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Unaudited interim results for the six months ended 31 December 2015
Eqstra Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/011672/06)
Share code: EQS
ISIN: ZAE000117123
Eqstra Corporation Limited
(Incorporated in the Republic of South Africa)
(Registration number 1984/007045/06)
Share codes: EQS05, EQS06, EQS07, EQS08A, EQS09
ISIN: ZAG000094731, ZAG000104449, ZAG000104506,ZAG000109745, ZAG111089
("Eqstra" or "the group" or "the company")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
Implementation of 2020 strategy is based on:
- Balanced capital structure
- Evolving differentiated services business model
- Operating efficiencies/margin improvement
Operating profit from continuing operations
increased by
7.1%
to R436 million
Cash generated by
operations before
changes in working
capital increased
0.9%
to R1 510 million
HEPS from continuing
operations increased
18.1%
to 22.2 cents
Divisional overview:
- Industrial Equipment – market share increased
- Fleet Management and Logistics – improved
operating margin
- Contract Mining and Plant Rental – drive
efficiencies
Introduction
Eqstra Holdings Limited ("the group" or "Eqstra") reported profit from continuing operations before depreciation,
amortisation and recoupments of R1 360 million (2014: R1 301 million). The loss for the period from continuing operations
of R438 (2014: R80 million profit) was mainly attributable to an asset impairment of R736 million in Contract Mining and
Plant Rental. The loss for the period of R1 122 million (2014: R152 million profit) includes discontinued operations comprising
the Benga operations in Mozambique and impairment of assets to a fair value less costs to sale, the closure of the
Construction Equipment business unit in Industrial Equipment division and the closure of the Commodities business unit
in Fleet Management and Logistics division. The closures are elements of Eqstra's strategy to exit non-core operations.
The period under review was a pivotal one for Eqstra as management moved ahead with implementation of several
key initiatives. These initiatives are expected to accelerate the transition of Eqstra to a services oriented group. The focus
remained liquidity and working capital management.
The Industrial Equipment division continued to perform well in its core forklift businesses. However, foreign exchange losses
of R20 million (2014: R3 million gain) in the period contributed to a decrease in continuing operations operating profit of
5.5% to R154 million (2014: R163 million). Following the exit from the Terex distribution business in July 2015, and as part of
implementing Eqstra's stated strategy, the division is in the process of closing the Construction Equipment business unit,
resulting in a loss of R69 million (2014: R7 million).
The core operations in the Industrial Equipment division represented by the forklift businesses in South Africa and the United
Kingdom continued to grow and improve market share even in a declining forklift market in South Africa.
During the period the Fleet Management and Logistics division delivered improved continuing operating profit of
R202 million (2014: R192 million). The division's operating margin improved to 19.2% (2014: 17.0%) mainly as a result of
benefits flowing from previous restructuring. The division also consciously decreased its revenue-generating assets as part
of its ongoing drive to preserve cash. The division is also in the process of closing the Commodity business unit.
The Contract Mining and Plant Rental division improved operating profit by 46.2% to R76 million (2014: R52 million) as a result
of improved efficiencies. Management responded to the continuing changes in the mining sector by earmarking R1 102
million of mining equipment for sale. This resulted in an impairment of R736 million. The value of assets held for sale differs to
the valuation-in-use methodology applied in June 2015. In addition, on 31 December 2015 the contract mining operations
at Benga, Mozambique concluded and the assets were impaired to a fair value on anticipated sale. This resulted in a
discontinued operations loss of R572 million (2014: R75 million profit). The anticipated sale of the assets were in line with
Eqstra's strategy to decrease exposure to the mining sector and also to improve liquidity.
The decrease in revenue-generating assets is part of the group's continued efforts to curtail capital expenditure to ensure
liquidity and to counteract the prevailing constraints in the capital markets. The continued positive cash generation
ensured that Eqstra was able to fund replacement capital expenditure without raising additional debt as well as repay
debt that matured during the period.
Salient features of the results for the interim period include:
- Continuing operating profit improved by 7.1% to R436 million (2014: R407 million) as the Contract Mining and Plant
Rental division's contribution improved.
- Discontinued operations includes the closure of Construction Equipment and Commodities business units as well
as the Benga operations.
- Revenue-generating assets (leasing assets and finance lease receivables), decreased by 19.6% to R8 030 million
(H2'15: R9 982 million), as a result of a combination of the divisions curtailing growth, asset impairments and
classifying R1 181 million as assets held for sale. The decrease in revenue-generating assets is central to our intent to
focus on core competencies and services.
- Net asset value per share decreased by 19.7% to 704.8 cents per share (2014: 877.6 cents per share) as a result of
asset impairments in the Contract Mining and Plant Rental division.
- Continuing operations headline earnings per share (HEPS) increased by 18.1% to 22.2 cents per share, mainly due
to an improvement in the performance of the Contract Mining and Plant Rental division.
DIVISIONAL REVIEW
Industrial Equipment
For the year
For the six months ended ended
31 December 31 December 30 June 30 June
2015 2014 2015 2015
Continuing operations Rm Rm Rm Rm
Revenue 1 448 1 389 1 219 2 608
Operating profit 154 163 158 321
Net finance costs (72) (80) (73) (153)
Profit before taxation 61 86 86 172
PBT margin (%) 4.2% 6.2% 7.1% 6.6%
Revenue-generating assets 2 714 2 365 2 513 2 513
Industrial Equipment's South African forklift business continued to perform well, increasing market share. The United
Kingdom and Ireland business delivered a solid performance in line with expectations. The division will continue to focus on
core businesses and look for further opportunities in the UK and Europe.
Fleet Management and Logistics
For the year
For the six months ended ended
31 December 31 December 30 June 30 June
2015 2014 2015 2015
Continuing operations Rm Rm Rm Rm
Revenue 1 054 1 132 1 059 2 191
Operating profit 202 192 196 388
Net finance costs (95) (106) (101) (207)
Profit before taxation 107 86 95 181
PBT margin (%) 10.2% 7.6% 9.0% 8.3%
Revenue-generating assets 3 054 3 484 3 199 3 199
The Fleet Management and Logistics division's operating profit margin improved by 12.9% despite difficult market
conditions. The phased rollout of the ERP system is reaching its final stages. Further efficiencies are expected in the next
financial year following the full implementation of our ERP system. The division continues to explore alternative funding
solutions to support future growth.
Contract Mining and Plant Rental
For the year
For the six months ended ended
31 December 31 December 30 June 30 June
2015 2014 2015 2015
Continuing operations Rm Rm Rm Rm
Revenue 1 651 1 575 1 688 3 263
Operating profit 76 52 120 172
Net impairment of leasing assets (736) – (97) (97)
Net finance costs (133) (118) (112) (230)
Loss before taxation 787 (63) (219) (156)
Revenue-generating assets 2 271 4 329 4 283 4 283
The Contract Mining and Plant Rental business continued to drive operational improvements and initiatives to improve
shareholder returns, making encouraging progress in a sector under extreme pressure.
The Contract Mining and Plant Rental division focused on improving efficiencies at mining operations during the past
six months. Regrettably, one of the mine sites reported a fatality resulting in 14 days of operations being lost. Other sites
continued to report excellent LTIFR statistics. The impairment of assets held for sale is an important step in the strategy of
improving liquidity and reducing exposure to the mining sector.
The PPM contract was extended for a further five years and the scope of the project increased. The contract allowed for a
sharing of any upwards movement in the platinum price. The Tharisa project was also extended for a further two years with
scope increases. The Dorstfontein contract terminates in March 2016, with extension possibilities. The Nsele Coal contract
should commence in April 2016.
Shareholders are referred to the SENS announcement on 3 February 2016 regarding the Benga operations in
Mozambique termination in December 2015 and the group's intention to sell the assets associated with these operations.
The sale is subject to shareholder approval. Assets were valued as assets held for sale at 31 December 2015.
The division also earmarked underutilised equipment for sale. An impairment of R736 million was raised in anticipation of
the proposed sale of assets.
Funding
During July and September 2015, the group successfully repaid the EQS02 and EQS04 bonds in the amounts of R50 million
and R411 million respectively. These bonds were repaid from a combination of free cash generated by the business and
general banking facilities. During September 2015 an additional R100 million commercial paper was issued as a private
placement.
Subsequent to the period end Eqstra continued to engage with its funding partners to refinance existing bank debt by
extending and smoothing the repayment profile. The board's intent is to further reduce the groups gearing over the
medium term. An update will be published once these arrangements have been completed.
Total interest-bearing borrowings remained flat at R7 545 million (H2'15: R7 519 million) largely due to curtailment of
capital expenditure during the period. Eqstra continues to manage the duration, currency and interest rate of its debt in
accordance with underlying revenue generating assets.
Standard & Poor's Ratings Services placed its 'zaBBB+/zaA-2' long- and short-term South Africa national scale ratings of
the group on negative CreditWatch in light of an expected fall in earnings following the trading update dated 3 February
2016. The formal review process has commenced and the outcome will be announced. Management are of the opinion
that the reduced exposure to mining, improvement in liquidity and debt refinancing should have a positive impact on the
credit rating of the group in the medium to long term.
Solvency and liquidity
The board is satisfied that the strategies to address the liquidity and refinancing risks, including the de-gearing strategy,
are on track and are effectively addressed. In its assessment of the group's solvency and liquidity position, the board is
comfortable that the assets of the group, fairly valued, exceed the liabilities of the group.
The board is also aware of the fact that the capital adequacy covenant was breached as at 31 December 2015 due to
the impairment of the South African mining equipment amounting to R736 million. Lenders were proactively informed. The
lenders have since decided to waive the breach on conditions accepted by the board.
In relation to the liquidity position of the group, the board is fully appraised of the group's position as it relates to upcoming
maturities that will become due and payable. Management has been proactive in addressing the immediate liquidity
concerns and are in the process of refinancing upcoming maturities to ensure that the group remains solvent and liquid.
The board realistically expects a favourable outcome on the debt refinancing process will be achieved. The achievement
of this outcome is critical to the group meeting its repayment obligations.
Dividend
The board agreed to withhold dividend payments to preserve cash as well as to strengthen the balance sheet and to
consider resuming dividend payments only once the targeted leverage ratio has been achieved.
Board changes
The board welcomed Mr ZB Swanepoel as non-executive director on 1 December 2015. His in-depth knowledge of the
mining industry will add value to Eqstra. Mrs S Dakile-Hlongwane retired from the board in November 2015 and is thanked
for her contribution.
Prospects
Group continues to focus on cash management and quality of earnings in terms of the 2020 strategy.
Industrial Equipment anticipates that the solid performance in the forklift businesses will continue in South Africa and the
United Kingdom. A healthy order book for long-term rental and cash sales is in place to support annuity revenue growth.
Fleet Management and Logistics earnings remain robust. We continue to drive value-add products with measured
expansion on leasing activities.
Contract Mining and Plant Rental continues to reduce the exposure to contract mining so that it does not exceed 30% of
the group's revenue-generating assets, focussing on efficiencies and contract management.
Any forecast financial information contained herein has not been reviewed and reported on by the company's external
auditors.
By order of the board
NP Mageza JL Serfontein
Chairperson Chief executive officer
1 March 2016
SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at
Unaudited Unaudited Audited
31 December 31 December 30 June
2015 2014 2015
Rm Rm Rm
ASSETS
Non-current assets 8 734 10 902 10 739
Intangible assets 229 191 220
Property, plant and equipment 382 495 468
Leasing assets 8 022 10 131 9 950
Deferred tax assets 83 57 65
Finance lease receivables 4 11 16
Other investments and loans(2) 14 17 20
Current assets 4 720 2 958 3 127
Finance lease receivables 4 16 16
Other investments and loans(2) 89 74 58
Inventories 1 108 1 115 1 062
Trade and other receivables and
derivatives 1 887 1 605 1 770
Taxation in advance 18 16 18
Cash and cash equivalents 433 132 203
Assets held for sale(4) 1 181 – –
Total assets 13 454 13 860 13 866
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 1 839 1 839 1 839
Other reserves 574 310 330
Retained income 445 1 461 1 569
Equity attributable to owners of the
parent 2 858 3 610 3 738
Non-controlling interests 27 26 32
Total equity 2 885 3 636 3 770
Non-current liabilities 5 819 6 577 6 351
Interest-bearing borrowings 5 212 5 816 5 601
Deferred tax liabilities 607 761 750
Current liabilities 4 750 3 647 3 745
Current portion of interest-bearing
borrowings(3) 2 333 2 048 1 918
Trade and other payables, provisions
and derivatives 1 949 1 573 1 782
Current tax liabilities 43 26 45
Liabilities directly associated with assets
held for sale(4) 425 – –
Total equity and liabilities 13 454 13 860 13 866
SUMMARISED CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited
for the six for the six
months months Audited
ended ended year end
31 December 31 December 30 June
2015 2014 2015
Rm Rm Rm
Continuing operations
Revenue 4 113 4 004 8 107
Profit from operations before
depreciation, amortisation
and recoupments 1 360 1 301 2 641
Depreciation and amortisation (928) (895) (1 763)
Recoupments 4 1 1
Operating profit 436 407 879
Net foreign exchange (losses) gains (16) 5 3
Net impairment of assets (7) (736) – (97)
(Loss) profit before net finance costs (316) 412 785
Net finance costs (300) (304) (599)
Finance costs including fair value gains (8) (306) (311) (617)
Finance income 6 7 18
(Loss) profit before taxation (616) 108 186
Income tax income (expense) 178 (28) (50)
(Loss) profit for the period from
continuing operations (438) 80 136
Discontinued operations
(Loss) profit for the period from
discontinued operations (684) 72 118
(Loss) profit for the period (1 122) 152 254
Attributable to:
Owners of the parent (1 124) 147 243
– (Loss) profit for the period from
continuing operations (440) 75 125
– (Loss) profit for the period from
discontinued operations (684) 72 118
Non-controlling interests 2 5 11
(Loss) profit for the period (1 122) 152 254
Cents Cents Cents
(Loss) earnings per share from
continuing operations (10)
– Basic and diluted (loss) earnings per
share (112.5) 18.9 31.5
(Loss) earnings per share from
discontinued operations (10)
– Basic and diluted (loss) earnings per
share (174.9) 18.1 29.7
SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited
for the six for the six
months months Audited
ended ended year end
31 December 31 December 30 June
2015 2014 2015
Rm Rm Rm
(Loss) profit for the period (1 122) 152 254
Total other comprehensive income for
the period, net of taxation 241 38 109
Exchange differences on translation of
foreign subsidiaries 194 43 92
Net fair value gains (losses) on cash flow
hedges and other fair value reserves 47 (5) 17
Total comprehensive (loss) income for
the period, net of taxation (881) 190 363
Attributable to:
Owners of the parent (883) 185 352
Non-controlling interests 2 5 11
(881) 190 363
SUMMARISED CONSOLIDATED DISCONTINUED OPERATIONS INCOME STATEMENT
Unaudited Unaudited
for the six for the six
months months Audited year
ended ended end
31 December 31 December 30 June
2015 2014 2015
Rm Rm Rm
Revenue 517 709 1 356
Profit from operations before
depreciation, amortisation (1) 233 429
Depreciation and amortisation (82) (137) (271)
Operating (loss) profit (83) 96 158
Net foreign exchange gains 29 8 11
Net impairment of assets(7) (458) – –
(Loss) profit before net finance costs (512) 104 169
Net finance costs (16) (32) (54)
Finance costs (17) (32) (55)
Finance income 1 – 1
(Loss) profit before taxation (528) 72 115
Income tax (expense) income (156) – 3
(Loss) profit for the period (684) 72 118
SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Non-
Stated Other Retained controlling
capital reserves income interest Total
Rm Rm Rm Rm Rm
Balance at 1 July 2014 1 839 272 1 314 26 3 451
Total comprehensive income
for the period – 38 147 5 190
Profit for the period – – 147 5 152
Other comprehensive income for
the period, net of taxation – 38 – – 38
Net share-based payment
movement – 2 – – 2
Dividends paid – – – (5) (5)
Vesting of share incentive scheme – (2) – – (2)
Balance at 31 December 2014 1 839 310 1 461 26 3 636
Total comprehensive income
for the period – 71 96 6 173
Profit for the period – – 96 6 102
Other comprehensive income for
the period, net of taxation – 71 – – 71
Devaluation of Lereko call option – (16) – – (16)
Derecognition of Lereko call option – (23) – – (23)
Realisation of currency translation
reserve – (12) 12 – –
Balance at 30 June 2015 1 839 330 1 569 32 3 770
Total comprehensive income
for the period – 241 (1 124) 2 (881)
Loss (profit) for the period – – (1 124) 2 (1 122)
Other comprehensive income for
the period, net of taxation – 241 – – 241
Net share-based payment
movement – 3 – – 3
Dividends paid – – – (7) (7)
Balance at 31 December 2015 1 839 574 445 27 2 885
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited
for the six for the six Audited
months ended months ended year end
31 December 31 December 30 June
2015 2014 2015
Rm Rm Rm
Cash flows from operating activities
Cash generated from operations before
working capital movements 1 510 1 496 3 111
Working capital movements 263 409 791
Cash generated from operations 1 773 1 905 3 902
Finance income 7 7 19
Finance costs (323) (343) (672)
Taxation paid (24) (12) (33)
Net cash flows from operating activities 1 433 1 557 3 216
Cash flows from investing activities
Acquisition of businesses – (22) (12)
Net capital expenditure (1 154) (1 350) (2 520)
Decrease in finance lease receivables 33 16 11
Net cash flows from investing activities (1 121) (1 356) (2 521)
Cash flows from financing activities
Repurchase of non-controlling interest (16) – (3)
Decrease in derivative financial
instruments – 6 –
Dividends paid (7) (7) (5)
Net decrease in interest-bearing
borrowings (91) (168) (590)
Net cash flows from financing activities (114) (169) (598)
Net increase in cash and cash
equivalents 198 32 97
Effect of exchange rate translation on
cash and cash equivalents 32 7 93
Cash and cash equivalents at beginning
of period 203 93 13
Cash and cash equivalents at end of
period 433 132 203
SUMMARISED CONSOLIDATED STATEMENT OF DISCONTINUED CASH FLOWS
Unaudited Unaudited
for the six for the six Audited
months ended months ended year end
31 December 31 December 30 June
2015 2014 2015
Rm Rm Rm
Net cashflows from operating activities 283 279 403
Net cashflows from investing activities (11) (19) 10
Net cashflows from financing activities (279) (263) (439)
Net cash outflow (7) (3) (26)
SEGMENTAL INFORMATION – SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at
Industrial Fleet Management Contract Mining Corporate Office
Group Equipment and Logistics* and Plant Rental* and Eliminations
31 December 30 June 31 December 30 June 31 December 30 June 31 December 30 June 31 December 30 June
2015 2015 2015 2015 2015 2015 2015 2015 2015 2015
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 229 220 15 12 173 167 40 39 1 2
Property, plant and equipment 382 468 196 186 80 79 81 139 25 64
Leasing assets 8 022 9 950 2 714 2 513 3 046 3 182 2 271 4 268 (9) (13)
Finance lease receivables 8 32 – – 8 17 – 15 – –
Other investments and loans 103 78 2 2 16 19 89 59 (4) (2)
Inventories 1 108 1 062 924 841 30 40 154 181 – –
Trade and other receivables and derivatives 1 887 1 770 509 503 295 261 1 105 985 (22) 21
Assets held for sale 1 181 – – – 34 – 1 147 – – –
Operating assets 12 920 13 580 4 360 4 057 3 682 3 765 4 887 5 686 (9) 72
Deferred tax assets 83 65
Taxation in advance 18 18
Cash and cash equivalents 433 203
Total assets 13 454 13 866
LIABILITIES
Trade and other payables, provisions and derivatives 1 949 1 782 709 587 473 416 689 707 78 72
Interest-bearing borrowings 7 545 7 519 2 513 2 364 1 945 2 144 2 881 3 082 206 (71)
Liabilities directly associated with assets held-for-sale 425 – – – 19 – 406 – – –
Operating liabilities 9 919 9 301 3 222 2 951 2 437 2 560 3 976 3 789 284 1
Deferred tax liabilities 607 750
Current tax liabilities 43 45
Total liabilities 10 569 10 096
GEOGRAPHIC SEGMENTATION
Operating assets 12 920 13 580 4 360 4 057 3 682 3 765 4 887 5 686 (9) 72
– South Africa 10 081 9 938 2 889 2 812 3 328 3 405 3 873 3 649 (9) 72
– Rest of world 2 839 3 642 1 471 1 245 354 360 1 014 2 037 – –
Trade and other payables, provisions and derivatives 1 949 1 782 709 587 473 416 689 707 78 72
– South Africa 1 291 1 339 567 440 299 386 347 441 78 72
– Rest of world 658 443 142 147 174 30 342 266 – –
Interest-bearing borrowings 7 545 7 519 2 513 2 364 1 945 2 144 2 881 3 082 206 (71)
– South Africa 6 073 5 932 1 492 1 539 1 877 2 079 2 498 2 385 206 (71)
– Rest of world 1 472 1 587 1 021 825 68 65 383 697 – –
Net capital expenditure 1 154 2 520 444 940 433 1 016 318 567 (41) (3)
– South Africa 888 1 767 261 676 390 868 278 226 (41) (3)
– Rest of world 266 753 183 264 43 148 40 341 – –
* The Eqstra Plant Leasing business had been reclassified into the Contract Mining and Plant Rental division from Fleet Management and Logistics to align with change in management structures. Comparative amounts have been reclassified accordingly.
SEGMENTAL INFORMATION – SUMMARISED CONSOLIDATED INCOME STATEMENT
for the six months ended
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
2015 2014 2015 2014 2015 2014 2015 2014 2015 2014
Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
BUSINESS SEGMENTATION
Revenue
– Sales of goods 829 958 629 704 188 209 12 45 – –
– Rendering of services, leasing income and other 3 284 3 046 810 644 835 872 1 639 1 530 – –
4 113 4 004 1 439 1 348 1 023 1 081 1 651 1 575 – –
Inter-segment revenue – – 9 41 31 51 – – (40) (92)
4 113 4 004 1 448 1 389 1 054 1 132 1 651 1 575 (40) (92)
Net operating expenses (2 753) (2 703) (990) (964) (499) (573) (1 302) (1 255) 38 89
Depreciation and amortisation (928) (895) (304) (262) (352) (368) (273) (268) 1 3
Recoupments 4 1 – – (1) 1 – – 5 –
Operating profit 436 407 154 163 202 192 76 52 4 –
Net impairment of assets(7) (736) – – – – – (736) – – –
Net foreign exchange (losses) gains (16) 17 (20) 3 – – 6 3 (2) 11
Fair value gains on foreign exchange derivatives – (12) (1) – – – – – 1 (12)
(Loss) profit before net finance costs (316) 412 133 166 202 192 (654) 55 3 (1)
Net finance costs (300) (304) (72) (80) (95) (106) (133) (118) – –
(Loss) profit before taxation (616) 108 61 86 107 86 (787) (63) 3 (1)
Income tax income (expense) 178 (28) (16) (24) (29) (22) 224 18 (1) –
(Loss) profit for the period from continuing operations (438) 80 45 62 78 64 (563) (45) 2 (1)
Discontinued operations
(Loss) profit for the period from discontinued operations (684) 72 (69) (7) (43) 4 (572) 75 – –
(Loss) profit for the period (1 122) 152 (24) 55 35 68 (1 135) 30 2 (1)
GEOGRAPHIC SEGMENTATION
Revenue 4 113 4 004 1 448 1 389 1 054 1 132 1 651 1 575 (40) (92)
– South Africa 3 185 3 411 961 1 018 935 1 009 1 329 1 476 (40) (92)
– Rest of world 928 593 487 371 119 123 322 99 – –
Operating profit 436 407 154 163 202 192 76 52 4 –
– South Africa 350 339 113 139 187 169 46 31 4 –
– Rest of world 86 68 41 24 15 23 30 21 – –
Net finance costs (300) (304) (72) (80) (95) (106) (133) (118) – –
– South Africa (264) (275) (58) (68) (89) (93) (117) (114) – –
– Rest of world (36) (29) (14) (12) (6) (13) (16) (4) – –
* The Eqstra Plant Leasing business had been reclassified into the Contract Mining and Plant Rental division from Fleet Management and Logistics to align with change in management structures. Comparative amounts have been reclassified accordingly.
NOTES
(1) Basis of preparation
The unaudited summarised consolidated financial statements for the six months ended 31 December
2015 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 2015
annual financial report, except for the adoption on 1 July 2015 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 did not have a material impact on the group.
Unaudited Unaudited Audited
31 December 31 December 30 June
2015 2014 2015
Rm Rm Rm
(2) Other investments and loans
Non-current assets 14 17 20
– Listed, at market value – 1 1
– Unlisted, at fair value or director's valuation 14 16 19
Current assets 89 74 58
– Call option – 20 –
– Other loans 89 54 58
103 91 78
(3) Current portion of interest-bearing borrowings
The current portion of interest-bearing borrowings includes R100 million commercial paper that is supported
by a R1 000 million standby liquidity facility with R180 million headroom as at 31 December 2015 and that has
an 13-month rolling notice period.
31 December 31 December 30 June
2015 2014 2015
Rm Rm Rm
(4) Assets classified as held for sale
Leasing assets 1 181 – –
The leasing assets classified as held for sale comprise assets from the Commodities discontinued operation
amounting to R34 million, assets from the Benga discontinued operation amounting to R782 million and leasing
assets of R365 million in the Contract Mining & Plant Rental division which have been earmarked for sale.
Liabilities directly associated with assets held for sale comprise Mozambique debt, tax liabilities and provisions.
31 December 31 December 30 June
2015 2014 2015
Rm Rm Rm
(5) Capital commitments 1 738 2 164 1 776
– Contracted 239 177 224
– Authorised by directors but not contracted 1 499 1 987 1 552
Contingent liabilities – – –
Guarantees 24 18 24
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.
(6) Fair value hierarchy disclosures
Valuation methodology
Level 1 – valuations with reference to quoted prices in an active market:
Financial instruments valued with reference to unadjusted quoted prices for identical assets or liabilities in active
markets where the quoted price is readily available and the price represents actual and regularly occurring
market transactions on an arm's length basis.
Level 2 – valuations based on observable and unobservable inputs include:
Financial instruments valued using inputs other than quoted prices as described above for level 1 but which
are observable for the asset or liability, either directly or indirectly, such as quoted price for similar assets
or liabilities in an active market; quoted price for identical or similar assets or liabilities in inactive markets;
valuation model using observable inputs; and valuation model using inputs derived from/corroborated by
observable market data.
The table below shows the group's financial asset and liabilities that are recognised and subsequently measured
at fair value, analysed by valuation technique.
Level 1 Level 2 Fair value
31 Dec 2015 Rm Rm Rm
Financial assets
Available-for-sale financial assets
– Investments – 14 14
Financial assets designated as fair value through profit
and loss
– Derivative financial assets – 65 65
– Loan and receivables – 89 89
Total financial assets – 168 168
Financial liabilities
Financial liabilities designated as fair value through
profit and loss
– Derivative financial liabilities – 4 4
Total financial liabilities – 4 4
The following summary sets out the principal instruments whose valuation may involve judgemental inputs:
Debt instruments held as assets
These instruments are valued based on valuation techniques using inputs derived from observable market data,
and, where relevant, assumptions in respect of unobservable inputs.
Derivatives
Derivative contracts can be exchange traded or traded over-the-counter (OTC). OTC derivative contracts
include forward and swap contracts related to interest rates, bonds, foreign currencies, credit spreads and
equity prices. Fair values of derivatives are obtained from dealer price quotations, discounted cash flow and
option pricing models.
31 December 31 December 30 June
2015 2014 2015
Rm Rm Rm
(7) Impairment of assets
Continuing operations 736 – 97
During the period, the group performed a review of the market conditions and underutilised leasing assets in
the Contract Mining and Plant Rental division. The review led to an impairment of R736 million (30 June 2015:
R97 million) being recorded, which has been recognised in profit and loss from continued operations. The
R736 million relates to specific leasing assets which have been written down to their estimated fair-value less
costs-to-sell, being their current market values.
Discontinued operations 458 – –
During the period, the leasing assets, equipment and property of the Benga operations as well as the leasing
assets of the Commodities business were impaired to their estimated fair-value less costs-to-sell.
(8) Finance costs including fair value gains
Finance costs from continued operations (306) (311) (617)
Finance costs from discontinued operations (17) (32) (55)
Total finance costs (323) (343) (672)
Cents Cents Cents
(9) Net asset value per share attributable to owner of 704.8 877.6 921.8
the parent
(10) Headline earnings per share
Continuing operations
– Basic and diluted headline earnings per share 22.2 18.8 48.9
Discontinued operations
– Basic and diluted headline earnings per share (24.4) 18.1 29.7
Reconciliation of continuing headline earnings per
share
Basic and diluted earnings per share (112.5) 18.9 31.5
Profit on sale of property, plant and equipment and
leasing assets (1.0) (0.1) (0.3)
Net impairments of assets 188.2 – 24.5
Taxation effect (52.5) – (6.8)
Continuing headline earnings per share 22.2 18.8 48.9
Unaudited Unaudited Audited
31 December 31 December 30 June
2015 2014 2015
Rm Rm Rm
Reconciliation of discontinued earnings per share
Basic and diluted earnings per share (174.9) 18.1 29.7
Profit on sale of property, plant and equipment and
leasing assets – – –
Net impairments of assets 117.1 – –
Taxation effect 33.4 – –
Discontinued headline earnings per share (24.4) 18.1 29.7
Million Million Million
(11) Weighted average number of shares in issue for the
period
Number of ordinary shares
– in issue 405.5 411.4 405.5
– in issue (net of treasury shares) 391.3 397.2 397
Weighted average number of ordinary shares in issue
during the period 391.2 397.1 397.3
– opening shares (net of treasury shares) 391.1 396.9 397.7
– disposal of treasury shares 0.1 0.2 (0.4)
Diluted weighted average number of ordinary shares 391.2 397.1 397.3
(12) Discontinued operations
In line with the group strategy to close or sell non-core businesses, the group closed the Construction Equipment
business, following the termination of the Terex distribution agreement, being included as a discontinued
operation.
Operations in Mozambique have also ceased with the termination of the Benga contract. Non-current leasing
assets of R782 million have been included as assets held for sale and the associated interest-bearing liabilities
and taxation liabilities of R406 million also separately disclosed.
Management has entered into a plan to dispose of the Commodities business and leasing assets of R34 million
have been disclosed as assets held for sale.
(13) Events after reporting period
Other than matters noted above, there are no additional subsequent events.
NAME AND REGISTRATION NUMBER
Eqstra holdings limited
1998/011672/06
JSE codes: EQS; 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*,
VJ Mokoena*, SD Mthembi-Mahanyele*,
AJ Phillips*, TDA Ross*,
LL von Zeuner*, ZB Swanepoel*
(*Independent)
EXECUTIVE DIRECTORS
JL Serfontein (CEO & 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)
INVESTOR RELATION
FTI Consultants
021 487 9022
1 March 2016
www.eqstra.co.za
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