| Fri 4 May 2001, 0:00 | | Amap - Preliminary Audited Results |
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Amalgamated Appliance Holdings Limited
Registration number 1997/004130/06
("AMAP" or "the group")
Preliminary audited results for the year ended 28 February 2001
Highlights
- Revenue up 26%
- Ongoing operating income up 43%
- Dividends up 20%
Abridged group income statement
Pro forma
12 months 18 months 12 months
ended ended ended
% 28 February 29 February 29 February
Change 2001 2000 2000
12 months R'000 R'000 R'000
Revenue 26% 719 780 699 431 569 776
Operating income
- Ongoing 43% 38 333 31 763 26 766
- Restructed division (6 917) 1 141 1 141
31 416 32 904 27 907
Items not affecting
headline earnings (2 829) - -
- Goodwill (547) - -
- Restructuring costs (2 282) - -
Profit from all
operating activities 28 587 32 904 27 907
Net interest expense 11 568 11 371 8 613
Profit before taxation 17 019 21 533 19 294
Taxation 4 923 6 296 5 654
Profit attributable to ordinary
shareholders 12 096 15 237 13 640
Dividend 3 974 4 286 4 286
8 122 10 951 9 354
Headline earnings (R'000) 7% 14 450 15 125 13 528
Shares in issue ('000) 198 696 165 868 165 869
Shares in issue
- weighted ('000) 180 379 125 043 136 319
Earnings per share (cents) 6,7 12,2 10,0
Headline earnings per
share (cents) 8,0 12,2 10,0
Diluted number of
shares ('000) 198 696 193 969 193 969
Diluted number of
share - weighted ('000) 198 696 137 532 137 532
Headline earnings per
share diluted
- weighted (cents) 7,3 11,0 9,8
Abridged group balance sheet
28 February 29 February
2001 2000
R'000 R'000
Equity and liabilities
Permanent capital 200 009 187 399
Shareholders' funds 200 009 159 299
Equity loan - 28 100
Current liabilities 154 173 162 724
Interest-bearing loans - short-term 24 484 26 522
Other payables 129 689 136 202
Total equity and liabilities 354 182 350 123
Assets
Non-current assets 39 351 35 309
Property, plant and equipment 21 601 19 110
Trade marks and goodwill 17 750 16 199
Loan to share incentive trust 3 551 3 450
Deferred taxation 22 106 26 932
Current assets 289 174 284 432
Stock 150 828 124 756
Accounts receivable 138 346 159 676
Total assets 354 182 350 123
Abridged group cash flow statement
12 months 18 months
ended ended
28 February 29 February
2001 2000
R'000 R'000
Cash flow from operating activities 9 218 (51 523)
Cash generated by operations 24 688 29 601
Working capital changes (11 208) (78 921)
Cash available from operations 13 480 (49 320)
Taxation paid (STC) (115) (71)
Cash available from operations 13 365 (49 391)
Dividends paid (4 147) (2 132)
Investing activities (11 841) (60 660)
Investment in new businesses - (56 500)
Increase in loan to share incentive trust (101) (1 750)
Additions of property, plant and equipment (9 370) (2 655)
Goodwill (1 400) -
Proceeds on disposal of property, plant
and equipment 1 927 245
Increase in investments (2 897) -
Financing activities 4 661 86 732
Repayment of long-term borrowings - (2 982)
Decrease in equity loan (28 100) 9 760
Proceeds from issue of shares 32 761 79 954
Net increase in cash 2 038 (25 451)
Cash resources/(borrowings) at beginning
of period (26 522) (1 071)
Cash borrowings at end of period (24 484 ) (26 522)
Abridged statement of changes in equity
12 months 18 months
ended ended
28 February 29 February
2001 2000
R'000 R'000
Balance at start of period - restated 187 399 84 580
Issue of share capital 328 692
Share premium 32 433 79 262
Movement on equity loans (28 100) 9 760
Attributable earnings 12 096 15 237
Dividends paid (4 147) (2 132)
Balance at end of period 200 009 187 399
Comments
Financial
The group's target markets in household electrical durables ("HED") experienced
a difficult year. Against this background AMAP achieved strong growth, with
turnover increasing by 26% to R719,8 million and ongoing operating income by
43% to R38,3 million. These comparisons reflect a combination of acquisitive
and organic growth and are made against the group's pro forma results for the
previous period as the actual figures are for 18 months.
As a result of the final restructuring and closure costs flowing from our
acquisitions of Tedelex, Santronics and Empisal, headline earnings increased by
7% to R14,5 million. The new shares issued pursuant to the acquisitions of
last year increased the weighted average number of shares by 32% and headline
earnings per share is reported at 8,0 cents (10,0 cents). The impact of the
restructured divisions' results was to reduce headline earnings per share by
2,7 cents.
These results were achieved in a year when the South African economy and the
HED market in particular were not able to sustain the buoyant trading
conditions of the last quarter of 1999. This period proved to be a false dawn
and such factors as illegal imports, currency weakness, unemployment,
Aids-related mortality and changing patterns in consumer spending appear to
have had a negative effect on the HED market. However, as reported previously,
the group has developed a stable and diverse operating platform with
considerable resilience. This enabled AMAP to grow the business through
development into new markets, the introduction of new product lines and
activities, a continuing programme of product cost reduction and further
optimisation and integration of operations.
The balance sheet and cash flow statements reflect the group's underlying
financial strength and the success of the continuing effort to improve capital
efficiency. In August AMAP reported an overstock position which had affected
working capital and thus the interest charge. It is pleasing to note that this
was rectified during the last six months and inventory and group borrowings
have each declined by approximately R30 million since the interim date. The
combination of a conservative forward cover policy and hard currency revenue
has enabled AMAP to manage its forex exposure cost effectively and securely.
The accounting policy relating to deferred tax has been changed to meet the
requirements of the new accounting standard AC102. In terms thereof, the group
has raised a prior year adjustment creating a deferred tax asset in respect of
its temporary differences which includes its assessed losses. The tax expense
reflected in the income statement represents the utilisation of this deferred
tax asset. The comparative figures have also been adjusted to reflect the new
accounting policy.
Operations
As indicated a year ago, the process of integration has continued and
intensified. The restructuring costs have been reflected separately in the
income statement. The electronics division has been unified under single
management and the operations streamlined where appropriate. All of the group's
small appliance activities have been consolidated into the appliance division
which has resulted in cost savings in distribution and service. The expiry of
leases will enable the group to consolidate its Gauteng facilities into a
single site early in the new year and further progress in the streamlining of
group operations is expected.
The electronics division again performed strongly in both sales and
profitability. The division succeeded in sustaining the rapid growth of its
Pioneer and Sansui distributorships and has concluded new arrangements with
overseas principals for the distribution of Sansui, Akai and Nakamichi. The
television market remained very tough throughout the year, particularly as a
result of low cost Chinese entrants which have placed margins under pressure.
While this did have an impact on both profitability and stockholding, the
strength of the group and its manufacturing market share have enabled it to
manage the situation.
The appliance division had reported record Christmas order books which were
duly translated into continued volume growth. This was achieved through the
introduction of 40 new product lines and the continued success of the group's
locally manufactured lines. During the year, Delonghi terminated its
arrangements with AMAP pursuant to its broad international strategy. This is
not expected to have any material impact on the group. Pace Grandom was able to
generate good growth in the latter part of the year through the introduction of
several innovative specialist product lines and the strength of its core
business.
The manufacturing division was adversely affected by the weakness of the rand.
However, the division was able to address market pressures on price through its
focused efforts to reduce product costs and inventory. The manufacturing
division alone has reduced inventory by some 30% over the year.
International
The group's international activities have made strong progress. A promising
venture has been created in Australia which has been awarded the Sansui
distributorship for that country and enabled the group to strengthen existing
ties with Mistral. Cordon Bleu(r) and Blue Ribbon(r) are respected brands in
the European market. These brands have been acquired and launched in Europe and
the UK. This has already had a positive impact on the group's results and
further progress is expected.
The export division increased its turnover by over 60% compared to last year
and the electronics division also achieved major growth in full container load
exports to hard currency destinations. Exports now comprise approximately 30%
of appliance manufacture and as a result the appliance factory is essentially
forex neutral. The international division has grown to the point where it not
only contributes to underlying performance but also represents a sound hedge
against the vagaries of the domestic market and currency.
Salton
The group's relationship with Salton grows from strength to strength with
Salton's decision to acquire a further 24 million shares at 125 cents which was
announced on 31 January 2001. Operationally, AMAP launched the George Foreman
range in South Africa on television for Christmas. Subsequently, George Foreman
visited South Africa at the time of the Lennox Lewis/Rahman bout and AMAP was
able to host an exciting press conference and cooking demonstration which
contributed strongly to brand awareness. The group also launched several other
new Salton products in South Africa and Europe during the first quarter of this
year. We have continued to work closely with Salton in engineering and
procurement in the East.
Dematerialisation: STRATE
In terms of the Johannesburg Securities Exchange South Africa requirement, the
company's shares have been dematerialised.
Dividend
AMAP has resolved to continue the policy of a single annual dividend after the
end of each financial year. The directors have proposed to issue capitalisation
shares to ordinary shareholders registered as such on Friday, 25 May 2001 (the
last day to register) provided that any shareholder shall be entitled to
decline all or part of the capitalisation share award and elect instead to
receive a cash dividend of 2,0 cents per share. Tedelex Limited and Salton USA
have advised the company of their intention to accept the capitalisation share
issue.
Documentation dealing with the capitalisation share issue and the cash
alternative will be posted to ordinary shareholders on or about 22 June 2001.
Annual report
The annual report and financial statements for the year ended 28 February 2001
will be posted to shareholders at the end of May 2001.
Prospects
In the budget speech on 21 March 2001, the Minister of Finance was able to
point, with justifiable confidence, to the success of fiscal policy and other
factors in building the underlying economy. Against this background, the
performance of our markets in the last 12 months has been disappointing. The
directors are cautiously optimistic that the sound economic fundamentals will
prevail in the year ahead to create an environment in which the group's
operations can flourish. Furthermore, the strength of AMAP's brands, the new
distributorships and products which have been secured and the beneficial
effects of product cost reductions and integration are expected to drive
domestic performance anyway. Internationally, the group expects to build on the
achievements of the last year with the weaker rand and the implementation of
new projects generating further strong growth. Overall, the directors are
confident of achieving growth in earnings of 20%.
By order of the board
BG Drummond
Secretary
4 May 2001
Directors
J Cohen (Chairman)
FR Thompson (Deputy chairman)
SG Bernhardt
MC Berzack*
S Cohen*
ML Davis*
L Dreimann*
MMKatz*
A Nossel
S Scafidas
WB Rue*
Alternates
S Green*
SA Lewis*
EGW Doornmalen*
*Non-executive
Transfer secretaries
Mercantile Registrars Limited
8th Floor, 11 Diagonal Street, Johannesburg 2001
PO Box 1053, Johannesburg 2000
Telephone (011) 370-5000
Registered office
29 Heronmere Road, Reuven 2091
PO Box 39186, Booysens 2016
Telephone: (011) 490-9000
www.amap.co.za
