Wrap Text
KAP - KAP International Holdings Limited - Unaudited Group Results for the
six-month period ended 31 December 2010
KAP INTERNATIONAL HOLDINGS LIMITED
Registration number: 1978/000181/06
Share code: KAP
ISIN: ZAE000059564
("KAP International" or "the company")
Unaudited Group Results for the six-month period ended 31 December 2010
Highlights
* Strong operating cash flows improve financial position
* Headline earnings grow from 11,0 cents to 13,9 cents per share
* Further margin improvement
* Good performance by Hosaf and automotive divisions
Performance
We submit our report to shareholders on the results and activities of KAP
International for the six months ended 31 December 2010.
The group`s strategy of aggressive cost cutting in the early phase of the
downturn has proved successful in the light of the results of the last two
years.
Revenue and earnings
Revenue from continuing operations for the period increased to R2 235 million
from R2 026 million in the previous period, due to good growth in Hosaf and
the automotive divisions.
Operating profit of R107 million has improved by 9% from the prior period.
Interest cost has reduced further due to lower borrowings and interest rates.
Headline earnings of 13,9 cents per share have improved from 11,0 cents in
the 2009 period.
Financial position and cash flow
Following sustained focus on cash generation and working capital, net
interest-bearing borrowings have decreased to R260,2 million (December 2009:
R453,7 million). The debt/equity ratio at end-December was 18,6%.
This cash was generated by strong operating cash flows, tight working capital
management and strict control over capital expenditure.
Operational overview
Industrial segment
Feltex Automotive
The division benefited from an increase in vehicle build over the period
(2010: 225 616 units vs 2009: 174 392). Expenses, working capital and capital
expenditure remain under tight control, with satisfactory cash generated as a
result. The division is benefiting from increased capacity installed in
previous years.
Industrial footwear
Trading in United Fram and Wayne Plastics remained competitive due to a
reduction in construction activity after June 2010. A renewed focus on
marketing coupled with a weaker Rand should alleviate some of this pressure
going forward. Increasing hide prices have also put Mossop`s cyclical results
under pressure.
Hosaf
The expanded PET plant is running well at maximum throughput and sales
volumes have grown as the local market for new PET packaging products has
increased in the food industry. The performance underscores our decision to
expand the plant two years ago.
Consumer segment
Bull Brand Foods
The division generated significant cash from working capital over the period,
and this remains a continued focus area. Trading conditions are difficult due
to the increased competition from imported products, particularly fish.
Brenner Mills
Following the significant reduction in the white maize price in the second
half of the 2010 financial year, the price has recovered in the first half of
2010/11. Volumes were under pressure as Brenner followed an approach of
maintaining margins.
Jordan
Sales volumes increased by some 26% (306 000 pairs) to 1,4 million for the
six-month period. Lower price points were achieved due to the effect of the
stronger Rand on Jordan`s imported footwear, and new product lines.
Glodina
Sales increased by 9% due to greater volumes at the major chains. Margins
came under some pressure due to the dramatic increase in the cotton price
over the period.
Corporate activity
As previously announced on SENS, a portion of Hosaf`s property in Cape Town
was sold to Steinhoff Properties (Pty) Limited, a related party, for a cash
consideration of R14,7 million (in line with a fair market valuation report),
subject to approval of the sub-division of the property by the relevant
authorities.
Directors and officers
J B Magwaza has been appointed as lead independent non-executive director.
Distribution
In line with previous years, the group will not pay an interim distribution.
Outlook
The group continues to focus on cash generation and cost control. Our past
restructuring efforts have placed us in a strong position to capitalise on
growth opportunities.
Appreciation
We are grateful to our shareholders, employees and other stakeholders, and
thank them for their continued support.
Claas Daun Paul Schouten John Haveman
Non-executive chairman Chief executive officer Chief financial
officer
Paarl
1 March 2011
Condensed Statements of Comprehensive Income
31 Dec 2010 31 Dec 2009 30 Jun 2010
6 months 6 months 12 months
Unaudited Unaudited Audited
Rm Rm Rm
Continuing operations
Revenue 2 235,4 2 025,9 3 970,5
Operating profit before
restructuring costs 107,1 97,9 198,2
Restructuring costs - - (3,7)
Operating profit 107,1 97,9 194,5
Net finance costs (21,1) (27,0) (52,7)
Share of results of joint
ventures 1,3 2,2 3,0
Profit before taxation 87,3 73,1 144,8
Taxation (25,2) (19,8) (48,7)
Profit after taxation from
continuing operations 62,1 53,3 96,1
Discontinued operations
Revenue - 27,1 29,7
Operating profit/(loss) before
restructuring costs - - 0,5
Restructuring costs - - (4,0)
Operating loss - - (3,5)
Net finance costs - (4,0) (1,5)
Loss after taxation from
discontinued operations - (2,9) (2,4)
Total profit for the period 62,1 50,4 93,7
Other comprehensive income - - -
Total comprehensive income 62,1 50,4 93,7
Total profit for the period 62,1 50,4 93,7
Owners of the company 58,8 47,9 87,4
Non-controlling interest 3,3 2,5 6,3
Total comprehensive income 62,1 50,4 93,7
Owners of the company 58,8 47,9 87,4
Non-controlling interest 3,3 2,5 6,3
Earnings per share (basic
and diluted)
Including discontinued operations 13,9 11,3 20,6
Excluding discontinued operations 13,9 12,0 21,2
Headline earnings per share
(basic and diluted)
Including discontinued operations 13,9 11,0 21,0
Excluding discontinued operations 13,9 11,7 21,2
Reconciliation of headline
earnings
Net profit attributable to owners
of the company 58,8 47,9 87,4
Profit on sale of property, plant
and equipment - (1,0) (2,2)
Impairments - - 4,0
Headline earnings 58,8 46,9 89,2
Weighted average shares in issue 424,5 424,5 424,5
Condensed Statements of Financial Position
31 Dec 2010 31 Dec 2009 30 Jun 2010
Unaudited Unaudited Audited
Rm Rm Rm
ASSETS
Non-current assets 1 098,8 1 146,4 1 128,5
Property, plant and equipment and
investment properties 933,8 928,7 945,7
Goodwill 66,7 66,7 66,7
Interest in joint ventures 26,3 24,0 22,7
Pension fund surplus 22,0 27,8 25,1
Deferred taxation assets 50,0 99,2 68,3
Current assets 1 446,0 1 309,9 1 381,7
Inventories 626,5 610,9 646,3
Trade and other receivables 767,4 637,9 621,1
Bank balances and cash 40,0 13,8 101,8
Assets held for sale 12,1 47,3 12,5
Total assets 2 544,8 2 456,3 2 510,2
EQUITY AND LIABILITIES
Capital and reserves 1 397,5 1 322,5 1 364,7
Equity holders` interest 1 356,4 1 286,5 1 327,0
Non-controlling interest 41,1 36,0 37,7
Non-current liabilities 66,4 81,7 61,7
Long-term interest-bearing
borrowings 33,2 39,7 30,5
Retirement benefit obligations 10,5 11,2 10,6
Deferred taxation liabilities 22,7 30,8 20,6
Current liabilities 1 080,9 1 052,1 1 083,8
Short-term interest-bearing
borrowings 56,6 92,0 72,7
Trade and other payables 795,8 605,5 636,8
Provisions 18,1 18,8 50,1
Bank overdrafts 210,4 328,6 324,2
Liabilities directly associated
with assets held for sale - 7,2 -
Total equity and liabilities 2 544,8 2 456,3 2 510,2
Number of shares in issue
(millions) 424,5 424,5 424,5
Net asset value per share
(cents) 319,5 303,1 312,6
Net interest-bearing debt to
equity (%) 18,6% 34,3% 23,9%
Condensed Statements of Cash Flow
31 Dec 2010 31 Dec 2009 30 Jun 2010
6 months 6 months 12 months
Unaudited Unaudited Audited
Rm Rm Rm
Cash flows from operating
activities 121,0 84,2 233,9
Cash generated by operations
before working capital changes 146,0 134,8 268,6
Net working capital changes 3,1 (14,5) 28,4
Cash generated from operations 149,1 120,3 297,0
Net finance costs (21,1) (31,0) (54,2)
Taxation paid (7,0) (5,1) (8,9)
Cash flows to investing
activities (25,9) (23,0) (42,5)
Purchase of property, plant
and equipment
Expansion (3,4) (5,6) (34,2)
Replacement (20,9) (19,4) (29,1)
Other investing activities (1,6) 2,0 20,8
Cash flows from operating and
investing activities 95,1 61,2 191,4
Cash flows to financing
activities (43,1) (92,5) (130,3)
Capital distributions to
shareholders (29,7) - -
Dividends and distributions
paid to minorities - - (2,1)
Decrease in borrowings (13,4) (92,5) (128,2)
Net increase/(decrease) in
cash and cash equivalents 52,0 (31,3) 61,1
Cash and cash equivalents at
the beginning of the period (222,4) (283,5) (283,5)
Cash and cash equivalents at
the end of the period (170,4) (314,8) (222,4)
Condensed Statements of Changes in Equity
31 Dec 2010 31 Dec 2009 30 Jun 2010
6 months 6 months 12 months
Unaudited Unaudited Audited
Rm Rm Rm
Balance at the beginning of
the period 1 364,7 1 272,1 1 272,1
Other comprehensive income - - -
Movement in share-based payment
reserve 0,4 - 1,0
Net profit for the period 62,1 50,4 93,7
Capital distribution to owners (29,7) - -
Distributions to minorities - - (2,1)
Balance at the end of the period 1 397,5 1 322,5 1 364,7
Owners of the company 1 356,4 1 286,5 1 327,0
Non-controlling interest 41,1 36,0 37,7
Condensed Segmental Analyses
Operating
profit before
restructuring
Revenue costs
Rm Rm
December 2010 (6 months) unaudited 235,4 107,1
Industrial 1 416,2 67,8
Consumer 819,2 39,3
Other - -
December 2009 (6 months) unaudited 2 053,0 97,9
Industrial 1 241,7 54,1
Consumer 810,9 43,8
Other 0,4 -
June 2010 (12 months) audited 4 000,2 198,7
Industrial 2 495,2 142,4
Consumer 1 505,0 56,3
Other - -
Condensed Segmental Analyses
Total
Depreciation assets
Rm Rm
December 2010 (6 months) unaudited (35,5) 2 544,8
Industrial (28,2) 1 709,1
Consumer (7,3) 782,6
Other - 53,1
December 2009 (6 months) unaudited (35,6) 2 456,3
Industrial (28,1) 1 576,6
Consumer (8,3) 779,1
Other 0,8 100,6
June 2010 (12 months) audited (70,8) 2 510,2
Industrial (56,0) 1 675,3
Consumer (14,8) 721,8
Other - 113,1
NOTES
31 Dec 2010 31 Dec 2009 30 Jun 2010
6 months 6 months 12 months
Unaudited Unaudited Audited
Rm Rm Rm
1 Net finance costs -
continuing operations 21,1 27,0 52,7
Interest received (1,3) (0,1) (3,7)
Interest paid 22,4 27,1 56,4
Net finance costs -
discontinued operations - 4,0 1,5
2 Capital expenditure
commitments 33,3 33,4 57,4
Contracted 7,4 10,6 8,0
Approved but not yet
contracted 25,9 22,8 49,4
3 Operating lease
commitments 59,5 36,4 72,8
4 Guarantees and contingent
liabilities 11,4 11,2 11,1
5 Taxation
The taxation rate is higher than the statutory rate due to permanent
differences in respect of the group`s pension fund surplus.
6 Basis of preparation of results
The results for the six months ended 31 December 2010 have been prepared in
accordance with the International Financial Reporting Standards ("IFRS"), and
comply with IAS 34 - Interim Financial Reporting, the AC 500 series of
interpretations, the requirements of the South African Companies Act, 1973
and the Listings Requirements of the JSE Limited. The accounting policies
used in the consolidated financial results for the six months ended 31
December 2010, are consistent with those applied in the audited financial
statements for the year ended 30 June 2010.
7 Unaudited results
The results for the six months ended 31 December 2010 have not been audited
or reviewed by the group`s auditors.
Corporate information
Non-executive directors: C E Daun* (Chairman), M J Jooste, J B Magwaza,
I N Mkhari, F Moller*, S H Nomvete, U Schackermann*, K E Schmidt,
D M van der Merwe
* German
Executive directors: P C T Schouten (CEO), J P Haveman (CFO)
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 9064
Transfer secretaries:
Computershare Investor Services (Pty) Limited
Address: 70 Marshall Street, Johannesburg, 2001
Postal address: PO Box 61051, Marshalltown, 2107
Telephone: 011 370 5000, Facsimile: 011 688 7710
Sponsor: PSG Capital (Pty) Limited
These results can be viewed on: www.kapinternational.com
Date: 01/03/2011 08:00:11 Supplied by www.sharenet.co.za
Produced by the JSE SENS Department.
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