AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014

Transcription

1 AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE

2 AGENDA 02 GROUP OVERVIEW 06 FINANCIAL REVIEW 22 DIVISIONAL REVIEW 37 OUTLOOK 39 QUESTIONS 1

3 GROUP OVERVIEW 02

4 GROUP OVERVIEW GROUP STRUCTURE INDUSTRIAL EQUIPMENT FLEET MANAGEMENT AND LOGISTICS CONTRACT MINING AND PLANT RENTAL DISTRIBUTION, LEASING RENTAL VALUE-ADDED SERVICES FOR: Forklifts Mobile cranes Port equipment Mining trucks Other industrial equipment VALUE-ADDED CORPORATE LEASING AND LOGISTICS FOR: 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 3

5 GROUP OVERVIEW SALIENT FEATURES REVENUE 9.8% R9 089 million to R9 978 million OPERATING PROFIT 9.6% R1 038 million to R938 million CASH GENERATED by operations before changes in working capital 3.4% R2 867 million to R2 965 million INTEREST-BEARING borrowings 5.0% R7 597 million to R7 976 million HEADLINE EARNINGS per share 26.3% cents to 76.7 cents REVENUE-GENERATING assets 4.8% R9 578 million to R million 4

6 MOVING VALUE GROUP OVERVIEW SALIENT FEATURES continued 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 5

7 FINANCIAL REVIEW 06

8 FINANCIAL REVIEW REVENUE OVERVIEW GROUP REVENUE* R9 978 million (2013: R9 089 million) INDUSTRIAL EQUIPMENT % Higher revenue from outright sales in UK FLEET MANAGEMENT AND LOGISTICS % Increase in leasing revenue and used vehicle remarketing CONTRACT MINING AND PLANT RENTAL % Increase due to a contract changing to wet rate and FX impact on Benga revenue * Excludes inter-company revenue of R370 million (2013: R204 million) 7

9 FINANCIAL REVIEW VALUE CHAIN REVENUE STATEMENT 2014 R MILLION Distribute Lease/rent Value-add Sell Total Industrial Equipment Fleet Management and Logistics Contract Mining and Plant Rental Total Industrial Equipment Fleet Management and Logistics Contract Mining and Plant Rental Total 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 8

10 FINANCIAL REVIEW VALUE CHAIN REVENUE STATEMENT % 12% 8% 11% 24% 25% 55% 56% Distribute Rent/lease Value-add Sell 9

11 FINANCIAL REVIEW GROUP INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2014 R MILLION % ch Revenue % Net operating expenses (6 974) (6 219) +12.1% Profit from operations % Depreciation, amortisation and recoupments (2 066) (1 832) +12.8% Operating profit (9.6%) Net foreign exchange (losses)gains (1) 7 Impairment of leasing assets (2) (16) Protech impairment (63) - Profit before net finance costs % Net finance costs (603) (543) +11.0% Profit before taxation (44.7%) 10

12 FINANCIAL REVIEW GROUP INCOME STATEMENT (cont) FOR THE YEAR ENDED 30 JUNE 2014 R MILLION % ch Profit before taxation (44.7%) Income tax expense (18) (78) (76.9%) Profit for the year (38.5%) RECONCILIATION OF TAXATION RATE (%) Standard taxation rate 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

13 FINANCIAL REVIEW WEIGHTED AVERAGE SHARES IN ISSUE MILLIONS Weighted average shares in issue, net of treasury shares Weighted share buy back (8.5) Weighted treasury shares sold for staff scheme 2.1 Weighted average shares in issue Basic and diluted HEPS (cents) Basic and diluted EPS (cents) 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 12

14 FINANCIAL REVIEW BALANCE SHEET - ASSETS R MILLION % ch Revenue-generating assets % Inventories % Trade and other receivables % Cash and cash equivalents (69.0%) Other assets % Total assets % % OPERATING ASSETS 15% South Africa Rest of Africa 14% 6% 77% UK 80% 13

15 FINANCIAL REVIEW BALANCE SHEET - EQUITY AND LIABILITIES R MILLION % ch Total equity % Interest-bearing borrowings % Accounts payables and provisions % Other liabilities % Total equity and liabilities % Revenue-generating assets Interest-bearing borrowings 14

16 FINANCIAL REVIEW CASH FLOW STATEMENT R MILLION % ch Cash generated from operations before working capital movements % Working capital movements* % Cash generated from operations % Cash flows from interest and taxation (630) (614) +2.6% Net cash flows from operating activities % 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%) * Includes R681 million (2013:R509 million) of leasing assets transferred to inventory as a non cash flow item 15

17 FINANCIAL REVIEW MOVEMENT IN CASH AND CASH EQUIVALENTS 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 * 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 16

18 FINANCIAL REVIEW CAPITAL EXPENDITURE R MILLION EXPANSION Industrial Equipment Fleet Management and Logistics Contract Mining and Plant Rental - 95 REPLACEMENT (NET OF PROCEEDS) Industrial Equipment Fleet Management and Logistics Contract Mining and Plant Rental TRANSFER TO INVENTORIES (681) (509) Net capital expenditure

19 FINANCIAL REVIEW FUNDING POSITION FUNDING FACILITIES (R MILLION) Facility size Utilised Unutilised RSA bank debt General banking facility Liquidity facility Term facility ECE backed debt US Ex-Im and Coface Call facility Asset manager Total RSA non-bank debt Bond Maturity date CP Various 823 EQS01 18 Nov EQS02 22 Sep EQS04 01 Jul EQS09 28 Nov EQS05 25 Apr EQS06 09 Apr EQS07 09 Apr EQS08A 04 Oct 2018 Amortising 419 Total SA funding Rest of world Total funding

20 R million FINANCIAL REVIEW RSA DEBT MATURITY PROFILE CP supported by a 13-month notice liquidity facility Planned bond issue through private placement 0 1H2015 2H2015 1H2016 2H2016 1H2017 2H2017 1H2018 2H2018 1H2019 Overnight borrowings ECA Bonds Long-term facilities Commercial paper 19

21 FINANCIAL REVIEW FUNDING 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 20

22 FINANCIAL REVIEW DEBT DIVERSIFICATION SOUTH AFRICAN DEBT DIVERSIFICATION 3% GEOGRAPHICAL DEBT DIVERSIFICATION 9% 9% 42% 55% 82% Bank debt Capital market and CP ECAs South Africa Rest of Africa United Kingdom 21

23 DIVISIONAL REVIEW 22

24 DIVISIONAL REVIEW SEGMENTAL CONTRIBUTIONS 60% REVENUE-GENERATING ASSETS 60% REVENUE 50% 51% 47% 43% 48% 47% 45% 44% 40% 20% 16% 34% 17% 32% 20% 33% 23% 34% 40% 20% 28% 28% 24% 25% 29% 29% 27% 26% 0% % Industrial Equipment Fleet Management and Logisics Contract Mining and Plant Rental 23

25 DIVISIONAL REVIEW INDUSTRIAL EQUIPMENT R MILLION % ch Revenue-generating assets % Inventories % Other assets % Operating assets % ch Revenue % EBITDA % Operating profit % Foreign exchange losses (5) (4) Net finance costs (153) (109) +40.4% Profit before taxation % PBT margin 5.0% 5.4% EBITDA to net finance costs 5.1x 5.8x 24

26 DIVISIONAL REVIEW INDUSTRIAL EQUIPMENT Divisional revenue by segment (R3 037 million) 9% 3% Forklifts - SA 24% 41% Forklifts - UK Heavy equipment (trucks, cranes, port equipment) Truck mounted cranes, aerial platforms and waste compactors Others 23% 25

27 DIVISIONAL REVIEW INDUSTRIAL EQUIPMENT SA FORKLIFT MARKET (UNITS) Q Q Q 2009 UK FORKLIFT MARKET (UNITS) Q Q Q Q Q Q Q 2011 F2014: -19.2% Y-O-Y 1Q Q Q 2014 F2014: +11.0% Y-O-Y 1Q Q Q 2014 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) 26

28 DIVISIONAL REVIEW OUTLOOK 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 ORDER BOOK (R m) Jun Dec Jun Dec Jun

29 DIVISIONAL REVIEW FLEET MANAGEMENT AND LOGISTICS R MILLION % ch Revenue-generating assets % Inventories (22.5%) Other assets % Operating assets % % ch Revenue % EBITDA % Operating profit % Net finance costs (184) (156) +17.9% Profit before taxation % PBT margin 6.5% 6.6% EBITDA to net finance costs 6.0x 6.3x 28

30 DIVISIONAL REVIEW FLEET MANAGEMENT AND LOGISTICS Divisional revenue by segment (R2 796 million) 7% 17% 25% 51% Fleet Management - passenger vehicles Fleet Management - commercial vehicles Logistics Fleet Management - Rest of Africa 29

31 Leasing units Value added units DIVISIONAL REVIEW FLEET MANAGEMENT AND LOGISTICS UNIT GROWTH 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 Leasing VAPs 30

32 DIVISIONAL REVIEW OUTLOOK 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 ORDER BOOK (R m) Jun Dec 2012 Jun Dec 2013 Jun

33 DIVISIONAL REVIEW CONTRACT MINING AND PLANT RENTAL R MILLION % ch Revenue-generating assets (3.0%) Inventories % Other assets (0.4%) Operating assets (1.7%) % ch Revenue % EBITDA (11.7%) Operating profit (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% EBITDA to net finance costs 4.2x 4.6x 32

34 DIVISIONAL REVIEW CONTRACT MINING AND PLANT RENTAL Divisional revenue by segment (R4 515 million) 20% 3% SA contract mining 7% SA plant rental Rest of Africa contract mining Rest of Africa plant rental 70% 33

35 DIVISIONAL REVIEW CONTRACT MINING AND PLANT RENTAL FY09 FY10 FY11 FY12 FY13 FY14 COMMODITY DIVERSIFICATION 63% 84% 19% 16% 18% 35% 37% 28% 25% 49% 26% 24% 45% 31% 36% 38% 26% PGMs Energy Other & plant rental 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) 34

36 DIVISIONAL REVIEW CLIENT MINING CONTRACTS COMMODITY LOCATION MONTHLY VOLUMES END DATE Platmin Pilanesberg Platinum Mine Platinum Northam, North West m³ 07/17 Angloplat Mogalakwena Mine Platinum Mokopane, Limpopo m³ 12/15 Tharisa Minerals Chrome Marikana, North West m³ 09/17 Khutala Colliery Coal Ogies, Mpumalanga m³ 02/15 Total Coal Dorsfontein East Coal Kriel, Mpumalanga m³ 01/16 Rio Tinto Benga Mine Coal Tete, Mozambique m³ 12/15 Sephaku - Aganang Mine 1 Lime stone Lichtenberg, North West m³ 03/17 Boteti - Karowe Diamond Mine 2 Diamonds Karowe, Botswana m³ 12/20 ¹ Start date September 2014 ² Start date November

37 DIVISIONAL REVIEW OUTLOOK 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 ORDER BOOK (R m) Jun 2012 Dec 2012 Jun Dec Jun

38 OUTLOOK 37

39 OUTLOOK GROUP 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 ORDER BOOK (R m) Jun Dec Jun Dec Jun Industrial Equipment Fleet Management and Logistics Contract Mining and Plant Rental 38

40 QUESTIONS 39