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Abridged audited results for the year ended 30 June 2013
KAP Industrial Holdings Limited
Registration number: 1978/000181/06
Share code: KAP
ISIN: ZAE000059564
("KAP" or "the company" or "the group")
KAP Industrial Holdings Limited
Abridged Audited results for the year ended 30 June 2013
- HEADLINE EARNINGS PER SHARE
up 20% from 24.2 cents to 29.1 cents
- R2 254m CASH GENERATED FROM OPERATIONS
- DIVIDEND
up 33% from 6 cps to 8 cps
- GEARING RATIO IMPROVED
from 64% to 50%
- NET ASSET PER SHARE
up from 238 cents to 263 cents
LOGISTICS
Unitrans comprises a specialist supply chain
business which designs, implements and manages
supply chains and logistics for a diverse customer
base on a long-term contractual basis in selected
African countries. In addition, this segment includes
the Unitrans Passenger Division which provides
transport to the public, tourist and personnel
market segments throughout Southern Africa.
INTEGRATED TIMBER
PG Bison's operations comprise forestry plantations
and various manufacturing and upgrading plants
which manufacture and/or distribute sawn timber,
poles, wood-based panel products, decorative
laminates, resin and solid surfacing materials to a
diverse customer base in Southern Africa.
MANUFACTURING
The Manufacturing Division produces a number
of key industrial products such as polyethylene
terephthalate (PET) resin, vehicle components,
footwear, and furniture and bedding-related
products.
Operational review
LOGISTICS
Unitrans Supply Chain Solutions
The current subdued economic conditions, especially in South Africa, affected the
Unitrans operations to varying degrees.
The Agriculture and Mining Division, and its African operations have generally
performed well, while operations in South Africa have been under pressure.
The Fuel and Chemical Division had satisfactory results due mainly to new contracts
secured despite the effect of the strike in the first half of the financial year.
The Freight and Logistics Division was susceptible to volume pressure on customers
affected by current economic conditions.
Unitrans Passenger
The Passenger Division continues to perform well both from a cash flow and a
profitability perspective.
The commuter operations delivered good results, backed-up by medium to long-term
contracts, and continues to gain new business in line with its organic growth strategy.
The tourist operations continue to deliver acceptable returns as a result of increased
tourism numbers.
Intercity operations continue to see pleasing growth, with increased volumes,
higher average fares and growth in market share. The Gautrain feeder and
distribution services continue to perform well, with volumes increasing, and service
levels being met.
Integrated Timber
The restructuring has delivered excellent results, with increased profits and margins.
PG Bison has been successfully repositioned as a focused timber products manufacturer
and primary upgrader in South Africa. This focused strategy has enjoyed widespread
support across the customer base, and has enabled the division to deliver excellent cash
generation and improved margins.
The new medium-density fibre board plant is on track to be commissioned in October 2013.
Manufacturing
The PET resin manufacturing operations (Hosaf) increased volumes and delivered growth
in profits and cash flow.
The Automotive components operations (Feltex) performed well due to buoyant local
vehicle sales.
The smaller divisions remained under pressure due to adverse market conditions in the
retail sector.
Financial review
Impact of the acquisition of the Steinhoff Industrial assets
In terms of the reverse acquisition in 2012, the comparative figures reflect the results of the
Steinhoff Industrial assets for 12 months, and the results of the traditional KAP assets for 3
months. The only segment which is affected by this is the Manufacturing division.
Revenue
Revenue from continuing operations increased by 37% due to growth experienced across
all major divisions.
Operating profit before capital items
The operating profit of R1 330 million increased from R1 098 million in the comparative period
due to a good operational performance. The Logistics Division's operating profit decreased from
R701 million to R686 million due mainly to the impact of the strike. The repositioned Integrated
Timber Division improved its operating profit, from R273 million to R347 million by increased
focus on its manufacturing strategy. The Manufacturing Division's operating profit increased on
a like for like basis due to a good perfomance from both the PET segment (Hosaf) and the
automative segment (Feltex).
Cash flow
As anticipated, the group generated healthy cash flow in the second half of the financial
year.
Cash generated from operations for the full year of R2 254 million represents 169% of
operating profit before capital items (2012: 174%) and includes a reduction in the working
capital investment of R225 million (2012: R279 million).
Debt structure and finance costs
The group's net debt of R3 079 million (2012: R3 540 million) equates to a gearing ratio
of 50% (2012: 64%). The majority of the debt is represented by a shareholder loan with
predetermined maturity dates which supports the capitalisation of the group in the
medium to long-term. Management remains confident in the serviceability of the debt
as indicated by the improving EBITDA/interest cover ratio at 5.7 times (2012: 4.5 times).
Headline earnings per share (HEPS) and earnings per share (EPS)
HEPS increased by 20% to 29.1 cents (EPS increased by only 2% due to the inclusion of
the once-off gain from bargain purchase in 2012).
Net asset value
The net asset value per share increased by 11% from 238 cents to 263 cents.
Corporate action
In line with its strategy to focus on the core strategic industrial assets within emerging
markets, KAP announced on 21 June 2013 the sale of its food assets, being Bull Brand
Foods and Brenner Mills.
On 23 July 2013, the Competition Commission approved the Bull Brand Foods transaction
without conditions, so the effective date of the transaction was 1 August 2013. Approval
is still awaited for the Brenner Mills transaction.
Outlook
The current slow economic conditions are expected to continue and
have led to a focus on the containment of costs and heightened efficiencies to maintain
margins in a more competitive low volume environment.
Both the Supply chain and Passenger divisions will continue to focus on expansion into Africa.
The Integrated Timber Division continues to focus on revenue growth and cost efficiencies.
The commissioning of the new medium-density fibre board plant in October
2013 will lead to further cost reductions, which should benefit margins.
Demand for PET resin remains high and volumes at Hosaf are expected to grow.
Appreciation
The consolidation of the business over the last 12 months has been well received by all
of our stakeholders, and bodes well for the future of KAP as an emerging market industrial group.
We would like to extend our sincere gratitude to all of our employees, shareholders,
customers and suppliers for the support which they have given us.
Final dividend announcement
In light of the good cash flows for the year, the Board has increased its gross dividend declared
by 33% to 8 cents per share (2012: 6 cents per share) from income reserves, for the year ended
30 June 2013.
Signed on behalf of the Board.
J de V du Toit K J Grové
Non-executive Chairman Chief Executive Officer
19 August 2013
Financial statements
SUMMARISED CONSOLIDATED Year ended Year ended
30 June 30 June
INCOME STATEMENT 2013 2012(*)
Audited Audited %
Notes Rm Rm change
Revenue(1) 14 360 10 481 37
Operating profit before depreciation, amortisation and
capital items 2 083 1 727 21
Depreciation and amortisation (753) (629)
Operating profit before capital items 1 330 1 098 21
Capital items 1 20 81
Earnings before interest, dividend income, associate
earnings and taxation 1 350 1 179 15
Net finance costs (368) (381)
Finance costs (468) (498)
Income from investments 100 117
Share of profit of associate companies 9 11
Profit before taxation 991 809 22
Taxation (274) (218)
Profit for the year from continuing operations 717 591 21
(Loss)/profit for the year from discontinued operations (6) 5
Profit for the year 711 596 19
Attributable to:
Owners of the parent 677 574 18
Non-controlling interests 34 22
Profit for the year 711 596 19
From continuing and discontinued operations:
Headline earnings per ordinary share (cents) 29.1 24.2 20
Fully diluted headline earnings per ordinary share (cents) 29.0 24.1 20
Basic earnings per ordinary share (cents) 28.9 28.4 2
Fully diluted earnings per ordinary share (cents) 28.8 28.2 2
From continuing operations:
Headline earnings per ordinary share (cents) 28.5 24.0 19
Fully diluted headline earnings per ordinary share (cents) 28.4 23.9 19
Basic earnings per ordinary share (cents) 29.2 28.2 4
Fully diluted earnings per ordinary share (cents) 29.1 28.0 4
Number of ordinary shares in issue (m) 2 346 2 337
Weighted average number of ordinary shares in issue (m) 2 342 2 019 16
Earnings attributable to ordinary shareholders (Rm) 677 574 18
Headline earnings attributable to ordinary shareholders
(Rm) 2 682 490 39
(*) Prior year figures have been represented to reflect discontinued operations.
(1) A reallocation of R291 million was done between revenue and cost of sales in the Logistics segment to bring prior
year disclosure in line with current year disclosure.
SUMMARISED CONSOLIDATED STATEMENT OF Year ended Year ended
COMPREHENSIVE INCOME 30 June 30 June
2013 2012
Audited Audited
Rm Rm
Profit for the year 711 596
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss:
Actuarial gain on defined benefit plans 2
Deferred taxation (1)
1
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign subsidiaries 62 (11)
62 (11)
Total other comprehensive income/(loss) for the year, net of taxation 62 (10)
Total comprehensive income for the year, net of taxation 773 586
Total comprehensive income attributable to:
Owners of the parent 739 564
Noncontrolling interests 34 22
Total comprehensive income for the year 773 586
ADDITIONAL INFORMATION Year ended Year ended
30 June 30 June
2013 2012(*)
Audited Audited
Rm Rm
Note 1: Capital items
From continuing operations:
Profit on disposal of property, plant and equipment 49 6
Foreign currency translation reserve released on disposal of subsidiary 6
Gain from bargain purchase 93
Loss on disposal of investments and associate companies and impairments (29) (24)
20 81
From discontinued operations:
Profit on disposal of property, plant and equipment 1
Loss on disposal of investments and associate companies and impairments (25)
(4) 81
Note 2: Headline earnings attributable to ordinary shareholders
Earnings attributable to owners of the parent 677 574
Adjusted for:
Capital items (note 1) 4 (81)
Taxation effects of capital items 1 (3)
682 490
(*) Prior year figures have been represented to reflect discontinued operations.
SUMMARISED CONSOLIDATED Year ended Year ended
STATEMENT OF CASH FLOWS 30 June 30 June
2013 2012
Audited Audited
Rm Rm
Cash generated before working capital changes 2 029 1 627
Changes in working capital 225 279
Increase in inventories (136) (11)
(Increase)/decrease in receivables (73) 176
Increase in payables 434 114
Cash generated from operations 2 254 1 906
Net interest paid (372) (375)
Dividends paid (158) (4)
Dividends received 1
Taxation paid (133) (68)
Net cash inflow from operating activities 1 591 1 460
Additions to property, plant and equipment - expansion (596) (419)
Additions to property, plant and equipment - replacement (651) (531)
Government grants received 22
Proceeds on disposal of property, plant and equipment 175 211
Additions to intangible assets (16) (26)
Acquisition of subsidiary companies, net of cash and cash equivalents on
hand at acquisition (37) 43
Disposal of subsidiaries and businesses, net of cash disposed (1)
(Increase)/decrease in investments and loans (31) 125
Increase in short-term loans receivable (5)
Other investing activities (27) (20)
Net cash outflow from investing activities (1 167) (617)
Decrease in bank overdrafts and short-term facilities (602) (950)
Increase in long-term interest-bearing loans and borrowings 455 611
(Decrease)/increase in short-term interest-bearing loans and borrowings (332) 86
Shares issued 1
Net cash outflow from financing activities (478) (253)
Net (decrease)/increase in cash and cash equivalents (54) 590
Effects of exchange rate changes on cash and cash equivalents 40 (14)
Cash and cash equivalents at the beginning of the year 1 346 770
Cash and cash equivalents at the end of the year 1 332 1 346
SUMMARISED CONSOLIDATED 30 June 30 June
STATEMENT OF FINANCIAL POSITION 2013 2012
Audited Audited
Rm Rm
ASSETS
Non-current assets
Intangible assets and goodwill 1 311 1 311
Property, plant and equipment, investment properties 6 413 6 129
Consumable biological assets 1 761 1 656
Investments and loans 134 83
Deferred taxation assets 68 76
9 687 9 255
Current assets
Inventories 1 389 1 367
Accounts receivable, short-term loans and other current assets 2 379 2 457
Cash and cash equivalents 1 332 1 346
Assets classified as held-for-sale 351 15
5 451 5 185
Total assets 15 138 14 440
EQUITY AND LIABILITIES
Capital and reserves
Ordinary stated share capital 6 970 6 969
Reserves (804) (1 405)
6 166 5 564
Non-controlling interests 135 119
Total equity 6 301 5 683
Non-current liabilities
Interest-bearing long-term liabilities 3 919 3 800
Deferred taxation liabilities 853 723
Other long-term liabilities and provisions 77 101
4 849 4 624
Current liabilities
Accounts payable, provisions and other current liabilities 3 429 3 047
Interest-bearing short-term liabilities 351 343
Bank overdrafts and short-term facilities 141 743
Liabilities classified as held-for-sale 67
3 988 4 133
Total equity and liabilities 15 138 14 440
Net asset value per ordinary share (cents) 263 238
Net interest-bearing debt to equity (%) 50% 64%
SUMMARISED CONSOLIDATED STATEMENT OF Year ended Year ended
CHANGES IN EQUITY 30 June 30 June
2013 2012
Audited Audited
Rm Rm
Balance at beginning of the year 5 683 3 999
Changes in stated share capital
Net shares issued 1
Reverse acquisition adjustment: pre-reverse acquisition share capital
of legal parent 858
Changes in reserves
Total comprehensive income for the year attributable to owners of the parent 739 564
Dividends and capital distributions paid (156) (335)
Share-based payments (25) 6
Reverse acquisition adjustment: movement in share capital of acquirer 24
Reverse acquisition adjustment: elimination of pre-acquisition reserves of
legal parent 500
Other reserve movements 43 (1)
Changes in non-controlling interests
Total comprehensive income for the year attributable to non-controlling interests 34 22
Dividends and capital distributions paid (18)
Acquired on acquisition of subsidiary 46
Balance at the end of the year 6 301 5 683
Comprising:
Ordinary stated share capital 6 970 6 969
Reverse acquisition reserve (3 952) (3 952)
Distributable reserves 3 105 2 531
Share-based payment reserve 24 49
Other reserves 19 (33)
Non-controlling interests 135 119
6 301 5 683
SEGMENTAL ANALYSIS Year ended Year ended
30 June 30 June
2013 2012
Audited Audited %
Rm Rm change
Revenue from continuing operations
Logistics 7 042 6 531 8
Integrated Timber 2 392 2 286 5
Manufacturing 5 076 1 747 191
14 510 10 564 37
Intersegment revenue eliminations (150) (83)
14 360 10 481 37
Operating profit before capital items from continuing
operations
Logistics 686 701 (2)
Integrated Timber 347 273 27
Manufacturing 297 124 140
1 330 1 098 21
30 June 30 June
2013 2012
Audited Audited
Rm Rm
Total assets
Manufacturing 3 3 544 3 767
Logistics 1 5 139 4 722
Integrated Timber 2 4 912 4 449
13 595 12 938
Reconciliation of total assets per statement of financial position to total
assets per segmental analysis
Total assets per statement of financial position 15 138 14 440
Less: Cash and cash equivalents (1 332) (1 346)
Less: Investments and loans in associate companies (109) (74)
Less: Investments and loans in joint-venture companies 1
Less: Interest-bearing loans receivable (30) (9)
Less: Related-party receivables (73) (73)
Total assets per segmental analysis 13 595 12 938
GEOGRAPHICAL INFORMATION Year ended Year ended
30 June 30 June
2013 2012
Audited Audited
Rm Rm
Revenue(1)
Southern Africa 14 360 10 481
Non-current assets
Southern Africa 9 687 9 255
(1) A reallocation of R291 million was done between revenue and cost of sales in the Logistics segment to bring prior
year disclosure in line with current year disclosure.
NOTES TO THE FINANCIAL STATEMENTS
1. Statement of compliance
The summarised consolidated financial information has been prepared and presented in
accordance with the framework concepts and the measurement and recognition requirements
of International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued
by the Financial Reporting Standards Council, the listing requirements of the JSE Limited, the
information as required by IAS 34: Interim Financial Reporting and the requirements of the South
African Companies Act 71 of 2008. The report has been prepared using accounting policies that
comply with IFRS which are consistent with those applied in the financial statements for the year
ended 30 June 2013.
2. Basis of preparation
The summarised financial statements are prepared in millions of South African Rands (Rm) on the
historical cost basis, except for certain assets and liabilities which are carried at amortised cost,
and derivative financial instruments and biological assets which are stated at their fair values.
The preparation of the group's summarised consolidated financial results for the 12 months ended
30 June 2013 was supervised by John Haveman, the group's Chief Financial Officer.
The acquisition of the Steinhoff Industrial assets effective 2 April 2012, classified as a reverse
acquisition under IFRS 3 Business Combinations and impacts the comparability of the June 2013
results versus those of the prior year. The results for the combined group are included for the full
year to June 2013. The comparative figures, however, reflect the results of the Steinhoff Industrial
assets for 12 months, and the results of the traditional KAP assets for 3 months. The only segment
which is affected by this is the Manufacturing segment.
3. Financial statements
The annual financial statements for the year have been audited by Deloitte & Touche, and
their accompanying unmodified audit report as well as their unmodified audit report on this
set of summarised financial information is available for inspection at the company's registered
office. Information included under the headings "Outlook" and "Operational review" has not
been audited or reviewed. Shareholders are therefore advised that in order to obtain a full
understanding of the nature of the auditors engagement they should obtain a copy of their report
with the accompanying financial information from the Company's registered office. Full details
of the group's business combinations for the year, additions and disposals of property, plant and
equipment as well as commitments and contingent liabilities will be included in the group's
Integrated Report to be published.
The results were approved by the Board of directors on 19 August 2013.
4. Changes in accounting policies
The accounting policies of the group have been applied consistently to the periods presented in
the consolidated financial statements.
5. Post-balance sheet events
Other than the approval of the Bull Brand Foods transaction by the Competition Commission, no
significant events have occurred in the period between the end of the period under review and the
date of this report.
6. Dividend timetable
The timetable in respect of the dividend is as follows:
DAY EVENT
Friday, 27 September 2013 Last day to trade
Monday, 30 September 2013 Shares trade ex dividend
Friday, 4 October 2013 Date to be recorded in the register to receive the
dividend
Monday, 7 October 2013 Payment date
Share certificates may not be demateralised or remateralised between Monday, 30 September 2013
and Friday, 4 October 2013
In terms of the taxation on dividends and the amendments to Section 11.17 of the JSE Listings
Requirements, the following additional information is disclosed:
(1) Local dividend tax rate is 15%;
(2) No STC credits were utilised in determining the net dividend;
(3) The withholding tax, if applicable at the rate of 15%, will result in a net cash dividend per
share of 6.8 cents;
(4) The issued ordinary share capital of KAP Industrial Holdings Ltd is 2 346 187 888 shares at
19 August 2013; and
(5) KAP Industrial Holdings Limited's tax reference number is 9999/509/71/5.
www.kap.co.za
KAP Industrial Holdings Limited
("KAP" or "the company" or "the group")
Non-executive directors: J de V du Toit (Chairman), MJ Jooste, AB la Grange,
JB Magwaza, IN Mkhari, SH Müller, SH Nomvete, PK Quarmby, DM van der Merwe,
CJH van Niekerk
Executive directors: KJ Grové (CEO), JP Haveman (CFO)
Registration number: 1978/000181/06
Share code: KAP
ISIN: ZAE000059564
Registered address: 28 6th Street, Wynberg, Sandton, 2090
Postal address: PO Box 18, Stellenbosch, 7599
Telephone: 021 808 0900 Facsimile: 021 808 0901
Email: info@kap.co.za
Transfer secretaries: Computershare Investor Services Proprietary Limited,
70 Marshall Street, Johannesburg, 2001
Company secretary: Steinhoff Africa Secretarial Services Proprietary Limited
Auditors: Deloitte & Touche
Sponsor: PSG Capital Proprietary Limited
Date: 19/08/2013 02:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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