| Tue 8 Sep 2009, 17:00 | | KAP - KAP International Holdings - Audited Group Results for the year ended 30 |
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KAP
KAP
KAP - KAP International Holdings - Audited Group Results for the year ended 30
June 2009
KAP INTERNATIONAL HOLDINGS LIMITED
Registration number: 1978/000181/06
Share code: KAP
ISIN: ZAE000059564
Audited Group Results for the year ended 30 June 2009
Highlights
- Strong operating cash flow and improved working capital
- Net asset value of R2,92 per share and a healthy balance sheet
- Hosaf PET expansion project successfully completed and operational
- Automotive Leather operation sold
- Restructuring of Bull Brand fresh meat and Durban Fibres completed
Condensed Income Statements
30 Jun 2009 30 Jun 2008
12 months 12 months
Rm Rm
Continuing operations
Revenue 3 839,0 3 700,8
Operating profit before restructuring costs 152,5 206,0
Restructuring costs (19,9) -
Operating profit 132,6 206,0
Net finance costs (59,3) (64,6)
Other costs (4,1) (5,8)
Share of results of joint ventures 2,7 3,7
Profit before taxation 71,9 139,3
Taxation (20,5) 3,2
Net profit from continuing operations 51,4 142,5
Discontinued operations
Revenue 725,2 919,6
Operating loss before restructuring costs (15,3) (5,9)
Net loss from discontinued operations (84,1) (12,7)
Total (loss)/profit for the year (32,7) 129,8
Attributable to KAP shareholders (37,3) 122,3
Attributable to minorities 4,6 7,5
Reconciliation of headline (loss)/earnings
Net (loss)/profit attributable to ordinary
shareholders (37,3) 122,3
Profit on sale of property, plant and equipment (1,9) (1,6)
Impairments 14,0 -
Loss on remeasurement of disposal group 11,4 -
Headline (loss)/earnings (13,8) 120,7
Weighted average shares in issue 424,5 424,5
Earnings/(loss) per share (cents)
Excluding discontinued operations 11,0 31,8
Including discontinued operations (8,8) 28,8
Headline earnings/(loss) per share (cents)
Excluding discontinued operations 11,4 31,4
Including discontinued operations (3,2) 28,4
Condensed Balance Sheets
30 Jun 2009 30 Jun 2008
Rm Rm
ASSETS
Non-current assets 1 166,4 1 045,9
Property, plant and equipment and investment
properties 939,9 828,2
Goodwill 66,7 60,5
Investments and loans 22,1 26,5
Pension fund surplus 30,4 39,4
Deferred taxation 107,3 91,3
Current assets 1 342,2 1 714,5
Inventories and biological assets 675,8 929,9
Receivables and prepayments 547,9 729,5
Cash and cash equivalents 58,5 55,1
Assets held for sale 60,0 -
Total assets 2 508,6 2 760,4
EQUITY AND LIABILITIES
Equity 1 272,1 1 308,7
Equity holders` interest 1 238,6 1 276,2
Minorities` interest 33,5 32,5
Non-current liabilities 64,7 117,5
Long-term borrowings 29,6 68,3
Retirement benefit obligations 11,3 11,7
Deferred taxation 23,8 37,5
Current liabilities 1 171,8 1 334,2
Short-term interest-bearing borrowings 193,5 266,8
Short-term interest-free borrowings - 27,0
Trade and other payables 591,0 758,3
Provisions 37,0 42,2
Bank overdrafts 342,0 239,9
Liabilities related to assets held for sale 8,3 -
Total equity and liabilities 2 508,6 2 760,4
Number of shares in issue (millions) 424,5 424,5
Net asset value per share (cents) 291,8 300,7
Net interest-bearing debt to equity (%) 40,5 39,7
Condensed Cash Flow Statements
30 Jun 2009 30 Jun 2008
12 months 12 months
Rm Rm
Net cash flows from operating activities 276,4 170,6
Cash generated from operations before working
capital changes 136,3 256,3
Net working capital changes 231,8 0,8
Cash generated from operations 368,1 257,1
Net cash finance costs (77,5) (75,9)
Taxation paid (14,2) (10,6)
Cash flows to investing activities (230,5) (160,4)
Purchase of property, plant and equipment
- expansion (189,0) (151,4)
- replacement (68,4) (26,0)
Other investing activities 26,9 17,0
Cash flows from operating and investing activities 45,9 10,2
Cash flows (to)/from financing activities (144,6) 176,9
Change in borrowings (141,0) 189,6
Distributions to minorities/shareholders (3,6) (12,7)
Net (decrease)/increase in cash and equivalents (98,7) 187,1
Opening cash and equivalents (184,8) (371,9)
Closing cash and equivalents (283,5) (184,8)
Condensed Statements of Changes in Equity
30 Jun 2009 30 Jun 2008
12 months 12 months
Rm Rm
Balance at the beginning of the period 1 308,7 1 191,1
Movement in share-based payment reserve - 0,6
Movement in foreign currency translation reserve (0,3) (0,2)
Net (loss)/profit for the period (32,7) 129,8
Distributions to minorities (3,6) -
Sale of trust shares - 0,1
Distributions to KAP shareholders - (12,7)
Balance at the end of the period 1 272,1 1 308,7
KAP shareholders 1 238,6 1 276,2
Minorities 33,5 32,5
Condensed Segmental Analyses
Operating
profit before
restructuring
Revenue costs
Rm Rm
June 2009 (12 months) 4 564,2 137,2
Industrial 2 242,0 73,5
Consumer 2 321,1 64,7
Other 1,1 (1,0)
June 2008 (12 months) 4 620,4 200,1
Industrial 2 388,6 106,2
Consumer 2 231,6 90,5
Other 0,2 3,4
Total assets Depreciation
Rm Rm
June 2009 (12 months) 2 508,6 59,3
Industrial 1 718,5 43,4
Consumer 752,1 15,4
Other 38,0 0,5
June 2008 (12 months) 2 760,4 56,2
Industrial 1 849,5 41,7
Consumer 971,7 15,0
Other (60,8) (0,5)
NOTES
30 Jun 2009 30 Jun 2008
12 months 12 months
1. Net finance costs continuing operations 59,3 64,6
Interest received (3,1) (0,5)
Interest paid 62,4 65,1
Net finance costs discontinuing operations 18,2 11,3
2. Capital expenditure commitments 50,9 136,4
Contracted 15,7 51,8
Approved but not yet contracted 35,2 84,6
3. Operating lease commitments 41,0 48,1
4. Guarantees and contingent liabilities 9,6 7,9
5. Taxation
The taxation rate is relatively high mainly due to STC incurred on
distributions to minority shareholders.
6. Basis of preparation of the results
The audited results of the group for the year ended 30 June 2009 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, and are consistent with those of the prior year.
7. Audit opinion
The auditors, Deloitte & Touche, have issued their opinion on the group`s
financial statements for the year ended 30 June 2009. 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.
Performance
Revenue and earnings
The board of directors reports on the results for the year ended 30 June 2009.
Operating profit from continuing operations declined by 26% compared to the
previous year due largely to difficult trading conditions in the automotive
operations. Headline earnings per share (including discontinued operations)
decreased from 28,4 cents to a loss of 3,2 cents.
Headline earnings per share (excluding discontinued operations) showed a far
smaller decline, decreasing to 11,4 cents.
Revenue for the year decreased slightly to R4,6 billion due to the effect of
the closure of the fresh meat division and a decline in sales in the automotive
operation.
Balance sheet and cash flow
Total interest-bearing debt reduced by R5 million to R514,9 million, and the
debt equity ratio at year-end was 40,5%. There was an intense focus on net
working capital during this financial year and this produced pleasing results.
A substantial portion was generated by the closure of the fresh meat operation
of Bull Brand. Capital expenditure for the year was R257,4 million, mainly for
the completion of the Hosaf expansion project. In addition there was an upgrade
of the cannery in Bull Brand, and a safety footwear machine was installed in
the Industrial Footwear division.
Distribution
Due to the funding requirements of the Hosaf expansion project, no distribution
is proposed for this financial year.
Operational overview
Industrial segment
Feltex Automotive
There was a sharp decline in vehicle production from 533 000 in 2007/8 to
398 000 units in the current financial year. This decline necessitated
restructuring in all automotive divisions to take account of these lower
volumes. The headcount was reduced by almost 1 000 people from 2 482 to 1 483
and costs were reduced wherever possible. The automotive leather division was
sold to Seton South Africa.
Installed capacity is now underutilised, particularly in the trim division, but
Feltex are set to benefit once the vehicle build recovers.
Industrial footwear
This division performed well. Sales were lower in United Fram and Wayne
Plastics, where pairs sold were down by 14%. Demand for gumboots remains
strong. The turnaround in Mossop remains on track, where margins improved
during the second half of the financial year.
Hosaf
Hosaf continued with their strategy of increasing PET production and reducing
fibre sales. The PET expansion was successfully completed in April 2009 and the
plant is currently performing extremely well and producing an excellent quality
product. The closure of the competing SANS plant during the financial year has
meant that Hosaf is now the only local producer. International margins remain
under pressure during the current economic climate, but Hosaf is well placed to
take advantage once markets improve.
Consumer segment
Bull Brand Foods
The fresh meat operation was closed during the year and one of the two farms
was sold. The cannery lines were upgraded to improve efficiencies and output
improved during the course of the year. The cannery has steadily been gaining
market share since 2001 and is now aggressively looking at export markets with
the view to further increasing turnover and benefiting from economies of scale.
Brenner Mills
Brenner once again produced a solid performance and demonstrated the benefits
of having a division that is of a defensive nature during the tough economic
times.
Jordan
Jordan`s volumes declined by 14% and margins were under pressure from
retailers. The volatile exchange rate made the pricing of imports extremely
difficult, but management has recently completed a major restructuring exercise
and the emphasis on cost control will enable them to improve performance in
future years. The strong brands are still highly sought after by both national
retailers and independent shoe stores.
Glodina
Although retail sales were lower than previous financial years, Glodina`s
emphasis on the hospitality sector has enabled them to maintain overall
operating margins in an extremely difficult trading environment. Their quality
products, strong brand and total dedication to customer service will enable
them to continue to produce good results.
Corporate activity
The Feltex Automotive Leathers division has been sold to Seton South Africa.
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 that its operations impact on society and the environment,
and is constantly striving to improve the well-being of all stakeholders in
this regard. Detailed information on sustainability can be found in the annual
report.
Directors and officers
There were no changes to the directors during the year. Ben la Grange of
Steinhoff Africa Holdings (Pty) Limited replaced Jan van der Merwe on the audit
and risk committee.
Outlook
The directors remain cautious regarding trading conditions in the new financial
year. The restructuring initiatives completed in 2008/9 have enabled all
divisions to reduce costs in line with expected lower volumes, and the group
will benefit when trading conditions improve. Hosaf is expected to generate
additional operating margin from the extra volume produced, and KAP`s earnings
are expected to be less volatile now that the fresh meat operations have been
closed and the automotive leathers division has been sold.
Appreciation
As always, we are grateful to our shareholders, employees, customers and other
stakeholders in these difficult times, and we look forward to better trading
conditions.
C E Daun P C T Schouten
Chairman Chief executive officer
8 September 2009
Paarl
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 (Proprietary) Limited
Please see these results on www.kapinternational.com
Date: 08/09/2009 17:00:01 Produced by the JSE SENS Department.
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