CFO Chantelle Ah Sing: AEEI's resilience and ability to adapt is all the more necessary

Chantelle says AEEI's interim results put the company in a respectable position to navigate its future.

African Equity Empowerment Investment (AEEI) has announced its interim results for the six months ended 29 February 2020. 

According to AEEI CFO Chantelle Ah Sing, the results were “satisfactory” and puts the group in a respectable position to navigate its future business operations. 

“Given the market conditions businesses now find themselves in due to global economic lockdowns as a result of Covid-19, the group’s performance, resilience and ability to adapt to change is all the more necessary in these trying times,” she says. 

According to a statement released by the company, AEEI delivered strong revenue growth resulting from strong contributions from the technology division for the interim period. The group revenue increased by 111 percent from R766 million to R1.6 billion, mainly due to acquisitive and organic growth in the technology division in the prior year. 

Profit before taxation increased from a loss of R593 million to a profit of R139 million due to a “satisfactory” operational performance of the underlying business and investments. The group’s profit for the period decreased from R448 million to R118 million due to an “abnormal loss on deemed disposal of an associate” and the deferred tax effect thereon.

Headline earnings per share decreased 30 percent to 12.30c, while earnings per share decreased 84 percent to 12.22c. According to the statement, this is an indication of the lower operations performance experienced in the first six months.

The group’s asset base remained stable at R7.5 billion, despite the economic volatility experienced by the impact of Covid-19, with other financial assets increasing by 35 percent to R788 million. 

“The net asset value amounted to R6.4 billion, which is a performance indicator of the group’s strong balance sheet and resilient business model,” the statement read. 

The net cash utilised from operating activities amounted to an outflow of R28 million due to lower operational performances from the fishing and brands division, technology division and the general subdued performance from some of AEEI’s underlying business in the first half of the year. 

Covid-19

According to the company, the hardest hit divisions in the group were those not considered essential services and those most affected by the Covid-19 economic lockdown. These include the health and beauty division, travel and tourism and the events side of the business, such as the Cape Town International Jazz Festival, which was unable to proceed in 2020, and whose revenues are historically generated in the latter half of the year. 

In addition to taking into consideration the extraordinary circumstances created by global lockdowns as a result of the transmission of Covid-19, AEEI is entering a restructuring period where it will transition from an operational organisation to that of an investment holding company.

“AEEI will streamline its corporate operations and resources as it currently transitions from an operational organisation to that of a pure investment holding company and focuses on looking for suitable investments that can expand its investment portfolio to bolster its balance sheet and enhance further stakeholder value,” Chantelle says.

The company stated that the restructure may result in the disposal of certain non-core assets that the group had previously actively managed, as well as equipping those investee companies – that fit the new structure – with the tools to function independently of the parent company. 
 
AEEI CEO Valentine Dzvova says that Covid-19 has had a major impact globally on all businesses and AEEI has not been spared. “We realistically expect this effect to last for at least the next 24 to 36 months, with potential for further fallout. To that end, we have already started making the necessary adjustments to the business, mindful of the people and environments these decisions will also affect.” 
 
Despite the group having a net cash outflow in the interim period, it continues to have strong cash balances with no significant external debt, which is a major advantage during the Covid-19 period.