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Summarised audited consolidated results for the year ended 31 December 2017
KAYDAV GROUP LIMITED
Incorporated in the Republic of South Africa
Registration number: 2006/038698/06
JSE share code: KDV ISIN: ZAE000108940
("KayDav" or "the company" or "the Group")
Summarised audited consolidated results for the year ended 31 December 2017
- Revenue (down 2%)
- Headline earnings per share 6.0 cents (down 62%)
Consolidated statements of profit or loss and other comprehensive income
Audited year Audited year
ended ended
31 December 2017 31 December 2016
R R
Revenue 945 021 732 967 752 148
Cost of sales (686 927 172) (703 367 040)
Gross profit 258 094 560 264 385 108
Other income 1 436 647 953 317
Operating expenses (237 690 294) (220 435 250)
Operating profit 21 840 913 44 903 175
Investment income 22 117 7 622
Finance costs (7 169 177) (6 425 087)
Profit before taxation 14 693 853 38 485 710
Taxation (4 320 397) (11 151 490)
Profit for the year 10 373 456 27 334 220
Other comprehensive income - -
Total comprehensive income attributable to
equity holders of the parent 10 373 456 27 334 220
Reconciliation between earnings and headline
earnings
Earnings 10 373 456 27 334 220
(Profit)/Loss on sale of plant and equipment (103 824) 79 193
Taxation on sale of plant and equipment 29 071 (22 174)
Headline earnings 10 298 703 27 391 239
Weighted average number of shares in issue 172 751 585 172 751 585
Basic and diluted earnings per share (cents)* 6.0 15.8
Headline and diluted headline earnings per
share (cents)* 6.0 15.9
* The company has no dilutionary instruments in issue.
Consolidated statements of financial position
Audited year Audited year
ended ended
31 December 2017 31 December 2016
R R
ASSETS
Non-current assets 104 833 852 101 948 746
Property, plant and equipment 78 014 855 75 460 258
Goodwill 26 361 344 26 361 344
Deferred taxation 457 653 127 144
Current assets 345 030 889 324 127 465
Inventories 177 863 712 168 668 440
Trade and other receivables 107 502 053 114 674 817
Cash and cash equivalents 57 295 167 40 782 429
Taxation 2 369 957 1 779
TOTAL ASSETS 449 864 741 426 076 211
EQUITY AND LIABILITIES
Capital and reserves 207 350 985 196 977 529
Share capital 173 173
Share premium 126 615 503 126 615 503
Accumulated profit 80 735 309 70 361 853
Non-current liabilities 32 695 780 34 402 592
Instalment sale liabilities 18 230 241 16 400 952
Interest-bearing liabilities 13 177 679 17 374 230
Deferred taxation 1 287 860 627 410
Current liabilities 209 817 976 194 696 090
Trade and other payables 132 993 998 124 880 933
Short-term portion of instalment sale liabilities 8 284 729 7 976 911
Short-term portion of interest-bearing liabilities 4 186 100 4 994 771
Bank overdraft 59 471 344 50 908 607
Taxation 235 968 2 064 387
Provisions 4 645 837 3 870 481
TOTAL EQUITY AND LIABILITIES 449 864 741 426 076 211
Shares in issue at year-end 172 751 585 172 751 585
Net asset value per share (cents) 120.0 114.0
Net tangible asset value per share (cents) 104.8 98.8
Summarised consolidated statements of changes in equity
Audited year Audited year
ended ended
31 December 2017 31 December 2016
R R
Balance at the beginning of the year 196 977 529 179Ê144 646
Total comprehensive income for the year 10 373 456 27 334 220
Distribution to shareholders - (9 501 337)
Total equity 207 350 985 196 977 529
Consolidated statements of cash flows
Audited year Audited year
ended ended
31 December 2017 31 December 2016
R R
Cash flows from operating activities
Operating cash before working capital movements 30 352 279 52 451 089
Working capital movements 7 162 614 (19 314 590)
Cash generated by operations 37 514 893 33 136 499
Investment income 22 117 7 622
Finance costs (7 169 177) (6 425 087)
Taxation paid (8 187 053) (9 131 137)
Net cash inflow from operating activities 22 180 780 17 587 897
Cash flow from investing activities
Investment in property, plant and equipment (2 197 709) (2 519 839)
Proceeds on disposal of property, plant
and equipment 1 696 894 535 021
Net cash outflow from investing activities (500 815) (1 984 818)
Cash flow from financing activities
Distribution to shareholders - (9 501 337)
Repayment of instalment sale liabilities (8 724 739) (9 403 871)
Proceeds from interest-bearing liabilities - 391 565
Repayment of interest-bearing liabilities (5 005 225) (5 592 480)
Net cash outflow from financing activities (13 729 964) (24 106 123)
Net increase/(decrease) in cash and
cash equivalents 7 950 001 (8 503 044)
Net cash and cash equivalents at the beginning
of the year (10 126 178) (1 623 134)
Net cash and cash equivalents at the end
of the year (2 176 177) (10 126 178)
Segmental analysis
Audited year Audited year
ended ended
31 December 2017 31 December 2016
R R
Segmental revenue
Board Distribution and Adaptation 868 459 371 905 481 498
Packaging 79 366 558 67 100 354
Internal revenue (2 804 197) (4 829 704)
Total revenue 945 021 732 967 752 148
Internal revenue relates to sales from the
Packaging segment to the Board Distribution
and Adaptation segment.
Segmental results
Board Distribution and Adaptation 14 680 027 38 479 331
Packaging 7 185 920 6 449 432
Other (25 034) (25 588)
Operating profit before interest 21 840 913 44 903 175
Operating assets
Board Distribution and Adaptation 375 355 604 373 609 186
Packaging 33 767 655 27 674 702
Other 18 831 633 1 447 130
Internal balances (7 279 104) (3 145 074)
Total operating assets 420 675 788 399 585 944
Operating liabilities
Board Distribution and Adaptation 176 521 490 168 454 239
Packaging 7 409 769 5 812 876
Other 64 337 780 55 284 851
Internal balances (7 279 104) (3 145 074)
Total operating liabilities 240 989 935 226 406 892
Segment 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 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 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.
Financial results
The Group had a challenging 2017 financial year.
Revenue dropped by 2% to R945.0 million (2016: R967.8 million) due to a 4%
contraction in revenue from the Board Distribution and Adaptation segment,
which was offset to an extent by strong growth in the much smaller Packaging
segment. The Board Distribution and Adaptation segment makes up 92% of Group
revenue. In this segment poor GDP growth negatively affected consumer and business
demand and with the industry already suffering from excess supply capacity,
sustained downward pressure on selling prices occurred, which compounded the
effect of lower volume demand. The Group's gross profit margin for the year ended
31 December 2017 was 27.3%, which is the same as that of the previous financial
year. Despite the decrease in revenue, operating expenses increased by 8%,
including a large negative impact from an increase in the bad debt expense
from R5.8 million for the year ended 31 December 2016 to R10.1 million for the
year ended 31 December 2017. When bad debts are excluded, the increase in
operating expenses year-on-year is 6% and is mainly caused by annual increases
in staff costs, which makes up more than 50% of operating expenses, with other
overhead expenses also reflecting inflationary increases. Consequently, earnings
dropped from R27.3 million for the year ended 31 December 2016 to R10.4 million
for the year ended 31 December 2017. Earnings per share and headline earnings
per share were 6.0 cents compared to earnings per share of 15.8 cents and
headline earnings per share of 15.9 cents for the year ended 31 December 2016.
At 31 December 2017, the Group had a net tangible asset base of R181.0 million
(2016: R170.6 million) with a net debt:equity ratio of 22% (2016: 29%) and a
current ratio of 1.6 (2016: 1.7).
Prospects
In the Board Distribution and Adaptation segment our industry has experienced
eroding operating profit margins as cost inflation outruns selling price
inflation. This is the result of supply exceeding demand. Structurally this
problem can be corrected by economic growth or by a decrease in manufacturing
and wholesale capacity. Since we have little control over the structural industry
issues, management is focusing on cost efficiency while developing new product
lines to augment revenue. The expansion of our product range responds to the
needs of our customers and potential customers while providing opportunities for
sales and profit growth.
The Packaging segment continues to provide opportunities for growth, being a
relatively small player in a large industry.
Changes to capital structure
There has been no change in KayDav's capital structure during the year ended
31 December 2017.
Distributions to shareholders
The KayDav board of directors ("the board") has decided that no distribution
to shareholders will be made at this time. The board considers it prudent to
conserve cash in light of the high-risk macroeconomic environment in which
the Group operates. This decision will be revisited at the time of publishing
the Group's interim financial statements during August 2018.
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 that require adjustment
or disclosure.
Basis of preparation
The summarised audited consolidated financial statements 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 Pronouncements 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 summarised audited
consolidated financial statements are consistent with those presented in the
annual financial statements for the year ended 31 December 2016.
The annual financial statements were prepared under the supervision of the CFO,
Martin Slier, CA(SA).
Directorate
There have been no changes to the directorate during the year ended
31 December 2017.
Audit report
The external auditor, Grant Thornton Johannesburg Partnership
("Grant Thornton"), has issued an unmodified opinion on the Group's
consolidated financial statements for the year ended 31 December 2017.
The audit was conducted in accordance with International Standards on
Auditing. The auditor responsible for the audit is K T Kuhn. An unmodified audit
opinion has been issued on the consolidated financial statements.
These summarised audited consolidated results for the year ended
31 December 2017 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 this 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 underlying 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 2017.
Posting of integrated annual report and notice of annual general meeting
Shareholders are advised that the integrated annual report containing the annual
financial statements will be posted on or before 31 March 2018. KayDav's annual
general meeting will be held at 10:00 on Thursday, 17 May 2018 at the offices of
Grant Thornton, 52 Corlett Drive, Wanderers Office Park, Illovo, 2196, Gauteng.
The last day to trade in order to be eligible to participate in and vote at the
annual general meeting is Tuesday, 8 May 2018 and the record date for voting
purposes is Friday, 11 May 2018.
Appreciation
The board extends its appreciation to our management and staff for their efforts
during this reporting period. We also thank our shareholders, customers and
suppliers for their continued support.
On behalf of the board
I H Stern G F Davidson
Chairperson Chief Executive Officer
22 March 2018
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: 021 704 2082
Executive directors: G F Davidson (CEO), M Slier (CFO)
Independent non-executive directors: I H Stern (Chairperson), B Tlhabanelo,
S van Niekerk, F Davidson
Company secretary: CIS Company Secretaries Proprietary Limited
Auditor: Grant Thornton
Transfer secretaries: Link Market Services South Africa Proprietary Limited
Sponsor: Java Capital
Website: www.kaydav.co.za
Date: 22/03/2018 04:32:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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