| Tue 28 Nov 2006, 8:19 | | Beget Holdings Limited - Reviewed results for the |
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BEE
BEE
Beget Holdings Limited - Reviewed results for the 6 months ended 31 October 2006
Beget Holdings Limited
Incorporated in the Republic of South Africa
Registration number: 2002/011635/06
Share code: BEE ISIN number: ZAE000044111
("Beget" or "the company")
REVIEWED RESULTS FOR THE 6 MONTHS ENDED 31 OCTOBER 2006
BALANCE SHEET at 31 October 2006
Reviewed Unaudited Audited
6 Months 6 Months * 16 Months
31-Oct-06 30-Jun-05 30-Apr-06
Assets R `000 R `000 R `000
Non-current assets 13,772 4,875 14,192
Property, plant and equipment 885 1,341 899
Intangible assets ** 12,887 1,903 13,293
Loans receivable 1,631
Current assets 4,041 6,219 3,561
Inventory 1,568 2,650 1,849
Trade and other receivables 2,473 3,567 1,712
Cash and cash equivalents 2 -
Total assets 17,813 11,094 17,753
Equity and liabilities
Capital and reserves 2,064 255 1,595
Issued capital 26,669 14,681 24,344
Distributable reserve (24,605) (14,426) (22,750)
Non-current liabilities 3,305 1,562 3,023
Shareholder loans 1,436 1,279 2,180
Long-term liabilities 261
Deferred tax 283 -
Deferred revenue 1,608 843
Current liabilities 12,444 9,277 13,135
Loans payable 4,668 2,102 6,508
Current portion of borrowings 46 264
Tax 12 12 12
Trade and other payables 5,748 5,829 5,010
Deferred Revenue 693 342
Bank overdraft 676 844 681
Provisions 601 226 582
Total equity and liabilities 17,813 11,094 17,753
Net asset value per share (cents) 0.40 0.07 0.39
* The group changed its year-end from 31 December to 30 April, consequently
these results are compared to corresponding items in the 6 month interim period
ended 30 June 2005.
** Capitalised development expenditure which includes: self developed computer
software, goodwill and intellectual property.
INCOME STATEMENT
Reviewed Unaudited Audited
6 Months 6 Months * 16 Months
30-Oct-06 30-Jun-05 30-Apr-06
R `000 R `000 R `000
Gross revenue 8,002 8,693 20,875
Gross profit/(loss) 5,221 3,545 7,795
Operating Expenses (5,619) (2,582) (12,289)
EBITDA (398) 963 (4,494)
Depreciation & Amortization (704) (664) (1,753)
Net Finance costs (753) (191) (1,452)
Profit/(Loss) before taxation (1,855) 108 (7,699)
Taxation - - -
Profit/(Loss) after taxation (1,855) 108 (7,699)
Minority interest - - (516)
Net loss for the period (1,855) 108 (8,215)
Weighted average shares in issue 508,413 369,000 409,380
(`000)
Earnings per share (cents) (0.36) 0.03 (2.01)
Headline earnings per share (0.36) 0.03 (1.96)
(cents)
RECONCILIATION BETWEEN EARNINGS AND HEADLINE EARNINGS
Earnings (1,855)) 108 (8,215)
Write-off of loan - - 211
Headline earnings (1,855) 108 (8,004)
STATEMENT OF CHANGES IN EQUITY
Share Share Cumulative Total
capital premium loss
R `000 R `000 R `000 R `000
Balance at 01 January 2005 0,724 13,599 (14,535) (935)
Cancellation of share capital (0.008) (0.008)
Net loss for the period (8,215) (8,215)
Issue of share capital 0,248 11,725 11,725
Share issue expenses+ (981) (981)
Balance at 30 April 2006 0,964 24,343 (22,750) 1,594
Net loss for the period (1,855) (1,805)
Issue of share capital 0,080 2,400 2,400
Share issue expenses+ (75) (675)
Balance at 30 April 2006 1,044 26,668 (24,605) 2,064
CASH FLOW STATEMENT
Reviewed Unaudited Audited
6 Months 6 Months 16 Months
*
31-Oct-06 30-Jun-05 30-APR-06
R `000 R `000
Cash flows from operating activities 241 (1,231) (3,611)
Cash flows from investing activities (284) (47) (12,073)
Cash flows from financing activities 48 243 14,811
Increase /(decrease) in cash and 5 (1,035) (873)
cash equivalents
Cash and cash equivalents at (681) 192 192
beginning of period
Cash and cash equivalents at end of (676) 843 (681)
the period
NOTES
Basis of preparation
The interim financial statements for the six months ended 31 October 2006 ("the
period") have been prepared in accordance with IFRS (International Financial
Reporting Standards) and IAS 34 - Interim Financial Reporting and in the manner
required by the Companies Act of South Africa.
The accounting policies applied in the preparation of the interim financial
statements are consistent with those applied in the previous comparable 6 months
ended 30 June 2005, as well as annual financial statements for the 16 months
ended 30 April 2006.
The interim financial statements were reviewed by PKF (PTA). Their reviewed
report is available for inspection at the companies registered offices.
GROUP PROFILE
Beget is an IT and telecoms group specialising in the development of
applications on the GSM (Global System for Mobile Communications) or the
cellular technology platform. The group"s flagship product is a biometric time
and attendance and access control unit, which uses the wireless GPRS (General
Packet Radio Signal) for the transmission of data. The group further provides
and integrates other GSM based services like SMS (Short Message Services) and
LBS (Location Based Services).
COMMENTARY ON RESULTS
The financial results reflected revenues of R8 million for the period. The Group
produced a significant improvement in EBITDA in comparison to the recently
reported 16 month period and as a result, a continued decrease in losses on a
monthly basis was experienced. The company returned to profitability in the
latter months of the period and consequently, improved annual results are
expected in the future. The increased expenses over previous periods have been
prudently managed, and the business in its current position is now geared to
deliver increased revenues with a marginal increase in expenses.
The improvement in the performance is largely as a result of a sustained
improvement in profit margins of biometric units. Gross profit margins increased
from 41% to 65% for the corresponding periods.
OPERATIONAL REVIEW
The group"s main focus for the period was increased sales, the majority of which
was in the biometric time and attendance industry. A greater adoption of
biometrics and its benefits, as well as an increased requirement for the
monitoring and management of labour has supported local sales. The past period
yielded a number of significant contracts and clients. The upgraded dual SIM
card units launched in late 2005 have performed exceptionally well.
A number of efforts to improve revenue growth were initiated, these included:
improved recruitment, performance management and sales administration. This in
conjunction with a new Cape branch resulted in a number of consistent trading
months and a substantial lead pool.
The efforts previously invested into the areas of operational and financial
reporting have resulted in: detailed internal reporting structures, tighter
controls, improved governance and a strong layer of middle management. All key
areas of the business are now regularly reported on.
Beget recently concluded a joint venture which will allow it to provide a full
payroll solution as part of its current offering. Beget has completed
integrating its wireless BegetBio fingerprint clocking device with the new
online T&A and Payroll solution.
The Beget Payroll is a benchmarked, world class online system that provides
clients with a host of functionality and flexibility. This unique "fingerprint
to payroll" solution allows Beget to provide an end-to-end solution, eliminating
a host of previously outsource services and software.
The recently announced BEE transaction required an upgrade of existing
technology to be used for biometric vehicle driver authentication, as well as,
the integration with existing vehicle tracking units.
What follows is a brief operational overview of Beget divisions:
MobileBIO, a biometric identification device is used in time and attendance and
access control industries. The device which communicates using wireless GPRS
technology and integrated software still remains unique globally. The division
accounts for 65% of group revenue and it continues to focus on local market
growth. The product currently still enjoys a first mover advantage. The
management is currently mainly focused on local sales with limited efforts in
the international markets.
SMSmalls, the SMS division has continued to generate consistent cash flows and
growth. This market has seen consistent annual growth of approximately 20%, and
contributes approximately 30% of the group revenues.
Location-Based Services (LBS) combines a suite of locally developed software to
track cell phones for a host of consumer, business and government applications.
A significant increase in the demand for these products has been experienced.
The traffic incident management application has performed well and current new
efforts include vehicle breakdowns, security and a consumer engine.
Despite good prospects, the GPRS based banking transactions and facilitating of
the upgrade of banking and transactional equipment, has not performed well
during the period. The long sales cycles and resistance to the adoption of new
technologies, has negatively affected this division. Although the GPRS Point of
Sale (POS) devices represent a compelling business model the prospects for these
products have not translated in to sustainable earnings. Beget still maintains a
limited but contained presence in this market. This division has been scaled
down to suite the current market needs, and management will address any
presented opportunities on an individual basis.
INVESTMENT
In October 2006 Beget advised shareholders that an agreement had been
successfully concluded with Seagicom (Proprietary) Limited and its controlling
BEE shareholders to acquire the shares in Seagicom, for a total purchase
consideration of R4 950 000. The purchase consideration will be settled by the
issue of 165 000 000 Beget ordinary shares at 3 cents per share. The proof-of-
concept has been completed and submitted.
Seagicom (Pty) Ltd is a subsidiary of SMM Telematics (Pty) Ltd (SMM). SMM
Telematics was awarded a contract by the transport department to install a
tracking system into 5000 cars as part of a cost-management exercise. With the
tracking system installed into the 5000 vehicles SMM utilized Seagicom as a
joint venture for the supply of the mobile biometric unit. Beget is currently
the only worldwide provider of a mobile biometric authentication system.
The Beget and Seagicom partnership is ideal as the technical synergies and a
common understanding of GSM applications exist. The deal facilitates the
introduction of BEE shareholding as well as the delivery of a world first
product. The entire deal is structured on a performance basis and both parties
are committed to the successful delivery of the contract. A circular containing
full details of the acquisition and incorporating a notice of general meeting
will be posted to shareholders in due course.
Beget now intends to focus on all potential government opportunities these
include applications for the police, education department and municipal
operations.
PROSPECTS
The biometric units continue to be well received by the local market and
adoption of the biometric technology is growing consistently. Beget has been
exposed to a number of new biometric application requirements across government
and industry. Revenues are expected to continue to grow as the management stays
focussed on building sustainable cash generation from existing divisions.
The conclusion of the BEE deal is further expected to result in positive
financial effects on the business as well as new opportunities as a result of
the transaction.
The management is satisfied with the company"s ability to continue as a going
concern as a result of the future prospects of the group as a whole.
Beget"s outlook for the next 6 months remains positive, improved sales as well
as the BEE contract supporting increased revenues.
POST BALANCE SHEET EVENTS
There are no post balance sheet events to report.
CHANGES TO THE BOARD
There are no changes to the board.
DECLARATION OF DIVIDEND
In line with the group policy no dividend has been declared for the period.
On behalf of the Board
28 November 2006
DB Harington - Chairman AH Potgieter - CEO
Directors: DB Harington* (Chairman); AH Potgieter (CEO), S Hirschowitz
(Financial Director), CJ van Coller*, JS Coetzee* *non-executive
Registered Office: Podium Building 2, cnr Lois & Atterbury Streets, Menlyn,
Pretoria (PO Box 40788, Moreleta Park, 0044)
Transfer Secretaries: Link Market Services South Africa (Pty) Limited, 11
Diagonal Street, Johannesburg, 2001 (PO Box 4844, Johannesburg, 2000)
Company Secretary: Secricover Network CC, 685B Verdi Street, Erasmuskloof, 0048
(PO Box 11699, Erasmuskloof, 0048)
Date: 28/11/2006 08:19:18 AM Produced by the JSE SENS Department
