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EXX: Proforma Financial Effects/Updated Timing of the Implementation of Replacement BEE Transaction And Withdrawal
Exxaro Resources Limited
(Incorporated in the Republic of South Africa)
Registration number: 2000/011076/06
JSE share code: EXX
ISIN: ZAE000084992
ADR code: EXXAY
(“Exxaro” or the “Company”)
PRO FORMA FINANCIAL EFFECTS AND UPDATED TIMING OF THE IMPLEMENTATION OF THE
REPLACEMENT BEE TRANSACTION AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Unless otherwise defined, all capitalised terms have the same meaning as defined in the cautionary
announcements released by Exxaro on 18 September 2017 and 5 October 2017.
1. INTRODUCTION
1.1. Exxaro shareholders are referred to the renewal of cautionary announcement released on the
SENS on Monday, 18 September 2017, relating to the Replacement BEE Transaction, and again
renewed on Thursday, 5 October 2017, which addressed the outcome of the MS333 Election
Process (together, the “Previous Announcements”).
1.2. The Election Process has now been concluded, and accordingly Exxaro is in a position to disclose
the pro forma financial effects of the Replacement BEE Transaction. This is addressed in
paragraph 2 below.
2. PRO FORMA FINANCIAL EFFECTS OF THE REPLACEMENT BEE TRANSACTION
2.1. The pro forma financial effects of the Replacement BEE Transaction, as set out in paragraph 2.6
on, inter alia, Exxaro’s net asset value per share, tangible net asset value per share, basic
earnings/(loss) per share, diluted earnings/(loss) per share, headline earnings/(loss) per share and
diluted headline earnings/(loss) per share are based on the most recently published reviewed
condensed group interim financial statements for the six-month period ended 30 June 2017, which
are in compliance with International Financial Reporting Standards (“IFRS”).
2.2. The pro forma condensed group Statement of Comprehensive Income, the pro forma condensed
group Statement of Financial Position and the pro forma Reconciliation of group Headline Earnings
(collectively, the “Pro Forma Financial Information”) and the accompanying report of the
Independent Reporting Accountant, PricewaterhouseCoopers Incorporated, will be included in the
Circular addressing the Replacement BEE Transaction, which is expected to be posted to Exxaro
shareholders on or about Monday, 23 October 2017.
2.3. The Pro Forma Financial Information is the responsibility of the Board of Directors of Exxaro and
was prepared for illustrative purposes only and may not, because of its nature, fairly present
Exxaro’s financial position, changes in equity and results of operations or cash flows. It does not
purport to be indicative of what the condensed group financial results would have been, had the
Replacement BEE Transaction been implemented on a different date.
2.4. The Pro Forma Financial Information has been prepared to illustrate the impact of the Replacement
BEE Transaction on the condensed group interim financial statements of Exxaro for the six-month
period ended 30 June 2017, had the Replacement BEE Transaction occurred on 1 January 2017
for purposes of the condensed group Statement of Comprehensive Income as well as the
Reconciliation of group Headline Earnings and on 30 June 2017 for purposes of the condensed
group Statement of Financial Position.
2.5. The main accounting impact of the BEE Replacement Transaction is summarised as follows:
2.5.1. In terms of IFRS 10: Consolidated Financial Statements, Exxaro controls NewBEECo and
as such NewBEECo will be consolidated by Exxaro. The resultant main impact of
consolidating NewBEECo is:
a. the shares held by NewBEECo in Exxaro are accounted for as treasury shares; and
b. the Third Party Funding is consolidated onto the pro forma Statement of Financial
Position.
2.5.2. In addition, an IFRS 2: Share based payment expense of R2 969 million is recognised in
the pro forma Statement of Comprehensive Income as a once-off charge and will not
have a continuing effect on the group Statement of Comprehensive Income. The share-
based payment expense has been calculated:
a. on the basis that the Specific Issue results in an option to be granted to BEE SPV and
the IDC, with their equity contributions (the MS333 Reinvestment and the IDC
Reinvestment), treated as a premium paid by BEE SPV and the IDC for this option;
and
b. with reference to the requirements of IFRS 2 and the South African Institute of
Chartered Accountants (“SAICA”) Financial Reporting Guide 2 Accounting for BEE
Transactions. Since these options are not tradable, IFRS 2 requires the fair value of
these instruments to be calculated using a suitable, market-consistent valuation
model. A Monte Carlo simulation model was used with information available as at 22
September 2017 and will be revised on implementation of the Replacement BEE
Transaction. The valuation is based on approximately 22% of Exxaro’s issued
ordinary share capital being held by NewBEECo for the benefit of BEE SPV and IDC
at a spot Exxaro Share price of R119.49 per share, being the closing share price as at
22 September 2017.
2.6. The pro forma financial effects of the Replacement BEE Transaction are set out in the table below:
Before After
Percentage
Replacement Replacement
change
For the six-month period ended 30 June BEE BEE
2017 Transaction Transaction %
Net asset value per share (1) Rand 118 137 16
Tangible net asset value per share (2) Rand 117 132 13
Basic earnings/(loss) per share cents 852 (198) (123)
Diluted earnings/(loss) per share cents 852 (198) (123)
Headline earnings/(loss) per share cents 882 (160) (118)
Diluted headline earnings/(loss) per share cents 882 (160) (118)
Weighted average number of shares (3) millions 316 253 (20)
Diluted weighted average number of shares
(4) millions 316 253 (20)
Number of shares in issue, net of treasury
shares millions 314 251 (20)
Notes:
1. Net asset value per share is calculated by dividing total equity attributable to owners of the parent
of the group by the total number of Exxaro shares in issue, net of treasury shares.
2. Tangible net asset value per share is equal to the total equity attributable to owners of the parent of
the group less the sum of intangible assets, goodwill and deferred tax assets divided by the total
number of Exxaro shares in issue, net of treasury shares.
3. The net movement in the weighted average number of shares comprises a reduction of 22 686 572
shares repurchased in accordance with the Second Repurchase and an increase of 67 221 565
shares in accordance with the Specific Issue. This is reduced by 107 612 026 shares which are
accounted for as treasury shares on consolidation.
4. There has been no movement in the diluted weighted average number of share as the
Replacement BEE Transaction is anti-dilutive. As a result of the IFRS 2 expense, Exxaro is in a
loss position, had Exxaro been in a profit position the Replacement BEE Transaction would have
had a dilutive impact.
3. REVISED TIMING OF THE REPLACEMENT BEE TRANSACTION
3.1. Posting of the Circular and notice of General Meeting of Exxaro Shareholders
3.1.1. The Circular to Exxaro shareholders containing the details of the Replacement BEE
Transaction, incorporating a notice of General Meeting and a form of proxy, is expected
to be posted on or around Monday, 23 October 2017.
3.1.2. Exxaro shareholders are advised that the Circular will be immediately available on
Exxaro’s website: www.exxaro.com.
3.1.3. The General Meeting of Exxaro shareholders will be convened, in terms of the notice of
General Meeting forming part of the Circular, to vote on the Replacement BEE
Transaction. The General Meeting is expected to be held at Exxaro Corporate Centre,
Roger Dyason Road, Pretoria West, at 10h00 on or around Monday, 20 November 2017.
3.2. Revised important dates and times relating to the Replacement BEE Transaction
Set out below are the revised salient dates and times relating to the approval and implementation
of the Replacement BEE Transaction:
2017
Record date to be entitled to receive the Circular incorporating Wednesday, 18 October
the notice of General Meeting
Posting of the Circular to Exxaro Shareholders and Monday, 23 October
announcement on SENS on
Last day to trade in order to be eligible to attend and vote at the Tuesday, 7 November
General Meeting
General Meeting Record Date in order to vote at the General Friday, 10 November
Meeting
For administrative purposes and the sake of good order, it will be Thursday, 16 November
appreciated if Forms of Proxy be received or lodged by 10h00 on
Thursday, 16 November 2017. Forms of Proxy may be lodged at
any time before the commencement of the General Meeting
General Meeting to be held at 10h00, at the Exxaro Corporate Monday, 20 November
Centre, Roger Dyason Road, Pretoria West
Results of the General Meeting published on SENS Monday, 20 November
Results of the General Meeting published in the South African Tuesday, 21 November
press
If all of the resolutions relating to the Second Repurchase
and the Specific Issue are passed by the requisite number of
Exxaro Independent Shareholders at the General Meeting:
Last day for Exxaro Independent Shareholders who voted Monday, 27 November
against the Second Repurchase Scheme to require Exxaro to
seek court approval for the Second Repurchase Scheme in
terms of section 115(3)(a) of the Companies Act
Last day to send notice of adoption of special resolutions to Monday, 4 December
dissenting shareholders in accordance of section 164 of the
Companies Act
Last day for Exxaro Independent Shareholders who voted Monday, 4 December
against the Second Repurchase Scheme to apply to court for
leave to apply for a review of the Second Repurchase Scheme in
terms of section 115(3)(b) of the Companies Act
The following dates assume that no court approval or review
of the Second Repurchase Scheme is required and will be
confirmed in the finalisation announcement if the Second
Repurchase, and as a result the Specific Issue, becomes
unconditional:
Expected date for compliance certificate to be received from the Tuesday, 5 December
TRP and fulfilment of all conditions precedent related to the
Replacement BEE Transaction
Finalisation announcement (when the Replacement BEE Tuesday 5 December
Transaction becomes unconditional) expected to be released on
SENS
Finalisation announcement published in the press Wednesday, 6 December
Repurchase Implementation Date (including cancellation and Wednesday, 13 December
delisting of Second Repurchase Scheme Shares) on or about
BEE Implementation Date (including Specific Issue Shares Thursday, 14 December
issued) on or about
Notes:
1. Exxaro Shareholders will be notified of any material amendments to the important dates and
times on SENS and in the South African press.
2. All times indicated above are South African standard times.
4. WITHDRAWAL OF CAUTIONARY
Shareholders are referred to the Previous Announcements and are advised that, due to the pro
forma financial effects of the Replacement BEE Transaction and updated timing of the
Replacement BEE Transaction’s implementation now having been disclosed in this announcement,
caution is no longer required by shareholders when dealing in the Company’s securities.
SE van Loggerenberg
Group Company Secretary
Pretoria
17 October 2017
Merchant bank, financial adviser and transaction sponsor to Exxaro
Rand Merchant Bank, a division of FirstRand Bank Limited
Legal adviser to Exxaro
Norton Rose Fulbright South Africa
Company sponsor to Exxaro
Absa Bank Limited, acting through its corporate and investment bank division
Independent Reporting Accountant and auditor to Exxaro
PricewaterhouseCoopers Incorporated
Date: 17/10/2017 11:54:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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