enX says true earnings power seen after transition into full industrial company

23rd October 2017

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

     

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Following a year of transformation into a “pure-play industrial company”, JSE-listed enX on Monday posted significant improvements in revenue, operating profit and adjusted earnings for the financial year to August 31, demonstrating the group’s “true earnings potential” after it exited contract mining.

Over the past year, the company has integrated several acquisitions and subsequently finalised its exit from eXtract in a move aimed at “dusting the industrial businesses off” and starting to build a solid record in the industrial sector.

The industrial segments of enX are now emerging from the shadows of mining, enX executive deputy chairperson and incoming CEO Paul Mansour said at a presentation of the company’s full-year results, in Sandton.

Mansour will succeed outgoing CEO and director Jannie Serfontein, who will step down on March 31, 2018.

“Our primary focus this year has been on becoming a pure-play industrial company, bedding down our acquisitions and driving the profitability of our existing operations,” Mansour told investors.

The diversified industrial group delivered an increase in operating profit to R673-million for the 2017 financial year, compared with R23-million in 2016, while adjusted earnings before interest and taxes (Ebit) increased from R40-million in 2016 to R736-million in 2017.

Adjusted headline earnings increased from R21-million in 2016 to R281-million, equating to adjusted headline earnings per share (HEPS) of 181.2c for the year under review, compared with the HEPS of 41.1c in the prior year.

However, enX’s headline loss widened, from R71.4-million in 2016, to R467-million in the year under review, owing to fair value adjustment relating to the restructuring and unbundling of the group’s investments in eXtract of R737-million and one-off restructuring and transaction costs of R29-million.

This translated into a headline loss a share of 301.2c, compared with headline earnings a share of 17.9c in 2016.

The first full-year results incorporating the enX Industrial Equipment (EIE) and Eqstra Fleet Management and Logistics (EFML) acquisitions also delivered an increase in revenue from R1.2-billion in 2016 to R6.2-billion in 2017.

The EIE and EFML acquisitions had been included in the 2017 financial results for ten months, while the West Africa International and African Group Lubricants acquisitions were included for the full year.

During the 12 months to August 31, the fleet business contributed revenue of R1.65-billion, with an adjusted profit before tax (PBT) of R181-million and adjusted Ebit of R327-million.

The equipment and petrochemicals divisions each contributed a respective R3.06-billion and R1.5-billion to revenue, along with PBTs of R197-million and R77-million respectively.

The equipment division reported an adjusted Ebit of R346-million and the petrochemicals segment R101-million during the 12 months under review.

Edited by Creamer Media Reporter

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