| Tue 7 Sep 2010, 16:00 | | KAP - KAP International Holdings Limited - Audited Group Results for the year |
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KAP
KAP
KAP - KAP International Holdings Limited - Audited Group Results for the year
ended 30 June 2010
KAP INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1978/000181/06
Share code: KAP
ISIN: ZAE000059564
Audited Group Results for the year ended 30 June 2010
Highlights
* Further improvement of debt/equity ratio to 24%
* Strong cash flows generated for the period
* Headline earnings grow from 3 cents loss to 21 cents profit per share
* Recovery in the automotive division
Performance
We submit our report to shareholders on the results and activities of KAP
International for the year ended 30 June 2010.
Revenue and earnings
Operating profit before restructuring costs has improved by 45% to R199
million following the restructuring of the 2008/9 period. Coupled with a
reduction in interest, this has resulted in headline earnings per share
including discontinued operations improving to a profit of 21,0 cents from
a loss of 3,2 cents in 2008/9. Headline earnings per share excluding
discontinued operations also increased significantly to 21,2 cents, up from
11,4 cents in 2008/9. Revenue for the year from continuing operations has
increased slightly to R3,97 billion (2008/9: R3,84 billion).
The results reflect the impact of the restructuring which management completed
early in the business cycle (2008/9) in respect of the fresh meat and
automotive divisions, as well as the disposal of the automotive leathers
division. This restructuring should help to provide more predictability of
earnings going forward.
Balance sheet and cash flow
Following continued focus on cash generation, net interest-bearing borrowings
have decreased further by R189,3 million to R325,6 million (2009:R514,9
million). The debt/equity ratio at year-end was 23,9%, which is particularly
pleasing in the light of tough economic conditions.
This cash was generated by strong operating cash flows, tight working capital
management and strict control over capital expenditure.
Capital distribution
In light of the improved cash flow, the board has declared a final capital
distribution of 7 cents per share, approximately three times cover.
Operational overview
Industrial segment
Feltex Automotive
Vehicle build remained nearly constant in the current financial year (2010:
392 299 vs 2009: 398 419) but are at similar levels to 2003/4. The restructuring
initiatives in the previous year led to strong profit growth, albeit off a low
base. Working capital was well managed and cash generation good. The trim
division took advantage of the difficult economic circumstances to increase
its market share further.
Trading conditions are expected to continue to be stable, but tight, as a
significant proportion of vehicles produced in South Africa are exported to
the United States and Europe whose economies still face significant challenges.
Industrial footwear
This division continued to perform well. Wayne Plastics continued to deliver
good volumes. United Fram`s volumes and prices remain under pressure due to
competition from imports. The turnaround in Mossop has been completed and the
division is now delivering better trading results.
Hosaf
Hosaf increased local sales of PET by 65% over the last financial year as a
result of the closure of Sans Fibres (a former competitor) and the expanded
plant is running efficiently. Market conditions during the period under
review remained satisfactory although disappointing that the impact of the
World Cup on volumes has not been as large as originally anticipated.
Consumer segment
Bull Brand Foods
Volumes in the cannery operations of Bull Brand remained low, although
the value-added manufacturing fared better. The division`s strategy of
increasing exports remains a focus area. The reorganisation of the
production process has also resulted in better efficiencies and operational
cost savings, and the division now requires increased volumes for these
improvements to reflect
in the results.
Brenner Mills
The maize price reduced due to a bumper local and US maize crop, which had
an effect on both prices and margins, and resulted in lower profitability.
Brenner continues to provide good operating profits and cash flow.
Jordan
As a result of the Jordan strategy to focus on lower volume, higher margin
products, pairs sold declined by 10% to 2,1 million, while revenue declined
by only 2,5%. Although the strong Rand assists the imported products, some
retailers have opted to import directly from China. The premium Asics brand
continues to dominate the running market in South Africa.
Glodina
There was strong growth in the hospitality sector due to the World Cup,
while the retail sector remained relatively flat as the market continues to
feel the effects of the recession. The hospitality sector year on year
increased in volume by 15%, while volumes to the major chains reduced by 4%.
Corporate activity
There was no material corporate activity during the period.
Directors and officers
K E Schmidt and U Schackermann were appointed to the board on 1 March 2010 as
independent non-executive directors, and as members of the audit and risk
committee.
Outlook
The group will continue to focus on strong cash generation and strict cost
control.
We are confident that our investment in the PET division, coupled with continued
growth in automotive will provide good returns in future years.
Appreciation
We are grateful to our shareholders, employees and other stakeholders, and thank
them for their continued support.
Claas Daun Paul Schouten John Haveman
Non-executive chairman Chief executive officer Chief financial officer
Capital distribution
In terms of the general authority obtained by the company at the general meeting
of shareholders held on 27 November 2009, the directors of the company have
declared a final capital distribution out of share premium of 7 cents per share
in respect of the period ending 30 June 2010.
The distribution will be payable on Monday, 4 October 2010 to shareholders
recorded in the register at the close of business on Friday, 1 October 2010.
To comply with the requirements of Strate the following dates are applicable:
Last date to trade cum-distribution Thursday, 23 September 2010
Trading commences ex-distribution Monday, 27 September 2010
Record date Friday, 1 October 2010
Posting of cheques/electronic bank transfers Monday, 4 October 2010
Accounts credited at CSDP or broker in respect of shareholders who have
dematerialised their shares Monday, 4 October 2010
Share certificates may not be dematerialised or rematerialised between
Thursday, 23 September 2010 and Friday, 1 October 2010, both days inclusive.
Any changes to the above dates will be advised by notification on SENS and in
the press.
For and on behalf of the board
M Balladon
Company secretary
Paarl
6 September 2010
Condensed Statements of Comprehensive Income
30 Jun 2010 30 Jun 2009
12 months 12 months
Rm Rm
Continuing operations
Revenue 3 970,5 3 839,0
Operating profit before restructuring costs 198,2 152,5
Restructuring costs (3,7) (19,9)
Operating profit 194,5 132,6
Net finance costs (52,7) (59,3)
Other costs - (4,1)
Share of results of joint ventures 3,0 2,7
Profit before taxation 144,8 71,9
Taxation (48,7) (20,5)
Profit after taxation from continuing operations 96,1 51,4
Discontinued operations
Revenue 29,7 725,2
Operating profit/(loss) before restructuring costs 0,5 (15,3)
Restructuring costs (4,0) (69,5)
Operating loss (3,5) (84,8)
Net finance costs (1,5) (18,2)
Loss after taxation from discontinued operations (2,4) (84,1)
Total profit/(loss) for the period 93,7 (32,7)
Other comprehensive income/(loss)
Movement in foreign currency translation reserve - (0,3)
Total comprehensive income/(loss) 93,7 (33,0)
Total profit/(loss) for the period 93,7 (32,7)
Owners of the company 87,4 (37,3)
Non-controlling interest 6,3 4,6
Total comprehensive income/(loss) 93,7 (33,0)
Owners of the company 87,4 (37,6)
Non-controlling interest 6,3 4,6
Earnings per share (basic and diluted)
Including discontinued operations 20,6 (8,8)
Excluding discontinued operations 21,2 11,0
Headline earnings per share (basic and diluted)
Including discontinued operations 21,0 (3,2)
Excluding discontinued operations 21,2 11,4
Reconciliation of headline earnings/(loss)
Net profit/(loss) attributable to owners of the company
87,4 (37,3)
Profit on sale of property, plant and equipment (2,2) (1,9)
Impairments 4,0 14,0
Loss on remeasurement of disposal group - 11,4
Headline earnings/(loss) 89,2 (13,8)
Weighted average shares in issue 424,5 424,5
Condensed Statements of Financial Position
30 Jun 2010 30 Jun 2009
Rm Rm
ASSETS
Non-current assets 1 128,5 1 166,4
Property, plant and equipment and investment properties
945,7 939,9
Goodwill 66,7 66,7
Interest in joint ventures 22,7 22,1
Pension fund surplus 25,1 30,4
Deferred taxation assets 68,3 107,3
Current assets 1 381,7 1 342,2
Inventories 646,3 675,8
Trade and other receivables 621,1 547,9
Bank balances and cash 101,8 58,5
Assets held for sale 12,5 60,0
Total assets 2 510,2 2 508,6
EQUITY AND LIABILITIES
Capital and reserves 1 364,7 1 272,1
Equity holders` interest 1 327,0 1 238,6
Non-controlling interest 37,7 33,5
Non-current liabilities 61,7 64,7
Long-term interest-bearing borrowings 30,5 29,6
Retirement benefit obligations 10,6 11,3
Deferred taxation liabilities 20,6 23,8
Current liabilities 1 083,8 1 171,8
Short-term interest-bearing borrowings 72,7 193,5
Trade and other payables 636,8 591,0
Provisions 50,1 37,0
Bank overdrafts 324,2 342,0
Liabilities directly associated with assets held for
sale - 8,3
Total equity and liabilities 2 510,2 2 508,6
Number of shares in issue (millions) 424,5 424,5
Net asset value per share (cents) 312,6 291,8
Net interest-bearing debt to equity (%) 23,9 40,5
Condensed Statements of Cash Flows
30 Jun 2010 30 Jun 2009
12 months 12 months
Rm Rm
Cash flows from operating activities 233,9 276,4
Cash generated from operations before working
capital changes 268,6 136,3
Net working capital changes 28,4 231,8
Cash generated from operations 297,0 368,1
Net finance costs (54,2) (77,5)
Taxation paid (8,9) (14,2)
Cash flows to investing activities (42,5) (230,5)
Purchase of property, plant and equipment
Expansion (34,2) (189,0)
Replacement (29,1) (68,4)
Other investing activities 20,8 26,9
Cash flows from operating and investing activities 191,4 45,9
Cash flows to financing activities (130,3) (144,6)
Dividends and distributions paid to minorities (2,1) (3,6)
Decrease in borrowings (128,2) (141,0)
Net increase/(decrease) in cash and cash equivalents 61,1 (98,7)
Cash and cash equivalents at the beginning of the
period (283,5) (184,8)
Cash and cash equivalents at the end of the period (222,4) (283,5)
Condensed Statements of Changes in Equity
30 Jun 2010 30 Jun 2009
12 months 12 months
Rm Rm
Balance at the beginning of the period 1 272,1 1 308,7
Other comprehensive income - (0,3)
Movement in share-based payment reserve 1,0 -
Net profit/(loss) for the period 93,7 (32,7)
Distributions to minorities (2,1) (3,6)
Balance at the end of the period 1 364,7 1 272,1
Owners of the company 1 327,0 1 238,6
Non-controlling interest 37,7 33,5
Condensed Segmental Analyses
Operating
profit before
restructuring
Revenue costs
Rm Rm
June 2010 (12 months) 4 000,2 198,7
Industrial 2 495,2 142,4
Consumer 1 505,0 56,3
Other - -
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)
Total
Depreciation assets
Rm Rm
June 2010 (12 months) (70,8) 2 510,2
Industrial (56,0) 1 675,3
Consumer (14,8) 721,8
Other - 113,1
June 2009 (12 months) (59,3) 2 508,6
Industrial (43,4) 1 718,5
Consumer (15,4) 752,1
Other (0,5) 38,0
Notes
30 Jun 2010 30 Jun 2009
12 months 12 months
Rm Rm
1 Net finance costs - continuing operations 52,7 59,3
Interest received (3,7) (3,1)
Interest paid 56,4 62,4
Net finance costs - discontinued operations 1,5 18,2
2 Capital expenditure commitments 57,4 50,9
Contracted 8,0 15,7
Approved but not yet contracted 49,4 35,2
3 Operating lease commitments 72,8 41,0
4 Guarantees and contingent liabilities 11,1 9,6
5 Taxation
The taxation rate is higher than the statutory rate mainly due to permanent
differences in respect of the group`s pension fund surplus. The cumulative
effect is a current year adjustment of R7,2 million.
6 Basis of preparation
The condensed financial information has been prepared in accordance with the
framework concepts and the measurement and recognition requirements of IFRS, the
AC 500 standards as issued by the Accounting Practices Board and the information
as required by IAS 34 - Interim Financial Reporting. The report has been
prepared using accounting policies that comply with International Financial
Reporting Standards which are consistent with those applied in the financial
statements for the year ended 30 June 2009, except for the changes required by
IAS 1 - Presentation of Financial Statements resulting in names for the
components of the financial statements and introduction of other comprehensive
income.
7 Audit opinion
The auditors, Deloitte & Touche, have issued their opinion on the group`s annual
financial statements for the year ended 30 June 2010. The audit was conducted in
accordance with International Standards on Auditing. They have issued an
unmodified audit opinion. These condensed financial statements have been derived
from the group financial statements and are consistent in all material respects,
with the group financial statements. A copy of their audit report is available
for inspection at the company`s registered office. Any reference to future
financial performance included in this announcement, has not been reviewed or
reported on by the company`s auditors.
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
There results can be viewed on: www.kapinternational.com
Date: 07/09/2010 16:00:01 Produced by the JSE SENS Department.
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