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EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015 1
INTERIM RESULTSFOR THE SIX MONTHS ENDED
31 DECEMBER 2015
4EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
LEGACYOutdated funding model
Market concerns
Capital market
Gearing limited divisional growth
Unbalanced risk portfolio during commodity peak
Unrealistic ROE targets
STRATEGY: BACKGROUND
CURRENT REALITYCore businesses healthy
Leaders in their fields; strong management
Geographical opportunities in stable markets
Growing market share and order books
Expanding services model
Mining sector capital constraints = opportunities
Proactive engagement with funders = balancing maturity profile
5EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
Implementation of 2020 strategy is based on:
Balanced capital structure
Evolving differentiated services business model
European market expansion
Recalibrate mining assets; focus on mining services
Operating efficiencies/margin improvement
Strong earning per share and cash generation
STRATEGY 2020
“Moving value globally,through powerful partnerships and creative solutions”
6EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
Selling of mining equipment in low demand – impairment of R736 million raised
Finalise sale of Benga assets – discontinued operations loss of R572 million,after taxation
Closure of non-core business units – discontinued operations loss of R112 million
Partnering of new revenue-generating assets to reach de-gearing targets
Reduced liquidity in South African capital markets
Credit rating limits access to capital market funding
Debt refinancing process
No dividend declared aligned with cash preservation policy
KEY CHALLENGES
7EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
PROGRESS
Reduce mining assets (all in use)
Cash preservation
FML African ERP rollout
Rationalisation of various businesses
Partnering of leasing assets
Conclude Benga (Mozambique) sale
Improve debt maturity profile
FML SA ERP rollout
European acquisitions/partnering
OEM partnering
FY20
16FY
2017
/18
8EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
SALIENT FEATURES– CONTINUING OPERATIONS
The results exclude discontinued operations
CASH GENERATEDBY OPERATIONS
BEFORE CHANGESIN WORKING CAPITAL
INCREASED
0.9%R1 496 million
to R1 510 million
OPERATINGPROFIT
INCREASED
7.1%R407 million
to R436 million
INTEREST-BEARINGBORROWINGS
INCREASED
0.3%R7 519 million
to R7 545 million
HEADLINEEARNINGSPER SHAREINCREASED
18.1%18.8 cents
to 22.2 cents
9EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
DIVISIONAL PERFORMANCE
DISTRIBUTION, LEASING RENTALVALUE-ADDED SERVICES FOR:
INDUSTRIALEQUIPMENT
ForkliftsPort equipmentLifting, loading and wasteOther industrial equipment
VALUE-ADDED CORPORATELEASING AND LOGISTICS FOR:
FLEET MANAGEMENTAND LOGISTICS
Passenger vehiclesLight, medium and heavycommercial vehiclesVehicle remarketingLogistics
OPENCAST MININGSERVICES:
CONTRACT MININGAND PLANT RENTAL
DrillingBlastingLoad and haulShort-term plant rentalLong-term plant leasing
REVENUE
R1 448mOPERATING PROFIT
R154mREVENUE-GENERATING ASSETS
R2 714mREVENUE CONTRIBUTION
35%
REVENUE
R1 054mOPERATING PROFIT
R202mREVENUE-GENERATING ASSETS
R3 054mREVENUE CONTRIBUTION
25%
REVENUE
R1 651mOPERATING PROFIT
R76mREVENUE-GENERATING ASSETS
R2 271mREVENUE CONTRIBUTION
40%
+4.3%
-5.5%
+8.0%
-6.9%
+5.2%
-4.5%
+4.8%
+46.2%
-47.0%
11EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
DIVISIONAL CONTRIBUTIONS
17%
20%
23%
25%
34%
32%
33%
34%
33%
38%
51%
47%
43%
42%
28%
0%
20%
40%
60%
2012 2013 2014 2015 H1'16
Industrial Equipment Fleet Management and Logisics Contract Mining and Plant Rental
REVENUE-GENERATING ASSETS
24%
25%
34%
31%
36%
40%
30%
40%
39%
47%
36%
45%
26%
29%
18%
0%
20%
40%
60%
2012 2013 2014 2015 H1'16
OPERATING PROFIT
12EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
SOUTH AFRICA
SA forklift market negatively effected by economy
Refocussed; increased sales coverage
Increased market share
600SA performed below expectations due to low demand
Closed 600SA manufacturing and Construction Equipment businesses
Heavylift business re-positioned
INDUSTRIAL EQUIPMENT
INDUSTRIALEQUIPMENT
55%
19%
17%
9%Forklifts - SA
Forklifts - UK
Heavy equipment(trucks, cranes, port equipment)
Lifting, loading and waste
0
2 000
4 000
6 000
Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15
Total market EIE totalSource: World Industrial Truck Statistics (WITS)
SA FORKLIFT MARKET (half yearly units)
REVENUE
R1 448mOPERATING PROFIT
R154mREVENUE-GENERATING ASSETS
R2 714mREVENUE CONTRIBUTION
35%
+4.3%
-5.5%
+8.0%
13EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
UK/EUROPE
Forklift business performed above expectations
Market growth of 17%
Maintained market share
Mirror SA strategy - increasing sales coverage
Identifying acquisition and partnership opportunities
INDUSTRIAL EQUIPMENT
INDUSTRIALEQUIPMENT
55%
19%
17%
9%Forklifts - SA
Forklifts - UK
Heavy equipment(trucks, cranes, port equipment)
Lifting, loading and waste
0
200
400
600
800
0
6
12
18
Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15
EIE
UK m
ark
et
Tota
l UK
ma
rket
(000
)
Total market EIE totalSource: British Industrial Truck Association (BITA)
UK FORKLIFT MARKET (half yearly units)
REVENUE
R1 448mOPERATING PROFIT
R154mREVENUE-GENERATING ASSETS
R2 714mREVENUE CONTRIBUTION
35%
+4.3%
-5.5%
+8.0%
14EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
Forklift businesses remain core focus
South Africa: Maintain market share, aftermarket opportunity
UK: increase market share, aftermarket opportunity
Selective acquisition/partnering opportunities in the UK and Europe
Build partnerships in Africa
More rationalisation and efficiency opportunities
Overall healthy order book for the long-term leasing book and cash sales
INDUSTRIAL EQUIPMENT OUTLOOK
* SA/UK order book split
2 2262 127
2 3812 419
3 2002 872
2 4442 192
13871 052
972977
0 500 1 000 1 500 2 000 2 500 3 000 3 500
*Dec 2015*Jun 2015
*Dec 2014*Jun 2014Dec 2013Jun 2013
Dec 2012Jun 2012
ORDER BOOK (R’m)
15EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
59%25%
5%11% Passenger vehicles
Commercial vehicles
Logistics
Rest of Africa
Change in business model to integrated services continuesto improve quality of earnings
Improved PBT margin from 7.6% to 10.2%
Exited sub-optimal contracts
Gearing reduced from 3:1 to 2:1 resulting in net debt reduction of R199m
Maintained negative working capital (-6.5%)
Marginal decrease in revenue-generating assets in line witha structured replacement program
Reduced staff costs to revenue ratio
Closure of Commodities and Nigerian businesses
FLEET MANAGEMENT AND LOGISTICS
FLEET MANAGEMENTAND LOGISTICS
REVENUE
R1 054mOPERATING PROFIT
R202mREVENUE-GENERATING ASSETS
R3 054mREVENUE CONTRIBUTION
25%
-6.9%
+5.2%
-4.5%
16EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
Quest system roll out into SA H2’16 following African implementation
Further reduction of overheads through Quest visibility and cost efficiencies
Focus on core annuity income strategy; maintain quality client base
Alternative funding structures to support leasing growth
Continued diversification into services
Growth opportunities exist
FLEET MANAGEMENT AND LOGISTICS OUTLOOK
4 4545 130
6 0436 160
5 8426 228
0 500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 4 500 5 000 5 500 6 000 6 500 7 000
Dec-15Jun 2015
Dec 2014Jun 2014
Dec 2013Jun 2013
*
ORDER BOOK (R’m)
*Exit of Commodities and under performing contracts. Clover fixed term contract.
17EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
Mozambique operations at Benga concluded in December 2015
Assets of R365 million earmarked for sales in SA, net of impairment of R736 million (R86 million excess assets costs)
Asset sales underway
Nsele contract commencement date extended to H2’16
Safety record: total project LTIF average 421 days in H1’16
Improved operational efficiencies impacting operating profit
Reduced revenue-generating assets by 44% since 2012; whilst keeping largest revenue contribution: “Doing more with less”
CONTRACT MINING AND PLANT RENTAL
CONTRACT MININGAND PLANT RENTAL
57%
8%
31%
4%SA contract mining
SA plant rental
Rest of Africa contract mining
Rest of Africa plant rental 41%
39%
36%
43%
39%
38%
16%
22%
26%
H1'16
H2'15
H2'14
PGMs Energy Other and plant rental
REVENUE
R1 651mOPERATING PROFIT
R76mREVENUE-GENERATING ASSETS
R2 271mREVENUE CONTRIBUTION
40%
+4.8%
+46.2%
-47.0%
18EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
MINING CONTRACTS
* The contract is under negotiation, operations are continuing
CLIENT COMMODITY LOCATIONMONTHLY VOLUMES
END DATE
Platmin – Pilanesberg Platinum Mine Platinum Northam, North West 1 600 000m3 03/21
Angloplat – Mogalakwena Mine Platinum Mokopane, Limpopo 400 000m3 12/15*
Tharisa Minerals Chrome Buffelspoort, North West 1 250 000m3 11/20
Exxaro – Dorsfontein East Coal Kriel, Mpumalanga 1 300 000m3 03/16*
Nsele Coal Coal Delmas, Mpumalanga 1 000 000m3 04/21
Sephaku - Aganang Mine Lime stone Lichtenberg, North West 125 000m3 03/17
Boteti - Karowe Diamond Mine Diamonds Karowe, Botswana 500 000m3 12/20
19EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
Global commodity pressures reduce miners capex; contract mining opportunity
Immediate opportunities with existing clients (scope and tenure) and outside usual tender opportunities
Opportunities to further improve efficiencies, utilisation, maintenance spend and contracting model on existing projects
Creative partnering and solutions creating success
Impaired assets to fair value based on current market conditions with a view to sell
Additional volumes secured and new contracts secured on the back of performance and contracting models
Using existing balance sheet for growth
CONTRACT MINING AND PLANT RENTALOUTLOOK
15 43211 508
8 5088 933
6 1709 983
10 636
0 2 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000
Dec 2015Jun 2015
Dec 2014Jun 2014
Dec 2013Jun 2013
Dec 2012ORDER BOOK (R’m)
21EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
GROUP INCOME STATEMENT
R’ MILLION H1’16 H1’15 % ch
Revenue 4 113 4 004 2.7
Net operating expenses (2 753) (2 703) 1.8
Profit from continuing operations 1 360 1 301 4.5
Depreciation, amortisation and recoupments (924) (894) 3.4
Operating profit 436 407 7.1
Net foreign exchange (losses) gains (16) 5
Impairment of leasing assets (736) -
(Loss) profit before net finance costs (316) 412
Net finance costs (300) (304) (1.3)
(Loss) profit before taxation from continuing operations (616) 108
22EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
GROUP QUALITY OF EARNINGS
R’ MILLION H1’16 H1’15
OPERATING PROFIT FROM CONTINUING OPERATIONS 436* 407**
Industrial Equipment 154 163
Fleet Management and Logistics 202 192
Contract Mining and Plant Rental 76 52
Corporate office 4 -
INCLUDED IN OPERATING PROFIT 120* 105**
Excess mining assets holding costs 86 68
Retrenchment costs 2 2
Section 54 stoppages at mining operation and closure costs 32 35
23EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
GROUP INCOME STATEMENT continued
The continuing EPS loss is primarily as a result of impairments on mining assets in Contract Mining and Plant Rental
Discontinued operations include:› Closure of Commodities and Construction Equipment business units› Conclusion of the Benga operations
R’ MILLION H1’16 H1’15
(Loss) profit before taxation from continuing operations (616) 108
Income tax income (expense) 178 (28)
(Loss) profit for the period from continuing operations (438) 80
Discontinued operations
(Loss) profit for the period from discontinued operations (684) 72
(Loss) profit for the period (1 122) 152
Benga: R572 millionConstruction: R69 millionCommodities: R43 million
24EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
WEIGHTED AVERAGE SHARES IN ISSUE
MILLIONS H1’16 H1’15
Weighted average shares in issue, net of treasury shares 391.1 396.9
Weighted treasury shares sold for staff scheme 0.1 0.2
Weighted average shares in issue 391.2 397.1
Continuing operations
Basic and diluted HEPS (cents) 22.2 18.8
Basic and diluted EPS (cents) (112.5) 18.9
Discontinued operations
Basic and diluted HEPS (cents) (26.1) 18.1
Basic and diluted EPS (cents) (174.9) 18.1
25EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
VALUE CHAIN REVENUE STATEMENT
Above is based on continuing operations, excluding Corporate Office eliminations
H1’16 R’ MILLION Distribute Lease/rent Value-add Sell Total
Industrial Equipment 436 516 407 89 1 448
Fleet Management and Logistics - 560 304 190 1 054
Contract Mining and Plant Rental - 238 1 400 13 1 651
Total continuing operations 436 1 314 2 105 298 4 153
H1’15 R’ MILLION Distribute Lease/rent Value-add Sell Total
Industrial Equipment 552 395 362 80 1 389
Fleet Management and Logistics - 675 297 209 1 181
Contract Mining and Plant Rental - 252 1 283 40 1 575
Total continuing operations 552 1 268 1 939 338 4 097
FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
26EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
H1’16
10%
32%
51%
7%
Distribute Rent/lease Value-add Sell
14%
31%47%
8%
VALUE CHAIN REVENUE STATEMENT
H1’15
27EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
AS AT 31 DECEMBER 2015
BALANCE SHEET – ASSETS
R’ MILLION H1’16 H2’15 % chRevenue-generating assets 8 030 9 982 (19.6)Inventories 1 108 1 062 4.3Trade and other receivables and derivatives 1 887 1 770 6.6Cash and cash equivalents 433 203 113.3Assets held for sale 1 181 - -Other assets 815 849 (4.0)Total assets 13 454 13 866 (3.0)
78%
11%11%
South AfricaRest of AfricaUK 73%
18%
9%OPERATING ASSETS
H2’15H1’16
Benga: R782 millionMining assets: R365 millionCommodities: R34 million
28EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
AS AT 31 DECEMBER 2015
BALANCE SHEET – EQUITY AND LIABILITIES
R’ MILLION H1’16 H2’15 % chTotal equity 2 885 3 770 (23.5)Interest-bearing borrowings 7 545 7 519 0.3Trade and other payables and derivatives 1 949 1 782 9.4Liabilities directly associated with assets held for sale 425 -Other liabilities 650 795 (18.2)Total equity and liabilities 13 454 13 866 (3.0)
0
3 000
6 000
9 000
12 000
2009 2010 2011 2012 2013 2014 2015 H1'16
Revenue-generating assets Interest-bearing borrowings
Benga debt: R259 millionBenga tax: R147 million
Commodities: R19 million
29EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
CASH FLOW STATEMENT
* Includes R196 million (2014: R292 million) of leasing assets transferred to inventory as a non-cash flow item
R’ MILLION H1’16 H1’15 % ch
Cash generated from operations before workingcapital movements 1 510 1 496 0.9
Working capital movements* 263 409 (35.7)
Cash generated from operations 1 773 1 905 (6.9)
Cash flows from interest and taxation (340) (348) 2.3
Net cash flows from operating activities 1 433 1 557 (8.0)
Net cash flows from investing activities (1 121) (1 356) 17.3
Net cash flows from financing activities (114) (169) 32.5
Net increase in cash and cash equivalents before effect of exchange rate 198 32
30EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
203
1 314
33
263
91
24
284
958
7
433
At beginning of the year
Cash generated from operations
Movement in finance lease receivables
Increase in working capital*
Decrease in interest-bearing borrowings
Taxation paid
Net finance costs and fx movements
Net capital expenditure*
Transactions with shareholders
At the end of the year
FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
MOVEMENT IN CASHAND 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
31EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
CAPITAL EXPENDITURE
R’ MILLION H1’16 H1’15
EXPANSION 452 676
Industrial Equipment 317 327
Fleet Management and Logistics 135 349
Contract Mining and Plant Rental - -
REPLACEMENT (NET OF PROCEEDS) 702 674
Industrial Equipment 127 109
Fleet Management and Logistics 298 331
Contract Mining and Plant Rental 277 234
TRANSFER TO INVENTORIES (196) (292)
Net capital expenditure 958 1 058
32EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
FUNDING POSITION – 31 DECEMBER 2015
* CTA – banks’ common terms agreement, which includes the Common Monetary Area and Botswana
FUNDING FACILITIES (R’ MILLION) FACILITY SIZE UTILISED HEADROOMRSA bank debt General banking facility 900 710 190
Liquidity facility 1 000 820 180Term facility 2 628 2 628
Botswana bank debt General banking facility 28 28Term facility 263 263
ECE backed debt US Ex-Im and Coface 136 136Total 4 955 4 557 398RSA non-bank debt Bond Maturity date 1 853
CP 22 Mar 2016 100EQS09 29 Nov 2016 100EQS05 25 Apr 2017 900EQS06 09 Apr 2018 340EQS07 09 Apr 2018 106EQS08A 04 Oct 2018 Amortising 279
Botswana non-bank debt Private placement 05 Sep 2018 28Total CMA funding 6 410 398Rest of world 1 731 1 394 337Total funding 7 804 735Cash and cash equivalent (433) 433Net funding 7 371 1 168
33EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
CMA (SA & BOTSWANA) BI-ANNUAL DEBT MATURITY PROFILE
CTA DEBT MATURITY PROFILE– 31 DECEMBER 2015
0
500
1 000
1 500
2 000
2 500
3 000
2H2016 1H2017 2H2017 1H2018 2H2018 1H2019 2H2019
ECA Overnight borrowings Commercial paper BondsLong term facilities Liquidity facility Botswana
34EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
DEBT DIVERSIFICATION
82%
4%14%
83%
6%
11%
80%
10%
10%
CMA (South Africa and Botswana)Rest of AfricaUnited Kingdom
69%
29%
2%
62%
36%
2%
59%
39%
2%
Bank debt Capital market ECAs
H1’16
H2’15
H1’15
H1’16
H2’15
H1’15
CTA DEBT DIVERSIFICATION GEOGRAPHICAL DEBT DIVERSIFICATION
36EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
Optimal capital structure will support earnings growthAppropriate partnering of leasing assets Pursue geographical opportunities in stable marketsFocus on quality of earningsCFO appointment to be announcedIndustrial Equipment: › Continue to focus on core business› Solid performance in the forklift businesses to continue in RSA and UK› A healthy order book in place to support annuity revenue growth
Fleet Management and Logistics: › Earnings remain robust› Drive VAP’s with measured expansion
Contract Mining and Plant Rental: › Disposal of impaired mining assets and seek opportunities with existing assets› Limit exposure of contract mining to 30% of group’s revenue-generating assets › Focus on efficiencies and contract management
GROUP OUTLOOK
EQSTRA UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015 37
QUESTIONS
IR CONTACT
HENK LINDEQUE+27 11 966 2523+27 82 876 [email protected]