KAP lifts dividend on disposals
SHARES in KAP Industrial Holdings, which focuses on SA and emerging African markets, closed 3.58% higher at R4.05 yesterday after the former Steinhoff International subsidiary reported a 21% rise in earnings and a 50% dividend increase for its year to June.
KAP’s sale of its footwear and food divisions, which will generate combined proceeds of about R568m, helped the company lift its dividend to 12c from 8c previously.
CEO Jo Grove said: “We felt it was prudent to give back some of that money to shareholders because it was a bit of a windfall.”
KAP’s revenue in the year to June increased 9% to R14.75bn, while headline earnings from continuing operations grew 21% to 34.1c per share. The footwear and food divisions were accounted for as discontinued operations.
Mr Grove said that KAP’s margin and earnings gains were the result of its “fairly aggressive restructure in the two biggest businesses — integrated timber and the logistics business — which is starting to bear fruit now”.
KAP’s shareholding changed materially at the end of the period, when Steinhoff reduced its stake in the company to 44.7% from 61.8% via an accelerated bookbuild offering ahead of Steinhoff’s planned listing in Frankfurt.
Investment management firm Allan Gray took up about half of the 400-million shares on offer, increasing its stake in KAP to 23.6%.
Investec Asset Management also upped its stake during the oversubscribed bookbuild, to 16.8%. Mr Grove said the liquidity of KAP’s shares was expected to improve.
Meanwhile, he said KAP had completed most of its planned restructuring work carried out over the past two years, which involved “tidying up the businesses and disposing of the noncore assets.
“Now the focus is really on building our existing businesses, both organically and through acquisitions, where possible. We’re looking to grow the business now.”
The logistics, integrated timber and manufacturing group grew its revenue generated from the rest of Africa by 18% to R1.6bn. Its operations outside SA now contribute 11% of group revenue.
Revenue gains elsewhere in Africa were the result of the growth in logistics services in East and Southern Africa, Mr Grove said. From next month, the firm would also benefit from a passenger transport contract with mining company Vale in Mozambique.
KAP’s revenue increased by a more moderate 8% in SA during the year, to R13.1bn.
The company’s largest division, logistics, grew revenue by 10% to R7.7bn in the year to June. The integrated timber business increased revenue by 8% to R2.6bn while the manufacturing operation grew revenue by 9% to R4.6bn.
Meanwhile, Mr Grove said KAP raised R1bn worth of listed domestic medium-term notes with three- and five-year tenures, in addition to further term debt maturing in between two and seven years.
This had extended KAP’s debt maturity profile, and raised funding “at very favourable rates”.
The proceeds of the notes and debt raised were used to replace the remaining balance of KAP’s Steinhoff loan, which the company had fully repaid. KAP reduced its gearing ratio to 40% from 50% in the previous year.