Good morning, ladies and gentlemen, and a welcome to KAP's results presentation for the six-month period ended 31 December 2023. Thank you for taking the time to attend and for your interest in KAP. Before Gary and Frans discuss KAP's performance, I would like to say a few words from the board's point of view on what has been another challenging period for KAP from a macroeconomic and operating environment perspective. Our key priorities as a board for the current year have been to ensure that the group's major capital projects are successfully implemented on time and in budget so they can start contributing to cash flow and reducing debt. That debt is managed with the objective of reducing it to prudent levels, and that the group's capital allocation priorities support enhanced shareholder value and long-term sustainability.
While the trading environment proved challenging during the period, I am encouraged that the group is making good progress on these three points. This is reflected in improved performance for PG Bison, for Restonic, and for Feltex. The indications that Unitrans is turning the corner and the planned on-time and on-budget completion of the major long-term capital projects. However, the progress made during this period is unfortunately overshadowed by the materially negative impact that a weaker polymers market has had, and to a lesser extent, the higher interest rate environment. I am positive that the group is focused on delivering the board's key priorities, and the results thereof should become visible in the 2025 financial year.
While the operating environment from now until then will certainly not be easy, I am comforted that the group has become adept to operate in difficult environments and hold the view that the outlook for KAP is positive. I'll now hand over to Gary to take you through the operational review.
Thank you, Pat, and welcome to everyone. Thank you for taking the time out to come and listen to our results today for the interim period to December 31. It's obviously been a challenging macro and operating environment. I think we're all aware of that, particularly in our world influenced by a significant weakness in the global chemical sector, which resulted in materially lower polymer margins. That had the single biggest impact on our results for the half-year. We also had elevated inflation and interest rates, the obvious infrastructure disruptions that we're all aware of, and then relatively softer consumer demand. The outcome of that was a very disappointing performance by Safripol. In Unitrans, a slower than expected recovery with some non-recurring items, and then higher finance costs, primarily due to the higher interest rates.
On the positive side, we feel that we were certainly market share winners in certain of our businesses, and we were able to enter new export markets and leverage existing markets to maintain production capacity in several of our factories. We continued to experience cost escalations, predominantly in raw materials, and were able to pass these through sales price increases. We also targeted specifically cost savings in all areas, certain restructuring activities, and efficiency improvements, and we saw that starting to come through in improved operating margins and lower costs. We made good progress in the initial phase of the Unitrans restructure, some low-hanging fruit which we took advantage of, and then during the period, we appointed a new CEO effective on the 1st of January of 2024 to really drive that restructure process through to completion by the end of the financial year.
Very pleasing performances by PG Bison, Restonic, and Feltex, which really supported the results, and then also really pleased with our working capital and cash generation, which supported a reduction in debt, which Frans will obviously go through in a little bit more detail when he goes through the balance sheet. So that was from, I guess, a high-level perspective. If we then look specifically at revenue, down slightly to ZAR 15 billion from ZAR 15.2 billion in the previous year, and that was largely due to Safripol, primarily due to weaker polymer prices, and then Unitrans, primarily due to the closure of loss-making contracts and low-margin business, which we closed at the end of the prior year. If we then go onto a summary of the operating profit, you can see there the big decrease, Safripol 67% in the middle of the page.
That is the overriding impact on the results for the half-year. So a reduction to ZAR 1.25 billion from ZAR 1.5 billion. Most businesses actually up, except for Safripol , down significantly, and then Unitrans, primarily due to non-recurring costs that came through there. From an overall segmental analysis, no material change in revenue, so the percentage split relatively stable. However, you can see on the operating profit line the significant influence of Safripol going from 36% down to 14%, and the rest of the businesses obviously adjusting accordingly. And as I said, the single biggest impact on KAP's results. If we then go into the divisional performance in a little bit more detail, so PG Bison performed well for the half-year, revenue up 9% to ZAR 2.9 billion, operating profit close to ZAR 600 million, and the operating margin at 19.9%, close to 20%.
So they experienced relatively stable market conditions for Particle Board. It softened towards the end of the period, which resulted in us increasing our exports. So exports up from 11% in the prior period to 20% in this period, really to compensate for the weakness in the local market and to allow us to run our factories at full capacity. MDF remained buoyant, so demand continued to outstrip our available supply. So overall, sales volumes were up 3%, with the exports obviously offsetting lower domestic volumes. I'm pleased to say we got our value-add percentage back to where it should be. In the prior period, we had some plant availability constraints, and we got that back online, and that really supported the margins through the period. So overall, the margin strong, and it's a combination of multiple factors, so no single factor.
We managed to get some sales price increases through to offset cost inflation. We had the higher value-add ratio. We see the benefits of our technology investments coming through in lower cost of production. And then we also had a biological asset revaluation, where in the prior year, that was actually a devaluation. Margin is within our guidance range, so pleased with that. And then lastly, a major issue for us in this period is completion of our MDF plant. ZAR 1.9 billion, we're investing in that plant in Mkhondo, the old Piet Retief. And I'm pleased to say that that is on track, within budget, commissioning to start up during March. It's an extended commissioning through to June, and then into beneficial production from July. If we then move on to Saket Kapoor, a very disappointing performance for us due primarily to the polymer margins.
Revenue down 8% to ZAR 4.7 billion, operating profit down 67% to ZAR 178 million, and operating margin obviously well below what we saw in the prior and well below our guidance range at 3.8%. Sales volumes were relatively stable and a bit of growth in the local market, so 6% higher on domestic sales, really offsetting lower exports. Export markets were not strong. Globally, PET margins were very weak, and it really made PET exports uncommercial. And in fact, very unfortunate for us in that the plant was actually running very well throughout that period, and we actually had to curtail that for five weeks to balance our production with our domestic demand on the basis that exports were not commercially viable. And we didn't actually want to get into the same position we were in last year, where we built up stock in a weakening market environment.
In terms of HDPE, we had some capacity constraints through electricity disruptions and a transformer failure on the polypropylene line, which constrained sales. Otherwise, we could have exported that product at commercial benefit. So overall, operating profit 67% lower, and it's primarily in the margins. So we did have some other factors, but they really are insignificant relative to the margin impact, mainly PET and secondly on polypropylene. The HDPE was relatively stable. We have certain contractual protection in that polymer, which supported HDPE through the period.
During the period, we discovered that we had actually been overcharged for one of our polymers, which we quickly corrected and recovered about ZAR 160 million of cash, which came into the cash in this year. However, based on the scale of the error, there was a prior period adjustment, which Frans will discuss in more detail when he goes through the financial statements.
Unitrans, overall, a satisfactory performance. So not where we wanted to be, a little bit slower than we had hoped, but quite a tough environment. Subdued demand. We saw elevated inventory levels, which kind of pointed towards lower demand levels. We made good progress, as I said earlier, with the initial phase of the restructuring. However, that didn't transfer through to earnings yet. It really had a positive balance sheet impact, which, again, you'll see through Frans's presentation. And the reason for that is we had some non-recurring restructure-related costs coming through. So we exited low-margin, low-return activities, and in one month of the prior period, we actually had a rollover of the Pick n Pay contract, which we lost. And as a result of that, our revenue was lower.
Operating profit, as I mentioned, we had some restructure-related costs of about ZAR 30 million and foreign exchange losses on our Africa operations, where there was a devaluation of the Malawian kwacha, which obviously affected our balance sheet in that region, which transferred into a restatement and our income statement. Operating margin below our guidance of 8%-10% and overall remaining a relatively disappointing performance from Unitrans. Just going into more detail on the restructure of this business, it has underperformed for some time. It remains a major subsidiary of KAP, ZAR 10 billion in revenue with ZAR 6 billion of assets. If we look at the performance over a period, it's been below our guidance margin of 8%-10% and below our return on capital employed target of 16% for some time.
Part of this has been through structural changes in certain sectors, and part of it has been through a misalignment of our cost structures following contract losses and certain internal factors around the capital efficiency and operating efficiency of this business. So we've embarked on a three-step process to improving the performance of this division. We're well entrenched in the first part of that with a consolidation of the three businesses into a single business and then restructuring and right-sizing that business. And that entails exiting low-return activities, disposing of the underutilized assets related to those activities, and rationalizing the related infrastructure. So that's well on track. Secondly is an organizational redesign, which will result in centralization of certain functions and leveraging technology to make that available. So the technology and the data in this business is very strong.
So although that will take a little bit longer, we're well placed to execute that in the H2 of this financial year. Obviously, aligning the costs with renewed activity levels. So again, on track with that in terms of phase one and a real focus going into phase two of that. And then applying stringent capital allocation criteria. So you'll see the impact of that as Frans goes through his CapEx slides, but already making strong progress. The second phase is to increase our focus on providing end-to-end solutions for clients as opposed to simply tendering on work as it becomes available. So it's a far more proactive approach to the market, and it requires building the capability internally while at the same time partnering with experts who already have that capability.
So that's going to take a little bit longer, but has already been initiated, and progress has started. Then once this has taken effect, it is to really pursue growth with a smaller cost base, better asset efficiency at the required margins and returns, and to remain focused on our key sectors of food and consumer, agriculture, petrochemical mining, and passenger transport. So just in terms of our progress with that, during F23, we closed loss-making operations that had incurred about ZAR 107 million of losses, and that had non-recurring costs in that period of about ZAR 27 million.
We sold underutilized assets in the prior year of about ZAR 300 million, which, again, you'll see in the CapEx slides. In the H1 of this year, we sold a further ZAR 250 million of underutilized assets. We curtailed CapEx, and we redeployed other assets to improve our utilization and reduce CapEx.
We had an overflow of closure costs related to primarily those loss-making businesses of about ZAR 30 million, which unfortunately impacted the first half results. And then if we look at what's due in the H2 , as I mentioned, we have appointed a new CEO that will really drive the next phase of the restructure. It's more complex, requires greater discipline and greater insight, and we require a fresh set of eyes and fresh skills to really drive that process into H2 and into F25.
So we've targeted another ZAR 100 million of asset disposals, and we've targeted in H2 ZAR 100 million of cost savings, which on an annualized basis should be in the region of about ZAR 200 million. That is largely related to operational efficiency and operational disciplines. Separate from that, a refreshed organizational design with centralization of certain key functions will result in further targeted savings.
That's a little bit of a longer process, and we'll hopefully see the benefit of that starting to come through in the next financial year. With all of this, it's really targeted around optimizing our existing business. And parallel to that, we will then start to build the business development capability to be able to secure new contracts according to our margin and return metrics, which is an extended process. To win a new major contract is generally a year. So you need to build the capability and run it parallel with optimizing our existing operations.
So overall, I'm actually very excited about where we are with this business and the progress that we've already seen in the last two months and with how that team has been mobilised and refocused their activities towards achieving these cost-saving targets and towards improving the business to achieve the margin and return metrics that we expect. So over to Feltex then. Feltex had a good performance for the half year, revenue up 24%, operating profit up 31% to ZAR 136 million, and operating margin within our guidance range at almost 10%. So revenue increased largely due to an increase in the build volumes in South Africa, as well as certain price adjustments to offset raw material cost escalations and then some contractual volume shortfalls. Industry volumes were healthy, so we saw an increase of 18% in the build volumes, and that's the core of that business.
That's generally our interior cockpit components. From a sales perspective, a little bit less buoyant. So LCV sales only increased by 4%, and in fact, SUV sales declined by 14%. Those statistics are the primary driver of our exterior components, which we sell through our Maxe brand. Operating margin, as I said, almost within our guidance of 10%-12%, and it was improved primarily through the increased volumes supported by the cost savings and process optimization. In this year, we also had a rollover of insurance benefits for business interruption related to the floods in KwaZulu-Natal, which in the prior year was roughly ZAR 15 million. So overall, pleased with the performance of Feltex. Lastly, we're onto Restonic.
This business, you may recall, we went through quite a significant restructuring in the prior year right from end to end, from product design and formulation through the sales, marketing, process, procurement, etc. We've really seen the benefits of that starting to come through. Revenue up 8% to close to ZAR 1 billion, operating profit up more than double to close to ZAR 100 million, and then operating margin of 10.2%, still below our guidance range of 13%-15%, but certainly a significant improvement over the 3.8% that we reflected in the prior period. Revenue was higher due to a combination of both volumes and price increases to recover our cost escalations. We generally felt during the period weaker consumer demand.
So we did observe the impact of higher interest rates and inflation, as well as continued disruption through load shedding, not as bad as we've experienced previously, but still a degree of disruption. And we feel that in that space, we managed to grow some market share. And we did that through new bedding products, both at entry-level and in the premium category, and a really focused concentration on our product, the sales and marketing efforts, the supply chain, really to support the sale of our products in store. So bedding units were up 3% in a market which we felt were slightly down. Foam and textile sales were up 2% and 13%, respectively. So as I mentioned, operating profit up more than 100% and really seeing the benefit of the restructure starting to come through.
So overall, I think a good operational performance, really slightly slower recovery in Unitrans than what we had expected, and unfortunately, a lot of good work really overshadowed by weakness in global polymer margins. So with that, I'm going to hand over to Frans, who's going to go through the financial results in more detail, and then I'll come back at the end in terms of the overview.
Thank you, Gary. And good morning, everyone. Thanks for taking the time to come and listen to us. So from a consolidated perspective for the six months, the salient features: revenue down 2% to ZAR 15 billion, EBITDA down 13% to ZAR 2 billion, operating profit down 17% to ZAR 1.3 billion. The effect of that is lower operating profit margin at 8.3%. Headline earnings per share were down 36% compared to 21.8% in the prior year.
There are stated numbers in the prior year, which I'll explain in detail just now. Very happy with cash generated from operations, increased more than 100% to ZAR 790 million, ZAR 914 million improvement in working capital to ZAR 3.9 billion, continued investment in CapEx, primarily the PG Bison and MDF expansion, and net debt reduced by ZAR 708 million. We also raised a ZAR 3 billion RCF in the period, which I'll explain in more detail. And then lastly, no dividend declared because it's our interim period, part of our past practice. I know this is a difficult or a busy slide, let me say that. But during the period, we identified that a material supplier overcharged us on raw materials for the period February 1, 2002 to September 30, 2023. That was in Safripol. When we discovered that in October, we immediately contacted them. There was no problem.
The error was corrected, and the overcharge of ZAR 183 million, the credit notes were passed to us. ZAR 163 million off that overcharge relates to the full financial year FY2023, of which ZAR 107 million relates to the H1 of the prior year. So we had to restate our prior year numbers due to the materiality of the error. So on the left-hand side, operating profit, if you look at 1H23, the top line there, operating profit restated by ZAR 94 million, a decrease in inventory, and then the ZAR 107 million on trade and other payables that you can tie back to the purchases. That's a ZAR 0.02 per share increase in the prior year headline earnings or a 9%. If you look on a full year basis, the same, ZAR 156 million in operating profit.
If you go down ZAR 7 million inventory and ZAR 163 million in purchases or payables, 0.04 on headline earnings, increasing it by 11% to 47.3. So when you look at the income statement, Gary explained operational results, but it's mainly impacted by material decline in Safripol performance, and that's due to global polymer weaker margins and selling prices, resulted in 17% down in operating profit.
Some other items to take note when you look at the income statement is the forex exchange loss of ZAR 43 million, mainly relating to the devaluation of the Malawian kwacha that's accounted for in the current period, and also insurance income of ZAR 35 million in the current period where it was ZAR 111 million in a prior year, ZAR 15 million PG Bison and ZAR 19 million in Feltex relating to the KZN fire floods. Net finance cost increased 20%, mainly due to increased interest rates.
The difference between net finance cost here and in the cash flow statement is capitalized interest, which I'll explain in more detail a little bit later. Look on the balance sheet. There's mainly three items I'd like to highlight. The three items are significant investment in our operating assets. If you look on property, plant, and equipment, prior year ZAR 14.5 billion, year-end ZAR 15 billion, and now December ZAR 15.5 billion. Also, working capital, a decrease compared to the prior year, ZAR 3.9 billion compared to ZAR 4.8 billion, but we've contained it through seasonal peaks that we have in our December periods.
Then a decrease in net interest bearing debt. When you look at property, plant, and equipment in more detail, the increase is shown there in the graph from June to December to ZAR 15.6 billion. Firstly, significant investments, ZAR 1.1 billion, mainly due to the major capital projects.
Of that, ZAR 885 million relate to the PG Bison and MDF expansion. Then there's a ZAR 82 million increase in property, plant, and equipment. That's due to interest that we capitalized on these major projects that extend over multiple years. In the prior year, it was only ZAR 21 million. And at half year into the end of the period, there was ZAR 2.5 billion in capital work in progress that is not yet contributing to cash flow and earnings. And that equates to 16% of our total property, plant, and equipment, a significant number. Disposals of underutilized Unitrans assets and redeployment to improve capital efficiency. You can see in the disposals there where we've sold assets to the value of ZAR 273 million. That's the net book value. It's not the proceeds.
Then replacement CapEx is well below depreciation, two factors mainly, manufacturing assets with lower depreciation or replacement CapEx, and then Unitrans that's going through a restructure. Working capital, we compare to the same period or December 2022, the same period, and suggest to eliminate seasonality in working capital. So there's been a significant focus on working capital since last year where we had the elevated working capital in December. And the working capital decreased ZAR 914 million, and we're quite pleased with the performance. Inventory down ZAR 206 million, receivables down ZAR 202 million, and payables increased ZAR 506 million. There's a continued focus to align the production and inventory levels with demand. And that's where Gary referred to the five-week shut that we had in PET. Inventory levels are also more aligned now with our trade payables, which was not the case in the prior year.
Debtors outstanding remained stable throughout this period. Then, like I said, we contained our working capital through the seasonality, but there is an increase from June to December that we normally expect. Just to note, it's not on the slide there, but at year-end, we had ZAR 258 million of insurance claims outstanding, recognized in the income statement, not received. We've largely recovered all that money in this period. If you look at the cash flow statement, although EBITDA is down 13%, we increased our cash generated from operations with ZAR 739 million to ZAR 790 million. That's more than 100%. Our net finance costs increased 48% to ZAR 516 million. And that's the difference between the income statement finance cost and the cash flow finance cost paid. And that's the capitalized interest.
Our cash conversion ratio at 40% is below our target of 90%, but we are confident that we will get to our forecast number of 90% by year-end. If you look at how we invested the money, there's significant investment in CapEx, ZAR 1.2 billion. That's conclusion of our major projects. Free cash outflow of ZAR 1 billion is ZAR 604 million better than the prior year, and that's mainly the working capital.
And then there's no dividends paid in this period relating to FY2023, but in the prior year, you can see the ZAR 700 million that we've paid relating to FY22. So I normally show this CapEx slide, the detailed CapEx slide, but this time, we've split it into two between manufacturing assets and other or basically logistics assets. And the reason for that is just the different useful lives of these assets and the different profile of how you depreciate them.
It just makes more sense to split them. So firstly, on the manufacturing assets, we've provided you again with all the detail and the cash flows over those periods. And just to put in context, these are multi-year complex engineering projects where there's a lot of components cost-related to steel, to the weakness of exchange rate, imports, etc. So for all these projects, we are largely within budget and on time, which I think is a phenomenal achievement by our engineering people and our operational employees. So if you look at the PG Bison cash flows there, so ZAR 885 million in this six months. And of the ZAR 1.9 billion, there's roughly only ZAR 330 million remaining. So the largest part of these major capital projects spent is behind us.
So all these projects will be commissioned and taken to production in H224, and we will see the income and cash generation into FY2025. And subsequent to these projects, we don't have any material committed CapEx. If you look at the non-manufacturing capital expenditure, basically mainly Unitrans, I draw your attention to the graphs there on the left-hand side where you can see in the past FY21, FY2022 that the replacement CapEx is slightly higher than depreciation. But there's a definite change from FY2023 going forward. And the trend and the reason for that is that we've started with a restructure, the right size of the capital employed, employment in that division. And what does that mean? We call it capital efficiency. Gary referred to that, the closure of loss-making contracts and operations, and then we dispose of those related assets. We disposed of underutilized assets as well.
And both of those, you can see in the proceeds where we've sold close to ZAR 300 million in FY2023. We sold ZAR 249 million in the current period, and we target to sell another ZAR 100 million in the remainder of this financial year. Also, we redeployed assets to improve our utilization and to reduce CapEx. And that's evident in the replacement CapEx where we've spent ZAR 682 million in the prior period or the prior financial year and only ZAR 121 million in this financial year. If you look at the movement of net interest bearing debt from June till December, so it's from our financial year-end, it increased ZAR 1.2 billion.
December on December, it actually decreased ZAR 708 million, but from June to December, the seasonality in our working capital where we've invested ZAR 1.2 billion in working capital. How did we fund that investment in working capital?
700 million increase in our new revolving credit facility and a balance of that out of cash and bank overdraft. So during this period, we concluded a ZAR 3 billion new syndicated revolving credit facility that we ran a process in the market. The structure of the RCF was firstly to replace the existing ZAR 750 million RCF that we had, plus it was to refinance the maturities that we've got on the right-hand of the slide there, just totaling close to ZAR 3 billion. The RCF consists of two components, two tenures, ZAR 2 billion in 3 years and ZAR 1 billion in 5 years, and it was placed at more favorable rates to what we have at the moment. A key factor to the RCF is we included a covenant ratchet for interest cover over the next three years. Our previous covenant was 3.5.
So for this financial year, it will be 3 x. Next financial year, FY2025, 3.25 x. And then going forward, FY2026, back to 3.5 x. Net debt to EBITDA cover reduced to 3x from our previous 3.2 x. The main benefits of this RCF for us is, number one, it balances our exposure between listed bonds and listed notes and bank exposure. That was more weighted towards notes in the past.
And then important for us, it's giving us refinancing certainty during a period of potential earnings volatility due to uncertain macroeconomic environment. If you look where we are in terms of the polymer cycle or the chemical cycle and during the period of starting up our major capital projects and get them to generating cash and earnings. Why RCF? Not a term loan. It also gives us the flexibility to facilitate planned reduction of debt from FY2025 going forward.
I'd like to thank our funders for their support in this placement of the RCF. On treasury activities, the only item to highlight there is GCR credit ratings, confirmed our rating at an A+ in November. On our debt serviceability ratios, the bottom of the slide, not the bottom, middle of the slide there, net debt to EBITDA 2.5 x. That's at our internal target of 2.5 x. EBITDA interest cover is 3.8 x. That's below our internal target of 4.5 for the reasons that we've explained, but it's within our covenant. If you look at the maturity profile, on the left-hand side there, you've got cash, committed facilities, and uncommitted facilities. The 2.3 there is the RCF, ZAR 700 million already drawn down, ZAR 2.3 billion available.
And that, with a planned reduction of debt in FY2025 of close to ZAR 1 billion, is sufficient to refinance the rest of this financial year to June 2024 and June 2025 maturities. So with that, I'd like to say thanks for listening to us, and then I hand over to Gary for the outlook.
Thank you, Frans, for that. So just in terms of the outlook, we don't see the environment changing. So there's nothing that points toward a positive change in the environment. So we are forecasting forward much of the same in terms of the operating environment. And as a result, a lot of our focus remains unchanged from what we've been focusing on to date. So continued focus on market share gains in the domestic market and then pursuing exports to maintain our production facilities at full capacity. We continue to see elements of cost escalation where we will seek to recover that through price adjustments. And then continued focus on cost savings. So cost savings, operational efficiencies, that focus will remain within all of the businesses. And then a big focus on our balance sheet.
Frans mentioned some of it, but continued focus on working capital, especially through to June, which is a seasonally lower period for us where we can optimize our working capital. And then continued tight management of CapEx. So far more stringent CapEx approval process both in terms of returns and in terms of scale of CapEx. And that's really directed towards facilitating a reduction in debt going forward. Also, asset optimisation. So what we mean by that is ceasing activities that don't meet our return hurdles. And this is relevant in all the divisions. So there's always pockets of unproductive activities. It's the discipline to stop those and dispose of the related assets. Additionally, two kind of major areas of focus is the completion of the restructuring of Unitrans. So the vast majority of that will be completed by June 30 .
It's a big business, as I said, ZAR 10 billion of revenue. So there will be a rollover into the following year, but the bulk of it will be completed by June 30 . Then completion of our major projects. So they are largely on track. One or two of the smaller ones are slightly behind, but those will be done in H2 and all be productive going into F2025. So looking beyond F2024 and those big capital projects, there's no major expansions and no major replacements that we committed to. So we certainly see a de-gearing of our balance sheet starting to take effect within F2025. And that will be supported by the commissioning of those major projects, lower CapEx, and then execution of the restructuring activities, which will lead to lower costs and improved profitability.
And then that will obviously be facilitated through what Frans has mentioned with the RCF where we have the flexibility to manage that degearing. Lastly, just in closing, there was some recent media speculation that KAP may dispose of Unitrans. I think just to give some clarity to that, first and foremost is we don't generally respond to media speculation. There is a major restructuring going on in that business, which we believe will materially improve performance. Over time, we have received interest in Unitrans, which we are exploring in a structured manner. However, there's nothing at this stage which requires any formal communication. And there's also no certainty that a sale will result from the exploration that we're going through. So Unitrans remains an integral part of KAP. It's a business that we need to fix.
We need to manage it in the best interests of the business itself and its customers and employees. And that will receive a dedicated focus from KAP and the senior management of Unitrans. So with that, I draw to a close our presentation. We've got some big projects. We need to conclude them. Polymers will likely remain a challenging environment. So we remain focused on our costs, on our efficiencies, and running our businesses as optimally as possible and really trading through this environment. It is tough. It's going to remain tough. And we'll remain really focused on the basics and grinding through until those projects are commissioned, running, and starting to generate cash. And then we see the degearing starting to take place. So there's a lot of staff watching this presentation.
So from center and from the respective management teams, we're putting a lot of pressure on our staff to achieve all of the initiatives that we're driving. So just from a staff perspective, really, our gratitude for your dedication and commitment to the task that we've set you. And really a big thank you from myself and from the KAP board. And then just in terms of our shareholders, our funding partners, and the board, thank you for your continued support. With that, we will then take questions, which, Christina, I think, you're going to read out.
Thank you, Gary. So our first few questions are from Charles Bowles from Titanium Capital. First one, can you please clarify what structural changes in select markets entail for Unitrans?
Sure. So what we've observed in a number of sectors, of which logistics is one, furniture retail could be another, where we've seen significant fragmentation in previously very structured, very organized, more corporate environments. We've seen quite significant fragmentation of smaller operators entering the market with different cost structures, different business models, different governance requirements, etc. And with that, we've had to adapt our approach to the market both in terms of maintaining our governance principles, maintaining the roadworthiness and state of our assets, and competing on a slightly different playing field. So as I said, that's happened in a number of sectors. It does provide certain advantages where there's still several corporate clients that want to deal with well-governed, well-run organizations. However, there's certain parts of the market that are more comfortable going with more informal operators, and that requires some change in our business.
Okay. Thank you, Gary. Next question. On the PET business, you took a 5-week shut due to soft demand. Can you elaborate which end markets this related to? Is it largely carbonated soft drinks?
So our domestic demand was actually relatively stable. So domestically, we sold a very similar volume to prior. The shut was directed toward exports, which previously, from time to time, have been profitable depending on global margins and prices and shipping rates. During this period, it just wasn't viable based on those margins and demand levels. And that was primarily into carbonated soft drinks in foreign markets.
Okay. Thanks, Gary. Can you give an indication of the security of Safripol feedstock supply in the medium to longer term, please?
Sure. I think there's been certain commentary around Sasol's business model. At this stage, that has no impact on the medium-term supply into Safripol. We are obviously engaging with Sasol. And to the extent that there is change, we'll communicate accordingly to the market.
Okay. Frans, one for you. Can you give an indication of the interest rate profile following your new RCF?
Yeah. It's roughly 0.4%-0.5% lower than our average interest rate that we pay at the moment.
Okay. Thank you, Frans. And then one here from Mark Gillman from Orion Asset Management. Could you please detail why it took so long to discover the overcharge on raw materials at Safripol?
I'll answer that. The way that our contracts actually work within Safripol, they're based on certain published indices. The index actually changed at a point in time. As a result of that, the reference pricing on those indices wasn't correctly calculated. It was really through an external change not related to either ourselves or our supplier. We do certainly have several checks and balances to monitor that, which is what ultimately led to the discovery. At the time, in the prior year, Safripol was very profitable. It's really when markets became more competitive that the interrogation intensified and led to the discovery of the error.
Okay. Thank you. And then one from James Twyman from Prescient. Could you give an idea of the amount of sales that will be removed from logistics as a result of the restructuring? Also, if possible, could you give guidance where polymer margins are now relative to the six months that you just reported?
Sure. The first question, generally, the revenue that you see currently is revenue that we would retain going forward. So the majority of loss-making revenue has been taken out. Sorry, Christina, just repeat the second question on polymer margins.
Yeah. The next one was just if you could give guidance on where margins are now relative to the period we've just reported?
They're relatively stable compared to what we've just reported.
Okay. Thank you, Gary. We have no further questions. So thank you, Pat, Gary, and Frans, and to our audience. If you've got any further questions after the presentation, you're welcome to reach out. Gary, I'll hand over to you to close the call, please. Thank you.
Yeah. Thank you, Christina. Thank you to everyone that has attended and listened to us. As I said, quite a tough environment, but we've got our plans. Those plans are being executed. They'll continue to be executed through the balance of this financial year. Then we're looking forward to running those new expansions, a restructured Unitrans into F2025. Thank you very, very much.