for the six months ended 28 february - home - enx group · all statements other than statements of...

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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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

R M

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


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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


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OU

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ACK

RECO

RD

1. Creating shareholder value

2. Delivered on strategy

7

WHO WE REPRESENT



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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


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BUIL

DIN

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SEG

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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


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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


• 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


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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


• 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


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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


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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



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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



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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


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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


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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


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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


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


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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

61 MAPLE STREETKEMPTON PARK, 1619

POSTNET SUITE X86, PRIVATE BAG X7ASTON MANOR 1630

for the six months ended 28 february - home - enx group · all statements other than statements of...

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