Zeda Limited · JSE:ZZD
Zeda — FY2023 Earnings Presentation
34 slides from Zeda's earnings presentation, November 2023
Slide 1: Annual Results FY2023
ANNUAL RESULTS FY2023 FOR THE YEAR ENDED 30 SEPTEMBER 2023 ZEDA Annual Results FY2023 2
Slide 2: Agenda
AGENDA BUSINESS OVERVIEW FINANCIAL OVERVIEW STRATEGY UPDATE OUTLOOK Q&A
Slide 3: Business Overview
BUSINESS OVERVIEW
Slide 4: Navigating the Impact of the Operating Environment
NAVIGATING THE IMPACT OF THE OPERATING ENVIRONMENT Recovery of Inbound Increased Corporate Rising interest market activities rates Improved fleet supply Financial burden of Reduction of black R1.55bn unbundling debt ownership Used car margin pressure Raised new funding ZEDA Annual Results FY2023 202
Slide 5: Stellar Financial Performance in a Challenging Environment
STELLAR FINANCIAL PERFORMANCE IN A CHALLENGING ENVIRONMENT +12% Revenue +18% EBITDA +23% Operating profit growth to R9.1bn EBITDA margin 36% Operating margin 17% +31% EPS ROE of 37% ROIC of 18.7% HEPS growth of 17% +400 basis points above WACC of 12.8% ZEDA Annual Results FY2023 2022 6
Slide 6: Excellent Strategy Execution to Sustain the Business
EXCELLENT STRATEGY EXECUTION TO SUSTAIN THE BUSINESS A1.za BBBEE Level 1 Settlement of national scale for operating entities R1.55bn Ba3 Global scale unbundling debt Credit rating by Moody’s +44% growth in heavy commercial fleet Extended subscription Corporatisation of model certain Van Rental terri
Slide 7: Solid Performance Demonstrates ESG Commitment
SOLID PERFORMANCE DEMONSTRATES ESG COMMITMENT Improved LTIFR to 0.18 18% reduction in 94% increase in electricity consumption waste recycle (FY2022:0.55) 122 Youth Employment First 10 EV Trucks 4 500 potholes p/m with Service (YES) learners Discovery Insure Patrol Vehicle for 16% increase in Hybrid
Slide 8: Rental Business: Strong Performance
RENTAL BUSINESS: STRONG PERFORMANCE increase in revenue to Key messages: +12% R6.6bn • Strong performance in car rental business • Growing contracted and discretionary business • Solid performance in Corporate increase in segment up 28% EBITDA to 17% • Ongoing recovery of the Inbound R1.9bn segment
Slide 9: Leasing Business: Exceptional Performance
LEASING BUSINESS: EXCEPTIONAL PERFORMANCE increase in revenue to Key messages: +13% R2.5bn • Exceptional performance by the leasing business • Growth underpinned by the Corporate sector up 6% • Heavy commercial strategy bearing increase in fruit, with commercial units up 44% (excludes 337 defleet) +
Slide 10: Car Sales Business: Resilient Performance in the Face of Headwinds
CAR SALES BUSINESS: RESILIENT PERFORMANCE IN THE FACE OF HEADWINDS Key messages cash generated +6% • Resilient car sales business despite R2.7bn challenging trading environment • Stronger focus on retail – improved mix to 71:29 trade retail mix • 1% improvement in retail contribution in retail • Mar
Slide 11: Financial Overview
) ZEDA FINANCIAL a OVERVIEW iy
Slide 12: Consistent Delivery of Profitable Business
CONSISTENT DELIVERY OF PROFITABLE BUSINESS Average Fleet EBITDA (Rm) Leasing Operations Operating Profit/(Loss) (Rm) EBITDA Margin Rental Operations Operating Margin 30 27 20 19 18 47 43 35 32 36 26% 22% 29% 35% 36% 11% 3% 11% 16% 17% Revenue +22.8% 1 552 +18.0% 10 161 +12.4% 3 321 2 814 9 145 1 264
Slide 13: Rental and Leasing Revenue Surpassed 2019 Levels
RENTAL AND LEASING REVENUE SURPASSED 2019 LEVELS Revenue (R’m) 12 000 10,162 +12% 9,145 544 10 000 121 8,133 +21% 2 126 7,672 1 852 100 2 167 219 8 000 +17% 1 817 3 006 6 000 3 403 Car sales 2 642 +29% 1 684 units decreased 4 000 36% 2023 vs 2019 Commissions & Other 4 486 -2% 3 952 Leasing 3 539 3 4
Slide 14: Net Finance Costs
NET FINANCE COSTS* (Rm/%) Net finance costs have increased, driven by higher 11,4% market rates and 700 12,0% debt levels 600 10,0% 500 7,2% 8,0% 400 4,7% 6,0% 300 576 4,0% 200 333 Net finance costs* 218 2,0% Net finance costs (excl. IFRS 16) up 100 Average debt costs more than 70% compared to 2022
Slide 15: Tax Charge Reconciliation
TAX CHARGE RECONCILIATION 2022 2023 6.0% 35,4% (0.3%) 1.7% 28,0% 27,0% (7.6%) 1.5% 0.4% 21,3% 2022 Statutory Net PY tax Impairment Other * 2022 Effective 2023 Statutory Net PY tax Non-deductible Withholding 2023 Effective rate underrprovisions tax rate rate overprovisions expenses tax tax rate Cumul
Slide 16: Robust Earnings
ROBUST EARNINGS Basic Earnings per share Headline Earnings per share (cents) (cents) +17.2% +30.7% 450 Continued 450 earnings 400 381 387 growth 400 350 325 350 296 300 300 250 250 200 190 200 190 Non-operating and capital item 150 relates to sale of property 150 100 Earnings were affected by the hi
Slide 17: Superior Returns
SUPERIOR RETURNS Return on Invested Capital vs WACC Return on Equity (%) (%) ROIC 20,0 40,0 achieved 18,7 36,7 above the 18,0 WACC 35,0 32,7 16,0 30,0 14,0 12,8 12,3 11,9 12,3 12,0 25,0 10,0 20,0 18,0 7,5 Capital deployment strategy 8,0 15,0 returned a ROIC above WACC 6,0 10,0 WACC updated to reflec
Slide 18: Demand Driven Fleet Growth
DEMAND DRIVEN FLEET GROWTH Classes of assets (R’m) Demand 2021 2022 2023 driven PPE (excl vehicles) 135 116 106 Fleet Fleet Assets - Rental 2,818 3,812 4,987 growth Fleet Assets - Leasing 3,462 3,509 4,100 Other Assets 743 847 941 Net working Capital - Receivables 3,426 1,499 1,292 - Inventory 307 4
Slide 19: Embedded Equity
EMBEDDED EQUITY (Rm/times) 10 000 12,00 8,13 Net debt to 9 000 10,00 8,30 EBITDA 8 000 7 000 8,00 improved at 6 000 5,50 1.45 9 087 5 000 6,00 7 321 4 000 6 280 4 746 *4,154 4,00 4 826 3 000 2,16 2 000 2,00 1 000 1,48 1,45 Net debt - 0,00 FY2021 FY2022 FY2023 Net debt to EBITDA Net debt at R4.8b Net
Slide 20: Capital Structure
CAPITAL STRUCTURE (Rm) Total 7 230 Net Debt Total to Equity Gross Debt: Improved 2 404 5 828 2,404 5,668 Net Equity to 67% Debt (842) 4,826 33% 1 674 Equity: 29% 3 727 Net 4 4 826% Net Debt 4 154 Net Debt: 67% 71% Equity is 33% of capital structure 1 941 Short Term Long Term Net Debt up from R4.1b t
Slide 21: Strong Cash Generation
STRONG CASH GENERATION 6,518 (3,507) STRONG CASH GENERATED FROM OPERATIONS (6) 126 4 826 598 4 154 (3,341) 284 Net debt to EBITDA at 1.45 for September 2023 Fleet investment of R6.5bn Net cash inflow R536m Opening Cash Net Decrease Tax paid Net interest Investing Other Closing net debt before Invest
Slide 22: Funding Facilities
FUNDING FACILITIES (Rm) 9,466 3,798 SEPTEMBER YTD FY23 Headroom 5,668 • Sufficient headroom of R3.8 billion • Balanced funding mix • Operating Assets and Liability matching • Solidify relationships with lenders Total Facilities Utilization Headroom • Introduced diversified funding Unbundling Loan Un
Slide 23: Key Take Away Messages
KEY TAKE AWAY MESSAGES Stable net debt of R4.5 billon Demand driven Consistency in delivering over the past 3 years Fleet growth profitable businesses Repositioned Diversified revenue Disciplined cost customer segments streams containment ZEDA Annual Results FY2023 2022 24
Slide 24: Strategy Update
STRATEGY UPDATE
Slide 25: Discipline in Strategy Execution
DISCIPLINE IN STRATEGY EXECUTION Outcomes 2021-2023 Usership economy NPAT: Prepare unbundling R365:m- R742m and listing Fix: • Mozambique and Integrated EBITDA margin: Botswana mobility Externalise the debts • BBBEE1 for operating 29%-36% entities Build internal capabilities ROIC 2021: Diversify rev
Slide 26: Expanding Subscription
EXPANDING SUBSCRIPTION iLEASE Avis where 12 – 48 months you are • Tailored Monthly • Brand agnostic 1 – 11 months rental • Best Total Cost of Flexibility Usership Accessible on short • Flexible Terms 1 – 11 months notice • Comprehensive Competitive pricing insurance All Customer • New or Used Segmen
Slide 27: Medium Term Outlook
MEDIUM TERM OUTLOOK
Slide 28: Key Focus Areas
KEY FOCUS AREAS Wellness and safety of Customer Centricity Customer Employee employees Operating Model (Zero harm) Tailored Solutions Experience Value Proposition Recognised as an Employer of Choice Expansion of renewable energy programme Enterprise and Sustainable Enterprise Supplier Establish Carb
Slide 29: Key Focus Areas – Growth
KEY FOCUS AREAS – GROWTH Long haul and On demand Inbound recovery last mile: Rental of Self service & & Corporate trucks and vans Driven service Greater Africa Expansion of Digitalise the growth subscription Car Sales business ZEDA Annual Results FY2023 2022 30
Slide 30: Medium Term Guidance
MEDIUM TERM GUIDANCE Key messages: Maintain Sustain • Maintain topline growth trajectory supported by growth growth margins in market segments trajectory • Manage margins supported by growth in profitability • Manage balance sheet – manage net debt to EBITDA, not an absolute number • Deliver solid r
Slide 31: Thank You Q&A
THANK YOU Q&A
Slide 32: Annexure
ANNEXURE
Slide 33: High Yield Business Supports Growth
HIGH YIELD BUSINESS SUPPORTS GROWTH Customer segments (billed days contribution) 4% 8% 15% 19% 15% 13% 30% 33% 30% Inbound 18% 21% 32% Local Replacement 8% Subscription 8% 12% 5% Public sector 17% 15% Corporate FY2021 FY2022 FY2023 ZEDA Annual Results FY2023 2022 34
Slide 34: Double Digit Growth Across the Leasing Product Portfolios
DOUBLE DIGIT GROWTH ACROSS THE LEASING PRODUCT PORTFLIOS Customer segments Product segments Product segment (revenue contribution) (revenue growth) Greater Africa Financed Managed Lease (FML) Public sector Operating Lease Managed Maintenance (OLMM) Corporate Maintenance Upfront (MAU) 18% 16% 18% 16%