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AFRISTRAT INVESTMENT HOLDINGS LIMITED - Change in Control of an Associate, Mybucks S.A. and Fourth Extension of Circular Distribution Date

Release Date: 25/11/2021 12:12
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Change in Control of an Associate, Mybucks S.A. and Fourth Extension of Circular Distribution Date

Incorporated in the Republic of South Africa
Registration number: 1998/013215/06
JSE Code: ATI - ISIN: ZAE000287587
Debt Issuer Code: ATID
Hybrid Issuer Code: ATIG
(“Afristrat” or “the Company” or “the Group”)


1. Introduction

   1.1. Shareholders are referred to the various announcements released on SENS relating inter alia to the
       proposed acquisition by Afristrat of MHMK Financial Services Limited (“MHMK Financial Services”),
       a share consolidation and the implementation of an employee share scheme (together, “Proposed
       Transaction”), dated 18 May 2021 and 15 October 2021 (“Transaction Announcements”).

   1.2. Capitalised terms used herein that are not otherwise defined, bear the meanings ascribed to them in
       the Transaction Announcements.

   1.3. Shareholders are further referred to the integrated annual report of the Company for the year ended
       31 March 2021 (“IAR”), distributed to shareholders on 30 July 2021.

   1.4. Shareholders’ attention is drawn to page 10 of the IAR, detailing the Operational Overview of MyBucks
       S.A. (“MyBucks”) in the IAR and the ‘Prospects’ paragraph thereof, in which it was stated that:
       1.4.1. An in-depth analysis of the financial position post the restructure has resulted in the realisation
                that the future prospects of MyBucks as an investment vehicle are unsustainable and would
                not provide any realistic turnaround value for Afristrat in the future.
       1.4.2. The Board has therefore started a strategic review to actively pursue the best route to rebuild
                value from the remaining two assets in MyBucks after settlement of all residual debts, and to
                recapitalise Afristrat in order to rebuild its financial services and banking division.
       1.4.3.   This strategic shift away from MyBucks culminated in the Proposed Transaction.

   1.5. Shareholders are further referred to the announcements released on SENS on 5 July 2021, 7
        September 2021 and 22 October 2021, related to the extension of the distribution date of the Circular
        due to unforeseen delays with the implementation of the Proposed Transaction.

   1.6. Shareholders are hereby advised that the Board of Afristrat (“Board”), nominated additional
        members to the Board of directors of MyBucks (“MyBucks Board”) for appointment, after vacancies
        arose due to resignations, and therefore effectively obtained control over MyBucks as defined in IFRS
        10 (“MyBucks Change in Control”) prior to the implementation of the Proposed Transaction, with
        effect from 17 November 2021 (“Effective Date”).

2. Rationale for the MyBucks Change in Control

   With reference to paragraph 1.4.2 above, the Company would like to commence with the processes to
   extract what value is left from the remaining assets of MyBucks, however, this process has been delayed
   due to the unforeseen delays in the implementation of the Proposed Transaction and put some of these
   processes at risk.
   Accordingly, the Board came to the decision that the Company will, through a nomination process to
   appoint directors to the MyBucks Board, obtain control of the MyBucks Board prior to the implementation
   of the Proposed Acquisition to accelerate the above process.

3. Changes to the Board of MyBucks

   With effect from 17 November 2021, Mr. Craig Lyons and Mr. Lutz Seebacher resigned from the MyBucks
   Board and Mr George Manyere was appointed to the MyBucks Board. The current MyBucks Board
   comprises: Mr Tertius de Kock and Mr George Manyere.

4. Accounting Treatment

   4.1. Shareholders are referred to note 5 of the annual financial statements contained in the IAR
        (‘Investment in Associates’), of which page 50, as it relates to MyBucks, states that:

        “Control for IFRS purposes is assessed in terms of IFRS10, which consider numerous factors when
        assessing “control”. In the case of Afristrat, there are several factors which lead to the assessment
        of control and ultimately also involves significant judgement by management. Based on, inter alia,
        the lack of a contractual right to entrench voting control, as no voting pool arrangement exists
        between Afristrat and MHMK, Afristrat having a majority independent Board from MHMK and the
        subsequent reduction of MHMK shareholding in Afristrat to 15.67% and the lack of contractual ability
        to appoint the majority directors to the Board of MyBucks, control in terms of IFRS10 is not established
        over MyBucks and accordingly MyBucks is not consolidated by the Group.”

   4.2. Following the MyBucks Change in Control, in terms of IFRS 10, the financial results of MyBucks will
        be consolidated into the Group results and reflected as a post balance sheet event for Afristrat in the
        pro forma financial information (“Financial Information”) contained in the Circular to be distributed
        to shareholders in due course.

   4.3. The table below indicates the pro forma financial effects of the MyBucks Change in Control and have
        been prepared to illustrate the impact of the MyBucks Change in Control on the reported financial
        information of Afristrat for the year ended 31 March 2021, had the event occurred on 1 April 2020
        for the statement of comprehensive income and as at 31 March 2021 for the statement of financial

   4.4. The pro forma financial effects below have been prepared using accounting policies that comply with
        IFRS and that are consistent with those applied in the annual financial statements of Afristrat for the
        financial year ended 31 March 2021. The pro forma financial effects, which are the responsibility of
        the Board, are provided for illustrative purposes only and, because of their pro forma nature, may
        not fairly present Afristrat’s actual financial position, changes in equity, results of operations or cash

                                                            Before the       After the
                                                               MyBucks         MyBucks 
                                                             Change in       Change in        Percentage
                                                               Control         Control         change (%)

 Basic earnings/(loss) per share (cents)                      (1.1570)        (0.6605)           42.92%
 Headline earnings/(loss) per share (cents)                   (1.1610)        (0.6636)           42.84%
 Net asset value per share (cents)                              (0.28)          (0.49)          (43.18%)
 Tangible net asset value per share (cents)                     (0.28)          (0.49)          (43.28%)
 Weighted average number of shares in issue (000’s)         46 530 245      46 530 245                 -
 Total number of shares in issue (000’s)                    59 445 881      59 445 881                 -

    4.5. The unaudited value of the net assets that are the subject of the change in control as at 17 November
         2021 was R39.1 million.
    4.6. The unaudited profit after tax attributable to the net assets that are the subject of the change in
         control was R271.7 million.

5. Impact on the Proposed Transaction

    The MyBucks Change in Control has no impact on the terms of the Proposed Transaction as MyBucks was
    not the main subject of the Proposed Transaction and the rationale for MyBucks remains the same going

6. Categorisation of the MyBucks Change in Control

    The MyBucks Change in Control has no consideration value and accordingly does not trigger the thresholds
    for a categorisable transaction in terms of the JSE Listings Requirements. Accordingly, the information
    disclosed herein is voluntary.

7. Fourth Extension of Circular Distribution Date

   7.1. The finalisation of the Financial Information to be disclosed in the Circular relating to the financial
        disclosure requirements set out in Section 8 of the JSE Listings Requirements has been further
        delayed, due to the MyBucks Change in Control.
   7.2. Accordingly, the Company approached the JSE for a further extension to distribute the Circular, to by
        no later than Tuesday, 21 December 2021, which has been granted.

25 November 2021

Merchantec Capital

Date: 25-11-2021 12:12:00
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