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Audited Condensed Group results for the year ended 31 August 2015
African Equity Empowerment 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")
Audited Condensed Group results for the year ended 31 August 2015
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Audited Audited
Group Group
31 August 31 August
2015 2014
R'000 R'000
Assets
Non-current assets 1 096 519 971 241
Property, plant and equipment 153 422 138 266
Goodwill 56 832 55 469
Intangible assets 339 697 336 367
Investment in associates 9 -
Other loans receivable 5 282 2 065
Other financial assets 525 115 427 173
Deferred tax 16 162 11 901
Current assets 228 952 204 991
Inventory 31 503 22 305
Biological assets 46 162 36 014
Other loans receivable 7 734 245
Current tax receivable 450 556
Trade and other receivables 111 037 98 753
Cash and cash equivalents 32 066 47 118
Non-current assets for sale 20 000 1 852
Total assets 1 345 471 1 178 084
Equity and liabilities
Capital and reserves
Share capital and share premium 403 177 403 177
Reserves 8 034 8 034
Retained income 300 895 157 825
Equity attributable to parent 712 106 569 036
Non-controlling interests 92 443 96 036
Total equity 804 549 665 072
Non-current liabilities 354 637 347 935
Other financial liabilities 112 800 135 445
Deferred tax 239 015 210 489
Other non-current liabilities 2 822 2 001
Current liabilities 186 285 165 077
Trade and other payables 95 698 98 873
Other financial liabilities 45 609 27 933
Current tax payable 6 869 6 715
Provisions 23 568 26 507
Other current liabilities 1 122 297
Bank overdraft 13 419 4 752
Total equity and liabilities 1 345 471 1 178 084
Net asset value ("NAV") per share (cents) 144.93 115.81
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
Group Group
31 August 31 August
2015 2014
R'000 R'000
Revenue 672 185 620 549
Cost of sales (443 546) (426 222)
Gross profit 228 639 194 327
Other income 3 595 4 710
Other expenses (150 738) (145 590)
Impairments (5 779) (1 172)
Gain on disposal of subsidiary 3 436 -
Fair valuation adjustments 106 405 46 303
Gain on deemed disposal of equity
accounted investments 3 224 22 556
Investment revenue 16 976 12 401
Loss from equity accounted investments (316) (6 179)
Finance costs (19 695) (19 164)
Profit before tax 185 747 108 192
Tax (36 491) (5 759)
Profit for the year 149 256 102 433
Other comprehensive income - -
Total comprehensive income 149 256 102 433
Attributable to:-
Non-controlling interests(NCI) (3 641) 5 631
Equity holders of the parent 152 897 96 802
149 256 102 433
Earnings and diluted earnings per
share (cents) 31.12 19.76
CONDENSED STATEMENT OF CHANGES IN EQUITY
Attributable Non-controlling Total
To Interests Equity
Parent
R 000's R 000's R 000's
Balance at 1 September 2013 472 234 4 762 476 996
Net profit for the year 96 802 5 631 102 433
Dividends declared to NCI by subsidiaries - (1 148) (1 148)
Business combinations - 86 791 86 791
Balance at 31 August 2014 569 036 96 036 665 072
Net profit for the year 152 897 (3 641) 149 256
Dividends declared to NCI by subsidiaries - (2 248) (2 248)
Dividends declared to outside shareholders (9 827) - (9 827)
Business combinations - 2 296 2 296
Balance at 31 August 2015 712 106 92 443 804 549
CONDENSED GROUP STATEMENT OF CASH FLOWS
Audited Audited
Group Group
31 August 31 August
2015 2014
R'000 R'000
Cash flow from operating activities 50 794 57 028
Cash flows from investing activities (39 758) (30 118)
Cash flows from financing activities (34 755) (25 639)
(Decrease)/Increase in cash and
cash equivalents (23 719) 1 271
Cash and cash equivalents at beginning of
the year 42 366 41 095
Cash equivalents at the end of the year 18 647 42 366
CONDENSED GROUP SEGMENTAL REPORT 2015
Fishing Food Food and
Fishing
R'000 R'000 R'000
Revenue 348 393 - 348 393
External sales 348 743 - 348 743
Inter group sales (350) - (350)
Segment result
Operating profit 68 157 123 527 191 684
Included in segment results: (14 898) 123 617 108 719
Depreciation and amortisation (14 898) - (14 898)
Fair valuation of investments - 123 617 123 617
Carrying amount of assets 277 311 323 122 600 433
Carrying amount of liabilities 132 005 139 233 271 238
Capital expenditure 24 082 - 24 082
Technology Health Biotechnology
Care
R'000 R'000 R'000
Revenue 217 335 9 620 -
External sales 216 513 9 620 -
Inter group sales 822 - -
Segment result
Operating profit/(loss) 33 071 (6 110) (14 862)
Included in segment results: (1 335) (1 703) (8 983)
Impairments - - (6 067)
Depreciation and amortisation (1 335) (1 703) (2 916)
Carrying amount of assets 96 733 30 332 345 397
Carrying amount of liabilities 44 315 12 272 88 469
Profit from equity accounted investments 9 - -
Capital expenditure 4 080 1 615 68
Corporate Events and Group
Tourism
R'000 R'000 R'000
Revenue 26 726 98 069 700 143
External sales - 97 309 672 185
Inter group sales 26 726 760 27 958
Segment result
Operating(loss)/ profit (27 176) 8 951 185 558
Included in segment results: (17 144) (184) (44 118)
Impairments 288 - (5 779)
Depreciation and amortisation (175) (229) (21 256)
Fair valuation of investments (17 257) 45 106 405
Carrying amount of assets 239 823 32 754 1 345 472
Carrying amount of liabilities 107 645 16 984 540 923
Loss from equity accounted investments - (325) (316)
Capital expenditure 7 645 195 37 685
CONDENSED GROUP SEGMENTAL REPORT 2014
Fishing Food Food and
Fishing
R'000 R'000 R'000
Revenue 315 119 - 315 119
External sales 314 938 - 314 938
Inter group sales 181 - 181
Segment result
Operating profit 51 243 63 164 114 407
Included in segment results: (15 494) 63 248 47 754
Depreciation and amortisation (15 494) - (15 494)
Fair valuation of investments - 63 248 63 248
Carrying amount of assets 248 286 188 858 437 144
Carrying amount of liabilities 119 176 92 420 211 596
Capital expenditure 15 985 - 15 985
Technology Health Biotechnology
Care
R'000 R'000 R'000
Revenue 184 991 22 986 -
External sales 184 927 22 392 -
Inter group sales 64 594 -
Segment result
Operating (loss)/profit 19 711 (6 471) (3 298)
Included in segment results: (899) (2 202) (821)
Impairments 109 (436) -
Depreciation and amortisation (1 008) (1 766) (821)
Carrying amount of assets 92 911 29 091 354 164
Carrying amount of liabilities 56 652 9 223 90 141
Loss from associate - - (6 179)
Capital expenditure 1 703 - 9
Corporate Events and Group
Tourism
R'000 R'000 R'000
Revenue 19 141 99 185 641 422
External sales 651 97 641 620 549
Inter group sales 18 490 1 544 20 873
Segment result
Operating (loss)/profit (32 605) 6 834 98 578
Included in segment results: (17 998) (253) 25 581
Impairments (845) - (1 172)
Depreciation and amortisation (214) (247) (19 550)
Fair valuation of investments (16 939) (6) 46 303
Carrying amount of assets 244 079 20 695 1 178 084
Carrying amount of liabilities 126 226 19 174 513 012
Loss from equity accounted investments - - (6 179)
Capital expenditure 517 68 18 282
Audited Audited
Group Group
31 August 31 August
Calculation of Headline Earnings 2015 2014
R'000 R'000
Earning attributable to
ordinary equity holders of
parent entity - IAS 33 152 897 96 802
Adjusted for:
Gain on deemed disposal of equity accounted
investments IAS 28 (2 321) (18 350)
Gain on disposal of subsidiary IFRS 3 (2 474) -
Losses on disposal of property, plant
and equipment - IAS 36 145 100
Impairment of intangible assets IAS 38 4 368 -
Headline earnings 152 615 78 552
Number of shares in issue 491 339 491 339
Weighted number of shares in issue 491 339 489 887
Diluted number of shares in issue 491 339 489 887
Headline earnings and diluted
headline earnings per share (cents) 31.06 16.03
Audited Audited
Group Group
Reconciliation between operating profit 31 August 31 August
and profit before tax 2015 2014
R'000 R'000
Operating profit 185 558 98 578
Investment revenue 16 976 12 401
Finance cost (19 695) (19 164)
Gain on deemed disposal of equity
accounted investments 3 224 22 556
Loss from equity accounted investments (316) (6 179)
Profit before tax 185 747 108 192
Business combination
The Group initially acquired an effective 25.10% indirectly in Magic 828 (Pty) Ltd, which resulted in the
company being treated as a joint venture in terms of the shareholders' agreement. AEEI acquired an additional
15% direct shareholding in the Company on 20 July 2015, which effectively means that the Group obtained
control over the Board of Magic 828 (Pty) Ltd. The Company is therefore accounted for as a subsidiary as a
result of this additional shareholding.
The fair value of the previously held equity interest in Magic 828 (Pty) Ltd amounted to R3,2m. Additionally,
an intangible asset of R8,8m and goodwill of R1,4m was recognised during the year under review as a result of
the gain on the deemed disposal of the joint venture.
Fair value of assets acquired and liabilities assumed are as follows:
Audited
Group
31 August
2015
R'000
Property, plant and equipment 65
Intangible assets 8 858
Deferred tax (2 463)
Trade and other receivables 255
Cash and cash equivalents 150
Other financial liabilities (2 825)
Trade payables (208)
Non-controlling interest (2 296)
Goodwill 1 363
Sale of Sekunjalo Capital (Pty) Ltd
Included in the results is the disposal of Sekunjalo Capital (Pty) Ltd, previously included under the Corporate
division. The effect of the de-recognition of the assets and liabilities on 1 June 2015 resulted in a gain on
the disposal of a subsidiary amounting to R3,4m as per the table below. The disposal is immaterial to the Group.
Audited
Group
31 August
2015
R'000
Deferred tax 40
Loans and receivables 349
Trade and other receivables 18
Cash and cash equivalents 1
Other financial liabilities (3300)
Trade payables (45)
Total net assets sold (2 937)
Share of net assets after sale (499)
Net assets sold (3 436)
Profit on disposal 3 436
Additional financial information
As per the Business Combination note above, the effect of the change in control over the Group's
investment in Magic 828 is included in the Events and Tourism Division. AEEI has met the definition of
control of Magic 828 in terms of IFRS 10 and it has been accounted for as a subsidiary as of 20 July 2015.
The once-off financial impact resulting from the change in control is a gain on the deemed disposal of
R3,2m (R2,48m net of tax) which is recognised in the Group's earnings and arose on the deemed disposal of
the investment in the joint venture in terms of IFRS 3.
The Group performs an annual impairment test on intangible assets based on cash-generating units ("CGU").
The recoverable amount for each of the CGU's has been determined based on the fair value less cost to
sell using the discounted cash flow method. Based on this test, an impairment of R6,1m was accounted for
the intangible asset in respect of the biosimilar drug under development.
Group performance
Highlights
- Revenue increased by 8% from R621m to R672m
- Operating profit increased by 88% from R99m to R186m
- Total assets increased by 14% from R1 178m to R1 345m
- Basic earnings increased by 58% from R97m to R153m
- Headline earnings increased by 94% from R79m to R153m
- Net Asset Value (NAV) per share increased by 25% from 115.81 cents to 144.93 cents
- Dividends declared increased by 25% from 2.0 cents to 2.5 cents
The Group revenue increased by 8% from R621m to R672m. The increase in revenue reflects the further
organic growth experienced in our underlying operations.
Profit before tax increased by 72% from R108m to R186m, which is attributable to the Group's equity
holders increasing from R97m to R153m. Basic earnings per share increased by 57% from 19.76 cents to 31.12
cents.
Headline earnings increased by 94% from R79m to R153m, with headline earnings per share ("HEPS")
increasing from 16.03 cents to 31.06 cents.
The Group's NAV increased by 25% from R569m to R712m, which shows the consistent growth and strength of
the Group's financial position. The NAV per share increased from 115.81 cents to 144.93 cents.
AEEI's strategic intent to increase its asset base is confirmed by the Group's total assets increasing by
14% from R1 178m to R1 345m.
Cash profits generated from operations is R103m (2014: R80m) before a R35m investment in working capital
(2014: R6m) to support further growth initiatives. This reinvestment is driven mainly by the organic growth
of the underlying food and fishing and technology divisions. At financial year end, net cash from operating
activities declined from the prior year as a result of this reinvestment.
Additional information is provided above with respect to the financial effects of the disposal of
Sekunjalo Capital and the change in control of Magic 828.
Strategic investments
The Group's strategic investments consist of British Telecom Communication Services South Africa ("BTSA"),
Saab South Africa (Pty) Ltd ("Saab").
The investment in BTSA is well positioned to grow consistently over the next few years. Regular net
dividend returns from this investment is expected from 2016 onwards.
Saab is the South African operation of Swedish multi-national Saab AB, which specialises in civil security
and defence. AEEI is in the process of restructuring its shareholding in Saab by obtaining a 25% plus
1 share in its operating subsidiary, Saab Grintek Defence (Pty) Ltd, and in turn disposing of its 5%
investment shareholding in Saab SA as announced on SENS on 19 May 2015.
Technology
The Sekunjalo Technology Solutions Group ("Sekunjalo TSL") has shown an increase in revenue of 17% from
R185m to R216m from its underlying operations. The revenue growth in the technology group is both
acquisitive and organic.
Sekunjalo TSL achieved excellent growth of R33m operating profit compared to R20m during the prior year.
The operating margin increased as a result of the operational investment and efficiencies in the
Technology Group as they gear up for growth in line with our expansion plan. The Group is now moving to
annuity based income after successfully implementing its contracts.
Health System Technologies ("HST") is a leading provider of Hospital Information and Laboratory
Information Systems for the South African and African public sector. The company has fully deployed its
HIS systems to 230 pathology laboratories over the past few years. HST's contribution to Sekunjalo TSL's
revenue amounted to 48% and its operating profit amounted to R24m.
Food and fishing
Premier Fishing SA (Pty) Ltd ("Premier Fishing") is the largest black-owned and controlled fishing company
in South Africa and the most transformed in terms of its management and employees.
Premier Fishing had an excellent year with above expected sales volumes and market prices being achieved
in the lobster, squid and abalone divisions. This is reflected in the division's increase in turnover of
11% from R315m to R348m.
The pelagic and squid division experienced exceptional catch rates through effective planning and vessel
scheduling and utilisation which all contributed to the excellent performance. The west and south coast
rock lobster division performed well taking into account extra sales volumes, better pricing and good
catch rates. As a result of the performance of all divisions, operating profit increased by 33% from R51m
to R68m.
The investment in Pioneer Foods has been classified under the food and fishing segment as management has
restructured all food-related operations under one segment.
Our investment in the JSE-listed Pioneer Foods increased from R189m to R318m. Dividends of R14,6m were
received in the current year, of which R10,6m resulted from a dividend in specie. The dividend in specie
was based on the decision by board of directors of Pioneer Foods to unbundle its interest in Quantum Foods
to its shareholders and to list the company separately on the JSE. The unbundling was effected on 6 October
2014, at which time the Group obtained 1 589 998 shares in Quantum Foods Ltd. Our investment in Quantum Foods
decreased from R10,6m to R5m during the year under review.
Health Care
The companies under the Health Care division, Sekpharma (Pty) Ltd, which focuses on ethical and consumer
products, and Wynberg Pharmaceuticals ("Wynberg"), focus on the production of natural products to promote
health and hygiene and food security in the agricultural and food processing sectors.
Sekpharma continued to adapt its outsourced commission income based model from a fixed cost model. Management
embarked on revamping the dossiers and updating its regulatory affairs to meet the ever changing regulatory
requirements. This process is near completion and will position the business for growth in the year ahead.
Wynberg has grown its market share within the Western Cape region and revenue has steadily increased. The
business is well positioned to enter full commercialisation in the coming year.
Biotechnology
Genius Biotherapeutics ("Genius"), formerly known as Bioclones (Pty) Ltd, is South Africa and Africa's
largest medical biotechnology company with strategic interests in biogenerics and novel compounds.
Genius made steady progress in its dendritic cell vaccine project with various small wins being achieved
and the pre-clinical trials is making headway. The company's partnership with the University of Cape Town is
progressing well.
Management continues with its plans to upgrade its production processes and improve on its regulatory
affairs at the facility in Centurion.
Events and Tourism
AEEI Events and Tourism has consistently generated good profits after espAfrika (Pty) Ltd improved on its
growth strategy. During the year under review, AEEI Events and Tourism's operating profit increased from
R6,8m to R8,9m. AEEI Events and Tourism owns the rights to the Cape Town International Jazz Festival which
continues to bear fruit by creating 2723 jobs.
Basis of preparation
The condensed consolidated financial statements are prepared in accordance with the JSE Limited's Listings
Requirements for provisional reports, and the requirements of the Companies Act applicable to summarised
financial statements. The Listings Requirements require provisional reports to be prepared in accordance
with the framework concepts and the measurement and recognition requirements of International Financial
Reporting Standards ("IFRS") and the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council
and - also to, as a minimum, contain the information required by IAS 34 Interim Financial Reporting. The
accounting policies applied in the preparation of the consolidated financial statements from which the
condensed financial statements were derived comply with IFRS and are consistent with those accounting
policies applied in the preparation of the previous consolidated annual financial statements.
This summarised report is extracted from audited information, but is itself not audited. The annual
financial statements were audited by Grant Thornton Cape Inc., who expressed an unmodified opinion
thereof. The audited annual financial statements and the auditor's report thereof are available for
inspection at the Company's registered office. The auditor's report does not necessarily report on all of
the information contained in this announcement. Shareholders are therefore advised that in order to obtain
a full understanding of the nature of the auditor's engagement, they should obtain a copy of the auditor's
report together with the accompanying financial information from the issuer's registered office.
The directors take full responsibility for the preparation of the financial information which has been
correctly extracted from the underlying annual financial statements. This financial information has been
prepared under the supervision of Wakeel McLachlan, Group Financial Manager, B.Com (Hons), CA (SA).
Events post reporting date
On 19 May 2015, AEEI announced that it was in negotiations with Saab SA (Pty) Ltd and Saab Grintek Defence
(Pty) Ltd to dispose of its effective shareholding of 5% in Saab SA (Pty) Ltd for R20m. The investment has
therefore been classified as held for sale in the statement of financial position. AEEI and Saab SA (Pty)
Ltd in terms of the heads of agreement, are finalizing a new shareholding structure, whereby AEEI is in
the process of acquiring 25% plus 1 share in Saab Grintek Defence(Pty) Ltd for a consideration amount
of R125m.
On 14 October 2015 AEEI purchased 1 190 476 shares in Sygnia Limited at R8.40 per share to a total value
of R10m.
Future prospects
Our strategic intent is to increase value in our core operational investments in our technology, food and
fishing, health and biotechnology as well as the events and tourism sectors, which have shown excellent
growth during the current year. The Group has built a solid platform for further growth over the next few
years.
As we continue to build on our financial successes, we believe that AEEI is well positioned to further
enhance its earnings and is also set to further bolster its asset and NAV through organic growth,
acquisitions and strategic initiatives.
Any reference to future financial performance included in this announcement has not been reviewed or
reported on by the Group's auditors.
Dividends
The board of directors approved and declared a final gross dividend of 2.5 cents per share (2014: 2.0 cents)
for the year ended 31 August 2015 from income reserves. The final dividend amount, net of South African
dividend tax of 15%, which equates to 0.375 cents per share, is therefore a net 2.125 cents per share for those
shareholders that are not exempt from dividend tax.
The number of ordinary shares in issue at the declaration date is 491 339 434 and the income tax number of
the company is 9314001034.
The salient dates of this dividend distribution are:
Declaration Date Wednesday, 4 November 2015
Last day to trade cum dividend Friday, 12 February 2016
Trading ex-dividend commences Monday, 15 February 2016
Record date Friday, 19 February 2016
Date of payment Monday, 22 February 2016
Share certificates may not be dematerialised or rematerialised between Monday, 15 February 2016, and
Friday, 19 February 2016, both days inclusive.
Changes to the board of directors
Dr MI Surve resigned from the board on 6 November 2014. Ms Zenariah Barends was appointed as a non-
executive director on 14 November 2014.
Appreciation
We would like to thank the AEEI board of directors for their continued strategic guidance, wise
stewardship and commitment in ensuring the continued success of the AEEI Group.
In addition, we would also like to express our sincere gratitude and appreciation to all our executives,
our team of skilled and talented employees, our associates, strategic partners and other stakeholders for
their passion, loyalty, trust, dedication and efforts as they continue to contribute to the success of
AEEI.
Prof VC Mehana K Abdulla
Executive chairman Chief executive officer (CEO)
4 November 2015
Directors
Prof VC Mehana (Non-executive chairman); *Khalid Abdulla (CEO); *Chantelle Ah Sing; *Cherie Hendricks;
Salim Young (Deputy chairman); Johannes Mihe Gaomab; Aziza Amod; Zenariah Barends and Takudzwa Hove
*Executive directors
Company secretary: Carmelita Arendse
Registered Address: Quay 7, East Pier, Victoria and Alfred Waterfront, Cape Town, 8001,
email: carmen@aeei.co.za
Transfer secretaries: Link Market Services South Africa (Pty) Ltd,
Rennie House, 13th Floor, 19 Ameshoff Street, Braamfontein, 2001
Auditors: Grant Thornton Cape Inc., Cape Town
Sponsor: PSG Capital (Pty) Ltd, Stellenbosch
Date: 04/11/2015 09:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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