JOHANNESBURG - Strong operating profits and asset growth boosted the financial performance of listed diversified investment and empowerment company African Equity Empowerment Investments (AEEI) in the six months to February.
Consistent organic and acquisitive growth, improved efficiencies in all divisions and the successful separate listing of group technology business AYO Technologies contributed towards a 1 326 percent increase in operating profit to R8.4 billion in the six months to February from R587m in the prior period.
Total assets grew by 351 percent to R9.7bn from R2.1bn.
AEEI’s focus on its Vision 2020 Vision strategy is said to have impacted positively on its asset base and broaden its portfolio.
Khalid Abdulla, the chief executive of AEEI, said yesterday (Tues) the increase in AEEI's total asset base was mainly due to the growth in current assets and the value unlocked on the listing of Premier Fishing and Brands Limited and ICT associate AYO Technology Solutions, as well as the consistent increase in underlying investments compared to the prior period.
He said the consistent increase in earnings and asset growth during a period of ongoing economic volatility demonstrated the group's efficient and effective business model during challenging market conditions.
Abdulla added that AEEI had shown consistent above-market growth and out-performed the JSE index over the past few years.
He said AEEI's management was excited about the potential for growth through an acquisition pipeline and expressed confidence that further announcements would be made over the next 12 months. Also, since AYO’s listing, it concluded a significant contract with a multinational client, Sasol (this announcement was made in the news on Tuesday morning).
During the period under review, Abdulla said that the Group relinquished control of AYO resulting in the division becoming an associate in February 2018 when the BT Board of directors was rearranged which resulted in AEEI having the ability to participate in policy-making processes, resulting in the Group obtaining significant influence and as a result, the investment is now treated as an associate in-line with IAS 28.
Abdulla said AEEI planned to expand into new markets in the next year or so, which would boost employment through the creation of hundreds of jobs.
AEEI employs up to 700 people and has operational investments in food and fishing, technology, health and beauty, events and tourism and bio-technology plus strategic investments in SAAB, Sygnia, Pioneer Foods and BT Communication Service South Africa (BT).
The group's profile included operational investments in JSE-listed Premier Fishing and Brands Limited, Premfresh Seafood’s and recently concluded the acquisition of a majority stake in Talhado, South Africa’s largest squid company. AEEI’s other operational divisions include Events and Tourism, Health and Beauty and Biotechnology divisions.
Revenue in the six month reporting period increased by 33 percent to R604m from R455m.
Abdulla attributed this increase mainly to significant revenue growth achieved from AEEI’s holding in the technology business.
Profit before tax for the period increased by 1 343 percent to R8.44bn from R585m, with strong returns from AEEI's diversified portfolio and the gain from the disposal of subsidiaries.
Earnings a share increased by 1 743 percent to 1 708.13c from 92.65c.
However, headline earnings a share decreased by 56 percent to 40.06c from 92.71c because of a result in the prior interim period being restated and a once off fair value adjustment prior to BT becoming an associate.
Abdulla said he had referred to AEEI's "Vision 2020 Vision" strategy over the past few years and it was now clearly apparent that their goals and targets were being met and, in most cases, exceeded.
"Despite numerous possible distractions, AEEI continues to keep its eye on the goal and is firmly focused on delivering on what it set out to achieve," he said.
Group net asset value (NAV) a share increased by 506 percent to 1 694.67c from 279.65c.
Abdulla said the group remained on a positive trajectory and was buoyant about its future prospects, particularly in regard to profitability, governance, and management, which all contributed to its sustainable business model.
An interim dividend of 3.30c was declared, which is a 65 percent increase on the 2.00c dividend paid in the previous interim period.