2014 AGENDA 02 OVERVIEW 06 REVIEW 22 REVIEW 37 39 GROUP - - PowerPoint PPT Presentation

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

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014

3

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%

R2 867 million to R2 965 million

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%

R7 597 million to R7 976 million

INTEREST-BEARING

borrowings R9 578 million to R10 034 million

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

MOVING VALUE

06

FINANCIAL REVIEW

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014

7

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

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014

8

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

• f 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

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014

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FINANCIAL REVIEW

VALUE CHAIN REVENUE STATEMENT

12% 24% 55% 9% Distribute Rent/lease Value-add Sell 2014 2013 11% 25% 56% 8%

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 10

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

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 11

FINANCIAL REVIEW

GROUP INCOME STATEMENT (cont)

R’ MILLION 2014 2013 % ch 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

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 12

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

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 13

FINANCIAL REVIEW

BALANCE SHEET - ASSETS

R’ MILLION 2014 2013 % ch 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

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 14

FINANCIAL REVIEW

BALANCE SHEET - EQUITY AND LIABILITIES

R’ MILLION 2014 2013 % ch 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%

2 000 4 000 6 000 8 000 10 000 12 000 2009 2010 2011 2012 2013 2014 Revenue-generating assets Interest-bearing borrowings

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 15

FINANCIAL REVIEW

CASH FLOW STATEMENT

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

R’ MILLION 2014 2013 % ch 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%)

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 16

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

* *

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 17

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

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 18

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

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 19

FINANCIAL REVIEW

RSA DEBT MATURITY PROFILE

200 400 600 800 1 000 1 200 1 400 1H2015 2H2015 1H2016 2H2016 1H2017 2H2017 1H2018 2H2018 1H2019

R’ million

Overnight borrowings ECA Bonds Long-term facilities Commercial paper CP supported by a 13-month notice liquidity facility Planned bond issue through private placement

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 20

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

• n 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

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 21

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

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 23

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

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 24

DIVISIONAL REVIEW

INDUSTRIAL EQUIPMENT

R’ MILLION 2014 2013 % ch Revenue-generating assets 2 286 1 949 +17.3% Inventories 917 772 +18.8% Other assets 690 624 +10.6% 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) Net finance costs (153) (109) +40.4% Profit before taxation 153 145 +5.5% PBT margin 5.0% 5.4% EBITDA to net finance costs 5.1x 5.8x

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 25

DIVISIONAL REVIEW

INDUSTRIAL EQUIPMENT

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

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 26

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

INDUSTRIAL EQUIPMENT

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) 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

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 27

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 2 192 500 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)

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 28

DIVISIONAL REVIEW

FLEET MANAGEMENT AND LOGISTICS

R’ MILLION 2014 2013 % ch Revenue-generating assets 3 399 3 181 +6.9% Inventories 55 71 (22.5%) Other assets 614 398 +54.3% 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% Net finance costs (184) (156) +17.9% Profit before taxation 182 157 +15.9% PBT margin 6.5% 6.6% EBITDA to net finance costs 6.0x 6.3x

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 29

DIVISIONAL REVIEW

FLEET MANAGEMENT AND LOGISTICS

51% 25% 17% 7% Divisional revenue by segment (R2 796 million)

Fleet Management - passenger vehicles Fleet Management - commercial vehicles Logistics Fleet Management - Rest of Africa

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 30

A 33% unitary increase in sales

• f 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

FLEET MANAGEMENT AND LOGISTICS

20 000 40 000 60 000 80 000 100 000 120 000 140 000 5 000 10 000 15 000 20 000

2009 2010 2011 2012 2013 2014

Value added units Leasing units

Leasing VAPs UNIT GROWTH

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 31

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 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)

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 32

DIVISIONAL REVIEW

CONTRACT MINING AND PLANT RENTAL

R’ MILLION 2014 2013 % ch 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% EBITDA to net finance costs 4.2x 4.6x

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 33

DIVISIONAL REVIEW

CONTRACT MINING AND PLANT RENTAL

70% 7% 20%

3% SA contract mining SA plant rental Rest of Africa contract mining Rest of Africa plant rental

Divisional revenue by segment (R4 515 million)

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 34

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)

CONTRACT MINING AND PLANT RENTAL

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

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 35

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

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 36

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 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

EQSTRA AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014 38

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 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