KAYDAV GROUP LIMITED - Summarised audited consolidated results for the year ended 31 December 2018

Release Date: 25/03/2019 16:04
Code(s): KDV
 
Wrap Text
Summarised audited consolidated results for the year ended 31 December 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 company" or "the Group")

Summarised audited consolidated results for the year ended 31 December 2018

-   Revenue up 6%
-   Headline earnings per share of 15.1 cents (up 152%)
-   Distribution to shareholders of 6.5 cents per share
-   Strong positive cash position at 31 December 2018


Consolidated statement of profit or loss and other comprehensive income

                                                      Audited year    Audited year
                                                             ended           ended
                                                       31 Dec 2018     31 Dec 2017
                                                                 R               R

Revenue                                                999 202 265     945 021 732
Cost of sales                                         (726 556 577)   (686 927 172)
Gross profit                                           272 645 688     258 094 560
Other income                                             2 067 855       1 436 647
Net impairment loss on trade and other receivables        (949 386)    (10 117 753)
Other operating expenses                              (231 119 400)   (227 572 541)
Operating profit                                        42 644 757      21 840 913
Investment income                                          213 394          22 117
Finance costs                                           (5 829 537)     (7 169 177)
Profit before taxation                                  37 028 614      14 693 853
Taxation                                               (10 569 677)     (4 320 397)
Profit for the year
                                                        26 458 937      10 373 456
Other comprehensive income                                       -               -
Total comprehensive income attributable to
equity holders of the parent                            26 458 937      10 373 456

Reconciliation between earnings and headline
earnings
Earnings                                                26 458 937      10 373 456
(Profit)/Loss on sale of plant and equipment              (402 435)       (103 824)
Taxation on sale of plant and equipment                    112 682          29 071
Headline earnings                                       26 169 184      10 298 703
Weighted average number of shares in issue             172 751 585     172 751 585
Basic and diluted earnings per share (cents)*                 15.3             6.0
Headline and diluted headline earnings per share
(cents)*                                                      15.1             6.0

* The company has no dilutionary instruments in issue.


Consolidated statement of financial position

                                         Audited year       Audited year
                                                ended              ended
                                          31 Dec 2018        31 Dec 2017
                                                    R                  R
ASSETS
Non-current assets                        106 938 011        104 833 852
Property, plant and equipment              80 381 282         78 014 855
Goodwill                                   26 361 344         26 361 344
Deferred taxation                             195 385            457 653
Current assets                            360 533 061        345 030 889
Inventories                               149 862 379        177 863 712
Trade and other receivables               105 321 395        107 502 053
Cash and cash equivalents                 105 248 322         57 295 167
Taxation                                      100 965          2 369 957
TOTAL ASSETS                              467 471 072        449 864 741
EQUITY AND LIABILITIES
Capital and reserves                      235 729 459        207 350 985
Share capital                                     173                173
Share premium                             126 615 503        126 615 503
Retained earnings                         109 113 783         80 735 309
Non-current liabilities                    28 905 812         32 695 780
Instalment sale liabilities                17 659 164         18 230 241
Interest-bearing liabilities                8 506 036         13 177 679
Deferred taxation                           2 740 612          1 287 860
Current liabilities                       202 835 801        209 817 976
Trade and other payables                  124 412 085        132 993 998
Short-term portion of instalment sale
liabilities                                 8 651 997          8 284 729
Short-term portion of interest-bearing
liabilities                                 4 662 214          4 186 100
Bank overdraft                             59 640 418         59 471 344
Taxation                                    1 416 100            235 968
Provisions                                  4 052 987          4 645 837
TOTAL EQUITY AND LIABILITIES              467 471 072        449 864 741
Shares in issue at year-end               172 751 585        172 751 585
Net asset value per share (cents)               136.5              120.0
Net tangible asset value per share (cents)      121.2              104.8


Summarised consolidated statement of changes in equity

                                                  Audited year    Audited year
                                                         ended           ended
                                                   31 Dec 2018     31 Dec 2017
                                                             R               R

Balance at the beginning of the year               207 350 985     196 977 529
Total comprehensive income for the year             26 458 937      10 373 456
Impairment of trade receivables (IFRS 9
adjustment)                                          2 666 024               -
Deferred taxation on impairment of trade
receivables                                           (746 487)              -
Total equity                                       235 729 459     207 350 985


Consolidated statement of cash flows
                                                    Audited year    Audited year
                                                           ended           ended
                                                     31 Dec 2018     31 Dec 2017
                                                               R               R
Cash flows from operating activities
Operating cash before working capital movements       50 865 221      30 352 279
Working capital movements                             25 442 253       7 162 614
Cash generated by operations                          76 307 474      37 514 893
Investment income                                        213 394          22 117
Finance costs                                         (5 829 537)     (7 169 177)
Taxation paid                                         (6 152 019)     (8 187 053)
Net cash inflow from operating activities             64 539 312      22 180 780
Cash flow from investing activities
Investment in property, plant and equipment           (4 632 229)     (2 197 709)
Proceeds on disposal of property, plant and
equipment                                              2 251 636       1 696 894
Net cash outflow from investing activities            (2 380 593)       (500 815)
Cash flow from financing activities
Repayment of instalment sale liabilities             (10 179 109)     (8 724 739)
Repayment of interest-bearing liabilities             (4 195 529)     (5 005 225)
Net cash outflow from financing activities           (14 374 638)    (13 729 964)
Net increase in cash and cash equivalents             47 784 081       7 950 001
Net cash and cash equivalents at the beginning of
the year                                              (2 176 177)    (10 126 178)
Net cash and cash equivalents at the end of the
year                                                  45 607 904      (2 176 177)


Segmental analysis

                                                 Audited year    Audited year
                                                        ended           ended
                                                  31 Dec 2018     31 Dec 2017
                                                            R               R
Segmental revenue
Board Distribution and Adaptation                 909 352 132     868 459 371
Packaging                                          92 573 803      79 366 558
Internal revenue                                   (2 723 670)     (2 804 197)
Total revenue                                     999 202 265     945 021 732

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

Segmental results
Board Distribution and Adaptation                  34 352 323      14 680 027
Packaging                                           8 424 093       7 185 920
Other                                                (131 659)        (25 034)
Operating profit before interest                   42 644 757      21 840 913

Operating assets
Board Distribution and Adaptation                 403 408 770     375 355 604
Packaging                                          43 036 061      33 767 655
Other                                                 935 762      18 831 633
Internal balances                                  (6 567 214)     (7 279 104)
Total operating assets                            440 813 379     420 675 788

Operating liabilities
Board Distribution and Adaptation                 164 391 280     176 521 490
Packaging                                           7 584 767       7 409 769
Other                                              62 176 075      64 337 780
Internal balances                                  (6 567 214)     (7 279 104)
Total operating liabilities                       227 584 908     240 989 935

Segment assets consist of property, plant and equipment, inventory, trade and other receivables and operating cash
and exclude taxation assets, investments, intra-group loans and intangible assets. Segmental liabilities include
trade and other payables, bank overdraft, provisions, instalment sale liabilities and interest-bearing liabilities
and exclude taxation liabilities and intra-group loans.

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.

Adoption of new accounting standards

IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers became effective during the financial
year, with only IFRS 9 Financial Instruments having a significant impact on the Group through its effect on the
impairment of trade receivables. The Group utilises the simplified approach in accordance with IFRS 9 and calculates
the impairment allowance in respect of trade receivables in accordance with a provision matrix based on debtors'
aging, historical loss ratios and forward-looking information. To transition to the new standard, the Group elected
not to restate comparatives but to adjust the effect of the change relating to prior periods in opening retained
earnings. The Group therefore applied the standard to opening trade receivables and adjusted the difference in the
impairment allowance so calculated and the impairment allowance at 31 December 2017 directly to retained earnings.
The effect of the change on the following line items were as follows:

Statement of financial position                              R

Trade and other receivables (increase)               2 666 024
Retained earnings (increase)                         1 919 537
Deferred taxation liability (increase)                 746 487

Financial results

We are delighted to report a much-improved performance from KayDav for the year ended 31 December 2018.

Despite tough trading conditions the Group was able to increase revenue by 6% to R999.2 million (2017: R945 million)
while earnings per share and headline earnings per share grew from 6 cents for the year ended 31 December
2017 to 15.3 and 15.1 cents respectively. This was achieved through management's concerted efforts to control costs.
Significantly, the net impairment loss on trade and other receivables (bad debt expense) decreased from 
R10.1 million for the year ended 31 December 2017 to only R0.9 million for the year ended 31 December 2018, while the
increase in other operating expenses was limited to only 2%. The decrease in the net impairment loss on trade and
other receivables was the result of focused credit control and collection processes leading to a much improved
trade receivables age profile.

At 31 December 2018 the Group had a net tangible asset base of R209.4 million (2017: R181 million) with a 
debt:equity ratio of 17% (2017: 21%), a current ratio of 1.8 (2017: 1.6) and a net positive cash balance of 
R45.6 million (2017: net overdraft of R2.2 million). In addition to increased profitability, the improvement 
in the cash position of the Group was driven by better inventory and trade receivable management.

Prospects

The Board Distribution and Adaptation segment consists of mature businesses with a large market share. To achieve
profitable growth in the current tough economic environment is difficult. In order to maximise profit and cash
generation in this segment, management remains committed to improved customer service, increased sales efforts,
improved cost efficiencies and enhanced working capital management.

The Packaging segment provides opportunities for growth being a relatively small player in a large industry.
Therefore, the Group continues to identify and introduce new product lines to drive growth.

Changes to capital structure

There has been no change in KayDav's capital structure during the year ended 31 December 2018.

Distribution to shareholders

Notice is hereby given that the board of directors of KayDav has resolved to make a distribution to shareholders by
way of 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 6.5 cents per share ("the cash distribution").

Salient dates

The salient dates in respect of the cash distribution are as follows:
Last day to trade in order to be eligible to
receive the cash distribution                          Tuesday, 9 April 2019
Shares trade "ex" the cash distribution                Wednesday, 10 April 2019
Record date for the cash distribution                  Friday, 12 April 2019
Cash distribution paid to shareholders                 Monday, 15 April 2019

Share certificates may not be dematerialised or rematerialised between Wednesday, 10 April 2019 and Friday, 
12 April 2019, both days inclusive. The cash distribution will be transferred to dematerialised shareholders' 
central securities depository participant brokers' accounts on Monday, 15 April 2019. Certificated shareholders' 
distribution payments will be posted to them or paid to their bank accounts on or about Monday, 15 April 2019.

Additional information

In terms of the JSE Listings Requirements in relation to cash distributions the following information is disclosed:

-  The issued share capital of KayDav is 172 751 585 ordinary shares; and

-  KayDav's tax reference number is 9154477161.

Given that the cash distribution is by way of a reduction of contributed tax capital, no withholding tax is
applicable to this cash distribution. However, the cash distribution may have capital gains tax consequences for
shareholders and they are therefore advised to consult their own professional tax advisers.

Subsequent events

With the exception of the declaration of the distribution to shareholders, set out above, 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 (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 2017 except for
the adoption of IFRS 9 and IFRS 15.

The annual financial statements were prepared under the supervision of the CFO, Martin Slier, CA (SA).

Directorate

Ian Stern retired as a director with effect from 1 October 2018. Shane van Niekerk was appointed as chairperson of
the board of directors as from that date.

Audit report

The external auditor, BDO South Africa Incorporated ("BDO"), has issued an opinion on the Group's consolidated
financial statements for the year ended 31 December 2018. The audit was conducted in accordance with International
Standards on Auditing. The auditor responsible for the audit is Ben Frey. An unmodified audit opinion has been
issued on the consolidated financial statements.

These summarised audited consolidated results for the year ended 31 December 2018 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 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 2018.

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 15 April 2019. KayDav's annual general meeting will be held at 10:00 on Thursday, 16 May 2019 at the
offices of BDO, 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, 7 May 2019 and the record date for
voting purposes is Friday, 10 May 2019.


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

S van Niekerk            G F Davidson
Chairperson              Chief Executive Officer

25 March 2019
Cape Town

Corporate information

Executive Directors: G F Davidson (CEO), M Slier (CFO)

Independent non-executive Directors: S van Niekerk (Chairperson), B Tlhabanelo, F Davidson

Registration Number: 2006/038698/06

Registered Address: 105 Bamboesvlei Road, Ottery, 7800

Postal Address: PO Box 272, Ottery, 7808

Telephone: 021 704 7060 Facsimile: 021 704 2082

Company Secretary: CIS Company Secretaries Proprietary Limited

Auditor: BDO South Africa Incorporated

Transfer Secretaries: Link Market Services South Africa Proprietary Limited

Website: www.kaydav.co.za

Sponsor: Java Capital

Date: 25/03/2019 04:04:00 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.

Email this JSE Sens Item to a Friend.

Share This Story