Kap Limited · JSE:KAP
Kap — FY2011 Earnings Presentation
48 slides from Kap's earnings presentation, June 2011
Slide 1: Annual Results 30 June 2011
A Annual lRResults lt 30 June 2011 Annual Results 30 June 2011
Slide 2: Agenda
Agenda • Introduction and Highlights Paul Schouten CEO • Financial Performance John Haveman CFO • Divisional Performance and Prospects Paul Schouten CEO Annual Results 30 June 2011
Slide 3: Goals that we set ourselves in 2008
Goals that we set ourselves in 2008 Make KAP’s profitability more predictable • Closure of Bull Brand fresh meat division (volatile and unpredictable earnings with large investment in working capital) • Sale of Feltex auto leathers to Seton • Sale of fibres division to Extrupet • Deal in term of wor
Slide 4: Highlights
Highlights Financial • Strong operating cash flows • Debt/equity ratio reduced to 9.1% • Net asset value per share R3.37 • Significant reduction in finance charges • EPS shows steady improvement to 30.9 cents (2010: 20.6 cents and 2009: 8.8 cents loss) • 44%% increase in HEPS S ffrom continuing oper
Slide 5: Annual Financial Results
Annual Financial Results For the year ended 30 June 2011 Annual Results 30 June 2011
Slide 6: Income Statement
Income Statement Jun 2011 Jun 2010 Jun 2009 Rm Rm Rm Continuing operations Revenue 4,217.1 3,842.9 3,839.0 Operating profit before restructuring costs 231.6 202.8 152.5 Restructuring costs (2.9) (0.6) (19.9) Net finance costs (25.6) (52.8) (63.4) Joint ventures 2.0 3.0 2.7 Profit before taxation 205
Slide 7: Balance Sheet – Assets
Balance Sheet – Assets Jun 2011 Jun 2010 Jun 2009 Rm Rm Rm Balance sheet strengthening g g Properties valued at R530m, book value R209m Net asset value per share (cents) 337 313 292 Net tangible asset value per share (cents) 321 297 276 Jun 2011 Jun 2010 Jun 2009 Rm Rm Rm Fixed assets 902.6 945.7 93
Slide 8: Fixed Assets Movements
Fixed Assets Movements Jun 2011 Jun 2010 Jun 2009 Rm Rm Rm Opening p g balance 945.7 939.9 828.2 Capital expenditure 61.6 63.3 257.4 Government incentives received (4.5) - - Disposals (15.0) (2.6) (17.2) Depreciation (69 9) (69.9) (70 8) (70.8) (59 3) (59.3) Impairment of sale assets (15.6) (0.3) (1
Slide 9: Capital Expenditure
Capital Expenditure Restricted to less than depreciation charge Capex will increase in 2012 but government assistance will help J Jun 2011 J Jun 2010 J Jun 2009 Rm Rm Rm Industrial segment 38.3 39.7 233.5 Automotive 21.5 21.3 15.4 Industrial footwear 11.1 2.7 19.7 Hosaf 5.7 15.7 198.4 g Consumer seg
Slide 10: Balance Sheet – Equity and Liabilities
Balance Sheet – Equity and Liabilities Interest-bearing liabilities reducing and gearing improving Jun 2011 Jun 2010 Jun 2009 Rm Rm Rm Equity 1,471.8 1,364.7 1,272.1 Interest-bearing borrowings 22.5 30.5 29.6 Deferred taxation liabilities 24 4 24.4 20 6 20.6 23 8 23.8 Retirement benefit obligations
Slide 11: Cash Flow Statement
Cash Flow Statement Cash flow continues to improve 2009 cash flow included Bull Brand and Hosaf effects Cash taxation paid in Feltex Fehrer JV Groupp assessed losses R528m Jun 2011 Jun 2010 Jun 2009 Rm Rm Rm EBITDA 321.2 269.0 125.1 Non-cash items ((32.9)) ((0.4)) 11.2 Change in working capital (18.
Slide 12: Debt History
100 200 300 400 500 600 700 800 0 Nov-04 N Jan-05 Mar-05 M May-05 M Jul-05 Sep-05 S Nov-05 N Jan-06 Mar-06 M May-06 M Jul-06 Sep-06 S Debt History Nov-06 N Jan-07 Mar-07 M May-07 M Jul-07 Sep-07 S Nov-07 N Jan-08 Mar-08 M May-08 M Jul-08 Sep-08 S Borrowings in R million Nov-08 N Jan-09 Mar-09 M May-
Slide 13: Capital Distribution
Capital Distribution Final cash distribution of 10 cents per share proposed Distribution of 7 cents per share paid in 2011 J Jun 2011 J Jun 2010 J Jun 2009 Rm Rm Rm Final distribution Headline earnings – continuing operations (cents per share) 32.7 22.7 11.4 Free cash flow (cents per share) 52.6 44.
Slide 14: Industrial Segment
Industrial Segment Annual Results 30 June 2011
Slide 15: Automotive
Automotive Annual Results 30 June 2011
Slide 16: Automotive
Automotive Vehicle sales in South Africa are recovering Vehicle build numbers have increased to 471,000 units (393,000 – 2010) Annual Results 30 June 2011
Slide 17: Automotive
Automotive Vehicle sales in South Africa are recovering Vehicle build numbers have increased to 471,000 units (393,000 – 2010) Increasing competition in local market • Number of brands increased • Growing market share of Korean manufacturers Annual Results 30 June 2011
Slide 18: Growth of SA Market
Growth of SA Market • Rapid growth in SA Market 2004 – 2006. • 2008 Market slow down due to interest rate increase and National Credit Act implementation. • 2009 Market slowed down even further due to Global Economic conditions. • 2010 Market improved after adverse 2009 Economic conditions. Growth o
Slide 19: Motor Industry in S.A.
Motor Industry in S.A. Number of brands in South Africa = 16 Annual Results 30 June 2011
Slide 20: Motor Industry in S.A.
Motor Industry in S.A. Number of brands in South Africa = 57 Annual Results 30 June 2011
Slide 21: Korean Threat
Korean Threat Korean Threat 30 25 20 % 15 10 5 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2007 2008 2009 Korean Sourced Vehicles Toyota Share VW Annual Results 30 June 2011
Slide 22: Automotive
Automotive Vehicle sales in South Africa are recovering Vehicle build numbers have increased to 471,000 units (393,000 – 2010) Increasing competition in local market • Number of brands increased • Growing market share of Korean manufacturers Good operating p g performance p with strong g cash flow O
Slide 23: Industrial Footwear
Industrial Footwear Annual Results 30 June 2011
Slide 24: Industrial Footwear
Industrial Footwear Safety footwear division struggled after the World Cup • Lack of demand from construction • Increased competition from the strong rand Please use New range of safety footwear launched Q3 2011 image UF9377 / 9378 / 9379 • New marketing team • Focus on customer service Gumboot divi
Slide 25: Footwear Sector Market
SA Footwear and Leather industry association shoe sales 2009 2010 Imports Pairs 146 million 184 million Locally produced Pairs 50 million 51 million Imports are soaring, but local production steady Footwear Sector Market 250 200 150 100 50 0 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 1
Slide 26: Hosaf
Hosaf Annual Results 30 June 2011
Slide 27: Hosaf
Hosaf Transformation from a fibre company to a PET company is complete Supplement local production with imports to supply customers Annual Results 30 June 2011
Slide 28: Hosaf Sales Mix
Hosaf Sales Mix 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 PET 13,333 , 12,305 , 14,590 , 33,628 , 45,304 , 53,366 , 52,550 , 59,040 , 64,607 , 109,140 , 121,539 , FIBRE 30,267 39,385 38,690 37,786 30,801 27,612 26,885 24,890 19,213 10,425 9,167 140,000 120,000 Tonnes per annum 100,000 8
Slide 29: PET Production
PET Production Tonnes (000’s) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 SANS 85 85 85 85 85 85 85 85 - - - Hosaf 13 12 15 34 45 53 53 59 65 109 122 Total local production 98 97 100 119 130 138 138 144 65 109 122 Imports 9 11 11 7 5 8 40 20 27 Total SA market 98 97 109 130 141 145 143 15
Slide 30: Hosaf
Hosaf Transformation from a fibre company to a PET company is complete Supplement local production with imports to supply customers Excellent quality produced by the plant • Most of the time production was working at max • Very low reject rate Annual Results 30 June 2011
Slide 31: CP50 Substandard
CP50 Substandard 4.00 3 50 3.50 3.00 2.50 2.00 % 1.50 1.00 0.50 0.00 July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June Target -SUB STD 2008 & 2009 2009 & 2010 2010 & 2011 Annual Results 30 June 2011
Slide 32: CP50 Waste
CP50 Waste 1.600 1.400 1.200 1.000 0.800 0.600 0 400 0.400 % 0.200 0.000 0 0 0 00 00 00 00 00 00 00 00 00 /0 /0 /0 1/ 2/ 3/ 4/ 5/ 6/ 7/ 8/ 9/ 10 11 12 1/ 1/ 1/ 1/ 1/ 1/ 1/ 1/ 1/ 1/ 1/ 1/ Target waste 2010 & 2011 2009 & 2010 2008 & 2009 2007 & 2008 Annual Results 30 June 2011
Slide 33: Hosaf
Hosaf Transformation from a fibre company to a PET company is complete Supplement local production with imports to supply customers Excellent quality produced by the plant • Most of the time production was working at max • Very low reject rate – benchmarked against Indorama Concentration on customer
Slide 34: Consumer Segment
Consumer Segment Annual Results 30 June 2011
Slide 35: Bull Brand
Bull Brand Annual Results 30 June 2011
Slide 36: Bull Brand
Bull Brand Major competition from imported fish products • Good fishing catch • Strong Rand Sales were same as last year • Cannery improved • Value added products were down New canned chicken (Gants) range will be launched • Success of the Heinz range • In store target date was August for Masscash C
Slide 37: Brenner
Brenner Annual Results 30 June 2011
Slide 38: Brenner
Brenner Sales were slightly down in tons – increase in competition and decrease in exports to Zimbabwe One-off cost of brand building advertising of approximately R4 million Restructure at the three mill locations to centralise certain functions Maize M i price i has h now stabilised t bili d after
Slide 39: Jordan
Jordan Annual Results 30 June 2011
Slide 40: Jordan
Jordan Excellent results and both sales and profit improved Sales in p pairs were well up p % increase 2011 vs 2010 • Own manufacture 10% • Imports 25% • Total 21% Ladies division has started to perform well We continue to expand our retail factory shop outlets • 2 new stores opened in 2011 and a fu
Slide 41: Puma
Puma Annual Results 30 June 2011
Slide 42: Asics Clothing
Asics Clothing Annual Results 30 June 2011
Slide 43: Glodina
Glodina Annual Results 30 June 2011
Slide 44: Glodina
Glodina Excellent performance in the light of all the challenges in the textile industry Turnover flat but cost control excellent Unfortunately more retailers are looking to source offshore • Our O response is to improve our customer service • Exports to Australia and Mauritius • New local customers
Slide 45: Prospects Government Incentives
Prospects Government Incentives EIP – Enterprise investment program • 15% on qualifying capex up to R200m Productivity incentive • 10% on value add sales less cost of production (locally produced goods) • Textile and footwear companies only (including leather goods manufacturers) • Amount to be rein
Slide 46: Prospects KAP business sectors
Prospects KAP business sectors Automotive Components Feltex Short term Exports to Europe & USA Long term New models & increased build Ford T6, Toyota, BMW and TATA? PET Hosaf Short term Impact of commodity prices Long term Growth market – we cannot supply full local requirements Food Short term Defe
Slide 47: Prospects
Prospects Hosaf • Demand remains strong Feltex • Increase in build – Ford T6, Toyota and BMW are all talking about increasing volumes, etc • Other divisions • Expect a steady performance • Recent weakening of the rand will help • Use ggovernment incentives to improve p efficiency y Interest charge w
Slide 48: Thank You
Thank You Annual Results 30 June 2011