enX GROUP LIMITED RESULTS PRESENTATION for the year ended 31 August - - PowerPoint PPT Presentation

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enX GROUP LIMITED RESULTS PRESENTATION

for the year ended 31 August 2017

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DISCLAIMER

Certain statements in this presentation regarding enX’s business operations may constitute “forward looking statements.” All statements other than statements of historical fact included in this presentation, including, without limitation, those regarding the financial position, business strategy, management plans and objectives for future

• perations of enX are forward looking statements. Forward-looking statements are not intended to be a guarantee of

future results, but instead constitute enX’s current expectations based on reasonable assumptions. Actual results could differ materially from those projected in our forward-looking statements due to risks, uncertainties and other factors. enX neither intends to nor assumes any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In preparation of this document we used certain publicly available data. While the sources we used are generally regarded as reliable we did not verify their content. enX does not accept any responsibility for using any such information.

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AGENDA

• 1. Overview
• 2. Track record
• 3. Building our segments
• 4. Financial review
• 5. Outlook
• 6. Q&A

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OVERVIEW

• 1. Transformed into a pure

play industrial company

• 2. Our quality businesses

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TRANSFORMED INTO A PURE-PLAY INDUSTRIAL COMPANY

EQUIPMENT FLEET PETROCHEMICALS

Materials handling equipment distributor in SSA Full service fleet management and logistics ExxonMobil petrochemicals distributor Largest independent producer

• f oil lubricants

#1 #2 #1

REVENUE: R6.22 bn ADJ EBIT: R736m ADJ HEADLINE EARNINGS: R281m REVENUE: R3.06bn ADJ PBT: R197m REVENUE: R1.65bn ADJ PBT: R181m REVENUE: R1.54bn ADJ PBT: R77m NAV per share: R15.06 NAV per share (excl. EXG): R13.87 NET DEBT/EBITDA (RSA): 2,3x

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EQUIPMENT FLEET PETROCHEMICALS

OUR QUALITY BUSINESSES

• Strong OEM partnership

with ExxonMobil

• Products are an industrial

necessity

• Largest independent

lubricant blender and distributer in SSA

• Customer contracts with

leading OEM’s

• Scalable platform
• Strong OEM partnerships

with Toyota and Mitsubishi

• Market leader in SA
• Annuity revenues, self

funding

• 13 000 strong fleet
• Own the value chain
• Platform to grow in the UK
• Market leading suite of

VAPs

• 14 000 leased units,

130 000 VAPs

• Annuity revenues
• Cutting edge data and

technology

• Scalable platform

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TRACK RECORD

• 1. Creating shareholder

value

• 2. Delivered in 2017
• 3. Decoupled from eXtract

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CREATING SHAREHOLDER VALUE

• Listed Austro
• Power business

acquired

• Post financial

crisis downturn

• Wild Rose

introduced as shareholders of reference

• Turnaround of

Wood

• Establishment of

Petrochemicals segment through acquisition

• f Centlube
• Group renamed

enX

• Awarded

ExxonMobil distributorship

• Acquisition
• f Genmatics,

WAI and AGL

• Empowerment

transaction and capital raise

• Acquisition of EFML

and EIE

• Decoupled from

eXtract

• Growing

Petrochemicals segment 50 100 150 200 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017

ADJUSTED HEPS (cps)# 2007 2009-12 2013 2014 2015^ 2016 2017

#

Adjusted for 11:1 consolidation

^

Excluding once-off foreign exchange loss

• Incl. 6 months
• f EIE and EFML
• Incl. 4 months
• f EIE and EFML

Total return to shareholders since 2013 CAGR = 33%

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DELIVERED IN 2017

CATEGORY WHAT WE SAID WHAT WE DID Strengthen OEM partnerships

• Grow market share with Toyota aspiration
• Local production of ExxonMobil

lubricants

• New product distribution opportunities
• Toyota commitment for a further 3-year

distribution agreement

• LOI signed with ExxonMobil to blend

lubricants at Cera plant

• Exploring opportunities to vertically

integrate lubricants supply chain Different with scale

• Acquisitions fully integrated
• Quest
• New blending plant
• New product revenue for Chemicals
• New power related revenues
• EIE, EFML, WAI and AGL
• Quest system implemented and
• perational
• Commissioned Cera inland blending

plant, resulting in increased capacity

• Began distributing polypropylene
• Entered prime-power market with

confirmed orders

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CATEGORY WHAT WE SAID WHAT WE DID

DELIVERED IN 2017

Geographical diversification

• Expand UK footprint
• Advanced discussions with multiple

UK dealers Financial discipline

• R1.87 Industrial adj. HEPS forecast
• Improve capital structure
• Group cost
• Achieved R1.81
• R70m/5-year bond
• New R550 million financing facility
• Redeemed notes R447 million
• Group function right sized

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DECOUPLED FROM EXTRACT

STRATEGIC REVIEW RECAPITALISATION AGREEMENT THARISA SALE PPM TERMINATION UNBUNDLING INVESTMENT VEHICLE PPM TERMINATION UNBUNDLING INVESTMENT VEHICLE

STATUS

enX loan receivable from eXtract R250m Expected timing of repayment R100m by March 2018 R150m by August 2019 Share equivalent value for enX shareholders R1.39 per share

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BUILDING OUR SEGMENTS

• 1. enX Equipment
• 2. enX Fleet
• 3. enX Petrochemicals
• 4. The way we do things

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enX EQUIPMENT

LATENT VALUE

• Industrial Equipment

› Growing our UK operations with the support

• f our global OEM partners

› Growth in selected African markets on an export, dealer basis › Operational efficiencies

• Power: Grow contract manufacturing volumes,

prime power and new power related revenues

• Wood: Build leasing and rental book

DEFENSIVE CHARACTERISTICS

• Market leaders in all businesses
• Long-term relationships and support from leading

global OEMs

• Stable blue-chip client base
• Industry diversification
• Annuity income streams
• Asset backed leasing contracts
• Conservative approach to RVs, maintenance and

provisions

• Control all parts of the distribution value chain:

› Distribution, leasing, after-market, used equipment › Strong after-market support teams

Growing our UK operations with the support of our global OEM partners

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enX FLEET

LATENT VALUE

• Monetising data and technology (R)evolution
• Quest offers ability to scale and use data to

enhance customer value proposition

• Leasing book

› Approved capex to retain existing clients and support new business for growth › Sales team investment

• Value-added products

› Continue to grow VAPs revenue › Non-capital intensive

DEFENSIVE CHARACTERISTICS

• Market leading position
• Annuity income streams
• Asset backed leasing contracts
• Stable blue-chip client base
• Industry diversification
• Unmatched portfolio of fleet management value-

added products

• Base interest rate pass-through
• Conservative approach to RVs, risk funds and

provisions

• Experienced management team

Leveraging data to differentiate our offering

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enX PETROCHEMICALS

LATENT VALUE

• Lubricants

› Growth in ExxonMobil distribution volumes › Growth in contract manufacturing volumes with Puma › ExxonMobil local production to drive margin and improve working capital management › New product distribution opportunities with ExxonMobil › New plant to carry highest global quality standards

• Chemicals

› Surplus capacity for new products › Volume growth in polymer and speciality chemicals on the back of excess volumes from USA refineries › New distributorships

DEFENSIVE CHARACTERISTICS

• Products are an industrial necessity
• Contract to service global strategic customers of

ExxonMobil (Toyota, Volvo, UD Trucks, Cat Equipment)

• Strong operational, marketing, product and

technology support from ExxonMobil

Building a leading independent petrochemicals business in partnership with ExxonMobil

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THE WAY WE DO THINGS

CAPITAL FLOWS

• Central cash pool
• Disciplined allocation

with board oversight

• Focused investment

criteria and hurdle rates CULTURE

• Entrepreneurial
• Common set of values
• Diverse opco cultures

GOVERNANCE

• Experienced, diverse board
• Focused on creating value, the right way
• Transformation

OPERATIONAL DECISIONS

• Decentralised
• Agile
• Cost efficient centre

?

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FINANCIAL REVIEW

• 1. Highlights
• 2. Segmental analysis
• 3. Condensed statement of

profit and loss

• 4. Condensed statement of

financial position

• 5. Condensed statement of

cash flows

• 6. Liquidity and funding
• 7. Capital markets evolution

Other EIE / EFML 4 months 6 months

Reporting periods

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H1 2017 H2 2017

6 months 6 months 12

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HIGHLIGHTS

Key performance indicators

*Previous period had been represented to take into account the share consolidation of 11:1

R’000 FY2017 FY2016 Revenue 6 281 342 1 150 951 Adjusted earning before interest and taxation (EBIT) 735 626 40 122 Adjusted headline earnings 281 072 21 135 Adjusted headline earnings per share (cents) * 181.2 41.1 Number of shares in issue* 180 439 427 54 562 187 Weighed average number of shares in issue (net of treasury)* 155 154 559 51 477 830 Net asset value per share (cents) 1 506.4 1 259.9 > Net Asset Value, excluding eXtract Assets held for sale (cents) 1 387.1

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HIGHLIGHTS

Adjustments to EBIT and Headline Earnings explained

R’000 EBIT Headline Earnings Earnings before interest and taxation (EBIT)/ Headline Earnings (66 080) (467 332) IFRS 2 – charges 6 708 6 708 Restructuring and transaction costs 28 720 28 720 Amortisation of intangible assets 27 311 27 311 eXtract adjustments (FV adjustments and associate losses) 738 967 738 967 Interest received - eXtract

• (60 800)

Taxation effects

• 7 498

Adjusted EBIT (1st column) / Headline Earnings (2nd Column) 735 626 281 072 Adjusted EBIT % / Headline Earnings % 12 5

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EQUIPMENT

SEGMENTAL ANALYSIS

REVENUE

R3 063 million

ADJ EBIT

R346 million

ADJ PBT

R197 million

LEASING ASSETS

R2 494 million

FY 2017

Industrial Equipment

• Y-on-y growth in forklift market
• Market share maintained in line with expectations
• Overhead recovery from aftermarket growing
• Marginal increase in leasing book

Wood

• Subdued wood industry trading conditions
• Revenue declined 8% whilst margins increased by 2%
• Profit growth on prior year

Power

• Market share growth in subdued economy
• Stability brought through rebalanced cost structures, working

capital management and refocus on revenue growth

• Strong free cash flow generation

31% 27% 5% 37% Lease/rent Value add Sell Distribute REVENUE VALUE CHAIN AUGUST 2017

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51% 30% 19% Lease/rent VAPs Remarketing

SEGMENTAL ANALYSIS

FLEET

REVENUE

R1 650 million

ADJ EBIT

R327 million

ADJ PBT

R181 million

LEASING ASSETS

R2 583 million

FY 2017

EFML

• Stabilising leasing book after multiple years of decline
• n the back of capital constraints
• VAPs and remarketing showed continued traction

increasing to 49% Revenue contribution

• Adj. PBT margin of 11%
• Investment into sales teams, increasing pipeline
• Large VAPs business awarded as a result
• End of term residual values continued to be profitable

VALUE CHAIN AUGUST 2017

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SEGMENTAL ANALYSIS

PETROCHEMICALS

REVENUE

R1 539 million

ADJ EBIT

R101 million

ADJ PBT

R77 million

INVENTORY

R392 million

FY 2017

Lubricants

• Production volumes increased
• New Cera facility significantly increased capacity
• CAT Lubricants integrated into Centlube business across

14 SADC countries

• Maintained contracts with all major principles and

customers Chemicals

• Sales volumes declined due to lower demand of plastic

polymers - declining consumer spend

• Chemicals, rubber and additives volume growth
• Began distribution of polypropylene
• Strong cash generation though efficient working capital

management

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CONDENSED STATEMENT OF PROFIT AND LOSS

R’000 FY2017 FY2016 Revenue 6 218 342 1 150 951 Net operating expenses (4 485 094) (1 111 076) Profit before depreciation and amortisation 1 733 248 39 875 Depreciation and amortisation (1 026 379) (9 799) Profit on disposal of property, plant and equipment 27 376 IFRS 2 charges (6 708) (6 323) Foreign exchanges losses (27 085) (876) Operating profit 673 103 23 256 Fair value adjustment of investments (736 563)

• Impairment of property plant and equipment
• (2 941)

Impairment of goodwill

• (78 205)

Share of (losses)/ profit from associates (2 620) 293 Net finance costs (291 679) (8 484) Loss before taxation (357 759) (66 081) Taxation (103 368) (5 312) Loss after taxation (461 127) (71 393)

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CONDENSED STATEMENT OF FINANCIAL POSITION

R’000 FY2017 FY2016 Property, plant and equipment 374 470 121 928 Leasing assets 5 077 814

• Goodwill and intangibles

933 453 279 729 Other investments and loans 237 323

• Inventories

1 229 624 542 626 Trade, other receivables and derivatives 1 213 608 400 537 Other assets 54 590 19 347 Bank and cash balances 317 806 60 150 Assets held for sale - eXtract 212 176

• Total assets

9 650 864 1 424 317 R’000 FY2017 FY2016 Total shareholders’ interests 2 715 250 687 420 Interest-bearing borrowings, overdraft and deferred vendor consideration 4 890 064 293 148 Deferred taxation 507 653 36 304 Trade, other payables, provisions and derivatives 1 500 073 405 962 Other liabilities 37 824 1 483 Total equity and liabilities 9 650 864 1 424 317

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CONDENSED STATEMENT OF CASH FLOWS

R’000 FY2017 FY2016 Cash generated from operations before working capital movements 1 699 545 42 178 Working capital movements 391 735 (20 016) Cash generated from operations 2 091 280 22 162 Net cash flows from interest and taxation (450 559) (9 868) Net cash flows from operating activities 1 640 721 12 294 Net cash flows from investing activities (2 636 043) (276 701)

• Capital expenditure

(1 384 740) (20 135)

• Business combinations

(1 315 228) (257 320)

• Other

63 925 754 Net cash flows from financing activities 1 288 782 259 770

• Capital raise (net of costs)

1 441 551 256 203

• Interest-bearing borrowings and deferred vendor consideration

(150 182) 12 907

• Other

(2 587) (9 340) Net increase/(decrease) in cash and cash equivalents 293 460 (4 637)

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LIQUIDITY AND FUNDING

Overview of interest-bearing borrowings

Funding facilities (R’million) Facility size Utilised Unutilised enX Leasing (EIE and EFML) - SA Banking 4 522 3 822 700 General banking facility 400

• 400

Term facility 2 383 2 383

• Liquidity facility

506 206 300 BBB notes 1233 1 233

• enX Leasing (EIE and EFML) - Rest of world

1 408 828 580 Asset backed funding UK (EIE) 1 344 807 537 General banking facilities UK (EIE) 26 5 21 General banking facility Zambia (EFML) 38 16 22 enX Trading 401 240 161 General banking facility 150 89 61 Term facility 200 100 100 Deferred vendor consideration 51 51

• Total funding

6 331 4 890 1 441 enX Leasing (EIE and EFML) - SA Banking Covenants (x) Level FY2017 Net Total Debt : EBITDA ≤ 3 2.34 EBITA : Net Finance Charges ≥ 1.2 1.60 Net Total Debt : Equity ≤ 3.37 2.32

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LIQUIDITY AND FUNDING

Liquidity and funding

Funding outlook

• Total debt levels to remain stable
• Planned refinancing of upcoming maturities in line

with market appetite

• Ring-fenced UK facility – renewed until FY2020

Long-term funding objectives

• Diversify funding sources
• Ample liquidity buffers for trading and upcoming

maturities

• A rated credit target
• Resilient maturity profile

200 400 600 800 1 000 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 SA (term facility) SA (bonds) SA (GBF) Offshore (GBF) Other

SA maturity profile (R’m)

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enX CAPITAL MARKETS EVOLUTION

EIE and EFML facilities separated from Contract Mining Bank and bond debt restructure to alleviate short term liquidity challenges Investment grade credit rating secured (BBB) R447 million note maturities redeemed Bond market access: R70 million (EQS10) 5-year money 300bps 3M Jibar A-RATING

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OUTLOOK

• 1. Outlook
• 2. Investment proposition

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OUTLOOK

PETROCHEMICALS Forklifts

• 12 vs. 10 months
• Organic and acquisitive UK

growth as planned

• Profit growth expected
• Improved efficiencies through

use of technology Power

• Prime power projects

Wood

• Profit growth expected
• Growth of packaging products

and adhesives

• Continued investment in leasing

book

• 12 vs. 10 months
• Stabilise and then grow the

leasing book through improved retention and new business

• Increase revenues from VAPs
• Utilise IP to improve

competitiveness by developing more services

• Monetisation of data and

technology Lubricants

• Commencement of ExxonMobil

blending

• Growth of ExxonMobil distribution

volumes

• Supply chain integration

Chemicals

• Increased volumes through

ExxonMobil Chemical distribution network

• Performance polyethylene resin

and speciality chemicals growth

• pportunities
• Growth on the back of new

distributorships

EQUIPMENT FLEET

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enX INVESTMENT PROPOSITION

Three distinct industrial clusters with market leading market positions Strong partnerships with leading global brand owners Attractive growth narrative for each industrial cluster Significant annuity revenue streams Serving a broad range

• f economic sectors

Sustainable capital structure unlocks cash flow for investment in growth Experienced board and established management in place to drive delivery

• f projections

Returns in excess of WACC, with further opportunities to widen spread

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Q&A

IR contacts

Paul Mansour, Dep Exec Chairman paul.mansour@enxgroup.co.za Irwin Lipworth, CFO irwin.lipworth@enxgroup.co.za Frank Ford enx.ir@fticonsulting.com