Starting strong

Endeavour Mining 27 May 2020 Update
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Endeavour Mining

Starting strong

Q120 results

Metals & mining

27 May 2020

Price

C$31.98

Market cap

C$3,550m

C$1.4072/US$

Net debt (US$m) at end March 2020

476.6

Shares in issue (000s)

111m

Free float

70.1%

Code

EDV

Primary exchange

TSX

Secondary exchange

US OTC

Share price performance

%

1m

3m

12m

Abs

10.3

9.9

56.6

Rel (local)

5.0

23.7

67.8

52-week high/low

C$32.88

C$19.05

Business description

Endeavour Mining is an intermediate gold producer, with four mines in Côte d’Ivoire (Agbaou and Ity) and Burkina Faso (Houndé and Karma) and one major development project in Mali (Kalana), all in the highly prospective West African Birimian greenstone belt.

Next events

EGM re acquisition

28 May 2020

Kari West and Center maiden reserve

Mid-2020

Houndé and Ity updated mine plans

Mid-2020

Fetekro PEA

Q320

Kalana updated feasibility study

H220

Analyst

Charles Gibson

+44 (0)20 3077 5724

Endeavour Mining is a research client of Edison Investment Research Limited

Endeavour’s Q1 results were characterised by record revenue, record adjusted EBITDA and record operating cash flow. At least as importantly, all operations were reported to be operating near normal and all of Endeavour’s employees who had contracted COVID-19 were reported to have recovered. Gold production in Q120 was 10.5koz (6.5%) in excess of our forecasts, which drove a positive variance of US$20.0m in revenue, only partially offset by tax and minority charges to result in a US$6.3m positive variance in attributable profits. As a result, at 30.3c/share, adjusted net earnings per share were materially ahead of both Edison’s and the market’s forecasts of 21.5c and 24.0c for the quarter, respectively.

Year end

Revenue (US$m)

EBITDA (US$m)

PBT*
(US$m)

Operating cash flow
per share (US$)

Capex (US$m)

Net debt**
(US$m)

12/18

752.0

264.8

70.5

2.33

486.5

518.6

12/19

886.4

355.7

106.9

2.75

254.9

535.9

12/20e

1,163.4

571.3

324.3

3.92

229.5

367.2

12/21e

1,063.2

580.8

331.1

3.99

93.5

54.8

Note: Pre-acquisition basis. *PBT is normalised, excluding amortisation of acquired intangibles and exceptional items. **Excludes restricted cash.

SEMAFO transaction still on track

After a period of relatively heavy investment, both Endeavour and SEMAFO are now entering ‘harvest’ mode. Neither has any large capital commitments for the next two years, with the result that the focus of each is maximising cash flow in FY20–21 before developing either Fetekro, Kalana or Bantou in FY22. The rationale for Endeavour’s combination with SEMAFO therefore is threefold: 1) to enhance Endeavour’s strategic position with production immediately in excess of 1Moz gold per annum, 2) to give it critical mass with four mines producing close to 200koz per annum each plus three near-term development projects (Fetekro, Kalana and Bantou) and 3) to enhance its capital markets profile with a larger market capitalisation and increased liquidity, such that it will meet the investment criteria of larger funds and more generalist investors. Extraordinary meetings to ratify the combination of Endeavour and SEMAFO have been called at 09.30 Eastern Time on 28 May. In the meantime, given that neither has mines in Canada, we do not believe it likely that a mooted national security review of the transaction (decision deadline date 25 June) will proceed. If no review is ordered, it is anticipated that the transaction will close towards the end of June.

Valuation: EDV alone worth US$33.46/share

To date, COVID-19 has had a minimal effect on Endeavour’s operations in West Africa. In the wake of the recent increases in the gold price, our terminal valuation of Endeavour at end-FY22 is US$40.49/share (cf US$40.38/share previously) on a standalone basis, which (in conjunction with forecast intervening cash flows) discounts back to a value of US$33.46/share in FY20 (cf US$33.38/share previously). At its current price, Endeavour’s acquisition of SEMAFO remains accretive to shareholders on a relative valuation basis. In addition, it remains materially cheaper than the majors (the ranks of which it is destined to join upon closure) on at least 77% (28 out of 36) of common valuation measures.

SEMAFO acquisition

On 23 March, Endeavour announced that it had entered into a joint, definitive agreement with SEMAFO, whereby it will acquire all of the issued and outstanding securities of SEMAFO by way of a Plan of Arrangement under the Business Corporations Act (Québec). Under the terms of the agreement, Endeavour will pay 0.1422 shares for each SEMAFO common share, resulting in its issuing an additional 47.6m shares (cf 109.9m currently in issue). Based on the 20-day volume weighted average prices of each company until 20 March, these terms represented a 27.2% price premium for SEMAFO shareholders. Based on the closing prices of each company’s shares on 20 March, they represented a 54.7% premium for SEMAFO shareholders and implied an equity value for SEMAFO of c C$1.0bn. In the aftermath of the transaction, existing Endeavour and SEMAFO shareholders will own approximately 70% and 30%, respectively, of an entity producing c 1Moz gold per year and which generated an estimated US$121.6m in pre-financing cash flows in FY19 (see our note EndAFO a good thing, published on 1 May 2020).

Endeavour’s principal investor, La Mancha, has committed to invest US$100m into the combined entity in order to provide for a larger free float and greater stock liquidity, and both sets of boards of directors have unanimously approved the transaction.

Pursuant to the rules of the TSX, the transaction will require approval by a simple majority of the votes cast by Endeavour’s shareholders and a two-thirds majority of votes cast by SEMAFO shareholders. In addition, Endeavour shareholders will be asked to approve the issuance of US$100m Endeavour ordinary shares to La Mancha by a simple majority.

La Mancha, the officers and directors of Endeavour (who together control approximately 31.8% of the outstanding shares of Endeavour) and the officers and directors of SEMAFO have all stated their support for the transaction. In addition to shareholder and court approvals, the transaction is subject to applicable regulatory approvals including TSX approval and the satisfaction of certain other customary closing conditions. The agreement includes customary provisions including non-solicitation provisions, a right to match any superior proposal and reciprocal termination fees of US$20m payable either way depending on circumstances.

Extraordinary meetings to ratify the combination have been called at both Endeavour and SEMAFO at 09.30 Eastern Time on 28 May. In the meantime, the two parties have been advised by the director of investments under the Investment Canada Act that the minister of innovation, science & economic development is considering whether to order a national security review of the transaction and has until 25 June to decide whether or not to proceed with such a review. If no review is ordered, it is anticipated that the transaction will close towards the end of June 2020. Since neither company has mining operations in Canada, we believe that it is unlikely that a review will proceed.

Endeavour Q120 results (pre-acquisition & pro forma)

Results in the first quarter of the year at Endeavour were characterised by record revenue, record adjusted EBITDA and record operating cash flow. At least as importantly, all operations were reported to be operating near normal (albeit with a revised roster to counteract local quarantine requirements) and all of Endeavour’s employees who had contracted COVID-19 were reported to have recovered. Gold production in Q120 was 10.5koz in excess of our forecasts, driven mainly by output at Houndé and Agbaou, while gold sales were 13.2koz in excess of our forecasts. As a result, revenue recorded a positive variance of US$20.0m (8.4%) relative to our expectations, partially offset by a tax charge, which was US$9.0m higher, and a minority charge, which was US$2.5m higher, to result in a US$6.3m positive variance in profits attributable to shareholders. As a result, at 30.3c/share, adjusted net earnings per share were materially ahead of both Edison’s and the market’s forecasts of 21.5c and 24.0c for the quarter, respectively. In Exhibit 1, Edison has also provided its estimate of Endeavour’s pro-forma Q120 income statement for the combined EDV-SFO group.

Exhibit 1: Endeavour Mining earnings, by quarter, Q219–Q120

(US$000s unless otherwise indicated)

Q219

Q319

Q419

Q419

Q120e

Q120

Q1/Q4

*Q1a/Q1e

*Q1a/Q1e

Est Q120

(underlying)

Change
(%)

Variance

(%)

Variance

(units)

(pro-forma)

Houndé production (koz)

58.2

54.7

55.0

55.0

50.0

55.9

1.6

11.8

5.9

55.9

Agbaou production (koz)

34.6

36.1

35.0

35.0

24.1

27.5

-21.4

14.1

3.4

27.5

Karma production (koz)

21.0

26.2

27.2

27.2

27.8

27.6

1.5

-0.7

-0.2

27.6

Ity production (koz)

57.3

63.8

60.4

60.4

59.5

61.0

1.0

2.5

1.5

61.0

Boungou production (koz)

32.0

Mana production (koz)

49.9

Total gold produced (koz)

171.3

180.8

177.6

177.6

161.4

171.9

-3.2

6.5

10.5

253.8

Total gold sold (koz)

170.7

185.3

171.9

171.9

161.4

174.6

1.6

8.2

13.2

251.4

Gold price (US$/oz)

1,285

1,443

1,445

1,445

1,581

1,581

9.4

0.0

0.0

1,581

Mine level cash costs (US$/oz)

632

613

678

678

720

661

-2.5

-8.2

-59.0

661

Group level AISC (US$/oz)

790

803

819

819

991

899

9.8

-9.3

-92.0

896

Revenue

 

 

 

 

– Gold revenue

219,371

267,292

248,398

248,398

248,928

269,902

8.7

8.4

20,974

393,113

Cost of sales

 

 

 

 

– Operating expenses

103,318

114,599

124,707

124,707

116,324

114,403

-8.3

-1.7

-1,921

160,064

– Royalties

11,032

14,480

13,638

13,638

13,687

17,452

28.0

27.5

3,765

23,956

Gross profit

105,021

138,213

110,053

110,053

118,917

138,047

25.4

16.1

19,130

209,093

Depreciation

(51,970)

(54,509)

(54,608)

(54,608)

(51,245)

(52,529)

-3.8

2.5

-1,284

(84,061)

Expenses

 

 

 

 

– Corporate costs

(5,143)

(6,166)

(3,250)

(3,250)

(5,957)

(5,231)

61.0

-12.2

726

(9,954)

– Impairments

0

0

(127,380)

0

0

0

N/A

N/A

0

0

– Acquisition etc costs

0

0

(4,552)

(4,552)

0

(4,330)

-4.9

N/A

-4,330

(4,330)

– Share based compensation

(4,385)

(5,238)

(8,819)

(8,819)

(5,333)

(1,623)

-81.6

-69.6

3,710

(3,197)

– Exploration costs

(1,674)

(3,858)

0

0

(2,750)

(1,333)

N/A

-51.5

1,417

(1,333)

Total expenses

(11,202)

(15,262)

(144,001)

(16,621)

(14,040)

(12,517)

-24.7

-10.8

1,523

(18,814)

Earnings from operations

41,849

68,442

(88,556)

38,824

53,632

73,001

88.0

36.1

19,369

106,218

Interest income

0

0

0

 0

0

0

N/A

N/A

0

452

Interest expense

(12,386)

(14,170)

(11,591)

(11,591)

(11,656)

(11,662)

0.6

0.1

-6

(14,458)

Net interest

(12,386)

(14,170)

(11,591)

(11,591)

(11,656)

(11,662)

0.6

0.1

-6

(14,006)

Loss on financial instruments

(11,757)

(49,528)

2,194

2,194

 0

(3,492)

N/A

N/A

-3,492

(3,492)

Other expenses

4,574

(673)

(12,219)

(12,219)

0

1,935

N/A

N/A

1,935

(231)

Profit before tax

22,280

4,071

(110,172)

17,208

41,975

59,782

247.4

42.4

17,807

88,489

Current income tax

13,845

16,917

29,661

29,661

15,343

23,699

-20.1

54.5

8,356

27,040

Deferred income tax

1,531

10,699

(31,151)

(9,446)

0

620

N/A

N/A

620

9,323

Total tax

15,376

27,616

(1,490)

20,215

15,343

24,319

20.3

58.5

8,976

36,363

Marginal tax rate (%)

69.0

678.4

1.4

117.5

36.6

40.7

-65.4

11.2

4.1

41.1

Profit after tax

6,904

(23,545)

(108,682)

(3,007)

26,632

35,463

N/A

33.2

8,831

52,126

Net profit from discontinued ops.

0

0

(4,394)

(4,394)

0

0

N/A

N/A

0

0

Total net and comprehensive income

6,904

(23,545)

(113,076)

(7,401)

26,632

35,463

N/A

33.2

8,831

52,126

Minority interest

6,193

8,654

4,487

4,487

6,983

9,465

110.9

35.5

2,482

12,062

Minority interest (%)

89.7

(36.8)

(4.0)

(60.6)

26.2

26.7

N/A

1.9

0.5

23.1

Profit attributable to shareholders

711

(32,199)

(117,563)

(11,888)

19,649

25,998

N/A

32.3

6,349

40,064

 

 

 

 

Basic EPS from continuing ops (US$)

0.006

(0.293)

(1.030)

(0.068)

0.179

0.235

N/A

31.3

0.056

0.253

Diluted EPS from continuing ops (US$)

0.006

(0.293)

(0.999)

(0.066)

0.172

0.235

N/A

36.6

0.063

0.243

Basic EPS (US$)

0.006

(0.293)

(1.069)

(0.108)

0.179

0.235

N/A

31.3

0.056

0.253

Diluted EPS (US$)

0.006

(0.293)

(1.038)

(0.105)

0.172

0.235

N/A

36.6

0.063

0.243

Normalised basic EPS from continuing operations (US$)

0.113

0.158

0.151

(0.047)

0.179

0.306

N/A

70.9

0.127

0.302

Normalised diluted EPS from continuing operations (US$)

0.113

0.158

0.146

(0.045)

0.172

0.306

N/A

77.9

0.134

0.291

Adjusted net earnings attributable (US$000s)

8,519

33,155

36,890

36,890

23,584

33,517

-9.1

42.1

9,933

54,310

Adj net EPS from continuing ops (US$)

0.078

0.302

0.336

0.336

0.215

0.303

-9.8

40.9

0.088

0.343

Source: Endeavour Mining, Edison Investment Research. Note: Company reported basis; *Compares Q120a with Q120e.

Items included in the reconciliation between adjusted net earnings attributable and total net and comprehensive earnings are losses from discontinued operations, deferred income tax effects, gains/losses on financial instruments, other expenses, share-based compensation and acquisition costs (all shown independently in the table above), plus the tax impact of adjusting items, non-cash and other adjustments and the minority interest attributable to the adjusting items (not shown independently).

While the minority interest charge during the quarter of US$9.5m may appear high at 26.7% of the company’s total net and comprehensive income of US$35.5m, given that it owns 85–90% of its producing assets, it equates to a much more reasonable 15.7% of aggregate post-tax earnings from mine operations (ie excluding all centralised expenses). Similarly, while the marginal tax rate may appear high at 40.7% of pre-tax income, it equates to a much more accurate 28.7% of aggregate pre-tax income from mine operations.

In general, all four of Endeavour’s mines recorded lower unit costs than we were expecting in Q120. Better grades were recorded at Karma, but worse grades at Ity, although these were offset by better recoveries and better throughput. Royalties were higher at all four mines (not least as a result of the higher gold price) and higher taxes at three out of the four mines (the exception being Ity). A higher than expected minority charge was also recorded at Karma. A full explanation and description of the factors and forces affecting operations in Q120 vs Q419 is provided in Endeavour’s press release accompanying its results and also its management discussion and analysis (MD&A). However, a brief summary of each of its mines’ performances during the quarter is as follows:

Exhibit 2: Endeavour Mining operations’ performance in Q120

Mine

Mining & processing

Costs

Grade

Recovery

Ity

Total tonnages mined up because of greater utilisation of larger mining trucks, improved surface haulages and less rain.

Ore extraction up at Daapleu and Bakatouo pits. More waste at Ity pit owing to cutback.

Mining costs down because of less pumping, better utilisation of larger trucks, lower maintenance and material being sourced from old heap leach pads.

Process costs increased because of more cyanide consumption on account of higher copper content.

Grade lower as supplemented with feed from low-grade stockpiles and heap leach pads.

Recovery up because of oxide material from old heap leach pads offsetting higher grade, but lower recovery material from Daapleu (as per DFS).

Houndé

Mining at Houndé focused on waste removal in Q1.

Ore extraction continued primarily from the Vindaloo and Bouéré pits.

Mining costs declined as a result of lower drill & blast and grade control requirements.

Reagent costs increased as a result of a high percentage of fresh ore processed.

Increases in sustaining capital related mainly to waste mining.

Stockpiles continued to contribute to processed ore.

Metallurgical recovery declined as proportion of material from Bouéré increased.

Agbaou

Lower-grade material was mined at Agbaou as expected, albeit with a lower stripping ratio, as operations focused on the North, South and West pits.

Increased mill utilisation.

Mining costs increased as a result of mining more fresh ore from lower elevations in the North and West pits.

Processed grade declined as a result of low-grade fresh ore being mined from the North and West pits.

Recovery declined as the percentage of fresh ore increased.

Karma

Production of gold was flat in Q1 vs Q4 as slightly lower tonnages and recoveries were offset by higher grades. Compared with Q119 however, both grades and recoveries were higher.

Mining at Karma in Q1 was focused on the Kao North pit supplemented by the start of mining at the GG1 pit.

Material stacked was flat vs Q419 as downtime on the conveyor was offset by increased throughput.

Mining costs increased on account of higher load and haul costs from the GG1 pit and the mining of lower elevations in the Kao North pit.

Processing costs declined as a result of lower maintenance and lower reagent consumption.

Sustaining capital costs increased, but only to US$0.6m as equipment orders were delayed owing to the coronavirus.

Grade increased as high-grade ore was mined from the Kao North pit.

Recovery declined as a consequence of lower recoveries being associated with material sourced from the GG1 pit.

Source: Endeavour Mining, Edison Investment Research

FY20 guidance vs forecasts

Historically, Endeavour has a good record of meeting its production and cost guidance targets and FY19 was the seventh year in succession in which the company achieved its production cost and all-in sustaining cost (AISC) targets.

In general, the first half of FY20 in particular is expected to be an extension of circumstances in Q419. Ity will continue to mine into harder fresh ore at Daapleu, which will restrain recoveries before a degree of improvement in H220. However, its CIL plant should naturally be less affected by the uncertainties of the Q3 rainy season than its historical heap leach operation. In addition, the second lift of its tailings storage facility has now been completed, with the result that management believes that the mine, which is located in an area of acknowledged high rainfall, is now better prepared for the FY20 wet season than at any time in the past. Performance at Houndé will depend largely on its ability to mine Kari Pump in H220, for which a permit is expected to be received in Q3. In the meantime, it will continue to mine predominantly hard ore at a relatively high stripping ratio in H120, although this will be somewhat mitigated by its plant continuing to operate at or above nameplate capacity. Readers should note that the difference between Edison’s cost and production forecasts for Houndé in FY20 and Endeavour’s guidance may be explained by the timing of the start of operations at Kari Pump. Whereas management expects a contribution from Kari Pump’s materially higher-grade ore in H220, Edison’s forecasts assume that there will be no such contribution until FY21, with the result that our cost forecasts in particular are slightly above the top of the guidance range for FY20 (and are therefore inherently conservative). At Agbaou, harder ore is expected to be mined, while the overall stripping ratio is anticipated to decrease slightly and throughput and recovery rates to decrease marginally owing to the harder ore blend. In the meantime, tonnes stacked at Karma are projected to increase as a result of the installation of the new stacker system and grades and recoveries to remain consistent with Q419 (albeit to improve upon FY19 generally, which was adversely affected by maintenance downtime related to the installation and commissioning of the tripper conveyor in addition to the heavy rains, which resulted in an increase in unit mining costs among other things).

In the wake of Q1 results, a summary of Endeavour’s outlook for each of its operations for the remainder of the year is as follows:

Exhibit 3: Endeavour Mining’s operations’ outlook, Q2–Q420

Mine

Outlook

Ity

Plant feed will continue to be sourced from the Daapleu and Bakatouo pits supplemented by material from the old heap leach dumps. In general, more fresh ore will be mined as the pits deepen. Mined and processed ore grades are anticipated to be approximately flat for the remainder of the year. Metallurgical recoveries are expected to decline.

Houndé

The focus of mining operations at Houndé in FY20 will be waste mining and removal. Low-grade stockpiles are expected to continue to contribute to processed ore into Q220. Thereafter, both mined tonnages and grades are expected to improve, although waste extraction will remain high in H2 in order to access high-grade material. The process to be granted a permit at Kari Pump is underway and (subject to bureaucratic delays) a mining permit is expected to be granted in Q3. Sustaining capex is anticipated to increase, as sums deferred from Q1 relating to waste removal are expended in Q2 and Q3.

Agbaou

Mining at Agbaou in 2020 will continue from the North and South pits, but will come to a halt at the West pit in H2. Throughput and recovery will decline in H2 as a greater proportion of hard, fresh ore is mined and processed.

Karma

Mining at Karma in 2020 will continue from the Kao North and GG1 pits. Overall grades are expected to decline as the grade in the Kao North pit declines.

Mine

Ity

Houndé

Agbaou

Karma

Outlook

Plant feed will continue to be sourced from the Daapleu and Bakatouo pits supplemented by material from the old heap leach dumps. In general, more fresh ore will be mined as the pits deepen. Mined and processed ore grades are anticipated to be approximately flat for the remainder of the year. Metallurgical recoveries are expected to decline.

The focus of mining operations at Houndé in FY20 will be waste mining and removal. Low-grade stockpiles are expected to continue to contribute to processed ore into Q220. Thereafter, both mined tonnages and grades are expected to improve, although waste extraction will remain high in H2 in order to access high-grade material. The process to be granted a permit at Kari Pump is underway and (subject to bureaucratic delays) a mining permit is expected to be granted in Q3. Sustaining capex is anticipated to increase, as sums deferred from Q1 relating to waste removal are expended in Q2 and Q3.

Mining at Agbaou in 2020 will continue from the North and South pits, but will come to a halt at the West pit in H2. Throughput and recovery will decline in H2 as a greater proportion of hard, fresh ore is mined and processed.

Mining at Karma in 2020 will continue from the Kao North and GG1 pits. Overall grades are expected to decline as the grade in the Kao North pit declines.

Source: Endeavour Mining, Edison Investment Research.

In the wake of Q120 results, Endeavour’s production and cost guidance for FY20, compared with Edison’s forecasts, is now as follows:

Exhibit 4: Endeavour production cost and AISC guidance, by mine, FY20 vs Edison forecast

Production (koz)

AISC (US$/oz)

Mine

FY20e guidance
(koz)

Current Edison FY20e forecast (koz)

Previous Edison FY20e forecast (koz)

FY20e guidance (US$/oz)

Current Edison FY20e forecast (US$/oz)

Previous Edison FY20e forecast (US$/oz)

Houndé

230–250

239.4

234.4

865–895

956

932

Agbaou

115–125

115.3

111.2

940–990

993

1,080

Karma

100–110

105.4

107.6

980–1,050

1,018

1,028

Ity CIL

235–255

244.7

249.5

630–675

687

677

Group total

680–740

713.1

702.6

*845–895

*913

*916

Source: Endeavour Mining, Edison Investment Research. Note: *Includes corporate general and administrative costs.

Readers should note that changes in our AISC forecasts relative to those set out in our last note (see EndAFO a good thing, published on 1 May 2020) have arisen largely as a consequence of our increased gold price expectation for the remainder of the year (see ‘FY20 financial forecasts by quarter’, below), which affects royalties payable by Endeavour’s mines that, in their turn, contribute to AISC estimates. All other forecasts remain broadly unchanged.

FY20 financial forecasts by quarter

In this note we present quarterly forecasts for Endeavour and also on a pro-forma basis for the combined Endeavour-SEMAFO entity for illustrative purposes only. We will aim to introduce consolidated estimates for the combined company once the deal is completed.

Whereas, in our last report (see EndAFO a good thing, published on 1 May 2020), we were forecasting a gold price of US$1,686/oz for Q220 and US$1,670/oz for the remainder of the year, we have now increased these in line with recent increases in the spot price of gold, to US$1,706/oz in Q220 and US$1,720/oz for the remainder of the year. On this basis, Edison’s financial forecasts for Endeavour for FY20, by quarter, including pro-forma forecasts for the combined EDV-SFO operation, are now as follows (subject to there being no major, future effect on operations as a result of the coronavirus):

Exhibit 5: Endeavour Mining FY20 earnings forecasts, by quarter

(US$000s unless otherwise indicated)

Pre-acquisition basis

Pro-forma basis (EDV+SFO)

Q120

Q220e

Q320e

Q420e

FY20e

(current)

Est Q120

Q220e

Q320e

Q420e

Houndé production (koz)

55.9

51.9

58.5

73.1

239.4

55.9

51.9

58.5

73.1

Agbaou production (koz)

27.5

30.3

24.1

33.4

115.3

27.5

30.3

24.1

33.4

Karma production (koz)

27.6

25.9

24.0

27.8

105.4

27.6

25.9

24.0

27.8

Ity production (koz)

61.0

55.5

59.7

68.5

244.7

61.0

55.5

59.7

68.5

Boungou production (koz)

32.0

34.5

36.7

36.7

Mana production (koz)

49.9

50.0

50.0

50.0

Total gold produced (koz)

171.9

163.6

166.3

202.8

704.7

253.8

248.1

253.1

289.6

Total gold sold (koz)

174.6

163.6

166.3

202.8

707.3

251.4

248.1

253.1

289.6

Gold price (US$/oz)

1,581

1,706

1,720

1,720

*1,645

*1,564

1,706

1,720

1,720

Mine level cash costs (US$/oz)

661

712

665

605

658

661

693

665

648

Mine level AISC (US$/oz)

899

978

907

779

878

867

937

891

833

Revenue

– Gold revenue

269,902

272,300

279,231

341,962

1,163,394

393,113

416,412

428,476

491,192

Cost of sales

– Operating expenses

114,403

116,465

110,651

122,736

464,255

160,064

171,890

168,294

187,754

– Royalties

17,452

17,613

18,149

22,307

75,521

23,956

25,992

26,873

31,030

Gross profit

138,047

138,222

150,431

196,919

623,619

209,093

218,529

233,308

272,408

Depreciation

(52,529)

(53,653)

(51,592)

(54,975)

(212,749)

(84,061)

(85,672)

(83,612)

(86,995)

Expenses

– Corporate costs

(5,231)

(5,957)

(5,957)

(7,943)

(25,088)

(9,954)

(10,680)

(10,680)

(14,240)

– Impairments

0

0

0

0

0

0

0

0

0

– Acquisition etc costs

(4,330)

0

0

0

(4,330)

(4,330)

0

0

0

– Share based compensation

(1,623)

(5,333)

(5,333)

(5,333)

(17,622)

(3,197)

(6,907)

(6,907)

(6,907)

– Exploration costs

(1,333)

(2,750)

(2,750)

(2,750)

(9,583)

(1,333)

(2,750)

(2,750)

(2,750)

Total expenses

(12,517)

(14,040)

(14,040)

(16,026)

(56,623)

(18,814)

(20,337)

(20,337)

(23,897)

Earnings from operations

73.001

70,529

84,799

125,918

354,247

106,218

112,520

129,360

161,516

Interest income

0

0

452

452

452

452

Interest expense

(11,662)

(9,056)

(9,319)

(6,224)

(36,262)

(14,458)

(11,852)

(12,115)

(9,020)

Net interest

(11,662)

(9,056)

(9,319)

(6,224)

(36,262)

(14,006)

(11,400)

(11,663)

(8,568)

Loss on financial instruments

(3,492)

 

 

 

(3,492)

(3,492)

0

0

0

Other expenses

1,935

0

0

0

1,935

(231)

0

0

0

Profit before tax

59,782

61,473

75,480

119,694

316,428

88,489

101,120

117,696

152,948

Current income tax

23,699

19,115

22,340

30,995

96,148

27,040

27,675

31,350

38,712

Deferred income tax

620

0

0

0

620

9,323

0

0

0

Total tax

24,319

19,115

22,340

30,995

96,768

36,363

27,675

31,350

38,712

Marginal tax rate (%)

40.7

31.1

29.6

25.9

30.6

41.1

27.4

26.6

25.3

Profit after tax

35,463

42,358

53,140

88,699

219,660

52,126

73,445

86,347

114,236

Net profit from discontinued ops.

0

0

0

0

0

0

0

0

0

Total net and comprehensive loss

35,463

42,358

53,140

88,699

219,660

52,126

73,445

86,347

114,236

Minority interest

9,465

8,716

10,184

14,186

42,551

12,062

14,660

16,313

19,581

Minority interest (%)

26.7

20.6

19.2

16.0

19.4

23.1

20.0

18.9

17.1

Profit attributable to shareholders

25,998

33,642

42,956

74,513

177,109

40,064

58,784

70,034

94,655

Basic EPS from continuing ops (US$)

0.235

0.303

0.387

0.671

1.597

0.253

0.371

0.442

0.597

Diluted EPS from continuing ops (US$)

0.235

0.289

0.368

0.639

1.521

0.243

0.357

0.425

0.574

Basic EPS (US$)

0.235

0.303

0.387

0.671

1.597

0.253

0.371

0.442

0.597

Diluted EPS (US$)

0.235

0.289

0.368

0.639

1.521

0.243

0.357

0.425

0.574

Norm. basic EPS from continuing ops (US$)

0.306

0.303

0.387

0.671

1.668

0.302

0.371

0.442

0.597

Norm. diluted EPS from continuing ops (US$)

0.306

0.289

0.368

0.639

1.588

0.291

0.357

0.425

0.574

Adj net earnings attributable (US$000s)

33,517

37,878

47,267

78,993

197,655

54,310

64,293

75,628

100,376

Adj net EPS from continuing ops (US$)

0.303

0.341

0.426

0.712

1.782

0.343

0.405

0.477

0.633

Source: Endeavour Mining, Edison Investment Research. Note: Company reported basis. *Includes adjustment for Karma stream.

Estimates above exclude costs relating to the takeover of SEMAFO (which are, anyway, excluded from the calculation of adjusted net EPS from continuing operations). Otherwise, readers’ attention is drawn to the general uplift of pro-forma per share estimates relative to pre-acquisition ones – indicating, among other things, the accretive nature of the acquisition.

Nevertheless, readers are cautioned that forecasting on a quarterly basis is prone to large variations between actual and forecast numbers. To this end, it is worth noting that the top end of Endeavour’s production guidance is 26.9koz gold (3.8%) above our forecast for the year, which is worth a material US$43.3m in additional revenue to the company (net of royalties) and therefore has the ability to increase our (pre-acquisition) estimate of Endeavour’s FY20 profit before tax by 13.7% (all other things being equal). As such, the exhibit above should be regarded as indicative, rather than prescriptive, particularly with respect to individual quarters. Within that context a comparison between Edison’s FY20 adjusted net EPS from continuing operations estimates and consensus estimates, by quarter, is as follows:

Exhibit 6: Edison adjusted net EPS from continuing operations estimates vs consensus, FY20, by quarter (US$)

(US$/share)

Q1

Q2e

Q3e

Q4e

Sum Q1–Q4e

FY20e

Edison forecast*

0.303

0.341

0.426

0.712

1.782

1.782

Mean consensus forecast

0.303

0.320

0.480

0.580

1.683

1.530

High

0.303

0.530

0.660

0.670

2.163

1.900

Low

0.303

0.170

0.340

0.440

1.253

1.400

Source: Refinitiv, Edison Investment Research. Note: *As per Exhibit 5 on the pre-acquisition basis. Priced 22 May 2020.

Absolute Endeavour valuation (pre-acquisition)

Endeavour is a multi-asset company that has shown a willingness and desire to trade assets to maintain production, reduce costs and maximise returns to shareholders (eg the sale of Youga in FY16, Nzema in FY17 and Tabakoto in FY18). Rather than our customary method of discounting maximum potential dividends over the life of operations back to FY20, therefore, we have opted to discount potential cash flows back over three years from FY20 and then to apply an ex-growth terminal multiple of 10x (consistent with using a standardised discount rate of 10%) to forecast cash flows in that year (ie FY22). In the normal course of events, exploration expenditure would be excluded from such a calculation on the basis that it is an investment. In the case of Endeavour, however, we have included it in our estimate of FY22 cash flows on the grounds that it may be a critical component of ongoing business performance in its ability to continually expand and extend the lives of the company’s assets. Note that, in the aftermath of the acquisition, the combined entity’s immediate strategic imperatives will be the continuation of exploration at Ity and Houndé plus investigating the potential to extend the mine lives of Mana and Boungou.

Compared with our last note (see EndAFO a good thing, published on 1 May 2020), our estimate of Endeavour’s cash flow in FY22 on the above basis has increased by 0.2% to US$4.05 per share (cf US$4.04/share previously), which should be credible within the context of its having generated US$1.14/share in cash flow from operations in Q120 and US$1.10/share in cash flow from operations in Q419. On this basis, our terminal valuation of the company at end-FY22 is US$40.49/share (cf US$40.38/share previously), which (in conjunction with forecast intervening cash flows) discounts back to a value of US$33.46/share at the start of FY20 (cf US$33.38/share previously).

Exhibit 7: Endeavour forecast valuation and cash flow per share, FY20–22e (US$/share)

Source: Edison Investment Research

Relative Endeavour valuation

Endeavour’s valuation on a series of commonly used measures, relative to a selection of gold mining majors (the ranks of which it will soon be joining once its takeover of SEMAFO is complete), is as follows:

Exhibit 8: Endeavour valuation relative to peers

Company

Ticker

Price/cash flow (x)

EV/EBITDA (x)

Year 1

Year 2

Year 3

Year 1

Year 2

Year 3

Endeavour (Edison)*

EDV

5.8

5.7

5.1

5.4

5.0

4.3

Endeavour (consensus)

EDV

5.8

5.0

5.3

6.1

5.6

5.9

Majors

 

Barrick

ABX

11.2

10.6

11.5

10.4

9.8

10.5

Newmont

NEM

13.2

11.0

12.0

11.0

9.0

10.2

Newcrest

NCM AU

13.3

9.9

10.1

10.7

9.3

9.2

Kinross

K

6.2

5.7

5.6

6.0

5.3

5.3

Agnico-Eagle

AEM

15.4

10.9

11.2

13.8

9.7

9.8

Eldorado

ELD

4.3

5.0

5.1

4.0

4.9

5.1

Average

 

10.6

8.9

9.2

9.3

8.0

8.3

Source: Edison Investment Research, Refinitiv. Note: *Pre-acquisition basis. Priced at 21 May 2020.

Of note is the fact that Endeavour’s valuation is materially cheaper than the averages of the majors on 100% of measures, regardless of whether Edison or consensus forecasts are used. On an individual basis, it is cheaper than the majors on at least 86% (31 out of 36) valuation measures if Edison forecasts are used and 77% (28 out of 36) of valuation measures if consensus forecasts are used.

Financials

Endeavour had US$476.6m in net debt on its balance sheet at end-Q120 cf US$535.9m at end-Q419. This level of net debt equates to a gearing (net debt/equity) ratio of 63.9% (cf 74.7% at end-Q419) and a leverage (net debt/[net debt + equity]) ratio of 39.0% (cf 42.7% at end-Q419). Note that US$476.6m reconciles with Endeavour’s Q120 balance sheet; it differs from the figure of US$472.7m quoted in some of the company’s other materials because the latter is calculated on the basis of the value of the minimum equipment finance obligations discounted back to present value rather than being presented on an undiscounted basis.

With capital expenditure relating to the Ity CIL project now having been, to all intents and purposes, completed, Endeavour has no major capex commitments in the future until the development of its next project. In the new gold price environment, cash flows were strongly positive in Q120 and we expect them to remain strongly positive into the foreseeable future, such that (excluding the merger with SEMAFO) we are forecasting that the company would have net debt of c US$367.2m as at end-FY20, which would equate to a gearing ratio of 40.2% and a leverage ratio of 28.7%. Thereafter, net debt would decline rapidly such that, all other things being equal, we estimate that the company would be net debt-free early in FY22, at which point it would potentially be able to make dividend distributions to shareholders.

Risks and sensitivities

Gains or losses on financial instruments

During the year ended 31 December 2019, Endeavour put in place a gold revenue protection programme in order to maximise cash flow certainty during its debt reimbursement phase. Similar to the strategy it put in place during its recent construction phases, this comprises a deferred premium collar strategy using written (sold) call options and bought put options to (effectively) create a synthetic short position. The programme began on 1 July 2019 and will end on 30 June 2020 and covers a total of 360,000oz (approximately 50% of Endeavour’s total estimated production over the period), with a floor price of US$1,358/oz and a ceiling price of US$1,500/oz. As at 31 March, 120,000oz remained outstanding under the collar derivative liability, implying (among other things) that contracts over 90,000oz of gold were exercised in Q120.

Edison’s short- to medium-term gold price forecasts are those set out in our recent report, Portents of economic weakness: Gold – doves in the ascendant, published on 14 August 2019, expressed in both nominal and real terms, below:

Exhibit 9: Edison gold price forecasts* (US$/oz)

US$/oz

2020e

2021e

2022e

2023e

Nominal gold price forecast (US$/oz)

1,635

1,509

1,560

1,421

Real gold price forecast (US$/oz)

1,572

1,395

1,387

1,350

Source: Edison Investment Research. Note: *See Portents of economic weakness: Gold – doves in the ascendant.

At US$1,720/oz at the time of writing, the gold price is currently 5.2% above Edison’s price forecast for CY20. In common with Edison’s stated practice, however, we use prevailing prices to generate our forecasts for the remainder of the current year (see Exhibit 5), followed by long-term forecasts thereafter (Exhibit 12).

While it is tempting to assume that a gold price above US$1,500/oz will automatically result in losses on Endeavour’s gold revenue protection programme, recent history would suggest that this is not a foregone conclusion. Exhibit 10, in particular, details Edison’s estimates of the losses and gains incurred by the programme during the past three quarters within the context of the gold price movement during the quarters and the extent of potential losses in Q220, assuming that all remaining ounces covered by the revenue protection programme are exercised during those periods:

Exhibit 10: Gain/loss on gold revenue protection programme (US$000s)

Q220e

Q120

Q419

Q319

Q219

Realised gain/(loss) on gold revenue protection strategy programme

(4,426)

(1,633)

Unrealised gain/(loss) on gold price protection strategy

7,229

(6,505)

Gain/(loss) on gold revenue protection programme

(10,985)

2,803

(8,138)

Gold price at end of period (US$/oz)

1,670

1,608

1,514

1,485

1,409

Gold price change during period (%)

+3.9

+6.2

+2.0

+5.4

Maximum gold price during period (US$/oz)

1,748

1,683

1,517

1,546

Gold price difference relative to US$1,500/oz (US$/oz)

*248

*183

*17

*46

Estimated ounces in programme exercised (oz)

120,000

90,000

75,000

75,000

Estimated potential realised gain/(loss)

(29,760)

(16,470)

(1,275)

(3,450)

Source: Endeavour Mining, Edison Investment Research. Note: *Based on maximum gold price during period.

Self-evidently, the extent of actual losses realised depends on, among other things, the timing and the exact price of gold when the contracts are exercised. Nevertheless, while the extent of the potential realised losses on the gold revenue protection programme in Q220 could not be considered trivial, it is worth noting that, historically, gains (or losses) on the gold revenue protection programme have not always been the largest constituent part of total gains (or losses) on financial instruments, as in Q120 and Q319, as cases in point, below:

Exhibit 11: Endeavour gain/(loss) on financial instruments, Q319–Q120 (US$000s)

Item

Q120

Q419

Q319

Gain/(loss) on other financial instruments

55

(982)

(1,307)

Change in value of receivable relating to sales of Tabakoto and Nzema

(132)

35

(22,389)

Realised gain on forward contract

6,686

0

0

Gain/(loss) on gold revenue protection programme

(10,985)

2,803

(8,138)

Unrealised gain/(loss) on convertible senior bond derivative

2,675

3,930

(14,168)

Gain/(loss) on foreign exchange

(1,751)

(3,592)

(3,526)

Total gain/(loss) on financial instruments

(3,492)

2,194

(49,528)

Source: Endeavour Mining. Note: Totals may not add up owing to rounding.

As a result of the inherent uncertainties surrounding gains (or losses) from financial instruments, they have been excluded from our forecasts in Exhibits 5 and 12. While the gold price protection strategy programme is a limited one therefore, investors should nevertheless be aware that the remaining contracts outstanding potentially represent an up to US$28.76m (US$0.268 per share gross of tax) risk to our FY20 earnings forecasts (albeit not our normalised or adjusted earnings forecasts).

COVID-19

Since the onset of the pandemic, governments in West Africa have acted decisively to implement appropriate response measures, using (where appropriate) their recent experience in dealing with Ebola in the region as a precedent. Out of three states of alert, West Africa is currently at a ‘Level 1’ state of readiness (ie that the virus remains predominantly outside West Africa), with the potential to escalate this to ‘Level 2’. In practice, this means that both Burkina Faso and the Ivory Coast have closed their borders and commercial flights both into and out of the countries have been suspended. Within this framework however, ‘key industries’ are allowed to remain operating and, in both countries, ministers are reported to be very keen that gold mining should continue. For their own protection therefore, mines have been isolated from the rest of the country.

Whether as a direct result of these measures or not, of all of the (populated) continents in the world, Africa to date has been the least affected by COVID-19. Endeavour has been supporting the national response in close collaboration with the health authorities in its host countries. In addition, it has mobilised and dispatched an expert medical response team to the region to provide it with an on-hand unit to respond rapidly to any infections that might arise at its mines.

At the asset level, each of the company’s operations are continuing to manage and respond to COVID-19 within the framework of the company’s incident management and response plan, which was activated at the outbreak of pandemic and has been validated by an epidemiologist special advisor to the company. As part of the response, a business continuity program has been put in place to protect employees while ensuring the safe operation of the company and its mines. Since early March, access to all mine sites has been strictly controlled with health screening in place for visitors, employees and contractors, and all non-essential travel has been cancelled. Endeavour has also asked any employee or contractor who is feeling unwell to stay at home and office workers are required to work from home.

On 14 March 2020, Endeavour was informed that an employee at the Houndé mine in Burkina Faso tested positive for COVID-19. The employee experienced mild symptoms hours after arriving at site, following his return from the UK. In line with the company’s COVID-19 protocol and procedures, the Burkinabe health authorities were immediately notified and the employee was placed in quarantine. The small number of people who had come into contact with the employee were all identified and also placed in quarantine as a preventative measure. As the employee did not show symptoms upon arrival and passed the mandatory health screening, the company further increased its preventive measures by introducing a mandatory 14-day quarantine period for any employees or contractors arriving in West Africa. As a result, of the few employees who had previously tested positive for COVID-19, all have now recovered and there have been no new reported cases since.

Consequently, Endeavour states that it has not witnessed any impact to production or operations at any of its mines or exploration activities as a result of COVID-19. It also states that it has sufficient inventory of supplies and equipment until at least the end of July 2020, while suppliers have confirmed that placed and forecast orders are intact. In the meantime, Endeavour has stated a readiness, if necessary, to charter its own planes to keep its operations supplied with necessary supplies and equipment.

From a financial perspective, Endeavour calculates its current cash-burn rate to be of the order of c US$70m per month, with the potential to reduce to US$25–30m per month (including paying all salaries) in the event that all mines are put on care and maintenance. As such, its current access to c US$300m of liquidity equates to approximately four months’ worth of costs at current rates of operation or 10 months at reduced rates.

To date, Endeavour’s efforts to combat the disease have concentrated on its global supply chain, health and safety systems, community relations and communication teams and, notably, includes the provision of medical equipment and supplies to local communities, such as masks, gloves and cleaning equipment, training dozens of local health workers and running COVID-19 awareness campaigns. It has undertaken to continue to provide these essential supplies and services for the duration of the pandemic in support of the healthcare centres in its local communities.

Simultaneously, Endeavour’s president and CEO Sébastien de Montessus has said that he will donate 30% of his base salary, and members of the leadership team and the board of directors have also volunteered to donate a portion of their salaries or fees for the next three months to combating the outbreak. As a company, Endeavour has said that it will match these funds to result in a total donation of approximately US$1m. The funds will be deployed by Endeavour’s community relations and medical teams to source much needed medical equipment for local community health centres and also to provide financial support to families and schools that have been affected by a loss of income as a result of the disease. These donations, combined with the amount already spent at the mines and supporting national and local efforts in Cote d’Ivoire, Burkina Faso, and Mali, will bring Endeavour’s total contribution to c US$6m.

Exhibit 12: Financial summary

US$'000s

2016

2017

2018

2019

2020e

2021e

2022e

December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

566,486

652,079

751,957

886,371

1,163,394

1,063,175

1,079,514

Cost of Sales

(376,794)

(597,528)

(487,119)

(662,613)

(596,398)

(486,744)

(475,369)

Gross Profit

189,692

54,551

264,838

223,758

566,996

576,431

604,145

EBITDA

 

 

213,916

201,166

264,838

355,690

571,326

580,761

604,145

Operating Profit (before amort. and except.)

127,981

70,379

95,769

158,471

358,577

367,783

533,318

Intangible Amortisation

0

0

0

0

0

0

0

Exceptionals

(36,272)

(149,942)

8,035

(189,900)

(7,822)

(4,330)

0

Other

(1,989)

(2,242)

(1,558)

(8,515)

1,935

0

0

Operating Profit

89,720

(81,805)

102,246

(39,944)

352,690

363,453

533,318

Net Interest

(24,593)

(18,789)

(23,671)

(43,066)

(36,262)

(36,720)

(5,483)

Profit Before Tax (norm)

 

 

101,399

49,348

70,540

106,890

324,250

331,063

527,835

Profit Before Tax (FRS 3)

 

 

65,127

(100,594)

78,575

(83,010)

316,428

326,733

527,835

Tax

(27,643)

(32,945)

(61,515)

(53,756)

(96,768)

(101,852)

(115,011)

Profit After Tax (norm)

73,756

16,403

9,025

53,134

227,482

229,211

412,824

Profit After Tax (FRS 3)

37,484

(133,539)

17,060

(136,766)

219,660

224,881

412,824

Net loss from discontinued operations

(154,795)

(4,394)

0

0

0

Minority interests

7,121

22,558

42,551

54,691

75,301

Net profit

(137,735)

(141,160)

219,660

224,881

412,824

Net attrib. to shareholders contg. businesses (norm)

(8,100)

30,576

184,931

174,520

337,523

Net attrib.to shareholders contg. businesses

(65)

(159,324)

177,109

170,190

337,523

Average Number of Shares Outstanding (m)

80.6

98.5

107.7

109.8

110.9

111.0

111.0

EPS - normalised ($)

 

 

(0.38)

(0.06)

(0.08)

0.28

1.67

1.57

3.04

EPS - normalised and fully diluted ($)

 

(0.38)

(0.06)

(0.08)

0.28

1.59

1.50

2.90

EPS - (IFRS) ($)

 

 

(0.83)

(1.59)

(1.34)

(1.49)

1.60

1.53

3.04

Dividend per share (p)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Gross Margin (%)

33.5

8.4

35.2

25.2

48.7

54.2

56.0

EBITDA Margin (%)

37.8

30.8

35.2

40.1

49.1

54.6

56.0

Operating Margin (before GW and except.) (%)

22.6

10.8

12.7

17.9

30.8

34.6

49.4

BALANCE SHEET

Fixed Assets

 

 

1,073,562

1,331,745

1,594,202

1,476,753

1,493,480

1,373,953

1,338,619

Intangible Assets

29,978

6,267

4,186

5,498

5,498

5,498

5,498

Tangible Assets

1,039,529

1,317,952

1,543,842

1,410,274

1,427,001

1,307,474

1,272,140

Investments

4,055

7,526

46,174

60,981

60,981

60,981

60,981

Current Assets

 

 

283,536

361,766

327,841

396,038

655,087

977,872

1,431,741

Stocks

110,404

141,898

126,353

168,379

223,730

204,457

207,599

Debtors

36,572

95,212

74,757

37,770

76,234

105,926

107,269

Cash

124,294

122,702

124,022

189,889

358,616

670,981

1,120,365

Other

12,266

1,954

2,709

0

(3,492)

(3,492)

(3,492)

Current Liabilities

 

 

(149,626)

(241,185)

(248,420)

(268,015)

(306,509)

(267,265)

(272,976)

Creditors

(145,311)

(223,527)

(224,386)

(238,584)

(277,078)

(237,834)

(243,545)

Short term borrowings

(4,315)

(17,658)

(24,034)

(29,431)

(29,431)

(29,431)

(29,431)

Long Term Liabilities

 

 

(246,811)

(451,705)

(729,290)

(788,279)

(788,279)

(788,279)

(788,279)

Long term borrowings

(146,651)

(323,184)

(618,595)

(696,383)

(696,383)

(696,383)

(696,383)

Other long term liabilities

(100,160)

(128,521)

(110,695)

(91,896)

(91,896)

(91,896)

(91,896)

Net Assets

 

 

960,661

1,000,621

944,333

816,497

1,053,779

1,296,282

1,709,105

CASH FLOW

Operating Cash Flow

 

 

164,522

244,092

274,938

367,882

530,613

544,390

605,370

Net Interest

(19,626)

(15,212)

(26,734)

(35,413)

(36,262)

(36,720)

(5,483)

Tax

(10,625)

(22,301)

(24,018)

(65,997)

(96,148)

(101,852)

(115,011)

Capex

(212,275)

(441,396)

(486,498)

(254,948)

(229,476)

(93,452)

(35,492)

Acquisitions/disposals

32,098

(37,332)

33,179

3,422

0

0

0

Financing

174,702

116,536

(6,231)

676

0

0

0

Dividends

(2,612)

(5,177)

(1,956)

(6,154)

0

0

0

Net Cash Flow

126,184

(160,790)

(237,320)

9,468

168,727

312,366

449,384

Opening net debt/(cash)

 

 

152,856

26,672

218,140

518,607

535,925

367,198

54,833

HP finance leases initiated

0

0

0

0

0

0

0

Other

0

(30,678)

(63,147)

(26,786)

(0)

0

0

Closing net debt/(cash)

 

 

26,672

218,140

518,607

535,925

367,198

54,833

(394,551)

Source: Company sources, Edison Investment Research. Note: Presented on pre-acquisition basis. EPS normalised from 2018 to reflect continuing business only. 2017 shown as originally reported (ie not restated). *Excludes restricted cash.


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