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KAYDAV GROUP LIMITED - Unaudited interim results for the six months ended 30 June 2016

Release Date: 08/09/2016 15:00
Code(s): KDV     PDF:  
Wrap Text
Unaudited interim results for the six months ended 30 June 2016

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

UNAUDITED INTERIM RESULTS
for the six months ended 30 June 2016

- Revenue R459 million (up 17%)
- Headline earnings per share 7.7 cents (up 13%)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                      Unaudited      Unaudited            Audited
                                     six months     six months               year
                                          ended          ended              ended
                                   30 June 2016   30 June 2015   31 December 2015
                                              R              R                  R
Revenue                             458 877 335    392 327 718        864 568 033
Cost of sales                      (329 964 292)  (281 954 185)      (621 857 231)
Gross profit                        128 913 043    110 373 533        242 710 802
Other income                            491 851        486 531            858 473
Operating expenses                 (107 819 864)   (91 728 148)      (192 740 639)
Operating profit                     21 585 030     19 131 916         50 828 636
Investment income                         5 529        102 500            130 895
Finance costs                        (3 064 506)    (2 862 717)        (5 871 522)
Profit before taxation               18 526 053     16 371 699         45 088 009
Taxation                             (5 315 033)    (4 630 816)       (12 916 823)
Profit for the period                13 211 020     11 740 883         32 171 186
Other comprehensive income                    -              -                  - 
Total comprehensive income 
attributable to equity holders of 
the parent                           13 211 020     11 740 883         32 171 186
Reconciliation between earnings and 
headline earnings
Earnings                             13 211 020     11 740 883         32 171 186
Loss/(profit) on disposal of plant 
and equipment                            23 799        (43 430)           155 088
Taxation on loss/(profit) from disposal 
of plant and equipment                   (6 664)        12 160            (43 425)
Headline earnings attributable to 
equity holders                       13 228 155     11 709 613         32 282 849

Weighted average number of 
shares in issue                     172 751 585    172 751 585        172 751 585
Basic and diluted earnings per 
share (cents)*                              7.6            6.8               18.6
Headline and diluted headline earnings 
per share (cents)*                          7.7            6.8               18.7

*The company has no dilutive instruments in issue
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
                                      Unaudited      Unaudited            Audited 
                                   30 June 2016   30 June 2015   31 December 2015
                                              R              R                  R
ASSETS
Non-current assets                   96 539 819     93 466 543         92 775 977
Property, plant and equipment        70 178 475     66 661 702         66 115 538
Goodwill                             26 361 344     26 361 344         26 361 344
Deferred taxation                             -        443 497            299 095
Current assets                      322 538 383    275 858 564        295 655 321
Inventories                         163 234 286    134 805 981        151 515 557
Trade and other receivables         132 192 991    112 213 598        105 857 636
Cash and cash equivalents            26 421 769     27 553 183         36 983 740
Taxation                                689 337      1 285 802          1 298 388
TOTAL ASSETS                        419 078 202    369 325 107        388 431 298

EQUITY AND LIABILITIES
Capital and reserves                182 854 329    158 714 343        179 144 646
Share capital                               173            173                173
Share premium                       126 615 504    136 116 840        136 116 840
Accumulated profit                   56 238 652     22 597 330         43 027 633
Non-current liabilities              32 123 183     37 176 562         32 141 294
Instalment sale liabilities          17 027 825     16 613 252         14 558 008
Interest-bearing liabilities         14 571 597     20 218 782         17 462 074
Deferred taxation                       523 761        344 528            121 212
Current liabilities                 204 100 690    173 434 202        177 145 358
Trade and other payables            120 642 620     96 493 943        118 950 994
Short-term portion of instalment 
sale liabilities                      8 680 931      9 337 363          8 627 935
Short-term portion of interest-bearing 
liabilities                           5 711 571      5 211 888          5 449 403
Bank overdraft                       64 495 051     58 444 083         38 606 874
Taxation                                523 827        175 858          2 018 794
Provisions                            4 046 690      3 771 067          3 491 358
TOTAL EQUITY AND LIABILITIES        419 078 202    369 325 107        388 431 298

Shares in issue at period end       172 751 585    172 751 585        172 751 585
Net asset value per share (cents)         105.8           91.9              103.7
Net tangible asset value per share (cents) 90.6           76.6               88.4

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                      Unaudited      Unaudited            Audited
                                     six months     six months               year
                                          ended          ended              ended
                                   30 June 2016   30 June 2015   31 December 2015
                                              R              R                  R
Cash flows from operating 
activities                          (18 770 229)   (25 836 473)        18 919 766
Cash flows from investing 
activities                             (819 218)       471 994         (7 527 853)
Cash flows from financing 
activities                          (16 860 701)   (16 934 115)       (24 422 741)
Net decrease in cash and cash 
equivalents                         (36 450 148)   (42 298 594)       (13 030 828)
Net cash and cash equivalents at 
the beginning of the period          (1 623 134)    11 407 694         11 407 694
Net cash and cash equivalents at the 
end of the period                   (38 073 282)   (30 890 900)        (1 623 134)

SEGMENTAL ANALYSIS
                                      Unaudited      Unaudited            Audited
                                     six months     six months               year
                                          ended          ended              ended
                                   30 June 2016   30 June 2015   31 December 2015
                                              R              R                  R
Segmental revenue
Board Distribution and Adaptation   432 275 289    371 572 007        816 678 686
Packaging                            28 240 556     21 467 488         49 606 551 
Internal revenue*                    (1 638 510)      (711 777)        (1 717 204)
Net revenue                         458 877 335    392 327 718        864 568 033 

*Internal revenue relates to sales from the Packaging segment 
to the Board Distribution and Adaptation segment      

Segmental results      
Board Distribution and Adaptation    18 997 054     16 791 127         45 552 997 
Packaging                             2 600 248      2 340 789          5 415 959 
Unrealised profit on internal revenue   (12 272)             -                  -
Other                                         -              -           (140 320)
Operating profit before interest     21 585 030     19 131 916         50 828 636 

Operating assets 
Board Distribution and Adaptation   369 446 628    324 134 122        332 808 281 
Packaging                            29 618 527     18 920 800         29 143 942 
Other                                 1 719 714        955 539            812 810 
Internal balances                    (8 757 348)    (2 775 997)       (2 292 562)
                                    392 027 521    341 234 464        360 472 471

CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN EQUITY
                                      Unaudited      Unaudited            Audited
                                     six months     six months               year
                                          ended          ended              ended
                                   30 June 2016   30 June 2015   31 December 2015
                                              R              R                  R
Balance at the beginning of 
the period                          179 144 646    155 611 036        155 611 036
Distribution to shareholders         (9 501 337)    (8 637 576)        (8 637 576)
Total comprehensive income for 
the period                           13 211 020     11 740 883         32 171 186
Balance at the end of the period    182 854 329    158 714 343        179 144 646

COMMENTARY
INTRODUCTION
KayDav comprises a group of businesses involved in the distribution of wood-based panels and packaging consumables and 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 shop fitting industries. Packaging consumables and machinery are products and machines which cater for a wide variety of packaging requirements in the industrial, agricultural and commercial sectors. 

FINANCIAL RESULTS
The Group delivered strong revenue and gross profit growth of 17%, with revenue of R392 million for the six months ended 30 June 2015 growing to R459 million for the six months ended 30 June 2016, while gross profit grew from R110 million to R129 million.  The Board Distribution and Adaptation segment grew revenue by 16% while the Packaging segment grew revenue by 32%, with the latter driven by the expansion of the Gauteng branch of Packit Packaging Solutions and the introduction of new product lines in this segment.

Operating expenses were 18% higher than that of the six months ended 30 June 2015. This increase reflects spending to deal with increased activity and to expand existing operations. In addition, the Group's bad debt expense for the six months ended 30 June 2016 was R1.3 million more than that of the previous corresponding period but still within norm for the Group.

The high turnover growth of 17%, tempered by increased operating expenditure, lead to earnings growth of 13% for the six months ended 30 June 2016 compared to the previous corresponding period. The Board is thus pleased to report that earnings and headline earnings per share increased from 6.8 cents for the six months ended 30 June 2015 to 7.6 cents and 7.7 cents respectively for the six months ended 30 June 2016.

The capital structure of the Group remains sound with a debt to equity ratio of 25% (30 June 2015: 32%) and a net asset base of R183 million at 30 June 2016 (30 June 2015: R159 million) after a distribution to shareholders out of share premium of 5.5 cents per share amounting to R9.5 million. The Group's current ratio at 30 June 2016 was 1.6 (30 June 2015: 1.6). 

The Group acquired plant and equipment and motor vehicles at a cost of R7.5 million during the reporting period of which R6.7 million was financed by instalment sale liabilities. The significant net overdraft position at 30 June 2016 of R38 million (30 June 2015: R31 million) was the result of paying a large supplier earlier than its normal trading terms for this month only and is the same arrangement which existed on 30 June 2015. The effect on net cash thus reversed during the following month.

PROSPECTS
On a macro-economic level, KayDav is concerned about deteriorating growth forecasts for South Africa and the effect it might have on investment in property and furniture. 
   
On an enterprise level the Group will continue to focus on its value offering to customers in order to maximise its market share. The Group's Packaging business is still a small player in the industry and we are confident of strong growth going forward, especially in the Gauteng market. The Board Distribution and Adaptation segment currently enjoys significant market share and will therefore be more affected by slow or negative macro-economic growth, however we remain convinced that responding to the needs of our customers gives us opportunities for growth.

KayDav remains open to acquisition opportunities which will create sustainable value for shareholders.  

DISTRIBUTIONS TO SHAREHOLDERS
The Group made a cash distribution of 5.5 cents per share to shareholders on 23 May 2016. 

CHANGES TO DIRECTORATE
Frank Davidson was appointed as independent non-executive director on 30 June 2016. Shareholders are referred to the Group's SENS announcement on that date in respect of this change. On 6 September 2016, Frank was appointed to the remuneration committee of the KayDav board of directors.

SUBSEQUENT EVENTS
No material change has taken place in the affairs of the Group between the end of the financial period and the date of this report, which requires adjustment or disclosure.

BASIS OF PREPARATION
The unaudited interim financial statements for the six months ended 30 June 2016 have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), the South African Institute of Chartered Accountants Financial Reporting Guides as issued by the Accounting Practices Committee, Financial Reporting Pronouncement as issued by the Financial Reporting Standards Council (FRSC), the requirements of IAS 34 (Interim Financial Reporting) and the requirements of the South African Companies Act and the JSE Listings Requirements.

The accounting policies applied in preparing these interim financial statements are consistent with those presented in the annual financial statements for the year ended 31 December 2015. These interim financial statements have not been reviewed or reported on by the KayDav auditors, Grant Thornton. This interim report was prepared by the financial director, Martin Slier CA(SA).

APPRECIATION
The board of directors 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

IH Stern                  GF Davidson
Chairman                  Chief Executive Officer

Cape Town
8 September 2016

CORPORATE INFORMATION
KAYDAV GROUP LIMITED
Incorporated in the Republic of South Africa
Registration number: 2006/038698/06
Share code: KDV
ISIN: ZAE000108940
('KayDav' or 'the Group')
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: 086 519 2014
Executive directors: GF Davidson (CEO), M Slier (CFO)
Non-executive directors: IH Stern (Chairman), B Tlhabanelo, S van Niekerk, 
F Davidson
Auditor: Grant Thornton
Company secretary: CIS Company Secretaries (Pty) Ltd
Transfer secretaries: Link Market Services South Africa (Pty) Ltd
Sponsor: Java Capital
www.kaydav.co.za


Date: 08/09/2016 03:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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