| Wed 14 Jun 2006, 13:12 | | Beige - Reviewed results for the 13 months ended |
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BEG
BEG
Beige - Reviewed results for the 13 months ended 31 March 2006 and
renewal of cautionary announcement
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 RESULTS FOR THE 13 MONTHS ENDED 31 MARCH 2006 AND RENEWAL OF
CAUTIONARY ANNOUNCEMENT
Group Balance Sheets
Restated Restated
Reviewed Reviewed Unaudited Audited
31 Mar 28 Feb 31 Aug 28 Feb
2006 2006 2005 2005
R"000 R"000 R"000 R"000
ASSETS
Non-current assets 24 018 21 308 12 265 10 581
Plant, equipment and 7 405 7 304 7 792 7 103
vehicles
Investment - goodwill 2 756 2 756 1 422 --
Investment in 4 604 2 196 250 250
associates
Secured Loans 4 218 4 190 -- --
Deferred taxation 5 035 4 862 2 801 3 228
Current assets 30 310 30 906 34 099 27 952
Inventories 12 327 12 215 10 414 11 665
Accounts receivable - 12 887 15 301 20 586 15 100
trade
Loans to associate 3 195 1 888 -- --
companies
Taxation prepaid -- -- 47 47
Cash resources 1 901 1 502 3 052 1 140
Total assets 54 328 52 214 46 364 38 533
EQUITY AND LIABILITIES
Capital and reserves 35 099 33 073 21 383 19 749
Shareholders" funds 35 099 33 073 21 383 19 749
Non-current liabilities 2 136 2 125 1 243 2 125
Long-term liabilities 2 136 2 125 1 243 2 125
Current liabilities 17 093 17 016 23 738 16 659
Accounts payable and 12 863 12 314 18 257 11 643
provisions
Current portion of long- 450 450 1 202 1 065
term liabilities
Taxation 103 103 316 316
Bank overdraft 3 677 4 149 3 963 3 635
Total equity and 54 328 52 214 46 364 38 533
liabilities
Ordinary shares in
issue (000"s)
At period end 574 465 574 465 342 459 295 145
Fully diluted (Note 1) 574 465 574 465 342 459 321 145
Net asset value per
share information
Net asset value per 6.11 5.76 6.24 6.69
share (cents)
Net tangible asset 5.63 5.28 5.83 6.69
value per share (cents)
Fully diluted net asset 6.11 5.76 6.24 6.15
value per share (cents)
Fully diluted net 5.63 5.28 5.83 6.15
tangible asset value
per share (cents)
Notes
1. 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.
Group Income Statements
Restated
Reviewed Unaudited Restated
13 Reviewed 6 months Audited
months year ended year
ended ended 31 Aug ended
31 Mar 28 Feb 2005 28 Feb
2006 2006 R"000 2005
R"000 R"000 R"000
Revenue 83 958 79 658 40 087 77 049
Cost of sales (70 778) (67 343) (27 236) (59 838)
Gross profit 13 180 12 315 12 851 17 211
Operating expenses (16 407) (15 129) (13 443) (21 719)
Depreciation (1 311) (1 210) (516) (1 253)
Operating loss (4 538) (4 024) (1 108) (5 761)
Other income 165 150 -- 206
Associate Company 3 675 1 266 -- --
Net loss from (698) (2 608) (1 108) (5 555)
activities before
finance charges and tax
Finance charges (774) (715) (402) (699)
Net loss before (1 472) (3 323) (1 510) (6 254)
taxation
Taxation 1 807 1 633 (216) (452)
Net profit/(loss) for 335 (1 690) (1 726) (6 706)
the period
Calculation of headline
earnings
Net profit/(loss) for 335 (1 690) (1 726) (6 706)
the period
Adjustments for:
Amortisation of -- -- -- 2 594
goodwill
Negative goodwill -- -- -- (101)
recognised in the
income statement
Profit on disposal of (44) (44) -- --
plant and equipment
291 (1 734) (1 726) (4 213)
Tax effect of -- -- -- --
adjustments
Headline profit/(loss) 291 (1 734) (1 726) (4 213)
for the period
Earnings per share
information
Weighted average shares 386 390 370 373 302 159 291 279
in issue (000"s)
Earnings/(loss) per 0.09 (0.45) (0.57) (2.30)
ordinary share (cents)
Headline 0.07 (0.47) (0.57) (1.44)
earnings/(loss) per
share (cents)
Abridged Group Cash Flow Statements
Restated Restated
Reviewed Unaudited Audited
31 March 31 August 28
2006 2005 February
R"000 R"000 2005
R"000
Net cash inflow/ (outflow) 3 176 1 596 1 095
from operating activities
Net cash outflow from (4 740) (2 627) (3 925)
investing activities
Net cash inflow/ (outflow) 2 283 2 615 1 963
from financing activities
Net increase/(decrease) in 719 1 584 (867)
cash and cash equivalents
Bank overdraft (net) at (2 495) (2 495) (1 628)
beginning of period
Bank overdraft (net) at end (1 776) (911) (2 495)
of period
Group Statement of Changes in Equity
Share Share Shares Accumu- Total
Capital premium to be lated
R"000 R"000 issued loss R"000
(R"000) R"000
Restated - Balance at 01 2 821 94 315 1 331 (72 070) 26 397
March 2004
Shares issued for Get
Fresh (less reduction 87 786 (1 331) -- (458)
relating to profit
warranty)
Shares issued for Elan 43 474 -- -- 517
plant and machinery
Net loss for the year -- -- -- (5 671) (5 671)
IFRS Adjustment 68 68
Prior year adjustment -- -- -- (1 104) (1 104)
Restated - Balance at 28 2 951 95 575 -- (78 776) 19 749
February 2005
Shares issued for cash 125 627 -- -- 752
Share options exercised 214 1 394 -- -- 1 608
by directors at 7.5 cents
Shares to be issued for -- -- 1 000 -- 1 000
purchase of Value
Chemicals at 7.5 cents
Loss for the period -- -- -- (1 726) (1 726)
Balance at 31 August 2005 3 290 97 596 1 000 (80 502) 21 384
Shares issued for Value 133 867 (1 000) -- --
Chemicals
Shares issued for Value 37 202 -- -- 239
Chemicals
Shares issued for rights 2 283 9132 -- -- 11 415
offer
Profit for the period -- -- -- 2 061 2 061
Balance at 31 March 2006 5 743 107 797 0 (78 441) 35 099
COMMENTARY
The directors of Beige announce the reviewed results for the 12 month
period ended 28 February 2006 and the 13 month period ended 31 March
2006. The accounting policies adopted for purposes of this report
comply, and have been consistently applied in all material respects, with
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 the
IFRS transition date being 01 March 2004.
Opening balances and comparative results have been restated for an
adjustment in terms of IAS16 in relation to the accounting for property,
plant and equipment, which requires that the useful lives of assets and
the estimated residual value of assets be evaluated each year.
The aggregate effect of the adoption of IFRS is set out below:
As Effect of Change in IFRS
previously transition Stock R"000
reported to IFRS Policy
under GAAP R"000 R"000
R"000
Reconciliation of equity
at 01 March 2004
Property, plant and 3 546 926 4 472
equipment
Intangible assets 2 189 2 189
Deferred taxation 3 463 3 463
Total non-current assets 9 198 926 10 124
Total current assets 28 766 28 766
Total liabilities 12 493 12 493
Share capital and premium 98 466 98 466
Accumulated loss (72 995) 926 (72 070)
Total equity 25 471 926 26 397
Reconciliation of equity
at 28 February 2005
Property, plant and 5 672 1 432 7 104
equipment
Intangible assets
Investment in Associate 250 250
Deferred taxation 3 665 (437) 3 228
Total non-current assets 9 587 995 10 582
Total current assets 29 056 (1 104) 27 952
Total liabilities 18 784 18 784
Share capital and premium 98 526 98 526
Accumulated loss (78 667) 995 (1 104) (78 777)
Total equity 19 859 995 (1 104) 19 749
Reconciliation of equity
at 31 August 2005
Property, plant and 6 078 1 715 7 793
equipment
Intangible assets 1 422 1 422
Investment in Associate 250 250
Deferred taxation 3 449 (648) 2 801
Total non-current assets 11 199 1 067 0 12 266
Total current assets 35 502 (1 405) 34 097
Total liabilities 24 981 24 981
Share capital and premium 101 886 101 886
Equity reserve
Accumulated loss (80 165) 1 067 (1 405) (80 503)
Total equity 21 721 1 067 (1 405) 21 383
As Effect of Other IFRS
previously depre- R"000 R"000
reported ciation
under GAAP transition
R"000 to IFRS
R"000
Reconciliation of net
profit for year ended 28
February 2005
Gross profit 18 315 -- -- 18 315
Operating and (23 478) 502 (1 100) (24 076)
administrative expenses,
including depreciation and
amortisation
Operating loss (5 163) -- -- (5 761)
Investment income 206 -- -- 206
Finance charges (699) -- -- (699)
Loss before taxation (5 656) 502 (1 100) (6 254)
Taxation (15) (437) -- (452)
Net loss for the period (5 671) 65 (1 100) (6 706)
Reconciliation of net
profit for period ended 31
August 2005
Gross profit 11 612 -- -- 11 612
Operating and (12 492) 282 (510) (12 720)
administrative expenses,
including depreciation and
amortisation
Operating loss (880) 282 (510) (1 108)
Investment income -- -- -- --
Finance charges (402) -- -- (402)
Loss before taxation (1 282) 282 (510) (1 510)
Taxation (216) -- -- (216)
Net loss for the period (1 498) 282 (510) (1 726)
In addition, in accordance with JSE Listings Requirements, where a
company has changed its year end, the company is required to present
reviewed results for the second interim period. Accordingly, the
reviewed results for the 12 months ended 28 February 2006 have been
presented. Due to the difference of only one month, the company has
limited its financial commentary to the results for the 13 month period
under review and abridged cash flow information and statement of changes
in equity has not been presented at 28 February 2006, as, in the
directors" opinion, the presentation of this information would not be
meaningful to shareholders.
The results for both the 12-month period ended 28 February 2006 and the
13-month period ended 31 March 2006 have been reviewed by Nexia Levitt
Kirson and the unqualified review 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. During
the period, the Group finalised the factory relocation, reorganised the
combined internal resources, implemented a new integrated accounting
system for the combined operations, focused on resolving quality issues
which arose from the relocation, settled the Tura contract and pursued an
acquisition strategy, which resulted in the successful acquisition of
Quality Products (Proprietary) Limited ("Quality Products"), in
conjunction with Thebe Healthcare (Proprietary) Limited ("Thebe") and
Mothebe Investments (Proprietary) Limited ("Mothebe"), with effect from
01 September 2005.
For the period under review Beige held a 40% interest in Quality Products
and the results of Quality Products have accordingly been accounted for
as an associate.
Results
The results for the period ended 31 March 2006 reflect a substantial
recovery from a loss of R6 million to a small profit of R 335 000.
Earnings per share have accordingly improved by over 100% from a loss of
2.30 cents per share to a profit of 0.09 cents per share, with headline
earnings improving from a loss of 1.44 cents per share to a profit of
0.07 cents per share. The recovery is largely attributable to the Quality
Products operations, managed by Beige and in which Beige owns a 40%
interest. Anticipated economies of scale and efficiencies as a result of
having all Johannesburg-based manufacturing under one roof in Chloorkop,
were realised, albeit slower than expected, with production issues only
showing a real improvement in the latter part of the year. This has
improved further following the appointment of Jack Noble as Chief
Operating Officer and the appointment of a new quality manager.
The results reflect a 9% increase in revenues over the prior period from
R77 million to R84 million, with a gross profit percentage of 15.7%
compared to 22%. Gross margin pressures continued to impact on the
business as a result of higher labour costs, air-freight costs and
temporary problems with quality of production, partly due to the
relocation and restructuring of the group. These issues have now been
largely addressed and this is expected to settle down in the forthcoming
year, with improved gross margins now being achieved. The strong Rand
continued 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. 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 24% 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 finance charges increasing over the
prior year.
Income from associates represents Beige"s 40% share in the earnings of
Quality Products for the period commencing 01 September 2005, which was
the effective date of acquisition of Quality Products.
Non-current assets increased substantially over the prior year with
goodwill arising on the acquisition of Value Chemicals and investment in
associates representing Beige"s 40% interest in Quality Products.
Secured loans arose in the period under review as a result of loans to
empowerment partners, namely Thebe and Mothebe, from Beige, which loans
are secured by the empowerment partner"s shareholding in Quality Products
and bear interest at the prime rate.
Current assets have increased primarily as a result of the loan by Beige
to Quality Products.
Prior year adjustment
During the period under review and pursuant to the implementation of a
new accounting system throughout the Group, Beige adopted a new
accounting policy with regard to provisions raised against slow moving
stock. Accordingly, a prior year adjustment has been made in relation to
provisions required for obsolete and slow moving stock.
Relocation of factories and head office
The relocation of the Group 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 loss of production and sales, higher labour costs resulting from
logistical and reorganisation moves and some problems with quality.
These issues are continually being addressed and economies of scale have
flowed through in the current period. Beige also restructured the
organisation and management in conjunction with the relocation and
subsequently appointed Jack Noble as Chief Operating Officer.
Contingent liability and legal issues
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 R750 000 no longer exists.
Costs were awarded to Beige in this matter. The resolution of this
matter brings a close to old matters relating to the former Beige, save
for the fraud case against two of the former directors, which trial will
begin on 28 August 2006.
Acquisitions, disposal and issue of shares
The company issued 13 680 000 shares at 6 cents per share to Arcay in
settlement of fees for services rendered in relation to the acquisition
of Quality Products and issued 3 700 000 shares for cash at 6 cents and 7
cents during the period under review.
In addition, Beige purchased the business and assets relating to Eco-Pure
from Value Chemicals ("the Value Chemicals acquisition") for R2,756
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 settled in cash. 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 for the 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.
The acquisition of 40% of Quality Products, in conjunction with BEE
partners, was approved by shareholders at a general meeting on 13
December 2005, with effect from 01 September 2005. The acquisition was
funded by a rights offer, whereby 228 305 833 new shares were issued at 5
cents per share on the basis of 2 new shares for every 3 held and funds
raised of R11 415 291.65 were primarily used for the purpose of funding
Beige"s portion of the acquisition of Quality Products. The rights offer
was over subscribed.
Subsequent events and Renewal of Cautionary Announcement
Subsequent to year end, Beige entered into negotiations which could have
a material effect on the price at which its securities trade on the JSE
Limited. As these negotiations are still in progress, shareholders are
advised to continue exercising caution when trading in their securities
until a further announcement in this regard is made.
As a result of these negotiations, the effluxion of time and the increase
in share price of Beige following the successful rights offer, the board
of directors, by mutual agreement with Jomo Sono, will no longer proceed
with the proposed BEE subscription at 5.5 cents per share as previously
announced.
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
The board of directors was restructured during the period under review
with a view to strengthening executive management in Johannesburg and
with a view to increased compliance with King II. The following director
changes occurred up to the date of this announcement:
Appointment Date Resignation Date
NP le Roux 23 September 2005 C van Zeil 31 May 2005
JA Noble 20 March 2006 MK von Berg 23 September 2005
RH Weissenberg 20 March 2006 NP le Roux 20 March 2006
(non executive)
Dr PJD Gubb 20 March 2006 KDD de Villiers 20 March 2006
(non executive)
MM du Preez 31 May 2006
(non executive)
Dividends
No dividend has been declared for the period ended 31 March 2006.
Prospects
With the acquisition of Quality Products, the acquisition of Value
Chemicals, the relocation of the Beige head office and Johannesburg
factories into one production facility in Chloorkop and the appointment
of Jack Noble as Chief Operating Officer, economies of scale and
operating efficiencies are expected to continue to improve, resulting in
a complete turnaround in the coming year.
By order of the Board
John Rawlings Mark Di Nicola
Chairman Chief Executive Officer
14 June 2006
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, J Noble, IL
Stromin, Dr PJD Gubb*, MM du Preez*, LI Karp*, RH Weissenberg*
(* Non-executive # American)
Designated Advisor Transfer Office
Arcay Corporate Services Ultra Registrar
Date: 14/06/2006 01:12:14 PM Produced by the JSE SENS Department
