| Tue 28 Nov 2006, 10:56 | | Beige Holdings Limited - Unaudited results and ren |
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BEG
BEG
Beige Holdings Limited - Unaudited results and renewal of cautionary
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 30 September 2006 and renewal of
cautionary announcement
Revenue up 183%
Operating profit up 900%
Net profit after tax up 449%
Earnings per share up 235%
Group Balance Sheets
Unaudited Audited as Restated,
six months at Unaudited
ended 31 March six months
30 September 2006 ended
2006 R"000 31 August
R"000 2005
R"000
ASSETS
Non-current assets 66 773 20 095 12 265
Property, plant and equipment 15 174 7 405 7 792
Intangible assets 44 692 2 756 1 422
Investment in associate -- 4 605 250
companies
Deferred taxation 6 907 5 329 2 801
Current assets 99 502 34 527 34 052
Inventories 27 249 12 327 10 414
Trade and other receivables 40 176 12 488 20 586
Loans to associate company -- 3 712 --
Secured loans 6 960 4 100 --
Cash and cash equivalents 25 117 1 900 3 052
Total assets 166 275 54 622 46 317
EQUITY AND LIABILITIES
Capital and reserves 58 808 35 461 21 383
Share Capital 7 854 5 756 3 420
Share Premium 123 074 107 853 98 465
Accumulated loss (72 120) (78 148) (80 502)
Non-current liabilities 23 230 1 177 1 243
Long-term liabilities 23 230 1 177 1 243
Current liabilities 84 237 17 984 23 692
Accounts payable and provisions 63 109 13 234 18 257
Current portion of long-term 10 816 970 1 202
liabilities
Taxation 6 439 103 270
Bank overdraft 3 873 3 677 3 963
Total equity and liabilities 166 275 54 622 46 318
Ordinary shares in issue (000"s)
At period end 593 513 575 605 342 459
At period end including shares 785 382 -- --
to be issued for purchase of 50%
of Quality Products (Note 1)
Fully diluted (Note 2) 814 382 575 605 342 459
Net asset value per share
information
Net asset value per share 9.98 6.16 6.24
(cents)
Net tangible asset value per 2.40 5.68 5.83
share (cents)
Net asset value per share 7.53 -- --
(cents) including shares issued
for purchase of 50% of Quality
Products
Net tangible asset value per 1.81 -- --
share (cents) including shares
issued for purchase of 50% of
Quality Products
Fully diluted net asset value 7.26 6.16 6.24
per share (cents)
Fully diluted net tangible asset 1.74 5.68 5.83
value per share (cents)
Notes
Subsequent to the period end, shareholders approved the acquisition of the
outstanding 50% plus one share shareholding in Quality Products, resulting
in Quality Products becoming a 100% held subsidiary of Beige. As the
effective date of this acquisition is 01 April 2006, Quality Products has
been fully consolidated in the interim results and the number of shares in
issue has accordingly been adjusted to represent this fully consolidated
position. In addition, 4 316 667 shares held as treasury stock have been
subtracted from the respective share totals for purposes of calculating net
asset value per share information.
Fully diluted net asset value per share information has been incorporated
to show the potential effect of full dilution for 29 000 148 options held
by directors and senior management, to subscribe for new shares at 7.5
cents per share. The options, which were approved by shareholders at the
general meeting held on 13 November 2006, were granted with effect from 01
April 2006 and expire on 31 March 2007.
Group Income Statements
Unaudited Audited for Restated,
six months the year Unaudited
ended ended six months
30 September 31 March ended
2006 2006 31 August
R"000 R"000 2005
R"000
Revenue 113 599 83 958 40 087
Cost of sales (86 705) (67 516) (27 236)
Gross profit 26 894 16 442 12 851
Operating expenses (18 592) (20 980) (13 959)
Operating profit/(loss) 8 302 (4 538) (1 108)
Investment income 592 165 --
Income from associate company -- 3 675 --
Net profit/(loss) from operations 8 894 (698) (1 108)
before finance charges
Finance charges (300) (774) (402)
Net profit/(loss) before 8 594 (1 472) (1 510)
taxation
Taxation (2 566) 1 797 (216)
Net profit/(loss) for the period 6 028 325 (1 726)
Calculation of headline earnings
Net profit/(loss) loss for the 6 028 325 (1 726)
period
Adjustments -- -- --
Headline earnings/(loss) for the 6 028 325 (1 726)
period
Earnings per share information
Weighted average shares in issue 785 382 386 390 302 159
(000"s)
Fully diluted shares in issue 814 382 575 605 302 159
(000"s)
Attributable earnings/(loss) per 0.77 0.08 (0.57)
ordinary share (cents)
Headline earnings/(loss) per 0.77 0.08 (0.57)
share (cents)
Fully diluted attributable 0.74 0.08 (0.57)
earnings/(loss) per ordinary
share (cents)
Fully diluted headline 0.74 0.08 (0.57)
earnings/(loss) per share
(cents)
Notes
1. Subsequent to the period end, shareholders approved the acquisition of
the outstanding 50% plus one share shareholding in Quality Products,
resulting in Quality Products becoming a 100% held subsidiary of
Beige. As the effective date of this acquisition is 01 April 2006,
Quality Products has been fully consolidated in the interim results
and the number of shares in issue has accordingly been adjusted to
represent this fully consolidated position. In addition, 4 316 667
shares held as treasury stock have been subtracted from the respective
share totals for purposes of calculating net asset value per share
information.
Abridged Group Cash Flow Statements
Unaudited Audited Restated,
30 September 31 March Unaudited
2006 2006 31 August
R"000 R"000 2005
R"000
Net cash inflow/ (outflow) from 27 238 2 930 1 596
operating activities
Net cash outflow from investing (42 736) (8 534) (2 627)
activities
Net cash inflow/ (outflow) from 38 519 6 322 2 615
financing activities
Net increase/(decrease) in cash 23 021 718 1 584
and cash equivalents
Bank overdraft (net) at (1 777) (2 495) (2 495)
beginning of period
Bank balance/(overdraft) at end 21 244 (1 777) (911)
of period
Group Statement of Changes in Equity
Share Share Shares Accumulated Total
Capital premium to be loss
R"000 R"000 issued R"000 R"000
(R"000)
Balance at 29 February 2 951 95 575 -- (78 473) 20 053
2005
Shares issued during the 2 805 12 278 -- -- 15 083
year
Profit for the period 325 325
Balance at 31 March 2006 5 756 107 853 -- (78 148) 35 461
191 868 195 shares issued 1 919 13 430 -- -- 15 349
to Thebe Medicare (Pty)
Ltd at 8 cps in respect of
the acquisition of 50%
plus one share in Quality
Products
17 908 865 shares issued 179 1 791 -- -- 1 970
to Mothebe Investments
(Pty) Ltd at 11 cps in
respect of the acquisition
of 10% minus one share in
Quality Products
Profit for the period -- -- -- 6 028 6 028
Balance at 30 September 7 854 123 074 -- (72 120) 58 808
2006
COMMENTARY
The directors of Beige are pleased to announce the results for the period ended
30 September 2006. These results show the consolidated position of Beige, post
the acquisition of the remaining 60% shareholding in Quality Products (Pty) Ltd
("Quality Products"), with effect from 01 April 2006, from Thebe Medicare (Pty)
Ltd ("Thebe") and Mothebe Investments (Pty) Ltd ("Mothebe"), both of whom
elected to swap the shares held by them in Quality Products into Beige,
resulting in Beige becoming the largest fully empowered contract manufacturer in
the personal care industry.
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"). Save for a new accounting policy with regard to
provisions applicable to slow-moving stock, adopted during the previous
financial period, the same accounting policies and methods of computation have
been followed as compared to the period ended 31 August 2005. Shareholders are
advised that the company adopted IFRS with effect from 01 March 2005 and are
reminded that the company changed its year end to 31 March during the prior
reporting period.
1. Group review
Beige is a contract manufacturing company that manufactures and distributes
cosmetics, soaps, laundry soaps and allied products for the bath and body care
for the South African and international markets. The business operations are
undertaken by clearly focused subsidiaries, located in Gauteng and KwaZulu
Natal.
During the period, the Group negotiated the acquisition of the remaining 60% of
Quality Products and the empowerment of the company, continued the focus on the
turnaround of the Chloorkop manufacturing facility and entered into negotiations
leading to the conclusion of an agreement with Candur Active Value Investments
(Pty) Ltd ("CAVI") post the period end. These initiatives all form part of a
strategic decision by management to grow market share in a controlled fashion
and to obtain critical mass at the factories. The long term benefits of this
growth strategy include the optimisation of available production capacity and
the achievement of greater pricing power and allied benefits resulting from bulk
procurement.
2. Financial and operational overview
The board is pleased with the results for the first six months of the year,
which shows the continuing success of the turnaround and acquisition strategy
underway at Beige. The figures for the six months to 30 September 2006 all
reflect a substantial increase throughout, due to the 100% consolidation of the
results of Quality Products with effect from 01 April 2006. The highlights of
these results include the 449% increase in net profit after tax, compared to the
six month period ended 31 August 2005, from a loss of R1 726 000 to a profit of
R6 028 888 and the 235% growth in earnings and headline earnings per share, from
a loss of 0.57 cents to profit of 0.77 cents. Shareholders are, however,
reminded that at the reporting date for the comparative period, the acquisition
by Beige of an initial 40% of Quality Products had not been completed and as
such, the comparative results do not reflect this initial investment in Quality
Products and should be viewed accordingly.
Sales increased from R40 087 000 in the comparative period to R113 599 000 for
the period under review, an increase of 183%. Although the gross profit margin
shows a decrease from 32.1% to 23.8% in the comparative period, this is largely
attributable to the long-term contracts entered into by the group, which
contracts provide for a lower margin than those normally achieved in the short
to medium run contracts. The long term contracts typically provide for minimum
volumes of production.
Overall the group is in a much stronger position than in the comparative period
as represented by a stronger balance sheet and the positive cash flow position.
4. Prospects
The acquisition of Quality Products, the day-to-day management of which has been
under the control of Beige since September 2005, provides the group with
excellent prospects for strong, sustained growth in earnings. In addition to the
enhanced value it has brought to the Group, the structuring of the acquisition
of the remaining 60% shareholding, enabled the Group to broaden its empowerment
credentials and forge a closer relationship with Thebe, the oldest broad-based
empowerment company in South Africa. This also provided the impetus for the
merger negotiations with the CAVI consortium through the proposed acquisition of
Crystal Pack (Pty) Ltd, which is expected to further enhance the value of the
Group.
5. Acquisitions and issue of shares
On 26 September 2006, it was announced on SENS that Beige had concluded an
agreement with Mothebe in terms of which Beige would acquire Mothebe"s 10% minus
one share shareholding in Quality Products for a purchase consideration of R2
969 975. The purchase consideration was settled by the issue of 17 908 865
Beige shares to Mothebe at an issue price of 11 cents per share. The agreement
resulted in Beige holding a 50% minus one share shareholding in Quality Products
prior to the approval by shareholders of the Thebe transaction and in Mothebe
holding a 3% interest in the company.
The agreement entered into with Anton Botha for the purchase of the Eco-Pure
business from Value Chemicals was amended during the period under review. The
amendment was entered into in order to simply the terms of the agterskot payment
provided for in the original agreement and provided for Beige to settle the
additional payment due in respect of the profit warranty in cash rather than
through the issue of additional shares. In terms of the amended agreement,
Beige has paid Anton Botha an additional R650 000 in cash and will pay an
additional R650 000 in cash on cession and transfer of the manufacturing
agreement entered into between PI Products (Pty) Ltd trading as Permark
International and Value Chemicals.
6. Subsequent events
Subsequent to the period end, shareholders approved the empowerment transaction
entered into with Thebe incorporating the acquisition by Beige of the remaining
50% plus one share shareholding in Quality Products. The approval of the
transaction on 13 November 2006 means that Quality Products is now a 100% held
subsidiary of Beige and is recognised as a black economic empowered company in
accordance with the Broad-Based Black Economic Empowerment Act, No. 53 of 2000.
On 19 October 2006, Beige announced its intention to acquire all the ordinary
shares in Crystal Pack (Pty) Ltd from CAVI for a purchase consideration of R78
538 164 to be settled by the issue of 785 381 643 ordinary Beige shares to the
vendor at an issue price of 10 cents per share. Shareholders are advised that
the condition precedent regarding the completion date of reciprocal due
diligence investigations by both the sellers and the purchaser has been extended
and is expected to be fulfilled by 23 December 2006. A circular containing full
details of the proposed acquisition and incorporating a notice of general
meeting will be posted to Beige shareholders within 28 days of the conclusion of
the afore-mentioned reciprocal due diligence investigations.
7. Director appointments
Mr MM du Preez was appointed to the board with effect from 31 May 2006, whilst
Messrs Y Bhayat and J Black were appointed to the board with effect from 13
November 2006, following the approval by shareholders of the empowerment
transaction entered into with Thebe and incorporating the acquisition by Beige
of the remaining 50% plus one share shareholding in Quality Products.
8. Dividends
No dividend has been declared for the period ended 30 September 2006.
9. Renewal of cautionary
Shareholders are referred to the Detailed Cautionary Announcement in respect of
the proposed acquisition by Beige of all the ordinary shares in Crystal Pack
(Pty) Ltd released on SENS on 19 October 2006. As the full impact of the
proposed acquisition will only be fully determined after completion of the
reciprocal due diligence investigations referred to in the paragraph 6 above,
shareholders are advised to continue to exercise caution when dealing in the
company"s securities until a full announcement incorporating the financial
effects of the acquisition is made.
By order of the Board
John Rawlings
Chairman
Mark Di Nicola
Chief Executive Officer
27 November 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, MM du Preez*; PJD
Gubb*, LI Karp*, JA Noble*; IL Stromin, RH Weissenberg*
(*Non-executive #American )
Designated Advisor Transfer Office
Arcay Moela Sponsors Link Market Services South Africa (Pty) Ltd
Date: 28/11/2006 10:56:14 AM Produced by the JSE SENS Department
