enX earnings skewed by failed Bidvest deal


enX earnings skewed by failed Bidvest deal

Published Date: 2020-05-21 | Source: Stephen Gunnion | Author: Stephen Gunnion

enX earnings skewed by failed Bidvest deal

The Fleet business was recorded as held for sale at the end of its most recent report period before the deal fell through.

exX Group has primed investors for a rise in first-half earnings due to distortions created by the failed sale of its Fleet Management and Logistics business to Bidvest.

In a trading statement, the industrial group said headline earnings per share (HEPS) for the six months to end-February would be between 128% and 138% higher than the 71.2c it reported last year. HEPS from continuing operations would decline by 5-15% from the 35.4c previously reported, while HEPS from its discontinued operations would be up by between 270% and 280%.

Earlier this month, it said the R3.1 billion sale of Eqstra to Bidvest was terminated after failing to get the approval of the Prudential Authority (PA) by the long stop date of 4 May. It couldn't get Bidvest to agree to extend the date to give the PA enough time to complete the process.

As this happened after the date of enX's interim results period, Fleet was still recorded as held for sale at the end of February, requiring the company to cease depreciation and amortisation and assess the carrying value of the business in terms of the transaction value. It said the post-tax depreciation and amortisation for the six-month period would have amounted to R204 million.

Had Fleet not been treated as an asset held for sale, enX said it would have expected HEPS in the range of 49.5c to 56.7c, down from last year's 71.2c.

When it announced the termination of the sale, it said the majority of its businesses had been able to trade since the start of lockdown conditions in SA and the UK, although at lower capacity and revenue levels. Although the gradual easing of local restrictions was expected to begin lifting activity levels, enX said new and used equipment sales were likely to remain under pressure due to the weaker rand and the slow down in the economy.

The company said it has taken steps to reduce cash outflows, including reducing overheads, supplier orders and capital expenditure. It had also accessed government support programmes to improve liquidity, which had been particularly beneficial in the UK.

enX's shares rose 8.1% to R4 yesterday.

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