Valterra Platinum Limited · JSE:VAL
Valterra Platinum — H1 2015 Earnings Presentation
37 slides from Valterra Platinum's earnings presentation, Jul 20, 2015
Slide 1: 2015 Interim Results Presentation
2015 INTERIM RESULTS PRESENTATION MANAGING THE BUSINESS FOR THE CURRENT ENVIRONMENT 20 July 2015
Slide 2: Cautionary Statement
CAUTIONARY STATEMENT Disclaimer: This presentation has been prepared by Anglo American Platinum Limited (“Anglo American Platinum”) and comprises the written materials/slides for a presentation concerning Anglo American Platinum. By attending this presentation and/or reviewing the slides you agree t
Slide 3: Agenda
AGENDA • Overview of H1 2015 • Safety • Operational Performance • Market Review • Financial Performance • Portfolio Restructuring / Strategy Update • Outlook • Key Messages • Q&A 3
Slide 4: Overview of H1 2015
OVERVIEW OF H1 2015 Chris Griffith, CEO
Slide 5: Overview of H1 2015
OVERVIEW OF H1 2015 Managing the business for the current low-price environment • Safety performance a priority Group refined platinum sales (Pt Moz) • Operational performance turnaround 1.38 1.20 1.25 1.07 • Financial results impacted by price and inflation – but mitigated by FX, cost 1.23 0.97 1.0
Slide 6: Safety, Health & Environment
SAFETY, HEALTH & ENVIRONMENT Chris Griffith, CEO An operator closing the main shaft ore pass tip cover (a safety device to ensure persons cannot fall into the ore pass)
Slide 7: Safety, Health & Environment
SAFETY, HEALTH & ENVIRONMENT Zero harm remains the focus SAFETY Fatalities • Progress on safety strategy 7 • Tragically 2 fatalities during H1 2015 • LTIFR of 1.04 – improvement measures in 18 place 1 6 5 HEALTH 2 1 2 1 2007 2012 2013 2014 H1 2015 • TB awareness programmes rolled-out; Fatalities - H
Slide 8: Operational Review
OPERATIONAL REVIEW Chris Griffith, CEO
Slide 9: Operations Performance in H1 2015
OPERATIONS PERFORMANCE IN H1 2015 Material progress at all operations • Total equivalent refined production up Mines equivalent refined production (Pt koz) 55% • Mogalakwena record performance – up 51 1 9% to 201 koz 177 • Implementing Rustenburg and Union 148 1,108 optimised mine plans 16 – Union d
Slide 10: Mogalakwena
MOGALAKWENA Optimising the performance of the mine with limited capital Production (Pt koz) • Will deliver 360 koz – 1 year ahead of plan 380 - 400 370 380 • Mine plan optimisation has reduced waste 336 22 20 stripping over next 10 years 300 16 • Now targeting 380 - 400 koz through further 348 360 o
Slide 11: Amandelbult
AMANDELBULT Making Amandelbult investable again Production (Pt koz) & Labour (headcount) • Implementing optimised mine plan to make Production Labour Amandelbult investable again 16,300 525 • Optimised plan aims to: 410 460 355 – Stabilise production first by increasing mineable face length, and red
Slide 12: Rustenburg
RUSTENBURG Restructuring complete: Now implementing optimisation plan Production (Pt koz) & Labour (headcount) • Restructuring completed in 2013 Production Labour consolidated 5 to 3 mines 700 24,000 50 • Reduced baseload production from 700 koz 562 to 500 koz - removed unprofitable production 59 48
Slide 13: Union
UNION Restructuring complete: Now implementing optimisation plan Production (Pt koz) & Labour (headcount) • Combined Union from 2 to 1 mine in 2013 Production Labour 260 8,000 • Reduced baseload production from 260 koz to 200 koz – removing unprofitable 200 178 production: 140 6,800 – Closure of Nor
Slide 14: Refined Production & Sales Volume in H1 2015
REFINED PRODUCTION & SALES VOLUME IN H1 2015 Refined production and sales normalised PLATINUM Group refined platinum production (Pt Moz) • Platinum production up 29% • Platinum sales up 11% 1.36 1.35 1.36 1.03 PALLADIUM & RHODIUM 1.17 1.03 1.02 1.10 0.86 • Palladium production up 33% • Rhodium produ
Slide 15: Financial Performance
FINANCIAL PERFORMANCE Ian Botha, Finance Director
Slide 16: H1 2015 Results
H1 2015 RESULTS Improved operational performance supporting financial results Earnings per share (Rand/share) Key Financials Rbn H1 2015 H1 2014 9.46 6.00 Revenue 29.9 27.8 EBITDA 6.2 2.6 Stock adjustment EBIT 3.8 0.4 5.14 5.14 Effective Tax Rate 21.9% 1.6% Headline Earnings 2.5 0.2 2.41 3.46 Projec
Slide 17: H1 2015 EBIT Variance
H1 2015 EBIT VARIANCE EBIT supported by improved operational performance and stock count adjustment 3,797 2,175 228 200 1,622 209 1,708 353 766 398 -303 2,620 2,730 1H 2014 Price (1) FX Inflation(2) Volume (3) 2014 Cash Restruc- Depr 1H 2015 Stock 1H 2015 Strike costs(5) turing before count impact (
Slide 18: Unit Cost
UNIT COST Management intervention reducing unit cost escalation below mining inflation Cost Inflation in H1 2015 Variance analysis (R/Pt oz) 11.2% +4.8% 19,386 801 1,196 7.7% Input cost (1,105) inflation: 6.7% (H1 2014: 7.1%) 18,494 SA CPI = 4.3% (H1 2014: 6.2%) 2.2% Electricity Labour Diesel 2014 I
Slide 19: Capital Expenditure
CAPITAL EXPENDITURE Disciplined capital allocation aligned to our strategy Capital Expenditure (Rbn) Project Capital Expenditure (Rm) R million 1H 2015 1H 2014 2.2 Amandelbult 239 122 0.7 1.6 Modikwa 101 99 Other 266 515 0.6 Total 606 736 1.5 1.0 Guidance (Rbn) 2015 2016 1H 2014 1H 2015 SIB Project
Slide 20: Net Debt Profile
NET DEBT PROFILE All mine complexes are cash positive Net debt (Rbn) Net debt profile (Rbn) 14.6 Opening net debt – 1 Jan 2015 14.6 12.9 11.5 Cash flow from operations (6.4) Capex and waste stripping 2.2 Net interest 0.6 2013 2014 H1 2015 Cash tax paid 0.4 Liquidity Headroom (Rbn) Other 0.4 10.9 (2.
Slide 21: Market Review
MARKET REVIEW Chris Griffith, CEO
Slide 22: Platinum Market
PLATINUM MARKET Market fundamentals remain challenging with downside risk potential Global light duty vehicle sales (H1 15 vs H1 14) • An increase in autocatalysis demand 8% with vehicle sales up 8% in Europe 4% 3% 1% • Indications are that China had a difficult first half (5)% – Shanghai Gold Excha
Slide 23: Market Prices
MARKET PRICES Fundamentals outweighed by global macro-economic environment Decline in US$ Platinum price in H1 2015 (US $/oz) LOWER US DOLLAR PRICES • US Dollar platinum price fell 10% in H1 1,300 (7)% y-o-y 0% YTD 1,250 H1 2015: $1,198/oz 2015 1,200 • US Dollar strength and the macro- 1,150 economi
Slide 24: Palladium and Rhodium Market
PALLADIUM AND RHODIUM MARKET H1 China & emerging market vehicle sales impact sentiment Palladium price stable in Q1 before decline PALLADIUM MARKET 850 +1% y-o-y • Slow down in auto sales growth in China US Dollar per ounce H1 2015 : $779/oz 800 & drop off in gasoline-based emerging markets has had
Slide 25: Strategy Update
STRATEGY UPDATE Chris Griffith, CEO
Slide 26: Repositioning the Portfolio
REPOSITIONING THE PORTFOLIO Repositioning the portfolio for long term value Operational improvement, Debottleneck, Mogalakwena Potential for future expansion 1 High quality asset portfolio Investment in replacement ounces. Potential Amandelbult to expand Twickenham Mechanise & Establish ideal scale
Slide 27: Disciplined Capital Allocation
DISCIPLINED CAPITAL ALLOCATION Reposition portfolio for long term value…but managing the business for current environment Increase efficiencies at Mogalakwena - Optimise efficiencies with limited capital spend - Debottlenecking +60koz - delay decision until 2016 Project / Asset Prioritisation Make A
Slide 28: Managing for the Current Environment
MANAGING FOR THE CURRENT ENVIRONMENT Reduce overhead to align to rightsized operation REPOSITIONING OF PORTFOLIO Overhead headcount reductions UNDERWAY • Pursuing Rustenburg and Union divestment 4274 (1,110) • Assessing exit options for Pandora and 3,863 3,098 (400) Bokoni 1,988 1,588 RIGHTSIZING TH
Slide 29: Outlook
AngloAmerican PLATINUM OUTLOOK Chris Griffith, CEO
Slide 30: 2015 Outlook
2015 OUTLOOK Operational turnaround and self help key in tough market environment • Challenging macro economic environment likely to continue to weigh down on market fundamentals • Refined production and sales expected to be higher in 2H 2015 in line with normal seasonal production – guidance mainta
Slide 31: Key Messages
KEY MESSAGES Chris Griffith, CEO
Slide 32: Key Messages
KEY MESSAGES Managing the business for the current low-price environment • Safety performance our priority • Challenging macro-economic environment - managing the business for current prices • Operational performance momentum • Financial position of the company much improved – All mine complexes wer
Slide 33: Thank You
THANK YOU
Slide 34: Appendices
APPENDICES
Slide 35: Cash Flow
CASH FLOW Positive cash generations from operations 4,882 (10,836) (12,913) (14,618) (1,563) (1,066) (606) (297) (108) (1,100) 6,445 Net debt Once-off Cash from SIB Net debt Tax & Projects JV & Other H1 Net debt 2014 Dec payment operations after free interest associates 2014 June 2015 cash flow Oper
Slide 36: Cost of Sales
COST OF SALES Rm H1 2015 H1 2014 % H2 2014 Change On-mine 16,347 12,336 33% 16,693 Purchase of metals 5,110 5,953 (14)% 6,458 Processing 3,223 2,819 14% 3,201 Smelting 1,586 1,406 13% 1,645 Treatment and 1,637 1,413 16% 1,556 refining Movement in inventories (438) 4,713 (109)% (2,010) Other costs 1,
Slide 37: Increased Stability Across Operations
INCREASED STABILITY ACROSS OPERATIONS Mogalakwena Amandelbult Rustenburg Union 37