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AMA - Amalgamated Appliance Holdings Limited - Audited results for the year
ending 30 June 2011
Amalgamated Appliance Holdings Limited
Registration number: 1997/004130/06
ISIN: ZAE000012647
Share code: AMA
("AMAP" or "the Group")
Audited results for the year ending 30 June 2011
Highlights (continuing operations)
Total capital distribution per share up 50% year-on-year, from 8 to 12 cents per
share
Revenue from continuing operations increased by 8,9% to R826 million
Headline earnings per share increased by 52,6% to 29,0 cents
Cash on hand R260,4 million
Condensed Group statement of comprehensive income
for the year ended 30 June 2011
Restated*
Audited Audited
30 June 30 June
2011 2010
% R`000 R`000
Continuing operations
Revenue 8,9 826 423 759 095
Operating profit 17,5 69 037 58 769
Fair value adjustment on financial (2 022) -
instruments
Restructuring costs - operations (1 118) (926)
Net interest received 11 517 12 215
Profit before taxation 10,5 77 414 70 058
Taxation (20 004) (20 142)
Profit for the year from continuing 57 410 49 916
operations
Discontinued operations
Loss from discontinuing operations - (11 441)
Total comprehensive income for the year 49,2 57 410 38 475
From continuing and discontinuing
operations
Basic earnings per share - (cents) 54,5 28,9 18,7
Diluted basic earnings per share - 54,3 28,7 18,6
(cents)
From continuing operations
Basic earnings per share - (cents) 19,4 28,9 24,2
Diluted basic earnings per share - 18,6 28,7 24,2
(cents)
From discontinuing operations
Basic loss per share - (cents) - (5,6)
Diluted basic loss per share - (cents) - (5,5)
Capital distribution per share - interim 4,0 -
(cents)
Capital distribution per share - final 8,0 8,0
(cents)
* Group comparative figures have been restated to reflect the transfer of assets
from "held for sale" to investment property.
Condensed Group statement of financial position
as at 30 June 2011
Audited Audited
30 June 30 June
2011 2010
R`000 R`000
ASSETS
Non-current assets 58 620 66 886
Property, plant and equipment 8 904 8 585
Investment property 11 707 -
Trademarks 1 645 1 645
Deferred taxation 36 364 56 656
Current assets 594 604 554 412
Inventories 137 050 145 958
Trade and other receivables 197 154 181 755
Taxation receivable - 10 615
Bank and cash on hand 260 400 204 377
594 604 542 705
Current assets classified as held for sale - 11 707
Total assets 653 224 621 298
EQUITY AND LIABILITIES
Total equity 494 970 465 135
Non-current liabilities 2 660 1 257
Long-term borrowings - 101
Deferred taxation 2 660 1 156
Current liabilities 155 594 154 906
Trade and other payables 127 817 110 174
Derivative financial liability 2 298 439
Capital distribution and dividends payable 204 157
Taxation 228 -
Short-term portion of long-term liability - 482
Provisions 25 047 31 947
155 594 143 199
Liabilities directly associated with assets - 11 707
classified as held for sale
Total equity and liabilities 653 224 621 298
Condensed Group statement of cash flows
for the year ended 30 June 2011
Audited Audited
30 June 30 June
2011 2010
R`000 R`000
Cash flow from operating activities 67 324 103 186
Cash generated by trading 74 752 51 333
Working capital changes (5 768) 42 720
Cash generated by operations 68 984 94 053
Capital distribution and dividends paid (23 788) -
Net interest received 11 517 12 145
Taxation received/(paid) 10 611 (3 012)
Cash flow from investing activities (5 195) 4 851
Additions to property, plant and equipment (5 540) (3 058)
Proceeds on disposal of property, plant and 345 7 909
equipment
Cash flow from financing activities (6 106) (18 976)
Net movement in treasury shares (5 623) (13 266)
Decrease in long term borrowings (483) (5 710)
Net increase in cash and cash equivalents 56 023 89 061
Cash surplus at the beginning of year 204 377 115 316
Cash surplus at the end of the year 260 400 204 377
Notes to the condensed Group statement of cash flows
for the year ended 30 June 2011
Audited Audited
30 June 30 June
2011 2010
R`000 R`000
Cash flow from operating activities 67 324 103 186
- Continuing operations 67 324 96 725
- Discontinuing operations - 6 461
Cash flow from investing activities (5 195) 4 851
- Continuing operations (5 195) (1 940)
- Discontinuing operations - 6 791
Cash flow from financing activities (6 106) (18 976)
- Continuing operations (6 106) (14 484)
- Discontinuing operations - (4 492)
Cash surplus/(deficit) at the end of the year 260 400 204 377
- Continuing operations 260 400 204 377
Condensed Group statement of changes in equity
for the year ended 30 June 2011
Audited Audited
30 June 30 June
2011 2010
R`000 R`000
Balance as at 1 July 465 135 438 672
Net profit for the period 57 410 38 475
Capital distribution (23 835) -
Net treasury movement (5 623) (13 266)
Share based payment 1 883 1 254
Balance at 30 June 2011 494 970 465 135
Supplementary information
for the year ended 30 June 2011
Restated
Audited Audited
30 June 30 June
2011 2010
% R`000 R`000
Shares in issue (000`s) 212 190 212 190
Shares in issue - weighted (000`s) 198 892 205 917
Diluted number of shares - weighted 200 252 206 554
(000`s)
Net asset value per share (cents) 233 219
Cost of sales (R`000) - continuing 565 745 517 867
operations
Cost of sales (R`000) - discontinuing - 98 820
operations
Net inventory provision raised - 13 073 8 562
continuing operations
Interest received (R`000) - continuing (11 949) (13 616)
operations
Interest received (R`000) - discontinuing - (20)
operations
Interest paid (R`000) - continuing 432 1 401
operations
Interest paid (R`000) - discontinuing - 90
operations
Legal fees (R`000) - continuing 6 188 1 580
operations
Capital expenditure (R`000) - continuing 5 540 2 996
operations
Capital expenditure (R`000) - - 63
discontinuing operations
Capital commitments (R`000) - continuing 478 -
operations
Depreciation, amortisation and impairment 4 489 4 698
charge (R`000) - continuing operations
Depreciation, amortisation and impairment - 2 998
charge (R`000) - discontinuing operations
Operating lease commitments (R`000) - 83 108 29 583
continuing operations
Profit (R`000) - continuing operations 57 410 49 916
Loss on disposal of property, plant and 387 549
equipment (R`000) - continuing operations
Total tax effects on adjustments (R`000) (108) (154)
- continuing operations
Headline profit (R`000) - continuing 57 689 50 311
operations
Headline earnings per share - (cents) - 29,0 24,4
continuing operations
Diluted headline earnings per share - 28,8 24,4
(cents) - continuing operations
Loss (R`000) - discontinuing operations - (11 441)
Loss on disposal of property, plant and - 380
equipment (R`000) - discontinuing
operations
Total tax effects on adjustments (R`000) - (106)
- discontinuing operations
Headline loss (R`000) - discontinuing - (11 167)
operations
Headline loss per share - (cents) - - (5,4)
discontinuing operations
Diluted headline loss per share - (cents) - (5,4)
- discontinuing operations
Headline earnings per share - (cents) - 52,6 29,0 19,0
continuing and discontinuing operations
Diluted headline earnings per share - 52,0 28,8 19,0
(cents) - continuing and discontinuing
operations
Supplementary information
for the year ended 30 June 2010
Total Total
discontinued discontinued
operations operations
Previously
Restated presented
Statement of comprehensive income - R`000 R`000
discontinued operations
Revenue 86 160 86 160
Operating loss (10 698) (9 265)
Restructuring costs - operations (4 960) (4 960)
Net finance costs (70) (70)
Loss before taxation (15 728) (14 295)
Taxation 4 287 3 875
Loss from discontinued operations (11 441) (10 420)
The major classes of assets and liabilities held for sales as follows:
Audited Audited
30 June 30 June
2011 2010
Statement of financial position R`000 R`000
Assets classified as held for sale
Property, plant and equipment - 11 707
Assets classified as held for sale - 11 707
Liabilities directly associated with
assets held for sale
Deferred taxation - (2 024)
Trade, other payables and provisions - (9 683)
Liabilities directly associated with - (11 707)
assets held for sale
Net assets classified as held for sale - -
NOTES
1. Basis of preparation
The audited condensed consolidated Group annual financial statements for the
year ended 30 June 2011 have been prepared in accordance with accounting
policies compliant with International Financial Reporting Standards (IFRS),
information as required by IAS 34 Interim Financial Reporting, the AC 500
Standards as issued by the Accounting Practices Board and the JSE Limited`s
Listings Requirements. The accounting policies and their application are
consistent, in all material respects, with those detailed in AMAP`s 2010 annual
report. All new and revised standards that became effective during the current
period were adopted and did not lead to any significant changes in accounting
policies.
2. Diluted basic and diluted headline earnings per share
Diluted basic and diluted headline earnings per share are determined by
adjusting the weighted average number of ordinary shares outstanding to assume
conversion of all dilutive ordinary shares.
3. Contingent liability
As disclosed in the Group`s annual report for the year ended 30 June 2007 and
subsequent years, SARS issued a letter of intent in February 2007 to levy
customs and excise on a wholly owned subsidiary for R28,3 million. The
subsidiary has raised a formal objection in line with the professional advice of
its external legal customs duty advisers, and remains confident that its
objection will be upheld. There is no obligation, current or pending, which is
considered likely to have a material adverse effect on the Group.
4. Assets transferred from "held for sale" to investment property
During the year ended 2009, the Atlantis property was transferred to held for
sale in line with the requirements of IFRS 5, non-current assets held for sale
and discontinued operations. However, this asset no longer meets the criteria
for classification as held for sale, and has been transferred to investment
property. Only the statement of comprehensive income has been re-presented.
Audited results
The auditors, Deloitte & Touche, have issued an unmodified audit opinion on the
Group`s annual financial statements for the year ended 30 June 2011. A copy of
their audit report is available for inspection at the company`s registered
office. These condensed Group annual financial statements have been derived from
the Group annual financial statements and are consistent, in all material
respects, with the Group annual financial statements.
Commentary
Having completed the difficult journey of restructuring AMAP over the last three
years, we are pleased to announce that the investment in the Group`s key brands
and intellectual property have continued to reap rewards, with the Group growing
revenue, margins and profit in line with targets during the year to June 2011.
We have also seen our trusted brands grow market share across all categories and
are well on our way to become Africa`s distributor of leading consumer brands.
Our operations are characterised by a team approach, with specialists in the
purchasing, logistics, financial, marketing and sales side of the business,
enabling us to approach each brand from a multi-disciplinary perspective and to
gain a deep understanding of each brand and its target market. The group`s
strategy of offering a boutique of brands offering "good, better, best" paid off
in the period under review with all brands achieving good growth.
With the kitchen becoming the centre of family life and often designed to be
open-plan in the modern home, the demand for fashionable, quality housewares,
not only for functional use, but for display purposes is increasing amongst
style-conscious consumers. Whether it`s a consumer starting out in the job
market and buying a Pineware iron and toaster or an established homeowner
purchasing a co-ordinated range of Russell Hobbs housewares, the kitchen is now
an extension of the consumer`s decorative environment and the group has
introduced new additions to its range of appliances to provide an integrated,
end-to-end product solution for our customers.
In line with this strategy, various housewares brands were launched into the
market. We now operate across the small appliance; sewing; housewares;
accessories; and personal care categories. This gives the group a diverse and
balanced portfolio of trusted brands, reducing our reliance on any one category
or customer income group. Indications are that by introducing innovator products
into stores, the group will benefit from additional growth at the top end of the
market. In line with this strategy the Wiltshire and Arti Farti brands were
introduced into the market place with resounding success. The impact of these
new brands has begun to flow through in the fourth quarter of the reporting
period.
Financial performance
Statement of comprehensive income - (continuing operations)
- Revenue from operations for the year under review increased by 8,9% to R826,4
million (2010: R759,1 million).
- Pre-tax profit for the year was R77,4 million (2010: R70,1 million -
restated).
- The Group received net interest of R11,5 million (2010: R12,2 million).
- Total comprehensive income for the year amounted to R57,4 million (2010: R49,9
million - restated).
- Basic earnings per share increased to 28,9 cents (2010: 24,2 cents -
restated).
- HEPS increased to 29,0 cents (2010: 24,2 cents - restated).
Statement of financial position
The statement of financial position is as follows:
- Current assets exceed current liabilities by a factor of almost four, while
the Group is ungeared.
- Cash on hand amounted to R260,4 million (2010: R204,4 million).
- Inventory decreased to R137,1 million from R146,0 million a year ago, and from
R154,3 million in 2009.
- Trade and other receivables at year end were R197,2 million, compared with
R181,8 million a year ago.
Management is confident that the business will continue to generate cash through
inventory control, stricter credit control, improved collections, overhead
savings and the benefits of improved product category selection that has been
implemented.
Acquisitions during the year
Tedelex Trading (Pty) Limited, a wholly-owned subsidiary of AMAP, has entered
into a sale of business agreement with Sammeg Satellite (Pty) Limited, Samsat
(Cape) (Pty) Limited, Samsat (KZN) (Pty) Limited, Sean Claude Meadows, Joel
Kevan Dorfan and Michael Roy Weinberg to acquire the businesses as going
concerns for a maximum purchase consideration of R70 000 000.
The sale is pending fulfilment of the conditions precedent, namely Competitions
Commission approval and transfer of major contracts.
Segmental reporting
The Group predominantly markets and distributes consumer durables from a single
business unit.
Subsequent events
No events material to the understanding of this report have occurred during the
period between 30 June 2011 and the date of this report.
Distribution to shareholders
Based on the current financial position, the board has declared a final capital
distribution by way of a capital reduction out of share premium of 8 cents per
share for the year ended 30 June 2011 (2010: 8 cents) out of share premium.
Shareholders are advised that the last date to trade cum the distribution will
be Friday, 14 October 2011.
The shares will commence trade ex the distribution as from Monday, 17 October
2011 and the record date will be Friday, 21 October 2011. The payment date is
Monday, 24 October 2011.
Share certificates may not be dematerialised or rematerialised between Monday,
17 October 2011 and Friday, 21 October, both dates inclusive.
Changes to the board and company secretary
Bruce Drummond was appointed as Chief Financial Officer on 5 November 2010.
Spyros Scafidas was appointed as a non-executive Director on 1 July 2011. Myron
Berzack resigned from the board on 7 September 2011. Leon Campher resigned from
the Board of Directors and as Chairman of the Board on 22 September 2011. David
Cleasby was appointed as Chairman of the Board of Directors and Colin Scott as
Lead Independent Director, effective 22 September 2011. Bruce Drummond, the
Chief Financial Officer and company secretary will resign from the position of
company secretary of AMAP effective 7 November 2011. Marion Kearns has been
appointed as company secretary of AMAP with effect from 7 November 2011.
The year ahead
Following the completion of the restructuring, the group`s financial position
has improved significantly in the key areas of gearing, inventories and cash on
hand. Having established a solid foundation for future growth, the group intends
to make inroads into new product categories and fulfill our vision of becoming
Africa`s preferred distributor of branded consumer merchandise.
Our strong cash position has also enabled us to acquire a number of new brands,
some of which were completed post-balance sheet date. These brands need to be
invigorated, but we expect them to make a contribution to our performance in the
next 18 months.
We remain cautiously optimistic about the group`s growth prospects over the next
year, despite the muted outlook for the South African economy. Our view is that
consumers are likely to remain under pressure for the foreseeable future and
will continue to look for value and quality in brands they can trust. We believe
AMAP is well positioned to meet their needs.
Acknowledgements
I would like to extend my appreciation and gratitude to our non-executive
directors and board members for their valuable guidance and counsel over the
past year. The strong financial position that AMAP now finds itself in is also
thanks to each and every staff member whose dedication and commitment to our
customers, suppliers and shareholders has helped the group establish a firm
foundation from which to grow.
For and on behalf of the board
David Cleasby Alan Coward
Chairman of the Board of Directors Chief Executive Officer
Johannesburg
26 September 2011
Directors
*DE Cleasby (Chairman)
AS Coward
MG Crow
BG Drummond
*SH Muller
DB Oliver
*DD Tabata
*S Scafidas
CKL Scott (Lead independent)
*Non-executive
Company Secretary
BG Drummond
Transfer secretaries
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg 2001.
PO Box 61051, Marshalltown 2107
Registered office
West Block, Pineslopes Office Park, Fourways 2055
PO Box 2207, Fourways 2055
Telephone (011) 267 3300
Sponsor
Bridge Capital Advisors (Pty) Limited
2nd Floor, 27 Fricker Road, Illovo Boulevard, Illovo 2196
www.amap.co.za
Date: 26/09/2011 07:10:04 Supplied by www.sharenet.co.za
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