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Operational update
KAP INDUSTRIAL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1978/000181/06)
JSE alpha code: KAP
(“KAP” or “the company”)
OPERATIONAL UPDATE
KAP management will participate in an investor conference from 17-18 March 2021, where
the recently published unaudited interim results for the six months to 31 December 2020 will
be discussed, together with the following operational update and outlook.
DIVISIONAL OPERATIONAL REVIEW
This operational update, as set out below, provides a high-level insight into the company’s
operational performance since 31 December 2020. The adjusted level three lockdown
regulations imposed in South Africa with effect from 29 December 2020 until 28 February 2021
had a negligible impact on the company’s operations.
The Integrated Timber division has continued to perform well with robust demand for its
products, supported by increased home related consumer spend. The division continues to
run all its production facilities at full capacity and retains a strong order book, both of which
are expected to continue to year end. The division will be performing scheduled annual
maintenance shuts of both the Ugie particleboard plant and Boksburg MDF plant during June
2021. The particleboard expansion project at the eMkhondo production facility is progressing
well and is scheduled for commissioning during January 2022.
The Automotive Components division continued to experience an improvement in volumes
post 31 December 2020, exceeding initial expectations. The recent restructure of the division’s
activities in line with subdued demand has contributed to improved margins. The division is
well prepared for a new model introduction due to commence in July 2021.
The Integrated Bedding division continued to perform well with strong demand and a stable
order book, taking into account traditional seasonality of the industry. The division continued
to extract value from its integrated value chain and to pursue opportunities to sell its raw
material related products into adjacent sectors, to grow revenue and expand margins.
The Polymers division continued to perform well with strong demand for all three polymers
and continued improvement in selling prices and margins compared to the prior period. Global
supply chain disruptions, however, impacted negatively on the availability of PTA, a key raw
material in the production of PET. This resulted in a PET production stoppage from
11 February 2021 to 8 March 2021. Production has since recommenced and returned to
normal levels.
The Contractual Logistics – South Africa division remained stable and continued to closely
track its prior year (pre-Covid) performance. Demand and activity levels across all sectors
remain satisfactory with the exception of general freight and the industrial operations which
remain subdued.
The Contractual Logistics – Africa division continued to perform well with the exception of
its activities in Botswana, which remains in a state of emergency due to Covid.
In the Passenger Transport division, commuter and personnel traveller numbers remained
subdued. The division’s tourism operations have been closed and consultations with relevant
stakeholders in relation to the potential closure of its intercity operations are progressing on
schedule.
OUTLOOK
Management remains confident that projected levels of economic activity and consumer
demand will continue to support a good performance by the company for the remainder of the
financial year.
By order of the Board
KAP Secretarial Services Proprietary Limited
Stellenbosch
16 March 2021
Debt Sponsor
Nedbank Corporate and Investment Banking
Date: 16-03-2021 05:05:00
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