AUDITED RESULTS - Extract · eqstra audited results for the year ended 30 june 2014 1 ... total 1...

2014

AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 1

AGENDA

02 GROUP

OVERVIEW 06 FINANCIAL

REVIEW 22 DIVISIONAL

REVIEW 37 OUTLOOK

39 QUESTIONS

02 GROUP OVERVIEW


GROUP OVERVIEW

GROUP STRUCTURE

DISTRIBUTION, LEASING RENTAL

VALUE-ADDED SERVICES FOR:

INDUSTRIAL

EQUIPMENT

Forklifts

Mobile cranes

Port equipment

Mining trucks

Other industrial equipment

VALUE-ADDED CORPORATE

LEASING AND LOGISTICS FOR:

FLEET MANAGEMENT

AND LOGISTICS

Passenger vehicles

Light, medium and heavy

commercial vehicles

Construction and mining equipment

Vehicle remarketing

Logistics

OPENCAST MINING

SERVICES:

CONTRACT MINING

AND PLANT RENTAL

Drilling

Blasting

Load and haul

Short-term plant rental

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 4 4

GROUP OVERVIEW

SALIENT FEATURES

REVENUE

9.8%

R9 089 million to R9 978 million

3.4%


CASH GENERATED by operations before changes in working capital

104.0 cents to 76.7 cents

HEADLINE EARNINGS per share

26.3%

OPERATING PROFIT

9.6%

R1 038 million to R938 million

5.0%


INTEREST-BEARING borrowings


REVENUE-GENERATING assets

4.8%

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 5 5

Results negatively impacted by once off items:

› In Contract Mining and Plant Rental; and

› Impairment of Protech investment

Fleet Management and Logistics and Industrial Equipment divisions

demonstrated resilience by recording an increase in revenue, operating

margins and profitability

Ongoing investments in revenue-generating assets translating into higher

annuity income and cash flows

Rest of Africa and UK increased their operating profit contribution

Continue to balance exposure to Contract Mining

No dividend declared:

› Position the group for future growth in Fleet Management and

Logistics and Industrial Equipment

› Will revert to stated dividend policy in near term

Global commodity demand under pressure which is impacting Contract

Mining and Plant Rental

GROUP OVERVIEW

SALIENT FEATURES continued

MO

VIN

G V

ALU

E

06 FINANCIAL REVIEW


FINANCIAL REVIEW

REVENUE OVERVIEW

* Excludes inter-company revenue of R370 million (2013: R204 million)

GROUP REVENUE* R9 978 million (2013: R9 089 million)

INDUSTRIAL

EQUIPMENT

FLEET MANAGEMENT

AND LOGISTICS

CONTRACT MINING

AND PLANT RENTAL

2 708

3 037

2013

2014 +12.1%

Higher revenue from outright

sales in UK

2 362

2 796

2013

2014 +18.4%

Increase in leasing revenue

and used vehicle remarketing

4 223

4 515

2013

2014 +6.9%

Increase due to a contract

changing to wet rate and FX

impact on Benga revenue


FINANCIAL REVIEW

Industrial Equipment value-add revenue decreased as a result of customers delaying

services on their owned fork trucks

Contract Mining and Plant Rental revenue from leasing/rent decreased on the back

of a slowdown of rentals into the mining sector

VALUE CHAIN REVENUE STATEMENT

2014 R’ MILLION Distribute Lease/rent Value-add Sell Total

Industrial Equipment 1 220 923 712 182 3 037

Fleet Management and Logistics - 1 212 930 654 2 796

Contract Mining and Plant Rental - 399 4 033 83 4 515

Total 1 220 2 534 5 675 919 10 348

2013

Industrial Equipment 1 051 740 744 173 2 708

Fleet Management and Logistics - 1 094 825 443 2 362

Contract Mining and Plant Rental - 509 3 602 112 4 223

Total 1 051 2 343 5 171 728 9 293


FINANCIAL REVIEW

VALUE CHAIN REVENUE STATEMENT

12%

24%

55%

9%

Distribute Rent/lease Value-add Sell

2014 2013

11%

25%

56%

8%


FINANCIAL REVIEW

GROUP INCOME STATEMENT

R’ MILLION 2014 2013 % ch

Revenue 9 978 9 089 +9.8%

Net operating expenses (6 974) (6 219) +12.1%

Profit from operations 3 004 2 870 +4.7%

Depreciation, amortisation and recoupments (2 066) (1 832) +12.8%

Operating profit 938 1 038 (9.6%)

Net foreign exchange (losses)gains (1) 7

Impairment of leasing assets (2) (16)

Protech impairment (63) -

Profit before net finance costs 872 1 029 +15.3%

Net finance costs (603) (543) +11.0%

Profit before taxation 269 486 (44.7%)

FOR THE YEAR ENDED 30 JUNE 2014


FINANCIAL REVIEW

GROUP INCOME STATEMENT (cont)


Profit before taxation 269 486 (44.7%)

Income tax expense (18) (78) (76.9%)

Profit for the year 251 408 (38.5%)

RECONCILIATION OF TAXATION RATE (%) 2014 2013

Standard taxation rate 28.0 28.0

Foreign tax incentive (14.1) (6.0)

Deferred tax asset recognition (5.1) (4.2)

Other taxation adjustments (2.1) 1.1

Effective taxation rate 6.7 18.9

FOR THE YEAR ENDED 30 JUNE 2014


FINANCIAL REVIEW

Lereko Mobility Proprietary Limited has an option to buy 5.8 million shares at the 20 day

VWAP as at 4 June 2015, alternatively Eqstra will repurchase and cancel the shares at

0.1 cents per share

WEIGHTED AVERAGE SHARES IN ISSUE

MILLIONS 2014 2013

Weighted average shares in issue, net of treasury shares 394.2 411.4

Weighted share buy back (8.5)

Weighted treasury shares sold for staff scheme 2.1

Weighted average shares in issue 396.3 402.9

Basic and diluted HEPS (cents) 76.7 104.0

Basic and diluted EPS (cents) 60.6 100.0


FINANCIAL REVIEW

BALANCE SHEET - ASSETS


Revenue-generating assets 10 034 9 578 +4.8%

Inventories 1 117 945 +18.2%

Trade and other receivables 1 704 1 576 +8.1%

Cash and cash equivalents 93 300 (69.0%)

Other assets 928 902 +2.9%

Total assets 13 876 13 301 +4.3%

77%

15%

8%

South Africa

Rest of Africa

UK

80%

14%

6% 2014 2013

OPERATING ASSETS


FINANCIAL REVIEW

BALANCE SHEET - EQUITY AND LIABILITIES


Total equity 3 451 3 275 +5.4%

Interest-bearing borrowings 7 976 7 597 +5.0%

Accounts payables and provisions 1 664 1 654 +0.6%

Other liabilities 785 775 +1.3%

Total equity and liabilities 13 876 13 301 +4.3%

0

2 000

4 000

6 000

8 000

10 000

12 000

2009 2010 2011 2012 2013 2014

Revenue-generating assets Interest-bearing borrowings


FINANCIAL REVIEW

CASH FLOW STATEMENT

* Includes R681 million (2013:R509 million) of leasing assets transferred to inventory as a non cash flow item


Cash generated from operations before working

capital movements 2 965 2 867 +3.4%

Working capital movements* 457 292 +56.5%

Cash generated from operations 3 422 3 159 +8.3%

Cash flows from interest and taxation (630) (614) +2.6%

Net cash flows from operating activities 2 792 2 545 +9.7%

Net cash flows from investing activities (3 117) (2 821) +10.5%

Net cash flows from financing activities 113 (44)

Net decrease in cash and cash equivalents before

effect of exchange rate (212) (320) (33.8%)


FINANCIAL REVIEW

MOVEMENT IN CASH AND CASH EQUIVALENTS

* Changes in working capital and net capital expenditure have been adjusted for the leasing assets

that were transferred to inventory as a non cash flow item

300

2 965

263

44

224

27

598

2 449

150

31

93

At beginning of the year

Cash generated from operations

Increase in interest-bearing borrowings

Movement in finance lease receivables

Increase in working capital

Taxation paid

Net finance costs and fx movements

Net capital expenditure

Transactions with shareholders

Business acquisitions and investments

At the end of the year

*

*


FINANCIAL REVIEW

CAPITAL EXPENDITURE

R’ MILLION 2014 2013

EXPANSION 1 045 1 199

Industrial Equipment 667 565

Fleet Management and Logistics 378 539

Contract Mining and Plant Rental - 95

REPLACEMENT (NET OF PROCEEDS) 2 085 1 636

Industrial Equipment 189 285

Fleet Management and Logistics 1 144 744

Contract Mining and Plant Rental 752 607

TRANSFER TO INVENTORIES (681) (509)

Net capital expenditure 2 449 2 326


FINANCIAL REVIEW

FUNDING POSITION

FUNDING FACILITIES (R’ MILLION) Facility size Utilised Unutilised

RSA bank debt General banking facility 900 101 799

Liquidity facility 1 000 1 000

Term facility 2 628 2 628

ECE backed debt US Ex-Im and Coface 216 216

Call facility Asset manager 50 50

Total 4 794 2 995 1 799

RSA non-bank debt Bond Maturity date 3 419

CP Various 823

EQS01 18 Nov 2014 270

EQS02 22 Sep 2015 50

EQS04 01 Jul 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 419

Total SA funding 6 414

Rest of world 1 720 1 488 232

Total funding 7 902


FINANCIAL REVIEW

RSA DEBT MATURITY PROFILE

0

200

400

600

800

1 000

1 200

1 400

1H2015 2H2015 1H2016 2H2016 1H2017 2H2017 1H2018 2H2018 1H2019

R’

mill

ion

Overnight borrowings ECA Bonds Long-term facilities Commercial paper

CP supported by

a 13-month notice

liquidity facility

Planned

bond issue

through

private

placement


After year-end the short-term UK debt was refinanced with a GBP53 million

3 year facility with a substantial reduction in guarantees from SA

R278 million bank debt maturing in March 2015 was extended by 3 years

S&P downgraded Eqstra’s long-term credit rating to zaBBB+ in April 2014 based

on their view that the group is exposed to the cyclical mining sector

Plan to balance the groups exposure to SA mining to 30% of group revenue

Negotiate contracts to cover larger fixed cost component to mitigate

standing time

Plan to raise about R250m through a private placement over the next quarter

FINANCIAL REVIEW

FUNDING


FINANCIAL REVIEW

DEBT DIVERSIFICATION

42%

55%

3%

Bank debt Capital market and CP ECAs

SOUTH AFRICAN DEBT DIVERSIFICATION

82%

9%

9%

South Africa Rest of Africa United Kingdom

GEOGRAPHICAL DEBT DIVERSIFICATION

22 DIVISIONAL REVIEW


DIVISIONAL REVIEW

SEGMENTAL CONTRIBUTIONS

16% 17%

20%

23%

34% 32% 33% 34%

50% 51%

47%

43%

0%

20%

40%

60%

2011 2012 2013 2014

Industrial Equipment Fleet Management and Logisics Contract Mining and Plant Rental

REVENUE-GENERATING ASSETS

24% 25%

29% 29% 28% 28%

26% 27%

48% 47% 45% 44%

0%

20%

40%

60%

2011 2012 2013 2014

REVENUE


DIVISIONAL REVIEW

INDUSTRIAL EQUIPMENT



Inventories 917 772 +18.8%


Operating assets 3 893 3 345

2014 2013 % ch

Revenue 3 037 2 708 +12.1%

EBITDA 780 636 +22.6%

Operating profit 311 258 +20.5%

Foreign exchange losses (5) (4)


Profit before taxation 153 145 +5.5%

PBT margin 5.0% 5.4%

EBITDA to net finance costs 5.1x 5.8x


DIVISIONAL REVIEW


41%

23%

24%

9% 3%

Divisional revenue by segment (R3 037 million)

Forklifts - SA

Forklifts - UK

Heavy equipment

(trucks, cranes, port equipment)

Truck mounted cranes, aerial

platforms and waste compactors

Others


UK delivered a commendable

performance achieving a 19% ROE

in GBP

SA delivered a solid financial

performance despite a weak forklift

market

Achieved objective of reducing

reliance on SA forklift business to

below 50% of divisional revenue

Re-signed the Toyota and BT

distributorship agreement for a

further 3 years and celebrating

a 30 year partnership

The Heavy Equipment business

benefitted from a solid performance

from Konecranes and improvement

in Terex Trucks business unit

The leasing to cash sales split in

SA is now approximately 55/45

(previously 50/50)

DIVISIONAL REVIEW


0

1 000

2 000

3 000

1Q

2007

1Q

2008

1Q

2009

1Q

2010

1Q

2011

1Q

2012

1Q

2013

1Q

2014

SA FORKLIFT MARKET (UNITS)

0

3 000

6 000

9 000

1Q

2007

1Q

2008

1Q

2009

1Q

2010

1Q

2011

1Q

2012

1Q

2013

1Q

2014

UK FORKLIFT MARKET (UNITS)

F2014: -19.2% Y-O-Y

F2014: +11.0% Y-O-Y


DIVISIONAL REVIEW

Expecting SA forklift and heavy lift market to remain challenging, with the UK

market increasing marginally

Healthy order book for the long-term leasing book and cash sales

Securing a new mobile crane distributorship

Further growth opportunities in the UK

Targeting further expansion of Konecranes into sub Sahara Africa and UK

OUTLOOK

3 396

3 200

2 872

2 444

2 192

0 500 1 000 1 500 2 000 2 500 3 000 3 500

Jun 2014

Dec 2013

Jun 2013

Dec 2012

Jun 2012

ORDER BOOK (R’m)


DIVISIONAL REVIEW

FLEET MANAGEMENT AND LOGISTICS



Inventories 55 71 (22.5%)


Operating assets 4 068 3 650 +11.5%

2014 2013 % ch

Revenue 2 796 2 362 +18.4%

EBITDA 1 105 986 +12.1%

Operating profit 366 311 +17.7%


Profit before taxation 182 157 +15.9%

PBT margin 6.5% 6.6%



DIVISIONAL REVIEW


51%

25%

17%

7%


Fleet Management - passenger vehicles

Fleet Management - commercial vehicles

Logistics

Fleet Management - Rest of Africa


A 33% unitary increase in sales

of value-added products

“VAPs” (GPS, managed

maintenance, warranties)

during the year

Developed a successful supply

chain partnership with a

leading dealership group

Loss making businesses have

been closed with further

consolidation of

underperforming business units

DIVISIONAL REVIEW


0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

0

5 000

10 000

15 000

20 000

2009 2010 2011 2012 2013 2014

Va

lue

ad

de

d u

nits

Lea

sin

g u

nits

Leasing VAPs

UNIT GROWTH


DIVISIONAL REVIEW

Annuity nature of business will ensure a defensive position in a challenging and

competitive market

The implementation of our new ERP system will drive future efficiencies and support

progress towards reaching ROE targets

Increase activity in government and parastatal outsource tenders

We anticipate steady growth from an active African market

OUTLOOK

6 160

5 842

6 228

6 254

5 262

0 1 000 2 000 3 000 4 000 5 000 6 000 7 000

Jun 2014

Dec 2013

Jun 2013

Dec 2012

Jun 2012

ORDER BOOK (R’m)


DIVISIONAL REVIEW

CONTRACT MINING AND PLANT RENTAL


Revenue-generating assets 4 383 4 517 (3.0%)

Inventories 145 102 +42.2%

Other assets 1 066 1 070 (0.4%)

Operating assets 5 594 5 689 (1.7%)

2014 2013 % ch

Revenue 4 515 4 223 +6.9%

EBITDA 1 112 1 259 (11.7%)

Operating profit 239 473 (49.5%)

Leasing assets impairment (2) (18)

Net foreign exchange gains 2 10

Net finance costs (263) (273) (3.7%)

Profit before taxation (24) 192

PBT margin (0.5%) 4.5%



DIVISIONAL REVIEW


70%

7%

20%

3%

SA contract mining

SA plant rental

Rest of Africa contract mining

Rest of Africa plant rental



DIVISIONAL REVIEW

PBT negatively impacted by:

› 3 week industrial action (R135 million)

› Abnormal rainfall (R70 million)

› Contract termination costs (R20 million)

› Slow down in SA plant rental business

exposed to mining sector

New contracts secured (Aganang, Karowe

and Rockwell) and will absorb off contract

surplus equipment

Existing contracts extended and additional

volumes secured on some contracts

Successful negotiation with Rio Tinto on

compensation for the suspension of work

at Benga. Contract has been changed to

cover fixed costs for any future stoppages

Loss making contracts ended (Wolwekrans

and Nkomati)


36%

24%

25%

35%

63%

84%

38%

45%

49%

37%

19%

26%

31%

26%

28%

18%

16%

FY14

FY13

FY12

FY11

FY10

FY09

PGMs Energy Other & plant rental

COMMODITY DIVERSIFICATION


DIVISIONAL REVIEW

MINING CONTRACTS

CLIENT COMMODITY LOCATION

MONTHLY

VOLUMES

END

DATE

Platmin – Pilanesberg Platinum Mine Platinum Northam, North West 1 000 000m³ 07/17

Angloplat – Mogalakwena Mine Platinum Mokopane, Limpopo 400 000m³ 12/15

Tharisa Minerals Chrome Marikana, North West 1 500 000m³ 09/17

Khutala Colliery Coal Ogies, Mpumalanga 800 000m³ 02/15

Total Coal – Dorsfontein East Coal Kriel, Mpumalanga 1 300 000m³ 01/16

Rio Tinto – Benga Mine Coal Tete, Mozambique 2 100 000m³ 12/15

Sephaku - Aganang Mine1 Lime stone Lichtenberg, North West 125 000m³ 03/17

Boteti - Karowe Diamond Mine2 Diamonds Karowe, Botswana 403 000m³ 12/20

¹ Start date September 2014

² Start date November 2014


DIVISIONAL REVIEW

Global commodity prices to remain under pressure

Two year SAFCEC wage agreement in place until August 2015

Division to benefit from the exit of underperforming and loss making contracts,

however redeployment of surplus equipment will be challenging

Change in ownership of two contracts have potential upside

Repositioning of the plant rental business from short-term to long-term contracts

OUTLOOK

8 933

6 170

9 983

10 636

9 871

0 2 000 4 000 6 000 8 000 10 000 12 000

Jun 2014

Dec 2013

Jun 2013

Dec 2012

Jun 2012

ORDER BOOK (R’m)

37 OUTLOOK


OUTLOOK

The group anticipates a weaker South African economy

Earnings from leasing activities will remain defensive

Continue to diversify our products, clients and geographic base in all our businesses

We expect the combined divisional efforts will improve the groups ability to deliver

acceptable returns to shareholders

GROUP OUTLOOK

3 396

3 200

2 872

2 444

2 192

6 160

5 842

6 228

6 254

5 262

8 933

6 170

9 983

10 636

9 871

0 5 000 10 000 15 000 20 000

Jun 2014

Dec 2013

Jun 2013

Dec 2012

Jun 2012

Industrial Equipment Fleet Management and Logistics Contract Mining and Plant Rental

ORDER BOOK (R’m)

39 QUESTIONS

AUDITED RESULTS - Extract · eqstra audited results for the year ended 30 june 2014 1 ... total 1...

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Transcript of AUDITED RESULTS - Extract · eqstra audited results for the year ended 30 june 2014 1 ... total 1...