| Wed 7 Dec 2005, 9:14 | | Beige - Unaudited Results For The Six Months Ended |
|
Beige - Unaudited Results For The Six Months Ended 31 August 2005
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 RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2005
Group Balance Sheets
Unaudited Audited Unaudited
as at as at as at
31 August 28 31 August
2005 February 2004
R"000 2005 R"000
R"000
ASSETS
Non-current assets 11 199 9 587 8 896
Plant, equipment and vehicles 6 078 5 672 3 769
Investment - goodwill 1 422 -- 1 707
Investment in associates 250 250 --
Deferred taxation 3 449 3 665 3 420
Current assets 35 502 29 056 35 261
Inventories 11 818 12 769 13 906
Accounts receivable - trade 18 978 15 100 19 811
- other 1 608 -- 614
Taxation prepaid 47 47 47
Cash resources 3 052 1 140 883
Total assets 46 702 38 643 44 157
EQUITY AND LIABILITIES
Capital and reserves 21 721 19 859 23 723
Shareholders" funds 21 721 19 859 23 723
Non-current liabilities 1 243 2 125 1 215
Long-term liabilities 1 243 2 125 1 215
Current liabilities 23 738 16 659 19 219
Accounts payable and 18 257 11 643 14 886
provisions
Current portion of long-term 1 202 1 065 332
liabilities
Taxation 316 316 98
Bank overdraft 3 963 3 635 3 903
Total equity and liabilities 46 702 38 643 44 157
Ordinary shares in issue
(000"s)
At period end 342 459 295 145 282 099
At period end including
shares to be issued for 290 829
purchase of 49% of Get Fresh
(Note 1 and 3)
Fully diluted (Note 2) 342 459 321 145 316 829
Net asset value per share
information
Net asset value per share 6.34 6.73 8.41
(cents)
Net tangible asset value per 5.93 6.73 7.80
share (cents)
Net asset value per share
(cents) including shares -- -- 8.16
issued for purchase of 49%
minority
Net tangible asset value per
share (cents) including -- -- 7.57
shares issued for purchase of
49% minority
Fully diluted net asset value 6.34 6.18 7.49
per share (cents)
Fully diluted net tangible 5.93 6.18 6.95
asset value per share (cents)
Notes
The number of shares issued to Mr C van Zeil in the prior year in relation to
the acquisition of the remaining 49% of Get Fresh as previously disclosed,
namely 13 316 213 shares, reduced to 8 729 893 due to an adjustment relating to
warranted debtors not being realised. This reduced the purchase price by
R458 632.
Fully diluted net asset value per share information was previously 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.
Directors exercised options in relation to 21 440 000 shares on 31 August 2005
at 7.5 cents. The balance of the options expired in October 2005.
Prior periods" partially diluted and fully diluted information per share has
accordingly been restated.
Group Income Statements
Unaudited Audited Unaudited
for the for the for the
6 months year 6 months
ended ended ended
31 August 28 31 August
2005 February 2004
R"000 2005 R"000
R"000
Revenue 40 087 77 049 41 802
Cost of sales (28 475) (58 734) (27 822)
Gross profit 11 612 18 315 13 980
Operating expenses (13 443) (22 225) (14 418)
Depreciation (799) (1 253) (641)
Operating loss (2 630) (5 163) (1 079)
Other income 1 750 206 19
Net loss from activities (880) (4 957) (1 060)
before finance charges and
tax
Finance charges (402) (699) (188)
Net loss before taxation (1 282) (5 656) (1 248)
Taxation (216) (15) (42)
Net loss for the period (1 498) (5 671) (1 290)
Calculation of headline
earnings
Net loss for the period (1 498) (5 671) (1 290)
Adjustments for:
Amortisation of goodwill -- 2 594 813
Negative goodwill recognised -- (101) (32)
in the income statement
Profit on disposal of plant -- -- (10)
and equipment
(1 498) (3 178) (519)
Tax effect of adjustments -- -- --
Headline loss for the period (1 498) (3 178) (519)
Earnings per share
information
Weighted average shares in 302 159 291 279 282 099
issue (000"s)
Attributable loss per (0.50) (1.95) (0.46)
ordinary share (cents)
Headline loss per share (0.50) (1.09) (0.18)
(cents)
Abridged Group Cash Flow Statements
Unaudited Audited Unaudited
31 August 28 31 August
2005 February 2004
R"000 2005 R"000
R"000
Net cash inflow/ (outflow) 1 596 1 095 (559)
from operating activities
Net cash outflow from (2 627) (3 925) (803)
investing activities
Net cash inflow/ (outflow) 2 615 1 963 (30)
from financing activities
Net increase/(decrease) in 1 584 (867) (1 392)
cash and cash equivalents
Bank overdraft (net) at (2 495) (1 628) (1 628)
beginning of period
Bank overdraft (net) at end (911) (2 495) (3 020)
of period
Group Statement of Changes in Equity
Share Share Shares to Accumulated Total
Capital premium be issued loss
R"000 R"000 (R"000) R"000 R"000
Balance at 01 March 2 821 94 315 1 331 (72 996) 25 471
2004
Shares issued for Get
Fresh (less reduction 87 786 (1 331) -- (458)
relating to profit
warranty)
Shares issued for 43 474 -- -- 517
Elan plant and
machinery
Net loss for the year -- -- -- (5 671) (5 671)
Balance at 29 2 951 95 575 -- (78 667) 19 859
February 2005
Shares issued for 125 627 -- -- 752
cash 214 1 394 -- -- 1 608
Share options -- 1 000 -- 1 000
exercised by
directors at 7.5
cents
Shares issued for
purchase of Value
Chemicals
Loss for the period -- -- -- (1 498) (1 498)
Balance at 31 August 3 290 97 596 1 000 (80 165) 21 721
2005
COMMENTARY
The directors of Beige announce the results for the period ended 31 August 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) and International
Financial Reporting Standards ("IFRS"). The same accounting policies and
methods of computation have been followed as compared to the year ended 28
February 2005. Shareholders are advised that the company adopted IFRS with
effect from 01 March 2005. With regard to the adoption of IAS36 (AC128),
goodwill and negative goodwill on the acquisitions was written off in the prior
year. Accounting for leases on a straight line basis in terms of Circular
7/2005 issued by SAICA did not require an adjustment to the results of Beige.
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 period, the Group focused on finalising the various factory moves,
reorganising the combined management and staff, implemented a new integrated
accounting system for the combined operations, resolving quality issues which
arose from the relocation, settled the Tura contract and pursued an acquisition
strategy. Further details are set out below.
Results
The results for the period ended 31 August 2005 reflect a decrease in revenues
of 0.04% with a decline in gross profit of 16.3%. The results also include
revenue of R3.6 million, and related cost of sales and expenses, from the
acquisition of the business of Value Chemicals with effect from 01 March 2005.
Although operating expenses have reduced, finance charges have increased by
113.8% and an increase in taxation of 414.3% has also impacted adversely on
earnings. Earnings per share have accordingly changed from a loss per share of
(0.46) cents per share to a (0.50) cents loss per share.
The decline in earnings is primarily attributed to firstly, a loss of revenues
during the relocation of the various production facilities into one location in
Chloorkop during the period and secondly, continued pressure on gross margins
which declined from 33.4% for the prior six month period to 29% for the current
period, although this represents a recovery from the prior year average gross
profit of 23.8%. This margin pressure is attributed to higher labour costs and
temporary problems with quality of production, partly due to the relocation and
restructuring of the group. This is expected to settle down in the second six
month period. The strong Rand continues to suppress both sales and margins in
the export market as well as local sales due to cheaper imported products being
available to the domestic market.
As expected, the volumes from the Tura contract were insignificant, as they were
linked to the supply of other products manufactured by Tura, the production of
which was delayed due to regulatory clearances being required on a new Tura
production facility in Nigeria, which were only received in May 2005. However,
in terms of the agreement Beige has recovered certain costs amounting to R1.75
million which have been shown as other income. The production facility in
Nigeria is now operational and volumes have started to increase, albeit well
below the original volumes as anticipated in terms of the contract.
Operating costs reduced by 6.8% despite additional costs being incurred relating
to the installation of a standard accounting system at the new premises. The
reduction in operating expenses already reflects cost savings that have resulted
from the relocation and reorganisation of the group.
The acquisition of additional plant was finalised during the prior year but
expected increases in international sales related thereto did not materialise as
a result of Rand strength. Increased plant and equipment and related financing
has resulted in the depreciation charge and finance charges increasing over the
prior period.
Relocation of factories and head office
The relocation of the head office and six out of its seven factories into the
new facility, measuring 23 000 square metres, was completed during the period
under review. During the move the group incurred temporary loss of production
and sales, higher labour costs resulting from logistical and reorganisation
moves and some problems with quality. These issues have been resolved and
economies of scale are expected to flow through in the current period. Beige
also restructured the organisation and management in conjunction with the
relocation.
Contingent liability
The directors advise that Beige has successfully defended the final litigation
against the company relating to the former Beige, whereby the previously
reported contingent liability of R750k no longer exists. Costs have been
awarded to Beige in this matter. The resolution of this matter brings a close
to old matters relating to the former Beige.
Acquisitions and issue of shares
The company issued 12 540 000 shares at 6 cents per share to Arcay in settlement
of fees for services rendered in relation to the acquisition of Quality
Products, which is detailed in subsequent events below.
In addition, Beige purchased the business and assets relating to Eco-Pure from
Value Chemicals ("the Value Chemicals acquisition") for R2 million with effect
from 01 March 2005, which purchase consideration has been settled, in part,
through the issue of 13 333 334 new shares at 7.5 cents, with the balance of R1
million to be settled in cash raised from the rights offer. A profit warranty
based on gross profit has been signed in terms of which additional shares will
be issued to the vendor, Anton Botha, in the event gross profit exceeds R2
million over the 18 month period ending 31 August 2006 on a Rand for Rand pro
rata basis up to R3 million and thereafter on a one third basis exceeding
R3 million. The increase in purchase price resulting from the warranty is
capped at R2 million.
On 31 August 2005, J Rawlings and I Stromin exercised options for 10 800 000 and
10 640 000 new shares respectively, at 7.5 cents per share. The remaining
option held by GP Victor expired in October 2005.
Subsequent events
Subsequent to 31 August 2005 the company announced a rights offer and the
acquisition of 40% of Quality Products in conjunction with BEE partners. The
acquisition is subject to, inter alia, approval of shareholders at a general
meeting on 13 December 2005 and a circular was posted to shareholders on 28
November 2005. In terms of the agreement Beige will manage Quality Products for
a management fee of R1.5 million per annum. The agreement will be with effect
from 01 September 2005.
The rights offer is at 5 cents per share on the basis of 2 new shares for every
3 held and is primarily for the purpose of funding Beige"s portion of the
acquisition of Quality Products. The rights offer opened on Monday, 28 November
2005 and closes at 12h00 on Thursday, 15 December 2005.
Change in year end
Pursuant to the acquisition of Quality Products, Beige has changed its year end
to 31 March each year in order to align itself with the quarterly budgeting and
reporting system already in place at Quality Products.
Director changes
Craig van Zeil resigned from the board with effect from 31 May 2005 and Marlene
von Berg resigned on 23 September 2005. Norman le Roux was appointed to the
board on 23 September 2005.
Dividends
No dividend has been declared for the period ended 31 August 2005.
Prospects and profit forecast
With the acquisition of Quality Products, the acquisition of Value Chemicals and
relocation of the Beige head office and factories into one production facility,
improved results, economies of scale and operating efficiencies are expected in
the second half of the year with a complete turnaround expected for the
following year.
The company has prepared a profit forecast for the current year and forthcoming
year, which has been reviewed by the company"s auditors, Nexia Levitt Kirson,
which report is available for inspection at the registered office of the
company. The profit forecast has been prepared for illustrative purposes only,
to provide information about the net income that will be earned from the
acquisition of a 40% interest in Quality Products (Proprietary) Limited for the
12-month period ended 31 March 2006 and the 12-month period ended 31 March 2007.
13 months ending 31 12 months ending 31
March 2006 (R"000) March 2007
(R"000)
Revenue 88 600 95 800
Net (loss)/profit (1 607) 4 013
before taxation
Taxation -- (16)
Net (loss)/profit (1 607) 3 997
for year
Income from 1 577 2 548
associate
Attributable (30) 6 545
(loss)/profit
(Loss)/profit per (0.01) 1.15
share (cents)
Headline (0.01) 1.15
(loss)/profit per
share (cents)
Notes:
Gross profit percentages used are based on historic gross profit percentages
achieved.
All expenses are based on expense levels achieved in previous periods. A 6%
inflation rate was used for the March 2007 profit forecast.
Labour costs are based on historical labour costs and are less than current
labour costs as reflected in the interim results, which costs were inflated as a
result of the move to central premises.
Taxation has been calculated at a rate of 29% per annum.
The investment in Quality Products (Proprietary) Limited has been treated as an
investment in an associate.
By order of the Board
John Rawlings Mark Di Nicola
Chairman Chief Executive Officer
7 December 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,
NP le Roux, IL Stromin, KDD de Villiers*, LI Karp* GH Pinches#
(*Non-executive **American #Alternate)
Designated Advisor Transfer Office
Arcay Corporate Services Ultra Registrar
Date: 07/12/2005 09:14:13 AM Produced by the JSE SENS Department
