acquisition of coates hire for personal use only - asx · sgh presentation | 20 september 2017...

SGH Presentation | 20 September 2017

Acquisition of Coates Hire

20 September 2017

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Important notice & disclaimers

2

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.

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 results 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.

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Transaction overview Coates Hire is a market leader in equipment solutions with strong growth prospects

3

Acquisition of remaining

stake in Coates Hire

from equity partners

Seven Group Holdings (“SGH”) has entered into binding agreements with an affiliate of Carlyle Asia Partners II,

a fund managed by The Carlyle Group (“Carlyle”), convertible note holders and certain employees to acquire

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

pro-forma basis(1)

and 91% increase in underlying FCF per share(2)

(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

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Transaction overview (cont’d) Coates Hire is a market leader in equipment solutions with strong growth prospects

4

(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

Funding and expected

financial impact Purchase consideration to be funded by existing cash reserves and undrawn bank facilities

− 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

− SGH pro-forma leverage (pro-forma net debt / pro-forma FY17 EBITDA) maintained at 3.8x(1)

following

completion of the transaction and the receipt of the WesTrac China sale proceeds

Conditions and

expected timing Expected completion of acquisition: 25 October 2017

Completion subject to debt rollover consent from Coates Hire lending group

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SGH Presentation | 20 September 2017 5

(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

Strategic rationale Strengthens SGH’s position as a leading industrial services operator

#1 hire equipment

company in Australia Coates Hire is the leading equipment hire company in Australia, across a range of end markets

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

growing infrastructure

sector activity

Increases SGH’s direct exposure to Australian East Coast infrastructure, a sector which is underpinned by

government spending and committed projects

Coates Hire is a major beneficiary of current activity levels given its position as the largest equipment hire business

Longstanding and deep

understanding of the

Coates Hire business

SGH has a long-standing involvement with the Coates Hire business, having first invested alongside Carlyle and

management in 2008

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

portfolio 100% ownership of Coates Hire improves SGH’s portfolio; Industrial Services will contribute ~73% of Group EBIT

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

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WesTrac 55%

Coates Hire 8%

Media 24%

Energy 9%

Other 4%

WesTrac 40%

Coates Hire 34%

Media 17%

Energy 6%

Other 3%

Strategic rationale (cont’d) Strengthens SGH’s position as a leading industrial services operator

6

(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

$297m

Industrial services: 63% Industrial services: 73%

$415m

FY17 EBIT(1,2) FY17 pro-forma EBIT(1,3)

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Overview 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

− Establishment of a centralised customer contact centre

− Establishment of a new transport management system to drive

efficiencies across the branch network

Further opportunities to enhance value by improving time

utilisation, pricing, and cost efficiencies

7

COATES HIRE’S PRODUCT RANGE

Access Generators & Power Distribution Materials Handling Tools & Equipment

Air & Air Accessories Industrial Tools & Equipment Portable Buildings & Toilets Traffic Management

Compaction Ladders & Scaffold Propping Training (RTO)

Concrete & Masonry Landscaping Pumps & Fluid Management Trucks, Vehicles & Trailers

Earthmoving Lift & Shift Shoring Welding

Floor and Cleaning Equipment Lighting

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Achievements in FY17

Improved safety with a reduction in LTIFR of 48% over FY16

Assets on hire continue to reach new highs with Jun 17 at 55.7%,

2.2% above pcp

FY17 average daily sales were higher than budget and prior year;

achieved with lower headcount and reduced network footprint

Profitability has been restored to the business with a $70m

turnaround in PBT from FY16

Debt reduction achieved while growing revenue:

– Completed $75m mandatory repayment of senior debt by Apr 17

– Two months and $18m ahead of budget

EBA in place for next 3 years

– 1.5% increase each year in 2018 and 2019

– Certainty of employment conditions until 2020

Changes in FY17

Resized the business:

– Completed fleet size reductions after the resources boom with

$719m of original cost assets disposed over the last three years

– Fleet now appropriate for the market

– Reduced headcount in July 2016 with average heads for FY17

down 10% on FY16

Movement of equipment from WA to East Coast is complete

Customer Contact Centre in place in the North BU

Updated business strategy rolled out across the business

Reshaped the ELT in August 2017 to focus the business on product

category management and driving alignment between sales and

operations

Coates Hire key highlights FY17 Achievements and changes

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Safety first Zero harm

Annual Lost Time Frequency Rate (Rolling 12m)

as at 30 June 2017

Annual Total Recordable Injury Frequency Rate (Rolling 12m)

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 For

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Coates Hire’s strategic pillars driving long-term success

10

Driving Growth and Returns Through the Cycle

Sustainable profit delivered safety

PEOPLE

Right People

Right Structure

Customer

Centric and

Commercial

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

CUSTOMER

Valued

Prioritised

Profitable

PRODUCTS &

SERVICES

Understand

our markets

and provide

profitable

solutions

REVENUE

MANAGEMENT

Market

Relevant,

matched to

value

proposition

BRAND

Recognised

Relevant

Understood

OPERATIONAL

EFFICIENCY

National

Consistent

Agile

Connected

Financial Targets Non-Financial Targets

Geographic Footprint Profitable Markets and Products Prioritise Profitable Customers

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Major initiatives in FY18 and beyond

11

(1) Rental market growth based on IBISWorld estimate for machinery and scaffolding rental growth, October 2016

Reinvestment in the

business $143m in net capital expenditure budgeted in FY18 up from $64m in FY17

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

Centre (CCC) Improving consistency in process and customer experience

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

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Supportive market outlook Positive outlook for infrastructure projects

12

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

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Coates Hire outlook underpinned by major long-term projects

13

1 Barangaroo 2 WestConnex 3 Pacific Highway 4 Melbourne

Metro Rail 5 Arrium Bauxite

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

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Diversified business model

14

Diversified end markets with strong leverage to

infrastructure market

Diversified blue chip customer base 1 2

(1) Based on FY17 results

More than 17,000 customers

No single customer represents more than 3% of revenues, with the

top 100 representing < 40%(1)

FY17 sector revenue split

Oil & gas 7%

Mining & resources (production)

10%

Mining & resources (development)

6%

Industrial maintenance

6%

Events 3%

Commercial & manufacturing

12%

Engineering & Construction

34%

Residential 4%

Non-residential 13%

Government 5%

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Strong fleet metrics and utilisation rates, enhancing return on invested capital

15

1 2

Targeted capex investment program...

Fleet on hire experiencing positive trends

…supported by data driven disposals program

Efficient return on invested capital via reduction in

redline equipment and improved turnaround time

3 4

–

20.0

40.0

60.0

80.0

100.0

120.0

140.0

Jul-16

Aug-1

6

Sep-1

6

Oct-

16

Nov-1

6

Dec-1

6

Jan-1

7

Feb-1

7

Mar-

17

Apr-

17

May-1

7

Jun-1

7

(YTD Actual capex approvals $m)

0

25

50

75

100

125

150

Jul-16

Aug-1

6

Sep-1

6

Oct-

16

Nov-1

6

Dec-1

6

Jan-1

7

Feb-1

7

Mar-

17

Apr-

17

May-1

7

Jun-1

7

(YTD Actual Disposals $m)

27.6%

23.5% 23.0%

22%

24%

26%

28%

30%

Jun-15 Jun-16 Jun-17

47.4%

53.5%

55.7%

42%

44%

46%

48%

50%

52%

54%

56%

58%

Jun-15 Jun-16 Jun-17

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Coates Hire benefiting from positive market trend

16

Trading revenue ($m) Underlying EBIT ($m)

Underlying EBIT margin

22.5%

17.2%

11.4% 11.1%

15.5%

FY13 FY14 FY15 FY16 FY17

279

188

104 97

142


1,241

1,095

919 873 918


+5%

+4ppts

+46%

534

432

310 267

308

230

84 79 125

64


EBITDA Net capex (excluding UK)

Underlying EBITDA & net capex ($m)

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Pro-forma financial impact

17

SGH financial profile – pro-forma impact(1)

(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

Pro-forma financial impact (FY17)

15% underlying EPS accretive on FY17 continuing

pro-forma basis(2)

91% accretive on a FCF / share basis through access

to 100% of cash flows(3)

Pro-forma net debt / pro-forma FY17 EBITDA maintained

at current level of 3.8x(4) following transaction completion

Strong deleveraging expected given cash flow profile

of combined business

Reported Pro-forma

FY16 FY17 FY16PF FY17PF

Revenue 2,237 2,282 3,110 3,193

Growth (%) (pcp) 2.0% 2.7%

Other income 70 52 68 55

Share of results from equity

accounted investees 90 121 86 98

Operating expenses (2,092) (2,127) (2,698) (2,735)

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% For

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Acquisition funding

18

(1) Coates Hire cash and debt as at 30 June 2017

Purchase Price Purchase consideration of $517m for 53.3% economic stake not owned by SGH

Funding

Purchase consideration to be funded via:

─ Existing cash / undrawn debt facilities

─ Expected proceeds of approximately $516m after tax from the sale of WesTrac China

Debt

SGH will assume Coates Hire’s cash of $48m(1) and Coates Hire’s debt of $1,087m(1)

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

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Trading update and outlook

19

Coates Hire

Poised to benefit from

infrastructure activity

Coates Hire is expected to continue to benefit from branch rationalisation and fleet redeployment undertaken in the prior year, together with

price realisation strategies as the New South Wales and Victoria infrastructure projects are delivered

Strong start to FY18 Strong start to the FY18 financial year with July and August tracking ahead of both pcp and YTD budget, with the market remaining

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 continuing to

benefit from mining

production cycle

WesTrac’s strong parts performance is expected to continue while service revenues will be impacted by ongoing cost reduction programs

including insourcing of maintenance work being undertaken by some customers

Product sales in the mining market are anticipated to remain subdued; however there has been an increase in forward orders coupled with

extended lead times from Cat, signalling an impending fleet renewal cycle

Energy assets well

positioned in East Coast

Earnings from Beach Energy are expected to increase with production to be maintained near record levels in FY18 as demand strengthens,

driven by the current East coast gas shortage

Media to deliver ongoing

TV ratings performance

Seven West Media should benefit from Commonwealth Games broadcast to underpin its robust TV market share growth in a challenging

advertising market. Publishing trends are set to continue with targeted costs reductions to offset the uplift in AFL costs.

Assuming a similar television market outcome, Seven West Media FY18 EBIT is estimated to be 5 per cent down on FY17

Strong start to FY18

Strong start to the year for WesTrac in July and August, reflecting the core demand of the mining production cycle and East Coast

infrastructure

Sale of WesTrac China is expected to complete in October subject to regulatory approval from MOFCOM

Group EBIT guidance SGH provided guidance at its annual results announcement on 22 August 2017 that FY18 underlying EBIT from continuing operations is

expected to be 5-10% up on FY17

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Appendix

20

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SGH pro-forma balance sheet

21

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

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SGH pro-forma free cash flow

22

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Branch 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 have sufficient scale for hub branches

Larger branches which are stocked to cater for regional needs

Will typically include a broad range of equipment across all categories

Typically adopted in metro regions to ensure efficient coverage and use of space

Multiple non-specialist 'spoke' stores set up in strategic, highly visible locations and stocked with non-specialist equipment

– Target market is smaller contractors, tradesman and retail. However, also services major customers with projects within their geographical territory

Large specialised 'hub' facilities created to 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

For certain large customers / projects, Coates Hire will establish a project facility on the customer’s site to service their key needs

Typically these sites are for large engineering or mining projects which require a high level of product expertise / service capability, and broad range of equipment to be located on the site

Dedicated Coates Hire personnel are on hand to assist the customer and provide training where needed

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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

Overview of product offering Coates Hire has the broadest range and largest fleet in Australia

Access Air and air

accessories

Compaction Concrete and

masonry

Earthmoving Floor and

cleaning

equipment

Generators

and power

distribution

Ground

equipment

Industrial tools

and equipment

Ladders and

scaffolding

Landscaping Lift, shift and

propping

Lighting Materials

handling

Offshore Tools and

equipment

Pumps and fluid

management

Site

accommodation

Traffic

management

Welding

Trucks, vehicles

and trailers

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Fleet management cycle Comprehensive strategy across the full equipment life cycle

Hire fleet investment

Formalised hire fleet investment process

which provides an approval framework

for new purchases

Process includes an assessment of

operational opportunity and financial

profile of investment

Final investment approved by CEO/CFO

#1

Fleet procurement

Full technical and commercial

assessment

Detailed tender processes

Strong, long-standing relationships with

key suppliers provides a competitive

advantage for Coates Hire

#2

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

#3

Disposal

Equipment which is uneconomic to

maintain is disposed of through a

number of market channels

Dedicated disposal managers ensure

strong commercial outcomes

#5

Fleet maintenance

Coates Hire’s ‘RUSC’ program is a

leading maintenance program in the

industry

Assets undergo a detailed fleet

inspection after each hire

Regular scheduled services are

undertaken in accordance with the

RUSC program

#4

#1

Hire fleet

investment

Fleet

procurement

#2

#3

#4

#5

Fleet

monitoring

Fleet

maintenance

Disposal

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Customer value proposition Unmatched brand, product and service offering

Our vision: right equipment, right place, right time

Branch network

Unmatched branch network of >200 branches

Enables Coates Hire to service the entire Australian market

National offering Formal national account management teams

to manage and meet demand from major customers for national agreements

Market expertise

Broad sector and project coverage with over 130 years industry experience

Track record of partnering successfully with customers on projects across various markets

Equipment range and

availability

Largest hire fleet of equipment in Australia

~340,000 individual pieces of equipment covering general hire and special project needs

Transportation offering Ability to co-ordinate logistics of transporting

equipment to customers’ sites Project site facilities

Broad range of project site facilities that provide unparalleled service levels

Ability to tailor a project site facility to meet customer site-specific requirements

Integrated equipment

management

Industry leading equipment management system, ensuring equipment has been maintained to the highest safety standards

Safety, environmental

and compliance ISO accreditation in health, safety, quality

management and environmental compliance

Product expertise

National product teams

Dedicated team of Product Specialists trained to support customers and internal staff

Training – RTO

Provides customers with a Registered Training Organisation for their training requirements nationally

Compliant with relevant legislation

Specialist engineering

solutions Engineered solutions for shoring, propping and

water management Industrial shutdowns

Provides fleet and asset management services for any industrial operation

Clear industry leader

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Equipment 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

Advantages of scale

Coates Hire footprint:

– Extensive branch network; rental fleet spanning > 20 product categories and > 7,500 models of equipment

– 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

of competitors

Financial resources allow Coates Hire to respond to market opportunities and compete strongly

Key trends: customers increasingly amenable to rental equipment and preference for single provider with broad range

Customers want a single

rental provider

Larger customers continue to look for a single, national provider of equipment

– Coates Hire has established national agreements and experienced national account management teams serving

major customers

Customers need a broad

product / service offering

The prevalence of larger mining, energy and infrastructure projects in Australia will favour rental providers who can offer a full product suite

and associated services to their customers

Coates Hire is one of the few companies with the fleet size and financial capacity to service projects of this scale

Health and safety Customer focus on health and safety is influencing customer decision-making

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Overview of SGH structure Diversified industrial services and investment group

28

Business

Australia

Caterpillar dealer in

WA NSW and ACT

Industrial lighting,

pumps, generators

FY17 EBIT

contribution

(Pro-forma)(2)

Minimal

Business

description

Listed Investments

Property Investments

Diversified Media

(Broadcast, Publishing

and Digital)

Diversified

Oil & Gas

Strategic

position

#1 equipment solution

company in WA , NSW

and ACT

Supplies one of the world’s

broadest ranges of lighting

towers, pumps, generators,

engines and compressors

Australia’s largest

diversified media

company

Uniquely positioned to

take advantage of the

Australian East Coast

gas shortage

Listed portfolio: Store of value

and liquidity for the Group

Property portfolio: Proven

ability to create value through

realisation of property assets

Diversified

investments

Seven Group

ownership 100% 100% 41%

SGH Energy 100%

Beach Energy 23% 100%

Industrial services(1) Media investments Energy Other investments

40%

17% 6% 3%

(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

34%

Industrial and general

equipment hire

Largest equipment hire

company in Australia

100%

For

per

sona

l use

onl

y

acquisition of coates hire for personal use only - asx · sgh presentation | 20 september 2017...

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