Kap Limited · JSE:KAP
Kap — FY2015 Earnings Presentation
45 slides from Kap's earnings presentation, September 2015
Slide 1: Annual Results Presentation for the year ended 30 June 2015
ANNUAL RESULTS PRESENTATION for the year ended 30 June 2015
Slide 2: Welcome
WELCOME Jaap du Toit – CHAIRMAN
Slide 3: Agenda
Agenda Annual results presentation for the year ended 30 June 2015 § WELCOME Jaap du Toit § YEAR UNDER REVIEW Gary Chaplin § DIVISIONAL HIGHLIGHTS Gary Chaplin § FINANCIAL PERFORMANCE John Haveman § OUTLOOK Gary Chaplin 3
Slide 4: Year under review
YEAR UNDER REVIEW Gary Chaplin – CEO
Slide 5: KAP Industrial Strategy
KAP Industrial Annual results presentation for the year ended 30 June 2015 STRATEGY KAP IS AN INDUSTRIAL GROUP FOCUSED ON: • Being the leaders in the markets we serve • High barrier to entry industries • Sustainable earnings through diversity in business • Sustainable margins through specialisation
Slide 6: Year under review
Year under review Annual results presentation for the year ended 30 June 2015 STRATEGIC CORPORATE ACTIVITY IMPROVES PERFORMANCE AND SETS BASE FOR STRONG OUTLOOK 1. Restructure core operations § Streamline reporting structure into two clearly defined segments: Diversified Logistics and Diversified I
Slide 7: Re-aligned divisions
Re-aligned divisions Annual results presentation for the year ended 30 June 2015 DIVERSIFIED LOGISTICS DIVERSIFIED INDUSTRIAL UNITRANS PASSENGER AUTOMOTIVE INTEGRATED TIMBER CHEMICAL LOGISTICS TRANSPORT COMPONENTS BEDDING Specialised Personnel, commuter, Forestry and timber Manufacture of PET, Manuf
Slide 8: Diverse revenue base
Diverse revenue base Annual results presentation for the year ended 30 June 2015 16% LOGISTICS – 50% INDUSTRIAL – 50% 37% Unitrans Logistics – 37% Timber – 16% 19% Passenger – 13% Chemical – 19% Automotive – 8% Integrated Bedding – 7% 8% 13% 7% 8
Slide 9: Financial highlights
Financial highlights Annual results presentation for the year ended 30 June 2015 STRATEGY IMPLEMENTATION CONTINUES TO IMPROVE QUALITY OF EARNINGS FY15 FY14 % increase Revenue (Rm) continuing 15 664 14 471 8 Operating profit before capital items (Rm) continuing 1 666 1 480 13 Cash generated from oper
Slide 10: Revenue increases by 8%
Financial highlights Annual results presentation for the year ended 30 June 2015 REVENUE INCREASES BY 8% TO R15 664 MILLION 13% 18 000 16 000 14 000 12 000 13% Revenue (Rm) 10 000 2% 10% 3% 8 000 14 471 15 664 6 000 4 000 2 000 0 FY14 Logistics Industrial like-for- Acquisitions Intersegment FY15 lik
Slide 11: Revenue growth by division
Financial highlights Annual results presentation for the year ended 30 June 2015 REVENUE GROWTH BY DIVISION 2 500 Logistics 2% Industrial 13% 15 664 2 000 1 500 Revenue (Rm) 14 471 1 000 500 0 FY14 Unitrans Logistics Passenger Timber Chemical Automotive Integrated bedding* FY15 components 11 *Previo
Slide 12: Operating profit growth by division
Financial highlights Annual results presentation for the year ended 30 June 2015 OPERATING PROFIT GROWTH BY DIVISION 800 700 Logistics 10% Industrial 16% 1 666 600 Operating profit (Rm) 500 1 480 400 300 200 100 0 FY14 Unitrans Logistics Passenger Timber Chemical Automotive Integrated bedding* FY15
Slide 13: Operating margin
Financial highlights Annual results presentation for the year ended 30 June 2015 KAP GROUP OPERATING PROFIT MARGIN INCREASED BY 40BPS IN FY15 Logistics Industrial 14% 14% 6% 12% 12% Operating margin (%) Operating margin (%) 10% 10% 8% 8% 6% 6% 10.4% 11.2% 9.7% 9.4% 9.7% 10.0% 4% 4% 2% 2% 0% 0% FY13
Slide 14: Divisional highlights
DIVISIONAL HIGHLIGHTS Gary Chaplin – CEO
Slide 15: Diversified Logistics
Diversified Logistics Annual results presentation for the year ended 30 June 2015 Gross revenue increases by 2% to R7 863m (FY14: R7 705m) Operating profit increases by 10% to R880m (FY14: R801m) Operating margin increases by 80bps to 11.2% (FY14: 10.4%) UNITRANS LOGISTICS § Competitive market cond
Slide 16: Sector specific business units facilitate African growth
Diversified Logistics Annual results presentation for the year ended 30 June 2015 SECTOR SPECIFIC BUSINESS UNITS FACILITATE AFRICAN GROWTH AGRICULTURE • Transport • Land preparation • Infrastructure development and maintenance FOODS PETROCHEMICAL • FMCG • Fuel • Poultry • Lubricants • Sugar/Molasses
Slide 17: Unitrans Logistics diversified revenue base
Logistics revenue Annual results presentation for the year ended 30 June 2015 UNITRANS LOGISTICS DIVERSIFIED REVENUE BASE § Revenue base diversified across sectors REVENUE BY SECTOR § Blue chip customers enhance earnings profile and limit 7% concentration risk § Top 15 customers 42% Petrochemical
Slide 18: Diversified Logistics: Unitrans Logistics
Diversified Logistics Annual results presentation for the year ended 30 June 2015 UNITRANS LOGISTICS § Agriculture margins supported by efficiencies and cost containment § Good performance in mining and infrastructure division § Strong performance in the food business driven by expansion of contr
Slide 19: Unitrans Logistics (continued)
Diversified Logistics Annual results presentation for the year ended 30 June 2015 UNITRANS LOGISTICS (continued) § African operations continue to perform well § Enhanced by new fuel contracts and volume growth in Botswana and Mozambique § Zambia investment gaining momentum § Termination of non p
Slide 20: Diversified Logistics: Passenger
Diversified Logistics Annual results presentation for the year ended 30 June 2015 PASSENGER § Commuter transport increased post labour unrest in prior year § Intercity transport performed well § Gautrain feeder services performed to expectation § Tourism division assisted by weak rand § New per
Slide 21: Focus on long-term contractual revenue and African growth
Diversified Logistics Annual results presentation for the year ended 30 June 2015 FOCUS REMAINS ON INCREASING LONG-TERM CONTRACTUAL REVENUE BASE AND AFRICAN GROWTH REVENUE BREAKDOWN 3% 6% 8% Commuter and personnel transport – 55% 55% Intercity – 28% Gautrain – 8% Tourism – 6% 28% Rest of Africa - 3%
Slide 22: Diversified Industrial
Diversified Industrial Annual results presentation for the year ended 30 June 2015 Gross revenue increases by 13% to R7 885m (FY14: R6 967m) Operating profit increases by 16% to R786m (FY14: R679m) Operating margin increases by 30bps to 10.0% (FY14: 9.7%) § Robust growth by all industrial businesse
Slide 23: Diversified Industrial: Timber
Diversified Industrial Annual results presentation for the year ended 30 June 2015 TIMBER § Strategic investments drive profitable revenue growth despite market contraction § Revenue increases due to: § Increased volumes from new MDF (medium-density fibreboard) plant § Increased ratio of value-a
Slide 24: Medium-density fibreboard plant
Timber Annual results presentation for the year ended 30 June 2015 MEDIUM-DENSITY FIBREBOARD PLANT § First phase of plant commissioned in November 2013, brought to full production (rated capacity of 300m3/day) § Second phase of plant commissioned March 2015 § Operating at full capacity of 380m3/d
Slide 25: Diversified Industrial: Chemical
Diversified Industrial Annual results presentation for the year ended 30 June 2015 CHEMICAL § Business alignment improved operational efficiency § Revenue growth limited by lower underlying raw material commodity prices despite strong volume growth § Exchange rate and commodity price volatility w
Slide 26: Diversified Industrial: Automotive components
Diversified Industrial Annual results presentation for the year ended 30 June 2015 AUTOMOTIVE COMPONENTS § Feltex increased volumes § Vehicle new build increase by 17% § New vehicle models § Growth in current vehicle models § Productivity gains as a result of industry labour unrest included in
Slide 27: Restonic acquisition creates Integrated Bedding division
Diversified Industrial Annual results presentation for the year ended 30 June 2015 RESTONIC ACQUISITION CREATES INTEGRATED BEDDING DIVISION § Acquisition of Restonic on 2 January 2015 § Performance in line with expectation § Continued strong performance by DesleeMattex due to market share gains §
Slide 28: Financial performance
FINANCIAL PERFORMANCE John Haveman – CFO
Slide 29: Financial highlights
Financial highlights Annual results presentation for the year ended 30 June 2015 STRATEGY IMPLEMENTATION CONTINUES TO IMPROVE QUALITY OF EARNINGS FY15 FY14 % increase Revenue (Rm) continuing 15 664 14 471 8 Operating profit before capital items (Rm) continuing 1 666 1 480 13 Cash generated from oper
Slide 30: Income statement
Income statement Annual results presentation for the year ended 30 June 2015 FY15 FY14 % increase Rm Rm Revenue 15 664 14 471 8 Operating profit before capital items 1 666 1 480 13 Capital items (35) (8) Net finance costs (289) (327) 12 Finance costs (344) (340) Investment income 55 13 Associate com
Slide 31: Discontinued operations
Discontinued operations Annual results presentation for the year ended 30 June 2015 DISPOSAL OF LOW RETURN BUSINESSES ENHANCES BALANCE SHEET FY15 FY14 Rm Rm Loss from discontinued operations* (8) (18) FY15 FY14 Cash proceeds on disposal of businesses Rm Rm Food – 278 Footwear 290 – Weatherboard 180
Slide 32: Balance sheet
Balance sheet Annual results presentation for the year ended 30 June 2015 IMPROVED QUALITY OF NET ASSET VALUE FY15 FY14 Rm Rm Property, plant, equipment and investment properties 7 129 6 633 Intangible assets and goodwill 1 598 1 290 Biological assets 1 824 1 875 Net working capital 398 252 Other as
Slide 33: Cash flow
Cash flow Annual results presentation for the year ended 30 June 2015 FY15 FY14 Rm Rm Operating profit from continuing operations 1 666 1 480 Depreciation and amortisation 784 750 EBITDA continued operations 2 450 2 230 EBITDA discontinued operations (1) (2) Plantation revaluation (86) (114) Other n
Slide 34: Cash flow (continued)
Cash flow ( c o n t i n u e d ) FY15 FY14 Rm Rm Cash flow from operating activities 1 483 1 238 Investing activities (874) (838) Expansion capex (512) (413) Replacement capex (683) (653) Proceeds on disposal of investments 470 278 Acquisition of investments (142) (2) Other investing activities (7) (
Slide 35: Improved debt ratios
Improved debt ratios Annual results presentation for the year ended 30 June 2015 THROUGH STRATEGY IMPLEMENTATION AND OPERATIONAL CASH GENERATION NET DEBT (Rm) NET DEBT TO EQUITY % 4 000 75% 3 000 50% 2 000 25% 1 000 0 0% FY13 FY14 FY15 FY13 FY14 FY15 NET DEBT TO EBITDA (TIMES) EBITDA INTEREST COVER
Slide 36: Net interest-bearing debt maturity
Net interest-bearing debt maturity Annual results presentation for the year ended 30 June 2015 3 000 2 500 2 000 1 500 1 000 Rand million 500 0 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 -500 -1 000 -1 500 Debt repayments (net of cash and cash equivalents) Available facilities -2 000 36
Slide 37: Outlook
TION™ OUTLOOK Gary Chaplin - CEO
Slide 38: Business environment
Business environment Annual results presentation for the year ended 30 June 2015 LOW FUEL PRICE § Changes in fuel price passed on to logistics customers § Margins enhanced in Passenger § Reduced logistic costs and positive operational impact in Diversified Industrial segment WEAK RAND § Logistic
Slide 39: Outlook: Diversified Logistics
Annual results presentation Outlook for the year ended 30 June 2015 DIVERSIFIED LOGISTICS DIVERSIFIED LOGISTICS § Sustainability of earnings underpinned by contractual nature of business § Reduced cost structure and improved efficiencies post restructure enables business to be more competitive in
Slide 40: Outlook: Diversified Logistics (Passenger)
Annual results presentation Outlook for the year ended 30 June 2015 DIVERSIFIED LOGISTICS DIVERSIFIED LOGISTICS § Passenger expansion in the rest of Africa § Mozambique personnel contract commenced in September 2014 and expanded in July 2015 § Further African opportunities § Opportunity in tough
Slide 41: Outlook: Timber
Annual results presentation Outlook for the year ended 30 June 2015 DIVERSIFIED INDUSTRIAL TIMBER § Business well structured for current market conditions (low cost base, strong market focus) § Continued export focus § Second phase of MDF upgrade commissioned in March 2015, full year for FY16 §
Slide 42: Outlook: Chemical
Annual results presentation Outlook for the year ended 30 June 2015 DIVERSIFIED INDUSTRIAL CHEMICAL SOUTH AFRICAN PET MARKET § Hosaf expansion approved § South African PET market forecast to grow by more than 7% per annum 27% § South African 2015 PET consumption 210 000 tpa § Hosaf expansion pro
Slide 43: Outlook: Automotive components
Annual results presentation Outlook for the year ended 30 June 2015 DIVERSIFIED INDUSTRIAL AUTOMOTIVE COMPONENTS § Volume growth expected to continue through greater vehicle model penetration § Expansion opportunities 43 43
Slide 44: Outlook: Integrated Bedding
Annual results presentation Outlook for the year ended 30 June 2015 DIVERSIFIED INDUSTRIAL INTEGRATED BEDDING § Acquisition of Restonic facilitates integrated bedding division § Decentralised mattress operations will be brought into production during FY16 § Distribution platform to be extended to
Slide 45: Thank you
THANK YOU