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eXtract GROUP LIMITED - Pro forma financial effects for the eXtract restructure and excess asset disposal and withdrawal of cautionary

Release Date: 21/06/2017 08:55
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Pro forma financial effects for the eXtract restructure and excess asset disposal and withdrawal of cautionary

EXTRACT GROUP LIMITED
(previously Eqstra Holdings Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1998/011672/06)
JSE share code: EXG       ISIN: ZAE000223202
(“eXtract” or “the company”)


PRO FORMA FINANCIAL EFFECTS FOR THE EXTRACT RESTRUCTURE AND EXCESS ASSET DISPOSAL AND WITHDRAWAL OF CAUTIONARY


eXtract shareholders are referred to the announcement released on SENS on 18 April 2017 regarding, inter alia, the
restructure and recapitalisation of eXtract (the “restructure”) and the disposal of excess assets, including the Tharisa
transaction (announced on SENS on 11 May 2017), the Sandton Plant transaction (announced on SENS on
9 June 2017) and the disposal by eXtract of 99% of the equity in PT MCC Extraction Solutions (“PT MCC”) to
Buildmax Limited for a nominal consideration (this transaction is not categorisable in terms of section 9 of the JSE
Listings Requirements) (the “excess asset disposal”).

The pro forma financial information (the “financial effects”) of the excess asset disposal and restructure (the
“transactions”) on eXtract’s net asset value (“NAV”) and net tangible asset value (“NTAV”) per share at
31 December 2016 and earnings per share (“EPS”), diluted EPS, headline earnings per share (“HEPS”) and diluted
HEPS for the 6 months ended 31 December 2016 are set out below. The financial effects are the responsibility of the
directors of eXtract and have been prepared for illustrative purposes only to provide eXtract’s shareholders with
information on how the transactions may have impacted the financial position and financial performance of eXtract.
Due to their nature, the financial effects may not fairly present eXtract’s financial position, changes in equity,
financial performance and cash flows subsequent to the transactions.

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 eXtract’s accounting policies as at
31 December 2016.

The table below reflects the financial effects of the transactions:

                                                                        Before the           After the
cents                                                                 transactions        transactions       % change

NAV per share                                                              (198.8)                18.0        (109.1%)
NTAV per share                                                             (198.8)                18.0        (109.1%)
Number of shares in issue net of treasury shares (million)                    499                4 254

EPS and diluted EPS from continuing operations                             (319.4)              (31.5)         (90.1%)
HEPS and diluted HEPS from continuing operations                           (116.5)              (11.3)         (90.3%)
EPS and diluted EPS from discontinued operations                            (59.8)                 0.5        (100.8%)
HEPS and diluted HEPS from discontinued operations                           109.0                11.2         (89.7%)
Weighted average shares in issue (million)*                                    405               4 160

* There are no dilutive shares

Notes and assumptions:

1. The figures set out in the “Before the transactions” column above have been extracted without adjustment from
   the unaudited interim results of eXtract for the six months ended 31 December 2016.
2. NAV per share and NTAV per share, as set out in the “After the transactions” column above, reflect the financial
   effects on the assumption the transactions were implemented on 31 December 2016 and after incorporating the
   following adjustments:
   2.1. For the excess asset disposal:
        2.1.1. The excess assets comprise property plant and equipment, leasing assets, inventory and assets held for
               sale with a combined carrying value of R1 710 million at 31 December 2016.
        2.1.2. The excess assets are assumed to be sold for an aggregate consideration of R1 681 million received in
               cash comprising:
               2.1.2.1.      for the Tharisa assets, a consideration of R303 million reduced by de-establishment costs and
                             leave and severance pay deductions of R24 million;
               2.1.2.2.      for the MCC properties in terms of the Sandton Plant transaction, a consideration of
                             R52 million;
               2.1.2.3.      for 99% of the issued shares of PT MCC, a nominal consideration of R1; and
               2.1.2.4.      for the balance of the excess assets, an assumed consideration of R1 350 million, being their
                             carrying value at 31 December 2016.
        2.1.3. A loss on sale of assets of R29 million, being the difference between the aggregate consideration of
               R1 681 million and the carrying value of the excess assets at 31 December 2016 of R1 710 million, is
               recognised.
        2.1.4. The aggregate proceeds of R1 681 million are applied to settle interest-bearing borrowings of
               R465 million and liabilities directly associated with assets held for sale of R199 million, with the
               balance of R1 017 million being allocated to cash and cash equivalents.
        2.1.5. Accumulated loss is increased by R119 million comprising:
               2.1.5.1.     the loss on sale of assets of R29 million; and
               2.1.5.2.     a provision of R90 million relating to the retrenchment of employees, other restructure related
                            costs and eXtract’s portion of once-off transaction costs.
   2.2. For the restructure:
        2.2.1. enX subscribes for new ordinary shares in MCC Contracts Proprietary Limited (“MCC”) at a
               subscription price of approximately R1 878 million, which equates to the aggregate value of MCC’s
               debt owing to enX being the designated debt less an amount of R250 million.
        2.2.2. The subscription proceeds are utilised by MCC to reduce the designated debt. enX exchanges all of the
               shares it holds in MCC for 3 755 171 958 eXtract shares at 50 cents per share.
3. EPS, diluted EPS, HEPS and diluted HEPS, as set out in the “After the transactions” column above, reflect the
   financial effects on the assumption the transactions were implemented on 1 July 2016 and after incorporating the
   following adjustments:
   3.1. For the excess asset disposal:
        3.1.1. A loss on sale of assets of R29 million, being the difference between the aggregate consideration of
               R1 681 million and the carrying value of the excess assets at 31 December 2016 of R1 710 million, is
               recognised. The carrying value at 31 December 2016 is after a net impairment charge of R1 141 million
               which is therefore left unchanged.
        3.1.2. The aggregate proceeds of R1 681 million are applied to settle interest-bearing borrowings of
               R465 million and liabilities directly associated with assets held for sale of R199 million, with the
               balance of R1 017 million being allocated to cash and cash equivalents, resulting in a reduction of net
               finance costs by R27 million.
        3.1.3. All income and expenses related to the excess assets comprising revenue of R1 152 million, profit from
               operations of R200 million, depreciation and amortisation of R171 million and finance income of
               R10 million are reversed.
        3.1.4. A provision of R90 million relating to the retrenchment of employees, other restructure related costs and
               eXtract’s portion of once-off transaction costs, together with assumed ongoing head office costs of
               R10 million have been provided for.
        3.1.5. The tax impact of the adjustments is calculated based on the statutory tax rate of 28%.
   3.2. For the restructure:
        3.2.1. enX subscribes for new ordinary shares in MCC at a subscription price of approximately R1 878
               million, which equates to the aggregate value of MCC’s debt owing to enX being the designated debt
               less an amount of R250 million.
        3.2.2. The subscription proceeds are utilised by MCC to reduce the designated debt. enX exchanges all of the
               shares it holds in MCC for 3 755 171 958 eXtract shares at 50 cents per share.
        3.2.3. Net finance costs relating to the designated debt of R117 million, together with taxation thereon, is
               reversed.
   3.3. All adjustments other than loss on sale of assets, provisions for retrenchment and restructure related costs and
        transaction costs are expected to have a continuing effect.

WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

Following the release of this announcement, the cautionary announcement originally published by eXtract on
13 March 2017 is hereby withdrawn and caution is no longer required to be exercised when dealing in eXtract shares.

21 June 2017


Joint corporate advisor and sponsor
Java Capital

Joint corporate advisor
BSM Black

Independent reporting accountants
Deloitte & Touche Sponsor Services

Date: 21/06/2017 08:55:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

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