| Mon 8 Sep 2008, 17:14 | | KAP - KAP International Holdings Limited - Audited group results for the year |
|
KAP
KAP
KAP - KAP International Holdings Limited - Audited group results for the year
ended 30 June 2008
KAP INTERNATIONAL HOLDINGS LIMITED
Registration number: 1978/000181/06
Share code: KAP
ISIN: ZAE000059564
("KAP" or "the group")
Audited group results for the year ended 30 June 2008
Highlights
Revenue growth of 26%
Headline earnings per share of 28,4 cents
New capital to be raised to strengthen balance sheet
Hosaf expansion on track
Net asset value increases from R2,75 to R3,01
Please see these results on www.kapinternational.com
CONDENSED INCOME STATEMENTS
30 June 2008 30 June 2007 30 June 2007
12 months 12 months 18 months
Audited Unaudited Audited
Rm Rm Rm
Revenue 4 620,4 3 673,5 5 242,2
Operating profit 200,1 239,5 338,5
Net finance costs (81,7) (40,7) (51,1)
Share of results of joint
ventures 3,7 2,0 3,2
Profit before taxation 122,1 200,8 290,6
Taxation 7,7 (39,7) (53,0)
Net profit for the year 129,8 161,1 237,6
Attributable to KAP
shareholders 122,3 153,5 226,0
Attributable to minorities 7,5 7,6 11,6
Reconciliation of headline earnings
Net profit attributable to ordinary
shareholders 122,3 153,5 226,0
Profit on sale of property,
plant and equipment (1,6) (5,5) (5,9)
Impairments - 2,6 2,6
Headline earnings 120,7 150,6 222,7
Weighted average shares in
issue (millions) 424,5 424,5 424,1
Earnings
Earnings per share (cents) 28,8 36,2 53,3
Headline earnings per share (cents) 28,4 35,5 52,5
Distributions per share (cents) - 17 17
CONDENSED BALANCE SHEETS
30 June 2008 30 June 2007
Audited Audited
Rm Rm
Assets
Non-current assets 1 045,9 915,1
Property, plant and equipment and
investment properties 828,2 709,1
Goodwill 60,5 56,4
Investments and loans 26,5 36,2
Pension fund surplus 39,4 45,5
Deferred taxation 91,3 67,9
Current assets 1 714,5 1 474,6
Inventories and biological assets 929,9 789,8
Receivables and prepayments 729,5 682,4
Cash and cash equivalents 55,1 2,4
Total assets 2 760,4 2 389,7
Equity and liabilities
Equity 1 308,7 1 191,1
Equity holders` interest 1 276,2 1 166,1
Minorities` interest 32,5 25,0
Non-current liabilities 117,5 114,5
Long-term interest-bearing borrowings 68,3 71,4
Retirement benefit obligations 11,7 14,0
Deferred taxation 37,5 29,1
Current liabilities 1 334,2 1 084,1
Short-term interest-bearing borrowings 266,8 73,3
Short-term interest-free borrowings 27,0 18,0
Trade and other payables 758,3 580,6
Provisions 42,2 37,9
Bank overdrafts 239,9 374,3
Total equity and liabilities 2 760,4 2 389,7
Number of shares in issue (millions) 424,5 424,5
Net asset value per share (cents) 300,7 274,7
Net interest-bearing debt to equity (%) 39,7% 43,3%
CONDENSED CASH FLOW STATEMENTS
30 June 2008 30 June 2007
12 months 18 months
Audited Audited
Rm Rm
Cash flows from operating activities 170,6 154,2
Cash generated from operations before
working capital changes 256,3 397,2
Net working capital changes 0,8 (177,9)
Cash generated from operations 257,1 219,3
Net finance costs (75,9) (51,1)
Taxation paid (10,6) (14,0)
Cash flows from investing activities (160,4) (219,5)
Purchase of property, plant and equipment
- expansion (151,4) (127,8)
- replacement (26,0) (54,6)
Other investing activities 17,0 17,3
Acquisition of subsidiaries, net of cash
acquired - (54,4)
Cash flows from financing activities 176,9 (195,9)
Increase/(decrease) in borrowings 189,6 (85,1)
Distributions to shareholders (12,7) (110,2)
Distributions to minorities - (0,6)
Net movement in cash and cash equivalents 187,1 (261,2)
Opening cash and cash equivalents (371,9) (110,7)
Closing cash and cash equivalents (184,8) (371,9)
CONDENSED STATEMENTS OF CHANGES IN EQUITY
30 June 2008 30 June 2007
12 months 18 months
Audited Audited
Rm Rm
Balance at the beginning of the period 1 191,1 1 055,2
Shares issued during the period - 4,8
Movement in share-based payment reserve 0,6 4,2
Movement in foreign currency translation
reserve (0,2) 0,1
Net profit for the period 129,8 237,6
Distributions to minorities - (0,6)
Sale of share trust shares 0,1 -
Distributions to KAP shareholders (12,7) (110,2)
Balance at the end of the period 1 308,7 1 191,1
KAP shareholders 1 276,2 1 166,1
Minorities 32,5 25,0
SEGMENTAL ANALYSES
Operating
Revenue profit
Rm Rm
June 2008
Industrial 2 388,6 106,2
Consumer 2 231,6 90,5
Other 0,2 3,4
Total 4 620,4 200,1
June 2007 (12 months unaudited)
Industrial 2 103,5 178,4
Consumer 1 569,8 61,1
Other 0,2 -
Total 3 673,5 239,5
June 2007 (18 months) - audited
Industrial 3 027,4 246,7
Consumer 2 214,5 93,5
Other 0,3 (1,7)
Total 5 242,2 338,5
Depreciation Total assets
Rm Rm
June 2008
Industrial 41,7 1 849,5
Consumer 15,0 971,7
Other (0,5) (60,8)
Total 56,2 2 760,4
June 2007 (12 months unaudited)
Industrial 32,6 1 525,1
Consumer 9,6 833,9
Other 0,5 (19,3)
Total 42,7 2 389,7
June 2007 (18 months) - audited
Industrial 50,2 1 567,6
Consumer 14,7 918,7
Other 0,7 (96,6)
Total 65,6 2 389,7
NOTES
30 June 2008 30 June 2007
12 months 18 months
Audited Audited
Rm Rm
1. Net finance costs 81,7 51,1
Interest received (0,5) (0,7)
Interest paid 82,2 51,8
2. Capital expenditure commitments 136,4 217,0
Contracted 51,8 29,8
Approved but not yet contracted 84,6 187,2
3. Operating lease commitments 48,1 23,9
4. Guarantees and contingent liabilities 7,9 5,8
5. Taxation
Taxation was in credit for the year mainly due to adjustments to assessed
losses in respect of prior periods.
6. Basis of preparation of the results
The audited results of the group for the twelve months ended 30 June 2008 have
been prepared in accordance with the accounting policies of the group, which
comply with International Financial Reporting Standards (IFRS), the
presentation and disclosure requirements of IAS 34 (Interim Financial
Reporting) and the Companies Act of South Africa.
Audit opinion
The auditors, Deloitte & Touche, have issued their opinion on the group`s
financial statements for the year ended 30 June 2008. The audit was conducted
in accordance with International Standards on Auditing. They have issued an
unmodified audit opinion. A copy of their audit report is available for
inspection at KAP`s registered office. These condensed financial
statements have been derived from the group financial statements and are
consistent in all material respects, with the group financial statements.
Review of results
The board of directors reports on the results for the twelve months ended 30
June 2008 ("2007/8"). Operating profit declined by 16% compared to the prior
twelve months ended 30 June 2007 ("2006/7") due largely to difficult trading
conditions in the automotive operations. Headline earnings per share decreased
from 35,5 cents to 28,4 cents.
Revenue for 2007/8 increased by 26% from R3,7 billion to R4,6 billion due
largely to Brenner Mills` revenue being consolidated for the full year.
Balance sheet, cash flow, capital raising and cautionary
The interest-bearing debt-to-equity ratio improved to 39,7% over the prior
period, although finance costs increased from 2006/7 due to higher debt levels
during the year for the funding of the Hosaf expansion.
Capital expenditure in respect of the Hosaf expansion and five-year shut-down
amounted to R85,8 million during the year, and a further R111,6 million is
earmarked for the completion of the project, including power generators.
KAP is cognisant of the challenging trading environment and the difficulties in
raising additional cash by way of debt, due to the persuasive and continuing
credit crunch, as well as the increased cost of debt.
As a consequence and, in order to ensure optimal gearing, adequate working
capital and capital expenditure resources, as well as compliance with the
relevant bank covenants, KAP requires long-term funding of approximately R300
million. This is to be raised by way of a renounceable rights offer. An
underwriting commitment in respect of the full amount of such rights offer has
been secured at an offer price not exceeding 120 cents per share.
Shareholders are advised to exercise caution in trading with their KAP shares
until such time as the detailed terms, conditions and timing relating to the
rights offer have been announced. The announcement will be made as soon as
possible.
Industrial segment
FELTEX AUTOMOTIVE
Sales volumes were affected by the slow-down in retail vehicle sales in South
Africa and the two-week strike which took place in September 2007. Margins
were eroded by high raw material input costs. Price increases have been agreed
to recover these costs, but vehicle build numbers are likely to remain soft for
the next financial year.
INDUSTRIAL FOOTWEAR
This division continued to perform well, with good operating profits and strong
cash flows. We do not foresee any drop in demand for either gumboots or safety
footwear going forward.
HOSAF
In spite of the challenges posed by high oil prices and electricity load
shedding, the division produced a solid operational performance on the back of
continually growing demand for its PET products and an excellent performance at
plant level. Additional capacity is currently being installed and will be fully
operational by March 2009.
Consumer segment
BULL BRAND FOODS
Industry margins improved significantly during the year under review. Although
feed costs were very high, the price of weaners remained steady throughout the
year, and this resulted in stable margins. The cannery performance was
excellent and Bull Brand remains focused on increasing its niche business in
order to optimise margins.
BRENNER MILLS
Aggressive cost cutting, combined with a solid performance from the mills,
resulted in a significant improvement in operating profit. The extremely high
maize prices made procurement difficult, and we have consistently implemented
our policy of procuring raw materials only six weeks forward.
JORDAN & CO
The number of pairs of shoes sold increased by 7% over the previous twelve
months, but margins were lower due to intense pressure from retailers. Strict
cost control and working capital management will further assist in improving
performance going forward.
GLODINA
The strength of the Glodina brand and the strategic initiative to increase
exposure in the hospitality sector of the market resulted in a pleasing
increase in revenue during the year. We continue to invest a significant amount
of capital to improve our production efficiencies and the quality of our
product range.
Corporate activity
There were no acquisitions or disposals during the year.
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. As evidence of our commitment to the community,
Glodina has become the first company in the world to be accredited in terms of
the new SANS 16001 standard, which is a management system for HIV/AIDS in the
workplace.
Directors and officers
There were no changes to the directors and officers during the year.
Capital distribution
Due to the cash requirements imposed by the Hosaf expansion, no distribution
is to be paid. Distributions will resume once the expansion is completed and
the group is generating sufficient cash flow.
Outlook
Our results will be impacted by higher input costs. In the 2008/9 year, the
automotive operations are expected to improve on their 2007/8 performance. The
Hosaf expansion will result in a significant boost to the operating profit of
the group in the 2009/10 year.
For and on behalf of the board
C E Daun P C T Schouten
Chairman Chief executive officer
Paarl
8 September 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 9064
Transfer secretaries: Computershare Investor Services (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 (Pty) Ltd
Date: 08/09/2008 17:14:01 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.
