AEEI halves final dividend after a tough 2021 financial year
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AFRICAN Equity Empowerment Investments (AEEI) halved its final dividend to 10 cents a share in the year to August 31, 2021, even though it held a strong balance sheet with R2.3 billion in cash.
The total dividend for the year was up 33.3 percent to 40c. Net asset value per share decreased 12.25 percent to 1 102.54c after its investments were not spared from the negative impact of the pandemic on all global markets. The share price increased 53.9 percent to R1.40 in one deal on the JSE yesterday,
Chief executive Valentine Dzvova said yesterday that while Premier Fishing and Brands had performed well, the technology business struggled with the loss of a large contract, some contracts not being renewed upon maturity, and organisations spending less on their IT spend in the current pandemic environment.
She said AEEI had to implement restructuring and retrenchments, but this was after keeping some people employed for up to a year in some businesses in the face of no trade through the pandemic.
“We are a people-oriented group, we care for our people, but at the end of the day we are answerable to shareholders and we had to take a hard decision.” She said the group would continue to trade resiliently into the new financial year in the face of many uncertainties such as a possible pending fourth wave of the pandemic and pressures on the economy such as high unemployment and a rising petrol price.
“The short-term outlook on the financial performance is not as optimistic as before the pandemic and as a result we had to impair the value of some of the investments to reflect this new reality. Despite this slight reduction in the net asset value of the group, the group continues to have a strong balance sheet and liquidity which is bolstered by cash reserves of R2.3bn,” she said.
Premier Fishing and Brands, the fishing and brands division, delivered a good result after last year’s subdued results, with revenue up 27 percent. The technology division had a challenging year which consisted of loss of major contracts as well as a volatile economic landscape. As a result, AYO Technology Solutions’ revenue fell 42 percent to R1.7bn.
In line with its growth strategy, AYO acquired Kathea Communications in March 2021, becoming the largest distributor of headset equipment in Africa, and positioning AYO to capitalise on opportunities from work-from-home and other changes in workforce behaviour.
Orleans Cosmetics had a challenging year. However, it benefited from a reversal of impairment on intangible assets of R3.65 million as distribution agreements with overseas principals were renewed or extended.
AfriNat, which operates in three sectors, agriculture which includes pre-and post harvest, hygiene and sanitation, and food preservation, is focused on providing sustainable solutions in food production and processing from seed to table.
Before the Covid-19 pandemic lockdown in 2020, AfriNat had a spike in hygiene and sanitation sales, which subsequently reduced in 2021.
Revenue on the agricultural side grew by 15 percent and would have grown more had it not been for supply chain challenges that resulted in major delays of imported raw materials from Europe.
Climatic changes leading to late rains which pushed revenue into the 2022 financial year end, and pressure on margins also resulted in lower than anticipated revenue. AfriNat revenue for 2021 fell by 3.6 percent to R13.1m.
The research and development division, which is engaged in product development phases at different stages, including work on the dendritic cell vaccine for cancer immunotherapy and communicable diseases such as extreme drug – resistant tuberculosis, made little progress in 2021, mainly due to the second and third waves of the Covid-19 pandemic, which prevented work from being done at Groote Schuur Hospital.
Revenue from the events and tourism division decreased due to the pandemic restrictions, which led to the cancellation of events and large public gatherings. Staff retrenchments and streamlining of operating costs were necessary.
Magic 828 experienced a tumultuous year, with the Covid-19 pandemic continuing to negatively impact sales revenue leading to a decline in advertising income. Faced with the reality of constrained cash flows, the company had to cut expenses and right-size operations. Overall revenue in this division was R10m compared with R36m in 2020.
BUSINESS REPORT ONLINE