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AER
AER
AER - Amecor - Condensed Consolidated Unaudited Results For The 6 Months
Ended 30 September 2008
AMALGAMATED ELECTRONIC CORPORATION LIMITED
("Amecor") or ("The Group")
(Incorporated in the Republic of South Africa)
(Registration number: 1997/010036/06)
Share code: AER & ISIN: ZAE000070587
CONDENSED CONSOLIDATED UNAUDITED RESULTS
FOR THE 6 MONTHS ENDED 30 SEPTEMBER 2008
Group turnover increased by 195%
Profit before tax increased by 69%
Earnings and headline earnings per share increased by 39%
Tangible net asset value per share increased by 56%
GROUP INCOME STATEMENT
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2008 2007 2008
(Unaudited) (Unaudited) (Audited)
R`000 R`000 R`000
Turnover 54 339 18 427 42 188
Operating cost (38 010) (8 908) (21 812)
excluding
depreciation and
amortisation
Operating profit 16 329 9 519 20 376
before depreciation
and amortisation
Depreciation and (583) (224) (1 015)
amortisation
Operating profit 15 746 9 295 19 361
Finance income 855 413 1 399
Finance expenses (167) (4) (7)
Profit before 16 434 9 704 20 753
taxation
Taxation (4 329) (2 771) (4 983)
Profit 12 105 6 933 15 770
Attributable to:
Ordinary shareholders 9 823 6 933 15 770
of Amecor
Minority interest 2 282 - -
12 105 6 933 15 770
CALCULATION OF GROUP
EARNINGS
Profits attributable 12 105 6 933 15 770
to shareholders
Less: minority (2 282) - -
interest
Profits attributable 9 823 6 933 15 770
to Amecor
shareholders
Headline earnings 9 823 6 933 15 770
Shares in issue
Ordinary shares in 74 045 74 045 74 045
issue (000`s)
Less: treasury shares (2 382) (5 515) (5 519)
(000`s)
Number of ordinary 71 663 68 530 68 526
shares in issue
(000`s)
Weighted average 70 096 68 530 68 526
number of shares in
issue (000`s)
Earnings per share 14,0 10,1 23,0
(cents)
Headline earnings per 14,0 10,1 23,0
share (cents)
Diluted earnings per 14,0 10,1 23,0
share (cents)
GROUP BALANCE SHEET
30 September 30 September 31 March
2008 2007 2008
(Unaudited) (Unaudited) (Audited)
R`000 R`000 R`000
ASSETS
Non-current assets 60 895 50 716 53 270
Property, plant and 4 518 3 370 2 623
equipment
Intangible assets 6 381 3 177 5 564
Goodwill 49 517 44 169 44 169
Deferred tax asset 479 - 914
Current assets 65 136 22 288 28 348
Inventories 18 938 5 366 5 375
Receivables and other 32 470 4 400 5 992
current assets
Taxation 753 1 468 1 638
Cash and cash 12 975 11 054 15 343
equivalents
Total assets 126 031 73 004 81 618
EQUITY AND LIABILITIES
Attributable to ordinary
shareholders of Amecor
Issued capital 71 574 69 252 69 252
Treasury shares (24) (55) (59)
Retained earnings 29 163 (2 049) 6 788
Total equity 16 611 (2 049) 6 788
attributable to equity
holders of Amecor
Minority interest 12 552 - -
Total equity 100 713 67 148 75 981
Non-current liabilities 11 425 589 1 557
Interest bearing 11 354 - -
borrowings
Deferred tax liabilities 71 589 1 557
Current liabilities 13 893 5 267 4 080
Trade and other payables 12 448 5 267 4 080
Taxation 1 445 - -
Total equity and 126 031 73 004 81 618
liabilities
Number of ordinary 71 663 68 530 68 526
shares in issue (000`s)
Net asset value per 123,0 98,0 110,9
share (cents)
Tangible net asset value 45,0 28,9 38,3
per share (cents)
GROUP CASH FLOW STATEMENT
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2008 2007 2008
(Unaudited) (Unaudited) (Audited)
R`000 R`000 R`000
Net income before tax, 17 017 9 928 21 768
adjusted for depreciation
and amortisation
Movement in working (10 911) (1 109) (3 784)
capital
Tax paid (5 315) (3 176) (5 617)
Dividends paid - (4 443) (4 443)
Net inflow from operating 791 1 200 7 924
activities
Net outflow from investing (16 721) (2 137) (4 572)
activities 1
Net inflow from financing 13 562 - -
activities 2
Net movement in cash (2 368) (937) 3 352
balances
Cash at beginning of the 15 343 11 991 11 991
year
Cash at the end of the 12 975 11 054 15 343
period
Note
1 The PDS Group was purchased during the year for R15,7 million, see details
below. This amount includes the acquisition of the property, plant and
equipment.
2 A loan was procured from ABSA Bank to finance future growth within the
Group.
GROUP STATEMENT OF CHANGES IN EQUITY
Issued Treasury Retained
capital shares earnings
R`000 R`000 R`000
Balance at 1 April 2007 69 252 (55) (4 539)
Dividends paid - - (4 443)
Profits attributable to - - 6 933
shareholders
Total changes - - 2 490
Balance at 1 October 2007 69 252 (55) (2 049)
Treasury shares - (4) -
Profits attributable to - - 8 837
shareholders
Total changes - (4) 8 837
Balance at 1 April 2008 69 252 (59) 6 788
Issue of shares to PDS Group
vendors
(3,1 million shares @ R1 each) - 31 -
Share premium (costs of 2 326 - -
acquisition)
Minorities acquired - - -
Profits attributable to - - 9 823
shareholders
Total changes 2 326 31 9 823
Balance at 30 September 2008 71 578 (28) 16 611
Total
attributable
to ordinary
shareholders Minority Total
of Amecor interest equity
R`000 R`000 R`000
Balance at 1 April 2007 64 658 - 64 658
Dividends paid (4 443) - (4 443)
Profits attributable to 6 933 - 6 933
shareholders
Total changes 2 490 - 2 490
Balance at 1 October 2007 67 148 - 67 148
Treasury shares (4) - (4)
Profits attributable to 8 837 - 8 837
shareholders
Total changes 8 833 - 8 833
Balance at 1 April 2008 75 981 - 75 981
Issue of shares to PDS Group
vendors
(3,1 million shares @ R1 each) 31 - 31
Share premium (costs of 2 326 - 2 326
acquisition)
Minorities acquired - 10 270 10 270
Profits attributable to 9 823 2 282 12 105
shareholders
Total changes 12 180 12 552 24 732
Balance at 30 September 2008 88 161 12 552 100 713
NOTES TO THE CONDENSED CONSOLIDATED UNAUDITED RESULTS
1. Significant Accounting Policies
Amecor is a company domiciled in South Africa. The condensed consolidated
unaudited financial statements of Amecor for the 6 months ended 30 September
2008 comprise the Company and its subsidiaries (together referred to as the
"Group").
The condensed consolidated unaudited financial statements were authorised for
issue by the directors on 26 November 2008.
1.1 Statement of Compliance
The condensed consolidated 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 - Interim Financial Reporting and the South African
Companies Act.
1.2 Basis of Preparation
The condensed consolidated financial statements are prepared on the
historical cost basis, except for financial instruments which are stated at
fair value, where applicable, in terms of IAS 32 - Financial Instruments:
Disclosure and Presentation and IAS 39 - Financial Instruments: Recognition
and Measurement.
The preparation of interim financial statements in conformity with IAS 34 -
Interim Financial Reporting requires management to make judgements, estimates
and assumptions that affect the application of policies and reported amounts
of assets and liabilities, income and expenses. The estimates and associated
assumptions are based on historical experience and various other factors that
are believed to be reasonable under the circumstances, the results of which
form the basis of making the judgements about carrying value of assets and
liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates.
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 and methods of computation applied are consistent
with those applied in the most recent annual financial statements. They have
been applied consistently by Group companies and have been applied
consistently to all periods presented in these condensed consolidated
unaudited financial statements.
2. Segmental analysis
The Group`s business segments and segmental information presented in the
condensed consolidated unaudited results for the six months ended 30
September 2008 represents the primary basis for segmental 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.
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2008 2007 2008
(Unaudited) (Unaudited) (Audited)
R`000 R`000 R`000
Segment turnover
Security and related 17 399 13 786 30 087
production and sales
Network and annuity 4 653 3 891 11 160
income
Supply and maintenance of 37 281 - -
alternative power sources
Other 3 175 4 315 8 947
Eliminations (8 169) (3 565) (8 006)
Total turnover 54 339 18 427 42 188
Profit attributable to
Amecor shareholders
Security and related 4 215 3 435 9 852
production and sales
Network and annuity 3 003 2 410 5 760
income
Supply and maintenance of 2 297 - -
alternative power sources
Other 308 1 088 3 128
Eliminations - - (2 970)
Total 9 823 6 933 15 770
Segment assets
Security and related 31 819 24 321 33 472
production and sales
Network and annuity 13 054 7 096 10 373
income
Supply and maintenance of 45 733 - -
alternative power sources
Other 79 287 64 764 64 821
Eliminations on (43 862) (23 177) (27 048)
consolidation
Total assets 126 031 73 004 81 618
Segment liabilities
Security and related 7 933 10 711 14 052
production and sales
Network and annuity 215 471 479
income
Supply and maintenance of 20 542 - -
alternative power sources
Other 33 506 19 744 17 997
Eliminations on (36 878) (25 070) (26 891)
consolidation
Total liabilities 25 318 5 856 5 637
3. Related Party Transactions
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2008 2007 2008
(Unaudited) (Unaudited) (Audited)
R`000 R`000 R`000
Purchases from fellow 4 391 - -
subsidiary companies
Purchases from related
parties are made at
normal market prices
Management fees paid to 3 491 3 565 8 006
fellow subsidiary company
Management fees were paid for services rendered in the areas of
administration and technical advice, based on the apportioned time spent by
the fellow subsidiary staff
4. Property, plant and equipment
The net book value of property, plant and equipment can be summarised as
follows:
1 April Current
2008 depreciation Additions
R`000 R`000 R`000
Plant and equipment 2 010 (453) 683
Motor vehicles 140 (36) 1 498
Furniture and fittings 227 (36) 52
Office equipment 91 (11) 63
Computer equipment and 110 (36) 175
software
Leasehold improvements 45 (11) 7
Total 2 623 (583) 2 478
30 September
Disposals 2008
R`000 R`000
Plant and equipment - 2 240
Motor vehicles - 1 602
Furniture and fittings - 243
Office equipment - 143
Computer equipment and - 249
software
Leasehold improvements - 41
Total - 4 518
MANAGEMENT COMMENTARY
Amecor`s principal operating businesses supply the following products and
services:
Holding company
Amecor
Management and administration
Tisec Management Services
Corporate head office, which is responsible for strategy, risk management and
administration. It is also the provider of shared services across common
business functions such as finance, IT, human resources, centralised
procurement, capital expenditure, growth and replacement projects
Amecor Power Services
Responsible for managing the marketing and sales within the Group
Operational
FSK Group
FSK Electronics SA
"FSK"
Short and long range digital synthesized radio transmitters; computerised
radio and GSM repeater networks, high speed radio and GSM modems, guard
monitoring equipment; and a range of unique GSM based equipment integrated
with high speed radio networks facilitating signal transmission worldwide
Sabre Radio Networks
"Sabre"
Ownership and operation of licensed data radio networks throughout South
Africa
PDS Group
Power Development Services
"PDS"
Supply, installation, maintenance and servicing of uninterrupted power supply
("UPS") systems, generators and associated standby power equipment
Durapower Manufacturing
"DM"
Import components, assemble, distribute and sale of UPS systems and
associated standby power equipment
Gillespie Diesel Services
"GDS"
Assembly, distribution and sale of generators
Financial review
The Board of Directors is pleased to report headline earnings for the six
months ended 30 September 2008 of 14,0 cents per share, an increase of 39% on
the comparative period. Turnover for the period under review increased by R36
million or 195% compared to the first half of financial year 2008 ("F2008").
Profit before tax was R16,4 million, an increase of R6,7 million or 69%
compared to the first half of F2008. The analysis of turnover and profit
before tax on a segmental basis is detailed herein.
Capital expenditure of R0,8 million (F2008: R3,3 million) was incurred in the
period under review reflecting an ongoing investment by the Group in research
and development.
Terms of the ABSA loan
A term loan agreement was entered into between Amecor and ABSA Bank Limited
in the amount of R12,5 million. The terms are summarised as follows:
Interest rate: Prime lending rate
Repayments of capital and Payable monthly, over a period of 60
interest: months
Security: Shareholding acquired in the PDS Group
PDS Group acquisition
With effect 1 July 2008 Amecor acquired 50,1% shareholding in the PDS Group.
The acquisition was in line with Amecor`s fundamental strategy 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
broaden services across a wider client base. At acquisition the balance sheet
is as follows:
PDS DM GDS Total
R`000 R`000 R`000 R`000
Assets and liabilities
acquired
Assets 21 771 6 156 17 056 44 983
Property, plant and 1 028 19 474 1 521
equipment
Cash acquired 2 776 18 294 3 088
Inventories 3 280 2 840 7 450 13 570
Trade and other receivables 13 140 3 279 8 838 25 257
Taxation 62 - - 62
Loans receivable 1 485 - - 1 485
Liabilities 11 879 2 885 9 610 24 373
Trade and other liabilities 8 387 1 648 8 066 18 101
Long-term borrowings 113 - - 113
Bank overdraft 1 216 1 170 - 2 386
Shareholder loans 1 414 21 924 2 359
Taxation 726 43 620 1 389
Deferred tax 22 3 - 25
Net asset value 9 893 3 271 7 446 20 610
% shareholding acquired 50,2 50,3 50,1
Proportional net asset 4 966 1 645 3 731 10 342
value acquired
Cost of business 7 534 2 496 5 660 15 690
combination
Fair value of shares issued 1 507 499 1 132 3 138
Cash received (1 560) 1 152 (294) (702)
Cash paid 7 587 845 4 822 13 254
Goodwill component of 2 568 851 1 929 5 348
acquisition 1
Profit since acquisition 1 398 486 2 696 4 579
(100%)
Profit if acquisition 3 717 1 309 6 446 11 472
occurred at beginning of
period
Turnover if acquisition 38 050 9 995 35 918 83 963
occurred at beginning of
period
Note
1 Goodwill arose in the business combination because the cost of the
combination included a premium paid to acquire shareholding in the above
business units. In addition, the consideration paid for the combination
effectively included amounts in relation to the benefit of the expected
synergies, revenue growth, future market development and the assembled
workforce of the Amecor Group. These benefits are not recognised separately
as the future economic benefits arising from them cannot be reliably
measured.
The Group also acquired the customer lists and customer relations of the PDS
Group as part of the acquisition. These assets could not be reliably measured
and separately recognised from goodwill because they are not capable of being
separated and sold, transferred, rented or exchanged, either individually or
together with any related contracts.
Operational review
The shareholding in the PDS Group contributed to both turnover and profit
before tax. The FSK Group remains profitable. Both operational groups of
Amecor are confident that targets for the remaining financial year 2009 are
achievable
.
Product development
The Group continues to invest in research and development which has resulted
in high quality products being launched into both the local and international
markets.
Capital commitments
The Group has committed product development costs in the sum of approximately
R1,0 million for the remainder of the financial year.
Contingently issuable shares
The dispute resolution arbitration with shareholder and former director Rabie
van der Merwe was set down for October 2008, as reported in our announcement
of 24 June 2008. At the time of writing we have been informed that Van der
Merwe is seeking postponement sine die.
Dividends
No interim dividend has been declared.
Outlook
Despite the challenging economic conditions, demand for the Group`s products
and services continues to grow. The Board is optimistic that, whilst consumer
spending slows down, public infrastructure demand will continue to remain
strong. Consequently the Board expects continued earnings and profitability
in the second half of the year to be in line with its budgets and organic
growth targets.
On behalf of the Board
H S Courtney D H Alexander
Chairman Chief Executive
Johannesburg
27 November 2008
Directors
H S Courtney (Chairman)*, D H Alexander, K A Colley, M Noge*
(*non-executive)
Transfer Secretaries
Link Market Services (Pty) Limited,
11 Diagonal Street, Johannesburg, 2001
(PO Box 4844, Johannesburg, 2000)
Registered Office
Resource House, 7 Spring Street, Rivonia 2196
(PO Box 1962, Rivonia, 2128)
Sponsor
Sasfin Capital Limited, PDNA Building,
Ground Floor, 25 Scott Street, Waverly 2090
(PO Box 95104, Grant Park, 2051)
Visit us at www.amecor.com
INNOVATION THROUGH TECHNOLOGY
Date: 28/11/2008 12:35:01 Produced by the JSE SENS Department.
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