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Interim financial report of eXtract Group Limited for the 6 month period ended 28 February 2018
eXtract Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/011672/06)
JSE share code: EXG
ISIN: ZA0002223202
("eXtract" or the "Company" or the "Group")
INTERIM FINANCIAL REPORT OF EXTRACT GROUP LIMITED
FOR THE 6 MONTH PERIOD ENDED 28 FEBRUARY 2018
SALIENT FEATURES
- enX restructuring agreement became effective in September 2017
- Debt conversion of R1 878 million effective in October 2017
- Net asset value at the end of the period of R237 million
FINANCIAL REVIEW
- The Group reported a loss for the period of R82 million compared to a
loss of R1 533 million in the prior period
- R652 million of mining assets sold during the period
- All mining contracts exited in order to monetise asset base
It is important to note that the comparative period is the six months ended 31 December
2016. Due to the change in year-end from 30 June to 31 August, the six-month interim
reporting date is now 28 February.
INTRODUCTION
During the period under review, eXtract continued to focus on exiting the remaining
mining contracts in a responsible manner and stabilising the remaining business while the
downsizing continues.
All the remaining mining contracts were exited during the reporting period (Mogalakwena
and Aganang, which ceased at the end of November 2017, and Mozambique, which
ceased during December 2017).
As previously communicated, the following key events took place during the reporting
period:
- Repayment of all bank debt;
- enX Group Limited ("enX") debt to equity conversion of R1.878 billion implemented on
12 October 2017;
- Repayment of R175 million of the R250 million enX debt;
- Sale of interest in the Last Mile Fund at face value of R25 million, receivable over a
three-year period;
- Sale of assets at Tharisa, Mogalakwena and Aganang as going concerns;
- Resolution of the Eqstra Botswana liquidation process and sanctioning by the High
Court in Botswana;
- Significant reduction of eXtract's overhead costs, including a reduction in headcount;
- Disposal of the head office property for R52 million and retrenchment of all head office
staff;
- Disposal of further excess assets (R652 million for the period under review); and
- Changes to the board of directors ("Board") and management of eXtract.
SUBSEQUENT EVENTS
Subsequent to the period-end, the following material events occurred:
- Repayment of a further R50 million of enX debt, leaving R25 million of debt remaining.
- Disposal of further excess assets of R19 million during March and April 2018.
- Receipt of cash of R26 million for the sale of Aganang assets.
FUTURE STRATEGY
Pursuant to the strategic review undertaken in the prior year, a number of key outcomes
have been identified and the implementation is on track. The ultimate goal remains to
protect the remaining shareholder value. The Board will in parallel look to further transform
the Group should any attractive opportunities arise.
SOLVENCY AND LIQUIDITY
The Board is satisfied that after the conversion of the enX mezzanine debt and preference
share instruments into equity during the reporting period, the Group is solvent at the
reporting period-end and for the foreseeable future.
The Board is further satisfied that the strategies to address the liquidity risks are on track and
are being effectively addressed and the Group has the ability to settle liabilities as they become
due and payable.
DIVIDEND
The Board has not declared a dividend given the Group's performance and change in
strategy.
LOOKING AHEAD
As previously communicated, eXtract will continue to focus on these commitments in the
short to medium-term:
- Reduction of external debt;
- Monetisation of assets held for sale; and
- Improving the efficiencies of existing leasing contracts.
GOING CONCERN
The results presented for the Group have been prepared on the assumption that the
Group, as a whole, will continue to operate as a going concern.
DIRECTOR CHANGES
The following directors resigned on 23 February 2018:
- Bernard Swanepoel - Executive chairman
- Clinton Halsey - Interim chief executive officer and chief investment officer
- Sipho Nkosi - Lead independent non-executive director
- Octavia Matloa - Independent non-executive director
- Khetiwe McClain - Independent non-executive director
The following directors were appointed on 23 February 2018:
- Frank Davidson - Lead independent non-executive director
- Nelis Leonard - Non-executive director
- Fedja Basic - Independent non-executive director
The following director's function was changed as announced on SENS on 3 May 2018:
- Jannie Serfontein - now chief executive officer and financial director until 30 June 2018
By order of the board of directors
JL Serfontein
Chief executive officer and financial director
4 June 2018
SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at
Unaudited Unaudited Audited
28 February 31 December 31 August
2018 2016 2017
Rm Rm Rm
ASSETS
Non-current assets - 762 -
Property, plant and equipment - 85 -
Leasing assets - 677 -
Current assets 365 1 625 1 267
Inventories - 78 15
Trade and other receivables and
derivatives 114 515 313
Cash and cash equivalents(15) 75 162 109
Assets held for sale(2) 176 870 830
Total assets 365 2 387 1 267
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 3 769 1 891 1 891
Other reserves 286 374 325
Accumulated loss (3 818) (3 256) (3 736)
Equity (deficit) attributable to owners
of the parent 237 (991) (1 520)
Non-controlling interests - - -
Total equity (deficit) 237 (991) (1 520)
Non-current liabilities 7 2 294 1 891
Interest-bearing borrowings(3) - 2 256 1 877
Deferred tax liabilities 7 38 14
Current liabilities 121 1 084 896
Current portion of interest-bearing
borrowings(3) - 465 -
Trade and other payables, provisions
and derivatives 20 420 226
Liabilities directly associated with
assets held for sale(2) 101 199 670
Total equity and liabilities 365 2 387 1 267
SUMMARISED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
Unaudited Unaudited
for the for the
six months six months Audited
ended ended year-end
28 February 31 December 31 August
2018 2016 2017
Rm Rm Rm
Loss for the period (82) (1 533) (2 013)
Total other comprehensive loss for
the period, net of taxation (39) (55) (72)
Items that may be reclassified
subsequently to profit or loss
Exchange differences on
realisation of foreign exchange
reserve (42) - -
Exchange differences on translation
of foreign subsidiaries 3 (55) (72)
Total comprehensive loss for the
period, net of taxation (121) (1 588) (2 085)
Attributable to:
Owners of the parent (121) (1 590) (2 087)
Non-controlling interests - 2 2
(121) (1 588) (2 085)
SUMMARISED CONSOLIDATED DISCONTINUED OPERATIONS INCOME STATEMENT
Unaudited Unaudited
for the for the
six months six months Audited
ended ended year-end
28 February 31 December 31 August
2018 2016 2017
Rm Rm Rm
Revenue 1 316 3 611 5 418
(Loss)/profit from operations before
depreciation and amortisation (173) 813 635
Depreciation and amortisation - (192) (330)
Operating (loss)/profit (173) 621 305
Net foreign exchange (before items
listed below) (losses)/gains 66 (24) (36)
Fair value gains recycled from equity - - 44
Net impairment of assets(6) 16 (1 389) (1 494)
IFRS 5 adjustment(9) (33) (439) (448)
Loss before net finance costs (124) (1 231) (1 629)
Net finance costs(8) (2) (264) (340)
Finance costs (4) (375) (353)
Finance income 2 111 13
Loss before taxation (126) (1 495) (1 969)
Income tax expense 44 28 22
Loss for the period (82) (1 467) (1 947)
Loss on sale of subsidiaries - (3) (3)
Deconsolidation of subsidiary(7) - (63) (63)
Total loss for the period from
discontinued operations (82) (1 533) (2 013)
Attributable to:
Owners of the parent (82) (1 535) (2 015)
Non-controlling interests - 2 2
Loss for the period (82) (1 533) (2 013)
Cents Cents Cents
Loss per share from discontinued
operations(11)
- Basic and diluted loss per share (384,0) (75 840,0) (84 640,0)
* Amounts re-presented to show all operations in comparative results as discontinued operations.
SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Accum-
ulated
loss) Non-
Stated Other Retained controlling
capital reserves income interest Total
Rm Rm Rm Rm Rm
Balance at 1 July 2016 1 839 449 (688) 29 1 629
Total comprehensive loss
for the period - (55) (1 535) 2 (1 588)
Loss for the period - - (1 535) 2 (1 533)
Other comprehensive income
for the period, net of taxation - (55) - - (55)
Vesting of share incentive
scheme - (4) - - (4)
New issue of stated capital* 37 - - - 37
Conversion of treasury shares 15 - - - 15
Dividend paid - - - (2) (2)
Dividend in specie - - (1 022) - (1 022)
Reversal of share-based
payment reserve - (16) 16 - -
Transfer within categories of
reserves - 22 (22) - -
Disposal of subsidiary - (27) - (29) (56)
Deferred taxation directly in
equity - 5 (5) - -
Balance at 31 December 2016 1 891 374 (3 256) - (991)
Total comprehensive loss
for the period - (17) (480) - (497)
Loss for the period - - (480) - (480)
Other comprehensive loss for
the period, net of taxation - (17) - - (17)
Realisation of translation reserve - (32) - - (32)
Balance at 31 August 2017 1 891 325 (3 736) - (1 520)
Total comprehensive loss
for the period - (39) (82) - (121)
Loss for the period - - (82) - (82)
Other comprehensive loss for
the period net of taxation - (39) - - (39)
New issue of stated capital 1 878 - - - 1 878
Balance at 28 February 2018 3 769 286 (3 818) - 237
* On 16 November 2016 101 400 000 shares were issued at R1 each.
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
28 February 31 December 31 August
2018 2016 2017
as at Rm Rm Rm
Cash flows from operating activities
Cash generated from operations
before working capital movements (93) 688 740
Working capital movements (18) 697 594
Cash (utilised in) generated from
operations (111) 1 385 1 334
Finance income 2 111 13
Finance costs (4) (341) (353)
Taxation paid (3) (29) (45)
Net cash flows from operating
activities (116) 1 126 949
Cash flows from investing activities
Acquisition/disposal of businesses - (75) (11)
Net capital disposals 652 (820) (211)
Movement in finance lease
receivables - 36 36
Net cash flows from investing
activities 652 (859) (186)
Cash flows from financing activities
Issue of shares - 37 37
Conversion of treasury shares - - 15
Dividends paid to minorities - (2) (2)
Net decrease in interest-bearing
borrowings (567) (447) (995)
Net cash flows from financing
activities (567) (412) (945)
Net decrease in cash and cash
equivalents (31) (145) (182)
Effect of exchange rate of translation
on cash and cash equivalents (3) (5) (20)
Derecognition of cash and cash
equivalents - (22) (23)
Cash and cash equivalents at
beginning of period 109 334 334
Cash and cash equivalents at end
of period 75 162 109
SUMMARISED CONSOLIDATED STATEMENT OF DISCONTINUED CASH FLOWS
Unaudited Unaudited Audited
28 February 31 December 31 August
2018 2016 2017
as at Rm Rm Rm
Net cash flows from operating
activities (116) 1 126 949
Net cash flows from investing
activities 652 (859) (186)
Net cash flows from financing
activities (567) (412) (945)
Net cash outflow (31) (145) (182)
NOTES
(1) Basis of preparation
The unaudited summarised consolidated financial statements for the six months
ended 28 February 2018 have been prepared in accordance with the framework
concepts, measurement and recognition requirements of International Financial
Reporting Standards (IFRS), the SAICA Financial Reporting Guides, as issued by the
Accounting Practices Committee and the Financial Reporting Pronouncements
as issued by the Financial Reporting Standards Council and contains information
required by IAS 34: Interim Financial Reporting, the JSE Limited Listings Requirements
and the South African Companies Act. The accounting policies and their application
are consistent, in all material respects, with those detailed in eXtract's previous annual
financial statements, except for the adoption on 1 September 2017 of those new,
revised and amended standards and interpretations detailed therein. These financials
have not been reviewed or reported on by the Company's auditors.
The adoption of the new and amended statements of generally accepted accounting
practice, interpretations of statements of generally accepted accounting practice,
and improvements project amendments did not have a material impact on the
Group.
These financial statements were prepared under the supervision of JL Serfontein
CA(SA).
(2) Assets classified as held for sale
Unaudited Unaudited Audited
28 February 31 December 31 August
2018 2016 2017
Rm Rm Rm
Property, plant and equipment - - 52
Leasing assets and inventory 176 870 778
176 870 830
Liabilities directly associated with
assets held for sale
Interest-bearing borrowings 26 151 375
Current taxation liabilities - 48 45
enX mezzanine debt 75 - 250
101 199 670
Excess assets comprises leasing assets in all operations. There were sales of R652 million
during the reporting period to 28 February 2018.
Management believes that the sale of these assets is highly probable within the next
12 months.
Corporate transaction disposal statement of financial position
Disposal
statement
of financial
position
8 November
2016
Rm
ASSETS
Intangible assets 3
Property, plant and equipment 257
Leasing assets 5 056
Other investments and loans 30
Finance lease receivables 2
Inventories 853
Trade and other receivables and derivatives 646
Operating assets 6 847
Taxation in advance 58
Cash and cash equivalents 75
Unallocated loss on sale from the corporate transaction (487)
Total assets 6 493
LIABILITIES
Trade and other payables and derivatives 1 153
Interest-bearing borrowings 6 575
Loans due from Contract Mining entities (2 853)
Operating liabilities 4 875
Deferred tax liabilities 411
Current tax liabilities 114
Total liabilities 5 400
The sale of the Fleet Management and Logistics division and the Industrial Equipment
division to enX took place on 8 November 2016. The disposal balance sheet is
disclosed above.
As part of the corporate transaction, subsidiaries of eXtract in the Fleet Management
and Logistics and Industrial Equipment divisions were transferred to enX on the
effective date being 8 November 2016.
(3) Interest-bearing borrowings
Unaudited Unaudited Audited
28 February 31 December 31 August
2018 2016 2017
Rm Rm Rm
Facility breakdown
External senior bank debt - 465 -
enX Mezzanine debt - 1 656 1 277
Preference shares - 600 600
- 2 721 1 877
In the current reporting period all bank debt was repaid.
The remaining portion of enX mezzanine debt was converted into equity except for
R250 million which remained as due and payable from the sale of assets and has
been reclassified as "liabilities directly associated with assets held for sale". Of this
R250 million, R75 million remains payable as at 28 February 2018.
(4) Capital commitments
28 February 31 December 31 August
2018 2016 2017
Rm Rm Rm
Capital commitments - 229 -
- Contracted - 59 -
- Authorised by directors but
not contracted - 170 -
Guarantees - 19 2
(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.
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 quoted price for similar assets or liabilities in an active market; quoted price
for identical or similar assets or liabilities in inactive markets; valuation model using
observable inputs; and valuation model using inputs derived from/corroborated by
observable market data.
There are no financial asset and liabilities that are recognised and subsequently
measured at fair value, analysed by valuation technique.
(6) Impairment of assets
28 February 31 December 31 August
2018 2016 2017
Rm Rm Rm
Impairment of leasing assets(1) - 1 329 1 411
Impairment of intangible assets - 42 32
Impairment of restricted cash - 18 18
Impairment of property, plant and - - 33
equipment
Impairment and reversal of (16) - -
impairments of loans
Total impairments (16) 1 389 1 494
Discontinued operations 16 (248) (1 494)
Continuing operations - 1 141 -
*Amounts re-presented to show comparative results from discontinued operations.
(7) Deconsolidation of subsidiary
28 February 31 December 31 August
2018 2016 2017
Rm Rm Rm
Discontinued operations
Gain on deconsolidation of subsidiary - 156 156
Provision for liabilities - (67) (67)
(Net of expected proceeds)
Impairment of inter-company loans - (152) (152)
Total - (63) (63)
The Karowe contract in Botswana was unlawfully terminated and money withheld
which resulted in the Botswana entity being placed in liquidation. The Group was
therefore no longer in control of the subsidiary and it was deconsolidated.
A deconsolidation gain was offset by the relevant impairment on inter-company
loans and provision for liabilities for which guarantees were provided.
(8) Net finance costs including fair value gains
28 February 31 December 31 August
2018 2016 2017
Rm Rm Rm
Net finance costs from continued - (134) -
operations
Net finance costs from discontinued (2) (130) (340)
operations
Total finance costs (2) (264) (340)
(9) Discontinued operations
All operations have been classified as discontinued in line with the Group strategy.
(10) Net/(deficit) asset value per share attributable to owner of the parent
28 February 31 December 31 August
2018 2016 2017
cents cents cents
1 112,9 (198,8) (576,8)
(11) Headline loss per share
28 February 31 December 31 August
2018 2016* 2017*
cents cents cents
Reconciliation of discontinued
headline loss per share
Basic and diluted loss per share (384,0) (75 840,0) (84 640,0)
Net impairments of assets (75,6) 68 620,0 62 740,0
IFRS 5 fair value adjustment 157,1 21 680,0 18 820,0
Loss on sale of subsidiaries - 140,0 140,0
Deconsolidation of subsidiary - 3 120,0 2 660,0
Taxation effect - (19 220,0) (2 660,0)
Headline loss per share (302,6) (1 500,0) (2 940,0)
Diluted headline loss per share (302,6) (1 500,0) (2 940,0)
* Comparative period basic and headline loss per share have been adjusted to
reflect the effect of 200:1 share consolidation implemented during the reporting
period.
(12) Weighted average number of shares in issue for the period
28 February 31 December 31 August
2018 2016* 2017*
Rm Rm Rm
Number of ordinary shares
- in issue 21,3 2,5 2,5
- in issue (net of treasury shares) 21,3 2,5 2,5
Weighted average number of ordinary
shares in issue during the period 21,3 2,0 2,4
- opening shares (net of treasury
shares) 506,9 2,0 2,0
- Additional shares issued - 0,1 0,4
- Share consolidation (485,6) - -
- disposal of treasury shares - 0,0 0,0
Diluted weighted average number of
ordinary shares 21,3 2,0 2,4
* Comparative period shares in issue have been adjusted to reflect the effect of 200:1
share consolidation implemented during the reporting period.
(13) Significant judgements and estimates
The preparation of the interim financial report requires the group's management to
make judgements, estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of
the interim financial statements, and the reported amounts of revenues and expenses
during the reporting period. The determination of estimates requires the exercise
of judgement based on various assumptions and other factors such as historical
experience and current and expected economic conditions. Actual results could differ
from those estimates.
The following accounting policies have been identified as involving particularly
complex or subjective decisions or assessments:
IMPAIRMENT OF ASSETS
An impairment loss is recognised when the recoverable amount of an asset is estimated
to be less than its carrying amount. In assessing fair value, management have obtained
independent valuations of all assets held-for-sale based on current market conditions.
INCOME TAXES
The group is subject to income taxes in numerous jurisdictions. Significant judgement
is required in determining the provision for income taxes due to the complexity of
legislation and the different tax jurisdictions involved. There are many transactions and
calculations for which the ultimate tax determination is uncertain during the ordinary
course of business. The group recognises liabilities for anticipated taxes based on
estimates. Where the final tax outcome of these matters is different from the amounts
that were initially recorded, such differences will impact the income tax and deferred
tax provisions in the period in which such determination is made.
CONTINGENT LIABILITIES
Management applies judgement to the probabilities and advice it receives from
its attorneys, advocates and other advisors in assessing if an obligation is probable,
more likely than not, or remote. This judgement application is used to determine if the
obligation is recognised as a liability or disclosed as a contingent liability.
INVENTORY PROVISIONS
The provision for inventory obsolescence is based on a physical count and inspection
of stock items which is performed periodically and takes into account the age,
condition and usage rates of the inventory.
FAIR VALUES AND FINANCIAL INSTRUMENTS
The carrying amounts of financial assets and liabilities with a maturity of less than six
months are assumed to approximate their fair value.
OTHER PROVISIONS
Management have taken a conservative view on various other potentially recoverable
assets, these continue to be pursued and will only be recognised once reasonable
certainty exists over the recoverability of the asset. These include Cash and cash
equivalents, property, plant and equipment, trade receivables and inventory.
(14) Exchange rates utilised:
Average USD: ZAR of 13.04
Closing USD: ZAR of 11.75
Closing BWP: ZAR of 1.25
(15) Cash and cash equivalents:
Mozambique: The equivalent of R20 million is held in the bank account of Eqstra
Mozambique Limitada (a subsidiary of eXtract) for potential claims. Management are
of the view that the cash will be repatriated to South Africa. However, the repatriation
of this cash is subject to Exchange Control approval.
Nigeria: The equivalent of R8 million is held in Nigeria in the bank account of Eqstra Fleet
Services Nigeria Limited (a subsidiary of eXtract) and continues to be impaired.
NAME AND REGISTRATION NUMBER
eXtract Group Limited
1998/011672/06
JSE share code: EXG
ISIN: ZAE0002223202
REGISTERED OFFICE AND BUSINESS ADDRESS
61 Maple Street, Pomona, Kempton Park, 1619. PO Box 1050,
Bedfordview, 2008
EXECUTIVE DIRECTORS
JL Serfontein
(Chief executive officer and financial director)
NON-EXECUTIVE DIRECTORS
Frank Davidson
Nelis Leonard
Fedja Basic
COMPANY SECRETARY
Fusion Corporate Secretarial Services (Pty) Ltd
TRANSFER SECRETARIES
Computershare Investor Services (Pty) Ltd
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
PO Box 61051, Marshalltown, 2107
SPONSOR
Java Capital
Date: 05/06/2018 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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