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Unaudited interim results for the period ended 28 February 2015
African Equity Empowerment Investments Limited
(Formerly Sekunjalo Investments Limited)
(Incorporated in the Republic of South Africa)
Registration number 1996/006093/06
Share code: AEE and ISIN: ZAE0000195731
("AEEI" or "the Group" or "the Company")
Unaudited interim results for the period ended 28 February 2015
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Group to Group to Group to
28 February 28 February 31 August
2015 2014 2014
6 months 6 months 12 months
R'000 R'000 R'000
Revenue 258 874 242 047 620 549
Cost of sales (178 010) (164 475) (426 222)
Gross profit 80 864 77 572 194 327
Other income 4 290 3 661 4 710
Other operating expenses (80 904) (64 809) (146 762)
Fair value adjustments 48 686 22 498 46 303
Gain on deemed disposal - - 22 556
Investment revenue 3 354 7 808 12 401
Loss from equity accounted investments - (4 005) (6 179)
Finance cost (10 367) (9 985) (19 164)
Profit before taxation 45 923 32 740 108 192
Taxation (10 624) (13 220) (5 759)
Profit for the period 35 299 19 520 102 433
Total comprehensive income for the period 35 299 19 520 102 433
Total comprehensive income
attributable to:
Equity holders of the parent 41 217 18 217 96 802
Non-controlling interest (5 918) 1 303 5 631
35 299 19 520 102 433
Basic and diluted earnings per ordinary share (cents) 8.39 3.72 19.76
Weighted (and fully diluted) average number of ordinary
shares in issue (000s) 491 339 489 339 489 887
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
Group to Group to Group to
28 February 28 February 31 August
2015 2014 2014
R'000 R'000 R'000
Assets
Non-current assets 1 004 625 750 291 971 241
Property, plant and equipment 140 188 129 239 138 266
Goodwill 55 469 37 325 55 469
Intangible assets 319 747 11 868 336 367
Investments in associates 436 108 377 -
Other loan receivables 1 704 46 597 2 065
Other financial assets 475 633 403 143 426 947
Deferred tax 11 156 13 742 11 901
Prepayments 292 - 226
Current assets 238 324 207 297 204 991
Inventory 26 174 30 024 22 305
Biological assets 36 343 42 101 36 014
Other financial assets 2 140 1 575 245
Current tax receivable 521 174 556
Trade and other receivables 119 143 96 909 98 753
Cash and cash equivalents 54 003 36 514 47 118
Non-current assets held for sale 1 852 1 990 1 852
Total assets 1 244 801 959 578 1 178 084
Equity and liabilities
Equity
Equity attributable to equity holders of parent
Share capital and share premium 403 177 403 177 403 177
Reserves 8 034 121 194 8 034
Retained income/(accumulated losses) 189 215 (33 920) 157 825
600 426 490 451 569 036
Non-controlling interest 89 698 6 065 96 036
690 124 496 516 665 072
Liabilities
Non-current liabilities 357 482 299 649 347 935
Other financial liabilities 139 752 159 116 135 445
Operating lease liability 2 436 1 120 1 794
Deferred tax 215 044 138 947 210 489
Other non-current liabilities 250 466 207
Current liabilities 197 195 163 413 165 077
Trade and other payables 122 904 93 645 98 873
Other financial liabilities 20 434 11 316 27 933
Current tax payable 8 595 4 395 6 715
Provisions 17 626 18 054 26 507
Other current liabilities 234 109 297
Bank overdraft 27 402 35 894 4 752
Total equity and liabilities 1 244 801 959 578 1 178 084
Net asset value per share (cents) 122.20 100.23 115.81
CONDENSED GROUP STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
Group to Group to Group to
28 February 28 February 31 August
2015 2014 2014
R'000 R'000 R'000
Cash flows from operating activities 10 672 (5 697) 57 028
Cash flows from investing activities (12 959) (7 385) (30 118)
Cash flows from financing activities (13 478) (27 394) (25 639)
Total cash movement for the period (15 765) (40 476) 1 271
Cash and cash equivalents at the beginning of the period 42 366 41 095 41 095
Cash and cash equivalents at the end of the period 26 601 619 42 366
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
For the period ended 28 February 2015
Attributable Non-
to controlling Total
parent interest equity
R'000 R'000 R'000
Balance at 1 September 2013 472 234 4 762 476 996
Profit for the period 96 802 5 631 102 433
Dividends paid - (1 148) (1 148)
Business combinations - 86 791 86 791
Balance at 31 August 2014 569 036 96 036 665 072
Profit/(loss) for the period 41 217 (5 918) 35 299
Dividends paid (9 827) (420) (10 247)
Balance at 28 February 2015 600 426 89 698 690 124
CONDENSED GROUP SEGMENTAL REPORT
Technology Marine Health Care
Unaudited Unaudited Unaudited
Group to Group to Group to
28 February 28 February 28 February
2015 2015 2015
R'000 R'000 R'000
Revenue 95 587 139 584 8 856
External sales 95 587 139 584 8 856
Segment results
Operating profit/(loss) 12 541 18 633 (610)
Included in segment results:
Reversal of impairments - - 436
Carrying amount of assets 94 841 247 052 29 165
Carrying amount of liabilities 56 506 128 049 8 563
Biotechnology Corporate Group
Unaudited Unaudited Unaudited
Group to Group to Group to
28 February 28 February 28 February
2015 2015 2015
R'000 R'000 R'000
Revenue - 14 847 258 874
External sales - 14 847 258 874
Segment results
Operating profit/(loss) (19 695) 42 067 52 936
Included in segment results:
Impairments (15 200) - (14 764)
Fair valuation of investments - 48 686 48 686
Carrying amount of assets 337 448 536 295 1 244 801
Carrying amount of liabilities 85 735 275 824 554 677
Technology Marine Health Care
Unaudited Unaudited Unaudited
Group to Group to Group to
28 February 28 February 28 February
2014 2014 2014
R'000 R'000 R'000
Revenue 88 492 119 020 11 547
External sales 88 492 119 020 11 547
Segment results
Operating profit/(loss) 14 713 15 064 (2 072)
Carrying amount of assets 77 170 249 082 37 739
Carrying amount of liabilities 39 919 129 341 9 138
Biotechnology Corporate Group
Unaudited Unaudited Unaudited
Group to Group to Group to
28 February 28 February 28 February
2014 2014 2014
R'000 R'000 R'000
Revenue - 22 988 242 047
External sales - 22 988 242 047
Segment results
Operating profit - 11 217 38 922
Included in segment results:
Fair valuation of investments - 22 498 22 498
Carrying amount of assets 154 180 438 515 956 686
Carrying amount of liabilities 24 909 259 215 462 522
Loss from associate (4 005) - (4 005)
NOTES
The Events and Tourism division was managed under the corporate office for the first six months as the bulk of the
revenue is generated in the second half of the year.
Determination of headline earnings
Unaudited Unaudited Audited
Group to Group to Group to
28 February 28 February 31 August
2015 2014 2014
R'000 R'000 R'000
Earnings attributable to ordinary equity
holders of parent entity IAS 33 41 217 18 217 96 802
Adjusted for:
Impairment of intangible assets IAS 38 10 944 - -
Loss on disposal of property, plant and equipment IAS 16 523 9 100
Gain on deemed disposal of associate IFRS 3 - - (18 350)
Headline earnings 52 684 18 226 78 552
Headline earnings per ordinary share (cents) 10.72 3.72 16.03
Reconciliation between operating profit and
profit before tax Unaudited Unaudited Audited
Group to Group to Group to
28 February 28 February 31 August
2015 2014 2014
R'000 R'000 R'000
Operating profit 52 936 38 922 98 578
Investment revenue 3 354 (9 985) (19 164)
Gain on deemed disposal - - 22 556
Loss from equity accounted investments - (4 005) (6 179)
Profit before tax 45 923 32 740 108 192
BASIS OF PREPARATION
The condensed consolidated financial statements are prepared in accordance with the JSE Limited (“JSE”) Listings
Requirements and the requirements of the Companies Act of South Africa, 2008, as amended, applicable to summarised
financial statements. The JSE Listings Requirements require financial reports to be prepared in accordance with
the framework concepts, the measurement and recognition requirements of International Financial Reporting Standards
(“IFRS”), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and also that they,
as a minimum, contain the information required by IAS 34 ‘Interim Financial Reporting’. The accounting policies
applied in the preparation of the summarised consolidated financial statements from which the summary consolidated
financial statements were derived are in terms of IFRS and are consistent with the accounting policies applied in
the preparation of the previous consolidated annual financial statements.
The unaudited interim financial results were prepared by Natasha September BCom (Hons), CA(SA).
HIGHLIGHTS
- Revenue increased by 7% from R242m to R259m.
- Operating profit increased by 36% from R39m to R53m
- Earnings per share increased by 125% from 3.72c to 8.39c
- Headline earnings per share increased by 188% from 3.72c to 10.72c.
- Total assets increased by 30% from R959m to R1 245m.
- Net asset value increased by 39% from R496m to R690m
- Net cash generated from operating activities increased by R16m from (-R5,6m) to R10,6m.
- On 23 February 2015 the Company paid a maiden dividend of R9.8m to its shareholders.
COMMENTARY
The AEEI Group posts excellent financial results due to all the underlying operations achieving consistent growth
in the first half of the 2015 financial year.
GROUP PERFORMANCE
The Group performed exceptionally well as a result of strong contributions from all its underlying investments.
Group revenue increased by 7% to R259m (2014: R242m) mainly due to greater revenue growth achieved from the marine
and technology divisions.
Operating expenses include R15m impairments in intangible assets.
Profit before tax for the period increased by 40% to R46m (2014: R33m), due to improved returns from all our
diversified portfolio of businesses.
Group earnings grew by 81% from R19m in the prior interim period to R35m.
Headline earnings per share (“HEPS”) increased by 7.00c from 3.72c to 10.72c and earnings per share (“EPS”)
increased by 4.67c from 3.72c to 8.39c for the six months under review.
As a result of the solid financial performance from the underlying divisions and the adequate management of our
working capital, R10,6m net cash from operations was generated (2014: a loss of R5,6m).
Net asset value (“NAV”) of the Group increased to R690m (2014: R496m) as a result of excellent operational
performance and greater fair value in the underlying investments. Net asset value per share increased by 22%
from 100.23c in the prior period to 122.20c.
The Group’s total asset base increased by R286m to R1 245m (2014: R959m), an increase of 30% mainly due to the
growth in our operations as well as the increase in our strategic investments.
STRATEGIC INVESTMENTS
The investment in the listed Pioneer Food Group consistently shows increased value since its acquisition. Our
investments in British Telecommunication Services SA and SAAB SA have performed as expected.
MARINE
The fishing division had a solid financial performance with revenue increasing by 17% from R119m to R139m. Better
catch rates, improved pricing, greater sales volumes and the weaker exchange rate, as well as consistent
efficiencies had a positive impact on the operating profit of R18m (2014: R15m).
AQUACULTURE
The abalone division continues to produce excellent results, which had a positive impact on the profitability of
the marine group, which is encouraging for future growth prospects.
TECHNOLOGY
The ICT division performed satisfactorily, with revenues increasing by 8% to R95m (2014: R88m) from its underlying
operations, which are in line with their expectations.The revenue growth experienced in our technology group is
both acquisitive and organic. The acquisitive growth results from investments in the second half of 2014.
The technology group achieved an operating profit of R12,5m (2014: R14,7m). The operating margin declined as a
result of the operational investment in our technology group as they gear up for growth in line with our expansion
plan. The group is moving to a more annuity-based income after successfully implementing its contracts.
HEALTH CARE
The health care division’s operating loss was curtailed and they incurred a loss of R0,6m from a loss of R2m in
the prior interim period. The natural chemical product range in health care is continuing to produce satisfactory
results. Our new business model is bearing fruit for this division.
BIOTECHNOLOGY
Genius Biotherapeutics, South Africa’s largest medical biotechnology company made progress in its dendritic
vaccine project and the pre-clinical work is making headway. Our partnership with the University of Cape Town
for dendritic cell vaccine is progressing well.
EVENTS AND TOURISM
Events Social Marketing and Productions Afrika (Pty) Ltd (“espAfrika”), a Group subsidiary, hosted a very
successful 16th Cape Town International Jazz Festival in March 2015. The company’s performance for the six months
is an expected operating loss as espAfrika has most of its bigger events during the second half of the financial year.
PROSPECTS
Due to the seasonal nature of the Group, the results are expected to be much stronger in the second half of the
financial year.
The Group will continue its strategic focus to grow the value of its core operational investments and improve the
value-add to its strategic investments.
The AEEI Group has built a strong platform for further organic growth and has positioned itself well to increase its
investments by acquisitions and partnerships.
The Group’s auditors have neither reviewed nor reported on any comments relating to future prospects.
DIVIDENDS
On 4 November 2014, the board of directors approved dividends to its shareholders. Dividends of R9,8m were paid to
shareholders on 23 February 2015.
The board will review the declaration of further dividends at the financial year ending 31 August 2015.
CHANGES TO THE BOARD OF DIRECTORS
Dr MI Survé resigned from the Board on 6 November 2014. Ms Zenariah Barends was appointed as a non-executive
director on 14 November 2014.
APPRECIATION
We wish to acknowledge the support of our staff, Group executives, management, our Board of Directors as well as
our strategic partners, stakeholders and business associates for their loyalty and dedication in contributing to
the success of the Group.
Professor Vukile Mehana Mr Khalid Abdulla
Non-executive chairman Chief executive officer
Cape Town
22 April 2015
DIRECTORS
Khalid Abdulla* (Chief executive officer); Prof Vukile Mehana (Non-executive chairman); Salim Young; Johannes Mihe
Gaomab; Aziza Amod; Takudzwa Hove; Cherie Felicity Hendricks*; Chantelle Ah Sing*; Zenariah Barends
*Executive directors
Company secretary: Carmelita Arendse
Registered address: Quay 7, East Pier, Victoria and Alfred Waterfront, Cape Town 8001
Email: carmen@sekunjalo.com
Transfer secretaries: Link Market Services South Africa (Pty) Ltd
19 Ameshoff Street, 13th Floor, Rennie House, Braamfontein, Johannesburg 2000
Auditors: Grant Thornton Cape
Sponsor: PSG Capital, Stellenbosch
Website: www.aeei.co.za
Date: 22/04/2015 03:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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