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eXtract GROUP LIMITED - Summarised audited consolidated results of eXtract group limited for the 12 months ended 31 August 2018

Release Date: 11/12/2018 16:25
Code(s): EXG     PDF:  
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Summarised audited consolidated results of eXtract group limited for the 12 months ended 31 August 2018

EXTRACT GROUP  
(Incorporated in the Republic of South Africa)
(Registration number: 1998/011672/06)
JSE share code: EXG        ISIN: ZAE000246013 

SUMMARISED AUDITED CONSOLIDATED RESULTS OF EXTRACT GROUP LIMITED FOR THE 12 MONTHS ENDED 31 AUGUST 2018

FINANCIAL REVIEW 
- The Group reported a loss for the year of R161 million (including
  profit on sale of subsidiary of R9 million) compared to a loss of
  R2 013 million in the prior period.
- R753 million of mining assets sold during the year
- All mining contracts being exited in order to monetise
  asset base
 
SALIENT FEATURES
- enX restructuring implemented on 12 October 2017
- Debt conversion of R1 877 million effective in October 2017
- Net asset value at the end of the year of R179 million

INTRODUCTION
During the year under review eXtract Group Limited ("eXtract" or
the "Group") has 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 financial
year (Mogalakwena, Tharisa 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 financial year:
- Repayment of all bank debt;
- enX Group Limited ("enX") debt to equity conversion of
  R1 877 million implemented on 12 October 2017;
- Repayment 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 to 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;
- Materially reduced head office structure;
- Disposal of further excess assets (R753 million for the year under
  review); and
- Changes to the board of directors ("Board") and management
  of eXtract. 

SUBSEQUENT EVENTS
Subsequent to the year-end, the following material events occurred:
- Disposal of further excess assets of R11 million to end November 2018;
- Announcement of the proposed delisting of eXtract, subject to the
  approval from shareholders and the JSE; and
- Cash offer of R6.00 per eXtract share at delisting date, in
  compliance with the JSE Listings Requirements.

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. The Board believes this
strategy could be best achieved in a delisted environment.

SOLVENCY AND LIQUIDITY
The Board is satisfied that after the conversion of the enX mezzanine
debt and preference share instruments into equity during the
financial year, the Group is solvent at the reporting year-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:
- Monetisation of assets held for sale;
- Improving the efficiencies of existing leasing contracts; and
- Further transform the Group should any attractive opportunities arise.

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 and on
  19 November 2018 appointed as Audit and Risk Committee chair
- Nelis Leonard - Non-executive director
- Fedja Basic - Independent non-executive director

Further changes were executed during the year:
- Fedja Basic resigned as an independent non-executive director
  with effect from 30 July 2018
- Andrew  Hannington was appointed as an independent
  non-executive director effective 21 August 2018 and Board chair
  from 19 November 2018
The following director's function was changed as announced on
SENS on 3 May 2018:
- Jannie  Serfontein - is Chief executive officer and Chief
  financial officer
By order of the Board

JL Serfontein
Chief executive officer and Chief financial officer

11 December 2018

AUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                                                               31 August      31 August
                                                                    2018           2017
as at                                                                 Rm             Rm
ASSETS                                                                                  
Non-current assets                                                    17              -
Loans                                                                 17              -
Current assets                                                       203          1 267
Inventories                                                            -             15
Trade and other receivables                                           65            313
Cash and cash equivalents                                             61            109
Assets held for sale(2)                                               77            830

Total assets                                                         220          1 267
EQUITY AND LIABILITIES                                                                  
Capital and reserves                                                                    
Stated capital                                                     3 768          1 891
Other reserves                                                       308            325
Accumulated loss                                                 (3 897)        (3 736)
Equity/(deficit) attributable to owners
of the parent                                                        179        (1 520)
Non-controlling interests                                              -              -
Total equity/(deficit)                                               179        (1 520)
Non-current liabilities                                                1          1 891
Interest-bearing borrowings(3)                                         -          1 877
Deferred tax liabilities                                               1             14
Current liabilities                                                   40            896
Trade and other payables                                              19            226
Provisions                                                            20              -
Current tax liabilities                                                1              -
Liabilities associated with assets held
for sale(2)                                                            -            670

Total equity and liabilities                                         220          1 267

AUDITED SUMMARISED CONSOLIDATED STATEMENT OF OTHER
COMPREHENSIVE INCOME
                                                                 for the        for the
                                                               12 months      14 months
                                                                   ended          ended
                                                               31 August      31 August
                                                                    2018           2017
                                                                      Rm             Rm
Loss for the period                                                (161)        (2 013)
Total other comprehensive gain/(loss)
for the period, net of taxation                                                       
Items that may be reclassified
subsequently to profit or loss                                        16           (72)
Exchange differences on translation
of foreign subsidiaries                                               16           (76)
Net fair value gain on cash flow
hedges and other fair value reserves                                    -             4

Total comprehensive loss for the
period, net of taxation                                             (145)       (2 085)
Attributable to:                                                                      
Owners of the parent                                                (145)       (2 087)
Non-controlling interests                                               -             2
                                                                    (145)       (2 085)
AUDITED SUMMARISED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME - DISCONTINUED OPERATIONS
                                                               for the 12    for the 14
                                                                   months        months
                                                                    ended         ended
                                                               31 August      31 August
                                                                     2018          2017
                                                                       Rm            Rm
Revenue                                                               999         5 418
(Loss)/profit from operations before
depreciation and amortisation                                       (230)           635
Depreciation and amortisation                                           -         (330)
Operating (loss)/profit                                             (230)           305
Net foreign exchange losses                                           (4)          (36)
Fair value gains recycled from equity                                  46            44
Net reversal of impairment/
(impairment) of assets(6)                                               7       (1 494)
IFRS 5 impairment                                                    (30)         (448)
Loss before net finance costs                                       (211)       (1 629)
Net finance costs                                                     (1)         (340)
Finance costs                                                         (6)         (353)
Finance income                                                          5            13

Loss before taxation                                                (212)       (1 969)
Income tax                                                             42            22
Loss for the period                                                 (170)       (1 947)
Profit/(loss) on sale of subsidiaries(7)                                9           (3)
Deconsolidation of subsidiary                                           -          (63)
Total loss for the period from
operations                                                          (161)       (2 013)

Attributable to:                                                    (161)       (2 013)
- Owners of the parent                                              (161)       (2 015)
- Non-controlling interest                                              -             2

Loss for the period                                                 (161)       (2 013)
                                                                    Cents         Cents
Loss per share from operations(11)
                                                                                        
- Basic and diluted loss per share                                (818.5)    (84 630.7)

* Prior year adjusted for the effect of the share consolidation of 200:1.

AUDITED SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS 
                                                                  for the       for the
                                                                12 months     14 months
                                                                    ended         ended
                                                                31 August     31 August
                                                                     2018          2017
                                                                       Rm            Rm
Cash flows from operating activities                                                   
Cash (utilised by)/generated from
operations before working capital
movements                                                           (173)           740
Working capital movements                                              67           594
Cash (utilised by)/generated from
operations                                                          (106)         1 334
Finance income                                                          4            13
Finance costs                                                         (6)         (353)
Taxation paid                                                         (2)          (45)
Net cash flows from operating
activities                                                          (110)           949
Cash flows from investing activities                                                   
Disposal of businesses                                               (11)          (11)
Net capital proceeds on disposals                                     716         (211)
Movement in finance lease
receivables                                                             -            36
Loans provided                                                       (25)             -
Net cash flows from investing activities                              680         (186)
Cash flows from financing activities                                                   
Issue of shares                                                         -            37
Conversion of treasury shares                                           -            15
Dividends paid to minorities                                            -           (2)
Net decrease in interest-bearing
borrowings                                                          (625)         (995)
Net cash flows from financing activities                            (625)         (945)
Net decrease in cash and cash
equivalents                                                          (55)         (182)
Effect of exchange rate translation on
cash and cash equivalents                                               -          (20)
Derecognition of cash and cash
equivalents                                                             7          (23)
Cash and cash equivalents at
beginning of period                                                   109           334
Cash and cash equivalents at end
of period                                                              61           109

AUDITED SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
                                                                Stated            Total       Retained   Non-controlling          
                                                                capital   other reserves  (loss)/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                               -             (72)        (2 015)                2     (2 085)
Loss for the period                                                   -                -        (2 015)                2     (2 013)
Other comprehensive loss for the period, net of taxation              -             (72)              -                -        (72)
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)
Realisation of translation reserve                                    -             (44)              -                -        (44)
Reversal of share-based payment reserve                               -               12              -                -          12
Taxation on realisation of translation reserve                        -             (17)             17                -           -
Transfer within categories of reserves                                -               23           (23)                -           -
Disposal of subsidiary                                                -             (27)              -             (29)        (56)
Deferred taxation directly in equity                                  -                5            (5)                -           -
Balance at 31 August 2017                                         1 891              325        (3 736)                -     (1 520)
Total comprehensive loss for the year                                 -               16          (161)                -       (145)
Loss for the year                                                     -                -          (161)                -       (161)
Other comprehensive gain for the year, net of taxation                -               16              -                -          16
New issue of stated capital*                                      1 877                -              -                -       1 877
Realisation of foreign currency translation on loan                   -             (46)              -                -        (46)
Taxation on realisation of translation reserve                        -               13              -                -          13
Balance at 31 August 2018                                         3 768              308        (3 897)                -         179
* 3 755 171 985 (2017: 101 400 000) shares were issued at fair value of 50 cents per share (2017: 37 cents per share).

(1) Basis of preparation

    The audited summarised consolidated financial statements for
    the 12 months ended 31 August 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 2017 annual financial report, except
    for the adoption on 1 September 2017 of those new, revised and
    amended standards and interpretations detailed therein. These
    financials were audited and reported on by eXtract's auditors
    and prepared by eXtract's CFO, JL Serfontein.

    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 eXtract.

                                                 31 August    31 August
                                                      2018         2017
(2)   Assets and liabilities held for sale                             
      ASSETS                                                           
      Property plant and equipment                      58           52
      Leasing assets (net of selling costs)             19          778
      Total assets held for sale                        77          830
      LIABILITIES                                                      
      Interest-bearing borrowings
      (net of contract mining debt)                      -          375
      Mezzanine loan with enX                            -          250
      Operating liabilities                              -          625
      Current tax liabilities                            -           45
      Total liabilities associated to
      assets held for sale                               -          670

    Excess assets   
    Assets held for sale comprise assets in South Africa of R50 million
    (August 2017: R696 million) and assets in Mozambique of
    R27 million (August 2017: R134 million). Management believe
    that the sales of the remainder of the assets are highly probable
    within the next 12 months. 

(3) Interest-bearing borrowings
    On 12 October 2017 enX converted R1 877 million debt to equity.
    eXtract repaid all bank debt as well as R250 million due to enX
    during the year from proceeds of asset sales resulting in a cash
    positive position at year-end, with no debt remaining.

                                                 31 August    31 August
                                                      2018         2017
    Capital commitments and
(4) contingent liabilities                                        
    Capital commitments contracted                       -            -
    Capital commitments authorised by directors 
    but not contracted                                   -            -
    Contingent liabilities                               3            -

(5) Fair value hierarchy disclosures
    R47 million of the assets held for sale were valued at fair value based
    on independent valuators valuation.

    R30 million of the assets held for sale were valued using sales contracts
    that were entered into subsequent to year end.

                                                   Period        Period
                                                    ended         ended
                                                31 August     31 August
                                                     2018          2017
                                                       Rm            Rm
(6)  Net reversal of impairment/
     (impairment) of assets                                            
     Impairment of leasing assets                       -       (1 411)
     Impairment of intangible assets                    -          (32)
     Impairment of restricted cash                      -          (18)
     Impairment of property, plant and
     equipment                                          -          (33)
     Reversal of impairment of cash                     7             -
     Total impairments                                  7       (1 494)

(7) Profit/(loss) on sale of subsidiaries                              
    Analysis of assets and liabilities
    disposed of:                                                       
    Trade and other receivables                      (77)            -
    Cash and cash equivalents                        (11)            -
    Assets held for sale                              (1)          (3)
    Trade and other payables                           90            -
    Provision for liabilities                           8            -
    Net liabilities disposed of at no
    consideration, resulting in a profit/
    (loss) on sale                                      9          (3)

     On 29 August 2018 the Group disposed of PTT MCC Extraction
     Solutions Indonesia Limited for no consideration. As the liabilities
     exceeded the assets the Group reported a net profit on disposal.
     During the 2017 financial period the Group disposed of the
     Eqstra Fleet Management and Logistics and Industrial Equipment
     divisions to enX Group Limited at a loss of R3 million.

(8)  Segmental disclosures
     The 2018 results consist of one segment being the Contract
     Mining division, hence no separate segmental analysis had
     been prepared. The 2017 financial period comprised the
     Contract Mining division and as discontinued the corporate
     disposal group being the previous Eqstra entities (Eqstra Fleet
     Management and Eqstra Industrial Equipment). 

(9) Discontinued operations
     All operations have been classified as discontinued in line with
     the Group strategy.
                                                  Audited       Audited
                                                31 August     31 August
                                                     2018          2017
                                                    Cents         Cents
(10) Net asset/(deficit) value per share
     attributable to owner of the parent            840.0      (59 972)

(11) Headline loss per share                                           
     Reconciliation of discontinued
     headline loss per share                                           
     Basic and diluted loss per share             (818.5)    (84 630.7)
     Net impairments of assets                     (35.6)      62 748.5
     IFRS 5 fair value adjustment                   152.5      18 816.2
     (Profit)/loss on sale of subsidiaries         (45.7)         126.0
     Deconsolidation of subsidiary                      -       2 646.0
     Taxation effect                                    -     (2 646.0)
     Headline loss per share                      (747.3)     (2 940.0)

                                                  Audited       Audited
                                                31 August     31 August
                                                     2018          2017
                                                  Million       Million
(12) Weighted average number of
     shares in issue for the period                                    
     Number of ordinary shares                                         
     - in issue                                      21.3           2.5
     - in issue (net of treasury shares)             21.2           2.5
        Weighted average number of
        ordinary shares in issue during
        the period                                   19.7           2.4
        - opening shares (net of treasury
          shares)                                     2.5           2.0
        - additional shares issued                   17.2           0.4
        - disposal of treasury shares                   -             -

        Basic and diluted weighted
        average number of ordinary
        shares                                       19.7           2.4

(13) Significant judgements and estimates
     There are no significant accounting judgements and estimates
     other than the valuation of assets held for sale and assessment
     of recoverability of receivables. Asset held for sale were valued
     by an independent valuator which was updated at 31 August
     2018 and adjustments processed as required. Receivables were
     assessed for recoverability based on expected future cashflows.

(14) Summarised report
     The summarised audited consolidated financial statements have
     been derived from and are consistent in all material respects
     with the consolidated annual financial statements for the year
     ended 31 August 2018 and an unmodified opinion has been expressed 
     thereon. 

     The directors take full responsibility for
     the preparation of these audited summarised consolidated
     31 August 2018 financial results and confirm that the financial
     information has been correctly extracted from the underlying
     audited consolidated annual financial statements. 

     The auditor's report does not necessarily report on all of the 
     information continued in this announcement/financial results.

     Shareholders are advised that, in order to obtain a full
     understanding of the nature of the auditor's engagement,
     they should obtain a copy of that report together with
     the consolidated and separate audited consolidated annual
     financial statements as at 31 August 2018.

(15) The auditors
     Deloitte & Touche has audited the consolidated annual financial
     statements for the 12 months ended 31 August 2018 and have issued 
     an unmodified opinion thereon. The audit was conducted in accordance 
     with International Standards on Audit Engagements.

     Any reference to future financial performance included in
     this announcement has not been audited or reported on by eXtract's auditors.

NAME AND REGISTRATION NUMBER                     EXECUTIVE DIRECTORS
EXTRACT GROUP LIMITED                            JL Serfontein (CEO and CFO)1 CA(SA)
                                                 (1Preparer of financial results)
(Registration number 1998/011672/06)
JSE share code: EXG
ISIN: ZAE000246013                               COMPANY SECRETARY
                                                 Fusion Corporate Secretarial Services Proprietary
REGISTERED OFFICE AND BUSINESS                   Limited 
ADDRESS
61 Maple Street, Pomona, Kempton Park,           TRANSFER SECRETARIES
1619 PO Box 1050, Bedfordview, 2008              Computershare Investor Services
                                                 Proprietary Limited
NON-EXECUTIVE DIRECTORS                          Rosebank Towers, 15 Biermann Avenue Rose-
                                                 bank, 2196
F Davidson*(Lead independent director),          PO Box 61051, Marshalltown, 2107 
A Hannington* (Chairman)
N Leonard*
(*Independent)                                   SPONSOR
                                                 Java Capital
SENS Release date: 11 December 2018

Date: 11/12/2018 04:25:00 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
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