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AYO TECHNOLOGY SOLUTIONS LIMITED - Listing of Ayo Technology on The Main Board of The JSE Limited ("JSE") and Abridged Pre-Listing Statement
Listing of Ayo Technology on The Main Board of The JSE Limited ("JSE") and Abridged Pre-Listing Statement AYO TECHNOLOGY SOLUTIONS LIMITED (Previously Sekunjalo Technology Solutions Limited) (Incorporated in the Republic of South Africa) Registration number: 1996/014461/06 JSE share code: AYO ISIN ZAE000252441 ("AYO Technology" or the "Company") LISTING OF AYO TECHNOLOGY ON THE MAIN BOARD OF THE JSE LIMITED ("JSE") AND ABRIDGED PRE-LISTING STATEMENT 1. INTRODUCTION AND HISTORY 1.1. AYO Technology is a broad based black economic empowerment ("B-BBEE") information and communication technology ("ICT") group offering numerous end to end solutions to a host of industries. The AYO Technology group was established in 1996 and has evolved over this time through continually adapting to the local and international ICT landscape. The process of adaptation was enabled by acquiring new businesses, partnerships and sourcing innovative technology within its existing portfolio. AYO Technology, through its divisions, subsidiaries and partners provides solutions to both the public and private sector within South Africa and abroad, with its private sector client base comprising mostly blue- chip multinationals. The AYO Technology group maintains strong relationships and holds key value-added reseller or supplier agreements with principles such as Nokia Siemens Networks South Africa (Pty) Ltd, InterSystems Corporation, Cisco Systems, Microsoft Corporation, IBM and Riverbed Technology Inc, which provides the group with continuous access to up to date technology. The AYO Technology group has a strategic relationship with BT Communications Services South Africa Proprietary Limited ("BT"). 1.2. Shareholders are herewith advised that the JSE has granted AYO Technology a listing by way of introduction of all its issued ordinary shares on the main board of the JSE ("Listing"), under the abbreviated name "AYO", share code "AYO" and ISIN ZAE000252441, with effect from the commencement of trade on Thursday, 21 December 2017 ("Listing Date"), subject to obtaining the requisite shareholder spread as required in terms of the listings requirements of the JSE ("JSE Listings Requirements"). AYO Technology will be listed in the "Computer Services" sector of the main board of the JSE. 1.3. In order to provide AYO Technology with additional capital to fund its further expansion, AYO Technology will, in conjunction with the Listing, undertake a private placement involving an offer to invited investors to subscribe for up to 99 782 655 ordinary no par value shares of the Company ("Private Placement Shares") at R43.00 per share thereby raising R4.3 billion for AYO Technology ("Private Placement"). 1.4. Prior to the Listing, AYO Technology shall issue 31 960 000 ordinary no par value shares ("B-BBEE Consortium Shares") to various broad based empowered consortiums ("B-BBEE Consortium Share Issue"). 1.5. African Equity Empowerment Investment Limited's shareholding in AYO Technology will, as a result of the Private Placement, be reduced from 69.55% (following the B-BBEE Consortium Share Issue) to approximately 49% on the Listing Date 2. PUBLICATION AND DISTRIBUTION OF PRE-LISTING STATEMENT 2.1. The pre-listing statement in relation to the Listing, which contains detailed information regarding AYO Technology ("Pre-listing Statement"), was published today, Wednesday, 13 December 2017 on AYO Technology's website (www.ayotsl.com). 2.2. Terms appearing in title case in this announcement and that are not otherwise defined herein, shall bear the meanings assigned to them in the Pre-listing Statement. 3. SALIENT DATES AND TIMES RELATING TO THE PRIVATE PLACEMENT AND LISTING The salient dates and times relating to the Private Placement and the Listing are set out below: 2017 Abridged Pre-listing Statement published Wednesday, 13 December on SENS on Pre-listing Statement published on AYO Wednesday, 13 December Technology's website (www.ayotsl.com) and made available for inspection Opening date of Private Placement on Wednesday, 13 December Abridged Pre-listing Statement published Thursday, 14 December in the press on Closing date of Private Placement at 17:00 Friday, 15 December on Notification of application to successful Monday, 18 December Invited Investors on Results of Private Placement released on Monday, 18 December SENS on General Meeting to approve the issuing of Monday, 18 December the Private Placement Shares and the B-BBEE Consortium Shares at 10:00 on Accounts at CSDPs/Brokers updated in Thursday, 21 December respect of Dematerialised Shareholders on Listing of Shares on the JSE expected at Thursday, 21 December commencement of trade at 09:00 on Notes: 1. The above dates are subject to change. Any such change will be announced on SENS. 2. All references to dates and times are to local dates and times in South Africa. 3. Invited Investors must advise their CSDP or Broker of their acceptance of the Private Placement Shares in the manner and cut-off time stipulated by their CSDP or Broker. 4. CSDPs effect payment on a "delivery-versus-payment" basis. 4. ABRIDGED PRE-LISTING STATEMENT OF AYO TECHNOLOGY The Abridged Pre-Listing Statement appearing below, is not an invitation to the public to subscribe for Shares, but is issued in compliance with the JSE Listings Requirements for the purpose of providing information to the public and investors in respect of AYO Technology. 4.1. OVERVIEW OF THE AYO TECHNOLOGY GROUP 4.1.1. AYO Technology is an ICT business focused on growth and its strategy is underpinned by a vision of creating a truly global, innovative and scalable B-BBEE ICT Group with its roots in South Africa. It intends to achieve this through: 188.8.131.52. targeting global innovation and growth areas of ICT and acquiring/partnering with experts in the space; 184.108.40.206. exploring synergies between its partners and its existing portfolio, with a view to maximizing the potential of its existing portfolio; and 220.127.116.11. exploiting the opportunities that exist in servicing multinationals based in South Africa who require both B-BBEE and an international network capability. 4.1.2. AYO Technology's growth strategy will be enabled by the capital raised pursuant to the Private Placement. The capital raised, the strategic relationship with BT and the strong acquisition pipeline will enable AYO Technology to be one of the most empowered multidiscipline ICT groups with, a full suite of products and services that is able to deliver turnkey ICT solutions to any client. 4.2. EXISTING BUSINESS The various existing businesses of the AYO Technology Group are detailed below: 4.2.1. HST 18.104.22.168. HST was founded in 1980 and is a specialist provider of optimized and integrated healthcare ICT solutions with offices in Cape Town, Johannesburg, Durban and Polokwane. HST's capabilities include: 22.214.171.124.1. the provision of modular and integrated healthcare information systems across all levels of care; 126.96.36.199.2. development, implementation and training services; 188.8.131.52.3. project management of complex and large implementations; 184.108.40.206.4. a blend of local and international skills, expertise and products; and 220.127.116.11.5. the provision and management of mission critical ICT infrastructure. 4.2.2. Puleng Technologies Puleng Technologies delivers product solutions and professional services to predominantly large blue-chip organisations. Puleng Technologies is a proudly South African B-BBEE Level Two ICT company with its roots firmly planted around building local expertise and providing clients with "Project Success" linked to the solutions that Puleng Technologies design and support. The Puleng Technologies blueprint provides clients with a client- centric strategy to manage and secure the two most valuable assets an organisation has, its "data" and "users", while at the same time providing a platform to build an efficient, collaborative governance, risk, and compliance (GRC) program to address IT risk facing its client's businesses. 4.2.3. Headset Solutions Headset Solutions was established in 1993 and is currently one of the largest importers and distributors of headsets on the African continent, with a presence in 10 African countries. Headset Solutions distributes two of the most notable brands within the telecommunications and consumer electronic markets, being Plantronics, which is a personal audio communication headset designer for a wide range of devices; and Konftel, which is one of the leading manufacturers of audio conferencing equipment. Headset Solutions seeks to deliver cutting edge telecommunication solutions backed up by exceptional service and after sales support. It is viewed as a value-added distributor by its principals and distributes throughout the African market via an in-house warehouse and distribution channel. 4.2.4. Afrozaar Afrozaar is a software consulting services and product development business, that specialises in providing scalable digital solutions to retailers, media groups and brand agencies. Afrozaar was founded in 2010, and has a client footprint in Africa, USA and Europe. Afrozaar's specialised digital media product set has been bundled into "The Publisher's Toolbox", a platform where each product can exist independently of the other, however when integrated, provides an enterprise content distribution ecosystem. Afrozaar is focused on the provision of multimedia platforms within an Amazon cloud hosted environment, where scalability and performance is achievable with minimal risk and cost. 4.2.5. WWC WWC is a digital transformation strategy and advisory firm with a 15-year track record in providing technology, client and change management solutions to businesses across Africa in order to add real business value. WWC works with medium to large B2C and B2B clients in government, retail, finance, telecommunications and the automotive industry. As a people and technology company, WWC partner with business leaders to create a clear picture of their organisation's digital potential and help them articulate their vision to the business. With these fundamental building blocks in place, their clients focus shifts to mapping out the best way to making that picture a reality. 4.2.6. Digital Matter Digital Matter, formed in 2000, is a specialist IT company focusing on enterprise application and solution development. Digital Matter is a certified Microsoft Corporation development partner and incorporates Microsoft Corporation technology as a digital platform in all applications, products and solutions. Digital Matter has product offerings covering mobile inspection management (InspectionOne), fixed asset management (AssetAuditor), tracking solutions, as well as solutions developed for clients in mobile field service, property inspections, franchise evaluation, mobile banking and commissioning. 4.3. COMPETITIVE ADVANTAGES 4.3.1. Empowerment The Board and management view AYO Technology's empowerment credentials as a significant competitive advantage, which is underpinned by the B-BBEE ICT Sector Codes that seek to advance economic transformation and enhance the participation of Black People in the South African economy. B-BBEE has broad support across South Africa, and business communities are expected to take the lead in transformation by addressing employment and ownership within their businesses. Recently new and more onerous B-BBEE ICT Sector Codes have been published which provide more preferential procurement points to companies in the ICT sector that procure products and services from entities that are 51% Black owned (and 30% Black women owned) (as these terms are defined in the B-BBEE ICT Sector Codes). It is these additional 11 points that customers of the Group can benefit from by procuring up to 40% of their total procurement from 51% Black owned businesses and a further 5 points for procuring 12% of their total procurement from 30% Black women owned businesses. AYO Technology believes that its B-BBEE ownership will enable it to rely on those changes to expand its business. In addition, South African companies listed on the JSE now have to publish a compliance report on their B-BBEE status annually and report on this to the B-BBEE commission established in terms of the B-BBEE Act. Considering the above legislation and the current competitive landscape, AYO Technology is well positioned to increase the market share of its current product and service offering and has attracted significant deal flow to acquire or partner with companies that require B-BBEE ownership in order to maintain or grow their businesses. Relative to its peers in the South African ICT sector, AYO Technology is expected to be favourably positioned to offer its clients more points for preferential procurement on their B-BBEE scorecard due to AYO Technology being 51% Black owned (and 30% Black women owned) (as these terms are defined in the B-BBEE ICT Sector Codes). The ability of AYO Technology to maximise preferential procurement points also provides the additional benefit of minimising operational risks for its clients. 4.3.2. Key Strategic Relationship with BT 18.104.22.168. AYO Technology will subscribe for 99% of the issued shares of Kilomix Investments, which holds 30% of the issued shares of BT, post the Listing, subject to the fulfilment of certain conditions precedent. 22.214.171.124. In addition to being an equity holder in BT, AYO Technology has entered into the BT Alliance Agreement , in terms of which AYO will be one of BT's strategic partners in South Africa. 126.96.36.199. In terms of the strategic relationship: 188.8.131.52.1. AYO Technology and BT will pursue opportunities with new clients, where there is scope for co-operation and/or complementary products and/or services; 184.108.40.206.2. BT will partner with AYO Technology in pursuit of existing BT clients and new prospective clients that are international companies headquartered in South Africa (or with significant ICT requirements in South Africa), with ICT requirements that align to BT's standard products and services, where such clients have particular B-BBEE requirements (in this regard BT and AYO Technology have already concluded a teaming agreement in relation to a request for proposal already submitted to a prospective client); 220.127.116.11.3. Depending on the needs of the client, AYO Technology will generally act as the prime contractor, with BT acting as the subcontractor, however in certain circumstances BT may act as the prime contractor and AYO Technology as the subcontractor; 18.104.22.168.4. AYO Technology and BT will be entitled to market each other's products and services in South Africa, on a "resell" basis or as part of a bundled solution; 22.214.171.124.5. it is envisaged that a number of employees of BT may transfer, by written agreement, to AYO Technology in order to operationalise and empower AYO Technology with the skills and intellectual property required to fulfil contracts awarded; and 126.96.36.199.6. AYO Technology agrees to remain at least 51% Black owned and 30% Black woman owned. 4.4. INCREASING PORTFOLIO THROUGH ACQUISITIONS As part of AYO Technology's growth strategy and stemming from its empowerment credentials and the strategic relationship with BT, AYO Technology will expand its product and service stable and in this regard a host of complementary target companies have been engaged and are at various stages of due diligence, with agreements expected to be concluded post the Listing. The target companies have been selected for the complementary products and services they offer to AYO Technology's existing product and service offering. 4.5. CLIENT OFFERINGS - DIVERSIFIED PORTFOLIO The AYO Technology Group's broad product and service offering for the following categories includes associated services, products and infrastructure platforms. 4.5.1. Big Data Analytics The Group's technologies, allows its clients to analyse enormous datasets in real-time, facilitating pro-active decision making on information that is real-time. This is especially relevant in, but not limited to, a healthcare environment where patient safety is of utmost concern. 4.5.2. Integration The Group deploys an integration engine, which provides the ability to integrate, in real time, and in accordance with international standards such as HL7 and IHE, thousands of devices, analyzers and external systems in order to deliver mission-critical results, guidance and interventions. Such integration is currently operational within the NHLS and the Western Cape Government where 1800 integration points are active at any given time. 4.5.3. Business Process Management This is the process of analysing existing processes and applying change management and business process re- engineering techniques, allowing AYO Technology to re- align its client's business and operational processes to implement solutions in accordance with best practice, ensuring optimal value to clients. 4.5.4. Software Development Bespoke software developments, localisation of international productions for the African market and development of new solutions is a focus area within the AYO Group. The AYO Group uses this skillset both internally, to develop products, as well externally by selling this service to clients. 4.5.5. Internet of Things (IoT) The AYO Technology Group has developed products that are at the forefront of wearable technologies in the entertainment, healthcare and security sectors. 4.5.6. Data Security The AYO Techology Group provides data security within the South African banking, e-commerce and telecommunications sectors focusing on identity management, access management and governance, data auditing and data protection as well as security management for networks, servers and devices amongst other things. AYO Techology assists organisations in managing data, security governance and risk and ensuring compliance. 4.5.7. Cloud Services AYO Technology has the ability to decommission an on- premise data centre and migrate to cloud or alternatively offer a hybrid cloud by integrating the on-premise data centre with a cloud. AYO Technology further has the ability to monitor performance of its client's cloud application and infrastructure, and leverage technology with algorithms and heuristics to provide insights into how its clients can improve cloud cost management and still deliver the same workload, gain cloud visibility and increase cloud resource utilization. 4.5.8. Digital Transformation, Advisory and Training Services AYO Technology's advisory services offers guidance that enables clearer visualization and subsequent communication of the potential for digital transformation within an organisation. AYO Technology then works with the organisation to turn this picture of potential into a roadmap for digital transformation. 4.5.9. AYO Academy Experience and skills availability are the biggest contributing factors to the success of any project. Unfortunately, the reality is that there is a lack of availability of experienced people in the local market, particularly emerging Black software developers. In order to ensure future success and longevity, AYO Technology has developed a mentorship programme in order to accelerate skills development within its business. In terms of this programme, AYO Technology offers bursaries to students or employs them on an internship or learnerships basis with the possibility of being retained as permanent employees thereafter. 4.6. RATIONALE FOR THE LISTING 4.6.1. The South African ICT sector is experiencing market consolidation to address a South African market demand for turn-key service providers. Over and above the demand for scalable turnkey service providers, the South African market lacks an empowered service provider and upon Listing, AYO Technology will be positioned as one of the leading empowerment groups in the South African ICT sector. Thus, in light of the current market conditions and regulation pertaining to Black economic empowerment in South Africa, AYO Technology is well positioned to capture part of the growing ICT spend across the South African market. AYO Technology's services are currently deployed in Africa and Europe and, as a result of AYO Technology's anticipated shareholding in, and strategic relationship with BT post Listing, an international brand providing access to global technology trends and to the broader global market, AYO Technology is further placed to grow its existing footprint. 4.6.2. Accordingly, the rationale for the Listing is to: 188.8.131.52. raise capital in order to fund the rollout of the BT strategic relationship; 184.108.40.206. raise capital in order to fund the BT Subscription; 220.127.116.11. raise capital in order to fund AYO Technology's acquisition pipeline; 18.104.22.168. allow AYO Technology to use listed scrip to fund future acquisitions; 22.214.171.124. provide AYO Technology's management and employees an opportunity to acquire an equity stake in AYO Technology post the listing through the AYO Technology Incentive Scheme, which will also serve as a valuable retention and incentivisation tool; 126.96.36.199. provide Invited Investors with an opportunity to participate in the Private Placement; and 188.8.131.52. provide Shareholders with a liquid, tradeable asset within a regulated environment and with a market- determined share price. 4.7. PROSPECTS 4.7.1. The Board believes that AYO Technology is well positioned for growth over the next three to five years and into the future. It is expected that the growth will be driven through leveraging AYO Technology's strong empowerment credentials, its strategic relationship with BT, as well as through a combination of acquisitions of new businesses, partnerships and sourcing innovative technology within its existing portfolio. 4.7.2. AYO Technology's vision is to combine leading industry solutions and services in order to provide digital innovation that will help enable its clients to achieve their business objectives and gain a competitive advantage through successful digital transformation. 4.7.3. Given the above, the Board is of the view that AYO Technology's prospects are favourable. 4.8. PRIVATE PLACEMENT AND USE OF PROCEEDS 4.8.1. AYO Technology will, in conjunction with the Listing, undertake the Private Placement by way of an offer to Invited Investors to subscribe for Private Placement Shares in AYO Technology at R43.00 per share, thereby raising R4.3 billion. 4.8.2. Only persons who fall within the categories envisaged in section 96(1)(a) of the Companies Act or who subscribe for Private Placement Shares, the subscription cost of which is not less than R1 000 000 per single addressee acting as principal (as contemplated in section 96(1)(b) of the Companies Act), are entitled to participate in the Private Placement. 4.8.3. The Listing is conditional on (i) shareholders of AEEI voting in favour of the resolutions required to issue the Private Placement Shares and the B-BBEE Consortium Shares at the General Meeting, (ii) all Private Placement Shares being placed in terms of the Private Placement and (iii) AYO Technology obtaining the requisite shareholder spread as required in terms of the JSE Listings Requirements. Should any of these conditions precedent fail, the Private Placement and any acceptance thereof shall not be of any force or effect and no person shall have any claim whatsoever against AYO Technology or any other person as a result of the failure of the conditions. 4.9. SHARE CAPITAL 4.9.1. The authorised and issued share capital of AYO Technology, immediately prior to the Listing Date, is set out below: Number of R Shares Authorised shares Ordinary Shares of no par 2 000 000 000 - value Redeemable Preference shares 50 000 - of R0.01 each Issued shares Stated capital - ordinary 244 342 539 232 069 087 Shares of no par value Treasury Shares - - 4.9.2. Following the Private Placement (and assuming that R4.3 billion is raised in the Private Placement), the authorised and issued shares of AYO Technology on the Listing Date is expected to be as follows: Number of R Shares Authorised shares Ordinary Shares of no par 2 000 000 000 - value Redeemable Preference shares 50 000 - of R0.01 each Issued share capital Stated capital - ordinary 344 125 194 4 522 723 265 Shares of no par value Treasury Shares - - 4.10. DIRECTORS The full names, ages, business address and capacities of the Directors of AYO Technology are provided below: Full name Age Capacity Business Address Salim Young 60 Chairman, 17 Belair Drive, independent non- Constantia, Cape Town, executive 8001 Director Kevin Andrew 42 Chief Executive 9 Simba Road, Warwick Hardy Officer Sunninghill, Johannesburg Naahied 39 Chief Financial 67 Rosmead Avenue, Gamieldien Officer Kenilworth Siphiwe 31 Chief Technology 9 Simba Road, Nodwele Officer Sunninghill, Johannesburg Walter Gideon 32 Independent non- 42 Willow Ridge, Madzonga executive Parade Ring Road, Director Royal Ascot, Milnerton 7441. Khalid Abdulla 52 Non-executive Quay 7, East Pier, Director Breakwater Boulevard, V&A Waterfront, Cape Town, 8001 Cherie 54 Non-executive Quay 7, East Pier, Felicity Director Breakwater Boulevard, Hendricks V&A Waterfront, Cape Town, 8001 Aziza Begum 55 Independent non- 26 Mayfield Avenue, Amod executive Rondebosch, Cape Town, Director 8001 Mbuso 39 Independent non- 3 Callington Crescent, Faithstrong executive 7 Villa Bella, Khoza Director Parklands, 7441 Telang Michael 39 Independent non- 1 Hamlin Manor Estate, Ntsasa executive Glenluce Drive, Director Douglasdale, 2021 4.11. COPIES OF THE PRE-LISTING STATEMENT Copies of the Pre-listing Statement are available in English and may be obtained during normal business hours from Wednesday, 13 December 2017 until the Listing Date (both days inclusive), from the registered office of AYO Technology at Quay 7 Breakwater Boulevard, East Pier, V&A Waterfront, Cape Town and from the offices of PSG Capital Proprietary Limited, the Transaction Advisor and Sponsor, at 1st Floor, Ou Kollege, 35 Kerk Street, Stellenbosch, 7600 and 2nd Floor, 11 Alice Lane (Bowmans Building), Sandhurst, Sandton, 2196. A copy of the Pre-listing Statement will also be available on AYO Technology's website (www.ayotsl.com) from Wednesday, 13 December 2017. Cape Town 13 December 2017 Transaction Advisor and Sponsor: PSG Capital Proprietary Limited Corporate Advisor and Bookrunner: AEEI Corporate Finance Proprietary Limited Independent Reporting Accountant and Auditor: Grant Thornton Legal Advisor: Tshisevhe Gwina Ratshimbilani Inc Date: 13/12/2017 12:30:00 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.