integrated annual report 2012 - jse€¦ · 20 directors’ responsibility for financial reporting...

INTEGRATED ANNUAL REPORT 2012

table of contents

1 About this Report

2 Group Profile

4 Five-Year Financial Review and Statistics

6 Board of Directors and Administration

8 Chairman and CEO’s Report

10 Corporate Governance Report

12 Audit and Risk Committee Report

13 Remuneration Committee Report

15 Sustainability Report

20 Directors’ Responsibility for Financial Reporting

20 Declaration by the Company Secretary

21 Independent Auditors’ Report

22 Directors’ Report

24 Consolidated Statements of Financial Position

25 Consolidated Statements of Comprehensive Income

26 Consolidated Statements of Changes in Equity

27 Consolidated Statements of Cash Flows

28 Notes to the Annual Financial Statements

55 Analysis of Shareholders

56 Notice of AGM

61 Form of Proxy

IBC Shareholders’ Diary

this report was compiled for KayDav Group limited and its subsidiaries (“the Group” or “KayDav”) and covers the year ended 31 December 2012.

the report was produced for our stakeholders including shareholders, employees, customers, suppliers, government and the communities in which we operate. It aims to present the risks and opportunities the Group faces including sustainability. We also disclose information regarding the Group’s business strategy, its governance and its performance.

In considering report content, we have considered issues which drive business strategy, are of concern to stakeholders and which can significantly impact the long-term sustainability of the Group as material. these issues have accordingly been prioritised for inclusion in this report.

We have not placed any limitations on the scope or boundaries of this report.

this is the second Integrated Report presented by the Group and we therefore expect that it will evolve and improve in future as we benefit from experience.

the 2011 report met the standards of a c+ applicable level in terms of the Global Reporting Initiative (GRI) framework G3.1. limited assurance on the content of the report was obtained in the prior period from the Group’s auditors PKf in terms of Isae 3000. the Group acknowledges the benefit in obtaining external assurance and the need for this assurance to be value adding and as such will evaluate the requirement for external assurance on an annual basis. the 2012 report has been based on the 2011 report and achieves a level c in terms of the GRI.

the table below sets out the standard disclosures in accordance with the G3.1 framework:

Disclosure Section Pagestrategy and analysis (1.1) chairman and

ceo’s Report8

organisational profile (2.1 – 2.10) Group Profile 2Report parameter (3.1 – 3.8 and 3.12)

about this Report 1

Governance commitments and engagement (4.1 – 4.4 and 4.14 – 4.15)

corporate Governance Report

10

core performance indicators (ec1, la1, la2, la4, la7, la13, la14, en28, PR9, so8)

sustainability Report 15

the financial statements on pages 24 to 54 of this report have been audited in accordance with the requirements of the companies act (act no. 71 of 2008) and have been prepared under the supervision of the financial director, Martin slier, ca(sa).

about thIs RePoRt

1

KAYDAV INTEGRATED ANNUAL REPORT 2012

GRouP PRofIle

oPeRatIonal MoDel

KayDav Group limited (“KayDav” or “the Group”), a public company incorporated and domiciled in south africa, is a distributor and upgrader of wood-based panels.

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.

for segment reporting purposes the Group consists of two operating segments, namely board distribution and manufacturing.

boaRD DIstRIbutIonthe Group’s main focus is on bulk distribution. this is achieved

through an extensive branch network in the Western cape,

Gauteng and recently KwaZulu-natal. Kayreed board and timber

(“Kayreed”) and Davidson’s Discount boards (“Davidson’s”) are

the two brand names servicing the panel market.

Kayreed is a bulk distributor of wooden board panels servicing

the Gauteng market. Davidson’s has an extensive branch

network with branches in ottery, Montague Gardens, brackenfell,

George and strand in the Western cape, silverton in Gauteng

and Durban in KwaZulu-natal. franchise Davidson’s stores are

situated in hermanus, Worcester, Gansbaai and bredasdorp. both

Kayreed and Davidson’s stores offer added value services such as

cutting and edging in addition to distribution.

1 2boards are supplied to KayDav Wood cutting and edging is done at KayDav

2

ManufactuRInGthe Group’s manufacturing operation is situated in the

Western cape. Davidson’s Manufacturing is a focused

manufacturer of veneer boards, foil boards, cabinet doors

and post form tops. this production facility focuses on the

application of various natural and synthetic decorative surfaces.

for the year ended 31 December 2012 61% (2011: 69%) of the

sales of this segment was to the board distribution segment.

both the board distribution and manufacturing segments

predominantly supplies the furniture manufacturing, shopfitting

and kitchen manufacturing and installation industries, while

also supplying significant quantities to other wood-based

panel distributors.

3 4the Group’s main focus is

on bulk distributionthese panels have a variety of applications in the

construction, furniture manufacturing, shopfitting and kitchen manufacturing and installation industries

Operationsbrackenfell

Montague Gardens

ottery

strand

epping

George

Johannesburg

silverton

Durban

Franchiseshermanus

Gansbaai

bredasdorp

Worcester

WesteRn caPe

GautenG

KWaZulu-natal

3


fIVe-YeaR fInancIal ReVIeW anD statIstIcs2012

R2011

R2010

R2009

R2008

R

Financial position

Property, plant and equipment 52 619 029 30 764 470 31 349 411 35 542 939 35 914 574

Goodwill 14 302 804 14 302 804 14 302 804 14 302 804 14 302 804

Deferred taxation asset 1 773 926 6 495 932 5 872 955 2 445 418 1 993 235

current assets 165 011 970 148 350 367 151 879 798 142 731 681 162 232 239

capital and reserves 129 133 100 119 147 678 115 650 549 125 842 799 137 186 672

non-current liabilities (excluding deferred taxation) 29 882 101 12 368 889 15 491 431 6 018 822 9 195 960

Deferred taxation liability 312 412 – 114 123 516 781 1 298 445

current liabilities 74 380 116 68 397 006 72 148 866 62 644 440 66 761 775

number of shares in issue at year-end 172 751 585 172 751 585 183 637 373 236 186 273 295 232 716

Interest-bearing debt (excluding bank overdraft)

Instalment sales long-term 9 926 850 4 114 591 4 248 936 6 018 822 9 195 960

Instalment sales short-term 4 547 748 3 775 494 3 215 677 2 552 466 3 501 529

Interest-bearing liabilities long-term 19 955 251 8 254 298 11 242 494 – –

Interest-bearing liabilities short-term 5 538 192 2 988 196 2 707 832 – –

39 968 041 19 132 579 21 414 940 8 571 288 12 697 489

Financial results

net sales 550 919 804 483 643 885 490 651 602 461 236 347 440 446 378

operating profit 30 833 365 26 396 904 10 025 058 14 044 295 (88 205 279)

earnings 20 350 534 18 179 079 6 585 801 6 505 388 (99 068 869)

headline earnings 19 973 757 18 895 822 7 708 113 6 541 413 20 161 004

earnings per share (cents) 11.8 9.9 3.3 2.3 (33.6)

headline earnings per share (cents) 11.6 10.3 3.9 2.3 6.8

Distributions to shareholders per share (cents) 6.0 5.5 – – –

Key ratios

Return on equity (%) 16 16 6 5 11

Return on capital employed (%) 23 23 9 11 25

all-in gearing ratio (%) 75 71 64 54 58

Debt to equity (%) 31 16 19 7 9

net debt to equity (%) 25 19 6 5 10

current ratio (times) 2.2 2.2 2.1 2.3 2.4

headline earnings to net sales (%) 4 4 2 1 5

Other

number of operations 9 8 9 9 9

number of employees 456 429 410 425 440

number of boards sold 1 907 765 1 736 610 1 646 661 * *

* Information not available due to unit of measure changes.

4

DefInItIonsCapital employed Capital employed is defined as capital and reserves plus interest-bearing debt less goodwill

Return on equityHeadline earnings/Average of opening and closing equity attributable to equity holders of the parent

Return on capital employedOperating profit before asset impairments/Average of opening and closing capital employed balances

All-in gearing ratioAll liabilities net of positive cash balances/(Capital and reserves less goodwill)

Debt to equityInterest-bearing debt excluding bank overdraft/Capital and reserves

Net debt to equityInterest-bearing debt less cash and cash equivalents/Capital and reserves

Current ratioCurrent assets/current liabilities

5


boaRD of DIRectoRs anD aDMInIstRatIon

Ian steRn 64Independent non-executive director

(5 years of service)

(Chairman) (Indefinite)

cta (Wits), ca(sa)

Ian worked for three companies listed

on the Jse until 1982, before joining the

ozz group of companies as financial

director. ozz limited was successfully

listed on the Jse on 5 september 1984.

In March 2003 ozz limited was sold to

a consortium comprising ethos Private

equity fund IV, RMb corvest limited

and Kagiso Ventures (Pty) limited.

Ian continued in his role as financial

director for a year after the buy-out

before leaving to pursue other interests.

Ian was appointed as chairman of the

board of KayDav Group limited on

5 october 2007.

boItuMelo tlhabanelo 36Independent non-executive director

(1 year of service)

(Indefinite)

b com, ca(sa)

boitumelo is a chartered

accountant who qualified with

Pricewaterhousecoopers in 2001.

since then he has gained 10 years’

investment management experience

with leading private equity firms

brait and Development Partners

International. he is now an independent

investor and co-founder and principal

of bopa Moruo, a black-owned

and managed private equity fund

management company. boitumelo was

appointed to the board of KayDav

Group limited on 15 December 2011.

Jonathan heRtZ 40Independent non-executive director

(5 years of service)

(Indefinite)

bsc, fIa, cfa

Jonathan was general manager at

fedsure assurance and managing

director at safrican Insurance company

limited, before being appointed coo

of Peregrine holdings in 2000. as

coo he had overall responsibility

for all aspects of the company’s

operations including businesses

within asset management, securities

structuring and trading, structured

finance and advisory, investment

banking and It development. Jonathan

left Peregrine in november 2005

and joined caveo fund solutions as

managing director. In 2007 Jonathan

founded, and is currently managing,

south africa alpha capital Management,

an international fund management

business. Jonathan was appointed as

director of KayDav Group limited on

14 June 2007.

6

GaRY DaVIDson 38Executive director

(5 years of service as director)

(Chief Executive Officer) (Indefinite)

b com, ca(sa)

Gary completed his b com at uct

and articles with Grant thornton

in 1999. In 2000 he was appointed

as director of Davidsons holding

company (Pty) limited and was

involved in the day-to-day running of

this business before being appointed

ceo of KayDav Group limited on

5 october 2007. Gary is also a director

of the subsidiaries of KayDav Group

limited.

Contractual termsnotice period: 2 months

Restraint of trade: 1 year

MaRtIn slIeR 41Executive director

(5 years of service as director)

(Chief Financial Officer) (Indefinite)

b com (law), hons b compt, ca(sa)

Martin completed his articles with

Grant thornton in 1999. he was an

audit manager with Grant thornton,

as well as management accountant at

e-tv, before joining Davidson’s as group

financial manager in January 2004.

Martin was appointed cfo of KayDav

Group limited on 5 october 2007.

Martin is also a director of the

subsidiaries of KayDav Group limited.

Contractual termsnotice period: 2 months

Restraint of trade: 1 year

aDMInIstRatIonCompany information

KayDav Group limited

Registration number: 2006/038698/06

Jse code: KDV

IsIn: Zae000108940

Head office and registered office

105 bamboesvlei Road, ottery, 7800

Po box 272, ottery, 7808

Auditors

PKf (Jhb) Inc., 42 Wierda Road West,

Wierda Valley, 2196

Private bag X10046, sandton, 2146

Company secretary

Probity business services (Pty) limited

3rd floor, the Mall offices,

11 cradock avenue, Rosebank, 2196

Po box 85392, emmarentia, 2029

Sponsors

Java capital, 2 arnold Road,

Rosebank, 2196

Po box 2087, Parklands, 2121

Transfer secretary

link Market services south africa

(Pty) limited, 5th floor,

11 Diagonal street,

Johannesburg, 2001. Po box 4844,

Johannesburg, 2000

7


stRateGIc oVeRVIeWKayDav continued to have a positive impact on the lives of its stakeholders during the 2012 financial year. significant economic value was created and distributed to the Group’s suppliers, employees, communities, government and providers of capital as set out in the sustainability Report. In addition we recognise that we have a responsibility to contribute to the collective effort to ensure a sustainable natural environment.

Economicour focus remains on being customer-centric and sales focused and continually improving the way we do business. the focus is therefore on offering value to customers at the service levels they expect.

In line with the Group’s medium-term operational strategy to grow market share in the south african wood-based panel and related products market while maintaining trading margins, it opened a Davidson’s Discount boards outlet in Durban during october 2012. Durban, being the largest geographical market for our products in south africa where we were not previously represented, was a logical next location for KayDav in its quest to increase market share profitably. further increases in market share will be targeted through opening or acquiring stores in new geographical areas, as well as improving the sales and profit performance of existing stores. the Group is committed to a cautious strategy in this regard so as to ensure the success and sustainability of any expansion activity undertaken.

supply exceeds demand in the wood-based panel market and as a result sales price inflation continued to lag behind operating cost inflation. We continue to believe that the strategy to increase market share together with a recovery in selling prices

when the supply demand gap is closed will have a significant effect on top-line sales growth in the medium to long term.

SocialEmployeesthe Group continued with its progress in training its workforce, providing them with skills to progress. as an employer we hope to create employment opportunities for potential and existing employees through successful growth strategies.

Due to the skills shortage in south africa recruitment is a continuing challenge. focus will thus continue to be on the advancement of skills, especially amongst members of previously disadvantaged groups.

KayDav has embarked on a process of developing a competency framework for different levels in the organisation. these competencies will be assessed by making use of psychometric assessments in order to establish suitability of candidates applying for vacancies, while enabling the organisation to develop structured training plans for new recruits. this initiative will benefit the organisation and the employee by ensuring that candidates with adequate skills are recruited to optimise the fit between the employee and the position, while also shortening the time it takes a new recruit to settle into the new role.

supervisors will also undergo psychometric and functional assessments in order to identify training needs. based on the results of these assessments a structured training programme running over 12 months will be developed to address training needs on generic supervisory skills, as well as functional competencies.

training for drivers will also receive special focus in the coming year in an endeavour to reduce vehicle accidents and improve productivity.

chaIRMan anD ceo’s RePoRt

PERFORMANCE HIGHLIGHTS

heaDlIne eaRnInGs PeR shaRe11.6 cents (uP 13%)

8

Within the context of strict labour legislation, we intend embarking on an audit of our current policies and procedures to ensure fair treatment of our employees, while ensuring compliance with relevant legislation. training will also be facilitated to supervisors and managers to ensure fair implementation of discipline. the focus will remain on progressive discipline with the goal of rectifying incorrect behaviour and encouraging staff to perform at their best.

the Group partnered with professional industrial psychologists to ensure that all requirements with regards to ethics are adhered to in the use of psychometric assessments, while minimising the risk of cultural bias in identification of talented individuals. Verification of qualifications and credibility assessments will in future be done in-house by trained professionals within the organisation to minimise risk of identity fraud and misrepresentation of information during recruitment.

Communitiesthe adoption of a workplan and terms of reference by KayDav’s social and ethics committee during December 2012 set a framework for structured activity with regard to KayDav’s contribution to future community development.

schools and education support organisations were funded during the 2012 financial year.

Environmentthe sustainability Report sets out the Group’s approach with regard to its environmental impact.

Group performanceEconomicthe Group continued to improve its financial result with earnings and headline earnings per share respectively increasing by 19% and 13% notwithstanding an increased effective tax

rate of 29% for the 2012 financial year compared to the 24% of the previous corresponding period. Return on equity of 16% (2011: 16%) and return on capital employed of 22% (2011: 23%) remained fairly stable.

earnings growth occurred while facing the headwinds of continued oversupply in the wood-based panel market and weak GDP growth.

a warehouse in ottery, which was previously rented from a third party, and a building used for cutting and edging was acquired by KayDav at a cost of R13 850 000 and R2 100 000 respectively during the 2012 financial year. the acquisitions were financed by a loan secured by a mortgage bond over the warehouse property of R7 980 000 and the remainder by a portion of a term loan of R10 000 000 (term loan 2) from our bankers (refer to note 12 in the notes to the annual financial statements for details of these loans).

the economic value generated and distributed statement contained in the sustainability Report sets out the significant benefits accruing to KayDav’s stakeholders in respect of the Group’s activities during the 2012 financial year.

Social and environmental impactthe Group is a significant employer and our impact in this regard is evident from the performance indicators on employment set out in the sustainability Report.

appropriate performance indicators to manage the Group’s environmental impact will be identified in the near future.

Main challenges and goalsthe table below sets out the main challenges and goals of KayDav for the short term and medium term.

Category/topic Challenge Goals short term Goals 3 – 5 years

Affectedstakeholders

Indicator orreport content

Economic overcome the excess supply in the sa board market and achieve consistent growth in return on equity.

create a customer-centric sales-focused organisation.

continued focus on market share growth and improvement in operational efficiencies. expand the Group’s geographical footprint.

all ceo and chairman’s Report

Social aligning the absenteeism rate in the Western cape with the rest of the country.availability of competent staff.

engage with staff in the Western cape to overcome the causes of absenteeism. continue with skills development programmes.

bring the Western cape absenteeism rate below 1.5%.Develop a highly skilled workforce.

employees ceo and chairman’s Reportsustainability Report

Environmental Minimise the Group’s impact on the environment caused as a result of operations.

Investigate appropriate indicators to measure the Group’s environmental impact.

create a platform from which to continually measure and improve the Group’s environmental impact.

all sustainability Report

Conclusionthe prolonged worldwide economic difficulties continue to hamper economic growth in south africa and also have an impact on KayDav.

It is a credit to our management and staff that we continue to perform satisfactorily regardless of macroeconomic factors.

9


KayDav is committed to a high standard of corporate

governance and endorses the code of corporate Practices

and conduct (“the code”) as set out in the King Report on

corporate Governance (King III).

boaRD of DIRectoRsKayDav has a unitary board which is responsible for governance

of the Group including its performance and sustainability.

the functions of the board have been established to provide

guidance to the Group via a structure of meetings and decision-

making thresholds to regulate material matters which have

been reserved for the board’s approval. no one director has

unfettered powers of decision-making.

the board of KayDav consists of three independent non-

executive directors and two executive directors and is

chaired by an independent non-executive director. the

Group defines the terms “independent” and “non-executive”

in accordance with the code and the Jse limited listings

Requirements. the chairman of the board evaluates directors

for classification as independent non-executive, non-executive or

executive.

the board itself evaluates its constitution and diversity and

will, if necessary, consider any changes to its composition.

new appointments are matters for the board as a whole and

are done in a formal and transparent manner.

the board meets at least four times per year to discharge

its responsibilities including providing guidance, reviewing

performance and setting Group strategy. Directors are provided

with comprehensive information to enable them to make

informed decisions.

the board meetings were attended as set out below:

March June August December

Ian stern (chairman) Present Present Present Present

Jonathan hertz Present Present Present Present

Gary Davidson (ceo) Present Present Present Present

Martin slier Present Present Present Present

boitumelo tlhabanelo Present Present Present Present

the board appraises its own performance as well as those of its

sub-committees.

boaRD coMMItteesthe board has established the following committees:

• AuditandRiskCommittee

• RemunerationCommittee

• SocialandEthicsCommittee

Audit and risk committeethe audit and Risk committee consists of the three

independent non-executive directors and is chaired by

Jonathan hertz. the chairman of the board is a member of the

audit and Risk committee.

the committee is responsible for reviewing accounting, auditing,

financial reporting, risk management and internal control matters

and also approves the use of the external auditors for non-

audit services.

the report of the audit and Risk committee is set out on

page 12.

Remuneration committeethe Remuneration committee consists of two independent

non-executive directors namely Jonathan hertz (chairman)

and Ian stern.

the report of the Remuneration committee is set out on

page 13.

Social and ethics committeethe social and ethics committee has been constituted

and met once during the year. the committee consists

of an independent non-executive director, namely

boitumelo tlhabanelo (chairman) and the two executive

directors Gary Davidson and Martin slier.

During December 2012 the committee adopted a terms

of reference and a workplan formalising the future work of

the committee.

coMPanY secRetaRYthe board of directors considered and satisfied itself on the

competence, qualifications and experience of the company

secretary. the company secretary maintains an arm’s length

relationship with the board of directors which is facilitated through

the fact that the company secretary is a third party company

secretarial service provider with various clients.

coRPoRate GoVeRnance RePoRt

10

InteRnal contRol anD RIsK ManaGeMentthe board is committed to maintaining an effective system of

internal control and risk management. Please refer to the audit and

Risk committee Report on page 12 for information on this aspect.

GoVeRnance of InfoRMatIon technoloGYthe code recommends that the board of directors be

responsible for the governance of information technology.

the board has ensured that procedures are in place to protect the

security of its network and data and that procedures are in place

for data backup. In addition the board approved a disaster recovery

plan for business critical information technology systems.

DealInG In secuRItIesthe Group has a policy in place to deal with dealings in

securities by directors and selected employees.

a record of all dealings in KayDav shares by directors

and selected employees is kept and ensures that proper

authority for dealing is in place prior to transactions being

initiated. any announcements which are required in respect of

dealings are made timeously on the Jse’s stock exchange news

service (sens).

coMPlIance WIth laWs anD ReGulatIonsKayDav complies with the laws and regulations it is subject to

and strives to be a good corporate citizen.

coMMunIcatIon WIth eMPloYeesManagement communicates with employees through the

organisational structures. Management operates an open door

policy for suggestions by employees. executive directors meet

with various managers on a regular basis where suggestions

are considered.

In addition management also meets with unions representing

employees at their request. the human resources manager

communicates salient issues to the chief executive officer.

When matters arise which require the attention of the board,

executive directors are responsible for bringing those to the

attention of the board.

no topics which require reporting were raised via these

structures during the year under review.

coMMunIcatIon WIth shaReholDeRs anD PotentIal shaReholDeRsthe Group is committed to provide shareholders with timely

and accurate information.

In accordance with the Jse limited listings Requirements the Group

publishes information on the Jse’s stock exchange news service

(sens) and where appropriate in the print media. When required,

information is directly mailed to shareholders or their agents.

the Group complies with applicable legislation and regulation

which governs disclosure of information including the companies

act, the Jse limited listings Requirements and International

financial Reporting standards.

the Group also maintains a website which contains investor

information as well as information about the Group and

its operations.

there have been no requests for information lodged with the

Group in terms of the Promotion of access to Information act.

coMPlIance WIth the coDethe Group’s register of compliance with the code is available on

the Group’s website (www.kaydav.co.za).

11


the audit and Risk committee performed its functions in

accordance with its charter.

the committee met three times during the year and attendance

of members is set out below:

March August December

Jonathan hertz (chairman)^ Present Present Present

Ian stern^ Present Present Present

boitumelo tlhabanelo* Present Present Present

^ Jonathan hertz and Ian stern have served on this committee for a period of five years.

* boitumelo tlhabanelo has served on this committee for a period of one year.

the ceo, cfo and the external auditors attend the meetings

by invitation. open formal and informal discussions occur

between the committee and ceo and cfo and issues identified

by the committee are addressed where required.

In respect to its function as audit committee the committee

reports as follows:

• Theindependenceandobjectivityoftheexternalauditors

were reviewed.

• TheauditfirmPKF(Jhb),andauditpartnerBenFrey,are,in

the committee’s opinion, independent of the company, and

have been proposed to the shareholders for approval to be

the Group’s auditor for the 2013 financial year.

• Onanongoingbasis,thecommitteereviewsandapproves

the fees proposed by the external auditors.

• Theappointmentoftheexternalauditorcomplieswiththe

companies act and with all other legislation relating to the

appointment of external auditors.

• Thenatureandextentofnon-auditservicesprovidedbythe

external auditors has been reviewed to ensure that the fees

for such services do not become so significant as to call into

question their independence.

• Thenatureandextentoffuturenon-auditserviceshave

been defined and preapproved.

• Thecommitteehasconsideredandsatisfieditselfastothe

appropriateness of the expertise and experience of the

financial director and the finance function.

• Thecommitteehascompliedwithitslegal,regulatoryand

other responsibilities.

• ThecommitteehasrecommendedthisIntegratedAnnual

Report to the board for approval.

InteRnal fInancIal contRol anD RIsK ManaGeMentthe various systems of internal control are designed to provide

reasonable assurance that assets are safeguarded, proper

accounting records are maintained, the integrity and accuracy

of financial information is protected and the incidence of fraud

is minimised.

nothing has come to the attention of the directors to indicate a

material breakdown or material weaknesses in the internal control

of the Group during the year. the committee is satisfied that the

accounting practices of the Group are sound, that the financial

statements fairly represent the financial affairs of the Group and

that the system of internal financial control is appropriate.

the internal audit function delivered regular written reports to

the committee during the year. the function currently consists

of one individual to whom the board has direct access. Internal

audit tests and reviews adherence to internal control procedures

at the Group’s various locations. an internal audit programme

is followed to test specific controls in areas where there are

perceived risk. the results of these internal audits are reported

to the committee and weaknesses and non-adherences are

addressed with management. subsequent to year-end the board

adopted an internal audit charter. the committee considered

the charter and recommended it to the board for approval.

the committee has performed an analysis of the risks to

which the Group is exposed and recorded those risks in a

risk register. the risk register is amended when appropriate.

strategies for mitigating the identified risks are developed and

implemented on an ongoing basis.

auDIt anD RIsK coMMIttee RePoRt

12

the committee performed its functions as delegated by the

board during the year.

the committee reviews remuneration policy and makes

recommendations to the board. It is primarily responsible

for overseeing the remuneration and incentives of executive

directors. In addition, the committee approves incentive

bonus schemes for senior employees. the committee also

recommends remuneration levels for non-executive directors to

the board to be presented to shareholders for approval.

the remuneration policy seeks to provide fair remuneration to

executives with a view to retain them and to motivate them to

achieve targeted performance levels. executives’ compensation

therefore consists of a benchmarked base pay package

supplemented by performance bonuses for achieving profit

targets. capital employed to achieve these targets is monitored

by the committee.

the committee utilises the services of independent

remuneration consultants to assist in benchmarking

remuneration of non-executive and executive directors.

executive directors are not paid above the median level paid

to directors with similar functions at companies of a similar size.

Directors’ remuneration is disclosed in note 28 of the annual

financial statements.

the ceo and cfo attend meetings of the Remuneration

committee but are excluded during deliberations in respect of

their own remuneration.

the committee meets once a year unless circumstances

necessitate additional meetings.

attendance at the committee meeting held in 2012 is set

out below:

March

Jonathan hertz (chairman) Present

Ian stern Present

ReMuneRatIon coMMIttee RePoRt

13


the activities of the Group have a significant impact on its

stakeholders which includes an economic, environmental

and social impact. the Group is committed to manage these

impacts responsibly. this report aims to inform stakeholders

about significant impact areas identified, the Group’s approach

to addressing these challenges and taking advantage of any

opportunities presented. the report further addresses our

processes and progress in these areas.

We have analysed the areas of importance to our stakeholders

and considered which topics would have a significant impact on

the decisions and assessments of our stakeholders.

the Group principally distributes products it acquires from market-

leading suppliers while the manufacturing segment manufactures

products from materials which have undergone processing

subsequent to its harvesting from the natural environment or

biological assets. the natural sources for the vast majority of

the Group’s products are forests and plantations. KayDav has

no influence on management of these resources. there are a

limited number of wood panel and related product manufacturers

in south africa, with the dominant ones being PG bison and

sonae novoboard. both these suppliers are committed to

sound environmental practices and sustainable plantation

management. the Group’s direct impact on the environment mainly

have to do with energy consumption (electricity and fuel) and co2

emissions primarily as a result of its delivery vehicles distributing

product which is an activity which lie at the core of its business.

We therefore continue to consider that the Group has a much

larger role to play and can influence economic sustainability

and social sustainability to a larger extent than its impact on the

environment. accordingly the report has a strong focus on the

Group’s economic and social impact with employment being the

focus area of the Group’s social impact.

the data presented for the KZn region, where the Group

opened a Davidson’s Discount boards branch in october 2012,

is for completeness’ sake and does not have much analytical

value due to its relatively small size and the fact that it has only

been in operation for three months of the 2012 financial year.

econoMIc KayDav’s stakeholders have again been the beneficiaries of

significant economic value created by the Group. the economic

value generated and distributed table below indicates that

providers of capital, suppliers, employees and government

participated significantly in the direct economic value generated.

employees have again been major participants receiving

R75 million of the economic value generated. Providers of capital

received R13 million which is down from the prior year as no

share buy-backs occurred during 2012. the economy at large

was the beneficiary of KayDav’s expenditure on operating costs

of R446 million, which includes amounts paid to suppliers.

Economic value generated and distributed for the year ended 31 December 2012

2012R

2011R

Direct economic value generated

Revenue 550 919 804 483 643 885

Investment income 169 509 144 514

other income 1 330 749 874 267

Total economic value generated 552 420 062 484 662 666

Economic value distributed

operating costs 446 187 093 393 287 193

employee salaries, wages and benefits 74 965 670 64 547 198

Payments to providers of capital 12 895 531 17 261 562

Payments to government (south africa) 3 099 493 6 519 828

community investments* 298 739 286 856

economic value retained/(distributed from prior years) 14 973 536 2 760 029

Total economic value retained and distributed 552 420 062 484 662 666

* In the prior year report sponsorships to schools, hospitals, etc. was regarded as advertising and was not included as community investments. Due to the benevolent nature of these sponsorships these items are now included under community investments.

sustaInabIlItY RePoRt

15


sustaInabIlItY RePoRt (contInueD)

In addition to the above, at year-end the Group made use of

105 labour broker staff (2011: 130) in Gauteng.

as expected, due to the physical nature of KayDav’s activities, the

Group’s total workforce remains at 80% male (2011: 80%). the

majority of our employees are located in the Western cape at

71% of the total workforce (2011: 72%), but when the labour

broker staff is included the ratio is 58% (2011: 55%). the

Western cape accounted for 47% (2011: 45%) of Group

revenue before eliminating intragroup transactions. as a

collective however, the Western cape operations are more

labour intensive than those of Gauteng.

Employee turnover

the rate of employees leaving employment dropped by

3 percentage points to 30% (2011: 33%) with the Western cape

rate dropping to 38% for 2012 compared to 42% for the year

ended 31 December 2011 (see tables la2 – 2012 and la2 –

2011 below). a total of 139 employees left the Group including

38 dismissals (2011: 57), 28 resignations (2011: 34), 46 contract

expiries (2011: 26) and 14 abscondments (2011: 16).

It is pleasing that the number of dismissals has dropped

considerably. We follow proper disciplinary procedures

throughout the Group which is both procedurally and

substantively fair. the Group employs labour consultants to assist

us in this regard.

the majority of employees who resigned or absconded are

engaged in direct labour where traditionally the employee

turnover is high. the Group provides fair working conditions and

remunerates at market-related rates. We therefore believe that

the high rate of employees leaving voluntarily has to do with the

mobility of labour.

KayDav employed 166 (2011: 161) new employees during the

year with the net number of additional employees hired after

adjusting for employees leaving being 27 (2011: 19).

While the Group is constantly striving to increase efficiencies

in a very competitive environment, employment numbers will

increase with activity growth.

socIal Employeesthe Group’s most significant social impact is through the effect it has on its employees and as potential employer.

Workforce profile

the tables below set out KayDav’s employee profile at 31 December 2012 and 31 December 2011:

Total workforce table (LA1)Employment contract Region Employment type

Permanent Fixed term Total Gauteng Western Cape KZN Full time Part time

2012

Male 339 25 364 104 254 6 364 0

female 89 3 92 20 69 3 92 0

428 28 456 124 323 9 456 0

2011

Male 319 24 343 104 239 n/a 343 0

female 81 5 86 18 68 n/a 86 0

400 29 429 122 307 n/a 429 0

16

Employee turnover (LA2)Male Female Total

<30 30 – 50 >50 Total <30 30 – 50 >50 Total <30 30 – 50 >50 Total2012New employee hiresGauteng 8 8 0 16 0 2 0 2 8 10 0 18Western cape 70 53 1 124 8 7 0 15 78 60 1 139KZn 0 5 1 6 2 1 0 3 2 6 1 9All locations 78 66 2 146 10 10 0 20 88 76 2 166Employees leaving employmentGauteng 5 5 6 16 0 0 0 0 5 5 6 16Western cape 58 46 5 109 6 6 2 14 64 52 7 123KZn 0 0 0 0 0 0 0 0 0 0 0 0All locations 63 51 11 125 6 6 2 14 69 57 13 139Total employee numbersGauteng 21 63 20 104 1 13 6 20 22 76 26 124Western cape 97 140 17 254 17 48 4 69 114 188 21 323KZn 0 5 1 6 2 1 0 3 2 6 1 9All locations 118 208 38 364 20 62 10 92 138 270 48 456New employee hire ratesGauteng (%) 38 13 0 15 0 15 0 10 36 13 0 15Western cape (%) 72 38 6 49 47 15 0 22 68 32 5 43KZn (%) 0 100 100 100 100 100 0 100 100 100 100 100All locations (%) 66 32 5 40 50 16 0 22 64 28 4 36Employees leaving employment ratesGauteng (%) 24 8 30 15 0 0 0 0 23 7 23 13Western cape (%) 60 33 29 43 35 13 50 20 56 28 33 38KZn (%) 0 0 0 0 0 0 0 0 0 0 0 0All locations (%) 53 25 29 34 30 10 20 15 50 21 27 30

2011New employee hiresGauteng 10 8 0 18 1 1 0 2 11 9 0 20Western cape 72 50 4 126 7 8 0 15 79 58 4 141All locations 82 58 4 144 8 9 0 17 90 67 4 161Employees leaving employmentGauteng 7 3 3 13 0 0 0 0 7 3 3 13Western cape 62 48 5 115 8 6 0 14 70 54 5 129All locations 69 51 8 128 8 6 0 14 77 57 8 142Total employee numbersGauteng 23 59 22 104 1 12 5 18 24 71 27 122Western cape 96 123 20 239 18 45 5 68 114 168 25 307All locations 119 182 42 343 19 57 10 86 138 239 52 429New employee hire ratesGauteng (%) 43 14 0 17 100 8 0 11 46 13 0 16Western cape (%) 75 41 20 53 39 18 0 22 69 35 16 46All locations (%) 69 32 10 42 42 16 0 20 65 28 8 38Employees leaving employment ratesGauteng (%) 30 5 14 13 0 0 0 0 29 4 11 11Western cape (%) 65 39 25 48 44 13 0 21 61 32 20 42All locations (%) 58 28 19 37 42 11 0 16 56 24 15 33

17


sustaInabIlItY RePoRt (contInueD)

Occupational health and safety KayDav continued to have very low rates of injury with no cases of occupational disease being reported. the target absenteeism rate, based on the number of sick leave days taken, for the Group remains at 1.5%. While this rate is still exceeded in the Western cape the male absenteeism rate has dropped to 1.8% (2011: 2.8%) and the female absenteeism rate to 2.0% (2011: 3.9%).

Occupational health and safety (LA7)Gauteng Western Cape KZN

Male Female Male Female Male Female2012Rates of injury (%) 0.0 0.0 0.0 0.0 0.0 0.0occupational disease rate (%) 0.0 0.0 0.0 0.0 0.0 0.0lost days due to occupational disease or injury – – 233 20 – –

2011Rates of injury (%) 0.0 0.0 0.1 0.0 n/a n/aoccupational disease rate (%) 0.0 0.0 0.0 0.0 n/a n/alost days due to occupational disease or injury – – 118 39 n/a n/a

the Group suffered no work-related fatalities (2011: nil).

Absenteeism based on sick leave days takenGauteng Western Cape KZN

Male Female Male Female Male Female2012number of sick leave days 258 54 1 224 376 – 1 absenteeism rate based on sick leave (%) 1.0 1.1 1.8 2.0 0.0 0.6

2011number of sick leave days 229 40 1 797 708 n/a n/aabsenteeism rate based on sick leave (%) 0.8 0.9 2.8 3.9 n/a n/a

Employee diversitythe Group is an equal opportunity employer. as expected, having regard to the nature of work, the Group’s employees are predominantly male. the majority of employees are between the ages of 30 and 50 years old while employees below the age of 30 years old make up a significant proportion of the workforce category. the underrepresentation of non-white employees in senior management of 5% (2011: 5%) is due to historical factors. KayDav’s board is male, 20% non-white (2011: 20%) and falls 80% (2011: 80%) in the 30 – 50 age category. a female human resources manager was appointed to fill a vacancy left by a female employee who left the Group during December 2012 to relocate to Durban. this improved the female representation in senior management subsequent to year-end to 24%.

Employee diversity (LA13)% of employees per category

by gender% of employees per category

by age group% of non-white employees per

categoryMale Female <30 30 – 50 >502012board of directors (%) 100 0 0 80 20 20senior management (%) 80 20 0 90 10 5Junior management (%) 73 27 16 69 16 49Workforce (%) 80 20 34 56 10 88

2011board of directors (%) 100 0 0 80 20 20senior management (%) 74 26 0 89 11 5Junior management (%) 75 25 21 63 17 46Workforce (%) 81 19 36 53 12 88

18

Remuneration of female employeestable la14 indicates that at year-end on average, in respect of the workforce category, the Group’s female employees are paid significantly more than male employees. the reason for this is that female employees in this category perform mostly clerical functions which attract higher remuneration than labour positions which are filled mainly by male employees. the table further indicates that male employees earn significantly more than female employees in the senior and junior management categories. Male employees occupy the majority of these positions and fill the higher paid of the positions in these categories, a situation which is the norm in our industry. specifically the branch manager positions in the senior management category are all filled by men.

Ratio of basic salary and remuneration of women to men by employee category (LA14)Gauteng Western Cape KZN

Basic salary Remuneration Basic salary Remuneration Basic salary Remuneration

board of directors (%) NE NE NF NF NE NE

senior management (%) 67 71 52 50 NF NF

Junior management (%) NM NM 70 73 NM NM

Workforce (%) 140 142 141 142 39 38

ne = no employees in this category nf = no female employees in this category nM = no male employees in this category

Collective bargainingat the year-end none of our employees were covered by collective bargaining agreements.

CommunitiesDuring the period under review the Group made a contribution to the empowerment through education trust, an organisation dedicated to providing education to children in townships. the Group is looking forward to the continuing monitoring of the progress of our recipient students as they progress with their schooling. KayDav also sponsored various initiatives by schools to raise funds for their activities.

Product responsibilitythe Group incurred no fines for non-compliance with laws and regulations concerning the provision and use of its products and services.

Societythe Group complies with laws and regulations and no significant fines or non-monetary sanctions were incurred for non-compliance with laws and regulations.

enVIRonMentalthe Group’s main impacts on the environment are via co2 emissions through its distribution activities and its consumption of fuel and electricity.

Management remuneration incentives are linked to profitability and with the cost of fuel and electricity making up a significant portion of operating expenses management is continually looking at ways to improve fuel economy and electricity consumption efficiency. the positive correlation between profit and increasing fuel and electricity efficiency is a powerful mechanism to limit KayDav’s environmental impact. the identification of appropriate indicators to measure and manage the Group’s environmental impact will get attention in the near future.

the Group complies with environmental legislation and incurred no significant fines or non-monetary sanctions from the authorities in this regard.

19


the directors are responsible for the preparation, integrity

and fair presentation of the financial statements and other

financial information included in this report. In presenting

the accompanying financial statements, International financial

Reporting standards, the saIca financial Reporting Guides as

issued by the accounting Practices committee, the Jse listings

Requirements and the companies act of south africa have been

followed; applicable accounting assumptions have been used

while prudent judgements and estimates have been made.

the going concern basis has been adopted in preparing the

financial statements. the directors have no reason to believe

that the company or the Group will not be a going concern

in the foreseeable future based on forecasts and available cash

resources. the financial statements support the viability of the

company and the Group.

DIRectoRs’ ResPonsIbIlItY foR fInancIal RePoRtInG

the financial statements have been audited by the

independent accounting firm, PKf (Jhb) Inc., which was given

unrestricted access to all financial records and related data,

including all resolutions and minutes of all meetings of the

shareholders, and the board of directors and committees

of the board. the directors believe that all representations

made to the independent auditors during the audit were valid

and appropriate.

the financial statements were approved by the directors on

26 March 2013 and are signed on their behalf.

Ian Stern Gary Davidson

chairman ceo

In terms of section 88(2)(e) of the companies act 2008, as

amended, we certify that, to the best of our knowledge and

belief, all returns required of a public company have, in respect

of the year under review, been lodged with the companies

and Intellectual Property commission (cIPc) and that all such

returns are true, correct and up to date.

Probity Business Services (Pty) Limited

company secretary

26 March 2013

DeclaRatIon bY coMPanY secRetaRY

20

We have audited the consolidated and separate financial

statements of KayDav Group limited, which comprise the

statements of financial position as at 31 December 2012, and

the statements of comprehensive income, statements of changes

in equity and statements of cash flows for the year then ended,

and the notes, comprising a summary of significant accounting

policies and other explanatory information.

DIRectoRs’ ResPonsIbIlItY foR the consolIDateD fInancIal stateMents the company’s directors are responsible for the preparation

and fair presentation of these consolidated and separate

financial statements in accordance with International financial

Reporting standards, and the requirements of the companies

act of south africa, and for such internal control as the

directors determine is necessary to enable the preparation of

consolidated and separate financial statements that are free from

material misstatements, whether due to fraud or error.

auDItoRs’ ResPonsIbIlItY our responsibility is to express an opinion on these consolidated

and separate financial statements based on our audit. We

conducted our audit in accordance with International standards

on auditing. those standards require that we comply with

ethical requirements and plan and perform the audit to obtain

reasonable assurance whether the consolidated and separate

financial statements are free from material misstatement.

an audit involves performing procedures to obtain audit

evidence about the amounts and disclosures in the financial

statements. the procedures selected depend on the auditors’

judgement, including the assessment of the risks of material

misstatement of the financial statements, whether due to fraud

or error. In making those risk assessments, the auditors consider

internal control relevant to the entity’s preparation and fair

presentation of the financial statements in order to design audit

procedures that are appropriate in the circumstances, but not

for the purpose of expressing an opinion on the effectiveness

of the entity’s internal control. an audit also includes evaluating

the appropriateness of accounting policies used and the

reasonableness of accounting estimates made by directors,

RePoRt of the InDePenDent auDItoRsto the shaReholDeRs of KaYDaV GRouP lIMIteD

as well as evaluating the overall presentation of the financial

statements.

We believe that the audit evidence we have obtained is sufficient

and appropriate to provide a basis for our audit opinion.

oPInIon In our opinion, the consolidated and separate financial

statements present fairly, in all material respects, the consolidated

and separate financial position of KayDav Group limited as

at 31 December 2012, and its consolidated and separate

financial performance and consolidated and separate cash

flows for the year then ended in accordance with International

financial Reporting standards, and the requirements of the

companies act of south africa.

otheR RePoRts RequIReD bY the coMPanIes actas part of our audit of the consolidated and separate financial

statements for the year ended 31 December 2012, we have read

the Directors’ Report, the audit and Risk committee Report

and the Declaration of the company secretary for the purpose

of identifying whether there are material inconsistencies between

these reports and the audited consolidated and separate

financial statements. these reports are the responsibility of the

respective preparers. based on reading these reports we have

not identified material inconsistencies between these reports

and the audited consolidated and separate financial statements.

however, we have not audited these reports and accordingly do

not express an opinion on these reports.

PKF (Jhb) Inc.

Director: b frey

Registered auditors

chartered accountants (sa)

Johannesburg

26 March 2013

21


Your directors have pleasure in submitting their report for the

year ended 31 December 2012.

natuRe of busInessthe Group distributes wood-based panels through its outlets in

the Western cape, Gauteng and KwaZulu-natal.

fInancIal Resultsthe salient features of the Group’s results are summarised below:

R

Revenue 550 919 804

Profit before taxation 28 471 251

net profit for the year 20 350 534

headline earnings 19 973 757

boRRoWInG PoWeRsthe borrowing powers are not restricted in the memorandum

of incorporation of the company.

shaRe caPItalthere were no changes to the company’s authorised share

capital during the reporting period.

DIstRIbutIon to shaReholDeRsthe company made a capital distribution out of share premium

to shareholders of 6 cents per share (2011: 5.5 cents per share)

during the year. no dividends were declared.

subsequent eVentsno material change has taken place in the affairs of the Group

between the end of the financial period and the date of this

report that will require adjustment or disclosure in the annual

financial statements.

sPecIal ResolutIonsthe following special resolutions were passed during the year on

3 May 2012:

• Aspecialresolutiontoadoptanewmemorandumof

incorporation.

• Aspecialresolutionauthorisingfinancialassistancetorelated

and interrelated companies.

DIRectoRs’ RePoRt

• Aspecialresolutionprovidinggeneralauthoritytothe

company to repurchase its shares.

• Aspecialresolutiontoapprovedirectors’remunerationfor

non-executive directors.

no special resolutions were passed by the company’s subsidiaries

since the date of the previous Directors’ Report relating to capital

structure, borrowing powers, the objects clause contained in the

memorandum of incorporation or any other material matter that

affects the affairs of the company and its subsidiaries.

DIRectoRsno changes to the board of directors took place during the year.

the directors in office at the date of this report are listed on

pages 6 and 7.

In accordance with the company’s memorandum of

incorporation Jonathan hertz will retire as director at the next

annual general meeting of the company and, being eligible, offers

himself for re-election.

Directors’ remuneration and interest in the shares of the

company are set out in note 28.

coMPanY secRetaRYProbity business services remained the company secretary

during the reporting period.

subsIDIaRY coMPanIesInformation in respect of interests in subsidiaries is set out in

note 31.

auDItoRsPKf (Jhb) Inc. was appointed as auditors at incorporation and

has been reappointed at each annual general meeting.

authoRItY to Issue annual fInancIal stateMentsthe board of directors of the company authorised the release of

these annual financial statements, of which this report forms part,

on 26 March 2013. the memorandum of incorporation of the

company does not make provision for shareholders to amend the

annual financial statements after they have been issued.

22

annual fInancIal stateMents 23


notes

Group Company

2012 R

2011 R

2012 R

2011 R

ASSETS

Non-current assets 68 695 759 51 563 206 109 838 628 109 838 628

Property, plant and equipment 2 52 619 029 30 764 470 – –

Goodwill 3 14 302 804 14 302 804 – –

Investment in subsidiaries 4 – – 109 838 628 109 838 628

Deferred taxation 5 1 773 926 6 495 932 – –

Current assets 165 011 970 148 350 367 59 965 012 70 414 479

Inventories 6 71 733 983 72 258 022 – –

trade and other receivables 7 71 365 557 68 390 409 – –

loans to subsidiaries 8 – – 59 963 929 70 387 285

cash and cash equivalents 23.7 20 841 337 6 167 920 1 083 27 194

taxation 1 071 093 1 534 016 – –

Total assets 233 707 729 199 913 573 169 803 640 180 253 107

EQUITY AND LIABILITIES

Capital and reserves 129 133 100 119 147 678 169 803 473 180 168 585

share capital 9 173 173 173 173

share premium 10 169 803 300 180 168 412 169 803 300 180 168 412

accumulated loss (40 670 373) (61 020 907) – –

Non-current liabilities 30 194 513 12 368 889 – –

Instalment sale liabilities 11 9 926 850 4 114 591 – –

Interest-bearing liabilities 12 19 955 251 8 254 298 – –

Deferred taxation 5 312 412 – – –

Current liabilities 74 380 116 68 397 006 167 84 522

trade and other payables 13 48 983 495 50 253 363 167 84 522

short-term portion of instalment sale liabilities 11 4 547 748 3 775 494 – –

short-term portion of interest-bearing liabilities 12 5 538 192 2 988 196 – –

bank overdraft 23.7 12 644 240 9 487 289 – –

taxation – 23 393 – –

Provisions 14 2 666 441 1 869 271 – –

Total equity and liabilities 233 707 729 199 913 573 169 803 640 180 253 107

net asset value per share (cents) 74.8 69.0

net tangible asset value per share (cents) 66.5 60.7

consolIDateD stateMents of fInancIal PosItIonat 31 DeceMbeR 2012

24

notes

Group Company

2012 R

2011 R

2012 R

2011 R

Revenue 16 550 919 804 483 643 885 – –

cost of sales (381 974 757) (333 033 080) – –

Gross profit 168 945 047 150 610 805 – –

other income 1 365 064 874 267 69 976 125 350

operating expenses (139 476 746) (125 088 168) (69 976) (125 350)

Operating profit 18 30 833 365 26 396 904 – –

Reversal of impairments – – – 90 126 654

Investment income 19 178 733 144 514 – –

finance costs 20 (2 540 847) (2 579 612) – –

Profit before taxation 28 471 251 23 961 806 – 90 126 654

taxation 21 (8 120 717) (5 782 727) – –

Profit for the year 20 350 534 18 179 079 – 90 126 654

other comprehensive income – – – –

Total comprehensive income attributable to equity holders of the parent 20 350 534 18 179 079 – 90 126 654

basic and diluted earnings per share (cents) 22 11.8 9.9

consolIDateD stateMents of coMPRehensIVe IncoMe foR the YeaR enDeD 31 DeceMbeR 2012

25


share capital

R

share premium

R

total share capital

R

accumulated loss

R

total equity

R

Group

balance at 31 December 2010 184 194 850 351 194 850 535 (79 199 986) 115 650 549

share repurchases (11) (4 581 889) (4 581 900) – (4 581 900)

Distribution to shareholders – (10 100 050) (10 100 050) – (10 100 050)

total comprehensive income for the year – – – 18 179 079 18 179 079




Balance at 31 December 2012 173 169 803 300 169 803 473 (40 670 373) 129 133 100

Company


share repurchase (11) (4 581 889) (4 581 900) – (4 581 900)



balance at 31 December 2011 173 180 168 412 180 168 585 – 180 168 585


total comprehensive income for the year – – – – –

Balance at 31 December 2012 173 169 803 300 169 803 473 – 169 803 473

consolIDateD stateMents of chanGes In equItYfoR the YeaR enDeD 31 DeceMbeR 2012

26

notes

Group Company

2012 R

2011 R

2012 R

2011 R

Cash flows from operating activities

operating cash before working capital movements 23.1 35 762 020 31 440 794 – –

Working capital movements 23.2 (2 561 139) (16 225 920) (84 355) 95 251

Cash generated/(utilised) by operations 33 200 881 15 214 874 (84 355) 95 251

Investment income 178 733 144 514 – –

finance costs (2 540 847) (2 579 612) – –

taxation paid 23.3 (2 646 771) (6 258 044) – –

Net cash inflow/(outflow) from operating activities 28 191 996 6 521 732 (84 355) 95 251

Cash flow from investing activities

Investment in property, plant and equipment 23.4 (9 578 057) (1 634 001) – –

Proceeds on disposal of property, plant and equipment 23.5 1 642 840 417 766 – –

sale of business 23.6 – (2 413 825) – –

Repayment of loans to subsidiaries – – 10 423 356 14 604 313

Net cash (outflow)/inflow from investing activities (7 935 217) (3 630 060) 10 423 356 14 604 313

Cash flow from financing activities

Repurchase of shares – (4 581 901) – (4 581 901)

Distribution to shareholders (10 365 112) (10 100 050) (10 365 112) (10 100 050)

Decrease in instalment sale liabilities (4 646 147) (3 534 601) – –

Increase/(decrease) in interest-bearing liabilities 6 270 946 (2 707 832) – –

Net cash outflow from financing activities (8 740 313) (20 924 384) (10 365 112) (14 681 951)

net increase/(decrease) in cash and cash equivalents 11 516 466 (18 032 712) (26 111) 17 614

net cash and cash equivalents at the beginning of the year (3 319 369) 14 713 343 27 194 9 580

Net cash and cash equivalents at the end of the year 23.7 8 197 097 (3 319 369) 1 083 27 194

consolIDateD stateMents of cash floWsfoR the YeaR enDeD 31 DeceMbeR 2012

27


1 accountInG PolIcIes Basis of preparation

the financial statements are prepared on the historical

cost basis, except for financial instruments which have been

accounted for in terms of Ias 39. the financial statements

incorporate the principal accounting policies set out below,

which are consistent with those applied in the previous year.

these policies comply with IfRs, the saIca financial

Reporting Guides as issued by the accounting Practices

committee and the companies act, and are in accordance

with Jse listings Requirements.

the financial statements are presented in south african

Rands as it is the currency of the economic environment in

which the Group operates.

the financial statements are prepared on a going

concern basis.

Basis for consolidationthe consolidated financial statements incorporate the

financial statements of the company and its subsidiaries. the

results of subsidiaries are included from the effective dates of

acquisition to the effective dates of disposal.

Intragroup transactions and balances are eliminated on

consolidation.

Property, plant and equipment and depreciationProperty, plant and equipment is stated at cost less

accumulated depreciation and any accumulated

impairment losses.

Depreciation is provided on the straight-line method to

write the plant and equipment down to their residual values

over their estimated useful lives. the depreciation rates

applied to the various classes of assets are:

buildings 4% per annum

Plant and equipment 10% per annum

office equipment 20% per annum

Vehicles 20% per annum

computer equipment 33% per annum

furniture and fittings 16.67% per annum

Residual values and useful lives are reassessed at each

financial year-end.

Goodwillthe acquisition method of accounting is used to account for

the acquisition of subsidiaries.

the cost of an acquisition is the fair value of assets given,

equity instruments issued and liabilities incurred at the date

of exchange. the costs attributable to the acquisition are

expensed.

Goodwill is initially recognised and carried at cost. Goodwill

is determined as the excess of the aggregate of:

• theconsiderationtransferred;

• theamountofanynon-controllinginterestinthe

acquiree measured in accordance with IfRs 3; and

• inabusinesscombinationachievedinstages,the

acquisition-date fair value of the acquirer’s previously

held equity interest in the acquiree

over the net of the acquisition-date amounts of the

identifiable assets acquired and the liabilities assumed

measured in accordance with IfRs 3.

subsequently goodwill is carried at cost less accumulated

impairment losses.

Goodwill is reviewed for impairment at least annually, or

when indicators of impairment exist. any impairment is

immediately recognised as an expense.

Impairment losses on goodwill cannot be reversed.

Investment in subsidiariesInvestments in subsidiaries are carried at cost less

impairment losses where necessary. they are stated at cost

except where there has been a decline in the recoverable

amount, in which case they are written down to the

recoverable amount.

Financial instrumentsfinancial assets and financial liabilities are recognised on the

Group’s statement of financial position when the Group

becomes a party to the contractual terms of the instrument.

financial instruments include cash and bank balances,

investments, receivables, payables, borrowings and derivative

financial instruments.

financial instruments are initially recognised at fair value plus

transaction costs.

notes to the annual fInancIal stateMentsfoR the YeaR enDeD 31 DeceMbeR 2012

28

financial assets are derecognised when the right to

receive cash flows from the asset has expired or has been

transferred and the Group has transferred substantially all

risks and rewards of ownership.

financial liabilities are derecognised when they are

extinguished, thus discharged, cancelled or expired.

at each financial year-end the Group assesses for each

financial asset whether there is objective evidence that one

or more events have had a negative effect on the future

cash flows of that asset. an impairment loss in respect of a

financial asset measured at amortised cost is calculated as

the difference between its carrying value and the present

value of the future cash flows discounted at the original

effective interest rate. an impairment loss in respect of an

available-for-sale financial asset is calculated by reference

to its current fair value. Impairment losses are recognised

in profit and loss. any cumulative loss in respect of an

available-for-sale financial asset previously recognised in other

comprehensive income is transferred to profit and loss. an

impairment loss is reversed if the reversal can be related

objectively to an event occurring after the impairment loss

was recognised. for financial assets measured at amortised

cost and available-for-sale financial assets that are debt

securities, the reversal is recognised in profit and loss. for

available-for-sale financial assets that are equity securities, the

reversal is recognised in comprehensive income.

Loans receivable

loans receivable originated by the enterprise are stated at

amortised cost, using the effective interest rate method, less

accumulated impairment losses.

Trade and other receivables

trade and other receivables are recognised initially at fair

value including transaction costs and are subsequently

measured at amortised cost using the effective interest rate

method, less provision for impairment.

Where the effect of the time value of money is not

considered material these instruments are not amortised

as their carrying amounts approximate their amortised

cost values.

Impairment of trade receivables is determined as set out

under the significant estimates section below.

the carrying amount of trade receivables is reduced through

the use of a provision for impairment account. Movements in

the provision for impairment are recognised in profit or loss.

uncollectible trade receivables are written off to profit

or loss, while the provision for impairment is reduced

accordingly.

subsequent recoveries of amounts previously written off are

recognised in other income.

Cash and cash equivalentscash and cash equivalents are carried at fair value and

comprise cash on hand and balances with banks and

investments in money market instruments.

Financial liabilitiesloans payable including interest-bearing debt, including

instalment sale liabilities and trade and other payables, are

recognised at amortised cost, using the effective interest rate

method and comprise original debt less principal payments.

Where the effect of the time value of money is not

considered material these liabilities are not amortised as

their carrying amounts approximate their amortised cost

values.

Hedge accountingthe Group’s activities expose it primarily to the financial

risks of changes in foreign currency exchange rates. the

Group uses foreign exchange forward contracts to hedge

this exposure. the Group does not use derivative financial

instruments for speculative purposes.

all foreign currency transactions are hedged through foreign

exchange forward contracts.

Derivative financial instruments are initially measured at fair

value on the contract date and are remeasured to fair value

at subsequent reporting dates.

for an effective hedge of an exposure to changes in the fair

value, the hedged item is adjusted for changes in fair value

attributable to the risk being hedged with the corresponding

entry in profit or loss.

Gains or losses from remeasuring the derivative, or for non-

derivatives of the foreign currency component of its carrying

amount, are recognised in profit or loss.

29


1 accountInG PolIcIes (continued) Inventories

Inventories are stated at the lower of cost and net realisable value, with due allowance being made for damage or obsolescence where applicable. Inventories are carried at cost based on the first-in first-out method. Movements in allowances for damaged, slow moving or obsolete stock are recognised in profit or loss.

Current taxationcurrent taxation for current and prior periods is, to the extent unpaid, recognised as a liability. Where amounts paid in respect of current and prior periods exceed the amount due for those periods, the excess is recognised as an asset.

current tax liabilities and assets are recognised using the tax rates and tax laws that have been enacted or substantively enacted by the statement of financial position date.

current tax expense is recognised in profit or loss unless it relates to items recognised directly in other comprehensive income, in which case it is recognised in other comprehensive income.

Deferred taxationDeferred taxation is accounted for using the comprehensive liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of taxable profits. Deferred tax assets are recognised when it is probable that future taxable profits will be available to off-set against deductible temporary differences.

Deferred taxation is recognised on all temporary differences other than those arising from investment in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future and on those that arise from the initial recognition of goodwill and transactions, other than business combinations, that do not affect either accounting or taxable profit or loss.

Deferred tax is recognised using the tax rates that are enacted or substantively enacted at the financial year-end and is expected to apply when the asset is realised or the liability is settled.

ProvisionsProvisions are recognised when the Group has a present legal or constructive obligation as a result of a past event which is probable and will result in an outflow of economic

benefits that can be reliably measured. Provisions are measured at the directors’ best estimate of the expenditure required to settle the obligation at the statement of financial position date and are discounted to present value where the effect is material. Provisions are calculated on a discounted basis, at pre-tax discount rates adjusted for risks associated with the obligation, where the effect is material to the original undiscounted provision. the carrying amount of the provision increases in each period as the discounting unwinds. the movement is recognised in profit or loss.

Leasesleases of property, plant and equipment, which confer substantially all the benefits and risks of ownership, are classified as finance leases. assets acquired in terms of finance lease agreements are capitalised at fair value or, if lower, at the present value of the minimum lease payments. finance lease payments are allocated using the effective interest rate method, between finance costs and capital repayments.

finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are charged to profit or loss over the term of the lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period.

operating leases are those leases that do not meet the above definition.

operating lease rentals are charged against profit on a straight-line basis over the term of the lease.

RevenueRevenue is measured at the fair value of the consideration received or receivable for goods provided in the normal course of business, net of discounts and value-added taxation.

Revenue from the sale of goods is recognised:

• whensubstantiallyalltherisksandrewardsofownershiphave been transferred to the buyer;

• theenterprisedoesnotretaincontinuingmanagerialcontrol of the goods to a degree usually associated with ownership;

• theamountofrevenueandcostsincurredortobeincurred in respect of the sale transactions can be measured reliably; and

• itisprobablethateconomicbenefitsassociatedwiththetransaction will flow to the Group.

notes to the annual fInancIal stateMentsfoR the YeaR enDeD 31 DeceMbeR 2012 (continued)

30

Cost of salescost of sales consists of the cost of the inventories sold during the period, including costs of conversion and other costs included in bringing the inventories to their present location and condition.

Income from investmentsInterest is recognised on a time proportion basis that takes into account the effective yield on the asset.

Borrowing costsborrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets until such time as the assets are substantially ready for their intended use or sale.

all other borrowing costs are written off on a time apportionment basis to profit or loss in the period in which they are incurred.

Share-based paymentsequity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instrument at grant date.

the fair value is measured using generally accepted valuation techniques, taking into account the terms and conditions upon which such instruments are granted.

the fair value determined at grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period.

at each statement of financial position date management reassesses the number of options expected to vest and the adjustment, if any, is taken to profit or loss with a corresponding adjustment in equity. When share options are exercised a transfer is done within equity to reflect the shares issued at the exercise price.

Foreign currenciesforeign currency transactions are recorded, on initial recognition in Rand, by applying to the foreign currency amount the exchange rate between the Rand and the foreign currency at the date of the transactions. at each statement of financial position date foreign currency monetary items are reported using the closing rate.

exchange differences arising on the settlement of monetary items or on reporting monetary items at rates different from those at which they were initially recorded during the period,

or reported in previous financial statements, are recognised in profit or loss.

Post-retirement benefitscontributions to the defined contribution plans in respect of service in a particular period are recognised as an expense in that period. the Group has no further payment obligations once the contributions have been paid.

Termination benefitstermination benefits are payable when employment is terminated before the normal retirement date or whenever the employee accepts voluntary redundancy in exchange for those benefits. the Group recognises termination benefits when it is demonstrably committed to terminating the employment of employees according to a detailed formal plan without possibility of withdrawal or as a result of an offer made to encourage voluntary redundancy.

Bonus plansthe Group recognises a liability and an expense for bonuses where the Group is contractually obliged or where there is a constructive obligation to pay such bonuses. a provision is made for the portion of expected unpaid bonuses which accrued by the year-end.

Employee leave entitlementemployee entitlements to annual leave are recognised when they accrue to employees. an accrual is made for the annual leave liability at the statement of financial position date.

Impairment of non-financial assetsat each financial year-end consideration is given as to whether indicators exist that assets might be impaired. When such indicators exist, the carrying amount of the relevant assets is reviewed.

Where the carrying amounts of such assets or cash-generating units exceed the estimated recoverable amount, these assets or cash-generating units are written down to their recoverable amount.

the recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs to sell and its value in use.

Impairment losses are first allocated to goodwill and then to other assets in the cash-generating unit on a proportional basis.

Impairment losses and reversals are recognised directly in profit or loss, unless such reversals relate to previously recognised revaluation reserves in equity.

31


1 accountInG PolIcIes (continued)Reversal of a previous impairment loss is limited to the original impairment and cannot increase the carrying amount of an asset to which it relates to an amount higher than that which would have been recognised had no impairment loss initially been recognised.

Significant estimatesIn preparing the financial statements, management is required to make estimates and assumptions that affect reported income, expenses, assets, liabilities and disclosure of contingent liabilities. use of available information and the application of judgement are inherent in the formation of estimates.

significant estimates and judgements are made in the following areas:

Property, plant and equipmentthe useful lives of plant and equipment are estimated using past industry as well as Group experience.

new developments and changes in circumstances inform any changes in these estimates.

Goodwill impairmentGoodwill is tested for impairment at the end of each financial period.

the recoverable amount of the cash-generating unit to which goodwill relates is determined as the higher of its fair value less costs to sell and its value in use. for the purpose of impairment testing goodwill is allocated to the cash-generating unit which benefited from the synergies of the combination.

In determining the value in use, cash flow forecasts are discounted at pre-tax rates which reflect the time value of money and the risk specific to the cash-generating unit.

Where the initial accounting of a business combination is provisional, the fair values of identifiable assets and liabilities will be determined within twelve months of the transaction.

Trade and other receivablesthe impairment provision for trade receivables is calculated by identifying specific past due debtors where indications are that amounts might not be recoverable. these indicators include payment delinquency and specific market information which cast doubt on the recoverability of the amount receivable.

In addition, a general assessment is made of the inherent potential for bad debts in the remaining debtors’ book and a percentage of such debtors are provided for.

TaxationJudgement is required in determining the provision for income taxes due to the complexity of legislation. there are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. the Group recognises liabilities for anticipated tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

the Group recognises the net future tax benefit related to deferred income tax assets to the extent that it is probable that the deductible temporary differences will reverse in the foreseeable future. assessing the recoverability of deferred income tax assets requires the Group to make significant estimates related to expectations of future taxable income. estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in each jurisdiction. to the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Group to realise the net deferred tax assets recorded at the reporting date could be impacted.

Share-based payments the value of share-based payments is arrived at with reference to the market prices of such shares and the utilisation of generally accepted valuation techniques.

actual results may differ from estimates made by management from time to time.

Segment informationoperating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker which is in line with IfRs. the chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the chief executive officer.

at year-end the Group was organised in two main reportable operating segments:

• boarddistribution;and

• manufacturing.

all Group operations are in the Rsa and are not subject to risks and returns that are different from those segments operating in other economic environments. no separate geographical segment disclosure is therefore provided.

other Group operations comprise head office and finance. neither of these constitutes a separate reportable segment.


32

2 PRoPeRtY, Plant anD equIPMent

Group

31 December 2012 31 December 2011

CostR

Accumulated depreciation/

impairmentR

Carrying value

Rcost

R

accumulated depreciation/

impairmentR

carrying value

R

land and buildings 16 146 047 (18 544) 16 127 503 – – –

Plant and equipment 34 769 820 (11 227 484) 23 542 336 29 574 199 (10 019 855) 19 554 344

office equipment 1 413 446 (996 318) 417 128 1 179 713 (828 413) 351 300

Vehicles 18 867 433 (7 292 513) 11 574 920 15 784 773 (5 745 302) 10 039 471

computer equipment 2 665 626 (1 923 652) 741 974 2 299 659 (1 643 208) 656 451

furniture and fittings 743 907 (528 739) 215 168 616 591 (453 687) 162 904

Total 74 606 279 (21 987 250) 52 619 029 49 454 935 (18 690 465) 30 764 470

Reconciliation of property, plant and equipment at 31 December

Opening balance

R

Additions and transfers

R

Disposals and transfers

RDepreciation

RImpairment

RTotal

R

2012

land and buildings – 16 146 047 – (18 544) – 16 127 503

Plant and equipment 19 554 344 7 107 823 (768 486) (2 351 345) – 23 542 336

office equipment 351 300 233 734 – (167 907) – 417 127

Vehicles 10 039 471 3 632 414 (342 626) (1 754 338) – 11 574 921

computer equipment 656 451 381 543 (8 420) (287 600) – 741 974

furniture and fittings 162 904 127 316 – (75 052) – 215 168

30 764 470 27 628 877 (1 119 532) (4 654 786) – 52 619 029

2011

land and buildings – – – – – –

Plant and equipment 19 787 512 3 646 184 (991 580) (2 187 772) (700 000) 19 554 344

office equipment 279 411 223 057 (6 107) (145 061) – 351 300

Vehicles 10 709 354 1 034 315 (75 478) (1 628 720) – 10 039 471

computer equipment 360 900 573 225 (3 704) (273 970) – 656 451

furniture and fittings 212 234 28 389 – (77 719) – 162 904

31 349 411 5 505 170 (1 076 869) (4 313 242) (700 000) 30 764 470

Plant and equipment, including vehicles, with a net book value of R18 722 251 (2011: R11 690 168) secure the instalment sale liabilities disclosed in note 11.

the movable assets of sign and seal trading 154 (Pty) limited and sharp Move trading 260 (Pty) limited serve as security for the interest-bearing liabilities as reflected in note 12.

33


Group Company

2012 R

2011 R

2012 R

2011 R

3 GooDWIllGoodwill Kayreed 399 567 399 567 – –

Kayreed acquisition 58 113 654 58 113 654 – –

Goodwill impairment (57 714 087) (57 714 087) – –

Goodwill Davidsons holding company 13 903 237 13 903 237 – –

Davidsons holding company acquisition 75 422 340 75 422 340 – –

Goodwill impairment (61 519 103) (61 519 103) – –

14 302 804 14 302 804 – –

the recoverable amount of goodwill was calculated by determining its value in use through the discounted cash flow method. cash flows were projected over a 10-year period. a 10-year period was used to account for the length of economic cycles in the industry.

the following key assumptions were applied:

average nominal growth (%) 11 9

Discount rate (%) 24 25

the nominal growth rate was calculated by assuming inflation at 7% (2011: 7%) with real growth rates for each year varying between 3% and 5% (2011: 2% and 3%), with a terminal growth rate of 7% (2011: 7%).

the discount rate was calculated by using a risk free rate adjusted for systematic and unsystematic risk factors.

Goodwill represents expected synergies and the value of the assembled workforce of the various businesses.

4 InVestMent In subsIDIaRIesshares at cost – – 109 838 628 109 838 628

Details of subsidiaries are detailed in note 31.


34

Group Company

2012 R

2011 R

2012 R

2011 R

5 DefeRReD taXatIonDeferred taxation assets comprise:

accelerated capital allowances (1 241 085) (3 094 179) – –

unrealised profits in inventory 103 295 124 793 – –

Doubtful debt allowances 1 078 417 2 356 156 – –

Payroll accruals 746 590 1 134 638 – –

Rental accruals 317 603 476 499 – –

forward exchange contracts 51 152 – – –

estimated tax losses 717 954 5 498 025 – –

1 773 926 6 495 932 – –

Deferred taxation liabilities comprise:

accelerated capital allowances 2 275 155 – – –

Doubtful debt allowances (1 050 035) – – –

Payroll accruals (858 169) – – –

Rental accruals (54 539) – – –

312 412 – – –

Deferred taxation asset 1 773 926 6 495 932 – –

Deferred taxation liability (312 412) – – –

1 461 514 6 495 932 – –

balance at the beginning of the period 6 495 932 5 758 832 – –

Recognition of previous period’s deferred tax assets – 1 234 447 – –

unrealised profits (21 498) (136 480) – –

temporary differences (232 849) 70 399 – –

estimated tax losses (4 780 071) (431 266) – –

1 461 514 6 495 932 – –

the Group considers it probable that sufficient taxable income will be available in the future to realise the deferred tax assets. the sufficiency of future taxable income was supported by budgets for the 2013 financial year as well as the historical trading results of the various divisions in the Group.

6 InVentoRIesInventories comprise

– raw materials 6 652 842 5 335 929 – –

– merchandise 73 228 267 74 195 326 – –

79 881 109 79 531 255 – –

Impairment (8 147 126) (7 273 233) – –

71 733 983 72 258 022 – –

no inventory items are carried at fair value.

cost of sales relates to inventory sold.

35


Group Company 2012

R 2011

R 2012

R 2011

R

7 tRaDe anD otheR ReceIVablestrade receivables 78 723 563 75 009 273 – –

Impairment allowance (10 135 486) (11 219 791) – –

68 588 077 63 789 482 – –

other receivables 2 777 480 4 600 927 – –

71 365 557 68 390 409 – –

the standard credit period on sale of goods is 30 days from the date of statement.

before accepting any new customer, the Group performs credit checks utilising external credit bureaux and banks.

Industry knowledge and visits to potential customer premises assist in the decision to accept a new customer and the setting of credit limits.

credit limits are continuously monitored through payment history checks and industry information.

Included in the Group’s trade receivable balance are debtors with a carrying amount of R7 676 630 (2011: R7 124 435) which are past due at the reporting date for which the Group has not provided as the amounts are still considered recoverable.

Ageing of past due but not impaired trade receivables120 days - 6 248 951 5 150 069

120 days + 1 427 679 1 974 366

7 676 630 7 124 435

Ageing of impaired trade receivables120 days - 2 609 190 1 937 662

120 days + 8 945 265 10 852 900

11 554 455 12 790 562

Included in this amount is value-added taxation of R1 418 969 (2011: R1 570 771).

Reconciliation of impairment allowanceopening balance 11 219 791 13 236 883

Reversed during the period (1 084 305) (2 017 092)

10 135 486 11 219 791

8 loans to subsIDIaRIesDavidsons holding company (Pty) limited – – 11 661 423 11 661 423

sharp Move trading 260 (Pty) limited – – 48 302 506 58 725 862

– – 59 963 929 70 387 285

the loans are interest free and payable on demand.


36

Group Company

2012 R

2011 R

2012 R

2011 R

9 shaRe caPItalAuthorised

1 000 000 000 ordinary shares of 0.0001 cent each 1 000 1 000 1 000 1 000

Issued

172 751 585 (2011: 172 751 585) ordinary shares of 0.0001 cent each 173 173 173 173

Unissued shares

the unissued shares are under the control of the directors until the forthcoming annual general meeting.

Reconciliation of number of ordinary shares in issue

ordinary shares in issue at the beginning of the year 172 751 585 183 637 373 172 751 585 183 637 373

ordinary shares repurchased during the year – (10 885 788) – (10 885 788)

ordinary shares in issue at the end of the year 172 751 585 172 751 585 172 751 585 172 751 585

10 shaRe PReMIuMbalance at the beginning of the period 180 168 412 194 850 351 180 168 412 194 850 351

Repurchase of shares – (4 581 889) – (4 581 889)

Distribution to shareholders (10 365 112) (10 100 050) (10 365 112) (10 100 050)

169 803 300 180 168 412 169 803 300 180 168 412

11 InstalMent sale lIabIlItIesInstalment sales over plant and equipment with interest rates varying between prime and two percentage points below prime 14 474 598 7 890 085 – –

short-term portion (4 547 748) (3 775 494) – –

9 926 850 4 114 591 – –

Minimum instalments

Payable within one year 5 550 132 4 274 157 – –

Payable in two to five years 11 264 166 4 598 783 – –

16 814 298 8 872 940 – –

Capital repayments included in minimum instalments



14 474 598 7 890 085 – –

Instalment sale liabilities are secured by plant and equipment, including vehicles, as set out in note 2.

37


Group Company

2012 R

2011 R

2012 R

2011 R

12 InteRest-beaRInG lIabIlItIesterm loans* 17 513 443 11 242 494 – –

Mortgage bond loan** 7 980 000 – – –

short-term portion (5 538 192) (2 988 196) – –

19 955 251 8 254 298 – –

Minimum instalments



Payable after five years 5 923 502 – – –

32 332 776 13 157 441 – –

Capital repayments included in minimum instalments



Payable after five years 4 846 374 – – –

25 493 443 11 242 494 – –

* term loans consist of the following two loans with the following outstanding balances:

nedbank term loan 1 8 245 025 11 242 494 – –

nedbank term loan 2 9 268 418 – – –

17 513 443 11 242 494 – –

these term loans bear interest at one percentage point above the prime overdraft rate quoted by nedbank and are secured by general notarial bonds over the moveable assets of sharp Move trading 260 (Pty) limited and sign and seal trading 154 (Pty) limited. the value of the security is R108 575 874 (2011: R95 132 407).

both term loans have a repayment period of five years with the final instalment of nedbank term loan 1 on 1 april 2015 and the final instalment of nedbank term loan 2 on 1 June 2017.

** the mortgage bond loan bears interest at the prime overdraft rate quoted by nedbank. the loan is secured by a mortgage bond over land and buildings with a carrying value of R13 850 000. the loan has a repayment term of ten years with the final instalment on 1 December 2022.


38

Group Company

2012 R

2011 R

2012 R

2011 R

13 tRaDe anD otheR PaYablestrade payables 40 777 121 43 549 403 – –

other payables 8 206 374 6 703 960 167 84 522

48 983 495 50 253 363 167 84 522

14 PRoVIsIonsProvision for leave pay

at the beginning of the year 1 869 271 2 134 099 – –

Movement during the year 797 170 (264 828) – –

2 666 441 1 869 271 – –

employee entitlements to annual leave are recognised as a provision when they accrue to employees. When employees utilise leave or employment is terminated the amounts so accrued are reversed against the provision. the provision is adjusted when rates of remuneration change.

15 banKInG facIlItIesthe Group’s banking facilities include an overdraft facility with a maximum limit of R25 000 000. at year-end R12 644 240 (2011: R9 487 289) of this overdraft facility was utilised.

the banking facilities are secured by a cession of debtors and unlimited cross sureties between KayDav Group limited, Davidsons holding company (Pty) limited, evertrade 168 (Pty) limited, evertrade 173 (Pty ltd, evertrade 180 (Pty) limited, tresso trading 298 (Pty) limited, sharp Move trading 260 (Pty) limited, sign and seal trading 154 (Pty) limited, braver trading (Pty) limited and KayDav Industries (Pty) limited.

16 ReVenuesale of goods 550 919 804 483 643 885 – –

17 shaRe-baseD PaYMentson listing a major shareholder of KayDav Group limited granted 1 500 000 share options to the chairman of the board, Ian stern. these options have a strike price of R1.00 and 300 000 options could be exercised on 15 november of each year from 2008 to 2012. If not exercised in a particular year the options were carried forward and can be exercised on or before 20 november 2013.

39


Group Company

2012 R

2011 R

2012 R

2011 R

18 oPeRatInG PRofItThe following items are included in operating profit

Audit fees

audit services 783 282 861 432 – –

other services 31 200 64 500 – –

814 482 925 932 – –

(Profit)/loss on disposal of tangible assets

Property, plant and equipment – owned (523 302) 295 476 – –

Impairment/(reversal of impairment)

Plant and equipment – 700 000 – –

Inventories 873 893 (502 152) – –

trade receivables (1 084 305) (2 017 092) – –

Investment in subsidiaries – – – (51 083 477)

loans to subsidiaries – – – (39 043 177)

Depreciation

Plant and equipment – owned 4 654 786 4 313 242 – –

Operating lease charges

Property 11 888 375 11 253 532 – –

Plant and equipment (including vehicles) 3 466 422 3 103 839 – –

15 354 797 14 357 371 – –

Staff costs

contributions to defined contribution retirement funds 3 103 596 3 074 290 – –

Medical benefits 1 400 554 1 486 661 – –

other (including salaries, bonuses, allowances, commissions, fringe benefits excluding retirement and medical) 70 449 374 59 986 247 – –

74 953 524 64 547 198 – –

19 InVestMent IncoMebank interest received 169 510 144 514 – –

south african Revenue service 9 223 – – –

178 733 144 514 – –


40

Group Company

2012 R

2011 R

2012 R

2011 R

20 fInance costsInterest-bearing borrowings including instalment sale liabilities 2 306 492 1 818 537 – –

bank overdraft 223 928 761 075 – –

south african Revenue service 10 427 – – –

2 540 847 2 579 612 – –

21 taXatIonsouth african normal tax at standard rate

– current year 3 122 786 6 485 779 – –

– prior year (36 485) 34 049 – –

Deferred 5 034 416 (737 101) – –

8 120 717 5 782 727 – –

Tax rate reconciliation

normal tax rate (%) 28 28 – –

Recognition of deferred tax asset (%) – (5) – –

non-deductible expenditure (%) 1 1 – –

effective tax rate (%) 29 24 – –

22 eaRnInGs PeR shaReWeighted average number of shares

shares in issue at the beginning of the year 172 751 585 183 637 373

shares repurchased (weighted) – (885 661)

172 751 585 182 751 712

Reconciliation between earnings and headline earnings

earnings 20 350 534 18 179 079

(Profit)/loss on sale of plant and equipment (523 302) 295 476

taxation on (profit)/loss on sale of plant and equipment 146 525 (82 733)

Impairment of plant and equipment – 700 000

taxation on impairment of plant and equipment – (196 000)

headline earnings 19 973 757 18 895 822

basic and diluted earnings per share (cents) 11.8 9.9

headline earnings per share (cents) 11.6 10.3 41


Group Company

2012 R

2011 R

2012 R

2011 R

23 notes to the cash floW stateMents23.1 Operating cash before working capital movements

Profit before taxation 28 471 251 23 961 806 – 90 126 654 adjusted for :Depreciation 4 654 786 4 313 242 – – Impairment of plant and equipment – 700 000 – – Reversal of impairments – – – (90 126 654)(Profit)/loss on disposal of assets (523 302) 295 476 – – Interest received (178 733) (144 514) – – finance costs 2 540 847 2 579 612 – – Movement in provisions 797 171 (264 828) – –

35 762 020 31 440 794 – – 23.2 Working capital movements

Inventories 524 039 (11 020 313) – – trade and other receivables (2 975 148) (2 268 086) – 10 729 trade and other payables (110 030) (2 937 521) (84 355) 84 522

(2 561 139) (16 225 920) (84 355) 95 251 23.3 Taxation paid

balance at the beginning of the year 1 510 623 1 772 407 – – charge for the year (3 086 301) (6 519 828) – – balance at the end of the year (1 071 093) (1 510 623) – – taxation paid (2 646 771) (6 258 044) – –

23.4 Investment in property, plant and equipment land and buildings (16 146 047) – – – Plant and equipment (7 107 823) (3 533 584) – – office equipment (233 734) (223 057) – – Motor vehicles (3 632 414) (783 283) – – computer equipment (381 543) (573 225) – – furniture and fittings (127 316) (28 389) – –

(27 628 877) (5 141 538) – – Non-cash portion of investment in property, plant and equipmentland and buildings financed by mortgage bond 7 980 000 – – – Plant and equipment financed by instalment sale liabilities 6 493 020 3 102 333 – – Motor vehicles financed by instalment sale liabilities 3 577 800 405 204 – –

(9 578 057) (1 634 001) – –

the prior year cash flows were reclassified to recognise assets acquired through instalment sales as non-cash flow items rather than an inflow from financing activities and an outflow in investing activities and also accounting for the Vat component on these transactions. the following reclassification was made in respect of the year ended 31 December 2011:

the cash inflows from operating activities increased by R452 536, the cash outflows from investing activities decreased by R3 507 537 and the cash outflows from financing activities increased by R3 960 073.

Details of the mortgage bond and instalment sale liabilities are disclosed in note 12.


42

Group Company

2012 R

2011 R

2012 R

2011 R

23.5 Proceeds on disposal of property, plant and equipmentPlant and equipment 1 314 672 375 000 – – computer equipment 6 868 – – – Motor vehicles 321 300 42 766 – –

1 642 840 417 766 – – 23.6 Sale of business

consideration received – – – – cash sold – – – – costs related to disposal of business – (2 413 825) – –

– (2 413 825) – – 23.7 Net cash and cash equivalents

cash and cash equivalents 20 841 337 6 167 920 1 083 27 194 bank overdraft (12 644 240) (9 487 289) – –

8 197 097 (3 319 369) 1 083 27 194

24 coMMItMentsCapital expenditure

Property

– contracted for – 2 100 000 – –

Plant and equipment

– contracted for – 827 557 – –

– 2 927 557 – –

Operating leases

the minimum commitments are

– property 23 999 899 24 071 724 – –

– plant and equipment (including vehicles) 1 565 570 1 925 440 – –

25 565 469 25 997 164 – –



thereafter – – – –

25 565 469 25 997 164 – –

no contingent rent is payable in respect of the operating leases. 43


25 fInancIal InstRuMents bY cateGoRY IncluDInG non-fInancIal assets anD lIabIlItIesFinancial assets by category including non-financial assets

Loans and receivables

R

Fair value through profit or loss – held

for tradingR

Fair value through profit

or loss – designated

R

Available-for-sale

R

Non-financial assets

RTotal

R

GROUP

2012

Property, plant and equipment – – – – 52 619 029 52 619 029

Goodwill – – – – 14 302 804 14 302 804

Deferred taxation – – – – 1 773 926 1 773 926

Inventories – – – – 71 733 983 71 733 983

trade and other receivables 70 678 609 – – – 686 948 71 365 557

current tax receivable – – – – 1 071 093 1 071 093

cash and cash equivalents 20 841 337 – – – – 20 841 337

91 519 946 – – – 142 187 783 233 707 729

2011

Plant and equipment – – – – 30 764 470 30 764 470

Goodwill – – – – 14 302 804 14 302 804

Deferred taxation – – – – 6 495 932 6 495 932

Inventories – – – – 72 258 022 72 258 022

trade and other receivables 65 016 028 – – – 3 374 381 68 390 409

current tax receivable – – – – 1 534 016 1 534 016

cash and cash equivalents 6 167 920 – – – – 6 167 920

71 183 948 – – – 128 729 625 199 913 573

COMPANY

2012

Investment in subsidiaries – – – – 109 838 628 109 838 628

loans to group companies 59 963 929 – – – – 59 963 929

cash and cash equivalents 1 083 – – – – 1 083

59 965 012 – – – 109 838 628 169 803 640

2011

Investment in subsidiaries – – – – 109 838 628 109 838 628

loans to group companies 70 387 285 – – – – 70 387 285

cash and cash equivalents 27 194 – – – – 27 194

70 414 479 – – – 109 838 628 180 253 107


44

Financial liabilities by category including non-financial liabilities

Financial liablilities at

amortised cost

R

Fair value through profit or loss – held

for tradingR

Non-financial liabilities

RTotal

R

GROUP

2012

Instalment sale liabilities (including short-term portion) 14 474 598 – – 14 474 598

Interest-bearing liabilities (including short-term portion) 25 493 443 – – 25 493 443

Deferred taxation – – 312 412 312 412

trade and other payables 44 199 796 182 685* 4 601 014 48 983 495

bank overdraft 12 644 240 – – 12 644 240

current taxation – – – –

Provisions – – 2 666 441 2 666 441

96 812 077 182 685 7 579 867 104 574 629

2011

Instalment sale liabilities (including short-term portion) 7 890 085 – – 7 890 085

Interest-bearing liabilities (including short-term portion) 11 242 494 – – 11 242 494

Deferred taxation – – – –

trade and other payables 47 749 238 4 351* 2 499 774 50 253 363

bank overdraft 9 487 289 – – 9 487 289

current taxation – – 23 393 23 393

Provisions – – 1 869 271 1 869 271

76 369 106 4 351 4 392 438 80 765 895

* these amounts relate to forward exchange liabilities. these liabilities are categorised as liabilities for which level 2 inputs are used to determine fair value.

COMPANY

2012

trade and other payables 167 – – 167

2011

trade and other payables 84 522 – – 84 522 45


26 RIsK ManaGeMentFinancial risk managementthe Group’s non-derivative financial instruments consist mainly of deposits with and borrowings from banks, trade receivables and trade payables and loans to and from subsidiaries.

these instruments either carry interest at market-related rates or are short term in nature. the book value of these financial instruments approximates fair value.

Derivative instruments used by the Group for hedging of foreign currency risk are forward exchange contracts. the Group does not speculate in the trading of these derivative instruments.

Foreign currency managementthe Group transacts a portion of its purchases in foreign currency. hedging instruments are used to reduce the risks arising from foreign currency fluctuations and are designated to accounts payable.

Foreign exchange riskIt is the policy of the Group to hedge all foreign transactions by covering the transactions with forward exchange contracts on transaction date.

as such no unhedged foreign exchange balances existed at period-end and the value of the open forward exchange contracts at period-end as well as the effect of this during the year on profit and loss is negligible.

Interest rate risk managementInterest rates on all deposits with banks and external borrowings are variable and linked to prime overdraft rates.

Management monitors the level of interest rate risk by ensuring that the level of interest-bearing liabilities are such that a significant increase in interest rates does not materially impact on the overall profitability of the Group.

Credit risk managementPotential credit risk comprises trade accounts receivable, other receivables and cash deposits with banks.

credit risk relating to trade accounts receivable is dispersed over a large number of customers.

there are no significant concentrations of credit risk in that no customer comprises more than 5% of accounts receivable.

the Group performs credit checks on all new customers and monitors the credit situation of each customer on an ongoing basis.

Where appropriate, accounts are secured through personal suretyships, collateral and credit insurance.

the Group invests surplus funds only with major financial institutions.

the Group’s maximum exposure to credit risk at year-end is set out below:

2012R

2011R

trade receivables 69 055 757 65 797 608

other receivables 2 090 532 1 226 546

cash and cash equivalents 20 841 337 6 167 920

91 987 626 73 192 074

the maximum exposure relating to trade receivables was arrived at by reducing the carrying value of trade receivables by value-added taxation.

the carrying value of other receivables was reduced by excluding non-financial assets to arrive at the maximum exposure of the Group relating to this item.

the carrying value of cash and cash equivalents represents the Group’s maximum exposure to credit risk relating to this item.

Liquidity risk managementthe Group manages liquidity risk by monitoring cash flows and ensuring that adequate unutilised borrowing facilities are maintained.

the Group’s facilities at 31 December 2012 are reflected in note 15.


46

Sensitivity analysisForeign exchange risk Interest rate risk

Profit/(loss) should the Rand exchange rate change by 5%

Profit/(loss) should the interest rate change by 2%

Carrying value

R

Amount exposed

to riskR

Rand appreciation

R

Rand depreciation

R

Amount exposed

to riskR

Rate increase

R

Rate decrease

RGROUP2012Financial assetsbank and cash 20 841 337 – – – 20 841 337 416 827 (416 827)trade and other receivables 71 365 557 – – – – – – Impact of financial assets on:– profit before taxation – – – – – 416 827 (416 827)– profit after taxation – – – – – 300 115 (300 115)Financial liabilities – Instalment sale agreements 14 474 598 – – – 14 474 598 (289 492) 289 492 Interest-bearing liabilities 25 493 443 – – – 25 493 443 (509 869) 509 869 trade and other payables 48 983 495 298 741* 14 937 (14 937) – – – bank overdraft 12 644 240 – – – 12 644 240 (252 885) 252 885 Impact of financial liabilities on:– profit before taxation – – 14 937 (14 937) – (1 052 246) 1 052 246 – profit after taxation – – 10 755 (10 755) – (757 617) 757 617 overall impact on profit after taxation – – 10 755 (10 755) – (457 502) 457 502

2011Financial assetsbank and cash 6 167 920 – – – 6 167 920 123 358 (123 358)trade and other receivables 68 390 409 – – – – – – Impact of financial assets on:– profit before taxation – – – – – 123 358 (123 358)– profit after taxation – – – – – 88 818 (88 818)Financial liabilities – Instalment sale agreements 7 890 085 – – – 7 890 085 (157 802) 157 802 Interest-bearing liabilities 11 242 494 – – – 11 242 494 (224 850) 224 850 trade and other payables 50 253 363 795 358** 39 768 (39 768) – – – bank overdraft 9 487 289 – – – 9 487 289 (189 746) 189 746 Impact of financial liabilities on:– profit before taxation – – 39 768 (39 768) – (572 397) 572 397 – profit after taxation – – 28 633 (28 633) – (412 126) 412 126 overall impact on profit after taxation – – 28 633 (28 633) – (323 308) 323 308

* this exposure is hedged with forward exchange contracts. the exposure is in euros.** this exposure was hedged with forward exchange contracts. R191 178 of the exposure was in euros while R604 180 was in us Dollars.

Maturity analysis of financial liabilities Instalment sale agreements and interest-bearing liabilities Refer to notes 11 and 12.

Trade and other payables trade and other payables are payable within six months.

Bank overdrafts bank overdrafts are repayable on demand.

Loans to subsidiaries loans to subsidiaries are payable on demand.

47


26 RIsK ManaGeMent (continued)Sensitivity analysis (continued)

Foreign exchange risk Interest rate riskProfit/(loss) should the Rand exchange rate change by 5%

Profit/(loss) should the interest rate change by 2%

Carrying value

R

Amount exposed

to riskR

Rand appreciation

R

Rand depreciation

R

Amount exposed

to riskR

Rate increase

R

Rate decrease

RCOMPANY2012Financial assetsloans to subsidiaries 59 963 929 – – – – – – bank and cash 1 083 – – – 1 083 22 (22)trade and other receivables – – – – – – – Impact of financial assets on:– profit before taxation – – – – – 22 (22)– profit after taxation – – – – – 16 (16)Financial liabilitiestrade and other payables 167 – – – – – – Impact of financial liabilities on:– profit before taxation – – – – – – – – profit after taxation – – – – – – – overall impact on profit after taxation – – – – – 16 (16)

2011Financial assetsloans to subsidiaries 70 387 285 – – – – – – bank and cash 27 194 – – – 27 194 544 (544)trade and other receivables – – – – – – – Impact of financial assets on:– profit before taxation – – – – – 544 (544)– profit after taxation – – – – – 392 (392)Financial liabilitiestrade and other payables 84 522 – – – – – – Impact of financial liabilities on:– profit before taxation – – – – – – – – profit after taxation – – – – – – – overall impact on profit after taxation – – – – – 392 (392)

Capital management the Group defines capital as equity funding by shareholders and debt funding from external parties. equity funding comprises share capital, share premium and reserves, less goodwill.

the Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to provide optimal returns for shareholders through maintenance of an optimal capital structure.

Previously the Group’s bankers required the maintenance of a gearing ratio below 1. the gearing ratio was defined as total liabilities to equity.

total liabilities excludes deferred taxation and is reduced by cash and cash equivalents. equity is reduced by goodwill. the Group managed this ratio as an external as well as internal capital structure requirement. at year-end this ratio was 0.73 (2011: 0.71).

During 2012 the Group and its bankers agreed that a gearing ratio defined as interest-bearing liabilities to equity would be more appropriate. Interest-bearing liabilities is reduced by cash and cash equivalents while equity is reduced by goodwill. the Group’s bankers require this ratio to be below 0.7. the Group adopted this ratio as an external as well as internal capital structure requirement. at year-end this ratio was 0.28 (2011: 0.21).


48

27 RetIReMent benefIts the Group operates defined contribution retirement plans for the benefit of its employees. all permanent employees are required

to become members of one of these plans. contributions to retirement funding during the reporting period amounted to R3 103 596 (2011: R3 074 290).

28 DIRectoRs’ ReMuneRatIon

Services as directors

RSalary

R Allowances

R

Bonuses and

perform-ance-

related payments

R

Retirement and related

benefitsR

Share-based payments

R

Other benefits

RTotal

R2012Executive directorsGary Davidson – 1 976 414 17 000 959 139 – – 54 708 3 007 261 Martin slier – 1 061 976 17 000 539 890 173 099 – 43 750 1 835 715

– 3 038 390 34 000 1 499 029 173 099 – 98 458 4 842 976 Non-executive directorsIan stern 436 375 – – – – – – 436 375 Jonathan hertz 242 917 – – – – – – 242 917 boitumelo tlhabanelo 180 000 – – – – – – 180 000

859 292 – – – – – – 859 292

2011Executive directorsGary Davidson – 1 558 946 42 000 743 815 – – 40 878 2 385 639 Martin slier – 812 732 42 000 440 545 142 641 – 35 280 1 473 198

– 2 371 678 84 000 1 184 360 142 641 – 76 158 3 858 837 Non-executive directorsIan stern 415 450 – – – – – – 415 450 Jonathan hertz 215 433 – – – – – – 215 433 boitumelo tlhabanelo* – – – – – – –

630 883 – – – – – – 630 883

* boitumelo tlhabanelo was appointed on 15 December 2011.

Directors are paid from sharp Move trading 260 (Pty) limited, a wholly-owned subsidiary of KayDav Group limited.

Key management and prescribed officers are defined as directors of KayDav Group limited.

2012 2011

Interest of directorsDirect

RIndirect

RDirect

RIndirect

RBeneficialIan stern 300 000 – 300 000 –Gary Davidson 13 325 794 25 349 797 13 325 794 25 093 532Martin slier 6 000 100 – 6 000 100 –

19 625 894 25 349 797 19 625 894 25 093 532

no movement in the interest of directors occurred between the year-end and the date of this report.

49


29 RelateD PaRtIesRelated parties are those that control or have significant influence over the Group or company, including major investors and key management personnel and parties that are controlled or significantly influenced by the Group or company, including subsidiaries.

Related party Nature of relationshipCompaniesDavidsons holding company subsidiaryKayDav Industries (Pty) limited subsidiaryevertrade 168 (Pty) limited subsidiaryevertrade 173 (Pty) limited subsidiaryevertrade 180 (Pty) limited subsidiarybraver trading (Pty) limited subsidiarytresso trading 298 (Pty) limited subsidiarysharp Move trading 260 (Pty) limited subsidiarysign and seal trading 154 (Pty) limited subsidiary

DirectorsKayDav Group LimitedGary DavidsonIan sternJonathan hertzMartin slierboitumelo tlhabanelo

Companies for which the directors of KayDav Group Limited are also directorsDavidsons holding company (Gary Davidson and Martin slier)KayDav Industries (Pty) limited (Ian stern, Gary Davidson and Martin slier)evertrade 168 (Pty) limited (Gary Davidson and Martin slier)evertrade 173 (Pty) limited (Gary Davidson and Martin slier)evertrade 180 (Pty) limited (Gary Davidson and Martin slier)braver trading (Pty) limited (Gary Davidson and Martin slier)tresso trading 298 (Pty) limited (Gary Davidson and Martin slier)sharp Move trading 260 (Pty) limited (Gary Davidson and Martin slier)sign and seal trading 154 (Pty) limited (Gary Davidson and Martin slier)

Significant shareholders % holding the David brouze trust 41.59the Davidson family trust 29.35Gary Davidson 7.71craig Dawson 5.14

Related party transactionsDirectorsDirectors’ emoluments are set out in note 28. the executive directors are the key management personnel for the Group andcompany and there are no other prescribed officers.

ShareholdersPremises rented from the Davidson family trust (major shareholder) resulted in a rent charge of R2 545 953 (2011: R2 357 359) for the year.

at year-end the combined rental amounted to R227 618 (2011: R210 757) per month and escalates at 8% per annum. the rental agreements will run until 30 november 2015.

Investment and loansRelated party investment and loans of the holding company are reflected in notes 4 and 8.

no guarantees have been issued in respect of these loans.


50

2012 R

2011 R

30 seGMental analYsIs at 31 December 2012 the Group was organised into two reportable operating segments:– board distribution; and– manufacturing.

Segmental revenueboard distribution 532 957 540 471 028 870 Manufacturing 46 495 481 40 686 396 other – – Internal revenue (28 533 217) (28 071 381)

550 919 804 483 643 885

Internal revenue relates to sales from the manufacturing segment to the board distribution segment.

Segmental resultsboard distribution 29 806 990 26 055 459 Manufacturing 1 026 375 184 335 other – 157 110 operating profit before interest 30 833 365 26 396 904

Inter-segment transactions are entered into under normal commercial terms and conditions available to third parties.

Operating assetsboard distribution 202 530 128 167 937 010 Manufacturing 16 267 026 14 455 121 other 1 288 801 447 638 Internal transactions (3 526 049) (5 258 948)

216 559 906 177 580 821

segment assets consist of property, plant and equipment, inventory, trade receivables and operating cash and excludes taxation assets, investments and intangible assets.

Operating liabilitiesboard distribution 73 101 065 57 809 459 Manufacturing 3 475 327 5 438 451 other 31 211 874 22 753 544 Internal transactions (3 526 049) (5 258 948)

104 262 217 80 742 506

segment liabilities include operating liabilities and excludes taxation liabilities.

Capital expenditureboard distribution 26 563 262 4 482 163 Manufacturing 1 084 197 467 267 other 219 164 230 853 Internal transactions (237 746) 324 890

27 628 877 5 505 173

capital expenditure comprises additions to property, plant and equipment.

51


2012 R

2011 R

30 seGMental analYsIs (continued)

Depreciation and impairment

board distribution 3 890 640 3 520 807

Manufacturing 687 444 1 460 207

other 76 702 32 228

4 654 786 5 013 242

the manufacturing segment number for the prior year includes an amount of R700 000 in respect of the impairment of a machine.

Secondary reporting format (geographical segments)

all Group operations are in the Rsa and are not subject to risks and returns that are different from those segments operating in other economic environments.

Issued share capital

shares at cost less amounts

written offamount

receivable

31 subsIDIaRIesDirect holdings

all wholly owned

Davidsons holding company (Pty) limited 200 200 11 661 423

Indirect holdings

all wholly owned via Davidsons holding company (Pty) limited

KayDav Industries (Pty) limited* 100 Indirect –

evertrade 168 (Pty) limited* 100 Indirect –



braver trading (Pty) limited* 100 Indirect –

tresso trading 298 (Pty) limited* 100 Indirect –

sharp Move trading 260 (Pty) limited 150 Indirect 48 302 506

sign and seal trading 154 (Pty) limited 200 Indirect –

* these subsidiaries will be deregistered in due course.


52

32 neW accountInG PRonounceMents at the date of authorisation of these financial statements, the following standards and interpretations were in issue but not yet effective.

Standard Details of amendmentAnnual periods beginning on or after

IfRs 1: first-time adoption of International financial Reporting standards

• AmendmentsaddanexceptiontotheretrospectiveapplicationofIFRStorequirethat first-time adopters apply the requirements in IfRs 9: financial Instruments and Ias 20: accounting for Government Grants and Disclosure of Government assistance prospectively to government loans existing at the date of transition to IfRs.

1 January 2013

• Annual Improvements 2009 – 2011 Cycle amendments clarify the options available to users when repeated application of IfRs 1 is required and to add relevant disclosure requirements.

1 January 2013

• Annual Improvements 2009 – 2011 Cycle amendments to borrowing costs. 1 January 2013

IfRs 7: financial Instruments – Disclosures

• Amendmentsrequireentitiestodisclosegrossamountssubjecttorightsofset-off,amounts set off in accordance with the accounting standards followed, and the related net credit exposure. this information will help investors understand the extent to which an entity has set off in its balance sheet and the effects of rights of set-off on the entity’s rights and obligations.

1 January 2013

IfRs 9: financial Instruments

• Newstandardthatformsthefirstpartofathree-partprojecttoreplaceIAS39:financial Instruments – Recognition and Measurement.

1 January 2015

IfRs 10: consolidated financial statements

• NewstandardthatreplacestheconsolidationrequirementsinSIC-12:Consolidation–special Purpose entities and Ias 27: consolidated and separate financial statements. standard builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company and provides additional guidance to assist in the determination of control where this is difficult to assess.

1 January 2013

• AmendmentstothetransitionguidanceofIFRS10:ConsolidatedFinancialStatements,IfRs 11: Joint arrangements and IfRs 12: Disclosure of Interests in other entities, this limiting the requirements to provide adjusted comparative information.

1 January 2013

• IFRS10exceptiontotheprinciplethatallsubsidiariesmustbeconsolidated.Entitiesmeeting the definition of “Investment entities” must be accounting for at fair value under IfRs 9: financial Instruments, or Ias 39: financial Instruments – Recognition and Measurement.

1 January 2014

IfRs 11: Joint arrangements

• Newstandardthatdealswiththeaccountingforjointarrangementsandfocusesonthe rights and obligations of the arrangement, rather than its legal form. standard requires a single method for accounting for interests in jointly controlled entities.

1 January 2013


1 January 2013

IfRs 12: Disclosure of Interests in other entities

• Newandcomprehensivestandardondisclosurerequirementsforallformsofinterestsin other entities, including joint arrangements, associates, special purpose vehicles and other off-balance sheet vehicles.

1 January 2013


1 January 2013

• Newdisclosuresrequiredforinvestmententities(asdefinedinIFRS10). 1 January 2013

IfRs 13: fair Value Measurement

• Newguidanceonfairvaluemeasurementanddisclosurerequirements. 1 January 2013

53


32 neW accountInG PRonounceMents (continued)

Standard Details of amendmentAnnual periods beginning on or after

Ias 1: Presentation of financial statements

• NewrequirementstogrouptogetheritemswithinOCIthatmaybereclassifiedtotheprofit or loss section of the income statement in order to facilitate the assessment of their impact on the overall performance of an entity.

1 July 2012

• Annual Improvements 2009 – 2011 Cycle amendments clarifying the requirements for comparative information including minimum and additional comparative information required.

1 January 2013

Ias 12: Income taxes

• Rebuttablepresumptionintroducedthataninvestmentpropertywillberecoveredinits entirety through sale.

1 January 2012

Ias 16: Property, Plant and equipment

• Annual Improvements 2009 – 2011 Cycle amendments to the recognition and classification of servicing equipment.

1 January 2013

Ias 19: employee benefits

• Amendmentstotheaccountingforcurrentandfutureobligationsresultingfromtheprovision of defined benefit plans.

1 January 2013

Ias 27: consolidated and separate financial statements

• ConsequentialamendmentsresultingfromtheissueofIFRS10,11and12. 1 January 2013

• Requirementtoaccountforinterestsin“InvestmentEntities”atfairvalueunderIFRS9:financial Instruments, or Ias 39: financial Instruments – Recognition and Measurement, in the separate financial statements of a parent.

1 January 2014

Ias 28: Investments in associates

• ConsequentialamendmentsresultingfromtheissueofIFRS10,11and12. 1 January 2013

Ias 32: financial Instruments – Presentation

• Amendmentsrequireentitiestodisclosegrossamountssubjecttorightsofset-off,amounts set off in accordance with the accounting standards followed and the net related credit exposure. this information will help investors understand the extent to which an entity has set off in its balance sheet and the effects of rights of set-off on the entity’s rights and obligations.

1 January 2013

• Annual Improvements 2009 – 2011 Cycle amendments to clarify the tax effect of distribution to holders of equity instruments.

1 January 2013

Ias 34: Interim financial Reporting

• Annual Improvements 2009 – 2011 Cycle amendments to improve the disclosures for interim financial reporting and segment information for total assets and liabilities.

1 January 2013

Interpretations

IfRIc 20: stripping costs in the Production Phase of a surface Mine 1 January 2013

the directors anticipate that the adoption of these standards and interpretations in future periods will have no material impact on the financial statements of the Group/company.

33 subsequent eVentsno material change has taken place in the affairs of the Group between the end of the 2012 financial year and the date of this report that will require adjustment or disclosure in the annual financial statements.


54

number of shareholders

% of total number of

shareholdersnumber of

shares% of total

issued capital

Analysis of shareholdings

1 – 1 000 29 21.5 8 473 0.00

1 001 – 10 000 36 26.7 188 036 0.11

10 001 – 100 000 38 28.1 1 643 472 0.95

100 001 – 1 000 000 21 15.6 6 383 906 3.70

1 000 001 and more 11 8.1 164 527 698 95.24

135 100.0 172 751 585 100.00

Major shareholders (holding 5% or more of shares in issue)

the Davidson family trust 50 699 593 29.35

the David brouze trust 71 854 335 41.59

Mr Gary frank Davidson* 13 325 794 7.71

Mr craig Graeme Dawson 8 883 863 5.14

Shareholder spread

Directors of KayDav Group limited and its subsidiaries** 4 3.0 53 859 554 31.18

shareholders with an interest of 10% or more in the company other than directors of KayDav Group limited and its subsidiaries*** 2 1.5 97 204 132 56.27

Public 129 95.5 21 687 899 12.45

135 100.0 172 751 585 100.00

Distribution of shareholders

Individuals 107 79.3 43 182 040 25.0

Private companies 13 9.6 5 948 677 3.5

close corporations 7 5.2 424 150 0.2

trusts 8 5.9 123 196 718 71.3

135 100.0 172 751 585 100.0

Share trades during the period

opening price (cents) 44

closing price (cents) 102

high (cents) 110

low (cents) 41

Volume (number of shares) 3 501 672

* Mr Gary frank Davidson has a 50% indirect beneficial interest in the Davidson family trust.** Includes the 50% indirect beneficial interest in the Davidson family trust of Mr Gary frank Davidson.*** excludes 50% of the holding of the Davidson family trust, being the beneficial interest of Mr Gary frank Davidson.

analYsIs of shaReholDeRsat 31 DeceMbeR 2012

55


notIce of annual GeneRal MeetInG

notice is hereby given that the annual general meeting of shareholders of KayDav will be held at 2 arnold Road, Rosebank, 2196, Gauteng on thursday, 13 June 2013 at 10:00 (the “annual general meeting”) for the purposes of transacting the following business, with or without amendment:

a) to receive, consider and adopt the annual financial statements of the company and the Group as at and for its year ended on 31 December 2012, together with the reports of the directors and auditors thereon;

b) transacting any other business as may be transacted at the annual general meeting of shareholders of a company; and

c) considering and, if deemed fit, adopting with or without modification the shareholder ordinary and special resolutions set out herein.

Important dates to note

Record date for receipt of notice purposes thursday, 28 March 2013last day to trade in order to be eligible to vote friday, 31 May 2013Record date for voting purposes (“voting record date”) friday, 7 June 2013last day to lodge forms of proxy at 10:00 tuesday, 11 June 2013annual general meting held at 10:00 thursday, 13 June 2013Results of annual general meeting released on sens thursday, 13 June 2013

In terms of section 62(3)(e) of the companies act, 71 of 2008 (the “companies act” or the “act”):

• ashareholderwhoisentitledtoattendandvoteattheannual general meeting is entitled to appoint a proxy or two or more proxies to attend and participate in and vote at the annual general meeting in the place of the shareholder, by completing the form of proxy in accordance with the instructions set out therein;

• aproxyneednotbeashareholderofthecompany;and

• KayDavshareholdersrecordedintheregisterofthecompany on the voting record date (including proxies) are required to provide reasonably satisfactory identification before being entitled to attend or participate in the annual general meeting: in this regard, all KayDav shareholders recorded in the register of the company on the voting record date will be required to provide identification satisfactory to the chairman of the annual general meeting. forms of identification include valid identity documents, driver’s licences and passports.

oRDInaRY ResolutIonsOrdinary resolution 1: Adoption of annual financial statements“Resolved that the annual financial statements of the company for the year ended 31 December 2012, including the Directors’ Report and the Report of the audit committee, be and are hereby received and adopted.”

In order for ordinary resolution 1 to be adopted, the support of more than 50% of the total number of votes exercisable by shareholders, present in person or by proxy, is required to pass this resolution.

Ordinary resolution 2: Re-election of director“Resolved that Jonathan hertz, who retires by rotation in terms of article 26.8 of the company’s memorandum of incorporation (‘MoI’) and who is eligible and available for re-election, be re-elected as a director of the company.”

a brief curriculum vitae of Jonathan hertz can be found on page 6 of the annual report of which this notice forms part.


Ordinary resolution 3: Appointment of auditors“Resolved that PKf (Jhb) Inc., together with ben frey as the designated audit director, be and are hereby reappointed as auditors of the company for the ensuing financial year and the directors be and are hereby authorised to fix the remuneration of the auditors.”


Ordinary resolution 4: Appointment of audit committee members“Resolved that the members of the company’s audit committee set out below be and are hereby appointed with effect from the end of this annual general meeting in terms of section 94(2) of the companies act. the membership as proposed by the board of directors of the company, all of whom are independent non-executive directors, is:

4.1 Jonathan hertz as member and chairman of the audit committee;

4.2 Ian stern as member of the audit committee, notwithstanding Ian’s dual role as chairman of the board of directors and member of the audit committee; and

4.3 boitumelo tlhabanelo as member of the audit committee.

KayDav Group Limited(Registration number 2006/038698/06)

share code: KDVIsIn: Zae000108940

(“KayDav” or “the company” or “the Group”)

56

brief curricula vitae in respect of the above audit committee members can be found on page 6 of the annual report of which this notice forms part.


Ordinary resolution 5: Unissued ordinary shares“Resolved that the authorised, but unissued, shares in the capital of the company be placed under the control of the directors of the company until the next annual general meeting, with the authority to allot or issue all or part thereof in their discretion, subject to the provisions of the companies act and the listings Requirements of the Jse limited (the ‘listings Requirements’).”


Ordinary resolution 6: General authority to issue shares for cash“Resolved that, pursuant to the memorandum of incorporation (‘MoI’) of the company, the directors of the company be and are hereby authorised until this authority lapses at the next annual general meeting of the company, provided that this authority shall not extend beyond 15 months, to allot and issue shares for cash subject to the listings Requirements and the companies act, on the following bases:

a) the shares which are the subject of the issue for cash must be of a class already in issue or, where this is not the case, must be limited to such shares or rights as are convertible into a class already in issue;

b) the allotment and issue of shares for cash shall be made only to persons qualifying as ‘public shareholders’, as defined in the listings Requirements, and not to ‘related parties’;

c) shares which are the subject of general issues for cash:

(i) in aggregate in any one financial year may not exceed 15% of the company’s shares in issue of that class (for purposes of determining the shares comprising the 15% number in any one year, account must be taken of the dilutionary effect, in the year of issue of options or convertible securities, by including the number of any equity securities which may be issued in future arising out of the issue of such options/convertible securities);

(ii) as regards the number of shares which may be issued (the 15% number), same shall be based on the number of shares of that class in issue added to those that may be issued in future (arising from the conversion of options/convertible securities), at the date of such application:

(1) less any shares of the class issued, or to be issued in future arising from options/convertible securities issued, during the current financial year (which commenced 1 January 2013);

(2) plus any shares of that class to be issued pursuant to:

(aa) a rights issue which has been announced, is irrevocable and is fully underwritten; or

(bb) an acquisition (in respect of which final terms have been announced) which acquisition issue securities may be included as though they were securities in issue at the date of application;

d) the maximum discount at which shares may be issued is 10% of the weighted average traded of such shares measured over the 30 business days prior to the date that the price of the issue is agreed between the company and the party subscribing for the shares. the Jse should be consulted for a ruling if the company’s shares have not traded in such 30-business day period;

e) after the company has issued shares in terms of this general authority to issue shares for cash representing on a cumulative basis within a financial year, 5% or more of the number of shares in issue prior to that issue, the company shall publish an announcement containing full details of that issue, including:

(i) the number of shares issued;

(ii) the average discount to the weighted average traded price of the shares over the 30 business days prior to the date that the issue is agreed in writing between the company and the party/ies subscribing for the shares; and

(iii) the effects of the issue on the net asset value per share, net tangible asset value per share, earnings per share, headline earnings per share and, if applicable, diluted earnings and diluted headline earnings per share.”

In terms of the listings Requirements, in order for ordinary resolution 6 to be adopted, the support of at least 75% of the total number of votes exercisable by shareholders, present in person or by proxy, is required to pass this resolution.

Ordinary resolution 7: Signature of documentation“Resolved that any director of the company be and is hereby authorised to sign all such documents and do all such things as may be necessary or incidental to the implementation of ordinary resolutions 1, 2, 3, 4, 5, 6 and 7 and special resolutions 1 and 2.


sPecIal ResolutIonsSpecial resolution 1: Financial assistance to related or interrelated company“Resolved that, to the extent required by the companies act, the board of directors of the company may, subject to compliance with the requirements of the company’s MoI, the companies act and the listings Requirements, each as presently

57


constituted and as amended from time to time, authorise the company to provide direct or indirect financial assistance, as contemplated in section 45 of the companies act by way of loans, guarantees, the provision of security or otherwise, to any of its present or future subsidiaries and/or any other company or corporation that is or becomes related or interrelated (as defined in the companies act) to the company for any purpose or in connection with any matter, such authority to endure until the next annual general meeting provided that such authority shall not extend beyond two years, and further provided that inasmuch as the company’s provision of financial assistance to its subsidiaries will at any and all times be in excess of one-tenth of 1% of the company’s net worth, the company hereby provides notice to its shareholders of that fact.”

In order for special resolution 1 to be adopted, the support of at least 75% of the total number of votes exercisable by shareholders, present in person or by proxy, is required to pass this resolution.

Reason for and effect of special resolution 1In appropriate circumstances and if the need arises the company would like the ability to provide financial assistance in accordance with section 45 of the companies act. under the companies act, the company will, however, require the special resolution referred to above to be adopted, provided that the board of directors of the company be satisfied that the terms under which the financial assistance is proposed to be given are fair and reasonable to the company and, immediately after providing the financial assistance, the company would satisfy the solvency and liquidity test contemplated in the companies act. In the circumstances and in order to, inter alia, ensure that the company’s subsidiaries and other related and interrelated companies and corporations have access to financing and/or financial backing from the company (as opposed to banks), it is necessary to obtain the approval of shareholders, as set out in special resolution 1. therefore, the reason for, and effect of, special resolution 1 is to permit the company to provide direct or indirect financial assistance (within the meaning attributed to that term in section 45 of the act) to the entities referred to in special resolution 1 above.

Special resolution 2: Repurchase of shares “Resolved that the directors be authorised in terms of the company’s MoI, until this authority lapses at the next annual general meeting of the company unless it is then renewed at the next annual general meeting of the company and provided that this authority shall not extend beyond 15 months, to enable the company or any subsidiary of the company to acquire shares of the company subject to the listings Requirements and the companies act, on the following bases:

a) the acquisition of shares must be effected through the order book operated by the Jse trading system and done without any prior understanding or arrangement between the company and the counterparty;

b) the company (or any subsidiary) must be authorised to do so in terms of its MoI;

c) the number of shares which may be acquired pursuant to this authority in any financial year (which commenced on 1 January 2013) may not in the aggregate exceed 20% (or 10% where the acquisitions are effected by a subsidiary) of the company’s share capital as at the date of this notice of annual general meeting;

d) repurchases may not be made at a price more than 10% above the weighted average of the market value on the Jse of the shares in question for the five business days immediately preceding the repurchase;

e) repurchases may not take place during a prohibited period (as defined in paragraph 3.67 of the listings Requirements) unless a repurchase programme is in place and the dates and quantities of shares to be repurchased during the prohibited period have been determined and full details thereof announced on sens prior to commencement of the prohibited period;

f) after the company has acquired shares which constitute, on a cumulative basis, 3% of the number of shares in issue (at the time that authority from shareholders for the repurchase is granted), the company shall publish an announcement to such effect, containing full details of the repurchases or any other announcements that may be required in such regard in terms of the Jse listings Requirements applicable from time to time;

g) the company’s sponsor must confirm the adequacy of the company’s working capital for purposes of undertaking the repurchase of shares in writing to the Jse prior to the company (or any subsidiary) entering the market to proceed with the repurchase;

h) the company (or any subsidiary) shall appoint only one agent to effect repurchases on its behalf; and

i) the board of directors of the company must resolve that the repurchase is authorised, the company and its subsidiaries have passed the solvency and liquidity test as set out in section 4 of the companies act and since that test was performed, there have been no material changes to the financial position of the Group.”

In accordance with the listings Requirements the directors record that:

although there is no immediate intention to effect a repurchase of the shares of the company, the directors would utilise the general authority to repurchase shares as and when suitable opportunities present themselves, which may require immediate action. the directors undertake that, after considering the maximum number of shares that may be repurchased and the price at which the repurchases may take place pursuant to the buy-back general authority, for a period of 12 months after the date of this annual general meeting:

• thecompanyandtheGroupwill,intheordinarycourseofbusiness, be able to pay its debts;

• theconsolidatedassetsofthecompanyandtheGroupfairlyvalued in accordance with International financial Reporting standards, will be in excess of the consolidated liabilities of the company and the Group after the buy-back; and

notIce of annual GeneRal MeetInG (continued)

58

• thecompany’sandtheGroup’ssharecapital,reservesand working capital will be adequate for ordinary business purposes.

the following additional information, some of which may appear elsewhere in the annual report of which this notice forms part, is provided in terms of the listings Requirements for purposes of this general authority:

• Directors–pages6and7;

• Majorbeneficialshareholders–page55;

• Directors’interestsinshares–page49;and

• Capitalstructureofthecompany–page4.

Litigation statementIn terms of section 11.26 of the listings Requirements, the directors, whose names appear on pages 6 and 7 of the annual report of which this notice forms part, are not aware of any legal or arbitration proceedings including proceedings that are pending or threatened, that may have or have had in the recent past (being at least the previous 12 months) a material effect on the company’s financial position.

Directors’ responsibility statementthe directors whose names appear on pages 6 and 7 of the annual report of which this notice forms part, collectively and individually accept full responsibility for the accuracy of the information pertaining to this special resolution and certify that, to the best of their knowledge and belief, there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that the special resolution contains all information required by the companies act and the listings Requirements.

Material changesother than the facts and developments reported on in the annual report of which this notice forms part, there have been no material changes in the affairs or financial position of the company and its subsidiaries since the date of signature of the audit report for the financial year ended 31 December 2012 and up to the date of this notice.

Reason for and effect of special resolution 2the reason for special resolution 2 is to afford directors of the company a general authority for the company (or a subsidiary of the company) to effect a repurchase of the company’s shares on the Jse. the effect of the resolution will be that the directors will have the authority, subject to the listings Requirements and the companies act, to effect repurchases of the company’s shares on the Jse.

In order for special resolution 2 to be adopted, the support of at least 75% of the total number of votes exercisable by shareholders, present in person or by proxy, is required to pass this resolution.

quoRuMa quorum for the purposes of considering the resolutions above shall consist of three shareholders of the company personally present (and if the shareholder is a body corporate, must be represented) and entitled to vote at the annual general meeting. In addition, a quorum shall comprise 25% of all voting rights entitled to be exercised by shareholders in respect of the resolutions above.

the date on which shareholders must be recorded as such in the register maintained by the transfer secretaries, link Market services south africa (Pty) limited (5th floor, 11 Diagonal street, Johannesburg, 2001), for the purposes of being entitled to attend, participate in and vote at the annual general meeting is friday, 7 June 2013 (the “voting record date”).

VotInG anD PRoXIesa member who is entitled to attend and vote at the annual general meeting may appoint one or more proxies (who need not be a member of the company) to attend, speak and vote in his stead.

on a show of hands, every shareholder of the company present in person or represented by proxy shall have one vote only. on a poll, every shareholder of the company present in person or represented by proxy shall have one vote for every share in the company held by such shareholder.

a form of proxy is attached for the convenience of any KayDav shareholder holding certificated shares who cannot attend the annual general meeting but who wishes to be represented thereat. forms of proxy may also be obtained on request from the company’s registered office. the completed form of proxy must be deposited at or posted to the office of the transfer secretaries of the company, link Market services south africa (Pty) limited, 5th floor, 11 Diagonal street, Johannesburg, 2001 (Po box 4844, Johannesburg, 2000) to be received by not later than 10:00 on tuesday, 11 June 2013. any shareholder who completes and lodges a form of proxy will nevertheless be entitled to attend and vote in person at the annual general meeting should the shareholder subsequently decide to do so.

attached to the form of proxy is an extract of section 58 of the companies act, to which shareholders are referred.

shareholders who have already dematerialised their shares through a central securities Depository Participant (“csDP”) or broker and who wish to attend the annual general meeting must instruct their csDP or broker to issue them with the necessary letter of representation to attend.

Dematerialised shareholders, who have elected “own name” registration in the sub-register through a csDP and who are unable to attend but who wish to vote at the annual general meeting must complete and return the attached form of proxy and lodge it with the transfer secretaries of the company, link Market services south africa (Pty) limited, 5th floor, 11 Diagonal street, Johannesburg, 2001 (Po box 4844, Johannesburg, 2000) to be received by no later than 10:00 on tuesday, 11 June 2013.

59


all beneficial owners whose shares have been dematerialised through a csDP or broker other than with “own name” registration, must provide the csDP or broker with their voting instructions in terms of their custody agreement should they wish to vote at the annual general meeting. alternatively, they may request the csDP or broker to provide them with a letter of representation, in terms of their custody agreements, should they wish to attend the annual general meeting. such shareholder must not complete the attached form of proxy.

In terms of section 63(1) meeting participants will be required to provide identification to the reasonable satisfaction of the chairman of the annual general meeting and the chairman must be reasonably satisfied that the right of any person to participate in and vote (whether as a shareholder or as a proxy for a shareholder) has been reasonably satisfied.

electRonIc PaRtIcIPatIonshareholders or their proxies may participate in the annual general meeting by way of telephone conference call. shareholders or their proxies who wish to participate in the annual general meeting by telephone conference call as aforesaid, will be required to advise the company thereof by no later than 10:00 on Monday, 27 May 2013 by submitting, by e-mail to Martin slier at [email protected], or by fax, to be faxed to 086 519 2014 marked for the attention of Martin slier, relevant contact details including an e-mail address, cellular number and landline, as well as full details of the shareholder’s title to shares issued by the company and proof of identity, in

the form of copies of identity documents and share certificates (in the case of materialised shareholders), and (in the case of dematerialised shareholders) written confirmation from the shareholder’s csDP confirming the shareholder’s title to the dematerialised shares. upon receipt of the required information, the shareholder concerned will be provided with a secure code and instructions to access the electronic communication during the annual general meeting. shareholders must note that access to the electronic communication will be at the expense of the shareholders who wish to utilise the facility. shareholders who wish to participate in the annual general meeting by electronic participation must further note that they will not be able to vote during the annual general meeting. such shareholders, should they wish to have their vote counted at the annual general meeting, must, to the extent applicable:

(i) complete the proxy form; or

(ii) contact their csDP or stockbroker,

in both instances as set out above.

by order of the board

Probity Business Services (Pty) Limitedcompany secretary

26 March 2013

notIce of annual GeneRal MeetInG (continued)

60

KayDav Group Limited(Registration number 2006/038698/06)

share code: KDVIsIn: Zae000108940

(“KayDav” or “the company”)

foRM of PRoXY

for use by shareholders of KayDav holding certificated shares and/or dematerialised shareholders who have elected “own name” registration, nominee companies of central securities Depository Participants (“csDPs”) and brokers’ nominee companies, registered as such at the close of business on the voting record date, at the annual general meeting to be held at 10:00 on thursday, 13 June 2013 at 2 arnold Road, Rosebank, 2196, Gauteng (“annual general meeting”) or any postponement or adjournment thereof.

If you are a dematerialised shareholder, other than with “own name” registration, do not use this form. Dematerialised shareholders, other than with “own name” registration, should provide instructions to their appointed csDP or broker in the form as stipulated in the agreement entered into between the shareholder and the csDP or broker.

I/We _______________________________________________________________________________ (blocK letteRs Please)

of _____________________________________________________________________________________________ (aDDRess)

being the holder/s of _________________________________________________________________ KayDav shares hereby appoint:

1. ___________________________________________________________________________________________ or failing him/her,

2. ___________________________________________________________________________________________ or failing him/her,

3. the chairman of the annual general meeting,

as my/our proxy to attend and speak and to vote for me/us and on my/our behalf at the annual general meeting and at any adjournment or postponement thereof, for the purpose of considering and, if deemed fit, passing, with or without modification, the resolutions to be proposed at the annual general meeting, and to vote on the resolutions in respect of the ordinary shares registered in my/our name/s, in the following manner (see note 2):

Number of votesShares

For* Against* Abstain*ordinary resolution 1 – adoption of annual financial statements ordinary resolution 2 – Re-election of directorordinary resolution 3 – appointment of auditorsordinary resolution 4 – appointment of audit committee members4.1 Jonathan hertz4.2 Ian stern4.3 boitumelo tlhabaneloordinary resolution 5 – unissued ordinary sharesordinary resolution 6 – General authority to issue shares for cashordinary resolution 7 – signature of documentsspecial resolution 1 – financial assistance to related or interrelated partiesspecial resolution 2 – Repurchase of shares

* one vote per share held by KayDav shareholders recorded in the register on the voting record date.* Mark “for”, “against” or “abstain” as required. If no options are marked the proxy will be entitled to vote as he/she thinks fit.

unless otherwise instructed, my/our proxy may vote or abstain from voting as he/she thinks fit.

signed this ____________________________________________ day of ___________________________________________ 2013

signature __________________________________________________________________________________________________

assisted by me (where applicable) _______________________________________________________________________________(state capacity and full name)

a shareholder entitled to attend and vote at the annual general meeting is entitled to appoint a proxy to attend, vote and speak in his/her stead. a proxy need not be a shareholder of the company. each shareholder is entitled to appoint one or more proxies to attend, speak and, on a poll, vote in place of that shareholder at the annual general meeting.

forms of proxy must be deposited at link Market services south africa (Pty) limited, 5th floor, 11 Diagonal street, Johannesburg, 2001 or posted to Po box 4844, Johannesburg, 2000 so as to arrive by no later than 10:00 on tuesday, 11 June 2013.

Please read the notes on the reverse side hereof

61


1. this form of proxy is only to be completed by those ordinary shareholders who are:

a) holding ordinary shares in certificated form; or b) recorded in the sub-register in electronic form in their

“own name”,

on the date on which shareholders must be recorded as such in the register maintained by the transfer secretaries, link Market services south africa (Pty) limited, being friday, 7 June 2013 and who wish to appoint another person to represent them at the annual general meeting.

2. certificated shareholders wishing to attend the annual general meeting have to ensure beforehand with the transfer secretaries of the company (being link Market services south africa (Pty) limited) that their shares are registered in their name.

3. beneficial shareholders whose shares are not registered in their “own name”, but in the name of another, for example, a nominee, may not complete a proxy form, unless a form of proxy is issued to them by a registered shareholder and they should contact the registered shareholder for assistance in issuing instruction on voting their shares, or obtaining a proxy to attend, speak and, on a poll, vote at the annual general meeting.

4. a shareholder may insert the name of a proxy or the names of two alternative proxies of the shareholder’s choice in the space, with or without deleting “the chairman of the annual general meeting”. the person whose name stands first on the form of proxy and who is present at the annual general meeting will be entitled to act as proxy to the exclusion of those whose names follow.

5. a shareholder’s instructions to the proxy must be indicated by means of a tick or a cross in the appropriate box provided. however, if you wish to cast your votes in respect of a lesser number of shares than you own in the company, insert the number of shares in respect of which you desire to vote. If: (i) a shareholder fails to comply with the above; or (ii) gives contrary instructions in relation to any matter or any additional resolution(s) which are properly put before the annual general meeting; or (iii) the resolution listed in the proxy form is modified or amended, the member will be deemed to authorise the chairman of the annual general meeting, if the chairman is the authorised proxy, to vote in favour of the resolutions at the annual general meeting, or any other proxy to vote or to abstain from voting at the annual general meeting as he/she deems fit, in respect of all the member’s votes exercisable thereat. If, however, the member has provided further written instructions which accompany this form of proxy and which indicate how the proxy should vote or abstain from voting in any of the circumstances referred to in (i) to (iii) above, then the proxy shall comply with those instructions.

6. the forms of proxy should be lodged at link Market services south africa (Pty) limited, 5th floor, 11 Diagonal street, Johannesburg, 2001 or posted to Po box 4844, Johannesburg, 2000 so as to be received by not later than 10:00 on tuesday, 11 June 2013.

7. the completion and lodgement of this form of proxy will not preclude the relevant shareholder from attending the annual general meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof, should such shareholder wish to do so. In addition to the aforegoing, a shareholder may revoke the proxy appointment by (i) cancelling it in writing, or making a later inconsistent appointment of a proxy; and (ii) delivering a copy of the revocation instrument to the proxy, and to the company. the revocation of a proxy appointment constitutes a complete and final cancellation of the proxy’s authority to act on behalf of the shareholder as at the later of the date stated in the revocation instrument, if any; or the date on which the revocation instrument was delivered in the required manner.

8. the chairman of the annual general meeting may reject or accept any form of proxy which is completed and/or received, other than in compliance with these notes provided that, in respect of acceptances, he is satisfied as to the manner in which the shareholder/s concerned wish/es to vote.

9. any alteration to this form of proxy, other than a deletion of alternatives, must be initialled by the signatory/ies.

10. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form of proxy unless previously recorded by the company or link Market services south africa (Pty) limited or waived by the chairman of the annual general meeting.

11. a minor must be assisted by his/her parent or guardian unless the relevant documents establishing his/her legal capacity are produced or have been registered by link Market services south africa (Pty) limited.

12. Where there are joint holders of shares:

a) any one holder may sign the form of proxy; and

b) the vote of the senior (for that purpose seniority will be determined by the order in which the names of shareholders appear in the register of members) who tenders a vote (whether in person or by proxy) will be accepted to the exclusion of the vote/s of the other joint holder/s of shares.

13. If duly authorised, companies and other corporate bodies who are shareholders of the company having shares registered in their own name may, instead of completing this form of proxy, appoint a representative to represent them and exercise all of their rights at the annual general meeting by giving written notice of the appointment of that representative. this notice will not be effective at the annual general meeting unless it is accompanied by a duly certified copy of the resolution or other authority in terms of which that representative is appointed and is received at link Market services south africa (Pty) limited, at 5th floor, 11 Diagonal street, Johannesburg, 2001 to reach the company by no later than 10:00 on tuesday, 11 June 2013.

notes to the foRM of PRoXY

62

14. this form of proxy may be used at any adjournment or postponement of the annual general meeting, including any postponement due to a lack of quorum, unless withdrawn by the shareholder.

15. the aforegoing notes contain a summary of the relevant provisions of section 58 of the companies act, 2008 (the “companies act”), as required in terms of that section. In addition, an extract from the companies act reflecting the provisions of section 58 of the companies act, is attached to this form of proxy.

eXtRact fRoM the coMPanIes act“58. shareholder right to be represented by proxy

(1) at any time, a shareholder of a company may appoint any individual, including an individual who is not a shareholder of that company, as a proxy to –

(a) participate in, and speak and vote at, a shareholders meeting on behalf of the shareholder; or

(b) give or withhold written consent on behalf of the shareholder to a decision contemplated in section 60.

(2) a proxy appointment –

(a) must be in writing, dated and signed by the shareholder; and

(b) remains valid for – (i) one year after the date on which it was signed; or (ii) any longer or shorter period expressly set out in

the appointment,

unless it is revoked in a manner contemplated in subsection (4)(c), or expires earlier as contemplated in subsection (8)(d).

(3) except to the extent that the Memorandum of Incorporation of a company provides otherwise –

(a) a shareholder of that company may appoint two or more persons concurrently as proxies, and may appoint more than one proxy to exercise voting rights attached to different securities held by the shareholder;

(b) a proxy may delegate the proxy’s authority to act on behalf of the shareholder to another person, subject to any restriction set out in the instrument appointing the proxy; and

(c) a copy of the instrument appointing a proxy must be delivered to the company, or to any other person on behalf of the company, before the proxy exercises any rights of the shareholder at a shareholders’ meeting.

(4) Irrespective of the form of instrument used to appoint a proxy –

(a) the appointment is suspended at any time and to the extent that the shareholder chooses to act directly and in person in the exercise of any rights as a shareholder;

(b) the appointment is revocable unless the proxy appointment expressly states otherwise; and

(c) if the appointment is revocable, a shareholder may revoke the proxy appointment by –

(i) cancelling it in writing, or making a later inconsistent appointment of a proxy; and

(ii) delivering a copy of the revocation instrument to the proxy, and to the company.

(5) the revocation of a proxy appointment constitutes a complete and final cancellation of the proxy’s authority to act on behalf of the shareholder as of the later of –

(a) the date stated in the revocation instrument, if any; or (b) the date on which the revocation instrument was

delivered as required in subsection (4)(c)(ii).

(6) If the instrument appointing a proxy or proxies has been delivered to a company, as long as that appointment remains in effect, any notice that is required by this act or the company’s Memorandum of Incorporation to be delivered by the company to the shareholder must be delivered by the company to –

(a) the shareholder; or (b) the proxy or proxies, if the shareholder has – (i) directed the company to do so, in writing; and (ii) paid any reasonable fee charged by the company for

doing so.

(7) a proxy is entitled to exercise, or abstain from exercising, any voting right of the shareholder without direction, except to the extent that the Memorandum of Incorporation, or the instrument appointing the proxy, provides otherwise.

(8) If a company issues an invitation to shareholders to appoint one or more persons named by the company as a proxy, or supplies a form of instrument for appointing a proxy –

(a) the invitation must be sent to every shareholder who is entitled to notice of the meeting at which the proxy is intended to be exercised;

(b) the invitation, or form of instrument supplied by the company for the purpose of appointing a proxy, must –

(i) bear a reasonably prominent summary of the rights established by this section;

(ii) contain adequate blank space, immediately preceding the name or names of any person or persons named in it, to enable a shareholder to write in the name and, if so desired, an alternative name of a proxy chosen by the shareholder; and

(iii) provide adequate space for the shareholder to indicate whether the appointed proxy is to vote in favour of or against any resolution or resolutions to be put at the meeting, or is to abstain from voting;

(c) the company must not require that the proxy appointment be made irrevocable; and

(d) the proxy appointment remains valid only until the end of the meeting at which it was intended to be used, subject to subsection (5).

(9) subsection (8)(b) and (d) do not apply if the company merely supplies a generally available standard form of proxy appointment on request by a shareholder.”

63


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notes

64

Groundpepper

annual general meeting June 2013

Interim period-end June 2013

Interim results published september 2013

Year-end December 2013

annual results published March 2014

Posting of annual report March 2014

shaReholDeRs’ DIaRY

www.kaydav.co.za

105 bamboesvlei Road, ottery, 7800

integrated annual report 2012 - jse€¦ · 20 directors’ responsibility for financial reporting...

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