Kap Limited · JSE:KAP
Kap — H1 2025 Earnings Presentation
35 slides from Kap's earnings presentation, February 2025
Slide 1: Unaudited Results for the Six Months Ended 31 December 2024
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2024 UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2024 1
Slide 2: Agenda
AGENDA OPERATIONAL REVIEW Gary Chaplin FINANCIAL REVIEW Frans Olivier GROUP OUTLOOK Gary Chaplin Q&A Gary Chaplin/Frans Olivier UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2024 2
Slide 3: Operational Review
OPERATIONAL REVIEW Gary Chaplin Chief executive officer UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2024 3
Slide 4: Key Takeaways from the 1H25 Results
KEY TAKEAWAYS FROM THE 1H25 RESULTS Operating environment • Broadly positive sentiment during the period following GNU, two-pot retirement system, suspension of loadshedding, lower inflation and interest rates • Not yet filtering through to trading activity; operating environment remained depressed
Slide 5: Group Revenue Analysis
GROUP REVENUE ANALYSIS (Rm) 2 500 469 (115) (213) 36 9 (3) 15 355 2 000 144 15 028 1 500 1 000 500 0 1H24 PG Bison Safripol Unitrans Feltex Sleep Group Optix Intersegmental 1H25 eliminations UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2024 5
Slide 6: Group Operating Profit Analysis
GROUP OPERATING PROFIT ANALYSIS (Rm) 1 050 1 252 (162) 59 (94) 104 700 12 (18) 1 153 350 0 1H24 PG Bison Safripol Unitrans Feltex Sleep Group Optix 1H25 UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2024 6
Slide 7: PG Bison
PG BISON Successful ramp-up of MDF line, with good progress made in selling additional volumes • Ramp-up of new MDF line aligned with project feasibility • Panel sales volumes increased by 6% Revenue ▪ Domestic MDF sales volumes 20% higher R3 040 million 5% ▪ Exports up 28% due to increase in MDF
Slide 8: PG Bison MDF Project
PG BISON MDF PROJECT New MDF line presents meaningful future growth opportunities Project scope • 274 000 m3 new MDF line at Mkhondo facility (33% increase in total capacity) • R2 billion investment, construction commenced in April 2021, concluded June 2024 Rationale • Consolidate PG Bison as the le
Slide 9: Safripol
SAFRIPOL Improved performance underpinned by higher production volumes • Improved HDPE production efficiency following completion of R402 million HDPE conversion and extruder project in 2H24 Revenue • Production increased by 23%, largely due to prior year constraints not recurring R5 213 million • S
Slide 10: Unitrans
UNITRANS Improved result as turnaround gains traction • Revenue lower mainly due to cessation of low-margin, low-return activities; offset improved volumes in some operations Revenue • Increase in operating margin and profit supported by the benefits realised from the restructuring: R4 957 million ▪
Slide 11: Unitrans (continued)
UNITRANS Improved result as turnaround gains traction (continued) • Unitrans has a clear strategy, and the implementation thereof is progressing well: ▪ Provide end-to-end supply chain services in key sectors (agriculture, food, mining, petrochemical, passenger) ▪ Pursue organic growth (existing and
Slide 12: Feltex
FELTEX Temporary production disruptions affected results • Domestic new vehicle assembly volumes declined by 19%, with some temporary disruptions: ▪ Key model changeover at one OEM Revenue ▪ Technical-related challenges at another R1 157 million 16% • LCV and SUV sales down by 15% and up by 3%, re
Slide 13: Sleep Group (previously Restonic)
SLEEP GROUP (PREVIOUSLY RESTONIC) Positive momentum in performance despite subdued market conditions • Revenue higher largely due to a 6% increase in sales volumes of bedding units • Sales volumes of foam lower by 15% affected by exit of low-margin product line, and textiles Revenue declined by 9% R
Slide 14: Financial Review
FINANCIAL REVIEW Frans Olivier Chief financial officer UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2024 14
Slide 15: Salient Features of the 1H25 Results
SALIENT FEATURES OF THE 1H25 RESULTS Revenue EBITDA Operating profit R15.4 billion R1.9 billion R1.2 billion 2% 4% 8% Operating margin Headline earnings per share Net working capital 7.5% 17.2 cents R4.2 billion 80 bps 21% 8% Cash generated from operations Expansion capital expenditure N
Slide 16: Financial Analysis: Income Statement
FINANCIAL ANALYSIS Income statement 1H25 1H24 Variance Rm Rm % Revenue 15 355 15 028 2 Operating profit declined due EBITDA 1 897 1 982 (4) to lower performances from PG Bison and Feltex: Amortisation and depreciation (744) (730) 2 ▪ PG Bison results affected by Operating profit before capital items
Slide 17: Financial Analysis: Tax Rate Reconciliation
FINANCIAL ANALYSIS Tax rate reconciliation 1H25 1H24 % % Statutory tax rate 27.0 27.0 Government incentives include Government incentives (1.4) – a R28 million (1.2%) section 12I tax allowance related to the Withholding taxes 1.5 1.6 PG Bison MDF line Other (1.1) 0.5 Effective tax rate 26.0 29.1 UNA
Slide 18: Financial Analysis: Adjusted Headline Earnings per Share
FINANCIAL ANALYSIS ‘Adjusted’ headline earnings per share 1H25 1H24 Variance FY24 Cents Cents % Cents Reported 17.2 21.8 (21) 45.3 MDF project completed and PG Bison section 12l tax allowance (0.3) – (8.6) commissioned in June 2024 Adjusted 16.9 21.8 (22) 36.7 Section 12l tax allowance of R28 millio
Slide 19: Financial Analysis: Balance Sheet
FINANCIAL ANALYSIS Balance sheet 31 Dec 24 30 Jun 24 31 Dec 23 Rm Rm Rm Property, plant and equipment 16 128 16 043 15 556 Investment in major capital Right-of-use assets 332 300 363 projects completed Intangible assets 1 776 1 790 1 722 Net working capital higher Goodwill 656 659 661 due to: ▪ inve
Slide 20: Financial Analysis: Property, Plant and Equipment
FINANCIAL ANALYSIS Property, plant and equipment 4 950 (Rm) 4 450 503 (85) (673) Expansion capital expenditure reduced to R314 million (1H24: R1 090 million) 3 950 314 26 16 128 Capital work-in-progress of R521 million 3 450 16 043 521 (FY24: R343 million) relates mainly to the 343 completion of the
Slide 21: Financial Analysis: Net Working Capital
FINANCIAL ANALYSIS Net working capital (Rm) 950 407 (32) (77) Increase of R298 million from 31 December 2023 4 159 Inventory increased mainly due to completion of major capital projects 750 which resulted in: ▪ Increased capacity and resultant permanent investment in inventory ▪ Additional engineeri
Slide 22: Financial Analysis: Cash Flow
FINANCIAL ANALYSIS Cash flow 1H25 1H24 Rm Rm EBITDA 1 897 1 982 Cash generated from operations Net revaluation of biological assets (18) (28) down 18% due to: ▪ R85 million (4%) decrease Other non-cash adjustments 42 51 in EBITDA Cash generated from trading 1 921 2 005 ▪ R57 million more invested Wo
Slide 23: Financial Analysis: Cash Flow (continued)
FINANCIAL ANALYSIS Cash flow (continued) 1H25 1H24 Rm Rm Cash flow from operating activities (48) 91 Planned reduction in expansion Investing activities (747) (1 112) capital expenditure (down by R776 million) Expansion capex* (314) (1 090) Replacement capex^ (440) (26) Prior period replacement capi
Slide 24: Investment to Drive Growth and Efficiency Benefits
FINANCIAL ANALYSIS Investment to drive growth and efficiency benefits Manufacturing capital expenditure Material and strategic items* PG Bison PG Bison MDF line Photovoltaic (9.4 MWp PV) projects (Rm) of R2 047 million of R125 million 2 000 1 843 Pre-FY25: R1 923 million Pre-FY25: R116 million 1 800
Slide 25: Investment to Drive Growth and Efficiency Benefits (continued)
FINANCIAL ANALYSIS Investment to drive growth and efficiency benefits (continued) Non-manufacturing capital expenditure Items to highlight Unitrans Proceeds of Replacement of Expansion of Total (Rm) 1 400 1 338 R58 million R414 million R92 million R448 million (FY24: R319 million) (FY24: R400 millio
Slide 26: Treasury Activity: Net Interest-Bearing Debt
TREASURY ACTIVITY Net interest-bearing debt 4 450 (Rm) 278 9 267 3 950 97 33 (5) (12) Increase of R941 million from 30 June 2024 1 000 However, only increased by R55 million (stable) 3 450 compared to 31 December 2023 8 326 (1 450) Investment in net working capital of R1 272 million 2 950 since 30 J
Slide 27: Treasury Activity: Debt Serviceability Ratios
TREASURY ACTIVITY Debt serviceability ratios Bank covenant FY25 31 Dec 24 30 Jun 24 31 Dec 23 Gross interest-bearing debt (Rm) 10 485 9 724 10 330 Net debt: EBITDA Net interest-bearing debt (Rm) 9 267 8 326 9 212 internal limit < 2.5 times Equity excluding non-controlling interest (Rm) 12 952 12 475
Slide 28: Significant Debt Funding Activities for the Period
TREASURY ACTIVITY Significant debt funding activities for the period Revolving credit facility ('RCF') concluded in FY24 • R2 billion in three-year and R1 billion in five-year tenures at more favourable rates • Covenant ratchet on interest cover for the next three financial years ›› FY24: > 3.0 time
Slide 29: Net Interest-Bearing Debt Maturity at December 2024
TREASURY ACTIVITY Net interest-bearing debt maturity at 31 December 2024 (Rm) 5 000 4 000 Debt maturity profile following refinancing 3 316 allows for planned reduction of net debt 3 000 2 196 from 2H25 as major capital projects contribute to cash flow generation 2 000 1 000 1 120 0 (720) (1 936) (4
Slide 30: Group Outlook
GROUP OUTLOOK Gary Chaplin Chief executive officer UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2024 30
Slide 31: Group Outlook
GROUP OUTLOOK • Uncertain macroeconomic environment expected to persist; cautiously optimistic about South Africa’s medium-term outlook following GNU • Results for the period impacted by MDF ramp-up and disruptions in domestic vehicle assembly; we view these as temporary and expect their effects to
Slide 32: Q&A
Q&A UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2024
Slide 33: Appendix
APPENDIX UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2024
Slide 34: Divisional Contribution
DIVISIONAL CONTRIBUTION Revenue* Operating profit PG Bison PG Bison Safripol Safripol Unitrans Unitrans Feltex Feltex Sleep Group Sleep Group Optix Optix 0% 10% 20% 30% 40% 50% (10%) -10% 0% 10% 20% 30% 40% 50% 1H25 1H24 1H25 1H24 * Divisional contribution group results, before intersegmental elimin
Slide 35: Group Margin Analysis
GROUP MARGIN ANALYSIS* KAP operating margin decreased 80 bps to 7.5% Group 1H25 7.5% 1H24 8.3% 1H23^ 9.9% 1H22 11.4% 1H21 9.1% PG Bison Safripol Unitrans 1H25 13.6% 1H25 5.4% 1H25 6.5% 1H24 19.9% 1H24 3.8% 1H24 5.2% 1H23 18.4% 1H23^ 10.6% 1H23 6.2% 1H22 20.4% 1H22 12.7% 1H22 7.1% 1H21 14.7% 1H21 4.7