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KAP
KAP
KAP - Kap International Holdings - Unaudited Interim Results For The Six Months
Ended 31 December 2007
KAP INTERNATIONAL HOLDINGS LIMITED
Registration number: 1978/000181/06
Share code: KAP
ISIN: ZAE000059564
Unaudited interim results for the six months ended 31 December 2007
CONDENSED INCOME STATEMENTS
Dec 2007 Dec 2006 June 2007
6 months 6 months 18 months
Unaudited Unaudited Audited
Restated
Rm Rm Rm
Revenue 2 374,8 1 849,6 5 242,2
Operating profit 110,1 156,0 338,5
Net finance costs (40,6) (17,8) (51,1)
Share of results of joint ventures 2,1 1,2 3,2
Profit before taxation 71,6 139,4 290,6
Taxation (14,9) (33,7) (53,0)
Net profit for the period 56,7 105,7 237,6
Attributable to KAP shareholders 53,6 102,1 226,0
Attributable to minorities 3,1 3,6 11,6
Reconciliation of headline earnings
Net profit attributable to ordinary
shareholders 53,6 102,1 226,0
Profit on sale of property, plant and
equipment (1,0) (4,9) (5,9)
Impairments - 2,6 2,6
Headline earnings 52,6 99,8 222,7
Weighted average shares in issue 424,5 424,5 424,1
Earnings
Earnings per share (cents) 12,6 24,1 53,3
Headline earnings per share (cents) 12,3 23,5 52,5
Distribution per share (cents) - 14 17
CONDENSED BALANCE SHEETS
Dec 2007 Dec 2006 June 2007
Unaudited Unaudited Audited
Restated
Rm Rm Rm
Assets
Non-current assets 925,6 764,8 915,1
Property, plant and equipment and
investment
properties 731,6 620,9 709,1
Goodwill 53,5 3,3 56,4
Investments and loans 31,0 21,7 36,2
Pension fund surplus 44,8 48,8 45,5
Deferred taxation 64,7 70,1 67,9
Current assets 1 490,0 1 204,1 1 474,6
Inventories and agricultural assets 766,6 680,4 789,8
Receivables and prepayments 721,6 515,4 682,4
Cash and cash equivalents 1,8 8,3 2,4
Total assets 2 415,6 1 968,9 2 389,7
Equity and liabilities
Equity 1 235,1 1 195,1 1 191,1
Equity holders` interest 1 207,0 1 174,0 1 166,1
Minority interest 28,1 21,1 25,0
Non-current liabilities 350,0 91,2 114,5
Long-term borrowings -
interest-bearing 300,9 44,1 71,4
Retirement benefit obligations 13,7 17,7 14,0
Deferred taxation 35,4 29,4 29,1
Current liabilities 830,5 682,6 1 084,1
Short-term borrowings -
interest-bearing 91,1 36,2 73,3
Short-term borrowings - interest-free 19,3 - 18,0
Trade and other payables 553,8 441,9 580,6
Provisions 25,2 32,0 37,9
Bank overdrafts 141,1 172,5 374,3
Total equity and liabilities 2 415,6 1 968,9 2 389,7
Number of shares in issue (millions) 424,5 423,3 424,5
Net asset value per share (c) 284,4 277,3 274,7
Net interest-bearing debt to equity (%) 43,0% 20,5% 43,4%
CONDENSED CASH FLOW STATEMENTS
Dec 2007 Dec 2006 June 2007
6 months 6 months 18 months
Unaudited Unaudited audited
Restated
Rm Rm Rm
Net cash flows from operating
activities 35,6 118,8 154,2
Cash generated from operations before
working capital changes 140,4 165,6 397,2
Net working capital changes (58,2) (22,3) (177,9)
Cash generated from operations 82,2 143,3 219,3
Net finance costs (40,6) (17,8) (51,1)
Taxation paid (6,0) (6,7) (14,0)
Cash flows from investing activities (41,9) (102,2) (219,5)
Purchase of property, plant and
equipment
- expansion (45,0) (64,6) (127,8)
- replacement (8,2) (26,9) (54,6)
Other investing activities 11,3 12,3 17,3
Acquisition of subsidiaries, net of
cash acquired - (23,0) (54,4)
Cash flows from financing activities 238,9 (28,5) (195,9)
Increase/(decrease) in borrowings 251,6 (28,5) (85,1)
Distributions to shareholders (12,7) - (110,2)
Dividends to minorities - - (0,6)
Net increase/(decrease) in cash and
equivalents 232,6 (11,9) (261,2)
Opening cash and equivalents (371,9) (152,3) (110,7)
Closing cash and equivalents (139,3) (164,2) (371,9)
CONDENSED STATEMENTS OF CHANGES IN EQUITY
Dec 2007 Dec 2006 June 2007
6 months 6 months 18 months
Unaudited Unaudited Audited
Restated
Rm Rm Rm
Balance at the beginning of the period 1 191,1 1 083,2 1 055,2
Prior period restatements due to
change in IAS 41
valuation method - 0,9 -
Shares issued during the period - 4,8 4,8
Movement in share-based payment reserve - 0,5 4,2
Movement in foreign currency
translation reserve - - 0,1
Net profit for the period 56,7 105,7 237,6
Distributions to minorities - - (0,6)
Distributions to KAP shareholders (12,7) - (110,2)
Balance at the end of the period 1 235,1 1 195,1 1 191,1
KAP shareholders 1 207,0 1 174,0 1 166,1
Minorities 28,1 21,1 25,0
SEGMENTAL ANALYSES
Operating
Revenue profit
Rm Rm
Dec 2007 (6 months) - unaudited
Industrial 1 153,1 44,1
Consumer 1 237,0 65,2
Other/intra-group (15,3) 0,8
TOTAL 2 374,8 110,1
Dec 2006 (6 months) - unaudited, restated
Industrial 1 080,1 92,5
Consumer 771,1 62,5
Other/intra-group (1,6) 1,0
TOTAL 1 849,6 156,0
Jun 2007 (18 months) - audited
Industrial 3 027,4 246,7
Consumer 2 214,5 93,5
Other/intra-group 0,3 (1,7)
TOTAL 5 242,2 338,5
Depreciation Assets
Rm Rm
Dec 2007 (6 months) - unaudited
Industrial 20,5 1 466,8
Consumer 7,3 964,1
Other/intra-group 0,4 (15,3)
TOTAL 28,2 2 415,6
Dec 2006 (6 months) - unaudited, restated
Industrial 15,6 1 224,7
Consumer 4,4 764,0
Other/intra-group 0,3 (19,8)
TOTAL 20,3 1 968,9
Jun 2007 (18 months) - audited
Industrial 50,2 1 567,6
Consumer 14,7 918,7
Other/intra-group 0,7 (96,6)
TOTAL 65,6 2 389,7
NOTES
Dec 2007 Dec 2006 June 2007
6 months 6 months 18 months
Unaudited Unaudited audited
Restated
Rm Rm Rm
1. Net financing costs 40,6 18,0 51,1
Interest received - (0,5) (0,7)
Interest paid 40,6 18,5 51,8
2. Capital expenditure commitments 163,3 47,0 201,2
Contracted 22,9 9,5 29,8
Approved but not yet contracted 140,4 37,5 171,4
3. Operating lease commitments 26,1 32,4 23,9
4. Guarantees and contingent
liabilities 8,2 8,8 5,8
5. Taxation
Taxation remains low in relation to reported profits mainly due to non-taxable
income.
6. Basis of preparation of the results
The condensed unaudited results of the group for the six months ended 31
December 2007 have been prepared in accordance with the accounting policies of
the group and in accordance with International Accounting Standard 34: Interim
Financial Reporting, which comply with International Financial Reporting
Standards (IFRS). Certain prior period adjustments which were made in the June
2007 financial period have affected the December 2006 period (relating to a
change in the valuation method in accordance with International Accounting
Standard 41: Agriculture) and have been restated accordingly.
7. Unaudited results
The results for the six months ended 31 December 2007 have not been audited or
reviewed by the company`s auditors.
HIGHLIGHTS
- REVENUE GROWTH OF 28% DUE MAINLY TO BRENNER INCLUSION
- CONTINUED GROWTH OF TANGIBLE NET ASSET VALUE
- BRENNER PERFORMING WELL SINCE ACQUISITION
- FELTEX RESULTS AFFECTED BY AUTOMOTIVE STRIKE
Please see these results on www.kapinternational.com
REVIEW OF RESULTS
The board of directors reports on the results for the six months ended 31
December 2007. Operating profit reduced by 29% from the prior period due to the
effects of the strike in the automotive division, and headline earnings per
share decreased from 23,5 cents to 12,3 cents. Revenue for the period increased
by 28% due largely to the inclusion of Brenner Mills.
Balance sheet and cash flow
The interest-bearing debt-to-equity ratio at the end of the reporting period
remained stable at 43%. Capital expenditure of R53,2 million was incurred
during the period, R10,7 million of which was incurred in Hosaf in respect of
the capacity expansion, and R18,2 million of which was in the automotive
division for the roll-out of the new vehicle models. With the exception of the
Hosaf expansion, future capital expenditure is expected to be in line with
depreciation.
Industrial segment
FELTEX AUTOMOTIVE
Operating margins came under pressure during the period, due to the strike
affecting the automotive component manufacturers, and the slow introduction of
the new Toyota Corolla and the Mercedes Benz C Class.
INDUSTRIAL FOOTWEAR
An improved performance by the Mossop division and continued demand for
gumboots has resulted in a good performance by the division. Continued
expansion of the construction and mining sections will ensure the future growth
of this division.
HOSAF
Demand for PET has been sluggish due to continued cold weather affecting
consumption of carbonated soft drinks, but has improved in early 2008. The
announced increase in capacity is on track to be completed by December 2008.
Consumer segment
JORDAN & CO
Fashion footwear volumes have decreased due to the pressure on the retail
sector of the economy, but ongoing attention to profitability and its strong
brands will ensure that Jordan is well positioned in the market.
BULL BRAND FOODS
The cannery continued its good performance during the period. A continued focus
on cost control and the loss of a key competitor in the fresh meat division
should increase the demand for fresh meat.
BRENNER MILLS
Conditions for maize milling remain favourable. Cost reductions and increased
motivation of staff has borne fruit in the Brenner results.
GLODINA
Demand was strong during the peak season, the plant is running at full capacity
and there has been no downturn in revenue.
Corporate activity
There was no corporate activity during the period.
Distribution
In accordance with group policy, no interim distribution will be declared.
Corporate governance
The directors subscribe to the principles incorporated in the Code of Corporate
Practices and Conduct as set out in the King Report on Corporate Governance
(King II) and comply therewith.
Sustainability
The group recognises the impact of its operations on society and the
environment, and is constantly striving to improve the well-being of all
stakeholders in this regard.
Directors and officers
There were no changes to the directors and officers during the period.
Post balance sheet events
There have been no material events subsequent to 31 December 2007 and up to the
date of this report that would require adjustment or disclosure.
Outlook
Demand for products in the consumer segment is likely to slow in the short
term, but a sustained weaker exchange rate will have a positive effect on
results of the manufacturing operations.
For and on behalf of the board
C E Daun P C T Schouten
Chairman Chief executive officer
Paarl
Tuesday 4 March 2008
CORPORATE INFORMATION
Non-executive directors: C E Daun* (Chairman), M J Jooste, J B Magwaza,
I N Mkhari, F Moller*, S H Nomvete, D M van der Merwe * German
Executive directors: P C T Schouten (CEO), J P Haveman (CFO)
Registration number: 1978/000181/06 Share code: KAP ISIN: ZAE000059564
Registered address: 1st Floor, New Link Centre, 1 New Street, Paarl, 7646
Postal address: PO Box 3639, Paarl, 7620.
Telephone: 021 872 8726. Facsimile: 021 872 8904
Transfer secretaries: Computershare Investor Services 2004 (Proprietary)
Limited
Address: 70 Marshall Street, Johannesburg, 2001
Postal address: PO Box 61051, Marshalltown, 2107
Telephone: 011 370 5000. Facsimile: 011 327 3003
Sponsor: PSG Capital (Proprietary) Ltd
Date: 04/03/2008 16:22:02 Produced by the JSE SENS Department.
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