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AER
AER
AER - Amalgamated Electronic Corporation Limited - Unaudited interim results
for the six months ended 30 September 2010
AMALGAMATED ELECTRONIC CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1997/010036/06)
Share code: AER ISIN: ZAE 000070587
("Amecor") or ("the Group")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2010
GROUP CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2010 2009 2010
R`000 R`000 R`000
Revenue 71 093 67 389 139 906
Turnover 69 972 66 106 138 136
Cost of sales (36 121) (33 124) (69 696)
Gross profit 33 851 32 982 68 440
Operating cost excluding (13 159) (12 870) (28 862)
depreciation and amortisation
EBITDA 20 692 20 112 39 578
Depreciation and amortisation (1 177) (1 186) (2 397)
Operating profit 19 515 18 926 37 181
Finance income 718 964 1 396
Finance expenses (525) (1 218) (1 431)
Profit before taxation 19 708 18 672 37 146
Taxation (5 275) (4 695) (10 329)
Profit for the period 14 433 13 977 26 817
Other comprehensive income - - -
Total comprehensive income 14 433 13 977 26 817
for the year
Attributable to:
Ordinary shareholders of 12 106 12 224 23 266
Amecor
Non-controlling interest 2 327 1 753 3 551
Total comprehensive income 14 433 13 977 26 817
for the year
Earnings per share (cents) 16,0 16,2 30,8
Diluted earnings per share 16,0 16,2 30,8
(cents)
GROUP CONDENSED STATEMENT OF FINANCIAL POSITION
Unaudited Audited
30 September 31 March
2010 2010
R`000 R`000
ASSETS
Non-current assets 84 116 79 796
Property, plant and equipment 15 842 13 972
Intangible assets 13 971 11 521
Goodwill 54 034 54 034
Deferred tax asset 269 269
Current assets 86 710 88 540
Inventories 28 088 19 624
Receivables and other current assets 35 180 39 072
Taxation 2 273 2 951
Cash and cash equivalents 21 169 26 893
Total assets 170 826 168 336
EQUITY AND LIABILITIES
Issued capital 72 610 72 610
Retained earnings 53 444 47 576
Non-controlling interest 16 573 15 097
Total equity 142 627 135 283
Non-current liabilities 9 712 9 942
Interest bearing borrowings 6 884 7 114
Deferred tax liabilities 2 828 2 828
Current liabilities 18 487 23 111
Trade and other payables 14 733 18 060
Bank overdraft 1 143 48
Short-term portion of interest bearing 1 794 3 266
borrowings
Taxation 817 1 737
Total equity and liabilities 170 826 168 336
Net asset value per share (cents) 188,8 179,0
Net number of shares in issue (000`s) 75 565 75 565
GROUP CONDENSED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2010 2009 2010
R`000 R`000 R`000
Cash generated from 12 792 17 708 40 984
operations
Net finance (expense)/income 193 (254) (35)
Taxation paid (5 517) (3 480) (8 174)
Dividends paid (7 089) (6 240) (7 714)
Net inflow from operating 379 7 734 25 061
activities
Net outflow from investing (5 496) (3 997) (12 980)
activities
Net outflow from financing (1 702) (666) (1 947)
activities
Net movement in cash balances (6 819) 3 071 10 134
Cash and cash equivalents at 26 845 16 711 16 711
beginning of the year
Cash and cash equivalents at 20 026 19 782 26 845
the end of the period
GROUP CONDENSED STATEMENT OF CHANGES IN EQUITY
Attributable
to ordinary Non-
Issued shareholders controlling Total
capital of Amecor interest equity
R`000 R`000 R`000 R`000
Balance at 1 April 2009 71 904 30 550 13 020 115 474
Issue of shares in 986 - - 986
respect of share option
Treasury shares movement (280) - - (280)
Dividends paid - (6 240) (1 474) (7 714)
Total comprehensive - 23 266 3 551 26 817
income for the period
Total changes 706 17 026 2 077 19 809
Balance at 1 April 2010 72 610 47 576 15 097 135 283
Dividends paid - (6 238) (851) (7 089)
Total comprehensive - 12 106 2 327 14 433
income for the period
Total changes - 5 868 1 476 7 344
Balance at 30 September 72 610 53 444 16 573 142 627
2010
MANAGEMENT COMMENTARY
Amalgamated Electronic Corporation Limited ("Amecor") specialises in:
- the design, development and manufacturing of RF (radio frequency) and GSM
(global system for mobile communication) electronic security systems;
- network data communication;
- power generating; and
- voltage optimising equipment.
The core focus of the Group is to identify and meet the evolving international
demand for radio and GSM communication equipment, electronic security based
products, as well as power generating and voltage optimising equipment for
both local and international markets. Amecor is devoted to keeping abreast of
the latest technological advances, and proudly upholding its philosophy of
Innovation through Technology.
Amecor`s principal products and services include:
- design and manufacture of electronic security based products;
- subscription offering to licensed radio and GSM networks - radio
transmitters linked to our licensed frequencies (annuity income);
- alternative power solutions including generators and UPS (uninterrupted
power supply) systems; and
- power optimisation products, used to stabilise voltage consumption and
reduce unnecessarily high electricity costs.
Amecor also invests in ongoing research and development into new product
offerings, existing upgrades and product procurement.
Financial review
Amecor`s headline earnings achieved for the six months ended 30 September 2010
was 16,0 cents per share (F2010: 16,2 cents). Turnover and profit before tax
for the period under review was reported as:
- R70,0 million (F2010: R66,1 million); and
- R19,7 million (F2010: R18,7 million) respectively.
The analysis of turnover and total comprehensive income on a segmental basis
is detailed herein.
Cash generated from operations was R12,8 million (F2010: R17,8 million) to
total cash and cash equivalents recorded at R20,0 million (F2010: R19,8
million).
Net asset value per share increased to 188,8 cents (F2010: 164,4 cents) and
tangible net asset value per share to 98,8 cents (F2010: 80,3 cents).
Operational review
FSK Electronics ("FSK")
FSK`s turnover increased to R22,9 million (F2010: R21,4 million), contributing
R6,4 million (F2010: R5,2 million) to the Group profits. The increase is
attributed to the development and subsequent introduction of new products,
specifically GSM technology, into the security markets.
Sabre Radio Networks ("Sabre")
Sabre experienced an increase in turnover, from R40,7 million in F2010 to
R47,2 million during this reporting period and profit of R3,8 million (F2010:
R2,9 million), resulting from additional network charges relating to the GSM
product range and networks.
PDS Group
The PDS Group achieved a turnover of R47,2 million (F2010: R40,8 million) and
contributed R2,3 million (F2010: R1,8 million) of profits attributable to
Amecor shareholders. Durapower Manufacturing sales were negatively affected by
the strong Rand, while Gillespie Diesel Services experienced an increase in
demand for large industrial generator sets. Power Development Services posted
a slight increase resulting from sales and service agreements concluded.
Amecor Power Services ("APS")
In F2010 APS contributed R5,6 million to turnover and R2,0 million to profits
from supplying schools, hospitals, etc. with generators. This contract has
however been suspended during this reporting period until future payment
arrangements have been formalised and all existing outstanding debtors
relating hereto have been settled.
Amecor Powerstar
Amecor Powerstar is in the development stage of launching. Introducing a new
concept is not without its challenges, however the product has proven its
capabilities in the U.K. and is currently rolling out in Australia.
The concept behind this technically engineered transformer is to reduce the
incoming voltage supplied to customers by the national power utility Eskom,
thereby in turn optimising the voltage to 220v from higher voltages delivered
and in turn saving money on electricity KWh.
Given the increase in costs that have been awarded to Eskom; the compounded
increase over three years will be 100%. Client savings could be realised by
installing Powerstar units.
It is Amecor Powerstar`s strategy to roll out the products to larger chain
stores; the interest expressed by these companies contacted have been positive
and the outlook looks promising.
Product development
The Group continues to invest in research and development resulting in further
high quality products being launched into local and international markets.
Capital commitment
FSK has committed to ongoing product development costs in the next financial
year and has also committed a further R3,0 million to an additional surface
mount production line.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Significant accounting policies
Amecor is a company domiciled in South Africa. These condensed consolidated
financial statements of Amecor for the six months ended 30 September 2010
comprise the Company and its subsidiaries (together referred to as the
"Group").
These condensed consolidated interim results were authorised for issue by the
board of directors on 3 November 2010.
Basis of preparation
These condensed consolidated results have been prepared in accordance with the
framework concepts and the measurement and recognition requirements of the
International Financial Reporting Standards ("IFRS") and containing
information required by the International Accounting Standards 34 - Interim
Financial Reporting ("IAS 34"), AC 500 standards, the Listings Requirements of
the JSE Limited and in the manner required by the Companies Act. These
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 2010. The estimates and underlying assumptions are 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 financial statements. The comparative figures referred to in the
commentary relate to the prior year equivalent interim period ("F2010").
2. Earnings per share ("EPS")
EPS is based on the Group`s profit for the six months ended 30 September 2010,
divided by the weighted average number of shares in issue during the six month
period.
Unaudited Unaudited Audited
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2010 2009 2010
Earnings:
Profit attributable to equity 12 106 12 224 23 266
holders of Amecor (R`000)
Headline earnings (R`000) 12 106 12 224 23 266
Shares in issue
Weighted average number of 75 565 75 572 75 562
ordinary shares in issue
(000`s)
Earnings per share (cents) 16,0 16,2 30,8
Diluted earnings per share
Diluted earnings per share is
calculated by dividing
earnings attributable to
ordinary equity holders of
the Company by the diluted
average number of ordinary
shares in issue
Diluted weighted average 75 565 75 572 75 562
number of shares in issue
(000`s)
Diluted earnings per share 16,0 16,2 30,8
(cents)
Headline earnings per share
Headline earnings per
ordinary share is calculated
by dividing the net profit
attributable to shareholders
by the weighted average
number of shares in issue
during the year:
Weighted average number of 75 565 75 572 75 562
ordinary shares in issue
(000`s)
Headline earnings per share 16,0 16,2 30,8
(cents)
Diluted headline earnings per
share
Diluted headline earnings per
share is calculated by
dividing headline earnings
attributable to ordinary
equity holders of the Company
by the diluted average number
of ordinary shares in issue
Diluted weighted average 75 565 75 572 75 562
number of shares in issue
(000`s)
Diluted headline earnings per 16,0 16,2 30,8
share (cents)
3. 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 at
30 September 2010.
Unaudited Unaudited Audited
30 September 30 September 31 March
2010 2009 2010
Ordinary share capital and 142 627 124 210 135 283
reserves (R`000)
Total number of shares in 75 565 75 572 75 565
issue (000`s) (net of
treasury shares of 2,4
million, F2010: 2,4 million)
NAV per share (cents) 188,8 164,4 179,0
Ordinary share capital and 142 627 124 210 135 283
reserves (R`000)
Goodwill (54 034) (54 034) (54 034)
Intangible assets (13 971) (9 473) (11 521)
Tangible NAV 74 622 60 703 69 728
Total number of shares in 75 565 75 572 75 565
issue (000`s) (net of
treasury shares of 2,4
million, F2010: 2,4 million)
Tangible NAV per share 98,8 80,3 92,3
(cents)
4. Segmental analysis
The Group`s operating segments and segmental information presented in the
condensed consolidated results for the six months ended 30 September 2010
represents the 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.
Unaudited Unaudited Audited
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2010 2009 2010
R`000 R`000 R`000
Segment turnover
Production and sales 70 041 62 113 125 142
Security and related 22 809 21 358 41 983
production and sales
Supply and maintenance of 47 232 40 755 83 159
alternative power sources
Network and annuity income 6 576 5 588 15 513
Corporate head office and 3 858 11 998 20 912
other
Consolidation adjustments (10 503) (13 593) (23 431)
Total turnover 69 972 66 106 138 136
Comprehensive income
Production and sales 10 785 8 757 16 433
Security and related 6 376 5 239 9 305
production and sales
Supply and maintenance of 4 409 3 518 7 128
alternative power sources
Network and annuity income 3 793 2 899 8 418
Corporate head office and 5 834 9 010 3 039
other
Consolidation adjustments (5 979) (6 689) (1 073)
Total comprehensive income 14 433 13 977 26 817
Income attributable to non-
controlling shareholders
Supply and maintenance of 2 327 1 753 3 551
alternative power sources
Assets
Production and sales 103 053 93 809 100 976
Security and related 56 344 44 530 53 847
production and sales
Supply and maintenance of 46 709 49 279 47 129
alternative power sources
Network and annuity income 24 306 13 394 22 914
Corporate head office and 106 940 107 480 107 050
other
Consolidation adjustments (63 473) (59 026) (62 604)
Total assets 170 826 155 657 168 336
Liabilities
Production and sales (31 467) (30 758) (35 627)
Security and related (17 768) (11 099) (18 947)
production and sales
Supply and maintenance of (13 699) (19 659) (16 680)
alternative power sources
Network and annuity income (410) (416) (352)
Corporate head office and (55 960) (56 363) (55 666)
other
Consolidation adjustments 59 638 56 090 58 592
Total liabilities (28 199) (31 447) (33 053)
Depreciation and amortisation
Production and sales (1 021) (1 039) (2 110)
Security and related (708) (834) (1 482)
production and sales
Supply and maintenance of (313) (205) (628)
alternative power sources
Network and annuity income (51) (73) (121)
Corporate head office and (105) (74) (166)
other
Total depreciation and (1 177) (1 186) (2 397)
amortisation
Net finance income/(expense)
Production and sales 503 (339) 484
Security and related 326 - 136
production and sales
Supply and maintenance of 177 (339) 348
alternative power sources
Network and annuity income 78 303 670
Corporate head office and (388) (218) (1 189)
other
Total finance 193 (254) (35)
income/(expense)
5. Related party transactions
Unaudited Unaudited Audited
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2010 2009 2010
R`000 R`000 R`000
Purchases from fellow 775 7 413 13 750
subsidiary companies
Management fees 3 240 6 180 9 680
Operating lease 309 - 619
6. Subsequent events
No material subsequent events have occurred to date.
7. Dividends
No interim dividend has been declared.
8. Directors
HS Courtney (Non-executive chairman)
DH Alexander (Chief executive officer)
KA Colley (Financial director and company secretary)
M Noge (Non-executive director)
KA Vieira (Operational director)
All of the above directors are South African and are resident in South Africa.
9. Outlook
We remain optimistic that our focused strategy and operational efficiency will
enable us to deliver positive returns for our shareholders.
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
Sandton
2 November 2010
Directors
HS Courtney (Chairman)*
DH Alexander
KA Colley
M Noge*
KA Vieira
(* non-executive)
Auditors
Mazars, 2nd Floor Mazars House, 5 St David`s Place, Parktown, 2193
(PO Box 6697, Johannesburg, 2000)
Transfer Secretaries
Link Market Services (Proprietary) 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 (A division of Sasfin Bank Limited)
29 Scott Street, Waverly 2090
(PO Box 95104, Grant Park, 2051)
Visit us at www.amecor.com
INNOVATION THROUGH TECHNOLOGY
Date: 02/11/2010 16:27:01 Produced by the JSE SENS Department.
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