32
enX Group Limited results presentation for the year ended 31 August 2018
enX Group Limited results presentationfor 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.
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Agenda
01 Who we are
02 Our track record
03 Financial review
04 Outlook
05 Q&A
4
Who we are1. Why invest in enX
2. Who is enX
3. Who we represent
4. Our long term strategies
01
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
6
EQUIPMENT# FLEET PETROCHEMICALS
Who is enX
Manufacturing and distribution of
petrochemicals
• Oil lubricants
• Chemicals
• Base oils
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
An entrepreneurial, diversified industrial company
with the ambition to be the preferred custodian of leading global brands
# Excludes smaller equipment distribution businesses that we intend to divest of
7
Who we represent
Brand Recognition
Research and Development
Marketing Expertise
Growth Opportunities
GLOBAL BRAND MARKET POSITION
1
3
1
1
1
1
8
Our long term strategies
• Divest:
- Fleet
- Wood
- Power
• Invest:
- Forklift
- Petrochemicals
• Strengthen social licence
• Continue building market leading OEM partnerships
9
Our track record1. Highlights
2. Our journey
3. Our experienced non-executive directors
4. Our entrepreneurial management team
5. Delivering on our long term priorities
02
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: 188.5 cps
compared to 181.2 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
11
Our journey
# Adjusted for 11:1 consolidation ^ Excluding once-off foreign exchange loss
2013 to 20183.5x or 28% compound growth in ADJUSTED HEPS (cps)#
2007
• Listed Austro
• Power business
acquired
2013
• Wild Rose
Capital
introduced as
shareholder
of reference
2014
• Establishment of
Petrochemicals
segment
through
acquisition
of Centlube
• Group renamed
enX
2015^
• Awarded
ExxonMobil
distributor-ship
2016
• Acquisition
of Genmatics,
WAI and AGL
• Empowerment
transaction and
capital raise
2017
• Acquisition
of established
EFML and EIE
• Decoupled from
eXtract
• Growing
Petrochemical
segment
2018
• Expand UK
footprint
• 10 months of
results for EIE
and EFML
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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
NameMpho
MakwanaNopasika
LilaAnthony Phillips
Paul O’Flaherty
Steve Booysen
Paul Baloyi
LeratoMolefe
AllanJoffe
PositionIndependent
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
director
Non-executive director
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
* previously non-executive Chairman^ previously Executive Deputy Chairman
NameSteven Joffe
Paul Mansour
Jarrod Friedman
GaryNeubert
Trevor Williams
ChristianNeuberger
JacquiCarr
Brent Hean
Clint Nickall
Position CEO CIO CFO EIE Wood Power EFML Chemicals Lubricants
Segment enX Group enX Industrial enX Fleet enX Petrochemicals
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Delivering on our long term priorities
STRATEGY GOALS ACHIEVED
• 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
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
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Delivering on our long term priorities
STRATEGY GOALS ACHIEVED
• EIE level 4 contributor
• Lubricants level 3 contributor
• EFML level 3 contributor
• Amasondo level 2 contributor
Strengthen social
licence
• Achieve minimum level 4 BBBEE
contribution at operational level
• 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
Financial discipline • Optimal allocation of capital
• Consistent growth in earnings
• Strengthen capital structure
• Improve credit rating
• Active management of
re-financing risk
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Financial review1. 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
03
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Financial summary
Key performance indicators
R’000 2018 2017
Revenue 7 429 294 6 218 342
Adjusted earning before interest and taxation (EBIT) 815 185 735 626
Adjusted headline earnings 337 073 281 072
Adjusted headline earnings per share (cents) 188.5 181.2
Number of shares in issue 181 317 725 180 439 427
Weighed average number of shares in issue (net of treasury) 178 851 235 155 154 559
Net asset value per share (cents) - excluding eXtract asset held for sale in 2017 1 537.9 1 387.4
Net tangible asset value per share (cents) - excluding eXtract asset held for sale in 2017 1 110.1 928.6
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Financial summary
Adjustments to EBIT and Headline Earnings explained
R’000 EBITHeadline Earnings
Earnings before interest and taxation (EBIT)/Headline Earnings 686 287 282 652
Share-based payment expense 26 110 26 110
Restructuring and transaction costs 7 382 7 382
Amortisation of intangible assets 33 586 33 586
Retrenchments costs 5 636 5 636
Impairment of goodwill 56 184 -
Taxation effect on adjustments - (18 293)
Adjusted EBIT/Headline Earnings 815 185 337 073
Adjusted EBIT cps/Headline Earnings cps 455.8 188.5
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0
1 000 000
2 000 000
3 000 000
Leasing assets Interest-bearing liabilities
Segmental analysis
47%
41%
12%
Adj. PBT
August 2018
enX Equipment
enX Fleet
enX Petrochemicals
43%
40%
17%
Adj. PBT
August 2017
enX Equipment
enX Fleet
enX Petrochemicals
0
1 000 000
2 000 000
3 000 000
Leasing assets Interest-bearing liabilities
Fleet Equipment
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Segmental analysis
* Excludes Power and Wood.
EIE (SA):
• 12 months vs. 10 months results
• Leasing assets ↑ 11%
• Improvement in overhead recovery from aftermarket
• Successful implementation of Mobile Mechanic
FY 2018Rm 2018 2017
Revenue 3 166 2 441
Adj. EBIT 397 332
Adj. PBT 219 184
Leasing assets 2 762 2 494
Total assets 4 231 3 857
Interest-bearing liabilities 2 493 2 305
EIE*
32%
25%5%
38%
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 portsand terminals
• Grew dealer network
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Segmental analysis
EFML:
• 12 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
FY 2018
FLEET
Rm 2018 2017
Revenue 2 134 1 650
Adj. EBIT 380 327
Adj. PBT 197 181
Leasing assets 2 614 2 583
Total assets 3 050 3 117
Interest-bearing liabilities 1 875 1 885
42%
36%
22% REVENUE VALUE CHAIN
August 2018
Lease/rent
VAPs
Remarketing
22
47%
28%
16%
9%
Segmental analysis
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:
• Sales volumes and margin increased compared to
prior year
• Results benefited from new products introduced
during the year
FY 2018
PETROCHEMICALS
Rm 2018 2017
Revenue 1 625 1 539
Adj. EBIT 80 101
Adj. PBT 56 77
Inventory 462 392
Total assets 998 840
Interest-bearing liabilities 285 290
REVENUE VALUE CHAIN
August 2018
Lubricants
Polymers
Rubber
Chemicals & additives
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Condensed statement of profit and loss
R’000 2018 2017
Revenue 7 429 294 6 218 342
Net operating expenses (5 479 869) (4 485 094)
Profit before depreciation and amortisation 1 949 425 1 733 248
Depreciation and amortisation (1 141 121) (1 026 379)
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 741 225 673 103
Fair value adjustment of investments - (736 563)
Impairment of goodwill (56 184) -
Share of profit/(loss) from associates 1 246 (2 620)
Net finance costs (377 176) (291 679)
Profit/(loss) before taxation 309 111 (357 759)
Taxation (78 448) (103 368)
Profit/(loss) after taxation 230 663 (461 127)
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Condensed statement of financial position
R’000 2018 2017
Goodwill 478 746 504 510
Leasing assets 5 377 858 5 077 814
Inventories 1 352 939 1 229 624
Trade, other receivables and derivatives 1 125 091 1 216 748
Other assets 923 533 1 092 186
Bank and cash balances 451 305 317 806
Assets held for sale - eXtract - 212 176
Total assets 9 709 472 9 650 864
R’000 2018 2017
Total shareholders’ interests 2 793 220 2 715 250
Interest-bearing borrowings, overdraft, vendor loans 4 782 282 4 890 064
Deferred taxation 524 922 507 653
Trade, other payables and derivatives 1 548 604 1 500 073
Other liabilities 60 444 37 824
Total equity and liabilities 9 709 472 9 650 864
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Condensed statement of cash flows
R’000 2018 2017
Cash generated from operations before working capital movements 1 893 662 1 699 545
Working capital movements 559 935 391 735
Cash generated from operations 2 453 597 2 091 280
Net cash flows from interest and taxation (446 179) (450 559)
Net cash flows from operating activities 2 007 418 1 640 721
Net cash flows from investing activities (1 656 842) (2 636 043)
Net cash flows from financing activities (248 827) 1 288 782
Net increase in cash and cash equivalents 101 749 293 460
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Gross interest-bearing borrowingsFunding facilities (R’million) Facility size Utilised Unutilised
enX Leasing (EIE and EFML) – South Africa 4 233 3528 705
General banking facility 400 10 390
Term facility 2 583 2 583 -
Liquidity facility 344 29 315
Capital market 906 906 -
enX Leasing (EIE and EFML) - Rest of world 1 256 995 261
Asset backed funding UK (EIE) 1 213 960 253
General banking facility UK (EIE) 5 - 5
General banking facility Zambia (EFML) 38 35 3
enX Trading 378 283 95
General banking facility 150 130 20
Term facility 180 105 75
Deferred vendor consideration 35 35 -
Other 13 13 -
Total funding 5 867 4 806 1 061
enX Leasing SA Covenants ZAR (x) Level FY2018 HY2018 FY2017
Net total debt : EBITDA Improving ≤ 3.00 2.27 2.27 2.34
EBITA : Net finance charges Improving ≥ 1.20 1.75 1.74 1.60
Net total debt : Equity Improving ≤ 3.37 1.88 2.06 2.32
Loan to Value Improving ≤ 0.85 0.63 0.69 N/A
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Capital market evolution
EIE and FML facilities separated from eXtract
Debt restructure alleviates short term liquidity challenges
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
Notes issued:R260m 3 year
Bank term facility refinance:
R510m bank term facility
amortisation refinance
Notes issued:
R96m 4 year
Credit rating:
zaA- from S&P
FY2019 goals:
• Redeem/refinance R413m
April 2019 maturities
• Future funding strategy
dependent on outcome
of EFML process
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0
300
600
900
1 200
2019 2020 2021 2022 2023
Bond Debt Term Facility A
Term Facility C Liquidity Facility Repmt
0
300
600
900
1 200
2019 2020 2021 2022 2023
Bond Debt Term Facility A
Term Facility C Liquidity Facility Repmt
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 2018 - SA maturity profile (R’m)
Active management
of refinance risk
Oct 2018 - SA maturity profile (R’m)
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Outlook1. EFML cautionary announcement
2. Segmental outlook
04
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
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EQUIPMENT# FLEET PETROCHEMICALS
• 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
• 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
Segmental outlook
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Q&AContactsSteven Joffe, CEO
Jarrod Friedman, CFO
Paul Mansour, CIO
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