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Interim results for period ended 31 December 2014 and dividend declaration
AfroCentric Investment Corporation Limited
Registration number 1988/000570/06
JSE Code: ACT
ISIN: ZAE 000078416, ZAE 000082269
(“AfroCentric” or “the Company” or “the Group”)
Reviewed Interim Results
FOR THE SIX MONTHS ENDED 31 DECEMBER 2014
AND INTERIM DIVIDEND DECLARATION
THE BOARD HAS PLEASURE IN PRESENTING THE GROUP’S REVIEWED RESULTS
FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER 2014.
First interim dividend of 10 cents per share
26.6% increase in profit after tax
29.4% increase in headline earnings
56.8% increase in cash generated from operations
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Unaudited Audited
six months ended six months ended year ended
31 December 2014 31 December 2013 30 June 2014
R’000 R’000 R’000
ASSETS
Non-current assets 853 115 1 387 912 881 257
Plant and equipment 96 522 97 113 100 143
Investment property 15 000 15 000 15 000
Intangible assets 623 314 989 780 603 152
Investment in associates 48 387 54 100 77 183
Investments – other 17 728 - -
Investment in preference shares - 100 000 -
Interest bearing loan - 63 652 -
Deferred income tax assets 52 165 68 266 85 779
Current assets 652 489 484 225 679 450
Trade and other receivables 212 059 138 774 190 828
Investment in preference shares 90 000 - 90 000
Inventory 4 610 - 4 610
Receivables from associates and joint venture 4 712 - -
Taxation 20 585 20 227 4 563
Cash and cash equivalents 320 523 318 225 389 449
Current portion on interest bearing loan - 7 000 -
Total assets 1 505 604 1 872 137 1 560 707
EQUITY AND LIABILITIES
Capital and reserves 1 083 633 1 409 074 1 070 968
Issued ordinary share capital 543 454 901 000 543 454
Share-based payment reserve 12 886 2 793 10 765
Treasury shares (2 324) (2 324) (2 324)
Foreign currency translation reserve 2 350 1 437 1 337
Distributable reserve 527 267 506 167 517 736
Non-controlling interest 45 899 54 540 52 634
Total equity 1 129 531 1 463 614 1 123 602
Non-current liabilities 178 476 261 139 215 994
Deferred income tax liabilities 11 024 39 044 43 188
Non-Current Borrowings 150 000 200 000 157 823
Non-Current Provisions 8 350 8 350 8 350
Post-employment medical obligations 3 440 3 551 3 202
Accrual for straight lining of leases 5 662 10 194 3 431
Current liabilities 197 596 147 385 221 111
Provisions 8 431 7 068 9 105
Trade and other payables 114 321 78 975 121 887
Employment benefit provision 74 844 61 342 90 119
Total liabilities 376 073 408 523 437 105
Total equity and liabilities 1 505 604 1 872 137 1 560 707
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Unaudited Audited
six months ended six months ended year ended
31 December 2014 31 December 2013 30 June 2014
R’000 R’000 R’000
Revenue 1 016 170 937 170 1 958 260
Operating costs (842 972) (792 479) (1 601 903)
Operating profit 173 198 144 691 356 357
Other income 1 452 4 995 2
Net finance income 9 507 5 384 17 699
Foreign exchange benefit 1 013 183 83
Share of associate profits - Jasco 396 1 889 2 805
Share of associate profits - Healthcare 1 246 759 1 536
Profit before impairment and amortisation 186 812 157 901 378 483
Impairment of associate (10 577) (7 884) 3 720
Impairment of intangible asset - - (40 620)
Share-based payment expense (2 120) (2 793) (10 765)
Depreciation (17 990) (20 236) (40 475)
Amortisation of intangible assets (21 177) (23 435) (43 907)
Profit before income tax 134 948 103 553 246 436
Income tax expense (36 862) (26 109) (75 692)
Profit for the period 98 086 77 444 170 744
Other comprehensive income - - -
Total comprehensive income for the period 98 086 77 444 170 744
Attributable to:
Equity holders of the Parent 94 758 71 153 153 823
Non-controlling interest 3 328 6 291 16 920
98 086 77 444 170 744
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Reviewed Unaudited
six months ended six months ended
31 December 2014 31 December 2013
R’000 R’000
Balance at beginning of the period 1 123 602 1 053 079
Issue of share capital - 544 450
Second Tranche payment - (26 740)
Share-based awards reserve 2 120 (46 432)
Reduction in contingent shares to be issued - (137 258)
Redemption of preference shares at par - (166)
Dividends paid by Medscheme Namibia (3 544) -
Dividends paid to Allegra minorities (849) -
Dividends declared/Distribution to shareholders (84 214) -
Net profit for the period 94 758 71 153
Profit attributable to minorities 3 328 6 291
Dividend paid to minorities of AHL (5 670) (763)
Balance at end of the period 1 129 531 1 463 614
EARNINGS ATTRIBUTABLE TO EQUITY HOLDERS
Reviewed Unaudited Audited
six months ended six months ended year ended
31 December 2014 31 December 2013 30 June 2014
R’000 R’000 R’000
Number of ordinary shares in issue 467 855 101 467 797 446 467 855 101
Weighted average number of ordinary shares 467 855 101 302 656 582 384 574 258
Weighted average number of shares for
diluted EPS 467 855 101 302 656 582 384 574 258
Note 1: The weighted average number of
shares in issue at 31 December 2014
is 54.6% greater than at 31 December 2013
Basic earnings 94 758 71 153 153 823
Adjusted by: 7 411 7 822 30 122
- Impairment of intangible assets - - 40 620
- Impairment/(reversal) of associate 10 577 7 884 (3 720)
- Loss/(profit) on disposal of assets 108 (62) 235
Total tax effects of adjustments (3 273) - (4 906)
Total NCI effects of adjustments - - (2 107)
Headline earnings 102 169 78 976 183 945
Earnings per share (cents)
- Attributable to ordinary shares (cents) 20.25 23.51 40.00
- Diluted earnings per share (cents) 20.25 23.51 40.00
Headline earnings per share (cents)
- Attributable to ordinary shares (cents) 21.84 26.09 47.83
- Diluted earnings per share (cents) 21.84 26.09 47.83
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Unaudited Audited
six months ended six months ended year ended
31 December 2014 31 December 2013 30 June 2014
R’000 R’000 R’000
Cash generated from operations 125 475 80 015 321 044
Net finance income 9 507 5 384 17 699
Distribution to shareholders (84 214) - (70 178)
Tax and other payments (56 941) (38 272) (126 624)
Net cash inflow in operating activities (6 174) 47 127 141 941
Net cash outflow from investing activities (55 943) (83 348) (62 940)
Net cash inflow from financing activities (7 823) (5 948) (49 846)
Effect of foreign exchange benefit 1 013 183 83
Net increase in cash and cash equivalents (68 926) (41 986) 29 238
Cash and cash equivalents at beginning
of the period 389 449 360 211 360 211
Cash and cash equivalents at end of the period 320 523 318 225 389 449
SEGMENTAL ANALYSIS
Reviewed Unaudited Audited
six months ended six months ended year ended
31 December 2014 31 December 2013 30 June 2014
Profit Profit Profit
before Total before Total before Total
Revenue tax assets Revenue tax assets Revenue tax assets
R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000
Healthcare
administration 1 017 196 159 087 1 276 537 937 170 128 888 1 303 263 1 959 760 271 884 1 308 762
Electronics
(including
investment
income) - 396 - - 1 889 - - 2 805 -
Treasury
activities - - - - 397 140 598 - - -
Other(including
inter-segment
elimination) (1 026) (24 535) 229 067 - (27 621) 428 276 (1 500) (28 253) 251 945
1 016 170 134 948 1 505 604 937 170 103 553 1 872 137 1 958 260 246 436 1 560 707
COMMENTARY
INTRODUCTION
The Board is pleased to present the Company’s reviewed interim results for the six months ended
31 December 2014. On a rand for rand basis, the Company has satisfactorily continued its trend of
growth as in past periods, this revealed inter alia, in an 8.4% increase in Revenue, a 29% increase
in headline earnings, a 26.6% increase in Profits after Tax with further information as set out
alongside this commentary. The dilution in Basic Earnings and Headline Earnings per share arise
primarily as a result of the increased weighted average number of shares in issue at 31 December 2014,
arising through shares issued for the “second tranche” payments at 31 December 2013, including the
shares issued on conversion of the Company’s Convertible Preference Shares which occurred on the
same date (refer to note 1).
ACCOUNTING POLICIES AND BASIS OF PREPARATION
The condensed consolidated financial statements for the six months ended 31 December 2014 are
prepared in accordance with the requirements of International Financial Reporting Standards
(“IFRS”), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee,
the JSE Limited Listings Requirements, and the South African Companies Act 71 of 2008, as amended.
The condensed consolidated financial statements are prepared on the historical cost basis and the
accounting policies are consistent with those adopted and applied for the year ended 30 June 2014
in terms of IFRS.
NATURE OF BUSINESS
AfroCentric is a black-controlled, diversified investment holding company. It is listed on the
exchange operated by the JSE Limited in the Healthcare sector under the code: ACT. AfroCentric
holds a substantial 94.1% majority stake in AfroCentric Health Limited (“AHL”). AHL owns 100%
of the issued share capital in Medscheme Holdings (Pty) Ltd (“Medscheme”), a multi-medical scheme
administrator and managed care provider. The Group also has a meaningful presence in various African
countries as well as Mauritius.
RECENT DEVELOPMENTS
The Board is pleased to report on the progress towards the finalisation of the two material
transactions, first announced to shareholders during September 2014. These relate to the acquisition
of the wholesale and courier pharmacy businesses belonging to WAD Holdings (Proprietary) Limited
(“WAD”) and the strategic investment by SANLAM Limited in a Group subsidiary, AfroCentric Health
Limited (“AHL”).
These transactions have progressed to the point where agreements in the case of WAD have been signed
and the suite of agreements on the SANLAM investment are expected to be completed within weeks
hereafter. Both transactions remain subject to certain Regulatory Approvals and conditions precedent
and these processes will be appropriately attended to. In the case of SANLAM, shareholder approval
is required and a circular will shortly be distributed in this regard. Accordingly, these results
were purposely reviewed, given that the circular to shareholders for the SANLAM transaction approval,
requires that these interim results be reviewed by the Company’s auditors.
The Jasco redeemable preference shares held by the Company were redeemed on 6 February 2015. The
R90 million received through this redemption were utilised to reduce AfroCentric’s loan with ABSA
from R150 million at 31 December 2014, to R60 million presently.
OTHER HIGHLIGHTS
Some notable achievements for the Group were the following:
- Medscheme, and in particular the Medscheme Health Intelligence Unit (“HIU”), was named a semi-
finalist at the recent Accenture Innovation Index Awards 2015; and
- Medscheme, the largest health risk management services provider and the third largest medical
scheme administrator in South Africa, dominated the 2014 PMR Awards scooping an impressive
14 awards, underlining its position as the country’s foremost managed healthcare firm.
- Helios has together with myCARE which is a Pretoria based Managed Healthcare organisation,
secured a contract with Government Employees Medical Scheme (“GEMS”) to provide the medical
claims clearing house functionality for its providers.
PROSPECTS
While economic indicators in South Africa at this time suggest a challenging period ahead, it is
nevertheless expected that the principal business of the Group will continue to generate positive
outcomes, particularly given that the acquisition of WAD and the strategic investment by SANLAM
will significantly expand the Group’s capital base and positively position the Group for further
growth.
DIRECTORS AND OFFICERS
There were no changes to the Board of Directors for the period under review. However, on
1 March 2015, Shireen Lutchan was appointed as Group Company Secretary, following the resignation
of Wilbert Mhlanga.
INTERIM DIVIDEND
The Board of Directors has pleasure in announcing that the Company’s first interim dividend of
10 cents per ordinary share (gross) has been declared for the six months ended 31 December 2014.
Dividends are subject to Dividends Withholding Tax. The payment date for the dividend is Monday,
18 May 2015. This interim dividend will constitute part of the Group’s annual dividend, to be
considered with the results at year-end.
- the dividends have been declared out of profits available for distribution;
- the local Dividends Withholding Tax rate is 15 %;
- the gross dividend amount is 10 cents per ordinary share;
- the net cash dividend amount is therefore 8.5 cents per ordinary share;
- the company has 467 855 101 ordinary shares in issue at 31 December 2014; and
- the company’s income tax reference number is 9600/148/71/3.
The salient dates relating to the dividend are as follows;
- Last day to trade cum dividend Friday, 8 May 2015;
- Shares commence trading ex dividend Monday, 11 May 2015;
- Dividend record date Friday, 15 May 2015; and
- Dividend payment date Monday, 18 May 2015.
Share certificates for ordinary shares may not be dematerialised or rematerialised between
Monday, 11 May 2015 and Friday, 15 May 2015, both days inclusive.
BASIS OF PREPARATION
The reviewed interim results have been prepared under the supervision of Mr WRC Holmes CA (SA),
in his capacity as the Group Chief Financial Officer. These results were purposely reviewed given
that the circular to shareholders for the SANLAM transaction approval, required that the interim
results be reviewed by the Company’s auditors SizweNtsalubaGobodo Inc and PricewaterhouseCoopers
Inc. Their review report is available at the Company’s registered office. Any reference to the
Group’s future financial performance has not been reviewed or reported on by the Group’s Auditors.
By Order of the Board
Shireen Lutchan
Company secretary
Johannesburg
30 March 2015
Directors
AT Mokgokong** (Chairperson), D Dempers (CEO)***, WRC Holmes (CFO)***, NB Bam*,
JM Kahn**, MJ Madungundaba**, Y Masithela*, G Napier*, J Appelgryn**, MI Sacks**
*independent non-executive **non-executive ***executive
Registered Office
37 Conrad Rd, Florida North 1709
Sponsor
Sasfin Capital (A division of Sasfin Bank Limited)
Date: 30/03/2015 11:53:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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