Wrap Text
Summarised preliminary consolidated financial results
enX GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2001/029771/06)
JSE share code: ENX ISIN: ZAE000222253
("enX" or "the Group")
SUMMARISED PRELIMINARY CONSOLIDATED FINANCIAL RESULTS
for the year ended 31 August 2018
Revenue
UP 7.4 billion
(2017: R6.2 billion)
Operating profit
UP R741 million
(2017: R673 million)
Adjusted HEPS
UP 188.5 cps
(2017: 181.2 cps)
Obtained a zaA- credit
rating from S&P Global
Ratings
eXtract unbundled
and R250 million loan
repayment received
in full
NATURE OF BUSINESS
enX is a diversified industrial Group that provides quality branded industrial equipment, petrochemical,
fleet management and logistics products and related services.
enX is organised into three business segments as follows:
- enX Equipment ("Equipment"):
- enX Industrial Equipment ("EIE") provides distribution, rental and value added services for
industrial and materials handling equipment in South Africa, other African countries and
the United Kingdom and Ireland ("UK"). EIE in South Africa is the market leader in materials
handling and the sole distributor of Toyota Forklifts, BT warehousing equipment, Konecranes
heavy duty forklifts and container handling equipment, Terberg Terminal Tractors, Hawker
batteries and chargers, Hako Industrial cleaning equipment and Fassi truck mounted cranes in
sub-Saharan Africa. Its UK operation, Impact, is the exclusive distributor for Cat Lift Trucks and
Konecranes heavy duty forklifts and container handling equipment in the UK.
- Power comprise New Way Power which manufactures, installs and maintains diesel generators
as well as provides temporary power through Genmatics. The business also distributes a range
of industrial and marine engines and components through Power O2 which is the sole distributor
of John Deere and Mitsubishi industrial engines in South Africa; and
- Wood trades through Austro, which distribute professional woodworking equipment, tooling,
edging and the provision of associated services such as blade sharpening and equipment
maintenance. It is the sole distributor of Biesse equipment and Leitz tooling in South Africa.
- enX Fleet ("Fleet"):
- The Eqstra Fleet Management and Logistics business ("EFML" or "Eqstra") provides a full
spectrum of passenger vehicle services including leasing, fleet management, outsourcing
solutions, maintenance, warranty management and vehicle tracking solutions. It also provides
fleet management solutions for commercial vehicle fleet owners and logistics solutions.
Its footprint is South Africa and sub-Saharan Africa. Eqstra's commercial vehicle operations are
supported by a nationwide network of workshops and panel repair shops.
- enX Petrochemicals ("Petrochemicals"):
- Centlube and African Group Lubricants ("AGL") produce and market oil lubricants and greases
in South Africa and sub-Saharan Africa. They are the sole distributors of ExxonMobil lubricants
(excluding marine and aviation) and Houghton International's Advanced Fluids Solutions
and Services.
- West African International ("WAI") and enX Polymers distribute plastics, polymers, rubber
and speciality chemicals into Southern African. They are the sole agents and distributors of
ExxonMobil chemicals in South Africa.
enX has a proven track record of acquiring quality industrial assets that have strong market positions
that represent leading global brands with committed customer partnerships. We instil entrepreneurial
management to drive returns through the disciplined allocation of capital. enX was founded in 2007,
operates in fourteen countries and has over 2 500 employees.
FINANCIAL RESULTS
Overview
Revenue for the year increased to R7.4 billion (2017: R6.2 billion) with the inclusion of EIE and EFML
for twelve months compared to ten months in the previous year. Consistent with prior disclosures,
management has elected to disclose adjusted EBIT which provides a more meaningful reflection of
sustainable earnings. Adjusted EBIT increased to R815 million (2017: R736 million).
Earnings
Adjusted headline earnings increased to R337 million (2017: R281 million) and translated into adjusted
HEPS of 188.5 cents (2017: 181.2 cents). Earnings have been impacted by general sluggish economic
market conditions especially in the Power industry.
Capex
Aligned to our growth strategy, capital expenditure increased to R1 781 million (2017: R1 385 million)
primarily to re-invest in leasing fleets.
Funding
The Group's interest-bearing liabilities decreased slightly to R4 782 million (2017: R4 890 million).
Leasing assets increased to R5 378 million (2017: R5 078 million). Bank covenants were all met during
the year. The Group's higher average net borrowings for the year resulted in an increased net interest
charge to R377 million (2017: R292 million).
The Group redeemed its maturing notes amounting to R612 million during the year.
Investments
In October 2017 the Group unbundled its investment in eXtract Group Limited. During the year the
Group purchased three forklift dealerships in the UK to grow its EIE geographic footprint, amounting
to R76 million. In addition, the Group invested R53 million for 37% in a base oil supplier.
Cash flow
Cash flows from operating activities after capital expenditure amounted to R226 million (2017:
R256 million). In addition, eXtract repaid its R250 million loan in full.
OPERATIONAL OVERVIEW
Equipment
Revenue of R3 719 million (2017: R3 063 million), adjusted EBIT of R401 million (2017: R346 million)
and adjusted PBT of R223 million (2017: R197 million) were achieved.
The year under review produced satisfactory results for EIE. By all metrics the performance was
better than the previous year. Margins are continuing on an acceptable trajectory. Both the SA and UK
businesses performed well, and this is testament to the superior solutions, products and partnerships
that have been forged over the years. The bulk of the revenue is earned from after-market sales and
services. EIE focuses on its overhead recovery percentage contributed to performance. Despite the
volatility in exchange rates all the businesses remained price competitive.
The Power business experienced difficult trading conditions in the first half of the year but managed
to turn the performance in the second half despite a subdued trading environment. The Wood business
experienced a small improvement in revenue however, due to this growth being driven more by lower
margin equipment sales rather than higher margin consumables and services, profitability was down.
The business introduced a rental solution to clients which has been well received.
Fleet
Revenues of R2 134 million (2017: R1 650 million), adjusted EBIT of R380 million (2017: R327 million)
and adjusted PBT of R197 million (2017: R181 million) were achieved. Eqstra continued to attract new
business with the emphasis on investment in sales resources as well as the implementation of "Quest",
a bespoke integrated IT solution for Eqstra and its clients. Eqstra maintained its high quality blue chip
customer base.
Unit and revenue growth in value added products ("VAPs"), particularly GPS and accident management,
contributed positively to margins for the year.
Petrochemicals
The petrochemicals business achieved revenue of R1 625 million (2017: R1 539 million), adjusted EBIT
of R80 million (2017: R101 million) and adjusted PBT of R56 million (2017: R77 million). The decline in
profitability was the result of lower sales volumes to an overstocked blending customer depleting its
existing stock holdings. This has subsequently reversed, and sales volumes are increasing. A new
lubricants blend plant was commissioned during the year to service greater demand in production
volumes, enabling growth in capacity. All key clients were retained with a number of additional
mandates awarded during the year. A late surge in revenue at WAI contributed to revenue growth of
28%. This, together with strong margins, drove growth in profit of 69% on the prior year. Working capital
requirements increased to support sales volumes.
PROSPECTS
Strategy
Our 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. We aim to do this by investing in
assets and opportunities that:
- Drive differentiation and scale;
- Strengthen our partnerships with leading global brands;
- Expand our businesses geographically;
- Build an entrepreneurial culture;
- Maintain strong financial disciplines; and
- Ensure an ongoing social licence to conduct business.
We believe that operating on a decentralised basis is the most effective way to drive these strategies.
As a result we have had success executing on many objectives that fall within these themes. Focusing
our organic and acquisitive growth initiatives within our segments reduces the risks of growing as we
have experienced teams, industry knowledge and infrastructure in place. The specific initiatives that we
are pursuing are set out below:
Equipment:
Growing our operations with the support of our global OEM partners
- EIE aims to expand its UK footprint and market share through the acquisition of complementary
forklift businesses and strengthen its long-term partnership with Mitsubishi Caterpillar Forklifts
Europe, the supplier of Cat Lift Trucks. EIE will also seek to grow forklift market share in line with
Toyota's aspirations and improve operational efficiencies.
- The Board is exploring the potential disposal of the Power and Wood businesses.
Fleet:
Leveraging data to differentiate our product offering
- Eqstra is focused on growing revenues derived from VAPs, which are non-capital intensive, and
which differentiates its offering. Capital has been made available to support their initiative to
increase retention rates on existing business and pursue new leasing contracts. Following the
implementation of Quest, further data and technology opportunities are being extracted to enhance
our fleet management services and internal operational efficiencies. The board is in the process of
considering a potential divestment of the fleet business to unlock maximum value for shareholders.
Petrochemicals:
Building a leading independent petrochemicals business in partnership with ExxonMobil
- The lubricants business will focus on growing its distribution and contract manufacturing volumes
in sub-Saharan Africa. These growth opportunities have been enabled through the successful
commissioning of its new inland blending plant, integrated customer relationships and strong
partnership with ExxonMobil. It will continue to seek and develop new product distribution
opportunities through this relationship.
- The chemicals business will focus on growing volumes in selected polymer and speciality
chemicals. The business will also seek new distributorships, whereby it can increase sales volumes
through its existing infrastructure.
Group:
The Group's aim is to continue to grow its investment in the EIE and Petrochemicals businesses.
Our funding plan over the next 18 months is aimed at extending our debt maturity profile, attracting a
more diverse source of funds and achieving an "A" credit rating.
Outlook
The Group is in a process of assessing its investment portfolio with a view of optimising its allocation of
capital and achieve its strategy of being an entrepreneurial, diversified industrial company with a shared
ambition to be a preferred custodian of leading global brands. This process may involve divestment of
some of its current investments.
On a constant currency basis, EIE is expected to deliver annualised earnings growth driven by the UK
operations. Southern African forklift operations are expected to deliver solid performances.
The lubricant business received approval from ExxonMobil, allowing them to locally blend certain
products. Local blending should make us more competitive. Supportive conditions in the polymers and
rubber markets are expected to drive higher volumes and profitability.
Macro-economic conditions remained subdued. Whilst recognising this, enX believes that its business
model and current portfolio of businesses have defensive characteristics given the annuity generating
nature of its products and assets, strong market positions, brand partnerships and long-term client
commitments. The Group has an experienced, entrepreneurial management team who will continue
to maintain strong relationships with its OEM's, customers, drive cost efficiencies and be alert to
growth opportunities.
DIVIDENDS
In line with the Group policy to reinvest for growth, no cash dividend has been declared for the current
and prior years.
For and on behalf of the board
SB Joffe JS Friedman
Chief Executive Officer Chief Financial Officer
29 October 2018
SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
as at as at
31 August 2018 31 August 2017
R'000 R'000
ASSETS
Non-current assets 6 781 132 6 557 215
Property, plant and equipment 397 055 374 470
Leasing assets 5 377 858 5 077 814
Goodwill 478 746 504 510
Intangible assets 400 245 428 943
Trade, other receivables and derivatives 7 540 3 140
Investment in associate 54 240 -
Other investments and loans 18 214 142 908
Deferred taxation 47 234 25 430
Current assets 2 928 340 3 093 649
Trade, other receivables and derivatives 1 117 551 1 213 608
Inventories 1 352 939 1 229 624
Other investments and loans - 94 415
Taxation receivable 6 545 26 020
Bank and cash balances 451 305 317 806
Assets held for distribution - eXtract - 212 176
Total assets 9 709 472 9 650 864
EQUITY AND LIABILITIES
Total shareholders' interests 2 793 220 2 715 250
Stated capital 3 103 455 3 087 083
Other reserves (681 952) (725 389)
Accumulated profits 335 715 322 145
Equity attributable to equity holders of the parent 2 757 218 2 683 839
Non-controlling interests 36 002 31 411
Non-current liabilities 4 420 505 4 534 345
Interest-bearing liabilities 3 870 081 4 002 506
Deferred vendor considerations 11 989 24 186
Non-current financial liabilities 13 513 -
Deferred taxation 524 922 507 653
Current liabilities 2 495 747 2 401 269
Interest-bearing liabilities 832 161 820 125
Deferred vendor considerations 23 342 26 898
Trade, other payables, provisions and derivatives 1 548 604 1 500 073
Taxation payable 46 931 37 824
Bank overdrafts 44 709 16 349
Total equity and liabilities 9 709 472 9 650 864
Supplementary information:
Number of shares in issue 181 317 725 180 439 427
Number of shares in issue (net of treasury shares) 179 288 484 178 156 727
Net asset value per share (cents) 1 537.9 1 506.4
Net tangible asset value per share (cents) # 1 110.1 1 047.7
(#)Equity attributable to equity holders of the parent/Number of shares net of treasury shares.
SUMMARISED CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME
Audited Audited
for the year ended for the year ended
31 August 2018 31 August 2017
R'000 R'000
Revenue 7 429 294 6 218 342
Net operating expenses (5 479 869) (4 485 094)
Profit from operations before depreciation and
amortisation 1 949 425 1 733 248
Depreciation and amortisation (1 141 121) (1 026 379)
(Loss)/profit on disposal of property, plant and equipment (1 036) 27
Share-based payment expense (26 110) (6 708)
Foreign exchange losses (39 933) (27 085)
Operating profit 741 225 673 103
Impairment of goodwill (56 184) -
Fair value adjustment of investments - (736 563)
Profit/(loss) before interest and taxation 685 041 (63 460)
Net finance costs (377 176) (291 679)
Interest received 24 423 71 803
Interest paid (401 599) (363 482)
Share of profit/(loss) from associates 1 246 (2 620)
Profit/(loss) before taxation 309 111 (357 759)
Taxation (78 448) (103 368)
Profit/(loss) after taxation 230 663 (461 127)
Attributable to:
Equity holders of the parent 225 722 (467 313)
Non-controlling interests 4 941 6 186
Profit/(loss) after taxation 230 663 (461 127)
Other comprehensive profit/(loss) net of taxation:
Profit/(loss) after taxation 230 663 (461 127)
Items that may be reclassified subsequently to profit
or loss:
- Foreign currency translation reserve 41 578 4 108
Total comprehensive income/(loss) 272 241 (457 019)
Attributable to:
Equity holders of the parent 267 300 (463 205)
Non-controlling interests 4 941 6 186
Total comprehensive income/(loss) 272 241 (457 019)
Supplementary information:
Basic earnings/(loss) per share (cents) 126.2 (301.2)
Headline earnings/(loss) per share (cents) 158.0 (301.2)
Adjusted headline earnings per share (cents) 188.5 181.2
EBITDA 1 835 568 967 869
Adjusted EBIT 815 185 735 626
Adjusted headline earnings 337 073 281 072
Diluted earnings/(loss) per share 124.7 **
Weighted average number of shares in issue 178 851 235 155 154 559
Weighted average diluted number of shares in issue 180 968 812 **
** The dilutionary instruments in issue have an anti-dilutionary effect.
HEADLINE EARNINGS AND ADJUSTED HEADLINE EARNINGS RECONCILIATIONS
Audited Audited
for the year ended for the year ended
31 August 2018 31 August 2017
R'000 R'000
Profit/(loss) after taxation attributable to equity holders
of the parent 225 722 (467 313)
Adjusted for:
Loss/(profit) on disposal of property, plant and equipment 1 036 (27)
Impairment of goodwill 56 184 -
Taxation effect on adjustments (290) 8
Headline earnings/(loss) attributable to
ordinary shareholders 282 652 (467 332)
Adjusted for:
Share-based payment expense 26 110 6 708
Restructuring and transaction costs 7 382 28 720
Retrenchment costs 5 636 -
Amortisation of intangible assets* 33 586 27 311
Interest received - eXtract - (60 800)
Fair value adjustment of investments and associate losses
- eXtract - 738 967
Taxation effect on adjustments (18 293) 7 498
Adjusted headline earnings attributable to
ordinary shareholders^ 337 073 281 072
EBIT RECONCILIATION
Earnings before interest, taxation, depreciation and
amortisation ("EBITDA") 1 835 568 967 869
Depreciation and amortisation (1 149 281) (1 033 949)
Earnings/(loss) before interest and taxation (EBIT) 686 287 (66 080)
Share-based payment expense 26 110 6 708
Restructuring and transaction costs 7 382 28 720
Retrenchment Costs 5 636 -
Amortisation of intangible assets* 33 586 27 311
Fair value adjustment of investments and associate losses
- eXtract - 738 967
Impairment of goodwill 56 184 -
Adjusted EBIT^ 815 185 735 626
Adjusted EBIT% 11 12
^ Adjusted headline earnings per share and adjusted EBIT take into account all the profits and losses from
operational, trading, and funding activities for the year and exclude once off transaction costs, IFRS 2 costs,
intangible asset amortisation (excluding software), fair value adjustments of investments and other once
off items.
* The amortisation of intangible assets arising as part of business combinations has been added back for
adjusted headlines earnings and adjusted EBIT.
SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Audited Audited
for the year ended for the year ended
31 August 2018 31 August 2017
R'000 R'000
Stated capital 3 103 455 3 087 083
Balance at beginning of the year 3 087 083 634 565
Increase through the issue of shares (net of costs) 18 493 2 494 201
Treasury shares (2 121) (41 683)
Other reserves (681 952) (725 389)
Balance at beginning of the year (725 389) (40)
Foreign currency translation reserve 41 578 4 108
Share-based payment expense 1 859 7 106
Transfer from accumulated profits of the fair value
adjustment of investments - (736 563)
Accumulated profits 335 715 322 145
Balance at beginning of the year 322 145 52 895
Total comprehensive income/(loss) for the year 225 722 (467 313)
Transfer to other reserves of the fair value adjustment
of investments - 736 563
Unbundling dividend to shareholders (212 152) -
Non-controlling interest 36 002 31 411
Balance at beginning of the year 31 411 -
At acquisition of subsidiary - 27 812
Total comprehensive income for the year 4 941 6 186
Dividends paid to minority shareholders (350) (2 587)
Total shareholders' interests 2 793 220 2 715 250
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Audited
for the year ended year ended
31 August 2018 31 August 2017
R'000 R'000
Cash flows from operating activities 2 007 418 1 640 721
Cash generated from operations before working
capital movements 1 893 662 1 699 545
Working capital movements 559 935 391 735
Interest received 24 423 71 803
Interest paid (401 022) (356 864)
Taxation paid (69 580) (165 498)
Cash flows from investing activities (1 656 842) (2 636 043)
Capital expenditure (1 781 109) (1 384 740)
Additions to goodwill (11 983) -
Proceeds on disposal of assets 9 177 12 859
Business combinations (67 179) (1 315 228)
Proceeds from other investments and loans 194 252 51 066
Cash flows from financing activities (248 827) 1 288 782
Net movement in interest-bearing borrowings (238 803) (109 193)
Deferred vendor considerations paid (9 674) (40 989)
Payments on transactions with non-controlling interests (350) (2 587)
Net proceeds from shares issued - 1 441 551
Net increase in cash and cash equivalents 101 749 293 460
Effects of exchange rate charges on cash and
cash equivalents 3 390 -
Cash and cash equivalents at beginning of the year 301 457 7 997
Cash and cash equivalents at end of the year 406 596 301 457
SUMMARISED CONSOLIDATED SEGMENTAL ANALYSIS
Equipment Fleet Petrochemicals Group, financing and consolidation Total
Audited Audited Audited Audited Audited Audited Audited Audited Audited Audited
for the year ended for the year ended for the year ended for the year ended for the year ended for the year ended for the year ended for the year ended for the year ended for the year ended
31 August 2018 31 August 2017 31 August 2018 31 August 2017 31 August 2018 31 August 2017 31 August 2018 31 August 2017 31 August 2018 31 August 2017
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Revenue 3 718 995 3 062 983 2 134 020 1 649 884 1 624 632 1 538 666 (48 353) (33 191) 7 429 294 6 218 342
- South Africa 2 689 005 2 322 261 1 932 375 1 453 546 1 477 800 1 449 123 47 712 72 785 6 146 892 5 297 715
- Rest of World 1 017 326 736 944 179 717 175 169 133 075 81 299 - - 1 330 118 993 412
- Intercompany 12 664 3 778 21 928 21 169 13 757 8 244 (96 065) (105 976) (47 716) (72 785)
EBITDA* 971 717 858 530 857 140 807 432 87 044 108 767 (80 333) (806 860) 1 835 568 967 869
Depreciation and amortisation (622 491) (515 328) (482 338) (482 684) (10 169) (10 870) (34 283) (25 067) (1 149 281) (1 033 949)
EBIT 349 226 343 202 374 802 324 748 76 875 97 897 (114 616) (831 927) 686 287 (66 080)
- South Africa 270 820 293 027 335 215 293 097 53 840 84 981 (114 616) (831 927) 545 259 (160 912)
- Rest of World 78 406 50 175 39 587 31 651 23 035 13 006 - - 141 028 94 832
Adjusted EBIT 400 660 345 706 380 210 326 760 80 434 101 381 (46 119) (38 221) 815 185 735 626
Net finance costs (177 933) (149 047) (183 127) (145 735) (24 414) (23 960) 8 298 27 063 (377 176) (291 679)
Adjusted profit/(loss) before taxation 222 727 196 659 197 083 181 025 56 020 77 421 (37 821) (11 158) 438 009 443 947
Total assets 4 676 400 4 320 170 3 050 455 3 117 237 997 906 840 424 984 711 1 373 033 9 709 472 9 650 864
- Goodwill and intangible assets 30 077 13 235 26 543 8 391 3 295 2 881 819 076 908 946 878 991 933 453
- Leasing assets 2 763 398 2 494 411 2 614 460 2 583 403 - - - - 5 377 858 5 077 814
- Inventories 877 462 810 449 13 918 27 630 461 559 391 545 - - 1 352 939 1 229 624
- Trade, other receivables and
derivative financial assets 544 970 612 677 256 029 290 651 344 446 311 547 (20 354) 1 873 1 125 091 1 216 748
- Other assets 460 493 389 398 139 505 207 162 188 606 134 451 185 989 462 214 974 593 1 193 225
Total liabilities 3 567 297 3 341 322 2 457 554 2 482 791 778 819 766 238 112 582 345 263 6 916 252 6 935 614
- Interest-bearing liabilities
and overdraft 2 553 820 2 474 841 1 874 605 1 884 969 284 609 289 830 33 917 189 340 4 746 951 4 838 980
- Deferred vendor consideration 5 000 9 413 - - 30 331 41 671 - - 35 331 51 084
- Trade, other payables, provisions
and derivatives 768 342 649 298 307 696 319 655 453 553 430 321 19 013 100 799 1 548 604 1 500 073
- Other liabilities 240 135 207 770 275 253 278 167 10 326 4 416 59 652 55 124 585 366 545 477
Capital expenditure net of proceeds 851 287 736 540 893 843 615 677 26 768 19 219 34 445 1 771 932 1 371 881
Number of employees 1 811 1 736 563 611 129 97 15 14 2 518 2 458
GEOGRAPHICAL SEGMENTATION
Total assets 4 676 400 4 320 170 3 050 455 3 117 237 997 906 840 424 984 711 1 373 033 9 709 472 9 650 864
- South Africa 3 155 168 3 134 732 2 674 156 2 777 549 952 563 812 091 984 711 1 373 033 7 766 598 8 097 405
- Rest of World 1 521 232 1 185 438 376 299 339 688 45 343 28 333 - - 1 942 874 1 553 459
Total liabilities 3 567 297 3 341 322 2 457 554 2 482 791 778 819 766 238 112 582 345 263 6 916 252 6 935 614
- South Africa 2 370 495 2 402 197 2 339 710 2 381 130 754 511 742 208 112 582 345 263 5 577 298 5 870 798
- Rest of World 1 196 802 939 125 117 844 101 661 24 308 24 030 - - 1 338 954 1 064 816
* Excludes intercompany management fees.
No single customer exceeds 10% of group revenue.
BASIS OF PREPARATION
The summarised preliminary consolidated financial statements for the year ended 31 August
2018 have been prepared in accordance with the requirements of the JSE Listings Requirements
applicable to summarised preliminary reports and the requirements of the Companies Act, No. 71 of
2008 of South Africa applicable to summarised financial statements. The JSE Listings Requirements
require preliminary reports to be prepared in accordance with the framework concepts and the
measurement and recognition requirements of International Financial Reporting Standards ("IFRS"),
the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards Council, and to also, as a minimum,
contain the information required by IAS 34: Interim Financial Reporting.
This report was compiled under the supervision of JS Friedman CA(SA), CFO of enX.
The accounting policies applied in the preparation of the consolidated financial statements (from which
these summarised results are derived) are, in terms of IFRS, from and are consistent with the accounting
policies applied in the preparation of the previous consolidated financial statements.
NOTES
Audited
for the year ended
31 August 2018
R'000
1. Capital commitments
Total capital commitments contracted -
Future expenditure will be financed from cash generated from operations and
existing banking facilities.
Capital commitments of R16.5 million existed in the prior year.
On 13 February 2017 shareholders approved financial assistance in the form
of a R15 million enX indemnity with regards to Capleverage Proprietary
Limited.
There were no contingent liabilities at 31 August 2018.
2. Assets held for sale - eXtract
These assets were distributed via an in specie dividend declaration to enX shareholders on
13 October 2017, as part of the eXtract restructure agreement.
Audited Audited
for the year ended for the year ended
31 August 2018 31 August 2017
R'000 R'000
3. Interest-bearing liabilities
Medium Term Note Programme 1 106 166 1 233 897
Bank debt and overdraft - South Africa 2 645 323 2 776 806
Bank debt and overdraft - Rest of world 995 462 828 277
Deferred vendor considerations 35 331 51 084
4 782 282 4 890 064
Comprising:
Non-current 3 882 070 4 026 692
Current 900 212 863 372
4 782 282 4 890 064
Audited Audited
for the year ended for the year ended
31 August 2018 31 August 2017
R'000 R'000
4. Net finance costs
Interest received - other 11 875 11 003
Interest received - eXtract - 60 800
Interest paid (400 728) (356 864)
Deemed interest income/(expense) 11 677 (6 618)
(377 176) (291 679)
5. Fair value hierarchy disclosures
Valuation methodology
Level 1 - Valuations with reference to quoted prices in an active market:
Financial instruments valued with reference to unadjusted quoted prices for identical assets or
liabilities in active markets where the quoted price is readily available and the price represents
actual and regularly occurring market transactions on an arm's length basis. There are no
level 1 financial instruments in the current year.
Level 2 - Valuations based on observable and unobservable inputs include:
Financial instruments valued using inputs other than quoted prices as described above for
level 1 but which are observable for the asset or liability, either directly or indirectly, such as a
quoted price for similar assets or liabilities in an active market; a quoted price for identical or
similar assets or liabilities in inactive markets; a valuation model using observable inputs; and a
valuation model using inputs derived from/corroborated by observable market data.
Level 3 - Valuations based on unobservable inputs include:
Financial instruments are valued using significant inputs which are not based on observable
market data.
The table below shows the Group's financial assets and liabilities that are recognised and
subsequently measured at fair value, analysed by valuation technique.
Level 2 Level 3 Fair value
31 August 2018 R'000 R'000 R'000
Financial assets
Other investments and loans - 18 214 18 214
Designated as fair value through profit and loss
- Derivative financial assets 38 548 - 38 548
38 548 18 214 56 762
Financial liabilities
- - -
BUSINESS COMBINATIONS
The UK operation of EIE, Impact, acquired 100% of the share capital of three UK companies during the
year, thus expanding its geographical footprint. The companies acquired were Bendigo Mitchell Limited
on 17 October 2017, MacBrown Fork Truck Services Limited on 8 December 2017 and on 1 July 2018,
Dechmont Forklift Trucks Limited, a dealer of CAT Fork Lift Trucks. These businesses operate in broadly
the same geographical, product and customer markets as our current business operations.
In addition enX completed the acquisition of the Fleet business in Botswana by paying R12 million. This
payment was recorded as additional goodwill in the Fleet cash-generating unit.
R'000
Non-current assets 73 820
Current assets 35 637
Non-current liabilities (7 237)
Current liabilities (25 949)
Total identifiable net assets acquired 76 271
Total consideration transferred paid 76 271
Cash balances taken over (9 092)
Net cash outflow on total acquisitions 67 179
The purchase price allocation is provisional and will be finalised on the first anniversary of the
business combination.
Revenue of R48,5 million (GBP2.8 million) and net profit after taxation of R34,6 million (GBP.2 million) have
been included in these results with effect from the acquisition date. If the acquisition had occurred on
1 September 2017, the following amounts would have been included in the group results: Revenue of
R90,1 million (GBP5.2 million) and net profit after taxation of R5,2 million (GBP0.3 million).
SUBSEQUENT EVENTS
Improved maturity profile
Post year-end the Group obtained a zaA- long-term national scale credit rating from S&P Global Ratings.
This achievement enabled to Group to raise funds in the capital market at improved rates and also
broaden the scope of potential investors.
The banks agreed to extend R510 million of amortising bank term debt, improving the maturity profile of
the Group over the next 18 months. In addition, R96 million of four-year notes were raised in the capital
market.
The Group utilised cash received to early redeem R45 million of EQS05 bonds that were due to mature
in April 2019.
Apart from the above, there have been no other material events subsequent to year-end.
AUDIT REPORT
enX's independent auditor, Deloitte & Touche, has issued its opinion on the consolidated and separate
financial statements for the year ended 31 August 2018. The audit was conducted in accordance with
International Standards on Auditing. Deloitte & Touche has issued an unmodified opinion. A copy of the
independent auditor's report together with a copy of the audited consolidated and separate financial
statements is available for inspection at enX's registered office during normal business hours from
29 October 2018.
The summarised preliminary consolidated financial statements have been derived from and are
consistent in all material respects with the consolidated financial statements for the year ended
31 August 2018 but are not audited. The directors take full responsibility for the preparation of these
summarised preliminary consolidated financial results and confirm that the financial information has
been correctly extracted from the underlying audited consolidated financial statements. Any reference
to future financial information included in this announcement has not been reviewed or reported on
by the auditor. Shareholders are advised that, in order to obtain a full understanding of the nature of
the auditor's engagement, they should obtain a copy of that report together with the consolidated and
separate audited consolidated financial statements as at 31 August 2018.
DIRECTORS
Executive directors: SB Joffe (Chief Executive Officer), JS Friedman (Financial Director)
Non-executive directors: PM Makwana* (Chairman), PC Baloyi, SF Booysen*, A Joffe, NV Lila*,
LN Molefe*, PS O'Flaherty, AJ Phillips*
(* Independent)
The following changes to directorships took place during the year:
- TC Moodley resigned as a non-executive director, effective 21 December 2017;
- P Mansour, the previous Executive Deputy Chairman resigned as director, effective
31 December 2017 and was appointed Chief Investment Officer;
- JL Serfontein resigned as CEO, effective 31 December 2017;
- SB Joffe, the previous Chairman, was appointed CEO effective 1 January 2018;
- MP Makwana was appointed independent Chairman, effective 1 January 2018;
- LL von Zeuner resigned as independent non-executive director, effective 13 July 2018;
- IM Lipworth resigned as CFO and director, effective 31 August 2018;
- JS Friedman was appointed as CFO and director effective 1 September 2018; and
- A Joffe was appointed non-executive director effective 5 September 2018.
Registered office
202D 11 Crescent Drive, Melrose Arch, Melrose
Postal address
PostNet Suite X86, Private Bag X7, Aston Manor, 1630
Sponsor
The Standard Bank of South Africa;
Transfer secretaries
Computershare Investor Services Proprietary Limited
Auditors
Deloitte & Touche
Company secretary
L Moller
Release date
29 October 2018
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