depreciation (1 253) - (632)
Operating (loss)/profit (5 163) (1 079) 2 287
Other income 206 19 26
Net (loss)/profit from (4 957) (1 060) 2 313
activities before finance
charges and tax
Finance charges (699) (188) (224)
Net (loss)/profit before (5 656) (1 248) 2 089
taxation
Taxation (15) (42) 137
Net (loss)/profit for the (5 671) (1 290) 2 226
period
Calculation of headline R`000 R`000 R`000
earnings
Net (loss)/profit for the (5 671) (1 290) 2 226
period
Adjustments for:
Write back of unidentified -- -- (87)
deposits -- -- (750)
Capital profit
Amortisation of goodwill 2 594 813 1 516
Negative goodwill recognised (101) (32) (63)
in the income statement
(Loss)/profit on disposal and -- (10) (75)
impairment of plant and
equipment
(3 178) (519) 2 767
Tax effect of adjustments -- -- --
Headline (loss)/earnings for (3 178) (519) 2 767
the period
Ordinary shares in issue
(000`s)
- Weighted 291 279 282 099 272 126
- Fully diluted (Note 1) 317 279 316 829 311 442
Earnings per share
information
Attributable (loss)/earnings (1.95) (0.46) 0.82
per ordinary share (cents)
Headline (loss)/earnings per (1.09) (0.18) 1.02
share (cents)
Fully diluted attributable (1.79) (0.41) 0.71
(loss)/earnings per share
(cents)
Fully diluted headline (1.00) (0.16) 0.89
(loss)/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 Mr GP Victor to subscribe for new shares in Beige at 7.5 cents on or before
08 October 2005.
Group Balance Sheets
Audited as at Unaudited as at Audited as at
28 February 31 August 2004 29 February
2005 R`000 2004
R`000 R`000
ASSETS
Non-current assets 9 587 8 896 9 198
Plant, equipment and vehicles 5 672 3 769 3 546
Investment - intangibles -- 1 707 2 189
Investment in associates 250 -- --
Deferred taxation 3 665 3 420 3 463
Current assets 29 064 35 261 28 766
Inventories 12 768 13 906 12 715
Accounts receivable - trade 15 109 19 811 12 691
-- 614 2 497
- other
Taxation prepaid 47 47 67
Cash resources 1 140 883 796
Total assets 38 651 44 157 37 964
EQUITY AND LIABILITIES
Capital and reserves 19 860 23 723 25 471
Shareholders` funds 19 860 23 723 25 471
Non-current liabilities 2 665 1 215 963
Long-term liabilities 2 665 1 215 963
Current liabilities 16 126 19 219 11 530
Accounts payable and 11 724 14 272 8 684
provisions
Current portion of long-term 452 332 324
liabilities
Taxation 316 98 98
Bank overdraft 3 635 3 903 2 424
Total equity and liabilities 38 651 44 157 37 964
Ordinary shares in issue
(000`s)
At period end 295 145 282 099 282 099
At period end including
shares to be issued for 290 829 290 829
purchase of 49% of Get Fresh
(Note 1 and 3)
Fully diluted (Note 2 and 3) 321 145 316 829 316 829
Net asset value per share
information
Net asset value per share 6.73 8.41 9.03
(cents)
Net tangible asset value per 6.73 7.80 8.25
share (cents)
Net asset value per share
(cents) including shares 8.16 8.76
issued for purchase of 49%
minority
Net tangible asset value per
share (cents) including 7.57 8.01
shares issued for purchase of
49% minority
Fully diluted net asset value 6.18 7.49 8.04
per share (cents)
Fully diluted net tangible 6.18 6.95 7.35
asset value per share (cents)
Notes
1. The number of shares issued to Craig van Zeil in relation to the
acquisition of the remaining 49% of Get Fresh as previously disclosed,
namely 13 316 213 shares, has reduced to 8 729 893 due to an adjustment
relating to warranted debtors not being realised. This has reduced the
purchase price by R458 632.
2. 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 Mr GP Victor to subscribe for new shares at 7.5 cents each.
These options expire in October 2005.
3. Prior periods partially diluted and fully diluted information per share has
accordingly been restated.
Abridged Group Cash Flow Statements
Audited Unaudited Audited
28 February 31 August 29 February
2005 2004 2004
R`000 R`000 R`000
Net cash inflow/ (outflow) 862 (559) 1 988
from operating activities
Net cash (outflow)/inflow (4 077) (803) (4 179)
from investing activities
Net cash inflow/ (outflow) 2 348 (30) 1 975
from financing activities
Net decrease in cash and cash (867) (1 392) (216)
equivalents
(Bank overdraft)/cash and (1 628) (1 628) (1 412)
cash equivalents at beginning
of period
Bank overdraft at end of (2 495) (3 020) (1 628)
period
Group Statement of Changes in Equity
Share Share Accumula Shares Total
Capital premium ted loss to be
R`000 R`000 R`000 issued R`000
(R`000)
Balance at 28 February 2 434 91 754 (74 966) 698 19 920
2003
Issue of 8 723 850 shares 87 611 - (698) -
for Dudley`s acquisition
Issue of 30 000 000 300 1 950 - - 2 250
shares for conversion of
loans
Profit for year - - 2 226 - 2 226
49% of Get Fresh - net - - (256) - (256)
liability assumed
Issue of shares after - - - 1 331 1 331
year end for 49% of Get
Fresh
Balance at 29 February 2 821 94 315 (72 996) 1 331 25 471
2004
Shares issued for Get
Fresh (less reduction 87 786 -- (1 331) (458)
relating to profit
warranty)
Shares issued for Elan 43 475 -- -- 518
plant and machinery
Net loss for the year -- -- (5 671) -- (5 671)
Balance at 28 February 2 951 95 576 (78 667) -- 19 860
2005
COMMENTARY
The directors of Beige announce the results for the year ended 28 February 2005.
The accounting policies adopted for purposes of this report comply, and have
been consistently applied in all material respects, with South African
Statements of Generally Accepted Accounting Practice (GAAP). The same
accounting policies and methods of computation have been followed as compared to
the year ended 29 February 2004, except for the adoption of revised statements
AC128 - Impairment of Assets and AC129 - Intangible Assets. These statements
have been applied with effect from 01 March 2004 in terms of their respective
transitional provisions. In terms of AC128 goodwill was impaired and in terms
of AC129 goodwill is no longer amortised. Shareholders are advised that the
company will adopt International Financial Reporting Standards (`IFRS`) with
effect from 01 March 2005. The results have been audited by Nexia Levitt Kirson
and their unqualified opinion is available for inspection at the registered
office of the company.
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. The business operations are
undertaken by clearly focused subsidiaries, located in Gauteng.
During the year, the Group focused on securing the Tura contract, gearing up its
manufacturing operations and securing additional plant to increase its capacity.
It also continued with the bedding down of structural and operational changes,
as well as the relocation of six of its factories into a single site around year
end. The continued investment in the Group`s marketing drive has yielded
results, with the securing of further export opportunities flowing through at a
satisfactory rate. Further details are set out below.
Results
The results for the year ended 28 February 2005 reflect an increase in revenue
for the third consecutive year, increasing by 10.8% over the comparative period.
Despite the increase in revenue, the Group has shown a decline in earnings and
headline earnings in relation to the comparative period in the prior year,
moving from a profit of R2.2 million to a loss of R5.7 million and a headline
loss of R3.2 million compared to headline earnings of R2.8 million for the prior
year. Earnings per share and headline earnings per share have accordingly
decreased from 0.82 cents per share to (1.95) cents per share and from 1.02
cents per share to (1.09) cents per share respectively.
The decline in earnings is primarily attributable to continued pressure on gross
margins, partly due to the strengthening of the Rand during the reporting period
relating to export sales and to local pricing pressure caused by increased
competition from import substitution. Measures are being put in place to
address local and export pricing but the effects of these measures will take
time to reflect in the results.
In addition, the Tura contract secured during May 2004 has not come into full
production due to, inter alia, hand-over delays from the previous supplier and
lower than expected order volumes from Nigeria, while infrastructure and
carrying costs have been incurred. The volumes are expected to continue to be
depressed for the next three to six months as they are linked to the supply of
other products manufactured by Tura the production of which has been delayed due
to regulatory clearances being required on a new Tura production facility in
Nigeria, which were only received in May 2005.
Operating costs were well controlled despite additional costs being incurred in
relation to Tura, although marketing costs increased by 50% over the prior year.
In addition, Beige has established an office in Australia, through Beige
Australia, which in turn owns 26% in Get Fresh Cosmetics (Proprietary) Limited
(Australia).
The acquisition of additional plant was finalised during the year but expected
increases in international sales related thereto did not materialise as a result
of Rand strength. Increased plant and equipment has resulted in the
depreciation charge doubling year-on-year. Factory relocation and equipment
refurbishment costs have also been incurred, and the downtime has resulted in a
small loss in sales and production.
The above factors have, in turn, had an impact on financing costs which have
increased year-on-year.
With regard to the adoption of revised AC128, goodwill on the acquisition of Get
Fresh and Dudley`s was written off in light of the losses in the current year
and the continued effect of the strong Rand on export margins. The amount of
goodwill impaired as a result of the transitional adoption is R1.48 million.
Relocation of factories and head office
Shareholders are advised that Beige has now signed a sub-lease agreement for new
premises, located at 5 Brine Street, Chloorkop, Extension 1. The new telephone
number is (011) 976 0900. The company`s registered address remains the same.
An option to purchase the premises is currently being negotiated.
The head office and six out of its seven factories have already relocated into
the new facility, which measures 23 000 square metres. The relocation commenced
during February 2005 and was completed during April 2005, with the exception of
Argo Soap, which relocation is expected later in 2005. Whilst high costs of
relocation and installation of infrastructure are initially being incurred,
together with some temporary loss of production and sales, economies of scale
are expected to flow through in the current period. Beige is also restructuring
the organisation and management in conjunction with the relocation.
Acquisitions and issue of shares
The company issued 8 729 893 additional shares at 10 cents per share to Craig
van Zeil for the acquisition in the prior year of the remaining 49% shareholding
in Beige Factory Shoppe (Proprietary) Limited trading as Get Fresh (`Get
Fresh`). An adjustment was made to the purchase price as a result of certain
warranted debtors not being recovered. Accordingly, the purchase price has been
reduced by R458 632 and only 8 729 893 additional shares were issued as above,
resulting in a total cost of acquisition of R1 078 216, inclusive of the initial
cash portion paid of R205 227.
The Group has acquired plant and equipment to the value of R2.18 million from
Elan Products (Proprietary) Limited, which has been financed by taking over a
R1,5 million loan from the Industrial Development Corporation and the balance
through the issue of 4 316 667 new Beige shares at 12 cents per share. There
are no profit warranties in relation to this acquisition. The 4 316 667 shares
were pledged to Zizmax Investments (Proprietary) Limited trading as Dudley
Products (`Dudleys`) as security for credit terms extended to Elan. Subsequent
to year end, Dudleys has attached the shares, which are now held as treasury
shares.
Director changes
Craig van Zeil will be resigning from the board with effect from 31 May 2005 and
will head up Beige`s operations in Australia. Lionel Karp will be appointed to
the board of Beige Australia as a non-executive director to oversee Beige`s
interests.
Dividends
No dividend has been declared for the year ended 28 February 2005.
Prospects
With the relocation of the Beige head office and factories into one production
facility, economies of scale and operating efficiencies are expected over the
year, although the first quarter will be affected by downtime and the costs of
relocation. The Tura contract is expected to rise to better levels by mid-year
with the regulatory approval of Tura`s soap production facility in Nigeria
during May 2005.
Renewal of cautionary announcement
Further to the cautionary announcement dated 29 March 2005, shareholders are
advised that the company is still in acquisition negotiations which could affect
the price at which its securities trade. In addition, negotiations with Tura
are being pursued with regard to agreed minimum volume levels. Accordingly,
shareholders are advised to exercise caution when dealing in their securities.
By order of the Board
John Rawlings Mark Di Nicola
Chairman Chief Executive Officer
16 May 2005
Johannesburg
In accordance with AltX Listings Requirements, shareholders are advised
of the risks of investing in a company listed on the AltX and that the
JSE does not guarantee the viability or the success of a company listed
on the AltX. In terms of the JSE Listings Requirements, a Designated
Advisor has to be retained by the company. The Designated Advisor is
required, inter alia, to attend all Board meetings held by the company
to ensure that all the JSE Listings Requirements and applicable
regulations are complied with, approve the financial director of the
company and guide the company in a competent, professional and
impartial manner. If the company fails to retain a Designated Advisor
it must make arrangements to appoint a new Designated Advisor within 10
business days, failing which the company faces suspension of trading of
its securities. If a Designated Advisor is not appointed within 30
days of its suspension, the company faces the termination of its
listing without an offer to minorities.
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
JH Rawlings Chairman**, MM Di Nicola Chief Executive Officer, IL
Stromin, MK von Berg, C van Zeil, KDD de Villiers*, LI Karp* GH
Pinches#, NP le Roux#
(*Non-executive **American #Alternate)
Designated Advisor Transfer Office
Arcay Corporate Services Ultra Registrar
Date: 16/05/2005 02:42:32 PM
Produced by the JSE SENS Department
