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Updated Pro Forma financial effects in respect of the unbundling by AEEI of its shareholding in AYO
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 UNBUNDLING BY AEEI OF ITS
SHAREHOLDING IN AYO
AEEI Shareholders are referred to:
– the various announcements released on SENS relating to the Unbundling of AEEI’s entire
shareholding in AYO to AEEI Shareholders (“Unbundling”), by way of a pro rata distribution in
specie in the ratio of 1 AYO Share for every 2.89 AEEI Shares held on the Unbundling record date,
the last of which was released on SENS on 15 June 2023; and
– the circular to Shareholders containing details of the Unbundling (“Circular”) distributed to
Shareholders on 1 June 2023.
Unless expressly defined in this announcement, capitalised terms herein have the meaning given to
them in the Circular.
In compliance with paragraph 8.25(a) of the Listings Requirements, the pro forma financial effects of the
Unbundling on AEEI (“pro forma financial effects”) included in the Circular, were based on the then most
recently published financial results of AEEI, being the audited annual financial results for the year ended
31 August 2022 (“AEEI FY2022 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 June 2023, AEEI published its unaudited condensed consolidated interim results for the six
months ended 28 February 2023 (“AEEI HY2023 Results”). Due to a difference of more than 10%
between the pro forma financial effects based on the AEEI HY2023 Results to the pro forma financial
effects based on the AEEI FY2022 Results included in the Circular, the Company is required to publish
updated pro forma financial effects of the Unbundling on AEEI. AEEI Shareholders are advised that the
JSE has approved the publication of the updated pro forma financial effects on SENS, rather than requiring
AEEI to distribute a supplementary circular.
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 Unbundling, based on the AEEI HY2023 Results.
The Supplementary Consolidated Pro forma Financial Information has been prepared to illustrate the
impact of the Unbundling had the Unbundling occurred on 28 February 2023 for purposes of the pro
forma Income Statement and on 28 February 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 audited
results of AEEI for the year ended 31 August 2022.
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.
RESPONSIBILITY STATEMENT
The Independent Board accepts responsibility for the information in this announcement. To the best of
the Independent Board’s knowledge and belief, the information contained in this announcement is true
and the announcement does not omit anything likely to affect the importance of the information
contained herein.
SUPPLEMENTARY PRO FORMA FINANCIAL INFORMATION
Consolidated Pro Forma Statement of Comprehensive Income for the period ended 28 February 2023
Loss on Equity
settlement accounting
AEEI Unbundling of for AEEI
Group of liability income Group
before AYO for Transaction from after the
AYO Group dividend associate AYO
Unbundling in specie costs Unbundling
(Note 1) (Note 2) (Note 3) (Note 4) (Note 5)
2023 2023
R'000 R'000 R'000 R'000 R'000 000
Revenue 344 634 344 634
Cost of sales (193 417) (193 417)
Gross profit 151 217 - - - - 151 217
Other income 14 872 14 872
Operating expenses (161 312) (2 500) (163 812)
Net impairment changes and impairment
reversals (210 269) (210 269)
Fair value adjustments 0 0
Investment income 5 167 5 167
Finance costs (1 456) (1 456)
Income from equity accounted
investments 42 513 9 105 51 618
Loss on settlement of liability for dividend
in specie (686 872) (686 872)
Loss before taxation (159 268) 0 (686 872) (2 500) 9 105 (839 535)
Taxation 39 591 39 591
Loss from continuing
operations (119 677) 0 (686 872) (2 500) 9 105 (799 944)
Discontinued
operations
Loss from discontinued
operations (157 195) 157 195 0
Loss from operations (276 872) 157 195 (686 872) (2 500) 9 105 (799 944)
Other comprehensive
income:
Items that may be reclassified to
profit or loss:
Exchange differences on translating
foreign operations (3 448) (3 448)
Other comprehensive (loss)/profit for
the year net of taxation (3 448) 0 0 0 0 (3 448)
Total comprehensive loss for the
period (280 320) 157 195 (686 872) (2 500) 9 105 (803 392)
Total comprehensive loss
attributed to:
Owners of parent from continuing
operations (138 511) (686 872) (2 500) 9 105 (818 778)
Owners of parent from discontinued
operations (30 608) 157 195 126 587
Non-controlling interest from continuing
operations 18 834 18 834
Non-controlling interest from
discontinued operations (130 035) (130 035)
(280 320) 157 195 (686 872) (2 500) 9 105 (803 392)
Loss attributable to ordinary equity
owners of the parent for continuing
operations (138 511) 0 (686 872) (2 500) 9 105 (818 778)
Headline earnings
adjustments
Loss on settlement of liability for dividend
in specie 686 872 686 872
Tax effects
Headline loss from continuing
operations (138 511) 0 0 (2 500) 9 105 (131 906)
Loss attributable to ordinary equity
owners of the parent for discontinued
operations (30 608) 157 195 126 587
Headline earnings
adjustments 0
Loss on disposals of property, plant and
equipment (230) (230)
NCI effects of adjustments 0
Tax effects 0
Headline profit / (loss) from
discontinued operations (30 838) 157 195 0 0 0 126 357
Shares in issue ('000) 491 022 491 022 491 022 491 022 491 022 491 022
Weighted average shares in issue
('000) 491 022 491 022 491 022 491 022 491 022 491 022
Basic and diluted earnings/(loss) per
share (cents) for continuing operations (28,21) 0,00 (139,89) (0,51) 1,85 (166,75)
Basic and diluted earnings/(loss) per
share (cents) for discontinued
operations (6,23) 32,01 0,00 0,00 0,00 25,78
Basic and diluted earnings/(loss) per
share (cents) for total operations (34,44) 32,01 (139,89) (0,51) 1,85 (140,97)
Headline earnings/(loss) per share
(cents) for continuing operations (28,21) 0,00 0,00 (0,51) 1,85 (26,86)
Headline earnings/(loss) per share
(cents) for discontinued operations (6,28) 32,01 0,00 0,00 0,00 25,73
Headline earnings/(loss) per share
(cents) for total operations (34,49) 32,01 0,00 (0,51) 1,85 (1,13)
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 unaudited financial information of AEEI for the period ended 28 February 2023.
2. In the Unbundling process, AEEI will distribute its entire shareholding in AYO to its owners by
means of a dividend in specie. After the distribution has taken place, AEEI will no longer have
control of AYO and will deconsolidate the results of AYO from its consolidated results.
This column represents the deconsolidation of the comprehensive income of AYO for the period
ended 28 February 2023. The information is extracted from the published unaudited financial
information of AYO for the period ended 28 February 2023.
The published unaudited information of AYO was adjusted for the reversal of consolidation
adjustments directly related to the deconsolidation of AYO at 28 February 2023.
AYO was classified as a discontinued operation in the published unaudited information of AEEI for
the period ended 28 February 2023.
The deconsolidation of comprehensive income is considered to be continuing transaction as the
results of AYO will no longer be included in the consolidated results AEEI from the date of the
Unbundling.
3. The dividend in specie declared to Shareholders of AEEI and the corresponding liability for the
dividend payable is recognised at the fair market value of the AYO shares to be distributed.
Upon distribution of the shares as a dividend in specie, the liability for the dividend payable is settled
and the difference between the carrying value of the liability for the dividend payable and the
carrying value of the assets and liabilities of the former subsidiary is recognised in profit or loss.
The loss on settlement of the liability for the dividend in specie is calculated as follows:
Net asset value of AYO on Unbundling in proportion to AEEI shareholding in AYO of 49.36% AEEI
1 196 472
Less carrying value of the liability for the dividend in specie calculated as 169 866 829 shares at
R3 per share (509 600)
Loss on settlement of liability for dividend in specie 686 872
The loss recognised is excluded from Headline Earnings.
The loss on settlement of the liability for the dividend in specie will not have a continuing effect on
the consolidated statement of comprehensive earnings as it is a once-off transaction.
4. 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.
5. Represents the recording of the equity accounted income of Mainstreet 1653 Proprietary Limited
(“Mainstreet”) for the period.
Before the Unbundling, the shareholding of Mainstreet was held as follows:
AEEI - 60% of the issued share capital of Mainstreet
AYO - 40% of the issued capital of Mainstreet
The pre-Unbundling shareholding structure gave AEEI control over Mainstreet and the investment
was consolidated in AEEI financial statements.
In the Unbundling of AYO, the AEEI group deconsolidates its investment in Mainstreet.
Post the Unbundling of AYO, AEEI retains its 60% shareholding in Mainstreet, however in terms of
a shareholders agreement, AYO retains the rights to appoint the majority of the board of directors
of Mainstreet and has retained control of the entity.
Post the Unbundling of AYO, AEEI will exercise significant influence over its investment in
Mainstreet and will account for the investment in Mainstreet as an investment in associate under
the equity method.
Consolidated Pro Forma Statement of Financial Position at 28 February 2023
Equity
accounting
AEEI Group Unbundling for income AEEI Group
before AYO of AYO Transaction from after the
Unbundling Group Costs associate AYO
(Note 1) (Note 2) (Note 3) (Note 4) Unbundling
2023 2023 2 023
R'000 R'000 R'000 R'000 R'000
Assets
Non-current assets
Property, plant and equipment 472 071 472 071
Right of use assets 32 422 32 422
Goodwill 43 196 43 196
Intangible assets 262 361 262 361
Investment in associate 773 638 36 768 9 105 819 511
Investments in joint ventures - 0
Other financial assets 38 640 38 640
Finance lease receivables - 0
Deferred tax 75 302 75 302
Loans receivable - 0
Loans to related parties - 0
Total non-current assets 1 697 630 36 768 0 9 105 1 743 503
Current assets
Biological assets 83 073 83 073
Inventories 82 647 82 647
Current tax receivable 4 622 4 622
Trade and other receivables 148 527 148 527
Other financial assets - 0
Finance lease receivables - 0
Loan receivable 10 375 10 375
Cash and cash equivalents 205 246 (2 500) 202 746
Loans to related parties - 0
Total current assets 534 490 0 (2 500) 0 531 990
Disposal group assets
classified as held for sale 3 278 123 (3 278 123) 0
Total Assets 5 510 243 (3 241 355) - 2 500 9 105 2 275 493
Equity and liabilities
Equity attributable to equity
holders of the parent
Share capital 402 240 402 240
Reserves (28 420) 37 791 9 371
Retained income 1 832 680 (449 769) (2 500) 9 105 1 389 516
Equity attributable to equity
holders of parent 2 206 500 (411 978) (2 500) 9 105 1 801 127
Non-controlling interest 2 081 605 (2 049 616) 31 989
4 288 105 (2 461 594) (2 500) 9 105 1 833 116
Liabilities
Non-current liabilities
Other financial liabilities 4 706 4 706
Derivatives financial liabilities 0
Lease liabilities 29 047 29 047
Employee benefit obligation 1 849 1 849
Deferred tax 259 715 259 715
Total non-current liabilities 295 317 0 0 0 295 317
Current liabilities
Provisions 27 063 27 063
Trade and other payables 75 122 75 122
Other financial liabilities - 0
Lease liabilities 12 003 12 003
Deferred income 2 824 2 824
Current tax payable 17 701 17 701
Dividend payable 12 210 12 210
Contingent consideration
liability - 0
Loans from related parties 0
Bank overdraft 137 137
Total current liabilities 147 060 0 0 0 147 060
Disposal group liabilities
classified as held for sale 779 761 (779 761) 0
Total liabilities 1 222 138 - 779 761 - - 442 377
Total Equity and Liabilities 5 510 243 (3 241 355) (2 500) 9 105 2 275 493
Number of shares in issue
('000) 491 022 491 022 491 022 491 022 491 022
Net asset value per share
(cents) 873,30 (501,32) (0,51) 1,85 373,33
Net tangible asset value per
share (cents) 811,07 (501,32) (0,51) 1,85 311,10
0 0 0 0 0
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 unaudited financial information of AEEI for the period ended 28 February 2023.
2. In the Unbundling process, AEEI will distribute its entire shareholding in AYO to its owners by
means of a dividend in specie. After the distribution has taken place, AEEI will no longer have
control of AYO and will deconsolidate the results of AYO from its consolidated results.
This column represents the deconsolidation of the net asset value of AYO as at 28 February 2023.
The information is extracted from the published unaudited financial information of AYO for the
period ended 28 February 2023. The published unaudited information of AYO was adjusted for the
reversal of consolidation adjustments directly related to the deconsolidation of AYO at 28 February
2023. AYO was classified as a discontinued operation in the published unaudited information of
AEEI for the period ended 28 February 2023.
3. Represents the transaction costs in respect of the proposed transaction that will be settled from
existing available cash.
4. Represents the recording of the equity accounted income of Mainstreet for the period.
Before the Unbundling, the shareholding of Mainstreet 1653 was held as:
AEEI - 60% of the issued share capital of Mainstreet
AYO - 40% of the issued capital of Mainstreet
The pre-Unbundling shareholding structure gave AEEI control over Mainstreet and the investment
was consolidated in AEEI financial statements.
In the Unbundling of AYO, the AEEI group deconsolidates its investment in Mainstreet.
Post the Unbundling of AYO, AEEI retains its 60% shareholding in Mainstreet, however in terms of
a shareholder’s agreement, AYO retains the rights to appoint the majority of the board of directors
of Mainstreet and has retained control of the entity.
Post the Unbundling of AYO, AEEI will exercise significant influence over its investment in
Mainstreet and will account for the investment in Mainstreet as an investment in associate under
the equity method.
Cape Town
23 June 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
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
supplementary pro forma financial information, as set out in the announcement containing such
supplementary information to be issued on or about 22 June 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 and described in the Announcement.
The supplementary pro forma financial information has been compiled by the directors to illustrate
the impact of the corporate action or event, described in the Circular issued to shareholders on the
01 June 2023, on the Group’s financial position as at 28 February 2023, as if the corporate action had
taken place at 28 February 2023 for the statement of financial position and 1 September 2022 for
statement of comprehensive income purposes. 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
published unaudited financial information for the period ended 28 February 2023.
Directors’ Responsibility for the Pro Forma Financial Information
The directors are responsible for compiling the supplementary 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 supplementary 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 supplementary 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 supplementary pro forma financial information.
The purpose of the supplementary pro forma financial information included in the Announcement 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 28 February 2023 would have been as
presented.
A reasonable assurance engagement to report on whether the supplementary 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 supplementary pro forma financial information provides 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 supplementary 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 supplementary pro forma
financial information has been compiled, and other relevant engagement circumstances.
Our engagement also involves evaluating the overall presentation of the supplementary 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 supplementary 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
23 June 2023
9 Autumn Street, Rivonia, 2191
Date: 23-06-2023 04:51:00
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