Wrap Text
Unaudited Interim Results and Cash dividend declaration
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")
CONDENSED CONSOLIDATED UNAUDITED RESULTS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013 AND DIVIDEND DECLARATION
Highlights
- Maiden interim dividend of 6.5 cents per share - Under geared balance sheet with net debt of
- Turnover up 15.0% to R177.1 million R6.9 million
- Network and annuity PBIT up 24.7% to R12.1 million - Cash on hand R51.3 million
AMECOR'S MARKET LEADING OPERATIONS ARE FOCUSED ON MAKING IT SAFE
TO LIVE AND DO BUSINESS IN SOUTH AFRICA AND AFRICA
OVERVIEW
Amecor ("the Group") and its subsidiaries comprise four complementary businesses providing products and services to the security industry
in South Africa and increasingly into Africa. Though the Group increased turnover by 15.0% to R177.1 million, earnings
per share remained constant in the first half; testimony to the challenging trading conditions experienced in the distribution
businesses. Sabre Radio Networks ("Sabre"), Amecor's annuity income business continues to perform exceptionally well and
now comprises 50% of the Group's operating profit ("PBIT"). The Group continues to refine its strategic focus and is optimistic
about the financial performance for the second six months.
AMECOR ACTIVITIES
Amecor operates the following business units:
Network
Sabre is the largest security network operator within southern Africa. Its Radio and GSM infrastructure offers a secure data
network comprising base stations and hi-level repeater technology. Sabre has a national network footprint enabling security
companies and other users to route signals and data to their respective control centres.
Transmission technology
FSK Electronics SA ("FSK") is the leading manufacturer of sophisticated transmission technology and equipment monitoring
security applications. The Company's expert team of engineers also specialise in the design of radio and GSM transmitters,
receivers and transceivers, which underpins the growth in annuity earnings for Sabre.
Distribution
Secequip is one of the leading wholesale distributors of security technologies within southern Africa. The Group specialises
in the import and distribution of premium security products, which boast uncontested industry reputations. Secequip
products may be applied to a broad range of market sectors, with equipment ranging from basic alarm units, to sophisticated
detection and intrusion prevention technologies. Eleven easily accessible Secequip branches are based in all major centres
of South Africa. National distribution outlets support Group synergies through shared product lines and a complementary
customer base.
Alternative power supplies
Alternative power supplies include generators, inverters and uninterrupted power supply (UPS) systems. Power Development
Services, alongside sister companies Gillespie Diesel Services ("GDS") and Durapower Manufacturing ("PDS Group"),
are engaged in the assembly, distribution, installation and maintenance of world-class alternative power solutions; offered
primarily to the industrial, commercial and government market sectors. In the event of power outages, the PDS Group ensure
ongoing operation of Amecor's electronic security services (such as Sabre networks) and products.
STRATEGIC REVIEW
Amecor has prioritised the following key strategic objectives:
- Network. Amecor is focused on growing its annuity income from this business unit. Good organic growth will augment new
innovations such as various "man to machine" applications where GSM technology is applied to offsite monitoring of sites,
equipment and other processes such as temperature fluctuations. This facilitates early warning notifications without being on
site. The Group will continue to seek growth opportunities for this flagship division.
- Africa. FSK is currently distributing a broad range of security products and network services to eleven African countries,
specific to each countrys' requirements, including Tanzania, Nigeria, Ghana, Botswana and Angola. FSK's focused expansion
in Africa capitalises on the growing demand for sophisticated security technology in these markets. Gross margins in these
markets are higher than in South Africa.
- New products, research and development("R&D"). Security awareness is a prevalent reality in South Africa with businesses
and households looking to expand security measures. Amecor is consistently seeking new products to meet this requirement.
Secequip has added to its closed circuit television ("CCTV") division various sophisticated visual recognition software
and end user control applications. The Group continues to invest in R&D, resulting in further high quality products being
launched into selective growth markets.
- Cost savings. Amecor continues to assess and evaluate potential cost-saving structures within the Group in anticipation of
creating greater stakeholder value. A number of opportunities have been identified and the results of these initiatives will
materialise in the next fiscal period.
- Acquisitions. Amecor intends to pursue potential acquisitions complementary to the Group's network division. Alternative
sectors within the security, commercial, and new industrial markets are continuously under review.
FINANCIAL REVIEW
The consolidated Group turnover increased by 15% from R154.3 million to R177.1 million. The Group's network
division was a substantial contributor growing its revenue by 29.6%. Notwithstanding exceptional gross margins in
Amecor's Network division, overall Group margins came under pressure as a result of adverse exchange rates and
discounted pricing to remain competitive in the industry. The resulting gross profit increased by 7% to R64.3 million
(F2013: R59.9 million), a testament to the tough trading conditions experienced by the distribution units of the Group.
Group EBITDA ("earnings before interest, tax, depreciation and amortisation") of R26.0 million remained constant
(F2013:R25.9 million), due to reduced gross margins. EBITDA margins declined from 16.7% in the comparable prior period
to 14.6%. PBIT of R23.1 million was achieved (PBIT margin of 13. 5%) versus R23.3 million in the prior corresponding period
(PBIT margin of 15.1%). Operational expenses increased by 12% primarily due to inflationary expenses, such as fuel and
electricity costs, as well as an increase in salaries resulting from Amecor's expanding workforce.
Net finance expense was R1.4 million (F2013: R1.7 million). Interest cover improved to a very healthy 16.5 times (F2013: 13.6 times).
Profit after tax amounted to R16.6 million (F2013: R16.5 million) and profits attributable to Amecor shareholders of
R14.7 million, was in line with the prior corresponding period.
Headline earnings per share amounted to 19.8 cents (F2013: 19.7 cents), mainly attributable to the decline in Group's gross
margins.
Cash flow was negatively impacted by a R17.8 million increase in inventory. This increase included the first time stocking of
CCTV equipment amounting to R4 million, and a R3 million increase in stock due to an abnormal shipping problems that
required a double ordering of requisite stock, within Secequip. These inventory levels should be liquidated in the second half
of the financial year. GDS also contributed to the increase in inventory by R3.8 million to ensure timeous execution of their
current healthy order book.
During the six months, Amecor invested R5.0 million into its new state-of-the-art automated production facility. To date the
total amount invested in this facility is R9.0 million, with a further R8.5 million to be invested in the next six months.
The balance sheet remains strong with net debt of R6.9 million (F2013: Net cash of R8.6 million).
OPERATIONAL REVIEW
Network
Sabre experienced a significant 29.6% growth in turnover in the past six months. Increasing demand for cellular-based alarm
transmissions has added a substantial number of users to the network. GSM product lines distributed into the rest ofAfrica, through sister
company FSK Electronics, have boosted the demand for private networks throughout the continent, specific to each country/customers'
requirements.
Transmission technology
Amecor's research and development team have produced a number of new technologies which are currently being field
tested. New product ranges target untapped markets, and facilitate the growing demand for improved user friendly interface.
Upgrades to factory facilities alongside the Group's added surface mount technology machines which increase operational
efficiency through a computer driven PC-Board population process. New products are due to be launched into market within
the coming six months.
Distribution
The Group's national distribution arm, Secequip, has added a number of new products and accessories to its line of branches.
Secequip's recently established CCTV division has broadened the Group's spectrum of merchandise, offering product and support
for both baseline and high-end technology.
Secequip is often faced with competitive pricing challenges without their own intellectual property and the increasing
product imports from the East. As a result Secequip faces the challenge, in the short term, of compromising margins to remain
competitive in the security industry. They are also exposed to foreign exchange fluctuations as their primary suppliers are based
in Britain. Plans are underway to address the issues.
Alternative power supplies
Isolated power outages have called for the effective installation of back-up power at a number of commercial and government
institutions. Amecor's power development division has benefitted from sustained demand in its current market, and continues
to boast its unchallenged repute with large blue chip firms. Alternative power products are not priority purchases thus price
sensitive. In addition, cheaper fully assembled Eastern imports are flooding the South African market through retail outlets and
creating pressure in this division. Alternative marketing initiatives are underway which are due to be rolled out prior to the
next fiscal period.
CHANGE IN DIRECTORS
Amecor welcomes the appointments of William Kirsh and Stanley Shane to the board as non-executive directors, with
immediate effect.
This follows the resignation of non-executive directors Stephen Courtney and Mochele Noge, and the substantial restructuring
of the Amecor's shareholding on 11 October 2013.
OUTLOOK
The prospects for Amecor are promising for the following reasons:
- Network. Efforts to create enhanced monitoring technology provide a gateway for future expansion by attracting more
customers to the division. Continued good growth in annuity income is expected.
- Transmission technology and distribution. Continuous research and development of new and improved products create
for an opportunity playing in the broad market spectrum, ranging from entry level security to the highly developed, more
demanding markets.
- Alternative power supplies. Cross-border marketing into Africa has broadened the client base for this division.
- New factory. The expansion of the factory facilities at Amecor House is expected to enhance Group operating synergies and
further improve productivity within the next fiscal.
DIVIDEND DECLARATION
The Directors have elected to pay an interim dividend in the amount of 6.5 cents per ordinary share in respect of the six
months ended 30 September 2013. This is a dividend as defined in the Income Tax Act, 1962, and is payable from income
reserves. The South African Dividend Withholding Tax ("DWT") rate is 15% and no credits in terms of secondary tax on
companies have been utilised. The net amount payable to shareholders who are not exempt from DWT is 5.525 cents gross per
share, while it is 6.5 cents per share to those who are exempt from DWT.
There are 77 985 337 ordinary shares in issue; thus the total dividend amount payable is R5.1 million.
Six-month 12-month
period to period to
Tax reference number 9236/070/64/6 30 September 2013 31 March 2013
Distributable dividend (R'000) 5 069 7 799
Total number of shares in issue ('000) 77 985 77 986
Dividend payable per share (cents) 6.5 10.0
Declaration date Monday, 2 December 2013
Last day to trade cum dividend Wednesday, 18 December 2013
Trading ex dividend commences Thursday, 19 December 2013
Record date Friday, 27 December 2013
Payment date Monday, 30 December 2013
Share certificates may not be dematerialised or rematerialised between Thursday, 19 December 2013 and Friday, 27 December
2013, both dates inclusive. The certificated register will be closed for this period.
FINANCIAL INFORMATION
STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months Six months 12 months
ended ended ended
30 September 30 September 31 March
2013 2012 2013
R'000 R'000 R'000
Revenue 178 383 155 647 319 463
Turnover 177 112 154 307 317 012
Cost of sales (112 766) (94 370) (201 426)
Gross profit 64 346 59 937 115 586
Operating cost excluding depreciation and amortisation (38 285) (34 083) (74 506)
EBITDA 26 061 25 854 41 080
Depreciation and amortisation (2 951) (2 473) (3 237)
PBIT 23 110 23 381 37 843
Finance income 1 261 1 217 2 451
Finance expenses (2 654) (2 913) (6 212)
Profit before taxation 21 717 21 685 34 082
Taxation (5 078) (5 186) (8 822)
Profit for the period 16 639 16 499 25 260
Other comprehensive income – – –
Total comprehensive income for the year 16 639 16 499 25 260
Profit and total comprehensive income attributable to:
Ordinary shareholders of Amecor 14 736 14 650 23 234
Non-controlling interest 1 903 1 849 2 026
Total comprehensive income for the year 16 639 16 499 25 260
Earnings per share (cents) 19.8 19.7 31.3
Diluted earnings per share (cents) 19.8 19.7 31.3
STATEMENT OF FINANCIAL POSITION
Unaudited Audited
30 September 31 March
2013 2013
R'000 R'000
ASSETS
Non-current assets 112 220 107 356
Property, plant and equipment 26 418 23 719
Intangible assets 23 706 21 769
Goodwill 59 661 59 661
Deferred tax asset 2 435 2 207
Current assets 188 910 181 503
Inventories 67 222 49 384
Receivables and other current assets 66 576 60 682
Taxation 3 797 4 557
Cash and cash equivalents 51 315 66 880
Total assets 301 130 288 859
EQUITY AND LIABILITIES
Share capital 70 633 70 693
Retained earnings 100 053 92 750
Non-controlling interest 20 882 19 638
Total equity and reserves 191 568 183 081
Non-current liabilities 64 191 64 194
Borrowings 58 266 58 221
Deferred tax liabilities 5 925 5 973
Current liabilities 45 371 41 584
Trade and other payables 44 677 39 708
Taxation – 794
Borrowings 694 1 082
Total equity and liabilities 301 130 288 859
STATEMENT OF CASH FLOWS
Unaudited Unaudited
Six months Six months
ended ended
30 September 30 September
2013 2012
R'000 R'000
Cash generated by operations 7 269 15 387
Net finance expense (1 392) (1 696)
Taxation paid (5 386) (2 234)
Dividends paid (8 092) (6 292)
Net (outflow)/inflow from operating activities (7 601) 5 165
Net outflow from investing activities (7 561) (5 342)
Net outflow from financing activities (403) (368)
Net movement in cash balances (15 565) (545)
Cash and cash equivalents at beginning of the year 66 880 59 632
Cash and cash equivalents at the end of the period 51 315 59 087
STATEMENT OF CHANGES IN EQUITY
Accumulated Non-controlling
Share capital profit interest Total equity
R'000 R'000 R'000 R'000
Balance at 1 April 2012 70 843 75 506 18 222 164 571
Dividends paid – (5 978) (314) (6 292)
Total comprehensive income – 14 650 1 849 16 499
Treasury share purchase (63) – – (63)
Total changes (63) 8 672 1 535 10 144
Balance at 30 September 2012 70 780 84 178 19 757 174 715
Balance at 1 April 2013 70 693 92 750 19 638 183 081
Dividends paid – (7 433) (659) (8 092)
Total comprehensive income – 14 736 1 903 16 639
Treasury share purchase (60) – – (60)
Total changes (60) 7 303 1 244 8 487
Balance at 30 September 2013 70 633 100 053 20 882 191 568
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 2013 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 26 November
2013. The unaudited condensed consolidated financial statements for the six months ended 30 September 2013
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 2013 have been prepared in accordance with
and contain information required by International Accounting Standards 34 – Interim Financial Reporting ("IAS 34"),
as well as the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, 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 2013, are in terms of IFRS and are consistent with those applied in the Group audited annual financial
statements for the year ended 31 March 2013. 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 2013. 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 ended Six months ended
30 September 30 September
2013 2012
Earnings:
Profit attributable to equity holders of Amecor (R'000) 14 736 14 650
Shares in issue
Weighted average number of ordinary shares in issue ('000) 74 307 74 517
Earnings and diluted earnings per share (cents) 19.8 19.7
Headline earnings per share
Profit attributable to equity holders of Amecor (R'000) 14 736 14 650
Less: Profit on sale of property, plant and equipment (27) –
Tax effect of adjustment 8 –
Headline earnings (R'000) 14 717 14 650
Weighted average number of ordinary shares in issue ('000) 74 307 74 517
Headline and diluted headline earnings per share (cents) 19.8 19.7
3. Net asset value ("NAV") per share
Unaudited Audited
30 September 31 March
2013 2013
Ordinary share capital and reserves (R'000) 191 568 183 081
Total number of shares in issue ('000) (net of treasury shares) 74 307 74 332
NAV per share (cents) 257.8 246.3
Ordinary share capital and reserves (R'000) 191 568 183 081
Intangible assets including goodwill (R'000) (83 367) (81 430)
Tangible NAV 108 201 101 651
Total number of shares in issue ('000) (net of treasury shares) 74 307 74 332
Tangible NAV per share (cents) 145.6 136.8
4. Segmental analysis
The Group's operating segments and segmental information presented in the condensed consolidated results for the six
months ended 30 September 2013 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.
Head Inter-
Technology Supply and office and company
transmission maintenance management elimination
and of alternative subsidiary and
Network distribution power companies consolidation Total
R'000 R'000 R'000 R'000 R'000 R'000
Six months to
30 September 2013
Revenue 16 118 103 564 69 871 17 368 (28 538) 178 383
Segment turnover 15 333 103 416 69 540 7 052 – 193 342
Inter-company turnover (70) (5 340) (5 629) (7 190) – (18 228)
Sales to external customers 15 263 98 076 63 911 (138) – 177 112
Gross profit 12 184 34 742 16 888 6 213 (5 681) 64 346
EBITDA 11 467 10 095 3 807 8 665 (7 973) 26 061
Depreciation (120) (999) (340) (442) – (1 901)
Amortisation – (720) (60) (270) – (1 050)
PBIT 11 347 8 376 3 407 7 953 (7 973) 23 110
Finance income 784 146 143 2 152 (1 965) 1 261
Finance expense – (1 974) (2) (2 643) 1 965 (2 654)
Profit before taxation 12 131 6 548 3 548 7 463 (7 973) 21 717
Taxation (3 329) (1 697) – (52) – (5 078)
Profit for the period 8 802 4 851 3 548 7 411 (7 973) 16 639
Profit attributable to:
Amecor shareholders 8 802 4 718 1 778 7 411 – 14 736
Non-controlling shareholders – 133 1 770 – – 1 903
8 802 4 851 3 548 7 411 (7 973) 16 639
Segment assets 56 504 147 579 62 278 161 589 (126 820) 301 130
Segment liabilities (3 367) (88 400) (21 784) (106 721) 110 708 (109 564)
Six months to
30 September 2012
Revenue 12 367 89 666 54 793 17 098 (18 277) 155 647
Segment turnover 11 826 89 503 54 364 6 467 – 162 160
Inter-company turnover – (1 415) – (6 438) – (7 853)
Sales to external customers 11 826 88 088 54 364 29 – 154 307
Gross profit 9 790 32 382 16 908 6 097 (5 240) 59 937
EBITDA 9 313 10 050 5 609 4 648 (3 766) 25 854
Depreciation (81) (1 383) (392) (328) – (2 184)
Amortisation – (255) – (34) – (289)
PBIT 9 232 8 412 5 216 4 286 (3 766) 23 381
Finance income 540 163 228 4 141 (3 855) 1 217
Finance expense – (3 868) (18) (2 882) 3 855 (2 913)
Profit before taxation 9 772 4 708 5 426 5 545 (3 766) 21 685
Taxation (2 380) (1 596) (1 145) (65) – (5 186)
Profit for the period 7 392 3 112 4 281 5 480 (3 766) 16 499
Profit attributable to:
Amecor shareholders 7 392 2 827 2 147 5 480 (3 766) 14 650
Non-controlling shareholders – 285 2 134 – – 1 849
7 392 3 112 4 281 5 480 (3 766) 16 499
Segment assets 43 481 122 296 54 224 164 863 (113 087) 271 777
Segment liabilities (890) (69 694) (15 573) (112 083) 101 178 (97 062)
12 months to
31 March 2013
Revenue 23 635 191 325 112 810 20 359 (28 666) 319 463
Segment turnover 22 503 191 010 112 356 14 003 – 339 872
Inter-company turnover (35) (3 069) (6 116) (13 640) – (22 860)
Sales to external customers 22 468 187 941 106 240 363 – 317 012
Gross profit 18 660 70 722 25 196 12 583 (10 877) 116 284
EBITDA 17 734 20 292 6 140 7 566 (8 319) 43 413
Depreciation (181) (2 305) (710) (740) – (3 936)
Amortisation – (1 428) (194) (12) – (1 634)
PBIT 17 553 16 559 5 236 6 814 (8 319) 37 843
Finance income 1 132 315 454 6 356 (5 806) 2 451
Finance expense – (5 873) (95) (6 050) 5 806 (6 212)
Profit before taxation 18 685 11 001 5 595 7 120 (8 319) 34 082
Taxation (5 232) (2 339) (1 476) 224 – (8 822)
Profit for the period 13 453 8 663 4 119 7 344 (8 319) 25 260
Profit attributable to:
Amecor shareholders 13 453 8 692 2 064 7 344 (8 319) 23 234
Non-controlling shareholders – (29) 2 055 – – 2 026
13 453 8 663 4 119 7 344 (8 319) 25 260
Segment assets 49 840 132 805 59 526 166 103 (119 415) 288 859
Segment liabilities (1 189) (74 653) (20 349) (111 690) 102 103 (105 778)
On behalf of the board
DH Alexander KA Colley
Chief Executive Officer Chief Financial Officer
Johannesburg
2 December 2013
Directors
DH Alexander, KA Colley, KA Vieira, CH Boulle (Chairman)*#, W Kirsh*(appointed 7 November 2013), SD Shane*
(appointed 7 November 2013), PFC Ying*#
[*Non-executive, #Independent]
All of the above directors are South African and are resident in South Africa.
Auditors
Mazars, 2nd Floor, Mazars House, 5 St Davids' Place, Parktown, 2193 (PO Box 6697, Johannesburg, 2000)
Transfer secretaries
Link Market Services South Africa 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 720, Florida Hills, 1716)
Sponsor
Sasfin Capital Limited (A division of Sasfin Limited), 29 Scott Street, Waverley, 2090 (PO Box 95104, Grant Park, 2051)
Corporate Adviser
Integrated Capital Management Proprietary Limited, Unit 1b, 3 Melrose Boulevard, Melrose Arch, 2196
(PO Box 333, Melrose Arch, 2076)
Visit us at www.amecor.com
INNOVATION THROUGH TECHNOLOGY
Date: 02/12/2013 04:33:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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