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Unaudited interim results for the six months ended 30 June 2015
KAYDAV GROUP LIMITED
Incorporated in the Republic of South Africa
Registration number: 2006/038698/06
Share code: KDV * ISIN: ZAE000108940
("KayDav" or "the Group")
Unaudited interim results for the six months ended 30 June 2015
- Revenue R392 million (up 15%)
- Headline earnings per share 6.8 cents (up 15%)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Unaudited Unaudited
6 months 6 months Audited
ended ended year ended
30 Jun 2015 30 Jun 2014 31 Dec 2014
R R R
Revenue 392 327 718 341 866 047 761 739 077
Cost of sales (281 954 185) (242 606 640) (544 059 207)
Gross profit 110 373 533 99 259 407 217 679 870
Other income 486 531 109 024 147 248
Operating expenses (91 728 148) (83 677 012) (174 400 706)
Operating profit 19 131 916 15 691 419 43 426 412
Investment income 102 500 77 363 102 689
Finance costs (2 862 717) (1 773 059) (4 594 484)
Profit before taxation 16 371 699 13 995 723 38 934 617
Taxation (4 630 816) (3 938 607) (11 118 641)
Profit for the period 11 740 883 10 057 116 27 815 976
Other comprehensive income - - -
Total comprehensive income attributable to
equity holders of the parent 11 740 883 10 057 116 27 815 976
Reconciliation between earnings and headline
earnings
Earnings 11 740 883 10 057 116 27 815 976
(Profit)/loss on disposal of plant and
equipment (43 430) 79 446 355 990
Taxation on (profit)/loss from disposal of plant
and equipment 12 160 (22 245) (99 677)
Impairment of plant and equipment - - 158 290
Taxation on impairment of plant and equipment - - (44 322)
Headline earnings attributable to equity
holders 11 709 613 10 114 317 28 186 257
Weighted average number of shares in issue 172 751 585 172 751 585 172 751 585
Basic and diluted earnings per share (cents) 6.8 5.8 16.1
Headline and diluted headline earnings per
share (cents) 6.8 5.9 16.3
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Unaudited Unaudited Audited
30 Jun 2015 30 Jun 2014 31 Dec 2014
R R R
ASSETS
Non-current assets 93 466 543 79 072 676 91 259 337
Property, plant and equipment 66 661 702 63 841 185 64 492 411
Goodwill 26 361 344 14 302 804 26 361 344
Deferred taxation 443 497 928 687 405 582
Current assets 275 858 564 239 245 109 246 726 035
Inventories 134 805 981 121 630 065 113 181 728
Trade and other receivables 112 213 598 100 358 080 89 893 263
Cash and cash equivalents 27 553 183 15 828 971 42 922 052
Taxation 1 285 802 1 427 993 728 992
Total assets 369 325 107 318 317 785 337 985 372
EQUITY AND LIABILITIES
Capital and reserves 158 714 343 137 852 175 155 611 036
Share capital 173 173 173
Share premium 136 116 840 144 754 416 144 754 416
Accumulated profit/(loss) 22 597 330 (6 902 414) 10 856 447
Non-current liabilities 37 176 562 29 037 514 38 892 969
Instalment sale liabilities 16 613 252 17 575 099 15 327 764
Interest-bearing liabilities 20 218 782 11 238 242 22 896 413
Deferred taxation 344 528 224 173 668 792
Current liabilities 173 434 202 151 428 096 143 481 367
Trade and other payables 96 493 943 88 217 218 93 241 500
Short-term portion of instalment sale
liabilities 9 337 363 8 371 573 8 407 221
Short-term portion of interest-bearing
liabilities 5 211 888 5 738 310 6 260 622
Bank overdraft 58 444 083 45 174 815 31 514 358
Taxation 175 858 645 317 972 386
Provisions 3 771 067 3 280 863 3 085 280
Total equity and liabilities 369 325 107 318 317 785 337 985 372
Shares in issue at period-end 172 751 585 172 751 585 172 751 585
Net asset value per share (cents) 91.9 79.8 90.1
Net tangible asset value per share (cents) 76.6 71.5 74.8
CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN EQUITY
Unaudited Unaudited
6 months 6 months Audited
ended ended year ended
30 Jun 2015 30 Jun 2014 31 Dec 2014
R R R
Balance at the beginning of the period 155 611 036 140 751 333 140 751 333
Distribution to shareholders (8 637 576) (12 956 274) (12 956 273)
Total comprehensive income for the period 11 740 883 10 057 116 27 815 976
Balance at the end of the period 158 714 343 137 852 175 155 611 036
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Unaudited Unaudited
6 months 6 months Audited
ended ended year ended
30 Jun 2015 30 Jun 2014 31 Dec 2014
R R R
Cash flows from operating activities (25 836 473) 3 944 523 47 084 040
Cash flows from investing activities 471 994 (354 122) (8 250 925)
Cash flows from financing activities (16 934 115) (18 811 886) (13 301 062)
Net (decrease)/increase in cash and cash
equivalents (42 298 594) (15 221 485) 25 532 053
Net cash and cash equivalents at the
beginning of the period 11 407 694 (14 124 359) (14 124 359)
Net cash and cash equivalents at the end of
the period (30 890 900) (29 345 844) 11 407 694
SEGMENTAL ANALYSIS
Unaudited Unaudited
6 months 6 months Audited
ended ended year ended
30 Jun 2015 30 Jun 2014 31 Dec 2014
R R R
Segmental revenue
Board distribution and adaptation 371 572 007 341 866 047 746 506 296
Packaging 21 467 488 - 15 232 781
Internal revenue (packaging) (711 777) - -
Net revenue 392 327 718 341 866 047 761 739 077
Segmental results
Board distribution and adaptation 16 791 127 15 691 419 41 447 577
Packaging 2 340 789 - 1 978 835
Operating profit before interest 19 131 916 15 691 419 43 426 412
Operating assets
Board distribution and adaptation 324 134 122 306 080 656 300 114 312
Packaging 18 920 800 - 12 357 651
Other 955 539 999 333 1 431 886
Internal balances (2 775 997) (5 421 687) (3 414 394)
341 234 464 301 658 302 310 489 455
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 shopfitting 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
Revenue of R392 million (30 June 2014: R342 million) grew by 15% compared to the
previous corresponding period with gross profit of R110 million (30 June 2014:
R99 million) growing by 11%. Revenue growth in the board distribution and adaptation
segment of 9% was satisfactory considering the difficult economic environment. However,
its effect on gross profit was eroded by a decrease in the gross margin from 29% for
the six months ended 30 June 2014 to 28% for the six months ended 30 June 2015.
Selling prices in the wood-based panel industry will remain under pressure until
local production capacity is withdrawn or significant growth in demand occurs so as
to achieve a closer balance between demand and supply.
Operating expenses were 10% higher than that of the six months ended 30 June 2014,
but only 3% higher when the new packaging segment is excluded. This was primarily
due to savings resulting from the actions taken during 2014 when the Davidsons
Manufacturing operation was relocated and integrated with the Group's Ottery outlet.
KayDav is pleased to report that despite the current economic climate and difficult
trading conditions, earnings grew by 17% from the previous corresponding period.
Consequently earnings and headline earnings per share increased from 5.8 cents and
5.9 cents respectively for the six months ended 30 June 2014 to 6.8 cents for the
six months ended 30 June 2015. The increase in earnings was driven primarily by the
Davidsons Manufacturing savings mentioned above and by the performance of the
packaging segment which was only acquired after 30 June 2014 and which contributed
operating profit of R2.3 million during the current reporting period.
During the six months ended 30 June 2015 the Group acquired plant and equipment and
motor vehicles at a cost of R6 million which was financed by instalment sale
liabilities. The significant net overdraft position at 30 June 2015 of R31 million
(30 June 2014: R29 million) was the result of paying a large supplier earlier than
its normal trading terms require for this month only and is the same arrangement
which existed on 30 June 2014. The effect was reversed in the following month.
KayDav's capital structure remains sound with a debt to equity ratio of 32%
(30 June 2014: 31%) and a net asset base of R159 million at 30 June 2015
(31 December 2014: R156 million) after a distribution to shareholders of
5 cents per share amounting to R9 million. The Group's current ratio at
30 June 2015 was 1.6 (30 June 2014: 1.6).
In the report of the previous corresponding period the segment report included the
manufacturing segment. This segment has been fully integrated with the then board
distribution segment at the Group's Ottery premises and includes common use of
assets, premises, staff and other resources to the extent that expenses, assets and
liabilities are no longer separately distinguishable and consequently therefore this
segment is no longer separately reported on. The board distribution and adaptation
segment now combines both activities with the packaging segment reported separately.
PROSPECTS
In the packaging segment immediate opportunities exist in the introduction and
development of new product lines as well as in the expansion of its Johannesburg
operation. KayDav has introduced new product lines with early success and we look
forward to building on this momentum.
The board distribution and adaptation segment continues to be negatively affected by
slow macroeconomic growth. The Group remains focused on increasing its market share
profitably by being customer-centric and sales focused while maintaining and improving
working capital efficiency.
DISTRIBUTIONS TO SHAREHOLDERS
The Group made a cash distribution of 5 cents per share to shareholders on 18 May 2015.
CHANGES TO DIRECTORATE
Shane van Niekerk was appointed as independent non-executive director on 1 August 2015
to fill the vacancy left by the resignation of Jonathan Hertz, who resigned with effect
from 31 July 2015. As a result of these changes Boitumelo Tlhabanelo was appointed as
chairman of KayDav's audit and risk committee and Shane van Niekerk as member thereof
and as chairman of KayDav's remuneration committee. Shareholders are referred to the
Group's SENS announcement of 29 July 2015 in respect of these changes for more
information.
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 interim financial statements have been prepared in accordance with International
Financial Reporting Standards, the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee, the requirements of IAS 34 (Interim Financial
Reporting) and in compliance with the JSE Listings Requirements and the Companies
Act, No. 71 of 2008 as amended.
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 2014. 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
I H Stern G F Davidson
Chairman Chief Executive Officer
Cape Town
24 August 2015
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: G F Davidson (CEO), M Slier (CFO)
Independent non-executive directors: I H Stern (Chairman), B Tlhabanelo, S van Niekerk
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: 24/08/2015 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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