Bulked up enX says it’s resilient despite tough economy


Bulked up enX says it’s resilient despite tough economy

Published Date: 2017-10-24 | Source: Stephen Gunnion | Author: Stephen Gunnion

Bulked up enX says it’s resilient despite tough economy

The group has made a number of acquisitions to become a diversified industrial business

enX bought Eqstra's industrial equipment and fleet management and logistics businesses in a R7.8 billion deal just over a year ago. It also bought West African International and acquired the remaining shares in African Group Lubricants. Following the recent unbundling of eXtract Group, it says it's now a pure-play diversified industrial business with a significantly increased market capitalisation, assets under management and earnings base.

The deal-making has helped boost revenue for the year to end August fivefold, to R6.2 billion from R1.2 billion. Adjusted earnings before interest and tax rose to R736 million from R40 million, while adjusted earnings per share jumped 341% to 181.2c. however, the fair value adjustments relating to the eXtract investments of R737 million and once-off restructuring and transactions costs resulted in a headline loss of 301.2c per share from headline earnings of 17.9c last year.

The Eqstra deal has also resulted in ballooning debt, with net interest-bearing borrowing increasing to R4.89 billion from R293 million. This resulted in an interest bill of R292 million, up from R8 million.

enX has now segmented its businesses into three operations: Equipment, Fleet and Petrochemicals. It says its long-term goal is to build a growing, cash generative industrial business which over time consistently delivers returns on equity in excess of its cost of capital. Although the economy remains subdued, it believes its current portfolio of businesses have defensive characteristics given the annuity generating natures of its products and assets.

The group has also announced the Executive Deputy Chairman Paul Mansour will replace Jannie Serfontein as CEO from the end of March 2018. The role of Executive Deputy Chairman will fall away.

It hasn't declared a dividend in line with its policy to reinvest for growth. Its shares added 1.1% to close at R14 yesterday.

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