Wrap Text
Updated trading statement for the year ended 30 June 2025
KAP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1978/000181/06)
Share code: KAP
ISIN: ZAE000171963
Company Alpha Code: KAP
LEI code: 3789001F51BC0045FD42
('KAP' or 'the Company' or 'the Group')
UPDATED TRADING STATEMENT FOR THE YEAR ENDED 30 JUNE 2025
On 10 June 2025, the Company published an operational update and initial trading statement in which it advised
shareholders that a reasonable degree of certainty existed, that if trading conditions persisted:
- Earnings per share ('EPS') was expected to decrease by more than 30% for the year ended 30 June 2025
('FY25'), which is a decrease of at least 13.1 cents per share, when compared to the EPS of 43.8 cents
reported for the year ended 30 June 2024 ('FY24'); and
- Headline earnings per share ('HEPS') was expected to decrease by more than 30% for FY25, which is a
decrease of at least 13.6 cents per share, when compared to the HEPS of 45.3 cents reported for FY24.
As indicated in the operational update, the Group experienced a generally subdued operating environment in
FY25, with performance largely negatively affected by the following:
- increased operating costs relating to the start-up and ramp-up of PG Bison's new medium-density fibreboard
('MDF') line;
- higher finance costs, which costs were capitalised during the construction phase of the Group's major capital
projects (including the MDF line) which were completed in FY24; and
- lower vehicle production by two major original equipment manufacturers ('OEMs'), which resulted in a weaker
performance by Feltex.
The subdued operating environment was particularly challenging during the fourth quarter of FY25 which further
impacted the Group's operating performance.
For FY25, the Group is expected to deliver a modest growth in revenue, a decline in earnings before interest,
taxes, depreciation and amortisation ('EBITDA') of less than 10% and a decline in operating profit before capital
items of less than 15%.
The Company is in the process of finalising its FY25 financial results and confirms that a reasonable degree of
certainty now exists, that for FY25:
- EPS will be between a loss of 1.8 cents and earnings of 2.4 cents, representing a decrease of between 104%
and 95% compared to the EPS of 43.8 cents reported for FY24, resulting largely from impairments; while
- HEPS will be between 21.9 cents and 26.1 cents, representing a decrease of between 52% and 42%
compared to the HEPS of 45.3 cents reported for FY24.
EPS and HEPS were impacted by higher finance costs, lower tax incentives on the major capital expansion
projects in the current period and overall lower EBITDA as mentioned above. EPS was furthermore significantly
impacted by impairments of goodwill, intangible assets and property, plant and equipment related to certain
underlying investments (the details of which are set out below).
In accordance with IFRS requirements, the Group conducts annual impairment assessments on all goodwill and
intangible assets with indefinite useful lives, as well as on property, plant and equipment where impairment
indicators exist. As a result of these assessments, intangible assets of Feltex's aftermarket business, Maxe, was
fully impaired, following shifts in customer and consumer behaviours in accessorising vehicles as well as
noticeable shifts to alternative vehicle models; all impacting profitability. Goodwill and intangible assets of Optix
were partially impaired, following continued underperformance on this investment due to a more extended sales
cycle and inability to expand its subscriber base resulting in revised expectations of operating profitability going
forward. Property, plant and equipment of Safripol's polyethylene terephthalate ('PET') plant was partially impaired
having experienced an extended period of lower global PET prices and margins following global oversupply,
ultimately impacting profitability of the business. It is expected that this global cyclical low in prices and margins
will continue in the medium term and show signs of improvement only from beyond 2030.
The current financial year reflected the start-up year of operation of the Group's major capital projects, which are
expected to produce attractive returns in the medium term and have useful lives of more than 20 years. The
operational and financial effects related to the start-up and ramp-up of these projects experienced during the year
are not unusual for projects of this nature and scale, are temporary and will therefore reverse over time. These
projects are now fully operational and continue to offer good growth opportunities for the Group over the medium
term as markets are developed. In addition, management continues to focus on and is making meaningful progress
with realising value from major projects, addressing areas of underperformance and reducing debt.
The Company's results for FY25 are expected to be announced on SENS on or about 28 August 2025 wherein
the performance, financial position and outlook will be presented in more detail.
Shareholders are advised that the Company's auditors have not yet finalised their audit, review and reporting
requirements of the financial information on which this trading statement is based.
Stellenbosch
13 August 2025
Equity and Debt Sponsor
PSG Capital
Date: 13-08-2025 04:00:00
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