KAP Industrial : Operational Update And Trading Statement

KAP INDUSTRIAL HOLDINGS LIMITED

(Incorporated in the Republic of South Africa)

(Registration number: 1978/000181/06)

Share code: KAP

ISIN: ZAE000171963

LEI code: 3789001F51BC0045FD42 ("KAP" or "the Company")

OPERATIONAL UPDATE AND TRADING STATEMENT

The Company's executive directors will be attending an investor conference from 29 to 31 March 2022 and in anticipation thereof, the following operational update provides guidance in relation to KAP's operational

performance for the first eight months, up to 28 February 2022, of the financial year ending 30 June 2022. This update should be read in conjunction with the Company's interim results released on 23 February

2022, for the six months ended 31 December 2021.

OPERATIONAL UPDATE

PG Bison continues to perform very well, supported by healthy demand in both domestic and export markets. The eMkhondo (Piet Retief) particleboard plant expansion was successfully commissioned during February/March 2022, adding approximately 14% additional production capacity to the division. This additional capacity will offset a considerable portion of the anticipated production losses due to scheduled annual plant maintenance shutdowns planned for the second half of the 2022 financial year ("2H22").

Restonic has experienced a challenging start to the 2H22 period, with subdued consumer demand and continued volatility and escalations in commodity driven raw material costs. Traditionally, the first half of the financial year tends to be notably stronger than the second half, which is currently being experienced.

Feltex's performance has improved into 2H22, with more stability in vehicle build volumes and with the technical challenges related to the start-up of component production for a new model launch having been largely resolved.

Safripol continues to perform exceptionally well, with strong demand for all three polymers, higher selling prices and improved margins. This continues to be supported by global factors of supply and demand, supply chain disruptions and commodity pricing, which favour local manufacture and supply.

Unitrans continues to trade on a relatively stable basis, with the South African operations performing well, the passenger operations remaining stable and the rest-of-Africa operations continuing to find trading conditions challenging, especially in Botswana.

RUSSIA-UKRAINE CONFLICT

The impact of the Russia-Ukraine conflict on KAP has been limited to date. KAP's divisions do not source critical raw materials or equipment from Russia or Ukraine and do not sell into these regions. Escalations in global commodity prices and supply constraints and disruptions are expected to continue favouring local manufacture and supply, which has been beneficial for KAP through Covid-19. It is, however, anticipated that resultant global inflationary pressures will ultimately impact local prices and potentially consumer demand.

TRADING STATEMENT

In terms of the JSE Limited ("JSE") Listings Requirements, a listed company is required to publish a trading statement once it is satisfied that a reasonable degree of certainty exists that financial results for the next period to be reported on will differ by at least 20% from the financial results for the prior corresponding period.

While there are four months remaining of the Company's financial year ending 30 June 2022, following the eight-month period covered by this operational update and trading statement, a reasonable degree of certainty exists that if current trading conditions persist, the Company's earnings from continuing operations will increase by more than 50% compared to the prior corresponding financial year.

Headline earnings per share ("HEPS") from continuing operations is expected to increase by a minimum of 21.5 cents to at least 64.5 cents (FY21: 43.0 cents) and earnings per share ("EPS") from continuing operations is expected to increase by a minimum of 22.0 cents to at least 66.0 cents (FY21: 44.0 cents).

A further trading statement will be issued in terms of the JSE Listings Requirements when a reasonable degree of certainty exists as to the likely range of the expected increase in EPS and HEPS compared to the prior corresponding period.

Shareholders are advised that the financial information in this announcement and on which this trading statement is based has not been audited, reviewed or otherwise reported on by the Company's external auditors.

By order of the Board

KAP Secretarial Services Proprietary Limited

Stellenbosch

29 March 2022

Sponsor

PSG Capital