“We can anticipate and respond effectively because we have the foundation in place. Finance is embedded in the business and is a broad-scope function, which enables end-to-end process improvement and strong process integrity and controls.”

– Lain Macdonald, CFO, BP


We are in the final stages of wrapping up our Vision 2020 Vision journey. The Group separately listed both the technology and fishing and brands divisions, thus unlocking shareholder value in 2017 and 2018. This followed by several acquisitions and this led to doubling up of our revenue, cash EBIT and total assets in the five years. We concluded 2019 with a resilient performance that created consistent value for shareholders.

We succeeded in meeting most of our strategic objectives set out in our Vision 2020 Vision by achieving the visionary growth as set out in 2015 over our five-year journey depicted on pages 64 and 65. During the 2019 financial year, we continued with our acquisitive growth strategy through the acquisition of further technology businesses and utilising the capital from the fishing and brands listing to expand their businesses.

Our first strategic priority to leverage the investment portfolio – driving growth through acquisitions, was met. With the conclusion of the acquisitions of Zaloserve (Pty) Ltd, Mainstreet (Pty) Ltd and Global Command and Control Technologies (Pty), Ltd effective 19 December 2018, 28 February 2019 and 1 March 2019 respectively, we achieved our strategic objectives to grow our investment portfolio through acquisitions.

The second strategic priority was to maintain gross margins from our underlying operations and retain the Group’s margins within the targeted range. A change in product and business mix resulted in our margins decreasing below the target range of 30% to 35%. However, our businesses continued to grow in volume rather than in margin. The Group’s gross profit increased by 150% from R290m in the prior year to R725m in 2019.

Our third strategic priority for the Group was to improve social, governance and financial sustainability in our business in order to secure long-term growth and value creation for the Group. We continued to support an early childhood development facility – Where Rainbows Meet Training and Development Centre, to uplift the community in Vrygrond as part of our corporate social responsibility programme at AEEI.

As from 1 September 2018, the Group adopted the newly effective International Financial Reporting Standards (IFRS) standards: IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers. After the initial assessment, these did not have a material impact on the annual financial statements and only additional disclosures were included as required by the new standards.

We are delighted that transformation targets were met in AEEI as we retained our previous B-BBEE status from the prior year and maintained a Level 1 accreditation. Refer to the Sustainability Report for more information.

We believe that 2019 has been “business unusual” with the stakeholder scrutiny and an increase in audit and reputational risks. Yet we continued with our strategic focus to grow the businesses organically as well as through acquisitions for a sustainable future. Our investment portfolio grew by adding three additional businesses to the Group, increasing our total assets from R1.3bn in 2015 to the current R7.4bn.

After taking into consideration the once-off accounting loss and impairments, the loss before tax amounts to R2.4bn. The ordinary earnings attributable to AEEI shareholders declined to a R1.5bn loss, which translated to 304.09c loss per share. The headline earnings, which is adjusted for loss on disposal and impairments, is R495m against the prior year’s R119m earnings. An increase of 316% compared to the prior year reflects exceptional acquisition growth in the financial performance of the subsidiaries. The table on page 63 sets out the normalised view of profit before taxation after excluding the nonrecurring items and shows the adjusted profit achieved from the underlying divisions as R233m, an 117% increase from the prior year.

After 21 December 2018, the Group regained control over AYO Technology Limited (AYO), and subsequently consolidated AYO from the date of control as defined by IFRS 10 Consolidated Financial Statements. The change in control stemmed from AEEI’s ability to direct the relevant activities of AYO based on the IFRS 10 control assessment. AEEI’s investment in AYO was previously classified as an associate and was accounted for using the equity method in accordance with IAS 28.

AYO and its underlying subsidiaries were consolidated with effect from December 2018 and the disposal of the associate investment occurred at a fair value consideration of R2.3bn, realising an accounting loss of R2.4bn on the deemed disposal. The net revenue and expenses of the technology division were consolidated in the statement of profit and loss. Income from equity accounted investments includes a full year of our share of profits in BT Communication Services South Africa (Pty) Ltd as well as four months’ share of profits from the technology division.

Due to the muted outlook, we adopted a prudent approach to impair the potential value in the biotechnology division. The statement of profit and loss includes a R59m impairment charge as a result thereof.



The most significant event in the balance sheet was the consolidation of the assets and liabilities of the AYO Group of companies as this investment is now accounted for as a subsidiary at a fair value of R2.3bn. The change in control in the subsidiary is the major reason for the decrease in the ordinary equity to AEEI shareholders from R4.9bn to R3.3bn, as the decrease in value was accounted for against the statement of profit and loss.

On 26 February 2019, the AEEI Board of directors accepted the non-binding offer from Pioneer Foods Group Ltd (PFG) to repurchase 1 589 998 Pioneer Foods shares and 1 598 998 Quantum Foods Holding shares for the purchase consideration of R78.19 and R3.30 per share respectively. The proceeds were 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 by 27 May 2019. The financial impact on the Group of the net proceeds received from the disposal of the Pioneer Quantum Foods shares, before any tax liability, amounted to R17m.

On 30 June 2019, the technology division disposed of Acacia Cloud Solutions (Pty) Ltd, a subsidiary of Afrozaar (Pty) Ltd and AYO, for a consideration of R1.2m and realised a profit on disposal of R1.3m.


Non-current fixed assets increased by R197m in additional property, plant and equipment, mainly as a result of the R126m expansion of the abalone farm and vessel upgrades in the fishing and brands division as well as R106m additions from the technology division. The intangible assets increased from R277m to R293m, mainly due to the addition of R72m from the newly acquired subsidiaries and R49m of impairment from the biotechnology division. The increase in goodwill from R86m to R219m is mainly due to the acquisition of AYO and its subsidiaries.

Cash and cash equivalents increased substantially from R363m to R3.9bn at year-end. This is largely attributable to the cash included from the technology division and also includes cash on hand from all subsidiaries in the Group. Total current assets of almost R5bn includes the assets of AYO and its newly acquired subsidiaries.


The total liabilities decreased by 38% from R1 697m to R1 051m, which demonstrates the low gearing of the Group. The disposal of investments in the Group impacted the financial liabilities, which decreased from R226m to R126m and was mainly due to settlement of the preference share liability of R109m relating to the Pioneer Foods investment.

As a result of the investment in associate being disposed of, the deferred tax liability reduced from R1.2bn to R156m and is the major reason for the non-current liabilities decreasing from R1.4bn to R284m.


The net asset value (NAV) per share increased by 12% from 1 152.98c to 1 304.15c which is underpinned by the strong asset value from the underlying investments delivering a resilient performance. Over the past five years, the NAV per share grew at an annual growth rate of 138%.


Net cash generated from operating activities increased by 9% from R131m to R143m. Additional interest income affected the operating activities of the subsidiary operations. The strong operational performance from the fishing and brands division was offset by the cash utilised by the technology and events and tourism divisions, which reduced the cash generated from operations.

The investing activities were impacted by the business combination which amounted to R3.3bn, resulting from the change in control in AYO, together with the acquisitions in the technology division as well as the sale of financial assets. Capital expenditure of R45m was incurred for the existing fishing operations and R80m to expand the fishing operations is in line with the growth plans which played a significant part in our Vision 2020 Vision.

Shareholders were paid dividends amounting to R217m during the current year compared to R72m in the prior year, which reflects our commitment to increase our returns to our shareholders. We are committed to reducing our debt exposure by the repayment of our financial obligations of R161m (2018: R81m) during the year


AEEI returns value to its shareholders in the form of dividends and share price appreciation. We continue to reward our shareholders and accordingly increased our total gross dividend per share to 17c per share, an 11% increase from the prior year. The Board declared a final gross dividend of 6c per share based on the 2019 financial results on 23 December 2019. The share price closed at 165c at year-end and we expect this to increase further as the Group continues to meet its strategic objectives.

Share buybacks were approved by the Board of directors and the Company bought back 317 000 shares representing 0.06% of the total shares in issue. The shares were purchased at an average price of R2.95 per share for a total cash consideration of R936 887 and this reduced our share capital from 491 339 434 to 491 022 434 shares.





The AEEI Group incurred R156m (2018: R121m) in capital expenditure, which included R116m for the fishing and brands division and R25m related to assets from the technology division. Since the technology division’s listing in December 2017, the technology division acquired 55% in Zaloserve (Pty) Ltd, which holds 100% shareholding in Sizwe Africa IT Group (Pty) Ltd who have contributed R180m net assets to the Group and the other technology assets in SGT Solutions (Pty) Ltd and Global Command and Control Technologies (Pty) Ltd includes R93m in net assets.

As a result of the conclusion of these acquisitions, the Group experienced tremendous growth in revenue, and the acquisition strategy set out in the Vision 2020 Vision continues to return growth and sustainable shareholder value.


Investments of R80.6m were made during the year to construct the infrastructure at the abalone farm and to maintain the hatchery facility built in 2018 to grow additional animals and hold more stock. The stock holding increased by 16 tons from 145 tons to 161 tons, in preparation for the pipeline for the larger farm. The abalone division is on track to complete construction in the 2020 financial year.

espAfrika (Pty) Ltd’s management restructured the business to get the maximum returns from its business. espAfrika continues to deliver its renowned Cape Town International Jazz Festival – Africa’s Grandest Gathering. Further working capital was invested in Magic 828 (Pty) Ltd and Opispex (Pty) Ltd to increase revenue to obtain tangible returns in the short to medium term.

Our biotechnology division believes that the long-term dendritic cell vaccine project will advance the immunotherapy field in cancer treatment and further investment was made in the biotechnology division to own the intellectual property acquired from collaboration with the University of Cape Town and to commence phase 1 human trials next year.


Experiences in the external environment such as the decline in the financial market, socio-political uncertainties and greater stakeholder scrutiny, are factors out of our control which continue to have an impact on our ability to increase stakeholder value. The weakening of the rand increased our revenue generation in the fishing and brands division with an exchange gain earned of R4.9m, and the average dollar exchange rate achieved by the fishing and brands division is 14.10 against 13.42 in the prior year.

The weather conditions are continuously monitored to get the maximum number of seaworthy days in order to increase the catch rates for the fishing and brands division. Vessel planning and scheduling is key to ensuring efficient fishing volumes so that between 90% and 100% of the division’s lobster quota was caught by year-end. The diversification strategy to increase the squid division performance through acquisition enables the offset against the lower financial performance in the pelagic and abalone division.

The outcome of the fishing rights allocation process for the west coast lobster division was a decline of 44% in the total allowable catch and 4% for the south coast lobster division respectively for the 2018/2019 fishing season. Operational management continues to manage this area within their control and continues to engage with outside quota holders to increase their catch allocation.


As stakeholder scrutiny into our subsidiaries and the AEEI Group continued during the year, we held ourselves accountable to act in a virtuous manner and encourage our employees to keep their heads up high and be proud ambassadors for the Group and to look ahead to return value to stakeholders by growing sustainable businesses.

“The value of a business is a function of how well the financial capital and the intellectual capital are managed by the human capital. You’d better get the human capital right.”
— Dave Bookbinder

In a volatile, uncertain, complex and ambiguous world, we are required to keep up with the global and local competition and explore available opportunities to grow our investments and meet our strategic objectives. We remain committed to creating superior value for our stakeholders and improving our gross profits by reviewing the cost structures and operating efficiencies, and increasing our social, governance and financial impact on society and the economy.


I would like to congratulate all the financial teams in all the companies, subsidiaries and associates across the AEEI Group for their hard work, dedication and commitment to meet the challenging pressure to deliver quality financial information to our stakeholders. I express my thanks to our Board and executive management team for their ongoing guidance and support during a time of everchanging events and decisions. We also thank our external auditors, BDO South Africa Inc, for their long-term service and enduring support over a span of more than two decades.


AEEI is well positioned to anticipate and prepare for rapid change as it has built a solid agile foundation to grow further by improving its profitability and delivering greater value to its shareholders. Through our focused and disciplined approach in our investment philosophy, the Group has enabled good returns from our underlying investments.

Chantelle Ah Sing

Group Chief financial officer