| Mon 5 Mar 2007, 17:41 | | KAP - KAP International Holdings Ltd - Unaudited I |
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KAP
KAP
KAP - KAP International Holdings Ltd - Unaudited Interim Results For the twelve
months ended 31 December 2006 and capital distribution
KAP International Holdings Ltd
Registration number: 1978/000181/06
Share code: KAP
ISIN: ZAE000059564
Unaudited Interim Results For the twelve months ended 31 December 2006
FINANCIAL HIGHLIGHTS
- REVENUE UP
15% TO R3,418 MILLION
- OPERATING CASH FLOW UP
67% TO R185 MILLION
- DISTRIBUTION UP
17% TO 14 CENTS PER SHARE
- OPERATING PROFIT UP
12% TO R256 MILLION
Balance sheet
31 Dec 31 Dec
2006 2005
Unaudited Restated
Rm Rm
Assets
Non-current assets 764,6 696,4
Property, plant and equipment and
investment properties 620,9 529,5
Goodwill 3,3 -
Investments and loans 21,7 26,6
Pension fund surplus 48,8 45,0
Deferred taxation 69,9 95,3
Current assets 1 204,0 1 054,9
Inventories and agricultural assets 680,3 539,1
Receivables and prepayments 515,4 513,6
Cash and cash equivalents 8,3 2,2
Total assets 1 968,6 1 751,3
Equity and liabilities
Equity 1 194,6 1 057,1
Equity holders` interest 1 173,6 1 043,1
Minority interest 21,0 14,0
Non-current liabilities 91,4 119,9
Long-term borrowings - interest-bearing 44,1 75,5
Long-term borrowings - interest-free - 5,9
Retirement benefit obligations 17,7 19,8
Deferred taxation 29,6 18,7
Current liabilities 682,6 574,3
Short-term borrowings - interest-bearing 36,2 46,9
Short-term borrowings - interest-free - 3,8
Trade and other payables 441,9 371,0
Provisions 32,0 39,7
Bank overdrafts 172,5 112,9
Total equity and liabilities 1 968,6 1 751,3
Number of shares (thousand)
- in issue 424 465 423 266
- weighted average 423 861 421 477
Net asset value per share (c) 276,5 246,4
Net interest-bearing debt to equity (%) 20,5% 22,1%
Income statement
31 Dec 31 Dec
2006 2005
Unaudited Restated
Rm Rm
Revenue 3 418,3 2 974,4
Operating profit 255,8 227,7
Pension fund surplus (net) - 50,6
Discontinued operation closure cost - (10,9)
Net finance costs (28,2) (19,4)
Share of results of joint ventures 2,3 0,7
Profit before taxation 229,9 248,7
Taxation (47,3) (46,2)
Net profit for the year 182,6 202,5
- continuing operations 182,6 215,4
- discontinued operations - (12,9)
Net profit for the year
- attributable to KAP shareholders 175,1 196,3
- attributable to minorities 7,5 6,2
Reconciliation of headline earnings
Net profit attributable to KAP shareholders 175,1 196,3
Profit on sale of property, plant and equipment (5,3) (12,0)
Impairment of property and investment property 2,6 0,6
Discontinued operation closure cost - 9,5
Headline earnings 172,4 194,4
Earnings per share (cents) 41,3 46,6
Headline earnings per share (cents) 40,7 46,1
Distribution per share (cents) 14,0 12,0
Cash flow statement
31 Dec 31 Dec
2006 2005
Unaudited Restated
Rm Rm
Cash flows from operating activities 184,5 110,5
Cash generated from operations before working
capital changes 297,8 216,7
Net working capital changes (78,4) (83,7)
Cash generated from operations 219,4 133,0
Net finance costs (28,2) (19,4)
Taxation paid (6,7) (3,1)
Cash flows from investing activities (121,2) (139,1)
Purchase of property, plant and equipment
- expansion (99,8) (139,2)
- replacement (26,9) (26,0)
Other investing activities 5,5 26,1
Cash flows from financing activities (116,8) (81,8)
Decrease in borrowings (70,2) (73,1)
Distributions to shareholders (51,3) (8,7)
Proceeds on share issue 4,7 -
Net decrease in cash and equivalents (53,5) (110,4)
Opening cash and equivalents (110,7) (0,3)
Closing cash and equivalents (164,2) (110,7)
Statement of changes in equity
31 Dec 31 Dec
2006 2005
Unaudited Restated
Rm Rm
Balance at the beginning of the period 1 057,1 863,6
Cumulative effect of Circular 9/2006 - (1,4)
Shares issued during the period 4,7 13,8
Movement in share-based payment reserve 1,6 1,1
Movement in foreign currency translation
reserve (0,1) -
Net profit for the period 182,6 202,5
Distributions to shareholders (51,3) (22,5)
Balance at the end of the period 1 194,6 1 057,1
Segmental analysis
Operating
Revenue % profit %
Rm Rm
December 2006 (unaudited) 3 418,3 100% 255,8 100%
Industrial 2 002,1 59% 165,8 65%
Consumer 1 415,8 41% 93,0 36%
Other 0,4 - (3,0) (1%)
December 2005 (restated) 2 974,4 100% 227,7 100%
Industrial 1 816,7 61% 160,4 70%
Consumer 1 181,2 40% 68,3 30%
Other (23,5) (1%) (1,0) -
Total
assets % Depreciation %
Rm Rm
December 2006 (unaudited) 1 968,6 100% 43,2 100%
Industrial 1 222,1 62% 33,3 77%
Consumer 764,1 39% 9,4 22%
Other (17,6) (1%) 0,5 1%
December 2005 (restated) 1 751,3 100% 42,2 100%
Industrial 1 127,8 64% 33,6 79%
Consumer 660,5 38% 9,2 22%
Other (37,0) (2%) (0,6) (1%)
Notes
31 Dec 31 Dec
2006 2005
Unaudited Restated
Rm Rm
1. Net finance costs 28,2 19,4
Interest received (0,1) (8,0)
Interest paid 28,3 27,4
2. Capital expenditure commitments 47,0 33,3
Contracted 9,5 10,3
Approved but not yet contracted 37,5 23,0
3. Operating lease commitments 32,4 36,0
4. Guarantees and contingent liabilities 8,8 9,4
5. Adoption of Circular 9/2006
The group has adopted SAICA Circular 9/2006, transactions giving rise to
revenue adjustments/purchases, and 2005 results have been restated accordingly
(unaudited).
Basis of presentation
The consolidated abridged results have been prepared in accordance with
International Accounting Standard 34 (Interim Financial Reporting), 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 accounting policies are consistent
with those applied in the financial statements for the year ended
31 December 2005, except for the adoption of SAICA Circular 9/2006. The results
have been prepared on the basis of IFRS and interpretation statements in issue
that will be effective at the group`s next IFRS reporting date, 30 June 2007.
Shareholders are reminded that the next set of audited financial results will
be for the 18-month period from January 2006 to June 2007 due to the change in
year-end of the group. These interim results will be reviewed by the Group`s
Auditors and shareholders notified once the review has been completed.
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.
Black economic empowerment
The group realises that the implementation of black economic empowerment is a
long-term endeavour, is committed to the process and is taking action
accordingly.
Commentary
Review of results
The directors are pleased to report on the results for the twelve months ended
31 December 2006.
Revenue increased by 15% to R3 418 million due to strong organic growth.
Operating profit increased by 12% to R255,8 million, reflecting improved trading
conditions. Once again the group generated good operating cash flows, up 67%
from 2005, and the balance sheet remained strong.
As the 2005 results included a more favourable tax rate and 8,5 cents per share
relating to the non-recurring pension fund surplus, headline earnings per share
decreased by 12% to 40,7 cents compared to 46,1 cents for the prior period.
Excluding the pension fund surplus during the previous financial year the growth
in headline earnings was 8,2%.
The effective tax rate is 20,6% (2005: 18,6%).
Industrial segment
AUTOMOTIVE
Revenue and operating profit in the automotive division improved on the prior
year mainly as a result of the 10,5% growth in vehicles built in South Africa
from 490 044 units in 2005 to 541 333 units in 2006. Fehrer turnover increased
by 21% and Trim turnover increased by 19%, indicating a significant gain in
market share.
INDUSTRIAL FOOTWEAR
Industrial footwear achieved exceptionally good results for the year as a
result of excellent marketing of their strong brands and increased activity in
the division`s target markets, including mining, security and construction.
Volumes and market share increased on both leather and gumboots. Cost savings
have realised as a result of a drive to improve operational efficiences at
Wayne Plastics.
HOSAF FIBRES
Performance in the PET market was satisfactory, which saw a further increase in
Hosaf`s share of local market sales. Continued process improvements at the
polymer plants in the second half of 2006 resulted in reduced operating costs
per ton produced.
Consumer segment
JORDAN & CO
Profits increased through growth in the major brands of Bronx, Jordan and
Asics. There were encouraging performances from the developing ladies footwear
division while the manufacturing division managed to hold on to its market
share despite cost pressures from importers.
BULL BRAND FOODS
Trading results have been satisfactory during the period under review with good
performances from the fresh meat and canned divisions measured against both
prior year and budget. Trading in the fresh meat division was strong and the
cannery increased turnover by 14% on the prior year.
GLODINA
The buoyant South African economy fuelled an increase in consumer spending
during the year. Strong demand through all major chain outlets resulted in
record turnover for the period. Despite resistance to price increases, margins
have been maintained through rigorous control of waste, rejects and a constant
drive to reduce operating costs.
Balance sheet and cash flow
The balance sheet of the group remains robust, with an interest-bearing debt to
equity ratio of 20,5% (2005: 22,1%) and a current ratio of 1,76
(2005: 1,84).
Capital expenditure for the 12 months amounted to R126,7 million, of which
R80,2 million was spent in the automotive division mainly in anticipation of
the new Toyota Corolla and the Mercedes Benz C Class.
R50,8 million was distributed to KAP shareholders in May 2006.
Finance charges have increased to fund greater activity in the business.
Corporate action
Caravelle Carpets (Pty) Ltd, a loose lay carpet manufacturer, was acquired
effective 1 July 2006 for a consideration of R23 million, giving rise to
goodwill of R3,3 million.
A joint venture with the Australian Futuris Corporation is planned to commence
in June 2007 which will improve the availability of local raw materials for the
automotive trim division.
Prospects
The acquisition of Caravelle Carpets and the joint venture with Futuris
Corporation will increase the automotive division`s product offering. Reduced
manufacturing volumes during a model change-over will put pressure on revenue
for the first six months of 2007, but growth in local vehicle manufacturing and
increased product offering should result in greater revenue in the new
financial year.
We anticipate continued satisfactory performance by the consumer segment of the
group and growth in operating profit in the future.
For and on behalf of the board
C E Daun P C T Schouten
Chairman Chief executive officer
Capital distribution
The directors have declared, subject to the required shareholders` approvals at
a general meeting, a capital distribution of 14 cents per share. This will be
the last distribution payable by the company in respect of the January to
December reporting cycle, but a distribution will be declared after the June
reporting period, commensurate with earnings.
The distribution will be payable on Monday, 30 April 2007 to shareholders
recorded in the register at the close of business on Thursday, 26 April 2007.
To comply with the requirements of STRATE the following provisional dates are
applicable:
2007
General meeting of shareholders Wednesday, 11 April
Last date to trade cum-distribution Thursday, 19 April
Trading commences ex-distribution Friday, 20 April
Record date Thursday, 26 April
Posting of cheques/electronic bank transfers Monday, 30 April
Share certificates may not be dematerialised or rematerialised between Friday,
20 April 2007 and Thursday, 26 April 2007, both days inclusive.
Any changes to the above dates and times will be advised by notification on
SENS.
For and on behalf of the board
M Balladon
Company secretary
5 March 2007
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
Logos
please see these results on www.kapinternational.com
Date: 05/03/2007 17:41:16 Produced by the JSE SENS Department.
