York Timber Holdings Limited · JSE:YRK
York Timber — FY2016 Earnings Presentation
45 slides from York Timber's earnings presentation, Sep 28, 2016
Slide 1: Results presentation for the year ended 30 June 2016
Results presentation FOR THE YEAR ENDED 30 JUNE 2016
Slide 2: History timeline
History timeline 2 Implementation of growth strategy, with focus on EBITDA generation Rights issue of R552 million 1916 1946 1980 2007 2009 2012 2014 York acquired Global Forest Business was returned to Products, making it the largest profitability, coupled with successful vertically integrated soli
Slide 3: Who we are
Who we are 3 28,89% York is an integrated forestry company, operating through its wholly-owned subsidiaries, York Timbers 28,72% Proprietary Limited, that owns plantations and 19,04% processing plants, and Agentimber Proprietary Limited, that runs a wholesale distribution network 12,84% York has the
Slide 4: Operational footprint
Operational 4 footprint 199 300 000ha surface area in South Africa 1 268 443ha dedicated to commercial forestry 646 759ha planted with pine 454 190ha managed for lumber production
Slide 5: Operational footprint
Operational 5 footprint York’s Forest Stewardship Council (FSC) certified plantation of 60 470ha consists of 54 745ha pine and 2 449ha eucalyptus planted and temporarily unplanted area of 3 276ha Sustainable raw material supply under- Mpumalanga Gauteng Eastern Cape pins the investment in processing
Slide 6: The numbers
6 The numbers
Slide 7: Financial highlights
Financial 7 highlights BUILDING A SUSTAINABLE COMPANY REQUIRES CONSISTENT PERFORMANCE AND CASH GENERATION OVER TIME Group revenue Cash flow from operations Net asset value (R’000) (R’000) (cents) 2 000 000 300 000 900 250 000 1 500 000 800 200 000 1 000 000 150 000 700 100 000 500 000 600 50 000 0 0
Slide 8: Financial highlights
Financial 8 highlights Earnings per share Biological assets Cash generated from Operating profit increased by increased in value by operations increased increased by 135% to 9% to 56% to 27% to 73 cents R2 334 R285 R183 per share million million million 2015: 31 cents per share 2015: R2 140 million
Slide 9: Six-year financial review
Six-year 9 financial review YORK HAS GROWN REVENUE BY 13.0% CAGR SINCE 2011 CAGR % Audited % Audited Audited Audited Audited Audited 2011-2016 2016 change 2015 2014 2013 2012 2011 Group revenue R’000 13 1 771 049 15 1 543 149 1 323 976 1 131 994 1 112 843 959 143 Gross profit R’000 3,5 500 566 24 40
Slide 10: Six-year financial review
Six-year 10 financial review EARNINGS PER SHARE SHOW STRONG GROWTH: 44.1% CAGR SINCE 2011 CAGR % Audited % Audited Audited Audited Audited Audited 2011-2016 2016 change 2015 2014 2013 2012 2011 Earnings R’000 44,1 238 212 135 101 468 50 994 106 864 137 818 38 317 Weighted average number of shares nu
Slide 11: Underlying value
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Slide 12: Investment case
Investment 12 case THE CURRENT SHARE PRICE DOES NOT REFLECT THE UNDERLYING PERFORMANCE OF THE BUSINESS York’s share price (R2,50) was trading at a 70% discount to the underlying tangible net asset value (R8,34) as at 30 June 2016. Not only does the discount make it an attractive investment, but the
Slide 13: Investment case
Investment 13 case STRONG BALANCE SHEET AND GOOD CASH GENERATION Net asset value and share price Underlying tangible net asset growth 5 000 000 900 R’000 cents originates from growth in the biological asset and continued investment in 4 000 000 EBITDA and cash-generating capital equipment. A sustain
Slide 14: Key performance indicators
14 Key performance indicators
Slide 15: Key performance indicators
Key performance 15 indicators York’s strategy is consistent with prior years and 2016 has seen the execution of the first phase, namely the Plywood York has set Expansion Project. Changing economic conditions, with a weakening local currency prominent during the financial year, the following has als
Slide 16: Future outlook
Future 16 outlook York’s summarised strategy will be focusing on the following six key areas to improve quality of earnings and diversification of revenue 3 YEAR REMANU- FORECAST LUMBER PLYWOOD FOREST FACTURING WHOLESALE ENERGY R1,8 billion revenue 50% 19% 5% 1% 25% 0% contribution Approach Consolid
Slide 17: Key performance indicators
Key performance 17 indicators Target in Capitals Key performance indicators Value 3 years’ time 2016 % change 2015 Natural Value of biological asset R’million 2 594 2 334 9 2 140 Total landholding hectares 93 988 93 988 – 93 988 Total forestry area planted hectares 57 950 57 194 – 57 042 Additional
Slide 18: Key performance indicators
Key performance 18 indicators Target in Capitals Key performance indicators Value 3 years’ time 2016 % change 2015 Human Staff turnover % 2,0 3,5 36 2,6 People trained number 4 285 3 083 68 1 835 Safety – lost time injury frequency rate factor 1,5 1,7 (2) 1,8 Clinic visits number – primary health ca
Slide 19: Biological assets
Biological ee tit i eee
Slide 20: New possibilities
New 20 possibilities Genome sequencing: determining the genetic makeup of an organism Marker assisted selection: identifying genes responsible for a specific trait
Slide 21: Nano technology and optimisation
ese NANO TECHNOLOg,, ov" 2 o® B\ & 2 a The “dark side” Rod 2) =) ¢ WANTENAN Ce = SX ; 2 S Y, fo) Sy OS < ) Sy = e S$ a @ 94000 ha ga Sm OPTIMISATION S % fe) E > oF % s in Cc Ny we wm ran *Y susts ¥ sn » vont tg Pes 7 App ae ROACH TO OP aA YORK TIMBERS 100 YEARS
Slide 22: Producing hybrid seeds
Producing 22 hybrid seeds Two years Flowers (female) Controlled pollination Mature cone Processing Pollen (male) Hybrid seed Seed extraction 1kg 60 000 seeds = trees
Slide 23: York's business model offers a sustainable carbon cycle
York’s business model offers a 23 sustainable carbon cycle NATURAL AND MAN-MADE SOURCES A MARKET EMIT CARBON FOR TREES CO₂ released into the atmosphere from The trees York plants and the products it a variety of sources, including bio- manufactures store carbon, both while energy, fossil fuels and w
Slide 24: Converting biomass into energy
When converting 24 BIOMASS into energy 1 ton of biomass = 750kWh, equivalent to the annual consumption of: Advantages of the Biomass Power Plant Project: • Drastically lower carbon footprint than coal • Allows York to extract maximum value from renewable and sustainable wood that it grows • Stimulat
Slide 25: Sustainability and new regimes
Sustainability 25 and new regimes Site-species-matching A match means the tree will • be more tolerant to climatic impacts, pests and diseases • yield significantly better growth • have improved timber quality MORE IMPORTANTLY! The future value of York’s Correct site-species-matching can: biological
Slide 26: New pine regime for York Escarpment
New pine regime 26 for York Escarpment Biological asset valuation growth for FY2016 = R193 million This equates to 2 557 774m³ of additional volume growth The projected yields and wood properties will improve significantly with the regime change to the existing plantation
Slide 27: Processing
27 Processing
Slide 28: Performance indicators for mills
Performance 28 indicators for mills VOLUME RECOVERY is measured to quantify how much of the raw material was effectively converted into a saleable product. Put simply, it indicates the ability of a mill to convert raw material to finished product. It is a ratio between volume of logs used and the vo
Slide 29: Performance indicators for mills
Performance 29 indicators for mills In order to drive performance at the processing units, a couple of key performance indicators are used as leading indicators. It serves as a quantitative display of the processing unit’s performance and is used as a continuous improvement tool. The key performance
Slide 30: Performance indicators for mills
Performance 30 indicators for mills VALUE RECOVERY is a measure which indicates how much value was extracted from the raw material. The goal is to maximise the value extracted from the raw material used while satisfying the needs of York’s customers. The value recovery is calculated based on a ratio
Slide 31: Solid wood products
31 Solid wood products “10 TIMBERS
Slide 32: Timber all around us
Timber 32 all around us Wood is seen as a green product as it locks in carbon, making it one of the most sustainable resources on the planet. It has a smaller production of carbon footprint than traditional building materials such as steel and concrete. In addition, it is also an aesthetically desir
Slide 33: Rise of the Plyscrapers
Rise of the 33 “Plyscrapers” London – United Kingdom The “Toothpick” Wood is making a comeback as a building material with the The “Toothpick” is what Londoners are calling development of engineered timber, an eco-friendly alternative plans for a 984ft tower unveiled on April 8. used in “plyscrapers
Slide 34: People make the difference
34 People make the difference
Slide 35: Mapping York's business
Mapping 35 York’s business FOREST RESIDUE BY PRODUCT Biomass Remanufacturing Wholesale Retail Truss Nursery Forests External log Processing Proposed Warehouse and Customer base plants Nursery developing Through industry- purchasing facilities biomass plant distribution Supplied directly Corporate an
Slide 36: The donut approach - management structure
The donut approach 36 - management structure
Slide 37: Key pillars of York's high-performance culture
Key pillars of York’s 37 high-performance culture The team equation: delivering success PROJECT EVOLVE A multi-faceted approach to business improvement THE YORK ADVENTURE CLUB An outdoor club for employees YORK ACTION SYSTEM and community members Structured engagement through a Enjoyment of the beau
Slide 38: Review of the numbers
38 Review of the numbers
Slide 39: Financial overview
Financial 39 overview Statement of financial position 2016 % 2015 as at 30 June 2016 R’000 change R’000 The biological asset increased in line with the increased forecast yield of planted trees at maturity Assets due to the temporary unplanted areas decreasing slightly and the expected yield per hec
Slide 40: Financial overview
Financial 40 overview Statement of financial position 2016 % 2015 as at 30 June 2016 R’000 change R’000 The Group repurchased shares in the open market Equity and liabilities in order to benefit from the discount between the Equity 2 632 573 9 2 419 994 share price and the tangible net asset value p
Slide 41: Financial overview
Financial 41 overview Condensed statement of profit or loss and other comprehensive income for the year ended 30 June 2016 2016 % 2015 R’000 change R’000 Strong growth in revenue is testimony to growth in market share driven by focused selling efforts, Revenue 1 771 049 15 1 543 149 in both the Proc
Slide 42: Financial overview
Financial 42 overview Condensed statement of cash flows for the year ended 30 June 2016 2016 % 2015 Improved profitability and working capital R’000 change R’000 management have contributed to a continued strong cash-generating ability of the underlying operational Net cash from operating activities
Slide 43: Branch out and invest in an asset class where money grows on trees
43 Continue this journey with us and we will show you why you need to: Branch out and invest in an asset class where money really does grow on trees.
Slide 44: Disclaimer
Disclaimer 44 This presentation contains forward-looking statements about York’s operations and financial conditions. The Company has prepared this presentation based on information available to it at the time of writing, including information derived from public sources. No representation or warran
Slide 45: Thank you
Thank you