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

Results presentation

FOR THE YEAR ENDED 30 JUNE 2016

2

History timeline

1916 1946 1980 2007 2009 2012 2014

York acquired Global Forest Products, making it the largest vertically integrated solid wood processor in Southern Africa. In the same year, the largest fire ever experienced in the history of South Africa swept through the Sabie valley Rights issue

• f R552 million

Business was returned to profitability, coupled with successful refinancing of debt Implementation of growth strategy, with focus on EBITDA generation

3

Who we are

28,89%

Shareholding

Empowerment Development agencies Other Mutual funds Private companies

York is an integrated forestry company, operating through its wholly-owned subsidiaries, York Timbers Proprietary Limited, that owns plantations and processing plants, and Agentimber Proprietary Limited, that runs a wholesale distribution network

York has the largest market share of the South African timber and plywood market. This share in the market is a result of York’s sustainable biological assets, integrated

• perations of primary and value-added

processes Revenue: R1 771 million Total asset value: R4 561 million Number of people employed: 5 238

(includes employees and contractors)

28,72% 19,04% 12,84% 10,51%

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Operational 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

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Operational 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- pins the investment in processing facilities. Sabie and Jessievale sawmills are ideally situated next to timber supply from York as well as from external resources. Distribution network is well positioned to service the Southern African market.

Mpumalanga 1 Driekop Sawmill (pine timber products) 2 Nicholson & Mullin Sawmill and treatment plant 3 Sabie Sawmill and treatment plant 4 Plywood Plywood manufacturer 5 Jessievale Sawmill and treatment plant Gauteng 6 Pretoria Warehouse and distribution facility 7 Roodekop, Johannesburg Warehouse, distribution and value-added products KwaZulu-Natal 8 Durban Sales office Eastern Cape 9 Port Elizabeth Sales office Western Cape 10 Epping, Cape Town Warehouse, distribution and treatment facility Free State 11 Bloemfontein Warehouse and distribution facility

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The numbers

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BUILDING A SUSTAINABLE COMPANY REQUIRES CONSISTENT PERFORMANCE AND CASH GENERATION OVER TIME

500 000 1 000 000 1 500 000 2 000 000 2011 2012 2013 2014 2015 2016

Financial highlights

Group revenue (R’000)

* 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

50 000 100 000 150 000 200 000 250 000 300 000 2011 2012 2013 2014 2015 2016 Cash flow from operations (R’000) 500 600 700 800 900 2011 2012 2013 2014 2015 2016 Net asset value (cents) 150 000 300 000 450 000 600 000 2011 2012 2013 2014 2015 2016 Gross profit (R’000) 50 000 100 000 150 000 200 000 250 000 2011 2012 2013 2014 2015 2016 EBITDA (R’000) 500 600 700 800 900 2011 2012 2013 2014 2015 2016 Underlying TNAV* (cents)

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Financial highlights

Earnings per share increased by

135% to

73 cents per share

2015: 31 cents per share

Biological assets increased in value by

9% to

R2 334 million

2015: R2 140 million

Cash generated from

• perations increased

56% to

R285 million

2015: R183 million

Operating profit increased by

27% to

R183 million

2015: R144 million

Revenue increased by

15% to

R1 771 million

2015: R1 543 million

EBITDA increased by

25% to

75 cents per share

2015: 60 cents per share (28%)

Underlying tangible net asset value (UTNAV) up

13% to

834 cents per share

2015: 739 cents per share (4%)

Core earnings per share increased by

63%

2015: 27%

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Six-year financial review

YORK HAS GROWN REVENUE BY 13.0% CAGR SINCE 2011 INVESTMENT IN EBITDA-GENERATING CAPABILITY: 71.9% CAGR SINCE 2011

CAGR % 2011-2016 Audited 2016 % change Audited 2015 Audited 2014 Audited 2013 Audited 2012 Audited 2011

Group revenue R’000 13 1 771 049 15 1 543 149 1 323 976 1 131 994 1 112 843 959 143 Gross profit R’000 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 Operating profit R’000 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 EBITDA R’000 (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 Net profit before finance costs R’000 18,7 390 032 99 196 272 123 531 192 834 303 395 165 676 Finance costs R’000 (10,8) 56 632 (3) 58 385 56 440 54 672 87 308 100 370 Cash flow from operations R’000 8,8 284 963 56 182 574 151 461 106 486 197 088 187 239 Biological assets R’000 3,8 2 334 327 9 2 140 067 2 103 092 2 100 870 2 070 222 1 936 398 Interest-bearing borrowings R’000 7,8 894 145 20 743 360 562 616 597 173 558 400 614 225 Investment in property, plant and equipment R’000 71,9 283 241 39 203 288 66 169 51 958 36 340 18 887 Net working capital R’000 7,5 162 685 (26) 219 485 213 182 180 446 119 372 113 460

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Six-year financial review

EARNINGS PER SHARE SHOW STRONG GROWTH: 44.1% CAGR SINCE 2011 RETURN ON EQUITY : 36.8% CAGR

CAGR % 2011-2016 Audited 2016 % change Audited 2015 Audited 2014 Audited 2013 Audited 2012 Audited 2011

Earnings R’000 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

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Underlying value

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Investment 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 2016. 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

150 300 450 20 40 60 80 2011 2012 2013 2014 2015 2016 P/E ratio EPS Share price (actual)

York Timbers P/E vs share price (cents)

200 400 600 800 1 000 2011 2012 2013 2014 2015 2016 UTNAV Share price

York Timbers UTNAV vs share price (cents / share)

100 200 300 2011 2012 2013 2014 2015 2016 EBITDA Cash flow from operations

York Timbers EBITDA and cash flow from operations (R’000) Earnings per share (which includes fair value adjustments to the biological asset) shows a consistent increase over time, but is not reflected in the growth of the share price and consequently not evident in the price earnings

• ratio. This illustrates the value potential evident

in a York share investment Underlying tangible net asset value has grown sustainably and consistently over a five-year period, illustrating the growth of the biological asset and continued capital investment in cash- generating assets. During the same period, however, the share price of the Company has reduced and is not an accurate reflection of the true value of the organisation Raw material from York’s own biological asset, plus externally procured logs, converted by the capital invested in processing plants, and direct access to the market of final products, assisted not only EBITDA growth but also cash flow from

• perations to improve year-on-year

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Investment case

STRONG BALANCE SHEET AND GOOD CASH GENERATION

Underlying tangible net asset growth

• riginates from growth in the biological

asset and continued investment in EBITDA and cash-generating capital

• equipment. A sustained level of debt has

been applied to the balance sheet, and has increased with the Plywood Plant Expansion Project during the current and preceding financial years. Net working capital investment remains productive, supporting the increased levels of activity in care of a growing customer base

300 600 900 (2 000 000) (1 000 000) 1 000 000 2 000 000 3 000 000 4 000 000 5 000 000 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)

Net asset value and share price

R’000 cents

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Key performance indicators

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Key performance indicators

• 1. Cash generation

Earnings before interest, tax, depreciation and amortisation (EBITDA) target of R500 million

• 2. Total shareholder return

Improvement in the share price to R5 per share

• 3. Sustainable asset management practices

Increase the underlying tangible net asset value (UTNAV) to R8,40 per share

• 4. Strategic alignment of company

Strategic alignment of the business to be competitive and operate on a sustainable basis

York has set the following medium-term targets for achievement within three years inclusive

• f the Biomass

Power Plant Project:

York’s strategy is consistent with prior years and 2016 has seen the execution of the first phase, namely the Plywood Expansion Project. Changing economic conditions, with a weakening local currency prominent during the financial year, has also highlighted plywood export opportunities, which are being pursued enthusiastically The outcome of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) will determine the timing of the next phase of the strategy – if the bid is successful and financial close can be achieved, York will build a 28MW biomass power station with 25MW sold into the grid under a 20-year Power Purchase Agreement. Not only will this contribute towards building an annuity income stream, but the synergy value for York’s forest will also improve the sustainability and yields from the plantation’s biological asset If, however, the Biomass Power Plant Project bid is unsuccessful, York will pursue various sawmill projects that will unlock strategic value for all stakeholders. The new sawmill will be fed through a log merchandising yard that will optimise full tree length logs for sawmill and plywood production processes. In addition York continues to consider other acquisitions

YORK’S STRATEGY IS BASED ON VALUE CREATION THROUGH OPTIMISATION

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Future

• utlook

York’s summarised strategy will be focusing on the following six key areas to improve quality of earnings and diversification

• f revenue

3 YEAR FORECAST LUMBER PLYWOOD FOREST REMANU- FACTURING WHOLESALE ENERGY R1,8 billion revenue contribution 50% 19% 5% 1% 25% 0% Approach Consolidate and upgrade Commissioning and new value adding products Increase plantation area, Research & Development Invest in value-adding Expand and new markets Invest in REIPPPP EBITDA multiplier 1,1 2,9 1,4 18,0 1,0 153,0 R2,5 billion revenue contribution 39% 21% 6% 1% 20% 13% Timeline One to three years One year Three years One year One year Two years and six months from announcement

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Key performance indicators

Capitals Key performance indicators Value Target in 3 years’ time 2016 % change 2015 Natural Value of biological asset R’million 2 594 2 334 9 2 140 Total landholding hectares 93 988 93 988 – 93 988 Total forestry area planted hectares 57 950 57 194 – 57 042 Additional areas with planting permits hectares 4 580 4 580 – 4 580 Conservancy areas hectares 28 938 28 938 – 28 938 Temporary unplanted areas (TUP) hectares 2 520 3 276 (4) 3 428 Manufactured Purchase of property, plant and equipment R’million 1 750 283 39 203 Value margin sawmills % 45,0 43,4 7 40,5 Value margin plywood plant % 47,5 43,3 (2) 44,4 Safety margin sawmills % 20,0 19,2 89 10,2 Safety margin plywood plant % 30,0 27,3 (33) 40,9 Market share – Lumber % 26,0 23,4 5 22,3 – Plywood % 80,0 65,0 5 62,0 Electricity consumption kWh 50 561 344 50 803 975 4 49 062 334 Intellectual New products launched R’million 50 41 16 36 Logtrace Accounting System R’million 1 2 (41) 3 FSC certification Yes Yes Yes Diversified product mix - Lumber:plywood:biomass %

65,0%:20,0%:15,0 81,7%:18,3%:0 81,6%:18,4%:0

Project Evolve annualised contribution benefits R’million 9 9,3 42,8

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Key performance indicators

Capitals Key performance indicators Value Target in 3 years’ time 2016 % change 2015 Human Staff turnover % 2,0 3,5 36 2,6 People trained number 4 285 3 083 68 1 835 Safety – lost time injury frequency rate factor 1,5 1,7 (2) 1,8 Clinic visits number – primary health care 14 825 14 416 11 12 959 – counselling 2 280 2 338 (10) 2 609 Social CSI spend in community programmes R’million 16,0 10,8 13 9,5 Training programmes spending R’million 14,0 6,3 80 3,5 BBBEE rating Level 4 4 4 Financial Total assets R’million 6 571 4 561 12 4 071 Profitability – EBITDA/revenue % 22,0 13,7 6 12,9 Gearing % 60,0 19,0 – 19,0 Total cost excluding external log purchases % 75,0 76,2 (1) 77,0 Net cash from operating activities R’million 500 225 87 121 Market capitalisation R’million 4 400 828 (7) 894 EBITDA return on capital employed % 8,4 5,8 (12) 5,2

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Biological assets

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New possibilities

Genome sequencing: determining the genetic makeup of an organism Marker assisted selection: identifying genes responsible for a specific trait

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22 22

Producing hybrid seeds

Flowers (female) Pollen (male) Controlled pollination Hybrid seed

1kg seeds

=

60 000 trees

Two years

Mature cone Seed extraction Processing

23 23

York’s business model offers a sustainable carbon cycle

NATURAL AND MAN-MADE SOURCES EMIT CARBON CO₂ released into the atmosphere from a variety of sources, including bio- energy, fossil fuels and wildfires A MARKET FOR TREES The trees York plants and the products it manufactures store carbon, both while in use and when they are recycled BIOMASS CREATES CARBON-NEUTRAL ENERGY

• CO₂ is released when biomass

decomposes

• The biomass plant converts biomass
• r raw material that is not used for products

into renewable energy

• 1 ton of biomass = 750kWh

SUSTAINABLY MANAGED FORESTS CLEAN THE AIR The trees York plants absorb CO₂ from the atmosphere. For every 1kg of wood grain, 1,8kg of CO₂ is absorbed and 0,87kg of O₂ is produced

24 24

When converting BIOMASS into energy

1 ton of biomass = 750kWh, equivalent to the annual consumption of:

Advantages of the Biomass Power Plant Project:

• Drastically lower carbon

footprint than coal

• Allows York to extract

maximum value from renewable and sustainable wood that it grows

• Stimulates the economy to

develop local community members as entrepreneurs to collect biomass needed to fuel the Biomass Power Plant Project

• Provides continuous

baseload energy

25 25

Sustainability and new regimes

Site-species-matching

A match means the tree will

• be more tolerant to climatic impacts, pests and diseases
• yield significantly better growth
• have improved timber quality

MORE IMPORTANTLY!

The future value of York’s biological asset is enhanced

Correct site-species-matching can:

• Maximise growth potential of the site –

the species planted on the site will yield maximum volume for a given site

• Maximise plant survival – frost sensitive

species can be avoided on temperate sites

• Maximise wood quality benefits –

planting of tropical species can be avoided on high altitude sites

• Avoid planting certain species that are

at risk of fire or hail damage in areas susceptible to such damage

• Achieve optimal diameter growth in trees

Site-species- matching can improve volume growth by

20% - 30%

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New pine regime for York Escarpment

Biological asset valuation growth for FY2016

= R193 million

This equates to

2 557 774m³ of additional volume growth

The projected yields and wood properties will improve significantly with the regime change to the existing plantation

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Processing

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Performance indicators for mills

VOLUME RECOVERY is measured to quantify how much of the raw material was effectively converted into a saleable product. Put simply, it indicates the ability of a mill to convert raw material to finished product. It is a ratio between volume of logs used and the volume of saleable product produced

To illustrate this factor, we will use the following analogy:

Mr Kwamba is given 10m³ of LOGS He processed it at the sawmill and produced 5,3m³

• f products. This means he recovered 53% VOLUME

from the logs he was given This is good because he did not waste the raw material and extracted a number of products from the logs Michelangelo is given a block of MARBLE measuring 1m³ He chips away and produced a statue The statue measures 0,4m³. This means he USED 40% OF THE MARBLE to produce the statue This is not a very high volume recovery of the block of marble. If he used the same marble block for countertops instead, he could have produced 0,5m³ of marble countertops and therefore used 53% of the marble block, thus achieving a higher volume recovery

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In order to drive performance at the processing units, a couple of key performance indicators are used as leading indicators. It serves as a quantitative display of the processing unit’s performance and is used as a continuous improvement tool. The key performance indicators for processing are:

• Safety margin
• Volume recovery
• Value recovery
• Log paying capability factor

Performance indicators for mills

SAFETY MARGIN is a measure used to quantify the ability of a processing unit to cover its operational costs. Key drivers in the safety margin are production throughput and

• perational costs. By increasing the safety

margin the processing unit increases its ability to meet its financial commitments and effectively also its profit margin. Safety margin is expressed as a percentage and calculated by dividing volume produced above the breakeven volume into the breakeven production volume

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Performance indicators for mills

VALUE RECOVERY is a measure which indicates how much value was extracted from the raw material. The goal is to maximise the value extracted from the raw material used while satisfying the needs of York’s customers. The value recovery is calculated based on a ratio between the average selling price of the final product and the cost of all the raw materials (typically logs and glue) used to produce the final product Although Michelangelo did not achieve a high volume recovery in the previous example, the statue would sell for more than the marble countertops. In other words, if Michelangelo made marble countertops, he achieves higher volume recovery but if he sells the statue, he achieves higher value recovery

High value recovery PLUS high safety margin

= PROFIT

Statue of David = low volume recovery BUT high value recovery

The products that Mr Kwamba produced in the previous example were structural products. This basket of products is of higher value compared to other products. This means he will achieve a good value recovery

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Solid wood products

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Timber all around us

Wood is seen as a green product as it locks in carbon, making it one of the most sustainable resources on the planet. It has a smaller production of carbon footprint than traditional building materials such as steel and concrete. In addition, it is also an aesthetically desirable building material Cross-laminated timber (CLT) is an engineered wood product. It comprises either three, five or seven panels of wood layered and glued together at right angles. CLT has exceptional strength and stability. It also possesses extremely good insulation properties in addition to its excellent strength-to-weight ratio Using CLT as a building material will reduce construction time and therefore lower construction costs. The building codes in South Africa currently do not allow for timber structures to be taller than three storeys, but that should change with projects showing interest in using CLT globally

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Rise of the “Plyscrapers”

Wood is making a comeback as a building material with the development of engineered timber, an eco-friendly alternative used in “plyscrapers” around the world – Tara John London – United Kingdom

The “Toothpick” The “Toothpick” is what Londoners are calling plans for a 984ft tower unveiled on April 8. The skyscraper’s architect says using timber will reduce the weight of the building

Melbourne - Australia

Forte Forte in Melbourne is a 105ft timber apartment building that uses cross-laminated timber (CLT), which is said to have the same structural strength as concrete and steel

Source: Time Magazine, April 25, 2016

British Columbia - Canada

Wood Innovation and Design Centre The 96ft high Wood Innovation and Design Centre in British Columbia, built in 2014, has locally made engineered wood, like laminated veneer lumber, in its structure

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People make the difference

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Mapping York’s business

Truss plants Corporate and independent retailers Remanufacturers Furniture manufacturers Construction contractors FOREST RESIDUE BY PRODUCT Biomass Remanufacturing Wholesale Retail

YORK’S VISION IS TO BECOME THE LEADING INTEGRATED TIMBER PROCESSOR IN SOUTHERN AFRICA, PROFICIENTLY DELIVERING PRODUCTS AND SERVICES OF THE HIGHEST QUALITY

Nursery

Nursery developing high yielding tree species, including hybrids, to allow

• ptimal site and

species matching Seedlings/cuttings are dispatched to plantations after five to eight months

Forests

Through industry- leading silviculture practices, FCS standard forests are advanced on a substantial basis 1 100 to 1 333 trees are planted per hectare and pruned at three, five and seven years. Removal of the least performing trees (thinning) is conducted at ages 8 to 10 and 10 to 15, prior to harvesting

External log purchasing

External purchase

• f logs contributes

to a stable industry and supplies growing needs from processing facilities

Processing facilities

Five sawmills and

• ne plywood plant

running at recoveries greater than forest theoretical at continuous production

Proposed biomass plant

Prunings, thinnings, bark and pulp recycled to generate energy for

• wn use and resale

Warehouse and distribution facilities

Three distribution warehouses supporting customer supply chain needs and demand for timber

Customer base

Supplied directly from the mill or via the warehouse to:

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The donut approach

• management structure

37 37

Key pillars of York’s high-performance culture

The team equation: delivering success PROJECT EVOLVE

A multi-faceted approach to business improvement

THE YORK ADVENTURE CLUB

An outdoor club for employees and community members Enjoyment of the beauty of nature and participation in fun outdoor events, maintaining an active healthy lifestyle and participating in Company events

YORK TRAINING ACADEMY

York-specific training, internal subject matter experts and high calibre customised development experience

DONUT MANAGEMENT PHILOSOPHY

A revision of the organogram to allow for an energetic, dynamic combination

• f experience and young talent

YORK ACTION SYSTEM

Structured engagement through a management integration software system

LEADERSHIP

A committed and qualified leadership team

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Review of the numbers

39

Statement of financial position

as at 30 June 2016

Financial

• verview

2016 R’000 % change 2015 R’000

Assets

Non-current assets 3 461 328 12 3 088 139 Biological assets 1 993 501 9 1 821 029 Investment property 26 231 20 21 895 Property, plant and equipment 852 096 36 628 112 Goodwill 565 442 – 565 442 Intangible assets 1 632 (40) 2 711 Other financial assets 19 387 (54) 41 900 Deferred tax 3 039 (57) 7 050 Current assets 1 100 128 12 983 180 Inventories 239 459 (7) 258 332 Current tax receivable 8 183 230 2 477 Trade and other receivables 225 516 7 211 265 Biological assets 340 826 7 319 038 Cash and cash equivalents 286 144 49 192 068 Total assets 4 561 456 12 4 071 319

The biological asset increased in line with the increased forecast yield of planted trees at maturity due to the temporary unplanted areas decreasing slightly and the expected yield per hectare increasing with improvements and amendments to the forestry

• regime. Growth exceeded harvesting

Capital expenditure of R283 million was driven by the Plywood Plant Expansion Project and mechanical harvesting equipment in Forestry as part of insourced activities Net working capital decreased due to reduced stock levels and maintained focus on debtor collections At the year-end short-term deposits amounting to R224 million (2015: R113 million) were available to pursue investment opportunities

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2016 R’000 % change 2015 R’000

Equity and liabilities

Equity 2 632 573 9 2 419 994 Share capital 1 486 946 (2) 1 511 938 Reserves 91 (88) 732 Retained income 1 145 536 26 907 324 Liabilities Non-current liabilities 1 531 193 15 1 332 998 Loans from related parties 1 350 (10) 1 505 Loans and borrowings 802 196 18 678 150 Retirement benefit obligation 24 010 5 22 829 Deferred tax 687 332 13 605 605 Provisions 13 114 6 12 371 Cash-settled share-based payments 3 191 (75) 12 538 Current liabilities 397 690 25 318 327 Loans and borrowings 91 949 41 65 210 Current tax payable 2 (97) 79 Operating lease liability 80 (85) 540 Trade and other payables 302 290 21 250 112 Cash-settled share-based payments 3 369 41 2 386 Total liabilities 1 928 883 17 1 651 325 Total equity and liabilities 4 561 456 12 4 071 319

Financial

• verview

Statement of financial position

as at 30 June 2016 The Group repurchased shares in the open market in order to benefit from the discount between the share price and the tangible net asset value per share With the receipt of the Plywood Expansion Project loan from the Land Bank during the year, interest-bearing borrowings increased The EBITDA payback of these investments is not yet reflected in the earnings base and will come through in the next financial year, and is an important value consideration when determining York’s value

• n an earnings multiple basis

Trade payables increased by R43 million due to active working capital management

41

Condensed statement of profit or loss and other comprehensive income

for the year ended 30 June 2016

2016 R’000 % change 2015 R’000 Revenue 1 771 049 15 1 543 149 Cost of sales (1 270 483) 12 (1 138 734) Gross profit 500 566 24 404 415 Other operating income 17 970 (39) 29 618 Administration expenses (335 603) 16 (290 012) Operating profit 182 933 27 144 021 Investment income 11 762 228 3 585 Fair value adjustments 195 337 360 42 422 Bargain purchase – (100) 6 244 Finance costs (56 632) (3) (58 385) Profit before taxation 333 400 142 137 887 Taxation (95 188) 161 (36 419) Profit for the year 238 212 135 101 468 Other comprehensive income for the year net of taxation (641) (146) 1 400 Total comprehensive income 237 571 131 102 868 Earnings per share Basic and diluted earnings per share (cents) 73 135 31

Financial

• verview

Strong growth in revenue is testimony to growth in market share driven by focused selling efforts, in both the Processing and Wholesale segments Gross profit increased due to improved margins, especially due to improved product mix and value recovery The operating margin increased from 9,3% to 10,3% in line with the improved margins and product mix Net cash finance cost decreased, despite bigger borrowings, as a result of the capitalisation of interest accrued during the construction phase of the Plywood Expansion Project as well as a negotiated reduced finance rate Profit and earnings per share increased dramatically

• n the back of a R193 million increase in the value of

the biological asset during the year, as well as better

• perating profitability

42

Financial

• verview

Condensed statement of cash flows for the year ended 30 June 2016

2016 R’000 % change 2015 R’000 Net cash from operating activities 225 106 87 120 581 Net cash applied to investing activities (263 853) 29 (204 018) Net cash from financing activities 125 793 (24) 165 041 Cash movement for the year 87 046 7 81 604 Cash at the beginning of the year 192 068 110 464 Effect of exchange rate movement

• n cash balance

7 030 – Cash at the end of the year 286 144 49 192 068

Improved profitability and working capital management have contributed to a continued strong cash-generating ability of the underlying operational businesses York continues to be cash-generative despite the substantial investment made into the upgrading

• f all facilities

Capital expenditure of R283 million (2015: R203 million) was driven predominantly by the Plywood Plant Expansion Project and mechanical harvesting equipment purchased in Forestry Funding for the Plywood Plant Expansion Project was partly offset by a share buyback of R25 million

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Continue this journey with us and we will show you why you need to:

Branch out and invest in an asset class where money really does grow on trees.

44

Disclaimer

This presentation contains forward-looking statements about York’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 warranty, express or implied, is provided in relation to the fairness, accuracy, correctness, completeness or reliability of the information, opinions or conclusions expressed herein. All references to three-year forecast, forecast to 2019, business KPIs and medium-term targets are based on successful financial close of the Renewable Energy Independent Power Producer Procurement Programme and commencement of the Biomass Power Plant Project. This presentation is not intended to be relied upon as advice to investors, potential investors or funders and does not take into account the investment objectives, financial situation or needs of any investor. All investors should consider such factors in consultation with a professional advisor of their choosing when deciding if an investment is appropriate. The Company undertakes no obligation to update or revise these forward-looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Inevitably, some assumptions will not materialise, and unanticipated events and circumstances may affect the ultimate financial results. Projections are inherently subject to substantial and numerous uncertainties and to a wide variety of significant business, economic and competitive risks, and the assumptions underlying the projections may be inaccurate in any material respect. Therefore, the actual results achieved may vary significantly from the forecasts, and the variations may be material.

Thank you