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Unaudited interim results for the six months ended 30 June 2016
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')
UNAUDITED INTERIM RESULTS
for the six months ended 30 June 2016
- Revenue R459 million (up 17%)
- Headline earnings per share 7.7 cents (up 13%)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 2016 30 June 2015 31 December 2015
R R R
Revenue 458 877 335 392 327 718 864 568 033
Cost of sales (329 964 292) (281 954 185) (621 857 231)
Gross profit 128 913 043 110 373 533 242 710 802
Other income 491 851 486 531 858 473
Operating expenses (107 819 864) (91 728 148) (192 740 639)
Operating profit 21 585 030 19 131 916 50 828 636
Investment income 5 529 102 500 130 895
Finance costs (3 064 506) (2 862 717) (5 871 522)
Profit before taxation 18 526 053 16 371 699 45 088 009
Taxation (5 315 033) (4 630 816) (12 916 823)
Profit for the period 13 211 020 11 740 883 32 171 186
Other comprehensive income - - -
Total comprehensive income
attributable to equity holders of
the parent 13 211 020 11 740 883 32 171 186
Reconciliation between earnings and
headline earnings
Earnings 13 211 020 11 740 883 32 171 186
Loss/(profit) on disposal of plant
and equipment 23 799 (43 430) 155 088
Taxation on loss/(profit) from disposal
of plant and equipment (6 664) 12 160 (43 425)
Headline earnings attributable to
equity holders 13 228 155 11 709 613 32 282 849
Weighted average number of
shares in issue 172 751 585 172 751 585 172 751 585
Basic and diluted earnings per
share (cents)* 7.6 6.8 18.6
Headline and diluted headline earnings
per share (cents)* 7.7 6.8 18.7
*The company has no dilutive instruments in issue
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Unaudited Unaudited Audited
30 June 2016 30 June 2015 31 December 2015
R R R
ASSETS
Non-current assets 96 539 819 93 466 543 92 775 977
Property, plant and equipment 70 178 475 66 661 702 66 115 538
Goodwill 26 361 344 26 361 344 26 361 344
Deferred taxation - 443 497 299 095
Current assets 322 538 383 275 858 564 295 655 321
Inventories 163 234 286 134 805 981 151 515 557
Trade and other receivables 132 192 991 112 213 598 105 857 636
Cash and cash equivalents 26 421 769 27 553 183 36 983 740
Taxation 689 337 1 285 802 1 298 388
TOTAL ASSETS 419 078 202 369 325 107 388 431 298
EQUITY AND LIABILITIES
Capital and reserves 182 854 329 158 714 343 179 144 646
Share capital 173 173 173
Share premium 126 615 504 136 116 840 136 116 840
Accumulated profit 56 238 652 22 597 330 43 027 633
Non-current liabilities 32 123 183 37 176 562 32 141 294
Instalment sale liabilities 17 027 825 16 613 252 14 558 008
Interest-bearing liabilities 14 571 597 20 218 782 17 462 074
Deferred taxation 523 761 344 528 121 212
Current liabilities 204 100 690 173 434 202 177 145 358
Trade and other payables 120 642 620 96 493 943 118 950 994
Short-term portion of instalment
sale liabilities 8 680 931 9 337 363 8 627 935
Short-term portion of interest-bearing
liabilities 5 711 571 5 211 888 5 449 403
Bank overdraft 64 495 051 58 444 083 38 606 874
Taxation 523 827 175 858 2 018 794
Provisions 4 046 690 3 771 067 3 491 358
TOTAL EQUITY AND LIABILITIES 419 078 202 369 325 107 388 431 298
Shares in issue at period end 172 751 585 172 751 585 172 751 585
Net asset value per share (cents) 105.8 91.9 103.7
Net tangible asset value per share (cents) 90.6 76.6 88.4
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 2016 30 June 2015 31 December 2015
R R R
Cash flows from operating
activities (18 770 229) (25 836 473) 18 919 766
Cash flows from investing
activities (819 218) 471 994 (7 527 853)
Cash flows from financing
activities (16 860 701) (16 934 115) (24 422 741)
Net decrease in cash and cash
equivalents (36 450 148) (42 298 594) (13 030 828)
Net cash and cash equivalents at
the beginning of the period (1 623 134) 11 407 694 11 407 694
Net cash and cash equivalents at the
end of the period (38 073 282) (30 890 900) (1 623 134)
SEGMENTAL ANALYSIS
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 2016 30 June 2015 31 December 2015
R R R
Segmental revenue
Board Distribution and Adaptation 432 275 289 371 572 007 816 678 686
Packaging 28 240 556 21 467 488 49 606 551
Internal revenue* (1 638 510) (711 777) (1 717 204)
Net revenue 458 877 335 392 327 718 864 568 033
*Internal revenue relates to sales from the Packaging segment
to the Board Distribution and Adaptation segment
Segmental results
Board Distribution and Adaptation 18 997 054 16 791 127 45 552 997
Packaging 2 600 248 2 340 789 5 415 959
Unrealised profit on internal revenue (12 272) - -
Other - - (140 320)
Operating profit before interest 21 585 030 19 131 916 50 828 636
Operating assets
Board Distribution and Adaptation 369 446 628 324 134 122 332 808 281
Packaging 29 618 527 18 920 800 29 143 942
Other 1 719 714 955 539 812 810
Internal balances (8 757 348) (2 775 997) (2 292 562)
392 027 521 341 234 464 360 472 471
CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN EQUITY
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 2016 30 June 2015 31 December 2015
R R R
Balance at the beginning of
the period 179 144 646 155 611 036 155 611 036
Distribution to shareholders (9 501 337) (8 637 576) (8 637 576)
Total comprehensive income for
the period 13 211 020 11 740 883 32 171 186
Balance at the end of the period 182 854 329 158 714 343 179 144 646
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 delivered strong revenue and gross profit growth of 17%, with revenue of R392 million for the six months ended 30 June 2015 growing to R459 million for the six months ended 30 June 2016, while gross profit grew from R110 million to R129 million. The Board Distribution and Adaptation segment grew revenue by 16% while the Packaging segment grew revenue by 32%, with the latter driven by the expansion of the Gauteng branch of Packit Packaging Solutions and the introduction of new product lines in this segment.
Operating expenses were 18% higher than that of the six months ended 30 June 2015. This increase reflects spending to deal with increased activity and to expand existing operations. In addition, the Group's bad debt expense for the six months ended 30 June 2016 was R1.3 million more than that of the previous corresponding period but still within norm for the Group.
The high turnover growth of 17%, tempered by increased operating expenditure, lead to earnings growth of 13% for the six months ended 30 June 2016 compared to the previous corresponding period. The Board is thus pleased to report that earnings and headline earnings per share increased from 6.8 cents for the six months ended 30 June 2015 to 7.6 cents and 7.7 cents respectively for the six months ended 30 June 2016.
The capital structure of the Group remains sound with a debt to equity ratio of 25% (30 June 2015: 32%) and a net asset base of R183 million at 30 June 2016 (30 June 2015: R159 million) after a distribution to shareholders out of share premium of 5.5 cents per share amounting to R9.5 million. The Group's current ratio at 30 June 2016 was 1.6 (30 June 2015: 1.6).
The Group acquired plant and equipment and motor vehicles at a cost of R7.5 million during the reporting period of which R6.7 million was financed by instalment sale liabilities. The significant net overdraft position at 30 June 2016 of R38 million (30 June 2015: R31 million) was the result of paying a large supplier earlier than its normal trading terms for this month only and is the same arrangement which existed on 30 June 2015. The effect on net cash thus reversed during the following month.
PROSPECTS
On a macro-economic level, KayDav is concerned about deteriorating growth forecasts for South Africa and the effect it might have on investment in property and furniture.
On an enterprise level the Group will continue to focus on its value offering to customers in order to maximise its market share. The Group's Packaging business is still a small player in the industry and we are confident of strong growth going forward, especially in the Gauteng market. The Board Distribution and Adaptation segment currently enjoys significant market share and will therefore be more affected by slow or negative macro-economic growth, however we remain convinced that responding to the needs of our customers gives us opportunities for growth.
KayDav remains open to acquisition opportunities which will create sustainable value for shareholders.
DISTRIBUTIONS TO SHAREHOLDERS
The Group made a cash distribution of 5.5 cents per share to shareholders on 23 May 2016.
CHANGES TO DIRECTORATE
Frank Davidson was appointed as independent non-executive director on 30 June 2016. Shareholders are referred to the Group's SENS announcement on that date in respect of this change. On 6 September 2016, Frank was appointed to the remuneration committee of the KayDav board of directors.
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, which requires adjustment or disclosure.
BASIS OF PREPARATION
The unaudited interim financial statements for the six months ended 30 June 2016 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 Pronouncement 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 interim financial statements are consistent with those presented in the annual financial statements for the year ended 31 December 2015. 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
Chairman Chief Executive Officer
Cape Town
8 September 2016
CORPORATE INFORMATION
KAYDAV GROUP LIMITED
Incorporated in the Republic of South Africa
Registration number: 2006/038698/06
Share code: KDV
ISIN: ZAE000108940
('KayDav' or 'the Group')
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
Facsimile: 086 519 2014
Executive directors: GF Davidson (CEO), M Slier (CFO)
Non-executive directors: IH Stern (Chairman), B Tlhabanelo, S van Niekerk,
F Davidson
Auditor: Grant Thornton
Company secretary: CIS Company Secretaries (Pty) Ltd
Transfer secretaries: Link Market Services South Africa (Pty) Ltd
Sponsor: Java Capital
www.kaydav.co.za
Date: 08/09/2016 03:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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