RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2014 Interims Final... · 2016-11-25 · RESULTS FOR...

RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2014

Wednesday, 19 November 2014

1

CHIEF EXECUTIVE OFFICER MANDI GLAD

www.keatonenergy.co.za


AGENDA

HIGHLIGHTS Mandi Glad

FINANCIAL PERFORMANCE Jacques Rossouw

KEATON AS A VALUE PROPOSITION Mandi Glad



HIGHLIGHTS 4

Improved safety performance at both Vanggatfontein and Vaalkrantz

Total sales up 7% to 1.45Mt

Revenue up 10% to

R783 million

HEPS of 13.7 cents per share down from 19.4 cents due to increased number of shares in issue and increased finance costs

Gross profit up 6% to

R124.5 million Cash generated from operations

up 54% to R315.6 million Cash and cash equivalents up 63% to R113.2 million

Net debt to equity % decreased from 35% to 29%



SAFETY | Fatality free since inception

VANGGATFONTEIN LTIFR VAALKRANTZ LTIFR

5

* LTIFR per 200 000 man hours

0.20

0.00

0.10 0.09

0.04

1HFY13 2HFY13 1HFY14 2HFY14 1HFY15

0.45

0.36

0.17

0.23

0.12


* LTIFR per 200 000 man hours



OPERATIONS

VANGGATFONTEIN VAALKRANTZ

6

1HFY14 2HFY14 1HFY15

Sales (Mt) 1.20 1.09 1.26

ROM (Mt) 1.73 1.67 1.99

Revenue (Rm) 585 542 638

EBITDA (Rm) 269 276 346

Capex (Rm) 135 159 230

LOM (years) 17+ 17+ 20+

No. of employees* 486 519 484


Sales (Mt) 0.15 0.15 0.19

ROM (Mt) 0.23 0.20 0.19

Revenue (Rm) 125 120 145

EBITDA (Rm) 9 (7) 11

Capex (Rm) 2 2 9

LOM (years) 2 4+ 4+

No. of employees* 808 713 813

* Includes contractors

JACQUES ROSSOUW

7

CHIEF FINANCIAL OFFICER



8

EXTRACTS FROM THE STATEMENT OF PROFIT OR LOSS (Rm) 1HFY15 1HFY14 % CHANGE FY14

Revenue 783.0 709.8 10% 1 372.6

Cost of Sales (658.5) (592.6) 11% (1 153.9)

Cash cost (433.5) (422.9) 3% (802.4)

Depreciation (233.8) (172.6) 35% (348.1)

Inventory movement 8.8 2.9 203% (3.4)

Gross profit 124.5 117.2 6% 218.7

Other Income 18.6 9.2 102% 13.0

Mining and related expenses (24.5) (10.6) 131% (11.5)

Operating profit before net finance cost 82.5 84.6 (2%) 150.1

Finance cost (28.1) (21.7) 29% (50.6)

Net profit after taxation 35.3 42.3 (17%) 64.4

HEPS (cents per share) 13.7 19.4 (29%) 30.3

FINANCIAL PERFORMANCE

From operational results



9

COST OF SALES ANALYSIS (Rm) 1HFY15 1HFY14

Mining Contractors 352.1 273.1

Amortisation and depreciation 233.8 172.6

Transport costs 156.3 153.7

Fuel 82.9 63.1

Other direct mining costs 67.6 67.7

Inventory movement (8.8) (2.9)

Deferred stripping capitalised (225.4) (134.7)

658.5 592.6


* From operational results



10


» GROSS PROFIT (%)

-10%

-5%

0%

5%

10%

15%

20%

-200

-100

0

100

200

300

400

500

600

700

800


Rev

en

ue

(R

m)

(9%)

2%

16% 17%

15%

GP

%

20%

0%

15%

10%

5%



11


» EBITDA (%)

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

0

100

200

300

400

500

600

700

800


12%

9%

40% 38%

36%

Rev

en

ue

(R

m)

EBIT

DA

%



12


» HEADLINE EARNINGS PER SHARE

-25

-20

-15

-10

-5

0

5

10

15

20

25


Ce

nts

pe

r sh

are

(21.1)

19.4

13.7



13


NORMALISED EARNINGS CENTS PER SHARE

HEPS 13.7

Higher number of shares in issue 2.3

Increased finance costs 2.8

Normalised earnings per share 18.8



-

100

200

300

400

500

600

700

14


» GROUP NET DEBT MOVEMENT (Rm)

Net debt 1 Apr 2014

Capital and other

additions

Finance cost and

forex losses Tax paid

Net cash from

operations

Dividends paid

Prepayment for coal offtake

Net debt 30 Sept

2014

Other net investing activities

324

275

16

2 318

8 7

43

271



15


» CASH GENERATED BY OPERATIONS (Rm)

63

129

205

212

316

0

50

100

150

200

250

300

350




16


» CASH AND CASH EQUIVALENTS (Rm)

0

20

40

60

80

100

120

FY13 FY14 1HFY15

69.6

113.2

19.6



17


» RETURN ON EQUITY (%)


(5%)

5%

3%

(3%)

2%



18


» NET DEBT TO EQUITY (%)

FY13 FY14 1HFY15

39%

35%

29%

KEATON AS A VALUE PROPOSITION



20

LOCATION | Operations and projects

Moabsvelden

Vanggatfontein Colliery

Vaalkrantz Colliery

Sterkfontein Project

Braakfontein Project Koudelager Project

Balgray Project



21

SUBSTANTIAL | Group resources and reserves

COAL RESOURCE (MTIS) (AD) ROM COAL RESERVE (Mt) (AR)

PROJECT INFERRED INDICATED MEASURED TOTAL COAL RESOURCE

PROBABLE PROVED TOTAL ROM

COAL RESERVE

Vanggatfontein Colliery - 62.6 83.1 145.7 6.0 51.3 57.3

Moabsvelden Project - 2.0 53.5 55.5 1.2 41.4 42.6

Bankfontein Project 11.0 5.1 - 16.1 - - -

Roodepoort Project 5.3 12.2 8.9 26.4 - - -

Sterkfontein Project 40.6 50.2 - 90.8 23.6 - 23.6

Vaalkrantz Colliery - 15.1 - 15.1 2.5 0.2 2.7

Braakfontein Project - 64.9 - 64.9 24.9 - 24.9

Koudelager Project 0.9 11.4 - 12.3 - - -

TOTAL 57.8 223.5 145.5 426.8 58.2 92.9 151.1



SUSTAINABLE | Growth profile 22

2012 2013 2014 2015 2016 2017 2018

Mtpa saleable

2019 2020

6.0

5.5

5.0

4.5

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0

» Vanggatfontein Colliery

» Vaalkrantz Colliery

» Moabsvelden remote pit

» Braakfontein Colliery



PROJECTS

MOABSVELDEN BRAAKFONTEIN

23

» Negotiations with Eskom well-advanced, stand-alone coal supply agreement required prior to commencement of mine construction

» Satellite pit on Moabsvelden planned to feed new 200ktpm processing plant on Vanggatfontein via dedicated 5km haul road

» Primary export & domestic middling thermal products

» Project implementation study to be finalised before end FY15

» Pit development scheduled to commence during 1HFY16, plant commissioning during 2HFY16, first product Q4 FY16

» Awaiting various regulatory approvals

» Results of additional phase of feasibility structural drilling have delivered positive outcome

» Environmental studies iro water use & NEMA applications underway

» Feasibility/implementation study underway, due for completion June 2015, at which time go/no go decision to be made

» Integrated 1.6Mtpa opencast & underground mine with processing facility

» Primary export & domestic middling thermal products from dual seam operation, anticipated Q4 FY17



24

» Attractive long term coal market fundamentals remain in place

» Thermal coal demand growth projected at 5%, this will slow supply growth due to a lack of ongoing investment thereby helping to re-balance the market

» Long term impact on coal demand driven by Chinese economic growth

» Even with lower growth rates energy demand in China will grow significantly

» It is expected that at least 50% of new Chinese electricity demand will be coal based generation

GLOBAL COAL MARKET OUTLOOK

» API4

Source: IHS Energy / SSY/ GlobalCoal

» Supply demand balance (Mt)

Source: Glencore

USD

$/t



GLOBAL COAL MARKET OUTLOOK 25

» India has emerged as the dominant growth market

» USD36bn invested in generation capacity

» USD61bn invested in transmission capacity

» Current installed coal fired capacity = 145GW

» 2020 target installed coal fired capacity = 214GW

» Indian thermal coal imports (Mt)

Sources: CEA, Government budget, Glencore



DOMESTIC COAL MARKET OUTLOOK 26

» Eskom’s base load is made up 86% by coal-fired generating capacity

» Eskom currently runs 13 base load coal-fired power stations, including three return-to-service stations which could provide 36GW to the grid

» As Medupi and Kusile are brought on line this will increase to 44.5GW

» Despite a slight reduction in production, coal maintained its strong position as the leading South African mining commodity revenue generator

» Eskom coal supply requirements (Mt)

Source: Eskom

86%

1%

3% 4%

6% 0%

0%

Coal

Hydroelectric

Pumped storage

Nuclear

Open cycle gas turbines

Renewables

Distribution

» Eskom electricity base load

Source: Eskom; SBG Securities analysis

29%

16%

3% 2% 2%

48%

Exports

Sasol

Industries

Metallurgy

Merchants / Domestic

Eskom

» SA coal uses (255Mt total in FY13)

Source: DMR; SBG Securities analysis



KEY DELIVERABLES | Where from 27

» Safety first

» 2Mtpa target

» Develop a suite of long life assets

» Build a sustainable cash generative business

» Growth through acquisition

» Financing in difficult environment

» 5Mtpa target

» Consistent operational and financial year

» Safe

» Profitable

WIP



KEY DELIVERABLES | Where to 28

» Vaalkrantz LOM enhancement project results

» Moabsvelden regulatory approvals & domestic off-take

» Consistent operational and financial performance

» Dividends

» Commission Moabsvelden

» Increased cash generation

» Commission Braakfontein

» Achieve 5Mtpa

» Enhance shareholder returns



KEATON AS AN INVESTMENT PROPOSITION 29

» Net asset value 421

» Market price 275

» Good long term-value in our share

– Share trading at a significant discount to NAV

– Cash generative

– Approved dividend policy

» Net asset value (NAV) expressed as a percentage of market capitalisation

0%

50%

100%

150%

200%

250%

Source: * extracts from PWC's SA Mine 2014 - 6th edition

Cents per share at 30 September 2014


Wednesday, 19 November 2014

30



31

DISCLAIMER

Opinions expressed herein are by nature subjective to known and unknown risks and uncertainties. Changing information or circumstances may cause the actual results, plans and objectives of Keaton Energy Holdings Ltd (the “Company”) to differ materially from those expressed or implied in the forward looking statements. Financial forecasts and data given herein are estimates based on the reports prepared by experts who in turn relied on management estimates. Undue reliance should not be placed on such opinions, forecasts or data. No representation is made as to the completeness or correctness of the opinions, forecasts or data contained herein. Neither the Company, nor any of its affiliates, advisors or representatives accepts any responsibility for any loss arising from the use of any opinion expressed or forecast or data herein. Forward-looking statements apply only as of the date on which they are made and the Company does not undertake any obligation to publicly update or revise any of its opinions or forward looking statements whether to reflect new data or future events or circumstances.

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RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2014 Interims Final... · 2016-11-25 · RESULTS FOR...

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