For personal use only

Transcription

1 Acquisition of Coates Hire 20 September 2017

2 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 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 forwardlooking 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. 2

3 Transaction overview Coates Hire is a market leader in equipment solutions with strong growth prospects 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 3

4 Transaction overview (cont d) Coates Hire is a market leader in equipment solutions with strong growth prospects 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 (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 4

5 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 Longstanding and deep understanding of the Coates Hire business Enhances SGH s portfolio 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 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 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 (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 5

6 Strategic rationale (cont d) Strengthens SGH s position as a leading industrial services operator FY17 EBIT (1,2) FY17 pro-forma EBIT (1,3) Energy 9% Other 4% Energy 6% Other 3% Media 24% $297m WesTrac 55% Media 17% $415m WesTrac 40% 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 6

7 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 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 7

8 Coates Hire key highlights FY17 Achievements and changes 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 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 Certainty of employment conditions until

9 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 9

10 Coates 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 & SERVICES REVENUE MANAGEMENT BRAND OPERATIONAL EFFICIENCY Right People Right Structure Customer Centric and Commercial Valued Prioritised Profitable Understand our markets and provide profitable solutions Market Relevant, matched to value proposition Recognised Relevant Understood National Consistent Agile Connected 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 10

11 Major initiatives in FY18 and beyond 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 (1) Rental market growth based on IBISWorld estimate for machinery and scaffolding rental growth, October

12 Supportive 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

13 Coates Hire outlook underpinned by major long-term projects 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 13

14 Diversified business model Diversified end markets with strong leverage to infrastructure market 1 2 Diversified blue chip customer base Non-residential 13% FY17 sector revenue split Government 5% Oil & gas 7% Mining & resources (production) 10% More than 17,000 customers No single customer represents more than 3% of revenues, with the top 100 representing < 40% (1) Residential 4% Mining & resources (development) 6% Industrial maintenance 6% Events 3% Engineering & Construction 34% Commercial & manufacturing 12% (1) Based on FY17 results 14

15 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 For personal use only Strong fleet metrics and utilisation rates, enhancing return on invested capital Fleet on hire experiencing positive trends % 30% 55.7% 56% 53.5% 54% 28% 52% 50% 26% 47.4% 48% 46% 24% 44% 42% 22% Jun-15 Jun-16 Jun-17 Targeted capex investment program Efficient return on invested capital via reduction in redline equipment and improved turnaround time 27.6% 23.5% 23.0% Jun-15 Jun-16 Jun-17 supported by data driven disposals program (YTD Actual capex approvals $m) (YTD Actual Disposals $m)

16 Coates Hire benefiting from positive market trend Trading revenue ($m) Underlying EBIT ($m) 279 1,241 1,095 +5% % FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17 Underlying EBIT margin Underlying EBITDA & net capex ($m) 22.5% +4ppts % 15.5% % 11.1% FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17 EBITDA Net capex (excluding UK) 16

17 Pro-forma financial impact SGH financial profile pro-forma impact (1) Reported Pro-forma FY16 FY17 FY16PF FY17PF Revenue 2,237 2,282 3,110 3,193 Growth (%) (pcp) 2.0% 2.7% Other income Share of results from equity accounted investees Operating expenses (2,092) (2,127) (2,698) (2,735) 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 EBITDA EBITDA margin (%) 13.6% 14.4% 18.2% 19.1% Depreciation & amortisation (33) (31) (202) (196) EBIT 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 17

18 Acquisition funding 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 (1) Coates Hire cash and debt as at 30 June

19 Trading update and outlook Coates Hire Poised to benefit from infrastructure activity Strong start to FY18 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 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 Energy assets well positioned in East Coast Media to deliver ongoing TV ratings performance Strong start to FY18 Group EBIT guidance 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 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 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 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 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 19

20 Appendix 20

21 SGH 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 21

22 SGH pro-forma free cash flow 22

23 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 23

24 Overview 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 specialised 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 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 24

25 Fleet management cycle Comprehensive strategy across the full equipment life cycle #5 Disposal Equipment which is uneconomic to maintain is disposed of through a number of market channels Dedicated disposal managers ensure strong commercial outcomes Disposal #5 Hire fleet investment #1 #1 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 #4 Fleet maintenance #4 Final investment approved by CEO/CFO 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 Fleet maintenance #3 Fleet monitoring Fleet procurement #2 #2 Fleet procurement Full technical and commercial assessment Detailed tender processes Strong, long-standing relationships with key suppliers provides a competitive 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 25

26 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 26

27 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 Limited financial capacity of competitors 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 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 Customers need a broad product / service offering 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 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 27

28 Overview of SGH structure Diversified industrial services and investment group Industrial services (1) Media investments Energy Other investments Business Australia Listed Investments Property Investments Business description Caterpillar dealer in WA NSW and ACT Industrial and general equipment hire Industrial lighting, pumps, generators Diversified Media (Broadcast, Publishing and Digital) Diversified Oil & Gas Diversified investments Strategic position #1 equipment solution company in WA, NSW and ACT Largest equipment hire company in Australia 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 FY17 EBIT contribution (Pro-forma) (2) 40% 34% Minimal 17% 6% 3% Seven Group 100% 100% 100% 41% ownership SGH Energy 100% Beach Energy 23% 100% (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 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 28