Salungano Group Limited · JSE:SLG
Salungano — Wescoal Holdings — FY2016 Earnings Presentation
30 slides from Salungano's earnings presentation, June 2016
Slide 1: Annual Results Presentation for the Year Ended 31 March 2016
ANNUAL RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2016 JUNE 2016
Slide 2: Important Notice
IMPORTANT NOTICE This document has been prepared by Wescoal Holdings Limited (the “Company”). For the purposes of this notice, the presentation that follows (the “Presentation”) shall mean and include the slides that follow, the oral presentation of the slides by the Company, any question-and-answer
Slide 3: Contents
CONTENTS ● STRATEGIC UPDATE & PRIORITIES ● FINANCIAL PERFORMANCE ● OPERATIONAL PERFORMANCE ● RISKS & MITIGATION ● LOOKING AHEAD ● INVESTMENT CASE & PROSPECTS 3|
Slide 4: Strategic Update & Priorities
STRATEGIC UPDATE & PRIORITIES OUR OBJECTIVE • Sustainable coal mining business which delivers value to stakeholders throughout the business cycle › We do this in the context of our natural environment, social and political environment, and the economy WHAT HAVE WE ACHIEVED IN FY16 • Operationalised
Slide 5: Strategic Update & Priorities | Continued
STRATEGIC UPDATE & PRIORITIES | CONTINUED GOING FORWARD • Continue to deliver solid, predictable operational and financial performance • Continue re-alignment of trading business in line with Wescoal’s needs • Operationalise Intibane and Khanyisa • Develop and implement a structured, detailed busine
Slide 6: Executive Management
EXECUTIVE MANAGEMENT Waheed Sulaiman Bothwell Mazarura Vikesh Dhanooklal Bongani Hlope Thivha Tshithavhane Chief Executive Chief Financial Group Legal Adviser Head: Group Business Development Officer Officer & Company Secretary Human Resources & Projects 6|
Slide 7: Operational Management
OPERATIONAL MANAGEMENT Dutch Botes Bonani Siko Izak van der Walt Ettienne Strydom Mike Berry Jaap Kruger Head of General Manager Ops. Financial Manager Projects Manager Head of Manager Wescoal Mining Wescoal Mining Operations Wescoal Mining Wescoal Trading Processing Plant (37 years experience) (17
Slide 8: Financial Highlights
FINANCIAL HIGHLIGHTS 2016 2015 HEPS ▲ by 76% 26.2 cps 15.2 cps EPS ▲ by 67% 27.1 cps 15.7 cps Turnover R1 590m R1 705m Gross profit ▲ R251.7m R219.6m Operating profit ▲ R100.9m R46.2m Operational EBITDA ▲ 42% R152.1m R107.0m Total comprehensive income R51.8m R29.0m Wescoal’s Board has agreed to dist
Slide 9: Statement of Comprehensive Income
STATEMENT OF COMPREHENSIVE INCOME Reviewed Audited March 2016 March 2015 R000 R000 % Change Revenue 1 589 870 1 674 372 -5.0 Gross profit 251 720 219 644 14.6 Gross profit margin 15.8% 13.1% 2.7 Operational EBITDA 152 107 107 042 45.1 Interest 20 920 9 154 11.8 Taxation 28 239 8 129 20.1 Total compr
Slide 10: Segmental Report
SEGMENTAL REPORT Trading Mining Other Total Statement of comprehensive income R000 R000 R000 R000 31 March 2016 Total segment revenue 988 183 627 185 1 710 1 617 078 Inter-segment revenue 0 (26 033) (1 174) (27 207) External revenues 988 183 601 152 536 1 589 871 Operational EBITDA 31 904 124 685 (4
Slide 11: Headline Earnings Per Share
HEADLINE EARNINGS PER SHARE HEPS FOR THE FULL YEAR cps 30 27.1 25 20 15.2 15.4 15 12.2 11.4 10 5 0 2012 2013 2014 2015 2016 11 |
Slide 12: Revenue and Operating Profit 5 Year Track Record
REVENUE AND OPERATING PROFIT 5 YEAR TRACK RECORD REVENUE OPERATING PROFIT Rm Rm 2 000 120 1 674.4 100.9 1 589.9 100 1 500 80 1 147.4 1 000 60 45.2 45.5 676.9 630.8 40 500 26.0 27.2 20 0 0 2012 2013 2014 2015 2016 Revenue Operating profit * Prior years 2012 to 2014 Eskom sales not available 12 |
Slide 13: Statement of Financial Position
STATEMENT OF FINANCIAL POSITION Reviewed Audited March 2016 March 2015 NOTES: R000 R000 • Invested R170m during the year on Non-current assets 631 120 474 673 capital and development Property, plant and equipment 496 350 324 740 • Reduction of Inventory contributed to Investment property 709 709 int
Slide 14: Statement of Financial Position
STATEMENT OF FINANCIAL POSITION Reviewed Audited March 2016 March 2015 • Restructure initiatives enabled reducing R000 R000 loan funding during second half of the Total shareholders’ funds (385 061) (279 821) year: Non-current liabilities (86 932) (97 137) › R52m additional share capital was raised
Slide 15: Strong Cash Flow Generation Maintained
STRONG CASH FLOW GENERATION MAINTAINED R000 250 000 239 589 PERFORMANCE • Free cash utilised to increase mining 200 000 asset base 150 000 100 000 94 905 47 134 50 000 38 492 12 533 0 2012 2013 2014 2015 2016 15 |
Slide 16: Operational Review and Segmental Disclosure
OPERATIONAL REVIEW AND SEGMENTAL DISCLOSURE
Slide 17: Operating Structure
OPERATING STRUCTURE HOLDINGS LIMITED WESCOAL MINING (PTY) LTD WESCOAL TRADING (PTY) LTD First mining activity started in 2009 First trading activity started in 2005 Mining operations: Trading operations: Khanyisa Colliery, Intibane Colliery, Elandspruit Colliery inland region, coastal region Process
Slide 18: Segmental Contributions (as at 31 March 2016)
SEGMENTAL CONTRIBUTIONS (AS AT 31 MARCH 2016) REVENUE OPERATIONAL EBITDA 21% 39% Mining Trading 61% 79% 18 |
Slide 19: Mining Division
MINING DIVISION MINING DIVISION REVENUE MINING DIVISION RECORDABLE INJURIES 5 YEAR TRACK RECORD 5 YEAR EBIT TRACK RECORD VS INDUSTRY RECORD 700 100 300 627 91 275 90 86 263 596 600 556 250 80 500 207 70 200 60 400 318 50 46 150 300 40 34 100 200 30 56 20 100 50 10 2 2 1 0 0 0 0 2013 2014 2015 2016 2
Slide 20: Mining Division Update | Bucked the 2015 Trend
MINING DIVISION UPDATE | BUCKED THE 2015 TREND ELANDSPRUIT COLLIERY • Contains 5 mineable coal seams, which extend to a maximum depth of 70m below surface, are near horizontal in formation and devoid of geological complexities • Seams are mined selectively to ensure optimal product recovery during b
Slide 21: Mining Division Update | Cost Management Remains a Focus
MINING DIVISION UPDATE | COST MANAGEMENT REMAINS A FOCUS INTIBANE COLLIERY • The Intibane Colliery was issued a water use license in late December 2015 • Ramp up in site activity, increasing production to its steady state target of +50kt per month ROM • Intibane produces coal which is suitable for t
Slide 22: Trading Division Update
TRADING DIVISION UPDATE CREATES OPERATIONAL FLEXIBILITY WITH THE MINING DIVISION • Exceeded expectations in a difficult business environment with strong performance • The division’s national footprint • Operating EBITDA was R31.9m, maintaining FY15 performance continues to be a key differentiator an
Slide 23: Risks and Mitigations
RISKS AND MITIGATIONS Risk Response Update 1 HDSA ownership • Process to achieve HSDA control by December 2016 • HDSA ownership increased to over 40% of Wescoal advanced • Potential implementation of ESOP as part of overall plan to increase HDSA ownership 2 Wescoal funding • Raised R52m of Share Cap
Slide 24: Looking Ahead
LOOKING AHEAD • Wescoal will transform into a majority-black-owned business supplying Eskom and other customers cost effectively • The challenging environment presents opportunities for corporate activity › Consolidation in the coal sector is likely and Wescoal sees itself as an active participant t
Slide 25: WSL vs Mining Index | Relative Performance
WSL VS MINING INDEX | RELATIVE PERFORMANCE 25 |
Slide 26: WSL vs Domestic Junior Coal Peers
WSL VS DOMESTIC JUNIOR COAL PEERS * Peers have been normalised 26 |
Slide 27: Investment Case
INVESTMENT CASE • Multi-pronged Eskom strategy to secure long term revenue base • Diversifying revenue streams; e.g. increasing coal exports • Advancing HDSA ownership in 2016 • Organic and inorganic opportunities in the SA coal sector • Strong focus on cost and cash management • Leadership team foc
Slide 28: Conclusion
CONCLUSION “The outstanding financial and operational achievements speak for themselves Most importantly they say to the market: ‘Wescoal is well positioned for sustainable growth off a robust platform’ and to shareholders: ‘the confidence you have placed in the transformation process and the team i
Slide 29: Questions?
QUESTIONS? LEADING THE WAY THROUGH SUSTAINABLE MINING AND DYNAMIC THINKING
Slide 30: Coal, South African Export Price | ZAR & USD
COAL, SOUTH AFRICAN EXPORT PRICE | ZAR & USD 30 |