Chant West Acquisition Investor Deck Developing a leading Australian financial technology and e-learning company ASX: ENZ enzumo.com
DISCLAIMER This presentation is not and does not form part of any offer, invitation or recommendation in respect of securities. Any decision to buy or sell Enzumo Limited securities or other products should be made only after seeking appropriate financial advice. Reliance should not be placed on information or opinions contained in this presentation and, subject only to any legal obligation to do so, Enzumo Limited does not accept any obligation to correct update them. This presentation does not take into consideration the investment objectives, financial situation or particular needs of any particular investor. To the fullest extent permitted by law, Enzumo Limited and its affiliates and their respective officers, directors, employees and agents, accept no responsibility for any information provided in this presentation, including any forward looking information, and disclaim any liability whatsoever (including for negligence) for any loss howsoever arising from any use of this presentation or reliance on anything contained in or omitted from it or otherwise arising in connection with this.
TABLE OF CONTENTS 1. Transaction highlights and overview 2. Strategic Rationale 3. The Transaction Explained 4. Financial Summary 5. Capital Raising and Capital Structure 6. Pro-forma financial information 7. Indicative Timetable 8. Transaction Summary
TRANSACTION HIGHLIGHTS: OVERVIEW ACQUISITION HIGHLIGHTS The acquisition brings together two expanding and highly complementary financial services firms. Operating since 1997, Chant West is a market leading independent provider of research and various services to the superannuation & wealth management industry. Chant West is a highly profitable business, with growing earnings and forecast FY16 normalised EBITDA of approx. $1.4 million. Chant West s research-driven services in the superannuation and pension markets, combined with Enzumo s expertise in financial technology, will provide numerous opportunities across the combined group s client base. High calibre, blue chip client base including a number of blue chip companies including ANZ Bank, Commonwealth Bank, AMP Limited, MLC Limited, Australian Super and BT Advice. Chant West also specialise in providing outsourcing advice to medium and large-sized organisations. Significantly diversifies Enzumo s revenue base transitions from 100% financial planning to 60% financial planning and 40% Super Funds. Importantly, >75% of the combined entity s revenue will be recurring and contract based. Directors believe the transaction will be EPS and EBITDA accretive in FY16, prior to any synergies or any acquisition related amortisiation.
STRATEGIC RATIONALE COMPLEMENTARY BUSINESSES CLIENT SYNERGIES & MARKET DOMINANCE Early cross selling benefits. Enzumo will be able to apply its financial technological skills to Chant West s existing business to dramatically improve growth for both businesses Chant West has limited expertise in technology but has an excellent, long standing client base Chant West has a number of Blue Chip wealth management customers who are long term clients and Enzumo has many mid-tier and IFA customers The combined entity will account for the majority of wealth management customers in Australia & NZ VALUABLE RESEARCH DATA Chant West has a very large data base that Enzumo can repackage using their technological skills and Learning Management System to produce salable products that meet industry demands NEW MARKETS NEW PRODUCTS CROSS SELLING This data will have an educational use that will be of benefit to the wealth management industry but in particular the Super Fund industry Chant West s capability will be able to be plugged into the new Enzumo Dealer and licensee solution currently in development Chant West does not have a dedicated sales team, Enzumo does. The Enzumo sales team will be able to cross sell both Chant West and Enzumo products as they are complementary COSTS SAVINGS Standard corporate efficiencies and savings of a combined business.
THE TRANSACTION EXPLAINED THE METRICS The total consideration is $9.5m - $6.98m in cash & $2.52m in ENZ Shares at $0.28 (9m shares to be voluntary escrowed for 12 months). Chant West s existing cash reserves of ~$2.2m will be retained within the business, effectively reducing the purchase price to ~$7.3m. Transaction is financed by a $9.5m Two Tranche Placement. Directors and Management have committed to ~$2.45m in the capital raising (subject to s/h approval). Chant West s founders and upper management personnel are contracted to remain with the newly merged company and will own ~9% of the newly merged company with Warren Chant joining the board of directors. Normalised EBITDA Multiple of the Acquisition is ~5.17 times (FY16). The merged Entity is expected to generate annualised revenue of ~$9m The transaction creates intangible assets of $8.7m on a June 15 pro-forma basis
TRANSACTION HIGHLIGHTS: FINANCIAL SUMMARY ENZUMO CHANT WEST ENZUMO (POST ACQUISITION) IMPACT REVENUE FY15(A) REVENUE FY16(F) EBITDA FY16(F) $2.7m - $2.7m - $3.7m $5.5m $9.2m +148% No forecast $1.4m No forecast - CASH ON HAND $2m $2.2m ~$5.4m +170% NET DEBT Nil Nil Nil N/A MARKET CAP ($0.35 ) $18.3m N/A $33.4m +83% EV $16.3m N/A $28.0m +72%
THE CAPITAL RAISING EXPLAINED INSTITIUONAL CAPITAL RAISING SHARES TO BE ISSUED To fund the transaction, Enzumo will issue: - 33.9 million ordinary shares via placement - 9 million shares issued to the vendor ISSUE PRICE Shares issued under the placement will be issued at $0.28 per share. This price represents a discount of approximately 13% discount to the 5 day VWAP up to the 29 th October 2015 and ~2% discount to last trade. PRIVATE PLACEMENT A$9.5 million is to be raised through the issue of 33.9 million Enzumo Shares under a two tranche placement to institutional and sophisticated investors. The placement will be lead managed by Baker Young Stockbrokers with Lodge Partners as Joint book runners. PLACEMENT DIRECTORS Enzumo founders have applied for ~2.68m shares totalling $750,000 subject to shareholder approval at the AGM Kestrel Capital (related to Chairman and NED) have applied for ~6.25m shares totaling $1.7m subject to approval at the AGM
CAPITAL STRUCTURE POST COMPLETION POST COMPLETION CAPITAL STRUCTURE The indicative capital structure of Enzumo post completion of the transaction is as follows: POST COMPLETION OF PLACEMENT $ 9.5M PLACEMENT Shares on Issue (undiluted) $ 95.5m Market Capitalisation ($0.35) $ 33.4m Cash Post Placement (net costs) $ 5.4m ENTERPRISE VALUE $ 28.0m
CAPITAL STRUCTURE AND SHARE OWNERSHIP ENZUMO CURRENT SHAREHOLDER STRUCTURE ENZUMO SHAREHOLDER STRUCTURE POST COMPLETION 26% ENZ Directors / Founders 16% 9% 17% Core CW Founders & Staff Staff ENZ Directors / Founders Kestrel Capital Kestrel Capital 63% 11% HNW, Institutional & Retail 46% 12% HNW & Retail Institutions
THE ACQUISITION EBITDA MULTIPLE FY16 (F) EBITDA 1,412,000 Normalised EBITDA Multiple 6.7 Value 9,500,000 Share Price $0.28 Cash 6,980,000 Shares 2,520,000 Total 9,500,000 Less cash left in Chant West @ Completion 2,200,000 Net Business Acquisition Value 7,300,000 ACTUAL NORMALISED EBITDA MULTIPLE 5.17
INDICATIVE TIMETABLE EVENTS Announcement of Acquisition, Placement & Recommence Trading Monday 2 nd November 2015 Settlement & Allotment of Placement Shares via DvP (Tranche 1) Wednesday 11 th November 2015 Release Cleansing Prospectus Wednesday 11 th November 2015 Despatch of Notice of AGM Tuesday 17 th November 2015 AGM held and resolutions voted on Friday 18 th December 2015 Settlement via DvP & Allotment of Shares (Tranche 2) Monday 21 st December 2015 Finalisation and Full Settlement in Chant West Transaction Wednesday 23 rd December 2015
TRANSACTION SUMMARY SUMMARY Chant West acquisition is a key milestone in the development of Enzumo as a leading financial technology services and e-learning business. Acquisition underpins existing revenue base and provides a robust platform for continued expansion into growing superannuation and wealth management sectors. Chant West is an earnings accretive business - forecast FY16 normalized EBITDA of ~$1.4m that provides a number of immediate organic growth opportunities. The merged Entity is expected to generate annualised revenue of ~$9m Further expands Enzumo s blue chip client base to include ANZ Bank, Commonwealth Bank, AMP Limited, MLC Limited, Australian Super and BT Advice. Enzumo s Board and Management team significantly strengthened with appointment of key Chant West staff providing a wealth of industry knowledge and experience. A$9.5 million is to be raised through the issue of 33.9 million Enzumo shares under a two tranche placement to institutional and sophisticated investors.
CONTACT DETAILS Andrew Rawlinson CEO & Executive Director P: +61 410 610 044 E: andrewr@enzumo.com Niall Cairns Chairman P: +61 418 410 306 E: nccairns@kestrelcapital.com.au Dirk van Dissel Baker Young Stockbrokers Associate Director - Corporate P: +61 8 8236 8896 E: dvandissel@bakeryoung.com.au Alex Fabbri Director Corporate Finance P: +61 3 9200 7098 E: a.fabbri@lodgepartners.com.au