| Mon 26 Nov 2007, 7:41 | | AER - Amecor - Statement re IFRS issues in the pre |
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AER
AER
AER - Amecor - Statement re IFRS issues in the preliminary and annual financial
statements for 31 March 2006
Amalgamated Electronic Corporation Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/010036/06)
Share code: AER ISIN: ZAE000070587
("Amecor" or "the Company" or "the Group")
STATEMENT RE IFRS ISSUES IN THE PRELIMINARY
AND ANNUAL FINANCIAL STATEMENTS FOR 31 MARCH 2006
This announcement is made at the insistence of the JSE Limited, acting on the
advice which they received from the GAAP Monitoring Panel ("GMP"). Amecor
wishes to advise shareholders that the previously published preliminary results
and 2006 AFS omitted certain IFRS information, inter alia, IFRS 3 disclosure
together with information regarding the shares that were due to be issued for
the acquisition in the future and DEPS. DEPS was incorrectly reflected in the
2006 AFS and has been corrected and removed in the 2007 AFS. The existence of
the contingently issuable shares in the 2006 AFS is however no longer correct
due to the discovery, subsequent to the issue of the 2006 AFS that certain of
the FSK profits are non - recurring and thus the vendors do not qualify for the
5 250 000 shares which would have been issuable if they had achieved the excess
super profits as set out in the circular to shareholders of 19 July 2005, and
the 2005 AFS (19 July 2005) and in the 20 05 preliminary announcement published
in the press on 31 May 2005. The 2007 AFS reflects the restated comparative
information.
The Amecor annual financial statements for year ended 31 March 2006 ("AFS
2006") disclosed diluted earnings per share based on 5 250 000 contingently
issuable shares which would have been issued to the FSK vendors upon
achievement of certain profit warranties for the year to 31 March 2006.
The definition of "profit" as defined, in the vendor agreements for the
purposes of determining the excess profits qualifying for the issue of the 5
250 000 contingently issuable shares, is recurring profits.
The conditions were not met as certain FSK profits were non - recurring
windfall profits, therefore the 2006 annual financial statements should not
have included diluted earnings per share as profits of a "recurring" nature
were not achieved.
The Company auditors and Group directors confirm that the non-recurring
windfall profit does not impact on the "at acquisition" opening balances of the
FSK Group as determined in terms of IFRS 3.
A contingent liability note in the 2007 annual financial statements (refer page
42, note 27) has disclosed the details of the arbitration process to be set out
for the last quarter of 2007, or first quarter of 2 008 but as yet not
confirmed by the complainant Rabie van der Merwe who has not yet furnished the
necessary costs and instructions to enable the process to begin.
The 2006 annual financial statements and the preliminary report should instead
have only disclosed the contingent liability as the achievement of the profit
warranties has been disputed by one of the FSK vendors as disclosed in
subsequent announcements (refer Annual Report F2006 - Notes to the financial
statements page 30, note 10). Consequently, this error was corrected in the
annual financial statements for the year ended 31 March 2007 ("AFS 2007") on
Note 28 (page 42), which reads as follows:
"Correction note: Prior year`s financial statements reflected diluted earnings
per share of 18,6 cents . This was incorrect and has been corrected in these
financial statements."
It must be noted that the information relating to the acquisition of the FSK
Group was fully disclosed in the F2005 results announcement published in the
press and on SENS on or about 31 May 2005, and was recorded in detail in the
2005 annual financial statements as part of the Chairman`s statement (page 3-
9), dated 15 July 2005 and in the circular to shareholders issued 19 July 2005.
The details were also outlined in the interim announcement of 30 September
2005. However, the information was not disclosed in the manner required by
IFRS.
The table below sets out the requirements of IFRS 3 regarding the acquisition
of business units and subsidiary companies with effect from 1 April 2005, which
information should have been included in the preliminary report and annual
financial statements.
Greater
Sabre Gauteng
FSK FSK Radio Alarm
Electronics Alarmnet Networks Network
SA (Pty) Ltd (Pty) Ltd (Pty) Ltd (Pty) Ltd
R000`s R000`s R000`s R000`s
Design,
manufacture Manage and maintain radio
and supply networks in all the major
of specialised centres of South Africa. These
radio frequency networks allow security companies to
electronic transmit data signals from remote
equipment, points to a separate control room.
Nature of technologies The FSK Network companies has its
business and solutions own infrastructure and is able to offer
of subsidiary to the security a network that is supported, designed and
companies industry specifically manufactured for network operation
Assets and
liabilities
acquired:
Assets 8 506 89 411 218
Cash acquired 1 046 6 146 4
Inventories 1 315 - - -
Accounts receivable 2 625 24 33 33
Intangible assets 1 705 - - -
Property, plant
and equipment 1 815 59 232 181
Liabilities 4 771 509 579 521
Trade payables 4 639 364 572 511
Long - term
borrowings 119 145 7 -
Shareholder loans 13 - - 10
Net asset value 3 735 (420) (168) (303)
Goodwill
Contingently
issuable shares1
(5 250 000 Amecor
shares at R2.22 per share)
Total
consideration
payable
Shareholding
(Shares of R1
each) (R`s) 100 100 1 000 1 000
Shareholding
acquired 100% 100% 100% 100%
Consideration
settled by
issuing of 19 755000 ordinary
Amecor shares at R1 each
Consideration
discharged in cash
Total
consideration paid
Contingently
issuable shares1
(5 250 000 Amecor
shares at R2.22 per share)
Total
consideration
payable
Biz
Afrika 327
(Pty) Ltd Total
R000`s R000`s
Management
and
Nature of admini-
business stration
of subsidiary company
companies
Assets and liabilities acquired:
Assets 130 9 354
Cash acquired 56 1 258
Inventories - 1 315
Accounts receivable 70 2 785
Intangible assets - 1 705
Property, plant and equipment 4 2 291
Liabilities 235 6 615
Trade payables 111 6 197
Long - term borrowings - 271
Shareholder loans 124 147
Net asset value (105) 2 739
Goodwill 42 261
45 000
Contingently issuable shares1
(5 250 000 Amecor shares
at R2.22 per share) 11 655
Total consideration payable 56 655
Shareholding
(Shares of R1 each) (R`s) 100
Shareholding acquired 100%
Consideration settled by
issuing of 19 755 000 ordinary
Amecor shares at R1 each 19 755
Consideration discharged in cash 25 245
Total consideration paid 45 000
Contingently issuable shares1
(5 250 000 Amecor shares at
R2.22 per share) 11 655
Total consideration payable 56 655
Note 1: The purchase price payable by Tisec to the seller is a minimum of R45
000 000, payable by the issue of 54 000 000 consolidated ordinary shares in
Tisec at 83,33 cents per share and, subject to the achievement of certain
profit warranties up to a further 5 250 000 ordinary Tisec shares. The shares
were listed but as the conditions for the profit warranty were not met, the
shares are still held as treasury shares pending the outcome of the dispute
resolution arbitration process.
Segmental analysis at 31 March 2006
Greater
Sabre Gauteng
FSK FSK Radio Alarm
Electronics Alarmnet Networks Network
SA (Pty) Ltd (Pty) Ltd (Pty) Ltd (Pty) Ltd
R000`s R000`s R000`s R000`s
Turnover 25 853 2 024 3 409 2 332
Profit before tax 10 724 1 511 1 661 1 551
Segment assets 13 883 782 1 603 1 285
Segment liabilities (4 078) (128) (592) (461)
Biz
Afrika 327
(Pty) Ltd Total
R000`s R000`s
Turnover - 33 618
Profit before tax 194 15 641
Segment assets 139 17 692
Segment liabilities (80) (5 339)
Contingent liability
The purchase price payable for the acquisition of the FSK Group in 2005 was a
minimum of R45 million which was fully discharged in 2006. Subject to the
achievement of certain excess profits, up to a further 5 250 000 ordinary
Amecor shares were to be made available for issue to the vendors (as set out in
paragraph 3.3.2 of the circular of 19 July 2005), the outcome of which is
subject to a dispute resolution arbitration process provided for in the vendor
agreements, which is set down for the last quarter of 2007 and which will
determine the quantum (if any) of additional shares to be awarded.
Goodwill
Consisting of designs, know how, patents, trademarks and intellectual property
relating to radio transmitters, repeaters, base stations and Sabre radio and
data networks. Their fair value could not be measured accurately, therefore
recorded as goodwill.
Johannesburg
23 November 2007
Sponsor
MACQUARIE
Date: 26/11/2007 07:41:00 Produced by the JSE SENS Department.
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