Salie said the initiative was driven by the BTSA team, which consisted of Mr Kevin Hardy, the previous chief executive of AYO who at the time, was the incumbent chief executive of BTSA, and others. The forthcoming information and assurances were regarded as credible and reliable as they were provided by Hardy.
He said much of the pre-listing valuation was based on the assumption that a deal with BTSA would materialise.
Salie said it only emerged much later (a year after listing) that BTSA was not happy with the state of play.
AYO was to have taken a 30percent interest directly in BTSA from African Equity Empowerment Investments (AEEI), while also transferring some clients from BTSA to its portfolio.
“These clients to be transferred were included in the profitability projections of the pre-listing,” Salie confirmed. “Both parties seem to have neglected their duty to ensure that this document be provided and had they done so timeously, the damage caused by Hardy and Nodwele could have been mitigated to a large extent.” (Siphiwe Nodwele is the former AYO chief investment officer).
Salie went on to explain how they were under pressure to perform in line with the pre-listing forecast, following a series of questions from commissioners Gill Marcus and advocate Lubbe that were levelled at him.
The latter putting it to Salie that the numbers produced in the valuations were nothing more than a thumb suck.
Marcus weighed in by stating that the actual valuation of AYO, above R2.3billion, appeared to have been created by adjusting assumptions rather than real profits
Salie gave a detailed and different account, from that of previous witness testimony, of the deals/investments post the company’s listing on the JSE. He pointed out that the deal structures presented by Nodwele were not of the required standard.
“Issues of risk and return was not properly assessed,” he said. “Considering the pressure that AYO was under to implement their acquisition strategy it is noteworthy that they rather (have) walked away from bad deals than enter deals for the sake of a deal.”
Salie said he believed AYO could deliver value to shareholders. He indicated that the company would be able to earn R200million cash profit on a turnover in excess of R3bn for the next 12 months.
“That supplemented with the current acquisition pipeline and a revitalised relationship with BTSA will drive share performance for shareholders.”
Salie admitted that the company still had some serious challenges to overcome, such as reputational damage.
The commission was appointed to investigate wrongdoing by the PIC. The outcome of the inquiry will inform how the PIC conducts itself in future.
AYO’s share was unchanged on the JSE yesterday at R10.99.