Wrap Text
Unaudited Interim Results for the six months ended 31 December 2013
Eqstra Holdings Limited
Registration number: 1998/011672/06
JSE code: EQS;
ISIN: ZAE000117123
Eqstra Corporation Limited
Registration number: 1984/007045/06
JSE codeS:EQS01; EQS02; EQS04; EQS05; EQS06; EQS07; EQS08A; EQS09
UNAUDITED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2013
REVENUE INCREASED
14.7% to R4 935 million
OPERATING PROFIT DECREASED
13.5% to R461 million
HEADLINE EARNINGS PER SHARE DECREASED
25.4% to 34.9 cents
EARNINGS BEFORE INTEREST,TAXATION, DEPRECIATION AND AMORTISATION DECREASED
0.8% to R1 406 million
CASH FLOWS FROM OPERATING ACTIVITIES INCREASED
36.2% to R1 370 million
REVENUE-GENERATING ASSETS INCREASED
3.8% to R9 942 million
Introduction
The on-going investment that Eqstra Holdings Limited ("Eqstra") has made in
revenue-generating assets continue to translate into higher annuity income and
operating cash flows. Earnings growth was however negatively impacted by the
three week nationwide SAFCEC (South African Federation of Civil Engineering Contractors)
industrial action impacting the Contract Mining and Plant Rental division.
Overview of operations
- Revenue increased by 14.7% to R4 935 million (H1'13: R4 302 million) as a result
of investments in long-term revenue generating assets. Revenue was also
positively impacted by growth in logistics and other value-added service in Fleet
Management and Logistics, equipment sales in Industrial Equipment and the
effect of a weakening currency on the translation of foreign operations.
- Operating profit decreased by 13.5% to R461 million (H1'13: R533 million) due
to the impact of industrial action in Contract Mining and Plant Rental. These
losses offset the increase in operating profit reported in Fleet Management and
Logistics and Industrial Equipment.
- Earnings before interest, taxation, depreciation and amortisation decreased
marginally by 0.8% to R1 406 million (H1'13: R1 418 million), despite the R135 million
negative impact of the industrial action.
- Cash flows from operating activities increased by 36.2% to R1 370 million
(H1'13: R1 006 million) as a results of an improvement in working capital.
- Revenue-generating assets (leasing assets and finance lease receivables)
increased by 3.8% to R9 942 million (H2'2013: R9 578 million) with continued
leasing asset growth in Industrial Equipment and Fleet Management and Logistics.
The value of the leasing fleet in Contract Mining and Plant Rental has remained
unchanged with continued curtailment of expansionary capital expenditure.
- Net asset value increased by 2.1% to 808.3 cents per share (H2'13: 791.4 cents
per share).
- Headline earnings decreased by 25.4% to 34.9 cents per share (H1'13: 46.8 cents
per share).
Debt funding
Eqstra's debt maturity profile continues to mirror the long-term nature of
associated revenue-generating assets.
Total interest-bearing borrowings increased by 5.2% to R7 991 million (H2'13:
R7 597 million).
During the period the group raised R465 million through a five-year amortising
bond and an additional R100 million was raised through a three-year nominal
bond. Both bonds were issued at 200 basis points above the three-month Jibar
rate through private placements. The proceeds of the bonds were used to finance
growth in revenue-generating assets and to repay commercial paper and bank term
debt. We consider an amortising bond an ideal funding instrument as it reduces
refinancing risk and matches the cash flows derived from the revenue-generating assets.
The current portion of interest-bearing borrowings increased to R2 503 million
(H2'13: R2 056 million) as the expensive R270 million EQS01 bond and a GBP28 million
term facility for the United Kingdom (UK) operations now falls due within 12 months.
We are in the process of extending this UK facility for another three years.In
addition Eqstra continues to manage the duration, currency and interest rate risk of
its debt in accordance with underlying revenue-generating assets.
The recent increase in the repo rate will have a positive effect on the financial
results as the revenue-generated by the equity invested in prime linked leasing assets
more than offset the additional cost of funding working capital.
The group complied with all bank covenants for the period. It achieved an interest
cover (EBITDA) ratio of 4.9 times (H1'13: 5.4 times) and maintained a capital
adequacy ratio of 24.4% (H1'13: 24.4%).
The board is satisfied that the group has sufficient facilities in place to meet
anticipated liquidity requirements and that medium-term refinancing objectives have
been met.
Divisional review
Industrial Equipment
for the
for the six months ended year ended
31 December 31 December 30 June 30 June
2013 2012 2013 2013
Rm Rm Rm Rm
Revenue 1 507 1 228 1 480 2 708
Operating profit 145 109 149 258
Net finance costs (70) (50) (59) (109)
Profit before taxation (PBT) 74 56 89 145
PBT margin 4.9% 4.6% 6.0% 5.4%
Revenue-generating assets 2 159 1 684 1 949 1 949
The strategy to achieve geographical and product diversification underpinned strong
divisional results in a declining South African forklift market. Revenue was also
supported by improved sales volumes in the Heavy Equipment business unit. Despite the
improved financial results, the division has already aligned overhead costs in
South Africa (SA) to a declining forklift market.
The UK operations increased earnings from a recovering economy and a weaker Rand.
Recently the business unit secured the UK distributorship rights for Konecranes and
Mafi terminal tractors.
The Terex Crane distributorship was not renewed as at 31 December 2013 and the
distribution of Terex Trucks will continue as per the agreement.
Fleet Management and Logistics
for the
for the six months ended year ended
31 December 31 December 30 June 30 June
2013 2012 2013 2013
Rm Rm Rm Rm
Revenue 1 351 1 134 1 228 2 362
Operating profit 183 172 139 311
Net finance costs (87) (78) (78) (156)
Profit before taxation 96 93 64 157
PBT margin 7.1% 8.2% 5.2% 6.6%
Revenue-generating assets 3 259 3 087 3 181 3 181
The division reported solid revenue growth in its core leasing and logistics business
units, whilst operating margin was impacted by non-recurring rationalisation costs and
lower overall margin in its vehicle remarketing activities. Profit contributions from
value-added products continued, in particular GPS Tracking Solutions. The leasing fleet
reflected marginal growth as a result of selective capital allocation to new business
to ensure measured growth.
An empowerment transaction was concluded with Nozala to position the division to compete
for future government and parastatal tenders.
Contract Mining and Plant Rental
for the
for the six months ended year ended
31 December 31 December 30 June 30 June
2013 2012 2013 2013
Rm Rm Rm Rm
Revenue 2 286 2 022 2 201 4 223
Operating profit 130 246 227 473
Net finance costs (130) (138) (135) (273)
Profit before taxation - 90 102 192
PBT margin - 4.5% 4.6% 4.5%
Revenue-generating assets 4 567 4 450 4 517 4 517
The division's turnaround was negatively impacted by a R135 million loss in
earnings due to industrial action in the first quarter. Increased volumes at Tharisa
mine and the successful start-up at Mogalakwena mine contributed positively to revenue.
The US Dollar based Benga project performed in line with expectations and
divisional results benefited from the weaker Rand. As part of the strategy to exit
loss making contracts, the Wolvekrans contract was concluded at the end of
January 2014 and the Nkomati contract will not be renewed in August 2014.
Equipment from the loss making contracts will be redeployed to accommodate
increased volumes on existing and new contracts.
Dividend
No interim dividend has been declared in line with the group's dividend policy.
Outlook
The group's strategy to remain invested in the UK will benefit earnings as the UK
economy improves.
The drive to continually improve efficiencies has resulted in on-going cost reductions
that will position the group for an anticipated weaker South African economy.
Earnings from leasing activities are set to remain defensive and higher interest rates
will have a positive impact on earnings.
The mining sector, more specifically the Benga project, is expected to remain challenging.
By order of the board
NP Mageza WS Hill
Chairperson Chief Executive Officer
3 March 2014
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
as at
Unaudited Unaudited Audited
31 December 31 December 30 June
2013 2012 2013
Rm Rm Rm
ASSETS
Non-current assets 10 718 9 843 10 345
Intangible assets 126 66 91
Property, plant and equipment 549 522 538
Leasing assets 9 874 9 041 9 491
Deferred tax assets 31 29 35
Finance lease receivables 24 40 33
Other investments, loans and derivatives(2) 114 145 157
Current assets 2 958 2 515 2 956
Inventories 1 102 949 945
Trade and other receivables 1 591 1 248 1 576
Derivative financial assets 126 36 52
Finance lease receivables 44 65 54
Taxation in advance 27 18 29
Cash and cash equivalents 68 199 300
Total assets 13 676 12 358 13 301
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 1 837 1 866 1 816
Other reserves 279 135 218
Retained income 1 209 997 1 222
Equity attributable to owners of the parent 3 325 2 998 3 256
Non-controlling interests 17 16 19
Total equity 3 342 3 014 3 275
Non-current liabilities 6 238 6 706 6 302
Interest-bearing borrowings 5 488 5 968 5 541
Deferred tax liabilities 750 738 761
Current liabilities 4 096 2 638 3 724
Current portion of interest-bearing borrowings(3) 2 503 1 313 2 056
Trade and other payables and derivatives 1 562 1 310 1 656
Current tax liabilities 31 15 12
Total equity and liabilities 13 676 12 358 13 301
CONDENSED GROUP INCOME STATEMENT
Unaudited Audited
for the six months ended Year ended
31 December 31 December 30 June
2013 2012 2013
Rm Rm Rm
Continuing operations
Revenue 4 935 4 302 9 089
Profit from operations before depreciation,
amortisation and recoupments 1 407 1 431 2 870
Depreciation and amortisation (946) (907) (1 836)
Recoupments - 9 4
Operating profit 461 533 1 038
Net foreign exchange (losses) gains (1) (3) 7
Net impairment of leasing assets - (19) (16)
Profit before net finance costs 460 511 1 029
Net finance costs (287) (266) (543)
Finance costs including fair value gains(5) (302) (281) (582)
Finance income 15 15 39
Profit before taxation 173 245 486
Income tax expense (32) (60) (78)
Profit for the period from continuing operations 141 185 408
Discontinued operations
Loss from discontinued operations - (2) (18)
Profit for the period 141 183 390
Attributable to:
Owners of the parent 138 181 385
- Profit for the period from continuing operations 138 183 403
- Loss for the period from discontinued operations - (2) (18)
Non-controlling interests 3 2 5
Profit for the period 141 183 390
Cents Cents Cents
Earnings per share from continuing operations
- Basic and diluted earnings per share 34.9 45.1 100.0
Earnings per share from discontinuing operations
- Basic and diluted loss per share - (0.5) (4.5)
CONDENSED GROUP STATEMENT
OF COMPREHENSIVE INCOME
Unaudited Audited
for the six months ended Year ended
31 December 31 December 30 June
2013 2012 2013
Rm Rm Rm
Profit for the period 141 183 390
Total other comprehensive income for the period,
net of taxation 66 28 125
Exchange differences on translation of foreign
subsidiaries 43 15 87
Net fair value gain on cash flow hedges and other fair
value reserves 23 13 38
Total comprehensive income for the period,
net of taxation 207 211 515
Attributable to:
Owners of the parent 204 209 510
- Profit for the period from continuing operations 204 211 528
- Loss for the period from discontinued operations - (2) (18)
Non-controlling interests 3 2 5
207 211 515
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Non-
Stated Other Retained controlling
capital reserves income interests Total
Rm Rm Rm Rm Rm
Balance at 1 July 2012 1 929 106 931 14 2 980
Total comprehensive income for the period - 28 181 2 211
Profit for the period - - 181 2 183
Other comprehensive income for
the period, net of taxation - 28 - - 28
Net share-based payment expense - 9 - - 9
Devaluation of Lereko call option - (5) - - (5)
Dividends paid - - (115) - (115)
Other movements (63) (3) - - (66)
Balance at 31 December 2012 1 866 135 997 16 3 014
Total comprehensive income
for the period - 97 204 3 304
Profit for the period - - 204 3 207
Other comprehensive income for the
period, net of taxation - 97 - - 97
Net share-based payment expense - 7 - - 7
Realisation of currency translation reserve - (21) 21 - -
Other movements (50) - - - (50)
Balance at 30 June 2013 1 816 218 1 222 19 3 275
Total comprehensive income
for the period - 66 138 3 207
Profit for the period - - 138 3 141
Other comprehensive income for the period,
net of taxation - 66 - - 66
Net share-based payment movement - (12) - - (12)
Purchase of non-controlling interest - 1 - (1) -
Sale of treasury shares by subsidiary 20 - - - 20
Dividends paid - - (146) (4) (150)
Other movements 1 6 (5) - 2
Balance at 31 December 2013 1 837 279 1 209 17 3 342
CONDENSED GROUP STATEMENT OF CASH FLOWS
Unaudited Audited
For the six months ended Year ended
31 December 31 December 30 June
2013 2012 2013
Rm Rm Rm
Cash flows from operating activities
Cash generated from operations before working capital
movements 1 411 1 493 2 867
Working capital movements 257 (185) 292
Cash generated from operations 1 668 1 308 3 159
Finance income 15 15 39
Finance costs (302) (293) (593)
Taxation paid (11) (24) (60)
Net cash flows from operating activities 1 370 1 006 2 545
Cash flows from investing activities
Acquisition of businesses (16) (32) (28)
Net capital expenditure (1 705) (1 288) (2 835)
Decrease in finance lease receivables 19 39 42
Decrease in other investments and loans - 3 -
Net cash flows from investing activities (1 702) (1 278) (2 821)
Cash flows from financing activities
Repurchase of non-controlling interest (2) - -
Transactions with shareholders (129) (178) (228)
Net increase in interest-bearing borrowings 227 41 184
Net cash flows from financing activities 96 (137) (44)
Net decrease in cash and cash equivalents (236) (409) (320)
Cash and cash equivalents at beginning of period 300 610 610
Effect of foreign exchange rate changes 4 (2) 10
Cash and cash equivalents at end of period 68 199 300
SEGMENTAL INFORMATION - CONDENSED STATEMENT OF FINANCIAL POSITION
as a
Industrial Fleet Management and Contract Mining and Corporate Office and
Group Equipment Logistics Plant Rental Eliminations
31 December 30 June 31 December 30 June 31 December 30 June 31 December 30 June 31 December 30 June
2013 2013 2013 2013 2013 2013 2013 2013 2013 2013
Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm
Unaudited Audited Unaudited Audited Unaudited Audited Unaudited Audited Unaudited Audited
BUSINESS SEGMENTATION
ASSETS
Intangible assets 126 91 6 - 86 58 33 30 1 3
Property, plant and equipment 549 538 166 164 101 94 178 164 104 116
Leasing assets 9 874 9 491 2 159 1 949 3 191 3 094 4 576 4 517 (52) (69)
Finance lease receivables 68 87 - - 68 87 - - - -
Other investments and loans 114 104 - - 8 - 1 1 105 103
Inventories 1 102 945 795 772 101 71 206 102 - -
Trade and other receivables and derivatives 1 717 1 681 524 460 296 246 773 875 124 100
Operating assets 13 550 12 937 3 650 3 345 3 851 3 650 5 767 5 689 282 253
Deferred tax assets 31 35
Taxation in advance 27 29
Cash and cash equivalents 68 300
Total assets 13 676 13 301
LIABILITIES
Trade and other payables and derivatives 1 562 1 656 619 535 359 400 514 622 70 99
Interest-bearing borrowings 7 991 7 597 2 248 1 948 2 518 2 186 3 434 3 312 (209) 151
Operating liabilities 9 553 9 253 2 867 2 483 2 877 2 586 3 948 3 934 (139) 250
Deferred tax liabilities 750 761
Current tax liabilities 31 12
Total liabilities 10 334 10 026
GEOGRAPHIC SEGMENTATION
Operating assets 13 550 12 937 3 650 3 345 3 851 3 650 5 767 5 689 282 253
- South Africa 10 764 10 287 2 655 2 550 3 618 3 419 4 209 4 065 282 253
- Rest of World 2 786 2 650 995 795 233 231 1 558 1 624 - -
Trade and other payables and derivatives 1 562 1 656 619 535 359 400 514 622 70 99
- South Africa 1 295 1 425 493 460 326 364 406 502 70 99
- Rest of World 267 231 126 75 33 36 108 120 - -
Interest-bearing borrowings 7 991 7 597 2 248 1 948 2 518 2 186 3 434 3 312 (209) 151
- South Africa 6 458 6 017 1 579 1 391 2 428 2 034 2 660 2 441 (209) 151
- Rest of World 1 533 1 580 669 557 90 152 774 871 - -
Capital expenditure 1 705 2 835 538 850 677 1 279 490 702 - 4
- South Africa 1 517 2 472 428 699 634 1 221 455 548 - 4
- Rest of World 188 363 110 151 43 58 35 154 - -
SEGMENTAL INFORMATION - CONDENSED INCOME STATEMENT
for the six months ended (unaudited)
Industrial Fleet Management Contract Mining Corporate Office
Group Equipment and Logistics and Plant Rental and Eliminations
31 December
31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 2012
2013 2012 2013 2012# 2013 2012# 2013 2012 2013 Rm
Rm Rm Rm Rm Rm Rm Rm Rm Rm
BUSINESS SEGMENTATION
Revenue
- Sales of goods 1 140 873 766 663 283 210 91 - - -
- Rendering of services, leasing income and other 3 795 3 429 597 547 1 003 856 2 195 2 022 - 4
4 935 4 302 1 363 1 210 1 286 1 066 2 286 2 022 - 4
Inter segment revenue - - 144 18 65 68 - - (209) (86)
4 935 4 302 1 507 1 228 1 351 1 134 2 286 2 022 (209) (82)
Net operating expenses (3 528) (2 871) (1 135) (940) (824) (645) (1 766) (1 373) 197 87
Depreciation and amortisation (946) (907) (227) (179) (344) (324) (390) (408) 15 4
Recoupments - 9 - - - 7 - 5 - (3)
Operating profit 461 533 145 109 183 172 130 246 3 6
Net foreign exchange losses (1) (3) (1) (3) - - - - - -
Net impairment of leasing assets - (19) - - - (1) - (18) - -
Profit before net finance costs 460 511 144 106 183 171 130 228 3 6
Net finance costs (287) (266) (70) (50) (87) (78) (130) (138) - -
Profit before taxation 173 245 74 56 96 93 - 90 3 6
Income tax (expense) income (32) (60) (20) (17) (27) (26) 16 (16) (1) (1)
Profit before taxation from continuing operations 141 185 54 39 69 67 16 74 2 5
Loss from discontinued operations - (2) - (2) - - - - - -
Profit for the period 141 183 54 37 69 67 16 74 2 5
GEOGRAPHIC SEGMENTATION
Revenue 4 935 4 302 1 507 1 228 1 351 1 134 2 286 2 022 (209) (82)
- South Africa 3 967 3 594 1 172 998 1 250 1 043 1 754 1 635 (209) (82)
- Rest of World 968 708 335 230 101 91 532 387 - -
Operating profit 461 533 145 109 183 172 130 246 3 6
- South Africa 313 434 117 94 164 154 29 180 3 6
- Rest of World 148 99 28 15 19 18 101 66 - -
Net finance costs 287 266 70 50 87 78 130 138 - -
- South Africa 250 232 61 42 85 77 104 113 - -
- Rest of World 37 34 9 8 2 1 26 25 - -
# Prior period re-presented to reflect changes in reporting structures following sale of Bucyrus and exit of New Holland distributorships
NOTES
(1) Basis of preparation
The unaudited condensed consolidated financial statements for the six months ended 31 December 2013
have been prepared in accordance with the framework concepts, measurement and recognition
requirements of International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides,
as issued by the Accounting Practices Committee and the Financial Reporting Pronouncements as issued
by the Financial Reporting Standards Council and contains information required by IAS 34: Interim
Financial Reporting, the JSE Limited Listings Requirements and the South African Companies Act. The
accounting policies and their application are consistent, in all material respects, with those detailed in
Eqstra's 2013 annual report, except for the adoption on 1 July 2013 of those new, revised and amended
standards and interpretations detailed therein.
The adoption of the new and amended statements of generally accepted accounting practice,
interpretations of statements of generally accepted accounting practice, and improvements project
amendments has not had an effect on the group's interim financial results.
31 December 31 December 30 June
2013 2012 2013
Rm Rm Rm
(2) Other investments, loans and
derivatives
- Listed, at market value 58 63 64
- Unlisted, at fair value 56 37 40
- Loans receivable - 4 -
- Derivative financial asset - 41 53
114 145 157
(3) Current portion of interest-bearing borrowings
The current portion of interest-bearing borrowings includes R700 million (June 2013: R900 million)
commercial paper that is supported by a R1 000 million standby liquidity facility that has an 13-month
rolling notice period.
(4) Capital commitments 1 761 1 131 2 086
- Contracted 703 464 501
- Authorised by directors but not contracted 1 058 667 1 585
Contingent liabilities - - -
The expenditure is substantially for the acquisition and replacement of leasing assets. Expenditure will
be financed from cash generated from operations and existing banking facilities.
(5) Finance costs including fair value gains
Finance costs 303 291 585
Fair value gains on borrowings and interest
swaps (unrealised) (1) (10) (3)
302 281 582
Cents Cents Cents
(6) Net asset value per share
attributable to owners of the parent 808.3 745.6 791.4
(7) Headline earnings per share
Continuing operations
- Basic and diluted headline earnings per share 34.9 46.8 104.0
Reconciliation of continuing earnings per share
Basic earnings per share 34.9 45.1 100.0
Profit on sale of property, plant and equipment - (2.3) (1.0)
Net impairments of leasing assets - 4.7 4.7
Taxation effect - (0.7) 0.3
Headline earnings per share 34.9 46.8 104.0
Million Million Million
(8) Weighted average number of shares in
issue for the period
Number of ordinary shares
- in issue (net of treasury shares) 396.9 419.4 394.2
Weighted average number of ordinary shares in
issue during the period 395.6 406.0 402.9
- opening shares (net of treasury shares) 394.2 411.4 411.4
- disposal of treasury shares 1.4 - -
- share buy back - (5.4) (8.5)
Diluted weighted average number
of ordinary shares 395.6 406.0 402.9
NAME AND REGISTRATION NUMBER
Eqstra Holdings Limited
1998/011672/06
JSE codes: EQS; EQS01; EQS02; EQS04; EQS05; EQS06; EQS07; EQS08A; EQS09
ISIN: ZAE000117123
REGISTERED OFFICE AND BUSINESS ADDRESS
61 Maple Street, Pomona, Kempton Park, 1619
PO Box 1050, Bedfordview, 2008
NON-EXECUTIVE DIRECTORS
NP Mageza*(Chairperson), MJ Croucamp*, S Dakile-Hlongwane, GG Gelink*, VJ Mokoena*,
SD Mthembi-Mahanyele*, AJ Phillips*, TDA Ross*, LL von Zeuner*#
(*Independent), (#Appointed 22 November 2013)
EXECUTIVE DIRECTORS
E Clarke, WS Hill (CEO), JL Serfontein (CFO)1 CA(SA)
(1Preparer of financial results)
COMPANY SECRETARY
L Möller
TRANSFER SECRETARIES
Computershare Investor Services (Proprietary) Limited
70 Marshall Street, Johannesburg, 2001 PO Box 61051, Marshalltown, 2107
SPONSOR
Rand Merchant Bank (a division of FirstRand Bank Limited)
Date: 4 March 2014
Date: 04/03/2014 07:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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