York Timber Holdings Limited · JSE:YRK
York Timber — FY2013 Earnings Presentation
34 slides from York Timber's earnings presentation, October 2013
Slide 1: Investor Presentation: Audited results for the period ended 30 June 2013
Investor Presentation Audited results for the period ended 30 June 2013
Slide 2: Why York?
Why York ? Financial performance Forestry Division Processing Division Market analysis Growth outlook Questions
Slide 3: Why invest in York?
Why invest in York? York fundamentals: • Revenue up 2% to R1.1 billion; 52% increase in Processing division 1. Cost optimisation: • Optimised cost structure • Cash generated from operations of R106 million (2012: R197 million) • Optimised production capacity • R28 million contribution to self insura
Slide 4: Why invest in York?
Why invest in York? 3. Investment in human capital: • Manage our plantation resources on a sustainable basis and supply • Correct skills set/skills audit optimal raw materials to each processing unit • Right attitude • Enriched training strategy • Improve plant efficiencies by replicating the most s
Slide 5: What is the true value of York?
What is the true value of York? Biological asset is valued at • Balance sheet values R2.1 billion fair value using a discounted cash flow – Biological asset method. – Property plant and equipment Property plant and – Working capital increase equipment is valued at R430 – Deferred tax million, deprec
Slide 6: Financial performance
Why York ? Financial performance Forestry Division Processing Division Market analysis Growth outlook Questions
Slide 7: Summary Financial Performance
Summary Financial Performance • Revenue growth 2013 Change 2012 Change 2011 Change 2010 supported by performance in Group Revenue 1 131 994 2% 1 112 843 16% 959 143 5% 909 361 Processing Division Gross Profit 410 298 -3% 421 519 0% 420 912 20% 350 117 although impacted by Gross Profit Margin 36% -4%
Slide 8: Balance Sheet Trend
Balance Sheet Trend • Net Working Capital R4 000 000 800 increase by R61 million • Net Asset Value 700 increased to R2.27 billion R3 000 000 • Underlying TNAV 600 excludes deferred tax, that increased from R6.55 R2 000 000 to R6.92 per share 500 • Goodwill tested and Cents R'000 R1 000 000 400 remai
Slide 9: Income statement changes
Income statement changes • Revenue increased by 2% owing to increase R300 000 in pricing • EBITDA margin R200 000 reduced by 1% primarily as a result of external log purchases R100 000 • Selling General and Admin expenses increased marginally R0 Profit R'000 by 1.4% • Cost of debt reduced (R100 000)
Slide 10: EBITDA reconciliation for 2012 to 2013
EBITDA reconciliation for 2012 to 2013 : R’000 • Processing performance is reflective of capital R250 000 R19 151 Actual R188 663 R190 403 R3 210 investments to position R200 000 York for future strategy R150 000 • 2012 EBITDA reconciliation to 2013 negatively impacted R100 000 by external log purch
Slide 11: Forestry Division
Why York ? Financial performance Forestry Division Processing Division Market analysis Growth outlook Questions
Slide 12: Forestry: Salient Features and Future Prospects
Forestry Salient Features and Future Prospects Performance • R31 million increase in biological asset • Minimum forestry wage impact of R3 million for 2013. Full impact ca R16 million per annum • 25% increase in procured logs vs. 16% lower production as division focused on increasing plant maturity
Slide 13: Pine Plantation management
Pine Plantation management Plantation management practices impacts the volume and quality of 3rd Thinning timber produced 30 400 to 250 Clearfell 2nd • Site specie matching is a Thinning critical decision before 650 to planting is commenced. 400 Various Pinus species with 25 characteristics that mit
Slide 14: Biological Asset – age class distribution and volume forecast
Biological Asset – age class distribution and volume forecast 22 500 • York average Five year intervals plantation age is 20 000 managed to increase 17 500 • New genetic material 15 000 Mar-07 Mar-08 and improved Mar-09 Hectares planted 12 500 Mar-10 silviculture practices Mar-11 have shown 10 000 M
Slide 15: Biological Asset
Biological Asset • Biological assets Burnt areas: hectares Temporary unplanted area: hectares 12 000 6 000 fair valued on discounted cash 10 000 5 000 flow basis 8 000 4 000 • Value improved by ca R31 million 6 000 3 000 • TUP and historical 4 000 2 000 damage due to fire have a negative 2 000 1 000
Slide 16: Biological Asset
Biological Asset Difference in assumptions: • The biological asset method R800 000 calculates cash flows based Cash flow comparison: Biological asset valuation vs on the trees planted at year end. These trees are thinned R700 000 operational management according to the current regimes and clearfelle
Slide 17: Processing Division
Why York ? Financial performance Forestry Division Processing Division Market analysis Growth outlook Questions
Slide 18: York Timbers Value Chain
York Timbers Value Chain YORK TIMBERS TREES ARE OPTIMISED An accurate merchandising Thorough production process is used to ensure planning to ensure correct maximum use of the tree log mixes arrive at the mills ( > , posta aas poole + Dried in state of the art dryers Logs are UEEICEES@ . Boards are
Slide 19: Processing: Salient Features and Future Prospects
Processing Salient Features and Future Prospects Performance • Division’s objective is to create additional revenue streams from Processing Division 2013 acquired raw material and obtain a better margin from by- products 45% 40% • Processing division revenue up by R47 million 35% 30% • Maintained co
Slide 20: International Sawmill and Lumber Cost Benchmarking
International Sawmill and Lumber Cost Benchmarking Residue revenue USD/m3 South African rankings: Brazil 14 34 5 98 10 Labour costs BC Interior R.Far East* R:$ = 9.20 • 2nd highest lumber Can - Prairies Other direct costs Siberia* prices Chile 16 43 8 88 14 Overhead/ Admin NW Russia* • 2nd highest t
Slide 21: Market analysis
Why York ? Financial performance Forestry Division Processing Division Market analysis Growth outlook Questions
Slide 22: Building and construction value flow
Building and construction value flow • Total spend in CURRENT REALITY OF INVESTMENT IN BUILDING AND CONSTRUCTION: YTD 2012 (DEC) building and (R MILLION) Total Building Total Bldng and Constr Total Construction construction is ca R350 billion R 164 342 R 350 114 R 185 772 Residential • Construction
Slide 23: Market Drivers and Lead Indicators
Market Drivers and Lead Indicators Building Plans Passed & Buildings Completed Net Building in the Pipeline Total Building: BC: 1993-2013: Net Building in the Pipeline (NBIP): BPP & BC Total Building (Including A&A): 1993-2013 by month: m2 (May) (Source: StatsSA; BMI-BRSCU: BC by Month and Type of B
Slide 24: Government Spending – Human Settlements (Residential)
Government Spending – Human Settlements (Residential) • High demand for housing persists across RSA • Informal ANNUAL HOUSING BACKLOG (UNITS) settlements increased from 800 to 2500 over period • Government recognised need – budget allocations: • R846 bn to infrastructure over 4 years. • R1.5 trillio
Slide 25: Market Overview – Lumber Industry Statistics
Market Overview – Lumber Industry Statistics • York shows price Industry Volume (m3) & York Market Share % Lumber Price Index : Industry and York growth while 1 560 21.5% 2 650 maintaining market Thousands share in a softer 1 540 2 550 21.0% market 1 520 2 450 1 500 20.5% 2 350 • Market demand 1 480
Slide 26: Market structure and need for consolidation
Market structure and need for consolidation • Significant Market Share – Softwood Sawmills Processors in South Africa consolidation has taken place at the reseller level York • Saw milling Merensky industry 21% fragmented and Tekwani 32% resellers take Sappi advantage of multiple product 13% Cape Pi
Slide 27: Growth outlook
Why York ? Financial performance Forestry Division Processing Division Market analysis Growth outlook Questions
Slide 28: Raw material supply in York geographical area
Raw material supply in York geographical area Estimated afforested area Hectares Mpumalanga & Swaziland MPU North 129 000 MPU Central 105 000 MPU South 265 000 MPU Total 499 000 Swaziland 92 000 Total Hectares 591 000 • Sabie and Jessievale ideally situated to timber supply from own and external res
Slide 29: Optimising strategy of raw material resource
Optimising strategy of raw material resource • Improved biological asset – Increase yield per hectare – Optimising cost structuring of forestry operations – Procure external raw materials supply • Investment in processing technology – R1.2 billion investment over the next 4 years funded by debt and
Slide 30: Delivery of York Strategy
Delivery of York Strategy • Extracting maximum value from the available fibre in the escarpment area while increasing productivity • Increase intake capacity to approximately 3 000 cubic metres per day and plywood plant’s intake by around 200 cubic metres per day • Increase energy efficiency Expansi
Slide 31: Summary and Investment Proposition
Summary and Investment Proposition • York presents • Company well positioned to benefit from change in market dynamics – York set consistent cash to lead: generation in the – Industry consolidation through the development of the integrated site in Sabie medium to long – Integrated fibre utilisation
Slide 32: Questions
Why York ? Financial performance Forestry Division Processing Division Market analysis Growth outlook Questions
Slide 33: Thank you
a\ YORK TIMBERS Thank you
Slide 34: Disclaimer
DISCLAIMER This presentation contains forward-looking statements about the company’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 wa