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Unaudited interim results for the six months ended 30 June 2018
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 2018
- Revenue R465 million, up 7%
- Headline earnings per share 4.1 cents, up from the prior year headline loss per
share of 0.7 cents
CONSOLIDATED STATEMENTS
OF FINANCIAL POSITION
Unaudited Unaudited Audited
30 June 2018 30 June 2017 31 December 2017
R R R
ASSETS
Non-current assets 108 075 596 103 124 525 104 833 852
Property, plant and equipment 81 557 603 76 516 664 78 014 855
Goodwill 26 361 344 26 361 344 26 361 344
Deferred taxation 156 649 246 517 457 653
Current assets 318 567 631 331 511 183 345 030 889
Inventories 153 218 945 174 171 930 177 863 712
Trade and other receivables 131 625 531 125 792 293 107 502 053
Cash and cash equivalents 28 870 096 27 490 786 57 295 167
Taxation 4 853 059 4 056 174 2 369 957
Total assets 426 643 227 434 635 708 449 864 741
EQUITY AND LIABILITIES
Capital and reserves 217 307 912 195 920 414 207 350 985
Share capital 173 173 173
Share premium 126 615 503 126 615 503 126 615 503
Accumulated profit 90 692 236 69 304 738 80 735 309
Non-current liabilities 35 063 611 33 345 371 32 695 780
Instalment sale liabilities 21 701 916 17 566 434 18 230 241
Interest-bearing liabilities 10 900 625 15 337 662 13 177 679
Deferred taxation 2 461 070 441 275 1 287 860
Current liabilities 174 271 704 205 369 923 209 817 976
Trade and other payables 92 170 456 129 370 029 132 993 998
Short-term portion of instalment sale liabilities 9 606 927 7 684 121 8 284 729
Short-term portion of interest-bearing liabilities 4 422 096 3 948 110 4 186 100
Bank overdraft 63 551 616 59 840 105 59 471 344
Taxation - - 235 968
Provisions 4 520 609 4 527 558 4 645 837
Total equity and liabilities 426 643 227 434 635 708 449 864 741
Shares in issue at period end 172 751 585 172 751 585 172 751 585
Net asset value per share (cents) 125.8 113.4 120.0
Net tangible asset value per share (cents) 110.5 98.2 104.8
CONSOLIDATED STATEMENTS OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2018 30 June 2017 31 December 2017
R R R
Revenue 464 649 829 434 757 555 945 021 732
Cost of sales (340 553 761) (313 798 607) (686 927 172)
Gross profit 124 096 068 120 958 948 258 094 560
Other income 857 054 631 100 1 436 647
Operating expenses (111 774 014) (119 500 032) (237 690 294)
Operating profit 13 179 108 2 090 016 21 840 913
Investment income 17 155 18 401 22 117
Finance costs (2 872 324) (3 517 529) (7 169 177)
Profit/(loss) before taxation 10 323 939 (1 409 112) 14 693 853
Taxation (3 033 037) 351 997 (4 320 397)
Profit/(loss) for the year 7 290 902 (1 057 115) 10 373 456
Other comprehensive income - - -
Total comprehensive income/(loss) attributable
to equity holders of the parent 7 290 902 (1 057 115) 10 373 456
Reconciliation between earnings and
headline earnings
Earnings/(loss) 7 290 902 (1 057 115) 10 373 456
(Profit)/loss on disposal of plant and equipment (367 837) (111 978) (103 824)
Taxation on profit/loss from disposal of
plant and equipment 102 994 31 354 29 071
Headline earnings/(loss) attributable to equity holders 7 026 059 (1 137 739) 10 298 703
Weighted average number of shares in issue 172 751 585 172 751 585 172 751 585
Basic and diluted earnings/(loss) per share (cents)* 4.2 (0.6) 6.0
Headline and diluted headline earnings/(loss)
per share (cents)* 4.1 (0.7) 6.0
*The company has no dilutive instruments in issue
CONSOLIDATED STATEMENTS
OF CASH FLOWS
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2018 30 June 2017 31 December 2017
R R R
Cash flows from operating activities
Operating cash before working capital movements 16 814 901 6 489 139 30 352 279
Working capital movements (36 430 084) (11 655 800) 7 162 614
Cash (utilised)/generated by operations (19 615 183) (5 166 661) 37 514 893
Investment income 17 155 18 401 22 117
Finance costs (2 872 324) (3 517 529) (7 169 177)
Taxation paid (4 277 893) (6 072 294) (8 187 053)
Net cash (outflow)/inflow from
operating activities (26 748 245) (14 738 083) 22 180 780
Cash flow from investing activities
Investment in property, plant and equipment (612 318) (405 860) (2 197 709)
Proceeds on disposal of property,
plant and equipment 2 107 705 635 678 1 696 894
Net cash inflow/(outflow) from
investing activities 1 495 387 229 818 (500 815)
Cash flow from financing activities
Repayment of instalment sale liabilities (5 211 427) (4 631 648) (8 724 739)
Repayment of interest-bearing liabilities (2 041 058) (3 083 228) (5 005 225)
Net cash outflow from financing activities (7 252 485) (7 714 876) (13 729 964)
Net (decrease)/increase in cash and cash equivalents (32 505 343) (22 223 141) 7 950 001
Net cash and cash equivalents at the
beginning of the period (2 176 177) (10 126 178) (10 126 178)
Net cash and cash equivalents at the
end of the period (34 681 520) (32 349 319) (2 176 177)
CONSOLIDATED STATEMENTS
OF CHANGES IN EQUITY
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2018 30 June 2017 31 December 2017
R R R
Balance at the beginning of the period 207 350 985 196 977 529 196 977 529
IFRS 9 adjustment - provision for bad debts 2 666 025 - -
Total comprehensive income for the period 7 290 902 (1 057 115) 10 373 456
Balance at the end of the period 217 307 912 195 920 414 207 350 985
SEGMENTAL ANALYSIS
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2018 30 June 2017 31 December 2017
R R R
Segmental revenue
Board Distribution and Adaptation 423 457 241 398 270 023 868 459 371
Packaging 42 567 916 37 833 829 79 366 558
Internal revenue (Packaging)* (1 375 328) (1 346 297) (2 804 197)
Net revenue 464 649 829 434 757 555 945 021 732
Segmental results
Board Distribution and Adaptation 9 813 473 (1 370 955) 14 680 027
Packaging 3 365 635 3 468 126 7 185 920
Other - - (25 034)
Unrealised profit on internal revenue - (7 155) -
Operating profit before interest 13 179 108 2 090 016 21 840 913
Operating assets
Board Distribution and Adaptation 377 442 092 378 214 359 375 355 604
Packaging 30 846 298 30 287 968 33 767 655
Other 4 345 789 4 298 018 18 831 633
Internal balances (17 362 004) (8 828 672) (7 279 104)
395 272 175 403 971 673 420 675 788
*Internal revenue relates to sales from the Packaging segment to the Board Distribution and Adaptation segment
Segment assets consist of property, plant and equipment, inventory, trade and other receivables and operating cash and excludes
taxation assets, investments and intangible assets.
Operating liabilities
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2018 30 June 2017 31 December 2017
R R R
Board Distribution and Adaptation 152 383 013 176 329 169 176 521 490
Packaging 3 369 390 6 957 738 7 409 769
Other 68 483 847 63 815 784 64 337 780
Internal balances (17 362 004) (8 828 672) (7 279 104)
206 874 246 238 274 019 240 989 935
Segment liabilities include trade and other payables, bank overdraft, provisions, instalment sale liabilities and interest-bearing liabilities
and exclude taxation liabilities.
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.
APPLICATION OF IFRS 9 AND IFRS 15
Stakeholders should note that the Group applied the provisions
of IFRS 9 (Financial Instruments), which is effective for year-ends
beginning on or after 1 January 2018, from 1 January 2018. This
involved the application of a provision matrix to calculate the
expected credit losses contained in gross trade receivables
in order to calculate an appropriate impairment allowance.
Accordingly, a historical loss ratio for each trade receivable
aging period, in 30-day increments, was calculated and was
then adjusted for forward-looking factors in order to arrive at
an expected loss ratio per aging period. This provision matrix
was then used to calculate expected credit losses. Comparative
information was not restated but the change in the impairment
allowance relating to prior periods, a reduction of R2.7 million,
was adjusted for by increasing opening accumulated profit. In
respect of the consolidated statement of profit or loss and other
comprehensive income for the six months ended 30 June 2018,
the application of IFRS 9 resulted in an earnings increase of
R0.5 million as compared to what the situation would have been,
had we applied our previous methodology.
IFRS 15 (Revenue from Contracts with Customers) is effective for
year-ends beginning on or after 1 January 2018. The application
of this standard did not result in any adjustments.
FINANCIAL RESULTS
KayDav was able to achieve earnings and headline earnings per
share of 4.2 cents and 4.1 cents respectively during the first six
months of its 2018 financial year, notwithstanding the prevailing
tough trading conditions. This performance is a significant
improvement on the loss per share and headline loss per share
of 0.6 cents and 0.7 cents respectively of the prior comparative
period. The improvement was driven by a reduction in the bad
debt expense of R8 million when compared against that of the
six months ended 30 June 2017. The remainder of operating
expenses remained on par with that of the prior comparative
period, which is a reduction in real terms.
The Group was able to grow revenue by 7% to R465 million and
gross profit by 3% to R124 million. Management will continue to
work on improving gross profit margins.
The capital structure of the Group remains sound with a
debt-to-equity ratio of 21% (30 June 2017: 23%) and a net
asset base of R217.3 million at 30 June 2018 (30 June 2017:
R195.9 million).The Group's current ratio at 30 June 2018 was 1.8
(30 June 2017: 1.6). The net overdraft position at 30 June 2018
of R34.7 million (30 June 2017: R32.3 million) was the result
of paying a large supplier earlier than its normal trading terms
require in return for additional settlement discount, resulting in a
relatively low creditor funding position at period end.
KayDav acquired plant and equipment and motor vehicles at
a cost of R9.4 million (30 June 2017: R5.4 million) during the
reporting period, of which R8.8 million (30 June 2017: R5 million)
was financed by instalment sale liabilities. Plant and machinery and
motor vehicles with a carrying value of R1.7 million (30 June 2017:
R0.5 million) were sold for R2.1 million (30 June 2017: R0.6 million).
PROSPECTS
Board Distribution and Adaptation
The wood-based panel industry is seasonal with the majority
of revenue and profits made during the second half of the year.
While the normal seasonal upswing will occur as usual, low
business confidence levels and consumer caution will continue
to constrain year-on-year growth. While it is unclear when the
general economy will improve, with the benefits it will bring to
KayDav, management will continue to deal with factors within
its control including improvement of our service and product
offering to customers, containment of costs and strong working
capital management.
Packaging
Strong revenue and profit growth occurred at our Johannesburg
operation during the first six months of 2018 and we expect the
strong growth to continue. However, our Cape Town operation
experienced tougher trading conditions with the drought affecting
agricultural output. When agricultural production and general
economic activity in the Western Cape return to pre-drought
levels, profitable growth will return.
DISTRIBUTION TO SHAREHOLDERS
The KayDav board of directors has decided that no distribution to
shareholders will be made for the six months ended 30 June 2018.
CHANGES TO DIRECTORATE
There has been no change in the directorate during the six
months ended 30 June 2018.
SUBSEQUENT EVENTS
No material change has taken place in the affairs of the Group
between the end of the interim 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 2018 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 2017,
except as set out above under the heading "Application of IFRS 9
and IFRS 15". These interim financial statements have not been
reviewed or reported on by KayDav's auditor, 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
Chairperson Chief Executive Officer
Cape Town
Wednesday, 5 September 2018
CORPORATE INFORMATION
KAYDAV GROUP LIMITED
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
Company Secretary:
CIS Company Secretaries (Pty) Ltd
Executive Directors:
GF Davidson (CEO), M Slier (CFO)
Non-executive Directors:
IH Stern (Chairperson), B Tlhabanelo,
S van Niekerk, F Davidson
Auditor:
Grant Thornton Johannesburg Partnership
Transfer Secretaries:
Link Market Services South Africa (Pty) Ltd
Sponsor:
Java Capital
Website: www.kaydav.co.za
Date: 05/09/2018 09:50:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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