31 slides from Epe Capital Partners Ltd. Class A's earnings presentation, Sep 28, 2020
Slide 1: Ethos Capital Investor Presentation
ETHOS CAPITAL INVESTOR PRESENTATION 28 SEPTEMBER 2020
Slide 2: Contents
1 Executive summary CONTENTS 2 Portfolio overview 3 Liquidity analysis 4 Outlook
Slide 3: Executive Summary
EXECUTIVE SUMMARY Financial year ended 30 June 2020 headlines at a glance NAV per share: NAV per share: Brait investment R9.12 R6.65 and R750m Ethos Capital Rights Issue completed in on an aggregate basis on an accounting basis with the Brait with Brait assets at NAV investment at the Brait share pr
Slide 4: Performance Review
PERFORMANCE REVIEW PORTFOLIO PERFORMANCE – 20% reduction in Net Asset Value Per Share (“NAVPS”) for the year to 30 June 2020 from R11.34 to R9.12 as a result of: • R750m capital raise in February 2020 • EV / EBITDA multiple reduction across most Portfolio Companies • Lower maintainable EBITDA of man
Slide 5: Performance Review: Brait Portfolio
PERFORMANCE REVIEW BRAIT PORTFOLIO – Significant amount of time spent with Portfolio Company boards and management teams focusing on: • Short term strategies to survive the impact of COVID • Understanding and aligning behind Brait’s new strategy with new / refreshed strategies to optimise value in t
Slide 6: Performance Review: Brait Debt
PERFORMANCE REVIEW BRAIT DEBT – Refinancing and significant reduction in Brait net debt: • BML debt reduced from R4.6bn (March 2020) to R2.7bn post receipt of Iceland proceeds and GBP7m New Look investment • Interest saving of R310m on an annualised basis – Increased headroom on covenants for both t
Slide 7: Portfolio Company Performance Overview
PORTFOLIO COMPANY PERFORMANCE OVERVIEW Overview of Ethos key unlisted portfolio companies – Strong operational performance has continued despite COVID – >40% growth in LTM EBITDA in ZAR to June 2020 broadly across territories and customers – Growth opportunities in new customer deployments, new prod
Slide 8: Brait Portfolio Company Overview
PORTFOLIO COMPANY PERFORMANCE OVERVIEW Brait portfolio company overview – Clubs opened in Italy, Thailand, Singapore, Australia and the UK (7 remain closed in London) – Early indications are positive with usage levels above and freeze / terminations in-line with management’s forecasts – South Africa
Slide 9: Brait Liquidity & Cash Cost Analysis
BRAIT LIQUIDITY & CASH COST ANALYSIS Brait cash cost savings, debt and covenants CASH COST SAVINGS DEBT & COVENANTS Total Group debt (R million) CB REPURCHASE PREMIER LOAN REPAYMENT 12,750 Liquidity management: Liquidity management: Repurchase of a portion R150m of shareholder loan proceeds of 2020
Slide 10: Contents
1 Executive summary CONTENTS 2 Portfolio overview 3 Liquidity analysis 4 Outlook
Slide 11: Ethos Capital NAV Analysis
ETHOS CAPITAL NAV ANALYSIS Changes in NAV since June 2019 Impact of the Rights Issue Audited Illustrative Proforma Audited and Brait investment 30 June Equity Brait 30 June 30 June 2019 raise investment 2019 2020 Investments 1,427 74.1% - 1,034 2,461 92.4% 2,529 99.4% Brait (at cost / NAV) - - 1,034
Slide 12: Portfolio Overview
PORTFOLIO OVERVIEW 31 December 2019 vs 30 June 2020 Pro forma at 31 December 2019 – adjusted for Rights Issue and Brait investment Capital EV / EBITDA # of Portfolio Ethos Capital Ethos Capital Invested (unlisted) Companies all-in Brait NAVPS entry price R2.7bn 7.4x 24 R7.99 R9.89 COVID-19 PANDEMIC
Slide 13: Total Asset Contribution
TOTAL ASSET CONTRIBUTION The largest 10 assets constitute 90% of total assets 29% 7% 90% of total assets 53% 40% 13% South Africa Rest of sub-Saharan Africa 9% International 8% 8% 6% 6% 4% 5% 3% 2% 2% 2% 1% 1% 1% Other * MTN Chibuku Autozone New Look Twinsaver TymeBank Gammatek Primedia Synerlytic K
Slide 14: Portfolio Company Performance Overview
PORTFOLIO COMPANY PERFORMANCE OVERVIEW The majority of companies (by value) grew both revenue and EBITDA LTM SALES GROWTH BY UNLISTED COMPANY INVESTMENT RETURN Value - R'm Number % 7 1 Change ChannelVas 146.8 35% Vertice 27.7 22% 4 562 548 Echo 16.9 11% Synerlytic 10.5 10% 223 3 43 MTN (19.5) (48%)
Slide 15: NAV Movement Analysis
NAV MOVEMENT ANALYSIS Decrease in NAVPS and NAV since 30 June 2019 The Ethos Capital NAV decreased from R1.8bn in June 2019 (pre-Rights Issue) to R1.7bn in June 2020, driven by the following factors: NAVPS (Rand): BY VALUATION DRIVER NAV (R’millon): BY VALUATION DRIVER 22 102 (1.55) (106) (114) (640
Slide 16: Portfolio Company Implied Valuations
PORTFOLIO COMPANY IMPLIED VALUATIONS Ethos Capital share price implies the following EV / LTM multiples 7.9x - - - - EV / EBIAT average 5.8x 9.0x 5.5x 10.5x 9.5x 9.0x 7.3x 11.4x 9.1x 11.7x 14.4x 11.1x 3.7x 9.8x 11.5x EV/EBITDA 5.4x 5.5x 5.4x 5.4x 5.3x 5.2x 5.2x 5.1x 4.8x 4.2x 4.6x 4.0x average 3.5x
Slide 17: NAV Composition by Portfolio Company
NAV COMPOSITION BY PORTFOLIO COMPANY The combined NAV of the top 2 assets exceeds EC’s market capitalisation Attributable NAV (Brait at 30 June NAV) 636 62% NAV (Brait at 30 June share price) 73 16 84 114 115 153 47% 178 431 Current market capitalisation (3) 548 Channel Vas Brait listed value Echote
Slide 18: Channel VAS Update
CHANNEL VAS UPDATE % of Total Assets Value (Rm) TMB Ethos stake 29% 548m 1.52x 20% Channel VAS is a leading provider of Airtime Credit Services (“ACS”) to prepaid mobile subscribers and has expanded into Micro Finance Services (“MFS”) leveraging its existing credit scoring capability and access to d
Slide 19: Virgin Active Update
VIRGIN ACTIVE UPDATE % of Total Assets Value (Rm) TMB Ethos stake 13% 243m n/a 10% Virgin Active is one of the leading international health club operators and strives to provide customers with a combination of outstanding exercise experiences and a world class digital offering EBITDA change (GBPm) –
Slide 20: Echo Update
ECHO UPDATE % of Total Assets Value (Rm) TMB Ethos stake 9% 178m 1.12x 62% Echo is a corporate Internet Service Provider, providing Information and Communications Technology (”ICT”) services through an aggregation of third-party networks YoY growth – Company continues to grow strongly with new clien
Slide 21: Premier Update
PREMIER UPDATE % of Total Assets Value (Rm) TMB Ethos stake 8% 157m n/a 13% Premier is a leading South African FMCG manufacturer offering branded and private label solutions. The business has strong heritage brands in bread, maize meal, wheat flour, feminine hygiene and sugar confectionary Q1 21 gro
Slide 22: Vertice Update
VERTICE UPDATE % of Total Assets Value (Rm) TMB Ethos stake 8% 153m 1.25x 88% Vertice sells medical technology and supplies across a wide range of applications predominantly to support emergency and critical procedures YoY growth – Strong organic and acquisition-led growth over the past 12 months: 8
Slide 23: Kevro Update
KEVRO UPDATE % of Total Assets Value (Rm) TMB Ethos stake 6% 115m 0.57x 29% Kevro is the largest supplier of corporate-branded clothing and promotional products in South Africa – Significant underperformance in the past six months largely as a result of the company’s IT integration project and distr
Slide 24: Synerlytic Update
SYNERLYTIC UPDATE % of Total Assets Value (Rm) TMB Ethos stake 6% 114m 1.26x 89% The Synerlytic group operates in subsets of the Testing, Inspection and Certification market and is one of the leading condition monitoring and fluid analysis specialists in Africa (through WearCheck) and supplier of ce
Slide 25: Primedia Update
PRIMEDIA UPDATE % of Total Assets Value (Rm) TMB Ethos stake 5% 84m 0.56x 24% Primedia is one of the leading South African broadcasting and outdoor advertising businesses Advertising spend change – Operational performance significantly impacted by low GDP growth environment and the impact of Radio O
Slide 26: Overview of Other Ethos Unlisted Portfolio Companies
PORTFOLIO COMPANY PERFORMANCE OVERVIEW Overview of other Ethos unlisted portfolio companies % of Total Assets – Leading distributor of mobile accessories and low technology products 4% – COVID impacted sales but new products and sales channels have underpinned recent performance – Digital banking pl
Slide 27: Contents
1 Executive summary CONTENTS 2 Portfolio overview 3 Liquidity analysis 4 Outlook
Slide 28: Liquidity Profile
LIQUIDITY PROFILE Sufficient liquidity to fund outstanding fund commitments 137 Realisations Existing outflows Available liquidity 2,728 3,245 3,108 460 32 (112) Total Fee provision Net Invested Base facility Treasury Commitment FY21 FY22 FY23 FY24 commitments commitments capital shares gap * Availa
Slide 29: Contents
1 Executive summary CONTENTS 2 Portfolio overview 3 Liquidity analysis 4 Outlook
Slide 30: Outlook for Ethos Capital
OUTLOOK FOR ETHOS CAPITAL Significant uncertainty remains regarding the impact and longevity of COVID, particularly the effects of a second lockdown in various jurisdictions Underlying performance of most Portfolio Companies have rebounded strongly since the reopening of the South African economy wh
Slide 31: Disclaimer
DISCLAIMER THE INFORMATION CONTAINED HEREIN IS PROVIDED FOR INFORMATIONAL AND DISCUSSION PURPOSES ONLY AND IS NOT, AND MAY NOT BE RELIED ON IN ANY MANNER AS, LEGAL, TAX OR INVESTMENT ADVICE OR AS AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY A LIMITED PARTNERSHIP INTEREST IN ANY ETHOS FUNDS.