Group CFO Jowayne van Wyk says that AEEI remains on a positive trajectory.
African Equity Empowerment Investments (AEEI) has announced its reviewed financial results for the year ended 31 August 2020, with an increase in revenue and net cash from operating activities, despite the impact of Covid-19.
According to the results statement, AEEI’s strategy to consistently increase its operations and portfolio is evident by the steady growth in the group’s revenue which increased by a significant 44 percent from R2.4 billion to R3.4 billion, while basic earnings per share increased by 101.3 percent this year.
“The revenue growth of 44 percent has been a remarkable achievement for the AEEI group,” says AEEI group CFO Jowayne van Wyk. “The IT division was the major contributor to revenue growth due to their organic and acquisitive revenue growth in 2020. This was despite a material decline in our fishing division revenue due to Covid-19 causing global selling prices to decline and the lowest squid catch rates in the past 15 years.”
The net asset value per share decreased slightly by 3.66 percent from 1 304.2c to 1 256.5c, resulting from the negative impact of the pandemic on the global market. Despite the slight reduction in the net asset value (NAV) of the group, AEEI continues to retain its strong balance sheet and liquidity, which is bolstered by cash reserves of R3.3 billion.
Net cash generated from operating activities achieved a sizeable increase of 39.5 percent from R143,144 to R199,642, while NAV for the group decreased by 3.66 percent from R6.4 billion to R6.1 billion, year-on-year as a result of the group’s stringent efficient and effective working capital management especially in light of the difficulties brought about by the global economic crisis as well as the Covid-19 pandemic.
Jowayne says that AEEI management’s focus on cash preservation and reductions in operating expenses was the key driver to achieve a net cash generation of 39.5 percent.”
“Although the group performed well, it was done so during immensely challenging times, yet AEEI remains on a positive trajectory and we intend to continue improving its financial performance, while driving sustainable returns for its stakeholders,” says Jowayne. “We are pleased to declare a final gross dividend to shareholders of 20c per share. The total gross dividend to shareholders for the 2020 financial year amounts to 30c, an increase of 76.5 percent.”
Divisional performance
The company’s fishing and brands division, Premier Fishing and Brands, AEEI experienced a decline in revenue and profitability because of the pandemic putting stress on selling prices.
The group’s technology division, through AYO Technology Solutions, grew its revenue by 81.2 percent, mainly through its operating divisions and acquisitive growth.
Read more: Covid-19 has served as an accelerator for markets AYO operates in
Revenue for the health and beauty division increased by 7.1 percent from R42 million to R45 million, largely due to AfriNat and its supply of Covid-19 pandemic-related personal protective equipment products. Orleans Cosmetics experienced suppressed consumer spending on luxury items such as cosmetics and perfumes, but the swift action by management in implementing mitigation plans and the personal sacrifices made by their employees curbed the losses, which saw Orleans Cosmetics contributing a positive EBIT to the group for the 2020 financial year.
The events and tourism division were negatively impacted by the fallout of Covid-19 and the resultant international lockdowns, with business and leisure travel banned and the prohibition of large gatherings enforced.
Because of the Covid-19 level 5 lockdown, EspAfrika was not permitted to host “Africa’s Grandest Gathering’ this year. The hardest hit by Covid-19, revenue declined by a significant 67 percent from R103 million to R38 million because of the cancellation of the event and its pre and post activities.
Tripos Travel, AEEI’s travel business, was severely impacted by the ban on travel. Tripos is in the process of mapping a new strategy to cater for emerging travel needs post-Covid-19. In the interim, the business has been right sized to cater for a reduction in activity, thereby increasing cost efficiencies.
AEEI’s radio station, Magic 828 continued on its path to improve its financial performance, and has successfully set up an internet radio station for a restaurant chain in the Middle East, thereby increasing its listenership to other parts of the country. As of August 2020, Magic 828 reached a listenership of 240,000 as compared to 187,000 in August 2019.
Genius Biotherapeutics, the group’s research and development division, in collaboration with research partners based at the University of Cape Town, is set to commence human clinical trials on breast cancer next year.
According to the statement, AEEI’s strategic investments in BT Communications Services South Africa, Saab Grintek Defence, and Sygnia, all continue to bolster the value of our diversified investment portfolio with a regular annual dividend flow.
“The resilient management teams across all our businesses and our employees, all embraced the measures required to ensure the sustainability of the business as a whole,” says Jowayne. “We really would like to salute all the staff of the AEEI group and our stakeholders for the trust they have shown in the executives. I would also like to wish everyone a secure and peaceful festive season.”
