| Mon 9 Mar 2009, 7:05 | | AMA - AMAP - Unaudited Interim Results For The Six Months Ended 31 December 2008 |
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AMA
AMA
AMA - AMAP - Unaudited Interim Results For The Six Months Ended 31 December 2008
AMALGAMATED APPLIANCE HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1997/004130/06)
Share code: AMA & ISIN: ZAE000012647
("AMAP" or "the Group")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2008
CONDENSED GROUP INCOME STATEMENT
for the period ended 31 December 2008
% change Unaudited Restated Restated
6 months Unaudited Audited
31 December 6 months 12 months
2008 31 December 30 June
R`000 2007 2008
R`000 R`000
Revenue (33) 612 489 907 809 1 606 642
Operating (loss)/profit (3 299) (589) 30 908
Restructuring costs - (5 626) (8 900) (9 607)
operations
Net write down of (50 753) (6 067) (23 419)
inventory
Fair value adjustments (5 768) 2 863 (2 823)
on financial instruments
Net interest paid (3 590) (5 644) (12 833)
Loss before tax (276) (69 036) (18 337) (17 774)
Taxation 19 794 4 222 4 681
Loss for the period from (249) (49 242) (14 115) (13 093)
continuing operations
Discontinued operations
(Loss)/profit from (1 250) 987 (4 807)
discontinuing operations
Loss for the period from (285) (50 492) (13 128) (17 900)
continuing and
discontinuing operations
Loss per share
From continuing and
discontinuing operations
Basic loss per share - (285) (24,2) (6,3) (8,6)
(cents)
Diluted basic loss per (284) (24,2) (6,3) (8,6)
share - (cents)
From continuing
operations
Basic loss per share - (250) (23,6) (6,8) (6,3)
(cents)
Diluted basic loss per (250) (23,6) (6,8) (6,2)
share - (cents)
CONDENSED GROUP BALANCE SHEET
as at 31 December 2008
Unaudited Unaudited Audited
6 months 6 months 12 months
31 December 31 December 30 June
2008 2007 2008
R`000 R`000 R`000
Assets
Non-current assets 115 028 78 490 83 725
Property, plant and equipment 15 355 47 464 40 861
Goodwill 1 170 1 170 1 170
Trademarks 4 596 4 596 4 596
Investments in associates 2 326 - -
Deferred taxation 69 411 25 260 37 098
Non-current assets classified as 22 170 - -
held for sale
Current assets 605 864 983 256 729 817
Inventories 242 780 419 009 365 188
Trade and other receivables 238 869 324 462 307 304
Taxation prepaid 3 520 3 518 3 521
Derivative financial asset - 1 520 -
Bank and cash on hand 116 229 234 747 53 804
Current assets classified as held 4 466 - -
for sale
Total assets 720 892 1 061 746 813 542
Equity and liabilities
Total equity 457 332 510 367 506 337
Capital and reserves 457 332 510 367 506 337
Non-current liabilities 6 940 12 905 8 988
Long-term borrowings 1 667 9 941 6 826
Deferred taxation 112 2 964 2 162
Non-current liabilities directly 5 161 - -
associated with assets classified
as held for sale
Current liabilities 256 620 538 474 298 217
Trade, other payables and 145 862 297 224 207 749
provisions
Derivative financial liability 6 271 - 1 704
Capital distribution and dividends 159 172 159
payable
Taxation 8 371 938 1 090
Bank overdraft 74 176 219 253 71 254
Short-term portion of long-term 1 791 4 422 5 065
liability
Provisions 17 507 16 465 11 196
Liabilities directly associated 2 483 - -
with assets classified as held for
sale
Total equity and liabilities 720 892 1 061 746 813 542
CONDENSED GROUP CASH FLOW STATEMENT
for the period ended 31 December 2008
Unaudited Unaudited Audited
6 months 6 months 12 months
31 December 31 December 30 June
2008 2007 2008
R`000 R`000 R`000
Cash flow from operating activities 63 487 (139 256) (167 691)
Cash (utilised)/generated by (60 207) 1 916 5 213
trading
Working capital changes 132 327 (81 800) (97 100)
Cash generated/(utilised) by 72 120 (79 884) (91 887)
operations
Net interest paid (3 588) (5 738) (12 971)
Taxation paid (5 045) (28 198) (37 384)
Capital distribution and dividends - (25 436) (25 449)
paid
Cash flow from investing activities (902) (7 096) (9 179)
Additions to property, plant and (1 593) (7 234) (9 831)
equipment
Proceeds on disposal of property, 691 138 652
plant and equipment
Cash flow from financing activities (2 469) 1 000 (1 427)
Net movement in treasury shares 40 (2 431) (2 384)
(Decrease)/increase in long-term (2 509) 3 431 957
borrowings
Net increase/(decrease) in cash and 60 116 (145 352) (178 297)
cash equivalents
Cash (deficit)/surplus beginning of (17 450) 160 847 160 847
period
Cash surplus/(deficit) at the end 42 666 15 495 (17 450)
of the period
NOTES TO THE CONDENSED GROUP CASH FLOW STATEMENT
for the period ended 31 December 2008
Unaudited Unaudited Unaudited
6 months 6 months 12 months
31 December 31 December 30 June
2008 2007 2008
R`000 R`000 R`000
Cash flow from operating activities 63 487 (139 256) (167 691)
- Continuing operations 63 207 (143 856) (172 608)
- Discontinuing operations 280 4 600 4 917
Cash flow from investing activities (902) (7 096) (9 179)
- Continuing operations (895) (4 693) (6 528)
- Discontinuing operations (7) (2 403) (2 651)
Cash flow from financing activities (2 469) 1 000 (1 427)
- Continuing operations (1 125) (764) (1 893)
- Discontinuing operations (1 344) 1 764 466
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
for the period ended 31 December 2008
Unaudited Unaudited Audited
6 months 6 months 12 months
31 December 31 December 30 June
2008 2007 2008
Balance as at 1 July 506 337 551 163 551 163
Net loss for the period (50 492) (13 128) (17 900)
Capital distribution - (25 462) (25 462)
Net treasury movement 40 (2 431) (2 384)
Share-based payment 1 447 225 920
Balance at period end 457 332 510 367 506 337
SUPPLEMENTARY INFORMATION
for the period ended 31 December 2008
Unaudited Restated Restated
6 months unaudited audited
31 December 6 months 12 months
2008 31 December 30 June
2007 2008
Shares in issue (000`s) 211 190 212 190 211 190
Shares in issue - weighted (000`s) 208 419 208 928 208 646
Diluted number of shares - weighted 208 449 209 103 210 435
(000`s)
Net assets value per share (cents) 217 241 240
Cost of sales (R`000) - continuing 573 559 803 596 1 364 181
operations
Cost of sales (R`000) - 1 861 (1 484) 7 112
discontinuing operations
Interest received (R`000) - (4 946) (2 830) (3 913)
continuing operations
Interest received (R`000) - (2) - -
discontinuing operations
Interest paid (R`000) - continuing (8 536) (8 474) (16 746)
operations
Interest paid (R`000) - - (94) (138)
discontinuing operations
Capital expenditure (R`000) - 1 586 4 793 7 131
continuing operations
Capital expenditure (R`000) - 7 2 441 2 700
discontinuing operations
Capital commitments (R`000) - 395 780 1 098
continuing operations
Depreciation, amortisation and 3 144 4 110 10 689
impairment charge (R`000) -
continuing operations
Depreciation, amortisation and 1 667 1 624 3 585
impairment charge (R`000) -
discontinuing operations
Finance and operating lease 23 668 37 215 28 061
commitments (R`000) - continuing
operations
Loss attributable to ordinary (49 242) (14 115) (13 093)
shareholders (R`000) - continuing
operations
(Profit)/loss on disposal of (242) 16 156
property, plant and equipment
(R`000) - continuing operations
Impairment of property, plant and - - 2 157
equipment and trademarks (R`000) -
continuing operations
Total tax effects on adjustments 68 (5) (648)
(R`000) - continuing operations
Headline loss (R`000) - continuing (49 416) (14 104) (11 428)
operations
Headline loss per share - (cents)- (23,7) (6,8) (5,5)
continuing operations
Diluted headline loss per share - (23,7) (6,7) (5,4)
(cents)- continuing operations
(Loss)/profit attributable to (1 250) 987 (4 807)
ordinary shareholders (R`000) -
discontinuing operations
Loss on disposal of property, plant - 21 26
and equipment (R`000) -
discontinuing operations
Impairment of property, plant and - - 304
equipment and trademarks (R`000) -
discontinuing operations
Total tax effects on adjustments (6) (92)
(R`000) - discontinuing operations
Headline (loss)/profit (R`000) - (1 250) 1 002 (4 569)
discontinuing operations
Headline (loss)/earnings per share (0,6) 0,5 (2,2)
- (cents) - discontinuing
operations
Diluted headline (loss)/earnings (0,6) 0,5 (2,2)
per share - (cents) - discontinuing
operations
Changes to comparative information
Comparative information has been restated for the treatment of Tedelex
Manufacturing (Pty) Limited and Tedelex Properties (Atlantis) (Pty) Limited as
discontinued operations.
6 months - 31 December 2007
Unaudited Unaudited
reclassified
Previously Discontinued Restated
stated operations unaudited
R`000 R`000 R`000
Revenue 954 709 46 900 907 809
Operating (loss)/profit 895 1 484 (589)
Restructuring costs - operations (8 900) - (8 900)
Net write down of inventory (6 067) - (6 067)
Fair value adjustments on financial 2 863 - 2 863
instruments
Net interest paid (5 738) (94) (5 644)
(Loss)/profit before tax (16 947) 1 390 (18 337)
Taxation 3 819 (403) 4 222
Loss from continuing operations (14 115)
Profit/(loss) from discontinued 987
operations
(Loss)/profit from continuing and (13 128) 987 (14 115)
discontinuing operations
12 months - 30 June 2008
Audited Audited
reclassified
Previously Discontinued Restated
stated operations audited
R`000 R`000 R`000
Revenue 1 662 931 56 289 1 606 642
Operating (loss)/profit 26 689 (4 219) 30 908
Restructuring costs - operations (12 500) (2 893) (9 607)
Net write down of inventory (23 419) - (23 419)
Fair value adjustments on financial (2 823) - (2 823)
instruments
Net interest paid (12 971) (138) (12 833)
(Loss)/profit before tax (25 024) (7 250) (17 774)
Taxation 7 124 2 443 4 681
Loss from continuing operations (13 093)
Profit/(loss) from discontinued (4 807)
operations
(Loss)/profit from continuing and (17 900) (4 807) (13 093)
discontinuing operations
The reclassifications have no impact on the previously reported balance sheet.
Discontinued operations and assets classified as held for sale
Following the decision to dispose of Tedelex Manufacturing (Pty) Limited and
Tedelex Properties (Atlantis) (Pty) Limited, these two entities have been
classified as discontinued in the current year and prior years have been
restated accordingly.
Unaudited Unaudited
For the period ended Unaudited Tedelex Tedelex
31 December 2008 Total Properties Manu-
discontinued (Atlantis) facturers
operation (Pty) Ltd (Pty) Ltd
R`000 R`000 R`000
Revenue 8 742 - 8 742
Operating (loss)/profit (1 860) 932 (2 792)
Net write up of inventory 123 - 123
Net interest received 2 - 2
(Loss)/profit before tax (1 735) 932 (2 667)
Taxation 485 (261) 746
(Loss)/profit from discontinuing (1 250) 671 (1 921)
operations
The major classes of assets and liabilities classified as held for sale
are as follows:
Unaudited Unaudited
As at 31 December 2008 Unaudited Tedelex Tedelex
Total Properties Manu-
held for sale (Atlantis) facturers
R`000 (Pty) Ltd (Pty) Ltd
R`000 R`000
Non-current assets
Property, plant and equipment 21 839 11 706 10 133
Deferred taxation 331 - 331
Non-current assets classified as 22 170 11 706 10 464
held for sale
Current assets
Inventory 651 - 651
Investment in associate (3 731) - (3 731)
Trade and other receivables 6 928 - 6 928
Taxation prepaid 4 4 -
Bank and cash on hand 613 - 613
Assets classified as held for sale 4 465 4 4 461
Non-current liabilities
Long-term borrowings (3 158) - (3 158)
Deferred taxation (2 003) (2 003) -
Non-current liabilities directly (5 161) (2 003) (3 158)
associated with assets classified
as held for sale
Current liabilities
Trade, other payables and (1 032) (19) (1 013)
provisions
Taxation (89) - (89)
Investment in associate 1 405 - 1 405
Short-term portion of long-term (2 767) - (2 767)
liability
Liabilities directly associated (2 483) (19) (2 464)
with assets classified as held for
sale
Net investment in associate 2 326 - 2 326
Net assets classified as held for 18 991 9 688 9 303
sale
Trading environment
The trading environment in the consumer goods sector during the reporting period
was characterised by fierce competition between distributors for a share of the
smaller market and tight stock controls exercised by retailers. The combined
effect resulted in sales in the fourth quarter of the calendar year being below
expectations. Consequently, the decision made by the Board at the beginning of
2008 to rationalise and restructure the organisation is proving to be
beneficial.
Operational review
Russell Hobbs continued to increase its market share during the period and the
Group`s strategy of having a bouquet of offerings through Salton, Pineware and
George Foreman was successful with revenue from these goods increasing compared
to the previous period. The decision to narrow the range of electronic goods and
only trade in products that achieve required returns resulted in a significant
drop in television and audio revenue.
Furthermore, the discontinuation of load shedding and extremely low sales
compelled the Board to write down the Group`s power inverter stock to net
realisable value. As at 1 December 2008, the statutory legal entities within the
Group were combined so that all trading now takes place through one company,
namely Tedelex Trading (Pty) Limited. The benefits of this reorganisation will
be derived in the second half of the current financial year.
Financial performance
Group revenue for the period was 33% lower compared to the prior year, primarily
as a result of lower television and audio sales. Gross margins were lower due to
the write down of the power inverter stock by an additional R74,5 million and
the clearing out of excess audio and television stock.
Restructuring costs incurred amounted to R5,6 million.
Notwithstanding the poor trading results, the Group generated cash from
operations for the period of R72,1 million (2007: utilised R79,9 million). This
was driven by targeted restructuring initiatives and improved debtor and
inventory management resulting in net cash on hand of R42,7 million (2007: R15,5
million).
The way forward
The Group remains fully committed to delivering sustainable value to its
stakeholders. In line with the Group`s strategy to focus on the marketing of
branded products, exploratory discussions have been entered into for the sale of
its Atlantis manufacturing operation. Furthermore, an agreement has also been
reached relating to the sale of the Atlantis Manufacturing property. The sale of
the property will generate a significant cash inflow and further reduce the
Group`s working capital requirements.
The economic climate suggests that trading conditions will not improve in the
short term. Consequently the Group will remain focused on cost reductions, cash
management and maintaining its relatively ungeared balance sheet.
AMAP believe that by continuing to focus and invest in its brands as well as
delivering superior service to its customers, the Group will be well placed to
face challenges and return to profitability in the near future.
Changes to the Board and senior management
The following changes to the Board have taken place since the date of our last
report:
- Spyros Scafidas resigned as non-executive director of the Group with effect
from 31 October 2008
- Steven Karele was appointed as Chief Financial Officer and executive director
with effect from 1 December 2008
- Murray Graham Crow was appointed as executive director with effect from 1
December 2008
- Byron Nichles resigned as Group Chief Financial Officer and executive director
with effect from 31 December 2008
Segmental reporting
The Group markets and distributes consumer durables predominantly in Southern
Africa and therefore the Board does not consider the disclosure of segmental
information in terms of IFRS 8 to be meaningful.
Corporate governance
The Group subscribes to the spirit of good corporate governance as set out in
the King II Report and accepts the need to conduct the enterprise with
integrity, transparency and equal opportunity.
NOTES
1. Basis of preparation
The interim report is prepared in accordance with:
- IAS 34 Interim Financial Reporting;
- The requirements of the South African Companies Act, 61 of 1973, as amended;
and
- The Listings Requirements of the JSE Limited.
These financial statements incorporate accounting policies that are consistent
with those used in preparing the financial results for the year ended 30 June
2008.
2. Related-party transactions
The company entered into various related-party transactions. These transactions
are no less favourable than those arranged with third parties.
3. Contingent liability
As disclosed in the Group`s annual report for the year ended 30 June 2007, SARS
issued a letter of intent in February 2007 to levy customs and excise on a
wholly owned subsidiary for R29 million. The subsidiary has raised a formal
objection, in line with professional advice from external legal customs duty
advisers, and remains confident that its objection will be upheld.
There is no obligation, current or pending, which is considered likely to have
an adverse effect on the Group.
4. Assets classified as held for sale
During the period under review it was decided to transfer the assets of the
Atlantis manufacturing operation and the Atlantis property to assets held for
sale in line with the requirements of IFRS 5. The proposed split of the
manufacturing operation transaction once complete is expected to compose of 80%
held for sale and 20% investment in associate.
5. Discontinued operations
The results have been adjusted for the effect of the assets held for sale in
note 4 above.
Subsequent events
Apart from the entering of an agreement to dispose of the Atlantis manufacturing
property, no other events material to the understanding of the report have
occurred in the period between 31 December 2008 and the date of this report.
For and on behalf of the board
Leon Campher
Non-executive Chairman
Alan Coward
Group Chief Executive Officer
Johannesburg
6 March 2009
Directors: *PL Campher (Chairman), AS Coward, MG Crow, *WA du Plessis,
S Karele, *SA Levitt, *SH Muller, DB Oliver *Non-executive
Secretary: BG Drummond
Transfer secretaries:?Computershare Investor Services (Pty) Limited,
70 Marshall Street, Johannesburg 2001??PO Box 61051, Marshalltown 2107
Registered office:?29 Heronmere Road, Reuven 2091??PO Box 39186,
Booysens 2016, Telephone (011) 490 9000
Sponsor:?Bridge Capital Advisors (Pty) Limited, 2nd Floor, 27 Fricker Road,
Illovo Boulevard, Illovo 2196
www.amapholdings.co.za
Date: 09/03/2009 07:05:05 Produced by the JSE SENS Department.
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