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Beige brings new blush to the boards
The cosmetics and pharmaceuticals company will be listed next month, writes MARCIA KLEIN
THE name of pharmaceuticals and cosmetics group Beige may not be familiar, but some of its products are - they fill the toiletries and cosmetics shelves of some of SA's major retail stores. Beige itself will soon be more recognisable as it plans to go public and list on the JSE on November 20. It will raise R8-million through a R2-million preferential offer and a R6-million public offer. A further R14-million will be raised in a private placing. The company operates out of a newly built state-of-the-art cosmetics factory, where it manufactures according to the same high standards and under the same stringent conditions as its pharmaceuticals, which it has been manufacturing for more than two decades. Beige was started in 1974 by pharmacist Dennis Heyman (now MD of pharmaceuticals) and Sydney Rogers (MD of cosmetics), who, together with four staff members, were involved in pharmaceutical manufacturing. Beige also made cosmetics at the time, but they were a small part of the business. Today Beige employs 320 people, including a team of 11 pharmacists, but the secret to its success is that it still does the same thing, only on a much larger scale. Both Heyman and Rogers can still be found in their white coats, overseeing the research, development and manufacturing process. According to its prospectus, Beige expects to double attributable income to R4.87-million in the year to June 1998 from R2.3-million this year, or a threefold increase since 1995. These relate to organic growth only and do not account for possible joint ventures and acquisitions. Turnover is expected to grow to R60-million from R44.7-million and pre-tax income is expected to more than double to R7.5-million. Pharmaceuticals account for 55% of turnover and cosmetics 45%, but due to the expansion in the ethnic cosmetic market, the company expects a marked shift towards the cosmetic side. A third division, Beige Registrations, owns and administers generic registrations valued at about R7.8-million. "We manufacture our own registered generic products, which constitute about 50% of the pharmaceutical side, with the rest of the pharmaceutical business being the manufacture of products for the major pharmaceutical companies," says financial director Barry Duke. The cosmetics division manufactures cosmetics in a pharmaceutical environment. "We have no double standards, we use the same rigorous process and specs," says Rogers. The plant has a rigorous maintenance regime, and most of the plant is new, with a continuous replacement policy in place. Beige is also very flexible, and can manufacture batches of product ranging from 50kg (for example eye creams) to 3 000kg (foam baths). Duke says although there is some reliance on the Woolworths business, Beige has benefited from the close relationship "in that the discipline, quality, style and flair demanded by Woolworths ensures that the manufacture of cosmetics meets the exemplary standards required of pharmaceutical manufacturers". Duke says Woolworths is actively expanding its market share, and Beige has been contracted to play a major role in this expansion substantiated by a long-term contract. Beige has a technology agreement with Peter Black plc, a major supplier to Marks & Spencer. Duke says expansion has been financed internally or by loan capital. The listing will repay borrowings of about R6.2-million, reduce gearing, give Beige working capital to expand the business and enable it to acquire businesses. The listing will also allow it to expand its ethnic cosmetics range. Joint venture opportunities with African American cosmetics producers are being investigated. Duke says a joint venture of such a nature "would give Beige a powerful new product range and marketing muscle to increase its penetration of the ethnic market". There are several growth opportunities, including extending and promoting Beige's own brand of generic pharmaceuticals, new lower- and middle-sector ethnic products, entering ventures with US cosmetics houses, acquiring a pharmaceutical distribution company, acquisition of a soap manufacturer and further exports, particularly into Africa.
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