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Summarised unaudited interim results for the six months ended 30 June 2017
KAYDAV GROUP LIMITED
Incorporated in the Republic of South Africa
Registration number 2006/038698/06
JSE share code: KDV
ISIN: ZAE000108940
("KayDav" or "The Group")
SUMMARISED UNAUDITED INTERIM RESULTS
for the six months ended 30 June 2017
- Revenue R435 million (down 5%)
- Headline loss per share 0.7 cents (down 109%)
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Unaudited Unaudited Audited
30 June 2017 30 June 2016 31 December 2016
R R R
ASSETS
Non-current assets 103 124 525 96 539 819 101 948 746
Property, plant and equipment 76 516 664 70 178 475 75 460 258
Goodwill 26 361 344 26 361 344 26 361 344
Deferred taxation 246 517 - 127 144
Current assets 331 511 183 322 538 383 324 127 465
Inventories 174 171 930 163 234 286 168 668 440
Trade and other receivables 125 792 293 132 192 991 114 674 817
Cash and cash equivalents 27 490 786 26 421 769 40 782 429
Taxation 4 056 174 689 337 1 779
Total assets 434 635 708 419 078 202 426 076 211
EQUITY AND LIABILITIES
Capital and reserves 195 920 414 182 854 329 196 977 529
Share capital 173 173 173
Share premium 126 615 503 126 615 504 126 615 503
Accumulated profit 69 304 738 56 238 652 70 361 853
Non-current liabilities 33 345 371 32 123 183 34 402 592
Instalment sale liabilities 17 566 434 17 027 825 16 400 952
Interest-bearing liabilities 15 337 662 14 571 597 17 374 230
Deferred taxation 441 275 523 761 627 410
Current liabilities 205 369 923 204 100 690 194 696 090
Trade and other payables 129 370 029 120 642 620 124 880 933
Short-term portion of instalment
sale liabilities 7 684 121 8 680 931 7 976 911
Short-term portion of
interest-bearing liabilities 3 948 110 5 711 571 4 994 771
Bank overdraft 59 840 105 64 495 051 50 908 607
Taxation - 523 827 2 064 387
Provisions 4 527 558 4 046 690 3 870 481
TOTAL EQUITY AND LIABILITIES 434 635 708 419 078 202 426 076 211
Shares in issue at period end 172 751 585 172 751 585 172 751 585
Net asset value per share (cents) 113.4 105.8 114.0
Net tangible asset value
per share (cents) 98.2 90.6 98.8
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2017 30 June 2016 31 December 2016
R R R
Revenue 434 757 555 458 877 335 967 752 148
Cost of sales (313 798 607) (329 964 292) (703 367 040)
Gross profit 120 958 948 128 913 043 264 385 108
Other income 631 100 491 851 953 317
Operating expenses (119 500 032) (107 819 864) (220 435 250)
Operating profit 2 090 016 21 585 030 44 903 175
Investment income 18 401 5 529 7 622
Finance costs (3 517 529) (3 064 506) (6 425 087)
(Loss)/profit before taxation (1 409 112) 18 526 053 38 485 710
Taxation 351 997 (5 315 033) (11 151 490)
(Loss)/profit for the period (1 057 115) 13 211 020 27 334 220
Other comprehensive income - - -
Total comprehensive (loss)/income
attributable to equity holders of
the parent (1 057 115) 13 211 020 27 334 220
Reconciliation between earnings
and headline earnings
(Loss)/earnings (1 057 115) 13 211 020 27 334 220
(Profit)/loss on disposal of
plant and equipment (111 978) 23 799 79 193
Taxation on (profit)/loss from
disposal of plant and equipment 31 354 (6 664) (22 174)
Headline earnings attributable to
equity holders (1 137 739) 13 228 155 27 391 239
Weighted average number of
shares in issue 172 751 585 172 751 585 172 751 585
Basic and diluted
(loss)/earnings per share (cents)* (0.6) 7.6 15.8
Headline and diluted headline
(loss)/earnings per share (cents)* (0.7) 7.7 15.9
* The company has no dilutive instruments in issue
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2017 30 June 2016 31 December 2016
R R R
Cash flows from operating activities
Operating cash before working
capital movements 6 489 139 25 586 631 52 451 089
Working capital movements (11 655 800) (35 798 581) (19 314 590)
Cash (utilised)/generated
by operations (5 166 661) (10 211 950) 33 136 499
Investment income 18 401 5 529 7 622
Finance costs (3 517 529) (3 064 506) (6 425 087)
Taxation paid (6 072 294) (5 499 302) (9 131 137)
Net cash (outflow)/inflow
from operating activities (14 738 083) (18 770 229) 17 587 897
Cash flow from investing activities
Investment in property,
plant and equipment (405 860) (879 240) (2 519 839)
Proceeds on disposal of
plant and equipment 635 678 60 022 535 021
Net cash inflow/(outflow)
from investing activities 229 818 (819 218) (1 984 818)
Cash flow from financing activities
Distribution to shareholders - (9 501 337) (9 501 337)
Repayment of instalment sale
liabilities (4 631 648) (4 731 054) (9 403 871)
Proceeds from interest-bearing
liabilities - - 391 565
Repayment of interest-bearing
liabilities (3 083 228) (2 628 310) (5 592 480)
Net cash outflow from
financing activities (7 714 876) (16 860 701) (24 106 123)
Net decrease in cash and
cash equivalents (22 223 141) (36 450 148) (8 503 044)
Net cash and cash equivalents
at the beginning of the year (10 126 178) (1 623 134) (1 623 134)
Net cash and cash equivalents at
the end of the period (32 349 319) (38 073 282) (10 126 178)
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2017 30 June 2016 31 December 2016
R R R
Balance at the beginning
of the period 196 977 529 179 144 646 179 144 646
Distribution to shareholders - (9 501 337) (9 501 337)
Total comprehensive (loss)/income
for the period (1 057 115) 13 211 020 27 334 220
Balance at the end of the period 195 920 414 182 854 329 196 977 529
SEGMENTAL ANALYSIS
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2017 30 June 2016 31 December 2016
R R R
Segmental revenue
Board Distribution and Adaptation 398 270 023 432 275 289 905 481 498
Packaging 37 833 829 28 240 556 67 100 354
Internal revenue* (1 346 297) (1 638 510) (4 829 704)
Net revenue 434 757 555 458 877 335 967 752 148
Segmental results
Board Distribution and Adaptation (1 370 955) 18 997 054 38 479 331
Packaging 3 468 126 2 600 248 6 449 432
Other - - (25 588)
Unrealised profit on internal revenue (7 155) (12 272) -
Operating profit before interest 2 090 016 21 585 030 44 903 175
Operating assets
Board Distribution and Adaptation 378 214 359 369 446 628 373 609 186
Packaging 30 287 968 29 618 527 27 674 702
Other 4 298 018 1 719 714 1 447 130
Internal balances (8 828 672) (8 757 348) (3 145 074)
403 971 673 392 027 521 399 585 944
*Internal revenue relates to sales from the Packaging segment to the Board
Distribution and Adaptation segment
COMMENTARY
INTRODUCTION
KayDav comprises a group of businesses involved in the distribution of wood-based
panels and packaging consumables and machinery. Wood-based panels are manufactured
through the compression of wood waste into solid panels. These panels have a variety
of applications in the construction, furniture manufacturing and shop fitting
industries. Packaging consumables and machinery are products and machines which cater
for a wide variety of packaging requirements in the industrial, agricultural and
commercial sectors.
FINANCIAL RESULTS
The Group made a loss and headline loss per share of 0.6 cents and 0.7 cents
respectively for the six months ended 30 June 2017 compared to earnings and headline
earnings per share of 7.6 cents and 7.7 cents respectively for the prior comparative
period. Adverse domestic economic conditions lead to a contraction in demand which
was acutely felt in the Board Distribution and Adaptation segment which accounts for
92% of Group revenue. Sales in this segment decreased by 8% from R432.3 million for
the six months ended 30 June 2016 to R398.3 million for the six months ended
30 June 2017. Consequently, Group gross profit of R121.0 million (30 June 2016:
R128.9 million) dropped by R8 million when compared to the prior comparative period.
The effect of this on earnings was compounded by a significant increase in the bad
debt expense to R9.7 million (30 June 2016: R5.0 million) as a result of specific bad
debts written off and increased provisions to cater for long outstanding debtors.
Operating expenses were 7% higher than that of the six months ended 30 June 2016 when
the bad debt expense is excluded. This increase primarily represents inflationary
cost increases.
The capital structure of the Group remains in line with the previous period, with a
debt to equity ratio of 23% (30 June 2016: 25%) and a net asset base of
R195.9 million at 30 June 2017 (30 June 2016: R182.9 million). The GroupÕs current
ratio at 30 June 2017 was 1.6 (30 June 2016: 1.6). The significant net overdraft
position at 30 June 2017 of R32.3 million (30 June 2016: R38.1 million) was the
result of paying a large supplier earlier than its normal trading terms required
for this month only and was the same arrangement which existed on 30 June 2016.
The effect on net cash thus reversed during the following month.
KayDav acquired plant and equipment and motor vehicles at a cost of R5.4 million
during the reporting period of which R5.0 million was financed by instalment sale
liabilities. Motor vehicles with a carrying value of R0.5 million were sold for
R0.6 million.
PROSPECTS
BOARD DISTRIBUTION AND ADAPTATION
The wood-based panel industry is seasonal with the majority of revenue and profits
made during the second half of the year. This, in conjunction with management's
expectation that the bad debt expense for the second half-year will be significantly
lower than that of the first half-year, leads management to expect that the Group
will be profitable for the year ended 31 December 2017.
During this challenging period, where low business confidence levels continue to
suppress demand, our focus is on weathering the storm. For KayDav this implies
strong working capital management and continuing to improve our service and product
offering to customers. Management however continues to operate the Group for the
long term and therefore decisions are being made to improve profitability and
sustainability beyond this economic downturn.
PACKAGING
The Group's Packaging segment, while still relatively small, grew revenue by 34%
and operating profit before interest by 33%, when compared to the prior comparative
period. We are confident that this segment has sufficient opportunities for strong
growth during the short and medium term.
DISTRIBUTION TO SHAREHOLDERS
KayDav has resolved not to make any distributions to shareholders until the Group
has returned to an acceptable level of profitability.
CHANGES TO DIRECTORATE
There was no change in the directorate during the six months ended
30 June 2017.
SUBSEQUENT EVENTS
No material change has taken place in the affairs of the Group between the end of
the financial period and the date of this report that requires adjustment or
disclosure.
BASIS OF PREPARATION
The summarised unaudited interim financial statements for the six months ended
30 June 2017 have been prepared in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB),
the South African Institute of Chartered Accountants Financial Reporting Guides as
issued by the Accounting Practices Committee, Financial Reporting Pronouncements as
issued by the Financial Reporting Standards Council (FRSC). The requirements of
IAS 34 (Interim Financial Reporting) and the requirements of the South African
Companies Act and the JSE Listings Requirements.
The accounting policies applied in preparing these summarised interim financial
statements are consistent with those presented in the annual financial statements for
the year ended 31 December 2016. These interim financial statements have not been
reviewed or reported on by the KayDav auditors, Grant Thornton. This interim report
was prepared by the financial director, Martin Slier CA(SA).
APPRECIATION
The board of directors extends its appreciation to our management and staff for their
efforts during this reporting period. We also thank our customers and suppliers for
their continued support.
On behalf of the board
IH Stern GF Davidson
Chairperson Chief Executive Officer
Cape Town
Tuesday, 22 August 2017
CORPORATE INFORMATION
KAYDAV GROUP LIMITED
Income tax reference number: 9154/477/16/1
Registered address: 105 Bamboesvlei Road, Ottery, 7800
Postal address: PO Box 272, Ottery, 7808
Telephone: 021 704 7060
Company secretary: CIS Company Secretaries (Pty) Ltd
Executive directors: GF Davidson (CEO), M Slier (CFO)
Non-executive directors: IH Stern (Chairperson), B Tlhabanelo, S van Niekerk,
F Davidson
Auditor: Grant Thornton Johannesburg Partnership
Transfer secretaries: Link Market Services South Africa (Pty) Ltd
Sponsor: Java Capital
Website: www.kaydav.co.za
Date: 22/08/2017 01:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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