Wrap Text
Condensed Provisional Consolidated Reviewed Results
for the Year Ended 31 March 2015
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" or "the Group")
CONDENSED PROVISIONAL CONSOLIDATED REVIEWED RESULTS
FOR THE YEAR ENDED 31 MARCH 2015, APPOINTMENT TO THE BOARD OF DIRECTORS
AND DIVIDEND DECLARATION
HIGHLIGHTS
- Core Group turnover up 28% to R112.6 million
- Cash generated from operations up 42% to R40.4 million
- EBITDA adjusted for all non-recurring items up 11% to R35.1 million
- Annuity income up 42%
- Normalised continuing HEPS up 19% to 24.7 cents
- Once-off impairments and provisions of R64 million
- Final dividend of 8.0 cents per share, resulting in 14.5 cents per share
for the full year
Newly appointed Chief Executive Officer, Keith Vieira commented: "As the leading
technology and network security service provider, Amecor is accelerating its annuity
income growth in South Africa and gaining momentum in select African markets using its
proven infrastructure and technology. Our core operations, Networks and Transmission
Technology, delivered satisfactory results with good momentum continuing in the current
financial year. The year to March 2015 was a year of restructuring and operational review
with a change in leadership and disposal of non-core businesses which, together with the
accounting changes in line with best practice, prompted the posting of non-recurring
accounting adjustments. We are optimistic about a continued positive performance for
the 2016 financial year."
Enquiries
Amecor: 011 477 2600 Keith Vieira (CEO) or Dean Colley (CFO)
CapitalVoice: 082 921 9110 Johannes van Niekerk
COMMENTARY
GROUP OVERVIEW
Following the disposal of Secequip Proprietary Limited ("Secequip") and the PDS Group
(comprising 50.2% of Power Development Services, 50.1% of Gillespie Diesel Services and
50.3% of Dura Manufacturing), Sabre Radio Networks ("Sabre") and FSK Electronics SA ("FSK"),
the remaining complementary core businesses will be reported as a single unit in future.
- Networks and transmission technology
Sabre is the largest security network provider in Southern Africa. It has a
comprehensive network footprint of data transmission equipment enabling users, such
as security companies, to route signals and data to their control centres. Its radio
and GSM infrastructure offers a data network comprising almost 1 000 base stations
and advanced repeater technology, dominating the majority of the independent
South African network. Sabre is further developing its technology and customer
interface in South Africa and is successfully expanding this into the rest of Africa.
FSK is one of the leading designers and manufacturers of sophisticated data
transmission technology primarily used in the security industry, to provide signal
transmission networks to security companies in 13 countries, including Ghana,
Ivory Coast, Nigeria, Tanzania and New Zealand. FSK specialises in the design of
radio and GSM transmitters, receivers and transceivers, which also support the
growth in annuity earnings for Sabre.
- Alternative power supplies
Effective 31 March 2015, and in line with Amecor's strategic focus on its core
operations, Amecor disposed of its entire equity interest in the PDS Group. The full
proceeds of R16 million were received post the 2015 financial year-end.
OPERATIONAL REVIEW
During the year to 31 March 2015 Amecor, now represented by its core networks and data
transmission technology business, continued to develop its growing annuity income
through organic growth, leveraging technology and the introduction of innovative
products.
The business delivered strong revenue in GSM services through the supply of a reliable
and technologically superior product, evidenced by the strong revenue growth recorded.
The introduction of new initiatives, which only commenced in the second half of the
2015 financial year, are expected to have a more significant impact in the
2016 financial year. Additional users subscribing to Sabre's security data network
continues to accelerate growth in annuity income.
For transmission technology products high levels of automation are also improving
efficiency and accuracy of production processes. Though margins have stabilised after
weakening in the first half of the current financial year, rand weakness and competitor
action may contribute to pressure on margins.
FINANCIAL REVIEW
Summary results
The Group's core business continued to produce robust top line growth, with turnover
increasing by 28% over the previous corresponding period to R112.6 million. EBITDA
from continuing normalised operations increased by 11% to R35.1 million after excluding
all non-recurring impairments and provisions set out below. Action has been taken to
address the significant cost increases encountered in the 2015 financial year including
a reduction of head office costs by R2.5 million, the positive effects of which are
expected in the 2016 financial year.
Statement of cash flows
Cash generated from operations increased 42% to R40.4 million in the 2015 financial
year and represents a 115% cash conversion on normalised EBITDA of R35.1 million. Cash
and cash equivalents at 31 March 2015 increased 10% to R40.7 million.
Statement of financial position
As a result of the impairments the covenant requirements to the bond programme were not
met as at 31 March 2015. As a consequence the bond is disclosed as a current liability
at 31 March 2015. Post year-end, and in line with the bond programme, Amecor elected an
early prepayment of R33 million which will result in a reduction of financing costs of
R3.7 million per annum. As at 30 June 2015, and as a result of the bond restructuring,
the covenants have been met.
Amecor's balance sheet, post the non-recurring impairments and provisions, is now correctly
structured and optimally positioned to deliver solid returns whilst remaining liquid, with
cash on hand of R40.7 million at 31 March 2015. After the bond restructuring cash on hand
is expected to be in excess of R32 million at the end of June 2015.
Statement of comprehensive income
As a result of the non-recurring impairments and provisions the basic loss per share and
headline loss per share were (69.5) cents and (19.3) cents loss respectively.
Excluding the non-recurring impairments and provisions, Amecor's normalised continuing
HEPS increased 19% to 24.7 cents per share.
During the year under review Amecor, under new leadership, took decisive action to
review the balance sheet, exit non-core assets and ensure appropriate accounting
practices were adopted. These actions prompted the following non-recurring impairments
of assets and provisions for future obligations to the total value of R64 million for
the year to 31 March 2015, details of which are provided below:
- Other financial assets
Amecor has taken a conservative view on the other financial assets and impaired this
by R19.9 million.
- Immovable property impairment
Having considered the fair market rental for comparable properties, the value of the
Group's head office was reduced by R17.4 million. Further capital expenditure may
need to be incurred to complete the new building and secure new tenants.
- Intangibles: research and development ("R&D")
Capitalised R&D of products was assessed and impaired by R12.7 million to reflect
expenditure not likely to contribute to current or future production.
- Provisions and impairments
R14 million of non-recurring provisions and impairments pertaining to inventory
obsolescence, retrenchments, non-recovery of receivables and correction of costs
incorrectly capitalised was also processed in the 2015 financial year.
Disposal of subsidiary companies
- Disposal of Secequip
Amecor disposed of its 79% interest in Secequip for R2 million with effect from
1 April 2014, resulting in a R2.4 million loss on disposal of subsidiary.
- Disposal of the PDS Group
Effective 31 March 2015, and in line with the Group's strategic focus on its
core business, Amecor disposed of its equity interest in the PDS Group. The total
sale proceeds of R16 million were received in cash post year-end (31 March 2015),
valuing the business on a historic price:earnings multiple of 8.1 times. An
accounting loss on disposal of subsidiary of R12.4 million was recognised in the 2015
financial year.
Restatement of financial results for the year ended 31 March 2014
- Expenses incorrectly capitalised
R1.5 million of bond-raising fees pertaining to the R60 million bond were
incorrectly capitalised to the balance sheet in the 2012 financial year and has
subsequently been corrected.
- Contract costing: GDS
Contract cost accounting was incorrectly applied in the prior year in GDS,
resulting in a R1 million correction.
- Disposal of Amecor Integrated Solutions ("AIS")
A R5.3 million inter-company loan owing from AIS to Amecor was erroneously not
accounted for in the prior year as per the terms of the sale agreement (effective
31 March 2014) and should have resulted in the write-down of the inter-company
loan account in Amecor's financial records at 31 March 2014.
- Change to the non-controlling interest ("NCI") portion pertaining to Secequip
In calculating the NCI of R762 000 in the 2014 financial year, a loss of R957 000
for Secequip was incorrectly applied instead of the correct profit of R3.4 million,
resulting in the NCI being understated by R934 000.
CHANGE IN DIRECTORS
As announced on SENS on 18 March 2015 Amecor welcomes the appointment of Jarred Winer
as a non-executive director and Clive Angel as an alternate non-executive. We are also
pleased to announce the appointment of Danna Strydom to the board as an independent
non-executive director with effect from 29 June 2015. Danna holds a degree in
electrical engineering and is an MBA graduate who was the managing director of
ADT Security from February 2002 to February 2014 and prior to this was the
Managing Director of Chubb Electronic Security. Danna holds a wealth of industry
experience which Amecor will look to leverage off, as the Group continues to grow in
the security electronics industry.
OUTLOOK
With the review and restructuring that took place in the 2015 financial year Amecor
is now in a position to move ahead in an unencumbered way.
Amecor's market dominance is expected to continue with strong organic growth in the
local and African markets anticipated. New monitoring technology and the roll-out of
new products is providing a further impetus to growth.
Sabre is experiencing strong growth in its number of subscribers on a monthly basis and
the board of directors of Amecor ("the board") are confident that this cumulative build-up
will result in a significant increase in annuity income and consequently the Group expects
to deliver strong earnings growth for the 2016 financial year from this division. Sabre is
also expected to continue its exceptional free cash flow generation. New cloud technology
will enable further growth and allow for rapid expansion in the local and African security
industry. The continuing launch of new products should strengthen the Group's annuity income
in its select markets.
FSK's new data transmission technology products in both South Africa and Africa are
being positioned to bolster Sabre's annuity income, which will place some pressure on
FSK's margins initially as growth ramps up. The ongoing growth and development of new
technology within FSK further underpins Sabre's existing annuity expansion. Cost containment
remains a strategy for the new management team and the rate of cost increase is anticipated
to decrease materially.
Excellent free cash flow generation is expected to continue and will be utilised in
shareholder value-enhancing initiatives, such as share buy-backs and other growth
initiatives.
Amecor continues to evaluate potential synergistic acquisitions in select markets
with a bias towards enhancing its annuity income.
DIVIDEND DECLARATION
In addition to the interim dividend of 6.5 cents per share, the Directors have elected
to pay a final gross cash dividend in the amount of 8.0 cents per ordinary share in
respect of the year ended 31 March 2015. 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%. The net amount payable to shareholders who are not exempt from DWT is
6.8 cents per share, while it is 8.0 cents per share to those who are exempt from DWT.
The 77 985 337 ordinary shares in issue will result in a total dividend amount payable
of R6.2 million.
The Company's income tax number is 9381/483/84/2.
F2015 - F2015 - F2014
Final Interim
Distributable dividend (R'000) 6 239 5 069 9 748
Total number of shares in issue ('000) 77 986 77 986 77 986
Dividend payable per share (cents) 8.0 6.5 12.5
Declaration date Tuesday, 30 June 2015
Last day to trade cum dividend Friday, 17 July 2015
Trading ex dividend commences Monday, 20 July 2015
Record date Friday, 24 July 2015
Payment date Monday, 27 July 2015
Share certificates may not be dematerialised or rematerialised between Monday,
20 July 2015 and Friday, 24 July 2015, both dates inclusive. The certificated
register will be closed for this period.
On behalf of the board
KA Vieira D Colley
Chief Executive Officer Chief Financial Officer
Johannesburg
30 June 2015
FINANCIAL INFORMATION
GROUP PROVISIONAL STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME
Restated
Reviewed audited
twelve months twelve months
ended ended
31 March 2015 31 March 2014
R'000 R'000
Revenue 112 569 87 930
Cost of sales (56 914) (34 383)
Gross profit 55 655 53 547
Other income - 3
Operating expenses (33 285) (21 876)
Earnings before interest, taxation, depreciation and
amortisation ("EBITDA") 22 370 31 674
Depreciation/Amortisation (4 560) (4 362)
Impairment (49 982)
(Loss)/profit from operations (32 172) 27 312
Finance income 1 863 2 072
Finance costs (6 808) (5 710)
(Loss)/profit before taxation (37 117) 23 674
Taxation (1 628) (8 137)
(Loss)/profit from continuing operations (38 745) 15 536
(Loss)/profit from discontinued operations (10 903) 1 041
Loss on disposal of subsidiary (14 837) (2 565)
Profit from discontinued operations 3 935 3 606
Total comprehensive (loss)/income for the year (49 648) 16 577
Total comprehensive (loss)/income attributable to:
Equity holders of Amecor at the end of the period (51 606) 14 431
Non-controlling interest 1 958 2 146
Total (49 648) 16 577
(Loss)/earnings per share (cents) (69.5) 19.4
Continuing operations (52.2) 20.9
Discontinued operations (17.3) (1.5)
Dividend per share (cents) 14.5 12.5
GROUP PROVISIONAL STATEMENT OF FINANCIAL POSITION
Restated
Reviewed audited Audited
twelve months twelve months twelve months
ended ended ended
31 March 2015 31 March 2014 31 March 2013
R'000 R'000 R'000
ASSETS
Non-current assets 79 070 107 323 107 356
Property, plant and equipment 14 686 28 549 23 719
Intangible assets 14 000 24 154 21 769
Goodwill 44 169 54 034 59 661
Deferred tax asset 6 215 586 2 207
Current assets 107 504 126 595 181 503
Inventories 12 354 26 176 49 384
Trade and other receivables 12 880 56 782 60 682
Other financial assets 36 637 -
Cash and cash equivalents 40 736 36 888 66 880
Taxation 4 897 6 749 4 557
Assets of disposal group held for sale 68 767
Total assets 186 574 302 685 288 859
EQUITY AND RESERVES 104 430 186 104 183 081
Equity attributable to Amecor shareholders 104 430 165 551 163 443
Non-controlling interest 20 553 19 638
Non-current liabilities 1 231 66 559 64 194
Borrowings 60 051 58 221
Deferred tax liability 1 231 6 508 5 973
Current liabilities 80 913 37 177 41 584
Trade and other payables 19 399 36 626 39 708
Taxation 1 514 378 794
Borrowings 60 000 173 1 082
Liabilities of disposal group held for sale 12 845
Total equity and liabilities 186 574 302 685 288 859
GROUP PROVISIONAL STATEMENT OF CASH FLOWS
Restated
Reviewed audited
twelve months twelve months
ended ended
31 March 2015 31 March 2014
R'000 R'000
Net inflow from operating activities 15 970 2 732
Cash generated from operations 40 410 28 625
Net finance cost (4 945) (3 639)
Taxation paid (10 207) (9 991)
Dividends paid (9 288) (12 263)
Net outflow from investing activities (3 502) (15 225)
Net outflow from financing activities (231) (1 532)
Movement in cash balances 12 237 (14 025)
Cash and cash equivalents at the beginning of the period 28 499 42 524
Cash and cash equivalents at the end of the period 40 736 28 499
Cash included in continuing operations 40 736 28 499
Cash included in discontinued operations - 11 390
STATEMENT OF CHANGES IN EQUITY
Attributable Non-
Share Share Accumulated to Amecor controlling
capital premium profit shareholders interest Total
R'000 R'000 R'000 R'000 R'000 R'000
Balance at 1 April 2012 743 70 100 75 506 146 349 18 222 164 571
Dividends paid (5 990) (5 990) (610) (6 600)
Total comprehensive income - profit 23 234 23 234 2 026 25 260
Net movement - treasury shares (150) (150) (150)
Total changes (150) 17 244 17 094 1 416 18 510
Balance at 1 April 2013 743 69 950 92 750 163 443 19 638 183 081
Dividends paid - (12 263) (12 263) (1 231) (13 494)
Total comprehensive income - profit - 14 431 14 431 2 145 16 577
Net movement - treasury shares (60) - (60) - (60)
Total changes (60) 2 168 2 108 914 3 023
Balance at 31 March 2014 - restated 743 69 890 94 918 165 551 20 552 186 104
Net movement - treasury shares (227) (227) (227)
Dividends paid (9 288) (9 288) (1 093) (10 381)
Total comprehensive (loss)/income
for the year (51 606) (51 606) 1 958 (49 648)
Disposal of subsidiary - (21 418) (21 418)
Total changes - (227) (60 894) (61 121) (20 552) (81 674)
Balance at 31 March 2015 743 69 663 34 024 104 430 - 104 430
NOTES TO THE CONDENSED PROVISIONAL CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Amecor is a company domiciled in South Africa. These condensed provisional
consolidated reviewed annual financial statements of the Amecor Group for the year
ended 31 March 2015 comprise condensed provisional consolidated reviewed annual
financial statements of Amecor and its subsidiaries.
These condensed provisional consolidated reviewed annual financial statements
were authorised for issue by the board of directors on 29 June 2015. The condensed
provisional consolidated reviewed annual financial statements for the year ended
31 March 2015 were prepared by the financial director, Mr Dean Colley, and have
been reviewed by the Company's auditors, Grant Thornton.
Basis of preparation
The condensed provisional consolidated reviewed results for the year ended
31 March 2015 have been prepared in accordance with the framework concepts and the
measurement and recognition requirements of International Financial Reporting
Standards ("IFRS") and contain information required by International Accounting
Standard ("IAS") 34: Interim Financial Reporting, the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee and Financial Reporting
Pronouncements ("FRPs") as issued by the Financial Reporting Standards Council
("FRSC"), the 2008 South African Companies Act and the JSE Listings Requirements.
The accounting policies as well as the methods of computation used in the
preparation of the results for the year ended 31 March 2015 are in terms of IFRS
and are consistent with those applied in the audited annual financial statements
for the year ended 31 March 2014. The results are presented in rand, which is
Amecor's presentation currency.
Grant Thornton has issued an unqualified review opinion on these condensed
provisional consolidated reviewed financial statements, as required by the
JSE Limited. Their review was conducted in accordance with ISRE 2410, "Review of
interim financial information performed by the independent auditor of the entity".
These financial statements have been approved by the board and condensed for the
purposes of this report. The auditor's review opinion is available for inspection
at Amecor's registered office.
The auditors' report does not necessarily report on all the information contained
in this report. Shareholders are therefore advised that, in order to obtain a full
understanding of the nature of the auditors' engagement, they should obtain a copy
of the auditors' report together with the accompanying financial information from
the registered office.
2. EARNINGS PER SHARE
Restated
Reviewed audited
twelve months twelve months
ended ended
31 March 2015 31 March 2014
R'000 R'000
Earnings per share ("EPS")
(Loss)/earnings per share
Continuing operations
(Loss)/earnings:
(Loss)/profit attributable to Amecor shareholders (38 745) 15 536
Shares in issue:
Weighted average number of shares in issue ('000) 74 210 74 306
Basic (loss)/earnings per share (cents) (52.2) 20.9
Diluted (loss)/earnings per share (cents) (52.2) 20.9
Discontinued operations
Loss attributable to Amecor shareholders (12 861) (1 105)
Shares in issue:
Weighted average number of shares in issue ('000) 74 210 74 306
Basic loss per share (cents) (17.3) (1.5)
Diluted loss per share (cents) (17.3) (1.5)
Total (loss)/earnings per share
(Loss)/profit attributable to Amecor shareholders (51 606) 14 431
Shares in issue:
Weighted average number of shares in issue ('000) 74 210 74 306
Basic (loss)/earnings per share (cents) (69.5) 19.4
Diluted (loss)/earnings per share (cents) (69.5) 19.4
Headline earnings per share ("HEPS")
Headline (loss)/earnings - continuing operations (17 046) 15 430
Basic (loss)/earnings (38 745) 15 536
Loss/(profit) on disposal of property, plant and equipment 48 (147)
Impairment: Building 17 431
Impairment: Intangible assets 12 658
Taxation on above (28%) (8 438) 41
Shares in issue:
Weighted average number of shares in issue ('000) 74 210 74 306
Headline (loss)/earnings per share (cents)
- continuing operations (23.0) 20.8
Diluted headline (loss)/earnings per share (cents) (23.0) 20.8
Headline earnings - discontinued operation 2 710 1 460
Basic loss (12 861) (1 105)
Loss on disposal of subsidiary 14 837 2 565
Impairment: Intangible assets 1 102
Profit on disposal of property, plant and equipment (82)
Taxation on above (28%) (286) -
Shares in issue:
Weighted average number of shares in issue ('000) 74 210 74 306
Headline: Earnings per share (cents) 3.7 2.0
Diluted headline: Earnings per share (cents) 3.7 2.0
Total headline (loss)/earnings (14 337) 16 890
Basic (loss)/earnings (51 606) 14 431
Loss on disposal of subsidiary 14 837 2 565
Profit on disposal of property, plant and equipment (34) (147)
Impairment: Building 17 431
Impairment: Intangible assets 13 759
Taxation on above (28%) (8 724) 41
Shares in issue:
Weighted average number of shares in issue ('000) 74 210 74 306
Headline (loss)/earnings per share (cents) (19.3) 22.7
Diluted headline (loss)/earnings per share (cents) (19.3) 22.7
3. NET ASSET VALUE ("NAV") PER SHARE
Restated
Reviewed audited
twelve months twelve months
ended ended
31 March 2015 31 March 2014
Ordinary share capital and reserves (R'000) 104 430 186 104
Total number of shares in issue
net of treasury shares ('000) 74 210 74 306
NAV per share (cents) 140.7 250.5
Tangible net asset value ("TNAV") per share 104 430 186 104
Ordinary share capital and reserves (R'000) (58 169) (78 188)
Less: Intangible assets and goodwill (R'000) 46 261 107 916
Total number of shares in issue
net of treasury shares ('000) 74 210 74 306
TNAV per share (cents) 62.3 145.2
4. SEGMENTAL ANALYSIS
Profit
attributable
to Amecor Total Total
Sales EBITDA shareholders assets liabilities
R'000 R'000 R'000 R'000 R'000
12 months to 31 March 2015
Security 115 963 35 181 14 687 134 610 (9 458)
Head office and management
subsidiary companies 15 424 (5 565) (56 996) 147 679 (170 073)
Inter-company elimination and
consolidation (18 818) (7 246) (9 297) (95 716) 97 387
Continuing operations 112 569 22 370 (51 606) 186 573 (82 144)
12 months to 31 March 2014
Security 91 803 39 375 27 340 140 170 (20 990)
Head office and management
subsidiary companies 13 738 16 072 4 805 161 925 (114 732)
Inter-company elimination and
consolidation (17 611) (23 773) (17 714) (124 211) 51 316
Continuing operations 87 930 31 674 14 431 177 884 (84 406)
CORPORATE INFORMATION
Registered Office
Amecor House, 14 Richard Road, Industria North, 1709
(PO Box 720, Florida Hills, 1716)
Directors
KA Vieira, D Colley, CH Boulle (Chairman)*#, JF Evans*#, W Kirsh*, SD Shane*,
C Angel* (alternate), PFC Ying*#, J Winer*
(* Non-executive # Independent)
All of the above directors are South African and are resident in South Africa.
Company Secretary
KA Colley
Auditors
Grant Thornton, 52 Corlett Drive, Wanderers Office Park, Illovo, 2196
(Private Bag X5, Northlands, 2116)
Transfer Secretaries
Link Market Services Proprietary Limited, 13th Floor, Rennie House
19 Ameshoff Street, Braamfontein, 2001
(PO Box 4844, Johannesburg, 2000)
Sponsor
Merchantec Capital
2nd Floor, North Block, Hyde Park Office Tower
Corner 6th Road and Jan Smuts Avenue, Hyde Park, Johannesburg, 2196
(PO Box 41480, Craighall, 2024)
Visit us at www.amecor.com
INNOVATION THROUGH TECHNOLOGY
Date: 30/06/2015 04:45:00 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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