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KIR
KIR
KIR - Kairos Industrial Holdings - Abridged audited results for the year ended
29 February 2008
Kairos Industrial Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1987/02927/06)
Share code: KIR ISIN: ZAE000011284
("Kairos", "the group" or "the company")
Abridged audited results for the year ended 29 February 2008
ABRIDGED INCOME STATEMENTS
Group Company
Year Year Year ended Year
ended ended 29 Feb ended
29 Feb 28 Feb 2007 2008 28 Feb 2007
2008 R`000 R`000 R`000
R`000
Turnover 245 398 197 277 300 300
Cost of sales (214 875) (161 842) - -
Gross profit 30 523 35 435 300 300
Operating costs (26 976) (29 145) (713) (214)
Operating 3 547 6 290 (413) 86
profit/(loss)
before:
Investment income 4 880 2 113 - -
Profit on disposal 21 744 - -
of fixed assets
Other income 696 1 098 770 -
Finance costs (6 954) (4 768) (118) -
Profit before 2 190 5 477 239 86
taxation
Taxation (1 389) 1 094 - (363)
Net profit/(loss) 801 6 571 239 (277)
attributable to
ordinary
shareholders
Reconciliation of
headline earnings
Net profit as above 801 6 571
Profit on disposal (21) (744)
of fixed assets
Fair value 1 513 -
adjustment
Retrenchment costs 661 -
Headline earnings 2 954 5 827
Headline
earnings per 1,17 2,31
share (cents)
Basic earnings
per share 0,32 2,61
(cents)
ABRIDGED BALANCE SHEETS
Group Company
29 Feb 28 Feb 29 Feb 28 Feb
2008 2007 2008 2007
R`000 R`000 R`000 R`000
ASSETS
Non-current assets 57 673 55 792 1 007 1 007
Investment properties 11 700 11 700 - -
Property, plant and 39 406 37 525 - -
equipment
Goodwill 3 874 3 874 - -
Intangible assets 2 500 2 500 - -
Investment in subsidiary - - 1 007 1 007
companies
Mineral and exploration 193 193 - -
assets
Current assets 87 552 74 963 961 958
Inventories 35 496 27 116 - -
Loan to group companies - - 774 830
Other financial assets 7 311 8 823 121 114
Trade and other 38 973 31 699 47 7
receivables
Mineral and exploration 1 271 - - -
assets
Taxation overpaid - 59 - -
Cash and cash equivalents 4 501 7 266 19 7
Total assets 145 225 130 755 1 968 1 965
EQUITY AND LIABILITIES
EQUITY
Stated capital 209 564 209 564 210 147 210 147
Reserves 6 075 6 947 - -
Accumulated loss (150 480) (152 153) (208 206) (208 445)
Total equity 65 159 64 358 1 941 1 702
Non-current liabilities 18 866 19 407 - -
Other financial 10 103 11 254 - -
liabilities
Instalment sale agreements 3 435 3 667 - -
Deferred taxation 5 328 4 042 - -
Loan payable - 444 - -
Current liabilities 61 200 46 990 27 263
Loans from shareholder/ 3 342 2 936 - -
group companies
Other financial 16 562 13 932 - -
liabilities
Current taxation payable 103 373 - 238
Instalment sale agreements 2 278 1 886 - -
Trade and other payables 33 106 22 555 27 25
Provisions 5 365 3 963 - -
Loan payable 444 1 249 - -
Bank overdraft - 96 - -
TOTAL EQUITY AND 145 225 130 755 1 968 1 965
LIABILITIES
STATEMENT OF CHANGES IN EQUITY
For the year ended 29 February 2008
Non-
Accumu- Reva- distri- Capital
lated luation butable redemptio Share Total
losses reserve reserves n capital equity
R`000 R`000 R`000 reserve R`000 R`000
R`000
GROUP
Opening (169 189) 15 131 641 - 210 147 56 730
balance as
previously
reported
Adjustment
s
Transfer - - (460) 460 - -
to capital
redemption
reserve
Transfer - 181 (181) - - -
to
revaluatio
n reserve
Transfer 1 075 (888) - - - 187
to
deferred
tax
Transfer 9 391 (10 995) - - - (1 604)
to
retained
income
Balance at (158 723) 3 429 - 460 210 147 55 313
28
February
2006 as
restated
Changes in
equity
Revaluatio - 3 802 - - - 3 802
n of
property,
plant and
equipment
IFRS - (744) - - - (744)
adjustment
Net income - 3 058 - - - 3 058
(expense)
recognised
directly
in equity
Profit for 6 570 - - - - 6 570
the year
Total 6 570 3 058 - - - 9 628
recognised
income and
expenditur
e for the
year
Shares - - - - (583) (583)
held by
subsidiari
es
Total 6 570 3 058 - - (583) 9 045
changes
Balance at (152 153) 6 487 - 460 209 564 64 358
28
February
2007
Changes in
equity
Realisatio 19 (19) - - - -
n of
revaluatio
n of
assets
sold
Realisatio 853 (853) - - - -
n of
revaluatio
n reserve
through
use
872 (872) - - - -
Profit for 801 - - - - 801
the year
Total 1 673 (872) - - - 801
recognised
income and
expenses
for the
year
Total 1 673 (872) - - - 801
changes
Balance at (150 480) 5 615 - 460 209 564 65 159
29
February
2008
Accumu- Total
lated Share shareholders`
losses capital funds
R`000 R`000 R`000
COMPANY
Balance at (208 168) 210 147 1 979
28 February 2006
Loss for the year (277) - (277)
Balance at (208 445) 210 147 1 702
28 February 2007
Changes in equity
Profit for the year 239 - 239
Balance as at (208 206) 210 147 1 941
29 February 2008
SEGMENTAL ANALYSIS
for the year ended 29 February 2008
2008 2007 %
R`000 R`000 Change
REVENUE
Mining supplies 187 661 131 687 42,5
Manufacturing - bricks 57 737 65 590 (12,0)
245 398 197 277 24,4
OPERATING AND
INVESTMENT INCOME
Mining supplies 8 580 5 331 60,9
Manufacturing - bricks (4 522) 496 (1 011,7)
Property and other (511) 464 (210,4)
Investment income 4 880 2 113 131,0
8 427 8 404 0,3
CASH FLOW STATEMENTS
Group Company
Year Year Year Year
ended ended ended ended
29 Feb 28 Feb 29 Feb 28 Feb
2008 2007 2008 2007
R`000 R`000 R`000 R`000
Net cash(outflow)/ 5 283 (9 909) 80 (155)
inflow from operating
activities
Cash flows from
investing activities
Net cash from investing (7 802) (8 057) (68) 57
activities
Net cash from financing (150) 13 855 - 105
activities
Total cash movement for (2 669) (4 111) 12 7
the year
Cash at the beginning of 7 170 11 281 7 -
the year
Total cash at end of the 4 501 7 170 19 7
year
COMMENTARY
Basis of preparation
The financial statements are presented on a going concern basis on the
assumption that the group`s funding requirements will be met.
The consolidated annual financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRS) and IAS 34 interim
financial reporting and the requirements of the South African Companies Act,
61 of 1973, as amended. The accounting policies used in the preparation of the
annual financial statements are consistent with those used in the previous
corresponding period.
Financial highlights
Group revenue for the financial year under review increased by 24,4% to
R245,398 million compared to R197,277 million the previous year.
It has been disappointing on the back of increased revenues that at the
operating level the profit has declined from R6,290 million in 2007 to R3,547
million in the current year. This drop in operating profit can largely be
attributed to the increasing interest rates and the consequent effect that
this had on the demand for bricks, specifically in the second half of the
year. Added to this has been the increase in the group`s in-feed costs,
notably fuel, steel and coal, and then finally major disruptions resulting
from the power crisis which had a significant effect on the group`s fourth
quarter performance.
Net profit after taxation amounted to R801 thousand compared to R6,571 million
in the 2007 financial year. Headline earnings per share decreased by 49,4% to
1,17 cents while the net asset value per share increased by 1,3% to 25,85
cents per share.
REVIEW OF ACTIVITIES OF OPERATIONAL SUBSIDIARIES
Major operations
Witbank Brickworks(1961)(Pty) Limited
The year under review has been a difficult one for the company. The
implementation of the new Credit Act and rising interest rates resulted in a
lower demand for bricks which put pressure on the average selling prices of
the product. This together with the increased in-feed costs of coal and fuel,
put tremendous pressure on the company`s margins.
Management recognised the above-mentioned problems during the year and
restructured the company accordingly to meet the lower levels of demand. The
restructure is now complete and has resulted in the company retrenching 340
employees incurring retrenchment costs of R661 thousand.
Consequent to the above, revenue for the year declined by 12% to R57,737
million and an operating loss of R4,363 million was incurred.
Consolidation of duplicate functions has been streamlined together with
production capacity being optimised at both brickyards. Management is now
satisfied that the company is well positioned for performance in the new
financial year.
BroKrew Industrial (Pty) Limited
The mining industry has had a buoyant year with the exception of the first two
months of 2008 where the power crisis had a significant effect. The company
has again performed well this year with growth in revenue of 42,5% to R187,661
million and an increase in the operating profit of 60,9% to R8,580 million.
Diversification within the company over the last three years into specialised
large scale projects, predominantly for the mining industry, is directly
responsible for the continuing growth that the company currently enjoys. The
company remains a major leader in the manufacture and supply of ventilation
equipment to the mining sector.
Management continues to look to ways of adding value to the bouquet of
services it supplies to its customers.
Minor operations
Coal Reserves
The subsidiary, Kairos Coal & Exploration (Pty) Ltd has applied and
successfully obtained certain, but not all, of its prospecting licenses for
coal. Prospecting has commenced on certain portions of the land where small
deposits of coal have been found. It is premature to comment on the prospects
of this venture. There are still outstanding applications with regard to
prospecting rights. Until such time as the company has been able to evaluate
all the reserves it has identified to prospect, it is prudent to take a
cautious view for the future.
Township Development
As previously reported the subsidiaries, Ten Cradock Avenue (Pty) Ltd and
Estlind Investments (Pty) Ltd remain the owners of prime development land
comprising more than 200 hectares in the township of Witbank, Mpumalanga.
Negotiations are ongoing and a development agreement should be finalised
shortly. The process has taken longer than originally anticipated and the
project should start contributing to earnings within the next 24 months.
SKILLS DEVELOPMENT
Training and development programmes are continuing, providing the necessary
skills training to all levels of staff.
EMPLOYMENT EQUITY
The company remains compliant with the Act and continues to encourage the
internal movement and promotion of employees.
AUDIT OPINION
The annual financial statements have been audited by Nexia HBLT Chartered
Accountants (East Rand) Inc. The auditors` unqualified audit opinion is
available for inspection at the company`s registered office.
DIVIDENDS
The directors have decided not to declare a dividend for the year under review
(2007: Nil).
STRATEGY
The company will continue with its existing strategy, in that it will focus
its efforts on its core revenue-producing businesses - Witbank Brickworks
(1961) (Pty) Ltd and BroKrew Industrial (Pty) Ltd ensuring that both the
businesses are optimised and that any growth opportunities are exploited. In
conjunction with this strategy the company will continue to investigate
appropriate acquisitions as they might be identified.
APPRECIATION
I wish to record my appreciation and thanks to all management, staff and
directors for their integral contribution, loyalty and support over the past
12 months.
Wouter L van Deventer
Chief executive
30 May 2008
Registered office
1111 Church Street,
Hatfield,
Pretoria 0083.
PO Box 11328
Hatfield,
Pretoria 0028.
Telephone +27 12 342-1980
Facsimile +27 12 342-1976
Directors
JB Oosthuizen*#
WL van Deventer
JJ de W Mulder
WA Lombard
VD Mazibuko
* Non-executive
# Independent
Sponsor:
Bridge Capital Advisors (Pty) Limited,
2nd Floor,
27 Fricker Road,
Illovo Boulevard,
Illovo 2196.
PO Box 651010,
Benmore 2010
Transfer Secretaries:
Computershare Investors Services (Pty) Limited,
70 Marshall Street,
Johannesburg 2001.
PO Box 61051,
Marshalltown 2107.
Date: 30/05/2008 07:05:29 Produced by the JSE SENS Department.
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