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Inerim results for 6 month period ending September 2012
AMALGAMATED ELECTRONIC CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/010036/06)
Share code: AER ISIN: ZAE000070587
("Amecor" or "the Company")
HIGHLIGHTS:
- EPS and HEPS increased 20.8%
- Turnover increased 85.6%
- Profit attributable to Amecor shareholders up 19.5%
UNAUDITED RESULTS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2012
GROUP CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2012 2011 2012
R'000 R'000 R'000
Revenue 155 647 84 081 218 474
Turnover 154 307 83 137 214 982
Cost of sales (94 370) (44 623) (126 329)
Gross profit 59 937 38 514 88 653
Operating cost excluding depreciation and amortisation (34 083) (16 868) (51 226)
EBITDA 25 854 21 646 37 427
Depreciation and amortisation (2 473) (1 775) (4 133)
Operating profit before interest and taxation 23 381 19 871 33 294
Finance income 1 217 747 1 857
Finance expenses (2 913) (213) (3 190)
Profit before taxation 21 685 20 405 31 961
Taxation (5 186) (5 998) (10 616)
Profit for the period 16 499 14 407 21 345
Other comprehensive income – – –
Total comprehensive income for the period 16 499 14 407 21 345
Profit and total comprehensive income attributable to:
Ordinary shareholders of Amecor 14 650 12 264 18 632
Non-controlling interest 1 849 2 143 2 713
Total comprehensive income for the period 16 499 14 407 21 345
Earnings per share (cents) 19.7 16.3
Diluted earnings per share (cents) 19.7 16.3
GROUP CONDENSED STATEMENT OF FINANCIAL POSITION
Unaudited Audited
30 September 31 March
2012 2012
R'000 R'000
ASSETS
Non-current assets 104 635 101 749
Property, plant and equipment 23 168 22 497
Intangible assets 20 037 17 838
Goodwill 59 661 59 661
Deferred tax asset 1 769 1 753
Current assets 167 142 166 761
Inventories 48 780 44 931
Receivables and other current assets 58 990 58 870
Taxation 285 3 328
Cash and cash equivalents 59 087 59 632
Total assets 271 777 268 510
EQUITY AND LIABILITIES
Share capital 70 780 70 843
Retained earnings 84 178 75 506
Non-controlling interest 19 757 18 222
Total equity and reserves 174 715 164 571
Non-current liabilities 62 727 62 834
Borrowings 57 652 57 684
Deferred tax liabilities 5 075 5 150
Current liabilities 34 335 41 105
Trade and other payables 33 333 39 831
Short-term portion of borrowings 1 002 1 274
Total equity and liabilities 271 777 268 510
GROUP CONDENSED STATEMENT OF CASH FLOWS
Unaudited Unaudited
Six months Six months
ended ended
30 September 30 September
2012 2011
R'000 R'000
Cash generated by operations 15 387 14 017
Net finance (expense)/income (1 696) 535
Taxation paid (2 234) (6 230)
Dividends paid (6 292) (6 355)
Net inflow from operating activities 5 165 1 967
Net outflow from investing activities (5 342) (3 593)
Net outflow from financing activities (368) (1 123)
Net movement in cash balances (545) (2 749)
Cash and cash equivalents at beginning of the year 59 632 35 024
Cash and cash equivalents at the end of the period 59 087 32 275
GROUP CONDENSED STATEMENT OF CHANGES IN EQUITY
Non-
Share Accumulated controlling Total
capital profit interest equity
R'000 R'000 R'000 R'000
Balance at 1 April 2011 72 560 62 915 16 007 151 482
Dividends paid – (5 967) (388) (6 355)
Total comprehensive income – 12 264 2 143 14 407
Treasury share purchase (617) – – (617)
Total changes (617) 6 297 1 755 7 435
Balance at 1 October 2011 71 943 69 212 17 762 158 917
Dividends paid – (5 978) (314) (6 292)
Total comprehensive income – 20 944 2 309 23 253
Treasury share purchase (1 163) – – (1 163)
Total changes (1 163) 14 966 1 995 15 798
Balance at 30 September 2012 70 780 84 178 19 757 174 715
MANAGEMENT COMMENTARY
Amalgamated Electronic Corporation Limited ("Amecor") is a holding company made up of eight reputable
subsidiaries offering integrated solutions in the world of electronic security, data networks and power-based
technology. Amecor and its subsidiaries ("the Group") have a national footprint, with distribution branches
in primary locations throughout South Africa. International exporting opportunities play a definitive role in
expanding Amecor's global reach.
The Group's broad range of products and services include:
- electronic security systems, encompassing sophisticated transmission technology and an exclusive
range of security products and applications;
- a private data network, enabling subscribers secured transmission of data as well as off-site product
control; and
- power generating equipment, which includes a variety of generators, inverters and UPS systems.
Financial and operational review
Turnover increased by 85.6% to R154.3 million (2011: R83.1 million) and gross profit by 55.6% to
R59.9 million (2011: R38.5 million). The increase on last year resulted primarily from the integration of
Secequip's financial performance into the Group. EBITDA increased by 19.4% to R25.9 million (2011:
R21.6 million). The production and sales element of the Group faced challenges in the current economic
conditions, resulting in margin reductions to remain competitive in the challenging market. The Group, as
a whole, experienced an increase in operating costs of 102.1% to R34.1 million (2011: R16.9 million) as a
direct result of the Secequip business acquisition as well as electricity rate hikes, higher salaries and
wages, and increasing fuel prices.
The increase in depreciation and amortisation of 39.3% to R2.5 million (2011: R1.8 million) arose from
depreciation of assets acquired as part of the Secequip transaction, and additional amortisation being
expensed in FSK.
Finance income increased by R0.5 million from R0.7 million in 2011 to R1.2 million, while finance costs rose
to R2.9 million (2011: R0.2 million). Both were attributable to the bond issued by Amecor in the amount of
R60.0 million as R11.6 million remains unutilised, attracting interest income. Quarterly interest payments are
processed at an interest rate linked to three-month JIBAR.
Income attributable to Amecor shareholders increased from R12.3 million in 2011 to R14.7 million, and basic
and headline earnings per share increased by 20.8% to 19.7 cents (2011: 16.3 cents).
In line with the increased turnover, primarily attributable to the acquisition of the Secequip business,
working capital increased during the year.
Cash and cash equivalents within the Group at the end of the period under review was R59.1 million
(2011: R32.3 million).
The Secequip purchase price allocation was finalised during the period resulting in an increase in goodwill of
R5.7 million recognised on the transaction. The goodwill represents the synergies expected to occur due to
this transaction.
Product development
The Group continues to invest in research and development resulting in further high quality products being
launched into local and international markets. The net intangible assets increased by 19.8% to R20.0 million
(2011: R16.7 million).
Capital commitment
The Group has committed to ongoing product development costs in the next financial year.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Significant accounting policies
Amecor is a company domiciled in South Africa. These condensed consolidated financial statements
of Amecor for the six months ended 30 September 2012 comprise the Company and its subsidiaries
(together referred to as the "Group").
These condensed consolidated interim results were authorised for issue by the board of directors on
12 November 2012. The unaudited condensed consolidated financial statements for the six months
ended 30 September 2012 have been prepared by the Financial Director, Mrs K Colley and have not
been reviewed or audited by the Company's auditors, Mazars.
Basis of preparation
These condensed consolidated results for the period ended 30 September 2012 have been prepared in
accordance with and contain information required by International Accounting Standards 34 – Interim
Financial Reporting ("IAS 34"), as well as the AC 500 series as issued by the Accounting Practices Board
or its successor, the Listings Requirements of the JSE Limited and the South African Companies Act, 71 of
2008, as amended.
The accounting policies and methods of computation used in the preparation of the results for the period
ended 30 September 2012, are in terms of IFRS and are consistent with those applied in the Group
audited annual financial statements for the year ended 31 March 2012. The comparative figures referred
to in the commentary relate to the prior year equivalent interim period.
These condensed consolidated financial statements do not include all of the information required for full
financial statements and should be read in conjunction with the consolidated annual financial statements
for the year ended 31 March 2012. The estimates and underlying assumptions are on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the estimate is revised if the
revision affects only that period or in the period of the revision and future periods if the revision affects
both current and future periods.
2. Earnings per share ("EPS")
Unaudited Unaudited
Six months Six months
ended ended
30 September 30 September
2012 2011
Earnings:
Profit attributable to equity holders of Amecor (R'000) 14 650 12 264
Shares in issue
Weighted average number of ordinary shares in issue ('000) 74 517 75 205
Earnings and diluted earnings per share (cents) 19.7 16.3
Headline earnings per share
Profit attributable to equity holders of Amecor (R'000) 14 650 12 264
Less: Profit on sale of property, plant and equipment - -
Tax effect of adjustment - -
Headline earnings (R'000) 14 650 12 264
Weighted average number of ordinary shares in issue ('000) 74 517 75 205
Headline and diluted headline earnings per share (cents) 19.7 16.3
3. Net asset value ("NAV") per share
Unaudited Audited
30 September 31 March
2012 2012
Ordinary share capital and reserves (R'000) 174 715 164 571
Total number of shares in issue ('000) (net of treasury shares) 74 517 74 548
NAV per share (cents) 234.5 220.8
Ordinary share capital and reserves (R'000) 174 715 164 571
Goodwill (59 661) (59 661)
Intangible assets (20 037) (17 838)
Tangible NAV 95 017 87 072
Total number of shares in issue ('000) (net of treasury shares) 74 517 74 548
Tangible NAV per share (cents) 127.5 116.8
4. Segmental analysis
The Group's operating segments and segmental information presented in the condensed consolidated
results for the six months ended 30 September 2012 represents the basis for segmental reporting.
The business segment reporting format reflects the Group's management and internal reporting structure.
Inter-segment transactions are concluded at arm's length terms and conditions.
Unaudited Audited Unaudited
Six months Twelve months Six months
ended ended ended
30 September 31 March 30 September
2012 2012 2011
R'000 R'000 R'000
Segment turnover
Production and sales 143 867 204 496 70 443
Security and related production and sales 89 503 115 809 22 519
Supply and maintenance of alternative
power sources 54 364 88 687 47 924
Network and annuity income 11 826 20 374 9 657
Corporate head office and other 6 467 16 106 7 342
Inter-company sales (1 766) (15 126) (1 200)
Consolidation adjustments (6 087) (10 868) (3 105)
Total turnover 154 307 214 982 83 137
Comprehensive income
Production and sales 11 248 15 412 9 553
Security and related production and sales 6 967 11 137 5 251
Supply and maintenance of alternative
power sources 4 281 4 275 4 302
Network and annuity income 7 392 11 222 5 112
Corporate head office and other 1 625 3 817 6 179
Consolidation adjustments (3 766) (9 106) (6 437)
Total comprehensive income 16 499 21 345 14 407
Assets
Production and sales 176 520 167 331
Security and related production and sales 122 296 114 159
Supply and maintenance of alternative
power sources 54 224 53 172
Network and annuity income 43 481 39 454
Corporate head office and other 164 863 143 659
Consolidation adjustments (113 087) (81 934)
Total assets 271 777 268 510
5. Related party transactions
Unaudited Audited Unaudited
Six months Twelve months Six months
ended ended ended
30 September 31 March 30 September
2012 2012 2011
R'000 R'000 R'000
Purchases from fellow subsidiary companies 1 766 15 126 1 200
Management fees 5 907 10 420 3 105
Operating lease 568 578 422
6. Subsequent events
No material subsequent events have occurred to date.
7. Dividends
No interim dividend has been declared.
8. Directors
HS Courtney (Non-executive chairman)
DH Alexander (Chief executive officer)
KA Colley (Financial director and company secretary)
M Noge (Non-executive director)
CH Boulle (Non-executive director)
KA Vieira (Operational director)
PFC Ying (Non-executive director)
All of the above directors are South African and are resident in South Africa.
9. Outlook
We remain optimistic that our focused strategy and operational efficiency will enable us to deliver
positive returns for our shareholders.
We believe that the Group's market position, low-cost, high quality products, and commitment to
operational improvement and expansion will ensure our ongoing success.
On behalf of the board
DH Alexander KA Colley
Chief Executive Officer Financial Director
Johannesburg
13 November 2012
Directors
HS Courtney (Chairman)*, DH Alexander, KA Colley, M Noge*, KA Vieira, CH Boulle*#, PFC Ying*#
(*Non-executive, #Independent)
Auditors
Mazars, 2nd Floor, Mazars House, 5 St Davids' Place, Parktown 2193 (PO Box 6697, Johannesburg 2000)
Transfer secretaries
Link Market Services Proprietary Limited, 13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein 2001
(PO Box 4844, Johannesburg 2000)
Registered office
Amecor House, 14 Richard Road, Industria North 1709 (PO Box 1962, Rivonia 2128)
Sponsor
Sasfin Capital Limited (A division of Sasfin Limited), 29 Scott Street, Waverley 2090
(PO Box 95104, Grant Park 2051)
Visit us at
www.amecor.com
INNOVATION THROUGH TECHNOLOGY
Date: 13/11/2012 12:49:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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