| Mon 2 Mar 2009, 17:00 | | KAP - Kap International Holdings Limited - Unaudited Group Results For the Six |
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KAP
KAP
KAP - Kap International Holdings Limited - Unaudited Group Results For the Six
Months Ended 31 December 2008
KAP INTERNATIONAL HOLDINGS LIMITED
Registration number: 1978/000181/06
Share code: KAP
ISIN: ZAE000059564
("KAP" or "the group")
Unaudited group results for the six months ended 31 December 2008
Highlights
Increase in cash generated from operations
Hosaf expansion to be completed by April
Discontinuation of Bull Brand Fresh Meat division announced
Please see these results on www.kapinternational.com
CONDENSED INCOME STATEMENTS
Dec 2008 Dec 2007 Jun 2008
6 months 6 months 12 months
Unaudited Unaudited Audited
Rm Rm Rm
Revenue 2 580,8 2 374,8 4 620,4
Operating profit
Continuing operations 82.9 110.1 200.1
Discontinuing operations (18.4) - -
Net finance costs (46,8) (40,6) (81,7)
Share of results of joint ventures 3,7 2,1 3,7
Profit before taxation 21,4 71,6 122,1
Taxation (5,2) (14,9) 7,7
Net profit for the period 16,2 56,7 129,8
Attributable to KAP shareholders 12,8 53,6 122,3
Attributable to minorities 3,4 3,1 7,5
Reconciliation of headline earnings
Net profit attributable to
ordinary shareholders 12,8 53,6 122,3
Profit on sale of property,
plant and equipment - (1,0) (1,6)
Headline earnings 12,8 52,6 120,7
Weighted average shares in issue 424,5 424,5 424,5
Earnings
Earnings per share (cents) 3,0 12,6 28,8
Headline earnings per share (cents) 3,0 12,3 28,4
CONDENSED BALANCE SHEETS
Dec 2008 Dec 2007 Jun 2008
Unaudited Unaudited Audited
Rm Rm Rm
Assets
Non-current assets 1 095,5 925,6 1 045,9
Property, plant and equipment and
investment properties 891,5 731,6 828,2
Goodwill 60,5 53,5 60,5
Investments and loans 18,8 31,0 26,5
Pension fund surplus 34,6 44,8 39,4
Deferred taxation 90,1 64,7 91,3
Current assets 1 512,6 1 490,0 1 714,5
Inventories and biological assets 787,5 766,6 929,9
Receivables and prepayments 695,0 721,6 729,5
Cash and cash equivalents 30,1 1,8 55,1
Total assets 2 608,1 2 415,6 2 760,4
Equity and liabilities
Equity 1 321,2 1 235,1 1 308,7
Equity holders` interest 1 288,9 1 207,0 1 276,2
Minority interest 32,3 28,1 32,5
Non-current liabilities 125,0 350,0 117,5
Long-term interest-bearing borrowings 80,2 300,9 68,3
Retirement benefit obligations 12,6 13,7 11,7
Deferred taxation 32,2 35,4 37,5
Current liabilities 1 161,9 830,5 1 334,2
Short-term interest-bearing borrowings 212,8 91,1 266,8
Short-term interest-free borrowings 27,0 19,3 27,0
Trade and other payables 593,4 553,8 758,3
Provisions 24,7 25,2 42,2
Bank overdrafts 304,0 141,1 239,9
Total equity and liabilities 2 608,1 2 415,6 2 760,4
Number of shares in issue (millions) 424,5 424,5 424,5
Net asset value per share (cents) 303,6 284,4 300,7
Net interest-bearing debt to equity (%) 44,0 44,0 40,7
CONDENSED STATEMENTS OF CHANGES IN EQUITY
Dec 2008 Dec 2007 Jun 2008
6 months 6 months 12 months
Unaudited Unaudited Audited
Rm Rm Rm
Balance at the beginning of the period 1 308,7 1 191,1 1 191,1
Movement in share-based
payment reserve - - 0,6
Movement in foreign currency
translation reserve (0,1) - (0,2)
Net profit for the period 16,2 56,7 129,8
Distributions to minorities (3,6) - -
Sale of share trust shares - - 0,1
Distributions to KAP shareholders - (12,7) (12,7)
Balance at the end of the period 1 321,2 1 235,1 1 308,7
KAP shareholders 1 288,9 1 207,0 1 276,2
Minorities 32,3 28,1 32,5
CONDENSED CASH FLOW STATEMENTS
Dec 2008 Dec 2007 Jun 2008
6 months 6 months 12 months
Unaudited Unaudited Audited
Rm Rm Rm
Net cash flows from operating
activities 53,7 35,6 170,6
Cash generated from operations
before working capital changes
Continuing operations 116.6 140.4 256.3
Discontinuing operations (14.4) - -
Net working capital changes 0,8 (58,2) 0,8
Cash generated from operations 103,0 82,2 257,1
Net finance costs (45,1) (40,6) (75,9)
Taxation paid (4,2) (6,0) (10,6)
Cash flows from investing activities (95,4) (41,9) (160,4)
Purchase of property,
plant and equipment
- expansion (69,3) (45,0) (151,4)
- replacement (26,0) (8,2) (26,0)
Other investing activities (0,1) 11,3 17,0
Cash flows from financing activities (47,4) 238,9 176,9
Increase/(decrease) in borrowings (43,8) 251,6 189,6
Distributions to shareholders - (12,7) (12,7)
Distributions to minorities (3,6) - -
Net movement in cash and equivalents (89,1) 232,6 187,1
Opening cash and equivalents (184,8) (371,9) (371,9)
Closing cash and equivalents (273,9) (139,3) (184,8)
SEGMENTAL ANALYSES
Operating
Revenue profit
Rm Rm
December 2008 (6 months) - unaudited
Industrial 1 275,2 35,1
Consumer 1 364,0 26,0
Other (78,4) 3,4
Total 2 560,8 64,5
December 2007 (6 months) - unaudited
Industrial 1 153,1 44,1
Consumer 1 237,0 65,2
Other (15,3) 0,8
Total 2 374,8 110,1
June 2008 (12 months) - audited
Industrial 2 388,6 106,2
Consumer 2 231,6 90,5
Other 0,2 3,4
Total 4 620,4 200,1
Depreciation Assets
Rm Rm
December 2008 (6 months) - unaudited
Industrial 23,2 1 569,7
Consumer 8,6 984,1
Other 0,2 54,3
Total 32,0 2 608,1
December 2007 (6 months) - unaudited
Industrial 20,5 1 466,8
Consumer 7,3 964,1
Other 0,4 (15,3)
Total 28,2 2 415,6
June 2008 (12 months) - audited
Industrial 41,7 1 849,5
Consumer 15,0 971,7
Other (0,5) (60,8)
Total 56,2 2 760,4
NOTES
Dec 2008 Dec 2007 Jun 2008
6 months 6 months 12 months
Unaudited Unaudited Audited
Rm Rm Rm
1. Net finance costs 46,8 40,6 81,7
Interest received - - (0,5)
Interest paid 46,8 40,6 82,2
2. Capital expenditure commitments
Contracted 113,6 22,9 51,8
Approved but not yet contracted 24,5 140,4 84,6
3. Operating lease commitments 59,8 26,1 48,1
4. Guarantees and contingent
liabilities 12,9 8,2 7,9
5. Taxation
Taxation is slightly higher than the statutory rate, due to STC being paid on a
dividend.
6. Basis of preparation of the results
The unaudited results of the group for the six months ended 31 December 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.
7. Unaudited results
The results for the six months ended 31 December 2008 have not been audited or
reviewed by the company`s auditors.
REVIEW OF RESULTS
The board of directors reports on the results for the six months ended
31 December 2008. Revenue increased by 8%, due to the effect of high commodity
prices in Hosaf and Brenner Mills. Operating profit declined by 41%
(R45,6 million) as a result of poor margins in the Fresh Meat division of
Bull Brand and low demand in the automotive division. Headline earnings per
share decreased from 12,3 cents to 3 cents per share.
Balance sheet and cash flow
Cash generated from operations improved from R82,2 million to R103,0 million due
to sound working capital management. Net finance costs increased by R4,5 million
to R45,1 million due to the increase in interest rates. The group continued with
the Hosaf expansion project and R95,4 million was spent on investing activities
during the year.
Interest-bearing debt increased by R47,0 million to R566,9 million due largely
to the Hosaf expansion and the debt to equity ratio at 31 December 2008 was
44,0%.
Industrial segment
FELTEX AUTOMOTIVE
Sales volumes were affected by the worldwide slow-down in vehicle sales and
this trend is expected to continue until the end of 2009. Margins were also
impacted by raw material costs.
INDUSTRIAL FOOTWEAR
Once again the division performed well and demand for gumboots in particular
remains strong.
HOSAF
Hosaf operating profit was in line with the previous year. The plant was shut
down in mid-February 2009 in order to complete the expansion project and we
expect to restart during April 2009. Hosaf is currently experiencing strong
demand for its products.
Consumer segment
BULL BRAND FOODS
Industry margins in the Fresh Meat industry were extremely poor during the
period under review. Feed costs were high due to the high maize price and meat
prices remained low. This resulted in a loss being incurred in the Fresh Meat
division. The cannery performed well and the group remains focused on
increasing distribution and optimising margins whilst growing this strong
brand.
BRENNER MILLS
The three mills delivered sound operational performance and demand for the
product remains strong. Maize prices have stabilised and this has made
procurement easier and we are consistently implementing a conservative
procurement policy.
JORDAN
Management embarked on a cost-cutting exercise during the period under review
and has achieved a significant reduction in expenses by focusing on employment
costs and on the strength of their brands. The management team increased
operating profit during a very difficult trading period. There has been a switch
to local manufacturing because of the effect of the exchange rate on imported
shoe prices.
GLODINA
Glodina showed a slight improvement in operating profit and their focus on
quality and service to customers has meant that demand for their products
remains strong. Management implemented a new warehouse and distribution
system during the period under review which will reduce distribution costs
in the future.
Corporate activity
There were no acquisitions or disposals during the period.
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 operates 19 industrial facilities in South Africa and employs 5 793
people. The impact of its operations on society and the environment is
constantly under scrutiny and we continue to improve and respond to the broader
sustainability agenda. All industrial facilities are required to develop
management systems to internationally recognised certification standards. These
systems proactively address safety, health, environment and quality risks.
Directors and officers
There were no changes to the directors and officers during the period.
Capital distribution
Due to the cash requirements imposed by the Hosaf expansion and the
prioritisation of reducing debt and gearing, no distribution is proposed at the
interim stage.
Outlook
Shareholders are referred to the SENS announcement of 24 February 2009. The
group intends to discontinue its operations in the Fresh Meat division of Bull
Brand and this will be completed by 31 August 2009. The Hosaf expansion will be
completed and fully operational by April 2009. This will double the capacity of
the Hosaf plant. Automotive volumes are expected to remain low for the
remainder of this calendar year and the group has already had a significant cut
in employee numbers in this division. The reduced demand will affect the
profitability of this division. Industrial Footwear and Brenner Mills are
expected to continue to perform well, while improved cost structures in Jordan
and Glodina should enable them to maintain their margins.
For and on behalf of the board
C E Daun P C T Schouten
Chairman Chief executive officer
Paarl
2 March 2009
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: 011 688 7710
Sponsor: PSG Capital (Pty) Limited
Date: 02/03/2009 17:00:06 Produced by the JSE SENS Department.
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