enx Group Limited results presentation

Transcription

1 enx Group Limited results presentation for the year ended 31 August 2018

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. 2

3 Agenda 01 Who we are 02 Our track record 03 Financial review 04 Outlook 05 Q&A 3

4 01 Who we are 1. Why invest in enx 2. Who is enx 3. Who we represent 4. Our long term strategies 4

5 Why invest in enx Preferred custodian of leading global brands Entrepreneurial and committed management team Diversity across geographies, customers, products and services Dynamic allocation of capital at attractive rates of return - a core competence 5

6 Who is enx An entrepreneurial, diversified industrial company with the ambition to be the preferred custodian of leading global brands EQUIPMENT # FLEET PETROCHEMICALS Distribution, leasing, rental, after-market and value-added services for: Forklifts Port and crane equipment Materials handling equipment Full fleet of Fleet management solutions across all vehicle classes: Leasing Fleet management products and services Tracking Insurance and remarketing Manufacturing and distribution of petrochemicals Oil lubricants Chemicals Base oils # Excludes smaller equipment distribution businesses that we intend to divest of 6

7 Who we represent GLOBAL BRAND MARKET POSITION Brand Recognition Marketing Expertise Research and Development Growth Opportunities

8 Our long term strategies Divest: - Fleet - Wood - Power Invest: - Forklift - Petrochemicals Strengthen social licence Continue building market leading OEM partnerships 8

9 Our track record Highlights 2. Our journey 3. Our experienced non-executive directors 4. Our entrepreneurial management team 5. Delivering on our long term priorities 9

10 Highlights First full year of trading since the Eqstra acquisition delivered adjusted headline earnings of R337 million Adjusted HEPS growth of 4% in subdued markets: cps compared to cps zaa- long-term credit rating from S&P, 2 notches improvement vs. GCR Stabilised fleet leasing book Renewed access to debt capital markets, deleveraging and improved maturity profile in South African leasing businesses Acquired three new bolt-on forklift dealers in the UK. ~R76 million investment ExxonMobil accreditation for local blending Acquired minority interest in a ExxonMobil base oil distributor, including strategic storage capacity in Durban port Recovered all monies, R250 million, due by extract 10

11 Our journey 2013 to x or 28% compound growth in ADJUSTED HEPS (cps) # ^ Listed Austro Power business acquired Wild Rose Capital introduced as shareholder of reference Establishment of Petrochemicals segment through acquisition of Centlube Group renamed enx Awarded ExxonMobil distributor-ship Acquisition of Genmatics, WAI and AGL Empowerment transaction and capital raise Acquisition of established EFML and EIE Decoupled from extract Growing Petrochemical segment Expand UK footprint 10 months of results for EIE and EFML # Adjusted for 11:1 consolidation ^ Excluding once-off foreign exchange loss 11

12 Our experienced non-executive directors Mpho Makwana assumed the role of independent non-executive Chair effective 1 January 2018 Allan Joffe appointed as non-executive director on 5 September 2018 Name Mpho Makwana Nopasika Lila Anthony Phillips Paul O Flaherty Steve Booysen Paul Baloyi Lerato Molefe Allan Joffe Position Independent non-executive Chair Audit and risk committee Chair Remuneration committee Chair IT steering committee Chair Asset and liability committee Chair Investment committee Chair Independent Non-executive non-executive director director 12

13 Our management team Steven Joffe* appointed as Chief Executive Officer effective 1 January 2018 Paul Mansour^ appointed Chief Investment Officer effective 1 January 2018 Jarrod Friedman appointed Chief Financial Officer effective 1 September 2018 Name Steven Joffe Paul Mansour Jarrod Friedman Gary Neubert Trevor Williams Christian Neuberger Jacqui Carr Brent Hean Clint Nickall Position CEO CIO CFO EIE Wood Power EFML Chemicals Lubricants Segment enx Group enx Industrial enx Fleet enx Petrochemicals * previously non-executive Chairman ^ previously Executive Deputy Chairman 13

14 Delivering on our long term priorities STRATEGY GOALS ACHIEVED Preferred custodian of OEM brands Strengthen OEM partnerships Local production of ExxonMobil lubricants Grow market share in line with OEM aspirations New product distribution opportunities Differentiate with scale Quest, in house Fleet ERP system Increase volumes through new blending plant New chemical product revenues Geographical diversification Expand European footprint 5-year lubricant blending agreement signed with ExxonMobil 3-year renewal of distributor agreement with ExxonMobil Invested in a ExxonMobil base oil distributor Sales reward recognition from Toyota Industrial Corporation Quest bedded down New revenues generated from ExxonMobil chemical products Acquired three additional forklift dealers in the UK which expanded footprint and grew leasing book 14

15 Delivering on our long term priorities STRATEGY GOALS ACHIEVED Strengthen social licence Achieve minimum level 4 BBBEE contribution at operational level EIE level 4 contributor Lubricants level 3 contributor EFML level 3 contributor Amasondo level 2 contributor Financial discipline Optimal allocation of capital Consistent growth in earnings Strengthen capital structure Improve credit rating Active management of re-financing risk Initiatives underway to focus capital deployment 4% y-o-y growth in HEPS Net debt to equity ratio reduced to 154% A- credit rating from S&P R360 million raised in debt capital markets Refinanced R510 million of bank amortisations Sufficient liquidity for next 18 months of maturities 15

16 Financial review Financial summary 2. Segmental analysis 3. Condensed statement of profit and loss 4. Condensed statement of financial position 5. Condensed statement of cash flows 6. Gross interest-bearing borrowings 7. Capital market evolution 8. Liquidity and funding 16

17 Financial summary Key performance indicators R Revenue Adjusted earning before interest and taxation (EBIT) Adjusted headline earnings Adjusted headline earnings per share (cents) Number of shares in issue Weighed average number of shares in issue (net of treasury) Net asset value per share (cents) - excluding extract asset held for sale in Net tangible asset value per share (cents) - excluding extract asset held for sale in

18 Financial summary Adjustments to EBIT and Headline Earnings explained R 000 EBIT Headline Earnings Earnings before interest and taxation (EBIT)/Headline Earnings Share-based payment expense Restructuring and transaction costs Amortisation of intangible assets Retrenchments costs Impairment of goodwill Taxation effect on adjustments - (18 293) Adjusted EBIT/Headline Earnings Adjusted EBIT cps/headline Earnings cps

19 Segmental analysis 12% 17% 47% Adj. PBT August % Adj. PBT August % enx Equipment enx Fleet 40% enx Equipment enx Fleet enx Petrochemicals enx Petrochemicals Fleet Equipment Leasing assets Interest-bearing liabilities Leasing assets Interest-bearing liabilities 19

20 Segmental analysis EIE* Rm Revenue Adj. EBIT Adj. PBT Leasing assets Total assets Interest-bearing liabilities FY 2018 EIE (SA): 12 months vs. 10 months results Leasing assets 11% Improvement in overhead recovery from aftermarket Successful implementation of Mobile Mechanic 38% 5% 25% 32% REVENUE VALUE CHAIN August 2018 New equipment Value added services Used equipment Rental EIE (UK): Grew national footprint with 3 acquisitions Leasing assets 10% Success with the Konecrane brand breaking into key ports and terminals Grew dealer network * Excludes Power and Wood. 20

21 Segmental analysis FLEET Rm Revenue Adj. EBIT Adj. PBT Leasing assets Total assets Interest-bearing liabilities EFML: FY month vs 10 months of results Leasing book growth 1% after multi-year decline due to capital constraints Strong remarketing profits Growth in value add product revenues Quest stable and efficiencies materialising 22% REVENUE VALUE CHAIN August % Lease/rent VAPs Remarketing 36% 21

22 Segmental analysis 16% 9% PETROCHEMICALS Rm Revenue Adj. EBIT Adj. PBT Inventory Total assets Interest-bearing liabilities % REVENUE VALUE CHAIN August 2018 Lubricants Lubricants: Growth in ExxonMobil volumes ExxonMobil blending accredited Profitability materially impacted by lower blending volumes due to a customer s temporary over stock position Chemicals: FY 2018 Sales volumes and margin increased compared to prior year Results benefited from new products introduced during the year Polymers 28% Rubber Chemicals & additives 22

23 Condensed statement of profit and loss R Revenue Net operating expenses ( ) ( ) Profit before depreciation and amortisation Depreciation and amortisation ( ) ( ) Loss/(profit) on disposal of property, plant and equipment (1 036) 27 IFRS 2 Share based payment expense (26 110) (6 708) Foreign exchanges losses (39 933) (27 085) Operating profit Fair value adjustment of investments - ( ) Impairment of goodwill (56 184) - Share of profit/(loss) from associates (2 620) Net finance costs ( ) ( ) Profit/(loss) before taxation ( ) Taxation (78 448) ( ) Profit/(loss) after taxation ( ) 23

24 Condensed statement of financial position R Goodwill Leasing assets Inventories Trade, other receivables and derivatives Other assets Bank and cash balances Assets held for sale - extract Total assets R Total shareholders interests Interest-bearing borrowings, overdraft, vendor loans Deferred taxation Trade, other payables and derivatives Other liabilities Total equity and liabilities

25 Condensed statement of cash flows R Cash generated from operations before working capital movements Working capital movements Cash generated from operations Net cash flows from interest and taxation ( ) ( ) Net cash flows from operating activities Net cash flows from investing activities ( ) ( ) Net cash flows from financing activities ( ) Net increase in cash and cash equivalents

26 Gross interest-bearing borrowings Funding facilities (R million) Facility size Utilised Unutilised enx Leasing (EIE and EFML) South Africa General banking facility Term facility Liquidity facility Capital market enx Leasing (EIE and EFML) - Rest of world Asset backed funding UK (EIE) General banking facility UK (EIE) 5-5 General banking facility Zambia (EFML) enx Trading General banking facility Term facility Deferred vendor consideration Other Total funding enx Leasing SA Covenants ZAR (x) Level FY2018 HY2018 FY2017 Net total debt : EBITDA Improving EBITA : Net finance charges Improving Net total debt : Equity Improving Loan to Value Improving N/A 26

27 Capital market evolution FY2019 goals: Redeem/refinance R413m April 2019 maturities Future funding strategy dependent on outcome of EFML process Notes issued: R260m 3 year Credit rating: zaa- from S&P Bank term facility refinance: R510m bank term facility amortisation refinance Notes issued: R96m 4 year BBB Investment grade credit rating secured Note maturities: R493m maturing notes redeemed Notes issued: R70m 5 year Syndicated loan: R200m 3 year Note maturities: R612m maturing notes redeemed Note specific liquidity facility: R315m 3.5 year EIE and FML facilities separated from extract Debt restructure alleviates short term liquidity challenges 27

28 Liquidity and funding Funding developments post Aug 2018 Received a zaa- long-term credit rating from S&P R96m 4yr listed notes issued 55bps tighter margin than April 2018 issue R510m refinance of bank term debt amortisations Early redemption of R45m EQS05 that mature in April 2019 Funding outlook Depends on outcome of EFML process Sufficient liquidity to meet next 18 months maturities 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 credit rating 4. Spread the maturity profile 5. Manage and reduce cost of funding Feb SA maturity profile (R m) Oct SA maturity profile (R m) Active management of refinance risk Bond Debt Term Facility A Bond Debt Term Facility A Term Facility C Liquidity Facility Repmt Term Facility C Liquidity Facility Repmt 28

29 04 Outlook 1. EFML cautionary announcement 2. Segmental outlook 29

30 EFML cautionary announcement Board completed a review of strategic options in respect of ownership interest of EFML Concluded that new owner may potentially be able to optimize EFML value proposition Divestment process has commenced Ultimate outcome will be dependent on price received 30

31 Segmental outlook EQUIPMENT # FLEET PETROCHEMICALS Organic and acquisitive UK growth Stable SA performance and market share growth underpinned by healthy order book Grow in selected African markets on an export, capital-lite, dealer basis Improve efficiencies through use of technology Focus on organic growth of lease book Increase revenues from VAPs Explore opportunities to invest in complementary businesses Utilise IP and technology to improve competitiveness Grow ExxonMobil distribution volumes, supported by local blending Toll blending volume anticipated to recover Increase volumes of polyethylene supplied by ExxonMobil Increase synthetic rubber market share following closure of local manufacturer Introduction of cleaner base oil grades to SA market 31

32 05 Q&A Contacts Steven Joffe, CEO Jarrod Friedman, CFO Paul Mansour, CIO 32