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AFRICAN EQUITY EMPOWERMENT INVESTMENTS LIMITED - Unaudited interim results for the period ended 28 February 2019 and Interim dividend declaration

Release Date: 09/05/2019 15:10
Code(s): AEE     PDF:  
Wrap Text
Unaudited interim results for the period ended 28 February 2019 and Interim dividend declaration

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 2019 and Interim dividend declaration

Financial highlights  

-Revenue increased by 31% from the restated R604m to R792m
-Profit for the period increased by 246% to R546m 
-Earnings per share increased by 238% from the restated 28.32c to 95.77c
-Headline earnings per share increased by 37% from the restated 28.32c to 38.67c 
-Total assets increased by 32% from the restated R7 362m to R9 735m
-Net asset value increased by 8% from R4 910m to R5 319m
-Net cash from operating activities increased to R123m 


Group performance                      

The Group delivered excellent revenue growth resulting from strong contributions from all its underlying investments for the 
interim period. Group revenue increased by 31% from the restated R604m to R792m, mainly due to the significant revenue achieved 
from the technology and the fishing and brands divisions. As a result of the change in control, which is detailed below,(refer 
to "Significant Events"), two months of trading revenue of R356m of the technology division's financial performance, was included
in the statement of profit and loss and other comprehensive income.

In the prior interim period, the technology division AYO Technology Solutions ("AYO") has been accounted for as an associate. Subsequent 
to 28 February 2018 it was determined that the associate was at that stage regarded a subsidiary within the Group and not an associate 
as previously stated and this required a restatement of prior period interim results. In terms of IFRS 5 Non-current assets held for 
sale, the technology division's revenue and operating expenses have been consolidated into the Group's statement of profit and loss 
and other comprehensive income. Please refer to "Restatement of prior period" for full details. 

Profit for the period increased by 246% from the restated R158m in the prior interim period to R546m due to excellent operational
performance of the underlying businesses. The earnings were also positively impacted by the change in control of AYO Technology 
Solutions ("AYO"),as a consequence this investment in the associate has been derecognised.

The Group's loss before tax for the period decreased from the restated R105m profit to a loss of R498m, mainly due to the loss 
on the deemed disposal of an associate, which was offset with strong returns from our diversified portfolio.

Headline earnings per share ("HEPS") increased by 37% from 28.32c to 38.67c, while earnings per share ("EPS") increased by 238% 
from the restated 28.32c to 95.77c for the six months under review. The increase in HEPS over the prior interim period is an indication
of the strategic plans at play with good organic and acquisitive earnings growth. The Group's normalised HEPS increased by 120% from 
17.23c to 37.95c. Normalised earnings are defined as earnings from continuing operations excluding non-recurring items and once-off
fair value adjustments.

The Group's asset base increased by 32% from R7.3bn to R9.7bn due to the additional acquisitive assets and the organic growth of
the underlying businesses. Net asset value ("NAV") for the Group increased by 8% from R4.9bn to R5.3bn as a result of the strengthened 
financial position of the Group. The NAV per share increased from the 999.25c at August year end to 1 082.66c.

Net cash from operating activities increased to R123m as a result of the solid operational performance from the underlying businesses.



Condensed Group Statement of Financial Position
 
                                                               Unaudited        Unaudited       Unaudited       Audited
                                                                                 Restated
                                                                Group to         Group to        Group to      Group to
                                                             28 February      28 February     28 February     31 August
                                                                    2019             2018            2017          2018
                                                                   R'000            R'000           R'000         R'000
ASSETS    
Non-current assets                                             4 158 086        2 033 216       1 802 651     6 705 151
Property, plant and equipment                                    478 563          196 318         152 387       324 229
Goodwill                                                       1 894 903           82 940          81 070        86 201
Intangible assets                                                367 687          384 560         339 424       277 853
Investments in associates                                        856 096          809 936         775 167     5 575 997
Investment in joint ventures                                          33               33             115             -
Other loans receivable                                            95 865           53 348           9 967        11 808
Other financial assets                                           424 718          495 719         429 803       419 905
Deferred tax                                                      40 221           10 372          14 718         9 158
    
Current assets                                                 5 442 730        5 204 746         348 677       657 125
Inventory                                                        199 370           95 225          48 106        56 978
Other financial assets                                           467 806                -               -             -
Biological assets                                                 76 015           55 873          48 359        68 021
Other loans receivable                                             6 285           13 855          15 711         3 083
Current tax receivable                                             5 686              911           1 718         2 168
Trade and other receivables                                      764 338          327 326         149 901       164 157
Cash and cash equivalents                                      3 923 230        4 711 556          84 882       362 718
Non-current assets held for sale                                 134 293                -               -             -
    
Total assets                                                   9 735 109        7 237 967       2 151 328     7 362 276
    
Equity and liabilities    
Equity    
Equity attributable to equity holders of parent    
Share capital and share premium                                  402 240          403 177         403 177       403 177
Reserves                                                           8 074           19 838           8 034         8 034
Retained earnings                                              4 909 068        (350 027)         962 802     4 498 480
                                                               5 319 412           72 988       1 374 013     4 909 691
Non-controlling interest                                       3 223 420        6 324 354          74 380       755 358
                                                               8 542 832        6 397 342       1 448 393     5 665 049
    
LIABILITIES     
Non-current liabilities                                          218 304          462 983         492 457     1 486 862
Other financial liabilities                                      117 909          241 925         276 292       208 392
Deferred tax                                                      90 662          218 227         210 528     1 278 257 
Other non-current liabilities                                      9 733            2 831           5 637           213
   
Current liabilities                                              853 158          377 642         210 478       210 365
Trade and other payables                                         604 738          229 939         112 753       105 993
Other financial liabilities                                       49 227           21 665          25 254        18 328
Current tax payable                                               90 288           34 718          11 482        21 969

Provisions                                                        63 437           21 806          21 272        27 392
Other current liabilities                                              -              330           1 910           900
Bank overdraft                                                    45 468           69 184          37 807        35 783
Non-current liabilities held for sale                            120 815                -               -             -

Total equity and liabilities                                   9 735 109        7 237 967       2 151 328     7 362 276

    
Net asset value per share (cents)                                1082.66            14.86          279.65        999.25 
Number of ordinary shares in issue (000's)                       491 022          491 339         491 339       491 339


 

Condensed Group Statement of Profit and Loss
and Other Comprehensive Income
                                                               Unaudited        Unaudited       Unaudited       Audited
                                                                                 Restated
                                                                Group to         Group to        Group to      Group to
                                                             28 February       28 February    28 February     31 August
                                                                    2019             2018            2017          2018
                                                                6 months         6 months        6 months     12 months

                                                                   R'000            R'000           R'000         R'000 
Revenue                                                          791 538          604 391         454 878       700 691
Cost of sales                                                  (456 618)        (379 184)       (287 912)     (410 192)
Gross profit                                                     334 920          225 207         166 966       290 499
Other income                                                      10 585           60 431           5 390        11 467
Other operating expenses                                       (185 684)        (224 533)       (136 668)     (256 060)
Net impairments, impairment reversals and write off                    -          (1 651)           (352)     (140 319)
Fair value adjustments                                             4 588           70 180         551 437       (5 414)
Gain on deemed disposal of subsidiaries                                -                -               -     6 049 029
Gain on bargain purchase                                               -                -               -           952
Loss on deemed disposal of associate                           (795 451)                -               -             -
Shared based payment (B-BBEE)                                         -         (11 809)               -             -
Profit from equity accounted investments                          86 494           29 377           9 070        57 914
Investment revenue                                                60 248           53 854           2 119        33 421
Finance cost                                                    (13 848)         (12 091)        (12 580)      (30 839)
Profit/ (Loss) before taxation                                 (498 148)          188 965         585 382     6 010 650
Taxation                                                       1 044 363         (30 631)       (136 781)   (1 062 789)
Profit from continuing operations                                546 215          158 335         448 601     4 947 861
Discontinued operations           
Profit from discontinued operations                                    -                -               -       159 533

Profit and total comprehensive income for the period             546 215          158 335         448 601     5 107 394

Total comprehensive income
attributable to:
Equity holders of the parent                                     470 526          139 133         455 232     4 992 064
Non-controlling interest                                          75 689           19 202         (6 631)       115 330
                                                                 546 215          158 335         448 601     5 107 394
Basic and diluted earnings per ordinary share (cents)              95.77            28.32           92.65       1016.01 
    
Headline and diluted earnings per ordinary share (cents)           38.67            28.32           92.71         24.24
    
Weighted (and fully diluted) average number of ordinary
shares in issue (000s)                                           491 329          491 339         491 339       491 339




Condensed Group Statement of Changes in Equity
For the period ended 28 February 2019
                                                          Attributable              Non-           Total
                                                                    To       Controlling          Equity
                                                                Parent          interest 
                                                                 R'000             R'000           R'000
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                                          139 133           19 202          158 335
Other comprehensive income                                      11 808                -           11 808
Changes in ownership interest
- additional shares acquired                                   (4 826)          (1 705)          (6 531)      
 
Changes in ownership interest (dilution) - 
control not lost                                           (1 323 596)        5 576 377        4 252 781
 
Dividends paid                                                (27 024)         (30 147)         (57 171)
Balance at 28 February 2018                                     72 988        6 324 354        6 397 342
   
Profit for the period                                        4 852 917           94 780        4 947 697
Dividends paid                                                (16 214)                -         (16 214)
Changes in ownership interest- control lost                          -      (5 715 462)      (5 715 462)
Business combinations and additional share purchased                 -           51 686           51 686
Balance at 31 August 2018                                    4 909 691          755 358        5 665 049
Business combinations                                                -           20 451           20 451
Change in ownership interest (deemed disposal)
- control gained                                                    41        2 371 922        2 371 963
Shares repurchased                                               (937)                -            (937)
Profit for the period                                          470 526           75 689          546 215

Dividends paid                                                (59 909)                -         (59 909)
Balance at 28 February 2019                                  5 319 412        3 223 420        8 542 832 
   

Condensed Group Statement of Cash Flows
                                                             Unaudited        Unaudited          Audited
                                                                               Restated 
                                                           28 February      28 February        31 August
                                                                  2019             2018             2018
                                                                 R'000            R'000            R'000
Cash generated by operations                                   114 049         (56 211)          174 263
Investment revenue                                              65 244           60 280           64 855
Finance cost                                                  (13 848)         (12 091)         (31 217)
Other operating activities                                    (42 286)         (19 466)         (77 087)
Net cash flows from operating activities                       123 159         (27 448)          130 814
Cash flows from investing activities   
Net movement in property, plant and equipment                 (67 357)         (52 733)        (120 059)
Net movement in intangible assets                             (55 678)            (747)          (8 059)
Net movement in biological assets                              (2 994)                -                -
Business combination                                         3 307 077                -         (77 217)
Deemed disposal of businesses and sale of business                   -                -      (4 303 642)
Movement in other investing activities                       (115 775)         (30 933)              671
Sale/(Purchase)of financial assets                             287 425                -         (85 056)
Movement from investment in associates                         108 034                -           18 746
Net cash flows from investing activities                     3 460 732         (84 413)      (4 574 616)
Cash flows from financing activities   
Repayment of other financial liabilities                      (10 572)         (34 378)         (80 573)
Proceeds from other financial liabilities                       37 417                -           20 492
Proceeds from share issue                                           -         4 265 280                -
Change in ownership                                                 -                 -        4 322 111
Dividends paid including minorities                           (59 909)         (57 171)         (71 795)
Net cash flows from financing activities                      (33 065)        4 173 731        4 190 235
Total cash movement for the period                           3 550 827        4 061 870        (253 567)
Cash and cash equivalent at the beginning of the period        326 935          580 502          580 502
   
Cash and cash equivalents at the end of the period           3 877 762        4 642 372          326 935
   


Condensed Group Segmental Report 2019

Condensed Group Segmental Report - 28 February 2019           
                                                                                   
                                                                                                                            Combined                                                                                        
                                                        Combined                                                           corporate     
                                                      technology                                                                 and 
                        Fishing                              and     Health                Events                          strategic 
                            and             Telecommu- telecommu-       and       Bio-        and                            invest-                                       
                         brands Technology  nications   nication     beauty technology    tourism   Corporate       Food       ments      Group   
                      Unaudited  Unaudited  Unaudited  Unaudited  Unaudited  Unaudited  Unaudited   Unaudited  Unaudited   Unaudited  Unaudited
                          R'000      R'000      R'000      R'000      R'000      R'000      R'000       R'000      R'000       R'000      R'000
Revenue                 286 920    358 736          -     358 736    22 996          -     25 072      96 336      5 247     101 583    795 307 
External revenue        286 180    355 707          -     355 707    22 996          -     25 072      96 336      5 247     101 583    791 538 
Internal revenue            740    (3 029)          -       3 029         -          -          -           -          -           -      3 769 

           
Segment results           
Profit/(Loss) before 
tax                      69 019    171 021     41 793     212 814    4 956     (4 547)     (5 180)  (775 572)        362   (775 210)  (498 148)  
Profit/(Loss) after 
tax                      50 945    146 626     41 793     188 419    4 607     (2 727)     (2 501)    307 110        362     307 472    546 215
Included in 
segment results:           
Loss on deemed 
disposal of 
subsidiary                   -           -          -           -        -          -           -   (795 451)          -           -  (795 451) 
Depreciation  
and amortisation       (7 157)     (1 496)          -     (1 496)      (89)    (1 100)        (710)       (36)         -         (36)  (10 589)
Fair valuation 
of investments               -      14 877          -      14 877         -          -           -   ( 10 289)         -     (10 289)     4 588          
Non-current assets     488 480     551 653    818 918   1 370 571    40 221    191 243      19 587   2 047 984         -   2 047 984  4 158 086 
Current assets         522 828   4 666 215         20   4 666 235    19 322      2 496      39 337     192 466        45     192 532  5 442 730 
Non-current 
liabilities            129 792      29 249          -      29 249    12 095     46 846       7 122   (127 616)   120 815     (6 800)    218 304
Current liabilities    107 867     508 852         18     508 871 4 405 614    37 178                 194 223          -     194 223    853 159 
Profit from associates       -      63 527     22 967      86 494         -         -           -           -          -           -     86 494 
Capital expenditure    116 400       8 459          -       8 459         -         -          70         224          -         224    125 153 



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. Additionally, the investment in BT Communications Services South Africa Proprietary Limited was previously 
disclosed under Corporate has and is now disclosed under the Technology segment.


Condensed Group Segmental Report  2018

Condensed Group Segmental Report  28 February 2018           
                                                                                                                            Combined                                                                                        
                                                       Combined                                                            corporate     
                                                     technology                                                                  and 
                      Fishing                               and       Health                Events                         strategic 
                          and             Telecommu-  telecommu-         and      Bio-         and                           invest-                                       
                       brands Technology  nications    nication       beauty               tourism   Corporate       Food      ments       Group   
                    Unaudited  Unaudited   Unaudited   Unaudited   Unaudited  Unaudited  Unaudited   Unaudited  Unaudited  Unaudited   Unaudited
                        R'000      R'000       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      38 755      4 675     43 430     642 698
External revenue      183 428    348 665           -     348 665      24 171          -     38 956       4 495      4 675      9 170     604 391
Internal revenue        1 151          7           -           7           -          -      2 889      34 260          -     34 260      38 301         
Segment results
Profit/ (Loss) before
taxation               35 853     83 814      29 377     113 191       2 674     (7 968)    (5 755)     43 611      7 360    50 971      188 965
Profit/(Loss) after
taxation               23 528     68 648      29 353      98 002       1 948    (31 075)    (5 544)     64 116      7 360    71 477      158 335
           
Included in segment results:           
Net (impairments)/
impairment reversals 
and write offs              -          -           -           -           -           -         -     (1 651)          -    (1 651)     (1 651)
Depreciation and
amortisation          (7 534)    (1 894)           -      (1 894)        (76)    (1 131)     (106)       (619)          -      (619)    (11 360)
BBBEE Share based 
payment                     -   (11 809)           -     (11 809)          -           -         -          -           -         -     (11 809)
Fair valuation of 
investments                                                    -           -           -         -      62 716      7 464     70 180      70 180
           
Non-current assets    199 032     83 508     809 936     893 443      40 313     368 342    10 056     305 480    216 555    522 035   2 033 221
Current assets        664 895  4 442 078           5   4 441 989      21 530         549    38 926      36 761         96     36 857   5 204 746
Non-current 
liabilities            96 316     21 001           -      21 001      15 923      89 367       753     116 427    123 290    239 624     462 983
Current liabilities   104 341    153 890          24     153 913      11 385       1 033    40 415      66 555          -     66 555     377 642
           
Profit from associates      -     29 377           -      29 377           -           -         -           -          -          -      29 377
Capital expenditure    51 549      2 277           -       2 277           -           -        39          22          -         22      53 887



Determination of headline earnings
                                                                              Unaudited       Restated        Unaudited       Audited
                                                                            28 February    29 February      28 February     31 August 
                                                                                   2019           2018             2017          2018
                                                                                  R'000          R'000            R'000         R'000
     
Earnings attributable to ordinary equity holders
of parent entity                                          IAS 33                470 526        139 133          455 232     4 992 064
Adjusted for:     
Impairment of intangible assets                           IAS 38                      -              -               -         95 625
Impairment of goodwill IAS 36                                  -                      -              -                         11 937
Loss on disposal of property, plant and equipment         IAS 16                    143              -              284         3 541
Gain on disposal of associates                            IAS 28                      -              -                -       (1 491)
Loss on disposal of subsidiaries                          IFRS 3                      -              -                -         1 985
Gain on bargain purchase                                  IFRS 3                      -              -                -         (952)
Gain/Loss on deemed disposal of associate/subsidiary     IFRS 10                617 270              -                -   (4 953 624)
Deferred tax effect on deemed disposal of associate       IAS 12              (897 920)              -                -             -

     
Headline earnings                                                               190 019        139 133          455 516       119 085
Normalised headline earnings                                                    186 459         84 673           27 601       123 297
     
Headline earnings and diluted headline earnings per 
ordinary share (cents)                                                            38.67          28.32            92.71         24.24
Normalised headline earnings per ordinary share (cents)                           37.95          17.23             5.62         25.09
    

Reconciliation of reportable segments profit or loss    
                                                                               Unaudited      Restated        Unaudited       Audited
                                                                             28 February   29 February      28 February     31 August 
                                                                                    2019          2018             2017          2018
                                                                                   R'000         R'000            R'000         R'000
     
Total loss before tax for reportable segments                                  (498 148)       105 152          585 382     6 010 650
     
Taxation                                                                       1 044 363      (15 465)        (136 781)    (1062 789)
Profit from continuing operations                                                546 215        89 687          448 601     4 947 861
Profit from discontinued operations                                                    -        68 648                -       159 533
Profit for the period and total comprehensive income                             546 215       158 335          448 601     5 107 394

Divisional performance

Fishing and brands

The fishing and brands division delivered a strong performance for the period under review with revenue increasing by 56% and operating 
profit increasing by 92% compared to the prior period. The increase in operating profit is mainly  attributable to the excellent catches
and strong sales performance of the squid division, which was offset by the lower operational performance of the lobster division with low 
landings being experienced and the expected performance from pelagic division. 
 
The abalone division continued to focus on its expansion plans and have already increased its spat production from an average of 100 000 
spat per month to approximately 200 000 spat. Sales volumes remained constant to that of the prior period, as the abalone farm continues to
strategically grow out it's abalone to larger sizers in order to meet market demand, thereby maximising the value received for their abalone.
The farm expansion project is on track as planned.

Technology

The information and communications technology ("ICT") subsidiary, AYO Technology Solutions Limited ("AYO") is one of the largest 
Broad-Based Black Economic Empowerment ("B-BBEE") information and communications technology ("ICT") companies in South Africa. AYO delivers
end-to-end ICT solutions to multiple industries in South Africa's public and private sectors through strategic partnerships. These 
partnerships enable them to service customers across the African continent, North America, Europe and Mauritius. 

The ICT subsidiary achieved significant growth in profit after tax and for the first four months of the interim period, this contributed
significantly to the Group's profit from equity accounted investments. In addition to that, due to the change in control (as referred to
under "Significant Events"), the ICT investment was treated as a subsidiary from the 21st of December 2018 and two months of trading 
revenue and expenses was consolidated into the Group's results. AYO achieved significant organic growth in its various businesses and its
acquisition growth is strong as it builds on its platforms driven by its "Go to Market" strategy. 

AEEI's associate investment in BT Communication Services SA Proprietary Limited continually produces consistent earnings and it contributed
positively to the Group's profit from equity accounted investments.

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 revenue from the health and beauty business slowed down in the first half of the year due to subdued customer and consumer demand in the
current economic climate. Management expects an improvement in the businesses in the second half of the year.

Biotechnology

Genius Biotherapeutics, one of Africa's largest medical biotechnology companies, in collaboration with research partners at the University 
of Cape Town strive to start the clinical trials on breast cancer in the next few months.

The dendritic cell vaccine project progressed with the completion of the clean rooms at the University of Cape Town in preparation for the 
upcoming human clinical trials.

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 Proprietary Limited 
("Magic 828")(managed under the corporate division).

espAfrika a Group subsidiary, hosted a very successful 20th Cape Town International Jazz Festival post interim period. The company's 
performance for the six months is as expected as espAfrika hosts most of its events during the second half of the financial year. 

Magic 828 which has been in existence for just over 3 years and contributed to the Group's gross revenue for the period and with its 
extensive marketing campaign has seen its listenership consistently increasing over the interim period.

Under the current economic climate, Tripos Travel managed its cost structure under declining revenue and remains positive that it will 
achieve break even in the second half of the year.

Strategic investments

The Group's strategic investments consist of: Pioneer Foods Group Limited ("Pioneer"), Sygnia Limited ("Sygnia"), Saab Grintek Defence 
Proprietary Limited ("SGD") and BT Communications Services South Africa Proprietary Limited ("BT") which is now reported under the 
technology division / segment.

AEEI has minority equity stakes in SGD, Sygnia and Pioneer. 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.All of The Pioneer
Food Limited Food's shares were disposed of on the 15th of March 2019 and all of the Quantum Food shares are expected to be disposed of on
or before the 31 May 2019. Refer to Events after Reporting period for full details.


Significant events

Change in control - associate becomes a subsidiary

During the interim period, the Group regained control over AYO as defined by IFRS 10, and subsequently consolidated AYO from the date of 
control being 21 December 2018. The change in control stemmed from AEEI ability to direct the relevant activities of AYO based on the 
IFRS 10 assessment.

The fair value calculation of the rights to customer contracts, work force, and assets are provisional. The provisional fair values of 
the identifiable assets and liabilities are show below:        

Property, plant and equipment                                     95 633         
Goodwill                                                          90 871
Intangible assets                                                 22 369
Investment in associate                                          145 211
Other financial assets                                           918 377
Deferred tax                                                      48 010
Inventories                                                      111 642
Trade and other receivables                                      326 627
Cash and cash equivalents                                      3 341 216
Trade and other payables                                       (285 844)
Other financial liabilities                                     (53 686)
Provisions                                                      (18 669)
Current tax payable                                             (57 867)
Total identifiable net assets                                  4 683 890

 
Non-controlling interests                                    (2 371 922)
Fair value of previously held interest                       (4 008 857)
Goodwill                                                       1 696 889
Total                                                                  -

Net cash outflow on acquisition date: 
Cash consideration paid                                                -
Cash acquired                                                  3 308 684
Net cash inflow                                                3 308 684

Goodwill is attributable to the strong position and profitability in AYO Technology Solutions trading in the technology market and 
additional customer contracts and are additional acquisitions are expected to arise in the future.

Revenue of R356m has been included in the Group`s trading results since the effective date.
 
Acquisition of subsidiary during the period
On 9 February 2019, the AEEI Group concluded the acquisition of an effective 80% shareholding in Saab Grintek Technologies Proprietary
Limited, now known as SGT Solutions Proprietary Limited ("SGT Solutions") via a special purpose vehicle, Main Street 1653 Proprietary 
Limited for a purchase consideration of R100m. The consideration includes a cash portion of R60m and a contingent consideration of R40m,
if the company achieves profit warranties for the next two years.

SGT Solutions is a turnkey solutions integrator specialising in the design, supply, deployment, commissioning and maintenance of multi-
technology telecommunication systems for mobile broadband and converged solutions, through partnerships with their customers and 
technology providers. The company specialises in integrated, leading-edge and comprehensive solutions across the entire spectrum of 
telecommunications. The company earns annual revenue in excess of R450m for the full year commencing 1 January 2018 and generates
profit of R26m annually. 

The fair value calculation of the acquired rights to customer lists, work force, brand and assets are provisional. The provisional fair
values of the identifiable assets and liabilities are shown below:

Property, plant and equipment                                      3 179
Intangible assets                                                 26 594
Deferred Tax Assets                                               14 186
Inventories                                                       65 090
Trade and other receivables                                       53 028
Other financial assets                                             3 845
Current tax payable                                                  765
Cash and cash equivalents                                         25 861
Other financial liabilities                                      (8 550)
Trade and other payables                                        (85 389)
Provisions                                                      (15 159)
Total identifiable net assets                                     83 451
 
Non-controlling interests                                       (16 691)
Goodwill                                                          21 514
Total purchase price                                              88 274
 
Consideration paid 
Cash                                                              60 000
Present value of contingent consideration                         28 274
 
Net cash outflow on acquisition date: 
Cash consideration paid                                         (60 000)
Cash acquired                                                     25 861
Net cash outflow                                                (34 139)

The acquisition related costs of R1.3m have been included in the operating expenses in the statement of profit and loss and other 
comprehensive income.

Goodwill is attributable to the strong position and profitability in SGT Solutions trading in the telecommunications market and synergies
are expected to arise after the Company's acquisition of the new subsidiary. 

Revenue of R41.2m has been included in the Group`s trading results since the effective date.

Restatement of the prior period

The Group held an 80% equity interest in AYO as at 31 August 2017. On 21 December 2017 AYO listed on the main board of the Johannesburg
Stock Exchange (JSE), whereby AYO issued shares under a private placement resulting in a further dilution of the Group's shareholding to
49.36%. For the interim financial statements for the period ended 28 February 2018 management was of the view that the Group lost control
of its subsidiary. The effective date of this loss of  control was 21 February 2018. Subsequent to 28 February 2018, it was assessed that
the effective date of this loss of control was 24 August 2018. Therefore, for the six months period ending 28 February 2018, AYO was still
a subsidiary within the Group and not an associate as previously stated. This error of judgment has been classified as a prior period error,
requiring a retrospective restatement of the interim financial statements for the period ended 28 February 2018. The above restatement had 
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:

                                                                                                                                   
                                                                           Restatement of    
                                                                            investment in       
                                                            As previously    associate to          
R'000                                                              stated      subsidiary         Restated
28 February 2018 
Consolidated Statement of Financial Position 

Assets 
Non-current assets                                              8 932 902     (6 899 681)        2 033 221
Property, plant and equipment                                     189 584           6 729          196 313
Goodwill                                                           41 216          41 724           82 940
Intangible assets                                                 371 284          13 276          384 560
Investment in associate                                         7 774 204     (6 964 268)          809 936
Other financial assets                                            494 597           1 122          495 719
Deferred tax                                                        8 306           2 066           10 372
Current assets                                                    762 762       4 441 984        5 204 746
Inventory                                                          57 679          37 546           95 225
Other loans receivable                                             11 297           2 558           13 855
Current tax receivable                                                231             680              911
Trade and other receivables                                       168 407         158 919          327 326
Cash and cash equivalents                                         469 275       4 242 281        4 711 556
Total assets                                                    9 695 664     (2 457 687)        7 237 967
         
Equity and liabilities        
Reserves                                                            8 029          11 809           19 838
Retained earnings                                               7 915 389     (8 265 416)        (350 027)
Non-controlling interest                                          684 321       5 640 033        6 324 354
Equity attributable to equity holders of parent                 8 326 595     (1 929 253)        6 397 342
         
Liabilities    
Non-current liabilities                                           460 998           1 985          462 983
Other financial liabilities                                       241 887              38          241 925
Deferred tax                                                      218 323            (96)          218 227
Other non-current liabilities                                         788           2 043            2 831
Current liabilities                                               223 750         130 006          377 642
Trade and other payables                                           99 932         153 893          229 939
Other financial liabilities                                        16 947           4 718           21 665
Current tax payable                                                30 563           4 155           34 718
Provisions                                                         10 073          11 733           21 806
Other current liabilities                                              78             252              330
Bank overdraft                                                     66 157           3 027           69 184
Total equity and liabilities                                    9 695 664     (2 457 697)        7 237 967
Net asset value per share (cents)                                 1694.67      (1 679.82)            14.86
    
Consolidated Profit and Loss and Other Comprehensive Income        
Other operating expenses                                        (166 834)        (57 697)        (224 544)
Gain on deemed disposal of subsidiaries                         8 195 907     (8 195 907)                -
Profit before tax                                               8 442 571     (8 253 605)          188 968
Taxation                                                         (30 633)               -                -
Profit from continuing operations                               8 411 938     (8 253 603)           89 687
Profit from equity accounted investments                           29 377               -           29 377
Profit for the year                                             8 411 938     (8 253 603)          158 335
Total comprehensive income                                      8 411 933     (8 253 603)          158 335
Basic and diluted earnings per ordinary share (cents)            1 708.13      (1 679.81)            28.32
Headline earnings per ordinary share (cents)                        40.06         (11.74)            28.32
    
Condensed Group Statement of Cash Flows    
Cash generated by operations                                       13 823        (70 034)         (56 211)
Net cash flows from operating activities                           42 545        (69 993)         (27 448)
Deemed disposal of business and sale of business              (4 239 253)       4 239 253                -
Net cash flows from investing activities                      (4 323 666)       4 239 253         (84 413)

Change in ownership                                             4 195 286     (4 195 286)                -
Proceeds from share issue                                               -       4 265 280        4 265 280
Net cash flows from financing activities                        4 103 737          69 994        4 173 731

Cash and cash equivalents at the end of the period                403 118        4 239 254       4 642 372
 


Investment in BT associate               

The objective of a fair value measurement is to estimate the price at which an ordinary transaction to sell the asset or to transfer the
liability would take place between market participants at the measurement date under current market conditions. This is a difficult
process as it requires making judgments about future expectations. When management originally considered the fair value of the investment
in BT, they relied on what they deemed to be reliable information. 

During the financial year-end period ending 31 August 2018, it came to management's attention that the information was not reliable as
initially applied. Management obtained an external independent valuation which reflected a much higher amount than what was disclosed in
the interim financial statements as at 28 February 2018. This error of judgment has been classified as a prior period error, requiring a 
retrospective restatement of the interim financial statements for the period ended 28 February 2018. The annual financial statements at
31 August 2018 were corrected after the valuation was adjusted.

Events after reporting period

Acquisition of subsidiary
On 13 December 2018, AEEI acquired 76% of the ordinary share capital in Global Command and Control Technologies Proprietary Limited 
("GCCT"). GCCT purchased the command, control, training and simulation business as a going concern from Saab Grintek Defence Proprietary 
Limited for a cash consideration of R23m. The effective date of the transaction when the conditions precedent was fulfilled is 1 March 
2019. AEEI acquired this business to strengthen its intellectual asset base and to expand its footprint into Africa as part of its 
strategic objectives.

A reasonable estimate cannot be made on the financial effects on the AEEI Group as it is impracticable to obtain provisional financial
information.

Disposal of the Pioneer Foods Group Limited investment
On 26 February 2019, the AEEI Board of directors accepted the non-binding offer by Pioneer Foods Group Limited to repurchase 1 589 998 
Pioneer Foods shares in Pioneer Foods Limited and 1 598 998 Quantum Foods shares in Quantum Foods Holding Limited for the purchase 
consideration of R78.19 and R3.30 per share respectively. The proceeds will be used to redeem all outstanding liabilities in respect 
of the A preference shares and B preference shares as well as settle all outstanding dividends on the latter shares. 

The financial impact on AEEI is the net proceeds received from the disposal of the Pioneer Foods shares, before any tax liability, 
amounts to R12 750 856 on the effective date, being 15 March 2019. The regulatory approval of the repurchase of the Quantum Foods 
shares has not yet been obtained as at the reporting date and the disposal effective date is expected to be before 31 May 2019.
The Pioneer transaction has been disclosed as Non-current assets held for sale in the Group Statement of Financial Position.

Share repurchases

During the interim period, and as approved at the AGM relating to general share repurchase, the Company bought back 317 000 shares 
representing 0.06% of the total shares in issue prior to the repurchase. The shares were purchased at an average price of R2.95 per 
share for a total cash consideration of R 936 887.


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 2019, the Group held the following instruments measured at fair value:
                                                                  Level 1         Level 2        Level 3          Total
2019                                                                R'000           R'000          R'000          R'000
Listed shares                                                     186 671               -              -        186 671
Unlisted shares                                                         -               -        250 367        250 367
Biological assets                                                       -               -         68 021         68 021
Total                                                             186 671               -        318 388        505 059

                                                                  Level 1         Level 2        Level 3          Total
2018                                                                R'000           R'000          R'000          R'000
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

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

Reporting entity

African Equity Empowerment Investments Limited ("AEEI") is a Company domiciled in South Africa. These condensed consolidated interim 
financial statements as at and for the six months ended 28 February 2019 comprises AEEI the Company and its subsidiaries ("The Group") 
and its interest in associates and joint ventures. AEEI is a majority black-controlled entity, which holds interests in six sectors 
and promotes Broad-Based Black Economic Empowerment and sound corporate governance and ethical 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 2018.

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 interim 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 2019 are in terms of IFRS and are 
consistent with the accounting policies applied in the preparation of the previous consolidated annual financial statements, except
for adoption of accounting policies below.

The unaudited interim financial results were prepared by Christo Botes, financial manager, CA(SA), and Rufaro Chanakira, CA(SA),
financial controller, under the supervision of Chantelle Ah Sing, chief financial officer and were not reviewed or audited by the
Group's external auditors, BDO Cape Incorporated.

Accounting policies

During the current reporting period, the Group adopted the following newly effective standards for the first time which did not have 
a material impact on the annual financial statement:
-IFRS 9 Financial instruments
-IFRS 15 Revenue from contracts with customers

IFRS 9 Financial Instruments

The Group has assessed the impact of IFRS 9, including the application of the expected credit loss ("ECL") model for the measurement
of the impairment allowance of our trade and other receivables (through the application of the simplified approach) as well as other 
loans receivable using the provision matrix for measuring the loss allowance for receivables. For financial assets and financial
liabilities, the existing classification and measurement requirements of IAS 39 will remain the same under IFRS 9, except the loans
and receivables will be classified as financial assets at amortised cost.

The impairment of trade and other receivables are recognised under lifetime expected credit loss basis did not result in
a change in IAS 39 allowances due to the short-term nature of trade and other receivables. 

Based on the detailed impact assessment performed in the various divisions, the application of IFRS 9 had no significant
impact on the reported earnings or the financial position for the reporting period under review.

IFRS 15 Revenue from contracts with customers

IFRS 15 replaces all existing revenue requirements in IAS 18 and applies to all revenue arising from contracts with customers, 
unless the contracts are in the scope of the standards on leases, insurance contracts and financial instruments.
However, given the nature of revenue streams and contracts with customers, the adoption of the standard did not materially affect
the manner of revenue recognition, and therefore no transitional adjustment is required to the opening retained income at the date 
of the initial application. The Group will include enhanced revenue disclosures related to the nature and timing of the service 
obligations.

Transition Method
The Group has transitioned to IFRS 9 and IFRS 15 retrospectively, by using the cumulative effect of initial application as an 
adjustment to the opening retained income. Comparative information has therefore not been restated and continues to be reported 
under the previous applicable IAS 39 & IAS 18 standards. Based on the impact assessment above, no adjustment was required to adjust
the retained earnings or any financial statement items by the application of IFRS 9 and 15 on 1 September 2018.

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 and associate investments.

The AEEI Group continues to build on its solid platform for further organic growth and has positioned itself well to further increase
its investments by acquisition. Management continues to focus on the last year of its five-year strategic plan ("Vision 2020 Vision") 
and has firmed up its acquisition pipeline for both the fishing and brands and the technology division. 

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


Changes in the directorate    

At the Annual General Meeting ("AGM") held on 18 January 2019, Messrs AM Salie, TT Hove, JM Gaomab and Ms Barends did not make
themselves available for re-election at the AGM and voluntary elected to step off the Board and accordingly the requisite resolutions 
were withdrawn. 

Ms CF Hendricks voluntary elected to step off the Board as a director of the Company but continues her role as an executive in the 
capacity of Corporate Affairs and Sustainability.

Accordingly, Messrs AM Salie, TT Hove, JM Gaomab, Ms Z Barends and Ms CF Hendricks are therefore no longer directors to the Board 
effective 18 January 2019.

Mr I Amod was appointed as an independent non-executive director to the Board of AEEI effective 21 January 2019.

Reverend Dr VC Mehana resigned as an independent non-executive director and Chairman of the Board effective 14 March 2019, due to his
commitments as a director of other boards and is no longer a director of the AEEI Board. 

The Board further advises that Aziza Amod has been appointed as the acting chairperson and Advocate Dr Ngoako Ramatlhodi as the acting 
audit chairman.


Dividends

The Board of directors are pleased to announce that it has approved and declared an interim dividend of 11.00 cents per share for the 
six-month period ended 28 February 2019 from income reserves. The interim dividend amount, net of South African dividend tax of 20% 
which equates to 2.20 cents per share, is therefore 8.80 cents per share for those shareholders that are not exempt from dividend tax.


The number of ordinary shares in issue at declaration date is 491 022 434 and the income tax number of the Company is 9314001034.

The salient dates of this dividend distribution are:

Gross dividend (cents per share)                                   11.00
Dividend net of dividend withholding tax                            8.80
Last day to trade cum dividend                      Tuesday, 28 May 2019
Trading ex-dividend commences                     Wednesday, 29 May 2019
Record date                                          Friday, 31 May 2019
Date of payment                                      Monday, 3 June 2019

Share certificates may not be dematerialised or rematerialised between Wednesday, 29 May 2019 and Friday, 31 May 2019, 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.


Mrs Aziza Amod                                                     Mr Khalid Abdulla
Acting non - executive chairman                              Chief executive officer

Cape Town
9 May 2019

Directors
*Khalid Abdulla (chief executive officer); Aziza Amod (acting non-executive Chairman); *Chantelle Ah Sing; Ismet Amod (appointed 
18 January 2019) and Advocate Dr Ngoako Ramatlhodi *Executive directors*


Company secretary:     Damien Terblanche
Registered address:    1st Floor, North Block, Waterway House, 3 Dock Road, Victoria and Alfred Waterfront, Cape Town 8001
Email:                 damien@aeei.co.za
Transfer secretaries:  Link Market Services South Africa Proprietary Limited 19 Ameshoff Street,13th Floor, Rennie House, 
                       Braamfontein, Johannesburg 2001
Auditors:              BDO Cape Incorporated
                       6th Floor, 123 Hertzog Boulevard, Cape Town, 8001  
Sponsor:               Vunani Capital Proprietary Limited
                       Vunani House, Vunani Office Park, 151 Katherine Street, Sandown, Johannesburg, 2196



Date: 09/05/2019 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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