Acquisition of Coates Hire - 20 September 2017
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Acquisition of Coates Hire
20 September 2017
SGH Presentation | 20 September 2017
Important notice & disclaimers
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 th e financial statements, so is
merely provided for indicative purposes. The company and its employees do not warrant the data and disclaim any liability flo wing 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 relian ce 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 equipme nt) 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 a re 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.
Period-on-period changes that are greater than 100%, less than (100)% or change between positive and negative are omitted for presentation purposes.
Non-IFRS Financial Information
SGH results comply with International Financial Reporting Standards (“IFRS”). The underlying segment performance is consistent with the annual financial
statements and excludes Significant Items comprising impairment of equity accounted investees, investments and non-current assets, fair value movement of
derivatives, net gains on sale of investments and equity accounted investees, restructuring and redundancy costs, share of re sults from equity accounted
investees attributable to Significant Items, loss on sale of investments and derivative financial instruments, acquisition transaction costs, significant items in
other income, remeasurement of tax exposures and unusual tax expense impacts.
This presentation 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 the business, make
decisions on the allocation of resources and assess operational management. Non-IFRS measures have not been subject to audit or review.
SGH Presentation | 20 September 2017 2
Transaction overview
Coates Hire is a market leader in equipment solutions with strong growth prospects
Acquisition of remaining Seven Group Holdings (“SGH”) has entered into binding agreements with an affiliate of Carlyle Asia Partners II,
stake in Coates Hire a fund managed by The Carlyle Group (“Carlyle”), convertible note holders and certain employees to acquire
from equity partners securities in Coates Group Holdings Pty Ltd
(“Coates Hire”) representing an economic interest of 53.3% not currently owned by SGH
Purchase consideration for the 53.3% of Coates Hire is $517m
─ Implies 6.5x EV / FY17 EBITDA for 100% of Coates Hire
In the 12 months to 30 June 2017, Coates Hire generated trading revenue of $918m and
underlying EBITDA of $308m
Coates Hire is the largest equipment hire company in Australia and is well positioned to leverage the strong growth
prospects in the East Coast infrastructure and construction markets
Strategic rationale The acquisition continues SGH’s focus on driving growth opportunities and efficient capital allocation in the
business:
− #1 hire equipment company in Australia
− Increases exposure to Australian East Coast infrastructure activity
− Low risk transaction given long involvement and part-ownership of the asset since 2008
− Enhances SGH’s portfolio as the company expands its industrial services business
− Financially compelling acquisition provides 15% accretion in underlying EPS in FY17 on a full year
(1) (2)
pro-forma basis and 91% increase in underlying FCF per share
(1) Based on the underlying result for the 12 months to 30 June 2017 on a continuing operations basis and assuming completion of the Coates Hire acquisition and sale of WesTrac China. Coates Hire financials based on disclosures as per the
2017 SGH Annual Report
(2) FCF is defined as underlying operating cash flow less net capex divided by the weighted number of shares on issue
SGH Presentation | 20 September 2017 3
Transaction overview (cont’d)
Coates Hire is a market leader in equipment solutions with strong growth prospects
Funding and expected Purchase consideration to be funded by existing cash reserves and undrawn bank facilities
financial impact
− SGH has significant liquidity through $520m in undrawn bank facilities, $516m in after-tax proceeds from the
sale of WesTrac China and the $420m value of the listed investment portfolio
(1)
− SGH pro-forma leverage (pro-forma net debt / pro-forma FY17 EBITDA) maintained at 3.8x following
completion of the transaction and the receipt of the WesTrac China sale proceeds
Conditions and Expected completion of acquisition: 25 October 2017
expected timing
Completion subject to debt rollover consent from Coates Hire lending group
(1) Based on pro-forma underlying EBITDA for the 12 months ended 30 June 2017, excluding the earnings contribution from WesTrac China. Pro-forma net debt includes Coates Hire net debt of approximately $1,039m as at 30 June 2017 and
includes the receipt of WesTrac China sale proceeds
SGH Presentation | 20 September 2017 4
Strategic rationale
Strengthens SGH’s position as a leading industrial services operator
#1 hire equipment Coates Hire is the leading equipment hire company in Australia, across a range of end markets
company in Australia
Strengthens SGH’s position as a leading provider of diversified industrial services
Diversified across products, customers and end markets
National footprint across >200 branches (1)
Increases exposure to Increases SGH’s direct exposure to Australian East Coast infrastructure, a sector which is underpinned by
growing infrastructure government spending and committed projects
sector activity
Coates Hire is a major beneficiary of current activity levels given its position as the largest equipment hire business
Longstanding and deep SGH has a long-standing involvement with the Coates Hire business, having first invested alongside Carlyle and
understanding of the management in 2008
Coates Hire business
The acquisition of the remaining 53.3% represents a low risk opportunity to obtain control of an attractive asset
Transaction is not subject to the usual due diligence and integration risks given long history
Enhances SGH’s 100% ownership of Coates Hire improves SGH’s portfolio; Industrial Services will contribute ~73% of Group EBIT
portfolio
Provides an opportunity to generate operational efficiencies:
– Significant funding synergy and savings across the Group
– Integration of WesTrac and Coates Hire improves customer solution offerings and operational efficiencies
Financially compelling 15% underlying EPS accretive on an FY17 underlying continuing pro-forma basis(2)
91% accretive on a FCF per share basis through access to 100% of cash flows
WesTrac China sale proceeds of approximately $516m after tax provides additional liquidity
(1) Branch network includes storage facilities and maintenance locations of WesTrac and AllightSykes
(2) Based on pro-forma EBITDA for the 12 months ended 30 June 2017, excluding the contribution from WesTrac China. Pro-forma net debt includes Coates Hire net debt of approximately $1,039m as at 30 June 2017 and WesTrac China sale proceeds
SGH Presentation | 20 September 2017 5Strategic rationale (cont’d)
Strengthens SGH’s position as a leading industrial services operator
FY17 EBIT (1,2) FY17 pro-forma EBIT (1,3)
Other
Energy 3%
Other 6%
Energy 4%
9%
Media
17% WesTrac
40%
Media
24%
$297m WesTrac
55%
$415m
Coates Hire
8%
Coates Hire
34%
Industrial services: 63% Industrial services: 73%
(1) Continuing operations only. Excludes WesTrac China
(2) Coates Hire FY17 reported contribution is based on equity accounted share of associate net profit
(3) Coates Hire FY17 pro-forma contribution is based on consolidation of EBIT
SGH Presentation | 20 September 2017 6Overview of Coates Hire
#1 equipment hire company in Australia
Australia’s largest equipment hire and solutions provider
− Approximately 4x larger than the nearest competitor
− Strong market brand awareness and preference
− Highly diversified end market exposure and customer base
Operates a network of over 200 branches nationwide
− Network / brand / people / customers allows Coates Hire to flex
in the right places
Strongly leveraged to growth from Australian East Coast
infrastructure and construction markets
− NSW and VIC businesses continue to perform well with revenue
up ~15% in both states to Jun-17
− Group revenue up 5% YoY to Jun-17 with EBIT margins
increasing from 11% to 15%
− Fleet relocation, cost control, price realisation and branch
rationalisation initiatives yielded a 46% growth in FY17 EBIT
Strategic initiatives in place to drive future profitability
− Renewed focus on turnaround time to enhance fleet utilisation
− Investment in data and digital to drive customer satisfaction and
business efficiency COATES HIRE’S PRODUCT RANGE
− Establishment of a centralised customer contact centre Access Generators & Power Distribution Materials Handling Tools & Equipment
Air & Air Accessories Industrial Tools & Equipment Portable Buildings & Toilets Traffic Management
− Establishment of a new transport management system to drive Compaction Ladders & Scaffold Propping Training (RTO)
efficiencies across the branch network Concrete & Masonry Landscaping Pumps & Fluid Management Trucks, Vehicles & Trailers
Further opportunities to enhance value by improving time Earthmoving Lift & Shift Shoring Welding
Floor and Cleaning Equipment Lighting
utilisation, pricing, and cost efficiencies
SGH Presentation | 20 September 2017 7Coates Hire key highlights FY17
Achievements and changes
Achievements in FY17 Changes in FY17
Improved safety with a reduction in LTIFR of 48% over FY16 Resized the business:
Assets on hire continue to reach new highs with Jun 17 at 55.7%, – Completed fleet size reductions after the resources boom with
2.2% above pcp $719m of original cost assets disposed over the last three years
FY17 average daily sales were higher than budget and prior year; – Fleet now appropriate for the market
achieved with lower headcount and reduced network footprint
– Reduced headcount in July 2016 with average heads for FY17
Profitability has been restored to the business with a $70m down 10% on FY16
turnaround in PBT from FY16
Movement of equipment from WA to East Coast is complete
Debt reduction achieved while growing revenue:
Customer Contact Centre in place in the North BU
– Completed $75m mandatory repayment of senior debt by Apr 17
Updated business strategy rolled out across the business
– Two months and $18m ahead of budget
Reshaped the ELT in August 2017 to focus the business on product
EBA in place for next 3 years category management and driving alignment between sales and
operations
– 1.5% increase each year in 2018 and 2019
– Certainty of employment conditions until 2020
SGH Presentation | 20 September 2017 8Safety first
Zero harm
Annual Lost Time Frequency Rate (Rolling 12m) Annual Total Recordable Injury Frequency Rate (Rolling 12m)
as at 30 June 2017 as at 30 June 2017
Safety measures are moving in the right direction
But still work to do with further reductions targeted in FY18
LTIFR has reduced by 48% since FY16
TRIFR has reduced by 22% since FY16
SGH Presentation | 20 September 2017 9Coates Hire’s strategic pillars driving long-term success
Sustainable profit delivered safety
Financial Targets Non-Financial Targets
Geographic Footprint Profitable Markets and Products Prioritise Profitable Customers
PEOPLE CUSTOMER PRODUCTS & REVENUE BRAND OPERATIONAL
SERVICES MANAGEMENT EFFICIENCY
Right People Valued Understand Market Recognised National
Right Structure Prioritised our markets Relevant, Relevant Consistent
Customer Profitable and provide matched to Understood Agile
Centric and profitable value Connected
Commercial solutions proposition
Data driven insights into category and product decisions
A workplace culture that values leadership, trust, learning, teamwork, execution discipline and courage
Deep market and customer analysis to drive future investment decisions and enhanced customer experience
Investing in capabilities of the business – data capabilities; online channel; category managers; digitisation
Driving Growth and Returns Through the Cycle
SGH Presentation | 20 September 2017 10Major initiatives in FY18 and beyond
Reinvestment in the $143m in net capital expenditure budgeted in FY18 up from $64m in FY17
business
Long-term purchasing arrangements with OEMs to improve “whole of life” ownership costs
Additional operational spend of $10m in FY18 for improvement initiatives (refer below)
Turn Around Time (TAT) Management and delivery of People, Process and Technology capabilities
Aimed at improving the time an asset spends between being “Off Hire” and being made “Available for Hire”
Customer Contact Improving consistency in process and customer experience
Centre (CCC)
Ultimately assisting in the drive to optimise fleet utilisation
Creating a foundation for transition to digital with real time fleet data
Transport New Transport Management System to improve transport efficiencies across the branch network
Data analytics to provide insights to drive better negotiated contracts and rates with external suppliers
Digital Development of an online channel to meet customer demands
Streamline processes to drive efficiencies throughout the business including capabilities for fleet optimisation and
enhanced analytics
Culture Focus on workforce engagement, reduced turnover, training and leadership
Redefining culture to align to achieving strategic objectives
Market Focus on growing market share in a buoyant rental market
Projected market growth of 3.1% per year from FY17 to FY22 (1)
Network Looking at opportunities to open branches – Weipa and Grafton have been successful in FY17
(1) Rental market growth based on IBISWorld estimate for machinery and scaffolding rental growth, October 2016
SGH Presentation | 20 September 2017 11Supportive market outlook
Positive outlook for infrastructure projects
Coates Hire set to capture further upside
Strong growth in infrastructure activity on the Australian East Coast has improved demand for construction equipment and heavy machinery
Further upside to be captured given that peak investment for committed projects is expected to occur in 2020 / 2021 with further projects to emerge
Source: Deloitte Access Economics Investment Monitor June 2017
SGH Presentation | 20 September 2017 12Coates Hire outlook underpinned by major
long-term projects
Melbourne Arrium Bauxite
1 Barangaroo 2 WestConnex 3 Pacific Highway 4 Metro Rail 5 Weipa
Type Construction Road Infrastructure Road Rail Mining
Commence Jan-12 Mar-16 Jul-16 Jan-18 Mar-16
Finish Jan-20 Jun-20 Dec-21 Dec-23 Dec-18
SGH Presentation | 20 September 2017 13Diversified business model
Diversified end markets with strong leverage to Diversified blue chip customer base
1 infrastructure market 2
More than 17,000 customers
FY17 sector revenue split
No single customer represents more than 3% of revenues, with the
Government Oil & gas top 100 representing < 40%(1)
5% 7%
Non-residential Mining & resources
13% (production)
10%
Mining & resources
Residential
(development)
4%
6%
Industrial
maintenance
6%
Events
3%
Engineering & Commercial &
Construction manufacturing
34% 12%
(1) Based on FY17 results
SGH Presentation | 20 September 2017 14Strong fleet metrics and utilisation rates, enhancing return
on invested capital
Fleet on hire experiencing positive trends Efficient return on invested capital via reduction in
1 2 redline equipment and improved turnaround time
58% 30%
55.7%
56%
53.5% 27.6%
54% 28%
52%
50% 26%
47.4%
48%
46% 24% 23.5%
23.0%
44%
42% 22%
Jun-15 Jun-16 Jun-17 Jun-15 Jun-16 Jun-17
Targeted capex investment program... …supported by data driven disposals program
3 4
(YTD Actual capex approvals $m) (YTD Actual Disposals $m)
140.0 150
120.0 125
100.0
100
80.0
75
60.0
50
40.0
20.0 25
– 0
Oct-16
Mar-17
Apr-17
Oct-16
Mar-17
Apr-17
Jan-17
Jun-17
Jan-17
Jun-17
Feb-17
Feb-17
Aug-16
Sep-16
Nov-16
Dec-16
Aug-16
Sep-16
Nov-16
Dec-16
May-17
May-17
Jul-16
Jul-16
SGH Presentation | 20 September 2017 15Coates Hire benefiting from positive market trend
Trading revenue ($m) Underlying EBIT ($m)
279
1,241
+5%
1,095
188 +46%
919 873 918
142
104 97
FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17
Underlying EBIT margin Underlying EBITDA & net capex ($m)
22.5%
+4ppts 534
17.2%
15.5% 432
11.4% 11.1% 310 308
267
230
125
84 79 64
FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17
EBITDA Net capex (excluding UK)
SGH Presentation | 20 September 2017 16Pro-forma financial impact
SGH financial profile – pro-forma impact(1) Pro-forma financial impact (FY17)
Reported Pro-forma
FY16 FY17 FY16PF FY17PF
15% underlying EPS accretive on FY17 continuing
Revenue 2,237 2,282 3,110 3,193 pro-forma basis(2)
Growth (%) (pcp) 2.0% 2.7% 91% accretive on a FCF / share basis through access
to 100% of cash flows(3)
Other income 70 52 68 55
Pro-forma net debt / pro-forma FY17 EBITDA maintained
Share of results from equity at current level of 3.8x(4) following transaction completion
90 121 86 98
accounted investees
Strong deleveraging expected given cash flow profile
Operating expenses (2,092) (2,127) (2,698) (2,735)
of combined business
EBITDA 305 328 566 611
EBITDA margin (%) 13.6% 14.4% 18.2% 19.1%
Depreciation & amortisation (33) (31) (202) (196)
EBIT 272 297 364 415
EBIT margin (%) 12.1% 13.0% 11.7% 13.0%
(1) Financials only include continuing operations. FY16 and FY17 numbers include income from associates
(2) Based on the underlying result for the 12 months to 30 June 2017 on a continuing operations basis and assuming completion of the Coates Hire acquisition and WesTrac China sale are completed
(3) FCF defined as operating cash flow less net capex divided by the weighted number of shares on issue
(4) Pro-forma net debt calculated as SGH pro-forma debt less pro-forma cash and cash equivalents as at 30 June 2017, Coates Hire net debt of approximately $1,039m, and the receipt of WesTrac China sale proceeds
SGH Presentation | 20 September 2017 17Acquisition funding
Purchase Price Purchase consideration of $517m for 53.3% economic stake not owned by SGH
Purchase consideration to be funded via:
Funding ─ Existing cash / undrawn debt facilities
─ Expected proceeds of approximately $516m after tax from the sale of WesTrac China
SGH will assume Coates Hire’s cash of $48m(1) and Coates Hire’s debt of $1,087m(1)
Debt Transaction is contingent on bank rollover consent
If satisfactory waivers cannot be obtained, SGH may seek to refinance the debt
Timing Expected acquisition close: 25 October 2017
(1) Coates Hire cash and debt as at 30 June 2017
SGH Presentation | 20 September 2017 18Trading update and outlook
Coates Hire
Poised to benefit from Coates Hire is expected to continue to benefit from branch rationalisation and fleet redeployment undertaken in the prior year, together with
infrastructure activity price realisation strategies as the New South Wales and Victoria infrastructure projects are delivered
Strong start to the FY18 financial year with July and August tracking ahead of both pcp and YTD budget, with the market remaining
Strong start to FY18 buoyant, driven by strong growth from the Australian East Coast infrastructure and construction markets
Coates Hire guidance Underlying FY18 EBIT on track to achieve growth of 10% on FY17
SGH
WesTrac’s strong parts performance is expected to continue while service revenues will be impacted by ongoing cost reduction programs
WesTrac continuing to including insourcing of maintenance work being undertaken by some customers
benefit from mining
Product sales in the mining market are anticipated to remain subdued; however there has been an increase in forward orders coupled with
production cycle extended lead times from Cat, signalling an impending fleet renewal cycle
Energy assets well Earnings from Beach Energy are expected to increase with production to be maintained near record levels in FY18 as demand strengthens,
positioned in East Coast driven by the current East coast gas shortage
Seven West Media should benefit from Commonwealth Games broadcast to underpin its robust TV market share growth in a challenging
Media to deliver ongoing advertising market. Publishing trends are set to continue with targeted costs reductions to offset the uplift in AFL costs.
TV ratings performance
Assuming a similar television market outcome, Seven West Media FY18 EBIT is estimated to be 5 per cent down on FY17
Strong start to the year for WesTrac in July and August, reflecting the core demand of the mining production cycle and East Coast
Strong start to FY18 infrastructure
Sale of WesTrac China is expected to complete in October subject to regulatory approval from MOFCOM
SGH provided guidance at its annual results announcement on 22 August 2017 that FY18 underlying EBIT from continuing operations is
Group EBIT guidance expected to be 5-10% up on FY17
SGH Presentation | 20 September 2017 19Appendix
SGH Presentation | 20 September 2017 20SGH pro-forma balance sheet
Basis of preparation:
- Acquisition calculated as a step acquisition with an assumed 30% control premium in accordance with AASB 3 Business Combinations
- Goodwill on acquisition subject to change within 12 months of transaction close pending finalisation of detailed purchase price accounting
- The step acquisition will result in the recognition of a ~$47m gain in the Group's FY18 P&L due to the remeasurement to fair value of the Group's existing 46.5% equity accounted interest
SGH Presentation | 20 September 2017 21SGH pro-forma free cash flow
SGH Presentation | 20 September 2017 22Branch network overview
Coates Hire tailors its branch model based on location and customer needs
#1 Generalist branch structure #2 Hub and spoke structure #3 Project site facilities
Typically used in regional areas that do not Typically adopted in metro regions to For certain large customers / projects,
have sufficient scale for hub branches ensure efficient coverage and use Coates Hire will establish a project facility
of space on the customer’s site to service their key
Larger branches which are stocked to
needs
cater for regional needs Multiple non-specialist 'spoke' stores set
up in strategic, highly visible locations and Typically these sites are for large
Will typically include a broad range of
stocked with non-specialist equipment engineering or mining projects which
equipment across all categories
require a high level of product expertise /
– Target market is smaller contractors,
service capability, and broad range of
tradesman and retail. However, also
services major customers with projects equipment to be located on the site
within their geographical territory Dedicated Coates Hire personnel are on
hand to assist the customer and provide
Large specialised 'hub' facilities created to
training where needed
support spoke branches with specialist
equipment and service major customers
– Generally located in less visible
locations, but with access to major
transport routes
– Target customers include larger
construction, engineering clients
SGH Presentation | 20 September 2017 23Overview of product offering
Coates Hire has the broadest range and largest fleet in Australia
Broad range of product, largest fleet and wide end market exposure
Continuous investment in new equipment means Coates Hire has broadest range and largest fleet in Australia, including special ised equipment to
meet specific mining, LNG and infrastructure market requirements
Focus on highly flexible fleet, which can be used across multiple end-markets
Maintains strong partnerships with only the highest quality equipment manufacturers
The fleet is rigorously maintained to the highest standards through a customised integrated equipment management system
With >200 branches, Coates Hire has the logistics capability and infrastructure to deliver equipment to locations anywhere in Australia
A team of dedicated product specialists providing quality advice
Access Air and air Compaction Concrete and
accessories masonry
Earthmoving Floor and Generators Ground
cleaning and power equipment
equipment distribution
Industrial tools Ladders and Landscaping Lift, shift and
and equipment scaffolding propping
Lighting Materials Offshore Tools and
handling equipment
Pumps and fluid Site Traffic Welding
management accommodation management
Trucks, vehicles
and trailers
SGH Presentation | 20 September 2017 24Fleet management cycle
Comprehensive strategy across the full equipment life cycle
#5 #1
Disposal Hire fleet investment
Equipment which is uneconomic to #5 Formalised hire fleet investment process
maintain is disposed of through a Hire fleet
which provides an approval framework
number of market channels Disposal investment
for new purchases
Dedicated disposal managers ensure Process includes an assessment of
strong commercial outcomes operational opportunity and financial
#1 profile of investment
#4 Final investment approved by CEO/CFO
#4
Fleet maintenance
Coates Hire’s ‘RUSC’ program is a #2
leading maintenance program in the Fleet procurement
Fleet Fleet
industry maintenance procurement Full technical and commercial
Assets undergo a detailed fleet assessment
inspection after each hire Detailed tender processes
Regular scheduled services are #2
Strong, long-standing relationships with
undertaken in accordance with the #3 Fleet key suppliers provides a competitive
RUSC program monitoring advantage for Coates Hire
#3
Fleet monitoring
Regular monitoring of key KPIs: dollar and time utilisation, slow moving
and underperforming assets, capital returns
Regular reports generated, summarising areas of underperformance,
to ensure problems can be quickly identified and addressed
Relocation of underperforming assets to areas of higher demand
SGH Presentation | 20 September 2017 25Customer value proposition
Unmatched brand, product and service offering
Our vision: right equipment, right place, right time
Unmatched branch network of >200 branches Formal national account management teams
Branch network Enables Coates Hire to service the entire National offering to manage and meet demand from major
Australian market customers for national agreements
Broad sector and project coverage with over Largest hire fleet of equipment in Australia
130 years industry experience Equipment range and
Market expertise ~340,000 individual pieces of equipment
Track record of partnering successfully with availability covering general hire and special project
customers on projects across various markets needs
Broad range of project site facilities that
Ability to co-ordinate logistics of transporting provide unparalleled service levels
Transportation offering equipment to customers’ sites Project site facilities
Ability to tailor a project site facility to meet
customer site-specific requirements
Industry leading equipment management
Integrated equipment Safety, environmental ISO accreditation in health, safety, quality
system, ensuring equipment has been
management and compliance management and environmental compliance
maintained to the highest safety standards
Provides customers with a Registered Training
National product teams
Organisation for their training requirements
Product expertise Dedicated team of Product Specialists trained Training – RTO nationally
to support customers and internal staff
Compliant with relevant legislation
Provides fleet and asset management services
Specialist engineering Engineered solutions for shoring, propping and for any industrial operation
water management Industrial shutdowns
solutions
Clear industry leader
SGH Presentation | 20 September 2017 26Equipment rental industry structure and trends
Coates Hire well positioned as a national industry player
Industry structure: highly fragmented with national scale
Fragmented market Fragmented with a limited number of players of scale
Coates Hire footprint:
– Extensive branch network; rental fleet spanning > 20 product categories and > 7,500 models of equipment
Advantages of scale
– Service capability to comply with manufacturers standards and meet customer requirements for reliability and safety compliance
– Specialist product capabilities, such as dewatering and shoring, delivered through systems, people and processes
Limited financial capacity Financial resources allow Coates Hire to respond to market opportunities and compete strongly
of competitors
Key trends: customers increasingly amenable to rental equipment and preference for single provider with broad range
Larger customers continue to look for a single, national provider of equipment
Customers want a single
– Coates Hire has established national agreements and experienced national account management teams serving
rental provider
major customers
The prevalence of larger mining, energy and infrastructure projects in Australia will favour rental providers who can offer a full product suite
Customers need a broad and associated services to their customers
product / service offering
Coates Hire is one of the few companies with the fleet size and financial capacity to service projects of this scale
Customer focus on health and safety is influencing customer decision-making
Health and safety
SGH Presentation | 20 September 2017 27Overview of SGH structure
Diversified industrial services and investment group
Industrial services(1) Media investments Energy Other investments
Listed Investments
Business
Australia Property Investments
Business Diversified Media
Caterpillar dealer in Industrial and general Industrial lighting, Diversified Diversified
(Broadcast, Publishing
description WA NSW and ACT equipment hire pumps, generators Oil & Gas investments
and Digital)
Listed portfolio: Store of value
Supplies one of the world’s Uniquely positioned to and liquidity for the Group
#1 equipment solution Australia’s largest
Strategic Largest equipment hire broadest ranges of lighting take advantage of the
company in WA , NSW diversified media
position and ACT
company in Australia towers, pumps, generators,
company
Australian East Coast Property portfolio: Proven
engines and compressors gas shortage ability to create value through
realisation of property assets
34%
FY17 EBIT 40%
contribution Minimal
(Pro-forma)(2)
17% 6% 3%
Seven Group SGH Energy 100%
100% 100% 100% 41% Beach Energy 23% 100%
ownership
(1) Pro-forma for sale of WesTrac China; expected to complete by October 2017
(2) Based on Segment EBITDA for the 12 months ended 30 June 2017. Segment EBITDA comprises profit before depreciation and amortisation, net finance expense, income tax and significant items. WesTrac Australia segment results have been
reduced in relation to the elimination of sales to Coates Hire. Media investments comprise investments accounted for using the equity method and financial assets fair valued through other comprehensive income. Excludes AllightSykes given
the negative contribution from the segment
SGH Presentation | 20 September 2017 28You can also read
