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Pro forma financial effects for the eXtract restructure and unbundling and withdrawal of cautionary
ENX GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2001/029771/06)
JSE share code: ENX ISIN: ZAE000222253
(“enX” or “the company”)
PRO FORMA FINANCIAL EFFECTS FOR THE EXTRACT RESTRUCTURE AND UNBUNDLING AND WITHDRAWAL OF CAUTIONARY
enX shareholders are referred to the announcement released on SENS on 18 April 2017 regarding, inter alia, the
recapitalisation of eXtract Group Limited (“eXtract”) and the subsequent unbundling of enX’s shareholding in eXtract (the
“transaction”).
The pro forma financial information (the “financial effects”) of the transaction on enX’s net asset value (“NAV”) per share
and net tangible asset value (“NTAV”) per share at 28 February 2017 and earnings per share (“EPS”), diluted EPS,
headline earnings per share (“HEPS”) and diluted HEPS for the 6 months ended 28 February 2017 are set out below. The
financial effects are the responsibility of the directors of enX and have been prepared for illustrative purposes only to
provide enX’s shareholders with information on how the transaction may have impacted the financial position and financial
performance of enX. Due to their nature, the financial effects may not fairly present enX’s financial position, changes in
equity, financial performance and cash flows subsequent to the transaction.
The financial effects are presented in accordance with the JSE Listings Requirements, the Guide on Pro Forma Financial
Information issued by The South African Institute of Chartered Accountants and the measurement and recognition
requirements of International Financial Reporting Standards (“IFRS”).
The financial effects have been prepared using accounting policies that are consistent with IFRS and with the basis on
which the historical financial information has been prepared in terms of enX’s accounting policies as at 28 February 2017.
The table below reflects the financial effects of the transaction:
Before the After the
cents transaction transaction % change
NAV per share 1 820.6 1 180.5 (35.2%)
NTAV per share 1 367.8 727.7 (46.8%)
Number of shares in issue, net of treasury shares 178 156 747 178 156 747 -
EPS 73.6 51.7 (29.8%)
HEPS 73.6 51.8 (29.6%)
Diluted EPS 72.8 51.2 (29.7%)
Diluted HEPS 72.8 51.2 (29.7%)
Weighted average shares in issue, net of treasury shares 155 154 559 155 154 559 -
Diluted number of shares in issue 156 867 245 156 867 245 -
Notes and assumptions:
1. The figures set out in the “Before the transaction” column above have been extracted from the condensed unaudited
interim financial results of enX for the six months ended 28 February 2017.
2. NAV per share and NTAV per share, as set out in the “After the transaction” column above, reflect the financial effects
on the assumption the transaction was implemented on 28 February 2017 and after incorporating the following
adjustments:
2.1. enX subscribes for new ordinary shares in MCC Contracts Proprietary Limited (“MCC”) at a subscription price
of approximately R2 105 million, which equates to the aggregate value of MCC’s debt owing to enX being the
First Mezzanine Loan, Second Mezzanine Loan and MCC Preference Shares (collectively referred to hereinafter
as the “eXtract Debt”). The subscription proceeds are utilised by MCC to settle the eXtract Debt. enX
exchanges all of the shares it holds in MCC for 5 213 202 682 eXtract shares at 40.38 cents per share; and
2.2. 5 314 602 682 eXtract shares, comprising the 5 213 202 682 eXtract shares acquired in terms of paragraph 2.1
above and the 101 400 000 existing ordinary eXtract shares held by enX, are unbundled to enX shareholders in
terms of the transaction and have been fair valued using the closing share price of 20c per eXtract share as at
28 February 2017. This results in a negative fair value adjustment of R72.4 million being the difference between
the carrying value of the eXtract Debt and equity as at 28 February 2017 of R1 135.3 million and fair value.
Accordingly, the total value of the in specie dividend to enX shareholders is R1 062.9 million.
2.3. The eXtract share price at the transaction effective date may be different from the share price at
28 February 2017, which would result in a different fair value adjustment. The fair value adjustment would be
recorded in the statement of profit and loss and other comprehensive income. Every 1 cent movement (either up
or down) in the eXtract share price away from the carrying value of the eXtract shares of 21.4 cents per eXtract
share at 28 February 2017, will result in an increase or decrease in EPS and HEPS as set out in the “After the
transaction” column of 34.3 cents per share. The amount of the in specie dividend would however change by an
equivalent amount of this fair value adjustment, with the result that there would be no impact on NAV per share
and NTAV per share.
2.4. Once off transaction costs of R5 million have been accounted for.
3. EPS, diluted EPS, HEPS and diluted HEPS, as set out in the “After the transaction” column above, reflect the financial
effects on the assumption the transaction was implemented on 1 September 2016 and after incorporating the following
adjustments:
3.1. The income earned on the eXtract Debt of R60.8 million (and tax thereon of R17.0 million), is reversed, which
adjustment is of a continuing nature;
3.2. The loss from the associate investment in eXtract of R2.4 million is reversed, which adjustment is of a
continuing nature;
3.3. The eXtract Debt was advanced and issued on 1 September 2016, as part of the transaction that was detailed in
an announcement released on SENS on 30 June 2016. The negative fair value adjustment of R12.5 million
recognised in enX’s condensed unaudited interim financial results for the six months ended 28 February 2017,
which relates to valuing the existing 101 400 000 eXtract shares held by enX to their fair value at 28 February
2017, has been reversed as this adjustment would not have been incurred should the transaction have been
effective on 1 September 2016. This adjustment is once-off;
3.4. On 1 September 2016 enX subscribes for new ordinary shares in MCC at a subscription price of approximately
R2 105 million and the subscription proceeds are utilised by MCC to settle the eXtract Debt. enX exchanges all
of the shares it holds in MCC for 5 213 202 682 eXtract shares. 5 314 602 682 eXtract shares, comprising the
5 213 202 682 eXtract shares acquired in paragraph 2.1 above, together with the 101 400 000 existing ordinary
eXtract shares held by enX, are fair valued as part of the purchase price allocation on their distribution to
shareholders as an in specie dividend; and
3.5. Once off transaction cost of R5 million have been accounted for.
4. There are no other subsequent events that require adjustments to the financial effects.
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Following the release of this announcement, the cautionary announcement originally published by enX on 31 March 2017,
and renewed on 18 April 2017, is hereby withdrawn and caution is no longer required to be exercised when dealing in enX
shares.
15 May 2017
Corporate advisor and sponsor
Java Capital
Independent reporting accountants
Deloitte
Date: 15/05/2017 07:55:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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