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AMA
AMA
AMA - AMAP - Unaudited interim results for six months ended 31 December 2006
Amalgamated Appliance Holdings Limited
Registration number 1997/004130/06
("AMAP_hor_gthe Group")
ISIN: ZAE000012647
Share code: AMA
UNAUDITED INTERIM RESULTS FOR SIX MONTHS ENDED 31 DECEMBER 2006
CONDENSED GROUP INCOME STATEMENT
for the period ended 31 December 2006
Unaudited Restated* Audited
6 Months Unaudited 12 Months
31 Dec 2006 6 Months 30 June 2006
R_f000 31 Dec 2005 R_f000
R_f000
Revenue 1 139 379 1 150 623 2 150 771
Operating profit 114 806 104 022 180 764
Fair value adjustments on financial (8 376) (3 039) 6 988
instruments
Net interest paid (5 579) (1 425) (4 211)
Profit before tax 100 851 99 558 183 541
Taxation (30 256) (27 064) (53 993)
Net profit 70 595 72 494 129 548
Attributable to equity holders of 70 595 71 711 129 548
the parent
Attributable to minority interest - (783) -
Earnings per share - (cents) 34,0 34,8 62,7
Diluted basic earnings per share - 33,7 34,3 62,0
(cents)
Distribution to shareholders - - - 20,0
(cents)
*Restated revenue (R1 056 830 less settlement discount R13 067 (circular
09/2006) plus international cell phone sales R106 860 (previously net
reported))
CONDENSED GROUP BALANCE SHEET
as at 31 December 2006
Unaudited Unaudited Audited
31 Dec 2006 31 Dec 2005 30 June 2006
R_f000 R_f000 R_f000
ASSETS 52 031 60 634 56 153
Non-current assets
Property, plant and equipment 36 950 35 822 36 050
Goodwill 1 170 1 170 1 170
Trademarks 5 204 8 117 5 539
Other financial assets 5 573 13 824 10 211
Deferred tax 3 134 1 701 3 183
Current assets 909 032 825 766 885 690
Inventory 503 396 384 098 366 904
Trade and other receivables 358 487 310 269 249 730
Derivative financial asset 1 581 - 24 789
Bank and cash on hand 45 568 131 399 244 267
Total assets 961 063 886 400 941 843
EQUITY AND LIABILITIES 547 031 458 560 517 002
Total equity
Long-term borrowings 6 755 8 740 6 433
Current liabilities 407 277 419 101 418 408
Trade and other payables 385 265 389 010 366 637
Derivative financial liability - 3 227 -
Capital distribution and dividends 232 83 77
payable
Taxation 21 780 23 104 47 592
Short-term portion of long-term - 3 677 4 102
liability
Total equity and liabilities 961 063 886 400 941 843
CONDENSED GROUP CASH FLOW STATEMENT
for the period ended 31 December 2006
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
31 Dec 2006 31 Dec 2005 30 June 2006
R_f000 R_f000 R_f000
Cash flow from operating (153 343) (144 629) (26 431)
activities
Cash generated by trading 125 162 124 144 194 665
Working capital changes (216 909) (181 433) (127 041)
Cash utilised by operations (91 747) (57 289) 67 624
Net interest paid (5 579) (1 425) (4 211)
Taxation paid (56 017) (51 001) (54 924)
Dividends paid - (34 914) (34 920)
Cash flow from investing activities (4 756) (2 691) (7 175)
Additions property, plant and (5 441) (3 140) (7 917)
equipment
Proceeds on disposal of property, 119 360 465
plant and equipment
Decrease in other financial assets 566 89 277
Cash flow from financing activities (40 600) (1 040) (1 886)
Net movement in treasury shares 1 536 (66) 970
Capital distribution (42 282) - -
Increase/(decrease) in long-term 146 (974) (2 856)
borrowings
Net decrease in cash (198 699) (148 360) (35 492)
Cash and cash equivalent at 244 267 279 759 279 759
beginning of period
Cash and cash equivalent at the end 45 568 131 399 244 267
of the period
STATEMENT OF CHANGES IN EQUITY
for the period ended December 2006
Unaudited Share Share Treasury Accu-
capital pre- shares mulated
R_f000 mium R_f000 profits
R_f000 R_f000
Balance at 30 June 2005 2 122 162 741 (10 915) 230 808
Net profit for the period - - - 71 711
Dividend settled - cash election - - - -
Net treasury movement - - (66) -
Share-based payment - - - -
Balance at 31 December 2005 2 122 162 741 (10 981) 302 519
Net profit for the period - - - 57 837
Net treasury movement - - 1 036 -
Share-based payment - - - -
Balance at 30 June 2006 2 122 162 741 (9 945) 360 356
Net profit for the period - - - 70 595
Capital distribution - (42 437) - -
Net treasury movement - - 1 536 -
Share-based payment - - - -
Balance at 31 December 2006 2 122 120 304 (8 409) 430 951
STATEMENT OF CHANGES IN EQUITY (continued)
for the period ended December 2006
Unaudited Share- Share- Minority Total
holder based interest R_f000
for compen- R_f000
dividend sation
R_f000 reserve
R_f000
Balance at 30 June 2005 34 960 1 021 - 420 737
Net profit for the period - - 783 72 494
Dividend settled - cash election (34 960) - - (34 960)
Net treasury movement - - - (66)
Share-based payment - 355 - 355
Balance at 31 December 2005 - 1 376 783 458 560
Net profit for the period - - (783) 57 054
Net treasury movement - - - 1 036
Share-based payment - 352 - 352
Balance at 30 June 2006 - 1 728 - 517 002
Net profit for the period - - - 70 595
Capital distribution - - - (42 437)
Net treasury movement - - - 1 536
Share-based payment - 335 - 335
Balance at 31 December 2006 - 2 063 - 547 031
Basis of preparation of results
The interim report is prepared in accordance with:
* IAS 34 Interim financial reporting
* The requirements of the South African Companies Act, Act 61 of 1973 as amended
and
* The Listing Requirements of the JSE Limited (JSE)
These financial statements incorporate accounting policies that are consistent
with those used in preparing the financial results for the year ended June 2006.
SUPPLEMENTARY INFORMATION
For the period ended 31 December 2006
Unaudited Restated* Audited
6 Months Unaudited 12 Months
31 Dec 2006 6 Months 30 June 2006
R_f000 31 Dec 2005 R_f000
R_f000
Shares in issue (000_fs) 212 190 212 190 212 190
Shares in issue - weighted (000_fs) 207 905 206 291 206 561
Diluted number of shares - weighted 209 554 209 057 208 974
(000_fs)
Net asset value per share (cents) 258 216 244
Cost of sales (R_f000) 882 523 909 619 1 712 659
Interest received (R_f000) 3 064 5 013 4 948
Interest paid (R_f000) (8 643) (6 438) (9 159)
Capital expenditure (R_f000) 5 440 3 140 7 917
Capital commitments (R_f000) 2 580 583 1 450
Depreciation, amortisation and 4 780 4 864 11 512
impairment charge (R_f000)
Finance and operating lease 45 964 40 742 49 440
commitments (R_f000)
Profit attributable to ordinary 70 595 71 711 129 548
shareholders (R_f000)
(Profit)/loss on disposal of (11) (99) 168
property, plant
and equipment (net of tax) (R_f000)
Impairment of property, plant and - 305 2 199
equipment (R_f000)
Headline earnings (R_f000) 70 584 71 916 131 915
Headline earnings per share - 34,0 34,9 63,9
(cents)
Diluted headline earnings per share 33,7 34,4 63,1
- (cents)
*Restated cost of sales (R802 759) plus international cell phone cost of
sales R106 860 (previously net reported)
COMMENTARY
The trading context
Trading conditions for the period under review showed continued momentum from
the extended consumer boom, while some signs of a slowdown began to emerge in
our core markets. The traditional furniture retailers in particular reported
slowing growth rates and greater difficulty in debt collection. A weaker Rand
in September and October 2006 saw some price increases on imported goods.
Festive season trade, while still healthy, did not reach the levels expected by
many commentators. In consumer electronics, some of our major international
competitors aggressively entered the mass market, which placed a ceiling on
margins in this segment. The growth of flat screen television was an ongoing
feature, although with significant price deflation, as anticipated. In small
appliances, solid growth was evident in all market segments with consumers
continuing to buy up to well known and respected brands.
Operating performance
In the light of the conditions described above, both of Amap_fs major trading
divisions performed creditably, with a combined increase of 11%, stable gross
margins and operating cost increases contained to well below inflation. In
Appliances, Russell Hobbs further strengthened its position at the premium end
of the market and Salton remained the leading national brand. Seasonal product
sell-through was good, clearing the pipeline for strong sales during upcoming
seasonal peaks. In Electronics, Sansui held its position as brand leader in the
face of strong sales and marketing campaigns by its global competitors and
excellent progress was made in new areas such as Sansui computers and Polaroid
digital photography. Tedelex also grew strongly as we made a concerted effort
to revitalise this iconic South African brand. The international trading
activity of the mobile phone business was curtailed and a new strategy was
implemented for local sales. As a result of these strategic shifts, this
business contributed R119,4 million less sales than for the comparable period,
but performed ahead of budget on both turnover and profit. Our manufacturing
division faced the greatest challenge, with sales of CRT television inevitably
dampened by the emergence of plasma and LCD. Several initiatives are under way
to replace lost production with new products.
Financial performance
Revenue from continuing activities (excluding the R106,9 million of revenue from
the curtailed international mobile phone trading business) grew 11% for the
period under review. Gross margins for the Group improved meaningfully to 22,5%
(2005: 20,9%) mainly as a result of the shift of strategy in the low margin
mobile phone business, but also driven by solid trading in the core divisions.
Combined with generally well-controlled operating expenses, this resulted in an
operating profit increase of 10,4% year-on-year to R114,8 million (2005: R104,0
million). Our operating profit margin moved above the key 10% level. However,
our final results taking into account higher interest cost (as a result of
higher stock levels) and a negative fair value adjustment, were very much in
line with the comparable 6 months last year and the Group closed the period with
R45 million cash on hand.
Strategic developments
Amap has for several years evolved a strategy of focused expansion into related
product categories. Such growth has allowed the Group to utilise the
_gleverage_h of its existing brands, trade relationships, logistics,
administration and financial infrastructure to enhance profitability and
diversify its product portfolio. In recent years, this growth has been
predominantly organic, although in the initial years of its evolution, Amap made
a number of significant acquisitions to further this vision namely Tedelex
Trading (Tedelex, Sansui, Toshiba and Pioneer brands) in consumer electronics
and Pace Grandom in electrical accessories. In November 2006, we announced our
intention to make a significant move in this context, with a dual acquisition
that, if successfully concluded, would make Amap by far the leading manufacturer
and marketer of household durable products in South Africa. The prospective
acquisition of the South African furniture interests of the Steinhoff Group is
dealt with in detail in a separate announcement, which appears elsewhere in this
publication.
Distribution to shareholders
The board has resolved to continue the policy of a single distribution to
shareholders at the end of each financial year.
Board
No changes have taken place in the composition of the board which comprises six
non-executive directors and six executive directors.
Social responsibility and labour relations
Sound labour relations remains a priority of the Group, as it is the driving
force which ensures our employee participation in achieving the goals of our
Group. The relevant trade unions also make a valuable contribution in
maintaining our labour harmony.
The focus on employment equity has increased our skills development activities
with many more employees benefiting accordingly. Employee morale is good, which
is reflected in a very low staff turnover.
In terms of nation building, our Social Responsibility efforts continue to make
a difference to the quality of life of disabled and disadvantaged people.
Segmental reporting
The Group markets and distributes consumer durables predominantly in southern
Africa and therefore the directors consider the disclosure of segmental
information in terms of IAS 14 not to be meaningful.
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.
Subsequent event
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 except those as
detailed in the strategic developments section above.
For and on behalf of the board
J Cohen BG Drummond
Chairman Company Secretary
Johannesburg
1 March 2007
Directors: J Cohen (Chairman), S G Bernhardt (CEO - Manufacturing), *M C
Berzack, S Cohen (CEO - Corporate Services), *M Jooste, *J M Kahn, *J P Kieser,
*S A Levitt, R D Marais (CEO - Appliances), A Nossel (CEO - Electronics), S
Scafidas, *D van der Merwe (Alternate), 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 Advisors (Pty) Limited, 1st Floor, Building 22A, The
Woodlands, Woodlands Drive, Woodmead
www.amapholdings.co.za
Date: 05/03/2007 10:00:02 Produced by the JSE SENS Department.
