| Mon 11 Sep 2006, 7:00 | | KAP International - Unaudited interim results for |
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KAP
KAP
KAP International - Unaudited interim results for the six months ended
30 June 2006
KAP International Holdings Ltd
Registration number: 1978/000181/06
Share code: KAP
ISIN: ZAE000059564
Unaudited interim results for the six months ended 30 June 2006
- HEADLINE EARNINGS UP 26% TO 17,0c PER SHARE
- REVENUE UP 11% TO R1,569 MILLION
- OPERATING MARGIN UP TO 6,3% FROM 5,4%
- STRONG OPERATING CASH FLOWS
Balance sheet
30 Jun 30 Jun 31 Dec
2006 2005 2005
Unaudited Reviewed Audited
Rm Rm Rm
Assets
Non-current assets 699,3 631,7 696,0
Property, plant and equipment and
investment properties 540,6 483,6 529,5
Investments and loans 20,3 21,6 26,6
Pension fund surplus 45,9 - 45,0
Deferred taxation 92,5 126,5 94,9
Current assets 1 121,0 1 052,8 1 056,9
Inventories and agricultural assets 571,1 511,9 539,1
Receivables and prepayments 548,0 519,8 515,6
Cash and cash equivalents 1,9 21,1 2,2
Total assets 1 820,3 1 684,5 1 752,9
Equity and liabilities
Equity 1 084,5 971,9 1 058,5
Equity holders" interest 1 067,0 962,3 1 044,5
Minority interest 17,5 9,6 14,0
Non-current liabilities 103,3 148,4 119,9
Long-term borrowings - Interest-bearing 51,3 95,5 75,5
Long-term borrowings - Interest-free 5,8 - 5,9
Retirement benefit obligations 22,0 40,8 19,8
Deferred taxation 24,2 12,1 18,7
Current liabilities 632,5 564,2 568,2
Short-term borrowings - Interest-bearing 51,0 24,7 41,1
Short-term borrowings - Interest-free 0,7 - 3,1
Trade and other payables 396,2 345,8 371,2
Provisions 30,4 33,6 39,7
Bank overdrafts 154,2 160,1 112,9
Total equity and liabilities 1 820,3 1 684,5 1 752,9
Notes
30 Jun 30 Jun 31 Dec
2006 2005 2005
Unaudited Reviewed Audited
Rm Rm Rm
1.Capital expenditure commitments 106,9 90,1 33,3
Contracted 41,1 82,5 10,3
Approved but not yet contracted 65,8 7,6 23,0
2. Operating lease commitments (12 months) 12,5 28,1 16,0
3. Guarantees and contingent liabilities 9,4 10,6 9,1
4. Taxation 13,3 10,8 46,2
Current taxation 5,5 1,6 4,2
Deferred taxation - current and prior year 7,8 2,9 35,6
Secondary tax on companies - 2,6 2,6
Effect of tax rate change - 3,7 3,8
Income statement
30 Jun 30 Jun 31 Dec
2006 2005 2005
Unaudited Reviewed Audited
Rm Rm Rm
Revenue 1 568,7 1 416,3 2 997,9
Operating profit 99,0 77,0 227,7
Pension fund surplus (net) - - 50,6
Discontinued operation closure cost - - (10,9)
Net finance costs (10,4) (8,3) (19,4)
Share of results of joint ventures 1,2 1,1 0,7
Profit before taxation 89,8 69,8 248,7
Taxation (13,3) (10,8) (46,2)
Net profit 76,5 59,0 202,5
Attributable to ordinary shareholders 72,5 56,8 196,3
Attributable to minorities 4,0 2,2 6,2
Reconciliation of headline earnings
Net profit attributable to ordinary
shareholders 72,5 56,8 196,3
Profit on sale of property, plant and
equipment (0,4) (0,1) (12,0)
Impairment of investment property - - 0,6
Discontinued operation closure cost - - 9,5
Headline earnings 72,1 56,7 194,4
Number of shares (thousand)
in issue 423 258 423 258 423 258
weighted average 423 258 421 477 421 477
Earnings per share (cents) 17,1 13,5 46,6
Headline earnings per share (cents) 17,0 13,5 46,1
Distribution per share (cents) - - 12,00
Cash flow statement
30 Jun 30 Jun 31 Dec
2006 2005 2005
Unaudited Reviewed Audited
Rm Rm Rm
Net cash flows from operating activities 51,4 42,9 110,5
Cash generated from operations before
working capital changes 118,2 96,8 218,5
Net working capital changes (56,4) (44,2) (85,5)
Cash generated from operations 61,8 52,6 133,0
Net finance costs (10,4) (8,3) (19,4)
Taxation paid - (1,4) (3,1)
Cash flows from investing activities (18,4) (94,9) (139,1)
Purchase of property, plant and
equipment (35,2) (62,7) (165,2)
Other investing activities 16,8 (32,2) 26,1
Cash flows from financing activities (74,6) (86,7) (81,8)
Decrease in borrowings (23,3) (78,0) (73,1)
Distributions to shareholders (51,3) (8,7) (8,7)
Net decrease in cash and equivalents (41,6) (138,7) (110,4)
Opening cash and equivalents (110,7) (0,3) (0,3)
Closing cash and equivalents (152,3) (139,0) (110,7)
Statement of changes in equity
30 Jun 30 Jun 31 Dec
2006 2005 2005
Unaudited Reviewed Audited
Rm Rm Rm
Balance at the beginning of the period 1 058,5 921,4 863,6
Shares issued during the period - 13,8 13,8
Movement in share-based payment
reserve 1,0 - 1,1
Movement in foreign currency translation
reserve (0,2) 0,2 -
Net profit for the period 76,5 59,0 202,5
Distributions to shareholders (51,3) (22,5) (22,5)
Balance at the end of the period 1 084,5 971,9 1 058,5
Segmental analysis
Operating
Revenue % profit %
Rm Rm
June 2006 (unaudited) 1 568,7 100 99,0 100
Industrial 923,8 59 68,5 69
Consumer 644,7 41 30,0 30
Other 0,2 - 0,5 1
June 2005 (reviewed) 1 416,3 100 77,0 100
Industrial 882,7 62 53,9 70
Consumer 532,6 38 23,0 30
Other 1,0 - 0,1 -
December 2005 (audited) 2 997,9 100 227,7 100
Industrial 1 823,9 61 160,4 70
Consumer 1 197,5 40 68,3 30
Other (23,5) (1) (1,0) -
Total
assets % Depreciation %
Rm Rm
June 2006 (unaudited) 1 820,3 100 22,9 100
Industrial 1 148,8 63 16,5 72
Consumer 656,0 36 5,0 22
Other 15,5 1 1,4 6
June 2005 (reviewed) 1 684,5 100 19,5 100
Industrial 1 008,9 60 14,0 72
Consumer 587,3 35 4,9 25
Other 88,3 5 0,6 3
December 2005 (audited) 1 752,9 100 42,2 100
Industrial 1 129,0 64 33,6 80
Consumer 660,9 38 9,2 22
Other (37,0) (2) (0,6) (2)
Commentary
Review of results
The directors are pleased to report on the results for the six months ended
30 June 2006. Headline earnings per share increased by 26% to 17,0 cents
compared to 13,5 cents for the prior period. Revenue increased from R1 416
million to R1 569 million due to strong organic growth.
The effective tax rate of the group is lower than the statutory rate due to
the reversal of deferred taxation liabilities.
Industrial segment
AUTOMOTIVE
The production of locally manufactured vehicles increased by 17,1% to a new
record high of 253 591 units for the six months to June 2006 (2005: 216 560
units). Margins were maintained by the continuous improvement programme in
spite of raw material price increases. The acquisition of Caravelle Carpets
for R23 million on 1 July 2006 will broaden the product range of the
division. The division is now preparing for the 2007 launch of the Toyota
Corolla and Mercedes Benz C Class.
INDUSTRIAL FOOTWEAR
In line with the strategy of the division, imported safety footwear now
accounts for 20% of revenue. Unit sales are up on 2005, and the new
compounding plant for the gumboot division is now fully operational, which
will result in further decreases in raw material costs. The order book of
the division is extremely strong, as reflected in the performance of
customers, in mining, construction and security sectors.
HOSAF FIBRES
Overall polymer volume and PET market share have increased compared to
2005, and both the Cape Town and Durban plants are performing well.
The slightly weaker exchange rate has been of benefit to Hosaf"s margins,
and the continued increase in capacity will ensure further improvements in
operating profit.
Consumer segment
JORDAN & CO
The newly-launched ladies" footwear division has had a very successful
start to the year, and Asics, Bronx and Jordan brands all had double-digit
growth compared to the previous period. Total sales revenue has increased
by 19% and India is being developed as an additional procurement source to
complement existing facilities in China.
BULL BRAND FOODS
Slightly lower sales volumes have been more than offset by significantly
higher meat selling prices. Tight control of operating expenses and the
realisation of economies of scale have resulted in good results for Bull
Brand. The opening of the first branded butcheries marks a renewed focus on
extracting down-stream benefits.
GLODINA
Following a strong offtake from major retailers, Glodina"s sales are ahead
of budget. Rejects and wastage have been well controlled, and an increased
focus is being placed on the hospitality industry ahead of the 2010 World
Cup as a growth market for the future.
Balance sheet and cash flow
The balance sheet of the group remains strong, with an interest-bearing
debt to equity ratio of 23,5% (2005: 26,7%), an interest cover of 9,5 times
(2005: 9,3 times) and a current ratio of 1,77 (2005: 1,86).
R35,2 million was spent on property, plant and equipment during the period,
with anticipated further expenditure of R106,9 million during the second
half of the year largely to ramp up for the new Toyota Corolla and the
Mercedes Benz C Class. R50,8 million was distributed to KAP shareholders in
May 2006.
Capital distribution
In accordance with group policy, no interim distribution will be declared.
Change of year-end
The group has changed its financial year-end from December to June with
immediate effect in order to synchronise with a significant shareholder and
to facilitate administration. The next set of audited financial results
will be for the 18-month period from January 2006 to June 2007.
Basis of presentation
The consolidated preliminary results have been prepared in accordance with
International Financial Reporting Standards (IFRS), the Listings
Requirements of the JSE Limited and Schedule 4 of the South African
Companies Act. The results are presented in millions of Rands on the
historical cost basis except for certain financial instruments, which are
carried at either fair value or amortised cost as appropriate. The results
have been prepared on the basis of IFRS and interpretation statements in
issue that will be effective at the Group"s revised reporting IFRS date, 30
June 2007.
Corporate governance
The group subscribes to and complies with the Code on Corporate Governance
Practices and Conduct as contained in the second King Report on Corporate
Governance.
Prospects
Further forecast growth in South African automotive vehicle build and
government"s continued commitment to the MIDP bode well for the automotive
market.
As PET moves into new global markets by developing niche products, the
prospects for growth of the industry in South Africa are very favourable.
The sustained strength of our brands in the consumer marketplace is
underpinned by sound economic fundamentals and a restrained monetary
policy.
The group is thus well placed for further growth during 2006 and into 2007.
Shareholders are reminded that the group generates the greater portion of
its earnings in the July to December period.
For and on behalf of the board
C E Daun P C T Schouten
Chairman Chief executive officer
Paarl
11 September 2006
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 8904
Transfer secretaries: Computershare Investor Services 2004
(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 Limited
please see these results on www.kapinternational.com
Date: 11/09/2006 07:00:11 AM Produced by the JSE SENS Department
