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AER
AER
AER - Amalgamated Electronic Corporation - Condensed Consolidated Reviewed
Results For The Year Ended 31 March 2009 And Dividend Declaration
AMALGAMATED ELECTRONIC CORPORATION LIMITED
("Amecor") or ("The Group")
(Incorporation in the Republic of South Africa)
(Registration number 1997/010036/06)
Share code: AER
ISIN: ZAE000070587
CONDENSED CONSOLIDATED REVIEWED RESULTS
FOR THE YEAR ENDED 31 MARCH 2009 AND DIVIDEND DECLARATION
- Turnover increased by 227%
- Operating profit increased by 107%
- Profit after tax increased by 88%
- Earnings and headline earnings per share increased by 47%
- Dividend declared of 8 cents per share
GROUP INCOME STATEMENT
Year ended Year ended
31 March 31 March
2009 2008
(Reviewed) (Audited)
Notes R`000 R`000
Revenue 140 459 43 748
Turnover 138 100 42 188
Operating cost excluding (95 763) (21 812)
depreciation and amortisation
Operating profit before 42 337 20 376
depreciation and amortisation
Depreciation and amortisation (2 351) (1 015)
Operating profit 39 986 19 361
Finance income 1 653 1 399
Finance expenses (1 282) (7)
Profit before taxation 40 357 20 753
Taxation (10 700) (4 983)
Profit 29 657 15 770
Attributable to:
Ordinary shareholders of Amecor 23 762 15 770
Minority interest 5 895 -
29 657 15 770
Earnings per share (cents) 3 33,7 23,0
Diluted earnings per share (cents) 31,9 23,0
GROUP BALANCE SHEET
31 March 31 March
2009 2008
(Reviewed) (Audited)
Notes R`000 R`000
ASSETS
Non-current assets 69 941 53 270
Property, plant and equipment 7 7 183 2 623
Intangible assets 7 725 5 564
Goodwill 54 034 44 169
Deferred tax asset 999 914
Current assets 88 152 28 348
Inventories 22 952 5 375
Receivables and other current 46 030 5 992
assets
Taxation 2 459 1 638
Cash and cash equivalents 16 711 15 343
Total assets 158 093 81 618
EQUITY AND LIABILITIES
Issued capital 71 904 69 193
Retained earnings 43 570 6 788
Total equity attributable to equity 30 550 6 788
holders of Amecor
Minority interest 13 020 -
Total equity 115 474 75 981
Non-current liabilities 12 051 1 557
Interest bearing borrowings 5 10 601 -
Deferred tax liabilities 1 450 1 557
Current liabilities 30 568 4 080
Trade and other payables 29 370 4 080
Taxation 1 198 -
Total equity and liabilities 158 093 81 618
Net asset value per share (cents) 4 161,2 110,9
GROUP CASH FLOW STATEMENT
Year ended Year ended
31 March 31 March
2009 2008
(Reviewed) (Audited)
R`000 R`000
Net inflow from operating activities 7 233 7 924
Net outflow from investing activities (18 477) (4 572)
Net inflow from financing activities 11 909 -
Net movement in cash balances 665 3 352
Cash at beginning of the year 15 343 11 991
Cash and cash equivalents acquired 703 -
Cash and cash equivalents at the end of 16 711 15 343
the year
GROUP STATEMENT OF CHANGES IN EQUITY
Attributable
to ordinary
Issued Retained shareholders
capital earnings of Amecor
R`000 R`000 R`000
Balance at 1 April 2007 69 197 (4 539) 64 658
Dividends paid to shareholders - (4 443) (4 443)
Treasury shares (4) - (4)
Profit attributable to - 15 770 15 770
shareholders
Total changes (4) 11 327 11 323
Balance at 1 April 2008 69 193 6 788 75 981
Issue of shares to PDS Group 3 138 - 3 138
vendors
Treasury shares (427) - (427)
Minorities acquired - - -
Profits attributable to - 23 762 23 762
shareholders
Total changes 2 711 23 762 26 473
Balance at 31 March 2009 71 904 30 550 102 454
Minority Total
interest equity
R`000 R`000
Balance at 1 April 2007 - 64 658
Dividends paid to shareholders - (4 443)
Treasury shares - (4)
Profit attributable to - 15 770
shareholders
Total changes - 11 323
Balance at 1 April 2008 - 75 981
Issue of shares to PDS Group - 3 138
vendors
Treasury shares - (427)
Minorities acquired 7 125 7 125
Profits attributable to 5 895 29 657
shareholders
Total changes 13 020 39 493
Balance at 31 March 2009 13 020 115 474
MANAGEMENT COMMENTARY
Amecor`s principal operating businesses supply the following products and
services:
HOLDING COMPANY
Amecor Amalgamated Electronic Corporation Limited
MANAGEMENT AND ADMINISTRATION
Tisec Management Services
Amecor Power Services
Biz Afrika 327
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
Amecor Property Developments
"APD"
Factory premises situated at 22 Richard Road, Industria currently being
refurbished for occupation in December 2009
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"
Assemble, distribute and sale of diesel generators
FINANCIAL REVIEW
The board of directors is pleased to report headline earnings for the 12 months
ended 31 March 2009 of 33,7 cents per share (2008: 23,0 cents), an increase of
46,5% on the comparative period. Turnover and profit before tax for the period
under review increased by:
- 7,3% to R138,1 million; and
- ,5% to R40,4 million
respectively compared to the financial year 2008. The analysis of turnover and
profit before tax on a segmental basis is detailed herein.
Capital expenditure of R2,8 million was incurred in the period under review
reflecting an ongoing investment by the Group in research and development.
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
Non-current assets
Property, plant and equipment 1 028 19 474 1 521
Group loans 1 485 (2) - 1 483
Current assets
Inventory 3 280 2 840 7 450 13 570
Trade and other receivables 13 100 3 204 8 621 24 925
Cash 2 776 18 294 3 088
Vat control 40 76 - 116
Taxation 62 - - 62
Deposits and prepayments - - 217 217
Total assets 21 771 6 155 17 056 44 982
Non-current liabilities
Instalment sale creditors 1 413 22 924 2 359
Directors`/shareholders` loans 113 - - 113
Current liabilities
Bank overdraft 1 216 1 170 - 2 386
Trade and other payables 7 754 1 644 6 083 15 481
Provisions and accruals 486 4 179 669
Customers` deposits 148 - 1 402 1 550
Deferred tax 22 2 - 24
Taxation 726 43 620 1 389
Current portion of long-term - - 36 36
liability
Vat control - - 366 366
Total liabilities 11 878 2 885 9 610 24 373
Net asset value 9 893 3 270 7 446 20 609
% shareholding acquired 50,2 50,3 50,1
Proportional net asset value 4 967 1 645 3 730 10 342
acquired
Cost of business combination 7 535 2 496 5 660 15 690
- Fair value of shares issued 1 507 499 1 132 3 138
- Cash received (1 363) 1 152 (294) (505)
- Cash paid 7 391 845 4 822 13 058
Goodwill component of 2 568 851 1 929 5 348
acquisition1
Profit since acquisition (100%) 3 697 1 516 6 614 11 827
Profit attributable to Amecor 1 841 753 3 300 5 895
shareholders (50,1%)
Note 1: The purchase price paid for the 50,1% shareholding of the PDS Group was
allocated between identifiable assets and liabilities acquired. The amount that
exceeded the identifiable assets and liabilities is recognised as goodwill.
OPERATIONAL REVIEW
FSK Electronics ("FSK")
FSK remains profitable. The continuous development of new FSK products in 2009
has allowed FSK to branch into other avenues of the security industry, where the
procurement of complementary products has added to the diversity and
adaptability of the enhanced FSK product range. The product range has been
extended by a total of four completed products, and continues to grow with the
Research and Development Division team`s commitment to innovation and
technology.
Sabre Radio Networks ("Sabre")
Sabre has contributed substantially to its client base as its continuous growth
and recurring annuity income has served the Group well.
Sabre owns, installs, manages and maintains all the equipment used on the radio
frequency ("RF") networks. These networks enable the sending and receiving of
data signals to and from secured sites and security control rooms. Sabre`s
networks are situated throughout all major centres in South Africa, permitting
national coverage, with real time monitoring of sites from anywhere in the
country.
In addition to the radio network, Sabre provides a GSM private Access Point Name
("APN") and servers for the routing of alarm information via the GSM network.
The GSM network allows for national routing of alarm signals, along with a high
speed back up to the radio networks. Consequently, the network transmits signals
using the two mediums of RF and mobile technology. This dual medium ensures
instantaneous transmission of data via routing equipment which automatically
selects the most effective path for signals.
PDS Group
The acquisition of 50,1% of the PDS group into Amecor has contributed to product
diversification in the Group. The PDS Group of companies, comprising Power
Development Services ("PDS"), Gillespie Diesel Services ("GDS") and Durapower
Manufacturing ("DM") operate as a cohesive unit, complementing individual
business operations through the manufacturing, distribution and installation of
power solutions.
The PDS brand has managed to live up to its long standing reputation of superior
quality in the power industry, trading in only top of the range equipment. This
high standard of product has far superseded the influx of cheap unreliable
imports without service support. PDS has managed to raise the bar and set the
benchmark in alternative power solutions through product quality, reliability,
after sales service and above all safety.
The current demand for alternative electricity around South Africa has
positioned PDS advantageously.
DM continues to supply tailor made uninterrupted power supply ("UPS") solutions
of a superior quality to a broad market spectrum.
Contingently issuable shares
Dispute resolution arbitration with shareholder and former director Rabie van
der Merwe has to date not been settled. Yet another postponement was applied for
by Mr Van der Merwe and granted. No further dates have been set for the
arbitration.
Product development
The Group continued to invest in research and development resulting in further
high quality products being launched into local and international markets.
Capital commitment
The Group has committed to ongoing product development costs in the next
financial year. The FSK Group has acquired property for the sum of R3,3 million
and committed a further R5,0 million for alterations and improvements.
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 year ended 31 March 2009
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 3 June 2009.
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 - Interim Financial Reporting and the South African
Companies Act.
1.2 Basis of preparation
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 International Accounting Standards 34 ("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 2009. The Company envisages posting the annual reports
around the end of August 2009.
The accounting policies of the Group are consistent with the prior years`
audited financial statements.
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. The reviewed report is available for inspection at the Company`s
registered office.
3. Earnings per share ("EPS")
EPS is based on the Group`s profit for the twelve month period ended 31 March
2009, divided by the weighted average number of shares in issue during the year.
Weighted
average Earnings
Net number of per share
profit shares in issue Cents
000`s 000`s
Earnings 23 762 70 602 33,7
Diluted earnings 23 762 74 542 31,9
Headline earnings
reconciliation
Headline earnings per share
is based on the Group`s
headline earnings divided by
the weighted average number
of shares in issue during
the 12 month period ended 31
March 2009.
Headline earnings 23 762 70 602 33,7
Diluted headline earnings 23 762 74 542 31,9
Diluted earnings and headline earnings arose pursuant to share options being
exercised by the executives and Employee Share Trust. 3 939 775 shares were
issued at an issue price of 25 cents per share.
4. Net asset value ("NAV") per share
The net asset value per share is the value of the Group`s assets, less the sum
of the value of its liabilities, divided by the number of shares in issue.
Reviewed year
ended 31 March
2009
Ordinary share capital and reserves (R`000) 115 474
Total number of shares in issue (net of treasury 71 641
shares of 2 404 811) (000`s)
NAV per share (cents) 161,2
Ordinary share capital and reserves (R`000) 115 474
Goodwill (54 034)
Intangible assets (7 725)
Tangible net asset value 53 715
Total number of shares in issue (net of treasury 71 641
shares of 2 404 811) (000`s)
Tangible NAV per share (cents) 75,0
5. Increase in borrowings
Funding was procured through ABSA Bank in the sum of R12,5 million to provide
the PDS Group with working capital and capital expenditure within the Amecor
Group.
Amecor Property Developments registered a bond with ABSA Bank over the property
acquired at 14 Richard Road, Industria, for the total amount of R6,0 million. To
date, R2,2 million has been drawn down with the remaining balance available upon
commencement of the building improvements.
6. Segmental analysis
The Group`s business segments and segmental information presented in the
condensed consolidated reviewed results for the year ended 31 March 2009
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.
Year ended Year ended
31 March 31 March
2009 2008
(Reviewed) (Audited)
R`000 R`000
Segment turnover
Security and related production and 42 380 30 087
sales
Network and annuity income 13 235 11 160
Supply and maintenance of alternative 80 338 -
power sources
Holding and management subsidiaries 19 270 8 947
Eliminations (17 123) (8 006)
Total turnover 138 100 42 188
Profit attributable to Amecor
shareholders
Security and related production and 8 634 9 852
sales
Network and annuity income 7 013 5 760
Supply and maintenance of alternative 5 932 -
power sources
Holding and management subsidiaries 359 3 128
Eliminations 1 824 (2 970)
Total 23 762 15 770
7. Property, plant and equipment
The net book value of property, plant and equipment can be summarised as
follows:
Fixed
assets
acquired
at
acquisition Current
1 April of PDS deprecia-
2008 Group tion
R`000 R`000 R`000
Land and buildings - - -
Plant and equipment 2 010 98 (1 098)
Motor vehicles 140 1 297 (538)
Furniture and fittings 227 33 (78)
Office equipment 91 49 (34)
Computer equipment and 110 44 (168)
software
Leasehold improvements 45 - (32)
Total 2 623 1 521 (1 948)
31 March
Additions Disposals 2009
R`000 R`000 R`000
Land and buildings 3 499 - 3 499
Plant and equipment 549 (21) 1 538
Motor vehicles 404 (43) 1 260
Furniture and fittings 57 - 239
Office equipment 74 - 180
Computer equipment and 461 (15) 432
software
Leasehold improvements 22 - 35
Total 5 066 (79) 7 183
8. Related party transactions
Year ended Year ended
31 March 31 March
2009 2008
(Reviewed) (Audited)
R`000 R`000
Purchases from fellow subsidiary 7 630 -
companies
Purchases from related parties are made
at normal market prices.
Management fees paid to fellow 9 493 8 006
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.
Rental contracts with related parties 628 660
The rentals are charged at arm`s length
and market related rates, as determined
by an independent third party.
Sales to related parties 9 771 -
These transactions occurred under arm`s length, market related terms and
conditions.
9. Post balance sheet events
A staff share option scheme was established in Amecor in 2005. The directors and
staff elected to exercise their options, in the total sum of 3,9 million
ordinary Amecor shares at a price of 25 cents per share, on 7 April 2009.
10. Dividends
The Directors have elected to pay a single annual dividend and to retain a four
times dividend cover. Accordingly the Company`s second annual dividend, payable
on Monday, 6 July 2009, for the year ended 31 March 2009, will be in the amount
of 8 cents per ordinary share, calculated as follows:
Profit after taxation (R`000) 23 762
Dividend cover 4 times
Distributable dividend (R`000) 6 238
Total number of shares in issue (000`s) 77 985
Dividend payable per share (cents) 8
Dividend payment details
Last day to trade cum dividend Friday, 26 June 2009
Trading ex dividend commences Monday, 29 June 2009
Record date Friday, 3 July 2009
Payment date Monday, 6 July 2009
Share certificates may not be dematerialised or rematerialised betwee Monday, 29
June 2009 and Friday, 3 July 2009, both dates inclusive. The certificated
register will be closed for this period.
11. Directors
HS Courtney (Non-executive Chairman)
DH Alexander (Chief Executive Officer)
KA Colley (Executive Director and Company Secretary)
M Noge (Independent Non-executive Director)
KA Vieira (Operational Director)
All of the above directors are South African and are resident in South Africa.
Keith Vieira was appointed an executive director on 12 January 2009. Keith was
previously the Operational Director of the FSK Group.
12. Outlook
Economists predict a challenging year ahead, but we remain confident that our
focused strategy and operational efficiency will enable us to continue to
deliver.
We believe that the Group`s market position, low-cost, high quality products,
and commitment to operational improvement and expansion will ensure our ongoing
success.
On behalf of the board
HS Courtney DH Alexander
Chairman* Chief Executive
Johannesburg
11 June 2009
Directors
HS Courtney (Chairman)*, DH Alexander
KA Colley, M Noge*, KA Vieira
* 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
Sponsor
Sasfin Capital
(A division of Sasfin Bank Limited)
PDNA Building, Ground Floor
25 Scott Street Waverley, 2090
(PO Box 95104, Grant Park, 2051)
Visit us at www.amecor.com
INNOVATION THROUGH TECHNOLOGY
Date: 11/06/2009 07:05:03 Produced by the JSE SENS Department.
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