York Timber Holdings Limited · JSE:YRK
York Timber — FY2023 Earnings Presentation
47 slides from York Timber's earnings presentation, Jun 30, 2023
Slide 1: Results Presentation for the Year Ended 30 June 2023
RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2023
Slide 2: The Period Was Impacted By
THE PERIOD WAS IMPACTED BY
Slide 3: Current Year Result – Main Themes
CURRENT YEAR RESULT – MAIN THEMES • Current year EBITDA from segments disappointing at R105 million • Demonstrate challenges in Lumber market and our response Short term pain for medium • Build on healthy margins in Plywood and opportunity to increase production and long-term sustainable returns • I
Slide 4: EBITDA Contribution Ratio
EBITDA CONTRIBUTION RATIO EBITDA contribution FY 2023 Sabie -11% Jessievale 11% Plywood 77% Mothballed mills -16% Forests 20% Fleet 14% Wholesale 19% Stadsrivier 1% Corporate and other -16% 100% Contribution to EBITDA EBITDA contribution ratio 100% 80% 60% 40% 20% 0% -20% -40% Sabie Jessievale Plywo
Slide 5: Lumber Market
LUMBER MARKET av YORK TIMBERS
Slide 6: Industry Sales – Lumber
INDUSTRY SALES – LUMBER Industry sales – Lumber 1 800 000 160 000 Lumber market decreased by 5 140 000 Change in market conditions: 1 700 000 120 000 • Rising interest rates 100 000 • Electricity shortage 1 600 000 80 000 • Decrease in building plans • Lower market sentiment 60 000 • Industry stock
Slide 7: Lumber Production Performance
LUMBER PRODUCTION PERFORMANCE
Slide 8: Lumber Processing
LUMBER PROCESSING FY 2022 FY 2023 Sawmills excl. % cost Production statistics Driekop Sawmills increase Lumber production volumes 187 786 199 074 6% Sales volumes 188 911 193 402 2% ASP indexed 1.00 0.96 (4%) Composition Cost of cost increases Description of production experienced Cost increases ero
Slide 9: Lumber Processing
LUMBER PROCESSING Lumber history indexed 3-year (R/m³ actual) FY 2021 FY 2022 FY 2023 CAGR ASP 1.00 1.11 1.07 3% Raw material costs 1.00 1.04 1.18 8% Variable costs 1.00 1.16 1.49 22% Salaries and wages 1.00 1.10 1.14 7% Plant and machinery 1.00 1.21 1.34 16% Internal transport 1.00 1.18 1.64 28% Ut
Slide 10: Lumber Processing – Sabie Sawmill
LUMBER PROCESSING Sabie sawmill Cost of production Impact of strike 6 000 exceeds ASP 5 000 4 000 Sabie sawmill 3 000 • Sabie sawmill is loss making 2 000 • Production costs exceed selling prices 1 000 0 -1 000 Jul-21 Mar-22 May-22 Apr-22 Jul-22 Mar-23 May-23 Apr-23 Oct-21 Feb-22 Oct-22 Feb-23 Jun-2
Slide 11: Lumber Processing
LUMBER PROCESSING • Losses putting the Company under cash flow pressure • No safety margin with current business model – business exposed to any downtime due to high break-even volumes • We are re-balancing the plant to the bottleneck capacity • Improving throughput and availability for installed ca
Slide 12: Plywood Performance
PLYWOOD PERFORMANCE
Slide 13: Plywood Performance
PLYWOOD PERFORMANCE FY 2022 FY 2023 Sawmills excl. % cost Production statistics Driekop Sawmills increase Plywood production volumes 72 511 82 201 13% Sales volumes 71 910 78 980 10% ASP indexed 1.00 1.04 4% Composition Cost of cost increases Plywood processing Description of production experienced
Slide 14: Plywood Performance
PLYWOOD PERFORMANCE 3-year Plywood three-year history indexed FY 2021 FY 2022 FY 2023 CAGR ASP 1.00 1.41 1.47 21% Cost of production 1.00 1.22 1.38 17% Profit/(loss) per production m³ 1.00 2.15 1.81 35% Plywood performance Margin 26% 46% 34% 15% • Opportunity to increase production Production volume
Slide 15: Processing Overall
PROCESSING OVERALL
Slide 16: Processing Overall
PROCESSING OVERALL • We have engaged a specialist to assist York at its Sabie operations to implement 5 S (sort, set in order, shine, standardise and sustain) and FMEA (failure modes and effects analysis) principles • We made changes to our plant management and maintenance teams by appointing experi
Slide 17: Forestry Performance
FORESTRY PERFORMANCE
Slide 18: Forestry Performance
FORESTRY PERFORMANCE Forestry drivers 2020 2021 2022 2023 CAGR Thinning volumes 78 311 96 473 119 643 160 120 Thinning costs 13 093 395 14 568 099 17 955 884 25 823 330 Thinnings R/m³ 167 151 150 161 -1% Clearfell 406 226 608 255 410 955 426 258 Clearfell costs 50 789 872 67 743 473 54 854 700 54 03
Slide 19: Forestry Performance per Region
FORESTRY PERFORMANCE PER REGION 2023 Earnings Clearfell At rotation Area Forestry contribution (R’000) composition volumes volumes Hectares composition Forestry Division EBITDA - Escarpment (119 657) -333% 159 169 525 000 34 952 59% - Highveld 155 586 433% 294 358 300 000 23 901 41% (excl. non-direc
Slide 20: Biological Asset
exert oiccion ASSET
Slide 21: Biological Asset – Escarpment Harvesting Profile
BIOLOGICAL ASSET Escarpment – clearfell volumes 700 000 600 000 Intake 500 000 Escarpment harvesting profile 400 000 • Clearfell volumes in the Escarpment will be very low over the short term 300 000 • Shortfall will be sourced from third 200 000 parties 100 000 0 2024 2025 2026 2027 2028 2029 2030
Slide 22: Biological Asset – Highveld Harvesting Profile
BIOLOGICAL ASSET Highveld – total harvesting 800 000 700 000 600 000 Highveld harvesting profile 500 000 • Harvesting volumes in the Highveld are in rotation 400 000 • Excess volumes are sold externally, 300 000 and veneer logs are transported to Intake 200 000 Sabie 100 000 0 2024 2025 2026 2027 20
Slide 23: Biological Asset – Fair Value Adjustment
BIOLOGICAL ASSET Fair value adjustment R386 million (June 2022: profit of R88 million) R’000 Reasons Change in product mix and age (315 326) Change in Escarpment clearfell age Revenue and price 121 747 Increase in price Operating costs (162 234) Increase in operational costs Biological Asset Valuat
Slide 24: Discounting Impact of Change in Clearfell Age
BIOLOGICAL ASSET Discounting impact of change in clearfell age 3 000 000 2 500 000 2 000 000 Change in BAV due to increase in clearfell age 1 500 000 Impact of discounting due to 1 000 000 change in clearfell age 500 000 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 20 year model
Slide 25: Biological Asset – Increase in Clearfell Age
BIOLOGICAL ASSET Total Clearfell age volume Pulp H class A class B class C class D class m³/ha 23 years 11 556 174 232 462 233 690 1 334 362 4 383 676 4 668 879 703 105 373.13 20 years 9 759 542 237 058 228 546 1 316 456 4 249 010 3 402 001 326 473 315.12 Biological asset – increase in Increase/(dec
Slide 26: Escarpment Volumes – Revised Clearfell Strategy
BIOLOGICAL ASSET Escarpment volumes – revised clearfell strategy 700 000 140% 600 000 120% 500 000 100% Regulated volumes for Escarpment 400 000 80% Ability to supply Plywood intake 300 000 60% from own Escarpment sources 200 000 40% 100 000 20% 0 0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 2
Slide 27: Biological Asset – External Purchases
BIOLOGICAL ASSET External purchase description FY 2022 FY 2023 % change External purchases 333 301 251 617 Excluding DKP (79 907) - 253 394 251 617 (1%) External purchases Log intake at processing sites 547 553 587 390 • External purchases constituted As percentage of log intake 46% 43% 43% of intak
Slide 28: External Purchases
EXTERNAL PURCHASES External log purchases 250 000 000 200 000 000 150 000 000 100 000 000 External purchases profile based on regulated volumes 50 000 000 0 -50 000 000 -100 000 000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 28
Slide 29: Rebuilding a Team
REBUILDING A TEAM av YORK TIMBERS
Slide 30: Rebuilding a Team – New Team Members
REBUILDING A TEAM – NEW TEAM MEMBERS • Chief Financial Officer • General Manager Fleet • General Manager Forestry • Sawmill manager – Sabie sawmill • Workshop Managers – Sabie site, Jessievale • Sawmill manager – Plywood Over the past 18 months we had to • Production managers – Sabie and Plywood reb
Slide 31: Debt Profile
aokt'?,. PROFILE
Slide 32: Debt Profile
DEBT PROFILE Interest bearing debt 1 000 000 900 000 800 000 700 000 600 000 500 000 Debt reduced 400 000 300 000 200 000 100 000 0 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 Total interest bearing debt 32
Slide 33: Debt Facilities 2023
DEBT FACILITIES 2023 Balance Description R’000 Originated Repayment terms Land Bank term loan 177 805 • Original 2007 purchase loan for GFP • Re-financed June 2019 – equal monthly instalments assets were repaid through capital raise over 3 years at prime less 0.5% • R600 million re-financed with Lan
Slide 34: Financial Results
FINANCIAL RESULTS
Slide 35: Eight-Year Historical Financial Results
EIGHT-YEAR HISTORICAL FINANCIAL RESULTS Audited CAGR % Audited % Restated Audited Audited Audited Audited Audited Audited 2015-2022 2023 Change 2022 2021 2020 2019 2018 2017 2016 Group revenue R'000 (1) 1 666 294 (9) 1 838 810 1 928 589 1 438 825 1 600 522 1 812 350 1 832 805 1 771 049 Gross profit¹
Slide 36: Eight-Year Historical Financial Results | Continued
EIGHT-YEAR HISTORICAL FINANCIAL RESULTS | CONTINUED Audited CAGR % Audited % Restated Audited Audited Audited Audited Audited Audited 2015-2022 2023 Change 2022 2021 2020 2019 2018 2017 2016 Basic earnings R'000 (204) (312 859) (271) 182 757 137 069 (217 637) (36 268) 138 280 367 286 238 212 Weighte
Slide 37: Financial Overview | Continued
FINANCIAL OVERVIEW | CONTINUED REVENUE GROSS PROFIT EBITDA R million (Before fair value changes on biological assets) (Before fair value changes on biological assets) R million R million 2 000 600 400 500 1 500 300 400 1 000 300 200 200 500 100 100 0 0 0 2016 2017 2018 2019 2020 2021 2022 2023 2016
Slide 38: Condensed Statement of Profit or Loss
CONDENSED STATEMENT OF PROFIT OR LOSS 30 June 2023 30 June 2022 Audited R’000 Audited Restated Revenue 1 666 294 1 838 810 • Cost of sales includes fair value on (1 702 360) biological assets of R384 million Cost of sales* (1 248 408) (2022: R90.8 million) Gross profit (36 066) 590 402 • Gross profi
Slide 39: Statement of Financial Position as at 30 June 2023
STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2023 30 June 2023 30 June 2022 Audited R’000 Audited Restated ASSETS • Fair value adjustment movement to NON-CURRENT ASSETS 3 252 229 3 609 930 plantation biological asset R386 million Biological assets 2 216 402 2 538 757 Investment property 13 884 12 1
Slide 40: Statement of Financial Position | Continued
STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2023 | CONTINUED 30 June 2023 30 June 2022 Audited R’000 Audited Restated EQUITY AND LIABILITIES EQUITY 2 682 931 2 751 049 • Group had a rights offer where Share capital 1 735 670 1 491 674 142 857 142 shares were issued Reserves 18 336 17 587 for R250
Slide 41: Condensed Statement of Cash Flows
CONDENSED STATEMENT OF CASH FLOWS 30 June 2023 30 June 2022 Audited R’000 Audited Restated • Capitalisation of establishment cost led Cash generated from operations 128 102 255 387 to decrease of cash from investing activities of R38.7 million Interest and tax paid (40 218) (55 555) (2022: R53.2 mil
Slide 42: Accounting Policy Changes and Restatements
ACCOUNTING POLICY CHANGES AND RESTATEMENTS Change in Accounting Policy – IAS 41 Biological Assets • Plantation establishment costs capitalised • Costs incurred to create an asset • Investing cashflow Fair-value movement in Biological Asset Change in Accounting Policy and restatements • Included in c
Slide 43: Segment Results
SEGMENT RESULTS R’000 Processing plants Wholesale Forestry and fleet Agriculture Total 2023 Reportable segment profit* 64 453 21 113 17 205 2 494 105 265 2022 Reportable segment profit/(loss)* - restated 203 485 38 349 33 677 (5 117) 270 394 * Being earnings before interest, tax, depreciation, amort
Slide 44: EBITDA and Fair Value Adjustments on Biological Assets
EBITDA AND FAIR VALUE ADJUSTMENTS ON BIOLOGICAL ASSETS R’000 Operating loss for the year (393 537) Depreciation and impairments 119 695 Fair value adjustment on biological assets 384 099 Total 110 257 44
Slide 45: York's Core Values
YORK’S CORE VALUES DOWN 1. York employees are excited about teamwork and being part of the York team, value client relationships and communication with all stakeholders. Collaboration between business units is vital. ACROSS 2. York seeks employees that are enthusiastic, creative, dynamic, inspiring,
Slide 46: Disclaimer
DISCLAIMER 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 warranty,
Slide 47: Thank You
www.york.co.za THANK YOU