AEEI SETS NEW RECORD WITH FINANCIAL YEAR END RESULTS SOARING WITH 53% INCREASE IN OPERATING PROFIT AND 24% INCREASE IN NAV

22 November 2016
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Highlights
-           Revenue increased by 12% from R 672m to R752m
–           Operating profit increased by 53% from R 186m to R285m
–           Earnings per share increased by 43% from 31.12 cents to 44.09 cents
–           Headline earnings per share increased by 39% from 31.06 cents to 43.13 cents
–           Total assets increased by 26% from R1 345m to R1 691m
–           Net Asset Value (NAV) increased by 24% from R805m to R1 001m
–           Net cash generated from operating activities increased by 47% from R51m to R75m
–           A dividend increase of 32% approved for February 2017 distribution to shareholders

JSE-listed African Equity Empowerment Investments Limited (AEEI), a diversified operations and investment company, today announced record turnover and excellent earnings growth as a result of contributions from all its underlying operations and investments for the year under review.

With its implementation of “Vision 2020 Vision” strategic plans and the resultant strong contributions from all its underlying operations and investments in this financial year, the AEEI Group confirmed that its revenue increased by 12 percent from R672m to R752m driven in the main by organic growth and the expansion of its operations into new markets.

Mr Khalid Abdulla, Group Chief Executive Officer of AEEI said: “The 2016 financial year was filled with global and local challenges across all fronts –  political, economic and social – but we buckled down, remaining singularly focused on reaching our pre-identified goals”.

The approach clearly worked with the Group’s operating profit soaring by 53 percent from R186m to R285m.

Basic earnings per share increased by 42 percent from 31.12 cents to 44.09 cents, while headline earnings per share increased by 39 percent from 31.06 cents to 43.13 cents.

AEEI’s strategic intent to increase its asset base is evident in the Group’s total assets, which increased by 26 percent from R1 345m to R1 691m as a result of growth in our operational and strategic assets as well the acquisitions in Saab Grintek Defence and Sygnia Limited, which were finalised during the year under review.

The Net Asset Value (NAV), increased by 24 percent from R805m to just over R1 billion as NAV per share increased by 29 percent from 144.93 cents to 186.52 cents compared to last year.

As a result of the solid financial performance from the underlying divisions and sectors, net cash from operations increased by 43 percent from R51m to R75m.

Dividends declared increased by 32% from 2.5 cents to 3.30 cents per share.

The Food and Fishing division also surpassed expectations by increasing its sales volumes and achieving better pricing, good catch rates, efficient vessel scheduling and utilisation, specifically in its south and west coast rock lobster, pelagic, squid and abalone sectors. This is evident in the food and fishing division’s significant growth in revenue of 15% from R349m to R401m and operating profit increasing to R75m compared to the prior year of R68m.

The Technology division’s revenue was steady at R215m from its underlying operations, which is in line with their budget. There was, however, pleasing growth in its operating profit since the organic growth is mainly annuity income and  due to efficiencies as well as the completion of its hospital information system implementation to over 230 pathology laboratories in South Africa as well as in two laboratories in Tanzania.

The Technology division has also started its further growth plans by concluding two transactions post balance sheet date. These acquisitions will see the Technology division double in size with additional revenue of over R200m annually, bringing the expected revenue for the Technology division for 2017 to greater than R400m. It appears that the group is starting to flex its muscle for exponential growth.

As alluded previously, AEEI is preparing to separately list its Food and Fishing as well as its Technology divisions in future. This will be accomplished by the goals as set out in the Group’s “Vision 2020 Vision” strategy, which amongst others, remains core to all companies within the Group to create shareholder value.

A key milestone for Genius Biotherapeutics was the Dendritic Cell Vaccine Technology (DCV) project and the submission of the clinical trial application to the Medical Control Council (MCC) in 2016. Human trials are expected to commence during 2017.

The AEEI Events and Tourism division delivered excellent revenue growth by achieving a 30 percent increase in revenue from R98m to R127m, partially as a result of a new owned event launched by espAfrika – The “Royal Escape Experience”, as well as Tripos Travel’s broadened scope into the leisure travel industry.

espAfrika hosted another successful Cape Town international Jazz Festival (CTIJF) and was voted one of the World’s Best Festivals by FEST 300 and voted the Best Festival in Cape Town in a local festival poll (OFLOCAL) during 2015/2016.

On yet another musical note, Magic 828 radio station, launched on 01 October 2015 is operating smoothly, having recently celebrated its first anniversary. The focus through the year shifted from operations to marketing and exploring various offerings to increase advertising revenue.

Tripos Travel continues to increase their percentage market share of business and leisure travel as well as tours and this will aid in increasing their margins going forward. The business now has an efficient base and stable business model with available capacity which can now be leveraged to grow profitability.

British Telecoms South Africa (BTSA), Pioneer Foods Group Limited (Pioneer), Sygnia Limited (Sygnia) and Saab Grintek Defence (SGD) currently form the strategic investment arm of AEEI.

The fully-paid up investment in BTSA is well positioned to grow consistently over the next few years. Earnings grew consistently and a dividend was received in the current year and is expected to continue in the foreseeable future.

AEEI’s investment in Pioneer performed well overall since the date of acquisition. However, owing to the drought and market perception of the possible impact thereof, the share price was under pressure and we believe this to be a temporary decline. The share value has subsequently shown an improvement at reporting date.

The investment in Sygnia was acquired on 14 October 2015 and the value thereof subsequently appreciated by 80% during the year. A maiden dividend was received from Sygnia. Dividend income is expected to continue annually.

AEEI’s equity interest of 25% plus 1 share in SGD has positively impacted the Group’s balance sheet by meeting the strategic objective to increase the asset base and by leveraging the existing strategic investment portfolio. This investment provided a healthy dividend return during the year and it is expected to continue annually.

The consistent year on year display of the excellent financial performance and the steady growth of the Company’s share price should confirm to the market that AEEI, with its diversified operations and investment portfolio, strong BBBEE credentials and local and international growth, is a Company worth investing in.

Abdulla remarked, “We have been especially fortunate to exceed our targets for the year as a result of greater revenue growth achieved from the Food and Fishing, Technology and Events and Tourism divisions. This year, our strategy to achieve consistent organic growth with the reinvestment into our businesses as well as the strategic acquisitions we have made are consistent with our overall objective of building a sustainable high-growth Company for the future which is now reflected in our financial results.”

Looking ahead, AEEI now has a solid balance sheet with improved cash flow.

“Our business model is on a firm growth path and we continue to add value for our stakeholders and shareholders. Additionally, there have been further acquisitions in our Technology sector that were finalised post financial year end and we are anticipating further deals in the not too distant future”, says Abdulla.

Non-executive chairman, Professor Vukile Mehana said, “I am particularly proud of AEEI’s financial performance. The latter half of this financial year was spent feverishly working toward attaining critical mass, with the determination to list the Food and Fishing and the Technology divisions within the next 3-5 years. Despite the economic instability experienced globally, AEEI has a good balance of local and exported products and services in its Group, enough to balance the probability of the impact of external challenges that are beyond our control. Our “Vision 2020 Vision” is in action mode.”

Not only has the Group’s financial performance exceeded expectations, but other performance measures were recognised with a number of industry awards. AEEI is the only Company to receive three prestigious awards in as many months.

AEEI was recently recognised by Empowerdex in its annual benchmark of JSE Listed companies as the Most Empowered Company, the Most Empowered Management Control, and was also listed by the Financial Mail as a Top 10 Performer on the JSE for financial performance. AEEI is ranked amongst the Top 10 places for the IRAS highest SDTI score for governance as well.

Abdulla continues, “We are deeply honoured to have been recognised for our efforts with these awards, testament to our commitment to Broad Based Black Economic Empowerment, Enterprise Development and delivering strong financial performance with a holistic and sustainable business model”.

“The Group is on a positive trajectory and I and my executive team are excited and confident that we will continue to grow the business over the medium to long term,” concludes Abdulla.

African Equity Empowerment Investments Limited (“AEEI or “The Company” or “The Group”) is a majority black-owned and black-managed investment holding Company based in South Africa.

The Group has investments in food and fishing, Technology, health and biotherapeutics, events and tourism, all supporting Broad-based Black Economic Empowerment (BBBEE) and small, medium and micro enterprises (SMMEs). The Group also holds strategic investments in British Telecoms South Africa, Saab Grintek Defence, Pioneer Foods and Sygnia Limited, some with international partners.

Our growth strategy is underpinned by our diverse portfolio and is reflected in our results. This growth strategy has laid a strong foundation for the next phase of the AEEI’s Group’s evolution which is reflected in achievements in terms of “Vision 2020 Vision”.

AEEI’s primary market remains in South Africa; however, we continue to expand into the rest of Africa. Outside of South Africa we have a market presence in Asia, America, Africa, Europe, Dubai, United Kingdom, Zambia, Ghana, Uganda, Cameroon, Australia, Zimbabwe, Tanzania, Nigeria, Kenya and Namibia through our subsidiaries.

AEEI achievements:

  • 1st overall in the Empowerdex Top 100 Empowered Companies Award of 2016 ;
  • 1st overall in the Empowerdex Top 100 Empowered Management Award of 2016;
  • Ranked as a Top 10 JSE-listed Company in the Financial Mail’s Top 100 Companies for financial performance in 2016 and 2015;
  • 1st overall in 2016 and 10th overall in 2015 in the Sustainability Data Transparency Index by the Integrated Reporting and Assurance Services out of the top 500 JSE-listed companies. In 2014, AEEI received the top award – Sustainability Data Transparency Index’s highest score in the Financial Services sector and was rated 16th overall. In 2013 AEEI was ranked 182 overall;
  • Impumelelo Certificate of Excellence Award – Top Empowered Companies – in recognition of our commitment to transformation for the 2015 year.

For more information, visit www.aeei.co.za

Should you wish to set up an interview with Mr Khalid Abdulla, contact:

Feroza Petersen | mobile:   082 801 3919 | email: feroza@aeei.co.za | aeei.co.za
Group Communications and Marketing manager
AEEI