Sephaku Holdings Limited · JSE:SEP
Sephaku — FY2016 Earnings Presentation
23 slides from Sephaku's earnings presentation, June 2016
Slide 1: Provisional Financial Results Presentation for the Year Ended 31 March 2016
BUILDING BLOCKS FOR GROWTH PROVISIONAL FINANCIAL RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2016
Slide 2: Agenda
Agenda 1. OPERATIONAL PERFORMANCE OVERVIEW – Dr Lelau Mohuba • Dangote Cement SA (Pty) Ltd (CEMENT) • Métier Mixed Concrete (Métier) 2. FINANCIAL PERFORMANCE OVERVIEW – Neil Crafford-Lazarus • Statement of comprehensive income • Statement of financial position • Statement of cash flows 3. OUTLOOK –
Slide 3: Operational Performance Overview
1 OPERATIONAL 2 PERFORMANCE OVERVIEW 3
Slide 4: CEMENT achieves R2,3 billion revenue
OPERATIONAL CEMENT achieves R2,3 billion revenue PERFORMANCE OVERVIEW ● CEMENT reached annualised steady state capacity utilisation of 80% in May 2015 • Aganang plant operated uninterrupted since April 2015 and is at 70% utilisation • Delmas grinding plant is operating at 90% utilisation ● Sales vol
Slide 5: CEMENT optimisation programme
OPERATIONAL CEMENT optimisation programme PERFORMANCE OVERVIEW ● To date the improvement results include: • An increase in production capacity to 2,8 million tonnes per annum as a result of optimising raw materials composition • Further improvements expected during the second half of CY2016 ● The pr
Slide 6: Industry analysis
OPERATIONAL Industry analysis PERFORMANCE OVERVIEW ● RSA cement demand market at 13,8 million tonnes per annum (mtpa) with potential for growth • 3,2% year-on-year cement demand growth including imports in calendar year 2015¹ ● Market progressively skewed towards bagged cement with high demand in th
Slide 7: Imports
OPERATIONAL Imports PERFORMANCE OVERVIEW Annual imports by origin ● Volume decline of 37% 1400 for the 12-month period ended December 2015 1200 to 820 ktpa 1000 ● Reduction mainly due to the provisional tariffs 800 imposed on the dumped cement from Pakistan 600 ● Re-introduction of 400 imported ceme
Slide 8: Imports
OPERATIONAL Imports PERFORMANCE OVERVIEW Monthly imports by origin – January 2015 to April 2016 ● Final ITAC tariffs 180 approved in 160 December 2015: • ±91 000 tonnes 140 imported in 120 Q1 CY2016 – a decline of 70% from 100 295 000 tonnes 80 imported in Q1 CY2015 60 • ±98% imported from 40 China
Slide 9: CEMENT's market positioning
OPERATIONAL CEMENT’s market positioning PERFORMANCE OVERVIEW ● Well positioned in the rural bag market approximately 65% of the sales volumes ● Established and solid strategic relationships with the distribution channels ● Significant share of the Gauteng bulk market through the Métier relationship
Slide 10: Métier increases revenue by 13%
OPERATIONAL Métier increases revenue by 13% PERFORMANCE OVERVIEW ● Recorded 13% revenue increase to R874 million • Growth in sales mainly due to the 11th plant output and the pumping services division • Métier started the year with a strong order book and positive signals from the increase in the nu
Slide 11: Financial Performance Overview
1 2 FINANCIAL 3 PERFORMANCE OVERVIEW
Slide 12: Salient points for the period
FINANCIAL Salient points for the period PERFORMANCE OVERVIEW ● Group increases in earnings • Operating profit increased by 42,1% from R59,3 million to R84,2 million • Basic earnings per share increased by 22,8% from 24,43 cents to 30 cents • Headline earnings per share increased by 22,1% from 24,43
Slide 13: Statement of comprehensive Income (R'000)
FINANCIAL Statement of comprehensive Income (R’000) PERFORMANCE OVERVIEW Group Focus on earnings growth and quality 874 253 Métier Revenue 775 425 ● Cost of sales increased from 56% (523 460) (R434,4 million) to 60% (R523,5 million) Cost of sales (434 431) ● Slight improvement in expenses from 350 7
Slide 14: CEMENT – a year of two halves
FINANCIAL CEMENT¹ – a year of two halves PERFORMANCE OVERVIEW ● First half associate reached steady state utilisation rate of 80% • Focus on earnings growth and achieving steady rate ● Second half introduced the optimisation programme and a focus on earnings quality ● Cost of sales improved from 79,
Slide 15: Statement of financial position (R'000)
FINANCIAL Statement of financial position (R’000) PERFORMANCE OVERVIEW Group ● Net asset value 999 867 increased by 7,4% for Non-current assets 1 015 419 the comparative period 1 035 526 234 522 from 419,79 cents Current assets 204 070 to 450,99 cents 227 435 1 234 389 Total assets 1 219 489 ● 8,7%
Slide 16: Statement of cash flows (R'000)
FINANCIAL Statement of cash flows (R’000) PERFORMANCE OVERVIEW Group ● Net operating cash flow increased 100 000 91 231 by 10,6% to R78,5 million 78 471 (2015: R70,9 million) due to 80 000 70 914 70 925 70 914 increased earnings 60 000 ● Higher (31%) investing cash outflow year on year mainly due to
Slide 17: CEMENT's 18 month pricing profile
FINANCIAL CEMENT’s 18 month pricing profile based to 100 PERFORMANCE OVERVIEW CEMENT’s average weighted bag sales (based) prices ● Year-on-year pricing 110 largely flat in most markets except for the highly 105 contested Gauteng market that had a 5% decline 100 ● Regional effective pricing currently
Slide 18: Management of CEMENT's debt covenants
FINANCIAL Management of CEMENT’s debt covenants PERFORMANCE OVERVIEW ● Pricing competition and inability to increase pricing has resulted in pressure on the CEMENT debt covenants ● Shareholders (Dangote Cement PLC & SepHold) agreed to inject R130 million to relieve the pressure ● SepHold’s commitmen
Slide 19: Outlook
“fl iG OUTLOOK
Slide 20: Medium term focus
Medium term focus OUTLOOK SepHold ● Continue to evaluate growth opportunities through • Expansion of current operations • Complementing current operations with backward integrated acquisitions • Exploring downstream opportunities CEMENT ● Pursue the optimisation programme in all focus areas • Increa
Slide 21: Questions?
THANK YOU FOR PARTICIPATING QUESTIONS?
Slide 22: Disclaimer
Disclaimer This presentation includes certain forward-looking information. All statements other than statements of historical fact are, or may be deemed to be, forward- looking statements, including, without limitation, those concerning: Sephaku Holdings’ strategy; the economic outlook for the indus
Slide 23: Investor relations contact
2016 Sakhile Ndlovu Investor relations officer Tel: + 27 12 612 0210 Email: sakhile@sepman.co.za Website: www.sephakuholdings.com