| Tue 8 Sep 2009, 7:05 | | AMA - Amalgamated Appliance Holdings Limited - Reviewed Consolidated Results For |
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AMA
AMA
AMA - Amalgamated Appliance Holdings Limited - Reviewed Consolidated Results For
The Year Ended 30 June 2009
AMALGAMATED APPLIANCE HOLDINGS LIMITED
Registration number: 1997/004130/06
ISIN: ZAE000012647
Share code: AMA
("AMAP" or "the Group")
REVIEWED CONSOLIDATED RESULTS FOR THE YEAR ENDED 30 JUNE 2009
Highlights
* R230,7 million working capital improvement from operations
* R124,1 million net cash on hand
* R210,9 million inventory reduction
* Restructuring finalised
CONDENSED GROUP INCOME STATEMENT
for the year ended 30 June 2009
% Reviewed Restated
change 30 June 2009 30 June 2008
R`000 R`000
Continuing operations
Revenue (35) 1 044 294 1 606 642
Operating loss (71 448) (7 327)
Impairment of goodwill and (5 766) -
trademarks
Restructuring costs - operations (7 820) (9 607)
Net write down of inventory (2 397) (23 300)
Fair value adjustments on financial 909 33 673
instruments
Net interest paid (2 694) (12 833)
Loss before taxation (360) (89 216) (19 394)
Taxation 25 821 5 174
Loss for the year from continuing (346) (63 395) (14 220)
operations
Discontinued operations
Loss from discontinuing operations (5 621) (3 680)
Loss for the year from continuing (286) (69 016) (17 900)
and discontinuing operations
attributable to shareholders
Loss per share
From continuing and discontinuing
operations
Basic loss per share (cents) (285) (33,1) (8,6)
Diluted basic loss per share (289) (33,1) (8,5)
(cents)
From continuing operations
Basic loss per share (cents) (347) (30,4) (6,8)
Diluted basic loss per share (347) (30,4) (6,8)
(cents)
From discontinuing operations
Basic loss per share (cents) (50) (2,7) (1,8)
Diluted basic loss per share (59) (2,7) (1,7)
(cents)
CONDENSED GROUP BALANCE SHEET
as at 30 June 2009
Reviewed Audited
30 June 2009 30 June 2008
R`000 R`000
ASSETS
Non-current assets 87 459 83 725
Property, plant and equipment 11 890 40 861
Goodwill - 1 170
Trademarks 1 645 4 596
Deferred taxation 73 924 37 098
Current assets 514 244 729 817
Inventories 154 293 365 188
Trade and other receivables 187 289 307 304
Taxation prepaid 6 649 3 521
Bank and cash on hand 124 943 53 804
Assets classified as held for sale 41 070 -
Total assets 601 703 813 542
EQUITY AND LIABILITIES
Total equity 438 672 506 337
Capital and reserves 438 672 506 337
Non-current liabilities 1 433 8 988
Long-term borrowings 676 6 826
Deferred taxation 757 2 162
Current liabilities 161 598 298 217
Trade and other payables 96 729 207 749
Derivative financial liability 2 077 1 704
Capital distribution and dividends payable 157 159
Taxation 318 1 090
Bank overdraft 868 71 254
Short-term portion of long-term liability 1 125 5 065
Provisions 19 254 11 196
Liabilities directly associated with assets 41 070 -
classified as held for sale
Total equity and liabilities 601 703 813 542
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2009
Reviewed Audited
30 June 2009 30 June 2008
R`000 R`000
Balance as at 1 July 506 337 551 163
Net loss for the year (69 016) (17 900)
Capital distribution - (25 462)
Net treasury movement 74 (2 384)
Share based payment 1 277 920
Balance at year end 438 672 506 337
Changes to comparative information
Comparative information has been reclassified for the treatment of Tedelex
Manufacturing (Pty) Limited, Tedelex Properties (Atlantis) (Pty) Limited and the
Atlantis TV factory operations (a division of Tedelex Trading(Pty) Limited) as
discontinued operations.
30 June 2008
Audited Reclassified
previously discontinued
stated operations Restated
R`000 R`000 R`000
Revenue 1 662 931 56 289 1 606 642
Operating profit/(loss) 26 689 34 016 (7 327)
Restructuring costs - (12 500) (2 893) (9 607)
operations
Net write down of inventory (23 419) (119) (23 300)
Fair value adjustments on (2 823) (36 496) 33 673
financial instruments
Net interest paid (12 971) (138) (12 833)
Loss before taxation (25 024) (5 630) (19 394)
Taxation 7 124 1 950 5 174
Loss from continuing (14 220)
operations
Loss from discontinued (3 680)
operations
Loss from continuing and (17 900) (3 680) (14 220)
discontinuing operations
The reclassifications have no impact on the balance sheet.
SUPPLEMENTARY INFORMATION
for the year ended 30 June 2009
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 and the Atlantis TV factory
operation (a division of Tedelex Trading (Pty) Limited), these two entities and
the Atlantis TV factory have been classified as discontinued in the current year
and prior year has been reclassified accordingly.
For the year Reviewed Reviewed Reviewed Reviewed
ended 30 June 2009 Total Tedelex Tedelex Atlantis
discontinued Properties Manu- TV factory
operation (Atlantis) facturing operation1
R`000 (Pty) Limited (Pty) Limited R`000
R`000 R`000
Revenue 18 584 - - 18 584
Operating (8 031) 2 155 1 349 (11 534)
(loss)/profit
Restructuring costs (1 296) - - (1 296)
- operations
Net write up/(write 635 - (373) 1 008
down) of inventory
Fair value 885 - - 885
adjustments on
financial
instruments
Net interest - - 38 (38)
received/(paid)
(Loss)/profit before (7 807) 2 155 1 014 (10 975)
taxation
Taxation 2 186 (603) (284) 3 073
(Loss)/profit from (5 621) 1 552 730 (7 902)
discontinuing
operations
The major classes of
assets and
liabilities
classified as held
for sale as follows:
As at 30 June 2009 Reviewed Reviewed Reviewed Reviewed
Total Tedelex Tedelex Atlantis
held for Properties Manu- TV factory
sale (Atlantis) facturing operation1
R`000 (Pty) Limited (Pty) Limited R`000
R`000 R`000
Assets classified as
held for sale
Property, plant and 21 878 11 707 10 171 -
equipment
Deferred taxation 24 - 24 -
Inventories 9 038 - 299 8 739
Trade and other 10 129 - 761 9 368
receivables
Bank and cash on 1 - 1 -
hand
Assets classified as 41 070 11 707 11 256 18 107
held for sale
Liabilities directly
associated with
assets classified as
held for sale
Long-term borrowings (2 780) - (2 780) -
Deferred taxation (2 499) (2 024) (475) -
Trade and other (25 230) (9 683) (5 904) (9 643)
payables
Taxation (89) - (89) -
Bank overdraft (8 760) - (296) (8 464)
Short-term portion (1 712) - (1 712) -
of long-term
liability
Liabilities directly (41 070) (11 707) (11 256) (18 107)
associated with
assets classified as
held for sale
1 Atlantis TV factory operation is a division of Tedelex Trading (Pty) Limited.
SUPPLEMENTARY INFORMATION (continued)
for the year ended 30 June 2009
% Reviewed Restated
change 30 June 2009 30 June 2008
R`000 R`000
Shares in issue (000`s) 211 190 211 190
Shares in issue - weighted (000`s) 208 469 208 646
Diluted number of shares - weighted 208 575 210 435
(000`s)
Net asset value per share (cents) 208 240
Cost of sales (R`000) - continuing 891 233 1 313 097
operations
Cost of sales (R`000) - 26 422 58 196
discontinuing operations
Interest received (R`000) - (8 450) (3 913)
continuing operations
Interest received (R`000) - (38) -
discontinuing operations
Interest paid (R`000) - continuing 11 144 16 746
operations
Interest paid (R`000) - 38 138
discontinuing operations
Capital expenditure (R`000) - 2 584 7 131
continuing operations
Capital expenditure (R`000) - 52 2 700
discontinuing operations
Capital commitments (R`000) - 892 1 098
continuing operations
Depreciation, amortisation and 10 424 10 689
impairment charge (R`000) -
continuing operations
Depreciation, amortisation and 1 668 3 585
impairment charge (R`000) -
discontinuing operations
Operating lease commitments (R`000) 19 004 28 061
- continuing operations
Loss attributable to ordinary (63 395) (14 220)
shareholders (R`000) - continuing
operations
(Profit)/loss on disposal of (83) 156
property, plant and equipment
(R`000) - continuing operations
Impairment of goodwill (R`000) - 1 170 -
continuing operations
Impairment of trademarks (R`000) - 4 596 -
continuing operations
Impairment of property, plant and - 2 157
equipment (R`000) - continuing
operations
Total tax effects on adjustments (1 264) (648)
(R`000) - continuing operations
Headline loss (R`000) - continuing (58 976) (12 555)
operations
Headline loss per share (cents) - (372) (28,3) (6,0)
continuing operations
Diluted headline loss per share (372) (28,3) (6,0)
(cents) - continuing operations
Loss attributable to ordinary (5 621) (3 680)
shareholders (R`000) - discontinuing
operations
(Profit)/loss on disposal of (19) 26
property, plant and equipment
(R`000) - discontinuing operations
Impairment of property, plant and 179 304
equipment (R`000) - discontinuing
operations
Total tax effects on adjustments (45) (92)
(R`000) - discontinuing operations
Headline (loss)/profit (R`000) - (5 506) (3 442)
discontinuing operations
Headline loss per share (cents) - (60) (2,6) (1,6)
discontinuing operations
Diluted headline loss per share (60) (2,6) (1,6)
(cents) - discontinuing operations
Headline loss per share (cents) - (301) (30,9) (7,7)
continuing and discontinuing
operations
Diluted headline loss per share (307) (30,9) (7,6)
(cents) - continuing and
discontinuing operations
CONDENSED GROUP CASH FLOW STATEMENT
for the year ended 30 June 2009
Reviewed Audited
30 June 2009 30 June 2008
R`000 R`000
Cash flow from operating activities 138 591 (167 691)
Cash (utilised)/generated by trading (77 848) 5 213
Working capital changes 230 699 (97 100)
Cash generated/(utilised) by operations 152 851 (91 887)
Net interest paid (2 694) (12 971)
Taxation paid (11 564) (37 384)
Dividends paid and capital distribution (2) (25 449)
Cash flow from investing activities (301) (9 179)
Additions to property, plant and equipment (2 636) (9 831)
Proceeds on disposal of property, plant and 2 335 652
equipment
Cash flow from financing activities (5 524) (1 427)
Net movement in treasury shares 74 (2 384)
(Decrease)/increase in long-term borrowings (5 598) 957
Net increase/(decrease) in cash and cash 132 766 (178 297)
equivalents
Cash (deficit)/surplus beginning of year (17 450) 160 847
Cash surplus/(deficit) at the end of the year 115 316 (17 450)
NOTES TO THE CONDENSED GROUP CASH FLOW STATEMENT
for the year ended 30 June 2009
Reviewed Restated
30 June 2009 30 June 2008
R`000 R`000
Cash flow from operating activities 138 591 (167 691)
- Continuing operations 126 447 (174 770)
- Discontinuing operations 12 144 7 079
Cash flow from investing activities (301) (9 179)
- Continuing operations (3 090) (6 527)
- Discontinuing operations 2 789 (2 652)
Cash flow from financing activities (5 524) (1 427)
- Continuing operations (2 747) (1 893)
- Discontinuing operations (2 777) 466
Cash surplus/(deficit) at the end of the year 115 316 (17 450)
- Continuing operations 124 075 3 465
- Discontinuing operations (8 759) (20 915)
Notes
1. Basis of preparation
The condensed financial statements have been prepared in accordance with:
* IAS 34: Interim Financial Reporting using accounting policies that are in
accordance with IFRS and consistent with those applied in the prior year;
* The requirements of the South African Companies Act, 61 of 1973, as amended;
and
* The Listings Requirements of the JSE Limited.
2. Auditor`s review opinion
These results have been reviewed by independent external auditors Deloitte &
Touche and their unmodified review opinion is available for inspection at the
registered office. Their review was in accordance with ISRE 2410: Review of
Interim Financial Information Performed by the Independent Auditor of the
Entity.
3. Diluted basic and headline loss per share
Diluted basic and headline loss per share is determined by adjusting the
weighted average number of ordinary shares outstanding to assume conversion of
all dilutive ordinary shares. This has an anti-dilutive effect.
4. Related party transactions
The Group entered into various related party transactions. These transactions
are no less favourable than those arranged with third parties.
5. Contingent liability
As disclosed in the Group`s annual report for the year ended 30 June 2008 and
its interim results, SARS issued a letter of intent in February 2007 to levy
customs and excise on a wholly owned subsidiary for R28,3 million. The
subsidiary has raised a formal objection, in line with the professional advice
of its 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 a
material adverse effect on the Group.
6. Assets classified as held for sale
In line with the Group strategy to focus on sales and marketing it was decided
in December 2008 to transfer the assets of Tedelex Manufacturing (Pty) Limited,
Tedelex Properties (Atlantis) (Pty) Limited and the Atlantis TV factory
operation (a division of Tedelex Trading (Pty) Limited) to assets held for sale
in line with the requirements of IFRS 5: Non-current Assets Held for Sale and
Discontinued Operations.
7. Restatement of prior year figures
Comparative information has been reclassified to account for discontinued
operations and assets held for sale as described in note 6 above.
8. 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 IAS 14: Segment Reporting, to be meaningful.
9. Subsequent events
No events material to the understanding of the report have occurred during the
period between 30 June 2009 and the date of this report.
Reviewed consolidated results for the year ended 30 June 2009
Trading environment
The year under review was defined by the economic recession and its impact on
the consumer goods sector. The consumer was forced to "buy down" and the
industry was obliged to transform accordingly. Retailers restrategised their
businesses and cash generation became a prerequisite resulting in pressure being
placed on the distributors.
Commentary
The need to discount the Intellipower power inverter range of products had the
most significant impact on the business. The downturn resulted in reduced demand
on the national electricity grid and power outages ceased. Furthermore, as a
result of the drop in world battery prices due to the fall in commodity prices
of lead and copper and the fact that stock received was not of the required
specification (which is the subject of a claim for refund) the company decided
to discount the product. The loss attributable to this product line amounted to
R65,7 million before tax (2008: Profit before tax R14,4 million).
Fierce competition necessitated that the Group change its model of selling
consumer electronic products to the retail trade. The Group no longer procures
and warehouses product based on market research or demand. Instead orders are
now only placed on a "back to back" basis. This change resulted in substantial
staff retrenchments, stock clearance sales and forex losses.
As part of the Group restructuring all trading has been channeled to one
company. In line with this strategy trademarks and goodwill to the value of R5,8
million (2008: Nil) before tax were fully impaired.
The change of the consumer electronic sales model together with the programme
initiated in the prior year to integrate the back office functions and reduce
fixed overheads has seen the staff complement reduce from 466 employees to 204
employees excluding manufacturing staff.
The impact of the downturn also resulted in short time, layoffs and
retrenchments at the Group`s appliance factory in Pinetown and electronics
factory in Atlantis.
Negotiations with various interested parties were initiated for the sale of the
Tedelex Manufacturing (Pty) Limited, Tedelex Properties (Atlantis) (Pty) Limited
and the Atlantis TV factory operation (a division of Tedelex Trading (Pty)
Limited). These assets are therefore classified as "held for sale" in the
balance sheet.
The Group has also embarked on a programme to outsource the electronics service
operation. This project is underway and has been completed in the first quarter
of the new financial year.
On the positive side, housewares under the Russell Hobbs brand was launched
during May 2009. Feedback from consumers and the retail trade has been good and
all indications are that the introduction of this new product category bodes
well for the future.
Sales in the categories of small domestic appliances and sewing machines
continue to be pleasing. Whilst year on year revenue was slightly lower, gross
profits grew marginally and the brands maintained their respective market
shares.
Financial performance
Income statement (continuing operations)
Changing the method for the sale of consumer electronic goods is primarily
responsible for the 35% reduction in revenue on the prior year. This together
with the discounting of the Intellipower product also had a significant impact
on the Group`s gross margin which declined from 18,3% to 14,7% for the year.
Restructuring costs incurred amounted to R7,8 million (2008: R9,6 million). The
effect of the retrenchments and cost savings will result in lower running costs
into the future.
The total charge to the income statement in respect of IFRS 2: Share Based
Payments, for the year amounted to R1,3 million (2008: R0,9 million).
The fair value adjustment in terms of IAS 39: Financial Instruments: Recognition
and Measurement, amounted to a profit of R0,9 million (2008: Profit of R33,7
million). In the prior year, the Group reported a loss of R2,8 million as the
discontinuing operations had reported a loss of R36,5 million.
Net finance costs reduced from R12,8 million to R2,7 million due to cash
generated from trading.
Balance sheet
Stringent working capital management had a considerable impact on strengthening
the Group`s balance sheet.
Against the challenging trading environment inventory decreased by R210,9
million to R154,3 million (2008: R365,2 million). This was primarily
attributable to the action of changing the method of sale of consumer electronic
products as well as improved management control over the categories of seasonal
small domestic appliances and electrical accessories.
Trade and other receivables decreased by R120,0 million in line with reduced
trade and as a result of emphasis placed on collection of overdues and stricter
control on credit approvals.
Net cash on hand amounted to R124,1 million compared to a net overdraft of R17,5
million as at June 2008.
Cash flow
In spite of the trading conditions the Group was able to generate R230,7 million
(2008: (R97,1 million)) through working capital improvements. Cash generated by
operations amounted to R152,9 million (2008: (R91,9 million))which resulted in a
net increase of R132,8 million (2008: (R178,3 million)) in cash.
Management is confident that the business will continue to generate cash through
inventory control, overhead savings and the benefits of improved product
category selection that has been implemented.
Prospects
Although trading continues to be tough the Group is positive about the future.
Restructuring has resulted in a lower overhead base, positive cash generation
and a virtually ungeared balance sheet.
Significant inroads have been made with new product categories and initial
indications of an export drive into Africa have been encouraging.
The prospect of lower interest rates will have a positive impact on consumer
spending in the categories of goods in which the Group trades.
The 2010 Soccer World Cup is also expected to increase general demand for
consumer durable goods.
In light of the above, the Group expects to improve operational performance in
the new year.
Distribution to shareholders
Due to the Group`s results, the Board has resolved not to declare a dividend.
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
* Dumisani Dumekhaya Tabata was appointed as an independent non-executive
director with effect from 1 July 2009
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.
Acknowledgement
The Board would like to acknowledge and thank management, staff, suppliers,
customers and shareholders for their valued commitment and support during these
difficult times.
For and on behalf of the Board
Leon Campher
Non-Executive Chairman
Alan Coward
Group Chief Executive Officer
Johannesburg
07 September 2009
Directors
*PL Campher (Chairman), AS Coward, MG Crow, *WA du Plessis, S Karele, *SA
Levitt, *SH Muller, DB Oliver, *DD Tabata *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.amap.co.za
Date: 08/09/2009 07:05:02 Produced by the JSE SENS Department.
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