Fishing and brands division
Premier Fishing and Brands Ltd (Premier) had a tough year which saw overall revenue dropping by R100m from R575m to R475m, mainly as a result of the squid division. The squid sector saw reduced catch rates, which was industry-wide. However, whilst the export market for squid remains very strong as the market saw high prices per kilogram, the Group, unfortunately, could not capitalise on the price factor due to low volumes caught, which was industry-wide. Gross profit margins from 2021 to 2022 remained relatively consistent. Profit before tax rose to R19m (2021: R18m), primarily due to a grant received from the Department of Trade and Industry (DTI), as well as solid performances for the lobster sector as well as solid divisional performances in the pelagic and the hake sector.
Fishing rights application process (FRAP)
The FRAP was officially concluded in March 2022. Premier’s applications were scored and rated based on the quality of how they operated the fishing rights, the efficiency and usage of the assets and resources, investment into the vessels and the management of the entire crew over the past 15 years. Premier is pleased to announce that the Department of Agriculture, Forestry and Fishing (DAFF) granted them all its fishing rights for the next 15 years in March 2022 in the following sectors:
- South Coast Rock Lobster
- Anchovies
- Pilchards
- Squid
- Hake – deep sea
- Hake – longline
The Premier Group looks forward to the next 15 years of fishing. It will look to continue its good management of the entire fleet and crew and continue the massive strides it has made in job creation, corporate social investment, and transformation.
Technology
AYO Technology Solutions Ltd’s (AYO) revenue increased by 6% from R1.7bn to R1.8bn due to improved revenue generation from the managed services and unified communications divisions.
The acquisition of Kathea Communication Solutions (Pty) Ltd (Kathea) in 2021 has proved itself by performing significantly well in the current financial year, as it earned revenue of R236m in the current year. In the prior year, the AYO Group consolidated revenue of R93m from Kathea for the six months from 1 March 2021 to 31 August 2021.
On 1 November 2021, the AYO Group disposed of its 100% shareholding in Puleng Technologies (Pty) Ltd (Puleng). Due to a change in control, Global Command and Control Technologies (Pty) Ltd is now an associate of AYO and remains part of the AEEI Group as a subsidiary. The Group’s gross profit percentage decreased from 26% in the prior year to 22% in the current year due to the prior year margin including high gross profits earned by Puleng.
Global command and control technologies (PTY) LTD (GC2T)
GC2T experienced a challenging year resulting in a loss before tax of R21.8m from a loss of R10.7m reported in the prior year. The primary challenge was the delays in finalising a contract with a key client, resulting in an associated programme that could not be initiated. The delay of the contract was addressed as a matter of urgency with the client. Even though COVID-19 measures in South Africa were lifted last year, it still impacted engagement and interaction with several of GC2T’s key stakeholders and clients resulting in GC2T not being able to mitigate the above-mentioned delays as quickly as expected. Positive outlooks for GC2T include an African Union (AU) contract that management has concluded for the duration of one year as well as a three-year contract with the South African Airforce via Armscor worth R110m.
Events and tourism division
The revenue of the events and tourism division decreased due to the COVID-19 pandemic, which led to the cancellation of events and large public gatherings, including the division’s flagship event, the annual Cape Town International Jazz Festival, also known as “Africa’s Grandest Gathering.” Staff retrenchments and streamlining of operating costs were necessary for the current year to curtail costs in the reality of having no income.
Tripos Travel (Pty) Ltd has had improved revenue from R8m to R17m in the past year due to the increased travel recovery following the COVID-19 downturn. Corporate and leisure clients have begun travelling more frequently and this has doubled revenue. Industry forecasts are positive for more growth in the next 6-12 months. Overall revenue in this division was R18m (2021: R10m).
Health and beauty division
Orleans Cosmetics (Pty) Ltd had a challenging year but increased revenue marginally to R33.8m.
The Company continues to recover from the COVID-19 pandemic with customer sales improving marginally. The delay in deliveries of products from overseas suppliers due to global supply chain issues negatively affected sales.
The impact of the COVID-19 pandemic was not as severe as originally contemplated in the cosmetics industry and it remained resilient, with the majority of the sales in skincare.
AfriNat (Pty) Ltd operates in three sectors: agriculture which includes pre-and post-harvest, hygiene and sanitation, and food preservation, which focused on providing sustainable solutions in food production and processing from seed to table.
The overall revenue for 2022 is R11.8m compared to R13.1m in the prior year. The revenue and overall loss are primarily attributed to logistical delays in raw materials and they were unable to meet market requirements. The European markets deterred local citrus farmers from exporting, causing a ripple effect and leading to a minimal uptake of their products.
Research and development division
The research and development division are engaged in product development phases at different stages, including developmental work on the dendritic cell vaccine (DCV) for cancer immunotherapy and communicable diseases such as extreme drug-resistant tuberculosis.
There was minimal progress during 2022 due to the multiple strains of the COVID-19 pandemic and funding not being available. Our legal teams have registered and maintained the IP registrations into new territories worldwide for the maturation of the dendritic cells, which is the basis of this technology. Management continues to seek alternative funding partners to derive value from these high potential innovative products.
Corporate division
The Group’s strategic investments consist of BT Communications Services South Africa (Pty) Ltd (BT), African Legend Investments (Pty) Ltd (ALI) and Sygnia Ltd (Sygnia). These investments continue to bolster the value of our diversified investment portfolio with a regular annual dividend flow. Sygnia’s share price decreased year on year, resulting in the value of our investment decreasing by R2.4m as at 31 August 2022. Our investment in ALI increased by R2.8m as at our financial year end. The corporate division’s revenue decreased from R30m to R22m, however, the profit before tax increased from R2.5m to R5.7m. The increase in profit before tax is mainly due to the increase in our associate BT’s equity results which countered the loss of R7.8m from the disposal of Magic 828 (Pty) Ltd (Magic 828). Magic 828 was sold during the year. The radio station contributed R2.1m revenue and losses of R4.5m for 11 months to 31 July 2022 when it was sold.
Strategic investments
Our strategic investments in British Telecommunication Services South Africa Proprietary Limited (BT) and Sygnia Ltd (Sygnia) continue to yield good returns. In the current financial year, our strategic investments yielded revenue of R42m in equity accounted earnings from BT and R5m in dividends from Sygnia (2021: R28m from BT and R3m from Sygnia.)
Group financial position
| SUMMARISED BALANCE SHEET |
AUGUST
2022
R’000 |
AUGUST
2021
R’000 |
| Non-current assets |
3 036 320 |
2 862 570 |
| Current assets |
2 993 437 |
3 587 256 |
| Total assets |
6 029 757 |
6 449 826 |
| Total liabilities |
1 152 335 |
1 036 103 |
| Group’s share of equity |
2 569 520 |
2 831 016 |
| Group’s net asset value (cents) |
993.32 |
1 102.54 |
Material matters that have affected our strategy
We identified our material matters in terms of relevance from our risk assessment process, which included uncertain events that could potentially negatively affect the Group. In addition, the risk assessment process took into account the legitimate and reasonable needs, interests and expectations of our material stakeholders in the best interests of the Group and the capital affected. Refer to Material Matters Impacting our Strategy on pages 50 and 51 for detailed information.
Financial outlook
Our fishing and brands division is well-positioned for growth over the next few years. The allocation of the FRAP 15-year quota allocation will have a positive effective on the growth of the business.
AYO continues to focus on its acquisition strategy to complement and enhance the businesses they currently own. This will enable them to service a substantial client base in a number of industry verticals, including financial services, telecommunications, public enterprises, health care and media.
The health and beauty division withstood the post-COVID-19 financial slump and is on a trajectory to improve its results in 2023.
Special thanks and appreciation
A special thank you goes to our incredible team and the employees in the Group. We could not have done it without you. I would like to thank you for making our year a success despite all the challenges and hurdles we faced to ensure the sustainability of our business with minimal distraction from outside forces by remaining focused.
2022 has been an extremely challenging year for AEEI and its subsidiaries, our team, associates, partners and stakeholders, and I would like to thank you graciously for your unwavering loyalty and support during one of our most turbulent years.
Conclusion
AEEI has demonstrated that it is well-positioned to mitigate risk, flexible enough to change strategic direction in the face of adversity, and remains focused on further growth by improving its profitability and delivering greater value to its shareholders.
JOWAYNE VAN WYK
Chief financial officer
