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Summarised audited consolidated results for the year ended 31 December 2014
KAYDAV GROUP LIMITED
Incorporated in the Republic of South Africa
Registration number: 2006/038698/06
Share code: KDV * ISIN: ZAE000108940
("KayDav" or "the Group" or "the company")
SUMMARISED AUDITED CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2014
- Earnings per share 16.1 cents (up 18%)
- Headline earnings per share 16.3 cents (up 19%)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
year ended year ended
31 December 31 December
2014 2013
R R
Revenue 761 739 077 666 218 405
Cost of sales (544 059 207) (468 870 730)
Gross profit 217 679 870 197 347 675
Other income 147 248 507 320
Operating expenses (174 400 706) (161 313 907)
Operating profit 43 426 412 36 541 088
Investment income 102 689 166 891
Finance costs (4 594 484) (3 557 933)
Profit before taxation 38 934 617 33 150 046
Taxation (11 118 641) (9 439 202)
Profit for the year 27 815 976 23 710 844
Other comprehensive income - -
Total comprehensive income attributable to
equity holders of the parent 27 815 976 23 710 844
Reconciliation between earnings and headline earnings
Earnings 27 815 976 23 710 844
Loss on sale of plant and equipment 355 990 27 058
Taxation on loss on sale of plant and equipment (99 677) (7 576)
Impairment of plant and equipment 158 290 -
Taxation on impairment of plant and equipment (44 322) -
Headline earnings 28 186 257 23 730 326
Weighted average number of shares in issue 172 751 585 172 751 585
Basic and diluted earnings per share (cents)* 16.1 13.7
Headline earnings per share (cents)* 16.3 13.7
* The company has no dilutionary instruments in issue.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
at at
31 December 31 December
2014 2013
R R
ASSETS
Non-current assets 91 259 337 73 245 308
Property, plant and equipment 64 492 411 57 005 752
Goodwill 26 361 344 14 302 804
Deferred taxation 405 582 1 936 752
Current assets 246 726 035 184 990 190
Inventories 113 181 728 87 957 081
Trade and other receivables 89 893 263 76 305 832
Cash and cash equivalents 42 922 052 20 710 093
Taxation 728 992 17 184
TOTAL ASSETS 337 985 372 258 235 498
EQUITY AND LIABILITIES
Capital and reserves 155 611 036 140 751 333
Share capital 173 173
Share premium 144 754 416 157 710 689
Accumulated profit/(loss) 10 856 447 (16 959 529)
Non-current liabilities 38 892 969 26 118 763
Instalment sale liabilities 15 327 764 12 288 476
Interest-bearing liabilities 22 896 413 13 830 287
Deferred taxation 668 792 -
Current liabilities 143 481 367 91 365 402
Trade and other payables 93 241 500 40 701 296
Short-term portion of instalment sale liabilities 8 407 221 5 708 338
Short-term portion of interest-bearing liabilities 6 260 622 6 124 965
Bank overdraft 31 514 358 34 834 452
Taxation 972 386 890 319
Provisions 3 085 280 3 106 032
TOTAL EQUITY AND LIABILITIES 337 985 372 258 235 498
Shares in issue at year-end 172 751 585 172 751 585
Net asset value per share (cents) 90.1 81.5
Net tangible asset value per share (cents) 74.8 73.2
SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Audited Audited
year ended year ended
31 December 31 December
2014 2013
R R
Balance at the beginning of the year 140 751 333 129 133 100
Total comprehensive income for the year 27 815 976 23 710 844
Distribution to shareholders (12 956 273) (12 092 611)
Total equity 155 611 036 140 751 333
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Audited
year ended year ended
31 December 31 December
2014 2013
R R
Net cash flows from operating activities 47 084 040 2 410 780
Net cash flows from investing activities (8 250 925) (1 129 274)
Net cash flows from financing activities (13 301 062) (23 602 962)
Net increase/(decrease) in cash and cash equivalents 25 532 053 (22 321 456)
Net cash and cash equivalents at the beginning of the year (14 124 359) 8 197 097
Net cash and cash equivalents at the end of the year 11 407 694 (14 124 359)
SEGMENTAL ANALYSIS
Audited Audited
year ended year ended
31 December 31 December
2014 2013
R R
Segmental revenue
Board distribution 734 727 296 648 861 028
Manufacturing 32 174 860 41 713 661
Packaging 15 232 781 -
Internal revenue (20 395 860) (24 356 284)
Total revenue 761 739 077 666 218 405
Internal revenue relates to sales from the manufacturing
segment to the board distribution segment.
Segmental results
Board distribution 48 516 466 37 932 997
Manufacturing (7 068 889) (1 391 909)
Packaging 1 978 835 -
Operating profit before interest 43 426 412 36 541 088
Operating assets
Board distribution and adaptation 300 114 312 243 977 814
Packaging 12 357 651 -
Other 1 431 886 695 262
Internal balances (3 414 394) (2 694 318)
Total operating assets 310 489 455 241 978 758
Operating liabilities
Board distribution and adaptation 132 667 666 70 895 015
Packaging 10 867 326 -
Other 40 612 559 48 393 150
Internal balances (3 414 394) (2 694 318)
Total operating liabilities 180 733 157 116 593 847
The manufacturing operation was restructured and fully integrated into the Group's
Ottery board distribution business during the final quarter of 2014. As a result assets
and liabilities of the manufacturing segment are no longer separately distinguishable
from that of the board distribution business and therefore not separately reported.
The operating assets and liabilities for the combined operation are reported under
the segment "board distribution and adaptation". Segmental assets consist of property,
plant and equipment, inventory, trade and other receivables and operating cash and
exclude taxation assets, investments and intangible assets. Segmental liabilities
consist of operating liabilities and exclude taxation liabilities.
ACQUISITION OF NEW BUSINESS
The Group acquired the business known as Packit Packaging Solutions ("Packit"),
a business involved in the distribution of packaging materials and machinery, on
1 August 2014 through its wholly-owned subsidiary Sign and Seal Trading 154 (Pty) Ltd.
The purchase price is contingent on the net profit performance of the business for the
period 1 March 2014 to 28 February 2015.
At 1 August 2014 the estimated purchase price was R15 189 314. The purchase price is
capped at R15 214 060 and had a floor of R7 995 946. The contingent consideration
recognised reflects the Group's estimate of the contingent consideration which will
be payable. The acquisition is not categorisable for JSE purposes.
The assets and liabilities as at 1 August 2014 arising from the acquisition were:
2014
R
Property, plant and equipment 459 713
Inventory 2 951 241
Trade and other receivables 55 380
Provisions (335 560)
Fair value of net assets 3 130 774
Goodwill 12 058 540
Acquisition consideration 15 189 314
Goodwill represents expected synergies and the value of
the assembled workforce and business relationships of
the business.
The acquisition consideration must be settled in cash.
Acquisition consideration consists of the following:
Initial consideration (paid during the year) 7 995 943
Contingent consideration recognised as at the acquisition
date (payable by 7 June 2015) 7 193 371
15 189 314
No measurement period or other adjustment to contingent
consideration was required at year-end date.
The acquired business contributed revenues of R15 232 781
and net profit before tax of R1 972 380 to the Group for the
five months since acquisition.
PRO FORMA COMBINED NUMBERS
The pro forma revenue and net profit numbers for the combined
Group, assuming the acquisition occurred on 1 January 2014,
are as follows:
Revenue 778 677 790
Profit before tax 39 325 462
COMMENTARY
INTRODUCTION
KayDav comprises a group of businesses involved in the distribution of wood-based
panels as well as packaging and packaging machinery. Wood-based panels are
manufactured through the compression of wood waste into solid panels. These panels
have a variety of applications in the construction, furniture manufacturing and
shopfitting industries. Packaging consumables and machinery are those products and
machines which cater for a wide variety of packaging requirements in the industrial,
agricultural and commercial sectors.
The Group entered the packaging industry with the acquisition of Packit on
1 August 2014 as set out in KayDav's SENS announcement on 26 August 2014. The final
consideration will be determined with reference to Packit's audited net profit before
tax for the year ended 28 February 2015. At 1 August 2014 KayDav estimated that the
acquisition consideration would be R15.2 million, which is also the agreed upper
limit of the acquisition consideration. No change to the contingent consideration
was required at 31 December 2014.
FINANCIAL RESULTS
We are pleased to report a satisfying set of results for the 2014 financial year.
Revenue grew by 14% from R666.2 million for the year ended 31 December 2013 to
R761.7 million for the year ended 31 December 2014. When the new packaging segment is
excluded revenue growth was 12%, which is satisfactory considering the continued
pressure on selling prices in the board distribution segment as a result of supply
exceeding demand.
Pressure on selling prices also led to a drop in the gross margin by one percentage
point to 28.6% (2013: 29.6%) with gross profit increasing by 10% to R217.7 million from
the R197.3 million of the prior year. The Group was able to control operating
expenditure which increased by only 8% compared to the 10% growth in gross profit,
from R161.3 million for the year ended 31 December 2013 to R174.4 million for the
year ended 31 December 2014. This resulted in strong profit and earnings growth with
headline earnings per share of 16.3 cents (2013: 13.7 cents) and earnings per share
of 16.1 cents (2013: 13.7 cents) growing by 19% and 18% respectively. Operating profit
was negatively impacted by the loss in the manufacturing segment of R7.1 million which
includes the cost of relocation of R2.0 million. KayDav is confident that after this
relocation the operation will now contribute positively to earnings in future years.
The net tangible asset base of the Group at 31 December 2014 of R129.2 million
(2013: R126.4 million) after a cash distribution to shareholders out of share premium
of R13.0 million (2013: R12.1 million), continues to provide a sound platform for
growth. Interest-bearing debt, excluding bank overdraft, as a percentage of capital
and reserves increased from 27% at 31 December 2013 to 34% at 31 December 2014 after
the addition of a five-year term loan of R13 million from the Group's bankers to fund
the acquisition of Packit. KayDav also acquired a building for the expansion of its
Brackenfell outlet at a cost of R3.1 million which was partially funded by a ten-year
term loan secured by mortgage bond over the property. Instalment sale finance increased
from R18.0 million at the end of the prior financial year to R23.7 million at
31 December 2014 after financing the acquisition of motor vehicles with a cost of
R10.7 million and plant and equipment with a cost of R0.9 million.
At 31 December 2014 KayDav had a current ratio of 1.7 (2013: 2.0).
PROSPECTS
KayDav's entry into the packaging industry provides opportunities for growing
organically through additional product lines and through wider and deeper market
penetration especially in Gauteng where Packit's operation is still small relative
to that of Cape Town. In the short term, the Group anticipates that resources will
be applied to execute the organic growth strategy at Packit.
In KayDav's traditional board distribution business slow macroeconomic growth
continues to affect industry growth. The Group remains focused on increasing its
market share profitably by being customer centric and sales focused while maintaining
and improving working capital efficiency.
CHANGES TO CAPITAL STRUCTURE
There has been no change in KayDav's capital structure during the year ended
31 December 2014 aside from a distribution out of share premium to shareholders of
7.5 cents per share, amounting to R13 million, on 12 May 2014.
DISTRIBUTIONS TO SHAREHOLDERS
For the current year, the directors decided on a lower distribution of 5 cents per
share when compared to the 7.5 cents per share distributed on 12 May 2014 in order
to preserve cash to contribute towards funding growth.
Accordingly 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, No. 58 of 1962) of
5 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, 8 May 2015
Shares trade "ex" the cash distribution Monday, 11 May 2015
Record date for the cash distribution Friday, 15 May 2015
Cash distribution paid to shareholders Monday, 18 May 2015
Share certificates may not be dematerialised or rematerialised between
Monday, 11 May 2015 and Friday, 15 May 2015.
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 9154/477/16/1.
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 summarised 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 summarised audited consolidated
financial statements are consistent with those presented in the annual financial statements
for the year ended 31 December 2014.
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.
AUDIT REPORT
These summarised audited consolidated results for the year ended 31 December 2014 have
been extracted from the audited annual financial statements but are not themselves
audited. The audit report does not necessarily cover all the information included in
the announcement. 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
the auditor's report together with the accompanying financial information from the
company's registered office. The directors take full responsibility for the preparation
of these summarised audited consolidated results and confirm that the financial
information has been correctly extracted from the underlying audited results for the
year ended 31 December 2014.
ANNUAL REPORT
Shareholders are advised that the integrated annual report containing the financial
statements will be posted on or before 31 March 2015. KayDav's annual general meeting
will be held at 10:00 on Thursday, 14 May 2015 at the offices of Grant Thornton (Jhb) Inc,
52 Corlett Drive, Wanderers Office Park, Illovo, 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
23 March 2015
CORPORATE INFORMATION
Incorporated in the Republic of South Africa
Registration number: 2006/038698/06
Share code: KDV
ISIN: ZAE000108940
Income tax reference number: 9154/477/16/1
Registered address: 105 Bamboesvlei Road, Ottery, 7800
Postal address: PO Box 272, Ottery, 7808
Telephone: 021 704 7060
Facsimile: 021 714 2082
Executive directors: G F Davidson (CEO), M Slier (CFO)
Independent non-executive directors: I H Stern (Chairman), J Hertz, B Tlhabanelo
Company secretary: CIS Company Secretaries (Pty) Ltd
Auditor: Grant Thornton (Jhb) Inc
Transfer secretaries: Link Market Services South Africa (Pty) Ltd
Sponsor: Java Capital
Website: www.kaydav.co.za
Date: 23/03/2015 04:35:00 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
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