Wrap Text
Reviewed Consolidated Results for the Year Ended 30 June 2013
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 CONSOLIDATED RESULTS FOR THE YEAR ENDED 30 JUNE 2013
Shareholders are reminded that following a change in the Company’s year-end from 31 March to 30 June each
year, the comparative period for which the results for the year ended 30 June 2013 are required to be compared to,
for purposes of this results announcement is the three month period ended 30 June 2012 and that the results
presented below are not always comparable to the prior period.
Condensed Consolidated Statement of Financial Position as at 30 June 2013
Reviewed Audited
12 months 3 months
30 June 2013 30 June 2012
R’000 R’000
ASSETS
Non-current assets 215 802 250 471
Property, plant and equipment 160 990 172 315
Intangible assets 32 945 55 366
Investment in joint venture 11 672 4 165
Other receivables 160 271
Deferred income tax assets 10 035 18 354
Current assets 185 582 242 935
Inventories 66 173 116 763
Trade and other receivables 116 505 120 288
Cash and cash equivalents 2 904 5 884
Total assets 401 384 493 406
EQUITY AND LIABILITIES
Equity attributable to equity holders of the company 88 581 187 714
Ordinary share capital 15 442 15 442
Ordinary share premium 179 898 179 898
Other reserves 11 775 12 927
Accumulated loss (118 534) (20 553)
Non-controlling interest 1 282 1 703
Total equity 89 863 189 417
Non-current liabilities 111 011 91 122
Borrowings 91 423 81 784
Deferred income tax liabilities 655 9 338
Holding company loan 18 933 -
Current liabilities 200 510 212 867
Trade and other payables 145 176 168 131
Current portion of long-term borrowings 16 250 8 933
Current income tax liabilities 518 1 508
Bank overdrafts 38 566 34 295
Total liabilities 311 521 303 989
Total equity and liabilities 401 384 493 406
Ordinary shares (000’s)
In issue 1 544 197 1 544 197
Net asset value per share information (net of non-controlling
interest)
Net asset value per share (cents) 5.74 12.16
Net tangible asset value per share (cents) 3.60 8.57
Condensed Consolidated Statement of Comprehensive Income for the year ended 30 June 2013
Reviewed Audited
12 months 3 months
30 June 2013 30 June 2012
R’000 R’000
Revenue 694 689 182 902
Cost of sales (641 621) (160 453)
Gross profit 53 068 22 449
Distribution costs (16 067) (4 584)
Administrative expenses (123 602) (20 335)
Other income 570 -
Operating loss (86 031) (2 470)
Finance income 937 248
Finance costs (15 191) (3 278)
Loss after net financing costs (100 285) (5 500)
Share of profit of joint venture 1 445 57
Loss before income tax (98 840) (5 443)
Income tax expense (714) 1 618
Loss for the year/period (99 554) (3 825)
Other comprehensive income:
Other comprehensive income for the year/period, net of tax - -
Total comprehensive loss for the year/period (99 554) (3 825)
Total comprehensive loss attributable to:
Equity holders of the company (99 133) (3 582)
Non-controlling interest (421) (243)
(99 554) (3 825)
Loss for the year/period (99 554) (3 825)
Non-controlling interest 421 243
Loss for the year/period attributable to equity holders of the
company (99 133) (3 582)
Headline earnings adjustments:
Total comprehensive loss for the year/period attributable to equity
holders of the company (99 133) (3 582)
Adjustments:
Profit on sale and leaseback of property net of tax (18) (4)
Impairment of fixed assets 15 147 -
Impairment of intangible asset 22 421 -
Headline earnings for the year/period attributable to equity
holders of the company (61 583) (3 586)
Ordinary shares (000’s):
Weighted average shares in issue (Note 1) 1 544 197 1 544 197
Diluted (Note 2) 1 544 197 1 544 197
Earnings per share information
Earnings per share (cents) (6.42) (0.23)
Headline earnings per share (cents) (3.99) (0.23)
Diluted earnings per share (cents) (6.42) (0.23)
Diluted headline earnings per share (cents) (3.99) (0.23)
Notes:
1. 87 624 017 (June 2012: 87 624 017) shares held as treasury stock 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 June 2013 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
30 June 2013 is equal to the strike price, and more than the strike price at 30 June 2012. 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.
Condensed Consolidated Statement of Cash Flows for the year ended 30 June 2013
Reviewed Audited
12 months 3 months
30 June 2013 30 June 2012
R’000 R’000
Cash flows from operating activities:
Net cash generated from operating activities (15 874) 6 367
Cash flows from investing activities:
Net cash used in investing activities (27 265) (3 366)
Cash flows from financing activities:
Net cash generated from financing activities 35 888 1 299
Net decrease in bank overdrafts including
cash and cash equivalents (7 251) 4 300
Bank overdrafts including cash and cash
equivalents at the beginning of the year/period (28 411) (32 711)
Bank overdrafts including cash and cash
equivalents at the end of the year/period (35 662) (28 411)
Condensed Consolidated Statement of Changes in Equity for the year ended 30 June 2013
Share
Ordinary Ordinary Ordinary based
share treasury Share Revaluation payment Total other
capital shares premium reserve reserve reserves
R’000 R’000 R’000 R’000 R’000 R’000
Group
Balance at 31 March 2012 16 319 (877) 179 898 11 236 1 979 13 215
Comprehensive income:
Loss for the period -- -- -- -- -- --
Total comprehensive income for the
period -- -- -- -- -- --
Realisation of revaluation reserve -- -- -- (288) -- (288)
Profit on sale of treasury shares net of
taxation -- -- -- -- -- --
Sale of treasury shares -- -- -- -- -- --
Dividends paid -- -- -- -- -- --
Total contributions by and distributions
to owners of the company, recognised
directly in equity -- -- -- (288) -- (288)
Other comprehensive income:
Other comprehensive income for the period -- -- -- -- -- --
Balance at 30 June 2012 16 319 (877) 179 898 10 948 1 979 12 927
Comprehensive income:
Loss for the year -- -- -- -- -- --
Total comprehensive income -- -- -- -- -- --
Realisation of revaluation reserve -- -- -- (1 152) -- (1 152)
Total contributions by and distributions
to owners of the company, recognised
directly in equity -- -- -- (1 152) -- (1 152)
Other comprehensive income: -- -- -- -- -- --
Other comprehensive income for the year -- -- -- -- -- --
Balance as at 30 June 2013 16 319 (877) 179 898 9 796 1 979 11 775
Condensed Consolidated Statement of Changes in Equity for the year ended 30 June 2013 cont…
Accumulated Non-controlling
loss Total interest Total equity
R’000 R’000 R’000 R’000
Group
Balance at 31 March 2012 (17 259) 191 296 1 946 193 242
Comprehensive income:
Loss for the period (3 582) (3 582) (243) (3 825)
Total comprehensive income (3 582) (3 582) (243) (3 825)
Realisation of revaluation reserve 288 -- -- --
Profit on sale of treasury shares net of
taxation -- -- -- --
Sale of treasury shares -- -- -- --
Dividends paid -- -- -- --
Total contributions by and distributions to
owners of the company, recognised
directly in equity 288 -- -- --
Other comprehensive income:
Other comprehensive income for the period -- -- -- --
Balance at 30 June 2012 (20 553) 187 714 1 703 189 417
Comprehensive income:
Loss for the year (99 133) (99 133) (421) (99 554)
Total comprehensive income -- -- -- --
Realisation of revaluation reserve 1 152 -- -- --
Total contributions by and distributions to
owners of the company, recognised
directly in equity 1 152 -- -- --
Other comprehensive income:
Other comprehensive income for the year -- -- -- --
Balance as at 30 June 2013 (118 534) 88 581 1 282 89 863
Condensed Consolidated
Segmental Analysis for the year Outsource
ended 30 June 2013 manufacturing Packaging Other Group
R’000 R’000 R’000 R’000
Total segment revenue
- reviewed as at 30 June 2013 657 395 75 974 -- 733 369
- audited as at 30 June 2012 177 190 20 615 -- 197 805
1
Inter-segment revenue
reviewed as at 30 June 2013 (30 270) (8 410) -- (38 680)
- audited as at 30 June 2012 (12 846) (2 057) -- (14 903)
Revenue from external
customers
- reviewed as at 30 June 2013 627 125 67 564 -- 694 689
- audited as at 30 June 2012 164 344 18 558 -- 182 902
Operating profit/(loss) before
impairments
- reviewed as at 30 June 2013 (16 615) (25 698) (6 150) (48 463)
- audited as at 30 June 2012 3 952 (4 374) (2 048) (2 470)
Goodwill impairment
- reviewed as at 30 June 2013 (22 421) -- -- (22 421)
- audited as at 30 June 2012 -- -- -- --
Impairment of fixed assets
- reviewed as at 30 June 2013 -- (15 147) -- (15 147)
- audited as at 30 June 2012 -- -- -- --
Operating profit/(loss)
- reviewed as at 30 June 2013 (39 036) (40 845) (6 150) (86 031)
- audited as at 30 June 2012 3 952 (4 374) (2 048) (2 470)
Net finance costs
- reviewed as at 30 June 2013 (7 800) (1 266) (5 188) (14 254)
- audited as at 30 June 2012 (2 226) (292) (512) (3 030)
Profit/(loss) before tax and
share of profit of joint venture
- reviewed as at 30 June 2013 (46 838) (42 111) (11 336) (100 285)
- audited as at 30 June 2012 1 727 (4 667) (2 560) (5 500)
Total assets
- reviewed as at 30 June 2013 336 662 52 737 11 985 401 384
- audited as at 30 June 2012 401 810 85 824 5 771 493 405
Total liabilities
- reviewed as at 30 June 2013 203 561 27 966 79 994 311 521
- audited as at 30 June 2012 221 486 29 662 52 840 303 988
1 Includes intra-segment revenue.
Additional information
Reviewed Audited
Year ended Three months ended
30 June 2013 30 June 2012
R’000 R’000
Amortisation of intangible assets - 242
Depreciation of property, plant and
equipment 16 532 4 269
Purchase of property, plant and
equipment 24 924 5 728
Impairment of fixed assets 15 147 -
Impairment of goodwill 22 421 -
Operating lease commitments 82 349 39 663
COMMENTARY
The directors of Beige and its subsidiaries present the reviewed results for the year ended 30 June 2013. These
results show the consolidated position of Beige compared to the audited results for the three month period ended
30 June 2012.
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 the holding company.
3. Basis of preparation
Shareholders are reminded that the company changed its year end from 31 March to 30 June each year
and, in order to accommodate this change, prepared audited financial statements for the three month
period ended 30 June 2012. The results for the year ended 30 June 2013 are accordingly being compared
to the results for the three month period ended 30 June 2012 and shareholders should take note of the fact
that the results presented in this reviewed results announcement are not comparable to the results
presented for the three months ended 30 June 2012.
The condensed consolidated financial statements for the year ended 30 June 2013 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 interim financial director, Mr A Heeralal.
The principal accounting policies used in the preparation of the results for the year ended 30 June 2013 are
consistent with those applied for the 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. Reviewed results
PricewaterhouseCoopers Inc, the Group’s independent auditors, have reviewed the condensed
consolidated financial information for the year ended 30 June 2013, that comprise the condensed
consolidated statement of financial position at 30 June 2013, the condensed consolidated statement of
comprehensive income, the condensed consolidated statement of changes in equity, and the condensed
consolidated statement of cash flows for the period then ended, and have expressed an unqualified and
unmodified review opinion on these condensed consolidated financial statements. A copy of the review
opinion is available for inspection at the company’s registered office.
5. Segment reporting
The chief operating decision-maker has been identified as the executive directors being the Chief
Executive Officer and the interim Financial Director. These directors consider the business from a product
perspective for purposes of assessing the performance of outsource manufacturing and packaging
products. The operating segments are determined based on these reports.
6. Business review
Trading conditions in the local and international retail trading environment remain challenging as a result of
continued economic uncertainty. This is borne out in the substantial fluctuations in the monthly demand
book and provides for an extremely volatile trading environment. Certain customers have been facing
intense competition and pricing pressure. This has resulted in a drop in volumes from key customers due
to insourcing as well as continued pressure on the gross margins achieved by the group.
Revenue from outsource manufacturing remains under pressure and margins similarly remain under
pressure resulting from increased raw material costs and higher production costs attributable to above-
inflationary energy cost increases and additional labour costs linked to the volatility of the monthly demand
book. These costs were not fully recoverable by price increases given the competitive environment in
which the Group operates.
The company relocated its packaging operation during the latter part of the year under review and cost
savings have started to be realised. However, revenue from the packaging operation is also lower than
expected and margins remain under severe pressure due to the intense competition and downward pricing
pressures in this industry.
In order to mitigate the risks associated with the uncertain economic environment and in line with its
strategy of pursuing value enhancing opportunities, the group continued to pursue vertical integration
opportunities to secure sources of supply of raw materials and to improve margins. In line with this
strategy, the Company has secured a credit facility for the construction and installation of new soap noodle
manufacturing plant and equipment through the Industrial Development Corporation. The soap noodle
plant, was expected to be completed during the year ended 30 June 2013 but will only be completed after
the year end. Once commissioned, this plant will enable the group to manage its input cost as a result of a
higher degree of control over the value chain.
7. Financial and operational overview
The results for the year ended 30 June 2013 again reflect a period characterised by a challenging trading
environment in which economic uncertainty continued to impact the production decisions made by Beige’s
local and multi-national clients. Whilst the Group’s facilities enable it to accommodate changes to the
demand book and product mix, this did have an impact on the gross profit margin, which showed a decline
of 4.7% from the prior year of 12.3% to 7.6%. To some extent, the comparison to the prior three month
period makes comparisons meaningless.
During the year under review, the Company experienced certain challenges at its Durban plant as a result
of numerous changes in personnel and resultant stock system problems. This required serious
intervention together with changes in senior management. The board is comfortable that the system
problems have been resolved subsequent to year end. Stock losses in excess of R10 million were incurred
during this year.
The Company is pleased to report that initiatives at its Chloorkop plant have proved successful and the site
has been turned around. The Group’s repacking operations are also operating well and generating a
positive contribution to the group results.
A major contributor to the operating loss before impairment has again been the packaging segment with an
operating loss before impairment of R25.7 million (June 2012: R4.4 million). The loss in the current period
is primarily as a result of the difficult trading conditions in this sector, with a reduction in sales volumes and
margin pressures. Pursuant to the relocation of the plant, a reduction of monthly operating costs has been
achieved.
Notwithstanding the stock losses and operating losses mentioned above, the variance in the loss before
income tax from a R5.4 million loss for the three months ended 30 June 2012 to a R98.8 million loss in the
current year is attributable, inter alia, to the impairment of the fixed assets and goodwill.
The increase in the effective tax rate is due to the dividends on preference shares not being deductible for
tax purposes, impairment of goodwill and the derecognition of the deferred tax asset in the packaging
division.
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.
8. Prospects
The Group expects the trading conditions over the next year to remain challenging. The stock system
problems at its Durban plant have been identified and corrective procedures implemented along with the
appointment of a new General Manager at the plant. The soap noodle plant is expected to be
commissioned towards the end of 2013, which should serve to improve the group’s input costs. The
packaging plant relocation and cost reduction exercise at the group’s operations are expected to reduce
losses in the short term and, together with various initiatives with the group’s holding company on the sales
side, is expected to turn to profitability in the 2015 financial year.
To strengthen the management function, the Chairman has taken on a position in an executive role on the
Board. The Chairman’s wealth of experience and expertise will benefit the group. Key appointments have
also been made in the sales function to consolidate and expand the customer base and leverage the
group’s product offering in new markets. Furthermore, personnel from Lion Match have been seconded to
the group in order to introduce measures to improve the efficiencies in the manufacturing facilities and
implement cost cutting measures.
The Group continues to make additional investments in infrastructure and capacity and both the Durban
and Gauteng operations have been expanded in expectation of the future growth in demand for the goods
and services it provides. These initiatives all form part of a strategic decision by the Group to grow market
share in a controlled fashion. The long term benefits of this growth strategy include the optimisation of
available production capacity, improvements in efficiency and the achievement of greater benefits resulting
from consolidated procurement.
The change in control of the Company provides an opportunity for Beige to harness the benefits of being
associated with a larger group and well-known brand that is not in direct competition with the Group’s
customer base and this association is expected to present upside potential for the Group in the medium
term.
9. 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.
10. 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.
11. Going Concern
The directors have reviewed the group and company’s budget and cash flow forecasts and have satisfied
themselves that the group and company are in a sound financial position and they have access to sufficient
borrowing facilities to meet their foreseeable cash requirements.
On the basis of this review, the directors consider it appropriate to adopt the going concern basis in
preparing the group and company’s annual financial statements.
The Lion Match Company (Pty) Ltd has provided a further funding facility to support the cash requirements
of the group. Amounts drawn against this facility will be repayable in July 2017 or such earlier date at the
discretion of Beige. The existing facility of R20.5 of which R18.9m was drawn down by 30 June 2013 will
be repaid from the proceeds of the forthcoming rights offer.
12. Events after reporting period
As announced, the Company intends proceeding with a rights offer which will be wholly or partly
underwritten by The Lion Match Company Proprietary Limited. A detailed announcement will be made in
due course. Other than normal trading, no other material events have occurred subsequent to the year-
end that require reporting.
13. Changes to the board
During the year 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 but resigned with
effect from 30 June 2013. Mr A Heeralal changed his role from non-executive director to interim
financial director with effect from 21 May 2013.
- Mr MM Di Nicola resigned as CEO in September 2012, with effect from 30 April 2013 and Mr MG Allan
was appointed to the board in the position of CEO-designate and assumed the role of CEO with effect
from 1 May 2013.
- 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.
Subsequent to year end:
- Mr NMI (Gora) Abdoola changed his role from non-executive chairman to executive chairman with effect
from 18 July 2013.
- Mr MM Di Nicola resigned from the board as a non-executive director after the year end due to
increasing business interests outside the borders of South Africa.
14. Rights offer and renewal of cautionary announcement
Shareholders are referred to the previous cautionary announcements released on SENS regarding the
board’s decision to raise additional funds 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 Michael Allan
Executive Chairman Chief Executive Officer
14 October 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 (Executive Chairman), AH Trikamjee (Deputy Chairman) (#), M Allan (CEO), A Heeralal, AMI
Abdoola (#), C de Jager (#), AGS Osman (#), M Tembe (#)
(#) Non-executive
Designated Advisor Transfer Office
Arcay Moela Sponsors Proprietary Limited Link Market Services South Africa Proprietary Limited
Auditors
PricewaterhouseCoopers Inc
Date: 14/10/2013 05:08:00 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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