KAP Limited (KAP) Earnings Call Transcript

Good morning, ladies and gentlemen, from the sunny Cape Town. Thank you for joining us on this webcast for the release of the audited results of KAP for the year ended 30 June '21. At the outset, I'd like to state that I'm very proud of the performance of the company, its management and staff for the year. This hasn't been an easy year as you all know, for a number of reasons. And I think the company's results, which Gary and Frans will present for the year are very good, and place the company in a very strong financial position to execute on its future plans. We concluded our year-end Board meeting yesterday afternoon, and it was interesting process for me to reflect on the past year. While I'm very pleased with the financial results, the impact of COVID has been enormous, physically, emotionally and psychologically draining all of us. Within KAP, just over 2,000 employees have been infected with COVID. And while the vast majority have fully recovered, unfortunately, 52 employees have sadly passed away. On behalf of the Board, I offer my deepest condolences to the families, the friends and their colleagues of these individuals. Gary shared some of the stories about the staff of KAP who have risen above the fear, sadness and the personal challenges of this time to come to work every day to contribute to the continued operations of the group. And I'm really proud of each of one of these employees and like to thank each one of them for their loyalty and their commitment to the company and also for their contribution to these results. I wish them good health during this time and urge them to remain safe and be vaccinated. I now hand over to Gary and Frans to present the company's results.

Thank you, Jaap and thanks for those kind words. And at KAP, we employ roughly 19,000 people across our various operations. And I think each one of them have shown great courage and loyalty through this period, and I can't but support your words, Jaap, and we're sincerely grateful for obviously the contribution of all of our people. If we look at the year under review, and we did this table for our budget presentation, actually, just to get some reflection on where we've come from. And it's fascinating to see the disruption that we've experienced during this year. So if you look at that timeline there in terms of the different levels of lockdown restrictions that we've experienced throughout obviously, starting in F '20 and then moving into F '21. During the current year, we started the year in Level 3 and moved into Level 2 for 34 days, then Level 1, then back to Level 3 and back to Level 1, Level 2, Level 3, Level 4, and obviously, that's enormously disruptive. And I think COVID has brought around about some changes, which while challenging in some instances have been quite supportive of our business in other instances. So we've seen a significant move towards home spend, generally home improvement spend, which is I suppose a replacement of the disposable income, which was previously spent on travel, entertainment, alcohol, et cetera. We've seen an increase in health and hygiene spend. And we've seen completely disrupted global supply chains, which have really supported local manufacturer. And then we've seen complete unpredictability and uncertainty in terms of where these trends are going and what's going to evolve. And that obviously brings a degree of operational challenge. Obviously, with disrupted supply chains that's affected some of our own raw material and components that we use in our own products. And obviously, running large-scale factories and large-scale logistics operations, we employ, as I said, close to 19,000 people, and that comes with significant safety protocols and processes that we follow to ensure that our employees are safe during their working time. Obviously, certain markets were restricted. One of our primary markets in Botswana remains in a state of emergency, which obviously restricts our ability to operate. And then obviously, certain growth opportunities have been constrained. And unfortunately, this doesn't come at a particularly good time from the macroeconomic and sociopolitical environment and where we remain in a position with poor policy certainty and execution capability, unreliable electricity. We run big facilities and we're big users of electricity. Escalating social unrest, which I think culminated in the events of July in this year; low business confidence and consumer confidence, obviously, a consumer that remains under severe pressure, exacerbated by the impacts of COVID; and increasing unemployment; and then obviously, the increased economic shocks specific to COVID. I think what's important to note in this environment is we settled in tourism. And I think that's probably the best way to describe where we are. So we still are dealing with a lot of uncertainty and ongoing change. However, we have developed the capability to adapt quickly to that change, and we settled into a rhythm where we believe we can operate under these conditions on a sustainable basis going forward. And I think it's important to note some of the key items that we have achieved through this period, which really point towards the sustainability of our group going forward. So we stabilized the group post hard lockdown financially, operationally, psychologically and emotionally. And we've developed, as I mentioned, new and flexible operating capability, which gives us the ability to change and scale very rapidly. Obviously, in this environment, we've had to make some tough decisions, and we've rationalized a lot of operations, which have obviously affected people's lives. And those are never easy decisions to make, but I think we've dealt with them responsibly and empathetically under this environment. We feel that we've gained market share in most of our areas of operation, not an easy time to do it, but we feel that we have. And in addition to that, we've enhanced our leadership position in some of our industries. So obviously, in a time of uncertainty, clear decisive leadership is critical, and we operate in several industry bodies. And I think we've really supported those industry bodies and will continue to do so going forward. Really important through this period, it was a period of deep introspection for us as a group. We've done a very deep and broad strategy analysis within our business and initiated a number of interventions, both at group and divisional level, which are already yielding significant benefits and will continue to do so. And I'll talk a little bit more about that as I go on. So coming out of COVID, and I say coming out of it, I think it's firmly with us, but through this year, I think we have emerged from the year a much more focused business and a lot more streamlined, connected emotionally as an organization, a lot more energized, and a lot more confident. And I think that bodes well in terms of how we see the future. In terms of our strategy, so we have presented our strategy over several years and it has been consistent over several years. And as I said, at a time like this, I think it's appropriate to really be introspective and really analyze what we do and why we do it. And that has resulted in a refinement of our strategy. So you'll see as we kind of go through the next 6 to 12, 18 months, we will communicate more and more of this. But essentially, we have streamlined a lot of our key principles into a narrative, which is more easy to understand and more easy to digest, both internally and externally. And we are focusing our management teams on 4 key pillars: being -- maximizing revenue growth; market differentiation, creating platforms for operational excellence with the objective of enhancing shareholder value. And we're doing that through 8 work streams, which are currently in progress through our group. And they're really directed towards better articulating who we are as KAP in each one of our operational entities, what we do, why we do it and how we create value to our various stakeholders. So that's a really exciting process for us, and we're really excited about sharing it with our shareholders, with our staff. And as I said, that will start to evolve over the next 6 to 12 months and beyond that. If we then move on to the operational performance. Frans will go through the numbers in total. In summary, we're really happy with the results. And I think as Jaap said, it's not an easy environment. It's obviously a very sad and disturbing time for us. And in that context, it's really pleasing to be able to put a solid set of results on the table. If we start with our Integrated Timber division, so revenue of ZAR 4.2 billion almost, up 31%. Operating profit of ZAR 615 million, up 90% on prior. And then operating margin of 14.7%. And in this business, we saw strong demand across all of our categories. And it was really supported by strong downstream beneficiation demand, so kind of right deep through the value chain. And we continue to pursue our value-added strategy and the ratio of value-added products to raw products increased to 69%, in line with our strategy and our investments. All of our production facilities ran at full capacity, which really enabled us to unlock, really scale benefits and use that to improve margins. And the plantation valuation decreased by ZAR 204 million through the year. And this was mainly as a result of depressed sawlog prices and relatively flat pulpwood prices. With the global shortage of timber, we see this as a temporary situation. And I think if you do the numbers and add that as a noncash temporary item back to operating profit takes you to roughly ZAR 820 million operating profit before the noncash effect of the plantations, which I think is a really pleasing performance. We've spoken some time around our expansions in eMkhondo which relates to our particleboard line there, where we have replaced that line in 2 phases. The first phase operated throughout the period, and we're currently busy with the second phase, which we're making good progress on, and we remain on track to commission in January '22. And I think just to complement that team, obviously, a lot of that plant and equipment is from international suppliers where there have been significant travel restrictions and our local project teams have really jumped in and done a phenomenal job really at international standards in terms of getting that plant to where it needs to be for commissioning in January. And then lastly, we continue to make steady progress on the infrastructure and engineering design for a new greenfield MDF plant. We disclosed that some time ago, also in eMkhondo at the same site as our current plant. So we are making good progress. At this stage, our applications for government incentives and infrastructure support for that project, however, do remain outstanding. If we then move on to the Automotive Components division, our revenue at ZAR 2 billion, up 18%, and operating profit, ZAR 156 million, up 77%, with operating margins at 7.7%. So revenue growth there was supported by a healthy increase in new vehicle assembly volumes of 12% and LCV retail sales growth of 13%. So those are 2 primary drivers in how we perform in this business. And in spite of that increase, we still remain below pre-COVID levels. However, we did do a fairly deep restructure in that business during Q1 of the year, which really supported margins going through the period of lower revenue numbers. We did a lot of work during the year in terms of getting ready for the C class model changeover, which was initiated in July '21. And that's quite big in our lives. So it was quite important to get that right. And then the team did a great job in terms of meeting their relevant targets there. We also moved to completely new premises in our Maxe business. So we were in various premises, which we've now consolidated into a single site. A huge project, which I think their team did a great job in executing and continuing to supply the entire customer base during the process of consolidating various sites into a single facility. We are well-positioned just in terms of our APDP program. We achieved Level 4, and we believe we'll maintain it this year, which is important for us in terms of that program. And then during the year, we also made good progress in terms of the forward-looking new model introductions or model changeovers in terms of both the range and the X3 just in terms of securing the components which we supply into those programs. Moving on to the Bedding division. Revenue of ZAR 1.7 billion, up 35%. Operating profit of ZAR 254 million, up 49%, giving an operating margin of 14.7%. And this is an area where we really enjoyed strong consumer demand across the Board. So one of the elements that we found through this period is a really strong growth in home improvement spend. And that's really supported both our Timber business, PG Bison, where those products are used in home and work applications of office and kitchens, built-in cupboards et cetera, and then obviously, with our Restonic business, where we focused on sleep and the health benefits of sleep. And I think particularly in this period, we saw that coming through with increased demand for sleep-related products. Obviously, with significant global supply chain disruptions, we, in this business, have integrated backwards to control most of our primary raw materials. And that really helped us through this period to ensure continued production efficiencies and sustainable supply to our customers. Over the years, we've invested significantly in product automation and logistics, and this also helped us to operate efficiently through both the peak periods as well as the seasonal low period, which historically we found that transition to be quite challenging. And I think this year, the team there managed it particularly well. We've also continued to invest and expand our recycling related activities and really to use those together with some of our other raw materials to enter adjacent markets, primarily in the agriculture and health sectors, but also in the geotechnical space. So we identified that as an opportunity some time ago. We've migrated towards it. And then during the year, we went through an operational and management reorganization, which will, going forward, really provide more dedicated focus toward a sleep vertical focused on sleep and then a vertical focused on these adjacent markets and really leveraging off the base that we've created in this division. So really pleasing results, overall, I think from all 3 of the manufacturing businesses. If we then move on to Polymers. Just to explain, as we have done previously, the primary drivers of margin in this business is import parity prices of PET, high-density polyethylene and polypropylene. And that's really driven by global supply and demand. Also the indexed U.S. dollar price of our key raw materials being ethylene and propylene. And then on the index prices of PTA, MEG and PIA, which are the raw materials that we use into PET. The rand-dollar U.S. exchange rate has a fairly big impact on this business. Together with the commodity and the currency fluctuations during our procurement to sales cycle. During the year, there were a number of factors. Obviously, globally, we've been in a very volatile environment. And I think that certainly impacted on the results of this business. So general consumption levels were fairly volatile. They were actually fairly robust. And I think there was increased health and hygiene spend in certain areas, which really supported that demand. And we've seen the major petrochemical sector expansions taking place in the U.S., which led to an oversupply in certain areas, which if you look below down in those points, part of which were exacerbated by kind of severe weather events. So you've got these multiple supply and demand factors, which happened during the year. Pleasing for us was a bit of a normalization in the oil price. We're at kind of the $60, $70 level, it's quite a comfortable level for us to operate in. And then lastly, obviously, just with COVID and global supply chain disruptions that obviously favored local manufacturer as I've referred to earlier. So we had a positive impact on our Polymers division, and we've given you a table there, which really reflects the margin evolution from starting on the right and working backwards first half of '21 relative to the first half of '20 with growth in margins, moving into the second half of '21 compared to the second half of '20, where we see that being sustained. And then during the current year in the kind of third column from the right, the second half compared to the first half, where we see continued support for margins in both PET and polypropylene. And we saw a weakening in margins for HDPE, which I'll explain a little bit later on. But overall, in the column on your far left, year-on-year, a strong recovery in margins and really strong support for this business. We've given you quite a comprehensive table there. I won't go through it in any detail, but giving revenue sales volumes, production volumes and the average rand-dollar exchange rates, which really leads to revenue up 3% to ZAR 7.5 billion. Operating profit up 168% to ZAR 428 million and operating margin improving significantly to 5.7%. Revenue growth was really supported by improved selling prices. So if in your own time, you look at our sales volumes there, our sales volumes were actually down 5% primarily as a result of lower production, which was driven by 2 main factors: firstly, in our PET facility, we were impacted by a 43-day statutory 5-year maintenance shut, where we also did some debottlenecking activities. That was a planned shut. And then secondly, through the global supply chain disruptions, we lost 26 days during the year where we were unable to source primary raw materials for that site. So overall, sales volumes were good, and we're really limited by our ability to produce and the inventory levels, which we had available at the time. The differential in production versus sales volumes of polypropylene really points to a slight weakness in the fourth quarter, which is subsequent to year-end coming into the new year, really corrected itself. So we continue to make good progress in relation to moving towards higher margin, more durable, less single-use products in both polypropylene and HD. We concluded our global benchmarking study, which is a global study giving us information around our own competitiveness in terms of our cost base, both operational and raw material really comparing us to similar plants around the world. And we're quite comfortable with the outcome of that report. And then lastly, we initiated a launch of our campaign to plastic responsibly, and that's really directed towards influencing public behavior, public perception around plastics and the effect on the environment and trying to influence public behavior towards being more responsible in the use of plastics and how we use them in our daily lives. So again, quite pleased with how that's evolving. Moving on to the Logistics segment. On the top of your slide, we've got a revenue split there, which shows quite nice diversification through the segments that we operate in. In that division, we were able to grow revenue by 5% to ZAR 5.2 billion, it grew operating profit by 12% to ZAR 249 million, which led to an increase in operating margin to 4.8%. So overall, the division performed well. We're really pleased with their results. And we saw a fairly stable and consistent improvement in activity levels throughout the year. However, they still remain at pre-COVID levels -- below pre-COVID levels. So generally, all operations performed well with the exception of our cement and sugar-related activities where we embarked on restructure during the year, and we've repositioned management and where those operations report and what we actually do in that space to try and get them to where they should be. We continued to enhance and drive the application of our control tower. So this is a technology-driven center that we have at our head office, which is really directed toward improving our fleet utilization, improving driver performance, reducing accidents and really generating valuable business information for both us and our customers to really make both our business better and add value to our customers. So overall, in that business, during the year, we feel that we have gained a market share. We had a net gain. In other words, contracts renewed versus contracts lost of ZAR 333 million. And then we secured new contracts going forward with a revenue value of about ZAR 349 million. We also have a fairly strong pipeline of future opportunities. Obviously, the environment remains really competitive and those contracts are not banked until we've got them. But we're quite comfortable with the pipeline of opportunities looking forward. Looking at our Rest of Africa, so non-South African territories. We've given you a split there in terms of both the countries that we operate in from a revenue perspective as well as the nature of services that we render in those territories. In the division, revenue up 8% to ZAR 2 billion. Operating profit, marginally down 1% to ZAR 211 million, but retaining a healthy margin at 10.5%. And -- I mean, for me, this is a disappointing result in the sense that the division actually performed really well. So we're really pleased with how the division performed. And there was one major issue within this division, and it was largely our operations in Botswana. So throughout the entire year, Botswana remained in a state of emergency, and that was actually recently extended. So we remain in that situation. And if you look at that revenue by country, you can see the impact of that on our operations. 26% of our revenue comes from that territory where economic activity is severely impaired. And at the same time, there are certain moratoriums on one's ability to make adjustments in one's business. So quite a challenging environment to operate in. We have made good progress in terms of what we're going to do there and rationalizing fairly significantly by the end in terms of redeploying assets and people in terms of feeding into our broader road freight strategy. So I think looking into the new year, we're hopeful that we'll have a better performance coming out of that space. We've continued in our agricultural operations to drive the technology-driven precision farming, which will really complement our traditional activities there. And we also continue to expand in our road haulage operations in other commodities in addition to fuel. And we see that as giving us slow, steady, sustainable growth going forward. And then quite exciting for us, we initiated our rail project, which is a single corridor between Mozambique and Zimbabwe. And starting small, learning our lessons small, but really see quite significant opportunity there if we get it right. In that division, we had annualized revenue gains on contracts of ZAR 290 million and new contracts of ZAR 179 million. Moving lastly on to our Passenger Transport business. This has been a tough space for us for a number of reasons. Revenue up 3%, operating profit down 22% and operating margin still at a healthy 11.5%. And just to stress that those numbers are from continuing operations. So they exclude the results of our discontinued intercity and tourism operations, which we tried unsuccessfully to sell and eventually closed on the 13th of April. So those are reported as discontinued, and those relevant assets are held as assets for sale. So in this division, commuter operations is where we really felt the pressure and lower passenger numbers, lower cash fares, fixed route schedules and a relatively fixed overhead structure. So cost initiatives there were quite challenging to offset the impact of this. Our personnel operations remained relatively stable with compensation received for COVID-related reduction in passenger numbers allowed on the buses. And likewise, in our Gautrain operations, we received really good support from our concession partner there. And as a result, that division performed satisfactorily. And then lastly, in Mozambique, we continue to see opportunities in that space. And that business performed well with limited impact of the terrorist activity in that region. So although a bit of a disappointing results in a tough environment. Bear in mind, margins still remain healthy in that business, and our returns still remain healthy at those levels. So thanks for that. I will hand over to Frans, who will go through the operational -- sorry, go through the financial information, and then I'll come back at the end just to fill in with our outlook of how we see the world going forward. So thanks. Frans, over to you.

Thank you, Gary, and thank you, everyone, for taking the time out to come and listen to us today. If you look at -- or if you step back and you see what Gary presented there, it was a year full of surprises coming from hard lockdown in the prior year. And if you take that into consolidated numbers, what that means for us is we've had revenue up 11% to ZAR 24 billion. EBITDA up 26% to ZAR 3.4 billion. Operating profit before capital items, up 48% to ZAR 2.1 billion. And then headline earnings per share up 146% to ZAR 0.43. We had good cash generation in the period and cash flow from operations is up 68% to ZAR 3.5 billion. Gearing ratio down to 64%. And then we have resumed with the dividend. The Board declared a dividend yesterday of ZAR 0.15. We used to pay a dividend. We didn't pay one last year. So we have started to pay dividends again. Net asset value per share at ZAR 0.405. So if you take the -- so if you take all the divisional results into context, and you go from last year to this year, and firstly, how they stack up, this shows just the diversity, the strength and diversity in our group between the Industrial, Chemical and Logistics businesses and the resilience, where you see from the left there, we are -- basically in all divisions, we had the revenue growth and specifically in our Industrial businesses, we had strong growth. On the operating profit, made up by division. Here, we showed you the numbers in millions and not in percentages to show you absolute scale. And you can just see the good recovery post-COVID that Gary was referring to in the operational update. The Integrated Timber increased operating profit by ZAR 292 million; Automotive Components, ZAR 68 million; Bedding ZAR 83 million; and Polymers, ZAR 268 million. Unfortunately, the Logistics businesses, as a whole, is down 4%. I think Gary has explained that quite well, and we can still see or feel the continued effects of COVID during this year. If you look at passenger there, although they're down ZAR 52 million for the year, the business remaining subsequent to the closure of tourism and intercity is still a good business and it gives us a very good return on our capital employed. What that means in terms of operating margins is that on a consolidated group -- consolidated numbers, we have increased our margins by 220 basis points to 8.8%. And you can see there -- a good recovery in Integrated Timber, Automotive Components, Bedding and Polymers compared to the prior year, not yet at the levels of 2019 pre-COVID, but a strong recovery. And then you can see the effects of COVID still in all the Logistics businesses. If you look at the consolidated income statement, bearing in mind that just to remind you that this is from continuing operations. So it excludes the intercity and tourism. EBITDA at ZAR 3.4 billion, up 26%. If you look at operating profit, including capital items, at ZAR 2.1 billion compared to last year loss. I just draw your attention to the capital items in the prior year of [ ZAR 3.1 billion ], which was impairment, significant impairments last year that we've reported in sufficient detail last year. If you look at the net financing costs, down 29% from last year, and we could feel the effects or benefited this year from the effects of lower interest rates for the full period as well as lower debt levels throughout the financial year. If you go to the bottom of the income statement, the headline earnings of ZAR 1 billion, up 139%, a reduction in our weighted average number of shares by 3%. And I've got a slide later with more detail on it and headline earnings per share at ZAR 0.43. From a balance sheet perspective, fairly stable balance sheet compared to last year. If you look at the property, plant and equipment, right-of-use assets, intangible assets, goodwill, very stable. There some items that I'll highlight further in my presentation, like biological assets that were down ZAR 189 million. Net working capital, very stable. We've got some detail there as well. And then if you look at the net interest-bearing debt, that reduced by ZAR 511 million. I've also got some detail explaining it. So that brings you to a net asset value per share of ZAR 0.405. If you look at our asset base, we continue to invest in new technology assets. So I've introduced a new slide there that goes over 4 years where I split the expansion and the replacement and also giving you the depreciation. So you can see that over time that our replacement capital is in line with our depreciation. And then obviously, the significant amount that we spent in expansion that is supporting our current business and supporting growth into the future. You will also notice when you look at our results announcement and the financials that we've increased our disclosures in the segmental section, where we now give you total or CapEx split between expansion and replacement per division in the business for all our 7 businesses. In terms of our asset base on the right-hand side here, it is a diverse asset base. We plant machinery 31 vehicles and buses 28. And the intangibles is only 11% and goodwill, 4%. When you look at the plantation valuation movement for the year, where it started at ZAR 1.7 billion last year and ended up ZAR 1.5 billion this year. The increase due to growth and remunerations, the ZAR 142 million that is normally offset by the decrease due to harvesting on the one hand side -- on one side. And then if you look at the actual fair value adjustment of ZAR 154 million, that was mainly affected by 3 main items, and that's the reduction in sawlog prices that we've experienced in the current year. We've experienced flat pulpwood prices. But we also experienced increases in our costs. And that taken into account in your valuation models resulted in ZAR 154 million downward revaluation. We see those factors in terms of sawlog prices and pulpwood prices as being temporary. And over time, that will recover and support the valuation again. In terms of the net working capital, it's been stable throughout the year, starting at ZAR 1.9 billion, ending at ZAR 1.9 billion. Inventory increased ZAR 296 million, and that was mainly affected by higher commodity prices in the Polymers business. But across all our manufacturing businesses, we've experienced increased prices. With the opening balance was affected or last year's opening balance was affected by low activity in quarter 4 2020, basically the period throughout lockdown. And you can see the increase in receivables offset by payables in the current period, reflecting the increased activity for quarter 4 this year compared to last year. We see that this working capital level around about ZAR 2 billion is a normalized number. And going forward, I think you will see that we don't have significant swings in our working capital. Again, we've also included in our results presentation and financials, additional disclosure on working capital, where we show you or where we disclose now per division the net working capital and the net operating assets or the capital employed. If you look at the cash flow statement, firstly, you start with EBITDA from continuing operations, ZAR 3.4 billion. Then you add back the noncash flow revaluation effects on the biological assets of ZAR 190 million. We bring in the discontinued operations losses of ZAR 143 million. That brings you to cash generated before working capital of ZAR 3.5 billion. There was a small investment in working capital. That brings you to cash generated from operations at ZAR 3.5 billion which -- if you look at the conversion ratio from EBITDA to cash generated from operations at 106%, it's been a good performance, and it's above our internal target of 90% and Gary has complimented the management already, but I would also just like to compliment them for well done on the cash flow statement or firstly, on the earnings and then also on the conversion into cash. On the rest of the cash flow statement, we've invested ZAR 1.8 billion. That gives you free cash flow before dividends of ZAR 810 million. We utilize that cash firstly to buyback shares. So we bought back ZAR 158 million worth of shares during the year. And the balance we reduced -- we used to reduce debt. In terms of the share buybacks that I referred to, we mentioned at the half year presentation that we started a process to buy back 40 million shares that we've concluded in this period. And that is to facilitate issuing KAP shares in the future for the KAP share rights scheme, mainly to not be dilutive to shareholders. Also just to note is in the prior year, we bought back 36 million shares that we held at treasury also for the KAP share rights scheme. Those shares we've canceled during the current year, and they're no longer disclosed as the treasury shares. The net effect of this is the 3% reduction in the weighted average number of shares at the bottom of that slide. In terms of the movement in our net interest-bearing debt, we reduced the net interest-bearing debt by ZAR 511 million throughout the period where we started at ZAR 7 billion and ended at ZAR 6.5 billion. On the slide there, we show you what we've settled and what we've raised. In the ZAR 2.4 billion that we've settled, there is also ZAR 500 million in terms of the RCF that was drawn last year at year-end. Then we've raised ZAR 1.6 billion, and our cash balance reduced by ZAR 278 million from last year. If we look at the significant funding activities for the period, we've raised during the year KAP017 and KAP018, and we also raised a new term facility of ZAR 800 million, both 3 and 5 year tenors. We've settled the KAP010 and KAP006 during this period, and we also settled term loans of ZAR 554 million. GCR, global carrier rating, confirmed rating at A+ with a stable outlook. In terms of our serviceability ratios, you can see on, slightly, there, both gross interest-bearing debt and net interest-bearing debt reduced. Obviously, our EBITDA increase from last year. And the net effect of that is our net debt-to-EBITDA is at 1.9x, well within the 3.2x target and our EBITDA interest cover at 7.3x. And lastly, if you look at the material -- at our debt maturity profile on the left-hand side there, we have ZAR 720 million in cash and the available facilities in blue. And then on the right-hand side, we've got per year, what needs to be refinanced or paid down. And we have sufficient capacity and liquidity to refinance these as they come up. And in the next financial year, that blue block is ZAR 1.5 billion that we're looking at. So while I'm on that slide, I would like to thank our funders, both debt capital market and the banking partners that supported us in this year. I know it's not always easy. You come out of a COVID period. We only release the results every 6 months. And so thank you for that support. And I think that the set of results that we have with our debt ratios will be very helpful for us into the next financial year. Yes. And that's the consolidated number. So thanks again for listening to us, and Gary will take us now through the outlook.

Thank you, Frans, for that. Yes. So as I said at the outset, we're really pleased with the results, especially in this environment. And I think that placed us in a really strong financial position. So our balance sheet is good. We're moving into the new year with really good operational momentum and unrest that happened in July kind of hasn't thrown us, of course, we remain focused on what we're doing with good momentum. And then we've got some really exciting strategic initiatives that we're following. So looking forward, we remain optimistic and confident in terms of how we see things going forward. So just looking at each division and firstly, the Integrated Timber. So market demand remains strong. We continue to focus on our product range development, demand creation activities and our value-add strategy. So we continue to focus on that. And all our plants are currently running at full capacity. We've got good order books and really feeling positive about the forward-looking picture. That picture on the Screen A there is the eMkhondo Piet Retief expansion. So you can just see the scale of what we're doing there. And just to give you some context, those towers are 34 meters high. So that red tower in the forefront, there is a 34-meter tower which our own people on site actually constructed. So an amazing job there. And as I said, that's on track to be commissioned in January '22. It's going to bring a much needed additional particleboard capacity into the market to really support our customers and to support the downstream beneficiation that we see taking place currently. As I mentioned, limited impact of the July 2021 unrest. So in terms of FY '22, we're quite optimistic in terms of how that's going to run out. Beyond '22, we see ourselves in the position of creating and inspiring beautiful living spaces. So our products are used in kitchens, dining rooms, offices. And as we see the evolution of an integrated work and living space, we see our product being at the core of that. And that revolves or involves quite a lot of demand creation with our consumers and obviously, then the empowerment of our customers to be able to supply those consumer markets. We see enormous value in technology, and we will continue to invest in the latest technology to give us an execution platform at the lowest cost of product to market. This picture illustrates part of our capacity expansion. And on that same site is the MDF project, which we are pursuing and that we're looking at commissioning in 2024, subject to certain conditions still being fulfilled in terms of the approvals and support required. If we then move on to the Automotive Components business. So there, we see both vehicle assembly volumes as well as LCV sales volumes continuing to steadily improve. There are some disruptions around the semiconductor chip shortages around the world. And this does have a -- it does have an impact on us. Obviously, there's a limited amount we can do about it. But within those constraints, we still see a continued growth in this sector. We -- as I mentioned earlier, we have conducted a fairly deep internal restructure, which has given us a really good cost base looking into the future. And then as I mentioned earlier, the C-C class has started up in July. We were really well-positioned for that. And we're hopeful that, that model will be successful, and we'll see good growth coming out of it. Maxe is settled in the new site. We are already starting to see some of the operational efficiencies being unlocked. And we're hopeful that, that will also assist going through in F '22. We're in the process of relocating 2 of our sites in terms of our various operations to support both the Ranger model change as well as our activities with the X3 and hopefully, the forthcoming X3 model change. In this business, the unrest in July didn't have any impact on our assets. We did have to shut some of our operations for a period. And obviously, that also resulted in some supply chain issues with that Durban area being a kind of key gateway for the automotive space in terms of supply chain. So we have navigated through that. So we're back up and running back to normal. Beyond '22, we're supportive of this space, and we see the support from global OEMs in terms of the investments in the country as hugely positive, and likewise, we see the support of government through the APDP program also hugely positive. And then we see the opportunity to migrate into new electric vehicles as an opportunity. So our products are generally used in noise, vibration and heat transfer applications, which are generally soft fitting insulation-related types of products. And those are products that will be used more extensively actually, in new electric vehicles. So we see that as an opportunity to really grow into an evolving space. Moving on to the Bedding division. So demand for sleep products remains buoyant. And I mean it is a product that is being supported by increased spend on homes. Obviously, the unrest in July '21 had a material on our retail partners and our customers. We're doing whatever we can in that space to support them. But at this stage, we don't know to what extent it will affect our normal promotional peaks. We remain committed in that space, and we're trying to support our customers. We're building key stock items to support them to try and rebuild their footprint and get back to retailing as normal. Our integrated supply chain continues to support us. The global disruptions in supply chains are not finished. In fact, we see it continuing. And really, our backward integration is key to our sustainability in this business. We continue to expand into our recycling and raw material space. We, again, as I mentioned, see that as key to our sustainability. And going forward, we see continued growth in that space. We restructured our foam operations at the end of F '21, really streamlining that business, simplifying the product range, simplifying what we do and really to focus on our key customers and get back to the basics of doing what we should be doing well. And I think that's going to bring some benefit into F '22. So beyond '22, we -- as I mentioned, we split that division internally, under Mike Metz into 2 separate verticals, one concentrating on sleep. That remains our core. And we see a lot of opportunity remaining there with obviously, product and brand and consumer experience at the core of what we do. We also again see the value in technology as well as integration in terms of competitiveness, innovation and sustainability for our customers. We also continue to see logistics being key to enabling growth and ensuring sustainability, especially around that whole sleep sector value offering that we aspire to with our customers. We, as I mentioned, have split that into 2 internal divisions now, and it's really given us a dedicated focus on the sleep sector as well as dedicated focus on these alternative markets or pharmaceutical, geotechnical, agricultural and packaging, where we see a lot of opportunity to grow going forward. Moving on then to the Polymer space. So market demand for all 3 polymers that we produce remains really strong. And as I said, the global supply chain disruptions remain ever present, and there continues to be regional imbalances and continuous supply and demand and inventory level rebalancing, which really supports local manufacturer and local supply and sustainability. We've spoken for some time about our issues on our ethylene pricing. I'm pleased to say that we have been successful in reaching agreement with our key supplier in that space, I think, on a very fair and equitable basis. And you'll recall from the margin slide, a number of slides earlier, where we saw margin weakness on HDPE coming in H2, I think our renegotiated terms going forward will mitigate a lot of that weakness and give us a degree of moderation in the cyclicality of that polymer going forward. We also are continuing, and we've made good progress, and we'll continue to build on moving more towards copolymers and bimodal HDPE. Those are both technical terms, but they are effectively higher value and higher specification products, which are generally used in more durable, more higher-specification applications. In this business, we had a limited impact of civil unrest. And I think that management team did an exceptional job through all of the unrest in that region and they continue to run that plant right through that unrest and received phenomenal community support in terms of getting their people in and out of that plant and protecting the plant to ensure sustainability. And looking beyond '22, really sustainability of the sector, sustainability of the product and really the core of what we're looking at. And we're investing a lot of money around that space and a lot of money around consumer perception, consumer behavior and educating consumers around not only the implications of plastic, but also the alternative materials to make intelligent choices in terms of how we deal with plastic in a responsible manner. We see the evolution of our products into higher margin, higher specification, permanent non-single-use applications continuing, and we're actually doing a lot of research and development in that space as well in terms of the markets and the applications where we use our product. We see recycling as a key element of our future and in 2 different areas: firstly, actively participating which we currently already do in various areas, but also enabling recycling, so enabling industry to actually recycle and create new business opportunities for others. We'll continue to benchmark ourselves globally in terms of the Nexant study that we've used. And I think going forward, it's a critical element of our business. We do compete in a global space. And I think it's important that we remain fully educated in terms of how we sit in that global space. Looking at our Contractual Logistics business. We are hopeful that the general economic environment will continue to improve. And while there is a lot of pessimism and I suppose, frustration in the system, we believe that with the global supply chains remaining severely disrupted, and general supply of commodities being disrupted, we'll see increasing local manufacturer and increasing opportunity for local logistics, and we see that as a forward-looking trend. So we remain optimistic in terms of the environment. We're progressing quite well, as I mentioned, in terms of new contracts. We've got a healthy sales pipeline in terms of potential opportunities. And then we'll continue to invest in our Control Tower in terms of the technology that we deploy there both for our own internal application as well as trying to add value for our customers. Beyond '22, we are certainly refining our business in terms of the sectors, the markets and the customers that we're focusing on really to ensure optimal capital allocation. And we're also really focusing on our business intelligence in terms of how we can add more value to our customers. So as I mentioned, Control Tower will continue. And then I think something that is particularly emotive and particularly relevant in all of our lives is road safety and the implications of the road surfaces, road conditions and driver behavior, and that really remains at our core in terms of contributing to improving road safety in the country. In terms of our Africa business, also under the Unitrans brand, we will continue to operate in the agricultural space. It's an important space for us and we see a lot of opportunity in terms of growing our precision farming activities, which are really complementary to our traditional Logistics operations. As I mentioned earlier, Botswana remains in a state of emergency. We are actively streamlining and redeploying assets there and people. And we're hopeful that we'll see an improved performance coming into the F '22 year. We are making good progress in terms of expanding our road haulage operations outside of the traditional fuel only, and there's a lot of demand for commodity logistics, and we see continued growth. We have commenced operations on our Khoemacau mine in Botswana, which we also see as an exciting expansion with really strong growth prospects, which we're quite excited about. At the bottom right there, you see a train, which is a new area of operations for us. And we -- as I mentioned earlier, have commenced operations on a single corridor between Mozambique and Zimbabwe. We're starting small. We're learning our lessons small. But I think if you look at the general region and you look at the state of the roads and the extent of road haulage taking place, there's a real opportunity in this space, and we believe that whoever gets it right will unlock potentially significant value. In this business, although a lot of our product flows out of Durban cross-border, we did have some impact out of the unrest, but it was really limited. So looking forward, we'll continue to focus on those 4 verticals of agriculture with really using technology to drive it, material handling in the mining space, on-site logistics, corridor haulage to complement our current fuel business and then obviously to participation in the evolution of rail. Key in this business as well, and I think you see a common thread running through all of our businesses. is our focus on technology and business intelligence. And this team has done a great job in terms of rolling out a business intelligence platform really for internal and client-facing application. Lastly, the Passenger business. And unfortunately, we don't see COVID going away anytime soon. We see it being an ongoing issue in the world. And unfortunately, it has a direct impact on this business with lower passenger numbers, and we see that as a constraint on growth. We do, however, see over the long term, it remains a space we want to be in. It still yields good margin. It still yields good returns. And I think that team has shown its ability to manage multiple operations under very challenging circumstances, and we see that as a core competence going forward. So Mozambique will continue as a growth opportunity. And I think we'll continue to enjoy a relatively stable performance from our personnel and commuter operations. We did try to sell intercity and tourism, as I said, and I think getting that out of the system, we've already seen the benefits in terms of our management, just their focus and attention on where we should be focusing. And hopefully, we will dispose of all of those assets during this year. And as I mentioned, they are reflected as assets held for sale, and we've got a structured process to dispose of them during the year. Limited impact of the unrest during the year -- during July. And then looking forward, we will continue with commuter and personnel at our core, and we'll continue with our growth aspirations in both Mozambique and potentially neighboring countries. Then I think looking forward, we've spoken for some time about the potential of some small bolt-on acquisitions in this space really to bolt-on to an existing execution platform. So overall, it's got a lot to digest across the different businesses. If I summarize it in one context, we see COVID being with us for some time. We have fallen into a rhythm, which I think is sustainable long term where we've learned to adapt very quickly to the changes. We see with that continued spend on home, I think the world we live in has changed. And I think the work and social and living environment has changed. And I think that, that will continue to support increased spend on home. I think in addition, we'll see continued spend on health- and hygiene-related product and activities. And with the global supply chains, I don't think that's going to be fixed in the short term. I think it's with us for a number of months, if not years. And I think that, that will continue to support local manufacturer, and it will continue to make access to key raw materials critical. So overall, if we look at all of those things, they really play to our strategy in terms of who we are and what we do. And I think as we start to communicate going forward and give you more and more insight into where we see our business evolving, I think you'll see the excitement that we're feeling in terms of where we see our business and what the opportunities yield. So with that, in closing, I would just like to thank our staff. It has been an enormously challenging and, I think, emotionally traumatic time for us. We've -- as Jaap mentioned, we've lost some of our own staff. And some of our staff have lost family members, and that's not an easy environment to work in or circumstances to work under. And I think as individuals, they have really risen above these challenges and shown great courage in terms of coming to work and keeping our operations functioning as efficiently as we have and really producing this set of results. I think to our customers and suppliers, we haven't been ideal suppliers always. I think we've had severe challenges to deal with. We've always aspired to do what we can, but not always perfect. And likewise, I don't think we've always been perfect customers to our suppliers. And really, we appreciate the support and the ongoing commitment from both. From a shareholder perspective, I'm not sure whether your jobs were more difficult than our jobs during this period, but I wouldn't be -- I wouldn't like to be in some of your shoes if I look at the volatility in the markets and some of the decisions that you had to make. And really, we've got a very stable shareholder base, and we've enjoyed really strong support from shareholders. So really, our heartfelt gratitude for your support, and likewise, our funding partners. So as Frans mentioned, our banking partners, our debt capital partners. You're really important to us in terms of our ongoing operations, and we've enjoyed really good transparent relationships with you, and that's really been critical for us through this time. And then lastly, just to Jaap, firstly, and our Board. Jaap is an amazingly calming influence for me and for, I think, our Board. And through this period, I think we've operated really efficiently as a Board. We've got a lot of Board -- new Board members that have come in, and that obviously comes with its own challenges. And I think as a Board, we've been functional. We've been efficient. And we've, as management, Frans and I and the rest of our executive team have really enjoyed strong support. So from a Board perspective, really, thank you very much. And with that, we move on to the questions. So thank you for your attention. It was a little bit longer than we had planned, but I think there was a lot to get through. So really thank you for your attention, and we're happy to take questions.

Gary, we have a couple of questions come in. So thank you to everybody that submitted questions. And also to -- we've had a lot of people congratulating us on the results. So thank you for that as well. One of the questions that -- a theme that's come through is really around the supply chains. And what's kind of driving that disruption in the supply chain? Is it a local issue? Is it the global issue? And why do we see that persisting?

Yes. So we have seen it across the Board where we import a lot of our own raw materials, and we buy a lot of globally indexed raw materials. So I think you've got 2 factors happening. One is disruption in global supply chain and your -- just your accessibility to physical product has been a challenge. In our context, I think we've managed it well. Our only real impact has been in our PET facility where -- and this was a global issue on PTA, which is a primary raw material, where we lost 26 days of production time. So that has been the biggest impact on our business. Outside of that, our access to raw materials, we've managed quite well, I think. And bear in mind that a lot of our raw materials we manufacture internally ourselves. So where we've seen it often is in customers looking to us to buy more raw materials for their own applications. So that's been the one element, which if you look globally with just the basic principles of a lot of production taking place in the east and a lot of consumption taking place in the west and with countries and ports being shut down due to COVID, what we've seen a lot of western economies reverting to internal manufacturer as we've seen in our economy, and that's resulted in a lower requirement for product. That's one element. And then secondly, we've seen an overweight loading of empty containers in the west without being shipped back to the east. So we see product buildups taking place in the east with just literally no supply chain capability to get it out. Now if you look at that on a global basis, those aren't simple things to fix and especially with a continuing COVID situation in the world. And that's why we say we don't believe that it will be fixed in the short term. Now for us, provided we manage our own raw materials well, that places us in a strong position in terms of being primarily local manufacturers. The other element which brings in a degree of volatility is, as I said, one is just physical access to the raw material. But with that, there's the pricing of that raw material. And there, we've seen quite large escalations in prices, some of which is underpinned by real demand and supplier issues and some of which is really emotional and kind of index prices overshooting what is actually physically available. So you may have an index price that ramps up significantly, but it becomes a meaningless number because you just can't get the raw material anywhere. So those are the, I suppose, the volatilities and challenges that we see. I think we've managed that well over this year. And I think it's actually played in our favor. So looking forward, I think we're well placed in terms of where that puts us.

Thanks, Gary. Gary, I think the other question sort of theme coming out is around organic and inorganic growth where we allocate capital. And sort of leading on from that, what are we thinking regarding shareholder returns versus dividends or additional share buybacks? How do we see that going forward and where we're going to be putting that capital and how we were going to be dealing with that?

Capital allocation has been a key focus of us -- of ours. So looking forward, you would have seen in our remuneration policy, just in terms of how we are incentivizing management, a large element of it now revolves around returns on capital employed. And then obviously, we've done to drive the right behavior in terms of capital allocation. So looking forward, we always say we like to invest internally first, generally in markets and products and customer and supply chains that we know and understand. So we've identified a number of opportunities to invest internally. So that's our first investment, and that is both for replacement with new technology to be just more efficient and build margins as well as to expand. And then to move into adjacent territories where we can leverage off an existing asset base to enter new markets. And then thirdly, we would look at acquisitions really in spaces that would be complementary to what we do. Obviously, in this environment, I think cash and capital and strong balance sheets are essential. So we would obviously be extremely selective and cautious in terms of pursuing any material acquisitions in this environment. In terms of how we see share buybacks. We see it in 2 senses. We believe in our business. We believe we've got fantastic businesses, which I think have demonstrated their resilience through this period. So we see it as a real opportunity of creating increased shareholder value through buying back our own shares. So that remains on our agenda at all times. But in addition, we see value in buying back shares in order not to dilute shareholders through our share right scheme. So I think that's an important element in terms of total shareholder value as our dividends. So we see us going forward, migrating toward a more predictable dividend environment, which I think in the next couple of weeks and months, hopefully, we can communicate more clarity around that. But at this stage, both dividends, share buybacks and internal investment remain key to how we see the future.