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Updated Pro Forma Financial Effects In Respect of the BT Disposal
AFRICAN EQUITY EMPOWERMENT INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1996/006093/06)
Share Code: AEE
ISIN ZAE000195731
("AEEI" or "the Company")
UPDATED PRO FORMA FINANCIAL EFFECTS IN RESPECT OF THE BT DISPOSAL
Shareholders are referred to the announcements released on SENS on 28 September 2023 and
24 November 2023, and to the Circular relating to the disposal by Kilomix Investments Proprietary
Limited ("Kilomix"), a wholly-owned subsidiary of AEEI, of 30 000 ordinary shares, constituting 30% of
the issued share capital of BT Communications Services South Africa Proprietary Limited (" BTSA"), a
subsidiary of BT Limited, to BTSA for an aggregate amount of R290 million (" the Disposal"), as
distributed to Shareholders on Friday, 24 November 2023.
Terms defined in the Circular shall, unless otherwise stated, bear the same meaning in this
announcement.
In compliance with paragraph 8.25(a) of the Listings Requirements, the pro forma financial effects of the
Disposal on AEEI ("pro forma financial effects") included in the Circular, were based on the then most
recently published financial results of AEEI, being the unaudited interim financial results for the period
ended 28 February 2023 ("AEEI Interim Results").
In terms of paragraph 11.56 of the Listings Requirements, a supplementary circular must be published
if, at any time after a circular has been published and before the relevant shareholders meeting, there
has been a significant change affecting any matter contained in the circular. In the context of the pro
forma financial effects, "significant" means a change of 10% or more from the pro forma financial effects
included in the circular.
On 13 December 2023, AEEI published its reviewed condensed consolidated results for the year ended
31 August 2023 ("AEEI 2023 Results"). Due to a difference of more than 10% between the pro forma
financial effects based on the AEEI 2023 Results and the pro forma financial effects based on the AEEI
Interim Results included in the Circular, the Company is required to publish updated pro forma financial
effects of the Disposal on AEEI. AEEI Shareholders are advised that the JSE has no objection to the
publication of the updated pro forma financial effects on SENS, rather than requiring AEEI to distribute a
supplementary circular, as this is the only supplementary information and there are no other matters that
require revision.
The tables below set out the consolidated pro forma statement of financial position and statement of
comprehensive income (collectively, the "Supplementary Consolidated Pro forma Financial
Information") of AEEI in respect of the Disposal, based on the AEEI 2023 Results.
The Supplementary Consolidated Pro forma Financial Information has been prepared to illustrate the
impact of the Disposal had the Disposal occurred on 1 September 2022 for purposes of the pro forma
Income Statement and on 31 August 2023 for purposes of the pro forma Balance Sheet.
The Supplementary Consolidated Pro forma Financial Information has been prepared using accounting
policies that comply with IFRS, the Guide on Pro Forma Financial Information issued by the South
African Institute of Chartered Accountants and that are consistent with those applied in the reviewed
results of AEEI for the year ended 31 August 2023.
The Supplementary Consolidated Pro forma Financial Information, which is the responsibility of the
Directors of AEEI, are provided for illustrative purposes only and, because of their pro forma nature,
may not fairly present AEEI's financial position, changes in equity, results of operations or cash flows.
The Supplementary Consolidated Pro forma Financial Information has been prepared based on the
assumptions indicated in the notes to the tables below.
The Supplementary Consolidated Pro forma Financial Information has been reported on by the
independent reporting accountants, Crowe JHB, whose report on the Supplementary Consolidated Pro
forma Financial Information is also contained below.
Consolidated Pro Forma Statement of Comprehensive Income for the period ended 31 August 2023
AEEI
Investment Group after
Disposal income the
of invest- earned on disposal of
AEEI ment in Transaction funds investment
Group associate costs invested in
(Note 1) (Note 2) (Note 3) (Note 4) associate
2023 2023
R'000 R'000 R'000 R'000 R'000
Revenue
734 246 734 246
Cost of sales (410 392) (410 392)
Gross profit
323 854 - - - 323 854
Other income
50 252 50 252
Operating expenses (324 532) (2 192) (326 724)
Net impairment changes and impairment 708
reversals (854 775) 023 (146 752)
Fair value adjustments 6 042 6 042
Investment income 13 381 7 019 20 400
Finance costs (5 815) (5 815)
Income from equity accounted
investments 64 972 (62 422) 2 550
Loss on disposal of investment in
associate 0 (645 601) (645 601)
Loss on settlement of liability for
dividend in specie (514 798) (514 798)
Loss before taxation (1 241 419) 0 (2 192) 7 019 (1 236 592)
Taxation - 1
22 359 965 20 394
Loss from continuing operations (1 219 060) 0 (2 192) 5 054 (1 216 198)
Discontinued operations
Loss from discontinued operations (509 782) (509 782)
Loss from operations (1 728 842) 0 (2 192) 5 054 (1 725 980)
Other comprehensive income:
Items that may be reclassified to profit or loss:
Exchange differences on translating
foreign operations - Discontinued
operations (1 731) (1 731)
Other comprehensive (loss)/profit for
the year net of taxation ( 1 731) 0 0 0 (1 731)
Total comprehensive loss for the
period (1 730 573) 0 (2 192) 5 054 (1 727 711)
Total comprehensive loss attributed to:
Owners of parent from continuing (1 245
operations 690) 0 (2 192) 5 054 (1 242 828)
Owners of parent from discontinued
operations (180 941) (180 941)
Non-controlling interest from continuing
operations 26 630 26 630
Non-controlling interest from
discontinued operations (330 572) (330 572)
(1 730 573) 0 (2 192) 5 054 (1 727 711)
Loss attributable to ordinary equity (1 245 690)
owners of the parent for continuing
operations 0 (2 192) 5 054 (1 242 828)
Headline earnings adjustments
Derecognition of lease 10 718 10 718
Impairment of intangibles 139 503 139 503
Loss on settlement of liability for
dividend in specie 514 798 514 798
Gain on loss of control of subsidiary (20 302) (20 302)
Scrapping of property, plant and
equipment (129) (129)
Impairment of associate 702 471 702 471
Impairment of property, plant and
equipment 2 141 2 141
Headline loss from continuing
operations 103 510 0 (2 192) 5 054 106 372
Loss attributable to ordinary equity
owners of the parent for discontinued
operations (180 941) (180 941)
Headline earnings adjustments
Profit on disposals of property, plant and
equipment (148) (148)
Loss on disposal of subsidiary 14 125 14 125
Headline profit / (loss) from
discontinued operations (166 964) 0 0 0 (166 964)
Shares in issue ('000) 491 022 491 022 491 022 491 022 491 022
Weighted average shares in issue ('000) 491 022 491 022 491 022 491 022 491 022
Basic and diluted earnings/(loss) per
share (cents) for continuing
operations (253,69) 0,00 (0,45) 1,03 (253,11)
Basic and diluted earnings/(loss) per
share (cents) for discontinued
operations (36,85) 0,00 0,00 0,00 (36,85)
Basic and diluted earnings/(loss) per
share (cents) for total operations (290,54) 0,00 (0,45) 1,03 (289,96)
Headline earnings/(loss) per share
(cents) for continuing operations 21,08 0,00 (0,45) 1,03 21,66
Headline earnings/(loss) per share
(cents) for discontinued operations (34,00) 0,00 0,00 0,00 (34,00)
Headline earnings/(loss) per share
(cents) for total operations (12,92) 0,00 (0,45) 1,03 (12,34)
Notes to the pro forma consolidated statement of comprehensive income
1 The consolidated statement of comprehensive income has been extracted, without adjustment, from the
published reviewed financial information of AEEI for the period ended 31 August 2023.
2 Represents the disposal by AEEI of its 30% investment in BTSA.
2.1 Disposal of the investment in BTSA on the effective date of 1 September 2022 implies that the Equity
Accounted Income reported in the reviewed consolidated statement of comprehensive income for the period
ended 31 August 2023 is reversed.
The adjustment is considered to have a continuing effect on the statement of comprehensive income as
AEEI will no longer account for any proportion of the income of BTSA.
2.2 Disposal of the investment in BTSA on the effective date of 1 September 2022 implies that the impairments
recognised to the carrying value of the Investment in Associate in the reviewed consolidated statement of
comprehensive income for the period ended 31 August 2023 are reversed.
The adjustment is not considered to have a continuing effect on the statement of comprehensive income as
the impairments were once-off transactions recognised during the period.
2.3 AEEI has chosen to reflect the loss on the disposal of the Investment in Associate as at the effective date of
1 September 2022 in accordance with paragraph 8.17 of the JSE Listings Requirements and the Guide on
Pro Forma Financial Information issued by The South African Institute of Chartered Accountants, as we are
of the opinion that the loss as at 1 September 2022 will differ materially from the loss at 31 August 2023.
The material difference is a result of the impairment recognised to the carrying value of the Investment in
Associate as well as the Equity Accounted Earnings recorded for the period 1 September 2022 to 31 August
2023.
Calculation of loss on disposal of investment in BTSA ZAR '000
Proceeds on disposal of investment in BTSA 290 000
Less carrying value of investment in BTSA at 1 September 2022 (935 601)
(Loss) on disposal of investment (645 601)
The loss on disposal of the investment in BTSA will not have a continuing effect on the statement of
comprehensive income as it is a once-off realised loss.
3 Represents the transaction costs in respect of the proposed transaction. There is no tax impact as the costs
have been deemed capital in nature.
This adjustment will not have a continuing effect on the consolidated statement of comprehensive earnings.
4 Represents investment income calculated on the disposal consideration at market rates for cash invested in
the call account.
An average rate of 6.85% was used.
This adjustment will have a continuing effect on the consolidated statement of comprehensive earnings.
Consolidated Pro Forma Statement of Financial Position at 31 August 2023
AEEI
Disposal Investment Group
of income after the
investment earned on disposal of
AEEI in Transaction funds investment
Group associate costs invested in
(Note 1) (Note 2) (Note 3) (Note 4) associate
2023 2023
R'000 R'000 R'000 R'000 R'000
Assets
Non-current assets
Property, plant and equipment 480 036 480 036
Right of use assets 24 991 24 991
Goodwill 69 514 69 514
Intangible assets 61 105 61 105
Investment in associate 72 872 72 872
Other financial assets 49 029 49 029
Deferred tax 162 895 162 895
Loans receivable 18 18
Total non-current assets 920 460 0 0 0 920 460
Current assets
Biological assets 85 915 85 915
Inventories 63 395 63 395
Current tax receivable 8 557 8 557
Trade and other receivables 101 964 101 964
Other financial assets 5 934 5 934
Cash and cash equivalents 235 737 290 000 (2 192) 7 019 530 564
Total current assets 501 502 290 000 (2 192) 7 019 796 329
Disposal group assets
classified as held for sale 290 000 (290 000) 0
Total Assets 1 711 962 - (2 192) 7 019 1 716 789
Equity and liabilities
Equity attributable to equity holders of the parent
Share capital 402 240 402 240
Reserves 8 684 8 684
Retained income 63 285 (2 192) 5 054 66 147
Equity attributable to equity
holders of parent 474 209 0 (2 192) 5 054 477 071
Non-controlling interest 734 068 734 068
1 208 277 0 (2 192) 5 054 1 211 139
Liabilities
Non-current liabilities
Other financial liabilities 696 696
Lease liabilities 18 872 18 872
Employee benefit obligation 1 450 1 450
Deferred tax 218 576 218 576
Loans from related parties 82 890 82 890
Total non-current liabilities 322 484 0 0 0 322 484
Current liabilities
Provisions 12 057 12 057
Trade and other payables 99 705 99 705
Other financial liabilities 958 958
Lease liabilities 8 596 8 596
Deferred income 687 687
Current tax payable 1 874 1 965 3 839
Dividend payable 13 987 13 987
Contract liability 1 189 1 189
Loans from related parties 40 393 40 393
Bank overdraft 1 755 1 755
Total current liabilities 181 201 0 0 1 965 183 166
Disposal group liabilities
classified as held for sale - 0
Total liabilities 503 685 - - 1 965 505 650
Total Equity and Liabilities 1 711 962 0 (2 192) 7 019 1 716 789
Number of shares in issue
('000) 491 022 491 022 491 022 491 022 491 022
Net asset value per share
(cents) 246,07 0,00 (0,45) 1,03 246,66
Net tangible asset value per
share (cents) 219,47 0,00 (0,45) 1,03 220,06
Notes to the pro forma consolidated statement of financial position
1 The consolidated statement of financial position has been extracted, without adjustment, from the
published reviewed financial information of AEEI for the period ended 31 August 2023.
2 Represents the derecognition of the investment in associate on disposal as well as the receipt of the
disposal proceeds in cash.
Calculation of profit / (loss) on disposal of investment in BTSA
Cash proceeds on disposal of investment in BTSA 290 000
Derecognition of carrying value of investment in BTSA (290 000)
Profit / (Loss) on disposal of investment -
The carrying value of the investment in associate was accounted for in terms of IAS28 using the equity
method. In accordance with IAS28 the investment in associate was initially recognised at cost and then
adjusted each period by the post-acquisition change in the investor's share of the net assets of the
associate. The carrying value of the investment is further adjusted for any impairments calculated in
terms of IAS36.
The investment in associate was included in Disposal Group Assets held for disposal in accordance
with requirements of IFRS 5 in the Consolidated Statement of Financial Position.
3 Represents the transaction costs in respect of the proposed Disposal that will be settled from existing
available cash.
4 Represents investment income calculated on the disposal consideration at market rates for cash
invested in the call account.
An average rate of 6.85% was used.
Cape Town
27 December 2023
Transaction adviser and Sponsor
Vunani Sponsors
Joint Sponsor
Merchantec Capital
Legal Adviser
Clyde & Co Incorporated
Independent Reporting Accountants
Crowe JHB
Crowe JHB
9 Autumn Street, Rivonia
2191
P.O. Box 652550, Benmore, 2010,
South Africa
Main +27 11 217 8000
Fax +27 11 217 8001
www.crowe.com/za
info@crowe.za.com
Practice No: 903787
27 December 2023
Independent Reporting Accountant's Assurance Report on the Compilation of Pro Forma Financial
Information
To the Directors of African Equity Empowerment Investments Limited
We have completed our assurance engagement to report on the compilation of pro forma financial
information of African Equity Empowerment Investments Limited ("the Group") by the directors. The
pro forma financial information, as set out in the announcement containing such supplementary
information to be issued on or about 27 December 2023 (the "Announcement"), consists of the
Consolidated Pro Forma Statement of Comprehensive Income and the Consolidated Pro Forma
Statement of Financial Position and related notes. The applicable criteria on the basis of which the
directors have compiled the pro forma financial information are specified in the Johannesburg Stock
Exchange Limited (JSE) Listings Requirements.
The pro forma financial information has been compiled by the directors to illustrate the impact of the
corporate action or event, described in the Announcement, on the Group's financial position as at 31
August 2023, and the Group's financial Performance for the period then ended, as if the corporate
action or event had taken place at 1 September 2022 and for the period then ended. As part of this
process, information about the Group's financial position and financial performance has been
extracted by the directors from the Group's reviewed results for the period ended 31 August 2023
issued on 13 December 2023.
Directors' Responsibility for the Pro Forma Financial Information
The directors are responsible for compiling the pro forma financial information on the basis of the
applicable criteria specified in the JSE Listings Requirements and described in the Announcement.
Our Independence and Quality Management
We have complied with the independence and other ethical requirements of the Code of Professional
Conduct for Registered Auditors issued by the Independent Regulatory Board for Auditors (IRBA
Code), which is founded on fundamental principles of integrity, objectivity, professional competence
and due care, confidentiality and professional behaviour. The IRBA Code is consistent with the
corresponding sections of the International Ethics Standards Board for Accountants' International
Code of Ethics for Professional Accountants (including International Independence Standards).
Crowe JHB applies the International Standard on Quality Management 1, Quality Management for
Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services
Engagements, which requires the firm to design, implement and operate a system of quality
management including policies or procedures regarding compliance with ethical requirements,
professional standards and applicable legal and regulatory requirements.
Reporting Accountant's Responsibility
Our responsibility is to express an opinion about whether the pro forma financial information has been
compiled, in all material respects, by the directors on the basis specified in the JSE Listings
Requirements based on our procedures performed.
We conducted our engagement in accordance with the International Standard on Assurance
Engagements (ISAE) 3420, Assurance Engagements to Report on the Compilation of Pro Forma
Financial Information Included in a Prospectus which is applicable to an engagement of this nature
issued by the International Auditing and Assurance Standards Board. This standard requires that we
plan and perform procedures to obtain reasonable assurance about whether the pro forma financial
information has been compiled, in all material respects, on the basis specified in the JSE Listings
Requirements.
For purposes of this engagement, we are not responsible for updating or reissuing any reports or
opinions on any historical financial information used in compiling the pro forma financial information,
nor have we, in the course of this engagement, performed an audit or review of the financial
information used in compiling the pro forma financial information.
The purpose of pro forma financial information included in a prospectus is solely to illustrate the
impact of a significant corporate action or event on unadjusted financial information of the entity as
if the corporate action or event had occurred or had been undertaken at an earlier date selected for
purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of
the corporate action or event at 31 August 2023 would have been as presented.
A reasonable assurance engagement to report on whether the pro forma financial information has
been compiled, in all material respects, on the basis of the applicable criteria involves performing
procedures to assess whether the applicable criteria used by the directors in the compilation of the
pro forma financial information provide a reasonable basis for presenting the significant effects
directly attributable to the corporate action or event, and to obtain sufficient appropriate evidence
about whether:
• The related pro forma adjustments give appropriate effect to those criteria; and
• The pro forma financial information reflects the proper application of those adjustments
to the unadjusted financial information.
Our procedures selected depend on our judgement, having regard to our understanding of the nature
of the company, the corporate action or event in respect of which the pro forma financial information
has been compiled, and other relevant engagement circumstances.
Our engagement also involves evaluating the overall presentation of the pro forma financial
information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Opinion
In our opinion, the pro forma financial information has been compiled, in all material respects, on the
basis of the applicable criteria specified in the JSE Listings Requirements and described in the
Announcement.
Restriction of use
This report has been prepared for the purpose of satisfying the requirements of the JSE Listings
Requirements, and for no other purpose.
Crowe JHB
Gary Kartsounis
Partner
Registered Auditor
9 Autumn Street, Rivonia, 2191
Date: 27-12-2023 04:45:00
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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