BT2/: ENABLE Increasing EARNINGS PER SHARE (One setback allowed) FY2022 Perspective
Quote:
Originally Posted by
Snoopy
The 'Enable Annual Reports' may be found here:
https://www.enable.net.nz/about-enab...-publications/
Profits for the last five years have been normalised as described in the notes below:
'Earnings Per Share' = 'Adjusted Net Profit' / 'No. Shares on Issue'
FY2016: [$3.311m - $11.838m + 0.72( $0.377m + 0.005m)] / 34m = -24.3cps
FY2017: [-$8.518m - 0.72( $0.023m)] / 44m = -19.4cps
FY2018: [-$3.783m + 0.72($0.021m)] / 67.5m = -5.6cps
FY2019: [+$10.830m + 0.72($0.015m)] / 67.5m = 16.1cps
FY2020: [+$11.320m + 0.72($0.010m) - $0.006m] / 67.5m = 16.8cps
Notes
1/ For FY2016, I have removed $11.838m of asset revaluations that came about from a business recombination, added back $377k of business acquisition costs and $5k of Forex losses.
2/ For FY2017, I have removed $23k of Forex gains.
3/ For FY2018, I have added back $21k of Forex losses.
4/ For FY2019, I have added back $15k of Forex losses.
5/ For FY2020, I have added back $10k of Forex losses and subtracted $6k from asset sales
The eps trend is all one way, and that is up!
Conclusion: Pass Test
A couple of reporting periods have gone by since I last reported. So here are the updated numbers on how 'Enable', the Christchurch region's equivalent of Chorus, is doing. The 'Enable Annual Reports' may be found here:
https://www.enable.net.nz/about-enab...-publications/
Profits for the last five years have been normalised as described in the notes below:
'Earnings Per Share' = 'Adjusted Net Profit' / 'No. Shares on Issue'
FY2018: [-$3.783m + 0.72($0.021m)] / 67.5m = -5.6cps
FY2019: [+$10.830m + 0.72($0.015m)] / 67.5m = 16.1cps
FY2020: [+$11.320m + 0.72($0.010m) - $0.006m] / 67.5m = 16.8cps
FY2021: [+$15.621m +0.72($0.003m) + $0.251m] / 67.5m = 23.5cps
FY2022: [+$22.440m +0.72($0.018m) - $0.010m] / 67.5m = 33;2cps
Notes
1/ For FY2018, I have added back $21k of Forex losses.
2/ For FY2019, I have added back $15k of Forex losses.
3/ For FY2020, I have added back $10k of Forex losses and subtracted $6k from asset sales
4/ For FY2021, I have added back $3k of Forex losses and added back $251k of losses from disposal of Property, Plant & Equipment.
5/ For FY2022, I have added back $18k of Forex losses and subtracted $10k from asset sales
The eps trend is all one way, and that is up!
Conclusion: Pass Test
SNOOPY
BT3/: ENABLE ROE (>15% for five years, one setback allowed) [perspective 2022]
Quote:
Originally Posted by
Snoopy
ROE or 'Return on Equity' is calculated as follows:
ROE = Adjusted Net Profit / (Shareholder Equity - Equity Adjusted Asset Revaluations)
FY2016: -$8.252m / [$100.799m - (0.2944x $11.838m)] = -8.48%
FY2017: -$8,535m / [$138.888m - (0.3270x $11.838m)]= -6.32%
FY2018: -$3.768m / [$212.952m - 0.4068 x ($11.838m + $24.854m)] = -1.90%
FY2019: +$10.841m / [$227.988m - 0.4157x ($11.838m + $24.854m)] = +5.10%
FY2020: +$11.321m / [$311.323m - 0.4690x ($11.838m + $24.854m +$66.424m)] = +4.31%
Notes
1/ I have decided to adjust shareholder equity by removing the equity funded component of all historic asset revaluations. Asset revaluations are beneficial for shareholders. But since no shareholder funds were outlaid to obtain these revaluations (a good thing), it will artificially reduce the return on 'paid for' company equity - if I include the revaluations in my ROE calculations. To calculate the adjustment to make to:
1/ the shareholder equity for all historically revalued assets,
2/ for each year
I have taken the cumulative historically revalued totals and multiplied each total by the equity ratio of that year.
Although we are going in the right direction, at no time in the last five years has Enable got even close to our return on equity target.
Conclusion: Fail Test
ROE or 'Return on Equity' is calculated as follows:
ROE = Adjusted Net Profit / (Shareholder Equity - Equity Adjusted Asset Revaluations)
FY2018: -$3.768m / [$212.952m - 0.4068 x ($11.838m + $24.854m)] = -1.90%
FY2019: +$10.841m / [$227.988m - 0.4157x ($11.838m + $24.854m)] = +5.10%
FY2020: +$11.321m / [$311.323m - 0.4690x ($11.838m + $24.854m +$66.424m)] = +4.31%
FY2021: +$15,874m / [$357.410m - 0.4834x ($11.838m+$24.854m +$66.424m+$48.266m )] = +5.58%
FY2022: +$22.443m / [$359.850m - 0.4792x ($11.838m+$24.854m +$66.424m+$48.266m )] = +7.81%
Notes
1/ I have decided to adjust shareholder equity by removing the equity funded component of all historic asset revaluations. Asset revaluations are beneficial for shareholders. But since no shareholder funds were outlaid to obtain these revaluations (a good thing), it will artificially reduce the return on 'paid for' company equity - if I include the revaluations in my ROE calculations. To calculate the adjustment to make to:
1/ the shareholder equity for all historically revalued assets,
2/ for each year
I have taken the cumulative historically revalued totals and multiplied each total by the equity ratio of that year.
Although we are going in the right direction, at no time in the last five years has Enable got even close to our return on equity target.
Conclusion: Fail Test
SNOOPY
BT4/ ENABLE Ability to raise margins above the rate of inflation [perspective 2022]
Quote:
Originally Posted by
Snoopy
Net Profit Margin = Adjusted Net Profit After Tax / Working Revenues
FY2016: -$8.252m / [$63.370m - $43,144m -$8.538m] = -70.6%
FY2017: -$8,535m / [$36.272m - $8.781m]= -31.0%
FY2018: -$3.768m / [$48.473m - $6.628m]= -2.14%
FY2019: +$10.841m / [$58.678m - $2.486m] = +19.3%
FY2020: +$11.321m / [$76.985m - $2.000m] = +15.4%
Notes
1/ I have removed 'Contract Construction Revenue' of $43.144m when ENL was regarded as an associate to ESL, before ESL gained full control of it . From FY2017 onwards ESL took full control of ENL. This transaction occurred on 29th June 2016. Balance date for ESL/ENL is 30th June of each year.
2/ I have removed 'inventory' revenue from each year. 'Inventory' represents goods bought to be on sold to contractors for the building of the network.
The above trend is showing that as the fibre network finishes being built, and the take up improves, then profit margins for the business improves. That should not come as a surprise to anyone reading this. What might come as a surprise is to see the net profit margin dip in the last reported financial year. However, I see this as a 'rogue result' that does not devalue the underlying uptrend (yet).
Conclusion: Pass Test
Net Profit Margin = Adjusted Net Profit After Tax / Working Revenues
FY2018: -$3.768m / [$48.473m - $6.628m]= -2.14%
FY2019: +$10.841m / [$58.678m - $2.486m] = +19.3%
FY2020: +$11.321m / [$76.985m - $2.000m] = +15.4%
FY2021: +$15,874m / [$84.433m - $2.138m] = +19.3%
FY2022: +$22.443m / [$94.690m - $3.195m] = +24.2%
Notes
1/ I have removed 'inventory' revenue from each year. 'Inventory' represents goods bought to be on sold to contractors for the building of the network. The increase in inventory, despite the network being largely completed, is I believe likely to be related to a 'one in ten year' upgrade to the electronics that drive the network, the 'level 2' investment needed to ensure the network can fulfill future customer expectations like 'hyperfibre'.
The above trend is showing that as the fibre network finishes being built, and the take up improves, then profit margins for the business improves. That should not come as a surprise to anyone reading this. What might come as a surprise was to see the net profit margin dip over FY2020. However, this looks to be a 'rogue result' that has not derailed the underlying uptrend.
Conclusion: Pass Test
SNOOPY