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EQS
EQS
EQS - Eqstra Holdings - Unaudited Interim results for the six months ended
31 December 2008
EQSTRA HOLDINGS LIMITED
Registration number 1998/011672/06
Share code: EQS
ISIN: ZAE000117123
"EQSTRA"
Unaudited INTERIM results for the six months ended 31 December 2008
Highlights
- Revenue up by 33,1% to R4 412 million
- EBITDA up by 32,0% to R1 513 million
- Operating profit increased by 15,7% to R735 million
- Basic HEPS up 3,1% to 85,9 cents
- Leasing assets increased by 9,7% to R7 188 million (compared to 30 June
2008)
- Terex and New Holland Construction increased market share to 10%
CONSOLIDATED BALANCE SHEETS
as at
Pro forma
31 December 31 December Unbundling
2008 2007(1) adjustments(1)
Rm Rm Rm
ASSETS
Non-current assets 7 722 5 930 (438)
Intangible assets 8 27 (33)
Property, plant and equipment 361 278
Leasing assets 7 188 5 351
Deferred tax assets 35 45 (26)
Other investments and
loans(3) 130 229 189
Amounts owing by Imperial
Holdings
Limited subsidiaries (568)
Current assets 3 245 2 711 (126)
Inventories 1 844 1 478
Trade and other receivables 1 228 961 (125)
Taxation in advance 55 118
Cash and cash equivalents 118 154 (1)
Total assets 10 967 8 641 (564)
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 1 475 1 487 1 487
Group equity funding (391)
Non-distributable reserves (12) 4
Share based payment reserve 5
Distributable reserves 515 445 (427)
Equity holders` interest 1 983 1 936 669
Minority interest 17 12 (291)
Total shareholders` equity 2 000 1 948 378
Non-current liabilities 5 019 4 218 (1 855)
Interest-bearing borrowings 4 444 3 800 3 602
Deferred tax liabilities 575 418 (10)
Amounts owing to Imperial
Holdings
Limited subsidiaries (5 447)
Current liabilities 3 948 2 475 913
Trade and other payables 1 343 1 170 (35)
Provisions for liabilities
and other charges 49 162 19
Current tax liabilities 42 123 (4)
Current portion of
interest-bearing
borrowings(4) 2 514 1 020 933
Total liabilities 8 967 6 693 (942)
Total equity and liabilities 10 967 8 641 (564)
Notes
(1) These numbers are as per
the financial statements as
presented in
the pre-listing statement
issued on 20 March 2008.
(2) These numbers are as per
the pro forma financial
statements as
presented in the Eqstra
Holdings Limited annual
report for
30 June 2008.
(3) Other investments and
loans
- Listed, at market value 33 24
- Unlisted, at fair value or
directors` valuation 60 116 116
- Loans receivable 37 89 73
130 229 189
Capital commitments 537 388
Contingent liabilities 418 322
Leasing and
capital
equipment Audited
division in 30 June
Imperial(1) 2008(2)
Rm Rm
ASSETS
Non-current assets 6 368 7 100
Intangible assets 60 5
Property, plant and equipment 278 353
Leasing assets 5 351 6 550
Deferred tax assets 71 60
Other investments and loans(3) 40 132
Amounts owing by Imperial Holdings
Limited subsidiaries 568
Current assets 2 837 2 990
Inventories 1 478 1 690
Trade and other receivables 1 086 1 126
Taxation in advance 118 46
Cash and cash equivalents 155 128
Total assets 9 205 10 090
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 1 475
Group equity funding 391
Non-distributable reserves 4 72
Share based payment reserve
Distributable reserves 872 291
Equity holders` interest 1 267 1 838
Minority interest 303 17
Total shareholders` equity 1 570 1 855
Non-current liabilities 6 073 5 166
Interest-bearing borrowings 198 4 727
Deferred tax liabilities 428 439
Amounts owing to Imperial Holdings
Limited subsidiaries 5 447
Current liabilities 1 562 3 069
Trade and other payables 1 205 1 915
Provisions for liabilities and other charges 143 100
Current tax liabilities 127 27
Current portion of interest-bearing borrowings(4) 87 1 027
Total liabilities 7 635 8 235
Total equity and liabilities 9 205 10 090
Notes
(1) These numbers are as per the financial statements as presented in
the pre-listing statement issued on 20 March 2008.
(2) These numbers are as per the pro forma financial statements as
presented in the Eqstra Holdings Limited annual report for
30 June 2008.
(3) Other investments and loans
- Listed, at market value 24 27
- Unlisted, at fair value or directors` valuation 57
- Loans receivable 16 48
40 132
Capital commitments 2 758
Contingent liabilities 192
(4) Current portion of interest-bearing borrowings
The current portion of interest-bearing borrowings includes R1 616 million
commercial paper that is supported by a R1 950 million standby liquidity
facility that has an 18 month notice period.
(5) Basis of preparation
This unaudited financial information has been prepared in accordance with IAS
34 - Interim Financial Reporting and is in line with the pre-listing statement
and audited 30 June 2008 financial results. These results are a summary of the
group`s unaudited financial statements and have been prepared for illustrative
purposes to provide a more meaningful comparison year on year. These financial
statements are the responsibility of the directors and may not fairly present
the financial position of Eqstra, its results of operations, cash flow or
changes in equity. The external auditors have not reviewed the financial
results for the half year ended 31 December 2008.
(6) Accounting policies
The accounting policies and methods of computation adopted in preparation of
the unaudited financial statements are consistent with those of the annual
financial statements for the year ended 30 June 2008.
CONSOLIDATED CASH FLOW STATEMENTS
For the six months ended Year ended
Pro forma Pro forma
31 December 31 December 30 June
2008 2007(1) 2008(2)
Rm Rm Rm
Cash flows from operating activities
Cash generated by operations
before changes in working capital 1 533 1 0 22 2 406
Net working capital movements (881) (937) (645)
Cash generated by operations 652 85 1 761
Net finance costs excluding fair
value adjustments (397) (225) (523)
Taxation received (paid) 9 (39) (110)
Net cash flows generated
(utilised) from operating activities 264 (179) 1 128
Cash flows from investing activities
Net acquisition of subsidiaries
and businesses (2) (61)
Gross capital expenditure (1 852) (1 435) (3 854)
Proceeds on disposal of assets 328 5 03 1 095
Proceeds received from (purchase
of) other investments and loans 44 (4) (84)
Net cash flows utilised in
investing activities (1 480) (938) (2 904)
Cash flows from financing activities
Additional capital introduced 400
Share issue expenses (19)
Net movement of amounts owing to
Imperial Holdings Limited subsidiaries 1 182
Increase in interest-bearing
borrowings 1 206 24 1 604
Dividends paid (104) (250)
Net cash flows generated from
financing activities 1 206 1 1 02 1 735
Net decrease in cash and cash
equivalents (10) (15) (41)
Cash and cash equivalents at
beginning of period 128 169 169
Cash and cash equivalents at end
of period 118 154 128
CONSOLIDATED INCOME STATEMENTS
31 December
% 2008
change Rm
Revenue 33,1 4 412
Profit from operations before
depreciation and recoupments 1 513
Depreciation and recoupments (778)
Operating profit 15,7 735
Foreign exchange losses (12)
Fair value gains (losses) on foreign
exchange contracts 9
Fair value loss on other financial instruments
Profit before net finance costs 19,6 732
Net finance costs(8) (429)
Finance income 22
Profit before taxation and
exceptional item (9,5) 325
Fair value loss on share scheme loans (3)
Profit before taxation (10,3) 322
Income tax expense 98
Net profit for the period (9,7) 224
Attributable to:
Equity holders (9,7) 224
Minority interest
Profit after taxation (9,7) 224
Cents
Earnings per share(7)
Ordinary shares
- Basic (9,9) 86,4
- Diluted (10,0) 77,5
Headline earnings per share(7)
- Basic 3,1 85,9
- Diluted 3,4 77,1
Earnings per share reconciliation(7)
Headline earnings per share 3,1 85,9
Profit (loss) on sale of property,
plant and equipment 0,1
Profit on sale of leasing assets 0,6
Taxation effect (0,2)
Basic earnings per share (9,9) 86,4
(7) Based on the weighted average number
of shares in issue for the period
Net asset value per share (cents) 774,0
Number of ordinary shares (million)
- in issue 258,4
- weighted average 258,4
- dilutionary number of shares 29,5
- diluted weighted average 287,9
(8) Net finance costs Rm
Net interest paid 419
Fair value losses (gains) on borrowings and
interest swaps 10
429
For the six months ended
Pro forma
31 December Unbundling
2007(1) adjustments(1)
Rm Rm
Revenue 3 314
Profit from operations before
depreciation and recoupments 1 146
Depreciation and recoupments (511)
Operating profit 635
Foreign exchange losses (14)
Fair value gains (losses) on foreign
exchange contracts 7
Fair value loss on other financial
instruments (16) (16)
Profit before net finance costs 612 (16)
Net finance costs(8) (283) (49)
Finance income 30 20
Profit before taxation and
exceptional item 359 (45)
Fair value loss on share scheme loans
Profit before taxation 359 (45)
Income tax expense 111 (9)
Net profit for the period 248 (36)
Attributable to:
Equity holders 248 46
Minority interest (82)
Profit after taxation 248 (36)
Cents Cents
Earnings per share(7)
Ordinary shares
- Basic 95,9
- Diluted 86,1
Headline earnings per share(7)
- Basic 83,3
- Diluted 74,6
Earnings per share reconciliation(7)
Headline earnings per share 83,3
Profit (loss) on sale of property,
plant and equipment 0,1
Profit on sale of leasing assets 17,4
Taxation effect (4,9)
Basic earnings per share 95,9
(7) Based on the weighted average number
of shares in issue for the period
Net asset value per share (cents) 709,4
Number of ordinary shares (million)
- in issue 258,4 46,3
- weighted average 258,4
- dilutionary number of shares 29,5
- diluted weighted average 287,9
(8) Net finance costs Rm Rm
Net interest paid 283 49
Fair value losses (gains) on borrowings and
interest swaps
283 49
Year ended
Leasing and
capital
equipment Pro forma
division in 30 June
Imperial(1) 2008(2)
Rm Rm
Revenue 3 314 7 542
Profit from operations before
depreciation and recoupments 1 146 2 412
Depreciation and recoupments (511) (1 174)
Operating profit 635 1 238
Foreign exchange losses (14) (25)
Fair value gains (losses) on foreign
exchange contracts 7 (3)
Fair value loss on other financial
instruments
Profit before net finance costs 628 1 210
Net finance costs(8) (234) (532)
Finance income 10 20
Profit before taxation and
exceptional item 404 698
Fair value loss on share scheme loans (6)
Profit before taxation 404 692
Income tax expense 120 188
Net profit for the period 284 504
Attributable to:
Equity holders 202 382
Minority interest 82 122
Profit after taxation 284 504
Cents Cents
Earnings per share(7)
Ordinary shares
- Basic 95,5 170,3
- Diluted 83,8 150,4
Headline earnings per share(7)
- Basic 80,1 158,7
- Diluted 70,2 140,1
Earnings per share reconciliation(7)
Headline earnings per share 80,1 158,7
Profit (loss) on sale of property,
plant and equipment 0,2 (3,5)
Profit on sale of leasing assets 21,2 19,6
Taxation effect (6,0) (4,5)
Basic earnings per share 95,5 170,3
(7) Based on the weighted average number
of shares in issue for the period
Net asset value per share (cents) 559,3 718,2
Number of ordinary shares (million)
- in issue 212,1 258,4
- weighted average 212,1 224,0
- dilutionary number of shares 29,5 29,5
- diluted weighted average 241,6 253,5
(8) Net finance costs Rm Rm
Net interest paid 234 543
Fair value losses (gains) on borrowings and
interest swaps (11)
234 532
Statement of changes in equity
for the six months ended
Share Group
capital and equity
premium funding
Rm Rm
Pro forma balance at 25 June 2007 391
Net gains arising on translation of
foreign companies
Movement in hedge accounting reserve
Net gains not recognised in the
income statement
Net profit for the period
Dividends
Unbundling adjustments 1 487 (391)
Pro forma balance at 31 December 2007 1 487
Net gains arising on translation of
foreign companies
Impairment of Lereko call option
Movement in hedge accounting reserve
Net gains not recognised in the
income statement
Net profit for the period
Dividends
Share issue expenses (19)
Unbundling adjustments 7
Balance at 30 June 2008 1 475
Net gains arising on translation of
foreign companies
Movement in hedge accounting reserve
Revaluation of Lereko call option
Share based payments charge
Acquisition of mirror call option hedge
for share incentive scheme
Net (losses) gains not recognised in the
income statement
Net profit for the period
Balance at 31 December 2008 1 475
Non- Share
distri- based
butable payments
reserves reserve
Rm Rm
Pro forma balance at 25 June 2007 4
Net gains arising on translation of
foreign companies (2)
Movement in hedge accounting reserve 2
Net gains not recognised in the
income statement
Net profit for the period
Dividends
Unbundling adjustments
Pro forma balance at 31 December 2007 4
Net gains arising on translation of
foreign companies 29
Impairment of Lereko call option (33)
Movement in hedge accounting reserve 20
Net gains not recognised in the
income statement 16
Net profit for the period
Dividends
Share issue expenses
Unbundling adjustments 52
Balance at 30 June 2008 72
Net gains arising on translation of
foreign companies (13)
Movement in hedge accounting reserve (52)
Revaluation of Lereko call option 1
Share based payments charge 5
Acquisition of mirror call option hedge
for share incentive scheme (20)
Net (losses) gains not recognised in the
income statement (84) 5
Net profit for the period
Balance at 31 December 2008 (12) 5
Distri-
butable Minority
reserves interest Total
Rm Rm Rm
Pro forma balance at 25 June 2007 741 254 1 390
Net gains arising on translation of
foreign companies (2)
Movement in hedge accounting reserve 2
Net gains not recognised in the
income statement
Net profit for the period 202 82 284
Dividends (71) (33) (104)
Unbundling adjustments (427) (291) 378
Pro forma balance at 31 December 2007 445 12 1 948
Net gains arising on translation of
foreign companies 29
Impairment of Lereko call option (33)
Movement in hedge accounting reserve 20
Net gains not recognised in the
income statement 16
Net profit for the period 180 40 220
Dividends (107) (39) (146)
Share issue expenses (19)
Unbundling adjustments (227) 4 (164)
Balance at 30 June 2008 291 17 1 855
Net gains arising on translation of
foreign companies (13)
Movement in hedge accounting reserve (52)
Revaluation of Lereko call option 1
Share based payments charge 5
Acquisition of mirror call option hedge
for share incentive scheme (20)
Net (losses) gains not recognised in the
income statement (79)
Net profit for the period 224 224
Balance at 31 December 2008 515 17 2 000
SEGMENT INFORMATION - BALANCE SHEETS
as at
Group
Pro forma
31 December 31 December
2008 2007
Rm Rm
BUSINESS SEGMENTATION
Assets
Intangible assets 8 27
Property, plant and equipment 361 278
Leasing assets 7 188 5 351
Other investments and loans 130 229
Inventories 1 844 1 478
Trade and other receivables 1 228 961
Operating assets 10 759 8 324
Deferred tax assets 35 45
Taxation in advance 55 118
Cash and cash equivalents 118 154
Total assets per balance sheet 10 967 8 641
Liabilities
Accounts payable and provisions 1 392 1 332
Non interest-bearing liabilities 1 392 1 332
Interest-bearing borrowings 6 958 4 820
Deferred tax liabilities 575 418
Current tax liabilities 42 123
Total liabilities per balance sheet 8 967 6 693
GEOGRAPHIC SEGMENTATION
Operating assets 10 759 8 324
- South Africa 9 746 7 518
- Rest of World 1 013 806
Non interest-bearing liabilities 1 392 1 332
- South Africa 1 255 1 222
- Rest of World 137 110
Interest-bearing borrowings 6 958 4 820
- South Africa 6 239 4 384
- Rest of World 719 436
Gross capital expenditure 1 852 1 435
- South Africa 1 675 1 321
- Rest of World 177 114
1 852 1 435
Less: Proceeds on disposal (328) (503)
Net capital expenditure 1 524 932
Construction and Mining
Pro forma
31 December 31 December
2008 2007
Rm Rm
BUSINESS SEGMENTATION
Assets
Intangible assets 2 9
Property, plant and equipment 188 115
Leasing assets 3 076 1 678
Other investments and loans 34 25
Inventories 1 527 1 052
Trade and other receivables 854 461
Operating assets 5 681 3 340
Deferred tax assets
Taxation in advance
Cash and cash equivalents
Total assets per balance sheet
Liabilities
Accounts payable and provisions 785 664
Non interest-bearing liabilities 785 664
Interest-bearing borrowings
Deferred tax liabilities
Current tax liabilities
Total liabilities per balance sheet
GEOGRAPHIC SEGMENTATION
Operating assets 5 681 3 340
- South Africa 5 492 3 301
- Rest of World 189 39
Non interest-bearing liabilities 785 664
- South Africa 757 661
- Rest of World 28 3
Interest-bearing borrowings 3 667 1 849
- South Africa 3 523 1 802
- Rest of World 144 47
Gross capital expenditure 894 481
- South Africa 890 481
- Rest of World 4
894 481
Less: Proceeds on disposal (5) (7)
Net capital expenditure 889 474
Passenger and Commercial Vehicles
Pro forma
31 December 31 December
2008 2007
Rm Rm
BUSINESS SEGMENTATION
Assets
Intangible assets 5 7
Property, plant and equipment 66 66
Leasing assets 2 840 2 627
Other investments and loans 16
Inventories 56 115
Trade and other receivables 177 277
Operating assets 3 144 3 108
Deferred tax assets
Taxation in advance
Cash and cash equivalents
Total assets per balance sheet
Liabilities
Accounts payable and provisions 332 356
Non interest-bearing liabilities 332 356
Interest-bearing borrowings
Deferred tax liabilities
Current tax liabilities
Total liabilities per balance sheet
GEOGRAPHIC SEGMENTATION
Operating assets 3 144 3 108
- South Africa 2 881 2 835
- Rest of World 263 273
Non interest-bearing liabilities 332 356
- South Africa 283 285
- Rest of World 49 71
Interest-bearing borrowings 1 826 2 030
- South Africa 1 670 1 947
- Rest of World 156 83
Gross capital expenditure 598 675
- South Africa 536 643
- Rest of World 62 32
598 675
Less: Proceeds on disposal (184) (374)
Net capital expenditure 414 301
Industrial Equipment
Pro forma
31 December 31 December
2008 2007
Rm Rm
BUSINESS SEGMENTATION
Assets
Intangible assets 11
Property, plant and equipment 83 74
Leasing assets 1 272 1 046
Other investments and loans
Inventories 261 311
Trade and other receivables 192 210
Operating assets 1 808 1 652
Deferred tax assets
Taxation in advance
Cash and cash equivalents
Total assets per balance sheet
Liabilities
Accounts payable and provisions 123 308
Non interest-bearing liabilities 123 308
Interest-bearing borrowings
Deferred tax liabilities
Current tax liabilities
Total liabilities per balance sheet
GEOGRAPHIC SEGMENTATION
Operating assets 1 808 1 652
- South Africa 1 247 1 158
- Rest of World 561 494
Non interest-bearing liabilities 123 308
- South Africa 63 272
- Rest of World 60 36
Interest-bearing borrowings 1 395 948
- South Africa 976 642
- Rest of World 419 306
Gross capital expenditure 359 271
- South Africa 248 189
- Rest of World 111 82
359 271
Less: Proceeds on disposal (139) (122)
Net capital expenditure 220 149
Group and eliminations
Pro forma
31 December 31 December
2008 2007
Rm Rm
BUSINESS SEGMENTATION
Assets
Intangible assets 1
Property, plant and equipment 24 23
Leasing assets
Other investments and loans 96 188
Inventories
Trade and other receivables 5 13
Operating assets 126 224
Deferred tax assets
Taxation in advance
Cash and cash equivalents
Total assets per balance sheet
Liabilities
Accounts payable and provisions 152 4
Non interest-bearing liabilities 152 4
Interest-bearing borrowings
Deferred tax liabilities
Current tax liabilities
Total liabilities per balance sheet
GEOGRAPHIC SEGMENTATION
Operating assets 126 224
- South Africa 126 224
- Rest of World
Non interest-bearing liabilities 152 4
- South Africa 152 4
- Rest of World
Interest-bearing borrowings 70 (7)
- South Africa 70 (7)
- Rest of World
Gross capital expenditure 1 8
- South Africa 1 8
- Rest of World
1 8
Less: Proceeds on disposal
Net capital expenditure 1 8
SEGMENT INFORMATION - INCOME STATEMENTS
for the six months ended
Group
Pro forma
31 December 31 December
2008 2007
Rm Rm
BUSINESS SEGMENTATION
Revenue
- Sales of goods 1 449 1 189
- Rendering of services 2 961 2 125
- Other 2
4 412 3 314
Operating expenses (2 899) (2 168)
Depreciation (780) (556)
Recoupments 2 45
Operating profit (loss) 735 635
Foreign exchange (losses) gains (12) (14)
Fair value gains (losses) on foreign
exchange derivatives 9 7
Fair value loss on other financial instruments (16)
Profit before net finance costs and
exceptional item 732 612
Net finance costs (407) (253)
Profit before taxation and exceptional item 325 359
GEOGRAPHIC SEGMENTATION
Revenue 4 412 3 314
- South Africa 3 984 2 938
- Rest of World 428 376
Operating profit 735 635
- South Africa 660 580
- Rest of World 75 55
Net finance costs 407 253
- South Africa 369 241
- Rest of World 38 12
Construction and Mining
Pro forma
31 December 31 December
2008 2007
Rm Rm
BUSINESS SEGMENTATION
Revenue
- Sales of goods 1 017 623
- Rendering of services 1 734 1 035
- Other
2 751 1 658
Operating expenses (2 010) (1 151)
Depreciation (307) (195)
Recoupments 3 3
Operating profit (loss) 437 315
Foreign exchange (losses) gains 4 (8)
Fair value gains (losses) on foreign
exchange derivatives (6) 8
Fair value loss on other financial instruments
Profit before net finance costs and
exceptional item 435 315
Net finance costs (212) (88)
Profit before taxation and exceptional item 223 227
GEOGRAPHIC SEGMENTATION
Revenue 2 751 1 658
- South Africa 2 640 1 621
- Rest of World 111 37
Operating profit 437 315
- South Africa 402 311
- Rest of World 35 4
Net finance costs 212 88
- South Africa 202 86
- Rest of World 10 2
Passenger and
Commercial Vehicles
Pro forma
31 December 31 December
2008 2007
Rm Rm
BUSINESS SEGMENTATION
Revenue
- Sales of goods 106 270
- Rendering of services 801 728
- Other
907 998
Operating expenses (408) (595)
Depreciation (303) (222)
Recoupments (2) 43
Operating profit (loss) 194 224
Foreign exchange (losses) gains 2
Fair value gains (losses) on foreign
exchange derivatives
Fair value loss on other financial instruments
Profit before net finance costs and
exceptional item 194 226
Net finance costs (131) (117)
Profit before taxation and exceptional item 63 109
GEOGRAPHIC SEGMENTATION
Revenue 907 998
- South Africa 821 825
- Rest of World 86 173
Operating profit 194 224
- South Africa 171 189
- Rest of World 23 35
Net finance costs 131 117
- South Africa 118 109
- Rest of World 13 8
Industrial Equipment
Pro forma
31 December 31 December
2008 2007
Rm Rm
BUSINESS SEGMENTATION
Revenue
- Sales of goods 326 296
- Rendering of services 426 359
- Other
752 655
Operating expenses (476) (414)
Depreciation (170) (139)
Recoupments 1
Operating profit (loss) 107 102
Foreign exchange (losses) gains (17) (8)
Fair value gains (losses) on foreign
exchange derivatives 15 (2)
Fair value loss on other financial instruments
Profit before net finance costs and
exceptional item 105 92
Net finance costs (65) (48)
Profit before taxation and exceptional item 40 44
GEOGRAPHIC SEGMENTATION
Revenue 752 655
- South Africa 521 489
- Rest of World 231 166
Operating profit 107 102
- South Africa 90 86
- Rest of World 17 16
Net finance costs 65 48
- South Africa 50 46
- Rest of World 15 2
Group and eliminations
Pro forma
31 December 31 December
2008 2007
Rm Rm
BUSINESS SEGMENTATION
Revenue
- Sales of goods
- Rendering of services 3
- Other 2
2 3
Operating expenses (5) (8)
Depreciation
Recoupments (1)
Operating profit (loss) (3) (6)
Foreign exchange (losses) gains 1
Fair value gains (losses) on foreign
exchange derivatives 1
Fair value loss on other financial instruments (16)
Profit before net finance costs and
exceptional item (2) (21)
Net finance costs 1
Profit before taxation and exceptional item (1) (21)
GEOGRAPHIC SEGMENTATION
Revenue 2 3
- South Africa 2 3
- Rest of World
Operating profit (3) (6)
- South Africa (3) (6)
- Rest of World
Net finance costs (1)
- South Africa (1)
- Rest of World
Walter Hill, CE, commented:
"We delivered a satisfactory performance in difficult trading conditions
characterised by slower volume growth and margin pressure from the weaker Rand
and lower commodity prices.
Eqstra will benefit from the action taken to reduce inventory and costs and
continue to right-size, reduce debt and retain cash.
The Eqstra management team
is preparing for challenging market conditions and recognises that margins and
volume growth will be influenced by macro economic and other external factors.
All our businesses are well placed and resilient to withstand these turbulent
markets."
Overview of results
Eqstra`s revenue and operating profit grew by 33,1% and 15,7% respectively. The
effects of the global economic crisis and depressed commodity prices affected
the Construction and Mining and Industrial Equipment divisions in the final
quarter of 2008.
The group`s operating margin reduced from 19,2% to 16,7% due to the increased
contribution from the lower margin Construction and Mining distributorships.
The depreciation in the value of the Rand against the Japanese Yen and the Euro
reduced margins in the group`s distributorships. Basic headline earnings per
share increased to 85,9 cents per share, up 3,1% compared to the 31 December
2007 pro forma basic headline earnings as reported in the pre listing statement
of 20 March 2008.
Total assets increased by 8,7% to R10 967 million. Leasing assets increased by
9,7% to R7 188 million, whilst inventories, trade and other receivables
increased by 9,1% to R3 072 million. Net finance costs increased to R429
million, up 51,6% mainly as a result of increased borrowing to fund capital
expenditure. The prime rate of interest increased by 200 basis points over the
calendar year.
Cash generated by operations before changes in working capital increased by
50,0% to R1 533 million. Working capital increased by R881 million due to an
increase in inventory levels of R154 million, an increase in trade and other
receivables of R102 million and by a decline in trade payables of R625 million.
Gross capital expenditure of R1 852 million, that has been applied to revenue
earning assets, was funded by an increase in interest bearing borrowings of R1
206 million, ongoing disposal of assets of R328 million and cash generated of
R264 million.
Debt levels increased by R1 206 million to R6 958 million of funding that
matches or exceeds the run off or maturity profile of the revenue generation
assets. These levels are supported by committed facilities of R6 950 million in
South Africa and R988 million in Africa and the United Kingdom. The long-term
facilities of R3 850 million are fully utilised while capacity still exists
within our medium and short-term facilities. The group has successfully placed
R1 616 million in commercial paper during the period that is fully supported by
a stand-by liquidity facility of R1 950 million. It is Eqstra`s intention to
issue bonds in the capital market in order to refinance the long- term
facilities.
Capital adequacy of 18,2% has reduced marginally since year end due to the
increase in leasing assets, inventories and trade and other receivables. We
expect an improvement to year end as inventory levels are reduced and other
business activities are realigned to match the economic downturn. The
curtailment of capital expenditure and working capital will reduce overall debt
from current levels.
Operational Review
Construction and Mining
Revenue grew by 65,9% to R2 751 million and operating profits increased by
38,7% to R437 million. Terex and New Holland Construction`s revenue and
operating profit contribution to 31 December 2008 increased by 90,5% and 300,0%
respectively compared to the same period in 2007. These two brands have
increased their combined market share to 10% from 3% in the previous year.
MCC ceased mining in Zimbabwe for Zimplats in November, the fleet had reached
the end of its productive life and the client elected not to extend the life of
the open pit and concentrate on underground operations instead. Production was
suspended for Lonmin in November 2008, due to the depressed platinum price.
Leasing assets increased by 21,9% to R3 076 million compared to 30 June 2008.
Net finance costs increased to R212 million, up 140,9%, as a result of
increased inventory and significant fleet expansion in the contract mining and
plant hire business.
Passenger and Commercial Vehicles
Revenue decreased by 9,1% to R907 million and operating profits by 13,4% to
R194 million due to the termination of the RTG (Rentals to Government) and
Lesotho Government contracts. The fleet size remained relatively constant at 18
558 units, notwithstanding the termination of the above contracts. Leasing
assets increased by 3,0% to R2 840 million compared to 30 June 2008, due to the
leasing of higher value commercial vehicles and net finance costs grew by 12,0%
to R131 million. The continued long-term conservative approach to residual
values has been justified with the ongoing weakness in used vehicle pricing;
this has been offset by improved maintenance fund profits.
Industrial Equipment
Revenue increased by 14,8% to R752 million and operating profits increased by
4,9% to R107 million. The fleet decreased by 1,1% to 12 137 units due to a
reduction of the size of the short-term rental fleet. Leasing assets grew by
0,2% to R1 272 million compared to 30 June 2008 and net finance costs were up
by 35,4% to R65 million.
The South African operations achieved a market share at 35% in a forklift
market that contracted by 21% in 2008. 55% of new forklift sales were to the
rental fleet compared with 44% the previous year.
Despite the forklift market in the United Kingdom declining by 15% in 2008,
Eqstra`s forklift dealer in the UK, impact, was profitable to December 2008.
Impact now covers 65% of the UK industrial equipment market.
Dividend policy
As per the pre listing statement no interim dividend will be paid.
Outlook
The second six months of the financial year is expected to be challenging.
Eqstra is affected by the effects of the depressed commodities prices, slowing
economic growth, inclement weather and stricter financing criteria required by
banks for financing capital equipment. Decisive management action has been
taken to prepare for this period, including but not limited to, cash retention
and the reduction of inventories, costs and debt.
Subsequent to 31 December 2008, MCC Contracts has secured an outsourced open
cast mining contract with Coal of Africa to mine the Vele project near Musina.
This project will ramp up to produce 5 million tonnes of coking and thermal
coal per annum. Equipment from the concluded mining contracts will be
redeployed to this contract which will negatively impact earnings until the
project commences in August 2009.
The Passenger and Commercial Vehicle division is pursuing selective non capital
intensive opportunities. The division has secured a contract with Swissport to
lease assets to the value of R156 million and maintain their airside equipment
at airports throughout South Africa.
Prospects for the Industrial Equipment division are largely linked to the
general health of the economy.
The board is confident that Eqstra is well positioned and has the appropriate
strategies in place to successfully navigate through this challenging period.
By order of the board
DC Cronje WS Hill
Chairman Chief Executive
25 February 2009
Directors:
E Clarke (Chief Financial), DC Cronje (Chairman)*, MJ Croucamp*,
S Dakile-Hlongwane, WS Hill (Chief Executive), VJ Mokoena, PS Molefe,
SD Mthembi-Mahanyele*, AJ Phillips*, TDA Ross*
* Independent
Company Secretary:
L Moller
Registered Office:
12 Corobrik Road, Meadowdale
PO Box 1050, Bedfordview 2008
Transfer Secretaries:
Computershare Investor Services (Proprietary) Limited
Ground Floor, 70 Marshall Street, Johannesburg, 2001
Sponsor:
Merrill Lynch South Africa (Proprietary) Limited
www.eqstra.co.za
Date: 25/02/2009 07:30:06 Produced by the JSE SENS Department.
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