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AMA - Amalgamated Appliance Holdings Limited - Unaudited interim results for the

Release Date: 05/03/2012 07:05
Code(s): AMA
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AMA - Amalgamated Appliance Holdings Limited - Unaudited interim results for the period ended 31 December 2011 Amalgamated Appliance Holdings Limited Registration number: 1997/004130/06 ISIN: ZAE000012647 Share code: AMA ("AMAP" or "the Group") Unaudited interim results for the period ended 31 December 2011 Highlights - Interim distribution increased by 75,0% to 7,0 cents per share - Revenue increased by 16,6% to R526,1 million - Operating profit increased by 25,1% to R43,7 million - Basic earnings per share increased by 131,7% to 29,2 cents per share - Net cash on hand R204,4 million Condensed Group statement of comprehensive income Restated*
Unaudited Unaudited Audited 6 months 6 months 12 months R`000 Dec 2011 Dec 2010 Jun 2011 Revenue 16,6% 526 137 451 369 826 423 Operating profit 25,1% 43 674 34 905 69 037 Fair value adjustment on financial instruments 2 179 (4 488) (2 022) Restructuring costs - operations (1 425) - (1 118) Net interest received - bank and cash on hand 6 528 5 506 11 517 Profit before recovery of losses and taxation 41,8% 50 956 35 923 77 414 Taxation (14 280) (10 809) (20 004) Profit after taxation before recovery of losses 46,0% 36 676 25 114 57 410 Profit after taxation before recovery of losses 36 676 25 114 57 410 Total recovery of losses after taxation 20 742 - - Interest received - recovery of losses 9 448 - - Recovery of losses on defective products 19 361 - - Taxation on recovery of losses (8 067) - - Total comprehensive income for the period/year 128,6% 57 418 25 114 57 410 Basic earnings per share (cents) 131,7% 29,2 12,6 28,9 Diluted basic earnings per share (cents) 132,0% 29,0 12,5 28,7 Capital distribution per share (cents) 75,0% 7,0 4,0 12,0 Normalised** earnings per share (cents) 47,6% 18,6 12,6 28,9 Normalised** diluted basic earnings per share (cents) 48,0% 18,5 12,5 28,7 * Group comparative figures have been restated to reflect the transfer of assets from "held for sale" to investment property - see note 4. ** Normalised refers to profit after taxation before recovery of losses. Normalised earnings per share and normalised diluted earnings per share are calculated using profit after taxation before recovery on losses on the same basis as basic and diluted basic earnings per share. Condensed Group statement of financial position Unaudited Unaudited Audited
6 months 6 months 12 months R`000 Dec 2011 Dec 2010 Jun 2011 ASSETS Non-current assets 41 558 57 299 58 620 Property, plant and equipment 11 118 9 516 8 904 Goodwill/Trademarks 4 645 1 644 1 645 Investment property 11 707 - 11 707 Deferred taxation 14 088 46 139 36 364 Current assets 719 040 586 825 594 604 Inventories 240 094 172 063 137 050 Trade and other receivables 272 564 228 741 197 154 Derivative financial asset 2 008 - - Taxation prepaid - 10 618 - Bank and cash on hand 204 374 163 696 260 400 719 040 575 118 594 604 Current assets classified as held for sale - 11 707 - Total assets 760 598 644 124 653 224 EQUITY AND LIABILITIES Total equity 537 541 475 392 494 970 Non-current liabilities 2 645 1 444 2 660 Deferred taxation 2 645 1 444 2 660 Current liabilities 220 412 167 288 155 594 Trade and other payables 195 619 121 410 127 817 Bank overdraft 23 - - Derivative financial liability - 6 733 2 298 Capital distribution and dividends payable 234 139 204 Taxation 83 - 228 Short-term portion of long-term liability - 319 - Provisions 24 453 26 980 25 047 220 412 155 581 155 594 Liabilities directly associated with assets classified as held for sale - 11 707 - Total equity and liabilities 760 598 644 124 653 224 Condensed Group statement of cash flows Unaudited Unaudited Audited 6 months 6 months 12 months
R`000 Dec 2011 Dec 2010 Jun 2011 Cash flow from operating activities (50 275) (37 333) 67 324 Cash generated by trading 55 182 42 023 74 752 Working capital changes (104 258) (68 913) (5 768) Cash (utilised)/generated by operations (49 076) (26 890) 68 984 Capital distribution and dividends paid (16 944) (15 942) (23 788) Net interest received 15 976 5 506 11 517 Taxation (paid)/received (231) (7) 10 611 Cash flow from investing activities (5 774) (3 162) (5 195) Additions to property, plant and equipment (6 041) (3 230) (5 540) Proceeds on disposal of property, plant and equipment 267 68 345 Cash flow from financing activities - (186) (6 106) Net movement in treasury shares - 78 (5 623) Decrease in long-term borrowings - (264) (483) Net (decrease)/increase in cash and cash equivalents (56 049) (40 681) 56 023 Cash surplus at the beginning of year 260 400 204 377 204 377 Cash surplus at the end of the period/year 204 351 163 696 260 400 Condensed Group statement of changes in equity Unaudited Unaudited Audited 6 months 6 months 12 months
R`000 Dec 2011 Dec 2010 Jun 2011 Balance as at 1 July 494 970 465 135 465 135 Net profit for the period/year 57 418 25 114 57 410 Capital distribution (15 733) (15 925) (23 835) Net treasury movement - 78 (5 623) Share-based payment 886 990 1 883 Balance at period/year-end 537 541 475 392 494 970 Supplementary information Unaudited Unaudited Audited 6 months 6 months 12 months Dec 2011 Dec 2010 Jun 2011 Shares in issue (000`s) 212 190 212 190 212 190 Shares in issue - weighted (000`s) 196 661 199 620 198 892 Diluted number of shares - weighted (000`s) 198 092 200 911 200 252 Net asset value per share (cents) 253 224 233 Cost of sales (R`000) 372 432 310 640 565 745 Net inventory provision raised (R`000) 10 968 8 296 13 073 Interest received (R`000) 6 528 (5 711) (11 949) Interest received on recovery of losses (R`000) 9 448 - - Interest paid (R`000) - 205 432 Legal fees (R`000) 1 246 4 282 6 188 Capital expenditure (R`000) 960 3 230 5 540 Capital commitments (R`000) 4 588 1 509 478 Depreciation, amortisation and impairment charge (R`000) 3 510 2 295 4 489 Operating lease commitments (R`000) 76 775 22 799 83 108 Total comprehensive income (R`000) 57 418 25 114 57 410 Profit/(loss) on disposal of property, plant and equipment (R`000) 46 (64) 387 Total tax effects on adjustments (R`000) (13) 19 (108) Headline profit (R`000) 57 451 25 069 57 689 Headline earnings per share (cents) 131,7% 29,2 12,6 29,0 Diluted headline earnings per share (cents) 132,0% 29,0 12,5 28,8 Supplementary information Statement of comprehensive income Previously reported Restatement Restated R`000 Dec 2010 Dec 2010 Dec 2010 Operating profit 34 887 18 34 905 Profit before taxation 35 905 18 35 923 Taxation (10 804) (5) (10 809) Profit from continuing operations 25 101 13 25 114 Profit from discontinuing operations 13 (13) - From continuing operations Basic earnings per share (cents) 12,6 0,0 12,6 Diluted earnings per share (cents) 12,5 0,0 12,5 From discontinuing operations Basic earnings per share (cents) 0,0 0,0 0,0 Diluted earnings per share (cents) 0,0 0,0 0,0 NOTES 1. Basis of preparation These condensed financial statements have been prepared in accordance with the framework concepts and the measurement and recognition requirements of 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 2011 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 policy. The above information has not been reviewed or reported on by AMAP`s auditors. This financial information was prepared under the supervision of Bruce Drummond, CFO (BCom, FCIS). 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 are no other obligations, current or pending, which are considered 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 from 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 restated. Commentary on the Group`s interim results for the six months ended 31 December 2011 Trading environment The volatility of the exchange rate during the six months ended 31 December 2011 has created increased margin pressure and led to an extremely competitive market in the categories in which we operate. Consumer spending over the festive season was in line with our expectations. Operational review The Board is pleased to announce that the Group has achieved results above expectations compared to the prior period. Revenue grew by 16,6% and operating profit increased by 25,1%. Normalised earnings per share grew 47,6% to 18,6 cents per share. Basic earnings per share increased by 131,7% to 29,2 cents per share after accounting for the recovery of losses received from an arbitration award. The arbitration award was handed down in favour of the Group in respect of a claim by a subsidiary, Tedelex Trading (Proprietary) Limited, against Battery Technologies (Proprietary) Limited. The claim arose following the cancellation of orders of batteries supplied to Tedelex Trading (Proprietary) Limited on the basis that the batteries did not meet specification requirements. The award is an amount of over R20,7 million after tax which has been separately disclosed in the statement of comprehensive income under recovery of losses. The award has been received and banked. The continued focus on and investment in our trusted brands has resulted in the growth of market share despite tough trading conditions. Key to the Group`s growth strategy is the on-going development of intellectual capital, enabling a comprehensive approach to the Group`s purchasing, logistics, financial, marketing and sales activities. As reported in the Annual Integrated Report for June 2011, our strategic relationships with trade partners continue to grow and strengthen, and the Group is working with both suppliers and the customers to ensure a consumer orientated approach to business. Over the past six months, the new brands which were launched in the previous year have gained traction and continue to grow their market share. We continue to bring new categories to market through our strategic relationships with McPhersons and will launch the Multix brand in the next six months. The acquisition of the TDK, Case Logic, Memorex, Bell, Xonix agencies and the Sentry brand in our second quarter complement the Group`s offering. The addition of these brands, staff integration and synergies resulted in restructuring costs of R1,4 million. Our strategy of offering brands "good, better, best" continues to reap reward with all brands achieving good growth. The Group made a conscious decision to increase inventory leading up to December 2011 due to the early Chinese New Year shut-down and price increases from suppliers. Inventory was also bolstered by the entry into new product categories as highlighted above. Management is driving increased efficiencies, working capital management and cost reductions through technology initiatives. In line with the Group`s focus on sustainable business, our carbon footprint was assessed and rated by Global Carbon Exchange and was found to have improved on prior periods, and is well within industry acceptable standards. The Group`s quality improvement programme continues to successfully enforce the strength of our brands. Financial performance Statement of changes in comprehensive income - Revenue increased by 16,6% to R526,1 million (2010: R451,4 million) - Operating profit increased by 25,1% to R43,7 million (2010: R34,9 million) - Total comprehensive income increased by 128,6% to R57,4 million (2010: R25,1 million) - Normalised earnings per share increased by 47,6% to 18,6 cents per share (2010: 12,6 cents per share) - Basic earnings per share increased by 131,7% to 29,2 cents per share (2010: 12,6 cents per share) - Diluted headline earnings per share increased by 132,0% to 29,0 cents per share (2010: 12,5 cents per share). Statement of financial position - Inventory increased due to early ordering as a result of the early Chinese New Year, as well as entry into new product categories - The increase in goodwill/trademarks is as a result of amounts paid for the acquisition of the media brands - As discussed in the Annual Integrated Report for June 2011, assets previously held for sale were reclassified as investment property - The increase in trade and other payables is in line with the increase in stock and creditor payment terms - Bank and cash on hand amounted to R204,4 million (2010: R163,7 million) - The statement of financial position remains net ungeared, and current assets exceed current liabilities by a factor of over three times. Interim distribution to shareholders Based on the current financial position, the Board has declared an interim capital distribution of 7,0 cents per share for the six months ended 31 December 2011 (2010: 4,0 cents) out of contributed tax capital. Shareholders are advised that the last date to trade cum the distribution will be Friday, 23 March 2012. The shares will commence trade ex the distribution as from Monday, 26 March 2012 and the record date will be Friday, 30 March 2012. The payment date is Monday, 2 April 2012. Share certificates may not be dematerialised or rematerialised between Monday, 26 March 2012 and Friday, 30 March 2012, both dates inclusive. Changes to the Board and company secretary 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, both effective 22 September 2011. Bruce Drummond, the Chief Financial Officer and company secretary, resigned from the position of company secretary, effective 7 November 2011. Marion Kearns has been appointed as company secretary with effect from 7 November 2011. Segmental reporting The Group predominantly markets and distributes consumer durables from a single business unit. Information regarding aggregated customer and geographical information is in line with that disclosed in the Annual Integrated Report for June 2011 as required in line with the requirements for IFRS 8 - Operating Segments. Subsequent events No events material to the understanding of the report occurred during the period between 31 December 2011 and the date of this report. However, as detailed in the SENS dated 28 February 2012, the acquisition of Sammeg Satellite (Proprietary) Limited, Samsat (Cape) (Proprietary) Limited, and Samsat (KZN) (Proprietary) Limited became effective 29 February 2012. Prospects As a result of the current economic conditions, limited growth in retail sales in the categories in which we currently trade is expected for the balance of the financial year in our South African operations. We do however continue to expect substantial growth into Africa. The Group remains committed to ensuring earnings enhancement through both organic and acquisitive growth whilst improving return on equity on a sustainable basis. For and on behalf of the Board David Cleasby Alan Coward Non-executive Chairman Chief Executive Officer Johannesburg 5 March 2012 Directors *DE Cleasby (Chairman), AS Coward (CEO), MG Crow, BG Drummond (CFO), **SH Muller, DB Oliver, **DD Tabata, *S Scafidas, **CKL Scott (Lead independent) *Non-executive **Independent non-executive Company Secretary MJ Kearns Transfer secretaries Computershare Investor Services 70 Marshall Street, Johannesburg 2001 PO Box 61051, Marshalltown 2107 Registered office West Block, cnr The Straight and Witkoppen Road, Pineslopes Office Park Fourways 2191 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: 05/03/2012 07:05:10 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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