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Unaudited Interim Results for the Period Ended 31 December 2012
Amalgamated Appliance Holdings Limited
Incorporated in the Republic of South Africa
Registration number: 1997/004130/06
Share code: AMA
ISIN: ZAE000012647
("AMAP" or "the Group")
Unaudited interim results for the period ended 31 December 2012
HIGHLIGHTS
Revenue increased by 22,8% to R646,3 million
Operating profit increased by 35,5% to R59,2 million
Normalised profit after taxation increased by 14,2% to R41,9 million
Normalised earnings per share increased by 16,1% to 21,6 cents
Cash on hand R192,6 million
Offer from The Bidvest Group Limited to acquire all the ordinary shares in AMAP
COMMENTARY
The stagnant economic growth locally and reduced consumer spending has not affected
the strength of AMAP's brands. The brands continue to deliver organic growth across
all categories. The Group continues to grow market share in new categories maintaining
market share in existing categories and continued expansion into Africa.
The multimedia (Spectrum) and terrestrial (Aerial King) acquisitions have been bedded
down and have started to contribute towards revenue as well as bottom line growth.
The strategy of "good, better, best" continues to support all brands within the AMAP
Group. The sales, marketing and key accounts managers ensure that we provide the
right products and brands to customers across all the LSM groups. The key strategy of
being a focus Group specialising in sales and marketing with world class, low cost shared
services has enabled the Group to substantially grow its operating profit.
The Group continues to expand into new territories into Africa, driven by the Russell
Hobbs consultancy agreement which was concluded in September 2012. The marketing
expertise, agents and customer base supplied through the consultancy agreement,
although in the early stages of implementation, is expected to grow revenue at a higher
rate than previously anticipated.
The property in Atlantis was sold on 27 September 2012 for R34,5 million net proceeds.
As advised in the 30 June 2012 results, the trading name change to "Home of Living
Brands" has lifted the company's image and staff moral to a new level. The name change
of Amalgamated Appliance Holdings Limited to Home of Living Brands Holding Group
Limited was approved by shareholders at the AGM. The name change will take effect as
soon as it is registered with the CIPC.
In the SENS announcements dated the 28 November 2012, 21 December 2012 and
22 February 2013, The Bidvest Group Limited has made an offer to acquire the ordinary
share capital of Amalgamated Appliance Holdings Limited that it does not already own.
In this regard, a circular has been posted to shareholders. The directors of AMAP support
the deal as outlined in the scheme circular as detailed below.
FINANCIAL PERFORMANCE
Normalised earnings
The board of AMAP is of the opinion that the group's trading performance is more
appropriately reflected when calculating normalised earnings. Normalised earnings
exclude the impacts of non-recurring items as follows.
6 months 6 months 12 months
ended ended ended
31 Dec 31 Dec 30 June
Rm % 2012 2011 2012
Total comprehensive income (28,2) 41,2 57,4 84,8
Total non-recurring items
after tax 0,7 (20,7) (20,5)
Amortisation of intangibles 2,8
(Profit)/Loss on disposal
of property (20,3) 0,2
Consultancy fee costs
Russell Hobbs (6 months) 25,6
Net-interest received
recovery of losses (9,4) (9,4)
Recovery of losses on
defective products (19,4) (19,4)
Taxation on items above (7,4) 8,1 8,1
Normalised profit after taxation 14,2 41,9 36,7 64,3
Normalised earnings
per share (cents) 16,1 21,6 18,6 32,8
Normalised headline earnings
per share (cents) 16,8 21,6 18,5 32,0
The above table reflects the calculation of normalised profits and earnings:
- Profit after tax based on normalised earnings increased by 14,2% at R41,9 million
(2011: R36,7 million)
- Normalised earnings per share increased by 16,1% to 21,6 cents per share
(2011: 18,6 cents per share)
- Normalised headline earnings per share increased by 16,8% to 21,6 cents per share
(2011: 18,5 cents per share)
Statement of comprehensive income
The following highlights relating to the financial performance are detailed below:
- Revenue from operations for the period increased by 22,8% to R646,3 million
(2011: R526,1 million)
- Operating profit increased by 35,5% to R59,2 million (2011: R43,7 million)
- Fair value adjustment loss of R1,6 million (2011: profit R2,2 million)
- Net interest received of R3,9 million (2011: R6,5 million)
Refer to the detailed table above regarding non-recurring items removed from
comprehensive income.
Statement of financial position
The highlights of the financial position of the company are as follows:
- Current assets exceeded current liabilities by a factor of 3,9 (2011: 3,3) while the
statement of financial position is ungeared
- Inventories decreased to R229,4 million (2011: R240,1 million)
- Trade and other receivables amounted to R271,5 million (2011: R272,6 million)
- Cash on hand amounted to R192,6 million (2011: R204,4 million). Stringent working
capital management had a considerable impact on strengthening the Group's
financial position, despite payments being made for the Russell Hobbs consultancy
agreement, capital distributions to shareholders offset by the proceeds on the sale
of the Atlantis property which was finalised in October 2012.
Segmental reporting
The Group predominantly markets and distributes household consumer durables from
a single business unit. Information regarding aggregated customer and geographical
information is in line with that disclosed in the 30 June 2012 integrated annual report
as required by IFRS 8: Operating Segments.
Subsequent events
AMAP is pleased to announce that, effective 7 January 2013, a wholly-owned subsidiary
acquired the assets, trademarks and business of Metalix (Pty) Limited, a bake ware and
charcoal braai manufacturing facility, for a total purchase price of R9,5 million, no goodwill
impact on the current financials is expected. The acquisition of Metalix (Pty) Limited will
allow the manufacture of bake ware and charcoal braai products at our Pinetown based
factory. These are two new categories for the Group and, once bedded down, should
result in good growth in these categories although off a small base.
No other events material to the understanding to this report have occurred between
31 December 2012 and the date of this report.
Distribution to shareholders
As a result of the pending Bidvest offer to shareholders, a distribution will be made to
shareholders only as a condition of the transaction. (Refer to The Bidvest Group Limited
offer below).
Changes to the board
There were no changes to the board during this period. However, a SENS announcement
dated 10 February 2013 advised shareholders that Mr Des Oliver, Executive Director, has
elected early retirement, effective 31 December 2013. This will allow a smooth hand over
of all his functions and responsibilities.
In addition, Marion Kearns resigned as company secretary and Gareth Warburton,
CA(SA), was appointed company secretary with effect from 1 March 2013.
The Bidvest Group Limited ("Bidvest") offer to acquire the entire issued
ordinary share capital of AMAP that it does not already own
Shareholders are referred to the SENS announcements of 28 November 2012,
21 December 2012 and 22 February 2013 where The Bidvest Group Limited has
made a firm intention to make an offer to acquire the entire issued ordinary share capital
of AMAP Limited that it does not already own.
The offer is on the basis of a price of R3,50 per AMAP share and that AMAP will declare
a gross special dividend of up to 30 cents per AMAP share should the requisite majority
of AMAP shareholders approve the scheme at the scheme meeting.
A scheme circular was posted to shareholders on 11 March 2013 convening a general
meeting of shareholders to be held on 12 April 2013.
Prospects for the period ahead
While the economic outlook for the period ahead remains challenging, AMAP's strong
portfolio of brands, combined with the expected double digit growth into Africa, and
supported by having the right people, will enable us to overcome the market challenges.
We plan to carry the momentum of market share growth forward and target further cost
reductions for the remainder of this financial year. AMAP is confident that, with our current
strategy, we will continue to generate growth in normalised earnings going forward.
For and on behalf of the board
David Cleasby Alan Coward
Chairman of the board of directors Chief Executive Officer
Johannesburg
11 March 2013
Condensed Group statement of comprehensive income
Unaudited Unaudited Audited
6 months 6 months 12 months
Dec Dec June
R'm % 2012 2011 2012
Revenue 22,8 646,3 526,1 995,7
Operating profit 35,5 59,2 43,7 84,0
Fair value adjustment
on financial instruments (1,6) 2,2 (1,2)
Restructuring costs
operations (0,4) (1,4) (3,5)
Net interest received
bank and cash on hand 3,9 6,5 11,0
Amortisation of intangibles (2,8)
Profit on disposal of property 20,3
Consultancy fee costs
Russell Hobbs (25,6)
Net interest received
recovery of losses 9,4 9,4
Recovery of losses
on defective products 19,4 19,4
Profit before taxation (33,6) 53,0 79,8 119,1
Taxation (11,8) (22,4) (34,3)
Total comprehensive
income for the
period/year (28,2) 41,2 57,4 84,8
Basic earnings per share
(cents) (27,4) 21,2 29,2 43,2
Diluted basic earnings
per share (cents) (29,0) 20,6 29,0 42,2
Normalised earnings
per share (cents) 16,1 21,6 18,6 32,8
Capital distribution per
share (cents) interim 7,0 7,0
Capital distribution per
share (cents) final 10,0
Condensed Group statement of financial position
Unaudited Unaudited Audited
6 months 6 months 12 months
Dec Dec June
R'm 2012 2011 2012
ASSETS
Non-current assets 58,7 29,8 62,6
Property, plant and equipment 16,6 11,1 16,7
Goodwill 0,8 0,2 0,8
Intangibles 40,9 4,4 43,7
Deferred taxation 0,4 14,1 1,4
Current assets 699,5 719,1 641,6
Inventories 229,4 240,1 248,3
Trade and other receivables 271,5 272,6 207,5
Derivative financial asset 2,0
Taxation prepaid 6,0 3,3
Bank and cash on hand 192,6 204,4 182,5
Assets classified as held for sale 11,7 11,9
Total assets 758,2 760,6 716,1
EQUITY AND LIABILITIES
Total equity 566,7 537,5 544,4
Non-current liabilities 10,8 2,7 3,7
Deferred taxation 10,8 2,7 3,7
Current liabilities 180,7 220,4 165,8
Trade and other payables 163,4 195,6 148,8
Derivative financial liability 3,2 2,4
Capital distribution and
dividends payable 0,3 0,2 0,3
Taxation 0,1
Provisions 13,8 24,5 14,3
Liabilities directly associated
with assets classified as held for sale 2,2
Total equity and liabilities 758,2 760,6 716,1
Condensed Group statement of cash flows
Unaudited Unaudited Audited
6 months 6 months 12 months
Dec Dec June
R'm 2012 2011 2012
Cash flow from operating
activities 13,0 (50,3) 0,2
Cash generated by operations 62,5 55,1 103,5
Working capital changes (29,6) (104,3) (82,8)
Cash generated/(utilised)
by operations 32,9 (49,2) 20,7
Capital distribution and
dividends paid (19,4) (16,9) (29,4)
Net interest received 3,9 16,0 20,4
Taxation paid (4,4) (0,2) (11,5)
Cash flow from investing
activities (2,0) (5,7) (70,0)
Additions to property, plant
and equipment (2,4) (6,0) (13,8)
Acquisitions (56,5)
Proceeds on disposal of property,
plant and equipment 0,4 0,3 0,3
Cash flow from financing
activities (0,9) (8,1)
Net movement in treasury shares (0,9) (8,1)
Net (decrease)/increase in
cash and cash equivalents 10,1 (56,0) (77,9)
Cash surplus at the beginning
of the period/year 182,5 260,4 260,4
Cash surplus at the end
of the period/year 192,6 204,4 182,5
Condensed Group statement of changes in equity
Unaudited Unaudited Audited
6 months 6 months 12 months
Dec Dec June
R'm 2012 2011 2012
Balance at the beginning of the
period/year 544,4 495,0 495,0
Comprehensive income for the
period/year 41,2 57,4 84,8
Capital distribution (19,4) (15,7) (29,5)
Net treasury movement (0,9) (8,0)
Share-based payment 1,4 0,8 2,1
Balance at period/year-end 566,7 537,5 544,4
Supplementary information
Unaudited Unaudited Audited
6 months 6 months 12 months
Dec Dec June
% 2012 2011 2012
Shares in issue (000's) 212 190 212 190 212 190
Shares in issue
weighted (000's) 193 983 196 661 196 201
Diluted number of
shares weighted (000's) 199 808 198 092 200 909
Net assets value
per share (cents) 267 253 257
Cost of sales (R'm) 453,3 372,4 695,2
Net inventory provision
raised (R'm) 16,9 11,0 27,5
Interest received (R'm) (4,0) (6,5) (11,3)
Interest received on
recovery of losses (R'm) (9,4) (9,4)
Interest paid (R'm) 0,1 0,3
Capital commitments (R'm) 1,5 4,6 0,5
Depreciation (R'm) 2,4 3,5 5,5
Amortisation of
intangibles (R'm) 2,8
Operating lease
commitments (R'm) 70,8 76,8 78,7
Headline earnings
calculation:
Total comprehensive income
for the period/year 41,2 57,4 84,8
Profit on disposal of property,
plant and equipment (R'm) (20,3) * 0,2
Total tax effects on
adjustments (R'm) 0,5 (*) (*)
Headline profit (R'm) (62,7) 21,4 57,4 84,9
Headline earnings
per share (cents) (62,3) 11,0 29,2 43,3
Diluted headline earnings
per share (cents) (63,1) 10,7 29,0 42,3
Normalised headline earnings
per share (cents) 16,8 21,6 18,5 32,0
The major classes of assets
and liabilities held for sale
as follows:
Assets classified as
held for sale
Investment property (R'm) 11,7 11,7
Trade receivables (R'm) 0,2
Assets classified as
held for sale (R'm) 11,7 11,9
Liabilities directly associated
with assets held for sale
Deferred taxation (R'm) 2,0
Trade, other payables
and provisions (R'm) 0,2
Liabilities directly associated
with assets held for sale (R'm) 2,2
Net assets classified as
held for sale (R'm) 11,7 9,7
* Amount less than R50 000
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), the interpretations adopted by
the International Accounting Standards Board, South African Institute of Chartered
Accountants Financial Reporting Guides as issued by the Accounting Practices
Committee and Financial Reporting Pronouncements as issued by the Financial
Reporting Standards Council and include disclosure as required by IAS 34: Interim
Financial Reporting and the Companies Act of South Africa.
The financial statements have been prepared using accounting policies that comply
with IFRS and which are consistent with those applied in the preparation of the
financial statements for the year ended 30 June 2012.
The above information has not been audited by AMAP's auditors. The above
information was prepared under the supervision of the CFO BG Drummond
(BComm 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.
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
G Warburton
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
Telephone (011) 267 3300
Sponsor and Corporate Advisor
Bridge Capital Advisors (Pty) Limited
2nd Floor, 27 Fricker Road, Illovo Boulevard, Illovo, 2196
Auditors
Deloitte & Touché
Building 1 and 2, Deloitte Place, The Woodlands Office Park
Woodlands Drive, Sandton, 2196
www.amap.co.za
Date: 12/03/2013 07:05:00 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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