PERFORMANCE

Our stakeholder needs and expectations

We believe that the strength of our relationships with our key stakeholders is critical to achieving our strategic objectives and creating mutual value for the Company and its stakeholders. As such, our stakeholder management approach involves a thorough understanding of key stakeholders and assessing the material matters, including risks and opportunities. Our approach provides for our stakeholder’s needs and meeting their expectations. We create and protect value and continue to look at minimising value erosion.

We continue to strive to respond timeously and appropriately to issues raised through our interactions as stakeholders’ needs continue to evolve with new development and trends.

	SHAREHOLDERS, THE INVESTMENT COMMUNITY, AND PROVIDERS OF CAPITAL

Our engagement with our shareholders and the investment community emphasised the benefits to shareholders and the investment community through our financial performance. We have a diverse shareholder base, with most of them taking a medium- to long-term view of their investment in AEEI. We have a total of 6 509 shareholders as of 31 August 2022.
PRIMARY CONCERNS	THEIR NEEDS AND EXPECTATIONS	HOW WE ADDRESSED THESE CONCERNS AND EXPECTATIONS	HOW WE ENGAGED WITH THEM
Liquidity concerns post COVID-19 and their impact on the business Business and operational performance Market confidence and share price Return on investment capital Reputational damage Banking facilities Shareholder returns Capital management Growth of the businesses Risks and opportunities Environmental constraints Impairments	Creating sustainable growth in our businesses Value-add and return on investments Share price appreciation Sound balance sheet Growth in net asset value Payment of regular dividends Experienced leadership team Transparent reporting and disclosure Ethical operations on a sustainable basis Managing costs Sound ESG practices in our business units	We adjusted the execution of our strategic activities in response to the COVID-19 pandemic environment We switched our primary focus from increasing our returns and profitability to resilience and stabilising our businesses in a volatile environment We regularly engaged with shareholders, investors, and capital providers to maintain relevance We made transparent disclosures by increasing our levels of reporting We addressed adverse media reports and we are committed to address the issues raised by the different interested parties We repaid debt to strengthen the balance sheet and reduce longterm finance costs	We proactively communicated our strategy and activities to our shareholders, the investment community, and providers of capital through: our AGM; our interim results; SENS announcements and trading updates; our Integrated Report, annual financial statements, and online suite of reports; sustainability information; pre- and post-results feedback; print media to address reputational damage and banking facilities; various direct engagements with bankers, strategic partners, and shareholders to address reputational damage concerns; ad hoc online meetings (as requested); and our website – www.aeei.co.za.

Our engagement with our shareholders and the investment community emphasised the benefits to shareholders and the investment community through our financial performance.

We have a diverse shareholder base, with most of them taking a medium- to long-term view of their investment in AEEI.

We have a total of 6 509 shareholders as of 31 August 2022.

PRIMARY CONCERNS

THEIR NEEDS AND EXPECTATIONS

HOW WE ADDRESSED THESE CONCERNS AND EXPECTATIONS

HOW WE ENGAGED WITH THEM

Liquidity concerns post COVID-19 and their impact on the business
Business and operational performance
Market confidence and share price
Return on investment capital
Reputational damage
Banking facilities
Shareholder returns
Capital management
Growth of the businesses
Risks and opportunities
Environmental constraints
Impairments

Creating sustainable growth in our businesses
Value-add and return on investments
Share price appreciation
Sound balance sheet
Growth in net asset value
Payment of regular dividends
Experienced leadership team
Transparent reporting and disclosure
Ethical operations on a sustainable basis
Managing costs
Sound ESG practices in our business units

We adjusted the execution of our strategic activities in response to the COVID-19 pandemic environment
We switched our primary focus from increasing our returns and profitability to resilience and stabilising our businesses in a volatile environment
We regularly engaged with shareholders, investors, and capital providers to maintain relevance
We made transparent disclosures by increasing our levels of reporting
We addressed adverse media reports and we are committed to address the issues raised by the different interested parties
We repaid debt to strengthen the balance sheet and reduce longterm finance costs

We proactively communicated our strategy and activities to our shareholders, the investment community, and providers of capital through:

our AGM;
our interim results;
SENS announcements and trading updates;
our Integrated Report, annual financial statements, and online suite of reports;
sustainability information;
pre- and post-results feedback;
print media to address reputational damage and banking facilities;
various direct engagements with bankers, strategic partners, and shareholders to address reputational damage concerns;
ad hoc online meetings (as requested); and
our website – www.aeei.co.za.

	SHAREHOLDERS, THE INVESTMENT COMMUNITY, AND PROVIDERS OF CAPITAL

HOW WE DELIVERED VALUE TO THEM – VALUE CREATION, VALUE PRESERVATION AND VALUE EROSION

The Group’s negative outcome in results is against the backdrop of a very challenging year and tumultuous operating environment. We believe that our operational plans mitigated a more pronounced erosion of value. This resilience will ensure sustainability, resulting in long-term value creation.

	We executed our strategy to ensure the long-term sustainability of our investment portfolio by managing the risks and positioning ourselves to capitalise on opportunities in our markets.
	We ensured transparent, relevant, and timeous reporting to provide investors with pertinent information to make informed decisions.
	We remained resilient through the crisis of the last two years.
	We operated within our risk appetite.
	Our revenue decreased marginally from R2.34bn to R2.33bn.
	Our headline earnings loss decreased from (R108m) to (R182m).
	Headline earnings loss per share decreased from (22.08c) to (37.16c).
	Normalised headline earnings loss decreased from (R0.7m) to (R12.6m).
	Normalised headline earnings loss per share decreased from (0.14c) to (2.56c).
	Total assets decreased from R6.4bn to R6bn.
	No dividend was declared in order to extinguish debt and maintain adequate working capital levels in the face of a tough trading environment (2021: R196m).
	We used our capital responsibly, maintained sound corporate governance practices, and committed to transparent reporting.
	NAV per share decreased from 1 102.54c to 993.32c.

KEY OBJECTIVES AND METRICS WE TRACK:

NAV per share
Share price performance
NAV per share growth
AGM voting outcomes
Return on investments
Headline earnings per share
Earnings per share
Liquidity
Environmental, social and governance risks
The post COVID-19 pandemic impact on our operations

CAPITALS IMPACTED

	EMPLOYEES

We value the relationship with our employees by taking into account training and development, human capital requirements, transformation and diversity.

PRIMARY CONCERNS	THEIR NEEDS AND EXPECTATIONS	HOW WE ADDRESSED THESE CONCERNS AND EXPECTATIONS	HOW WE ENGAGED WITH THEM
Employee health and safety The evolving world of work Reputational damage and banking facilities The economy Transformation and diversity Job security in a volatile economic climate Market-related remuneration Clear career paths and opportunities for career development, including skills training Educational programmes Employee wellness programmes Corporate social investment and socio-economic development in communities Employee engagement and communication – the importance of open and honest feedback Protection of Personal Information (POPI)	A safe and healthy working environment Reputational damage to the business and business continuity in respect of banking facilities Flexible working conditions Competitive, market-related remuneration Career development, growth, and opportunities in the Group Contributing to an inclusive society through employment equity and gender equality An environment that is enabling and empowering	We ensured that health and safety protocols were adhered to and procedures followed throughout the COVID-19 pandemic and continue to provide PPE We addressed any reputational damage with all employees through various platforms We ensured acceptable working conditions for all employees We ensured remuneration is in line with market-related trends We invested in skills development and provided growth opportunities We remained committed to transformation and diversity, and this forms part of the Transformation Plan Socio-economic development (SED) and corporate social investment (CSI) projects focus on Company-specific areas of support We have bursary programmes to assist with secondary and tertiary education We created employment for interns and contractors We put into place third party payment solutions in response to banking challenges	We proactively communicated our strategy and activities to our shareholders, the investment community, and providers of capital through: Feedback and input from our employees assist us in understanding and responding to their concerns and needs. Communication channels include: open-door policy; newsletters, electronic communication, and notice boards; and CEO’s communiqué and direct communication between managers, teams, and individuals. Work performance reviews have been linked to personal development plans Our employees were kept abreast of the actions taken by the Company in response to negative media attention and reputational damage, including our approach to banking facilities and business continuity We have a 7-day Mental Health Survival online course made available to all employees Performance evaluation, including job grading and job specification requirements We provide training and development opportunities Anonymous whistle-blowing hotline and dedicated email address Career development and succession plans are in place to achieve our strategic objectives and ensure that we have the right skills to succeed

	EMPLOYEES

HOW WE DELIVERED VALUE TO THEM – VALUE CREATION, VALUE PRESERVATION AND VALUE EROSION

We assessed the relationship with our employees through the value we created, including performance against specific KPIs.

	Candidates for new vacancy positions are sourced from within the Group before being advertised externally. Preference is provided for transformation, gender and race diversity in the Transformation Plan.
	Continued progress is being made in delivering on our Transformation Plan and strategy, including persons with disabilities.
	A decline in the number of misconduct incidents and Commission for Conciliation, Mediation and Arbitration (CCMA) referrals demonstrates an improvement in employee relations.
	We paid R564m in salaries and wages.
	We concluded an 8% salary increase across the Group despite the challenging economic climate.
	We ensured business continuity despite the adverse reputational damage and banking challenges.
	We spent R7.7m on training and development with 374 employees receiving training.
	We enabled our employees to work remotely.
	We increased interventions on our employees’ physical, mental, and financial well-being by providing emotional and mental health counselling.
	A pension/provident fund is in place to assist employees in investing for their future retirement. In addition, Group risk insurance, which is linked to the provident fund, provides a lump-sum payment in the event of the disability or death of an employee.
	Funeral cover is provided either through the existing retirement funds or as part of the collective bargaining council agreements.
	Share ownership schemes are in place in some subsidiaries and associate companies.

KEY OBJECTIVES AND METRICS WE TRACK:

Employee health and welfare
A diverse and inclusive employee profile
An innovative culture
Career development and employment opportunities
Employee attrition

CAPITALS IMPACTED

Value creation

Value preservation

Value

	BUSINESS PARTNERS

We value our relationship with our business partners and ensure their needs and expectations are met.

PRIMARY CONCERNS	THEIR NEEDS AND EXPECTATIONS	HOW WE ADDRESSED THESE CONCERNS AND EXPECTATIONS	HOW WE ENGAGED WITH THEM
Clients: Sustainability of our businesses and products Innovative products and solutions Ethical and quality products and brands Competitive pricing and delivery B-BBEE and transformation Service providers and suppliers: Long-term sustainable support for small black-owned supplier companies Fair and transparent treatment and sustainability Fair payment terms Joint-venture partners: Financial performance, transparency, growth and leadership Reputational damage Access to banking facilities and its impact on clients The Protection of Personal Information (POPI)	Delivery of quality products and services Distribution of innovative sustainable products and services Developing innovative business solutions The long-term security of supply Environmental constraints and the impact on the economy Pricing of products due to a depressed economy Adherence to regulatory requirements Good corporate governance and ethics practices Adherence to POPI	Clients: We supplied additional product ranges and innovative solutions, including technical expertise We focused on manufacturing excellence, long-term security of supply and cost efficiencies Service providers and suppliers: We ensured timeous and fair payment terms We engaged with suppliers on product relationships with small black-owned businesses to ensure their sustainability Joint-venture partners: We remained committed to ethical business practices and respected the interests of all our partners Protection of Personal Information Act compliance: We have a system in place to mitigate, identify and rectify any breaches Reputational damage: We addressed the adverse reputation of the Group through meetings, the media, and SENS disclosures Access to banking facilities: Despite the banking challenges, we ensured timeous payment to suppliers and service providers We communicated with them and provided assurance that we had access to alternate banking facilities and payment solutions	We engaged with them through various forums, including: quality and performance reviews; contract negotiations and ongoing interactions in the ordinary course of business; supplier audits, including POPI compliance; industry forums; updated service level and nondisclosure agreements in line with POPI; and online meetings, telephonic and electronic interactions. In a fast-changing competitive environment, we continued to foster relationships and understand our clients’ needs and expectations We continuously worked towards understanding the needs of our customers, service providers and joint-venture partners We took an ethical approach to do business and remained open to clear and transparent business practices, alignment on standards, requirements, service, objectives, and customer satisfaction We ensured that our B-BBEE scores met key clients’ needs and vice versa

	BUSINESS PARTNERS

HOW WE DELIVERED VALUE TO THEM – VALUE CREATION, VALUE PRESERVATION AND VALUE EROSION

We continued to:

	Ensure continuity of long-term supply of products and services.
	Provide impactful and innovative business solutions.
	Provide professional services and technical expertise.
	Ensure timeous delivery and payment.
	Provide quality products and services.
	Enhance our procurement from community-based service providers and create employment.
	Adhere to regulatory compliance and laws in the supply of ethical products.
	Strive for good corporate governance practices and ethical behaviour.
	Assist with enterprise and supplier development.
	Ensure appropriate environmental and social compliance.
	Continued to install green energy at our abalone farm through a phased approach.
	Safeguard the privacy of their information by developing and executing a detailed POPI implementation and tracking plan.

KEY OBJECTIVES AND METRICS WE TRACK:

Client satisfaction
Client concerns and complaints
Brand value amongst our peers
Impactful solutions, new products, and new services are well received in the market
Reputation
Breach of POPI
Monitor the impact of climate change on their operations, including water and electrical resources

CAPITALS IMPACTED

Value creation

Value preservation

Value

	COMMUNITIES AND NGOs

We maintained strong relationships in the communities in which we operate.

PRIMARY CONCERNS	THEIR NEEDS AND EXPECTATIONS	HOW WE ADDRESSED THESE CONCERNS AND EXPECTATIONS	HOW WE ENGAGED WITH THEM
They expect us to create awareness of social and environmental issues they face and assist them in obtaining the desired outcomes for their communities, businesses, and families They expect us to be responsible corporate citizens and partner with community initiatives to contribute to socio-economic development and environmental issues Pioneer responsible corporate citizenship	Socio-economic development Partnering on common social and environmental issues Enterprise development Development of society through employment opportunities Financial access for learnership programmes Social welfare	We collaborated with them for the greater good regarding matters concerning society and the environment We addressed these through: socio-economic development programmes; enterprise development initiatives; development of society through employment opportunities and internships; financial access for learnership programmes; social welfare; environmental, social and governance matters; and embracing transformation in line with B-BBEE legislation.	We continued: to ensure that social welfare is aligned with national policies; to support early childhood development as part of our socio-economic development; monthly disbursement of salaries to an NGO to employ Grade R teachers in one of our communities; to provide access to funding through defined learning programmes; and our contribution to the growth of small businesses through enterprise development initiatives.

	COMMUNITIES AND NGOs

HOW WE DELIVERED VALUE TO THEM – VALUE CREATION, VALUE PRESERVATION AND VALUE EROSION

We ensured that:

	We provided basic and tertiary education support through our bursary, tertiary and learnership programmes.
	Our investment in education, training and development programmes will continue to enhance further growth prospects.
	Our partnership with community-based entities created new jobs and financial and in-kind support for new businesses.
	Health, welfare and NGOs also received direct support.
	We invested in sports facilities and programmes.
	We invested in an early childhood development (ECD) facility and continue to assist them with their basic needs.
	We ensured that the ECD facility could employ certificated early childhood development teachers by paying their monthly salaries.
	Paying our taxes and royalties to the government contributed to the welfare of society.
	Our support of local businesses resulted in the promotion of social and economic development.
	With the landscape changing in B-BBEE, we will continue to assist communities and businesses.
	We ensured that our socio-economic contribution is aligned with the Government’s National Development Plan.

KEY OBJECTIVES AND METRICS WE TRACK:

Providing career opportunities
Promoting socio-economic transformation by enabling economic inclusion, job creation and poverty alleviation
Promoting education and learnership programmes
Our impact on the environment
Breach of human rights

CAPITALS IMPACTED

Value creation

Value preservation

Value

	REGULATORS

We value our relationship with our business partners and ensure their needs and expectations are met.

PRIMARY CONCERNS	THEIR NEEDS AND EXPECTATIONS	HOW WE ADDRESSED THESE CONCERNS AND EXPECTATIONS	HOW WE ENGAGED WITH THEM
Ongoing compliance with regulatory frameworks and good governance Transformation, including gender and race diversity Environmental responsibility Socio-economic development Corporate social responsibility POPI compliance	Compliance with all legal, regulatory frameworks and requirements Responsible taxpayer Participating in industry and regulatory groups	We maintained sound governance principles and procedures We ensured timeous regulatory submissions of all relevant regulations to authorities We have policies and procedures in place We are represented in industry bodies We remained sensitive to employment levels in line with regulatory requirements We invested in employee development We remained committed to ethical business practices and supported social and environmental sustainability Our corporate social initiatives promoted SED Protection of Personal Information Act compliance: We instituted an implementation plan for compliance which is tracked quarterly, and have a system in place to mitigate, identify and rectify any breaches	We continued to: ensure resilient business and management practices and processes; ensure compliance with all industry requirements and obtained clarity where necessary; maintain transparent communication; remain professional and reacted to matters raised promptly; report on ethics, governance, the impacts on society and our environmental stewardship; and interacted with regulators and industry stakeholders to ensure sound regulatory frameworks. We ensured that all policies and agreements were updated with new legislative requirements

	REGULATORS

HOW WE DELIVERED VALUE TO THEM – VALUE CREATION, VALUE PRESERVATION AND VALUE EROSION

We ensured that:

	We continue to pay all taxes as required.
	Payment to regulatory bodies was made timeously to ensure compliance.
	We contributed to government revenues by paying direct, indirect and employee taxes.
	We continued to work closely with government and regulatory bodies to ensure compliance.

KEY OBJECTIVES AND METRICS WE TRACK:

Delivery of compliance with regulatory changes and meeting regulatory requirements
Maintaining and ensuring transparent and ethical business standards
Direct and indirect tax contributions
B-BBEE contributor status

CAPITALS IMPACTED

Value creation

Value preservation

Value