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CAPITAL EQUIPMENT NEWS
NOVEMBER 2016
28
A
R463 million loss for
Eqstra Holdings’ MCC
Contract Mining division
in the recently ended
financial year is a clear
testament of the trying
times in the mining industry. But, following
the approval of the enX transaction
by both shareholders and competition
authorities, Eqstra is set for a holistic
transformation of its business. The R7,8
billion deal, first made public on 30 June
2016, has been finally sealed following
shareholder approval for enX to purchase
Eqstra’s Industrial Equipment and Fleet
Management and Logistics divisions.
The deal will also usher in a new
lease on life for Eqstra’s MCC Contract
Mining business, a division that is under
immense pressure with its exposure to the
burdened mining sector feeling the wrath
of the current downward global commodity
prices and few-and-far-between mining
contracts. As part of the transaction, the
MCC Contract Mining division, the only
division remaining in the Eqstra Holdings
stable, will be recapitalised with a cash
injection of R1,4 billion. This will also
see Eqstra being rebranded as eXtract
Group Limited, and will be steered by a
new board of directors to take charge with
effect from November 1 this year.
Challenging business environment
Jannie Serfontein, CEO of Eqstra Holdings,
alludes to the fact that it has been a
tough time in the recent financial year
where the group recorded a loss of R2 253
million, in a year which he terms “eventful
and challenging”. While the Industrial
Equipment and Fleet Management and
Logistics divisions recorded profits of
R94 million and R141 million, respectively,
the Contract Mining division saw a loss
of R463 million, due to several reasons.
“The current year’s results were impacted
by leasing asset impairments of R1 498
million. As at June 30, 2016, the division
had R809 million worth of excess assets,”
Serfontein tells
Capital Equipment News.
Eqstra is also in the process of closing or
selling other non‑core operations as part
of its strategy to refocus the group. This
includes the excess assets in the Contract
Mining and Plant Rental business units
deemed unlikely to deliver desired return
over the short term. These assets were
previously valued as part of leasing assets.
Serfontein says the plant rental component
of the division was not delivering the
required returns in the current market
conditions and a decision was made to
close it. This part of the business has
since ceased operations effective October
1, 2016. “The division has discontinued
its plant rental operations. Related asset
impairments of R200 million were raised
during the year,” says Serfontein.
Meanwhile, following the end of MCC’s
MINING GIANT REAWAKENS
Following the conclusion of the deal between Eqstra Holdings and enX,
Eqstra is set to undergo a radical change that will position it for long-term
sustainability. Part of the deal will see a massive cash injection to recapitalise
the MCC Contract Mining division, which has been in a challenging space
through its exposure to the beleaguered mining sector, writes
Munesu Shoko.
Following the approval of the deal between
Eqstra and enX, Eqstra’s contract mining
division will be recapitalised with a cash
injection of R1,4 billion.