Sgh Limited · ASX:SGH
Sgh — Seven Group Holdings — FY2014 Earnings Presentation
35 slides from Sgh's earnings presentation, Aug 27, 2014
Slide 1: ASX cover letter for Presentation of Results
27 August 2014 Company Announcements Office Australian Securities Exchange Limited Level 6, 20 Bridge Street SYDNEY NSW 2000 By Electronic Lodgment Total pages: 35 (including cover letter) Dear Sir / Madam PRESENTATION OF RESULTS Following is a copy of the Presentation of Results for the financial y
Slide 2: Results for the Year Ended 30 June 2014
RESULTS FOR THE YEAR ENDED 30 JUNE 2014 Presentation on 27 August 2014
Slide 3: Disclaimer
Disclaimer Basis of preparation of slides Included in this presentation is data prepared by the management of Seven Group Holdings Limited (SGH) and other associated entities and investments. This data is included for information purposes only and has not been subject to the same level of review b
Slide 4: Today's Agenda
Today’s Agenda Overview & Outlook Don Voelte Financials Richard Richards Operations Ryan Stokes Media Investment Portfolio Property Industrial Services - WesTrac Group - AllightSykes - Coates Hire Group Energy Key Takeaways and Questions Don Voelte Results Presentation – FY14 27 Au
Slide 5: Group Highlights
Group Highlights Miners continuing to focus on cost efficiency with lower demand for new Mining sector downturn equipment continues to impact results Cost reductions delivered in FY13 and FY14 have positioned the business for growth in product support Media sector continued SWM delivered growt
Slide 6: Key Financial Numbers
Key Financial Numbers Total Group – Full Year Result Financial results for year ended FY 14 FY 13 % Change Trading revenue $ 3,088 m $ 4,752 m -35% Underlying EBIT 1, 2 $ 374 m $ 623 m -40% Underlying net profit after tax (excluding significant items) 2 $ 253 m $ 399 m -37% Significant Items (includ
Slide 7: Capital Management
Capital Management Ensure an efficient capital structure and maintain prudent levels of gearing Objectives Retain balance sheet flexibility to fund working capital needs of operating businesses through the cycle and pursue growth & investment opportunities Our aim is to maintain and grow the d
Slide 8: Transformation in Progress
Transformation in Progress Good progress being made across a range of focus areas – New management team in place at WesTrac Australia and new CEOs transitioning into WesTrac China and Coates Hire – Emphasis now shifting to systems and processes required to improve customer service and value propos
Slide 9: Outlook
Outlook – refer disclaimer Seven West Media sees the advertising market having low single digit growth in television, with magazines rate of decline to lessen and newspapers to continue current trend Trading conditions in the mining and industrial services sector remain challenging with coal and
Slide 10: Consolidated Profit and Loss
Consolidated Profit and Loss Underlying Performance $m FY 14 FY 13 Change % Please refer to the Annual Report for the Revenue 3,088.2 4,751.6 -35% detailed statutory Other income 104.6 78.8 33% results Share of results from equity accounted investees 104.5 125.1 -16% Significant items are Total
Slide 11: Summary of Significant Items
Summary of Significant Items $m FY 14 FY 13 Gain on sale - Consolidated Media - 50.1 Gain on sale - Property (KS1, KS2, KS3) 1.3 29.4 Gain on sale of other investments & fair value of derivatives 38.2 13.8 (Impairment) / impairment reversal - SWM equity (42.2) 77.9 (Impairment) - other - (9.6) Trans
Slide 12: Earnings Summary
Earnings Summary Total WesTrac WesTrac Allight Coates Media Portfolio $m Corp. Group Aus China Sykes Hire Investm. Investm. Trading revenue 3,088.2 2,377.3 616.4 94.5 - - - - Statutory EBIT 363.1 198.2 19.6 (4.6) 22.5 60.9 84.2 (17.7) Add back unfavourable individually significant items Restructurin
Slide 13: Consolidated Balance Sheet
Consolidated Balance Sheet Total Group As at As at Change Significant reduction in $m 30 Jun 14 30 Jun 13 % working capital levels Trade and other receivables 599.0 721.6 -17% Investment portfolio has Inventories 856.6 1,050.5 -18% generated value Intangible assets 874.8 765.2 14% Net debt inc
Slide 14: Consolidated Investment Listing
Consolidated Investment Listing Total Group As at As at $m 30 Jun 14 30 Jun 13 Seven West Media (Ordinary shares + RCPS) 3 964.0 947.1 Listed Portfolio 1,2 915.6 758.8 Coates Hire 3 452.3 430.2 Nexus Energy 4 129.2 - Other 72.5 73.0 Total investments 2,533.6 2,209.1 Notes: 1. Available for sale secu
Slide 15: Balance Sheet Metrics
Balance Sheet Metrics Total Group As at As at $m 30 Jun 14 30 Jun 13 Total assets 5,399.4 5,654.3 Total shareholder's equity 3,142.8 3,035.3 Net debt1 1,096.6 746.9 Debt ratios Gearing: net debt1 / net debt plus equity 25.9% 19.7% Net debt1 / underlying EBITDA2 2.6x 1.1x Interest cover2 5.9x 6.3x 1.
Slide 16: Operating Cash Flow
Operating Cash Flow $m FY 14 FY 13 Underlying EBIT 374.4 622.8 Add: depreciation and amortisation 48.1 63.2 Underlying EBITDA 422.5 686.0 Operating cash flow 244.9 840.5 Add: interest and other costs of finance paid 66.6 101.9 Add: income taxes paid 135.1 83.8 Add: restructuring costs 12.0 22.6 Less
Slide 17: Total Cash Flow
Total Cash Flow Investing cash flow includes: $m FY 14 FY 13 – Nexus Energy $(116)m Operating cash flow 244.9 840.5 – EMP China $(103)m Investing cash flow (387.7) 361.1 Financing cash flow (270.2) (790.2) – US oil and gas $(71)m Net (decrease)/ increase in cash and cash (413.0) 411.4 – Listed por
Slide 18: Consolidated Debt Maturity Profile
Consolidated Debt Maturity Profile Total Group as at 30 June 2014 (refer disclaimer) At 30 June 2014, the Group had $1,075m of available undrawn borrowing facilities Current “<1 year” debt includes a number of offshore and OEM facilities that are regularly rolled over for further terms These a
Slide 19: Debt Facilities
Debt Facilities Total Group as at 30 June 2014 (refer disclaimer) Debt Facilities $m By Type $m By Geography $m Total facilities 2,275.7 Syndicated facilities 750.0 Australia 1,451.7 Drawn (1,197.7) Capital markets - USPP 600.8 USA 600.8 Deferred borrowing costs (2.6) OEM financing 642.0 China 127.7
Slide 20: Seven West Media
Seven West Media Full Year Result Highlights Record June 2014 half year revenue share of 41.3% in SWM Revenue $m FY 14 FY 13 Change % Television 1,305.7 1,267.8 3.0% non-Olympic year and record overall market share of Newspapers 265.4 303.1 -12.4% 40.5% across FY14 Magazines 237.5 256.2 -7.3% Ad
Slide 21: Media Investments Profit and Loss
Media Investments Profit and Loss Excluding Significant Items SGH holds a 35.3% interest in the $m FY14 FY13 Change % ordinary shares of SWM and also holds RCPS with a 30 Jun 14 Share of associates NPAT carrying value of $302m - Seven West Media 74.3 72.6 2% - Consolidated Media Holdings 1 - 6.6 -
Slide 22: SGH Investment Portfolio
SGH Investment Portfolio Our aim is to realise value creation through selective investment opportunities where strategic rationale exists to enhance shareholder return The investment value is considered a store of value with a portfolio beta of 0.9 Focus on investments that are complementary t
Slide 23: SGH Property Holdings
SGH Property Holdings Our aim is to maximise the value and return from Kings Square Masterplan KS1 KS2 KS4 KS5 our existing property assets – Perth Entertainment Centre / Kings Square – Seven’s Dianella studio in Perth which is likely to be redeveloped in CY15 – Indirect property investments throu
Slide 24: Investments and Property Profit and Loss
Investments and Property Profit and Loss Excluding Significant Items $m FY 14 FY 13 Change % Other income comprises largely of dividends from Revenue 0.0 5.8 - the listed portfolio Other income 42.0 38.9 8% Share of results from equity accounted investees 4.1 0.0 - Total revenue and other income 4
Slide 25: WesTrac Australia Overview
WesTrac Australia Overview The volume of new resources projects has declined resulting in a normalisation of capital equipment demand – 2013 saw the previously unprecedented levels of new equipment sales start to normalise as new projects have been delayed – 2H revenue was impacted by the softenin
Slide 26: WesTrac Australia Full Year Result
WesTrac Australia Full Year Result Trading Revenue $m EBIT $m 63% decline in product sales compared to pcp 4,084 447 – Driven by the reduction in the mining industry’s Product 1,406 investment into new projects support 2,350 203 3% decline in product support sales compared 1,365 2,679 to prior y
Slide 27: S3 Program – Progress to Date
S3 Program – Progress to Date Pilot Release 1 Release 2 (Jan 2014 to Mar 2014) (Aug 2014 to June 2015) (May 2015 to Apr 2016) • Procure to Pay: test feasibility • Business Planning & Forecasting, • Service Parts & Rental of adopting leading Dealer Travel and Expense Management • Sales, Marketing and
Slide 28: WesTrac China Full Year Result
WesTrac China Full Year Result Trading Revenue $m EBIT $m $23.3m EBIT turnaround achieved through a 616 20.8 484 103 mix of higher product sales and lower fixed Product 101 cost base support Product 514 384 Product sales driven by the profitable growth of sales -2.5 the Power Systems business, a
Slide 29: AllightSykes Full Year Result
AllightSykes Full Year Result Revenue down 39% on pcp on the back of Trading Revenue $m EBIT $m softer demand from mining and infrastructure 156 sectors coupled with rental customers currently 95 de-fleeting Reduction in head count to align cost base with current operating environment FY 13 FY 1
Slide 30: Coates Hire Group Half Year Result
Coates Hire Group Half Year Result Trading Revenue $m EBIT $m Revenue of $1,095m down (12%) on pcp, driven 1,241 279 by soft trading conditions and sale of its UK 1,095 operations during the year 188 EBIT decreased (33%) on prior corresponding period and reflects the impact of the reduction in t
Slide 31: Energy Investments
Energy Investments At 30 June 2014, the investment in Nexus comprised secured debt with a face value of $45.7m and subordinated notes totaling $80.6m At the second creditors meeting on 11 August 2014, SGH’s bid of $180m for the company was approved and represents an effective acquisition price o
Slide 32: Macro Trends Support SGH Energy Strategy
Macro Trends Support SGH Energy Strategy Current long-term domestic gas supply Increasing cost pressures challenging contracts are concluding in the face of Australia’s LNG competitiveness unprecedented demand growth from LNG on shore projects facing increasing Gladstone CSG-to-LNG projects sc
Slide 33: Energy – Bivins Ranch
Energy – Bivins Ranch In June 2014, SGH acquired an 11.2% working interest in 200 square miles of oil and gas acreage in Texas for US$63.7m Stacked oil play consisting of sandstone deposits of Canyon Wash and Canyon Limestone Mix of production and development exposure with 11+ Mmboe net resour
Slide 34: Key Takeaways and Questions
Key Takeaways and Questions Significant restructuring across our industrial services businesses – focus returning to revenue generation and customer solutions Strong balance sheet in addition to strategic investments and property portfolio where we have demonstrated an ability to realise value
Slide 35: Slide 34
Results Presentation – FY14 27 August 2014 Slide 34