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eNX Group Limited Audited Results for the year ended 31 August 2017 | B
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eNX Group Limited Audited Results for the year ended 31 August 2017 | 1
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2
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
operations 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.
1
enX GROUP LIMITED RESULTS PRESENTATIONfor the six months ended 28 February 2018
2 | eNX Group Limited Audited Results for the year ended 31 August 2017
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OU
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ANAG
EMEN
T
1. Our management team
2. Our quality businesses
3. Who we represent
3
AGEN
DA1. Our management
2. Our track record
3. Building our segments
4. Financial review
5. Outlook
6. Q&A
eNX Group Limited Audited Results for the year ended 31 August 2017 | 3
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6
EQUIPMENT FLEET PETROCHEMICALS
OUR QUALITY BUSINESSES
Manufacturing, marketing and distribution of oil lubricants
Agent, reseller and distributor of polymer, rubber, fillers and specialised chemicals
Distribution, leasing, rental, after-market and value-added services for:• Forklifts• Port and crane equipment• Power generators• Hi-tech wood machinery
Fleet management solutions provider for:• Passenger vehicles• Light, medium and heavy
commercial vehicles
A track record of acquiring quality industrial assets that have strong market positions,are custodians of leading global brands with committed customer partnerships
We instil entrepreneurial management to drive returns through disciplined allocation of capital
5
OUR MANAGEMENT TEAM
• On 13 December 2017 enX announced the appointment of Steven Joffe as Chief Executive Officer, following the resignation of Jannie Serfontein on 1 January 2017
• Paul Mansour was appointed Chief Investment Officer • Mpho Makwana was appointed independent Chairman
Name Steven Joffe
IrwinLipworth
Paul Mansour
GaryNeubert
Trevor Williams
ChristianNeuberger
JacquiCarr
ClintNickall
Brent Hean
PositionChief
Executive Officer
Financial Director
Chief Investment
OfficerEIE Wood Power EFML Lubricants Chemicals
enX Group enX Industrial enX Fleet enX Petrochemicals
4 | eNX Group Limited Audited Results for the year ended 31 August 2017
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RECO
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1. Creating shareholder value
2. Delivered on strategy
7
WHO WE REPRESENT
EQUIPMENT FLEET PETROCHEMICALS
eNX Group Limited Audited Results for the year ended 31 August 2017 | 5
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DELIVERED ON STRATEGY
CATEGORY GOALS ACHIEVED
StrengthenOEM
partnerships
• Local production of ExxonMobil lubricants
• Grow market share with Toyota aspiration
• New product distribution opportunities
• Lubricant 5-year blending agreement signed with ExxonMobil effective 1 April 2018
• 3 year extension of ExxonMobil distribution agreement
• Awarded Sales, Vision 2020, Outstanding achievement and Premier Club Platinum Awards by Toyota Forklifts
• Pipeline of distribution opportunities for ExxonMobil products
Differentiate with scale
• Quest
• New blending plant
• New product revenue for Chemicals
• Quest system being marketed as a system solution
• Commissioned and upgraded manufacturing inland blending plant, resulting in increased capacity
• Final discussions to distribute additional products
9
CREATING SHAREHOLDER VALUE
# Adjusted for 11:1 consolidation in 2017^ Excluding once-off foreign exchange loss
2013 2014 2015 2016 2017 2018
ADJUSTED HEPS (cps)#
2007 2009-12 2013 2014 2015^ 2016 2017 2018• Listed Austro• Power business
acquired
• Post financial crisis downturn
• Wild Rose introduced as shareholders of reference
• Turnaround of Wood
• Establishment of Petrochemicals segment through acquisitionof Centlube
• Group renamed enX
• Awarded ExxonMobil distributorship
• Acquisitionof Genmatics, WAI and AGL
• Empowerment transaction and capital raise
• Acquisition of established EFML and EIE
• Decoupled from eXtract
• Growing Petrochemical segment
• 6 months of results for EIE and EFML
• Expanding UK footprint
6 | eNX Group Limited Audited Results for the year ended 31 August 2017
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BUIL
DIN
G O
UR
SEG
MEN
TS
1. The way we do things
2. enX Equipment
3. enX Fleet
4. enX Petrochemicals
11
CATEGORY GOALS ACHIEVED
DELIVERED ON STRATEGY
Geographical diversification
• Expand UK footprint• Acquired two additional businesses in the UK,
expanding footprint and growing leasing book
Financial discipline
• 87.5 cps adjusted HEPS
• Improve capital structure
• 16.5% growth period on period• Received R175 million of eXtract debt (H1), R25
million (H2)• Raised new R200 million syndicate loan (H1)• Redeemed notes R46.5 million (H1), R565.5
million (H2)• Raised R260 million bond (H2)• Refinanced R315.5 million liquidity facility (H2)• R4 billion to R3.5 billion de-leverage (net) post
redemptions• Debt funding position strengthened with a more
prudent maturity profile and sufficient liquidity to address capital repayments to the end of August 2019
eNX Group Limited Audited Results for the year ended 31 August 2017 | 7
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enX FLEET
LATENT VALUE
• Monetising data and technology– Quest offers:› Scalability› Machine learning (AI)› Big data analytics› Data consistency› Data in context/benchmarking› Reduced human intervention
• 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
• 30 year history• 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• Substantially a base interest rate pass-through• Conservative approach to RVs, risk funds and
provisions• Experienced management team
Leveraging data to differentiate our offering
13
enX EQUIPMENT
LATENT VALUE
• Industrial Equipment:› Growing our UK operations with the support
of our global OEM partners- Bolt on acquisitions of dealers to achieve national
coverage- Long-term equity partnership with OEM
› Growth in selected African markets on an export, dealer basis
› Operational efficiencies
• Power: Long term strategic options being considered• Wood: Innovating box-on-demand machine and
expanding into steel and stone industries with OEM Biesse
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, rental, after-market, pre-owned equipment
› Strong after-market support teams
Growing our UK operations with the support of our global OEM partners
8 | eNX Group Limited Audited Results for the year ended 31 August 2017
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FIN
ANCI
AL
REVI
EW
1. Highlights2. Segmental analysis3. Condensed statement of
profit and loss4. Condensed statement of
financial position5. Condensed statement of
cash flows6. Liquidity and funding7. Capital markets evolution
15
enX PETROCHEMICALS
LATENT VALUE
• Lubricants:› Secured additional 3 year distributor agreement and 5
year blending contract with ExxonMobil› Extended Toll Blending agreement for a further 3 years
untill end 2020› ExxonMobil local production to drive margin and
improve working capital from Q4 2018› New product distribution opportunities with ExxonMobil› Newly upgraded 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 fromUSA refineries
› New distributorships› Leading supplier of natural rubber and performance
polyethylene
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
• Close relationship and support from OEM as our skills improve
• Alignment with all principals seeing more integration into product offering
Building a leading independent petrochemicals business in partnership with ExxonMobil
eNX Group Limited Audited Results for the year ended 31 August 2017 | 9
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HIGHLIGHTS
Adjustments to EBIT and Headline earnings explained
R’000 EBIT HE
Earnings before interest and taxation (EBIT)/ Headline earnings (HE) 354 105 138 003
IFRS 2 – charges 4 086 4 086
Transaction costs 2 953 2 953
Amortisation of intangible assets 16 793 16 793
Taxation effect on adjustments - (5 846)
Adjusted EBIT 377 937 155 989
Adjusted EBIT % 10
17
HIGHLIGHTS
Key performance indicatorsR’000 H1 2018 H1 2017 FY 2017
Revenue 3 624 391 2 399 978 6 218 342
Adjusted earning before interest and taxation (EBIT) 377 937 306 749 735 626
Adjusted headline earnings 155 989 116 492 281 072
Adjusted headline earnings per share (cents) 87.5 75.1 181.2
Number of shares in issue 181 317 732 180 439 427 180 439 427
Weighed average number of shares in issue (net of treasury) 178 332 559 155 154 559 155 154 559
Net asset value per share (cents) 1 459.8 1 820.6 1 506.4> The NAV, excluding eXtract assets unbundled 1 459.8 1 323.7 1 387.4
10 | eNX Group Limited Audited Results for the year ended 31 August 2017
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SEGMENTAL ANALYSIS
H1 2018
EFML:
• 6 month vs 4 months of results
• Stable leasing book, with strong retention of customers and solid pipeline. Leasing assets August 2017 R2 618 million to R2 495 million in February 2018
• VAPs and remarketing showed continued traction increasing to 55% Revenue contribution
• Adj. PBT margin of 10%
• End of term residual values continued to be profitable
45%
30%
25%
Lease/rentVAPsRemarketing
FLEET
REVENUER1 032million
ADJ EBITR195million
ADJ PBTR104million
TOTAL ASSETSR2 988million
REVENUE VALUE CHAINFebruary 2018
INTEREST-BEARING LIABILITIESR1 886million
LEASING ASSETSR2 495million
19
32%
21%5%
42% Lease/rentValue addSellDistribute
EQUIPMENT
SEGMENTAL ANALYSIS
REVENUER1 835million
ADJ EBITR183million
ADJ PBTR97million
TOTAL ASSETSR4 404million
H1 2018
Industrial Equipment:
• 6 months vs. 4 months results• Y-on-Y SA forklift market down 4% and UK market down 12%• Market share growth exceeding expectations – SA and UK• Overhead recovery from aftermarket growing in line with
expectations• Marginal increase in leasing book• Successful integration of newly acquired businesses in UK
Wood• Subdued wood industry trading conditions• Profit growth on prior period, PBT of R4.3 million• Continued focus to increase rental business
Power• Continued market constraints resulted in additional
restructure of business to re-align to lower sales volumes• Focusing on manufacturing of customised generators above
600 kVA, importing smaller units• PBT loss of R11.3 million
INTEREST-BEARING LIABILITIESR2 370million
LEASING ASSETSR2 551million
REVENUE VALUE CHAINFebruary 2018
eNX Group Limited Audited Results for the year ended 31 August 2017 | 11
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CONDENSED STATEMENT OF PROFIT AND LOSS
R’000 H1 2018 H1 2017 FY 2017
Revenue 3 624 391 2 399 978 6 218 342
Net operating expenses (2 662 802) (1 707 749) (4 485 094)
Profit before depreciation and amortisation 961 589 692 229 1 733 248
Depreciation and amortisation (577 152) (409 852) (1 026 379)
Profit/(loss) on disposal of property, plant and equipment 524 (30) 27
IFRS 2 charges (4 086) (2 319) (6 708)
Foreign exchanges losses (26 770) (8 173) (27 085)
Operating profit 354 105 271 855 673 103
Fair value adjustment of investments - (12 506) (736 563)
Share of losses from associates - (2 226) (2 620)
Net finance costs (171 385) (81 929) (291 679)
Profit/(loss) before taxation 182 720 175 194 (357 759)
Taxation (41 910) (58 392) (103 368)
Profit/(loss) after taxation 140 810 116 802 (461 127)
21
PETROCHEMICALS
SEGMENTAL ANALYSIS
H1 2018
Lubricants:• Volumes lower than prior period due to customer
temporary over stock position • New Cera facility – blending accreditation in process• Maintained and extended contracts with all major
principles and customers
Chemicals:• Sales volumes increased compared to prior period• Chemicals, rubber and additives volume growth• Polyethylene saw material growth in volume• Strong cash generation though efficient working capital
management• Market leader in the distribution of performance
polymers
REVENUER778million
ADJ EBITR36million
ADJ PBTR26million
TOTAL ASSETSR825million
33%
12%8%
47%Polymers
Rubber
Chemicals & Additives
Lubricants
REVENUE VALUE CHAINFebruary 2018
12 | eNX Group Limited Audited Results for the year ended 31 August 2017
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CONDENSED STATEMENT OF CASH FLOWS
R’000 H1 2018 H1 2017 FY 2017
Cash generated from operations before working capital movements 935 987 698 495 1 697 668
Working capital movements 177 821 163 068 416 953
Cash generated from operations 1 113 808 861 563 2 114 621
Net cash flows from interest and taxation (225 795) (96 165) (513 048)
Net cash flows from operating activities 888 013 765 398 1 601 573
Net cash flows from investing activities (688 629) (1 750 885) (2 596 180)
Net cash flows from financing activities 37 367 1 290 365 1 288 145
Net increase in cash and cash equivalents 236 751 304 878 293 460
23
CONDENSED STATEMENT OF FINANCIAL POSITION
R’000 H1 2018 H1 2017 FY 2017
Goodwill 530 352 480 930 504 510
Leasing assets 5 045 852 5 115 365 5 077 814
Inventories 1 339 986 1 207 683 1 229 624
Trade, other receivables and derivatives 1 162 666 1 115 834 1 213 608
Other assets 948 269 896 329 1 095 326
Bank and cash balances 550 123 376 026 317 806
Assets held for sale - eXtract - 1 135 290 212 176
Total assets 9 577 248 10 327 457 9 650 864
R’000 H1 2018 H1 2017 FY 2017
Total shareholders’ interests 2 646 822 3 273 993 2 715 250
Interest-bearing borrowings, overdraft, vendor loans 4 895 653 4 889 940 4 890 064
Deferred taxation 519 459 482 704 507 653
Trade, other payables and derivatives 1 477 934 1 536 798 1 500 073
Other liabilities 37 380 144 022 37 824
Total equity and liabilities 9 577 248 10 327 457 9 650 864
eNX Group Limited Audited Results for the year ended 31 August 2017 | 13
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May 2018 - SA maturity profile (R’m)
0
300
600
900
1 200
2018 2019 2020 2021 2022 2023
Bond Debt Term Facility ATerm Facility C Liquidity Facility Repmt
0
300
600
900
1 200
2018 2019 2020 2021 2022 2023
Bond Debt Term Facility ATerm Facility C Liquidity Facility Repmt
LIQUIDITY AND FUNDING
Funding developments post Feb
• R565.5m note redemptions
• R260m notes issue
• R315.5m 3.5 year note specific liquidity facility secured
• Only R50m eXtract loan outstanding
• SA Leasing net debt ↓ ~R3.5bn
Funding outlook
• Overall debt levels to continue to decline
• Planned refinancing of Term A bank facilities
• Continuous drive to identify ways to reduce cost of funding
Long-term funding objectives
1. Diversify funding sources
2. Ample liquidity buffers for trading and upcoming maturities
3. Target ‘A’ rated credit
4. Resilient maturity profile
5. Reduce cost of funding
Feb 2018 - SA maturity profile (R’m)
Declininglevel of note maturities
To initiate refinance
25
LIQUIDITY AND FUNDING
Overview of gross interest-bearing borrowings Funding facilities (R’million) Facility size Utilised UnutilisedenX Leasing (EIE and EFML) - SA Banking 4 575 3 878 697General banking facility 400 3 397Term facility 2 583 2 583 -Liquidity facility (Note 1) 382 82 300BBB notes 1 210 1 210 -enX Leasing (EIE and EFML) - Rest of world 1 546 798 748Asset backed funding UK (EIE) 1 477 771 706General banking facilities UK (EIE) 33 7 26General banking facility Zambia (EFML) 36 20 16enX Trading 379 244 135General banking facility 150 115 35Term facility 190 90 100Deferred vendor consideration 26 26 -Other 13 13 -Total funding 6 500 4 920 1 580
EIE and EFML SA Covenants (x) Level H1 2018 FY 2017 H1 2017Net Total Debt : EBITDA Stable ≤ 3 2.27 2.34 2.22EBITA : Net Finance Charges Stable ≥ 1.2 1.74 1.60 1.69Net Total Debt : Equity Improving ≤ 3.37 2.06 2.32 2.55Note 1: The Liquidity facility increased to R315.5 million subsequent to the reporting period
14 | eNX Group Limited Audited Results for the year ended 31 August 2017
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OU
TLO
OK
1. Outlook
2. Investment proposition
27
enX CAPITAL MARKETS EVOLUTION
• Multiple milestones achieved• Strong liquidity position• Re-entry to the capital markets
IE and FMLfacilities separatedfrom Contract Mining
Debt restructure alleviates short term liquidity challenges
BBB Investment grade credit rating secured
FY2017: R493mmaturing notes redeemed
Notes issued:R70m 5yr
Syndicated loan:R200m 3yr
FY2018:R612m maturing notes redeemed
Note specific liquidity facility:R315m 3.5yr
Notes issued:R260m 3yr
eXtract loan:R200m repayment
Bank termfacility refinance
A-RATING
eNX Group Limited Audited Results for the year ended 31 August 2017 | 15
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OUTLOOK
The Group is focused on the dynamic allocation of capital and is consistently assessing its long term strategic options.
Reducing our cost structures throughout the Group is an ongoing objective.
Our goal is to build a growing, cash generative industrial business which over time consistently delivers returns on equity in excess of its cost of capital.
We have an experienced management team who will maintain the strong relationships with our OEMs, drive cost efficiencies and be alert to the opportunities to grow when macro events present.
29
EQUIPMENT FLEET PETROCHEMICALS
OUTLOOK
Lubricants• Commencement of ExxonMobil
blending in second half of financial year
• Growth of ExxonMobil distribution volumes
• Supply chain integrationChemicals• Increased volumes through
ExxonMobil Chemical distribution network (resins)
• Increase synthetic rubber market share
• Growth on the back of new distributorships with existing OEMs
Forklifts• 12 vs. 10 months• Organic and acquisitive UK growth as
planned• Stable SA performance and market
share growth underpinned by healthy order book
• Improved efficiencies through use of technology
Power• Targeting turnaround• Long term strategic options being
consideredWood • Austro biennial show in July 2018• Growth of box-on-demand machines
• 12 vs. 10 months• Sales team in place grow leasing
book through improved retention and new business
• Increase revenues from VAPs• Utilise Quest to improve
competitiveness by developing more services
• Monetisation of data and technology
16 | eNX Group Limited Audited Results for the year ended 31 August 2017
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enX INVESTMENT PROPOSITION
Three distinct industrial clusters withleading market positions
Strong partnerships withleading global brand owners
Attractive growth narrativefor each industrial cluster
Significant annuity revenue streamsServing a broad range
of economic sectors
Sustainable capital structureunlocks cash flow
for investment in growth
Experienced board andestablished management in place to drive delivery
of strategy
Returns in excess of WACC, withfurther opportunities to widen spread
32
Q&
A
IR contactsSteven Joffe, [email protected]
Irwin Lipworth, [email protected]
A | eNX Group Limited Audited Results for the year ended 31 August 2017
www.enxgroup.co.za
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