| Fri 26 Oct 2001, 0:00 | | Amalgamated Appliance Holdings Limited - Interim R |
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Isin Code : ZAE000012647
Share Code : AMA
Amalgamated Appliance Holdings Limited
Registration number 1997/004130/06
("AMAP" or "the group")
Interim results for the six months ended 31 August 2001
FINANCIAL highlights
R62 million cash generated
Revenue up 13%
Profit after tax up 44%
Earnings per share up 20%
OPERATIONAL highlights
Over 100% increase in appliance export revenues
Successful launch of new high-tech television range
Market share gains in key local sectors
Abridged group income statement
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
% 31 August 31 August 28 February
Change 2001 2000 2001
6 months R'000 R'000 R'000
Revenue 13 402 590 355 937 719 780
Operating income 5 13 515 12 883 28 587
Net interest expense 4 588 6 844 11 568
Profit before tax 48 8 927 6 039 17 019
Taxation 2 695 1 718 4 923
Profit attributable to ordinary
shareholders 44 6 232 4 321 12 096
Earnings per share (cents) 20 3,1 2,6 6,7
Earnings per share
- diluted (cents) 39 3,1 2,2 6,1
Headline earnings per
share - adjusted (cents) 3,2 4,0 8,0
Headline earnings per share
- weighted diluted (cents) 3,2 3,4 7,3
Abridged group balance sheet
Unaudited Unaudited Audited
31 August 31 August 28 February
2001 2000 2001
R'000 R'000 R'000
Assets
Non-current assets 34 986 33 952 36 456
Trademarks and goodwill 14 263 15 593 14 853
Property, plant and equipment 20 723 18 359 21 603
Loans 6 485 3 507 6 448
Deferred tax 19 354 25 086 22 106
Current assets 409 054 408 511 414 085
Total assets 469 879 471 056 479 095
equity and liabilities
Capital and reserves 205 404 190 834 200 009
Current liabilities 264 475 280 222 279 086
Total equity and liabilities 469 879 471 056 479 095
Abridged group cash flow statement
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 August 31 August 28 February
2001 2000 2001
R'000 R'000 R'000
Cash flow from operating
activities 29 200 (30 619) 12 678
Cash generated by operations 12 350 9 618 24 914
Working capital changes 17 790 (39 240) (11 210)
Cash available from operations 30 140 (29 622) 13 704
Taxation paid (STC) (104) (111) (140)
Cash available from operations 30 036 (29 733) 13 564
Dividends paid (836) (886) (886)
Investing activities (1 998) (2 281) (10 640)
Additions of property, plant
and equipment (2 366) (2 364) (9 372)
Proceeds on disposal of property, plant
and equipment 405 140 1 730
Increase in loans (37) (57) (2 998)
Net increase/(decrease) in cash 27 202 (32 900) 2 038
Cash borrowings at beginning of
period (24 484) (26 522) (26 522)
Cash resources/(borrowings) at end
of period 2 718 (59 422) (24 484)
Supplementary information
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 August 31 August 28 February
2001 2000 2001
Shares in issue (000's) 204 198 169 196 198 696
Shares in issue - weighted (000's) 200 530 166 773 180 379
Diluted number of shares (000's) 204 198 197 296 198 696
Diluted number of shares
- weighted (000's) 200 530 194 873 198 696
Net asset value per share (cents) 101 113 101
Cost of sales (R'000) 322 841 276 741 554 289
Capital expenditure (R'000) 2 366 2 364 9 372
Depreciation charge (R'000) 2 922 2 301 5 448
Headline earnings:
Headline earnings as previously
stated 12 195 14 450
Cost not qualified for
headline earnings
calculation as adopted at year-end 3 773
Change in accounting
policy - deferred tax
as adopted at year-end 1 812
Headline earnings - adjusted 6 395 6 610 14 450
Goodwill amortised 250 - 371
(Profit)/loss on disposal
of property, plant
and equipment (87) 7 (299)
Restructuring expenditure 2 282 2 282
Profit attributable to ordinary
shareholders 6 232 4 321 12 096
Note:
Accounting policies and disclosure requirements
The income statement, balance sheet and changes in equity statement for
August 2000 have been restated to take cognisance of change in presentation
as per AC101.
The accounting policies used in the preparation of the interim profit
announcement are consistent with those applied in the previous period
(February 2001). The interim profit announcement has been prepared in
accordance with the requirements of AC127.
Abridged statement of changes in equity
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 August 31 August 28 February
2001 2000 2001
R'000 R'000 R'000
Balance at beginning of period 200 009 187 399 187 399
Issue of share capital 55 33 328
Share premium 3 083 3 228 32 433
Equity loans (28 100)
Attributable earnings 6 232 4 321 12 096
Dividends settled
- cash election (836) (886) (886)
- capitalisation shares (3 138) (3 261) (3 261)
Balance at end of period 205 405 190 834 200 009
Comments
Overall the group made good progress in its strategy to become a niche
global manufacturer and distributor of small electrical durables and, at the
same time, further strengthened its broader domestic base.
Financial performance
In the six months Amap achieved a 44% increase in profit after tax from R4,3
million to R6,2 million, an increase in earnings per share of 20% to 3,1
cents and a 39% increase in fully diluted earnings per share to 3,1 cents.
Revenue grew by 13% and operating income by 5%. These results were driven by
appreciable organic growth in a market that continued to experience price
deflation in dollar terms. (Comparisons have been made using basic earnings
per share as the headline earnings are not comparable to the prior period as
a result of the new treatment of tax and the restructuring provisions
reported on in 2000).
Operating margins were 3,4%, reflecting continued difficult trading
conditions and the impact of a period of de-stocking and reorganisation
within the manufacturing business. These effects were offset by better
margins in some of the newly launched product lines.
Tight control has been maintained over working capital and the increased
purchasing power of the consolidated business enabled the group to obtain
better trading terms from suppliers. Inventory has been maintained at lower
levels than for the comparable period last year notwithstanding the
increased turnover. Interest rates payable by the group have also been
reduced. The result is that interest paid for the six-month period has
reduced significantly, offsetting the effect of the reduced operating
margin. Amap was in a net ungeared position at the reporting date, having
generated R62 million in cash over the last 12 months.
No income tax was payable due to estimated tax losses in the trading
companies and the taxation charge relates to the utilisation of the group's
estimated tax loss. The group does not expect to reach a tax-paying position
for at least the next year.
The balance sheet demonstrates the group's sound financial position. With
cash in the bank and permanent capital amounting to R205 million or 101
cents per share, Amap is well placed to address the seasonal trading
requirement of the second six months, as well as other opportunities.
Operations
The positive effects of the decisive action by SARS in dealing with illegal
imports, the rapid growth of hard currency revenues through international
activities and gains in market share through new product launches in the
domestic market enabled Amap to weather the domestic economic
underperformance and high levels of global volatility. It is particularly
pleasing to note that the predicted benefits of the integration of the
electronics division have come through convincingly in this period,
especially in cash flow.
The manufacturing divisions succeeded in overcoming several key challenges
in the period, which included de-stocking, staff reductions and difficulties
in commissioning new products, to produce acceptable results. R2,4 million
was invested in new equipment at the factories.
Overall, the group's operations have benefited from the inherent strengths
of Amap's multi-brand strategy and the balance of local manufacture,
importation and export. In more difficult times the group's entry level and
mass market brands attract cash-strapped consumers, while in better times
the group's noble brands provide an outlet for consumer aspirations and
growth. At the same time the local manufacturing operation thrives during
periods of rand weakness whereas the international sourcing operations
provide a constant flow of new products at competitive hard currency prices.
Prospects
In light of the prevailing international turmoil, it would be unwise to make
unequivocal forecasts with commentators mixed in their expectations for the
coming months. The recent dramatic decline of the rand must cloud the
outlook for calendar 2002. However, the group has once again secured a solid
order book for the upcoming seasonal peak in South Africa. This, combined
with exciting new product ranges in both major trading divisions holds
promise for the rest of the year. For manufacturing, there is a strong
forward order book in electronics while the appliance factory has a full
programme for commissioning new products to be launched in the new year. The
international division should sustain its growth as its client base expands.
With the group commanding an outstanding stable of brands, the benefits of
integration now emerging in the results, prospects of ongoing international
growth, and a business model with an inherent agility in dealing with
currency and market fluctuations, Amap is well positioned to continue its
progress in the second half of the financial year. The group also benefits
greatly from the strength and support of its alliance partner, Salton, whose
operations have now expanded into Europe, a key Amap market.
By order of the board
BG Drummond
Secretary
24 October 2001
Directors
J Cohen (Chairman), FR Thompson (Deputy chairman), SG Bernhardt, MC
Berzack*, S Cohen*, S Levitt*, L Dreimann*, MMKatz*, A Nossel, S Scafidas,
WB Rue*
Alternates
S Green*, SA Lewis*, EGW Doornmalen*
*Non-executive
Alpha code: AMA
ISIN number: ZAE 0000 12647
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
