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KAP
KAP
KAP - KAP International Holdings Limited - Unaudited Group Results For The Six
Months Ended 31 December 2009
KAP INTERNATIONAL HOLDINGS LIMITED
Registration number: 1978/000181/06
Share code: KAP
ISIN: ZAE000059564("the company" or "the group")
Unaudited Group Results for the six months ended 31 December 2009
Highlights
- Restructuring delivers benefits
- Further improvement in debt/equity ratio to 34%
- Strong cash flows generated for the period
- Headline earnings grow from 3 cents to 11 cents
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
31 Dec 2008
31 Dec 2009 6 months 30 Jun 2009
6 months Unaudited 12 months
Unaudited Restated Audited
Rm Rm Rm
Continuing operations
Revenue 2 025,9 2 136,3 3 839,0
Operating profit before
restructuring costs 97,9 99,1 152,5
Restructuring costs - (4,7) (19,9)
Operating profit 97,9 94,4 132,6
Net finance costs (27,0) (34,5) (59,3)
Other costs - - (4,1)
Share of results of joint
ventures 2,2 3,7 2,7
Profit before taxation 73,1 63,6 71,9
Taxation (19,8) (17,0) (20,5)
Profit after taxation from
continuing operations 53,3 46,6 51,4
Discontinued operations
Revenue 27,1 444,5 725,2
Operating loss before
restructuring costs - (29,9) (15,3)
Restructuring costs - - (69,5)
Operating loss - (29,9) (84,8)
Net finance costs (4,0) (12,3) (18,2)
Loss on remeasurement of
disposal group - - (15,9)
Loss before taxation (4,0) (42,2) (118,9)
Taxation 1,1 11,8 34,8
Loss after taxation from
discontinued operations (2,9) (30,4) (84,1)
Total profit/(loss) for
the period 50,4 16,2 (32,7)
Other comprehensive income
Movement in foreign currency
translation reserve - (0,1) (0,3)
Total comprehensive income for
the period 50,4 16,1 (33,0)
Total profit/(loss) for
the period 50,4 16,2 (32,7)
Attributable to KAP
shareholders 47,9 12,8 (37,3)
Attributable to minorities 2,5 3,4 4,6
Total comprehensive income 50,4 16,1 (33,0)
Attributable to KAP
shareholders 47,9 12,7 (37,6)
Attributable to minorities 2,5 3,4 4,6
Reconciliation of headline
earnings/(loss)
Net profit/(loss) attributable
to KAP shareholders 47,9 12,8 (37,3)
Profit on sale of property,
plant and equipment (1,0) - (1,9)
Impairments - - 14,0
Loss on remeasurement of
disposal group - - 11,4
Headline earnings/(loss) 46,9 12,8 (13,8)
Weighted average shares in
issue 424,5 424,5 424,5
Earnings and diluted earnings
per share
Earnings per share (cents)
Including discontinued
operations 11,3 3,0 (8,8)
Excluding discontinued
operations 12,0 10,2 11,0
Headline earnings per
share (cents)
Including discontinued
operations 11,0 3,0 (3,2)
Excluding discontinued
operations 11,7 10,2 11,4
CONDENSED STATEMENTS OF FINANCIAL POSITION
31 Dec 2009 31 Dec 2008 30 Jun 2009
Unaudited Unaudited Audited
Rm Rm Rm
ASSETS
Non-current assets 1 146,4 1 095,5 1 166,4
Property, plant and equipment
and investment properties 928,7 891,5 939,9
Goodwill 66,7 60,5 66,7
Investments and loans 24,0 18,8 22,1
Pension fund surplus 27,8 34,6 30,4
Deferred taxation 99,2 90,1 107,3
Current assets 1 309,9 1 512,6 1 342,2
Inventories and biological
assets 610,9 787,5 675,8
Receivables and prepayments 637,9 695,0 547,9
Cash and cash equivalents 13,8 30,1 58,5
Assets held for sale 47,3 - 60,0
Total assets 2 456,3 2 608,1 2 508,6
EQUITY AND LIABILITIES
Capital and reserves 1 322,5 1 321,2 1 272,1
Equity holders` interest 1 286,5 1 288,9 1 238,6
Minorities` interest 36,0 32,3 33,5
Non-current liabilities 81,7 125,0 64,7
Long-term borrowings 39,7 80,2 29,6
Retirement benefit
obligations 11,2 12,6 11,3
Deferred taxation 30,8 32,2 23,8
Current liabilities 1 052,1 1 161,9 1 171,8
Short-term interest-bearing
borrowings 92,0 212,8 193,5
Short-term interest-free
borrowings - 27,0 -
Trade and other payables 605,5 593,4 591,0
Provisions 18,8 24,7 37,0
Bank overdrafts 328,6 304,0 342,0
Liabilities directly
associated with assets
held for sale 7,2 - 8,3
Total equity and liabilities 2 456,3 2 608,1 2 508,6
Number of shares in issue
(millions) 424,5 424,5 424,5
Net asset value per share
(cents) 303,1 303,6 291,8
Net interest-bearing debt to
equity (%) 34,3% 42,9% 40,5%
CONDENSED STATEMENTS OF CHANGES IN EQUITY
31 Dec 2009 31 Dec 2008 30 Jun 2009
6 months 6 months 12 months
Unaudited Unaudited Audited
Rm Rm Rm
Balance at the beginning of
the period 1 272,1 1 308,7 1 308,7
Other comprehensive income - (0,1) (0,3)
Net profit/(loss) for the
period 50,4 16,2 (32,7)
Distributions to minorities - (3,6) (3,6)
Balance at the end of the
period 1 322,5 1 321,2 1 272,1
KAP shareholders 1 286,5 1 288,9 1 238,6
Minorities 36,0 32,3 33,5
CONDENSED STATEMENTS OF CASH FLOW
31 Dec 2009 31 Dec 2008 30 Jun 2009
6 months 6 months 12 months
Unaudited Unaudited Audited
Rm Rm Rm
Cash flows from operating
activities 84,2 53,7 276,4
Cash generated by operations
before working capital
changes 134,8 102,2 136,3
Net working capital changes (14,5) 0,8 231,8
Cash generated from
operations 120,3 103,0 368,1
Net cash finance costs (31,0) (45,1) (77,5)
Taxation paid (5,1) (4,2) (14,2)
Cash flows to investing
activities (23,0) (95,4) (230,5)
Purchase of property, plant
and equipment
Expansion (5,6) (69,3) (189,0)
Replacement (19,4) (26,0) (68,4)
Other investing activities 2,0 (0,1) 26,9
Cash flows from/(to)
operating and investing
activities 61,2 (41,7) 45,9
Cash flows to financing
activities (92,5) (47,4) (144,6)
Dividends and distributions
paid to minorities - (3,6) (3,6)
Decrease in borrowings (92,5) (43,8) (141,0)
Net decrease in cash and
cash equivalents (31,3) (89,1) (98,7)
Cash and cash equivalents at
the beginning of the period (283,5) (184,8) (184,8)
Cash and cash equivalents at
the end of the period (314,8) (273,9) (283,5)
CONDENSED SEGMENTAL ANALYSES
Operating
profit before
restructuring
Revenue costs
Rm Rm
December 2009 (six months, unaudited) 2 053,0 97,9
Industrial 1 241,7 54,1
Consumer 810,9 43,8
Other 0,4 -
December 2008 (six months, unaudited) 2 580,8 69,2
Industrial 1 305,2 37,2
Consumer 1 275,2 32,0
Other 0,4 -
June 2009 (twelve months, audited) 4 564,2 137,2
Industrial 2 242,0 73,5
Consumer 2 321,1 64,7
Other 1,1 (1,0)
Depreciation Total assets
Rm Rm
December 2009 (six months, unaudited) 35,6 2 456,3
Industrial 28,1 1 576,6
Consumer 8,3 779,1
Other (0,8) 100,6
December 2008 (six months, unaudited 32,0 2 608,1
Industrial 23,2 1 569,7
Consumer 8,6 984,1
Other 0,2 54,3
June 2009 (twelve months, audited) 59,3 2 508,6
Industrial 43,4 1 718,5
Consumer 15,4 752,1
Other 0,5 38,0
NOTES
31 Dec 2009 31 Dec 2008 30 Jun 2009
6 months 6 months 12 months
Unaudited Unaudited Audited
Rm Rm Rm
1 Net finance costs -
continuing operations 27,0 34,5 59,3
Interest paid 27,1 34,5 62,4
Interest received (0,1) - (3,1)
Net finance costs -
discontinued operations 4,0 12,3 18,2
2 Capital expenditure
commitments 33,4 138,1 50,9
Contracted 10,6 113,6 15,7
Approved but not yet
contracted 22,8 24,5 35,2
3 Operating lease
commitments 36,4 59,8 41,0
4 Guarantees and
contingent liabilities 11,2 12,9 9,6
5 Taxation
Taxation expense reflected in the statements of comprehensive income
approximates South African normal taxation at 28%.
6 Basis of preparation of results
The unaudited results of the group for the six months ended 31 December 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, 1973 (as amended), and are
consistent with those of the prior year, except for IAS 1 (Presentation of
Financial Statements), which was implemented during the period. The
restatements of the 31 December 2008 period relate to the Feltex Automotive
Leathers division, which has now been accounted for as a discontinued
operation.
7 Unaudited results
The results for the six months ended 31 December 2009 have not been audited or
reviewed by the company`s auditors.
PERFORMANCE
Revenue and earnings
The board of directors reports on the results for the six months ended
31 December 2009. The group underwent major restructuring in the previous
financial year and the benefits are evident in the results for the current
period. This restructuring, together with an intense focus on cost reduction and
cash generation, have resulted in an improvement in profitability. Headline
earnings per share increased from 3 cents per share to 11 cents per share.
Revenue from continuing operations for the six months ended December 2009
decreased marginally compared to the prior period due to a decline in sales of
automotive and consumer products.
Balance sheet and cash flow
The debt/equity ratio has improved further to 34,3% as a result of strong
operating cash flows and excellent working capital management, and we continue
to focus on this area. Net asset value per share remains above R3,00 despite
restructuring in the previous year.
OPERATIONAL OVERVIEW
Industrial segment
Feltex Automotive
Vehicle production for the period from July to December 2009 reduced by
approximately 30% compared to the previous period. The restructuring of the
division completed in the 2009 financial year has aligned its cost base to the
revised vehicle build volumes.
Industrial footwear
In United Fram, import competition will be countered by the release of the
division`s new range of products. Wayne Plastics has seen an increase in the
demand for gumboots across all sectors. Despite recent increases of
international hide prices due to the revival of the automotive leather industry,
Mossop is still delivering pleasing results.
Hosaf
The expanded Hosaf plant is producing according to plan amid strong demand for
PET, which is expected to continue with the World Cup soccer tournament. The
fibres division has been proactively downsized in line with reducing volumes.
Consumer segment
Bull Brand Foods
The cannery experienced slow demand during the period, but volumes started to
pick up towards the end of 2009. The new Bull Brand management team has
commenced various initiatives, including improved production flow and the
targeting of new markets such as exports and Halaal.
Brenner Mills
Brenner continued to deliver a good performance despite the reduction in the
maize price over the period, by focusing on efficiencies at the milling
operations.
Jordan
Sales volumes remain under pressure, although there has been a slight
improvement in the retail environment and in margins since 2009. Improved
information systems and warehousing/distribution integration will assist
Jordan to pursue more profitable business.
Glodina
Due largely to the hospitality sector, Glodina has nearly maintained sales
into the 2010 financial year, and has generated reasonable margins during the
period.
CORPORATE ACTIVITY
During the period, the group settled the outstanding consideration in respect
of the Brenner Mills acquisition.
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.
Directors and officers
Karl Schmidt and Ulrich Schackermann were appointed as independent,
non-executive directors on 1 March 2010.
Outlook
A gradual improvement in vehicle build coupled with the increased volumes in
Hosaf should result in overall revenue growth. The consumer operations should
improve in line with consumer sentiment. Responsible cost-cutting across the
group has positioned us to benefit once trading conditions improve.
Appreciation
We appreciate the support of our shareholders, employees, bankers, suppliers
and customers.
CE Daun PCT Schouten
Chairman Chief executive officer
Paarl
1 March 2010
Corporate information
Non-executive directors: C E Daun* (Chairman), M J Jooste, J B Magwaza,
I N Mkhari, F Moller*, S H Nomvete, U Schackermann*, K E Schmidt,
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
View these results on: www.kapinternational.com
Date: 01/03/2010 17:00:02 Produced by the JSE SENS Department.
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