Salungano Group Limited · JSE:SLG
Salungano — Wescoal Holdings — Investor Presentation (February 2016)
32 slides from Salungano's investor presentation, February 2016
Slide 1: Wescoal Investor Presentation
Wescoal Investor Presentation February 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: Business Overview
Business Overview • Established in June 2005 the company listed on the JSE on 20 July 2005. • Wescoal [WSL] is listed on the JSE main board: Basic Resources: Mining, subsector: Coal. • In 2014 acquired the Wescoal Processing Plant near Middleburg/Mpumalanga which has a 200Kt/m throughput capacity. •
Slide 4: Strategic Intent
Strategic Intent • To focus on the domestic coal mining market and transform Wescoal into a majority- black-owned business supplying Eskom and other customers cost effectively • Wescoal is steadfast in its strategic development plan with Elandspruit Colliery at the forefront • The challenging enviro
Slide 5: Strategic Priorities
Strategic Priorities • Strategic organic priorities include, bedding down the Elandspruit Colliery before embarking on additional major projects. • Future projects considered conservatively and with care. • The last phase of the Elandspruit Colliery includes initiatives to reduce operational risk by
Slide 6: Structure and background
Structure and background WESCOAL HOLDINGS Khanyisa Colliery > 80 Years of operational experience in SA Functioning operations Intibane Colliery Elandspruit Colliery (Flagship) Gauteng, Eastern Cape, Kwazulu Trading operations Processing plant 20km from Elandspruit Natal, Western Cape Logistics netwo
Slide 7: Segmental contributions
Segmental contributions (as at interims 30 September 2015) Revenue Operational EBITDA 31% 27% 69% 73% Mining Trading Mining Trading
Slide 8: Revenue
Revenue Revenue (R’000) 1 800 000 1 600 000 1 400 000 1 200 000 1 000 000 800 000 600 000 400 000 1 147 444 1 674 372 630 751 676 927 758 100 200 000 0 2012 2013 2014 2015 1H '16 8
Slide 9: Operating Profit
Operating Profit Operating profit (R’000) 50 000 45 000 40 000 35 000 30 000 25 000 20 000 15 000 10 000 25 959 27 170 45 168 17 869 45 540 5 000 0 2012 2013 2014 2015 1H '16 9
Slide 10: Cash Generated From Operations
Cash Generated From Operations 140 000 120 000 100 000 R’000 80 000 60 000 40 000 129 092 38 492 47 134 94 905 20 000 12 533 0 2012 2013 2014 2015 1H '16 Performance • Free cash utilised to increase mining asset base • No dividend declared during interim reporting period 10
Slide 11: Headline Earnings Per Share
Headline Earnings Per Share 18 HEPS for the full year 16 14 12 10 Cps 8 HEPS for the half-year 6 4 2 11,4 12,2 15,2 15,4 5,1 0 2012 2013 2014 2015 1H '16 Note: As reported at interim results October 2015, EPS attributable to the month of September 2015 was 2,50 cps, mainly on the back of the Elandsp
Slide 12: Mining Division Update – Bucking the 2015 trend
Mining Division Update – Bucking the 2015 trend Elandspruit Colliery • Mining right contains 5 potentially mineable coal seams, which occur from suboutcrop to a maximum depth of 70m below surface, near horizontal in formation and devoid of geological complexities such as faulting or dolerite intrusi
Slide 13: Mining Division Update - Cost management remains a focus.
Mining Division Update - Cost management remains a focus. The 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 80kt/m ROM. • Intibane produces coal which is suitable for the
Slide 14: Trading Division Update
Trading Division Update - creates operational flexibility with the mining division • 1H exceeded expectations in a difficult business environment with strong performance. • 1H operating EBITDA was R28,2 million up 39,8% over the prior period. • 1H divisional sales totalled 550 000 tons (2014: 626 00
Slide 15: Executive and Operational Management
Executive and Operational Management Executive Waheed Sulaiman Izak van der Walt Vikesh Dhanooklal Bongani Hlope Acting Chief Executive Officer Acting Chief Financial Officer Group Legal Adviser & Head: Group Human Resources Company Secretary Operational Dutch Botes Bonani Siko Ettienne Strydom Mike
Slide 16: Management Team Update
Management Team Update • Waheed Sulaiman appointed Acting CEO • Izak van der Walt appointed Acting CFO • Operational Management focused on performance • Additional management expertise harnessed in Legal/Company Secretary & HR: • Vikesh Dhanooklal appointed as Company Secretary & Group Legal Adviser
Slide 17: Management Team’s Focus Areas
Management Team’s Focus Areas • Strategy continues to evolve to establish a more sustainable business • Eskom long-term contracts • 50%+ black ownership • Funding strategies • Performance focussed: Production - Mining, Processing and Trading of Coal • Strengthen skills a platform to create a scalabl
Slide 18: WSL Shareholder information – Dec 2015
WSL Shareholder information – 23 Dec 2015 23 Dec 2015 27 Nov 2015 Change Rank Beneficial Holder % Holding % Holding % Holding 1 Ramaite Muthanyi Robinson Mr 17,70% 42 047 450 20,40% 42 047 450 0,00% 0 2 Simeka Capital Holdings (Pty) Ltd 12,76% 30 303 030 0,00% 0 • 30 303 030 3 Certificated 7,65% 18
Slide 19: WSL Share information and Shareholders
WSL Share information and Shareholders - (as at January 2016) Other Institutional Shareholders Shares in issue 237 533 578 Sovereignty Capital 0,42% 1 000 000 up from 196,301,361 Flagship Asset Management 0,28% 674 750 Sanlam Investment Management 0,08% 195 278 1 Yr. High 229cps - 1 Yr. Low 74cps Ab
Slide 20: WSL vs Mining Index – comparative performance
WSL vs Mining Index – comparative performance
Slide 21: WSL vs Mining Index – relative performance
WSL vs Mining Index – relative performance
Slide 22: WSL vs All Share vs Top 40 vs Mining Index
WSL vs All Share vs Top 40 vs Mining Index
Slide 23: Coal, South African export price ZAR & USD
Coal, South African export price ZAR & USD
Slide 24: WSL vs Domestic Junior Coal Peers
WSL vs Domestic Junior Coal Peers
Slide 25: Risks and Responses
Risks and Responses No Risk Response 1 • HDSA status of Wescoal • Process to achieve HSDA control by • Key for Eskom contracts December 2016 well underway • Key for export opportunities • Exploring new export opportunities, due to • Renewed focus for DMR ZAR/USD exchange rates and coal prices 2 • We
Slide 26: Investment Case & Prospects
Investment Case & Prospects • Actively pursuing multi-pronged Eskom engagement strategies. • Continue supplying Eskom from Elandspruit at production cost plus a rate of return, in a substantial/reliable market. • Advancing BEE/HDSA ownership in 2016 • Organic and inorganic opportunities in the SA co
Slide 27: Wescoal Values
Wescoal Values • Willingness to learn and share information allows for consistent improvement in work practices and compliance to high work standards • Safety consciousness ensures a safe, healthy and injury-free workplace • Integrity in behaving in an honest, correct and proper manner • Respecting
Slide 28: Recent SENS Announcements
Recent SENS Announcements 25th January 2016: Voluntary Operational and Market Update Over the past three months, the Wescoal Group has steadily maintained its progress in extremely difficult local and international market conditions, making headway across all facets of the operations. Mining Operati
Slide 29: Directors Dealings
Directors Dealings (Nov 2015 – January 2016) The following directors dealings were disclosed between Nov. 2015 – Jan. 2016: • 14 Jan. 2016 W Sulaiman (Exec) bought 120 000 shares R0.83 Tot. Value: R99 600 • 8 Jan. 2016 V Dhanooklal (Co.Sec.) bought 124 shares R0.95 Value: R 117 bought 29 876 shares
Slide 30: Change to the board of directors – (11 December 2015)
Change to the board of directors – (11 December 2015) Mr Robinson Ramaite automatically retired as a non-executive director of Wescoal post the annual general meeting on the 13th of November 2015, and was immediately thereafter re-appointed as a non-executive director and chairman of Wescoal by the
Slide 31: Results of the Combined Claw-back and Rights Offer
RESULTS OF THE COMBINED CLAW-BACK AND RIGHTS OFFER – (7 December 2015) The circular dated 17 November 2015 containing details of the combined claw-back and rights offer to Shareholders of a maximum of 49 041 904 new Wescoal shares at an issue price of 132 cents each (the “Combined claw-back and righ
Slide 32: Changes to the board of directors – (13 November) 2015
Changes to the board of directors – (13 November) 2015 Shareholders are advised of the following changes to the board of Wescoal Holdings Ltd: • Mr Waheed Sulaiman who was appointed as Acting Chief Executive Officer with effect from 31 March 2015, has been appointed at the AGM as Executive Director;
Wescoal Holdings — Investor Presentation (February 2016) on 6ix