FINAL RESULTS
For the year ended 31 March 2014
24 and 26 June 2014
Agenda
Welcome
Group overview
Financial performance
Industry and prospects
Risks
Q&A
Elandspruit project
2
Financial performance
3
Salient features
69,5% to R1,1bn
123,6% to R101,2m
143,3% to R52,0m
28,7% to 15,7cps
37,9% to R26,7m
Revenue
Operational E...
R’000
Reviewed
Mar 2014
Audited
Mar 2013
% Change
Revenue 1 147 444 676 927 69,5
Gross profit 125 529 72 674 72,7
Gross pr...
Statement of comprehensive income (cont)
334303
337067
351361
465679
223311
293684
325566
681765
0
200 000
400 000
600 000...
Earnings
Cents per share
Reviewed
Mar 2014
Audited
Mar 2013
% Change
Basic earnings per ordinary share 41,0 12,5 228,0
Ful...
Headline earnings per share
-26.2
11.4 12.2
15.7
-30
-25
-20
-15
-10
-5
0
5
10
15
20
2011 2012 2013 2014
Cps
HEPS for the ...
Segmental contribution
92%
8%
Operational EBITDA
Mining Trading
9
48%52%
Revenue
Mining Trading
Mining division
318 347
556 246
-
100 000
200 000
300 000
400 000
500 000
600 000
2013 2014
Revenue (R'000)
34 691
52 387
...
Trading division
358580
388899202300
-
100 000
200 000
300 000
400 000
500 000
600 000
2013 2014
Revenue (R’000)
30552
282...
Issues impacting earnings
• Trading division
• Tangible restructuring and relocation costs – R6 million
• Amortisation of ...
Issues impacting earnings
• Group
• Increased finance costs
• Higher operational costs
• Costs of early vesting of share o...
Statement of financial position - assets
R’000
Reviewed
Mar 2014
Audited
Mar 2013
% Change
Non-current assets 335 752 142 ...
R’000
Reviewed
Mar 2014
Audited
Mar 2013
% Change
Total shareholder’s funds 273 225 177 321 54,1
Non-current liabilities 9...
Cash generated from operations
12 533
38 456
47 134
-
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
50 000...
Cash and cash equivalents
19 913 21 370
51 987
-
10 000
20 000
30 000
40 000
50 000
60 000
2012 2013 2014
R’000
17
Group Overview
18
Strategic intent
“The key strategic thrust of Wescoal is to be a
leading junior miner with a sustainable resource
base and...
Structure and background
Wescoal Holdings
Functioning operations
Khanyisa
Intibane
Future operations Elandspruit
Productio...
Executive and operational management
Wiseman Khumalo
Executive Director
André Boje
Chief Executive Officer
Bonani Siko
Gen...
Themes for the 2013/2014 year
Trading Division
• MacPhail transaction final
• Funding secured
• R1 billion revenue
• Syner...
Our growth path
• Wescoal Mining
• Additional assets acquired in order
to supply local contracts as well as
access export ...
Our growth path - Intibane
24
Our growth path - Khanyisa
25
MacPhail acquisition
• Transaction unconditional end Nov 2013
• Acquisition price – R79 million
• National operator, Wesco...
MacPhail acquisition (cont)
• Integration successfully completed
• Excellent support from producers and suppliers
• Custom...
Elandspruit project
28
Location & infrastructure
• 10km’s west of Middelburg Mpumalanga
• Needs infrastructure and services
• Rail sidings 1km so...
Surface Rights
Complete
Complete
WIP
Complete
Complete
30
Legal compliance
• Duiker Mining surface right being transferred
• NOMR
• Section 11 granted and executed
• Valid to Octob...
Geology and resources
32
Geology and resources
33
Mine plan
34
Marketing
• Eskom
• Discussions initiated
• Definite interest
• Locality to power stations
• 60m ton supply cliff ~2016
• ...
Marketing
• Export
• Potential to produce RB1 & RB2 spec coal
• Current price barrier of API#4 = $75
• FOT mine = domestic...
Processing
• Existing plant rationale
• New plant cost ~ R300m
• Existing plant cost – cost effective
• Elandspruit EMP – ...
Processing
Raw Coal Section
Conveyor
Cyclone 900
S-Nuts
Peas
Duff
Material Handling
Section
Pre - Screen
Section
Cyclone
S...
Capital expenditure
• July 2014 – August 2015
• Total of R170 million
• Existing plant acquisition cost
• Mine infrastuctu...
Industry and Prospects
40
Industry - China
41
Bloomberg Sep 2013 on China:
• 58% of new power capacity until 2020 will come from coal (above 41% for...
Industry - India
42
India is recovering
Thermal output on the rise and inventories reducing
Indian Therman Electricity
Out...
Industry – energy costs
43
0
50
100
150
200
250
Hydropower Coal Wind onshore Nuclear Natural Gas Wind, offshore Small Hydr...
Successfully commissioned at
Intibane, establish at Khanyisa
Intibane phase 2, Khanyisa
triangle and commission
Elandsprui...
Prospects – Mining division
Being utilised but export price too
low to pursue additional allocation
5. Export allocation ...
Prospects – Mining division
• Intibane Commissioned June 2013
• Khanyisa Underground
• Khanyisa Opencast
• Intibane Phase ...
Expecting further synergy savings
Static whilst export pricing
remains at current levels
Prospects – Trading division
Focu...
Risks
48
Risks – Mining division
• Eskom
• Reliance on as a customer
• BEE requirement
• Escalating cost of production at Khanyisa
...
Risks – Mining division (cont)
• Amendments to the MRPDA
• Strategic mineral
• Price determination
• Amended royalty tax
•...
Risks – Mining division (cont)
• Elandspruit
• Funding
• Water use licence
• Eskom
51
Risks – Trading division
• Eskom/IPP’s
• Customer and margin erosion to primary producers
• Export price volatility
• Incr...
Key objectives - 2015
Commission Elandspruit
Cost control
Khanyisa & Intibane extensions
Enhance management structure
Dive...
Summary
Wescoal is in a stage of a rapid growth
encompassing all aspects of the group that will
lead to enhanced value for...
Thank you
www.wescoal.com
For any further Investor Relations questions please contact:
Andre Bojé (CEO): 011 954 2721 or
V...
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Wescoal Holdings Limited FY 2014 financial results presentation

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Wescoal Holdings Limited listed on the Johannesburg Stock Exchange has released its Full Year Results Presentation. Check out
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Wescoal Holdings Limited FY 2014 financial results presentation

  1. 1. FINAL RESULTS For the year ended 31 March 2014 24 and 26 June 2014
  2. 2. Agenda Welcome Group overview Financial performance Industry and prospects Risks Q&A Elandspruit project 2
  3. 3. Financial performance 3
  4. 4. Salient features 69,5% to R1,1bn 123,6% to R101,2m 143,3% to R52,0m 28,7% to 15,7cps 37,9% to R26,7m Revenue Operational EBITDA Cash reserves HEPS Headline earnings 26,6% to 3,8cpsDividends 4
  5. 5. R’000 Reviewed Mar 2014 Audited Mar 2013 % Change Revenue 1 147 444 676 927 69,5 Gross profit 125 529 72 674 72,7 Gross profit margin 10,9% 10.7% 2,8 Operational EBITDA 101 293 45 306 123,6 Profit before taxation 109 519 25 045 337,3 Taxation (22 839) (5 338) 327,9 Profit for the period from continuing operations 86 680 19 707 339,8 Net profit on the sale of assets (60 030) (388) - Headline earnings for the year 26 650 19 319 37,9 Statement of comprehensive income 5
  6. 6. Statement of comprehensive income (cont) 334303 337067 351361 465679 223311 293684 325566 681765 0 200 000 400 000 600 000 800 000 1 000 000 1 200 000 1 400 000 2011 2012 2013 2014 Revenue (R’m) First half Second half 12380 11506 10875 26651 -29427 9096 8832 60029 -40 000 -20 000 0 20 000 40 000 60 000 80 000 100 000 2011 2012 2013 2014 Profit for the year (R’m) First half Second half 6
  7. 7. Earnings Cents per share Reviewed Mar 2014 Audited Mar 2013 % Change Basic earnings per ordinary share 41,0 12,5 228,0 Fully diluted basic earnings per ordinary share 40,2 12,4 224,2 Headline earnings per ordinary share 15,7 12,2 28,7 Fully diluted headline earnings per ordinary share 15,4 12,2 26,2 • HEPS adjusted for an after tax profit on sale of Vlaklaagte prospecting right 7
  8. 8. Headline earnings per share -26.2 11.4 12.2 15.7 -30 -25 -20 -15 -10 -5 0 5 10 15 20 2011 2012 2013 2014 Cps HEPS for the full year 8
  9. 9. Segmental contribution 92% 8% Operational EBITDA Mining Trading 9 48%52% Revenue Mining Trading
  10. 10. Mining division 318 347 556 246 - 100 000 200 000 300 000 400 000 500 000 600 000 2013 2014 Revenue (R'000) 34 691 52 387 - 10 000 20 000 30 000 40 000 50 000 60 000 2013 2014 Profit from operations (R'000) 10.9 9.4 0 2 4 6 8 10 12 2013 2014 Margin (%) Performance: • Excellent result • Intibane produced 1,03m tons (or 54%) of total production (1,92m tons) • High operating costs remain a focus 10
  11. 11. Trading division 358580 388899202300 - 100 000 200 000 300 000 400 000 500 000 600 000 2013 2014 Revenue (R’000) 30552 2821922200 - 10 000 20 000 30 000 40 000 50 000 60 000 2013 2014 Gross Profit (R’000) Performance: • Physical integration completed in January 2014 • Synergy savings are being realised • Once off restructuring costs 4 166 4 687 3 800 4 000 4 200 4 400 4 600 4 800 2013 2014 Profit from operations (R'000) 11 MacPhail contribution
  12. 12. Issues impacting earnings • Trading division • Tangible restructuring and relocation costs – R6 million • Amortisation of intangible assets – R2 million • Eskom suspending IPP’s for last quarter • Mining division • Increased mining costs at Khanyisa • Eskom reduction from Khanyisa for last quarter • Accelerated rehabilitation and amortisation 12
  13. 13. Issues impacting earnings • Group • Increased finance costs • Higher operational costs • Costs of early vesting of share options 13
  14. 14. Statement of financial position - assets R’000 Reviewed Mar 2014 Audited Mar 2013 % Change Non-current assets 335 752 142 176 150,2 Property, plant and equipment 116 004 75 589 Investment property 709 709 Investments 6 664 2 293 Goodwill and intangible assets 111 722 50 655 Investment in associates 19 365 - Mineral assets 101 118 9 211 Deferred taxation 170 3 719 Current assets 368 391 146 948 150,7 Inventories and work in progress 60 839 15 986 Trade and other receivables 255 389 109 592 Cash and cash equivalents 52 163 21 370 Total assets 724 143 289 124 150,5 14
  15. 15. R’000 Reviewed Mar 2014 Audited Mar 2013 % Change Total shareholder’s funds 273 225 177 321 54,1 Non-current liabilities 96 471 15 368 527,7 Interest bearing loans 57 113 1 124 Rehabilitation provision 24 282 14 188 Deferred tax 15 076 56 Current liabilities 354 447 96 435 267,6 Trade and other payables 220 211 87 619 Bank overdraft 176 - Taxation payable 10 268 11 Interest bearing loans 123 792 8 805 Total equities and liabilities 724 143 289 124 150,5 Statement of financial position - Equity & Liabilities 15
  16. 16. Cash generated from operations 12 533 38 456 47 134 - 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000 45 000 50 000 2012 2013 2014 R’000 16
  17. 17. Cash and cash equivalents 19 913 21 370 51 987 - 10 000 20 000 30 000 40 000 50 000 60 000 2012 2013 2014 R’000 17
  18. 18. Group Overview 18
  19. 19. Strategic intent “The key strategic thrust of Wescoal is to be a leading junior miner with a sustainable resource base and a coal trading operation” Robinson Ramaite Chairman: Wescoal Holdings 19
  20. 20. Structure and background Wescoal Holdings Functioning operations Khanyisa Intibane Future operations Elandspruit Production 1.92m tons of coal 47% increase from 1,31m tons Future production target 4m tons of coal by 2016 Strategic intent – Division will produce the bulk of the Group’s profit > 80 Years of operational experience in SA Trading operations Benoni, Isando, Pretoria, Port Elizabeth, Worcester, Atlantis, Paarl and Cape Town Strategic intent – Remain the flagship feature of the Group 20
  21. 21. Executive and operational management Wiseman Khumalo Executive Director André Boje Chief Executive Officer Bonani Siko General Manager Operations – Wescoal Mining Ettienne Strydom Projects Manager Wescoal Mining Dutch Botes Chief Operations Officer Wescoal Group Morné du Plessis Chief Financial Officer Curtis Mnisi Group Financial Manager Wescoal Holdings Mike Berry Group Business Development Wescoal ExecutiveOperational 21
  22. 22. Themes for the 2013/2014 year Trading Division • MacPhail transaction final • Funding secured • R1 billion revenue • Synergy savings • Critical mass Elandspruit Mine • Transaction unconditional Aug 2013 • Surface rights Sep 2013 • WUL submitted Nov 2013 Management Enhanced management structures to ensure sustainability and optimal operational efficiency Intibane Colliery • 1st Coal June 2013 • Low cost mine • Produced 1,03 million tons • Commissioned XRT plant 1 3 Khanyisa Colliery • Produced 889k tons vs 1.31 million in 2013 • Increased production costs • Accelerated rehabilitation • Pillar project & XRT plant 54 2 22
  23. 23. Our growth path • Wescoal Mining • Additional assets acquired in order to supply local contracts as well as access export opportunities • Wescoal Trading • MacPhail acquisition will add critical mass to this segment  2009 2010 2011 2012 2013 2014 2015 2020 onwards Khanyisa GTIS 1,15 million tons Strip ratio: 3.5-4:1 Triangle extension Intibane GTIS 0.82 million tons Strip ratio: 1.5:1 Phase 2 Elandspruit GTIS 40,16 million tons Strip ratio: 2.35:1 Silverbank & Verblyden Potential of 4 million tons of coal mined per year 23
  24. 24. Our growth path - Intibane 24
  25. 25. Our growth path - Khanyisa 25
  26. 26. MacPhail acquisition • Transaction unconditional end Nov 2013 • Acquisition price – R79 million • National operator, Wescoal now have 8 operations in SA • Division rebranded as Wescoal Trading with strong management and coal experience in place 26
  27. 27. MacPhail acquisition (cont) • Integration successfully completed • Excellent support from producers and suppliers • Customers retained • Synergy savings being realised • Wescoal Trading annualised revenue > R1 billion 27
  28. 28. Elandspruit project 28
  29. 29. Location & infrastructure • 10km’s west of Middelburg Mpumalanga • Needs infrastructure and services • Rail sidings 1km south and 2km east • Adjacent to Glencore/Shanduka and Steelcoal collieries • Surface rights mainly agricultural 29
  30. 30. Surface Rights Complete Complete WIP Complete Complete 30
  31. 31. Legal compliance • Duiker Mining surface right being transferred • NOMR • Section 11 granted and executed • Valid to October 2026 • WUL – submitted and expected August 2014 • NEMA – applications submitted, in progress • Rezoning - applications submitted, in progress 31
  32. 32. Geology and resources 32
  33. 33. Geology and resources 33
  34. 34. Mine plan 34
  35. 35. Marketing • Eskom • Discussions initiated • Definite interest • Locality to power stations • 60m ton supply cliff ~2016 • BEE requirement • Domestic market • 16m ton market • Seek customers of primary producers • Trading division – new customers 35
  36. 36. Marketing • Export • Potential to produce RB1 & RB2 spec coal • Current price barrier of API#4 = $75 • FOT mine = domestic price • Added risk • Commissions • Punitive product specifications • Require API#4 > $85 36
  37. 37. Processing • Existing plant rationale • New plant cost ~ R300m • Existing plant cost – cost effective • Elandspruit EMP – no washing plant • Available end 2014 • All legislative requirements in place • Infrastucture in place • Offices • Pollution control dams • Roads 37
  38. 38. Processing Raw Coal Section Conveyor Cyclone 900 S-Nuts Peas Duff Material Handling Section Pre - Screen Section Cyclone Slew Conveyor Wescoal plant after 3 years, no additional capex 38
  39. 39. Capital expenditure • July 2014 – August 2015 • Total of R170 million • Existing plant acquisition cost • Mine infrastucture • Surface rights • Mine start up inc. box cut 39
  40. 40. Industry and Prospects 40
  41. 41. Industry - China 41 Bloomberg Sep 2013 on China: • 58% of new power capacity until 2020 will come from coal (above 41% for world average but a bit below their current 70-80% in China) • Coal fired power capacity will increase from 655GW to 955GW from 2010 to 2015 alone • From 2010 to 2020 will increase 78% from 655GW to 1167GW, Thereafter growth is likely to slow more Source:2013 Bloomberg; Authors Research and Analysis; China Coal Import Statistics, Stu Murray ©l
  42. 42. Industry - India 42 India is recovering Thermal output on the rise and inventories reducing Indian Therman Electricity Output (TWh)
  43. 43. Industry – energy costs 43 0 50 100 150 200 250 Hydropower Coal Wind onshore Nuclear Natural Gas Wind, offshore Small Hydropower Solar Hydropower Coal Wind onshore Nuclear Natural Gas Wind, offshore Small Hydropower Solar
  44. 44. Successfully commissioned at Intibane, establish at Khanyisa Intibane phase 2, Khanyisa triangle and commission Elandspruit Progress made but increased focus and attention required Prospects – Mining division Commissioned June 2013 and provided bulk of mining profits 1. Intibane – increased contribution  2. Cost control – margin improvement  3. Sustainability  4. X-Ray Technology (“XRT”) beneficiation  44
  45. 45. Prospects – Mining division Being utilised but export price too low to pursue additional allocation 5. Export allocation  45
  46. 46. Prospects – Mining division • Intibane Commissioned June 2013 • Khanyisa Underground • Khanyisa Opencast • Intibane Phase 2 • Khanyisa Triangle Extension • Establish Elandspruit end 2014 1.18 1.31 1.6 0.32 0 0.5 1 1.5 2 2.5 2012 2013 2014 Production (million tons of coal) 1.92 2.0 2.0 2.0 2.0 0.0 1.0 2.0 3.0 4.0 5.0 2015 2016 2017 Production (million tons of coal) Estimate Actual 46
  47. 47. Expecting further synergy savings Static whilst export pricing remains at current levels Prospects – Trading division Focus on margin increase and cost containment 1. MacPhail integration  2. Domestic pricing  Intibane focus on Eskom, Khanyisa for Trading Division 3. Restructure costs savings  4. X-Ray Technology (“XRT”) beneficiation  47
  48. 48. Risks 48
  49. 49. Risks – Mining division • Eskom • Reliance on as a customer • BEE requirement • Escalating cost of production at Khanyisa • Life of Mine at both Khanyisa and Intibane • Depletion before Elandspruit commissioning • Skills shortage 49
  50. 50. Risks – Mining division (cont) • Amendments to the MRPDA • Strategic mineral • Price determination • Amended royalty tax • Ministerial powers and deadlines • Legislative issues • Water use license • Rezoning requirements 50
  51. 51. Risks – Mining division (cont) • Elandspruit • Funding • Water use licence • Eskom 51
  52. 52. Risks – Trading division • Eskom/IPP’s • Customer and margin erosion to primary producers • Export price volatility • Increased competitor activity • Logistics oversupply 52
  53. 53. Key objectives - 2015 Commission Elandspruit Cost control Khanyisa & Intibane extensions Enhance management structure Diversify Mining division’s customer base 1 2 3 4 5 53
  54. 54. Summary Wescoal is in a stage of a rapid growth encompassing all aspects of the group that will lead to enhanced value for all stakeholders 54
  55. 55. Thank you www.wescoal.com For any further Investor Relations questions please contact: Andre Bojé (CEO): 011 954 2721 or Vanessa Rech (Keyter Rech Investor Solutions): 011-447-8656 55

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