Zeda Limited · JSE:ZZD
Zeda — H1 2023 Earnings Presentation
27 slides from Zeda's earnings presentation, May 2023
Slide 1: Interim Results 2023
INTERIM RESULTS 2023 FOR THE SIX MONTHS ENDED 31 MARCH 2023 ZEDA Interim Results 2023 1
Slide 2: Agenda
AGENDA BUSINESS OVERVIEW FINANCIAL OVERVIEW STRATEGY UPDATE OUTLOOK Q&A
Slide 3: A Constraint Trading Environment
A CONSTRAINT TRADING ENVIRONMENT High inflationary Consumers Energy challenges environment under pressure affecting operations Slowing down of High Weak used car market Interest rate currency ZEDA Interim Annual Results 2023 2022 3
Slide 4: Robust Group Performance
ROBUST GROUP PERFORMANCE Strong Stable High Topline & Profitability Margins Returns +20% +19% 38% 18% +27% 28% increase in increase in Revenue EBITDA EBITDA Operating profit BEPS Return On to to margin margin Equity R4.4bn R1.7bn HEPS (H1 2022: 38%) (H1 2022: 17%) up 4% (H1 2022: 22%) ZEDA Interim A
Slide 5: Demonstrated Positive ESG Impact
DEMOSTRATED POSITIVE ESG IMPACT Reduce environmental impact Demonstrate positive social impact 15% reduction in Environment Social electricity consumption 175 days of No Lost Time Injury despite increased fleet & Frequency Rate (LTIFR) increased rentals improved from 0.75 to 0.12 14% reduction in >5
Slide 6: Business Overview
BUSINESS OVERVIEW
Slide 7: Strategy Execution Delivers Solid Results
STRATEGY EXECUTION DELIVERS SOLID RESULTS Rental Leasing Business* Business# 57% EBITDA margin 31% EBITDA margin 26% increase in revenue 6% to R3.3bn increase in 17.8% revenue to 75.0% R1.1bn increase in maintenance fleet & service utilisation plans unit installation ZEDA Interim Annual Results 2023
Slide 8: Rental Business: High Yield Business Drove Growth
RENTAL BUSINESS: HIGH YIELD BUSINESS DROVE GROWTH Customer segments Customer segments (billed days contribution) (revenue growth) H1 2023 VS H1 2022 8% 19% Inbound Inbound 30% Local 139% Corporate 19% Replacement Public sector 14% Subscription 70% Replacement Public sector Subscription 25% 31% 27% C
Slide 9: Leasing Business: Growth Underpinned by Corporate Segment
LEASING BUSINESS: GROWTH UNDERPINNED BY CORPORATE SEGMENT Customer segments Product segments Product segments (revenue contribution) (revenue growth) Greater Africa Financed Managed Lease (FML) Maintenance Upfront (MAU) Public sector Operating Lease Managed Maintenance (OLMM) Operating Lease Managed
Slide 10: Car Sales – Control of Upstream and Downstream Value Chain
CAR SALES – CONTROL OF UPSTREAM AND DOWNSTREAM VALUE CHAIN Avis Car Sales Avis Car Sales performance differentiator integrated decision 1.5 reduction making ppts in margins 73% increase in cash generated to agility in R1.2bn fleeting requirements 71:29 variety of strategic vehicles Trade vs Retail d
Slide 11: Financial Overview
FINANCIAL OVERVIEW
Slide 12: Outperformance Across Key Metrics
OUTPERFORMANCE ACROSS KEY METRICS Upper 20th percentile Sustained margins: Quality earnings despite topline and EBITDA and a significant increase profitability Operating margins in interest rates growth Disciplined Strong cash Superior balance sheet generation from shareholder management operations
Slide 13: A Strong Set of Results
A STRONG SET OF RESULTS Revenue (Rm) EBITDA (Rm) Rental Operations Operating Profit/(Loss) (Rm) Average Fleet EBITDA Margin Leasing Operations Operating Margin 28 27 25 24 20 17 26% 27% 27% 25% 38% 38% 11% 12% 9% 9% 17% 18% 40 39 38 26 24 28 +20% +25% +19% 5 178 5 026 4 910 1 144 4 450 4 161 1 084 3
Slide 14: Growth in All Revenue Segments
GROWTH IN ALL REVENUE SEGMENTS (Rm) Car Sales 6 000 5 026 Rental 4 450 +20% 255 Leasing 5 000 55 Commissions 3 705 +12% 1 035 & Other 4 000 968 49 +3% 938 3 000 1 611 1 771 +50% 1 181 2 000 2 126 1 656 1 000 +8% 1 537 - H1 2019 H1 2022 H1 2023 ZEDA Interim Annual Results 2023 2022 14
Slide 15: Improved Effective Tax Rate
IMPROVED EFFECTIVE TAX RATE Statutory rate Effective tax rate Effective tax rate above statutory rate 40% due to 35% 30% 25% 20% Non-deductible expenses 33,34% 28,43% 27,06% 15% 28% 28% 27% Non-operating and capital items of R54m in 2022. 10% Profit on disposal of property – 5% R18m in 2023 - CGT 0%
Slide 16: Quality of Earnings
QUALITY OF EARNINGS MARCH 2022 TO SEPTEMBER 2022 MARCH 2023 EPS & HEPS 28,7 350,0 300,0 * * 142,4 250,0 17,6 7,45 27,5 200,0 * * 324,7 * * 296,1 150,0 * 206,71 196,5 189,1 182,3 100,0 154,8 50,0 - BEPS March Capital HEPS March April - Sept HEPS Sept 22 Capital adj for BEPS Sept 22 BEPS March Capital
Slide 17: Superior Returns
SUPERIOR RETURNS Return on Invested Capital Return on Equity (Rm/%) (Rm/%) 9.8% 11.9% 12.7% 22.4% 32.7% 28.3% 7 590 7 089 7 111 2 240 2 220 1 908 H1 2022# FY 2022 H1 2023# H1 2022# FY2022 H1 2023# Average invested capital Average shareholders interest ZEDA Interim Annual Results 2023 2022 # Rolling
Slide 18: Improved Gearing Levels
IMPROVED GEARING LEVELS Debt ratios (Rm/times) Net debt Net debt to EBITDA Net debt to Interest cover EBITDA (times) improved 6 000 9,1 10,0 to 1.6 8,8 8,3 9,0 5 000 8,0 4 000 6,2 7,0 6,0 3 000 5,0 4,0 Net debt reduced R5.1bn 2 000 2,5 3,0 2,2 1,5 1,6 1 000 2,0 Interest Cover at 6.2 times 1,0 - 0,0
Slide 19: Matching of Asset Term to Finance Term
MATCHING OF ASSET TERM TO FINANCE TERM Classes of assets (R’m) 2022 2021 2022 2023 Match September March March March asset term PPE (excl vehicles) 116 141 117 108 to finance Fleet Assets - Rental 3,823 2,636 3,594 5,021 term Fleet Assets - Leasing 3,498 3,443 3,416 3,648 Other Assets 847 743 696 77
Slide 20: Capital Structure
CAPITAL STRUCTURE Capital Structure as at 31 March 2023* Financing split (Rm) March 2023 Long-Term debt Floorplan funding and other debt Short term portion of long Secured Former shareholder short-term debt term debt @ 5% R 1,515m Overdraft Short-Term debt 30% H1 23 65% Total: 5,715 Long-Term debt N
Slide 21: Net Debt and Cash Flow Analysis
NET DEBT* AND CASH FLOW ANALYSIS 297 1 445 17 10 30 FREE 3 766 CASH FLOW 1 735 5 074 4 154 Net debt to EBITDA improved from 2.2 to 1.6 Fleet investment of R3.8bn Opening Cash Investement Decrease Tax paid Net interest Investing Other Closing net debt before in fleet in working paid and activites net
Slide 22: Adequate Funding Facilities
ADEQUATE FUNDING FACILITIES (Rm) Headroom • 2 626 7,700 9,000 Sufficient headroom of R2.6 billion 8,000 • Balanced funding mix 7,000 • Assets and Liability matching • 5,074 Financial Covenants have been met 6,000 5,000 4,000 3,000 Former Shareholder Loan 2,000 • R1.55 billion loan balance pre-unbund
Slide 23: Strategy Update & Outlook
. \ \ » " , » ie ‘ea f \ Ay , £ " j yy o eC STRATEGY 0 UPDATE & OUTLOO
Slide 24: Strategy Progress
STRATEGY PROGRESS FIX GROW FIX GROW Moz RAC turned around OP Leasing by 135% from loss making Usership Heavy Commercial segment - Economy Last Mile delivery by Ghana turnaround incorporating Avis Van Rental initiatives being in the Value chain implemented Subscription BBBEE – review of – to be exten
Slide 25: Outlook
OUTLOOK
Slide 26: Strong Business Fundamentals
STRONG BUSINESS FUNDAMENTALS INITIATIVES OUTCOMES Settle the legacy debt Reduce finance costs H2 Optimise the mix between FOCUS lease and owned Optimise balance sheet AREAS Cash generation through Strong cash generation used vehicle sales ZEDA Interim Annual Results 2023 2022 26
Slide 27: Thank You Q&A
Of Connecting humanity THANK YOU Q&A