27 February 2014 Company Announcements Office Australian Securities Exchange Limited Level 6, 20 Bridge Street SYDNEY NSW 2000 By Electronic Lodgment Total pages: 35 (including cover letter) Dear Sir / Madam Presentation of Results to Analysts Following is a copy of the Presentation of Results for the financial half year ended 31 December 2013. Yours faithfully Warren Coatsworth Company Secretary Seven Group Holdings Limited | ABN 46 142 003 469 38-42 Pirrama Road | Pyrmont NSW 2009 Australia | Postal Address: PO Box 777 | Pyrmont NSW 2009 Australia Telephone +61 2 8777 7777 | Facsimile +61 2 8777 7192
RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2013 1H FY14 Presentation on 27 February 2014
Disclaimer Basis of preparation of slides Included in this presentation is data prepared by the management of Seven Group Holdings Limited (SGH) and other associated entities and investments. This data is included for information purposes only and has not been subject to the same level of review by the company as the financial statements, so is merely provided for indicative purposes. The company and its employees do not warrant the data and disclaim any liability flowing from the use of this data by any party. SGH does not accept any liability to any person, organisation or entity for any loss or damage suffered as a result of reliance on this document. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements, and are subject to variation. All forward-looking statements in this document reflect the current expectations concerning future results and events. Any forward-looking statements contained or implied, either within this document or verbally, involve known and unknown risks, uncertainties and other factors (including economic and market conditions, changes in operating conditions, currency fluctuations, political events, labour relations, availability and cost of labour, materials and equipment) that may cause actual results, performance or achievements to differ materially from the anticipated results, performance or achievements, expressed, projected or implied by any forward-looking statements. Unless otherwise indicated, all references to estimates, targets and forecasts and derivations of the same in this material are references to estimates, targets and forecasts by SGH. Management estimates, targets and forecasts are based on views held only at the date of this material, and actual events and results may be materially different from them. SGH does not undertake to revise the material to reflect any future events or circumstances. Non-IFRS Financial Information SGH results are reported under International Financial Reporting Standards (IFRS). The underlying segment performance is presented in Note 3 to the financial statements and excludes Significant Items (comprising impairment of investments, fair value movement of derivatives, net gains on sale of investments, equity accounted investees and subsidiaries, restructuring and redundancy costs, share of results from equity accounted investees attributable to significant items, fair value unwind of deferred consideration in finance income and unusual tax expense impacts, as detailed in slide 11). This presentation also includes certain non-IFRS measures including Underlying Net Profit After Tax (excluding Significant Items), total revenue and other income, Segment EBIT margin and Segment EBITDA margin. These measures are used internally by management to assess the performance of our business, make decisions on the allocation of our resources and assess operational management. Non-IFRS measures have not been subject to audit or review. Results Presentation – 1H FY14 27 February 2014 Slide 2
Today’s Agenda Overview Don Voelte Outlook Don Voelte Financials Richard Richards Investments Ryan Stokes Property Ryan Stokes Industrial Services Don Voelte WesTrac Group AllightSykes Coates Hire Group Media Investments Don Voelte Key Takeaways and Questions Don Voelte Results Presentation – 1H FY14 27 February 2014 Slide 3
Group Highlights Reduced demand for new and rental equipment as Underlying results impacted miners focus on cost efficiencies and capital deferrals Transformation undertaken in FY13 has now right- by mining sector downturn sized the business Steady earnings in media TV advertising and audience uptick has offset print sector circulation and advertising declines Continued growth in value of listed portfolio to $857m Strength in investment Seeking further investment opportunities across portfolio results existing and new sectors Positive impact of Net gain after tax of $132.9m from Significant Items, Significant Items predominantly relating to SWM impairment reversal Net debt reduced by $106m to $608m Increased balance sheet Significant funding capacity available through surplus flexibility cash, undrawn facilities and listed portfolio Interim ordinary dividend of 20 cents per share, fully Interim dividend maintained franked Results Presentation – 1H FY14 27 February 2014 Slide 4
Key Financial Numbers Total Group – Half Year Result 1H FY14 1H FY13 % Change Trading revenue $ 1,577.1 m $ 2,704.2 m -42% EBITDA 1, 2 $ 213.7 m $ 406.5 m -47% Underlying net profit after tax (excluding Significant Items) 2 $ 131.8 m $ 235.1 m -44% Significant Items (including tax impact) 2 $ 132.9 m $ 22.9 m - Reported net profit after tax for the period $ 264.7 m $ 258.0 m 3% Underlying earnings per share (excluding Significant Items) 3 38 cents 72 cents -46% Statutory earnings per share (ordinary shares) 3 81 cents 79 cents 3% Interim 2014 fully franked dividend (payable April 2014) 20 cents 20 cents - Notes: 1. EBITDA equals profit before depreciation and amortisation, net finance costs, tax and Significant Items 2. Significant Items include net gains/losses on the sale of investments, subsidiaries and associates, impairment, fair value movement of derivatives, restructuring and redundancy, acquisition related costs, share of results from equity accounted investees attributable to significant items and unusual tax expense impacts. (Please refer to slide 11 for listing of Significant Items). 3. Earnings per share numbers above, are rounded to two decimal places. The percentage change is based on the actual unrounded EPS. Results Presentation – 1H FY14 27 February 2014 Slide 5
Capital Management Ensure an efficient capital structure and maintain prudent levels of gearing Retain sufficient balance sheet flexibility to fund the working capital needs of Objectives operating businesses through the cycle and to pursue growth and investment opportunities Our aim is to maintain and grow the dividend over time 20cps ordinary dividend declared, fully franked, representing a 53% payout Dividend ratio relative to underlying EPS 5.8% cash yield / 8.3% gross yield (S&P/ASX 200 Industrials: 3.8% gross) On-market buyback of up to 11.9m ordinary shares or 3.86% of shares outstanding, commencing in March Share buy back Buy back will be EPS accretive and funded from existing cash reserves Minimal revolving debt in Australia and China – significant cash and undrawn facilities available along with value of investment portfolio Balance sheet flexibility TELYS4 continue to be an attractive form of equity funding Coates Hire and Seven West Media have successfully completed their refinancing, extending facilities to 2017 and reducing their funding costs Successful refinancing Both businesses are in the process of reducing leverage Results Presentation – 1H FY14 27 February 2014 Slide 6
Transformation in Progress Good progress being made across a range of focus areas Transitioning new management team – Improving customer service and assurance – Emphasising operational efficiency – Ensuring capital effectiveness – – Expanding portfolio structure Businesses repositioned for current market conditions Implementing performance measurement and alignment of – 3-5 year plans and strategies – Enhancing processes, systems and controls Increasing focus on employee and customer safety – Results Presentation – 1H FY14 27 February 2014 Slide 7
S 3 Program – WesTrac Guiding Principles Alignment with Cat current and future direction Engage with strategic partners (Accenture and Cat) that understand our execution and interface risk WesTrac to be a steady follower leveraging proven Strong governance structure and centralised design solutions working with Cat dealers (Hewitt, Trakindo, Finning) authority both at SGH level (James Scott, Group Executive – Performance) and WesTrac level (Dan Process-Led Business Transformation Approach Lyons, Chief Information Officer) Incremental deployment of standard processes aligned with the selected templated solution Leveraging the existing DBS base, ADMS (Accenture Dealer Management System) has been created using current assets infused with IP from existing dealer systems, including Hewitt, Sotreq and Trakindo Existing ADMS/SAP dealers Current dealer peers on ADMS journey Recently selected ADMS and are planning implementation to commence Q1 2014 Live with first ADMS release Live end-to-end (Back Office), with second with a Dealer release (Opportunity ADMS Management Mgmt/Mobile Sales) in flight ADMS R1.0 & System built on R2** R1.1* SAP Soon to commence ADMS implementation Currently Implementing ADMS Back Office Results Presentation – 1H FY14 27 February 2014 Slide 8
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