toll gro level 7, 3 80 st kilda road melbourne vic 3004 austr ...2014/02/19 · income tax expense...

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Toll Holdings Limited

2014 Interim Results Brian Kruger, Managing Director

Grant Devonport, Chief Financial Officer

19 February 2014

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Toll Holdings Limited – 2014 Interim Results 2

Project Forward cost savings on target - $8m generated in 1H14

Toll Global Resources performance demonstrates strength of business pipeline to offset

completion of ADF contract

Returns from TOPS’ continued to grow

New intermodal rail arrangements with Asciano

Successful implementation of GraysOnline B2C delivery contract

Major new terminal and depot developments all on schedule and budget

TWU EBA completed

Group purchasing benefits and continuous improvement initiatives continue to

gain traction

USPP refinancing completed and first tranche of Singapore facility completed

Good progress on key initiatives despite

challenging environment

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3

Safety performance becoming a key differentiator

For the 12 months to December

2013, Lost Time Injury Frequency

Rate reduced by 19% from 2.0 to 1.6

For the 12 months to December

2013, Total Recordable Injury

Frequency Rate reduced by 15%

from 19.0 to 16.1

Toll Holdings Limited – 2014 Interim Results

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Launching a road safety partnership with the

Amy Gillett Foundation

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* Pre associates, acquisition accounting amortisation and non-recurring items

** Includes profit from associates and after acquisition accounting amortisation, but before non-recurring items

*** Return on invested capital is rolling 12 months net profit after tax before non-recurring items plus net interest divided by average net debt plus

shareholders equity

Group performance summary

6 months ended 31 December

$ million 2013 2012 change

Revenue $4,523 $4,546 0.5%

EBITDA* $391 $387 1.0%

EBIT** $259 $256 1.1%

Net profit after tax (before non-recurring items) $176 $174 1.4%

Net profit after tax (after non-recurring items) $176 $196 10.0%

Operating cash flow $308 $221 39.0%

EPS (before PPA and non-recurring items) 24.2 cps 25.4 cps 1.2 cps

Interim dividend per share (fully franked) 13.0 cps 12.5 cps 0.5 cps

Return on invested capital*** 7.7% 7.6% 0.1 pp For

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Organic revenue growth in difficult environment

$ million

Revenue half year

ended 31 December 2012 4,546

Disposal of Auto and Refrigerated (19)

Fuel and carbon surcharges 1

Other including acquisitions 8

Foreign exchange impact 73

TGF rate reduction (132)

Net new business / contracts completed (7)

Net volume changes 53

Revenue half year

ended 31 December 2013 4,523

TGF rate reduction reflecting excess shipping

capacity

Net organic growth of approx 1% reflecting Timor

Leste contract completion and loss of Coles FNQ

contract, together with impact of customer down

trading in some markets

Recent contract wins will support future growth

Group tender levels of approx $1 billion for the

half

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Divisional results

Toll Group Toll Holdings Limited

2014 Interim Results

Divisional results



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Strong result given completion of ADF Timor Leste contract

in February 2013

Toll Energy continued to benefit from existing contracts, with

recent new wins including Inpex and Santos supporting

future growth

Toll Mining Services had an improved result but still faces

challenging conditions, especially in Queensland

Toll Offshore Petroleum Services (TOPS) now fully tenanted

with significant growth in earnings

Toll Remote Logistics affected by completion of the ADF

contract, but new contract wins helping to offset

Toll Marine Logistics in Australia facing significant

competitive issues but seeing growth in Far North

Queensland

Toll Marine Asia saw continued difficult environment but is

making good progress on its vessel divestment programme

with a further 12 vessels sold

Revenue – $ million

EBITA – $ million*

* Excludes PPA amortisation and non-recurring items, includes profits from associates

Toll Global Resources – benefits of market diversity Toll Mining Services, Toll Energy, Toll Marine Logistics, Toll Remote Logistics, TOPS

Return on capital employed (rolling 12 months)

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Contract Logistics grew with successful contract renewals

and new contract wins including the expanded Coca-Cola

Amatil contract

NTS heavy haulage acquisition will provide increased

opportunities in the infrastructure sector

Customised Solutions had good operational performances.

New contract wins position this business well for future

growth

Domestic auto sector closures well anticipated and not

expected to have a material impact

Government Business Group in Singapore performed well,

growing new business to support core activities. A number

of customer contracts under tender

Singapore and Malaysia benefitted from one-off project

work

North Asia had an improved result due to customer wins

and improved performance from existing contracts




Toll Global Logistics – customer wins offsetting margin pressure Customised Solutions, Contract Logistics, Automotive Logistics, South and SE Asia,

Singapore/Malaysia, North Asia, Government Business Group


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Contract Logistics’ extended contract with

Coca-Cola Amatil

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Markets remain challenging with capacity oversupply

in ocean freight and continuing trend of customers

moving from air freight to ocean freight

Ocean freight volumes were up 15% while air freight

volumes were down 9%

Gross profit margin increased from 19.2% to 20.2%

reflecting benefits of Project Forward

Business process benefits to accrue from systems

rollout

Project Forward on track for cost savings of $15-20

million in FY14




Toll Global Forwarding – focus on controllables Asia, ANZ, Americas, Africa, Europe, Middle East


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Toll Global Forwarding ‘s new site in

Heathrow, UK

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Australian revenue flat overall; key driver being customer

down trading in mining services sector in Western Australia,

exacerbated by lower average consignment weights

Margins impacted by peak period depot capacity constraints

causing increased handling costs

Toll IPEC affected by consignment size, with lower fleet costs

offset by higher depot handling costs. New Sydney depot

progressing well and will lead to significant handling

efficiencies. Planning well advanced for new Melbourne

facility

GraysOnline contract commenced September 2013

Toll Priority grew revenue and earnings, new customer wins

and benefits of increased charter work. Productivity initiatives

will provide benefits in the future

Toll Fast affected by highly competitive market resulting in

reduced revenue and earnings

Toll Global Express Japan’s earnings improved primarily as a

result of improved operating efficiencies



Toll Global Express – resilient despite tough conditions Toll Priority, Toll IPEC, Toll Fast, Toll People, Japan


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Toll IPEC’s Bungarribee depot, NSW

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Underlying container volumes flat

Ongoing competitive environment affected margins

Toll Intermodal affected by loss of FNQ contract partially

offset by cost savings from new terminals. Asciano FNQ

transaction to improve returns in 2H

Toll Shipping saw lower volumes due to down trading by a

number of customers despite benefits from the Linfox Trans

Bass acquisition

Vessel dry-docking to affect both FY14 and FY15

Toll Tasmania also benefitted from the Linfox Trans Bass

acquisition and saw contract wins to grow both revenue and

EBITA

New Tasmanian facility upgrades progressing well

Toll NZ grew revenue but earnings affected by one-off

property costs




Toll Domestic Forwarding – positioning for the future Toll Intermodal, Toll New Zealand, Toll Shipping, Toll Tasmania


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Challenging trading conditions affected margins, with a

reduction in volumes from the higher margin mining

sector

Toll Express saw a reduced contribution from the

Western Australian project mining sector, and start up

costs associated with its Sydney depot expansion

Toll NQX also affected by mining sector weakness and

customer down trading

Toll Liquids results benefitted from new contract start

ups in the period and is well positioned to capitalise on

a strong pipeline of work on offer

Toll Transitions affected by reductions in Defence

movements




Toll Specialised & Domestic Freight – mining volumes down Toll NQX, Toll Express, Toll Liquids, Toll Transitions, Toll Linehaul and Fleet Services


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Financial results



Financial results


2014 Interim Results Financial results



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$ million 1H14 1H13 Change

Revenue 4,523 4,546 (23)

EBITDA (pre associates) 391 387 4

Depreciation,

amortisation and PPA (140) (139) (1)

Associates and JV’s 9 8 1

EBIT (before non-

recurring items) 259 256 3

Net finance costs (19) (17) (2)

Income tax expense (64) (66) 2

Net profit after tax

(before non-recurring

items)

176 174 2

Non-recurring items net

of tax - 22 (22)

Net profit after tax 176 196 (20)

Earnings reconciliation

EBITDA growth despite lower revenue

Depreciation, amortisation and PPA flat reflecting

$11 million reduction in PPA offset by $12 million

increase in depreciation

EBIT before non-recurring items marginally up on

prior period despite lower revenue

Net interest costs higher due to lower interest

income and weakening Australian dollar

Effective tax rate lower due to tax concession on

coastal shipping

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$ million 1H14 1H13 Change

EBITDA excluding non-cash

items 380 384 (4)

Working capital movement (76) (163) 87

Net operating cash flows 304 221 83

- Capital expenditure (205) (216) (11)

- Sale of PPE 55 19 36

Free cash flow 154 24 130

- Acquisitions & sale of

businesses 2 91 (89)

Net cash flow before

financing and tax 156 115 41

Net interest payments (15) (15) -

Tax payments (54) (82) (28)

Dividends (106) (92) (14)

Cash flow before movements

in net debt (19) (74) 55

Cash conversion 80% 57%

Operating cash flow continues to improve

Significant improvement in first half operating

cash conversion

Working capital improvement from both

receivables and payables

Capital expenditure continues to trend down

Sale of PPE consists of sales of vessels,

helicopters and properties

Tax payments reduced due to lower

instalment rate

Net dividends higher due to additional 1 cent per

share payment and lower dividend income

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Capital expenditure – focus on fleet and property

$ million 1H14

Sustaining

1H14

Growth

1H14

Total

1H13

Sustaining

1H13

Growth

1H13

Total

Toll Global Resources 22 21 43 13 48 61

Toll Global Logistics 13 6 19 9 9 18

Toll Global Forwarding 3 5 8 3 1 4

Toll Global Express 38 2 40 25 8 33

Toll Domestic Forwarding 12 16 28 34 9 43

Toll Specialised & Domestic Freight 46 2 48 41 2 43

Corporate 10 9 19 14 - 14

TOTAL 144 61 205 139 77 216

% of depreciation 104% 110%

Toll Global Express includes $16 million on property and $14 million on replacement fleet

Toll Global Resources reduction reflects completed TOPS investment

Toll Specialised & Domestic Freight continues investing in fleet replacement program

Toll Domestic Forwarding reduction due to completion of Kewdale and Moolabin terminals

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Return on capital is stable

EBIT $M

(rolling 12

months)

Average

capital

employed $M

Dec 2013

ROCE %

Dec 2012

ROCE %

Toll Global Resources 105.5 1,079 9.8 9.7

Toll Global Logistics 88.2 809 10.9 9.5

Toll Global Forwarding 6.0 759 0.8 1.3

Toll Global Express (Australia) 123.3 309 39.9 46.0

Toll Global Express (Japan) (1.3) 145 (0.9) (1.8)

Toll Domestic Forwarding 61.0 313 19.5 20.6

Toll Specialised & Domestic Freight 94.2 284 33.1 41.1

TOLL GROUP (after tax return on invested capital) 7.7 7.6

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Debt refinancing continuing to plan

Strong balance sheet position

$494 million in cash

$777 million in liquidity

Net debt position $1,344 million

Gearing 33.0%

Debt refinancing profile

USPP issuance funded in December; USD 250m

equivalent

SGD debt extension completed in December

Average debt maturity 2.9 years increased from 1.9

years at 30 June

Further $100m liquidity reduced through cancelling

undrawn facilities

Negotiation of HKD and JPY facilities to be

completed by April 2014

No material impact on net interest costs from refinancing

23% 45%

32%

Debt split

Bilateral Syndicated USPP

-

200

400

600

800

1,000

Group debt maturity profile ($ million)


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Toll Global Forwarding – delivering on cost savings

HK$ 1H14 1H13 $ change

Gross Profit 1,154 1,212 (58)

Gross Profit margin % 20.2% 19.2% +1.0%

G&A costs (1,034) (1,096) 62

EBITDA (excluding associates) 120 116 4

EBITA (including associates) 100 86 14

G&A Costs/Gross Profit % 89.6% 90.4% +0.8%

EBITA Conversion % 8.7% 7.1% +1.6%

Gross Profit dollars weaker due to air freight decline

Margins improved due to yield efficiency programs

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Cost management initiatives progress

Driving procurement benefits across the Group

Sustaining capital expenditure on depots to drive cost efficiencies

Sustaining capital expenditure on replacement fleet to gain savings on

rentals, repairs and maintenance costs

Back office efficiencies including Project Forward

Asset utilisation improvements

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Outlook



Outlook



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Toll Holdings Limited – 2013 Full Year Results 26

External environment both in Australia and globally remains patchy

Overall volume growth is still relatively flat

Business and consumer confidence remains fragile, although expect currency

and interest rates to ultimately support some improvement in Australia

Competitive environment will continue

We will continue to achieve positive contributions from:

One Toll selling and procurement activities

Costs and productivity improvements driven by capital expenditure, restructuring

and continuous improvement initiatives, including Project Forward

Continued success with net new customer wins

Investments in new business sectors

Toll is positioned well for any improvement in economic activity in Australia and key

offshore markets

Overall we still expect underlying EBIT to be ahead of last year and EBITA to be in

line with last year

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Questions & answers



Questions and answers



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Appendix



Appendix



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Toll

Global Resources

Toll

Global Logistics

Toll

Global Forwarding

Toll

Global Express

Toll

Domestic

Forwarding

Toll

Specialised

& Domestic

Freight

Provides logistics

services to the oil &

gas, mining, and

government and

defence sectors in

Australia Asia and

Africa

World class contract

logistics solutions

provider in the Asia

Pacific region

International freight

forwarding and

advanced supply

chain management

services

Market leading

express freight

operator in Australia

providing time

sensitive freight

distribution, and top

ten express logistics

provider in Japan

Domestic freight

forwarding across

Australia and New

Zealand

Provides a

comprehensive suite

of options Australia-

wide for palletised

freight, liquids

distribution, chemicals

distribution and

warehousing through

to relocation services

Toll Group

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$ million As at 31 Dec 2013 30 Jun 2013

Current Assets

Cash 494 516

Receivables 1,329 1,241

Inventories 64 62

Assets held for sale 99 56

Other 101 92

Total Current Assets 2,087 1,967

Non-Current Assets

Receivables 11 13

Investments 186 175

Property, plant & equipment 1,989 1,999

Intangible assets 1,712 1,660

Deferred tax assets 132 139

Other 20 21

Total Non-Current Assets 4,050 4,007

Total Assets 6,137 5,974

Current Liabilities

Accounts payable 916 868

Interest bearing liabilities 432 934

Current tax liabilities 84 80

Provisions and other 353 371

Liabilities held for sale 2 -

Total Current Liabilities 1,787 2,253

Non-Current Liabilities

Interest bearing liabilities 1,407 854

Deferred tax liabilities 19 18

Provisions and other 195 153

Total Non-Current Liabilities 1,621 1,025

Total Liabilities 3,408 3,278

Net Assets 2,729 2,696

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Appendix 3: Local reporting currency

Toll Global Forwarding Hong Kong $ million

1H14 1H13 change

Revenue 5,714 6,305 -9.4%

Gross Profit 1,154 1,212 -4.8%

EBITA 100 86 +16.3%

EBITA margin 1.7% 1.4% +0.3pp

EBITA includes profit from associates

Toll Global Logistics Singapore $ million

1H14 1H13 change

Revenue 796 827 -3.7%

EBITA 58 59 -1.7%

EBITA margin 7.2% 7.1% +0.1pp

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Appendix 4: Toll Global Forwarding volumes F

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This presentation includes “forward-looking statements.” These can be identified by words such as “may”, “should”, “anticipate”, “believe”, “intend”, “estimate” and “expect”. Statements which are not based on historic or current facts may be forward-looking statements.

Forward-looking statements are based on assumptions regarding Toll’s financial position, business strategies, plans and objectives of management for future operations and development and the environment in which Toll will operate.

Forward-looking statements are based on current views, expectations and beliefs as at the date they are expressed and which are subject to various risks and uncertainties. Actual results, performance or achievements of Toll could be materially different from those expressed in, or implied by, these forward-looking statements. The forward-looking statements contained in this presentation are not guarantees or assurances of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of Toll, which may cause the actual results, performance or achievements of Toll to differ materially from those expressed or implied by the forward-looking statements. For example, the factors that are likely to affect the results of Toll include general economic conditions in Australia and Globally; exchange rates; competition in the markets in which Toll does and will operate; weather and climate conditions; and the inherent regulatory risks in the businesses of Toll. The forward-looking statements contained in this presentation should not be taken as implying that the assumptions on which the projections have been prepared are correct or exhaustive.

Toll disclaims any responsibility for the accuracy or completeness of any forward-looking statement. Toll disclaims any responsibility to update or revise any forward-looking statement to reflect any change in Toll’s financial condition, status or affairs or any change in the events, conditions or circumstances on which a statement is based, except as required by law.

The projections or forecasts included in this presentation have not been audited, examined or otherwise reviewed by the independent auditors of Toll. Unless otherwise stated, all amounts are based on A-IFRS and are in Australian Dollars. Certain figures may be subject to rounding differences. Any market share information in this presentation is based on management estimates based on internally available information unless otherwise indicated.

You must not place undue reliance on these forward-looking statements.

This presentation is not an offer or invitation for subscription or purchase of, or a recommendation of securities. The securities referred to in these materials have not been and will not be registered under the United States Securities Act of 1933 (as amended) and may not be offered or sold in the United States absent registration or an exemption from registration.

Disclaimer F

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Thank you



Thank you



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toll gro level 7, 3 80 st kilda road melbourne vic 3004 austr ...2014/02/19 · income tax expense...

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