Results presentation FOR THE YEAR ENDED 30 JUNE 2016 History - PowerPoint PPT Presentation

Results presentation FOR THE YEAR ENDED 30 JUNE 2016

History timeline 2 Implementation of growth strategy, with focus on EBITDA generation Rights issue of R552 million 1916 1946 1980 2007 2009 2012 2014 York acquired Global Forest Business was returned to Products, making it the largest profitability, coupled with successful vertically integrated solid wood refinancing of debt processor in Southern Africa. In the same year, the largest fire ever experienced in the history of South Africa swept through the Sabie valley

Who we are 3 York is an integrated forestry company, operating 28,89% through its wholly-owned subsidiaries, York Timbers 28,72% Proprietary Limited, that owns plantations and processing plants, and Agentimber Proprietary Limited, 19,04% that runs a wholesale distribution network 12,84% York has the largest market share of the 10,51% South African timber and plywood market. This share in the market is a result of York’s sustainable biological assets, integrated operations of primary and value-added processes Shareholding Revenue: R1 771 million Total asset value: R4 561 million Empowerment Development agencies Number of people employed: 5 238 Other Mutual funds Private companies (includes employees and contractors)

Operational 4 footprint 199 300 000ha surface area in South Africa 1 268 443ha dedicated to commercial forestry 646 759ha planted with pine 454 190ha managed for lumber production

Operational 5 footprint York’s Forest Stewardship Council (FSC) certified plantation of 60 470ha consists of 54 745ha pine and 2 449ha eucalyptus planted and temporarily unplanted area of 3 276ha Sustainable raw material supply under- Mpumalanga Gauteng Eastern Cape pins the investment in processing facilities. 1 Driekop 6 Pretoria 9 Port Elizabeth Sawmill (pine timber products) Warehouse and distribution Sales office Sabie and Jessievale sawmills are ideally facility 2 Nicholson & Mullin situated next to timber supply from York Western Cape Sawmill and treatment plant 7 Roodekop, Johannesburg as well as from external resources. 10 Epping, Cape Town Warehouse, distribution 3 Sabie Distribution network is well positioned to Warehouse, distribution and value-added products Sawmill and treatment plant and treatment facility service the Southern African market. 4 Plywood KwaZulu-Natal Free State Plywood manufacturer 8 Durban 11 Bloemfontein 5 Jessievale Sales office Warehouse and distribution Sawmill and treatment plant facility

6 The numbers

Financial 7 highlights BUILDING A SUSTAINABLE COMPANY REQUIRES CONSISTENT PERFORMANCE AND CASH GENERATION OVER TIME Group revenue Cash flow from operations Net asset value (R’000) (R’000) (cents) 2 000 000 300 000 900 250 000 1 500 000 800 200 000 1 000 000 150 000 700 100 000 500 000 600 50 000 0 0 500 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 Gross profit EBITDA Underlying TNAV* (R’000) (R’000) (cents) 600 000 250 000 900 200 000 450 000 800 150 000 300 000 700 100 000 150 000 600 50 000 0 0 500 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 * Underlying tangible net asset value (UTNAV) represents the physical net asset value including property, plant and equipment, biological assets and all other assets less all liabilities, but excluding goodwill and the deferred tax on the biological asset. UTNAV improved from 739 cents per share for the prior year to 834 cents at year-end

Financial 8 highlights Earnings per share Biological assets Cash generated from Operating profit increased by increased in value by operations increased increased by 135% to 9% to 56% to 27% to 73 cents R2 334 R285 R183 per share million million million 2015: 31 cents per share 2015: R2 140 million 2015: R183 million 2015: R144 million EBITDA Revenue Underlying tangible net Core earnings per share increased by increased by asset value (UTNAV) up increased by 25% to 15% to 13% to 63% 75 cents R1 771 834 cents 2015: 27% million per share per share 2015: R1 543 million 2015: 739 cents per share (4%) 2015: 60 cents per share (28%)

Six-year 9 financial review YORK HAS GROWN REVENUE BY 13.0% CAGR SINCE 2011 CAGR % Audited % Audited Audited Audited Audited Audited 2011-2016 2016 change 2015 2014 2013 2012 2011 R’000 Group revenue 13 1 771 049 15 1 543 149 1 323 976 1 131 994 1 112 843 959 143 R’000 Gross profit 3,5 500 566 24 404 415 377 945 410 298 421 519 420 912 Gross profit margin % (8,4) 28 8 26 29 36 38 44 R’000 Operating profit 2.5 182 933 27 144 021 116 811 161 365 166 068 161 897 Operating margin % (9,4) 10 11 9 9 14 15 17 R’000 EBITDA (4,5) 242 758 22 199 390 156 262 187 153 194 726 195 060 EBITDA to revenue % (7,6) 13,7 6 12,9 11,8 16,5 17,5 20 R’000 Net profit before finance costs 18,7 390 032 99 196 272 123 531 192 834 303 395 165 676 R’000 Finance costs (10,8) 56 632 (3) 58 385 56 440 54 672 87 308 100 370 R’000 Cash flow from operations 8,8 284 963 56 182 574 151 461 106 486 197 088 187 239 R’000 Biological assets 3,8 2 334 327 9 2 140 067 2 103 092 2 100 870 2 070 222 1 936 398 R’000 Interest-bearing borrowings 7,8 894 145 20 743 360 562 616 597 173 558 400 614 225 R’000 Investment in property, plant and equipment 71,9 283 241 39 203 288 66 169 51 958 36 340 18 887 R’000 Net working capital 7,5 162 685 (26) 219 485 213 182 180 446 119 372 113 460 INVESTMENT IN EBITDA-GENERATING CAPABILITY: 71.9% CAGR SINCE 2011

Six-year 10 financial review EARNINGS PER SHARE SHOW STRONG GROWTH: 44.1% CAGR SINCE 2011 CAGR % Audited % Audited Audited Audited Audited Audited 2011-2016 2016 change 2015 2014 2013 2012 2011 R’000 Earnings 44,1 238 212 135 101 468 50 994 106 864 137 818 38 317 Weighted average number of shares number (0,4) 325 286 331 032 331 241 331 241 331 241 331 241 Earnings per share cents 44,5 73 135 31 15 32 42 12 Core earnings per share cents 16,8 31 63 19 15 30 30 14 Headline earnings per share cents 36,3 73 152 29 14 33 42 16 Net asset value per share cents 5,7 809 11 731 703 688 655 612 Tangible net asset value per share cents 7,6 635 13 559 531 516 484 440 Underlying TNAV cents 6,7 834 13 739 708 692 657 602 Return on equity % 36,8 9 116 4,2 2,2 4,7 6,4 1,9 RETURN ON EQUITY : 36.8% CAGR

11 Underlying value

Investment 12 case THE CURRENT SHARE PRICE DOES NOT REFLECT THE UNDERLYING PERFORMANCE OF THE BUSINESS York’s share price (R2,50) was trading at a 70% discount to the underlying tangible net asset value (R8,34) as at 30 June 201 6. Not only does the discount make it an attractive investment, but the Company has been able to historically generate EBITDA and cash flow on a consistent and sustainable basis, growing year-on-year York Timbers P/E vs share price York Timbers UTNAV York Timbers EBITDA and cash flow from operations (R’000) (cents) vs share price (cents / share) 80 450 1 000 300 800 60 300 200 600 40 400 150 100 20 200 0 0 0 0 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 P/E ratio EPS Share price (actual) UTNAV Share price EBITDA Cash flow from operations Raw material from York’s own biological asset, Earnings per share (which includes fair value Underlying tangible net asset value has grown adjustments to the biological asset) shows a sustainably and consistently over a five-year plus externally procured logs, converted by the consistent increase over time, but is not period, illustrating the growth of the biological capital invested in processing plants, and direct reflected in the growth of the share price and asset and continued capital investment in cash- access to the market of final products, assisted consequently not evident in the price earnings generating assets. During the same period, not only EBITDA growth but also cash flow from ratio. This illustrates the value potential evident however, the share price of the Company has operations to improve year-on-year in a York share investment reduced and is not an accurate reflection of the true value of the organisation

Investment 13 case STRONG BALANCE SHEET AND GOOD CASH GENERATION Net asset value and share price Underlying tangible net asset growth 5 000 000 900 R’000 cents originates from growth in the biological asset and continued investment in 4 000 000 EBITDA and cash-generating capital equipment. A sustained level of debt has 3 000 000 been applied to the balance sheet, and 600 has increased with the Plywood Plant 2 000 000 Expansion Project during the current and preceding financial years. Net working 1 000 000 capital investment remains productive, 300 supporting the increased levels of activity 0 in care of a growing customer base (1 000 000) (2 000 000) 0 2011 2012 2013 2014 2015 2016 Biological asset Property, plant and equipment Goodwill Cash Net working capital Interest-bearing borrowings Deferred tax Provisions and other NAV per share (cents)

14 Key performance indicators