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KAYDAV GROUP LIMITED - Condensed audited consolidated results for the year ended 31 December 2012

Release Date: 27/03/2013 08:17
Code(s): KDV     PDF:  
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Condensed audited consolidated results for the year ended 31 December 2012

KAYDAV GROUP LIMITED
Incorporated in the Republic of South Africa
Registration number: 2006/038698/06
JSE code: KDV * ISIN: ZAE000108940
("KayDav" or "the Group" or "the Company")

Condensed audited consolidated results for the year ended 31 December 2012

- Earnings per share 11.8 cents (up 19%)
- Headline earnings per share 11.6 cents (up 13%)
- Net tangible asset value per share 66.5 cents (up 10%)
- Distribution to shareholders per share 7 cents (up 17%)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                                                              Audited         Audited
                                                           year ended      year ended
                                                          31 December     31 December
                                                                 2012            2011
                                                                    R               R
Revenue                                                   550 919 804     483 643 885
Cost of sales                                           (381 974 757)   (333 033 080)
Gross profit                                              168 945 047     150 610 805
Other income                                                1 365 064         874 267
Operating expenses                                      (139 476 746)   (125 088 168)
Operating profit                                           30 833 365      26 396 904
Investment income                                             178 733         144 514
Finance costs                                             (2 540 847)     (2 579 612)
Profit before taxation                                     28 471 251      23 961 806
Taxation                                                  (8 120 717)     (5 782 727)
Profit for the year                                        20 350 534      18 179 079
Other comprehensive income                                          -               -
Total comprehensive income attributable to 
equity holders of the parent                               20 350 534      18 179 079
Reconciliation between earnings and headline earnings
Earnings                                                   20 350 534      18 179 079
(Profit)/loss on sale of plant and equipment                (523 302)         295 476
Taxation on (profit)/loss on sale of plant and equipment      146 525        (82 733)
Impairment of plant and equipment                                   -         700 000
Taxation on impairment of plant and equipment                       -       (196 000)
Headline earnings                                          19 973 757      18 895 822
Weighted average number of shares in issue                172 751 585     182 751 712
Basic and diluted earnings per share (cents)                     11.8             9.9
Headline earnings per share (cents)                              11.6            10.3


CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                                                              Audited         Audited
                                                                as at           as at
                                                          31 December     31 December
                                                                 2012            2011
                                                                    R               R
ASSETS
Non-current assets                                         68 695 759      51 563 206
Property, plant and equipment                              52 619 029      30 764 470
Goodwill                                                   14 302 804      14 302 804
Deferred taxation                                           1 773 926       6 495 932
Current assets                                            165 011 970     148 350 367
Inventories                                                71 733 983      72 258 022
Trade and other receivables                                71 365 557      68 390 409
Cash and cash equivalents                                  20 841 337       6 167 920
Taxation                                                    1 071 093       1 534 016
Total assets                                              233 707 729     199 913 573
EQUITY AND LIABILITIES
Capital and reserves                                      129 133 100     119 147 678
Share capital                                                     173             173
Share premium                                             169 803 300     180 168 412
Accumulated loss                                         (40 670 373)    (61 020 907)
Non-current liabilities                                    30 194 513      12 368 889
Instalment sale liabilities                                 9 926 850       4 114 591
Interest-bearing liabilities                               19 955 251       8 254 298
Deferred taxation                                             312 412               -
Current liabilities                                        74 380 116      68 397 006
Trade and other payables                                   48 983 495      50 253 363
Short-term portion of instalment sale liabilities           4 547 748       3 775 494
Short-term portion of interest-bearing liabilities          5 538 192       2 988 196
Bank overdraft                                             12 644 240       9 487 289
Taxation                                                            -          23 393
Provisions                                                  2 666 441       1 869 271
Total equity and liabilities                              233 707 729     199 913 573
Shares in issue at year-end                               172 751 585     172 751 585
Net asset value per share (cents)                                74.8            69.0
Net tangible asset value per share (cents)                       66.5            60.7


CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
                                                              Audited         Audited
                                                           year ended      year ended
                                                          31 December     31 December
                                                                 2012            2011
                                                                    R               R
Balance at the beginning of the year                      119 147 678     115 650 549
Total comprehensive income for the year                    20 350 534      18 179 079
Share repurchases                                                   -     (4 581 900)
Distribution to shareholders                             (10 365 112)    (10 100 050)
Total equity                                              129 133 100     119 147 678


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                                              Audited         Audited
                                                           year ended      year ended
                                                          31 December     31 December
                                                                 2012            2011
                                                                    R               R
Net cash flows from operating activities                   28 191 996       6 521 732
Net cash flows from investing activities                  (7 935 217)     (3 630 060)
Net cash flows from financing activities                  (8 740 313)    (20 924 384)
Net increase/(decrease) in cash and cash equivalents       11 516 466    (18 032 712)
Net cash and cash equivalents at the beginning 
of the year                                               (3 319 369)      14 713 343
Net cash and cash equivalents at the end of the year        8 197 097     (3 319 369)


SEGMENTAL ANALYSIS
                                                              Audited         Audited
                                                           year ended      year ended
                                                          31 December     31 December
                                                                 2012            2011
                                                                    R               R
Segmental revenue
Board distribution                                        532 957 540     471 028 870
Manufacturing                                              46 495 481      40 686 396
Internal revenue                                         (28 533 217)    (28 071 381)
Total revenue                                             550 919 804     483 643 885

Internal revenue relates to sales from the manufacturing 
segment to the board distribution segment.

Segmental results
Board distribution                                         29 806 990      26 055 459
Manufacturing                                               1 026 375         184 335
Other                                                               -         157 110
Operating profit before interest                           30 833 365      26 396 904


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 shopfitting industries.

FINANCIAL RESULTS
Revenue for the year ended 31 December 2012 increased by 13.9% to R550.9 million from 
R483.6 million for the year ended 31 December 2011. The lack of selling price 
inflation as a result of the oversupply of wood-based panels continued to hamper sales 
growth. The Group experienced pressure on gross margins during the second half of the 
2012 financial year resulting in gross profit for the year ending 31 December 2012 
being only 12.2% above that of the prior year. 

Operating expenses increased by 11.5% to R139.5 million compared to the R125.1 million 
of the previous period.

Profit before taxation increased by 18.8% to R28.5 million for the year ended 
31 December 2012, while the increase in total comprehensive income for the year was 
lower at 11.9% as a result of an increased effective tax rate of 29% compared to the 
24% for the year ended 31 December 2011. The 2011 financial year effective tax rate was 
reduced by the recognition of a previously unrecognised deferred tax asset during that 
financial year. 

Headline earnings per share of 11.6 cents for the year ended 31 December 2012, which 
is up 13% from the 10.3 cents for the previous corresponding period, was driven by 
increased profitability and the effect of share repurchases. Earnings for the year 
ended 31 December 2011 included an impairment of R504 000, after tax, which was 
excluded for headline earnings purposes.

The Group had a net tangible asset value of R114.8 million at 31 December 2012 
(2011: R104.8 million) after the Company made a capital distribution to shareholders 
of 6 cents per share during the 2012 financial year. Interest-bearing debt excluding 
bank overdraft was 31% (2011: 16%) of capital and reserves at the year-end. During 
the year the Group acquired a warehouse in Ottery, which was previously rented from a 
third party, at a cost of R13 850 000 and a building currently used for cutting and 
edging at a cost of R2 100 000. The acquisitions were financed by a loan secured by a 
mortgage bond over the warehouse property of R7 980 000 and the remainder by a portion 
of a term loan of R10 000 000 from KayDav's bankers. In addition the Group acquired 
plant and equipment at a cost of R7 107 823 and vehicles at a cost of R3 632 414 of 
which the major part was financed by instalment sales, resulting in outstanding 
instalment sale liabilities at 31 December 2012 increasing by R6.6 million to 
R14.5 million from the R7.9 million outstanding at 31 December 2011.

At 31 December 2012 the Group had a current ratio of 2.2 (2011: 2.2).

CAPITAL COMMITMENTS
KayDav had no capital commitments at year-end.

PROSPECTS
The Group remains focused on increasing its market share and profitability while 
maintaining and improving working capital efficiency. 

To this end KayDav opened a branch in Durban which commenced trading on 1 October 2012. 
This location, being the largest geographical market for our products where the Group 
did not have a presence previously, was a logical next step for KayDav. 

The industry is still battling the effects of oversupply on its selling prices, slow 
macroeconomic growth and the over indebtedness of the South African consumer. We are 
hopeful that these constraining factors will ease during 2013 and beyond. 

KayDav is well positioned to take advantage of growing demand when it occurs.

CHANGES TO CAPITAL STRUCTURE
There has been no change in KayDav's capital structure during the year ended 
31 December 2012 aside from a distribution out of share premium to shareholders of 
6 cents per share.

DISTRIBUTIONS TO SHAREHOLDERS
Notice is hereby given that the board of directors of KayDav has resolved to make a 
capital reduction in lieu of a dividend out of share premium (a reduction of 
Contributed Tax Capital as defined in the Income Tax Act) of 7 cents per share.

SALIENT DATES
The salient dates in respect of the cash distribution are as follows:
Last day to trade to be eligible to receive the cash distribution Friday, 12 April 2013
Shares trade "ex" the cash distribution Monday, 15 April 2013
Record date for the cash distribution Friday, 19 April 2013
Cash distribution paid to shareholders Monday, 22 April 2013

NOTES:
1. Any change to the above dates will, subject to approval of the JSE Limited, be 
communicated to shareholders by notification on SENS and in the press.
2. Shares may not be dematerialised or rematerialised between Monday, 15 April 2013 
and Friday, 19 April 2013.

Additional information
In terms of the JSE Listings Requirements in relation to cash distributions
the following information is disclosed:

1. The issued share capital of KayDav is 172 751 585 ordinary shares; and
2. KayDav's tax reference number is 9154477161.
Given that the cash distribution is by way of a reduction of Contributed Tax Capital, 
the information relating to dividends tax is not applicable and has not been disclosed.

SUBSEQUENT EVENTS
No 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 audited consolidated 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), the JSE Listings Requirements and the Companies Act, No. 71 of 
2008, as amended.

The accounting policies applied in preparing these condensed audited consolidated 
financial statements are consistent with those presented in the annual financial 
statements for the year ended 31 December 2011. 

The annual financial statements were prepared under the supervision of the CFO, 
Martin Slier CA(SA).

DIRECTORATE
There has been no change to the directorate during the year. Jonathan Hertz was 
appointed as chairman of the audit and risk committee and as chairman of the 
remuneration committee of the board during the 2012 financial year.

AUDIT REPORT
These condensed audited 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 31 March 2013. KayDav's annual general meeting 
will be held at 10:00 on Thursday 13 June 2013 at 2 Arnold Road, Rosebank, 2196, 
Gauteng.

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 2013

CORPORATE INFORMATION
Executive Directors: G F Davidson (CEO), M Slier (CFO)
Independent 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 (Pty) Limited
Transfer Secretaries: Link Market Services South Africa (Pty) Limited

27 March 2013

Sponsor: Java Capital
Date: 27/03/2013 08:17:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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