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BEG - Beige Holdings Limited - Unaudited group results for the six months ended
30 September 2011 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" or "the Group")
UNAUDITED GROUP RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2011 AND RENEWAL
OF CAUTIONARY ANNOUNCEMENT
The board presents its unaudited results for the six months ended 30 September
2011 below, together with audited results for the year ended 31 March 2011 and
unaudited results for the six months ended 30 September 2010.
Condensed consolidated statements of financial position as at 30 September 2011
Unaudited six Audited Unaudited six
months ended 31 March 2011 months ended
30 September 2011 30 September
R`000 R`000 2010
R`000
ASSETS
Non-current assets 279 298 260 454 247 627
Property, plant and 182 104 156 587 146 048
equipment
Intangible assets 87 724 88 207 89 481
Investment in joint - - -
venture* (Note 3)
Other receivables 410 410 -
Deferred income tax 9 060 15 250 12 098
assets
Current assets 206 772 192 516 214 677
Inventories 95 427 82 726 89 935
Trade and other 108 757 105 274 117 266
receivables
Cash and cash 2 588 4 516 7 476
equivalents
Total assets 486 070 452 970 462 304
EQUITY AND LIABILITIES
Equity attributable to 226 945 221 533
ownersof Beige Holdings 208 278
Limited
Ordinary share capital 15 396 15 396 15 399
Share premium 179 570 179 570 179 494
Other reserves 18 442 18 442 10 842
Retained earnings 13 537 8 125 2 543
Non-controlling interest 2 078 2 261 2 746
Total equity 229 023 223 794 211 024
Non-current liabilities 74 940 34 025 33 888
Borrowings 70 421 25 829 30 394
Deferred income tax 4 519 8 196 3 494
liabilities
Current liabilities 182 107 195 151 217 392
Trade and other payables 127 074 128 095 129 127
Borrowings 13 865 28 239 44 612
Current income tax 210 1 109 1 138
liabilities
Bank overdrafts 40 958 37 708 42 515
Total liabilities 257 047 229 176 251 280
Total equity and 486 070 452 970 462 304
liabilities
*- Amounts less than
R`000
Ordinary shares in issue
(000`s)
At period end (Note 1) 1 539 510 1 539 742 1 539 810
Diluted (Note 1 & 2) 2 039 510 1 539 742 1 539 810
Net asset value per
share information
Net asset value per 14.74 14.39 13.53
share (cents)
Net tangible asset value 9.04 8.66 7.72
per share (cents)
Diluted net asset value 12.35 14.39 13.53
per share (cents)
Diluted net tangible 8.05 8.66 7.72
asset value per share
(cents)
Condensed consolidated statements of comprehensive income for the six months
ended 30 September 2011
Unaudited six Audited Unaudited
months ended 31 March 2011 six months
30 September 2011 ended
R`000 R`000 30 September
2010
R`000
Revenue 298 254 594 687 289 291
Cost of sales (237 286) (485 537) (228 893)
Gross profit 60 968 109 150 60 398
Distribution costs (10 703) (17 510) (8 290)
Administrative expenses (34 088) (65 715) (35 718)
Operating profit 16 177 25 925 16 390
Gain on the re- - 696
measurement of call 696
option liability
Profit before finance 16 177 26 621 17 086
costs
Finance income 150 1 041 408
Finance costs (5 642) (10 651) (6 289)
Share of profit of joint - - -
venture*
Profit before income tax 10 685 17 011 11 205
Income tax expense (2 996) (3 707) (2 998)
Profit for the year 7 689 13 304 8 207
Other comprehensive
income:
Gain on property - 9 287 -
revaluation
Income tax expense - (1 687) -
Other comprehensive - 7 600 -
income for the period,
net of tax
Total comprehensive 7 689 20 904 8 207
income for the period
Total comprehensive
income attributable to:
Equity holders of Beige 7 872 21 245 8 063
Holdings Limited
Non-controlling interest (183) (341) 144
7 689 20 904 8 207
Profit for the period 7 689 13 304 8 207
Non-controlling interest 183 341 (144)
Profit for the period 7 872 13 645 8 063
attributable to equity
holders of Beige
Holdings Limited
*Amounts less than R`000
Earnings per share for
profit attributable to
equity holders of Beige
Holdings Limited:
In issue (cents) 0.51 0.89 0.52
Diluted (cents) 0.43 0.89 0.52
Headline earnings - - -
adjustments
Headline earnings for 7 872 13 645 8 063
the period
Headline earnings per
share for profit
attributable to equity
holders of Beige
Holdings Limited:
In issue (cents) 0.51 0.89 0.52
Diluted (cents) 0.43 0.89 0.52
Earnings per share
information
Weighted number of
ordinary shares (000`s):
In issue 1 539 510 1 539 742 1 539 810
Diluted 2 039 510 1 539 742 1 539 810
Treasury shares held 92 312 92 312 91 717
(`000)
Notes:
1 92 311 517 (2010: 91 716 667) shares held as treasury shares have been
subtracted from the respective share totals for purposes of calculating
earnings per share information.
2 Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares. The company has one category of dilutive
potential ordinary shares: convertible preference shares. Diluted earnings,
and the weighted average number of ordinary shares for 2011, have been
adjusted in this regard as the effect of the convertible preference
share conversion is dilutive i.e. the ruling share price at 30 September
2011 is more than the conversion strike price. Diluted earnings, and
the weighted average number of ordinary shares for 2010, have not been
adjusted in this regard as the effect of the convertible preference
share conversion is anti-dilutive, i.e. the ruling share price at 30
September 2010 is less than the conversion strike price.
3 The 50% investment in the joint venture, U Housing (Pty) Ltd, is accounted
for using the equity method of accounting. Under the equity method, the
investment in the joint venture is initially recognised at cost, and the
carrying amount is increased or decreased to recognise the investor`s share
of the profit or loss of the investee after the date of acquisition. In the
current reporting period both the carrying value of the investment and the
investor`s share of the profit or loss of the investee are less than R1`000
and therefore fall outside of the R`000 reporting.
Group statement of changes in equity for the six months ended 30 September 2011
Ordinary Ordinary Ordinary Revalu- Share Total
share treasury share ation based other
capital shares premium reserve payments reserves
reserve
GROUP R`000 R`000 R`000 R`000 R`000 R`000
Balance at 16 316 (917) 268 968 8 863 1 979 10 842
31March 2010
Comprehensive
income
Profit for - - - - - -
the period
Total - - - - - -
comprehensive
income
Transactions
with owners
Reclassificat - - (89 474) - - -
ion of fair
value
adjustment
Total (89 474) - - -
transactions
with owners
Balance at 30 16 316 (917) 179 494 8 863 1 979 10 842
September
2010 -
Unaudited
Comprehensive
income
Profit for - - - - - -
the period
Total - - - - - -
comprehensive
income
Transactions
with owners
Share buyback (6) - (24) - - -
(shares
cancelled
Treasury (6) (24) - - -
shares held
by subsidiary
Share issue - - (1) - - -
costs
Conversion of 9 - 125 - - -
preference
shares
Total 3 (6) 76 - - -
transactions
with owners
Other
comprehensive
income
Gain on - - - 7 600 - 7 600
property
revaluation
(net of
taxation)
Total other - - - 7 600 - 7 600
comprehensive
income
Balance at 31 16 319 (923) 179 570 16 463 1 979 18 442
March 2011
Comprehensive
income
Profit for - - - - - -
the period
Total - - - - - -
comprehensive
income
Transactions
with owners
Ordinary - - - - - -
dividend paid
Total - - - - - -
transactions
with owners
Balance at 30 16 319 (923) 179 570 16 463 1 979 18 442
September
2011 -
Unaudited
Group statement of changes in equity for the six months ended 30 September 2011
continued
Retained Total Non- Total
(loss)/ controlling
earnings interest
GROUP R`000 R`000 R`000 R`000
Balance at (94 994) 200 215 2 602 202 817
31March 2010
Comprehensive
income
Profit for the 8 063 8 063 144 8 207
period
Total 8 063 8 063 144 8 207
comprehensive
income
Transactions with
owners
Reclassification 89 474 - - -
of fair value
adjustment
Total 89 474 - - -
transactions with
owners
Balance at 30 2 543 208 278 2 746 211 024
September 2010 -
Unaudited
Comprehensive
income
Profit for the 5 582 5 582 (485) 5 097
period
Total 5 582 5 582 (485) 5 097
comprehensive
income
Transactions with
owners
Share buyback - (30) - (30)
(shares cancelled
Treasury shares - (30) - (30)
held by
subsidiary
Share issue costs - (1) - (1)
Conversion of - 134 - 134
preference shares
Total - 73 - 73
transactions with
owners
Other
comprehensive
income
Gain on property - 7 600 - 7 600
revaluation (net
of taxation)
Total other - 7 600 - 7 600
comprehensive
income
Balance at 31 8 125 221 533 2 261 223 794
March 2011
Comprehensive
income
Profit for the 7 872 7 872 (183) 7 689
period
Total 7 872 7 872 (183) 7 689
comprehensive
income
Transactions with
owners
Ordinary dividend (2 460) (2 460) - (2 460)
paid
Total (2 460) (2 460) - (2 460)
transactions with
owners
Balance at 30 13 537 226 945 2 078 229 023
September 2011 -
Unaudited
Condensed consolidated statement of cash flows for the six months ended 30
September 2011
Unaudited Audited Unaudited six
six months 31 March 2011 months ended
ended 30 September
30 September R`000 2010
2011 R`000
R`000
Cash flows from operating
activities
Cash generated from 5 479 54 975 20 330
operations
Net interest paid (5 492) (7 958) (5 881)
Income tax paid (1 161) (1 882) (1 007)
Net cash (used in) / 45 135 13 442
generated from operating (1 174)
activities
Cash flows from investing
activities
Purchases of property, plant (7 882) (13 794) (6 434)
and equipment
Net cash used in investing (7 882) (13 794) (6 434)
activities
Cash flows from financing
activities
Redemption of preference - (3 466) -
shares
Ordinary dividend paid (2 449) - -
Repayment of borrowings (19 889) (28 516) (6 517)
Proceeds from borrowings 26 216 2 979 -
Net cash generated from / (29 003) (6 517)
(used in) financing 3 878
activities
Net (increase)/decrease in (5 178) 2 338 491
bank overdrafts including
cash and cash equivalents
Bank overdrafts including (33 192) (35 530) (35 530)
cash and cash equivalents at
beginning of period
Bank overdrafts including (38 370) (33 192) (35 039)
cash and cash equivalents at
end of period
Segmental analysis for the six months ended 30 September 2011
Outsource
manufacturi Packaging Other Group
ng
R`000 R`000 R`000 R`000
Segment revenue
- Unaudited six months ended
30 September 2011
Total revenue 250 480 51 496 - 301 976
Intersegment revenue - (3 722) - (3 722)
Revenue from external 250 480 47 774 - 298 254
customers
- Audited as at 31 March 2011
Total revenue 490 874 112 376 - 603 250
Intersegment revenue - (8 563) - (8 563)
Revenue from external 490 874 103 813 - 594 687
customers
- Unaudited six months ended
30 September 2010
Total revenue 244 503 59 225 - 303 728
Intersegment revenue (10 955) (3 482) - (14 437)
Revenue from external 233 548 55 743 - 289 291
customers
Segment operating
profit/(loss)
- Unaudited six months ended 13 984 2 366 (173) 16 177
30 September 2011
- Audited as at 31 March 2011 21 768 3 235 922 25 925
- Unaudited six months ended 16 230 1 320 (1 160) 16 390
30 September 2010
Segment profit/(loss) before
taxation
- Unaudited six months ended 11 676 1 314 (2 305) 10 685
30 September 2011
- Audited as at 31 March 2011 15 895 1 544 (428) 17 011
- Unaudited six months ended 14 257 953 (4 005) 11 205
30 September 2010
Segment assets
- Unaudited six months ended 337 606 145 548 2 916 486 070
30 September 2011
- Audited as at 31 March 2011 328 230 123 031 1 709 452 970
- Unaudited six months ended 335 401 122 901 4 002 462 304
30 September 2010
Segment liabilities
- Unaudited six months ended 158 584 40 438 58 025 257 047
30 September 2011
- Audited as at 31 March 2011 140 786 42 660 45 730 229 176
- Unaudited six months ended 166 619 39 128 45 533 251 280
30 September 2010
* - Includes intra-segment revenue
COMMENTARY
The directors of Beige are pleased to announce the unaudited consolidated group
results for the six months ended 30 September 2011.
1 Nature of business
Beige is a registered holding company operating through a number of
subsidiaries. The Beige Group primarily operates as a contract and
packaging manufacturer, manufacturing and distributing cosmetics, soaps,
laundry soaps, packaging and allied products on behalf of brand owners for
both the local and international home and personal care industry and is the
largest fully empowered contract manufacturer in the South African home and
personal care industry.
2 Listing information
Beige is listed on the Alternative Exchange ("AltX") of the JSE Limited
under the share code: BEG. The company`s ISIN number is ZAE 000034161.
3 Basis of preparation
The condensed results have been prepared in accordance with IAS 34 -
Interim Financial Reporting and section 8.57 of the Listings Requirements
of the Johannesburg Stock Exchange ("the JSE"). The principal accounting
policies used in the preparation of the results for the six months ended 30
September 2011 are consistent with those of the annual financial statements
for the year ended 31 March 2011, as described in those annual financial
statements. The condensed consolidated interim financial information
should be read in conjunction with the annual financial statements for the
year ended 31 March 2011, which have been prepared in accordance with
International Financial Reporting Standards ("IFRS"). The company has not
early adopted any new standards in these interim results.
These results have not been reviewed or audited by the company`s auditors,
PricewaterhouseCoopers Inc.
4 Segment reporting
The chief operating decision-maker has been identified as the board of
directors. The board considers the business from a product perspective,
from which management assesses the performance of outsource manufacturing
and packaging products. Management has determined the operating segments
based on these reports.
5 Business review
The difficult trading conditions experienced in the previous comparative
reporting period continued to impact the Group`s results and the modest
increase in turnover was offset by a decrease in the Group`s operating
profit. Continued pressures in the economy have influenced consumer buying
habits which have changed to more inexpensive items and private label
brands. This has impacted on Beige`s product mix. The reverse logistics
business which was launched by Beige during the previous financial year
achieved good operating results as did the Argo business through which
Beige manufactures its own branded products, but the contract manufacturing
home and personal care business showed a moderate decline in operating
income. Ongoing cost management resulted in a reduction of administrative
costs of R1.6 million.
6 Financial and operational overview
Gross profit for the six months ended 30 September 2011 increased by 0.9%
on a 3.1% increase in turnover. The marginal decline in the gross margin,
as a percentage of turnover, is attributable to a number of factors,
including continued pressures in the economy and rising cost pressures,
including fuel, utility and material costs. The lower margin and increased
distribution costs have, to some extent, been offset by the effective
management of administrative expenses, which have decreased by 4.6% from
R35.7 million in the prior period to R34.1 million in the current period.
Operating profit for the period is marginally down 1.3% on the prior
comparative period, primarily due to the decline in gross margin and
increased distribution costs.
Current borrowings reduced substantially from the prior period largely as a
result of the repayment of short term debt through the successful rights
offer of preference shares to Beige shareholders, which rights offer was
fully subscribed. Long term borrowings have increased primarily as a
result of the issue of preference shares (refer note 11) and a capitalised
finance lease liability (refer note 10).
The cash flow position is expected to improve further with the proceeds
expected from the restructuring of the property interests as detailed in
note 10 below.
7 Prospects
Beige expects trading conditions to continue to remain challenging over the
next six months, however the Group is entering its traditionally busier
period. Management has implemented aggressive cost cutting strategies to
mitigate the challenging economic circumstances.
In order to mitigate the risks associated with the uncertain economic
environment and in line with its strategy of pursuing value enhancing
opportunities, the company is pursuing vertical integration opportunities
to secure sources of supply of raw materials and to improve margins. In
this regard the company is now pleased to announce the approval of a credit
facility for the construction and installation of new soap noodle
manufacturing plant and equipment through the Industrial Development
Corporation.
8 Dividends
A cash dividend of 0.15 cents per share was paid to all shareholders
recorded in the share register of the company at the close of business on
Friday, 22 July 2011.
The board of directors of Beige has decided to declare an interim cash
dividend in line with previously stated intentions. Notice is hereby given
that a cash dividend of 0.075 cents per share ("the dividend") has been
declared payable in respect of the six months ended 30 September 2011 to
shareholders recorded in the share register of the Company at the close of
business on Friday, 09 December 2011.
Shareholders` attention is drawn to the following important dates:
2011
Last day to trade "cum" the cash dividend Friday, 02 December
("LDT"):
Date trading commences "ex" the cash dividend: Monday, 05 December
Record date for payment of the cash dividend: Friday, 09 December
Date of payment of the cash dividend: Monday, 12 December
Share certificates may not be dematerialised or rematerialised between
Monday, 05 December 2011 and Friday, 09 December 2011 both dates inclusive.
Any changes in the above dates will be announced on SENS.
The solvency and liquidity of the company and the group was considered by
the board when approving the interim dividend for payment.
9 Changes to the board
The designation of the Chairman of the Board, Mr M Fandeso, was changed
from non-executive chairman to independent non-executive chairman following
his resignation from Thebe Investment Corporation (Pty) Ltd.
10 Acquisitions and disposals
Restructure of property interests and property acquisition
During the period under review, Beige entered into a joint venture with
True Group Limited in respect of the properties owned and leased by the
Beige Group. In terms of the joint venture, U Housing (Pty) Ltd, a newly
formed company, will purchase Beige`s existing property at Chloorkop
Extension 1 from a Beige subsidiary for a purchase consideration of R42.8
million, and has purchased the property occupied by Beige`s Durban-based
Quality Products factory for a purchase consideration of R33.3 million.
The transaction enables Beige to jointly own its factory premises via the
joint venture, as opposed to leasing those properties where large
investments in infrastructure and plant and equipment have and will
continue to be made. This strategy is expected to maximise the utilisation
of the Group`s existing assets, whilst avoiding the disruption to
production, the costs and the losses associated with a large scale factory
move. The transfer of the Quality Products factory has been concluded,
whilst the transfer of the Chloorkop property is in the process of being
registered at the Deeds Office. On final conclusion, the transaction will
result in the existing Chloorkop property debt being repaid and the release
of approximately R9.5 million in cash to the Beige Group, which cash will
be used for working capital and expansion purposes.
In terms of IFRS, the 50% interest in the joint venture is accounted for
using the equity method of accounting in the interim results and the long
term lease of the Quality Products factory from the joint venture has
accounted for as capitalised finance lease for the building component and
as an operating lease for the land component. The effect of the
capitalised finance lease is an increase in property, plant and equipment
of R22.8 million, an increase in long term borrowings of R18.5 million and
an increase in short term borrowings of R4.3 million.
11 Issue of shares
During the period under review, 25 000 000 variable rate, cumulative, non-
participating, convertible, redeemable preference shares were issued
pursuant to a partially underwritten rights offer to ordinary shareholders.
The preference shares attract a preference dividend of prime plus 2% per
annum for a period of three years from the date of issue and are thereafter
convertible into ordinary shares of the company in the ratio of 20 new
ordinary shares for every one preference share held. In the event of the
preference shares not being converted during the conversion period, they
will be automatically redeemed by the Company. The first preference
dividend will be paid to preference shareholders in May 2012.
12 Subsequent events
Change in control of the Company and Renewal of Cautionary Announcement
As announced on SENS on 2 November 2011, shareholders are advised that the
board of directors has received notice that The Lion Match Company
(Proprietary) Limited, a BBBEE company, has entered into an agreement to
acquire Thebe Investment Corporation (Pty) Ltd`s entire shareholding in
Beige comprising 562 841 737 ordinary shares.. This will constitute a
shareholding in excess of 35% of the issued ordinary share capital of the
Company, net of treasury shares. The agreement is subject to a number of
conditions precedent. This agreement may result in a change in control as
defined in the Takeover Regulations of the Companies Act, 2008 and may
result in a mandatory offer to minority ordinary shareholders in Beige, as
well as a comparable offer to preference shareholders in Beige, in
accordance with the requirements of the Takeover Regulation Panel.
Accordingly, both ordinary and preference shareholders in Beige are advised
to exercise caution when dealing in the Company`s securities until a
further announcement is made.
Acquisition of a 50% interest in Kgalagadi Soap Industries (Pty) Ltd
("KSI")
In line with its strategy to increase the Group`s footprint in Africa,
Beige has in principal reached an agreement in respect of the acquisition
of a 50% shareholding in Botswana-based KSI, a company involved in the
manufacture of laundry and toilet soaps. There are a number of suspensive
conditions still to be cleared, including the finalisation of agreements.
Variation of agreement in relation to the acquisition of Rap Products
International Pty Ltd
Following the signing of final settlement agreements with two of the
vendors of Rap Products International (Pty) Ltd, the details of which were
announced on SENS on 30 September 2011, 11 833 856 ordinary shares have
been issued at an issue price of 14 cents per share. The issue of the
shares was done via means of a transfer of treasury shares held by Beige
and there has accordingly been no direct impact on the issued share capital
of the Company.
Restructure of property interests and property acquisition
The sale of the Chloorkop property to the joint venture entered into during
the current period of review is in the process of being registered at the
Deeds Office. Please refer to note 10 for further details.
By order of the Board
Monwabisi Fandeso Mark Di Nicola
Chairman Chief Executive Officer
15 November 2011
Johannesburg
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
MP Fandeso*# Chairman*; MM Di Nicola Chief Executive Officer; MC Easter
Financial Director; MM du Preez*; LI Karp*#; RH Weissenberg*#; L Gadd*
(* Non-executive)(#independent)
Designated Advisor Transfer Office
Arcay Moela Sponsors (Proprietary) Link Market Services South
Limited Africa (Pty) Ltd
Date: 15/11/2011 16:57:01 Supplied by www.sharenet.co.za
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