AFRICAN EQUITY EMPOWERMENT INVESTMENTS LIMITED - Unaudited Interim Results For The Period Ended 28 February 2018

Release Date: 22/05/2018 10:15
Code(s): AEE
 
Wrap Text
Unaudited Interim Results For The Period Ended 28 February 2018

African Equity Empowerment Investments Limited
(Incorporated in the Republic of South Africa)
Registration number 1996/006093/06
Share code: AEE and ISIN: ZAE000195731
("AEEI" or "the Group" or "the Company")

Unaudited interim results for the period ended 28 February 2018

Condensed Group Statement of Financial Position                                                        Restated
                                                                                         Unaudited    Unaudited    Unaudited    Audited
                                                                                          Group to     Group to     Group to   Group to
                                                                                       28 February  28 February  28 February  31 August
                                                                                              2018         2017         2016       2017
                                                                                             R'000        R'000        R'000      R'000
Assets
Non-current assets                                                                       8 932 902    1 802 651    1 273 331  1 855 213
Property, plant and equipment                                                              189 584      152 387      151 712    154 527
Goodwill                                                                                    41 216       81 070       56 832     82 940
Intangible assets                                                                          371 284      339 424      329 365    384 027
Investments in associates                                                                7 774 204      775 167            9    780 559
Investment in joint ventures                                                                     -          115            -         33
Other loans receivable                                                                      53 348        9 967        6 880      8 366
Other financial assets                                                                     494 957      428 803      711 902    425 524
Deferred tax                                                                                 8 306       14 718       14 460     17 578
Prepayments                                                                                      3        1 000        2 171      1 659

Current assets                                                                             762 762      348 677      262 534    966 940
Inventory                                                                                   57 679       48 106       43 622     64 181
Biological assets                                                                           55 873       48 359       46 262     54 323
Other loans receivable                                                                      11 297       15 711       11 981     26 771
Current tax receivable                                                                         231        1 718          154      1 591
Trade and other receivables                                                                168 407      149 901      100 760    195 050
Cash and cash equivalents                                                                  469 275       84 882       59 755    625 024

Total assets                                                                             9 695 664    2 151 328    1 535 865  2 822 153

Equity and liabilities
Equity
Equity attributable to equity holders of parent
Share capital and share premium                                                            403 177      403 177      403 177    403 177
Reserves                                                                                     8 029        8 034        8 034      8 030
Retained income                                                                          7 915 389      962 802      357 594    866 286
                                                                                         8 326 595    1 374 013      768 805  1 277 493
Non-controlling interest                                                                   684 321       74 380       78 366    760 627
                                                                                         9 010 916    1 448 393      847 171  2 038 120

Liabilities
Non-current liabilities                                                                    460 998      492 457      503 666    461 302
Other financial liabilities                                                                241 887      276 292      255 647    245 622
Deferred tax                                                                               218 323      210 528      245 188    211 046
Other non-current liabilities                                                                  788        5 637        2 831      4 634

Current liabilities                                                                        223 750      210 478      185 028    322 371
Trade and other payables                                                                    99 932      112 753      107 578    169 984
Other financial liabilities                                                                 16 947       25 254       12 007     47 232
Current tax payable                                                                         30 563       11 482        9 093     32 506
Provisions                                                                                  10 073       21 272       20 932     27 642
Other current liabilities                                                                       78        1 910        1 580        485
Bank overdraft                                                                              66 157       37 807       33 838     44 522

Liabilities of disposal group                                                                    -            -            -        360
Total equity and liabilities                                                             9 695 664    2 151 328    1 535 865  2 822 153

Net asset value per share (cents)                                                         1 694.67       279.65       156.47     260.00
Tangible net asset value per share (cents)                                                1 610.72       194.07        77.87     164.96
Number of ordinary shares in issues (000's)                                                491 339      491 339      491 339    491 339

Condensed Group Statement of Profit and Loss and Other Comprehensive Income
                                                                                                       Restated
                                                                                         Unaudited    Unaudited    Unaudited    Audited
                                                                                          Group to     Group to     Group to   Group to
                                                                                       28 February  28 February  28 February  31 August
                                                                                              2018         2017         2016       2017
                                                                                             R'000        R'000        R'000      R'000
                                                                                          6 months     6 months     6 months  12 months
                                                                                             R'000        R'000        R'000      R'000
Revenue                                                                                    604 390      454 878      305 318  1 052 196
Cost of sales                                                                             (379 183)    (287 912)    (207 594)  (654 210)
Gross profit                                                                               225 207      166 966       97 724    397 986
Other income                                                                                60 431        5 390        3 761      3 960
Other operating expenses                                                                  (166 834)    (136 668)     (78 752)  (297 289)
Net impairments, impairment reversals and write-off                                         (1 651)        (352)           -     (2 605) 
Fair value adjustments                                                                      70 180      551 437       50 405    535 083
Gain on deemed disposal of subsidiaries                                                  8 195 907            -          465          -
Gain on sale of business                                                                         -            -            -      6 019
Gain on bargain purchase                                                                         -            -            -     11 898
Share based payment (B-BBEE)                                                               (11 809)           -            -          -
Profit from equity accounted investments                                                    29 377        9 070            -     30 203
Investment revenue                                                                          53 854        2 119       11 234     23 903
Finance cost                                                                               (12 091)     (12 580)     (11 069)   (28 267)
Profit before taxation                                                                   8 442 571      585 382       73 768    680 891
Taxation                                                                                   (30 633)    (136 781)     (16 261)  (155 029)
Profit from continuing operations                                                        8 411 938      448 601       57 507    525 862
Discontinued operations
Loss from discontinued operations                                                                -            -            -      2 810
Profit for the year                                                                      8 411 938      448 601       57 507    528 672
Other comprehensive income                                                                      (5)           -            -         (4)
Total comprehensive income                                                               8 411 933      448 601       57 507    528 668

Total comprehensive income attributable to:
Equity holders of the parent                                                             8 392 732      455 232       68 991    477 085
Non-controlling interest                                                                    19 202       (6 631)     (11 484)    51 583
                                                                                         8 411 933      448 601       57 507    528 668
Basic and diluted earnings per ordinary share (cents)                                     1 708.13        92.65        14.04      97.10

Headline and diluted earnings per ordinary share (cents)                                     40.06        92.71        14.02      94.89

Weighted (and fully diluted) average number of ordinary shares in issue (000s)             491 339      491 339      491 339    491 339


Condensed Group Statement of Changes in Equity
For the period ended 28 February 2018
                                                                                                   Attributable         Non-         
                                                                                                             To  Controlling      Total
                                                                                                         Parent     interest     Equity
                                                                                                          R'000        R'000      R'000
Balance at 31 August 2015                                                                               712 106       92 443    804 549
Profit/(loss) for the period                                                                             68 991      (11 484)    57 507
Dividends paid                                                                                          (12 292)      (2 593)   (14 885)
Balance at 28 February 2016                                                                             768 805       78 366    847 171
Profit for the period                                                                                   147 632        3 388    151 020
Dividends paid                                                                                                -          359        359
Changes in ownership interest control not lost                                                               15        2 470      2 485
Balance at 01 September 2016                                                                            916 452       84 583  1 001 035
Profit for the period                                                                                   455 232       (6 631)   448 601
Dividends paid                                                                                          (16 221)      (5 455)   (21 676)
Changes in ownership interest control not lost                                                           18 550      (11 150)     7 400
Business combinations                                                                                         -       13 033     13 033
Restated balance at 28 February 2017                                                                  1 374 013       74 380  1 448 393
Profit for the period                                                                                    21 857       58 214     80 071
Other comprehensive income                                                                                   (4)           -         (4)
Dividends paid                                                                                           (9 583)        (530)   (10 113)
Changes in ownership interest control not lost                                                         (109 905)     631 694    521 789
Business combinations                                                                                     1 115       (3 131)    (2 016)
Balance at 31 August 2017                                                                             1 277 493      760 627  2 038 120
Profit for the period                                                                                 8 392 736       19 202  8 411 938
Other comprehensive income                                                                               11 808            -     11 808
Changes in ownership interest - additional shares acquired                                               (4 826)      (1 705)    (6 531)         
Changes in ownership interest - (disposal and share issue) control not lost                          (1 323 592)   1 323 592          -                         
Dividends paid                                                                                          (27 024)     (30 147)   (57 171)
Changes in ownership interest (disposal) control lost                                                         -   (1 387 248)(1 387 248)
Balance at 28 February 2018                                                                           8 326 595      684 321  9 010 916

Condensed Group Statement of Cash Flows 
                                                                                                                    Restated  
                                                                                                      Unaudited    Unaudited    Audited
                                                                                                       Group to     Group to   Group to    
                                                                                                    28 February  28 February  31 August 
                                                                                                           2018         2017       2017
                                                                                                          R'000        R'000      R'000
Cash generated by operations                                                                             13 823       52 219     73 478
Investment revenue                                                                                       60 280        2 119     23 903
Finance cost                                                                                            (12 091)     (12 580)   (28 267)
Other operating activities                                                                              (19 467)      (6 643)    10 418
Net cash flows from operating activities                                                                 42 545       35 115     79 532
Cash flows from investing activities
Net movement in property, plant and equipment                                                           (52 733)     (15 665)   (24 485)
Net movement in intangible assets                                                                          (747)      (2 399)    (1 859)
Business combination                                                                                          -       (5 755)    (1 559)
Deemed disposal of businesses and sale of business                                                   (4 239 253)           -     (2 300)
Movement in other investing activities                                                                  (30 933)      (6 507)    14 980
Purchase of financial assets                                                                                  -            -    (14 118)
Net cash flows from investing activities                                                             (4 323 666)     (30 326)   (29 341)
Cash flows from financing activities
Repayment of other financial liabilities                                                                (34 378)     (14 548)   (46 006)
Receipt of other financial liabilities                                                                        -       20 379     45 519
Change in ownership                                                                                   4 195 286            -    507 518
Dividends paid including minorities                                                                     (57 171)     (18 614)   (31 789)
Net cash flows from financing activities                                                              4 103 737      (12 783)   475 242
Total cash movement for the period                                                                     (177 384)      (7 994)   525 433
Cash and cash equivalent at the beginning of the period                                                 580 502       55 069     55 069

Cash and cash equivalents at the end of the period                                                      403 118       47 075    580 502


Condensed Group Segmental Report - 2018
                                                                                               Combined 
                                                                                         technology and
                                                   Fishing and                      Tele-         tele-  Health and        Bio-      Events     
                                                        brands   Technology communication communication      beauty  technology and tourism   Corporate       Group
                                                     Unaudited    Unaudited     Unaudited     Unaudited   Unaudited   Unaudited   Unaudited   Unaudited   Unaudited
                                                   28 February  28 February   28 February   28 February 28 February 28 February 28 February 28 February 28 February 
                                                          2018         2018          2018          2018        2018        2018        2018        2018        2018 
                                                         R'000        R'000         R'000         R'000       R'000       R'000       R'000       R'000       R'000
Revenue                                                184 580      348 672             -       348 672      24 171           -      41 845      43 430     642 698
External revenue                                       183 428      348 665             -       348 665      24 171           -      38 955       9 170     604 390
Internal revenue                                         1 152            7             -             7           -           -       2 890      34 260      38 308

Segment results
Operating profit/(loss)                                 21 659       45 832           (24)       45 808       3 036      (7 973)     (5 865)  8 314 766   8 371 431

Included in segment results:
Net (impairments)/impairment reversals and write-offs       -            -              -             -           -           -           -      (1 651)     (1 651)
Depreciation and amortisation                          (7 534)      (1 894)             -        (1 894)        (76)     (1 131)       (106)       (619)    (11 360)
B-BBEE share based payment                                  -      (11 809)             -       (11 809)          -           -           -           -     (11 809)
Gain on deemed disposal of subsidiary                       -            -              -             -           -           -           -   8 195 907   8 195 907
Fair valuation of investments                               -            -              -             -           -           -           -      70 180      70 180

Non-current assets                                    199 032            -        809 936       809 936      40 313     368 342      10 056   7 505 224   8 932 902
Current assets                                        664 895            -              5             5      21 530         549      38 926      36 857     762 762
Non-current liabilities                                96 316            -              -             -      15 923      89 367         753     258 640     460 998
Current liabilities                                   104 341            -             24            24      11 385       1 033      40 415      66 552     223 750
 
Profit from associates                                      -            -         29 377        29 377           -           -           -           -      29 377
Capital expenditure                                    51 141        2 277              -         2 277           -           -          39          22      53 479

Condensed Group Segmental Report - 2017
                                                                                               Combined 
                                                                                         technology and
                                                   Fishing and                      Tele-         tele-  Health and        Bio-      Events                   Group
                                                        brands   Technology communication communication      beauty  technology and tourism   Corporate    Restated 
                                                     Unaudited    Unaudited     Unaudited     Unaudited   Unaudited   Unaudited   Unaudited   Unaudited   Unaudited
                                                   28 February  28 February   28 February   28 February 28 February 28 February 28 February 28 February 28 February 
                                                          2017         2017          2017          2017        2017        2017        2017        2017        2017 
                                                         R'000        R'000         R'000         R'000       R'000       R'000       R'000       R'000       R'000
Revenue                                                182 527      236 390             -       236 390       2 647           4      28 114      20 725     470 407
External revenue                                       182 527      233 683             -       233 683       2 647           4      26 788       9 229     454 878
Internal revenue                                             -        2 707             -         2 707           -           -       1 326      11 496      15 529

Segment results
Operating profit/(loss)                                 25 311       27 179       569 998       597 177        (966)     (8 079)     (3 502)    (23 168)    586 773


Included in segment results:
Net (impairments)/impairment reversals and write-offs        -            -             -             -           -           -           -       (352)        (352)
Depreciation and amortisation                           (7 067)      (2 125)            -        (2 125)       (850)     (1 748)       (109)      (705)     (12 604)
B-BBEE share based payment                                   -            -             -             -           -           -           -          -            -
Gain on deemed disposal of subsidiary                        -            -             -             -           -           -           -          -            -
Fair valuation of investments                                -            -       570 000       570 000           -           -           -    (18 563)     551 437

Non-current assets                                     152 440       72 113       864 448       936 561       3 983     350 066       9 719    349 882    1 802 651
Current assets                                         181 336      118 069             6       118 075       5 408           -      35 614      8 245      348 677
Non-current liabilities                                 94 596       20 314             -        20 314           -      91 066       1 160    285 321      492 457
Current liabilities                                     90 492       51 720             -        51 720       1 624         938      32 394     33 309      210 478

Profit from associates                                       -          151         8 919         9 070           -           -           -          -        9 070
Capital expenditure                                      8 148        4 305             -         4 305           -          16          45       (123)      12 391
 
                                                                                    

Notes

The Events and Tourism division excludes Magic 828 Proprietary Limited (“Magic 828 ”) as the company was managed under the corporate office for 
the first six months. Additonally, the investment in BT Communications Services South Africa Proprietary Limited was previously disclosed under 
Corporate has and is now disclosed under Technology.

Determination of headline earnings
                                                                                              Restated 
                                                                           Unaudited         Unaudited         Unaudited         Audited
                                                                    28 February 2018  29 February 2017  28 February 2016  31 August 2017
                                                                               R'000             R'000             R'000           R'000
Earnings attributable to ordinary equity holders of 
 parent entity                                             IAS 33          8 392 732           455 232            68 991         477 085
Adjusted for:
Impairment of intangible assets                            IAS 38                  -                 -               241               -
Loss on disposal of property, plant and equipment          IAS 16                  -               284                 -           2 048
Gain on disposal of subsidiaries                           IFRS 3                  -                 -              (335)         (4 334)
Gain on bargain purchase                                   IFRS 3                  -                 -                 -          (8 567)
Gain on deemed disposal of subsidiary                     IFRS 10         (8 195 907)                -                 -               -

Headline earnings                                                            196 825           455 516            68 897         466 232
Normalised headline earnings                                                 154 174            27 601            27 901          61 861
Headline earnings per ordinary share (cents)                                   40.06             92.71             14.02           94.89
Normalised headline earnings per ordinary shares (cents)                       31.38              5.62              5.68           12.59                                                                                                                          


Reconciliation of reportable segments profit or loss
                                                                                         
                                                                                              Restated  
                                                                           Unaudited         Unaudited         Unaudited         Audited
                                                                    28 February 201   29 february 2017  28 February 2016  31 August 2017
                                                                               R'000             R'000             R'000           R'000
Total operating profit for reportable segments                             8 371 431           586 773            73 603         655 052
Adjusted for:
Profit from equity accounted investments                                      29 377             9 070                 -          30 203
Investment revenue                                                            53 854             2 119            11 234          23 903
Finance cost                                                                 (12 091)          (12 580)          (11 069)        (28 267)
Profit before taxation                                                     8 442 571           585 382            73 768         680 891
Taxation                                                                     (30 633)         (136 781)          (16 261)       (155 029)
Profit for the period and total comprehensive income 
 from continuing operations                                                8 411 938           448 601            57 507         525 862
Loss from discontinued operations                                                  -                 -                 -           2 810
Other comprehensive income                                                        (5)                -                 -              (4)
Profit for the period and total comprehensive income                       8 411 933           448 601            57 507         528 668

Financial highlights

- Revenue increased by 33% from the restated R455m to R604m.
- Operating profit increased by 1326% from the restated R587m to R8 371m.
- Earnings per share increased by 1 744% from the restated 92.65 cents to 1 708.13 cents.
- Normalised headline earnings per share increased by 459% from the restated 5.62 cents to 31.38 cents.
- Total assets increased by 351% from the restated R2 151m to R9 696m.
- Net asset value increased by 522% from the restated R1 448m to R9 011m
- Net cash from operating activities increased by 23% from R35m to R43m.

Group performance

For the six months under review revenue for the Group was exceptional, with outstanding operating profits and asset growth, due to the strong contribitions from all
the underlying operations and investments. The consistant increase in earnings and asset growth during a period of ongoing economic volatility, demonstrates the Group's 
efficient and effective business model during challenging market conditions.

Group revenue increased significantly by 33% from the restated R455m to R604m, mainly due to the consistent growth in revenue from all our divisions and especially 
the technology associate which is in-line with its organic and acquisitive growth strategy as well as the improvement in the health and beauty division.

The Group's operating profit increased by 1 326% from the restated R587m to R8 371m due to the consistent organic and aquisitive growth, as well as efficiencies 
achieved fishing and brands, technology, health and beauty, as well as its strategic investments.

Group earnings grew by 1773% from the restated R449m in the prior interim period to R8 412m. The earnings increased substantially, mainly as a result of a once-off 
gain from a deemed disposal of a subsidiary. More details are reflected in the section further below.

Headline earnings per share (“HEPS”) decreased from 92.71c to 40.06c, while earnings per share (“EPS”) increased from the restated 92.65c to 1 708.13c for the 
six months under review. The decrease in HEPS is as a result of the prior year interim period being restated and including a once-off fair value adjustment prior 
to BT Communication Services South Africa (“BT”) becoming an associate.

Group’s normalised HEPS increased by 459% from 5.62 cents to 31.38 cents. Normalised earnings are defined as earnings from continuing operations excluding 
non-recurring items and once off fair value and/or gain on disposal adjustments.  

Profit before tax for the period under review increased by 1343% from the restated R585m to R8 443m with strong returns from our diversified portfolio and the 
gain on deemed disposal of subsidiaries.

The Group’s asset base increased by 351% from the restated R2 151m to R9 696m mainly due the increased fair value gain in the investment in associates since the 
comparative interim period and the growth in current assets.

Net asset value (“NAV”) of the Group increased by 492% from the restated R1.4bn to R8.3bn as a result of the excellent operational performance and the greater fair 
value in the underlying investments. The NAV per share increased by 506% from the restated 279.65c in the prior period to 1 694.67c.

As a result of the solid financial performance from the underlying businesses during a tough economic environment, net cash generated from operating activities 
increased by 23% from the restated 2017 interim results after providing for the significant working capital needs of R103m.

Fishing and brands

The fishing and brands division performed as expected with revenue remaining stable at R183m for the interim period. While the strengthening of the Rand impacted 
negatively on the revenue of the fishing and brands division, this was offset by further efficencies and increased sales volumes in the squid and lobster divisions, 
as well as an increase in market prices for all divisions.
 
The abalone division performed well to date while construction for the expansion of the abalone farm is on track in line with the expansion plans. The farm also 
continued to focus on increasing spat production, additional animal rearing capacity divisions, and stock holding in preparation for the farm expansion. 

Subsequent to the interim period, all the conditions precedent were met for the acquisition of a majority stake in Talhado Fishing Enterprises (Pty) Ltd (“Talhado”). 
The results of Talhado were not consolidated into the fishing and brands division during the period under review. For more details, refer to acquisition of business 
subsequent to the interim period under the significant events disclosure.

Technology

During the period under review, the Group's previous subsidary, AYO Technology Solutions Limited (“AYO”) was successfully separately listed on 21 December 2017. The Group 
now holds 49% equity in AYO since listing. This investment has been accounted for as an associate as at the period ended 28 February 2018.

The information and communications technology ("ICT") associate, AYO listed on the Johannesburg Stock Exchange ("JSE") as a leading Broad-Based black economic 
empowerment ("B-BEEE") ICT company with strong management expertise and a sound track record. The current improving market conditions and regulation pertaining to 
B-BEEE have set them in good stead to capture the growing ICT spend across the South African market. The ICT associate is currently servicing customers in Southern 
and Northern Africa, Europe and Mauritius. Its strategic alliance, with BT, provides it with access to global technology trends as well as access to the global market.

During the interim period under review, the Group relinquished control of AYO resulting in the division becoming an associate in February 2018. Refer to Significant 
events below for more details.

The ICT associate (AYO) has effectively been listed for two months of this reporting period. However in the five months since listing  they have already shown 
excellent organic progress in delivering on its planned strategy. 

In the short time frame since listing, our associate had a successful first few months operational performance, although certain key projects and transactions are 
still being finalised resulting in their management team expecting a much improved and accelerated performance in the second half of the current financial year. 

Within the first few months of this associate being listed, the associate concluded a significant contract with a multinational client, further details of which 
are expected to be announced over the coming days. 

The ICT associate achieved significant growth in revenue of 49% from R234m to R349m mainly as a result of obtaining new customer contracts in the financial service 
sector which leverages the strategy to gain market share through its B-BBEE and strong management credentials. The total profit before tax for the associate increased 
by 173% from R30m to R82m, which shows the consistency in growth plans.

The Group also holds a 30% equity interest in BT. This investment was accounted for as an associate.

Health and beauty

The companies in the health and beauty division, focuses on the importation and distribution of cosmetic brands as well as the manufacturing, sales and marketing 
of an extensive range of natural products that are human, animal and plant safe and internationally recognised in the food, agriculture, hygiene, beauty and general 
health sectors. 

The acquisition of Orleans Cosmetics Proprietary Limited in the prior year combined with the existing business has led to revenue increasing by 700% 
from R3m to R24m and operating profit increasing by 413% from a loss of R0,96m to a R3m profit.

Biotechnology

Genius Biotherapeutics South Africa, one of Africa's largest medical biotechnology companies, made good progress with its research and development activities 
as it prepares pre-clinical data on extreme drug resistant tuberculosis.

The dendritic cell vaccine project obtained final approval from the Medicines Control Council to commence with Phase 1 human clinical trials on breast cancer, provided 
that the clinical trials are performed in a validated clean room facility. The construction of clean rooms at the University of Cape Town is due to be completed by June 2018.

Events and tourism

The events and tourism division manages and owns an events planning and production company, espAfrika Proprietary Limited ("espAfrika"), a travel services company, 
Tripos Travel Proprietary Limited ("Tripos Travel") and a radio station Magic 828 (managed under the corporate division).

espAfrika a Group subsidiary, hosted a very successful 19th Cape Town International Jazz Festival post interim period. In terms of performance, the company expected 
to have an operating loss for the six months, as espAfrika hosts most of its events during the second half of the financial year.

Magic 828 which has been in existence for less than 36 months, contributed to Group gross revenue of R3m for the period and increased its listenership in the 
Western Cape region to more than 100 000 listeners.

Tripos Travel engaged in a turnaround strategy since 2016 which led to revenue increasing by 30% from R27m to R35m for the six months ended 28 February 2018.

Strategic investments

The Group's strategic investments consist of: Pioneer Foods Group (“Pioneer Foods”), Sygnia Limited (“Sygnia”) and Saab Grintek Defence Proprietary Limited ("SGD”) and 
BT which is now managed and reported under technology division and telecommunications.

AEEI has a minority equity stakes in SGD, Sygnia and Pioneer Foods. These investments have shown improvement in its investment value since the date of the acquisitions. 
Consistent growth in earnings and regular dividends are received from all the strategic investments.

AEEI owns the following equity interest in the above strategic investments:
- 25% + 1 share in SGD
- 0.75% in Pioneer Foods
- 1.73% in Sygnia

Significant events

Acquisition of business subsequent to interim period
On 30 November 2017, the fishing and brands division announced the acquisition of a 50.31% stake in Talhado for a consideration of R85m, subject to the fulfilment 
of certain conditions precedent. The conditions precedent have now been fulfilled and the transaction implemented. The fishing and brands division acquired Talhado 
for its squid fishing rights, brand and processing facilities, aiming to enhance the group's footprint in the squid sector. Talhado is the largest squid company in 
South Africa.

The fishing and brands pro forma results, including Talhado are available for review on www.premierfishing.co.za. 

Investment becomes an associate and changes in control

The Group held an 80% equity interest in AYO as at 31 August 2017. Prior to the listing of AYO, a decision was made to issue 10% of its shares to a B-BBEE Consortium, 
which resulted in a dilution of the Group’s investment in AYO to 69.55%. On 21 December 2017 AYO listed on the main board of the JSE, whereby AYO issued shares under a 
private placement resulting in a further dilution of the Group’s shareholding to 49.36%. Please refer to the statement of changes in equity for the effect of the 
transaction on retained earnings and non-controlling interest without a loss of control on this date.

This investment was accounted for as a subsidiary up to 21 February 2018 with its financial results being consolidated into the Groups’ interim results, where after 
the Group relinquished control over AYO by the restructure of the Board.

The above resulted in AYO becoming an associate on 21 February 2018.

The effect of the transaction is therefore as follows:
                                                                                                                               Unaudited
                                                                                                                        28 February 2018
                                                                                                                                   R'000
Derecognise assets (including goodwill) and liabilities at date control is lost IFRS10.B98(a)                                 (4 408 394)
Derecognise non-controlling interest IFRS10.B98(a)                                                                             5 640 033
Net assets value derecognised                                                                                                  1 231 639
Fair value of remaining interest in AYO IFRS10.B98(b)                                                                          6 964 268
Gain on deemed disposal of subsidiary                                                                                          8 195 907

Investment in associate
Balance as at 01 September 2017                                                                                                  780 559
Amount transferred to investment in associate                                                                                  6 964 268
Share of profits in associate                                                                                                     29 377
Dividend received from associate                                                                                                       -
Investment in associate as at 28 February 2018                                                                                 7 774 204

No impairment has been taken into account as the value in use of the investment exceeded the carrying amount of the investment.

IFRS 2 B-BBEE share based payment

Within technology, AYO issued 31 960 000 shares at an issue price of R1.50 per share to a B-BBEE Consortium. At the date of issuance, the fair value 
of the AYO shares exceeded the issue price of R1.50. In line with IFRS 2, the discount offered resulted in an IFRS 2 adjustment of R11.8m which is recognised in 
the Condensed Statement of Comprehensive Income with the contra recognised directly in equity.

Restatement of the prior year figures

Dividend and interest received

A detailed analysis of the dividends and interest received from AEEI's underlying investments was performed by management. As part of this assessment, management 
investigated certain dividend and interest received items which were previously disclosed under investment revenue in the financial statements, for the year ended 
31 August 2017 in-line with the JSE proactive monitoring guidance provided. Based on the findings, management reclassified the dividends and interest received to 
better reflect the nature of these income streams.

The above restatement is considered non-material and was announced in the full year results for the year ended 31 August 2017 as well as restated in the prior 
six-month period ending 28 February 2017.

Investment in associate

On 23 November 2016, the BT Board of directors was rearranged which resulted in AEEI having the ability to participate in policy-making processes, including 
participation in decisions about dividends or other distributions resulting in the Group obtaining significant influence. As a result, the investment is treated as 
an associate in-line with IAS 28. 

Prior to the investment in BT becoming an associate, the investment was held at fair value through profit and loss resulting in a fair value gain of R509m on 
31 October 2016. Post the interim period, additional information arose from the investment in BT as well as the revaluation of AEEI's underlying investments in 
technology assets, performed by management in preparation for the listing of AYO. Due to this assessment, a material fair value gain was recognised in the results 
for the year ended 31 August 2017 as well as the six-month period ended 28 February 2017. 

Accordingly, the reported earnings per the prior interim period increased by R310m from R138m to R449m. 

The above restatement has an effect on the reported earnings per the statement of profit and loss and other comprehensive income, statement of financial position 
and statement of cash flows as detailed in the table below:

                                                                                      Reclassification of  Restatement of
                                                                                                dividends      investment    
R'000                                                        As previously stated   and interest received    in associate       Restated
28 February 2017
Consolidated Statement of Financial Position
Investment in associate                                                   464 767                       -         310 400        775 167
Retained income                                                           652 402                       -         310 400        962 802
Net asset value per share (cents)                                          216.47                       -           63.18         279.65
Consolidated Profit and Loss and Other Comprehensive Income
Revenue                                                                   448 785                   6 093               -        454 878
Gross profit                                                              160 873                   6 093               -        166 966
Fair value adjustments                                                    151 437                       -         400 000        551 437
Investment revenue                                                          8 212                  (6 093)              -          2 119
Profit before tax                                                         185 382                       -         400 000        585 382
Taxation                                                                  (47 181)                      -         (89 600)      (136 781)
Profit from continuing operations                                         138 201                       -         310 400        448 601
Profit for the year                                                       138 201                       -         310 400        448 601
Total comprehensive income                                                138 201                       -         310 400        448 601
Basic and diluted earnings per ordinary share (cents)                       29.48                       -           63.17          92.65
Headline earnings per ordinary share (cents)                                29.53                       -           63.18          92.71
Consolidated statement of cash flows
Cash generated from operations                                             46 126                   6 093               -         52 219
Interest revenue                                                            8 212                  (6 093)              -          2 119

Events after reporting period

On 30 November 2017, the fishing and brands division announced the acquisition of a 50.31% stake in Talhado for a consideration of R85m. The conditions precedent 
were only met after the end of the interim reporting period. Refer above to Acquisition of business for more information. 

Fair value information

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities.
Level 2: Other techniques for all inputs which have a significant effect on the recorded fair value and are observable, either directly or indirectly.
Level 3: Techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.
As at 28 February 2017, the Group held the following instruments measured at fair value:
                                                                                   Level 1         Level 2         Level 3         Total
2018                                                                                R'000s          R'000s          R'000s        R'000s
Listed shares                                                                      250 100               -               -       250 100
Unlisted shares                                                                          -               -         244 857       244 857
Biological assets                                                                        -               -          55 873        55 873
Total                                                                              250 100               -         300 730       550 830

                                                                                   Level 1         Level 2         Level 3         Total
2017                                                                                R'000s          R'000s          R'000s        R'000s
Listed shares                                                                      283 654               -               -       283 654
Unlisted shares                                                                          -               -         145 149       145 149
Biological assets                                                                        -               -          48 359        48 359
Total                                                                              283 654               -         193 508       477 162

Refer to fair value adjustments in the Group's Statement of Comprehensive Income.

Reporting entity

AEEI is a company domiciled in South Africa. These condensed consolidated interim financial statements as at and for
the six months ended 28 February 2017 comprises AEEI the company and its subsidiaries ("The Group") and interest in associates and joint ventures. AEEI is a black-
controlled entity, which holds interests in six sectors and promotes B-BBEE and sound corporate governance practices.

Use of judgments and estimates

In preparing these condensed interim financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies
and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty, were the same as those that
applied to the audited consolidated financial statements as at and for the year ended 31 August 2017.

Measurement of fair values

The Group has an established control framework with respect to the measurement of fair values. The fair valuation calculations are performed by the Group's finance
department and operational team on an annual basis. The finance department reports to the Group's Chief Financial Officer. The valuation reports are approved by the
investment committee in accordance with the Group's reporting policies.

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 Financial Reporting Pronouncements as issued by the Financial Reporting 
Standards Council 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 unaudited interim results for the period ended 28 February 2018 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 the Group Financial Manager, Wakeel McLachlan B. Com (Hons), CA(SA) and were not reviewed or audited by the
Group's external auditors, BDO Cape Incorporated.

Prospects

The Group will continue with its strategic focus to grow the value of our core operational investments and improve the value add to our strategic investments.

The AEEI Group has built a solid platform for further organic growth and has positioned itself well to further increase its investments by acquisitions. 

Management is focused on its five-year strategic plan ("Vision 2020 Vision") and has firmed up its acquisition pipeline.

Mangement are excited about the potential for growth via an aquisition pipeline and are confident about the further announcements over the next 12 months.

The Group's auditors have not reviewed nor reported on any comments relating to future prospects.

Change in the directorate

At the Annual General Meeting (“AGM”) held on 22 February 2018, Salim Young did not make himself available for re-election at the AGM and voluntary elected to step 
off the Board to focus on his duties as the independent non-executive Chairman of AYO and accordingly the requisite resolution was withdrawn.

The Board further advises that Abdul Malick Salie has been appointed to the Board of Directors as an executive director in the capacity of Chief Investment Officer 
effective 22 February 2018.

Advocate Dr Ngoako Ramatlhodi has been appointed as an independent non-executive director to the board of AEEI effective 7 March 2018.

Dividends

The Board of Directors are pleased to announce that it has approved and declared an interim dividend of 3.30 cents per share for the six-month period 
ended 28 February 2018 from income reserves. The interim dividend amount, net of South African dividend tax of 20% which equates to 0.66 cents per share, 
is therefore 2.64 cents per share for those shareholders that are not exempt from dividend tax.

The number of ordinary shares in issue at declaration date is 491 339 434 and the income tax number of the Company is 9314001034.

The salient dates of this dividend distribution are:

Gross dividend (cents per share)                                  3.30
Dividend net of dividend withholding tax                          2.64
Last day to trade cum dividend                   Tuesday, 17 July 2018
Trading ex-dividend commences                  Wednesday, 18 July 2018
Record date                                       Friday, 20 July 2018
Date of payment                                   Monday, 23 July 2018

Share certificates may not be dematerialised or rematerialised between Wednesday, 18 July 2018 and Friday, 20 July 2018, both days inclusive.

Appreciation

We wish to thank our employees, Group executives, management, our Board of directors as well as our strategic partners, stakeholders and business partners for their
loyalty and dedication in contributing to the success of the Group.

Reverend Dr Vukile Mehana                  Mr Khalid Abdulla
Independent non - executive chairman       Chief executive officer

Cape Town
22 May 2018

Directors
*Khalid Abdulla (Chief executive officer); Reverend Dr Vukile Mehana (Non-executive Chairman); Johannes Mihe Gaomab; Aziza Amod; Takudzwa Hove *Cherie Felicity
Hendricks; *Chantelle Ah Sing; Zenariah Barends; *Abdul Malick Salie (appointed 22 February 2018) and Advocate Ngoako Ramatlhodi (appointed 7 March 2018)
*Executive directors*

Company secretary: Nobulungisa Mbaliseli
Registered address: Quay 7, East Pier, Victoria and Alfred Waterfront, Cape Town 8001,
Email: nobulungisa@aeei.co.za

Transfer secretaries: Link Market Services South Africa (Pty) Ltd,
19 Ameshoff Street,13th Floor, Rennie House, Braamfontein, Johannesburg 2000

Auditors: BDO Cape Incorporated, 6th Floor, 123 Hertzog Boulevard, Cape Town, 8001

Sponsor: PSG Capital Proprietary Limited, 1st Floor, Ou Kollege Building, 35 Kerk Street, Stellenbosch, 7600



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