Sephaku Holdings Limited · JSE:SEP
Sephaku — Technical Presentation (March 2014)
37 slides from Sephaku's technical presentation, Mar 25, 2014
Slide 1: Delmas Milling Plant Site Visit Presentation
DELMAS MILLING PLANT SITE VISIT PRESENTATION 25 MARCH 2014 25 March 2014 1
Slide 2: 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 industr
Slide 3: Agenda
AGENDA 1. Our strategic intent Overview Lelau Mohuba Neil Crafford Lazarus 2. Our view of the cement industry Industry analysis Pieter Fourie SA market insights Duncan Leith SepCem’s approach SepCem value proposition Pieter Fourie 3. Our brand-new plants Plant technology & efficiencies D
Slide 4: Our Strategic Intent
OUR STRATEGIC INTENT www.sephakuholdings.co.za 25 March 2014 4
Slide 5: The Sephaku Story
THE SEPHAKU STORY EXPLORATION Sephaku commenced business in 2006 as an HDSA-owned, mineral exploration company seeking opportunities brought about by changes in the MPRDA. Limestone and Fluorspar resources were quickly identified and proven as the most viable reserves in Sephaku's portfolio. This re
Slide 6: Execution Time Line – Strategic Refocus
EXECUTION TIME LINE – STRATEGIC REFOCUS • SepHold obtains • Listing on the JSE • Acquisition of first prospecting • 155 805 362 Métier Mixed rights shares issued Concrete enhancing shareholder value Growth 2005 2009 2010 2011 2012 2013 2014 • Unbundling • Production • African Nickel of Incubex of ce
Slide 7: The Sephaku Holdings Structure
THE SEPHAKU HOLDINGS STRUCTURE 100% 36% 64% Aganang Delmas Sephaku Limestone Cement Plant Milling Plant Ash Exploration www.sephakuholdings.co.za 25 March 2014 7
Slide 8: Building and Construction Materials Company
BUILDING AND CONSTRUCTION MATERIALS COMPANY • 100% ownership; acquired in February 2013 for R365 million • Specialist in the manufacture, distribution and marketing of high-value ready mixed concrete • Fleet size, pumping division and advanced production technology enhances efficiency • Ten plants i
Slide 9: Location of Assets
LOCATION OF ASSETS Pretoria Johannesburg Durban Operations Aganang Cement Plant Delmas Milling Plant Sephaku Ash (Kendal) Cape Town Dwaalboom project Métier Mixed Concrete www.sephakuholdings.co.za 25 March 2014 9
Slide 10: Operational Highlights for the Interim Period FY 2014
OPERATIONAL HIGHLIGHTS FOR THE INTERIM PERIOD FY 2014 Initial reporting period of revenue Metier sales constitute 100% of the revenue Positive earnings : group profit Sephaku Cement to contribute profit in CY 2014 Metier concrete sales increased by 35% High value concrete sales contribut
Slide 11: Financial Highlights for the Interim Period FY 2014
FINANCIAL HIGHLIGHTS FOR THE INTERIM PERIOD FY 2014 Operating profit of R33,8 million compared to the operating loss of R10,1 million for 2012 Earnings before interest, taxation, depreciation and amortisation (“EBITDA”) of R40,3 million compared to the loss before interest, taxation, depreciatio
Slide 12: Share Price Performance
SHARE PRICE PERFORMANCE Share ticker: JSE SEP • Share price on an upward trend Sector Construction and Materials › Approximately 40% Outstanding shares 189 872 979 one-year increase in Price @ 24 March 2014 (1300HS) R6.68 share price Market capitalisation as @ 24 March 2014 R1.2 billion • *Recognise
Slide 13: Our View on the Cement Industry
OUR VIEW ON THE CEMENT INDUSTRY www.sephakuholdings.co.za 25 March 2014 13
Slide 14: Macro – Economic Indicators
MACRO – ECONOMIC INDICATORS • GDP growth is relatively less than for the region which is ~6% • Forecasts do not take the government infrastructure programme into account . Indicator 2012 2013 2014 2015 2016 2017 2018 Consumer Price Inflation 5.7 5.9 5.7 5.6 5.5 5.6 5.5 Producer Price Inflation 6.2 6
Slide 15: SA Cement Industry Trends
SA* CEMENT INDUSTRY TRENDS GDP growth forecast 7 at 3,2%¹ in 2014 Rate % Cement sales forecast 6 at 4,8 – 5,0% to GDP: multiplier of 1,5 5 Cement demand growth was at 6% in 4 2013 Growth at 3% per 3 annum 2010 – 2012 Residential plans YOY 2 growth at 14,6% and 19,7% for 1 non-residential p
Slide 16: SA Cement Capacity vs Demand: 2006 – 2020
SA CEMENT CAPACITY vs DEMAND: 2006 – 2020 Capacities are based on 20 Sephaku's entry SepCem research, using Millions and ramp-up the maximum estimated clinker capacity of each 15 producer, combined with the estimated extender ratios to produce finished cement 10 Industry operating at Demand fore
Slide 17: SA Plant Capacity Analysis – 2014
SA PLANT CAPACITY ANALYSIS – 2014 Number of operating Average operating Estimated cement kilns kiln age tonnes per annum (000') Producer A 3 27 3,200 Producer B 3 37 3,900 Producer C 9 38 5,600 Producer D 2 19 1,800 TOTAL 17 37 14,500 Production capacity determined by kiln instead of milling capac
Slide 18: Construction Demand Drivers 1/4
CONSTRUCTION DEMAND DRIVERS 1/4 Public and private sector building and construction Bulk water infrastructure : in 2011 government stated plans to spend R14.2 billion on dams and water distribution systems o Construction of the Polihali Dam on the Senqu river in Lesotho, phase 2 of the LHWP star
Slide 19: Construction Demand Drivers 2/4
CONSTRUCTION DEMAND DRIVERS 2/4 Residential demand in line with improved incomes Entry-level housing market with a shortfall of c2.1 million houses* Resultant 50% increase in demand for related infrastructure Backlog in infrastructural projects coupled with the government’s NDP 18 defined st
Slide 20: Construction Demand Drivers 3/4
CONSTRUCTION DEMAND DRIVERS 3/4 SIP 4: Unlocking the economic opportunities in North West Province o Acceleration of identified investments in roads, rail, bulk water and water treatment and transmission infrastructure SIP 6 : Integrated Municipal Infrastructure Project Development o To address
Slide 21: Construction Demand Drivers 4/4
CONSTRUCTION DEMAND DRIVERS 4/4 Building plans trends¹ Building plans completed increased by 20.1 % for non-residential , 12.2% for residential and 20 % for additions & alterations Passed plans have steadily increased by an average of 30.9 % for non-residential , 15.9% for residential and 8.3
Slide 22: SA Cement Market Overview
SA CEMENT MARKET OVERVIEW www.sephakuholdings.co.za 25 March 2014 22
Slide 23: Industry Cement Sales and Forecast
INDUSTRY CEMENT SALES AND FORECAST 2002 - 2020 20 000 000 18 000 000 16 000 000 Cement tons 14 000 000 actual sales 12 000 000 10 000 000 Cement tons 8 000 000 forecasted Entry of SepCem capacity. 6 000 000 4 000 000 2 000 000 - Projected trend indicates a growth of 100% in cement sales volumes in
Slide 24: Customer Channels: Relative Demand
CUSTOMER CHANNELS : RELATIVE DEMAND 50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Readymix Precast Resellers Blenders Civil Building Other Mining Producers (C.P.M.) % per channel 48.2% 18.3% 14.7% 5.8% 5.4% 4.4% 1.8% 1.5% Resellers are the largest volume customer category Key d
Slide 25: SepCem's Approach to the Market
SEPCEM’S APPROACH TO THE MARKET Target to attain 20 - 25% of the inland market share Resultant national market share of 13 - 17% To produce three cement strengths : 32.5R , 42.5R and 52.5N Essentially 32.5 R and 42.5 R will be produced for the bag market Bulk market to be supplied with the
Slide 26: Sephaku Cement's Value Proposition
SEPHAKU CEMENT’S VALUE PROPOSITION www.sephakuholdings.co.za 25 March 2014 26
Slide 27: Competitive Edge to Industry Average
COMPETITIVE EDGE TO INDUSTRY AVERAGE Energy utilisation efficiency: 95 kWh per tonne as compared to 145 kWh per tonne Consistent cement quality: single 6 000tpd kiln for clinker Logistical advantage: proximity of Delmas to extender source, coal supply and the market Delmas plant – December 201
Slide 28: Logistics Overview
LOGISTICS OVERVIEW SepCem owned extender source ,Sephaku Ash, located 34km from Delmas Extender constitutes 40% content of the 32.5R cement targeted for the bag market Five major contractors have been selected as main transporters Three of the contractors transporting the bulk consignments f
Slide 29: Complementary Operations Overview
COMPLEMENTARY OPERATIONS OVERVIEW North West limestone mine Situated right next to the Aganang plant with an expected life of mine at 30 years Limestone to be mined opencast at a rate of 1.64 million tonnes for 1.0 million tonnes of clinker Extensive quality control will be done on drilling
Slide 30: Our Brand New Plants
OUR BRAND NEW PLANTS www.sephakuholdings.co.za 25 March 2014 30
Slide 31: Integrated Cement Plant Configuration
INTEGRATED CEMENT PLANT CONFIGURATION www.sephakuholdings.co.za 25 March 2014 31
Slide 32: Delmas Cement Plant Configuration
DELMAS CEMENT PLANT CONFIGURATION www.sephakuholdings.co.za 25 March 2014 32
Slide 33: Unique Features of Our Plants 1/2
UNIQUE FEATURES OF OUR PLANTS 1 / 2 Latest generation primary impact-crusher Supplier : Hazemag – Germany Latest limestone roller-screening technology for beneficiation Supplier : Wobbler/Hazemag – Germany Latest pyro-processing technology :air-separate pre-calciner kiln with 5-stage prehe
Slide 34: Unique Features of Our Plants 2/2
UNIQUE FEATURES OF OUR PLANTS 2 / 2 Best-in-class vertical roller milling across the board for raw milling, coal grinding and cement milling Supplier : Loesche – Germany Main process fans all from European supply Supplier : Vente-Oelde – Germany Rotary packer / palletisers Supplier : FLS
Slide 35: Conclusion
CONCLUSION www.sephakuholdings.co.za 25 March 2014 35
Slide 36: Sephold Investment Case
SEPHOLD INVESTMENT CASE Key management ~ 250 years combined experience in cement manufacturing and technology Technologically advanced plants Profitable concrete asset providing solid earnings and cash flow Focused strategy on the lucrative cement manufacturing sector Potential share price
Slide 37: Contact
CONTACT Sakhile Ndlovu Investor Relations Officer Tel : + 27 12 622 9400 Email : Sakhile@sepman.co.za 25 March 2014 37
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