| Wed 25 Jun 2008, 9:41 | | AER - Amecor - Condensed consolidated reviewed results for the year ended |
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AER
AER
AER - Amecor - Condensed consolidated reviewed results for the year ended
31 March 2008 and withdrawal of cautionary
AMALGAMATED ELECTRONIC CORPORATION LIMITED
("AMECOR")
(Incorporated in the Republic of South Africa)
(Registration number 1997/010036/06)
Share code: AER ISIN: ZAE000070587
("The Group")
- CONDENSED CONSOLIDATED REVIEWED RESULTS FOR THE YEAR ENDED 31 MARCH
2008;
- ANNOUNCEMENT OF THE ACQUISITION OF 50,1% OF THE PDS GROUP; AND
- WITHDRAWAL OF THE CAUTIONARY ANNOUNCEMENT
CONDENSED GROUP INCOME STATEMENT
Twelve months Twelve months
ended ended
31 March 31 March
2008 2007
(Reviewed) (Audited)
R000`s R000`s
Revenue 42 188 38 000
Earnings before interest, taxes, 20 376 18 518
depreciation and amortisation ("EBITDA")
Net interest received 1 392 572
Depreciation and amortisation (1 015) (720)
Profit before taxation 20 753 18 370
Taxation (4 983) (4 582)
Profit attributable to shareholders 15 770 13 788
Headline earnings per share (cents) 23,0 20,1
Earnings per share (cents) 23,0 20,1
Shares in issue (000`s) 74 046 74 046
Adjustment for treasury shares held (5 520) (5 516)
Shares in issue - weighted average 68 526 68 530
(000`s)
Headline earnings reconciliation
Earnings attributable to shareholders 15 770 13 788
Headline earnings 15 770 13 788
CONDENSED GROUP BALANCE SHEET
31 March 2008 31 March 2007
(Reviewed) (Audited)
R000`s R000`s
Non-current assets
Property, plant and equipment 2 623 2 191
Intangible assets 49 733 46 612
Current assets 28 348 20 454
Cash and cash equivalents 15 343 11 991
Other current assets 13 005 8 463
Total assets 80 704 69 257
Capital and reserves
Shareholders` equity 75 981 64 658
Non-current liabilities
Deferred taxation 643 483
Current liabilities
Accounts payable 4 080 4 116
Total equity and liabilities 80 704 69 257
Tangible net asset value per share 38,3 26,3
(cents) 110,9 94,4
Net asset value per share (cents)
CONDENSED GROUP CASH FLOW STATEMENT
Twelve months Twelve months
ended ended
31 March 2008 31 March 2007
(Reviewed) (Audited)
R000`s R000`s
Cash retained from operating activities 7 924 5 991
Net income before tax, adjusted for 21 768 20 216
depreciation and amortisation
Movement in working capital (3 784) (4 873)
Tax paid (5 617) (5 225)
Dividends paid (4 443) (4 127)
Cash utilised by investing activities (4 572) (4 094)
Cash utilised by financing activities - (4)
3 352 1 893
Net movements in cash balances
Cash and cash equivalents at beginning 11 991 10 098
of period
Cash and cash equivalents at end of 15 343 11 991
period
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
Issued Share Distributable Total
Capital Premium Reserve
R000`s R000`s R000`s R000`s
Balance at 1 April 685 68 512 (4 539) 64 658
2007
Dividends paid to - - (4 443) (4 443)
shareholders
Treasury shares - (4) - (4)
Profit attributable - - 15 770 15 770
to shareholders
Balance 31 March 685 68 508 6 788 75 981
2008
MANAGEMENT COMMENTARY
Amecor and its subsidiaries` principal businesses consist of the
manufacture and supply of the following products and related services:
- short and long range digital synthesized radio transmitters;
- computerised radio and GSM repeater networks;
- high speed radio and GSM modems;
- guard monitoring equipment;
- a range of unique GSM based equipment integrated with high speed radio
networks facilitating signal transmission worldwide;
- a new range of intrusion equipment specifically designed for low income
households; and
- the ownership and operation of licensed data radio networks throughout
South Africa.
Financial review
Revenue for the period under review increased by R4,2 million or 11,0%
compared to F2007. Earnings per share increased year on year by 14,4% to
23,0 cents per share. An increase in cash on hand by R3,4 million to
R15,3 million (F2007 - R12,0 million) was achieved in F2008.
Operational review
The Group has released a number of new products that have contributed to
the increase in turnover.
Electricity supply
The Group has been fortunate in that load shedding has not resulted in
significant down time in production. An uninterrupted power supply unit
is being commissioned to ensure that any future electricity supply cuts
will not impact negatively on production.
Contingently issuable shares
A dispute resolution arbitration, as reported on in earlier
announcements, has been set down and is due to be heard in October 2008,
which should determine the quantum (if any) of additional shares to be
awarded.
Product development
In addition to the new products launched in the 2008 financial year FSK
will expand the new range of radio equipment and broaden the product
offering in F2009. The Group will continue to invest in research and
development and bring high quality products to the local and
international markets.
Capital commitment
The Group`s ongoing research and development into new products will
ensure their position as a market leader in electronic manufacturing and
technology. Accordingly, Amecor has committed a further R2,5 million to
product development costs in the next financial year.
NOTES TO THE CONDENSED CONSOLIDATED REVIEWED FINANCIAL STATEMENTS
1. Significant accounting policies
Amecor is a company domiciled in South Africa. The condensed consolidated
reviewed financial statements of Amecor for the 12 months ended 31 March
2008 comprise the Company and its subsidiaries (together referred to as
the "Group").
The condensed consolidated reviewed financial statements were authorised
for issue by the directors on 23 June 2008.
1.1 Statement of compliance
The condensed consolidated reviewed financial statements have been
prepared in accordance with the recognition and measurement requirements
of International Financial Reporting Standards ("IFRS") and the
presentation and disclosure requirements of IAS 34 and the South African
Companies Act. The condensed consolidated financial statements do not
include all of the information required for full financial statements and
should be read in conjunction with the consolidated annual financial
statements for the year ended 31 March 2008, as set out in the 2008
Annual Report.
The estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the period in
which the estimate is revised if the revision affects only that period,
or in the period of the revision and future periods if the revision
affects both current and future periods.
The accounting policies have been applied consistently by Group companies
and have been applied consistently to all periods presented in these
condensed consolidated reviewed financial statements.
1.2 Basis of preparation
Amecor applies IFRS in preparation of its accounts. The condensed
financial statements have been prepared in accordance with the Listing
Requirements of the JSE Limited.
2. Review of results
Mazars Moores Rowland has signed an unqualified review opinion on the
condensed consolidated financial statements, as required by the JSE.
These financial statements have been approved by the board and condensed
for the purposes of this report. The auditors have reviewed the condensed
consolidated financial statements. Both the auditors` opinion and the
condensed consolidated financial statements are available for inspection
at the company`s registered office.
3. Net asset value ("NAV") per share
Net asset value (ordinary share capital and reserves) 75 981
(R000`s)
Intangible assets (capitalised development costs and (49 733)
goodwill)
Tangible net asset value ("TNAV") (R000`s) 26 248
Total number of shares in issue (000`s) (net of 68 526
treasury shares -5 520 000)
NAV per share (cents) 110,9
TNAV per share (cents) 38,3
4. Segmental analysis
The Group`s business segments and segmental information presented in the
condensed consolidated reviewed results represents the primary basis of
segment reporting. The business segment reporting format reflects the
Group`s management and internal reporting structure. Inter segment
transactions are concluded at arm`s length terms and conditions.
Corporate Production Network Eliminations Consolid
office and sales and R000`s ated
R000`s R000`s annuity R000`s
income
R000`s
Revenue 8 947 30 087 11 160 (8 006) 42 188
Profit 2 754 13 217 8 552 (3 770) 20 753
before
taxation
Profit 3 128 9 852 5 760 (2 970) 15 770
attributab
le to
shareholde
rs
Assets 64 821 33 472 10 373 (27 962) 80 704
Liabilitie (17 997) (13 658) (479) 27 411 (4 723)
s
5. Related party transactions
5.1 Tisec Management Services (Proprietary) Limited ("TMS") sub-
leases premises located at Resource House, 7 Spring Street
Rivonia, from Whirlprops 35 (Proprietary) Limited, a company whose
director is also a director and shareholder of Amecor.
5.2 The FSK Electronics, Sabre Radio Networks, Greater Gauteng
Alarm Networks FSK Alarmnet and Sabre Networks (FSK Group) lease
its premises from Switch Security (Proprietarty) Limited, a
company whose director is also a director of FSK and a shareholder
of Amecor.
5.3 Other than as disclosed in notes 5.1 and 5.2 above there were
no significant transactions with related parties.
6. Post balance sheet events
Subsequent to the year end the Company entered into an agreement with
the shareholders of the PDS group, consisting of Power Development
Services (Proprietary) Limited ("Power"), Durapower Manufacturing
(Proprietary) Limited ("DM") and Gillespie Diesel Services Close
Corporation ("GDS") to acquire an approximate 50,1% shareholding in
the PDS Group. The details of the transaction are included hereunder.
Power Durapower Gillespie Total
Development Manufacturing Diesel R000`s
Services (Proprietary) Services
(Proprietary) Limited (Proprietary)
Limited R000`s Limited
R000`s R000`s
Assets and
liabilities
acquired
Assets 16 343 4 078 14 211 34 632
Property, plant and 1 038 22 409 1 469
equipment
Cash acquired 1 406 512 4 091 6 009
Inventories 1 914 2 083 4 300 8 297
Accounts receivable 10 533 1 461 5 411 17 405
Loans receivable 1 452 - - 1 452
Liabilities 8 243 1 435 9 417 19 095
Trade and other 6 196 1 414 7 329 14 939
payables
Long term 655 - 49 704
borrowings
Shareholder loans 1 392 21 2 039 3 452
Net asset value 8 100 2 643 4 794 15 537
% shareholding 50,2% 50,3% 50,1% 50,1%
acquired
Shareholding value 4 066 1 329 2 402 7 797
Goodwill2 4 116 1 345 2 432 7 893
Total consideration 8 182 2 674 4 834 15 690
payable1
Note
1. The purchase consideration of R 15 689 603 will be discharged as
follows:
- R12 551 682 (twelve million five hundred and fifty one thousand six
hundred and eighty two rand) payable in cash; and
- R3 137 921 (three million one hundred and thirty seven thousand nine
hundred and twenty one rand) shall be discharged by the issue of such
number of Amecor ordinary shares at an issue price equal to the 30-day
weighted average JSE trading price, after all the conditions precedent
have been fulfilled.
2.The purchase price allocation valuation has not yet been completed. The
entire intangible asset value has therefore been provisionally allocated
to goodwill.
7. Dividend
In prior years the Group`s policy was to pay a single dividend annually
and to retain a three times dividend cover, at the discretion of the
Directors. The directors have elected not to distribute a dividend for
the year ended 31 March 2008 and to utilise the cash reserves for the
acquisition of the 50,1% shareholding in the PDS Group.
8. Directors
There were no changes to the board of directors in the period under
review.
9. Outlook
In the medium term the PDS Group acquisition will position Amecor to
achieve above average growth earnings per share. Moreover, with
additional capitalization the acquisition will enable Amecor to offer
full maintenance rental solutions to its customer base and thus build
additional recurring income and financial assets.
THE ACQUISITION OF A 50,1% INTEREST IN THE PDS GROUP ("PDS") AND
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
The board of Amecor is pleased to announce that it has reached an
agreement with RA Harverson, AL King, S Mackie, PP Malan, JM Bezdek, WG
Gillespie, C Maxwell and R Krisch ("the vendors") for the acquisition
("the acquisition") of at least 50,1% of the shares in the PDS group (or
"the business"), made up as follows within the separate companies ("the
transaction"):
Company Registration % Shareholding
number acquired
Power Development Services
(Proprietary) Limited 1999/007641/07 50,2%
Durapower Manufacturing
(Proprietary) Limited 1996/015696/07 50,3%
Gillespie Diesel Services Close
Corporation 2004/044668/23 50,1%
2. Call options
Amecor has acquired the option to purchase the remaining shares in and
claims on loan account against GDS and DM, and a further 24,7% of PDS at
a purchase price based on profits in F2009 and F2010. This option is
exercisable within 90 days after finalization of the PDS Group F2010
audit. Should Amecor not exercise its rights in terms of this option, the
vendors will then have a subsequent option to repurchase all of Amecor`s
shares in and claims on loan account against the PDS Group from Amecor at
a purchase price paid by Amecor for the shares together with interest
thereon..
3. Purchase consideration of the transaction
The purchase consideration for the acquisition is R15 689 603 ("fifteen
million six hundred and eighty nine thousand six hundred and three rand)
("the consideration"). The effective date of the acquisition is 1 March
2008.
Upon fulfillment of all the conditions precedent, the purchase
consideration will be paid as follows:
- R12 551 682 (twelve million five hundred and fifty one thousand six
hundred and eighty two rand) payable in cash; and
- R3 137 921 (three million one hundred and thirty seven thousand nine
hundred and twenty one rand) shall be discharged by the issue of such
number of Amecor ordinary shares at an issue price equal to the 30-day
weighted average JSE trading price, after all the conditions precedent
have been fulfilled.
- In addition Amecor will advance a loan of R7 337 418 (seven million
three hundred and thirty seven thousand four hundred and eighteen Rand)
to the PDS Group on loan account. R2 357 418 (two million three hundred
and fifty seven thousand four hundred and eighteen Rand) will be used to
pay vendors` shareholder claims on loan account.
4. Description of the business and rationale for the transaction
The acquisition is in line with Amecor`s strategy as stated in the F2007
reporting period and also brings a number of synergies between operating
entities within the Amecor Group as well as opportunities to cross sell
niche electronic solutions and broader services across a wider client
base.
The vendors` core businesses are:
Power Development Supply, installation, maintenance and servicing of
Services uninterrupted powers supply ("UPS") systems,
(Proprietary) generators and associated standby power equipment.
Limited
Durapower Import components, assemble, distribute and sale of
Manufacturing UPS systems and associated standby power equipment.
(Proprietary)
Limited
Gillespie Diesel Assemble, distribute and sale of diesel generators.
Services Close
Corporation
The vendor`s businesses are profitable and ideally positioned for
expansion and represent an earnings enhancement for Amecor if adequately
capitalized. Moreover with additional capitalization the acquisition will
enable Amecor to offer full maintenance rental solutions to its customer
base and thus build additional recurring income and financial assets in
the medium term.
5. Pro forma financial information
The unaudited pro forma financial effects of the transaction on Amecor`s
earnings per share ("EPS"), net asset value ("NAV") and tangible net
asset value ("TNAV") are set out below. The financial effects have been
prepared for illustrative purposes only. Because of its nature, the pro
forma financial information may not fairly represent the group`s
financial position and results of operations after the acquisition. The
unaudited pro forma information is the responsibility of Amecor`s
directors.
Before the After the % Change
acquisition acquisition
(cents)1 (cents)2
Earnings per share 23,0 25,8 12,0%
Headline earnings per 23,0 25,7 11,5%
share ("HEPS")
Net asset value per 110,9 117,4 5,9%
share
Tangible net asset 38,3 47,7 24,5%
value per share
Number of shares in 74 045 562 74 045 562 -
issue (shares)
Treasury shares 5 519 897 2 667 242 (51,7%)
(shares)
Shares in issue - 68 525 665 71 378 320 4,2%
weighted average (net
of treasury shares)
Notes:
1. The figures in the "Before" column are extracted from Amecor`s
reviewed financial results for the 12 months ended 31 March 2008.
2. EPS and HEPS figures in the "After" column are based on the
assumption that the acquisition took place on 1 April 2007, after taking
into account the following adjustments:
a. 2 852 655 shares at 110 cents per ordinary share were issued as part
of the purchase consideration;
b. Audited financial results of the companies being acquired for the
year ended 28 February 2008 were adjusted for additional costs.
c. A company tax rate of 29%.
d. The pro forma NAV and TNAV figures in the "After" column are based
on the assumption that the acquisition took place on 1 April 2007 and
that an assumed share price of 110 cents per ordinary share was used to
calculate the portion of the purchase consideration settled by the issue
of 2 852 655 Amecor shares.
This acquisition is subject to the fulfilment of certain suspensive
conditions; these being:
- Conclusion on service contracts between the companies and the vendors;
- Conclusion and approval of the due diligence audit ;
- Conclusion of the BEE agreement;
- Conversion of Gillespie Diesel Services Close Corporation to a private
company;
- The obtainment of relevant regulatory approvals including approval of
the Issuer Services Division of the JSE; and
- Amecor procuring the funding to implement the acquisition.
6. Categorisation of the transaction
This is a Category 2 transaction as defined in Section 9.5(a) of the
Listings Requirements of the JSE Limited ("Listings Requirements"). The
companies being acquired will amend their articles to conform to Schedule
10 of the Listings Requirements.
7. Withdrawal of cautionary announcement
Shareholders are referred to the cautionary announcement and further
renewal published on SENS on 25 April 2008 and 11 June 2008
respectively. By virtue of the conclusion of the acquisition on the terms
referred to in this announcement, caution is no longer required to be
exercised by shareholders when dealing in their securities.
On behalf of the board
HS Courtney
Chairman*
DH Alexander
Chief Executive
Johannesburg
25 June 2008
Directors
HS Courtney (Chairman)*, DH Alexander, KA Colley, M Noge**, P Van
Niekerk*
* non-executive, ** independent non-executive
Attorneys
HR Levin Attorneys, Notaries and Conveyancers, Kentgate, 64 Kent Avenue,
Dunkeld West, 2196
(P O Box 52235, Saxonwold 2132)
Transfer Secretaries
Link Market Services (Pty) Limited, 11 Diagonal Street, Johannesburg,
2001
(P O Box 4844, Johannesburg, 2000)
Registered office
2nd Floor, Mazars Moores Rowland House, 5 St Davids Place, Parktown, 2193
(P O Box 669, Johannesburg, 2000)
Sponsor
Sasfin Capital, Sasfin Place, 13-15 Scott Street Waverley, 2090
(P O Box 95104, Grant Park, 2051)
Visit us at www.amecor.com
Date: 25/06/2008 08:30:01 Produced by the JSE SENS Department.
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