Wrap Text
Unaudited Consolidated Results 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")
UNAUDITED CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2012 AND
RENEWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are reminded that the Company changed its year end from 31 March to 30 June each year in
order to align its year end with that of the new controlling shareholder. The unaudited interim results for the
six months ended 31 December 2012 are, however, required to be compared to the previous unaudited
interim results, being the period ended 30 September 2011. Shareholders should accordingly take note of
the fact that the comparative periods have different trading patterns and conditions and that the results
presented below will not be comparable in many instances to the results for the period ended 30 September
2011. In addition, for ease of comparison due to the year-end change, the results for the three month
audited period ended 30 June 2012 are also presented.
Condensed Consolidated Statement of Financial Position
Unaudited
Unaudited 31 Audited 30 September
December 2012 30 June 2012 2011
R’000 R’000 R’000
ASSETS
Non-current assets 257 088 250 471 279 298
Property, plant and equipment 173 111 172 315 182 104
Intangible assets 55 366 55 366 87 724
Investment in joint venture* (Note 1) 6 954 4 165 -
Other receivables 167 271 410
Deferred income tax assets 21 490 18 354 9 060
Current assets 207 825 242 935 206 772
Inventories 102 568 116 763 95 427
Trade and other receivables 102 504 120 288 108 757
Cash and cash equivalents 2 753 5 884 2 588
Total assets 464 913 493 406 486 070
EQUITY AND LIABILITIES
Equity attributable to equity holders of Beige
Holdings Limited 174 308 187 714 226 945
Ordinary share capital 15 422 15 442 15 396
Share premium 179 898 179 898 179 570
Other reserves 12 351 12 927 18 442
Retained (loss)/earnings (33 383) (20 553) 13 537
Non-controlling interest 1 416 1 703 2 078
Total equity 175 724 189 417 229 023
Non-current liabilities 100 077 91 122 74 940
Borrowings 91 511 81 784 70 421
Deferred income tax liabilities 8 566 9 338 4 519
Current liabilities 189 112 212 867 182 107
Trade and other payables 134 744 168 131 127 074
Borrowings 8 652 8 933 13 865
Current income tax liabilities 280 1 508 210
Bank overdrafts 41 436 34 295 40 958
Shareholder loan 4 000 - -
Total liabilities 289 189 303 989 257 047
Total equity and liabilities 464 913 493 406 486 070
*Amounts less than R’000
Ordinary shares (000’s)
In issue (Note 2) 1 544 197 1 544 197 1 539 510
Net asset value per share information (net of
non-controlling interest)
Net asset value per share (cents) 11.29 12.16 14.74
Net tangible asset value per share (cents) 7.70 8.57 9.04
Diluted net asset value per share (cents) 11.29 12.16 12.35
Diluted net tangible asset value per share
(cents) 7.70 8.57 8.05
Condensed Consolidated Statement of Comprehensive Income
Unaudited six
Unaudited six months
months ended Audited three ended 30
31 December months ended September
2012 30 June 2012 2011
R’000 R’000 R’000
Revenue 329 768 182 902 298 254
Cost of sales (295 932) (160 453) (237 286)
Gross profit 33 836 22 449 60 968
Distribution costs (9 103) (4 584) (10 703)
Administrative expenses (38 095) (20 335) (34 088)
Operating (loss)/profit (13 362) (2 470) 16 177
Finance income 555 248 150
Finance costs (6 928) (3 278) (5 642)
(Loss)/profit after net financing costs (19 735) (5 500) 10 685
Share of profit of joint venture* 77 57 -
(Loss)/profit before income tax (19 658) (5 443) 10 685
Income tax credit/(expense) 5 958 1 618 (2 996)
(Loss)/profit for the period (13 700) (3 825) 7 689
Other comprehensive income:
Gain on property revaluation 12 - -
Income tax expense (3) - -
Other comprehensive income for the period
net of tax 9 - -
Total comprehensive (loss)/profit for the
period (13 691) (3 825) 7 689
Total comprehensive loss attributable to:
Equity holders of Beige Holdings Limited (13 406) (3 582) 7 872
Non-controlling interest (285) (243) (183)
(13 691) (3 825) 7 689
(Loss)/profit for the period (13 691) (3 825) 7 689
Non-controlling interest 285 243 183
(Loss)/profit for the period attributable to
equity holders of Beige Holdings (13 406) (3 582) 7 872
*Amounts less than R’000
Headline earnings adjustments:
Total comprehensive (loss)/profit for the period
attributable to equity holders of Beige Holdings
Limited (13 406) (3 582) 7 872
Adjustments:
Profit on disposal of property net of tax (9) (4) -
Headline (loss)/earnings for the period
attributable to equity holders of Beige
Holdings Limited (13 415) (3 586) 7 872
Ordinary shares (000’s):
Weighted average shares in issue (Note 2) 1 544 197 1 544 197 1 539 510
Diluted (Notes 2 & 3) 1 544 197 1 544 197 2 039 510
Earnings per share information
(Loss)/earnings per share (cents) (0.87) (0.23) 0.51
Headline (loss)/earnings per share (cents) (0.87) (0.23) 0.51
Diluted (loss)/earnings per share (cents) (0.87) (0.23) 0.43
Diluted (loss)/headline earnings per share
(cents) (0.87) (0.23) 0.43
Notes:
1. 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 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.
2. 87 624 017 (June 2012: 87 624 017/September 2011: 92 311 517) shares held as treasury stock have
been subtracted from the respective share totals for purposes of calculating earnings per share
information.
3. 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 December 2012 and June 2012, have however not been
adjusted in this regard as the effect of the convertible preference share conversion is antidilutive, even
though the ruling share price at 31 December 2012 and 30 June 2012 is more than the conversion strike
price. Potential ordinary shares are antidilutive when their conversion to ordinary shares would increase
earnings per share or decrease loss per share from continuing operations. The calculation of diluted
earnings per share does not assume conversion, exercise, or other issue of potential ordinary shares that
would have an antidilutive effect on earnings per share. Diluted earnings, and the weighted average
number of ordinary shares for September 2011, have been adjusted in this regard as the effect of the
convertible preference share conversion was dilutive i.e. the ruling share price at 30 September 2011 was
more than the conversion strike price.
Condensed Consolidated Statement of Cash Flows
Six months Audited year Six months
ended 31 ended ended 30
December 30 June September
2012 2012 2011
R’000 R’000 R’000
Net cash generated from/(used in) operating activities (16 132) 6 367 (1 174)
Net cash used in investing activities (7 587) (3 366) (7 882)
Net cash generated from financing activities 13 447 1 299 3 878
Net (increase)/decrease in bank overdrafts
including cash and cash equivalents (10 272) 4 300 (5 178)
Bank overdrafts including cash and cash equivalents
at the beginning of the period/year (28 411) (32 711) (33 192)
Bank overdrafts including cash and cash
equivalents at the end of the period (38 683) (28 411) (38 370)
Condensed Consolidated Statement of Changes in Equity
Share
Ordinary Ordinary Ordinary Revalua based Total
share treasury Share tion payment other
capital shares premium reserve reserve reserves
R’000 R’000 R’000 R’000 R’000 R’000
Balance at 31 March 2011 16 319 (923) 179 570 16 463 1 979 18 442
Comprehensive income:
Profit for the period - - - - - -
Other comprehensive
income: - - - - - -
Other comprehensive income
for the period - - - - - -
Total comprehensive
income - - - - - -
Transactions with owners:
Dividends paid - - - - - -
Total contributions by and
distributions to owners of
the company, recognised
directly in equity - - - - - -
Balance at 30 September
2011 16 319 (923) 179 570 16 463 1 979 18 442
Comprehensive income:
Loss for the period - - - - - -
Other comprehensive
income:
Other comprehensive income
for the period - - - - - -
Total comprehensive
income - - - - - -
Transactions with owners:
Realisation of revaluation
reserve - - - (5 227) - (5 227)
Profit on sale of treasury
shares net of taxation - - - - - -
Sale of treasury shares - 46 328 - - -
Dividends paid - - - - - -
Total contributions by and
distributions to owners of
the company, recognised
directly in equity - 46 328 (5 227) - (5 227)
Balance as at 31 March 2012 16 319 (877) 179 898 11 236 1 979 13 215
Comprehensive income:
Loss for the period - - - - - -
Other comprehensive
income:
Other comprehensive income
for the period - - - - - -
Total comprehensive
income - - - - - -
Transactions with owners:
Realisation of revaluation
reserve - - - (288) - (288)
Total contributions by and
distributions to owners of
the company, recognised
directly in equity - - - (288) - (288)
Balance at 30 June 2012 16 319 (877) 179 898 10 948 1 979 12 927
Comprehensive income:
Loss for the period - - - - - -
Share
Ordinary Ordinary Ordinary Revalua based Total
share treasury Share tion payment other
capital shares premium reserve reserve reserves
Other comprehensive
income:
Other comprehensive income
for the period - - - - - -
Total comprehensive
income - - - - - -
Transactions with owners:
Realisation of revaluation
reserve - - - (576) - (576)
Total contributions by and
distributions to owners of
the company, recognised
directly in equity - - - (576) - (576)
Balance at 31 December
2012 16 319 (877) 179 898 10 372 1 979 12 351
Condensed Consolidated Statement of Changes in Equity (continued…..)
Non-
Retained controlling Total
(loss)\earnings Total interest equity
R’000 R’000 R’000 R’000
Balance at 31 March 2011 8 125 221 533 2 261 223 794
Comprehensive income:
Profit for the period 7 872 7 872 (183) 7 689
Other comprehensive income:
Other comprehensive income for the
period - - - -
Total comprehensive income 7 872 7 872 (183) 7 689
Transactions with owners :
Dividends paid (2 460) (2 460) - (2 460)
Total contributions by and
distributions to owners of the
company, recognised directly in
equity (2 460) (2 460) - (2 460)
Balance at 30 September 2011 13 537 226 945 2 078 229 023
Comprehensive income:
Loss for the period (35 273) (35 273) (132) (35 405)
Other comprehensive income:
Other comprehensive income for the
period - - - -
Total comprehensive income (35 273) (35 273) (132) (35 405)
Transactions with owners :
Realisation of revaluation reserve 5 227 - - -
Profit on sale of treasury shares net
of taxation 242 242 - 242
Sale of treasury shares - 374 - 374
Dividends paid (992) (992) - (992)
Total contributions by and
distributions to owners of the
company, recognised directly in
equity 4 477 (376) - (376)
Balance at 31 March 2012 (17 259) 191 296 1 946 193 242
Condensed Consolidated Statement of Changes in Equity (continued…..)
Non-
Retained controlling Total
(loss)\earnings Total interest equity
R’000 R’000 R’000 R’000
Comprehensive income:
Loss for the period (3 582) (3 582) (243) (3 825)
Other comprehensive income:
Other comprehensive income for the
period - - - -
Total comprehensive income (3 582) (3 582) (243) (3 825)
Transactions with owners :
Realisation of revaluation reserve 288 - - -
Total contributions by and
distributions to owners of the
company, recognised directly in
equity 288 - - -
Balance at 30 June 2012 (20 553) 187 714 1 703 189 417
Comprehensive income:
Loss for the period (13 415) (13 415) (285) (13 700)
Other comprehensive income:
Other comprehensive income for the
period 9 9 - 9
Total comprehensive income (13 406) (13 406) (285) (13 691)
Transactions with owners :
Realisation of revaluation reserve 576 - - -
Total contributions by and
distributions to owners of the
company, recognised directly in
equity 576 - - -
Balance at 31 December 2012 (33 383) (174 308) 1 418 175 726
Condensed Consolidated Segmental Analysis
Outsource
manufacturing Packaging Other Group
R’000 R’000 R’000 R’000
Total segment revenue
- unaudited six months ended 31
December 2012 313 882 37 775 - 351 657
- audited as at 30 June 2012 177 190 20 615 - 197 805
- unaudited six months ended 30
September 2011 250 480 51 496 - 301 976
Inter-segment revenue 1
- unaudited six months ended 31
December 2012 (16 915) (4 974) - (21 889)
- audited as at 30 June 2012 (12 846) (2 057) - (14 903)
- unaudited six months ended 30
September 2011 - (3 722) - (3 722)
Revenue from external
customers
- unaudited six months ended 31
December 2012 296 967 32 801 - 329 768
- audited as at 30 June 2012 164 344 18 558 - 182 902
- unaudited six months ended 30
September 2011 250 480 47 774 - 298 254
Operating profit/(loss)
- unaudited six months ended 31
December 2012 (2 487) (9 048) (1 827) (13 362)
- audited as at 30 June 2012 3 952 (4 374) (2 048) (2 470)
- unaudited six months ended 30
September 2011 13 984 2 366 (173) 16 177
Outsource
manufacturing Packaging Other Group
R’000 R’000 R’000 R’000
Total assets
- unaudited six months ended 31
December 2012 365 888 90 075 8 950 464 913
- audited as at 30 June 2012 401 810 85 824 5 771 493 405
- unaudited six months ended 30
September 2011 337 606 145 548 2 916 486 070
- Total liabilities
- unaudited six months ended 31
December 2012 200 969 26 743 61 477 289 189
- audited as at 30 June 2012 221 486 29 662 52 840 303 988
- unaudited six months ended 30
September 2011 158 584 40 438 58 025 257 047
1 Includes intra-segment revenue.
COMMENTARY
1. Nature of business
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 and
ISIN number is ZAE 000034161. The company has unlisted preference shares in issue, which
preference shares are held by a single shareholder.
3. Basis of preparation and change in year end
In order to align its year end with that of its holding company, The Lion Match Company Proprietary
Limited, Beige has changed its year end from 31 March to 30 June each year, which has resulted in the
unaudited results for the six months ended 31 December 2012 being compared to the unaudited results
for the six months ended 30 September 2011. Stakeholders should note that these comparative
periods have different trading patterns and conditions, resulting in the fact that in certain instances, the
results presented are not comparable to the comparative period.
The condensed consolidated financial statements for the six months ended 31 December 2012 were
prepared in accordance with the recognition and measurement criteria of International Financial
Reporting Standards (“IFRS”), IAS 34: Interim Financial Reporting, Section 8.57 of the Listing
Requirements of the Johannesburg Stock Exchange (“the JSE”), the requirements of the Companies
Act 2008 (No. 71 of 2008) and were prepared under the supervision of the Group’s financial director, Mr
NCK Vinay (CA)(SA).
The principal accounting policies used in the preparation of the results for the six months ended
31 December 2012 are consistent with those applied for the audited three months ended 30 June 2012.
During the period, the group adopted all the IFRS and interpretations being effective and deemed
applicable to the group. None of these had a material impact on the results of the group.
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
Beige continues to operate in an extremely challenging environment characterised by continued
economic uncertainty which has had an impact on both the multi-nationals and local retailers for which
Beige manufactures its products. This has resulted in many of Beige’s customers taking a short-term
view on their production requirements, resulting in substantial fluctuations in Beige’s monthly demand
book and changes in the product mix, often to lower margin products. This in turn has a negative impact
on Beige’s cost base as such costs are often unseen by customers and therefore difficult to recover.
Macro-economic issues such as above-inflationary wage settlements, energy and other utility cost
increases, a decline in the volumes of higher value products partially offset by an increase in lower value
products and a weakening exchange rate also impacted on the group’s business. Price increases which
the company attempted to implement during 2012 in order to recover these costs were strongly resisted
by customers and have thus largely only started being implemented during the latter part of the six month
period.
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 investing R30 million in a soap project
at the new Argo facility at Chloorkop, which is expected to result in lower manufacturing costs and
improved margins. The construction and installation of the new plant is currently underway and is
expected to be completed by July 2013. The project will improve the management of input costs, thereby
resulting in greater control over the value chain.
During the period under review, the pre-emptive right existing in the Kgalagadi Soap Industries (Pty) Ltd
(“KSI”) shareholder agreement was exercised by the existing shareholder in KSI.
Following a successful takeover, which resulted in Beige becoming a subsidiary of Lion Match, a move
was made to start streamlining various systems in line with that of the group’s new holding company. This
process commenced with the optimisation of the retail division and should result in efficiencies being
achieved through merged distribution channels, consolidated procurement processes and combined,
simplified banking facilities. The exploitation of these synergies will assist in cost control, which remains
a core focus area and is expected to strengthen the group’s bottom line while simultaneously paving the
way for improved and efficient facilities across both businesses.
6. Financial and operational overview
Operationally, it has been a challenging six months for Beige. Whilst revenue grew by 10.57% over the
prior six months reporting period (ended 30 September 2011), the gross margin has fallen from 20.44% to
10.26% due primarily to the reasons mentioned in the business review above. Active steps are being
taken to improve the gross margin through both price increases and input cost management.
Operations were also severely affected by in September and October 2012 by the transport strike, which
impacted both sales levels and input costs.
Distribution costs have been well controlled, with administrative costs increasing by 11.75% on the
comparative period, primarily associated with the change in control of the company, and a change in the
year end, which required an additional audit for the three months ended 30 June 2012.
Earnings and headline earnings per share moved from earnings to a loss, primarily due to the substantial
increase in cost of sales and the consequent drop in the gross margin which has negatively impacted on
the bottom line.
Working capital management continues to be a core focus for the company, particularly with regard to
improving the days in trade receivables and inventories.
Borrowings increased due to the loan obtained from the IDC (Industrial Development Corporation) which
was used to fund the Argo facility.
Intangible assets reduced from 30 September 2011 as a result of the impairment in the packaging
segment of the full value of goodwill (R31.6 million) that arose on the acquisition of Crystal Pack (Pty) Ltd
in 2007. The packaging segment continued to incur losses during the period as a result of the uncertain
economic environment relating to the packaging industry in general, but a strategic management plan
incorporating expected efficiencies resulting from the consolidation of the operations on to one site as
well as the streamlining of projects in order to drive down production costs and improve margins, has
been implemented. The consolidation and relocation was completed during January 2013.
The cash flow position is expected to improve due to the aggressive cost saving strategies being
implemented by management to mitigate the challenging economic condition. Further to this the rights
issue, as previously announced, is expected to have a positive effect on the group’s cash flow.
7. Prospects
Whilst the group expects trading conditions to remain challenging for the rest of the 2013 financial year as
a result of continued constrained economic conditions, the board and management are optimistic that the
strategies that were put into place during and after the period under review, including the relocation of the
Crystal Pack and Rap facilities, the exploitation of synergies between Beige and Lion Match and the
construction of the new Argo facility and soap plant, combined with a continued focus on working capital
management, will result in an improved performance over the full year.
8. Contingent liabilities
A contingent liability exists in respect of tax, penalties and interest for approximately R3.8 million. Based
on legal advice obtained, the board is of the opinion that no exposure exists in this regard.
9. Contingent assets
As announced in prior years, Beige has initiated criminal and civil legal actions against all parties who
were involved in the material irregularities at Crystal Pack (Pty) Ltd and steps to recover all amounts
involved, including costs and damages are ongoing. No asset in relation to this claim has been
recognised in these results or previous results as the claim is still in progress.
10. Changes to the board
During the period under review:
- Messrs MC Easter, LI Karp and RH Weissenberg resigned from the board of directors;
- Mr NCK Vinay was appointed to the board in the capacity of Group Financial Director; and
- Mr MM Di Nicola tendered his resignation as CEO in September 2012, with effect from 30 April 2013
and has agreed to remain on the board in the capacity of non-executive director.
Subsequent to the period end:
- Mr MG Allan was appointed to the board in the position of CEO-designate and will assume the role
of CEO with effect from 1 May 2013. The board welcomes Mike to the group and believes that his
understanding of factories, experience in commerce both in a corporate and entrepreneurial
environment, as well as knowledge of the FMCG industry and contract manufacturing stand him in
good stead to lead Beige into the next era of growth; and
- Mr G Wade has resigned as a director with effect from 19 February 2013. Gary was appointed to the
Board of Beige primarily to assist with the transition around the change in control at Beige.
11. Rights offer and renewal of cautionary announcement
Shareholders are referred to the cautionary announcement released on SENS on 14 December 2012
regarding the board’s decision to raise R25 million by way of a rights or claw back offer (“the offer”) of
new ordinary shares in order to fund the working capital requirements and growth of the group. The
details of the offer are still being finalised and shareholders are accordingly advised to continue to
exercise caution when dealing in the company’s securities until full details of the proposed offer have
been announced
By order of the Board
Gora Abdoola Mark Di Nicola
Chairman Chief Executive Officer
26 February 2013
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
NMI (Gora) Abdoola (Chairman)(#), AH Trikamjee (Deputy Chairman)(#), MM Di Nicola (CEO), MG Allan,
NCK Vinay, AMI Abdoola (#), C de Jager (#), A Heeralal (#), AGS Osman (#), M Tembe(#)
(#) Non-executive
Designated Advisor Transfer Office
Arcay Moela Sponsors (Pty) Ltd Link Market Services South Africa (Pty) Ltd
Auditors
PricewaterhouseCoopers Inc
Date: 26/02/2013 04:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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