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Eqstra Holdings Limited HY 2014 financial results presentation

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Eqstra Holdings Limited HY 2014 financial results presentation

Eqstra Holdings Limited HY 2014 financial results presentation

Published in: Investor Relations

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  • 1. UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2013
  • 2. AGENDA AGENDAGROUP OVERVIEW FINANCIAL REVIEW DIVISIONAL REVIEW OUTLOOK QUESTIONS 2
  • 3. GROUP OVERVIEW 3
  • 4. GROUP STRUCTURE Distribution, leasing, rental and value-added services for: Forklifts Mobile cranes Port equipment Mining trucks Other industrial equipment Value-added corporate leasing: Passenger vehicles Light, medium and heavy commercial vehicles Construction and mining equipment Vehicle remarketing Logistics Opencast mining services: Drilling Blasting Load and haul Short-term plant rental INDUSTRIAL EQUIPMENT FLEET MANAGEMENT AND LOGISTICS CONTRACT MINING AND PLANT RENTAL 4
  • 5. SALIENT FEATURES 5 +14.7% +36.2% (13.5%) (25.4%) Revenue Dec 2013 Dec 2012 R4 935m R4 302m Operating profit Dec 2013 Dec 2012 R461m R533m EBITDA Dec 2013 Dec 2012 R1 406m R1 418m Cash flows from operating activities Dec 2013 Dec 2012 R1 370m R1 006m HEPS Dec 2013 Dec 2012 34.9 cps 46.8 cps Revenue-generating assets Dec 2013 Jun 2013 R9 942m R9 578m (0.8%) +3.8%
  • 6. GROUP HIGHLIGHTS Industrial Equipment Product/geographical diversification and annuity revenue streams underpinned the business in a declining SA forklift market Improved UK contribution from recovering economy and weaker Rand Fleet Management and Logistics Division returning to normalised earnings Rationalisation and closure of loss making businesses have been concluded Contract Mining and Plant Rental Turn around negatively impacted by R135m loss in earnings due to industrial action Termination of loss making contracts underway 6
  • 7. FINANCIAL REVIEW 7
  • 8. REVENUE OVERVIEW 8 +22.7% Improved UK sales and weaker Rand +19.1% Increased revenue in logistics and other value added services +13.1% Higher revenue on equipment sales and a contract changing from dry to wet rates Group revenue +14.7% to R4 935 million (H1’13: R4 302 million)* INDUSTRIAL EQUIPMENT FLEET MANAGEMENT AND LOGISTICS CONTRACT MINING AND PLANT RENTAL * Excludes inter-company revenue of R209 million (H1’13: R86 million) 2 022 2 286 H1'13 H1'14 1 134 1 351 H1'13 H1'14 1 228 1 507 H1'13 H1'14
  • 9. VALUE CHAIN STATEMENT 9 Revenue, excluding corporate office and eliminations (Rm) Distribute Rent/lease Value-add Sell H1’14 Industrial Equipment 631 434 364 78 Fleet Management and Logistics - 570 498 283 Contract Mining and Plant Rental - 214 1 982 90 Total 631 1 218 2 844 451 H1’13 Industrial Equipment 501 353 301 73 Fleet Management and Logistics - 537 389 208 Contract Mining and Plant Rental - 264 1 758 - Total 501 1 154 2 448 281
  • 10. VALUE CHAIN STATEMENT (Continued) 10 12% 24% 55% 9% H1'14 Distribute Rent/lease Value-add Sell 12% 26% 56% 6% H1'13
  • 11. Rm H1’14 H1’13 % ch Revenue 4 935 4 302 14.7% Profit from operations 1 407 1 431 (1.7%) Depreciation, amortisation and recoupments (946) (898) 5.3% Operating profit 461 533 (13.5%) Foreign exchange losses (1) (3) Net impairment - (19) Profit before net finance costs 460 511 (10%) Net finance costs (287) (266) 7.9% Profit before taxation 173 245 (29.4%) INCOME STATEMENT 11 R135m lower due to industrial action at MCC Sub-standard tyres at Benga
  • 12. INCOME STATEMENT (Continued) 12 Rm H1’14 H1’13 % ch Profit before taxation 173 245 (29.4%) Income tax expense (32) (60) (46.7%) Profit for the year 141 185 (23.8%) Tax rate 18.5% 24.5% Basic and diluted HEPS (cents) 34.9 46.8 (25.4%) Basic and diluted EPS (cents) 34.9 45.1 (22.6%) Lower tax rate due to operating losses in SA Contract Mining
  • 13. WEIGHTED AVERAGE SHARES IN ISSUE 13 millions H1’14 H1’13 Weighted average shares in issue, net of treasury shares 394.2 411.4 Weighted share buy-back *(5.4) Weighted shares sold for staff share scheme **1.4 Weighted average shares in issue 395.6 406.0 * 9.3 million shares repurchased during H1’13 ** 2.7 million treasury shares sold for settlement of staff share incentive scheme during H1’14
  • 14. Inventories higher as a result of excess Contract Mining and Plant Rental equipment identified as available for sale BALANCE SHEET – TOTAL ASSETS 14 Rm H1’14 H2’13 % ch Revenue-generating assets 9 942 9 578 3.8% Other assets 973 902 7.9% Inventories 1 102 945 16.6% Trade and other receivables 1 591 1 576 0.1% Cash and cash equivalents 68 300 (77.3%) Total assets 13 676 13 301 2.8% Revenue-generating assets (Rm) +310 forex impact +218-31+32+92 8 487 8 884 9 146 9 578 9 942 H1'12 H2'12 H1'13 H2'13 H1'14 +193 +25 +74 +236 +158 Forex impact
  • 15. BALANCE SHEET – TOTAL EQUITY AND LIABILITIES 15 Rm H1’14 H2’13 % ch Total equity 3 342 3 275 2.0% Interest-bearing borrowings 7 991 7 597 5.2% Accounts payables and provisions 1 562 1 656 (5.7%) Other liabilities 781 773 1.0% Total equity and liabilities 13 676 13 301 2.8% 15.0% 17.2% 12.3% 12.9% 8.6% H1'12 H2'12 H1'13 H2'13 H1'14 ROE 23.0% 23.7% 24.4% 24.6% 24.4% H1'12 H2'12 H1'13 H2'13 H1'14 Capital adequacy ratio Includes R135m loss from industrial action Includes profit on sale of EMS
  • 16. CASH FLOW STATEMENT 16 Rm H1’14 H1’13 % ch Cash generated from operations before working capital movements 1 411 1 493 (5.5%) Working capital movements 257 (185) Cash generated from operations 1 668 1 308 27.5% Net cash flows from operating activities 1 370 1 006 36.2% Net cash flows from investing activities (1 702) (1 278) 33.2% Net cash flows from financing activities 96 (137) Net decrease in cash and cash equivalents before effect of exchange rate (236) (409)
  • 17. MOVEMENT IN CASH AND CASH EQUIVALENTS 17 Rm 300 1411 227 257 19 11 283 1705 129 18 68 At beginning of the year Cash generated from operations Increase in interest-bearing borrowings Decrease in working capital Movement in finance lease receivables Taxation paid Net finance costs and fx movements Net capital expenditure Transactions with shareholders Business acquisitions At the end of the year
  • 18. CAPITAL EXPENDITURE 18 Rm H1’14 H1’13 Expansion 449 626 Industrial Equipment* 324 154 Fleet Management and Logistics*# 125 388 Contract Mining and Plant Rental - 84 Net replacement (net of proceeds) 1 256 662 Industrial Equipment* 214 159 Fleet Management and Logistics*# 552 280 Contract Mining and Plant Rental 490 223 Net expenditure 1 705 1 288 * Prior year re-presented for CME divisional restructuring # Includes corporate office and eliminations
  • 19. Funding facilities (Rm) Facility size Utilised Unutilised RSA bank debt General banking facility 900 80 820 Liquidity facility* 1 000 1 000 Term facility 2 628 2 628 ECA backed debt US Ex-Im and Coface 216 216 Call facility Asset manager 50 50 Total 4 794 2 974 1 820 RSA non-bank debt Capital markets Maturity date 3 442 CP+EQ187 various 800 EQS01 18 Nov 2014 270 EQS02 01 Jul 2015 50 EQS04 22 Sep 2015 411 EQS09 28 Nov 2016 100 EQS05 25 Apr 2017 900 EQS06 09 Apr 2018 340 EQS07 09 Apr 2018 106 EQS08A 04 Oct 2018 Amortising 465 Total SA funding 6 416 Rest of World 1 704 1 469 235 Total funding 7 885 New * Liquidity facility with 13-month notice period to support commercial paper FUNDING POSITION 19 New
  • 20. RSA DEBT MATURITY PROFILE 20 0 200 400 600 800 1000 1200 1400 1600 F2014 F2015 F2016 F2017 F2018 F2019 Rm Overnight Borrowing ECA Commercial paper Bonds Long-term facilities CP backed by 13-month notice liquidity facility
  • 21. FUNDING DIVERSIFICATION 21 Geographical diversification of debt South African debt diversification 81% 10% 9% South Africa Rest of Africa United Kingdom 43% 54% 3% Bank Debt Capital Market and CP ECA's
  • 22. DIVISIONAL REVIEW 22
  • 23. SEGMENTAL CONTRIBUTIONS 23 R 4 935 million Revenue R9 942 million Revenue-generating assets R141 million Profit after taxation 28% 26% 46% 39% 50% 11% 22% 33% 45% Industrial Equipment Fleet Management and Logistics Contract Mining and Plant Rental
  • 24. INDUSTRIAL EQUIPMENT 24
  • 25. INDUSTRIAL EQUIPMENT 25 Rm H1’14 H2’13* % ch Revenue-generating assets 2 159 1 949 10.8% Inventories 795 772 3.0% Trade and other receivables 524 460 13.9% Other assets 172 164 4.9% Operating assets 3 650 3 345 9.1% H1’14 H1’13* Revenue 1 507 1 228 22.7% EBITDA 371 285 30.2% Operating profit 145 109 33.0% Foreign exchange losses (1) (3) Net finance costs (70) (50) 40.0% Profit before taxation 74 56 32.1% PBT margin 4.9% 4.6% EBITDA to net finance costs 5.3x 5.7x * Includes Construction and Mining Equipment
  • 26. INDUSTRIAL EQUIPMENT 26 38% 21% 26% 7% 8% Forklifts - SA Forklifts - UK Heavy equipment (trucks, cranes, port equipment) Truck mounted cranes, aerial platforms and waste compactors Other Divisional revenue by segment (R1 507m)
  • 27. INDUSTRIAL EQUIPMENT 27 UK achieved a 17% ROE and a 67% increase in PBT (in GBP) Secured distributorships for Konecranes and Mafi in the UK Strategy to reduce reliance on SA forklift business progressing well Overhead costs in SA have been aligned to a declining forklift market Heavy Equipment achieved improved sales volume Terex crane distributorship was not renewed at 31 December 2013; Terex trucks to continue as per agreementH1’14: -25% on H1’13 1,200 3,200 5,200 7,200 9,200 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 UK Forklift Market (Units) H1’14: +6% on H1’13 0 1,000 2,000 3,000 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 SA Forklift Market (Units)
  • 28. FLEET MANAGEMENT AND LOGISTICS 28
  • 29. FLEET MANAGEMENT AND LOGISTICS 29 Rm H1’14 H2’13* % ch Revenue-generating assets 3 259 3 181 2.5% Inventories 101 71 42.3% Trade and other receivables 296 246 20.3% Other assets 195 152 28.3% Operating assets 3 851 3 650 5.5% H1’14 H1’13* Revenue 1 351 1 134 19.1% EBITDA 527 495 6.5% Operating profit 183 172 6.4% Net finance costs (87) (78) 11.5% Profit before taxation 96 93 3.2% PBT margin 7.1% 8.2% EBITDA to net finance costs 6.1x 6.3x * Includes heavy plant leasing
  • 30. FLEET MANAGEMENT AND LOGISTICS 30 45% 30% 17% 8% Fleet Management - passenger vehicles Fleet Management - commercial vehicles Logistics Fleet Management - Rest of Africa Divisional revenue by segment (R1 351m)
  • 31. FLEET MANAGEMENT AND LOGISTICS Marginal growth in leasing fleet due to selective capital allocation to new business (measured growth) Solid revenue growth in the core leasing and logistics business units Operating margin impacted by non-reoccurring rationalisation costs and lower overall margins in our vehicle remarketing activities Profit contributions of value added products continued, in particular GPS Tracking Solutions Concluded an empowerment transaction with Nozala to position the division to compete for future government and parastatal tenders 31
  • 32. CONTRACT MINING AND PLANT RENTAL 32
  • 33. CONTRACT MINING AND PLANT RENTAL 33 Rm H1’14 H2’13 % ch Revenue-generating assets 4 576 4 517 1.3% Inventories 206 102 102.0% Trade and other receivables 773 875 (11.7%) Other assets 212 195 8.7% Operating assets 5 767 5 689 1.4% H1’14 H1’13 Revenue 2 286 2 022 13.1% EBITDA 520 654 (20.6%) Operating profit 130 246 (47.2%) Asset impairment - (18) Net finance costs (130) (138) (5.8%) Profit before taxation - 90 PBT margin - 4.50% EBITDA to net finance costs 4.0x 4.7x
  • 34. CONTRACT MINING AND PLANT RENTAL 34 69% 21% 7% 3% SA contract mining Rest of Africa contract mining SA plant rental Rest of Africa plant rental Divisional revenue by segment (R2 286m)
  • 35. CONTRACT MINING AND PLANT RENTAL Increased volumes at Tharisa and successful start up at Mogalakwena Negotiating a further extension of 5 years at PPM Exiting loss making contracts (Wolvekrans January 2014 and Nkomati August 2014) Equipment will be redeployed to existing contracts that have requested increased volumes Benga performed in line with expectations MCC not affected by current industrial action in the platinum sector 35 Revenue by commodity 32% 24% 25% 35% 63% 41% 45% 49% 37% 19% 26% 31% 26% 28% 18% H1'14 FY'13 FY'12 FY'11 FY'10 PGM's Energy (Coal and Uranium) Other & Plant Rental
  • 36. MINING CONTRACTS 36 Client Mineral Location Monthly volumes End date Platmin - Pilanesberg Platinum Mine Platinum Northam, North West 1 250 000m3 *02/2014 Angloplat – Mogalakwena Mine Platinum Mokopane, Limpopo 400 000m3 08/2014 ARM/Norilsk JV - Nkomati Nickel Nickel Machadodorp, Mpumalanga 1 200 000m3 08/2014 Tharisa Minerals Chrome Marikana, North West 1 200 000m3 *09/2017 Rio Tinto - Benga Mine Coal Tete, Mozambique 2 100 000m3 12/2015 Khutala Colliery Coal Ogies, Mpumalanga 800 000m3 11/2014 Total Coal - Dorstfontein East Coal Kriel, Mpumalanga 1 400 000m3 01/2016 * Contracts extension under negotiation
  • 37. OUTLOOK 37
  • 38. ORDER BOOKS (Rm) 38 Total confirmed order book at 31 Dec 2013 = R 15 212m 3 200 2 872 2 444 2 192 1 889 5 842 6 228 6 254 5 262 4 704 6 170 9 983 10 636 9 871 11 800 4 956 0 5,000 10,000 15,000 20,000 Dec 2013 Jun 2013 Dec 2012 Jun 2012 Dec 2011 Industrial Equipment Fleet Management and Logistics Contract Mining and Plant Rental Contract mining contracts under negotiation
  • 39. OUTLOOK Strategy to remain invested in the UK will benefit earnings as the UK economy improves Drive to continually improve efficiencies has resulted in on-going cost reductions that will position the group for an anticipated weaker SA economy Earnings from leasing activities to remain defensive and will benefit from higher interest rates The mining sector, more specifically Benga, is expected to remain challenging 39
  • 40. QUESTIONS AND ANSWERS 40
  • 41. CONTACTS 41 Walter Hill (CEO) +27 (0)11 966 2509 whill@eqstra.co.za Jannie Serfontein (CFO) +27 (0)11 966 2163 jserfontein@eqstra.co.za Investor relations: Paul Siddall +27 (0)11 966 2523 psiddall@eqstra.co.za www.eqstra.co.za