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AMA
AMA
AMA - Amalgamated Appliance Holdings Limited - Unaudited interim results for the
period ended 31 December 2011
Amalgamated Appliance Holdings Limited
Registration number: 1997/004130/06
ISIN: ZAE000012647
Share code: AMA
("AMAP" or "the Group")
Unaudited interim results for the period ended 31 December 2011
Highlights
- Interim distribution increased by 75,0% to 7,0 cents per share
- Revenue increased by 16,6% to R526,1 million
- Operating profit increased by 25,1% to R43,7 million
- Basic earnings per share increased by 131,7% to 29,2 cents per share
- Net cash on hand R204,4 million
Condensed Group statement of comprehensive income
Restated*
Unaudited Unaudited Audited
6 months 6 months 12 months
R`000 Dec 2011 Dec 2010 Jun 2011
Revenue 16,6% 526 137 451 369 826 423
Operating profit 25,1% 43 674 34 905 69 037
Fair value adjustment on
financial instruments 2 179 (4 488) (2 022)
Restructuring costs - operations (1 425) - (1 118)
Net interest received - bank
and cash on hand 6 528 5 506 11 517
Profit before recovery of
losses and taxation 41,8% 50 956 35 923 77 414
Taxation (14 280) (10 809) (20 004)
Profit after taxation before
recovery of losses 46,0% 36 676 25 114 57 410
Profit after taxation before
recovery of losses 36 676 25 114 57 410
Total recovery of losses
after taxation 20 742 - -
Interest received - recovery
of losses 9 448 - -
Recovery of losses on
defective products 19 361 - -
Taxation on recovery of losses (8 067) - -
Total comprehensive income
for the period/year 128,6% 57 418 25 114 57 410
Basic earnings per
share (cents) 131,7% 29,2 12,6 28,9
Diluted basic earnings per
share (cents) 132,0% 29,0 12,5 28,7
Capital distribution per
share (cents) 75,0% 7,0 4,0 12,0
Normalised** earnings per
share (cents) 47,6% 18,6 12,6 28,9
Normalised** diluted basic
earnings per share (cents) 48,0% 18,5 12,5 28,7
* Group comparative figures have been restated to reflect the transfer of assets
from "held for sale" to investment property - see note 4.
** Normalised refers to profit after taxation before recovery of losses.
Normalised earnings per share and normalised diluted earnings per share are
calculated using profit after taxation before recovery on losses on the same
basis as basic and diluted basic earnings per share.
Condensed Group statement of financial position
Unaudited Unaudited Audited
6 months 6 months 12 months
R`000 Dec 2011 Dec 2010 Jun 2011
ASSETS
Non-current assets 41 558 57 299 58 620
Property, plant and equipment 11 118 9 516 8 904
Goodwill/Trademarks 4 645 1 644 1 645
Investment property 11 707 - 11 707
Deferred taxation 14 088 46 139 36 364
Current assets 719 040 586 825 594 604
Inventories 240 094 172 063 137 050
Trade and other receivables 272 564 228 741 197 154
Derivative financial asset 2 008 - -
Taxation prepaid - 10 618 -
Bank and cash on hand 204 374 163 696 260 400
719 040 575 118 594 604
Current assets classified as held for sale - 11 707 -
Total assets 760 598 644 124 653 224
EQUITY AND LIABILITIES
Total equity 537 541 475 392 494 970
Non-current liabilities 2 645 1 444 2 660
Deferred taxation 2 645 1 444 2 660
Current liabilities 220 412 167 288 155 594
Trade and other payables 195 619 121 410 127 817
Bank overdraft 23 - -
Derivative financial liability - 6 733 2 298
Capital distribution and dividends payable 234 139 204
Taxation 83 - 228
Short-term portion of long-term liability - 319 -
Provisions 24 453 26 980 25 047
220 412 155 581 155 594
Liabilities directly associated with assets
classified as held for sale - 11 707 -
Total equity and liabilities 760 598 644 124 653 224
Condensed Group statement of cash flows
Unaudited Unaudited Audited
6 months 6 months 12 months
R`000 Dec 2011 Dec 2010 Jun 2011
Cash flow from operating activities (50 275) (37 333) 67 324
Cash generated by trading 55 182 42 023 74 752
Working capital changes (104 258) (68 913) (5 768)
Cash (utilised)/generated by operations (49 076) (26 890) 68 984
Capital distribution and dividends paid (16 944) (15 942) (23 788)
Net interest received 15 976 5 506 11 517
Taxation (paid)/received (231) (7) 10 611
Cash flow from investing activities (5 774) (3 162) (5 195)
Additions to property, plant and
equipment (6 041) (3 230) (5 540)
Proceeds on disposal of property, plant
and equipment 267 68 345
Cash flow from financing activities - (186) (6 106)
Net movement in treasury shares - 78 (5 623)
Decrease in long-term borrowings - (264) (483)
Net (decrease)/increase in cash and
cash equivalents (56 049) (40 681) 56 023
Cash surplus at the beginning of year 260 400 204 377 204 377
Cash surplus at the end of the
period/year 204 351 163 696 260 400
Condensed Group statement of changes in equity
Unaudited Unaudited Audited
6 months 6 months 12 months
R`000 Dec 2011 Dec 2010 Jun 2011
Balance as at 1 July 494 970 465 135 465 135
Net profit for the period/year 57 418 25 114 57 410
Capital distribution (15 733) (15 925) (23 835)
Net treasury movement - 78 (5 623)
Share-based payment 886 990 1 883
Balance at period/year-end 537 541 475 392 494 970
Supplementary information
Unaudited Unaudited Audited
6 months 6 months 12 months
Dec 2011 Dec 2010 Jun 2011
Shares in issue (000`s) 212 190 212 190 212 190
Shares in issue -
weighted (000`s) 196 661 199 620 198 892
Diluted number of shares
- weighted (000`s) 198 092 200 911 200 252
Net asset value per
share (cents) 253 224 233
Cost of sales (R`000) 372 432 310 640 565 745
Net inventory provision
raised (R`000) 10 968 8 296 13 073
Interest received (R`000) 6 528 (5 711) (11 949)
Interest received on
recovery of losses (R`000) 9 448 - -
Interest paid (R`000) - 205 432
Legal fees (R`000) 1 246 4 282 6 188
Capital expenditure (R`000) 960 3 230 5 540
Capital commitments (R`000) 4 588 1 509 478
Depreciation, amortisation and
impairment charge (R`000) 3 510 2 295 4 489
Operating lease commitments (R`000) 76 775 22 799 83 108
Total comprehensive
income (R`000) 57 418 25 114 57 410
Profit/(loss) on disposal
of property, plant and equipment
(R`000) 46 (64) 387
Total tax effects on
adjustments (R`000) (13) 19 (108)
Headline profit (R`000) 57 451 25 069 57 689
Headline earnings per
share (cents) 131,7% 29,2 12,6 29,0
Diluted headline earnings
per share (cents) 132,0% 29,0 12,5 28,8
Supplementary information
Statement of comprehensive income
Previously
reported Restatement Restated
R`000 Dec 2010 Dec 2010 Dec 2010
Operating profit 34 887 18 34 905
Profit before taxation 35 905 18 35 923
Taxation (10 804) (5) (10 809)
Profit from continuing operations 25 101 13 25 114
Profit from discontinuing operations 13 (13) -
From continuing operations
Basic earnings per share (cents) 12,6 0,0 12,6
Diluted earnings per share (cents) 12,5 0,0 12,5
From discontinuing operations
Basic earnings per share (cents) 0,0 0,0 0,0
Diluted earnings per share (cents) 0,0 0,0 0,0
NOTES
1. Basis of preparation
These condensed financial statements have been prepared in accordance with the
framework concepts and the measurement and recognition requirements of
International Financial Reporting Standards (IFRS) information as required by
IAS 34 - Interim Financial Reporting the AC 500 Standards as issued by the
Accounting Practices Board and the JSE Limited`s Listings Requirements. The
accounting policies and their application are consistent in all material
respects with those detailed in AMAP`s 2011 annual report. All new and revised
standards that became effective during the current period were adopted and did
not lead to any significant changes in accounting policy.
The above information has not been reviewed or reported on by AMAP`s auditors.
This financial information was prepared under the supervision of Bruce Drummond,
CFO (BCom, FCIS).
2. Diluted basic and diluted headline earnings per share
Diluted basic and diluted headline earnings per share are determined by
adjusting the weighted average number of ordinary shares outstanding to assume
conversion of all dilutive ordinary shares.
3. Contingent liability
As disclosed in the Group`s annual report for the year ended 30 June 2007 and
subsequent years, 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 are no other obligations, current or pending,
which are considered to have a material adverse effect on the Group.
4. Assets transferred from "held for sale" to investment property
During the year ended 2009, the Atlantis property was transferred from held for
sale in line with the requirements of IFRS 5 - Non-current assets held for sale
and discontinued operations. However this asset no longer meets the criteria for
classification as held for sale, and has been transferred to investment
property. Only the statement of comprehensive income has been restated.
Commentary on the Group`s interim results for the six months ended 31 December
2011
Trading environment
The volatility of the exchange rate during the six months ended 31 December 2011
has created increased margin pressure and led to an extremely competitive market
in the categories in which we operate. Consumer spending over the festive season
was in line with our expectations.
Operational review
The Board is pleased to announce that the Group has achieved results above
expectations compared to the prior period. Revenue grew by 16,6% and operating
profit increased by 25,1%. Normalised earnings per share grew 47,6% to 18,6
cents per share. Basic earnings per share increased by 131,7% to 29,2 cents per
share after accounting for the recovery of losses received from an arbitration
award.
The arbitration award was handed down in favour of the Group in respect of a
claim by a subsidiary, Tedelex Trading (Proprietary) Limited, against Battery
Technologies (Proprietary) Limited. The claim arose following the cancellation
of orders of batteries supplied to Tedelex Trading (Proprietary) Limited on the
basis that the batteries did not meet specification requirements. The award is
an amount of over R20,7 million after tax which has been separately disclosed in
the statement of comprehensive income under recovery of losses. The award has
been received and banked.
The continued focus on and investment in our trusted brands has resulted in the
growth of market share despite tough trading conditions. Key to the Group`s
growth strategy is the on-going development of intellectual capital, enabling a
comprehensive approach to the Group`s purchasing, logistics, financial,
marketing and sales activities.
As reported in the Annual Integrated Report for June 2011, our strategic
relationships with trade partners continue to grow and strengthen, and the Group
is working with both suppliers and the customers to ensure a consumer orientated
approach to business.
Over the past six months, the new brands which were launched in the previous
year have gained traction and continue to grow their market share. We continue
to bring new categories to market through our strategic relationships with
McPhersons and will launch the Multix brand in the next six months. The
acquisition of the TDK, Case Logic, Memorex, Bell, Xonix agencies and the Sentry
brand in our second quarter complement the Group`s offering. The addition of
these brands, staff integration and synergies resulted in restructuring costs of
R1,4 million. Our strategy of offering brands "good, better, best" continues to
reap reward with all brands achieving good growth.
The Group made a conscious decision to increase inventory leading up to December
2011 due to the early Chinese New Year shut-down and price increases from
suppliers. Inventory was also bolstered by the entry into new product categories
as highlighted above.
Management is driving increased efficiencies, working capital management and
cost reductions through technology initiatives. In line with the Group`s focus
on sustainable business, our carbon footprint was assessed and rated by Global
Carbon Exchange and was found to have improved on prior periods, and is well
within industry acceptable standards.
The Group`s quality improvement programme continues to successfully enforce the
strength of our brands.
Financial performance
Statement of changes in comprehensive income
- Revenue increased by 16,6% to R526,1 million (2010: R451,4 million)
- Operating profit increased by 25,1% to R43,7 million (2010: R34,9 million)
- Total comprehensive income increased by 128,6% to R57,4 million (2010: R25,1
million)
- Normalised earnings per share increased by 47,6% to 18,6 cents per share
(2010: 12,6 cents per share)
- Basic earnings per share increased by 131,7% to 29,2 cents per share (2010:
12,6 cents per share)
- Diluted headline earnings per share increased by 132,0% to 29,0 cents per
share (2010: 12,5 cents per share).
Statement of financial position
- Inventory increased due to early ordering as a result of the early Chinese New
Year, as well as entry into new product categories
- The increase in goodwill/trademarks is as a result of amounts paid for the
acquisition of the media brands
- As discussed in the Annual Integrated Report for June 2011, assets previously
held for sale were reclassified as investment property
- The increase in trade and other payables is in line with the increase in stock
and creditor payment terms
- Bank and cash on hand amounted to R204,4 million (2010: R163,7 million)
- The statement of financial position remains net ungeared, and current assets
exceed current liabilities by a factor of over three times.
Interim distribution to shareholders
Based on the current financial position, the Board has declared an interim
capital distribution of 7,0 cents per share for the six months ended 31 December
2011 (2010: 4,0 cents) out of contributed tax capital.
Shareholders are advised that the last date to trade cum the distribution will
be Friday, 23 March 2012. The shares will commence trade ex the distribution as
from Monday, 26 March 2012 and the record date will be Friday, 30 March 2012.
The payment date is Monday, 2 April 2012.
Share certificates may not be dematerialised or rematerialised between Monday,
26 March 2012 and Friday, 30 March 2012, both dates inclusive.
Changes to the Board and company secretary
Spyros Scafidas was appointed as a non-executive Director on 1 July 2011. Myron
Berzack resigned from the board on 7 September 2011. Leon Campher resigned from
the Board of Directors and as Chairman of the Board on 22 September 2011.
David Cleasby was appointed as Chairman of the Board of Directors and Colin
Scott as Lead Independent Director, both effective 22 September 2011. Bruce
Drummond, the Chief Financial Officer and company secretary, resigned from the
position of company secretary, effective 7 November 2011. Marion Kearns has been
appointed as company secretary with effect from 7 November 2011.
Segmental reporting
The Group predominantly markets and distributes consumer durables from a single
business unit. Information regarding aggregated customer and geographical
information is in line with that disclosed in the Annual Integrated Report for
June 2011 as required in line with the requirements for IFRS 8 - Operating
Segments.
Subsequent events
No events material to the understanding of the report occurred during the period
between 31 December 2011 and the date of this report.
However, as detailed in the SENS dated 28 February 2012, the acquisition of
Sammeg Satellite (Proprietary) Limited, Samsat (Cape) (Proprietary) Limited, and
Samsat (KZN) (Proprietary) Limited became effective 29 February 2012.
Prospects
As a result of the current economic conditions, limited growth in retail sales
in the categories in which we currently trade is expected for the balance of the
financial year in our South African operations. We do however continue to expect
substantial growth into Africa. The Group remains committed to ensuring earnings
enhancement through both organic and acquisitive growth whilst improving return
on equity on a sustainable basis.
For and on behalf of the Board
David Cleasby Alan Coward
Non-executive Chairman Chief Executive Officer
Johannesburg
5 March 2012
Directors
*DE Cleasby (Chairman), AS Coward (CEO), MG Crow, BG Drummond (CFO),
**SH Muller, DB Oliver, **DD Tabata, *S Scafidas, **CKL Scott
(Lead independent)
*Non-executive
**Independent non-executive
Company Secretary
MJ Kearns
Transfer secretaries
Computershare Investor Services
70 Marshall Street, Johannesburg 2001
PO Box 61051, Marshalltown 2107
Registered office
West Block, cnr The Straight and
Witkoppen Road, Pineslopes Office Park
Fourways 2191
PO Box 2207, Fourways 2055
Telephone (011) 267 3300
Sponsor
Bridge Capital Advisors (Pty) Limited
2nd Floor, 27 Fricker Road, Illovo Boulevard, Illovo 2196
www.amap.co.za
Date: 05/03/2012 07:05:10 Produced by the JSE SENS Department.
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