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Capital Raising Roadshow and Forecast Financial Information
AH-VEST LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1989/000100/06)
(“AH-Vest” or “the Company”)
Share code: AHL ISIN code: ZAE000129177
CAPITAL RAISING ROADSHOW (“ROADSHOW”), PROFIT ESTIMATE FOR THE YEAR ENDED 30 JUNE 2020
AND PROFIT FORECAST FOR THE YEARS ENDING 30 JUNE 2021 AND 30 JUNE 2022
The Board of AH-Vest has resolved to raise additional cash for the Company through the issue of
shares under the existing General Authority to issue shares for cash (“the placement”) in order to
substantially increase the Company’s inventory levels to meet increased order levels and to further
automate the packaging of its products, which is currently a bottleneck. The Company is seeking to
raise up to R30m.
As a result of a change in customer buying trends, AH-Vest lost around R22m in sales for the year
ended 30 June 2019 and estimates lost orders of more than R30m for the year ended 30 June 2020.
Building up stock levels will assist in meeting this requirement and the growing demand for the
Company’s products. In addition to this, the Company is seeking to address its shareholder spread
and to improve liquidity of the shares in accordance with its undertakings to the JSE.
The placement will be offered to qualifying investors through a road show and neither constitutes,
nor is intended to constitute, an offer to the public to purchase or subscribe for any shares.
The roadshow has commenced and will be conducted during July 2020 and August 2020, or until the
cash is raised. The issue of shares will be announced as soon as practicable following the closing of
the roadshow.
AcaciaCap Advisors is assisting AH-Vest on the capital raising and roadshow. For further information
or to request a presentation, please contact Michelle Krastanov on +2711 480 8570 or Kay Stoler on
+27 11 480 8628, or by way of e-mail at michelle@acaciacap.co.za or kay@acaciacap.co.za.
The Company has prepared a profit estimate for the year ended 30 June 2020 as well as a profit
forecast for the two years ending 30 June 2021 and 30 June 2022 on a pre-investment and post-
investment basis in order to ensure that the general market has access to all of the same information
as is being presented to potential investors. The investor presentation is available for downloading
on the Company’s website, www.alljoy.co.za.
No trading update has been issued for the year ended 30 June 2020 as, per the profit estimate,
earnings per share (“EPS”) and headline earnings per share (“HEPS”) are not expected to differ by
more than 20% from the EPS and HEPS reported for the prior year.
Whilst the audit for the year ended 30 June 2020 is in progress, the profit estimate has not been
audited or reviewed and reported on by either the Company’s auditors or a reporting accountant
in accordance with ISAE 3000 nor has the profit forecast been reviewed and reported on by the
Company’s auditor or r by a reporting accountant in accordance with ISAE 3400 and all financial
information is being issued on a voluntary basis due to the road show.
Statement of compliance
The profit estimate and the two year forecast have been prepared in accordance with the
framework concepts and the recognition and measurement criteria of International Financial
Reporting Standards (“IFRS”), its interpretations adopted by the International Accounting Standards
Board (IASB), IAS 34 – Interim Financial Reporting and the Listings Requirements of the JSE Limited.
The profit estimate for the year ended 30 June 2020 is set out below:
Unreviewed Profit Estimate for
the Year Ended Audited 12 months
30 June 2020 Ended
30 June 2019
R’000 R’000
Revenue 188 598 177 106
Cost of sales (116 390) (105 298)
Gross profit 72 208 71 808
Other Income 296 912
Operating expenses (58 642) (60 402)
Operating profit 13 862 12 318
Finance costs (5 580) (4 015)
Profit before taxation 8 282 8 303
Taxation (2 319) (2 377)
Total comprehensive income for the
year 5 963 5 926
Attributable to:
Equity holders of the parent 5 963 5 926
Total comprehensive income for the 5 963 5926
period
Headline earnings reconciliation
The headline earnings reconciliation is set out below:
Unreviewed Profit
Estimate for the Year
Ended Audited 12 months
30 June 2020 Ended
30 June 2019
R’000 R’000
R’000 R’000
Profit for the period attributable to equity
holders of the parent 5 963 5 926
Headline earnings attributable to
shareholders of the Company 5 963 6 016
Share information
Basic and diluted earnings per share
(cents) 5.85 5.81
Basic and diluted headline earnings per
share (cents) 5.85 5.90
Weighted average shares in issue (‘000) 101 973 101 973
Number of shares in issue at period end 101 973 101 973
Details of the profit forecast for the two years ending 30 June 2021 and 30 June 2022, together with
assumptions, are set out below:
Pre-investment Post investment
12 months 12 months 12 months 12 months
Ending Ending Ending Ending
30 June 30 June 30 June 30 June
2021 2022 2021 2022
R’000 R’000 R’000 R’000
Revenue 206 084 226 692 216 126 248 545
Cost of sales (128 527) (142 413) (134 596) (155 743)
Gross profit 77 557 84 279 81 530 92 802
Other Income 257 242 2 818 3 215
Operating expenses (64 065) (69 944) (64 402) (70 555)
Operating profit 13 749 14 577 19 946 25 462
Finance costs (5 255) (4 231) (5 255) (4 231)
Profit before taxation 8 494 10 346 14 691 21 231
Taxation (2 378) (2 897) (4 113) (5 945)
Total comprehensive income for the
year 6 116 7 449 10 578 15 286
Attributable to:
Equity holders of the parent 6 116 7 449 10 578 15 286
Total comprehensive income for the 6 116 7 449 10 578 15 286
period
Headline earnings reconciliation
The headline earnings reconciliation is set out below:
Pre-investment Post investment
12 months 12 months
12 months 12 months Ending Ending
Ending Ending 30 June 30 June
30 June 2021 30 June 2022 2021 2022
R’000 R’000 R’000 R’000
Profit for the period attributable to
equity holders of the parent 6 116 7 449 10 578 15 286
Headline earnings attributable to
shareholders of the Company 6 116 7 449 10 578 15 286
Share information
Basic and diluted earnings per share
(cents) 6.00 7.30 7.30 10.54
Basic and diluted headline earnings per
share (cents) 6.00 7.30 7.30 10.54
Weighted average shares in issue (‘000) 101 973 101 973 144 973 144 973
Number of shares in issue at period end 101 973 101 973 144 973 144 973
Basis of preparation
The profit estimate for the year ended 30 June 2020 and the profit forecast for the years ending 30
June 2021 and 2022 have been prepared using the accounting policies of AH-Vest used in the
preparation of the audited results for the year ended 30 June 2019 and the interim results for the six
months ended 31 December 2019. The financial information on which the profit estimate and
forecast have been prepared as well as the assumptions on which the forecast information is based
are the responsibility of the directors of AH-Vest. New accounting standards introduced over these
three periods have been considered as follows:
IFRS 9: Financial instruments
The standard requires financial assets to be measured either at amortized cost or fair value,
depending on the business model under which they are held and the cash flow characteristics of
the instrument. In addition, the standard replaces the incurred loss impairment model in IAS 39 with
an expected loss model. It will no longer be necessary for a credit event to have occurred before
credit losses are recognised. The profit forecast assumes a provision for credit losses at a rate of 0.3%
based on the estimated net invoiced sales.
IFRS 15: Revenue from contracts with customers
The IFRS replaces IAS 18 Revenue and provides a single, principles based five-step model to be
applied to all contracts with customers. The steps involve identifying the contract, identifying the
performance obligations under the contract, determining the transaction price, allocating the
transaction price to the performance obligations in the contract, and recognising revenue when the
entity satisfies a performance obligation. The amendments have no impact on the Company’s profit
forecast and revenue has been assumed to be earned in line with historical revenue recognition.
IFRS16: Leases – Effective date: 1 January 2019
The IFRS 16 replaces IAS 17 Leases. IFRS 16 has one model for lessees which will result in almost all the
leases being included on the Statement of Financial Position. Lessors continue to classify leases as
operating or finance leases. This had a material impact on the results of AH-Vest and was adopted
during the year ended 30 June 2019.
Key Assumptions:
The assumptions utilised in the profit forecast for the years ending 30 June 2021 and 2022 and which
are considered by management to be significant or are key factors on which the results of the
Company will depend, are disclosed below. The assumptions disclosed are not intended to be an
exhaustive list. There are other routine assumptions, which are not listed. The actual results achieved
during the forecast period may vary from the forecast and the variations may or may not be material.
The forecast financial information is based on the assumption that circumstances which affect the
Company’s business, but which are outside the control of the Directors, will not materially alter in
such a way as to affect the trading of the Company.
1. The current market conditions in the food industry in which the business operates are not
expected to change substantially following the COVID-19 pandemic.
2. The post investment forecast numbers assume that the capital of R30 million is raised primarily
for investment into growing the inventory levels needed to grow the business. The number of
shares in issue has been assumed to increase by 43 million shares, although this number may
vary.
3. The forecast numbers have been prepared in terms of IFRS and are based on the accounting
policies of the Company.
4. The forecast for the twelve month period ending 30 June 2021 commences from 1 July 2020.
5. Expenses have been forecast on a line-by-line basis and reflect the current budgeted
expenditure and take into account the cost of being listed.
6. The present level of interest and tax rates will remain substantially unchanged.
7. The expected impact on financial results due to foreign exchange movement has been kept
consistent with current ruling market conditions at an estimated average exchange rate over
the period. The average exchange rate used is a rate of USD1:R17.
8. Depreciation expense is provided for over the useful life of the assets used.
9. Revenue is based on an estimated percentage contribution between current clients and
expected new business.
10. Finance Costs are assumed at the current prime rate of Absa Bank Limited, being the current
lending rate enjoyed by the Company.
Detailed assumptions
1. REVENUE AND GROSS PROFIT ASSUMPTIONS AND COMMENTARY
An analysis of the revenue of the Company is set out below:
Pre-investment Post investment
Year Year Year Year
ending ending ending ending
30 June 2021 30 June 2022 30 June 2021 30 June 2022
R’000 R’000 R’000 R’000
Total Revenue 206 084 226 692 216 126 248 545
Cost of sales (128 527) (142 413) (134 596) (155 743)
Gross profit 77 557 84 279 81 530 92 802
For the 2021 and 2022 period the projected growth rate, pre-investment is 10% each year
based on current capacity and demand. Post investment, the growth in turnover is projected
at 15% each year based on the expectation that the Company will be able to meet existing
excess demand and also from the increased product range.
2. OPERATIONAL EXPENSES
The main components of operational expenses are salaries and wages, sales and distribution
costs and promotional expenses. The forecasts for salaries and wages for 2021 and 2022 are
based on the existing headcount.
The balance of the operational costs is based on the existing expense base of the Company.
The operating expenses are higher than the operating expenses for the year ended 30 June
2019 due to inflation and higher production and revenue. Whilst foreign exchange gains or
losses have been forecast, they are immaterial.
Depreciation and amortisation have been assumed on the basis of the existing depreciation
and amortisation rates used by the Company as well as on expected capital expenditure.
Details of the projected EBITDA, depreciation and amortisation are set out in the table below:
Pre-investment Post investment
30 June 30 June 30 June 30 June
2021 2022 2021 2022
R’000 R’000 R’000 R’000
EBITDA 17 953 18 932 24 150 29 816
Depreciation (4 610) (4 760) (4 610) (4 760)
Amortisation of Intangibles 406 406 406 406
No impairment of any assets has been assumed. The Company does not have any goodwill
on the balance sheet.
3. TAXATION
Taxation has been assumed at 28%.
4. FACTORS UNDER DIRECT INFLUENCE OF DIRECTORS
Revenue, cost of sales and operating expenses can be influenced by director actions.
5. FACTORS THAT ARE EXCLUSIVELY OUTSIDE THE INFLUENCE OF DIRECTORS
Regulatory, economic or political factors, including the short and medium term impact of
COVID-19 and the effect that the economic lockdown will have on customers, suppliers and
the industry, which in turn may have an impact on the Company.
6. FORWARD LOOKING STATEMENTS
This report may contain certain forward-looking statements concerning AH-Vest’s operations,
economic performance and financial condition, plans and expectations. Such views involve
both known and unknown risks, assumptions, uncertainties and other important factors that
could materially influence the actual performance of the Company. No assurance can be
given that these will prove to be correct and no representation or warranty expressed or
implied is given as to the accuracy or completeness of such views or as to any of the other
information in this report.
The Company does not undertake to update any forward-looking statements and does not
assume responsibility for any loss or damage, however arising, as a result of the reliance by any
party thereon, including, but not limited to, loss of earnings, profits or consequential loss or
damage.
JOHANNESBURG
14 August 2020
Designated Advisor
AcaciaCap Advisors (Pty) Ltd
Date: 14-08-2020 04:50:00
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