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KDV - Kaydav Group Limited - Audited results for the year ended 31 December 2011 KAYDAV GROUP LIMITED Incorporated in the Republic of South Africa Registration number: 2006/038698/06 JSE code: KDV * ISIN: ZAE000108940 ("KayDav" or "the Group") Audited results for the year ended 31 December 2011 - Headline earnings per share 10.3 cents (up 164%) - Net tangible asset value per share 60.7 cents (up 10%) Consolidated statement of comprehensive income Audited year Audited year ended 31 ended 31
December 2011 December 2010 R R CONTINUING OPERATIONS Revenue 483 643 885 460 837 937 Cost of sales (333 033 080) (328 430 134) Gross profit 150 610 805 132 407 803 Other income 874 267 1 227 431 Operating expenses (125 088 168) (116 709 971) Operating profit 26 396 904 16 925 263 Investment income 144 514 465 486 Finance costs (2 579 612) (2 737 521) Profit before taxation 23 961 806 14 653 228 Taxation (5 782 727) (20 470) Profit for the year 18 179 079 14 632 758 Other comprehensive income - - Total comprehensive income attributable to equity holders of the parent from continuing operations 18 179 079 14 632 758 DISCONTINUED OPERATION Loss for the year from discontinued operation before loss on disposal - (6 921 631) Loss on disposal of discontinued operation - (1 125 326) Loss for the year from discontinued operation - (8 046 957) Other comprehensive income - - Total comprehensive loss attributable to equity holders of the parent from discontinued operation - (8 046 957) Total comprehensive income attributable to equity holders of the parent from continuing and discontinued operations 18 179 079 6 585 801 Reconciliation between earnings and headline earnings Earnings 18 179 079 6 585 801 Loss/(profit) on sale of plant and equipment 295 476 (4 186) Taxation on (profit)/loss on sale of plant and equipment (82 733) 1 172 Loss on sale of business - 1 125 326 Impairment of plant and equipment 700 000 - Taxation on impairment of plant and equipment (196 000) - Headline earnings 18 895 822 7 708 113 Weighted average number of shares in issue 182 751 712 198 961 975 Basic and diluted earnings per share (cents) 9.9 3.3 Headline earnings per share (cents) 10.3 3.9 Basic and diluted earnings per share from continuing operations (cents) 9.9 7.3 Headline earnings per share from continuing operations (cents) 10.3 7.4 Distribution to shareholders per share (cents) 5.5 - Consolidated statement of financial position Audited year Audited year ended 31 ended 31 December 2011 December 2010
R R ASSETS Non-current assets 51 563 206 51 525 170 Plant and equipment 30 764 470 31 349 411 Goodwill 14 302 804 14 302 804 Deferred taxation 6 495 932 5 872 955 Current assets 148 350 367 151 879 798 Inventories 72 258 022 61 237 708 Trade and other receivables 68 390 409 66 122 323 Cash and cash equivalents 6 167 920 22 747 360 Taxation 1 534 016 1 772 407 TOTAL ASSETS 199 913 573 203 404 968 EQUITY AND LIABILITIES Capital and reserves 119 147 678 115 650 549 Share capital 173 184 Share premium 180 168 412 194 850 351 Accumulated loss (61 020 907) (79 199 986) Non-current liabilities 12 368 889 15 605 553 Instalment sale liabilities 4 114 591 4 248 936 Interest-bearing liability 8 254 298 11 242 494 Deferred taxation - 114 123 Current liabilities 68 397 006 72 148 866 Trade and other payables 50 253 363 56 057 241 Short-term portion of instalment sale liabilities 3 775 494 3 215 677 Short-term portion of interest bearing liability 2 988 196 2 707 832 Bank overdraft 9 487 289 8 034 017 Taxation 23 393 - Provisions 1 869 271 2 134 099 TOTAL EQUITY AND LIABILITIES 199 913 573 203 404 968 Shares in issue at year end 172 751 585 183 637 373 Net asset value per share (cents) 69.0 63.0 Net tangible asset value per share (cents) 60.7 55.2 Condensed consolidated statement of changes in equity Balance at the beginning of the year 115 650 549 125 842 799 Total comprehensive income for the year 18 179 079 6 585 801 Share repurchases (4 581 900) (16 778 051) Distribution to shareholders (10 100 050) - Total equity 119 147 678 115 650 549 Condensed consolidated statement of cash flows Audited year Audited year ended 31 ended 31
December 2011 December 2010 R R Net cash flows from operating activities 6 069 196 11 750 263 Net cash flows from investing activities (7 137 597) 5 096 041 Net cash flows from financing activities (16 964 311) (3 934 399) Net (decrease)/increase in cash and cash equivalents (18 032 712) 12 911 905 Net cash and cash equivalents at the beginning of the year 14 713 343 1 801 438 Net cash and cash equivalents at the end of the year (3 319 369) 14 713 343 Note to the financial statements The note below sets out the loss on disposal as well as cash flows resulting from the disposal of the discontinued operation during the prior period. Sale of business Plant and equipment - 4 062 960 Inventories - 4 855 567 Trade and other receivables - 5 356 673 Cash and cash equivalents - 1 404 346 Trade and other payables - (5 945 323) Provisions - (22 722) Net assets sold - 9 711 501 Costs related to the disposal of business - 2 413 825 - 12 125 326
Loss on disposal - (1 125 326) Consideration received - 11 000 000 Cash sold (1 404 346) Settlement of costs on disposal of business (2 413 825) - Cash (utilised)/realised on sale of business (2 413 825) 9 595 654 Segmental analysis Audited year Audited year ended 31 ended 31
December 2011 December 2010 R R Segmental revenue Board distribution 471 028 870 449 403 208 Manufacturing 40 686 396 62 870 866 Other - - Internal revenue (28 071 381) (21 622 472) Total revenue 483 643 885 490 651 602 Segmental results Board distribution 26 055 459 16 660 984 Manufacturing 184 335 (8 394 199) Other 157 110 1 758 273 Operating profit before interest 26 396 904 10 025 058 Discontinued operation - manufacturing - 6 900 205 Loss for the year from discontinued operation - 6 921 631 Net finance charges from discontinued operation - (21 426) Operating profit before interest from continuing operations 26 396 904 16 925 263 Commentary Introduction KayDav specialises in the adding of value to and distribution of wood based panels, which are manufactured through the compression of wood waste into a solid panel. Wood based panels are used for a variety of purposes in the construction, furniture manufacturing and shop fitting industries. Financial results Revenue for the year ended 31 December 2011 from continuing operations was 5% above that of the previous corresponding period. The lack of selling price inflation as a result of the over supply of wood based panels continued to slow top line sales growth. Despite the lack of selling price inflation the Group was able to return to historical gross margins after the significant pressure experienced on gross margins during the year ended 31 December 2010. As a result gross profit of R150.6 million from continuing operations for the year ended 31 December 2011 was 14% above gross profit of R132.4 million for the previous period. Operating expenses from continuing operations of R125.1 million was 7% above the R116.7 million of the previous period. The Group recognised a previously unrecognised deferred tax asset of R1.2 million during the year ended 31 December 2011. As a result of internal restructuring future taxable income will now be available to realise this deferred tax asset. Headline earnings per share of 10.3 cents for the year ended 31 December 2011, which is up 164% from the 3.9 cents for the previous corresponding period, was driven by increased profitability, the absence of the loss of the discontinued operation and the effect of share repurchases. The Group had a net tangible asset value base of R104.8 million at 31 December 2011 (2010: R101.3million) after the company repurchased 10 885 788 KayDav shares during the 2011 financial year and made a capital distribution to shareholders of 5.5 cents per share. Interest-bearing debt excluding bank overdraft was 16% (2010: 19%) of capital and reserves at the year end. The repurchase of shares was funded by internal funds. The Group is operating at a current ratio of 2.2 (2010: 2.1) and from a sound financial base to provide a platform for its activities. Capital commitments At year end the Group was committed to acquire a property which the Group currently occupies at a cost of R2 100 000. This acquisition will be funded by a combination of a bank loan secured by a mortgage bond over the property and internal funds. In addition the Group was committed to acquire two manufacturing machines at a cost of R827 557 which was financed subsequent to year end by instalment sale liabilities. Prospects While supply still exceeds demand for wood based panels resulting in pressure on selling prices, the Group has noticed signs of increased demand during the first quarter of 2012. These early signs bode well for 2012 but are tempered by the ongoing uncertainty about local and global economic growth. The Group therefore expects moderate growth for the 2012 financial year. KayDav remains focused on increasing its market share and profitability while maintaining and improving working capital efficiency. Changes to capital structure KayDav repurchased 10 885 788 KayDav shares during the 2011 financial year at a cost of R4.6 million bringing the number of shares in issue at year end to 172 751 585. Share capital and share premium were accordingly reduced by R4.6 million. These shares were acquired on the open market as follows: - 3 112 on 27 May 2011 at 35 cents per share; - 546 888 on 8 June 2011 at 35 cents per share; - 100 000 on 13 October 2011 at 35 cents per share; - 4 305 498 on 1 December 2011 at 40 cents per share; - 5 930 290 on 21 December 2011 at 44 cents per share. Distributions to shareholders KayDav made a distribution out of share premium to shareholders of 5.5 cents per share during the year ended 31 December 2011. Subsequent events Subsequent to year end the Group concluded an agreement to acquire a property it has occupied for a number of years from the landlord at a cost of R13 850 000. The acquisition will be financed by a combination of a bank loan secured by a mortgage bond over the property and internal funds. The purchase is subject to certain suspensive conditions. No other material changes have taken place in the affairs of the Group between the end of the financial year and the date of this report, which require adjustment or disclosure. Basis of preparation The condensed consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, the AC 500 series of interpretations, the requirements of IAS 34 (Interim financial reporting), the JSE Listings Requirements and the Companies Act, No. 71 of 2008, as amended. The accounting policies applied in preparing these condensed consolidated financial statements are consistent with those presented in the annual financial statements for the year ended 31 December 2010. The annual financial statements were prepared under the supervision of the CFO, Martin Slier. Directorate Boitumelo Tlhabanelo was appointed to the board as an independent non-executive director on 15 December 2011. He will also serve on Kaydav`s audit and risk committee. Boitumelo is a chartered accountant by profession and has more than 10 years of experience in investment management. He is a co-founder and principal of Bopa Moruo Capital, a private equity fund management company. Subsequent to the year-end Jonathan Hertz was appointed as chairman of both the audit and risk committee and the remuneration committee of the KayDav board, which appointments will take effect from 1 April 2012. Audit report These condensed consolidated financial results have been audited by KayDav`s auditors, PKF (Jhb) Inc, whose unqualified audit report is available for inspection at KayDav`s registered office. Annual report Shareholders are advised that the integrated annual report containing the financial statements will be posted on or before 30 March 2012. Appreciation The board 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 26 March 2012 Corporate information Executive Directors: G F Davidson (CEO), M Slier (CFO) Non-executive Directors: I H Stern (Chairman), J Hertz, B Tlhabanelo Registration Number: 2006/038698/06 Registered Address: 105 Bamboesvlei Road, Ottery, 7800 Postal Address: PO Box 272 Ottery 7808 Telephone: 021 704 7060 Facsimile: 021 704 2082 Company Secretary: Probity Business Services (Proprietary) Limited Transfer Secretaries: Link Market Services South Africa (Proprietary) Limited 27 March 2012 Sponsor: Java Capital Date: 27/03/2012 17:07:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). 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