INTRODUCTION · 2020. 10. 12. · • MFB (melamine faced board) press • New formica worktop line • MANUFACTURING • Feltex investment for new vehicle model KAP INDUSTRIAL Aug

INTRODUCTION JAAP DU TOIT

CHAIRMAN

1

AGENDA

•  KAP Industrial strategy •  Year under review •  Divisional highlights •  Financial performance •  Outlook

2 KAP INDUSTRIAL Aug 2014

KAP INDUSTRIAL STRATEGY

AN INDUSTRIAL GROUP FOCUSED ON •  Being the leaders in the markets we serve •  High barrier to entry industries •  Sustainable earnings through diversity in business •  Solid margins by adding value through our specialist skills and assets •  Strong cash flow generation •  Leveraging our base in Africa


YEAR UNDER REVIEW JO GROVE

CEO

4

YEAR UNDER REVIEW

5

BUSINESS OBJECTIVES COMPLETED •  Logistics USCS* restructure completed in FY14

•  Overhead cost savings more than offsets restructure costs •  Passenger follows USCS in Africa

•  Passenger concludes contract in Mozambique on USCS project •  PG Bison restructure completed

•  Benefits continue to flow through in year under review •  MDF (medium density fibreboard) plant commissioned •  Sale of non-core assets largely complete

•  Food division disposed of during year under review •  Disposal of footwear division subject to competition authorities

•  Progress in execution of African focussed strategy •  Continued investment in African and South African assets and infrastructure

*Unitrans Supply Chain Solutions

CONTINUED INVESTMENT IN INFRASTRUCTURE

6

•  LOGISTICS USCS •  New generation fuel tankers

•  3 year target 350 tankers by FY15 •  Invested in 280 tankers by FY14

•  New road train applications •  Cement and feed industry trucks and tankers •  Mining yellow metal

•  LOGISTICS PASSENGER •  Euro5 latest technology coaches •  Mozambique project fleet

•  INTEGRATED TIMBER •  MDF (medium density fibreboard) plant •  MFB (melamine faced board) press •  New formica worktop line

•  MANUFACTURING •  Feltex investment for new vehicle model

KAP INDUSTRIAL Aug 2014

14 801

2013 Logistics Timber Manufacturing Intersegment eliminations

2014

REVENUE INCREASES BY 9% TO R14 748m

7

R13

513

m

10% 8% 9%

R695m R193m R400m (R53m)

R14

748

m


DIVERISIFIED REVENUE MIX ENHANCES SUSTAINABLE EARNINGS

8

40%

12% 17%

31% Supply Chain Solutions

Passenger

Timber

Manufacturing

Revenue FY14


2013 Logistics Timber Manufacturing 2014

OPERATING PROFIT INCREASES BY 12% TO R1 472m

9

11% 19% 8%

R76m R65m R22m

R1

309m

R1

472m


DIVISIONAL HIGHLIGHTS

10

LOGISTICS

11

YEAR UNDER REVIEW LOGISTICS

12

Gross revenue increases by 10% to R7 737m

UNITRANS SUPPLY CHAIN SOLUTIONS (USCS)* •  Restructuring of USCS completed

•  Fuel and chemical division merged with the Agriculture and mining division •  Back office rationalisation •  Overhead cost savings more than offset restructuring costs

•  Customers under pressure in tough market conditions •  Mitigated by strict cost control and efficiency improvement

•  Investment in safety initiatives and operational excellence •  ISO roll out in Africa •  Investment in new technology to improve fuel consumption

(FY13: R7 042m)

Operating profit increases by 11% to R762m

(FY13: R686m)

*USCS consists of the Fuel, Agriculture and Mining division and the Freight and Logistics division


13

FUEL, AGRICULTURE AND MINING •  Strong mining performance through increased volumes •  Africa operations continue to perform well

•  Enhanced by new contracts in Botswana •  Solid performance in Malawi and Tanzania

•  Mozambique difficult trading conditions in agriculture •  Namibia focus on right sizing of the business •  Good performance of fuel division through volume growth and

improved efficiencies

•  Bitumen operations hampered by delayed infrastructure spend •  Vehicle operating costs per kilometre improved



14

FREIGHT AND LOGISTICS •  Good performance in transport operations enhanced by

•  Expansion of feed business into Africa •  Good performance in food, beverage and FMCG business •  Volume growth in the cement business

•  Underperformance in Fresh Freight warehouse and distribution operations •  Investment in fleet maintenance


32%

68%

Operating profit FY14

15

20%

80%

Africa

South Africa

Revenue FY14

USCS STRONG IN AFRICA


16

PASSENGER •  Increased fuel price impacts commuter and intercity business •  Commuter transport impacted by platinum strikes in Rustenburg •  Intercity performs well

•  Increased cross-border activity between Zimbabwe and South Africa •  Gautrain feeder services perform on target •  Improved performance in tourism division assisted by weak Rand


17

57% 27%

9% 7%

Commuter and personnel transport

Intercity

Gautrain

Tourism

Revenue FY14

PASSENGER REVENUE SPLIT


INTEGRATED TIMBER

18

YEAR UNDER REVIEW INTEGRATED TIMBER

19


(FY13: R2 392m)

•  Increased revenue due to capital investments despite subdued market conditions •  Increased volumes from new MDF (medium density fibreboard) plant •  Increased ratio of value added products due to capacity expansion •  Increased resin volumes to non panel markets

•  Margin improvement of 1.4% •  Increased efficiencies and cost benefits from new MDF plant •  Increased ratio of higher margin value added products •  Positive impact of major internal logistics restructure •  Continued cost savings yielded from 2012 PG Bison restructure


(FY13: R347m)


MEDIUM DENSITY FIBREBOARD PLANT

20

•  Plant producing at current rated capacity of 280m3/day •  Positive market response to the product •  Second phase in progress to increase capacity to 380m3/day •  Second phase commissioning planned for February 2015

MANUFACTURING

21

YEAR UNDER REVIEW MANUFACTURING

22


(FY13: R4 229m)

•  PET (Hosaf) market continues to grow •  Increase in regional exports

•  Automotive (Feltex) negatively impacted by industry labour unrest and model change over


(FY13: R276m)


YEAR UNDER REVIEW MANUFACTURING

23

CONTINUED •  Good turnaround by Vitafoam despite challenging market conditions

•  Increased market share •  Successful restructure and improved efficiencies

•  Improved performance by DesleeMattex •  Launched new product ranges •  Reduced lead times to customers •  Significant distribution cost savings

•  Challenging market impacts performance of BCM and Glodina


FINANCIAL PERFORMANCE JOHN HAVEMAN

CFO

24

FINANCIAL HIGHLIGHTS

25

FY14 FY13 % increase Revenue (Rm)* 14 748 13 513 9%

Operating profit before capital items (Rm)* 1 472 1 309 12%

Cash generated from operations before working capital (Rm) 2 071 2 021 2%

Headline earnings per share (cents)* 34.1 28.1 21%

Net asset value per share (cents) as at 30 June 286 263 9%

*From continuing operations

CONSOLIDATED CASH FLOW

26

Rand million

FY14 FY13

EBITDA continued operations 2 231 2 050 EBITDA discontinued operations (3) 52 Plantation revaluation (114) (105) Other non-cash items (43) 24 Cash generated before working capital changes 2 071 2 021 Working capital changes (183) 228

Inventory (39) (137) Accounts receivable (248) (62) Accounts payable 104 427

Cash generated from operations 1 888 2 249 Interest (330) (372) Taxation (125) (132) Dividends (195) (158) Net cash inflow from operating activities 1 238 1 587


CONSOLIDATED CASH FLOW CONTINUED

27

Rand million

FY14 FY13

Cash inflow from operating activities 1 238 1 587 Investing activities (838) (1 161)

Net replacement capex (653) (448)

Expansion capex (413) (599)

Proceeds on food assets 278 -

Other investing activities (50) (114) Cash flow after investing activities 400 426

Financing activities (385) (476)

External debt raised/(repaid) 2 856 (70)

Shareholder loan repaid (3 241) (406)

Movement in cash and cash equivalents 15 (50)


58% 20%

12%

10%

USCS

Passenger

Integrated timber

Manufacturing

SEGMENTAL CAPITAL EXPENDITURE NET TOTAL CAPEX*

28

FY13 FY14

48%

26%

20%

6%

*Net of proceeds and government grants received

CAPITAL STRUCTURE


OBJECTIVES FOR 2014 •  Diversify funding sources

•  Maiden bond issue •  Repayment of Steinhoff loan

•  Improvement of term profile

CAPITAL STRUCTURE

30

June 2014 June 2013

Total equity (Rm) 6 859 6 301 Ordinary shareholders’ funds (Rm) 6 709 6 166 Minority interests (Rm) 150 135

Net interest-bearing debt (Rm) 2 676 3 090

Net debt to equity (%) 40% 50%

Net debt to EBITDA (times) 1.2 1.5

EBITDA interest cover (times) 6.8 5.7


NET INTEREST-BEARING DEBT

31

Rand million

Jun 2014 Jun 2013 Net interest-bearing debt 2 676 3 090

Steinhoff - 3 241

Financial institutions 1 676 (151)

DMTN programme 1 000 –

Movement in net debt

Opening balance 3 090 3 552

Repayment of Steinhoff loan (3 241) (406)

Net movement in external debt 2 827 (56)

Closing balance 2 676 3 090

Net finance costs 325 364


INDEPENDENT FUNDING STRUCTURE

32

BOND ROADSHOW POSITIVELY RECEIVED •  Raised R1bn with 3 and 5 year maturity •  R322m – 3 year at 3M JIBAR plus 175bps •  R678m – 5 year at 3M JIBAR plus 204 bps •  Proceeds used to repay Steinhoff loan

RAISED TERM DEBT •  Raised other term debt with maturity of 2 to 7 years •  Proceeds used to repay Steinhoff loan

NET INTEREST-BEARING DEBT MATURITY

33

-1 000

-500

0

500

1 000

1 500

FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 Ran

d m

illio

n

Net of cash and cash equivalents


FY2015

0

1 000

2 000

3 000

4 000

2012 2013 2014

34

0%

25%

50%

75%

2012 2013 2014

Net debt to equity %

Net debt to EBITDA (times)

Net debt (Rm)

IMPROVING DEBT RATIOS

EBITDA interest cover (times)

0

1

2

2012 2013 2014 0

2

4

6

2012 2013 2014


OUTLOOK JO GROVE

CEO

35

OUTLOOK

36

LOGISTICS •  Cost structure now enables USCS to be more competitive in current

economic climate

•  Existing contract renewals •  Promising new contracts •  Zambia expansion


OUTLOOK CONTINUED

37

LOGISTICS •  Passenger expansion in Africa on the back of USCS infrastructure

•  Mozambique contract to start in September 2014 •  Opportunity in tough economic conditions

•  Flight to quality, customers require reputable suppliers •  Market rationalisation


38

INTEGRATED TIMBER •  Business well structured for current market conditions •  First phase of MDF (medium density fibreboard) upgrade for 12 months in 2015

(7 months in 2014)

•  Second phase of MDF upgrade in February 2015 •  Full year effect of logistics restructure in 2015 •  Paper impregnation plant (to be commissioned in 2016)

OUTLOOK CONTINUED

39

MANUFACTURING •  PET (Hosaf): Growth in demand expected to continue •  Automotive (Feltex): Volumes expected to grow

NEW OPPORTUNITIES •  Organic growth •  Looking for bolt-on opportunities •  Potential acquisitive growth in appropriate verticals

OUTLOOK CONTINUED

THANK YOU

40

APPENDIX

41

USCS* DIVERSE INDUSTRY EXPOSURE ENHANCES SUSTAINABLE REVENUE GENERATION CAPABILITY

42

Automotive 1%

Lubricants 2%

Chemicals 4%

Furniture 4%

Beverages 4%

Feed 4%

Other 4%

Food 5%

Gas 5%

Mining 8%

Construction 8%

Sugar and Agriculture 11%

FMCG 13%

Fuel 27%

*Unitrans Supply Chain Solutions

57%

43%

56%

44% Fuel, Agriculture and Mining

Freight and Logistics

Revenue FY14

LOGISTICS DIVERSE REVENUE COMPOSITION

43

Revenue FY13

Documents

INTRODUCTION · 2020. 10. 12. · • MFB (melamine faced board) press • New formica worktop line • MANUFACTURING • Feltex investment for new vehicle model KAP INDUSTRIAL Aug