Revenues reflect the effective shareholding of Oakbay Investments excluding portions attributable to other shareholders.
All revenue numbers are reflected gross as would be the case in the individual financial statements and intergroup revenue has not been removed for the purposes of this presentation as would be the case when preparing consolidated financial statements.
For additional information, see video on http://www.cnbcafrica.com/video/?bctid=5116990887001
2. ANNUAL RESULTS: 8 SEPTEMBER 2016
Basis of preparation
Revenues reflect the effective shareholding of Oakbay Investments excluding portions attributable to other
shareholders.
All revenue numbers are reflected gross as would be the case in the individual financial statements and
intergroup revenue has not been removed for the purposes of this presentation as would be the case when
preparing consolidated financial statements.
Disclaimer
Opinion 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 Oakbay Investments
Proprietary Limited (“the Company”) or any legal entity that is a subsidiary or associate of the Company (“the
Group”) to differ materially from those expressed or implied in any forward-looking statements.
Financial forecasts and data given herein are estimates based on audited annual financial statements,
information readily available in the public domain and reports prepared by experts who, in turn, may have
relied on management estimates. Undue reliance should not be placed on such opinions, forecasts or data
contained herein. Neither the Company, the Group, nor any of its affiliates, advisors, employees, directors,
agents 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 are based on current
circumstances and estimates, and the Company does not undertake any obligation to publicly update or
revise any opinions or forward-looking statements whether to reflect new data or future events or
circumstances.
2
4. ANNUAL RESULTS: 8 SEPTEMBER 2016
Basis of preparation and disclaimer
Overview of results
History of Group
Business philosophy
Divisional performance and outlook
ICT
Mining
Media
Strategic Investments
Government revenue breakdown
Group outlook
Q&A
CONTENTS
4
5. ANNUAL RESULTS: 8 SEPTEMBER 2016
OAKBAY INVESTMENTS PRESENTATION TEAM
Nazeem Howa
CEO of Oakbay Investments
Jacques Roux
CEO of Oakbay Resources
and Energy
Trevor Scott
CFO of Oakbay Resources
and Energy
Louis Lourens
Deputy CEO of JIC Mining
George Van Der Merwe
COO of Optimum
Stephan Nel
CEO of Sahara
Moegsien Williams
Editor in Chief of The New Age
5
6. ANNUAL RESULTS: 8 SEPTEMBER 2016
Continued strong performance
Group revenue increased 7% to 2.62 billion Rand (2015: 2.44
billion Rand)
Excellent progress on strategic priorities
3,991 jobs sustained despite South Africa’s wider economic
challenges, and 3,719 jobs in the mining sector
Solid growth in key sectors: mining, ICT, media and engineering
Continued business turnaround of under-performing Group assets
Growth driven by private sector contracts and business
philosophy of disrupting established industries and turning around
performance in under-performing assets
Mining continues to contribute the largest share of Group revenues
despite pressures to commodity prices
Sahara is the second biggest contributor to the group’s total
revenue
Neither JIC or Sahara has any government revenue
MAIDEN ANNUAL RESULTS
Mining ICT Media Engineering
Revenue by sector
6
8. ANNUAL RESULTS: 8 SEPTEMBER 2016
Contrary to misperceptions, Oakbay has been operating
successfully in South Africa for 20 years and has a long track
record of strong business performance in a number of sectors
Operations began in the IT sector with Sahara Computers and
have since diversified into a variety of sectors including: mining,
media and engineering
Group diversification has enabled consistent growth and job
creation throughout economic cycle
LONG TRACK RECORD OF SUCCESS
AND JOB CREATION IN SOUTH AFRICA
8 employees in 1997,
now employ 7,991
99% of the Group’s
employees are from
Southern Africa and
76% is South African
Paid over 141 million
Rand in corporate
income taxes
Grown revenues to 2.62
billion Rand
Sahara was
the Group’s
first company
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Sahara
notebook was
the number
one bestseller
in the country
Sahara was the number two brand in South Africa
for household goods, behind only Samsung
Acquired
JIC, a mining
services
company
Established
Tegeta, a
mining
exploration
company
Acquired an
indirect minority
stake in
engineering
company VR
Laser
8
Shiva
acquired
uranium
mine
Launched
the ANN7
news
network
Launched
The New
Age national
newspaper
9. ANNUAL RESULTS: 8 SEPTEMBER 2016
Two key deliverables with equal importance:
Profit and job creation
Five main principles are:
Seeking to disrupt established industries;
Turning around performance in under-performing or
distressed assets;
Managing its strategy and asset portfolio for the long-term;
Adopting a managerial structure that is un-bureaucratic,
allowing for rapid decision-making; and
Very hard work
OUR BUSINESS PHILOSOPHY
Oakbay has created thousands
of jobs for South Africans since
inception
All profits (after drawings and
retained working capital
balances) have been reinvested
in South Africa
9
11. ANNUAL RESULTS: 8 SEPTEMBER 2016
■ Sahara was established in 1997 as an ICT provider. Its CEO
is Stephan Nel
■ Has revolutionised the traditional dealer channel in South
Africa by changing the standard dynamics of how
distribution was handled at the time
- Best prices / Tier One product / easy access / unique
distribution country-wide
■ Always very visible, public face of Oakbay’s operations
- In 2005, Sahara’s notebook was the no. 1 South African-
branded notebook
■ Evolving strategy focussed on anticipating future customer
demand
- 2010: strategic shift and embraced increasing levels of
connectivity to become more retail and technology focused -
direct to retail customers and embracing tablets and
smartphones
- Focus now on mobile and two-in-one devices
- Sahara has recently partnered with the international brand
Alcatel to focus on telcos and the data industry
■ Sahara has undertaken no Government business since 2008
ICT DIVISION: OVERVIEW
Sahara customer base
60%
30%
10%
Retail Channels Corporate
11
12. ANNUAL RESULTS: 8 SEPTEMBER 2016
■ Sahara reported revenues of 1.1 billion Rand
■ Contributed 44% of Oakbay Investments’ revenues - second
biggest contributor
■ Shift to mobile product sales has continued throughout the
period, reflecting demand
■ Today, Sahara still serves a niche customer base of dealers
around the country:
- Top 5 retailers in the country
- A growing online base
- Corporate/B2B customers
■ Successfully implemented strategic priorities:
- Exiting lower margin contracts
- Enhancing relationships with technology partners/general
retailers who are the most progressive in the mobile area,
including: Alcatel and Edcon
ICT DIVISION: PERFORMANCE
12
13. ANNUAL RESULTS: 8 SEPTEMBER 2016
■ Sahara business will become 100% mobile-focused by the end of
2016
■ Focus on launching a variety of new products
- Cell phone accessories; and
- Innovative ideas such as a ‘child-proximity’ watch
■ Anticipated that more transactions will be direct to the retail
consumer
- Sahara will use transaction data to better understand
customer demands
■ Sahara has always embraced the Group’s philosophy of never
standing still – always pushing boundaries and/or disrupting
markets to extract value
■ Strategic emphasis for medium term:
- being online
- focusing on mobile products
- aligning itself with the best partners, and
- using data for the benefit of both consumers and Sahara
ICT DIVISION: OUTLOOK
13
14. MINING DIVISION
Jacques Roux
CEO of Oakbay Resources
and Energy
Trevor Scott
CFO of Oakbay Resources
and Energy
Louis Lourens
Deputy CEO of JIC Mining
George Van Der Merwe
COO of Optimum
15. ANNUAL RESULTS: 8 SEPTEMBER 2016
Mining operations include: extraction and prospecting licences for a
number of coal, uranium and gold ore bodies, as well as a mining
services business.
The Group’s mining businesses are:
Mining operations:
Oakbay Resources & Energy (listed on the Johannesburg Stock
Exchange – CEO is Jacques Roux): the owners and operators of
Shiva Uranium and the Brakfontein mine; and
Tegeta – the owners and operators of the Optimum and
Koornfontein coal mines
Mining services: CEO is JP Arora
JIC Mining Services – a provider of specialised mining services
for over 25 years
Demonstrable track record in turning around performance, driving
greater efficiencies and delivering profitable businesses
In 2015/16, Oakbay’s mining division has sustained 3,719 jobs vs
South Africa’s wider mining sector which has seen tens of
thousands of jobs lost
MINING DIVISION: OVERVIEW
15
16. ANNUAL RESULTS: 8 SEPTEMBER 2016
Group’s mining businesses reported total revenues of 1.17
billion Rand
44.5% of Oakbay Investments’ revenues
Shiva Uranium is one of the most significant and advanced
uranium projects in the world
Uranium mine is under development
Significant quantities of gold in the ore body means that
the mine continues to be profitable and employ over 700
workers
No employees have been retrenched since the
business was acquired
Tegeta supplied 1.49 million tonnes of coal to Eskom. This
constituted 1.25% of Eskom’s total coal supply
■ Oakbay’s 29% share in Tegeta equals 0.43 million
tonnes of supply and just 0.36% of Eskom’s total coal
supply
MINING DIVISION: PERFORMANCE
JIC is one of the largest business in the Oakbay
Investments group by revenue
Never had a government contract
Enables increased production levels and efficiencies
with safety as the highest priority
Home to MQA-accredited training academy, training
for the wider mining industry
16
17. ANNUAL RESULTS: 8 SEPTEMBER 2016
In April 2016, Tegeta completed its 2.15 billion Rand acquisition
of the Optimum coal mine and other assets from Glencore
Formal approval granted in February 2016 by the Competition
Tribunal of South Africa and Tegeta took full operational control
Tegeta: grown production and enhanced efficiencies to reduce cost
of coal production
Koornfontein coal production increased from 170,000 tonnes to
250,000 tonnes per month between April 2016 and July 2016 and
the cost of production per tonne has been reduced by 21%
At Optimum, a second drag line is now operational and a third is
expected to come on-stream in Q3 2016
Open cast coal production increased from 180,000 tonnes per
month in December 2015, to 440,000 tonnes in July 2016 and
cost of production has been reduced by 28%
Underground coal production per month has increased from
370,000 tonnes to 420,000 tonnes and cost of production has
been reduced by 10.2%
MINING DIVISION: TEGETA ACQUISITION
0
50
100
150
200
250
300
350
400
450
500
Koornfontein Optimum open cast Optimum
underground
Tonnes(000s)
Level of coal production April July
17
18. ANNUAL RESULTS: 8 SEPTEMBER 2016
Significant opportunities for JIC to cross-sell with existing
customers
Division major strategic focus on coal. Platinum demand
will remain, but coal has the potential to be a significant
driver of growth
Shiva Uranium: well positioned to take advantage of
anticipated increase in the global price of uranium
- Uranium produced is intended for export, once mining
becomes commercially viable
Export quality coal is being produced at both Optimum and
Koornfontein, and with increased production both mines are
exploring opportunities to open up export markets
MINING DIVISION: OUTLOOK
18
20. ANNUAL RESULTS: 8 SEPTEMBER 2016
A successful and growing media business led by Editor
in Chief, Moegsien Williams, which includes:
The New Age (TNA) national newspaper; and
Africa News Network (ANN7)
Launched in 2010, TNA’s strategy is to provide balance
to debate around government and government policy,
given most of the media landscape in terms of ownership
and political inclinations, is little changed since 1994
TNA’s business model has been to achieve its share of
private/public advertising revenue
Currently, the position of TNA is supportive of
government, whilst remaining editorially independent
and scrutinising of the ruling party
MEDIA DIVISION: OVERVIEW
Differentiated market position
Competitors’ news content output is very urban-
focused and opposition-supporting
TNA is much more regionally-focused, reflecting that
approx 50% of its readers are rurally located
TNA is sold and distributed in all nine of South Africa’s
provinces with six daily regional editions and a bureau
office in every province
TNA is the only truly national, broadsheet daily that
also has an element of regional focus - front page is
frequently different depending on which province it is
being read in
ANN7, launched in 2013, is broadcast across Africa on
DSTV
Network attracts more than 2.3 million monthly viewers
One of the most popular 24 hour news networks in
South Africa
ANN7 is present in is three provinces currently
Cadet Academy – since 2012 – has produced on
average 40 young journalists per year
Since inception, TNA and ANN7 have together created
783 jobs for South Africans
20
21. ANNUAL RESULTS: 8 SEPTEMBER 2016
■ Media businesses continuing to grow and generate revenue
through innovative new platforms
- Revenues of 275.6 million Rand, 10.5% of Oakbay’s revenues
- Both businesses are profitable
■ The media businesses generated 78.53 million Rand of
advertising revenue from the state which is 27.16%
■ Less than 9% of total government advertising spend is with TNA
and ANN7*
■ Challenging operating environment, specifically a general decline
in levels of commercial advertising
■ Innovative new platforms such as the ‘TNA Breakfast Briefing’
with SABC and ANN7’s ‘SA Decides’ programmes, have both
grown revenue through a mix of government and private sector
advertising and sponsorships
- Frequently reaches up to 2 million people and is South Africa’s
biggest breakfast show
- Broadcast across 43 countries in Africa
* Source: Nielsen Report 2015-16
MEDIA DIVISION: PERFORMANCE
21
22. ANNUAL RESULTS: 8 SEPTEMBER 2016
Strategy to continue to be at the forefront of transforming and
disrupting the South African media landscape
■ Continue to expand and become increasingly multi-channel
■ TNA focussed on having region-specific editions in all nine
provinces, an increase on current six editions across those nine
provinces.
■ ANN7 intends to mirror the roll-out model executed by TNA -
aggressive hiring process set to increase this to six provinces by
early 2017
Address the industry challenge of how to optimally manage
both its print and online content, with respect to overheads and
the consumption trends of its readers
Aspirations to add radio platform to ANN7 broadcast content –
clear market opportunity
■ Radio has huge penetration in South Africa - listened to by 87%
of the population
■ For every person who uses Facebook in South Africa, there are
three radio listeners
■ For every person who reads a newspaper, there are two times as
many listening to radio
Role to promote South Africa and effect real change that
benefits ordinary South Africans
MEDIA DIVISION: OUTLOOK
22
24. ANNUAL RESULTS: 8 SEPTEMBER 2016
■ Indirect minority shareholding (17%) in VR Laser, a
leading manufacturer of steel products for global, blue-
chip customers in a range of industries including:
defence, mining, rail and transport
■ VR Laser is already a very well-established name, with
a 15 year track record
- Often the only company who can fulfil contracts to
the standard demanded by global, blue-chip
companies
■ In the last six months alone, VR Laser has created 100
jobs, taking its total headcount from 150 to 250
■ Non-government contracts dominate VR Laser’s
operations. Non-government work accounted for :
- 2014-15: 68%
- 2015-16: 47%
- 2016 to date: 56%
■ VR Laser’s government revenue in 2015-16 was 118
million Rand, of which Oakbay’s 17% share is 20 million
Rand
STRATEGIC INVESTMENTS
■ By far the largest contributor of government work to VR
Laser is Denel, which contributed 39.1% of revenue
(87 million Rand)
- Primarily relates to contracts to supply armoured
vehicles for African peace keeping missions to the
United Nations – UN insisted that the vehicles be
manufactured at VR Laser
■ Denel’s latest published revenue in its most recent
Annual Report was 5.8 billion Rand
■ In terms of other government revenue (rail), Transnet
contributed less than 0.1%
■ The Group also has additional, associated but un-
consolidated strategic investments in Islandsite
Investments 180 and Confident Concepts.
■ These entities are involved in the equipment leasing
and property sectors. They generate total revenues of
189 million Rand, of which zero is generated from
Government sources
24
26. ANNUAL RESULTS: 8 SEPTEMBER 2016
Revenue split of Government contracts
Mining Media Engineering
Government revenue
attributable to the Group
totalled 235 million Rand
which accounted for 8.9%
of the Group’s revenue
GOVERNMENT REVENUE BREAKDOWN
Revenue split of Government contracts
26
28. ANNUAL RESULTS: 8 SEPTEMBER 2016
Continued focus on our two primary
performance indicators: profit and job
creation, via:
Disrupting long established and closed
industries; and
Planning for the long-term
Three strategic imperatives for our
business are:
Developing our uranium plan for
international export;
Developing an export capacity within our
coal mining facilities for which the current
coal price is encouraging; and
Establishing a free-to-air presence for our
media business
GROUP OUTLOOK
28