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AEP ENERGY AFRICA LIMITED - Audited Condensed Provisional Annual Results for the five months ended 30 June 2017

Release Date: 22/09/2017 16:30
Code(s): AEY     PDF:  
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Audited Condensed Provisional Annual Results for the five months ended 30 June 2017

AEP Energy Africa Limited 
Incorporated in the Republic of South Africa
(Registration number: 2017/024904/06)
JSE share code: AEY ISIN: ZAE000241741
("AEP" or "the Company")

AUDITED CONDENSED PROVISIONAL ANNUAL RESULTS FOR THE FIVE MONTHS ENDED 30 JUNE 2017

INTRODUCTION

The board of directors ("the Board") of the Company is pleased to present the provisional results for the five
months ended 30 June 2017.

AEP was incorporated on 24 January 2017 and successfully listed as a Special Purpose Acquisition Company
("SPAC") on the Alternative Exchange ("AltX") of the Johannesburg Stock Exchange ("JSE") on 30 June 2017,
raising R52 555 000 through the issue of 5 255 680 ordinary shares at R10 a share.

The purpose of AEP whilst it is a SPAC is to pursue the acquisition of a viable asset.

CONDENSED STATEMENT OF COMPREHENSIVE INCOME FOR THE FIVE MONTHS ENDED
30 JUNE 2017
                                                                                       2017 
                                                                                          R     
                                                             
Administrative and other operating expenditure                                  (6,162,222) 
Finance income                                                                       35,176  
Loss before taxation                                                            (6,127,046) 
Taxation                                                                            (9,849)  
Loss for period                                                                 (6,136,895) 
Other comprehensive income                                                                -
Total comprehensive loss for the period                                         (6,136,895) 

Earnings per share (cents)                                                                     
Basic and diluted loss per share (cents)                                           (18 224) 
 
Note: There are no dilutive instruments in issue

CONDENSED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2017
                                                                                      2017 
                                                                                         R 
ASSETS                                          

Property, plant and equipment                                                       16,884  
Non-current assets                                                                  16,884  
Other receivables                                                                1,093,600  
Cash and cash equivalents                                                       52,592,028  
Current assets                                                                  53,685,628  
Total assets                                                                    53,702,512  

EQUITY AND LIABILITIES                          
Stated capital                                                                  48,741,085  
Retained loss                                                                  (6,136,895) 
Total equity                                                                    42,604,190 
Trade payables and accrued expenses                                              9,765,037  
Taxation payable                                                                     9,850 
Loans from related parties                                                       1,323,435 
Current liabilities                                                             11,098,322 
Total equity and liabilities                                                    53,702,512  

CONDENSED STATEMENT OF CHANGES IN EQUITY FOR THE FIVE MONTHS ENDED 30 JUNE 2017

                                                                 Retained  
                                             Share capital           loss     Total equity 
                                                         R              R                R 
Balance at 24 January 2017                               -              -                - 
Shares issued                                   52,555,000              -       52,555,000 
Total comprehensive loss for the period                  -    (6,136,895)      (6,136,895) 
Transaction costs                              (3,813,915)              -      (3,813,915) 
Balance at 30 June 2017                         48,741,085    (6,136,895)       42,604,190 

CONDENSED STATEMENT CASH FLOWS FOR THE FIVE MONTHS ENDED 30 JUNE 2017
                                                                                      2017 
                                                                                         R 
                                                                                         
Cash generated from operating activities                                         2,510,751 
Finance income                                                                      35,176 
Net cash inflow from operating activities                                        2,545,927 
Cash flow from investing activities 
Additions to property, plant and equipment                                        (18,419) 
Net cash outflow from investing activities                                        (18,419) 
Cash flow from financing activities                                                        
Proceeds on share issue                                                                    
                                                                                52,555,000 
Payment for share issue costs                                                  (3,813,915) 

Borrowings from related party loan                                               1,323,435 
                                                                                           
Net cash inflow from financing activities                                       50,064,520 
Net movement in cash and cash equivalents                                       52,592,028 
Cash and cash equivalents at beginning of the period                                     - 
Cash and cash equivalents at the end of the period                              52,592,028 

SEGMENTAL REPORTING

The Board has considered the implications of IFRS 8: Operating segments and are of the opinion that the
current operations of the Company constitute one operating segment.

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

Loss per share
Basic loss per share

From continuing operations (cents per share)
Basic loss per share was based on losses after tax of R6 136 895 and weighted average number of ordinary
shares of 33 676, calculated against 200 shares issued on 24 January 2017 and 5 255 480 shares issued on
30 June 2017.

At reporting date AEP had not concluded a viable asset acquisition, therefore the income earned in the current year
is not indicative of the Company's future performance prospects.

Headline loss per share (cents)                                                   (18 224)
Diluted headline loss per share                                                   (18 224)
Reconciliation between earnings and headline earnings
Earnings and headline earnings                                                 (6 136 895)

Related party transactions 

Relationships 

Destiny Corporation Energy Proprietary Limited are the owners of Destiny Corporation Management Services
Proprietary Limited, the appointed Management Company of AEP. Destiny Corporation Energy Proprietary Limited
therefore has significant influence on the affairs and operations of AEP. Some of the directors
of Destiny Corporation Management Services Proprietary Limited are also executive directors of AEP.

Related party balances 

Loan accounts – Owing to related parties                                                
Destiny Corporation Energy (Pty) Ltd                                             1 323 435

The loan bears no interest and has no fixed payment terms.

The related party transactions are at arm's length basis

COMPARATIVE INFORMATION
The Company was incorporated on 28 January 2017. Accordingly, the Company does not have any comparative
information for any prior financial year.

BASIS OF PREPARATION

These provisional annual results have been prepared in accordance with the framework concepts and the
recognition and measurement principles of International Financial Reporting Standards ("IFRS") and the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as
issued by the Financial Reporting Standards Committee presented in accordance with the minimum content,
including disclosures, prescribed by IAS 34: Interim Financial Reporting applied to year-end reporting, the
Companies Act of South Africa, and the JSE Limited's Listings Requirements ("Listings Requirements").

These condensed financial results have been extracted from the audited annual financial statements of AEP
which have been prepared under the supervision of the Financial Director, Kevin Simons CA(SA). These
condensed annual financial results are not themselves audited. The audited annual financial statements and the
unmodified audit report provided by Deloitte and Touche on the audited annual financial statements are available
for inspection at the Company's registered office. The Board takes full responsibility for the preparation of this
report and ensuring that the financial information has been correctly extracted from the underlying annual
financial statements.

ACCOUNTING POLICIES
The accounting policies applied in the preparation of these provisional annual financial results for the five months
ended 30 June 2017 are in terms of IFRS and are consistent with those applied in the preparation of the annual
financial results of the Company for the five months ended 30 June 2017.

FINANCIAL OVERVIEW
Financial Performance
The key financial results reflected in these inaugural annual financial results are:

- AEP recorded an operating loss of R6 136 895 for its first year of operation, comprised almost entirely of
  costs associated with the listing of the Company on the JSE. In keeping with the JSE's Listings
  Requirements governing SPAC's, the Company was precluded from commercial trading until such time that its listing
  was approved and achieved.

- Basic loss per share and headline loss per share amounted to -18 224 cents. The loss per share should be
  viewed in the context of the following:

  - AEP listed on the JSE on 30 June 2017, the last day of its financial year end, and did not engage in any
    commercial trade prior to listing;
  - Apart from the 200 shares issued on the date of incorporation, no other shares were issued until the last
    day of the financial year;
  - The loss reported for this period is therefore comprised of permissible expenses incurred to advance
    and achieve AEP's JSE listing; and
  - AEP has not as yet acquired a viable asset and therefore any income earned is not indicative of the
    Company's future prospects.

Before listing, the Board made it known to the market that the Company was seeking the acquisition of a viable
asset in the Clean Energy industry. Since the listing, management has been diligently reviewing various potential
acquisition opportunities and is continuously engaging with potential vendors on propositions that could satisfy
the Company's vision and values. The Company has sufficient resources to make a significant investment, using
cash, equity and debt, or any combination thereof as deemed appropriate by management and the Board.

The JSE Listings Requirements entitle the shareholders of AEP to approve the acquisition of a viable asset. 
Accordingly, shareholders of AEP will be informed of any acquisition proposed by AEP, and their approval will 
be duly sought as and when the Company is in the position to do so. The funds raised through listing are held in 
escrow with Rand Merchant Bank (a division of First Rand bank) ("RMB") and yielded an interest return for the 
period under review of R35 176. The current tax for the period under review amounts to R9 849.

CHANGES TO THE BOARD

The following non-executive directors were appointed to the Board of the Company with effect from
5 July 2017:

   - Mr Thabo Leeuw;
   - Mr Sello Moloko; and
   - Mr Oliver Petersen.

SUBSEQUENT EVENTS

Changes to the Management Agreement

Subsequent to the financial period end, the Board agreed certain amendments proposed by the Public
Investment Corporation (SOC) Limited ("PIC") to restructure certain provisions of the management agreement
between AEP and Destiny Corporation Management Services Proprietary Limited ("Manco"). The proposed
changes are outlined below:

Current Agreement                           Proposed Change

The current agreement refers to a           The amended agreement would not have a compulsory
compulsory internalisation of the           internalisation mechanism nor timeframe. This would be at the
Manco into AEP at the end of 10 years.      agreement of the parties.

Manco charges a fee of R150,000 per         The amended agreement terms are that Manco charges a fee of
month whilst AEP remains a                  R150 000 per month to AEP prior to AEP making investments up
SPAC. Once AEP has concluded                to R250 000 000. Thereafter, the Manco fee will be charged at a
a viable asset acquisition and is no        flat annual rate of 1% of AEP's Net Asset Value ("NAV")
longer a SPAC, the fee changes to           (determined using a discounted cashflow methodology on a fair
ninety (90) basis points of Enterprise      and reasonable basis independently verified by an external party).
Value, declining to as low as thirty-
five (35) basis points according to a
reverse sliding scale of Enterprise         Further, Manco will own either of phantom or unlisted "B" class
Value growth.                               shares in the Company and will be paid a performance fee in the
                                            form of a phantom / B share dividend of 25% of the growth in
                                            AEP's NAV, above a hurdle rate of ten percent (10%), which is
                                            reviewable every three (3) years. This dividend may be subject to
                                            a claw-back, using an agreed formulaic determination.

The proposed changes to the management agreement require the approval of AEP shareholders, and will be tabled
or consideration at the Company's next general meeting.

GOING CONCERN
The Board has undertaken a detailed review of the going concern capability of the Company with reference to
certain assumptions and plans underlying various internal cash flow forecasts.

The Board has not identified any events or conditions that individually or collectively cast significant doubt on the
ability of the Company to continue as a going concern.

DIVIDENDS
No dividend has been declared during the period under review.

DISTRIBUTION OF THE ANNUAL REPORT

The annual report of the Company, together with a notice of annual general meeting, will be distributed to
shareholders in due course and by no later than 31 December 2017.

The Company has not prepared a full integrated annual report in accordance with the recommendations of the
King Code on Corporate Governance. This is because no reportable operations can exist in the company until a 
viable acquisition approved by the shareholders of AEP has been concluded.

On behalf of the Board
E.C.M.B. Kikonyogo

Johannesburg
22 September 2017

Designated Advisor
Questco Corporate Advisory Proprietary Limited
1st Floor, Yellowwood House, Ballywoods Office Park, 33 Ballyclare Drive, Bryanston, 2021

Registered office
2nd Floor, 28 Fricker Road, Illovo, Sandton, 2196

Company Secretary
IKB Company Secretaries Proprietary Limited
1st Floor, Yellowwood House, Ballywoods Office Park, 33 Ballyclare Drive, Bryanston, 2021

Transfer Secretaries
Computershare Investor Services Proprietary Limited
Rosebank Towers, 15 Biermann Avenue, Rosebank

Auditors
Deloitte and Touche
Building 1 & 2, Deloitte Place, The Woodlands, 20 Woodlands Drive, Woodmead

Directors

Non-executive: D.W. Wright (Chairman)*,S.M. David, E.L. Johnson*, M.M. Kekana*, C.J. Cloete*, S.S. Sibiya*,
S.M. Moloko, T.P. Leeuw , O.N.W. Petersen
Executive: E.C.M.B. Kikonyogo (Chief Executive Officer), N. Gugushe (Chief Operations Officer), K.G. Simons
(Chief Financial Officer)

* - Independent

Date: 22/09/2017 04:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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