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Audited results for the year ended 30 June 2012
AMALGAMATED APPLIANCE HOLDINGS LIMITED
Registration number: 1997/004130/06
ISIN: ZAE000012647
Share code: AMA
("AMAP" or "the Group")
AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2012
HIGHLIGHTS
- Capital distribution increased by 41.7% year-on-year, from 12 cents to 17 cents per share
- Revenue increased by 20.5% to R995,7 million
- Operating profit increased by 21.7% to R84,0 million
- Basic earnings per share increased by 49.5% to 43,2 cents
- Normalised earnings per share increased by 13.1% to 32.7 cents
- Cash on hand R182,5 million
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
30 June 30 June
2012 2011
% R'm R'm
Revenue 20.5 995,7 826,4
Operating profit 21.7 84,0 69,0
Fair value adjustment on financial instruments (1,2) (2,0)
Restructuring costs operations (3,5) (1,1)
Net interest received bank and cash on hand 11,0 11,5
Recovery of losses on defective products 19,4
Interest received on recovery of losses
on defective products 9,4
Profit before taxation 53.9 119,1 77,4
Taxation (34,3) (20,0)
Total comprehensive income for the year 47.7 84,8 57,4
Total comprehensive income for the year 84,8 57,4
Recovery of losses on defective products (19,4)
Interest received on recovery of losses
on defective products (9,4)
Taxation on recovery of losses
on defective products 8,1
Normalised earnings for the year 11.7 64,1 57,4
Normalised* earnings per share
Normalised earnings per share (cents) 13.1 32,7 28,9
Normalised diluted basic earnings
per share (cents) 11.1 31,9 28,7
Earnings per share
Basic earnings per share (cents) 49.5 43,2 28,9
Diluted basic earnings per share (cents) 47.0 42,2 28,7
Capital distribution per share interim (cents) 7,0 4,0
Capital distribution per share final (cents) 10,0 8,0
Total capital distribution per share 41.7 17,0 12,0
* Normalised refers to profit after taxation before recovery of losses on defective products. Normalised
earnings per share and normalised diluted earnings per share are calculated using profit after taxation
before recovery of losses and on the same basis as earnings per share and diluted earnings per share.
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Audited Audited
30 June 30 June
2012 2011
R'm R'm
ASSETS
Non-current assets 62,6 58,6
Property, plant and equipment 16,7 8,9
Goodwill 0,8
Intangible assets 43,7 1,6
Investment property 11,7
Deferred taxation 1,4 36,4
Assets classified as held for sale 11,9
Current assets 641,6 594,6
Inventories 248,3 137,1
Taxation 3,3
Trade and other receivables 207,5 197,1
Bank and cash on hand 182,5 260,4
Total assets 716,1 653,2
EQUITY AND LIABILITIES
Total equity 544,4 495,0
Non-current liabilities 3,7 2,7
Deferred taxation 3,7 2,7
Liabilities directly associated with assets classified
as held for sale 2,2
Current liabilities 165,8 155,5
Trade and other payables 148,8 127,8
Derivative financial liability 2,4 2,3
Capital distribution and dividends payable 0,3 0,2
Taxation 0,2
Provisions 14,3 25,0
Total equity and liabilities 716,1 653,2
CONDENSED GROUP STATEMENT OF CASH FLOWS
Audited Audited
30 June 30 June
2012 2011
R'm R'm
Cash flow from operating activities 0,2 67,3
Cash generated by trading 103,5 74,8
Working capital changes (82,8) (5,8)
Cash generated by operations 20,7 69,0
Capital distribution and dividends paid (29,4) (23,8)
Net interest received 20,4 11,5
Taxation (paid) received (11,5) 10,6
Cash flow from investing activities (70,0) (5,2)
Additions to property, plant and equipment (13,8) (5,5)
Acquisitions (56,5)
Proceeds on disposal of property, plant and equipment 0,3 0,3
Cash flow from financing activities (8,1) (6,1)
Net movement in treasury shares (8,1) (5,6)
Decrease in long-term borrowings (0,5)
Net (decrease) increase in cash and cash equivalents (77,9) 56,0
Cash surplus at the beginning of the year 260,4 204,4
Cash surplus at the end of the year 182,5 260,4
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Audited Audited
30 June 30 June
2012 2011
R'm R'm
Balance as at 1 July 495,0 465,1
Total comprehensive income for the year 84,8 57,4
Capital distribution (29,5) (23,8)
Net treasury movement (8,0) (5,6)
Share-based payment 2,1 1,9
Balance at year-end 544,4 495,0
SUPPLEMENTARY INFORMATION
Audited Audited
30 June 30 June
% 2012 2011
Shares in issue (000's) 212 190 212 190
Shares in issue weighted (000's) 196 201 198 892
Diluted number of shares weighted (000's) 200 909 200 252
Net asset value per share (cents) 257 233
Cost of sales (R'm) 695.2 565,7
Net inventory provision raised (R'm) 27,5 13,1
Interest received (R'm) (11,3) (11,9)
Interest received on recovery of losses (R'm) (9,4)
Interest paid (R'm) 0,3 0,4
Capital expenditure (R'm) 13,8 5,5
Capital commitments (R'm) 0,5 0,5
Depreciation (R'm) 5,5 4,5
Operating lease commitments (R'm) 78,7 83,1
Profit (R'm) 84,8 57,4
Loss on disposal of property,
plant and equipment (R'm) 0,2 0,4
Total tax effects on adjustments (R'm) (*) (0,1)
Headline earnings (R'm) 84,9 57,7
Headline earnings per share (cents) 49,3 43,3 29,0
Diluted headline earnings per share (cents) 46.9 42,3 28,8
The major classes of assets and liabilities held for sale are as follows:
Audited Audited
30 June 30 June
2012 2011
Statement of financial position R'm R'm
Assets classified as held for sale
Property, plant and equipment 11,7
Other receivables 0,2
Assets classified as held for sale 11,9
Liabilities directly associated with assets held for sale
Deferred taxation (2,0)
Other payables (0,2)
Liabilities directly associated with assets held for sale (2,2)
Net assets classified as held for sale 9,7
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, the JSE Limited Listings
Requirements and the requirements of the Companies Act of South Africa. The accounting
policies and their application are consistent, in all material respects, with those detailed in
AMAP's 2012 integrated 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 condensed consolidated financial report has been prepared in accordance with the
historic cost convention, except for certain financial instruments (derivative financial liabilities)
which are stated at fair value, and is presented in Rand, which is AMAP's functional and
presentation currency. These results were prepared on a going concern basis.
The independent auditors, Deloitte & Touche, have issued their opinion on the Group's
annual financial statements for the year ended 30 June 2012. The audit was conducted
in accordance with International Standards on Auditing. They have issued an unmodified
opinion. A copy of their audit report is available for inspection at AMAP'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. Any reference to future financial performance included in this
announcement has not been reviewed or reported on by the Company's auditors.
This document was prepared under the supervision of the CFO, Bruce Drummond, 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 advisors, 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 "investment property" to "held for sale"
Subsequent to year-end, the sale of property previously classified as investment property was
finalised. Accordingly, the asset has been transferred from investment property to assets held
for sale as at 30 June 2012.
COMMENTARY
In the face of slow economic growth due to weaker external demand, slower consumer spending
and capital formation by the private sector, the strength of AMAP's brands continued to deliver,
with our brands across all categories growing market share (including brands acquired in the year
under review). Key acquisitions have been bedded down and began contributing to the bottom
line, but are expected to only fully contribute in the forthcoming financial year.
AMAP's success depends on understanding the different profiles and preferences of our
consumers. The strategy of offering "good, better, best" brands in different categories is based on
comprehensive insights into consumers' purchasing behaviour. AMAP continues to differentiate
itself by investing in its brands and people.
Our marketing, sales and key account managers analyse the latest consumer trends and ensure
that we are able to deliver the right products and brands to customers across the LSM groups at
the right price. This strategy has led to strong growth in the financial year under review.
Key to our growth strategy as a sales and marketing entity is the on-going development of
intellectual capital, enabling us to use a comprehensive approach to purchasing, logistics,
financial, marketing and sales activities, which allows us to continue cutting costs by driving
efficiencies within the Group.
The Group has established a strong foothold in 15 African countries and we are targeting to
generate 10% of total revenue outside South Africa's borders by June 2014. Economies in sub-
Saharan Africa have been negatively affected by weaker global demand and lower commodity
prices, however, they proved to be more resilient than South Africa's economy.
An 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
award is an amount of R20,7 million (capital and interest) after tax, payment of which was received
in December 2011.
Having restructured and established a solid foundation for growth, we have the opportunity to
refresh our trading name. After in-depth research, our wholly-owned subsidiary, Tedelex Trading
(Proprietary) Limited, will be changing its name to "Home of Living Brands (Proprietary) Limited".
We believe this represents the evolution of AMAP and, in line with this change, we will propose
at the Annual General Meeting that AMAP's name be changed to "Home of Living Brands Group
Limited".
FINANCIAL PERFORMANCE
Statement of comprehensive income
Revenue from operations for the year under review increased by 20.5% to R995,7 million
(2011: R826,4 million). Profit before tax for the year was R119,1 million (2011: R77,4 million).
The Group received net interest of R20,4 million (2011: R11,5 million) including interest on an
arbitration award. Total comprehensive income for the year amounted to R84,8 million (2011:
R57,4 million). Normalised earnings per share increased to 32.7 cents (2011: 28.9 cents). Basic
earnings per share increased to 43,2 cents (2011: 28,9 cents) and headline earnings per share
increased to 43,3 cents (2011: 29,0 cents).
STATEMENT OF FINANCIAL POSITION
Current assets exceed current liabilities by a factor of 3.9 while the statement of financial position
is ungeared. Cash on hand amounted to R182,5 million (2011: R260,4 million). Stringent working
capital management had a considerable impact on strengthening the Group's statement
of financial position, despite payments made for acquisitions and capital distributions. In a
particularly challenging trading environment and with the expansion of our brand and product
range, inventory increased to R248,3 million from R137,1 million a year ago. This increase is
expected given low inventory levels in 2011, and is now within our targeted inventory holding
levels. Trade and other receivables at year-end was R207,5 million compared with R197,1 million a
year ago. This increase is due to higher revenue this year and was minimised by better collections
and stricter control on credit approvals. Management is confident that the business will continue to
generate cash through inventory control, overhead savings and the benefits of improved product
category selection.
ACQUISITIONS DURING THE YEAR
Tedelex Trading (Pty) Limited, a wholly-owned subsidiary of AMAP, acquired the business of
Spectrum Multimedia (Pty) Limited for a consideration of R15,8 million, effective 27 September
2011. In addition, the same subsidiary acquired the businesses of Sammeg Satellite (Pty) Limited,
Samsat Cape (Pty) Limited and Samsat (KZN) (Pty) Limited for a consideration of R40,7 million,
effective 29 February 2012. These acquisitions form part of the Group's growth strategy to acquire
new brands and harness potential synergies. Both businesses have been integrated into the
normal trading activity of Tedelex Trading (Pty) Limited.
Satellite Multimedia
products products
trading trading
business business Total
Assets acquired at date of acquisition R'm R'm R'm
Current assets 11,7 12,8 24,5
Inventories 11,7 12,8 24,5
Non-current assets 39,1 3,9 43,0
Plant and equipment 0,9 0,9
Intangible assets Trademarks 27,0 27,0
Intangible assets Agency agreements 11,2 3,9 15,1
Non-current liabilities (10,7) (1,1) (11,8)
Deferred tax liability (10,7) (1,1) (11,8)
Net identifiable assets 40,1 15,6 55,7
Goodwill arising on acquisition 0,6 0,2 0,8
Goodwill is recognised on the basis of the value acquired as well as the synergies to the Group.
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 2012 integrated annual report as required by IFRS 8: Operating Segments.
SUBSEQUENT EVENTS
Subsequent to year-end, the sale of a property previously classified as investment property was
finalised. Accordingly, the property has been transferred from investment property to assets held
for sale as at 30 June 2012. The disposal property, consisting of portion 64 (a portion 420 of the
farm Melkpost No 4, Atlantis), was sold for an amount of R35 million, less agents' commissions
and a lease termination consideration, resulting in net proceeds of R32 million. A R1 million deposit
was received on signature date, and the balance is secured by a bank guarantee. The disposal
proceeds will be utilised to satisfy current working capital requirements.
AMAP is pleased to announce that, effective 26 September 2012, a wholly-owned subsidiary has
concluded an agreement to extend its rights to the Russell Hobbs licence to include all categories
of goods (other than batteries and pet products) ("categories") and all countries in sub-Saharan
Africa and the Indian Ocean Islands (the "Territory"). These extended rights will apply for a period
of 18 years and thereafter AMAP will purchase and acquire the Russell Hobbs trademark ("the
Trademark") for all categories in the Territory.
In order to maximise the effect of the amended Russell Hobbs licence agreement, and to
expand sales into the Territory, AMAP has entered into a consultancy agreement, with Applica
Consumer Products Incorporated USA, who will assist AMAP in the short to medium term with the
necessary marketing support and category information. The value of these consultancy services
is R51 million.
AMAP believes that these transactions present a substantial opportunity to increase its current
market share in the new categories of goods, as well as increase its penetration into the Territory
as part of its export drive.
No other events material to the understanding of this report have occurred between 30 June 2012
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 of Contributed Tax Capital of 10 cents per share for the year ended
30 June 2012. The total capital distribution for the year of 17 cents includes 4 cents in respect of
the arbitration award received.
Shareholders are advised that the last date to trade cum the capital reduction will be Friday,
30 November 2012.
The shares will commence trade ex distribution as from Monday, 3 December 2012 and the record
date will be Friday, 7 December 2012. The payment date is Monday, 10 December 2012.
Share certificates may not be dematerialised or rematerialised between Monday, 3 December 2012
and Friday, 7 December 2012, both dates inclusive.
CHANGES TO THE BOARD
As reported in the integrated annual report for 30 June 2011, Spyros Scafidas was appointed as a
non-executive director with effect from 1 July 2011. Myron Berzack and Leon Campher resigned
from the Board in September 2011. David Cleasby was appointed as Chairman of the Board, and
Colin Scott as Lead Independent Director on 22 September 2011.
PROSPECTS FOR THE YEAR AHEAD
GDP growth in South Africa is expected to be around 2.5% for 2012, resulting in limited growth in
retail sales in South Africa in the categories in which we currently operate. We do however expect
continued growth in Africa. The Group remains committed to ensuring earnings enhancement
through both organic and acquisitive growth whilst improving return on equity on a sustainable
basis. While the economic and political outlook for the year ahead remains challenging, macro-
economic fundamentals are unlikely to change significantly. However, AMAP has trusted brands in
its portfolio which makes for an enviable business mix creating a solid investment for shareholders.
Our strong portfolio of brands is backed up by having the right people capable of tackling the
challenges ahead. We plan to carry the momentum in market share growth and targeted cost
reductions into the next financial year. We are confident that our strategy will continue to generate
growth in normalised earnings going forward.
ACKNOWLEDGEMENTS
We would like to express our thanks and appreciation to the members of the Board for their
insight and guidance over the past year. On behalf of the Board we would also like to thank our
shareholders, suppliers and customers for their support and, in particular, our employees for their
contribution.
We look forward to a challenging but fruitful financial year to come as we seek to continue to
deliver solid shareholder returns.
David Cleasby Alan Coward
Chairman of the Board of Directors Chief Executive Officer
27 September 2012
Directors
*DE Cleasby (Chairman), AS Coward (CEO), MG Crow, BG Drummond (CFO), **SH Müller
DB Oliver, **DD Tabata, *S Scafidas, **CKL Scott (Lead independent)
*Non-executive **Independent non-executive
Company Secretary
MJ Kearns
Transfer secretaries
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107)
Registered office
West Block, Pineslopes Office Park, corner The Straight and Witkoppen Roads, 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
Auditor
Deloitte & Touche, Building 1 and 2, Deloitte Place
The Woodlands Office Park, Woodlands Drive, Sandton, 2196
www.amap.co.za
Date: 27/09/2012 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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