| Tue 15 Apr 2003, 13:59 | | Results for the year ended 28 Feb 03 |
|
Amalgamated Appliance Holdings Limited -
Amalgamated Appliance Holdings Limited
Registration number 1997/004130/06
("AMAP" or "the group")
ISIN number: ZAE000012647
Share code number: AMA
Reviewed annual results for the year ended 28 February 2003
Strong growth through proven product marketing
Profit after tax 76%
Headline earnings per share 71%
Revenue increase 28%
Net cash on hand R108 m
Abridged group income statement
Change 2003 2002
% R"000 R"000
Revenue 28 1 100 777 862 338
Operating profit 56 51 675 33 025
Net interest paid (5 613) (5 907)
Profit before tax 70 46 062 27 118
Taxation 14 250 9 002
Profit attributable to
ordinary shareholders 76 31 812 18 116
Dividend proposed 7 775 5 105
Basic earnings per share
- weighted (cents) 71 15,4 9,0
Earnings per share diluted
- weighted (cents) 75 15,4 8,8
Headline earnings per share
- weighted (cents) 71 15,6 9,1
Diluted headline earnings
per share
- weighted (cents) 75 15,6 8,9
Dividend per share (cents) 3,75 2,5
Abridged group balance sheet
2003 2002
R"000 R"000
ASSETS
Non-current assets
Property, plant and equipment 29 812 21 207
Trademarks and goodwill 12 278 13 432
Loans 30 837 29 230
Deferred tax 6 132 13 167
Current assets 491 884 403 697
Inventory 208 788 155 249
Trade and other receivables 167 245 155 764
Bank and cash on hand 115 851 92 684
Total assets 570 943 480 733
EQUITY AND LIABILITIES
Capital and reserves 244 526 215 161
Long-term borrowings 4 560 816
Current liabilities 321 857 264 756
Trade and other payables 314 398 240 031
Bank overdraft and short-term borrowings 7 459 24 725
Total equity and liabilities 570 943 480 733
Abridged group cash flow statement
2003 2002
R"000 R"000
Cash flows from operating activities 56 912 102 008
Cash generated by operations 55 451 34 137
Working capital changes 4 303 68 813
Cash available from operations 59 754 102 950
Taxation paid (393) (105)
Cash available from operations 59 361 102 845
Dividends paid (2 449) (837)
Cash flows from investing activities (20 806) (10 143)
Additions to property, plant and
equipment (16 868) (7 902)
Proceeds on disposal of property,
plant and equipment 316 1 067
Acquisition of subsidiary (81) -
Increase in loans (4 173) (3 308)
Cash flow from financing activities 4 327 578
Increase in long-term borrowings 4 327 578
Net increase in cash 40 433 92 443
Cash surplus/(borrowings) beginning
of year 67 959 (24 484)
Cash resources end of year 108 392 67 959
Statement of changes in equity
2003 2002
R"000 R"000
Balance at the beginning of the year as
previously stated 217 428 200 009
Adjustment to prior year (2 267) (2 127)
Restated balance at the beginning
of the year 215 161 197 882
Issue of share capital 30 55
Share premium 2 626 3 082
Attributable earnings 31 812 18 116
Dividends settled:
- cash election (2 449) (837)
- capitalisation shares (2 656) (3 137)
Balance at end of the year 244 524 215 161
Group supplementary information
2003 2002
Shares in issue (000"s) 207 340 204 198
Shares in issue - weighted (000"s) 206 292 202 364
Diluted number of shares (000"s) 207 340 204 198
Diluted number of shares -
weighted (000"s) 206 292 204 943
Net asset value per share (cents) 118 105
Cost of sales (R"000) 879 708 697 988
Interest received (R"000) 4 664 3 722
Interest paid (R"000) (10 277) (9 629)
Capital expenditure incurred(R"000) 16 868 7 902
Capital expenditure not yet
contracted (R"000) 358 5 435
Depreciation and amortisation
charge (R"000) 9 141 6 860
Financial/Operating lease
commitments (R"000) 38 427 34 982
Headline earnings 32 241 18 349
Goodwill amortised 468 469
Profit on disposal of property,
plant and equipment (39) (236)
Profit attributable to ordinary
shareholders 31 812 18 116
Accounting policies
Change in accounting policies:
During the year the Group changed it accounting policy relating to the
depreciation of property in line with AC 135 Investment Property. Property is
now depreciated. The effects on opening retained income and current year net
income are summarised as follows (the change has no impact on taxation):
2003 2002 Prior periods
R"000 R"000 R"000
Decrease in retained earnings (148) (140) (2 127)
The accounting policies used in the preparation of the results are consistent
with those applied in the prior year, except for property depreciation, and are
in accordance with the South African Statements of Generally Accepted Accounting
Practice. Comparatives have been restated where appropriate.
Related party transactions
The company entered into various related party transactions. These transactions
are no less favourable than those arranged with third parties.
Loans
The directors have reviewed the securities held, and have satisfied themselves
that the loans are fully recoverable.
Subsequent events
No events material to the understanding of the report have occurred in the
period between the year end date and the date of this report.
Overview
The robust growth achieved in the first half of the year extended into the
second six month period, with the pattern of improved market penetration even
more pronounced during this period. A number of highlights were recorded for the
year:
- Sales volumes increased by 28% from R862 million to R1101 million.
- Profit before tax rose by 70% from R27 million to R46 million.
- Profit attributable to ordinary shareholders was up by 76% from R18 million to
R32 million.
- Headline earnings per share rose by 71% from 9,1 cents to 15,6 cents.
- The Group was in a substantially net ungeared position at year end, with net
cash on hand of R108 million.
- The dividend for the year increased by 50% to 3,75 cents.
Economic Environment
Economic activity in 2002 suffered in the shadow of high inflation, four
interest rate hikes, a continued lack of job opportunities and a volatile and
unpredictable rand. In spite of these challenges and aggressive tightening of
monetary policy, retail sales of durable consumer goods remained relatively
resilient for most of the year.
Operations, Financial and Strategy
Both the Appliance and Electronics divisions performed extremely well. Little
growth was attained in the export division for the full year because of the
sudden and remarkable turnaround in the fortunes of the rand during the last
quarter. Although the current level of the rand/dollar exchange rate is not
favourable for exports, the Group has succeeded in maintaining its connections
and an important international contract was recently concluded in the face of
stiff worldwide competition.
The Group"s multi-brand strategy, targeting as it has all market segments, has
cemented its competitive advantage and the close interactions established with
its customers and suppliers alike continue to yield positive results.
The balance sheet has strengthened further and although stocks have been
increased to cater for increasing demand, cash was generated during the year and
AMAP was in a substantially net ungeared position at the financial year-end with
cash on hand of R108 million. In the event, interest cover increased from
5,6 to 9,2 times. This improved result was attained through tight working
capital management.
The Board
The non-executive directors continue to play an important role in the strategic
direction of the Group, as well as provide valuable operational guidance and
advice, which is always appreciated.
Staff
It is also opportune to thank management and staff whose selfless efforts and
boundless enthusiasm have largely contributed to the year"s successful results.
Corporate Governance
The Group at all levels subscribes to the spirit of good corporate governance as
set out in both the King Report and the JSE Listings Requirements, and accepts
the need to conduct the enterprise with integrity, transparency and equal
opportunity.
Segmental Reporting
The Group predominantly markets and distributes Household Electrical Durables
(HED), and therefore the disclosure of segmental information in terms of AC115
would not be meaningful. Nevertheless the Group reports comprehensively on its
performance without divulging information that could jeopardise its competitive
advantage.
Dividend
AMAP has resolved to continue the policy of a single annual dividend paid after
the end of each financial year. The directors have proposed to issue
capitalisation shares to ordinary shareholders, 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 3,75 cents per share which
represents a dividend cover ratio of 4,1 times. Salton, the largest shareholder,
has advised of its intention to accept the capitalisation issue. Announcements
and documentation dealing with the capitalisation issue and the cash alternative
will be published in due course.
Salton Offer
Salton announced on Wednesday, 12 February 2003, its firm intention to make an
offer to the AMAP minority shareholders, to acquire up to a further 21,2% of
AMAP"s issued share capital which, if all the AMAP minority shareholders accept
the offer, is equivalent to 30,6% of the shares held by each AMAP minority
shareholder. The offer is at a cash consideration of 125 cents per AMAP share,
subject to the fulfilment of the conditions precedent to the offer. The last day
for AMAP minority shareholders to trade in AMAP shares on the JSE to be eligible
to participate in the offer is Wednesday, 23 April 2003 with the closing date
offer being Friday, 2 May 2003.
Views of the Board
The Board recommends acceptance of the offer which, in its opinion, is in the
best interests of the minority shareholders, since they have an opportunity to
sell a minimum of 30,6% of their AMAP shares at a substantial premium to current
market price and still participate meaningfully in the future growth of the
Group. There is, however, no obligation for them to sell any of their shares.
Social Responsibility and Manpower
The Group is committed to good labour relations, having created an environment
where all employees have the opportunity to develop to their full potential. Our
association with, and sponsorship of, the CIDA City Campus is ongoing with
gratifying results.
Review by Independent Auditors
The financial information has been reviewed by Deloitte & Touche whose
unqualified review report is available for inspection at the company"s
registered office.
Annual Report
The annual report and financial statements for the year ended 28 February 2003
will be posted to shareholders by the end of May.
Outlook
The Bureau of Economic Research has forecast that real household consumption
expenditure will slow slightly during the first half of calendar 2003 (year on
year). Furthermore should the rand stabilise at current levels, product price
deflation would mitigate against substantial revenue growth.
However, reducing inflation and a significant drop in interest rates in the
second half of the year could see spending pick up to above the expected 3%
economic growth level and the Group is well positioned to respond to this
opportunity with aggressive marketing plans and the introduction of
competitively priced new product ranges. Management is optimistic that further
growth will be achieved in the year ahead.
For and on behalf of the Board
J Cohen
Chairman
B G Drummond
Company secretary
15 April 2003
Amalgamated appliance holdings limited
Directors
J Cohen (Chairman) L Dreimann* (Deputy Chairman) S G Bernhardt M C Berzack* S
Cohen* JM Kahn* J P Kieser* SALevitt* A Nossel W B Rue* S Scafidas
Alternates
S Green* EGW Jansen van den Doornmalen*
*Non-executive
Transfer Secretaries
Computershare Investor Services
70 Marshall Street Johannesburg 2001
PO Box 61051 Marshalltown 2107
Telephone (011) 370-5000
Registered office
29 Heronmere Road Reuven 2091
PO Box 39186 Booysens 2016
Telephone (011) 490-9000
www.amap.co.za
Sponsor
Bridge Capital Services Pty Limited
Telephone (011) 802 5271
