KAP Industrial Holdings Limited (KAP) is a diversified industrial group focused on the African continent. The company has a market capitalisation of R13.3 billion, reported revenue of R14.7 billion in the 2014 financial year, and employs almost 20 000 people. Operating in 12 African countries (Uganda, Zimbabwe, Namibia, Botswana, Swaziland, Lesotho, Madagascar, Mozambique, Zambia, Malawi, Kenya and Tanzania), the company is well placed to benefit from sub-Saharan Africa’s healthy growth rates.

Through its 43% shareholding, the company’s association with Steinhoff International Holdings provides it with access to a broad range of skills and services with exposure to international best practice and scale. Further to this, KAP is a BBBEE level 4 value-adding company.

Strategic principles
The company has streamlined its activities according to five strategic principles to optimise its returns on capital employed and facilitate sustainable long-term growth in partnership with its customers and other stakeholders.

Market leadership
KAP aims to be number one or two in the sectors and geographic locations in which it operates. This allows the company to benefit from economies of scale and thereby employ international best practice, equipment and technologies to provide its customers with class-leading products and services, and to provide sustainable returns to stakeholders.

High barrier to entry industries
Including specialist skills and technologies, capital investment, licences, access to strategic raw materials and long-term contractual commitments, KAP is focused on industries and businesses with high barriers to entry. This allows the company to commit significant resources to its businesses in order to facilitate sustainable growth, as well as to optimise returns.

Sustainable earnings through diversity
The company is diversified across various industries, geographic locations and market sectors where it produces a broad range of products and services. Cash-generative industrial businesses facilitate continued investment in high-return logistics operations, which require ongoing reinvestment. Similarly, the long-term contractual nature of the logistics division provides stability during subdued economic conditions while the consumer-driven industrial division affords strong growth during economic upswings. This diversity facilitates the management of concentration risk and protects as well as stabilises earnings through economic cycles.

Solid margins by adding value
KAP focuses on providing value-added goods and services in a competitive, commodity-driven market-place. This assists in enhancing and protecting margins, as well as differentiating the company from its competitors.

Owning and managing the supply of raw materials and successfully maintaining sustainable long-term partnerships with key strategic suppliers also provide a unique competitive advantage, supporting good margins.

Leveraging our African base
KAP has operated in sub-Saharan Africa for more than 20 years through its various businesses. The company is well positioned to leverage its industry knowledge and expertise in African markets to provide strong sustainable growth.

With its focus on these principles, low performing and non-core assets were disposed of during this period and the cash generated was re-invested in new technology in line with its strategy.

Management structures in the company were also realigned during this period to better reflect the strategy and growth objectives of the company.

STRUCTURE AND DIVISIONAL PROFILE
Diversified logistics
Unitrans Fuel, Agriculture and Mining’s core business is to supply specialised transport, distribution and logistics services to a diverse and well established customer base across 10 sub-Saharan African countries.

Its experience and knowledge of the African business environment and uncompromising focus on safety, health, environment and quality provide an effective platform for expansion into African markets. Key stats:

• 5 900 employees
• 3 600 drivers
• 1 790 vehicles
• 115 million km travelled

Unitrans Freight and Logistics is focused on providing specialised logistics and value-added services to a diverse range of industries and market sectors. These include the design, implementation and management of specialised supply chains and logistic services. Key stats:

• 3 900 employees
• 1 400 drivers
• 1 380 vehicles
• 116 million km travelled

Unitrans Passenger provides transport services to the personnel, commuter, intercity and tourism markets. It is a diversified, competitive and performance-driven organisation rendering continuously improved passenger transportation, aligning its transport services with the demands of customers. Key stats:

• 3 700 employees
• 2 300 drivers
• 11.4 million passengers per annum

Diversified industrial
Timber: PG Bison aims to be the leading board manufacturer and primary upgrader in Africa. It harnesses the benefits of a backward integrated business model by owning and managing forestry and timber processing operations with primary manufacturing and value-adding facilities. The firm has invested in the latest available technology in these facilities. Key stats:

• 1 900 employees
• 43 000 ha forest
• 1 066 581 tons of fibre consumed

Chemical: Hosaf is the only producer of virgin polyethylene terephthalate (PET) in SA, which is used in the beverages and packaging industries. The business takes advantage of world-class technology to supply innovative products, while maintaining a commitment to safety and sustainability.

Woodchem SA is sub-Saharan Africa’s largest producer of formaldehyde and a broad range of urea formaldehyde resins. These products are used in more than 30 different industries in SA.

With the establishment of an additional formaldehyde plant in 2007, the company employs the latest technology to drive efficiencies and product quality. Key stats:

• 180 employees
• 2 chemical plants
• 128 000 tons of PET produced
• Supplies 90% of total resin and formaldehyde to sub-Saharan Africa

Automotive: Feltex comprises six business units that supply components, directly and indirectly, to the seven South African original equipment manufacturers for the assembly of new vehicles. The division aims to be market-driven and internationally competitive through strategic global alliances and the adoption of best practice. Key stats:

• 1 700 employees
• 13 manufacturing facilities
• 16.5 million components produced annually
• 1 025 tons of material, which is recycled back into manufacturing

Bedding: KAP’s integrated bedding division includes the manufacturing operations of Restonic, Vitafoam and DesleeMattex, which collectively produce foam, mattress fabric, springs, bed bases and mattresses under various brands in South Africa and neighbouring countries.

The division has manufacturing and distribution facilities in major centres utilising modern technology, which provide cost-effective quality products to its retail customers. Key stats:

• 1 600 employees
• 13 manufacturing plants
• 14 800 tons of foam produced
• More than 200 000 base sets produced per annum

From 2015 into the future
Following intensive streamlining of the company’s operations over the past three years, the group is well positioned for growth.

With its strategy firmly in place and the return on investment from some key activities already showing on the bottom line, KAP is well geared for growth in a booming African economy.

De Wagen Weg Office Park,
Stellentia Road,
Stellenbosch,
Western Cape
Tel: +27 (0)21 808 0900
Fax: +27 (0)21 808 0901
www.kap.co.za