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Condensed Consolidated Unaudited Interim results for the six months ended 30 September 2015 and 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" or "the Group")
CONDENSED CONSOLIDATED UNAUDITED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015
AND DIVIDEND DECLARATION
HIGHLIGHTS
- Group turnover up 18% to R61.1 million
- Cash generated from operations up 6% to R25.6 million
- EBITDA up 9% to R19.8 million
- Annuity income up 54%
- Continuing HEPS up 44% to 15.8 cents
- Interim dividend up 46% to 9.5 cents per share
Keith Vieira, Chief Executive Officer of Amecor commented:
"Amecor's leading position in Data Transmission technology in the security industry
has been entrenched with the successful launch of new products in FSK and Group
initiatives to further increase market share and new customer penetration. As a result
Sabre continues to experience strong growth in subscriber numbers, annuity revenue
and earnings."
COMMENTARY
GROUP OVERVIEW
Post the disposal of non-core assets in the last financial year ended 31 March 2015,
Amecor now comprises two core businesses, Sabre Radio Networks ("Sabre") and
FSK Electronics SA ("FSK").
Amecor continues to entrench itself as the leader in Data Transmission technology for
the security industry with an increasing annuity base of customers utilising our
network infrastructure.
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. 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.
FSK is now manufacturing and selling in excess of 20 000 individual items on average per
month whilst Sabre is billing in excess of 600 000 networking units on its annuity base.
OPERATIONAL REVIEW
Sabre launched various initiatives in the six months under review to expand its annuity
billing footprint and as a result the annuity revenue increased 54% for the six months
to 30 September 2015 compared to the previous corresponding period. Management is
confident that these initiatives will continue to yield strong revenue growth for the
balance of the 2016 financial year.
Sabre has also launched its data transmission technology services into Africa with
revenue from the African region outside South Africa expected to show incremental growth
for the balance of the 2016 financial year as the initiative gains traction. We are
positive this expansion will establish Sabre as a market leader on the African continent
in the longer term.
FSK will commence with the manufacture and distribution of the Rhino range of security
panels, which include control panels, home automation and integrated security solutions
for residential and commercial use which will be launched in January 2016. These products
have been designed to meet the needs and requirements of the African market.
Amecor is investing in both the increase in production capacity as well as the automation
of manufacturing processes to cater for the new products and service offerings mentioned
above. The return on investment into infrastructure is only expected after the 2016
financial year.
FINANCIAL REVIEW
SUMMARY RESULTS
With the focus now on the core Data Transmission and Networking business post the disposal
of non-core assets, the Group continues to produce healthy top line growth, with turnover
for the six months ended 30 September 2015 increasing by 18% to R61.1 million from the
previous corresponding period.
EBITDA from continuing operations increased by 9% to R19.8 million, with additional costs
for new systems and new products diluting some of the stellar growth in turnover. Costs
incurred in cementing the growth in annuity revenue also reduced the EBITDA growth for
the six-month period ended 30 September 2015, however, the earnings growth as a result of
the increasing annuity revenue and market share is expected to continue beyond the
2016 financial year. The growth in operating expenses is expected to be significantly more
tempered for the balance of the 2016 financial year.
Headline earnings per share from continuing operations increased 44% to 15.8 cents for
the six months ended 30 September 2015 (F2014: 11.0 cents) as the Group benefited from
both reduced depreciation resulting from assets that are fully written off as well as a
lower interest expense due to a large portion of the corporate bond which was issued
through the Private Placement Programme ("the Bond") being repaid in July 2015. Had the
repayment of the Bond been at the beginning of the year on 1 April 2015, the headline
earnings per share from continuing operations for the six months ended 30 September 2015
would have increased by an even greater amount from the previous corresponding period.
The financial results for the six months ended 30 September 2014 have been restated
following the disposal of the PDS Group (comprising 50.2% of Power Development Services,
50.1% of Gillespie Diesel Services and 50.3% of Dura Manufacturing) effective 31 March 2015.
STATEMENT OF CASH FLOWS
Healthy cash flow generation continues to be an ever-present theme within the Company,
with R25.6 million of cash being generated from operations for the six months ended
30 September 2015, an increase of 6% over the previous corresponding period. The Company
continues to be highly cash generative with a cash conversion ratio of 129% on EBITDA
of R19.8 million.
The lower interest expense as a result of the Bond repayment made in July 2015 has
further added to the Company's positive cash flow from operating activities and this
positive impact on cash flows will continue for the balance of the 2016 financial year.
Cash and cash equivalents at 30 September 2015 decreased 11% to R36.3 million from
R40.7 million at 31 March 2015 following Amecor's election to repay R32.5 million
against the Bond in July 2015. The net cash position (cash less interest-bearing debt)
at 30 September was R8.8 million which was a vast improvement from the negative
R19.3 million at 31 March 2015, further highlighting the Company's strong financial position.
STATEMENT OF FINANCIAL POSITION
Amecor's statement of financial position continues to be both highly solvent and liquid,
with interest-bearing debt:equity of only 26% (57% at 31 March 2015). The Private
Placement Programme matures in November 2016 and the Company is considering its options
for future funding requirements, however, the Group is well positioned to meet the Bond
repayment at maturity should the parties agree not to extend the current facility.
The Company remains highly liquid with R36.3 million of cash on hand at 30 September 2015.
Investment in new plant and machinery of approximately R4 million to R5 million is
expected in the medium term to ensure the Group is able to remain competitive, manufacture
efficiently and profitably, and capitalise on technological innovation. The upgrade will
stand the Company in good stead for the medium term as manufacturing equipment has proven
to be resilient over time requiring minimal ongoing maintenance.
STATEMENT OF COMPREHENSIVE INCOME
The basic earnings per share and headline earnings per share for the six months ended
30 September 2015 were 15.8 cents, a 10% increase on the previous corresponding period.
More relevant is the continuing earnings per share and headline earnings per share that
increased 44% to 15.8 cents on the previous corresponding period. The Company is on
track to post its highest earnings per share since listing.
SIGNIFICANT ACCOUNTING POLICIES
These condensed consolidated financial statements of Amecor for the six months ended
30 September 2015 comprise the Company and its subsidiaries.
The unaudited condensed consolidated financial statements for the six months ended
30 September 2015 have been prepared under the supervision of the Chief Financial Officer,
Mr Dean Colley, and have not been reviewed or audited by the Company's auditors,
Grant Thornton.
BASIS OF PREPARATION
The accounting policies applied in the preparation of these condensed consolidated
financial statements, which are based on reasonable judgements and estimates, are in
accordance with International Financial Reporting Standards ("IFRS") and are consistent
with those applied in the annual financial statements for the year ended 31 March 2015.
These condensed consolidated financial statements as set out in this report have been
prepared in terms of IAS 34: Interim Financial Reporting, the Companies Act, 2008
(Act 71 of 2008), as amended, the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Reporting Pronouncements as issued by
Financial Reporting Standards Council and the Listings Requirements of JSE Limited.
CHANGE IN DIRECTORS
There were no changes to the board of directors of Amecor ("the board") following the
release of the audited annual results for the 12-month period ended 31 March 2015.
OUTLOOK
Management is confident that the success of growth initiatives currently under way will
lead to continued earnings growth for the balance of the 2016 financial year. Currency
weakness may, however, place pressure on FSK's margins in the future.
FSK has launched new data transmission technology products into Africa which will augment
Sabre's annuity revenue. Additional new products are expected to be launched in the
second half of the 2016 financial year which will continue to place Sabre in a competitive
and market leading position.
Excellent free cash flow generation is expected to continue and will be utilised in
shareholder value-enhancing initiatives, such as share buy-backs, dividends and other
growth initiatives.
Amecor will also continue to innovate through technology and new product development.
Amecor continues to evaluate potential synergistic acquisitions in select markets with
a bias towards enhancing its annuity income.
DIVIDEND DECLARATION
The directors have elected to pay a gross interim dividend in the amount of 9.5 cents
per share (F2015 interim dividend: 6.5 cents per share) .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 8.075 cents per share, while it is 9.5 cents per share
to those who are exempt from DWT.
The number of ordinary shares in issue at the date of this declaration is 77 985 337
and will result in a total dividend amount payable of R7.4 million. The Company's
income tax number is 9381/483/84/2.
F2016 - F2015 - F2015 -
Interim Final Interim
Distributable dividend (R'000) 7 409 6 239 5 069
Total number of shares in issue ('000) 77 986 77 986 77 986
Dividend payable per share (cents) 9.5 8.0 6.5
Declaration date Wednesday, 25 November 2015
Last day to trade cum dividend Thursday, 17 December 2015
Trading ex dividend commences Friday, 18 December 2015
Record date Thursday, 24 December 2015
Payment date Monday, 28 December 2015
Share certificates may not be dematerialised or rematerialised between Friday,
18 December 2015 and Thursday, 24 December 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
25 November 2015
Enquiries
Amecor: 011 477 2600 Keith Vieira (CEO) or Dean Colley (CFO)
CapitalVoice: 082 921 9110 Johannes van Niekerk
FINANCIAL INFORMATION
GROUP PROVISIONAL STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME
Unaudited
Unaudited Restated Audited
six months six months twelve months
ended ended ended
30 Sep 2015 30 Sep 2014 31 Mar 2015
R'000 R'000 R'000
Revenue 62 575 52 621 114 432
Turnover 61 077 51 811 112 569
Cost of sales (25 355) (21 790) (56 914)
Gross profit 35 722 30 021 55 655
Other income 330 -
Operating expenses (16 262) (11 919) (33 285)
Earnings before interest, taxation,
depreciation and amortisation ("EBITDA") 19 790 18 102 22 370
Depreciation/amortisation (2 310) (4 266) (4 560)
Impairment - - (49 982)
(Loss)/profit from operations 17 480 13 836 (32 172)
Finance income 1 168 810 1 863
Finance costs (2 528) (3 258) (6 808)
(Loss)/profit before taxation 16 120 11 388 (37 117)
Taxation (4 511) (3 189) (1 628)
(Loss)/profit from continuing operations 11 609 8 199 (38 745)
(Loss)/profit from discontinued operations - 5 001 (10 903)
Loss on disposal of subsidiary - - (14 838)
(Loss)/profit from discontinued operations - 5 001 3 935
Total comprehensive (loss)/income
for the period 11 609 13 200 (49 648)
Total comprehensive (loss)/income
attributable to:
Equity holders of Amecor at the
end of the period 11 609 10 709 (51 606)
Non-controlling interest - 2 491 1 958
Total 11 609 13 200 (49 648)
(Loss)/earnings per share (cents) 15.8 14.4 (69.5)
Continued operations 15.8 11.0 (52.2)
Discontinued operations - 3.4 (17.3)
GROUP PROVISIONAL STATEMENT OF FINANCIAL POSITION
Unaudited
Unaudited Restated Audited
as at as at as at
30 Sep 2015 30 Sep 2014 31 Mar 2015
R'000 R'000 R'000
ASSETS
Non-current assets 82 955 150 203 80 125
Property, plant and equipment 14 776 33 008 14 686
Intangible assets 15 362 26 568 14 000
Goodwill 44 169 54 034 44 169
Other financial assets - 33 684
Deferred tax asset 8 648 2 909 7 270
Current assets 78 551 137 439 107 118
Inventories 9 010 34 507 12 354
Trade and other receivables 14 028 46 505 12 880
Other financial assets 14 234 16 200 36 637
Cash and cash equivalents 36 325 32 623 40 736
Taxation 4 954 7 604 4 511
Total assets 161 506 287 642 187 243
EQUITY AND RESERVES 107 770 194 685 104 430
Share capital 743 743 743
Share premium 67 339 69 890 69 663
Accumulated profit /(loss) 39 688 101 167 34 024
Equity attributable to Amecor shareholders 107 770 171 800 104 430
Non-controlling interest 22 885 -
Non-current liabilities 29 786 66 679 2 286
Borrowings 27 500 59 542 -
Deferred tax liability 2 286 7 137 2 286
Current liabilities 23 950 26 278 80 527
Trade and other payables 22 975 25 238 19 399
Taxation 975 191 1 128
Borrowings - 849 60 000
Total equity and liabilities 161 506 287 642 187 243
GROUP PROVISIONAL STATEMENT OF CASH FLOWS
Unaudited
Unaudited Restated Audited
six months six months twelve months
ended ended ended
30 Sep 2015 30 Sep 2014 31 Mar 2015
R'000 R'000 R'000
Net inflow/(outflow) from operating activities 11 772 10 485 24 140
Cash generated from operations 25 562 24 195 47 549
Net finance cost (1 360) (2 448) (4 629)
Taxation paid (6 485) (6 962) (9 492)
Dividends paid (5 945) (4 300) (9 288)
Net inflow/(outflow) from investing activities 18 640 (10 234) (5 741)
Net inflow/(outflow) from financing activities (34 823) 264 (451)
Movement in cash balances (4 411) 515 17 948
Cash and cash equivalents at the beginning
of the period 40 736 28 410 22 788
Cash and cash equivalents at the end
of the period 36 325 28 925 40 736
Cash included in continuing operations 36 325 28 925 40 736
Cash included in discontinued operations - 3 698 -
Discontinued operation (4 778)
Net outflow from operating activities (4 361)
Net outflow from investing activities (319)
Net outflow from financing activities (98)
STATEMENT OF CHANGES IN EQUITY
Attribut-
able
Accumu- to Amecor Non-con-
Share Share lated share- trolling
capital premium profit holders interest Total
R'000 R'000 R'000 R'000 R'000 R'000
Balance as at 1 April 2014
as restated 743 69 890 94 918 165 551 20 553 186 104
Dividends paid (4 460) (4 460) (159) (4 619)
Total comprehensive income 10 709 10 709 2 491 13 200
Total changes - - 6 249 6 249 2 332 8 581
Balance as at 30 September 2014 743 69 890 101 167 171 800 22 885 194 685
Balance as at 1 April 2014 as restated 743 69 890 94 918 165 551 20 553 186 104
Dividends paid (9 288) (9 288) (1 093) (10 381)
Total comprehensive loss for the year (51 606) (51 606) 1 958 (49 648)
Net movement - treasury shares (227) (227) (227)
Disposal of subsidiary - (21 418) (21 418)
Total changes (227) (60 894) (61 121) (20 553) (81 674)
Balance at 31 March 2015 743 69 663 34 024 104 430 - 104 430
Dividends paid (5 945) (5 945) (5 945)
Total comprehensive profit for the year 11 609 11 609 11 609
Net movement - treasury shares (2 324) - (2 324) (2 324)
Total changes (2 324) 5 664 3 340 3 340
Balance at 30 September 2015 743 67 339 39 688 107 770 107 770
NOTES TO THE CONDENSED PROVISIONAL CONSOLIDATED FINANCIAL STATEMENTS
1. EARNINGS PER SHARE
Unaudited
Unaudited Restated Audited
six months six months twelve months
ended ended ended
30 Sep 2015 30 Sep 2014 31 Mar 2015
R'000 R'000 R'000
Earnings per share ("EPS")
Earnings/(loss) per share
Continuing operations
Earnings/(loss):
Profit/(loss) attributable to Amecor
shareholders 11 609 8 199 (38 745)
Shares in issue:
Average number of shares in issue ('000) 73 269 74 306 74 210
Basic earnings/(loss) per share (cents) 15.8 11.0 (52.2)
Diluted earnings/(loss) per share (cents) 15.8 11.0 (52.2)
Discontinued operations
Profit/(loss):
Profit/(loss) attributable to Amecor
shareholders 2 510 (12 861)
Shares in issue:
Average number of shares in issue ('000) 73 269 74 306 74 210
Basic profit/(loss) per share (cents) - 3.4 (17.3)
Diluted profit/(loss) per share (cents) - 3.4 (17.3)
Total earnings/(loss) per share
Earnings/(loss):
Profit/(loss) attributable to Amecor
shareholders 11 609 10 709 (51 606)
Shares in issue:
Average number of shares in issue ('000) 73 269 74 306 74 210
Basic earnings/(loss) per share (cents) 15.8 14.4 (69.5)
Diluted earnings/(loss) per share (cents) 15.8 14.4 (69.5)
Headline earnings per share ("HEPS")
Continuing headline earnings/(loss)
per share 11 609 8 199 (17 045)
Basic earnings/(loss) 11 609 8 199 (38 745)
Profit/(loss) on disposal of property,
plant and equipment - 48
Impairment: Building - - 17 431
Impairment: Intangible assets - - 12 659
Taxation on above (28%) - - (8 438)
Shares in issue:
Weighted average number of shares in
issue ('000) 73 269 74 306 74 210
Headline earnings per share (cents)
- continuing operations 15.8 11.0 (23.0)
Diluted headline earnings/(loss)
per share (cents) 15.8 11.0 (23.0)
Headline earnings per share
- discontinued operation - 2 484 2 710
Basic earnings/(loss) - 2 510 (12 861)
Loss on disposal of subsidiary - - 14 837
Impairment: Intangible assets - - 1 102
Profit on disposal of property, plant
and equipment - (36) (82)
Taxation on above (28%) - 10 (286)
Shares in issue:
Weighted average number of shares
in issue ('000) 73 269 74 306 74 210
Headline earnings per share (cents) - 3.3 3.7
Diluted headline earnings per share (cents) - 3.3 3.7
Total headline earnings/(loss) per share 11 609 10 683 (14 337)
Basic earnings/(loss) 11 609 10 709 (51 606)
Loss on disposal of subsidiary - - 14 837
Profit on disposal of property, plant
and equipment - (36) (34)
Impairment: Building - - 17 431
Impairment: Intangible assets - - 13 759
Taxation on above (28%) - 10 (8 724)
Shares in issue:
Weighted average number of shares in
issue ('000) 73 269 74 306 74 210
Headline earnings/(loss) per share (cents) 15.8 14.4 (19.3)
Diluted headline earnings/(loss)
per share (cents) 15.8 14.4 (19.3)
2. NET ASSET VALUE ("NAV") PER SHARE
Ordinary share capital and reserves (R'000) 107 770 194 682 104 430
Total number of shares in issue net of
treasury shares ('000) 73 269 74 306 74 210
NAV per share (cents) 147.1 262.0 140.7
Tangible net asset value ("TNAV") per share
Ordinary share capital and reserves (R'000) 107 770 194 682 104 430
Less: Intangible assets and goodwill (59 531) (80 602) (58 169)
48 239 114 080 46 261
Total number of shares in issue net of
treasury shares ('000) 73 269 74 306 74 210
TNAV per share (cents) 65.8 153.5 62.3
3. SEGMENTAL REVENUE AND RESULTS
Head office Intercompany
management elimination
subsidiary and
Security companies consolidation Total
R'000 R'000 R'000 R'000
Continuing operations
30 September 2015
Sales 64 205 347 (3 475) 61 077
Gross profit 35 598 347 (223) 35 722
EBITDA 22 034 4 296 (6 540) 19 790
Investment revenue 970 198 1 168
Finance cost (14) (2 514) (2 528)
Depreciation and amortisation (1 959) (351) (2 310)
Impairment
Profit before taxation 21 031 1 629 (6 540) 16 120
Profit attributable to
Amecor shareholders 16 520 1 629 (6 540) 11 609
Total assets 77 697 78 059 5 750 161 506
Total liabilities 13 101 38 352 2 283 53 736
Continuing operations
30 September 2014
Sales 52 338 7 685 (8 212) 51 811
Gross profit 29 895 6 954 (6 828) 30 021
EBITDA 18 870 4 908 (5 676) 18 102
Investment revenue 753 57 810
Finance cost - (3 258) (3 258)
Depreciation and amortisation (2 032) (595) (2 627)
Impairment (1 639) (1 639)
Profit before taxation 17 591 (527) (5 677) 11 388
Profit attributable to
Amecor shareholders 14 345 (469) (5 677) 8 199
Total assets 140 304 202 370 (55 032) 287 642
Total liabilities 12 766 158 832 (78 641) 92 957
CORPORATE INFORMATION
AMALGAMATED ELECTRONIC CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
Registratioin number 1997/010036/06
Share code: AER ISIN: ZAE000070587
("Amecor" or "the Company" or "the Group")
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), D Strydom*#, PFC Ying*#,J Winer* (* Non-executive # Independent)
All of the above directors are South African and are resident in South Africa.
Company Secretary:
Acorim Proprietary Limited
2nd Floor, North Block, Hyde Park Office Tower, Corner 6th Road and Jan Smuts Avenue,
Hyde Park, Johannesburg, 2196 (PO Box 41480, Craighall, 2024)
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: 25/11/2015 10:48:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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