Wrap Text
Audited Provisional Results for the year ended 30 June 2014
KAP Industrial Holdings Limited
Registration number: 1978/000181/06
Share code: KAP
ISIN: ZAE000171963
("KAP" or "the company" or "the group")
KAP Industrial Holdings Limited
Audited Provisional Results for the year ended 30 June 2014
Financial review
These are provisional audited results for the year ended 30 June 2014.
Revenue and operating profit before capital items
Group revenue from continuing operations increased by 9% to R14 748 million
(FY13: R13 513 million) due to growth across all segments.
During the year the Footwear and Food divisions were sold and are therefore reported as
discontinued operations, which affects the Manufacturing division.
The group operating profit from continuing operations of R1 472 million increased from
R1 309 million in the comparative period due to a margin increase to 10,0% from 9,7%
achieved in FY13.
The Logistics division's operating profit increased to R762 million from R686 million due to
10% growth in revenue, with margins widening slightly to 9,8% from 9,7%.
The Integrated Timber division improved its operating profit to R412 million from
R347 million due to a combination of an 8% growth in revenue and an increase of the
operating margin to 15,9% from 14,5%.
The Manufacturing division's operating profit increased to R298 million from R276 million.
Revenue grew by 9% while margins remained constant at 6,5%.
Capital items
Capital items of R14 million in the continuing operations relate mainly to the disposal of
assets. In the discontinued operations, the capital items relate mainly to the disposal of
the Footwear division.
Cash flow
Cash generated before working capital changes increased to R2 071 million from
R2 021 million, which equates to 142% of operating profit before capital items.
During the period, R278 million was received as proceeds on the disposal of the Food
divisions.
Debt structure, finance costs and maturity profile
The sustained focus on strengthening the group's cash flows and balance sheet has
resulted in the group's net interest-bearing debt reducing to R2 676 million from R3 090
million, which equates to a gearing ratio of 40% (FY13: 50%).
FY14 FY13
Rm Rm
Interest-bearing long-term liabilities 3 436 3 919
Interest-bearing short-term liabilities 68 350
Bank overdrafts and short-term facilities 520 141
Cash and cash equivalents (1 348) (1 320)
Net interest-bearing debt 2 676 3 090
Total equity (excluding minorities) 6 709 6 166
Net interest-bearing debt: equity 40% 50%
EBITDA 2 228 2 102
Net finance charges 330 371
EBITDA: interest cover (times) 6.8 5.7
Net debt: EBITDA 1.2 1.5
During the period, the group raised R1 000 million of listed domestic medium-term notes
with a three-year and five-year tenure, as well as further term debt with maturity between
two and seven years. The maturity profile of the group has therefore been extended
significantly, with the debt raised at competitive rates. The proceeds of the notes and debt
raised were utilised to replace the remaining balance of the Steinhoff loan (which has now
been repaid in full) and to diversify funding sources.
Working capital
As indicated during interim results, the second half of the financial year has seen a
release of working capital. Continuing operations' investment in net working capital was
R269 million (FY13: R339 million).
Taxation
The effective tax rate of 26,5% is slightly lower than the South African statutory rate, due
mainly to the effect of earnings in lower-tax rate jurisdictions in Africa.
Headline earnings per share (HEPS)
HEPS from continuing operations increased by 21% to 34.1 cents from 28.1 cents in the comparative period.
Net asset value (NAV)
The NAV per share increased by 9% to 286 cents from 263 cents.
Corporate action
In line with the group's strategy to focus on core strategic industrial assets, the group
announced the disposal of its footwear interests to Bolton Footwear during the period,
and consequently the footwear assets are accounted for as held-for-sale on the balance
sheet and discontinued operations in the income statement. The disposal will realise
approximately R290 million in cash to be paid within six months from the effective date,
following approval by the Competition authorities.
Outlook
The Supply Chain Solutions and the Passenger divisions remain committed to growth in
Africa in partnership with its existing strong customer base, as well as capitalising on
opportunities in the South African market. The Supply Chain Solutions division will see
further benefits from its restructuring, while Mozambique expansion in the Passenger
division is expected to support growth.
In the Integrated Timber division, the volume and margin benefits of the new MDF plant and
efficiency improvement measures are expected to continue.
The Manufacturing division has improved its focus following its disposals over the last
two years. Hosaf is expected to deliver another good performance. Following a vehicle
model change over of one of its customers, Feltex is expected to regain its vehicle build
volumes.
The group continues to apply its strategy of focusing on its core industrial assets in
emerging African markets.
Appreciation
We thank our employees, shareholders, customers and suppliers for their continued
support and loyalty.
Final dividend announcement
In light of the good cash flows for the year and anticipated future cash flows received from
the disposal of non-core assets, the Board has approved a gross dividend of
12 cents per share (FY13: 8 cents per share) from income reserves, for the year ended 30
June 2014.
On behalf of the Board
J de V du Toit KJ Grové
Independent non-executive Chairman Chief Executive Officer
18 August 2014
Headline earnings
per share from
continuing operations
up by 21%
from 28.1 cents
to 34.1 cents
Dividend per share
up by 50%
from 8 cents to 12 cents
R1.9 billion
Cash generated
from operations
R1 billion
Maiden bond
programme
launched
KAP is an industrial business focused on growth in emerging African markets.
LOGISTICS
A specialist logistics division
that designs, implements and
manages supply chain and
logistics services.
A passenger transport division
providing personnel, tourist and
commuter transport services.
INTEGRATED TIMBER
An integrated timber division
incorporating timber plantations,
sawmills, poles and panel related
production facilities.
MANUFACTURING
An industrial manufacturing
division that produces a number
of key industrial products such
as polyethylene terephthalate
(PET) resin, vehicle components,
and furniture and bedding-related
products.
Operational review
LOGISTICS
Unitrans Supply Chain Solutions (USCS)
Considerable progress has been made in realigning
resources and intensifying focus on sustainable
specialist opportunities in the market. Unitrans
Supply Chain Solutions completed its restructure
into two divisions during the year under review.
Revenue and profit growth was experienced in
both these divisions with the once-off restructuring
charges being more than offset by resulting
cost savings.
The Fuel, Agriculture and Mining division reported
good revenue growth across its customer base, in
line with the African growth strategy. The continued
investment in our resources and infrastructure in
Africa during the past years is now driving margin
growth and increasing volumes.
Despite tough economic and operating conditions,
the Freight and Logistics division improved revenue
and profits. The good growth experienced was
hampered by a poor performance in Fresh Freight's
warehousing and distribution operations.
Unitrans Passenger
The Passenger division experienced difficult
trading conditions due mainly to the increase in
the fuel price and the protracted strike on the
platinum mines. However, the division continues
to deliver good cash flows and excellent returns
on assets.
The tourism market is showing signs of a
slow recovery, with the weakness of the Rand
assisting volumes.
Intercity operations remained under pressure
due to a fragmented market, although cross-
border activity between Zimbabwe and South
Africa is increasing.
The Gautrain feeder and distribution services
delivered sustained growth in line with
expectations.
INTEGRATED TIMBER
Revenue growth was achieved
primarily through increased
volumes from the new Medium
Density Fibreboard (MDF) plant,
an increased ratio of value added
products and increased resin
volumes to non-panel markets.
Margin improvement was
achieved through the efficiency
and cost benefits of the new
MDF plant, a major restructuring
of internal logistics and an
increased ratio of value added
products. The 2012 restructure
continued to yield cost savings
during this financial year.
MANUFACTURING
During the year, the division
disposed of its footwear
operations subject to
competition authorities approval.
The PET resin manufacturing
operation (Hosaf) again delivered
good results, which offset the
lower vehicle build due to a
vehicle model change over in
the Automotive components
operation (Feltex). The Furniture
and Bedding division delivered
satisfactory performance,
supported by key brands.
Summarised consolidated financial statements
SUMMARISED CONSOLIDATED Year ended Year ended
INCOME STATEMENT 30 June 30 June
2014 2013
Audited Audited* %
Notes Rm Rm change
Revenue 14 748 13 513 9
Operating profit before depreciation, amortisation and
capital items 2 231 2 050 9
Depreciation and amortisation (759) (741)
Operating profit before capital items 1 472 1 309 12
Capital items 1 (14) 20
Earnings before interest, dividend income, associate
earnings and taxation 1 458 1 329 10
Net finance charges (325) (364)
Share of (loss)/profit of associate and joint-venture companies (5) 14
Profit before taxation 1 128 979 15
Taxation (302) (272)
Profit for the year from continuing operations 826 707 17
(Loss)/profit for the year from discontinued operations 2 (69) 4
Profit for the year 757 711 6
Attributable to:
Owners of the parent 724 677 7
Non-controlling interests 33 34
Profit for the year 757 711 6
From continuing and discontinued operations:
Headline earnings per ordinary share (cents) 33,8 29,1 16
Fully diluted headline earnings per ordinary share (cents) 33,4 29,0 15
Basic earnings per ordinary share (cents) 30,9 28,9 7
Fully diluted earnings per ordinary share (cents) 30,5 28,8 6
From continuing operations:
Headline earnings per ordinary share (cents) 34,1 28,1 21
Fully diluted headline earnings per ordinary share (cents) 33,7 28,0 20
Basic earnings per ordinary share (cents) 33,8 28,7 18
Fully diluted earnings per ordinary share (cents) 33,4 28,6 17
Number of ordinary shares in issue (m) 2 346 2 346 –
Weighted average number of ordinary shares in issue (m) 2 346 2 342 –
Earnings attributable to ordinary shareholders (Rm) 724 677 7
Headline earnings attributable to ordinary shareholders (Rm) 3 792 682 16
ADDITIONAL INFORMATION Year ended Year ended
30 June 30 June
2014 2013
Audited Audited*
Rm Rm
Note 1: Capital items
From continuing operations:
(Loss)/profit on disposal of property, plant and equipment and investment property (8) 49
Loss on disposal of investments and impairments (6) (29)
(14) 20
From discontinued operations:
Profit on disposal of property, plant and equipment and investment property – 1
Loss on disposal of investments and impairments (83) (25)
(83) (24)
(97) (4)
Note 2: (Loss)/profit for the year from discontinued operations
Revenue 1 045 1 833
Operating (loss)/profit before depreciation, amortisation and capital items (3) 52
Depreciation and amortisation (7) (16)
Operating (loss)/profit before capital items (10) 36
Capital items (83) (24)
Earnings before interest, dividend income, associate earnings and taxation (93) 12
Net finance charges (5) (7)
(Loss)/profit before taxation (98) 5
Taxation 29 (1)
(Loss)/profit for the year from discontinued operations (69) 4
Note 3: Headline earnings attributable to ordinary shareholders
Earnings attributable to owners of the parent 724 677
Adjusted for:
Capital items (note 1) 97 4
Taxation effects of capital items (30) 1
Capital items of associate and joint-venture companies (net of taxation) 1 –
792 682
FAIR VALUES OF FINANCIAL Fair value Fair value Fair
as at as at value
INSTRUMENTS 30 June 2014 30 June 2013 hierarchy
Rm Rm
Derivative financial assets 1 52 Level 2
Derivative financial liabilities (6) – Level 2
Level 2 financial instruments are valued using techniques where all of the inputs that have a significant effect on the
valuation are directly or indirectly based on observable market data. These inputs include published interest rate yield
curves and foreign exchange rates.
SUMMARISED CONSOLIDATED STATEMENT OF Year ended Year ended
COMPREHENSIVE INCOME 30 June 30 June
2014 2013
Audited Audited*
Rm Rm
Profit for the year 757 711
Other comprehensive income/(loss)
Items that will not be reclassified subsequently to profit or loss:
Actuarial loss 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 16 62
16 62
Other comprehensive income for the year 15 62
Total comprehensive income for the year 772 773
Total comprehensive income attributable to:
Owners of the parent 739 739
Non-controlling interests 33 34
Total comprehensive income for the year 772 773
SUMMARISED CONSOLIDATED STATEMENT OF Year ended Year ended
CHANGES IN EQUITY 30 June 30 June
2014 2013
Audited Audited*
Rm Rm
Balance at beginning of the year 6 301 5 683
Changes in ordinary stated share capital
Net shares issued – 1
Changes in reserves
Total comprehensive income for the year attributable to owners of the parent 739 739
Dividends and capital distributions paid (232) (156)
Share-based payments 33 (25)
Other reserve movements 3 43
Changes in non-controlling interests
Total comprehensive income for the year attributable to non-controlling interests 33 34
Dividends and capital distributions paid (12) (18)
Shares bought from non-controlling interests (6) –
Balance at end of the year 6 859 6 301
Comprising:
Ordinary stated share capital 6 970 6 970
Reverse acquisition reserve (3 952) (3 952)
Distributable reserves 3 598 3 105
Share-based payment reserve 57 24
Other reserves 36 19
Non-controlling interests 150 135
6 859 6 301
SUMMARISED CONSOLIDATED STATEMENT OF 30 June 30 June
FINANCIAL POSITION 2014 2013
Audited Audited*
Rm Rm
ASSETS
Non-current assets
Goodwill and intangible assets 1 290 1 311
Property, plant and equipment, investment properties 6 633 6 394
Consumable biological assets 1 875 1 761
Investments in associate and joint-venture companies 145 138
Investments and loans 26 25
Deferred taxation assets 70 68
10 039 9 697
Current assets
Inventories 1 197 1 382
Accounts receivable, short-term loans and other current assets 2 545 2 370
Cash and cash equivalents 1 348 1 320
Assets classified as held-for-sale 428 351
5 518 5 423
Total assets 15 557 15 120
EQUITY AND LIABILITIES
Capital and reserves
Ordinary stated share capital 6 970 6 970
Reserves (261) (804)
6 709 6 166
Non-controlling interests 150 135
Total equity 6 859 6 301
Non-current liabilities
Interest-bearing long-term liabilities 3 436 3 919
Deferred taxation liabilities 994 852
Other long-term liabilities and provisions 89 77
4 519 4 848
Current liabilities
Accounts payable, provisions and other current liabilities 3 473 3 413
Interest-bearing short-term liabilities 68 350
Bank overdrafts and short-term facilities 520 141
Liabilities classified as held-for-sale 118 67
4 179 3 971
Total equity and liabilities 15 557 15 120
Net asset value per ordinary share (cents) 286 263
Net interest-bearing debt to equity (%) 40% 50%
SUMMARISED CONSOLIDATED STATEMENT OF Year ended Year ended
CASH FLOWS 30 June 30 June
2014 2013
Audited Audited*
Rm Rm
Operating profit before capital items 1 472 1 309
Depreciation and amortisation 759 741
Operating profit before depreciation, amortisation and capital items from
discontinued operations (3) 52
Net fair value adjustments of consumable biological assets and decrease due to
harvesting (114) (105)
Other non-cash adjustments (43) 24
Cash generated before working capital changes 2 071 2 021
Increase in inventories (39) (137)
Increase in receivables (248) (62)
Increase in payables 104 427
Changes in working capital (183) 228
Cash generated from operations 1 888 2 249
Dividends received 5 –
Dividends paid (200) (158)
Net finance costs (330) (372)
Taxation paid (125) (132)
Net cash inflow from operating activities 1 238 1 587
Additions to property, plant and equipment – expansion (413) (599)
Additions to property, plant and equipment – replacement, net of proceeds and (653) (448)
government grants received
Proceeds on disposal of investments 278 –
Other investing activities (50) (114)
Net cash outflow from investing activities (838) (1 161)
Net cash outflow from financing activities (385) (476)
Net increase/(decrease) in cash and cash equivalents 15 (50)
Effects of exchange rate changes on cash and cash equivalents 13 40
Cash and cash equivalents at beginning of year 1 320 1 330
Cash and cash equivalents at end of year 1 348 1 320
SEGMENTAL ANALYSIS Year ended Year ended
30 June 30 June
2014 2013
Audited Audited* %
Rm Rm change
Revenue from continuing operations
Logistics 7 737 7 042 10
Integrated Timber 2 585 2 392 8
Manufacturing 4 629 4 229 9
14 951 13 663 9
Intersegment revenue eliminations (203) (150)
14 748 13 513 9
Operating profit before capital items from
continuing operations
Logistics 762 686 11
Integrated Timber 412 347 19
Manufacturing 298 276 8
1 472 1 309 12
30 June 30 June
2014 2013
Audited Audited*
Rm % Rm %
Total assets
Logistics 5 520 39 5 139 38
Integrated Timber 5 175 37 4 912 36
Manufacturing 3 326 24 3 504 26
14 021 100 13 555 100
RECONCILIATION OF TOTAL ASSETS PER
SUMMARISED CONSOLIDATED STATEMENT OF 30 June 30 June
FINANCIAL POSITION TO TOTAL ASSETS PER 2014 2013
SEGMENTAL ANALYSIS Audited Audited*
Rm Rm
Total assets per statement of financial position 15 557 15 120
Less: Cash and cash equivalents (1 348) (1 320)
Less: Investments in associate and joint-venture companies (145) (138)
Less: Interest-bearing long-term loans receivable (26) (30)
Less: Interest-bearing short-term loans receivable (17) –
Less: Related-party receivables – (77)
Total assets per segmental analysis 14 021 13 555
GEOGRAPHICAL Year ended Year ended
30 June 30 June
INFORMATION 2014 2013
Audited Audited*
Rm % Rm %
Revenue
South Africa 13 139 89 12 145 90
Rest of Africa 1 609 11 1 368 10
14 748 100 13 513 100
30 June 30 June
2014 2013
Audited Audited*
Rm % Rm %
Non-current assets
South Africa 9 184 91 8 951 92
Rest of Africa 855 9 746 8
10 039 100 9 697 100
* prior year disclosure has been restated to account for the adoption of new and revised accounting standards as well
as to reflect discontinued operations.
NOTES TO THE FINANCIAL STATEMENTS
1. Statement of compliance
The summarised consolidated financial statements have 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
Listings 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
as amended. 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 except for the changes mentioned in note 5 below.
2. Basis of preparation
The summarised consolidated 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 2014 was supervised by John Haveman, the group's Chief Financial Officer.
3. Changes to comparative results
Prior years' disclosure has been restated to account for the adoption of new and revised
accounting standards, in particular the required equity accounting of joint ventures. In
addition, the June 2013 income statement was re-presented to reflect the discontinued
Footwear division.
4. Financial statements
The consolidated 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" and any reference to future financial information included in the summarised
financial information has not been audited or reviewed. Shareholders are therefore advised
that in order to obtain a full understanding of the nature of the auditor's 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 18 August 2014.
5. Changes in accounting policies
The accounting policies of the group have been applied consistently to the periods
presented in the consolidated financial statements, except for the adoption of the following
standards during the year:
IFRS 10 – Consolidated Financial Statements;
IFRS 11 – Joint Arrangements;
IFRS 12 – Disclosure of Interests in Other Entities;
IFRS 13 – Fair Value Measurement;
IAS 19 (revised) – Employee Benefits;
IAS 27 – Consolidated and Separate Financial Statements; and
IAS 28 – Investment in Associates and Joint Ventures.
Only IFRS 11 and IAS 28 had an effect on the group's results and required the restatement
of prior periods, but the restatement is immaterial and therefore no separate disclosure of
the restatement is required.
6. Post-balance sheet events
No significant events have occurred in the period between the end of the period under
review and the date of this report.
7. Dividend timetable
The timetable in respect of the dividend is as follows:
DAY EVENT
Friday, 26 September 2014 Last day to trade
Monday, 29 September 2014 Shares trade ex dividend
Friday, 3 October 2014 Date to be recorded in the register to receive the dividend
Monday, 6 October 2014 Payment date
Share certificates may not be demateralised or remateralised between Monday,
29 September 2014 and Friday, 3 October 2014.
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 10,2 cents;
(4) The issued ordinary share capital of KAP Industrial Holdings Limited is 2 346 187 888
shares at 18 August 2014; and
(5) KAP Industrial Holdings Limited's tax reference number is 9999/509/71/5.
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 Grove (CEO), JP Haveman (CFO)
Registered address: 28 6th Street, Wynberg, Sandton, 2090
Postal address: PO Box 18, Stellenbosch, 7599
Telephone: 021 808 0900 Facsimile: 021 808 0901
E-mail: 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
*Independent non-executive directors
www.kap.co.za
Date: 18/08/2014 02:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
