AEEI forced to impair investments in weak global environment

AFRICAN Equity Empowerment Investments’ (AEEI) headline loss per share (Heps) widened 68.36% to 37.16 cents from 22.07c a share for the year to August 31 as the weakening global economic environment and resulting disruptions impacted the operations and valuations of the group’s diversified investments.

Net asset value per share fell 9.9% to 993.32c per share from 1 102.54c per share.

The board did not declare a dividend.

The group’s directors said revenue fell slightly by 0.24% due to a challenging global economic environment characterised by increasing pressure on prices, resulting in lower margins and this, coupled with accounting adjustments on investments, led to an overall loss of R330 million.

The basic loss per share increased to 45.78c from a loss of 26.48c a share in 2021, mainly because of lower sales margins and increased operating expenses attributable to the prevailing global economic climate of increasing interest rates, as well as higher fuel and energy costs.

Heps declined due to higher onceoff net impairments and once these were eliminated, normalised headline earnings per share decreased to a loss of 2.56c per share from a loss of 0.14c per share in 2021.

The decline in net asset value meant the group’s investments had not been spared from the negative impact that the Covid-19 pandemic was having on all global markets, the directors said.

The short-term outlook on the financial performance was not as optimistic as before the pandemic and “as a result we had to impair the value of some of these investments to reflect this new reality.” The reduction of cash balances also contributed to the net asset value decrease.

On November 11 AEEI and Premier Fishing and Brands (PFB) announced that AEEI, with other related entities, were working on a transaction to buy out the minority shareholders in PFB, and delist the company.

This week AEEI’s listed technology company AYO Technology Solutions reported a 3% increase in revenue to R1.8bn, but its gross margin declined to 22% from 26%.

AEEI’s investment in British Telecom Services South Africa resulted in equity accounted earnings of R42m, while the strategic investment in Sygnia generated R5m in dividends for AEEI.