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AMA
AMA
Amap - Unaudited Interim Results For The Six Months Ended 31 December 2005
Amalgamated Appliance Holdings Limited
Registration number 1997/004130/06
("Amap" or "the Group")
ISIN: ZAE000012647 & Share code: AMA
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2005
*The results have been restated due to the first-time adoption of IFRS. Refer to
the accounting policy note.
FINANCIAL HIGHLIGHTS
Operating profit increase 22%
Interest paid reduction 78%
Net cash on hand R130m
Headline earnings per share 34,9 cents
ABRIDGED GROUP INCOME STATEMENT FOR THE PERIOD ENDED 31 DECEMBER 2005
Unaudited Restated* Restated*
6 months 6 months 12 months
% 31 December 31 December 30 June
6 months 2005 2004 2005
change R"000 R"000 R"000
Revenue (2) 1 056 830 1 075 996 1 798 174
Operating profit 22 104 022 85 601 169 132
Fair value adjustments on
financial instruments (3 039) 31 769 28 446
Net interest paid (78) (1 425) (6 556) (9 666)
Profit before taxation 99 558 110 814 187 912
Taxation (27) (27 064) (37 102) (59 947)
Net profit (2) 72 494 73 712 127 965
Profit attributable to
minority shareholders (783) - -
Profit attributable to
ordinary shareholders (3) 71 711 73 712 127 965
Basic earnings per
share - (cents) (3) 34,8 35,9 62,3
Diluted basic earnings
per share - (cents) (3) 34,3 35,3 61,2
ABRIDGED GROUP BALANCE SHEET AS AT 31 DECEMBER 2005
Unaudited Restated* Restated*
31 December 31 December 30 June
2005 2004 2005
R"000 R"000 R"000
ASSETS
Non-current assets 60 634 81 162 69 382
Property, plant and equipment 35 822 38 125 36 996
Goodwill 1 170 936 1 170
Trademarks 8 117 9 230 8 888
Other financial assets 13 824 25 834 16 256
Deferred tax - net 1 701 7 037 6 072
Current assets 825 766 828 050 739 944
Inventory 384 098 343 735 261 536
Trade and other receivables 310 269 382 315 186 136
Derivative financial asset - - 12 513
Bank and cash on hand 131 399 102 000 279 759
Total assets 886 400 909 212 809 326
EQUITY AND LIABILITIES
Capital and reserves 457 776 369 719 420 737
Minority interest 783 - -
Long-term borrowings 8 740 10 511 9 973
Current liabilities 419 101 528 982 378 616
Trade and other payables 389 010 475 257 323 749
Derivative financial liability 3 227 22 721 -
Dividends payable 83 37 37
Taxation 23 104 30 492 51 412
Short-term portion of long-term
liability 3 677 475 3 418
Total equity and liabilities 886 400 909 212 809 326
STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED 31 DECEMBER 2005
Fair Share- Share-
value holder based
Trea- adjust- Accumu- for compen-
Share Share sury ment lated divi- sation
capital premium share reserve profits dend reserve Total
Unaudited R"000 R"000 R"000 R"000 R"000 R"000 R"000 R"000
Balance at
1 July 2004
Audited) 2 122 162 741 (7 285) 2 194 132 396 30 767 - 322 935
IFRS
adjustments - - - - 5 472 - 318 5 790
Restated
balance
at 1 July
2004 2 122 162 741 (7 285) 2 194 137 868 30 767 318 328 725
Net profit
for the
period - - - - 73 712 - - 73 712
Net profit as
previously
reported - - - - 73 343 - - 73 343
IFRS
adjustments - - - - 369 - - 369
Dividend settled
- cash
election - - - - -(30 767) - (30 767)
Net treasury
movement - - (2 782) - - - - (2 782)
IFRS adjustment:
Share-based
payment - - - - - - 340 340
Fair value
movement - - - 491 - - - 491
Balance at
31 December
2004 2 122 162 741 (10 067) 2 685 211 580 - 658 369 719
Net profit
for the
period - - - - 54 252 - - 54 252
Net profit as
previously
reported - - - - 54 082 - - 54 082
IFRS
adjustments - - - - 170 - - 170
Dividends
adjustment
to share
incentive
trust - - - - (64) - - (64)
Dividends
proposed
- gross - - - - (36 072) 36 072 - -
Dividends
proposed
share
incentive
trust - - - - 1 112 (1 112) - -
Net treasury
movement - - (848) - - - - (848)
IFRS adjustment:
Share-based
payment - - - - - - 363 363
Fair value
movement - - - (2 685) - - - (2 685)
Balance at
30 June
2005 2 122 162 741 (10 915) - 230 808 34 960 1 021 420 737
Net profit
for the
period - - - - 71 711 - - 71 711
Dividend settled
- cash
election - - - - - (34 960) - (34 960)
Net treasury
movement - - (66) - - - - (66)
Share-based
payment - - - - - - 354 354
Balance at
31 December
2005 2 122 162 741 (10 981) - 302 519 - 1 375 457 776
ABRIDGED GROUP CASH FLOW STATEMENT FOR THE PERIOD ENDED 31 DECEMBER 2005
Unaudited Restated* Restated*
6 months 6 months 12 months
31 December 31 December 30 June
2005 2004 2005
R"000 R"000 R"000
Cash flow from operating
activities (144 629) (91 825) 77 417
Cash generated by trading 124 144 90 096 162 650
Working capital changes (181 433) (95 255) 5 697
Cash utilised/(generated)
by operations (57 289) (5 159) 168 347
Net interest paid (1 425) (6 556) (9 666)
Taxation paid (51 001) (49 343) (50 470)
Dividends paid (34 914) (30 767) (30 794)
Cash flow from investing
activities (2 691) (2 830) 4 130
Additions to property, plant
and equipment (3 140) (3 071) (7 435)
Proceeds on disposal of property,
plant and equipment 360 241 470
Proceeds on disposal of
investments - - 10 873
Decrease in other financial assets 89 - 222
Cash flow from financing
activities (1 040) 3 829 5 386
Net movement in treasury shares (66) (2 782) (3 630)
(Decrease)/increase in long-term
borrowings (974) 6 611 9 016
Net (decrease)/increase in cash (148 360) (90 826) 86 933
Cash surplus at the beginning
of the period 279 759 192 826 192 826
Cash resources at the end
of the period 131 399 102 000 279 759
SUPPLEMENTARY INFORMATION FOR THE PERIOD ENDED 31 DECEMBER 2005
Unaudited Restated* Restated*
6 months 6 months 12 months
31 December 31 December 30 June
2005 2004 2005
Shares in issue (000"s) 212 190 212 190 212 190
Shares in issue - weighted (000"s) 206 291 205 283 205 486
Diluted number of shares
- weighted (000"s) 209 057 208 964 209 127
Net asset value per share (cents) 216 174 195
Cost of sales (R"000) 802 759 818 985 1 359 088
Interest received (R"000) 5 013 2 039 4 513
Interest paid (R"000) (6 438) (8 595) (14 179)
Capital expenditure (R"000) 3 140 3 072 7 435
Capital commitments (R"000) 538 516 906
Depreciation, amortisation and
impairment charge (R"000) 4 864 5 498 11 404
Finance and operating lease
commitments (R"000) 40 742 39 765 30 457
Profit attributable to ordinary
shareholders (R"000) 71 711 73 712 127 965
Profit on disposal of property, plant
and equipment (net of tax) (R"000) (99) (144) (60)
Profit on disposal of
subsidiary (R"000) - - (663)
Profit on disposal of investment
(net of tax) (R"000) - - (4 318)
Impairment of non-current assets
(net of tax)(R"000) 305 - 714
Headline earnings (R"000) 71 917 73 568 123 638
Headline earnings per share - (cents) 34,9 35,8 60,2
Diluted headline earnings per
share - (cents) 34,4 35,2 59,1
Accounting Policies
The interim report is prepared on the historical cost basis except for financial
instruments on certain property, plant and equipment which have been fair
valued. This is in accordance with the recognition and measurement principles of
International Financial Reporting Standards (IFRS) expected to be applicable at
30 June 2006, IAS 34: Interim financial reporting, the requirements of the South
African Companies Act and the Listings Requirements of the JSE. The results are
presented in terms of IFRS statements and interpretations applicable at the date
of publication.
The Group has adopted and applied IFRS for the first time for the year ended
2006.
The transition date is 1 July 2004 ("the transition date"). The Group"s opening
IFRS balance sheet at the transition date has therefore been restated to reflect
all statements expected to be applicable at 30 June 2006. Certain accounting
policy changes and reclassifications were applied to comply with IFRS 1 and the
comparative figures in respect of 2005 have been adjusted to reflect these
changes.
The following new accounting policies were adopted:
* Property, plant and equipment
In terms of IFRS 1, a first time adopter may elect to use the fair value of
individual items of property, plant and equipment at transition date as the
deemed cost. Alternatively, a first time adopter may elect to measure individual
items of property, plant and equipment at depreciated cost, determined in
accordance with IFRS. These elections are available to each individual asset.
Amap has made this transitional election on individual asset level, as the
circumstances of each asset required.
* Share-based payments
The Group has applied IFRS 2: Share-based Payments. In accordance with the
transitional provisions, IFRS 2 has been applied to all grants of equity settled
awards granted after 7 November 2002, which were unvested as of 1 July 2004.
Reconciliations and descriptions of the effect of the transition from South
African Standards of Generally Accepted Accounting Practice to IFRS on the
Group"s assets, liabilities, equity and net profit, are provided below:
RECONCILIATION OF INCOME STATEMENT
6 months 12 months
31 December 30 June
2004 2005
R"000 R"000
Profit attributable to shareholders
As previously reported under SA GAAP 73 343 127 425
IFRS adjustments 369 540
Property, plant and equipment (net of tax) 709 1 243
Share-based payments (340) (703)
As reported under IFRS 73 712 127 965
RECONCILIATION OF ASSETS, LIABILITIES AND EQUITY
Property, Net Share-based
plant and deferred Retained compensation
equipment tax earnings reserve
R"000 R"000 R"000 R"000
1 July 2004
As previously reported 31 077 10 243 132 396 -
IFRS adjustments 8 044 (2 254) 5 472 318
Share-based payments - - (318) 318
Property, plant
and equipment 8 044 (2 254) 5 790 -
As reported under IFRS 39 121 7 989 137 868 318
31 December 2004
As previously reported 29 188 9 475 205 739 -
IFRS adjustments 8 937 (2 438) 5 841 658
Share-based payments - - (658) 658
Property, plant
and equipment 8 937 (2 438) 6 499 -
As reported under IFRS 38 125 7 037 211 580 658
30 June 2005
As previously reported 27 308 8 728 224 797 -
IFRS adjustments 9 688 (2 656) 6 011 1 021
Share-based payments - - (1 021) 1 021
Property, plant
and equipment 9 688 (2 656) 7 032 -
As reported under IFRS 36 996 6 072 230 808 1 021
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 period end date and the date of this report.
Comments
Operations
All divisions in the Group, operated profitably. With strong support from our
suppliers and customers, we maintained or increased market share in all key
categories. However, continuing price deflation in consumer electronics together
with a slowdown in demand for certain products such as home theatre systems
exerted pressure on revenues, leading to a marginal decline compared with the
prior period. The trend towards a more stable and stronger rand continues to
place a severe strain on our manufacturing facilities but ongoing efficiency
improvement has ensured their continued viability. We introduced several
exciting new products into our range during the period including the UnoUno
coffee maker, Sansui personal computers and several new LCD and Plasma TVs, all
of which have shown very promising sales trends. In addition, we have further
strengthened our core operating infrastructure to handle the Group"s growing
unit sales, with investments in logistics, customer service and information
technology.
Group performance
In spite of the 2% revenue decline from R1 076 million to R1 057 million, the
Group"s operating profits grew by 22% as a result of a combination of
productivity gains and reduced expenses. Coupled with an interest cost reduction
of 78% to R1,4 million and a lower tax rate, this strong operating result all
but offset the net unfavourable swing of R35 million before tax of fair value
adjustments on financial instruments (AC133/112) (2004: +R32 million; 2005 -R3
million), to deliver headline earnings per share of 35 cents (1 cents below the
comparable period last year). Cash on hand increased by almost R30 million after
providing R52 million for funding the mobile phone venture.
Board
During the period under review, Salton Inc. disposed of their 52,6% shareholding
in Amap and Steinhoff International purchased a strategic stake of 25,1% in the
Group. As a result, our USA directors L Dreimann and WB Rue resigned from the
Board together with alternate non-executive director, ECW Janssen van den
Doornmalen. Messrs MJ Jooste and DM van der Merwe representing Steinhoff joined
the Board effective 1 November 2005.
Social responsibility and labour relations
The Group has embarked on a systematic process, guided by The Department of
Trade and Industry"s Codes of Good Practice, to fulfil the broad-based
requirements of Black Economic Empowerment including employment equity,
management and control, skills development, procurement and equity ownership.
Our social responsibility programmes focus on education and development and the
upliftment of the quality of life of disadvantaged people. In addition, our
employee relations remain excellent, with strong union relationships and minimal
staff turnover.
Corporate governance
Operations at all levels subscribe to the spirit of good corporate governance as
set out in the King Report and Amap 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
declared at the end of each financial year. Accordingly, a dividend will be paid
for the twelve-month period ended 30 June 2006.
Outlook
Although the consumer economy remains positive, most retailers are expecting
growth to soften compared with the buoyant conditions prevailing over the past
eighteen months. Deflation in the electronics sector is expected to continue,
but at a slower rate and indications from China point to prices beginning to
stabilise. This, together with the expected growth in LCD and Plasma TVs during
the Olympics and soccer World Cup should boost revenues. Provided that stable
currency conditions prevail and consumer demand sustains, a further improvement
in operating profits should be attained. In the long term, the Group foresees
the association with our strategic partner, Steinhoff, yielding many
opportunities and benefits.
For and behalf of the board
J Cohen BG Drummond Johannesburg
Chairman Company secretary 8 February 2006
Directors
J Cohen (Chairman), SG Bernhardt, MC Berzack*, S Cohen, MJ Jooste*, JM Kahn*, JP
Kieser*,SA Levitt*, A Nossel, S Scafidas, DM van der Merwe*
Alternates
S Green*
*Non-executive
Transfer secretaries
Computershare Investor Services 2004 (Pty) 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: 08/02/2006 01:00:17 PM Produced by the JSE SENS Department
