Sgh Limited · ASX:SGH
Sgh — Seven Group Holdings — FY2015 Earnings Presentation
37 slides from Sgh's earnings presentation, Aug 26, 2015
Slide 1: Results for the Year Ended 30 June 2015
RESULTS FOR THE YEAR ENDED 30 JUNE 2015 Presentation on 26 August 2015
Slide 2: Agenda
Agenda Group Industrial Financials Media Energy Investments Wrap Up Overview Services Highlights Financials WesTrac Australia Seven West Media SGH Energy Property Portfolio Outlook Transformation Share Buy Back WesTrac China Listed Portfolio Questions Outlook Key Initiati
Slide 3: Group Overview | Disclaimer
Group Overview | 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
Slide 4: Caterpillar Equipment, Bondi Beach, April 2015
Caterpillar Equipment, Bondi Beach, April 2015 Cat excavators and dozers helped in the clean up effort after the severe storms in April 2015
Slide 5: Group Overview | Our Businesses
Group Overview | Our Businesses Industrial Services SGH Ownership Industry Strategic Position WesTrac Australia 100% Mining and construction equipment #1 equipment solution company in WA and NSW/ACT WesTrac China 100% Mining and construction equipment One of the leading equipment solutions companies
Slide 6: Group Overview | Highlights
Group Overview | Highlights Product support revenue growth in WesTrac Support revenue up 13% on pcp in WesTrac Australia on record production volumes of iron ore and coal Maintenance opportunities from installed equipment base Driving cash flow through the cycle Strong underlying EBITDA cash c
Slide 7: Group Overview | Key Financials
Group Overview | Key Financials Underlying Results FY15 FY14 % Change Trading revenue $ 2,779.6 m $ 3,088.2 m -10% Earnings before interest and tax (excluding Significant Items) 1 $ 314.5 m $ 374.4 m -16% 1 Underlying net profit after tax (excluding Significant Items) $ 204.3 m $ 253.2 m -19% 1 Unde
Slide 8: Group Overview | Transformation
Group Overview | Transformation Rationalisation of cost structure FTE count reduced by 330 in WesTrac Australia, WesTrac China and AllightSykes and reduced by 68 in Coates Hire Drive to improve technician productivity Consolidation of operating sites in WesTrac and Coates Hire Systems enhancem
Slide 9: Group Overview | Outlook
Group Overview | Outlook – refer disclaimer Trading conditions are transitioning Australia is moving into the production stage of the resource cycle China’s economic transformation is opening up new sector opportunities Upside on production cycle WesTrac’s product support business will continu
Slide 10: Financials | Profit and Loss
Financials | Profit and Loss $m FY15 FY14 Change % Revenue 2,779.6 3,088.2 -10% Please refer to the Annual Other income 126.6 104.6 21% Report for the detailed statutory results Share of results from equity accounted investees 80.1 104.5 -23% Significant Items are further Total revenue and other
Slide 11: Financials | Significant Items
Financials | Significant Items $m FY15 FY14 (Loss)/ gain on sale of investments and MtM on derivatives (5.5) 39.5 Impairment reversal - SWM equity 14.7 (42.2) Impairment - WesTrac China distribution network (237.6) - Impairment - Coates Hire (114.0) - Impairment - Other (99.8) - Restructuring, redun
Slide 12: Financials | Earnings Summary
Financials | Earnings Summary Total WesTrac WesTrac Allight Coates Media Other $m Energy Other Group Aus China Sykes Hire Invest. Invest. Trading and other revenue 2,779.6 2,120.0 555.7 82.5 - - 21.4 - - Statutory EBIT (582.8) 161.3 (214.1) (79.8) (155.0) (290.4) (13.9) 8.2 0.9 Add unfavourable Indi
Slide 13: Financials | Balance Sheet
Financials | Balance Sheet As at As at Change $m 30 Jun 15 30 Jun 14 % Decline in investments Trade and other receivables 452.1 599.0 -25% largely due to SWM ($369m) Inventories 929.2 856.6 8% and Coates ($163m) impairment offset by Investments 2,124.8 2,533.6 -16% increases in the investment port
Slide 14: Financials | Operating Cash Flow
Financials | Operating Cash Flow $m FY15 FY14 Underlying EBIT 314.5 374.4 Add: depreciation and amortisation 62.1 48.1 Underlying EBITDA 376.6 422.5 Operating cash flow 287.1 244.9 Add: interest and other costs of finance paid 87.9 66.6 Income taxes (refunded) / paid (26.1) 135.1 Add back: restructu
Slide 15: Financials | Total Cash Flow
Financials | Total Cash Flow $m FY15 FY14 Operating cash flow 287.1 244.9 Investing cash flow (261.1) (387.7) Financing cash flow 114.7 (270.2) Net increase in cash and cash equivalents 140.7 (413.0) Cash and cash equivalents at end of period 290.7 128.3 Opening net debt 1,069.4 713.4 Movement in ne
Slide 16: Financials | Debt Maturity Profile
Financials | Debt Maturity Profile At 30 June 2015, the Group had $967m of available undrawn borrowing facilities Current “<1 year” debt includes a number of offshore facilities that are regularly rolled over for further terms and are categorised as current due to their short dated nature Faci
Slide 17: Financials | Capital Management
Financials | Capital Management Our aim is to Ensure an efficient capital structure by maintaining prudent levels of gearing and retaining access to multiple capital markets Retain sufficient balance sheet flexibility to fund the working capital needs of operating businesses Enhancing shareholde
Slide 18: Financials | Key Initiatives
Financials | Key Initiatives Successful group wide refinancing $2.5bn in facilities refinanced across the wider Group, providing certainty for our businesses and demonstrating strong credit support for SGH Corporate facilities renegotiated with increase in value and tighter pricing Continued out
Slide 19: WesTrac Australia
WesTrac Australia Cat mining trucks supplied by WesTrac enable our customers to deliver record production volumes
Slide 20: Industrial Services | WesTrac Australia
Industrial Services | WesTrac Australia Record production volumes Australia is exporting more iron ore and coal than ever before Product support sales improvement Large installed base of mining equipment continues to generate maintenance work as customers seek to maximise productivity Contract
Slide 21: Industrial Services | WesTrac Australia
Industrial Services | WesTrac Australia Product support sales up 13% on pcp Growth in maintenance and warranty driven by conversion of service opportunities from the installed base Parts and service are essential in the mining industry to deliver growing production volumes to the rest of the wor
Slide 22: WesTrac China
WesTrac China Hydraulic excavators are a primary work tool for China’s construction and infrastructure sectors
Slide 23: Industrial Services | WesTrac China
Industrial Services | WesTrac China Improved profitability and positive cash flow Delivered EBIT growth of 9% on pcp and a higher EBIT margin of 4.2% This comes despite a challenging market where the property sector is in a protracted downturn with hydraulic excavator sales down 45% YoY Cat ha
Slide 24: Coates Hire Group
Coates Hire Group Coates Hire is Australia’s largest equipment rental company supplying the construction, infrastructure and mining sectors
Slide 25: Industrial Services | Coates Hire
Industrial Services | Coates Hire Largest rental service provider in Australia Unmatched network of 238 branches and 1.5 million items of equipment Trading conditions are competitive Revenue down 16% on pcp (adjusted for sale of Coates UK) Market growth is moving to NSW Negatively impacted b
Slide 26: Media
Media Seven West Media creates and delivers leading content across multiple platforms
Slide 27: Media | Seven West Media
Media | Seven West Media Continued leadership in ratings and content $m FY15 FY14 Change Full year market share of 40.0% in Television and market share gains 1 achieved in Digital and Magazines SWM share of associate NPAT 66.0 74.3 -11% Secured long term sports rights with AFL deal to 2022, Rio
Slide 28: Energy
Energy SGH Energy is positioned for future growth in East Coast and Asian demand for energy
Slide 29: Energy | East Coast Update
Energy | East Coast Update Overview Gippsland Basin - VIC East Coast gas demand is expected to ramp up significantly from 2017 coinciding with SGH Energy’s potential development timeline SGH Energy’s East Coast gas assets are located in the Gippsland Basin where existing or nearby infrastructure
Slide 30: Energy | WA and USA Update
Energy | WA and USA Update Crux AC/RL9 (15% interest) Browse Basin - WA First Crux P&A completed in August 2015 Auriga exploration well reached target depth in August 2015 Hydrocarbons are present and results are currently being analysed In line with retention lease conditions, we are commit
Slide 31: Investments
Investments SGH is enhancing shareholder value through property and listed investments
Slide 32: Investments | Profit and Loss
Investments | Profit and Loss $m FY15 FY14 Change % Revenue - - - Other income 43.4 42.0 3% Share of results from equity accounted investees 5.0 4.1 22% Total revenue and other income 48.4 46.1 5% Expenses (excluding interest and corporate) (6.5) (2.6) - % Segment EBITDA 41.9 43.5 -4% Depreciation a
Slide 33: Investments | Property Portfolio
Investments | Property Portfolio Realising value from our existing property assets On target to deliver approximately $30m in pre-tax profit from realisation of property assets in FY16 Kings Square, Perth Practical completion of Kings Square KS3 on 3 July 2015, KS4 in early September 2015 Kings
Slide 34: Investments | Listed Portfolio
Investments | Listed Portfolio Our aim is to enhance shareholder return by selectively deploying available capital $34m economic gain during the year 13.0% total pre-tax IRR for the year versus S&P / ASX 200 total return of 7.3% Dividend yield on portfolio of 6.1% (gross annualised basis) List
Slide 35: Outlook | Key Takeaways and Questions
Outlook | Key Takeaways and Questions Transition journey continues with an ongoing focus on cost control and efficiency Committed to enhancing shareholder value through existing businesses and new opportunities Prudent capital management initiatives and a sustainable dividend policy Pre-tax profit o
Slide 36: Appendix | Group Structure
Appendix | Group Structure Industrial Services Media Energy Investments 41% Property ~$63m 100% Portfolio Australia 100% Longtom ~$1,090m Listed Portfolio 100% 100% 15% Crux China Other Unlisted 100% Echuca Shoals Investments 100% 46% 11% Bivins Ranch 100% Other Exploration 100% 50% Notes: 1. Group
Slide 37: FY15 Results Presentation | 26 August 2015 | 37
FY15 Results Presentation | 26 August 2015 | 37