Sgh Limited · ASX:SGH
Sgh — Seven Group Holdings — H1 FY2018 Earnings Presentation
30 slides from Sgh's earnings presentation, Feb 21, 2018
Slide 1: Results for the six months ended 31 December 2017
Results for the six months ended 31 December 2017 Enabling Customer Performance
Slide 2: 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 sam
Slide 3: Group Overview | People, Safety and Culture
Group Overview | People, Safety and Culture LTIFR TRIFR Safety 1H FY18 1H FY17 1H FY18 1H FY17 Key priority for our business - core part of our culture and vital for WesTrac WA 2.0 1.6 9.8 12.8 enabling customer performance WesTrac NSW 2.1 0.0 11.5 4.8 Continuing to implement a cultural safety p
Slide 4: Group Overview | Our Businesses
Group Overview | Our Businesses Industrial Services Energy Simplified group structure Acquisition of Coates Hire completed on 25 October 2017 Australia’s leading mid-cap oil Sale of WesTrac China completed and gas producer on 31 October 2017 #1 equipment solution company in WA and NSW / ACT $468
Slide 5: Group Overview | Highlights
Group Overview | Highlights Result ahead of guidance Underlying EBIT of $224m for the half, up 42% on pcp including earnings uplift in Coates Hire and Beach Energy (up 23% on a pro-forma basis – refer Appendix) Underlying NPAT of $160m for the half, up 81% on pcp (66% on a pro-forma basis) Res
Slide 6: Group Overview | Key Financials
Group Overview | Key Financials Continuing Operations Including Discontinued Operations Underlying Results 1H FY18 1H FY17 % Change 1H FY18 1H FY17 % Change Trading revenue $ 1,397.2 m $ 1,063.4 m 31% $ 1,587.1 m $ 1,302.7 m 22% 1 Earnings before interest and tax $ 223.5 m $ 157.9 m 42% $ 240.7 m $
Slide 7: Financials | Profit and Loss
Financials | Profit and Loss $m 1H FY18 1H FY17 Change % Revenue 1,397.2 1,063.4 31% Other income 35.6 29.8 19% Share of results from equity accounted investees 73.2 69.2 6% Total revenue and other income 1,506.0 1,162.4 30% Expenses (excl. depreciation, amortisation and interest) (1,238.2) (990.3)
Slide 8: Financials | Significant Items
Financials | Significant Items $m 1H FY18 1H FY17 Impairment – SWM equity (91.3) (139.6) Impairment – other (5.6) - Loss on sale of WesTrac China (5.3) - Restructuring, redundancy, transaction and other costs (1.4) (4.7) Share of equity accounted investees' Significant Items 3.0 (9.9) Gain / (loss)
Slide 9: Financials | Earnings Summary
Financials | Earnings Summary Continuing Operations Total WesTrac Allight Coates Media Energy Other Other WesTrac $m Group Aus Sykes Hire Invest. Invest. China Revenue 1,397.1 1,193.9 40.2 156.6 - 2.4 4.0 - 189.9 Statutory EBIT 147.0 101.1 1.3 56.6 (39.4) 16.4 22.2 (11.2) 91.5 Add unfavourable Signi
Slide 10: Financials | Cash Flow
Financials | Cash Flow $m 1H FY18 1H FY17 EBITDA cash conversion improved by 10% to 58% Businesses are continuing to invest through net working Underlying EBIT 223.5 175.8 capital and capital expenditure to support the current and Add: depreciation and amortisation 44.3 16.0 projected level of s
Slide 11: Financials | Balance Sheet
Financials | Balance Sheet As at As at Change $m Balance sheet movements include impact of 31 Dec 17 30 Jun 17 % Coates Hire consolidation from October 2017 Trade and other receivables 531.7 341.4 56% Net assets held for sale reduced by sale of Inventories 693.2 654.7 6% WesTrac China Net assets
Slide 12: Financials | Debt Maturity Profile
Financials | Debt Maturity Profile AUD m At 31 December 2017, the Group had $419m of available undrawn borrowing facilities $1,034m of Coates Hire debt acquired at financial close, paid down by $531m since then, debt effectively refinanced upon bank consent to change of control and rollover Fa
Slide 13: Financials | Capital Management
Financials | Capital Management Capital raising completed $375m institutional placement; oversubscribed by 2.7x without major shareholder underwriting Resulted in free float increasing from 26% to 34% Provides additional balance sheet flexibility Domestic and foreign institutional investors
Slide 14: WesTrac Australia
WesTrac Australia WesTrac’s underground longwall systems are helping NSW’s coal miners remain globally competitive
Slide 15: Industrial Services | WesTrac Australia
Industrial Services | WesTrac Australia Value proposition WesTrac enables customers in the resource and construction industries to reduce lifecycle equipment ownership costs and help maximise profitability Investing in technology and utilising data in new ways to stay ahead of the curve – in are
Slide 16: Industrial Services | WesTrac Australia
Industrial Services | WesTrac Australia Improving market conditions Signs of mining capital recovery emerging with improvements in forward orders and reductions in the level of parked up fleet CAT lead times have extended for certain equipment (e.g. excavators) Product sales reflecting strength
Slide 17: Coates Hire
Coates Hire Coates Hire is meeting the demand for equipment on a wide range of transport infrastructure projects
Slide 18: Coates Hire | Positive outlook for infrastructure projects
Coates Hire | Positive outlook for infrastructure projects Coates Hire and WesTrac set to capture further upside Strong growth in infrastructure activity on the East Coast has improved demand for construction equipment and heavy machinery Further upside to be captured given that peak investment
Slide 19: Industrial Services | Coates Hire
Industrial Services | Coates Hire Strong growth from East Coast infrastructure NSW and VIC/SA businesses continue to perform well through infrastructure and construction activity with revenue up 8% and 5%, respectively Strong uplift in QLD with 13% revenue growth on pcp, while WA continues to be
Slide 20: Industrial Services | Coates Hire - strategic rationale
Industrial Services | Coates Hire - strategic rationale Increases exposure to growing infrastructure activity FY17 sector revenue split Direct exposure to East Coast infrastructure, a sector which is underpinned by government spending and committed projects Coates Hire is a major beneficiary of
Slide 21: Media
Media Seven is Australia’s number one free-to-air commercial television network offering the most innovative and comprehensive content
Slide 22: Media | Seven West Media
Media | Seven West Media $m 1H FY18 1H FY17 Change Improved performance during the half Underlying EBIT of $159m, up 7% on pcp SWM share of associate NPAT 41.1 38.5 7% Operating expenses down 14% in FY18 Other media investments 10.8 0.7 - % Net debt reduced to $711m, leverage ratio of 2.3x (co
Slide 23: Energy
Energy Longtom is positioned to deliver 80 PJ of gas into the East Coast market
Slide 24: Energy | Asset Overview
Energy | Asset Overview Focus on bringing gas to market $m 1H FY18 1H FY17 We have gas available and we are working on bringing it to market Sale of gas and condensate 2.4 2.3 Other income 0.4 0.0 Significant upside opportunity seen in East Coast gas contract prices given the well-publicised sho
Slide 25: Energy | Beach Energy Investment
Energy | Beach Energy Investment Transformational acquisition of Lattice Energy $m 1H FY18 1H FY17 Production (Mmboe) 5.5 5.2 Financial close on 31 January 2018, integration process is well progressed 2P reserves increase by 200% to 232 MMboe and further exploration upside Sales revenue 386 344
Slide 26: Investments
Investments The “Kodo“ development by Flagship Property Holdings (SGH stake: 47%) will provide 208 apartments over 30 storeys in Adelaide
Slide 27: Investments | Property and Listed Portfolios
Investments | Property and Listed Portfolios $m 1H FY18 1H FY17 Property impacted by slowdown in Perth market Revenue 4.0 1.5 KS5, KS6 and KS7 development deferred until market improves Other income 17.8 19.1 Share of associate NPAT (0.2) 0.3 11 lots sold at the Dianella residential development
Slide 28: Outlook | Key Takeaways and Questions
Outlook | Key Takeaways and Questions Industrial Services Strong parts performance has continued and is further underlined by an increase in fleet utilisation and major WesTrac continuing to component rebuilds as customers seek to extract incremental production gains benefit from growth in Signs
Slide 29: Appendix | Pro-Forma P&L
Appendix | Pro-Forma P&L FY17 Adjust- FY17 1H FY17 2H FY17 1H FY18 1H 18 vs Underlying EBIT $m Actual ments Pro-Forma Pro-Forma Pro-Forma Actual 1H 17 WesTrac 164.3 - 164.3 75.1 89.2 101.1 35% AllightSykes (3.1) - (3.1) (1.5) (1.6) 1.4 - Coates Hire1 24.7 75.0 99.7 33.0 66.7 40.5 23% Energy2,3 25.7
Slide 30: SG Ei Industrial Services, Media,
SG Ei Industrial Services, Media, Energy and Investments Westtae Coaleshire
Seven Group Holdings — H1 FY2018 Earnings Presentation on 6ix