Salungano Group Limited · JSE:SLG
Salungano — Wescoal Holdings — H1 FY2021 Earnings Presentation
31 slides from Salungano's earnings presentation, Dec 4, 2020
Slide 1: Results Presentation for the Six Months Ended 30 September 2020
RESULTS PRESENTATION FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2020 4 DECEMBER 2020 LAYING THE FOUNDATION TO GROW SUSTAINABLY
Slide 2: Disclaimer and Presentation Outline
DISCLAIMER PRESENTATION OUTLINE This presentation is published solely for informational purposes and does not constitute investment, legal, tax or other advice nor is Ref Title Presenter Slide it to be relied upon in making an investment decision. Information contained herein has been taken from sou
Slide 3: Overview
OVERVIEW Reginald Demana Group Chief Executive
Slide 4: Operational and Financial Overview
OPERATIONAL AND FINANCIAL OVERVIEW COAL MINED COAL SALES REVENUE 4.4Mt 4.2Mt R2 089 million (HY20: 2.7Mt) (HY20: 3.1Mt) (HY20: R2 063 million) EBITDA* NET PROFIT EPS R315 million R11 million 2.62 cents (HY20: R155 million) (HY20: R51 million loss) (HY20: 11.80 cents loss) Highlights Ongo
Slide 5: Market Update
MARKET UPDATE COVID-19 IMPACT AND COAL DEMAND • Workplace measures remain strictly adhered to RESPONSE TO COVID-19 • A policy to work from home and the office has been adopted for all corporate staff • 100% recovery rate and no work stoppages linked to COVID-19 • Force majeure notice withdrawn in Au
Slide 6: FY21 Strategy Update
FY21 STRATEGY UPDATE • 100% recovery rate, and no work stoppages linked to COVID-19 across • Navigate through COVID-19 all operations STABILITY • Roll-out of new operating model in Mining • On-boarding of new single mining contractor at VGF progressing well • Trading business review completed and re
Slide 7: Mining Segment
MINING SEGMENT Thivha Tshithavhane Mining Chief Executive
Slide 8: Health and Safety
HEALTH AND SAFETY Lost Time Injury (LTI) Performance Total Recordable Injury Frequency Rate (TRIFR) Performance 2 2 1.85 1.82 1.11 0.92 0.99 1.0 0.86 1 1 1.1 0.46 0.75 0.37 0.38 0.00 0.18 0.43 0.38 0 0 0.00 0.00 Apr 20 May 20 Jun 20 Jul 20 Aug 20 Sep 20 Apr 20 May 20 Jun 20 Jul 20 Aug 20 Sep 20 LTI
Slide 9: Mining Segment ROM and Sales Performance
MINING SEGMENT ROM AND SALES PERFORMANCE ROM Production (Kt) Mining Sales (Kt) (148) (78) HY20 Vanggatfontein Elandspruit Khanyisa HY21 HY20 Vanggatfontein Elandspruit Khanyisa *Moabsvelden HY21 *Includes own and third-party sales 9
Slide 10: Vanggatfontein Performance Update
VANGGATFONTEIN PERFORMANCE UPDATE SOLID ROM PRODUCTION FOR MOST OF HY21 32 1 021 22Mt 6 years HY21: 2.3Mt HY21: 1 5Mt HY21: 0.58 LTIFR permanent contractors reserves LoM coal mined sales volume safety Monthly ROM (Kt) Monthly Sales (Kt) 497 419 267 377 386 367 141 244 247 240 234 219 57 91 75 54 280
Slide 11: Elandspruit Performance Update
ELANDSPRUIT PERFORMANCE UPDATE SOLID ROM PRODUCTION FOR HY21 27 425 13Mt 4 years HY21: 1.6Mt HY21: 1 1Mt HY21: 0.34 LTIFR permanent contractors reserves LoM coal mined sales volume safety Monthly ROM (Kt) Monthly Sales (Kt) 265 256 256 264 258 260 253 222 230 191 207 188 192 177 185 178 133 135 159
Slide 12: Khanyisa Performance Update
KHANYISA PERFORMANCE UPDATE ROM PRODUCTION IMPACTED BY STOPPAGES 29 493 2Mt 2.5 years HY21: 0.5Mt HY21: 0.5Mt HY21: 0.64 LTIFR permanent contractors reserves LoM coal mined sales volume safety Monthly ROM (Kt) Monthly Sales (Kt) 134 128 138 122 120 120 121 116 117 126 108 111 103 91 100 97 93 92 100
Slide 13: Significant Increase in Inventory
SIGNIFICANT INCREASE IN INVENTORY Inventory (Mt) 1,400 1,200 Khanyisa Saleable 1,000 Elandspruit Saleable 800 Vanggatfontein Saleable 600 Khanyisa ROM 400 Elandspruit ROM 200 Vanggatfontein ROM - March April May June July August September 13
Slide 14: Moabsvelden
MOABSVELDEN PROJECT STATUS PROGRESS UPDATE • Project commenced in June 2020 • Projects completed / nearing completion: • Box cut development in progress Internal fencing – 96% complete • Slow ramp-up approach being followed External fencing – 93% complete • Rescheduling of capital expenditure un
Slide 15: Arnot
ARNOT EQUITY FY21F CAPEX FIRST COAL 50% R70-R80 H1’21 million • LOM optimisation yielding value-accretive results • Low capital intensity approach being adopted • Well-positioned to supply Eskom Arnot power station primarily via conveyor belt • Rehabilitation cost settlement discussions with Eskom a
Slide 16: Trading Segment
TRADING SEGMENT Reginald Demana Group Chief Executive
Slide 17: Trading Overview
OVERVIEW Sales (Kt) Sales (Rm) 350 358 271 259 246 230 137 104 Q1 Q2 Q1 Q2 HY20 HY21 HY20 HY21 • No reportable HSEC incidents • Major customer increased demand in winter months but at lower • Significant reduction in sales to a major customer in Q1 margins • Performance severely affected by COVID-19
Slide 18: Financials
FINANCIALS Jubilant Speckman Acting Chief Financial Officer
Slide 19: Salient Features
SALIENT FEATURES REVENUE GROSS PROFIT EBITDA R2 089 million R252 million R315 million (HY20: R2 063 million) (HY20: R195 million) (HY20: R155 million) CAPEX* NET DEBT GEARING R251 million R1 060 million 54% (FY20: R433 million) (FY20: R1 240 million) (FY20: 58%) * Capital Expenditure 19 19
Slide 20: Revenue and Operating Profit
REVENUE AND OPERATING PROFIT MAINTAINED SALES REVENUE Half-year (Rm) Revenue Diversity HY21 2 063 2 089 600 2100 500 27% 400 73% 300 200 Eskom 102 Other 100 HY20 15 0 (100) HY20 HY21 57% 43% Revenue Operating profits 20
Slide 21: Group EBITDA Trend
GROUP EBITDA TREND EBITDA (Rm) 103% 315 301 • Strongest 6-month performance in past five years 274 264 • Exceptional performance due to good sales volumes despite COVID-19 demand challenges; Solid ROM production – 177 lower reduced unit cost 155 155 139 • Realised cost saving in operating costs an
Slide 22: NPAT Variance
NPAT VARIANCE NPAT (Rm) (26) (51) 1. 2. 3. 4. 5. HY20 Mining Trading Moabsvelden Net operating Other HY21 Once off items Half year buy-ins Half year unit cost & costs Transport margin 1. Mining unit cost & transport margin • Lower unit cost due to higher production volumes (lower 4. Net operating co
Slide 23: Mining Unit Cost
MINING UNIT COST Unit cost [excluding buy-ins and delivery] (R/t) 319 332 305 Opex Other Processing Transport Fuel Mining HY19 HY20 HY21 Overall unit cost of production and processing reduced by 8% due to: • Higher ROM production of 4.4Mt (HY20: 2.7Mt) reducing fixed cost absorption rate • Higher pl
Slide 24: Statement of Financial Position
STATEMENT OF FINANCIAL POSITION Reviewed Reviewed Audited 30 Sept 2020 30 Sept 2019 31 Mar 2020 Rm Rm Rm Non-current assets 2 867 2 563 2 703 Property, plant and equipment 2 370 2 060 2 206 • Invested in mine development and extension Investments 28 81 28 projects Goodwill and intangible assets 84 8
Slide 25: Statement of Financial Position | Continued
STATEMENT OF FINANCIAL POSITION | CONTINUED Reviewed Reviewed Audited 30 Sept 2020 30 Sept 2019 31 Mar 2020 Rm Rm Rm Total shareholders’ funds 895 969 883 Non-current liabilities 2 153 1 788 1 218 • Net current assets position improved to Interest-bearing loans 807 564 - R181 million (FY20: -R603 mi
Slide 26: Main Components of Capital Expenditure
MAIN COMPONENTS OF CAPITAL EXPENDITURE HY21 FY20 Operations Rm Rm Moabsvelden 102 23 VGF 99 336 Khanyisa 19 25 Elandspruit and Processing 24 44 Wescoal Trading 1 2 Corporate and Other 6 3 Total 251 433 Main capital projects (Rm) 102 67 42 15 Khanyisa – Triangle 2 box cut VGF – Pit 5 box cut developm
Slide 27: Net Debt
NET DEBT Net debt movement (Rm) Net debt Cash flows from Cash flows from Net finance Tax paid CAPEX Rehab & Net borrowing Net debt 31 Mar 2020 operations operations cost intangibles movement 30 Sept 2020 (abnormal) Debt covenant ratio Lenders requirement HY21 FY20 Debt service cover >1.3 1.48 1.89 E
Slide 28: Finance: Cashflow and Liquidity Management
FINANCE CASHFLOW AND LIQUIDITY MANAGEMENT • As a result of lower sales, we have built up in excess of R155 million of inventory since the beginning of FY21 • Offset working capital pressure created by ROM and saleable product inventory build-up: WORKING CAPITAL TIED UP › December early closure for M
Slide 29: Looking Ahead
LOOKING AHEAD Reginald Demana Group Chief Executive
Slide 30: Looking Ahead: Focus Points
LOOKING AHEAD FOCUS POINTS RESTRUCTURING AND COST OPERATIONAL AND FINANCIAL RISK STRATEGY AND GROWTH MANAGEMENT MANAGEMENT • Improve the financial performance, • COVID-19 • LOM extensions efficiency and sustainability of the business • Debt and liquidity management › Elandspruit • Complete group-wid
Slide 31: Q&A
Q&A 4 DECEMBER 2020 LAYING THE FOUNDATION TO GROW SUSTAINABLY