York Timber Holdings Limited · JSE:YRK
York Timber — FY2019 Earnings Presentation
30 slides from York Timber's earnings presentation, 2019
Slide 1: Results Presentation for the Year Ended 30 June 2019
RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2019
Slide 2: Challenges During the Past Year
CHALLENGES DURING THE PAST YEAR 2 Strikes: April/ May, August/ September, November – January 2019 Total production days lost 239 days (18%) combined Impact: EBITDA loss of ca. R130 million Board changes: Four resignations Three independent non-executive directors appointed Investigations: Accusation
Slide 3: Financial Overview
FINANCIAL OVERVIEW 3 Revenue EBITDA Core earnings per share 12% 28% 70% to R1 601 million to R205 million to 8 cents (2018: R1 812 million) (2018: R284 million) (2018: 26 cents) Total debt Cost excluding log purchases Other salient features 13% • EBITDA for the six months ended 15% 30 June 2019
Slide 4: Eight-Year Historical Financial Results
EIGHT-YEAR HISTORICAL FINANCIAL RESULTS 4 CAGR % Restated 2012- Audited % Audited Audited Audited Audited Audited Audited Audited 2019 2019 change 2018 2017 2016 2015 2014 2013 2012 Group revenue R'000 5% 1 600 522 (12%) 1 812 350 1 832 805 1 771 049 1 543 149 1 323 976 1 131 994 1 112 843 Gross pro
Slide 5: Eight-Year Historical Financial Results | Continued
EIGHT-YEAR HISTORICAL FINANCIAL RESULTS | CONTINUED 5 CAGR % Restated 2012- Audited % Audited Audited Audited Audited Audited Audited Audited 2019 2019 change 2018 2017 2016 2015 2014 2013 2012 Basic (loss)/earnings R'000 (183%) (36 268) (126%) 138 280 367 286 238 212 101 468 50 994 106 864 137 818
Slide 6: Financial Overview | Continued
FINANCIAL OVERVIEW | CONTINUED 6 GROUP REVENUE | R million GROSS PROFIT | R million EBITDA | R million 2 000 600 300 500 1 500 400 200 1 000 300 200 100 500 100 0 0 0 2012 2013 2014 2015 2016 2017 2018 2019 2012 2013 2014 2015 2016 2017 2018 2019 2012 2013 2014 2015 2016 2017 2018 2019 CASH GENERATE
Slide 7: Financial Overview | Continued
FINANCIAL OVERVIEW | CONTINUED 7 Statement of financial position 2019 % 2018 as at 30 June 2019 R’000 change R’000 EQUITY AND LIABILITIES Equity 3 096 717 (1%) 3 130 276 Share capital 1 480 232 0% 1 480 232 Reserves 2 356 (767%) (353) Retained income 1 614 129 (2%) 1 650 397 Liabilities The reductio
Slide 8: Financial Overview | Continued
FINANCIAL OVERVIEW | CONTINUED 8 Statement of financial position 2019 % 2018 as at 30 June 2019 R’000 change R’000 The net increase in biological assets is the ASSETS result of a decrease in the weighted average volume adjustment factor from 10% in 2018 Non-current assets 3 994 693 (1%) 4 054 470 to
Slide 9: Biological Asset Valuation “BAV”
BIOLOGICAL ASSET VALUATION “BAV” 9 Fair value adjustment: R204 million (2018: R77 million) Factors R’000 Reasons Net growth (R61 687) TUP increase Revenue and Price (R6 452) Weak market Operating costs (R79 685) Wage rates/Timing Discount rate R78 293 β Change / R186 – Bootstrap rate Volume adjust
Slide 10: Biological Asset Valuation “BAV” Continued
BIOLOGICAL ASSET VALUATION “BAV” CONTINUED 10 Volume adjustment factor Step 1. Standard adjusted 8% (2018:8%) on harvestable volume » acknowledgment of enumeration errors and data corrections » No change to this assumption Step 2. Reduced further by weighted average of 2% (2018:10%), based on actual
Slide 11: Goodwill and Biological Asset Valuation Changes
GOODWILL AND BIOLOGICAL ASSET 11 VALUATION CHANGES GOODWILL allocated to forestry segment only Impairment: R208 million (2018: no impairment) Due to: Decrease in present value of segment • Decrease in long-term revenue inflation forecast • Increase in volume accuracy adjustment • Change in referen
Slide 12: Debt Facilities 2019
DEBT FACILITIES 2019 12 Balance Description R’000 Originated Repayment terms Land Bank term loan 337 966 • Original 2007 purchase loan for GFP • Re-financed June 2019 – equal monthly assets were repaid through capital raise instalments over 7 years at prime less • R600 million re-financed with Land
Slide 13: Log Prices
LOG PRICES 13 % Q2 2019 change Q2 2018 • ±50% External log purchases YORK SAWLOG PRICES IN RELATION TO INDUSTRY • Log prices have increased by CAGR 7.2% Average York price R871.06 8.4% R803.45 since 2014 Industry average R689.71 4.4% R660.43 • Price difference to industry average of 26% Price varian
Slide 14: Industry Sales Correlated with Buildings
INDUSTRY SALES CORRELATED WITH BUILDINGS 14 Building plans completed vs Industry Sales R 3 500 000 180 000 160 000 R 3 000 000 140 000 R 2 500 000 120 000 R 2 000 000 100 000 R 1 500 000 80 000 60 000 R 1 000 000 40 000 R 500 000 20 000 R- - Oct-16 Oct-17 Oct-18 Jun-16 Nov-16 Dec-16 Jan-17 Jun-17 No
Slide 15: Plywood Market
PLYWOOD MARKET 15 Market size: Strong international demand • USA 4.8 mil m3 pa, Japan 3 mil m3 pa, UK and Ger 1,7 mil m3 pa each, Canada 939 000 m3 pa, NED 875 000 m3 pa Local • Low grade and low quality imports dumped in domestic market – Brazilian producers • Plywood predominantly used for shutter
Slide 16: Timber Is Looking Up
TIMBER IS LOOKING UP OV E R JACK LONDON SQUARE PARCEL F2 and re TERRACE HOUSE HOHO VIENNA jenna, Asta iysiledepeinl TALL WOooD sea ition rd pices ucirmiouscsoensuy - BUILDINGS ARE uosTARNET Tau wl Se UNDERWAY OR ce BEEN ~ BUILT IN THE PAST BROCK COMMONS TALLWOOD HOUSE ORIGINE CONDOS: 1istoriag [C1 i
Slide 17: Wood Is Unique
WOOD IS UNIQUE 17 Wood is unique and highly beneficial for the production of wood-based products and components for construction purposes. Some of the properties would be almost impossible to replicate in any other building materials. Some of these properties include: Thermal: Wood does not change i
Slide 18: Innovation
INNOVATION 18 Lifecycle assessment comparison of wood vs other building materials: Engineered wood Cement Steel Aluminium ABSORBS EMITS EMITS EMITS 1.7 tons of CO₂ 927kg of CO₂ 1,83 tons of CO₂ 9,3 tons of CO₂ per ton of wood per ton of cement per ton of steel per ton of aluminium produced produced
Slide 19: Mass Timber Construction
MASS TIMBER CONSTRUCTION 19 Height Height Wooden skyscrapers are 58m 84m estimated to be around a Floors above ground Floors above ground 18 24 quarter of the weight of an Number of apartments Country 305 Austria equivalent reinforced concrete Country City structure as well as the building Canada Vi
Slide 20: Mass Timber Construction Continued
MASS TIMBER CONSTRUCTION CONTINUED 20 Strategic partnership with the University of Pretoria to establish a multidisciplinary research programme: Focused on structural engineering of advanced wood products in South Africa’s bioeconomy Sponsor a multidisciplinary chair position in wood structural engi
Slide 21: Wood Properties | Continued
WOOD PROPERTIES | CONTINUED 21 PhD study at University of British Columbia: Impact of altitude, soil geology and soil depth on P.patula solid wood properties for structural timber and plywood production Source Compartment Checking Team Location Age Contractor Volume Team Product System Length Produc
Slide 22: Wood Properties
WOOD PROPERTIES 22 Project co-ordinated by Camcore and the Forest Molecular Genetics group at the University of Pretoria Development of a molecular tool: The Pine Single Nucleotide Polymorphism (SNP) Chip • Link pine genes to economically important traits • Predict how a specific trait will be expre
Slide 23: Wood Properties | Continued
WOOD PROPERTIES | CONTINUED 23 Anticipate that the commercial pine SNP chip will be available end of 2019 Pine SNP Chip application A resistograph is Resistance values are Data is used to select the a tool that drills converted to densities best genotypes through any part on a tree stem and measures
Slide 24: Wood Properties | Continued
WOOD PROPERTIES | CONTINUED 24 York has completed a full stratification of its landholdings in terms of climate, soil and risk factors Basic ingredients for York has identified 26 TREE GROWTH: DIFFERENT SITE TYPES water to extract the full potential wood nutrients production radiation space P = G +
Slide 25: Cluster Development
CLUSTER DEVELOPMENT 25 55 km 43 km to Sabie 36 km to Sabie 112 km 147 km 240 km to Sabie
Slide 26: Strategic Update - Operational
STRATEGIC UPDATE - OPERATIONAL 26 Progress in 2019 Opportunities in 2020 Finger jointing capacity was consolidated to optimally Increase Jessievale capacity by ca. 40% to fully utilise utilise resources, reduce lead times and reduce the available raw material inventory Integrate the sawmilling opera
Slide 27: Strategic Update – Investors
STRATEGIC UPDATE – INVESTORS 27 Challenges Response 2007 acquisition debt of R338 million negatively impact Debt to be repaid with capital raising earnings and cash generation Input costs offset gains from strategic capital Market cap of ca R540 million: Total debt R660 million investments Investor
Slide 28: York’s Core Values
YORK’S CORE VALUES 28 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, inspiri
Slide 29: Disclaimer
DISCLAIMER 29 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 30: Thank You
THANK YOU av YORK TIMBERS