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Amalgamated Appliance Holdings Limited - Reviewed Interim Results for the 12
months ended 29 February 2004
AMALGAMATED APPLIANCE HOLDINGS LIMITED
Registration number 1997/004130/06
("AMAP" or "the Group")
ISIN: ZAE000012647
Share code: AMA
Reviewed Interim Results for the 12 months ended 29 February 2004
- Profit attributable to ordinary shareholders 121%
- Headline earnings per share 115%
- Revenue 29%
- Net cash on hand R201 m
Abridged Group Income Statement
for the period ended 29 February 2004
Reviewed Audited (*)
12 months 12 months
29 Feb 28 Feb
2004 2003
Change R"000 R"000
Revenue 29% 1 422 479 1 100 777
Operating profit 107% 106 970 51 675
Net interest paid (23%) (4 315) (5 613)
Profit before tax 123% 102 655 46 062
Taxation (32 251) (14 250)
Profit attributable to ordinary
shareholders 121% 70 404 31 812
Basic earnings per share - (cents) 117% 34,7 16,0
Headline earnings per
share - (cents) 115% 34,8 16,2
Diluted basic earnings per
share - (cents) 113% 33,9 15,9
Diluted headline earnings
per share - (cents) 112% 34,1 16,1
Dividend per share - (cents) - 3,75
Abridged Group Balance Sheet
as at 29 February 2004
Reviewed Audited (*)
29 Feb 28 Feb
2004 2003
R"000 R"000
ASSETS
Non-current assets
Property, plant and equipment 27 475 29 812
Goodwill 1 328 1 796
Trademarks 9 799 10 482
Other financial assets 26 823 26 561
Deferred tax 7 399 6 132
Current assets 634 888 491 884
Inventory 255 895 208 788
Trade and other receivables 178 365 167 245
Bank and cash on hand 200 628 115 851
Total assets 707 712 566 667
EQUITY AND LIABILITIES
Capital and reserves 302 089 240 248
Long-term borrowings - interest bearing 3 967 4 560
Current liabilities 401 656 321 859
Non-interest bearing:
Trade and other payables 383 355 313 817
Derivative financial liability 17 695 -
Interest bearing:
Bank overdraft - 7 459
Short-term portion of long-term liability 606 583
Total equity and liabilities 707 712 566 667
* Prior year comparatives have been restated, refer to note.
Abridged Group Cash Flow Statement
for the period ended 29 February 2004
Reviewed Audited
12 months 12 months
29 Feb 28 Feb
2004 2003
R"000 R"000
Cash flow from operating activities 98 995 57 611
Cash generated by trading 112 761 61 496
Working capital changes 159 4 570
Cash generated by operations 112 920 66 066
Net interest paid (6 636) (5 613)
Taxation paid (4 774) (393)
Dividends paid (2 515) (2 449)
Cash flow from investing activities (5 322) (21 210)
Additions to property, plant and equipment (7 626) (16 868)
Proceeds on disposal of property, plant
and equipment 380 313
Acquisition of subsidiary - (81)
Decrease/(increase) in other
financial assets 1 924 (4 574)
Cash flow from financing activities (1 437) 4 032
Net movement in treasury shares (844) -
(Decrease)/increase in long-term
borrowings (593) 4 032
Net increase in cash and cash equivalents 92 236 40 433
Cash and cash equivalent at the
beginning of the period 108 392 67 959
Cash and cash equivalents
at the end of the period 200 628 108 392
Statement of Changes in Equity
for the period ended 29 February 2004
Treasury Fair value
Share Share shares adjustment
capital premium trust reserves
R"000 R"000 R"000 R"000
Balance at 1 March 2002
as previously stated 2 042 154 905 - -
Consolidation of share
incentive trust - - (5 977) -
Balance at 1 March 2002
restated 2 042 154 905 (5 977) -
Net profit for the period - - - -
Dividends
- Less treasury shares - - - -
Dividend settled - - - -
cash election - - - -
Issue of share capital 32 2 624 (104) -
2 074 157 529 (6 081) -
AC133 opening balance
adjustment - - - 1 397
Restated balance at
1 March 2003 2 074 157 529 (6 081) 1 397
Net profit for the period - - - -
Dividend settled -
cash election - - - -
Issue of share capital 48 5 212 (326) -
Net treasury movement - - (844) -
Fair value movement - - - 909
Balance at 29 February 2004 2 122 162 741 (7 251) 2 306
Statement of Changes in Equity (continued)
for the period ended 29 February 2004
Share
Accumu- holders
lated for
profits dividends Total
R"000 R"000 R"000
Balance at 1 March 2002
as previously stated 53 109 5 105 215 161
Consolidation of share
incentive trust prior year 1 805 (104) (4 276)
Balance at 1 March 2002 restated 54 914 5 001 210 885
Net profit for the year 31 812 - 31 812
Dividends (7775) 7775 -
- Less treasury shares 326 (326) -
Dividend settled - cash election - (2 449) (2 449)
Issue of share capital - (2 552) -
79 277 7449 240 248
AC133 opening balance adjustment (7 510) - (6 113)
Restated balance at 1 March 2003 71 767 - 234 135
Net profit for the year 70 404 - 70 404
Dividend settled - cash election - (2 515) (2 515)
Issue of share capital - (4 934) -
Net treasury movement - - (844)
Fair value movement - - 909
Balance at 29 February 2004 142 171 - 302 089
Supplementary Information
Reviewed Audited
12 months 12 months
29 Feb 28 Feb
Change 2004 2003
Shares in issue (000"s) 212 190 207 340
Shares in issue - weighted (000"s) 203 131 198 787
Diluted number of shares -
weighted (000"s) 207 547 200 344
Net asset value per share (cents) 142 116
Cost of sales (R"000) 1 113 169 907 736
Interest received (R"000) 6 921 4 664
Interest paid (R"000) (11 236) (10 277)
Capital expenditure (R"000) 7 626 16 868
Capital commitments (R"000) 7 408 358
Depreciation and amortisation
charge (R"000) 10 901 9 143
Finance and operating lease
commitments (R"000) 32 706 38 427
Headline earnings (R"000) 119% 70 756 32 241
Goodwill amortised (R" 000) 468 468
Profit on disposal of property,
plant and equipment (net of tax) (R" 000) (116) (39)
Profit attributable to ordinary
Shareholders (R" 000) 121% 70 404 31 812
Accounting Policies
The accounting policies used in the preparation of the second interim results
announcement are consistent with those applied in the previous period other than
the changes reflected below. The results have been prepared in accordance with
South African Statements of Generally Accepted Accounting Practice"s AC127:
Interim financial reporting. During the year the Group changed its accounting
policy by adopting AC133: Financial Instruments: Recognition and Measurement.
AC133 has introduced a comprehensive framework for accounting for all financial
instruments. The principle effect of the adoption of the standard, has been the
recognition of derivative financial instruments on balance sheet at fair value
which is effective for the Group from 1March 2003. In terms of the statement
comparative years have not been restated, however, the closing balances of
financial instruments from the previous year have been revalued and processed
against opening retained earnings.
The Group, in the past, adopted a policy of hedging purchase transactions but,
the qualifying criteria for hedging in respect of AC133, now adopted, precludes
the Group from applying hedge accounting to transactions entered into after 1
March 2003. The impact of this is that gains or losses on derivative financial
instruments cannot be capitalised into the purchased asset. The transitional
provisions state that previously designated hedges that do not meet the
conditions for an effective hedge, should not be changed retrospectively, and
no changes have thus been made to the opening retained earnings in this regard.
Financial assets classified as available for sale are adjusted directly to
equity and thus had no impact on retained earnings.
The effects on opening retained earnings and current year net profit are
summarised as follows:
Gross Taxation Net
R"000 R"000 R"000
Opening retained earnings
(net decrease)
Fair value of unmatched derivative
Instruments (10 730) 3 220 (7 510)
Current period profit
(net increase)
Movement in derivative
instruments 3 841 (1 152) 2 689
Fair value adjustments to
financial assets (included in
interest received) 2 321 (696) 1 625
6 162 (1 848) 4 314
The effect on the balance sheet due to the adoption of AC133 and related
adjustments to the comparative balance sheet not reflected in retained earnings
can be summarised as follows:
Other financial Deferred Reserves
assets taxation
R"000 R"000 R"000
Fair value adjustments to
opening balances on
available for sale assets 1 644 (247) 1 397
Current period fair value
adjustments on available
for sale assets 1 069 (160) 909
2 713 (407) 2 306
Restatement of comparatives
A recent ruling given by the GAAP Monitoring Panel has provided more clarity
regarding the consolidation of share incentive scheme trusts.
Consequently the Group has changed its accounting policy in respect of its share
incentive scheme trust ("share trust"). The share trust is now consolidated to
the extent that the Group issued share capital is under the control of the
Group. These shares are shown as treasury shares. The prior year comparatives,
have been restated as follows: (losses and profits in dealings on these shares
are directly reflected under treasury shares.)
As previously Adjustment Restated
R"000 stated
Balance sheet
Other financial assets
(Share incentive scheme
loan receivable) 30 837 (4 276) 26 561
Treasury shares - 6 081 6 081
Accumulated profits
(opening) 77 146 2 131 79 277
Shareholders for dividend 7 775 (326) 7 449
There was no effect on the
income statement in either
year.
Number of shares
Shares in issue-weighted
("000) 206 292 (7 505) 198 787
Diluted number of shares -
weighted ("000) 206 292 (5 948) 200 344
Earnings per share
Basic earnings per
share (cents) 15,4 0,6 16,0
Diluted basic earnings
per share (cents) 15,4 0,5 15,9
Headline earnings per
share (cents) 15,6 0,6 16,2
Diluted headline earnings
per share (cents) 15,6 0,5 16,1
Net asset value per
share (cents) 117,9 (2,0) 115,9
Movement in share incentive scheme trust
The movement in the shares in the share incentive scheme trust for the period
under review can be summarised as follows:
29 Feb 28 Feb
2004 2003
"000 "000
Opening balance 8 680 4 173
Purchases 1 596 4 436
Shares exercised (774) -
Capitalisation award 234 71
Salton Inc. minority offer (2 656) -
Closing balance 7 080 8 680
Related party transactions
The company entered into various related party transactions. These transactions
are no less favourable than those arranged with third parties.
Subsequent events
No events material to the understanding of the report have occurred in the
period between the interim date and the date of this report.
Major shareholder
During this 12-month trading period Salton increased their shareholding to 52%.
Accordingly the Group changed its year-end to 30 June to be in line with that of
the holding company.
Review by independent auditors
The financial information has been reviewed, but not audited by Deloitte &
Touche whose unqualified review report is available for inspection at the
company"s registered office.
Cautionary announcement
The cautionary announcement issued with the trading update on 1 March 2004 is
hereby lifted.
Comments
Industry
The market buoyancy experienced during the first half continued unabated and,
along with solid competitive performance, led to a significant revenue increase
for the 12 months ended 29 February 2004. This was achieved despite a
substantial currency-driven decline in prices of consumer electronics and
appliances. Demand for home entertainment products reached new highs and a
change in mix, coupled with improved factory productivity, resulted in higher
margins for the period under review.
Financial performance
Revenue rose by 29% to R1422,5million with operating profits up by 107% to
R107,0million. Stringent efforts to contain operating costs, combined with
strong treasury control, boosted profit after tax and interest by 121% from
R31,8million to R70,4million, with cash on hand almost doubling to R200,7M,
leaving the Group in a net ungeared position at the end of the reporting period.
Careful currency management allowed the Group to successfully negotiate the
Rand"s volatility. Headline earnings per share climbed 115% from 16,2 cents to
34,8 cents, whilst net interest cover improved to 24,8 from 9,2 times.
Operations
Our core marketing and distribution operations performed exceptionally well,
with further improvements in efficiency and market share. The investment in new
factory equipment has permitted the electronics factory to achieve significant
gains in productivity. Our exclusive international supplier base ensured the
introduction of a number of exciting new offerings, both in electronics and
appliances. Although exports generated only a minor percentage of the Group"s
appliance sales, these activities diminished as a consequence of the strength of
the Rand. However, this trend was more than offset by growth in local sales and
margins.
Year-end
As advised in the interim results, Amap"s financial year-end has been changed
from 29 February 2004 to 30 June 2004 and a further report will be issued for
the sixteen-month period then ended.
Board
No changes have taken place in the composition of the Board, which comprises
seven non-executive directors and four executive directors.
Social responsibility and labour relations
Compliance with employee related legislation ensures excellent labour and Trade
Union relations, which in turn, assists with the development of our employee
potential. Support is given by the Group to efforts addressing the issues around
life-threatening diseases such as AIDS. The development of black students at
university level is the focus of our links through the Cida City Campus
programme to promote and inspire future entrepreneurs and business leaders.
Corporate governance
The Group at all levels subscribes to the spirit of good corporate governance as
set out in the King Report 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 directors consider the disclosure of segmental
information in terms of AC115 not to be meaningful.
Dividends
The directors have resolved to continue the policy of a single annual dividend
to be declared at the end of each financial year. Accordingly, a dividend will
be declared for the 16-month period ended 30 June 2004.
Outlook
Through the Group"s unique stable of brands, strong trade relationships and
effective operating infrastructure, a solid platform has been established for
sustainable growth in the foreseeable future. Assuming consumer spending remains
robust, and a stable currency environment prevails, the Group expects the
current satisfactory operating performance to continue for the next reporting
period.
For and on behalf of the Board
J Cohen
Chairman
B G Drummond
Company Secretary
21 April 2004
Directors J Cohen Chairman L Dreimann* Deputy Chairman J M Kahn* J P
Kieser* S G Bernhardt M C Berzack* S Cohen* S A Levitt* A Nossel S
Scafidas W B Rue*
Alternates S Green* E G W Janssen van den Doornmalen* *Non-executive
Transfer Secretaries Computershare Limited, 70 Marshall Street, Johannesburg
2001. PO Box 61051, Marshalltown 2107
Registered Office 29 Heronmere Road, Reuven 2091. PO Box 39186, Booysens
2016. Telephone (011) 490 9000
Sponsor Bridge Capital Services (Pty) Limited 1st Floor Building, 22A The
Woodlands, Woodlands Drive, Woodmead
Date: 21/04/2004 02:04:37 PM Produced by the JSE SENS Department
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