Enx Group Limited · JSE:ENX
Enx — Merger or Acquisition (October 2016)
32 slides from Enx's merger presentation, October 2016
Slide 1: Building the JSE's Next Industrial Titan
Building the JSE’s Next Industrial Titan R1,5 billion Capital Raise for enX/Eqstra transaction October 2016
Slide 2: Disclaimer
Disclaimer This Confidential Capital Raise Presentation (this “Presentation”) is being delivered to a potential Investor (the “Recipient”) who has expressed an interest in participating in an equity capital raise (the “Capital Raise”) for enX Group Limited (“enX”).The sole purpose of this Presentati
Slide 3: Unpacking enX Valuation Post Transaction: FY17 Earnings
Unpacking enX Valuation Post Transaction….Upside Potential Placement price Illustrative post transaction valuation range – FY17 Earnings 2100cps 2737cps 3327cps 30% 58% Low Value High Value The placement price (R ‘m) (R ‘m) leaves potential for upside gains as value is Industrial Businesses: Earning
Slide 4: Unpacking enX Valuation Post Transaction: FY18 Earnings
Unpacking enX Valuation Post Transaction….Upside Potential Placement price Illustrative post transaction valuation range – FY18 Earnings 2100cps 2960cps 3783cps 41% 80% Low Value High Value The placement price (R ‘m) (R ‘m) leaves potential for upside gains as value is Industrial Businesses: Earning
Slide 5: Salient Terms of the Capital Raise
Salient Terms of the Capital Raise Total Capital Raise R1.5 billion - Underwriting consortium R1.0 billion - Private placement participants R500 million Placement Shares (1) ~23.8 million enX shares Use of Proceeds Fund the Proposed Transaction Underwrite Fully underwritten at R21.00 per share Under
Slide 6: A Sizeable Industrial Platform Well Positioned for Growth
A Sizeable Industrial Platform Well Positioned for Growth FY2017 12 month Run Rate Forecast(1) Day 1 Financial Position(4) Revenues : R7,4 billion Assets : R12,5 billion EBITDA : R2,3 billion NAV : R4,4 billion Earnings : R490 million(2) NAV per share : R24,50 HEPS : R2,73(3) Employees : 2,500 Partn
Slide 7: Post Transaction enX – Three Industrial Clusters + Investment in Contract Mining
100% W Austro Group Limited Post Transaction enX – Three Industrial Clusters + Investment in Contract Mining INDUSTRIAL EQUIPMENT PETROCHEMICALS FLEET MANAGEMENT CONTRACT MINING (100%) 100% (100%) (100%) (20%) W ited Austro (Pty) Limited WOOD Operating (Previously Austro Wood (Pty) Limited) Entity g
Slide 8: Three Steps to Unlocking Value
Three Steps to Unlocking Value Separate Industrial Equipment and Fleet Management Businesses from Contract Mining Recapitalise Business Introduce Shareholders and Refinance Debt of Refenence 8
Slide 9: Eqstra Transaction Implemented as Follows
Eqstra Transaction Implemented as Follows… Transaction Steps: R1000m R500m minimum underwriter available to private 1. enX acquires Industrial uptake placement participants Equipment (IE) and Fleet Management and Leasing 2 (FML) in exchange for 52.6m(1) enX shares. enX shares unbundled by Eqstra 1 2
Slide 10: Shareholders of Reference Provide Long Term Stability and Strategic Direction
Shareholders of Reference Provide Long Term Stability and Strategic Direction ~35% Shareholders of Est 12% Reference B-BBEE Ownership (4) • Clear strategy and direction • Underpin for future capital requirements • Source of stability Private placement participants Wild Rose Underwriting Equity Capit
Slide 11: Significant Institutional Backing
Significant Institutional Backing Significant long term focused institutional shareholders provides a share price stability, improved liquidity for smaller market participants and capacity for enX to raise equity via additional rounds of capital raising enX Share Count (‘million) (1/2) Existing Larg
Slide 12: Achievable Earnings Bridge to FY2017 Projections
Achievable Earnings Bridge to FY2017 Projections…Undemanding Organic Growth R’ millions Add: Once - off Costs / Acquisitions Annual Head Office Staff Annual FY2017E Organic FY2016 Charges Termination WAG AGL Organic EBIT Growth Operating Division Actual EBIT Included Costs Acquisition Acquisition Gr
Slide 13: Execution of FY2018 Underlying Growth Drivers Already Well Advanced
Execution of FY2018 Underlying Growth Drivers Already Well Advanced Annual R’ millions FY2017E Annual FY2018E Organic EBIT Planned Organic EBIT Growth Operating Division (full year) Acquisitions Growth (full year) %(1) Key Growth Drivers Fleet Management and Capex availability to invest in Leasing 4
Slide 14: FY2017 and FY2018 Build-up of Earnings
FY2017 and FY2018 Build-up of Earnings FY2017 Earning Contribution (1)(2) 1 200 H/O Savings realised from Day 1 52% revenue 30 55 172 1 000 already contracted ~40% of full 450 800 coupon 448 36% revenue R2,73 R'million 600 already contracted 177 490 92 400 FY2017 HEPS 391 200 - 39 Power, Industrial
Slide 15: FY2016 Results: Rebasing and Restructuring Clears Way for Future Growth
FY2016 Results….Rebasing and Restructuring Clears Way for Future Growth Industrial Equipment Fleet Management and Leasing Forklifts: • Value add products continued to record • Increased market share and new and used unit sales in a growth declining SA market ( 21%) by securing a number of new contra
Slide 16: FY2016 Results: Rebasing and Restructuring Clears Way for Future Growth
FY2016 Results….Rebasing and Restructuring Clears Way for Future Growth Petrochemicals eXtract • Strong revenue and profitability growth • Significant impairment of surplus assets down to depressed market value • Full year of ExxonMobil distributorship included with gross margins now at • Profitable
Slide 17: Attractive Visible Growth Opportunities for Each Cluster
Attractive Visible Growth Opportunities for Each Cluster. Potential for New Clusters Industrial Equipment Petrochemicals Fleet Management and Leasing • Grow SA market share: Lubricants • Growth Capex: Capex 37% currently 40% in +24 previously constrained. R0,5bn • Local production for months. additi
Slide 18: Funding Strategy Critical to Driving Sustainable Profitability
Funding Strategy Critical to Driving Sustainable Profitability Industrial company mindset… NOT a quasi bank • Smooth maturity profile • Manageable refinancing quantums 1. Smooth maturity profile • Retain access to both bank and bond markets to maintain refinance flexibility. Look to tap other pools
Slide 19: The Improved Credit Profile of enX Group
The Improved Credit Profile of enX Group Funding Facilities and Capitalisation (R’m) (1) Pro-Forma Credit Metrics Day 1 Facility Size Utilisation PF Metric FY17E FY18E FY16(3) IE and FML 6 454 5 094 Term Debt 2 383 2 383 EBITDA (R ‘m) 2 081 2 272 2 463 Financial General Banking Facility 400 - Deprec
Slide 20: Heavily Impaired Financial Position. Significant Financial Leverage
Heavily Impaired Financial Position (R1,5bn). Significant Financial Leverage Financial Position (R’million) PF 30 June 2016 (1) 30 June Assets Held for Sale (R’million) 2016 Leasing Assets and PPE 2 121 Contract Mining - SA 135 Trade and Other Receivables 714 Contract Mining - Benga 511 Other Assets
Slide 21: Pillars of Growth
5 Pillars of Growth Improved Profitability KEY EVOLVING ACQUISITIONS OPTIMISATION DE-LEVERAGE BUSINESS CONTRACTS MODEL New key Reduce Building a Doing more Repaying debt profitable contract risks mining with less - through asset contracts to combined services group driving fleet, monetisation divers
Slide 22: A Well Incentivised and Aligned Management Team
A Well Incentivised and Aligned Management Team Key Steven Paul Jannie Irwin Gary Jacqui Brent Clint Christian Executive Joffe Mansour Serfontein Lipworth Neubert Carr Hean Nickall Neuberger Non- Executive Group Financial Industrial Power, Position Executive Deputy FML Chemicals Lubricants CEO Direc
Slide 23: Investment Case
Investment Case Combined Earnings and Equity Raise Catapults enX into Mid Cap Realm Industrial Returns in Three Distinct Industrial Excess of WACC, with Clusters with Strong op P[ Further Opportunities to Market Positions, Separate Widen Spread from Contract Mining Significant Earnings Attractive Gr
Slide 24: Annexures
Annexures: • Investment case • Debt Terms • Comparable Companies
Slide 25: Investment Case: Industrial Equipment
Investment Case: Industrial Equipment Business Strengths – Industrial Equipment Market Dynamics - Forklifts • Market leader in the Southern African forklift segment SA 37% Market Share (Units) UK 5% Market Share (Units) • Top 3 manufacturer and rental of diesel gensets 34% 28% 34% 29% 36% 34% 37% •
Slide 26: Investment Case: Fleet Management and Leasing
Investment Case: Fleet Management and Leasing Business Strengths Market Dynamics • Extensive Fleet: • Manage more than 140,000 fleet managed and LeasedCVehiclesC(units) leased 24880 25000 22000 • Blue-chip private sector customers contribute 91% 20000 16500 of revenue in SADEC. Clover / SAB / Distel
Slide 27: Investment Case: Petrochemicals
Investment Case: Petrochemicals Business Strengths Market Dynamics Oil Lubricants: Oil Lubricants Market Share Chemicals Market Share 85% 85% • Distribute 80% of all ExxonMobil Oil Lubricants in 90% enX 80% Southern Africa 4% Other 70% 60% • Blue-chip Customer Base 16% Shell, 60% • Integrated servic
Slide 28: New Smoothed Maturity Schedules across EIE and FML
New Smoothed Maturity Schedules across EIE and FML R’ million Total utilised FY2017 FY2018 FY2019 FY2020 FY2021 EQS05 - 25 April 2017 (2) 900 300 300 300 - - EQS06 - 9 April 2018 (2) 340 - 113 113 114 - EQS07 - 9 April 2018 106 - 106 - - - EQS08A - 04 Oct 2018 233 93 93 47 - - EQS09 - 29 Nov 2016 10
Slide 29: Indicative Terms of the Bank Debt in new Eqstra HoldCo
Indicative Terms of the Bank Debt in new Eqstra HoldCo Bank Debt Facilties Term General Banking Liquidity (1) Amount (R’m) 2 383 400 600 • Allocated to the scheduled redemptions of EQS05, EQS06 and EQS07 notes • Liquidity Facility repaid • 6 years; and quarterly (R25m per quarter) Repayment profile
Slide 30: Indicative Terms of the Debt in eXtract
Indicative Terms of the Debt in eXtract Bank Debt Facilties Term General Banking enX Sub Loan 465 (1 865 with immediate pay Amount (R’m) 200 1 466 down to 465) • Amount of R1 400m to be injected immediately (1) • Quarterly cash sweep after • 6 years Repayment profile • 364 day notice period bank int
Slide 31: Comparable Company Analysis
Comparable Company Analysis enX Barloworld Super Group KAP Invicta Hudaco 5% 17 16 39 % 39 % 29% 44 50% % % 50 50 50 % 50 50 31 % % % % % 40 % 21% 3% % 6% 8%3% Contribution to revenue New equipment Supply chain SA Diversified Capital Equipment IndustrialCEquip Consumer-related Logistics products Use
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