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Summary of audited final results and dividend declaration for the year ended 30 June 2015
AfroCentric Investment Corporation Limited
Incorporated in the Republic of South Africa.
Registration number 1988/000570/06
JSE Code: ACT
ISIN: ZAE 000078416
(“AfroCentric” or “the Company” or “the Group”)
Summary of audited final results and dividend declaration
For the year ended 30 June 2015
Profit before tax 13.40%
Cash generated from operations 23.65%
Dividend growth 11.11%
The Board of Directors has pleasure in presenting the Group’s audited
results for the year ended 30 June 2015.
Summarised consolidated statement of financial position
Audited Audited
as at as at
30 June 2015 30 June 2014
R’000 R’000
Assets
Non-current assets 991 080 881 257
Plant and equipment 102 639 100 143
Investment property 15 000 15 000
Intangible assets 744 487 603 152
Available for sale investment 18 444 –
Investment in associates 14 873 77 183
Deferred income tax assets 95 637 85 779
Current assets 569 738 679 450
Trade and other receivables 228 884 190 828
Investment in preference share – 90 000
Inventory 6 803 4 610
Current tax asset – 4 563
Cash and cash equivalents 334 051 389 449
Non-current asset held for sale 24 788 –
Total assets 1 585 606 1 560 707
Equity and liabilities
Capital and reserves 1 104 149 1 070 968
Issued ordinary share capital 543 454 543 454
Share-based payment reserve 20 160 10 765
Treasury shares (2 324) (2 324)
Foreign currency translation reserve 2 204 1 337
Distributable reserve 540 655 517 736
Non-controlling interest 62 930 52 634
Total equity 1 167 079 1 123 602
Non-current liabilities 86 252 171 117
Deferred income tax liabilities 54 822 43 188
Non-current borrowings – 112 946
Non-current provisions 8 350 8 350
Post-employment medical obligations 3 134 3 202
Accrual for straight lining of leases 19 946 3 431
Current liabilities 332 275 265 988
Borrowings 61 224 44 877
Provisions 9 211 9 105
Trade and other payables 146 317 121 887
Taxation 4 418 –
Employment benefit provisions 111 105 90 119
Total liabilities 418 527 437 105
Total equity and liabilities 1 585 606 1 560 707
Summarised consolidated statement of changes in equity
Audited Audited
year ended year ended
30 June 2015 30 June 2014
R’000 R’000
Balance at beginning of the period 1 123 602 1 053 079
Issue of share capital – 186 743
Second Tranche payment – (26 744)
Share-based awards reserve 9 395 10 765
Reduction in share based awards reserve – (49 225)
Reduction in contingent shares to be issued – (137 258)
Distribution to shareholders (130 999) (70 178)
Net profit for the period 154 785 153 823
Profit attributable to minorities 24 742 16 920
Distribution to AHL minorities (14 446) (14 323)
Balance at end of period 1 167 079 1 123 602
Summarised consolidated statement of cash flows
Audited
Audited year ended
year ended 30 June 2014
% 30 June 2015 (Restated)*
change R’000 R’000
Cash generated from operations 23.65 396 996 321 044
Net finance income 18 802 17 699
Distribution to shareholders (145 445) (84 501)
Tax and other payments (92 958) (85 557)
Net cash inflow in operating
activities 177 395 168 685
Net cash outflow from investing
activities (137 061) (62 940)
Net cash outflow from financing
activities (96 599) (76 590)
Effect of foreign exchange benefit 867 83
Net increase in cash and cash
equivalents (55 398) 29 238
Cash and cash equivalents at
beginning of the period 389 449 360 211
Cash and cash equivalents at end of
the period 334 051 389 449
* The cash flow statement has been restated as a result of a JSE Proactive
Monitoring process. Full details relating to this will be published in the
Group Annual Financial Statements once the Integrated Annual Report is
released on SENS.
Summarised consolidated statement of comprehensive income
Audited Audited
year ended year ended
% 30 June 2015 30 June 2014
change R’000 R’000
Revenue 7.15 2 098 312 1 958 260
Operating costs (1 726 240) (1 601 903)
Other income
Net finance income 18 802 17 699
– Finance income 28 799 34 246
– Finance cost (9 997) (16 547)
Dividend received in specie 17 729 –
Share of associate profits – Jasco 396 2 807
Share of associate profits –
Healthcare 912 1 536
(Impairment)/reversal of impairment (36 697) 3 720
– Impairment of investment in Jasco (21 792) 3 720
– Impairment of investment in Kenya (14 905) –
Impairment of intangible asset – (40 620)
Share-based payment expense (9 395) (10 765)
Depreciation (35 727) (40 475)
Amortisation of intangible assets (48 734) (43 907)
Profit before income tax 13.40 279 358 246 353
Income tax expense (100 584) (75 692)
Profit for the year 178 774 170 661
Other comprehensive income 753 83
Total comprehensive income for the
year 179 527 170 744
Attributable to:
Equity holders of the Parent 154 785 153 823
Non-controlling interest 24 742 16 920
179 527 170 744
Earnings attributable to equity holders
Audited Audited
year ended year ended
% 30 June 2015 30 June 2014
change R’000 R’000
Number of ordinary shares in issue 467 855 101 467 855 101
Number of preference shares in issue – –
Weighted average number of ordinary
shares 21.66 467 855 101 384 574 258
Weighted average number of shares for
diluted EPS 467 855 101 384 574 258
Basic earnings 154 785 153 823
Adjusted by: 36 883 37 135
– Impairment of intangible assets – 40 620
– Impairment/(reversal) of investment 21 792 (3 720)
in Jasco
– Impairment of investment in Kenya 14 905 –
– Loss on disposal of tangible assets 186 235
Total tax effects of adjustments (10 327) (4 906)
Total NCI effects of adjustments (1 567) (2 107)
Headline earnings 179 774 183 945
Earnings per share (cents)
– Attributable to ordinary shares
(cents) 33.08 40.00
– Diluted earnings per share (cents) 33.08 40.00
Headline earnings per share (cents)
– Attributable to ordinary shares
(cents) 38.43 47.83
– Diluted earnings per share (cents) 38.43 47.83
Cash earnings per share
– Attributable to ordinary shares
(cents) 84.85 83.48
– Diluted earnings per share (cents) 84.85 83.48
Segmental analysis
Audited year ended 30 June 2015
Segment Reporting
Profit
Revenue before tax Total assets
R’000 R’000 R’000
Healthcare SA 1 913 529 227 581 2 013 236
Healthcare Africa 157 818 56 056 126 357
Total Healthcare 2 071 347 283 637 2 139 593
Information Technology 401 454 33 663 465 035
Other (including inter-segment
elimination) (374 489) (37 942) (1 019 022)
2 098 312 279 358 1 585 606
Restated 30 June 2014
Segment Reporting
Profit
Revenue before tax Total assets
R’000 R’000 R’000
Healthcare SA 1 790 698 159 704 2 027 164
Healthcare Africa 142 146 46 648 99 110
Total Healthcare 1 932 844 206 352 2 126 274
Information Technology 366 132 59 202 292 920
Other (including inter-segment
elimination) (340 716) (19 201) (858 487)
1 958 260 246 353 1 560 707
Commentary
Accounting policies and basis of preparation
The summary consolidated financial statements are prepared in accordance
with the requirements of the JSE Limited Listings Requirements for
provisional reports, and the requirements of the Companies Act applicable
to summary financial statements. The Listings Requirements require
provisional reports to be prepared in accordance with the framework
concepts and the measurement and recognition requirements of International
Financial Reporting Standards (“IFRS”) and the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards Council and
to also, as a minimum, contain the information required by IAS 34 Interim
Financial Reporting. The accounting policies applied in the preparation of
the consolidated financial statements from which the summary consolidated
financial statements were derived are in terms of IFRS and are consistent
with those accounting policies applied in the preparation of the previous
consolidated annual financial statements.
Nature of business
AfroCentric Investment Corporation Limited (“AfroCentric”) is a black-
controlled, diversified investment holding company. It is listed on the
Johannesburg Stock Exchange (“JSE”) in the Healthcare Sector under the
code: ACT.
AfroCentric holds a substantial 94.10% majority stake in AfroCentric
Health Limited (“AHL”). AHL owns 100% of the issued share capital in
Medscheme Holdings (Pty) Limited (“Medscheme”), a multi-medical scheme
administrator and managed care provider. As the largest health risk
management services provider and third largest medical scheme
administrator in South Africa, Medscheme’s focus is to achieve
sustainability through innovation, effective health risk management,
complemented by a relentless drive for operational and service excellence.
Medscheme now has over 3.2 million lives under management with several
years experience in managing the Government Employees Medical Scheme
(“GEMS”).
Although Medscheme is essentially a South African enterprise, the Group
has a presence in Botswana, Namibia, Mauritius, Swaziland, Kenya and
Zimbabwe. Medscheme’s operations in Mauritius provides a platform for
further international expansion and AHL continues to explore other
opportunities on the African continent and elsewhere.
In addition to the conventional but impressive health management
infrastructure, specialised healthcare support services are provided to
the group by Allegra, Helios and other subsidiaries, including to a number
of third party clients.
Operational review
While profits before taxation improved by 13.40% to R279 358 million for
the year under review, attributable earnings have for the first time been
subjected to the fully dilutive impact of the significant number of shares
issued for the redemption of the preference shares and second tranche
payments. The results of this extraordinary factor is that earnings per
share and headline earnings per share have both reduced by less than 20%
as set out separately in this announcement. The marginal growth in
operating profit is partly the result of the Group’s costly expenditure
into more IT and clinical skills so as to create an expanded health
management platform and capacity for the foreseeable future. Membership
resignations in GEMS also had an effect on the growth in revenues and
operating profit.
The Road Accident Fund (“RAF”) contract for claims management was awarded
to the Group during the 2014 financial year and while much of the start up
and employee costs have been absorbed since the award was made, the
service is only expected to generate a contribution to profits during the
ensuing year.
During the year, the Group announced a strategic partnership that
establishes South Africa’s leading fraud management solution for
healthcare. The partnership sees AfroCentric’s healthcare IT services
subsidiary, Helios and global analytics software provider, FICO,
collaborating to offer an industry-leading fraud management and payment
integrity platform to all interested medical schemes in Southern Africa.
Deployed through Helios, it will dramatically enhance a medical schemes’
ability to detect, review, and investigate suspicious claims by scheme
members and service providers and set a standard in South Africa for cost-
effective quality healthcare with integrity. This latest partnership with
FICO is a meaningful step towards detecting and solving industry-wide
financial losses through fraud and system abuse.
The Group has provided for an impairment loss of R21 million due to the
decline in Jasco’s share price at year-end. Management has recommended the
disposal of the investment within the next 12 month period and has
accordingly classified the asset as a “Non-current asset held for sale”.
Recent developments
An update of recent developments is provided below:
WAD
Agreements were concluded for the acquisition of various WAD businesses,
the principal enterprise being Pharmacy Direct which is a designated
service provider to a wide range of South African medical aid schemes. The
business supplies chronic medication under prescribed minimum benefits and
normal chronic benefits to approximately 110 000 patients nationally.
Pharmacy Direct was awarded a tender in terms of which chronic medication
is dispensed on behalf of Government to districts in five of South
Africa’s nine provinces.
Sanlam
An agreement was also concluded with SANLAM Limited for their investment
in AfroCentric Healthcare Assets a wholly owned subsidiary of AfroCentric.
At this time almost all regulatory requirements have been approved and we
are not expecting any to be declined. The commencement of this
relationship is a proud moment, for AfroCentric, given that Sanlam is one
of the largest financial services groups in South Africa and that they
have chosen AfroCentric with a view to developing initiatives into
healthcare. It is intended that, the investment by Sanlam will inter alia,
facilitate a platform for the joint pursuit and expansion of the Group’s
traditional activities, as part of an expanded administration and managed
healthcare business model.
South African Police Medical Scheme (“POLMED”)
AfroCentric has been fortunate to have been awarded the tender for both
the Administration and Managed Care contracts, with services commencing in
January 2016. Polmed Medical Scheme is one of the largest and most
prestigious closed schemes in South Africa with approximately 180 000
principal members. We are indeed honoured to have won the tender for these
contracts and look forward to providing Polmed with our range of quality
services for which we are now well-known and recognised.
All of the above recent developments, will instill positive synergies to
the Group’s general value proposition for all stakeholders, inter alia,
adding scale, enhancing marketing and distribution channels, significantly
expanding its capital base and positively positioning the Group for
accelerated growth.
Prospects
After several years of hard work in a fiercely competitive market,
AfroCentric have not only developed a successful and sustainable business,
but in association with its new business partners, its new and expanding
client base and the continuing improvements in system technologies, the
Group is mindful of its opportunity for potential growth and expansion.
While the Board is generally cautious about measuring future prospects,
the developments recorded herein are encouraging features for the Group’s
overall business going forward.
Changes in directors
Subsequent to the year under review, the following changes were made to
the Board which are effective from 1 August 2015:
– Mr Wallace Holmes retired as Group Chief Financial Officer and as an
Executive Director.
– Mr Hannes Boonzaaier was appointed as Group Chief Financial Officer.
– Mr Willem Britz was appointed as an Executive Director of AfroCentric.
Mr W Mhlanga resigned as Group Company Secretary on 31 January 2015.
Subsequently, Ms S Lutchan was appointed with effect from 1 March 2015.
Dividends
The Board of Directors has pleasure in announcing that in addition to the
interim dividend already declared and paid for the year, a final dividend
of 10 cents per ordinary share (gross) has been declared for the year
ended 30 June 2015. Dividends are subject to Dividends Withholding Tax. In
accordance with the provisions of the JSE Listings Requirements, the
following additional information is disclosed.
• 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 30 June 2015.
• the company’s income tax reference number is 9600/148/71/3.
The salient dates relating to both the ordinary and preference dividends
are as follows;
Last day to trade cum dividend Friday, 16 October 2015
Shares commence trading ex dividend Monday, 19 October 2015
Dividend record date Friday, 23 October 2015
Dividend payment date Monday, 26 October 2015
Share certificates for ordinary shares may not be dematerialised or
rematerialised between Monday, 19 October 2015 and Friday, 23 October
2015, both days inclusive.
Audit opinion
This summarised report is extracted from audited information, but is not
itself audited. The directors take full responsibility for the preparation
of this report and the financial information has been correctly extracted
from the underlying annual financial statements. The annual financial
statements were audited by PricewaterhouseCoopers Inc. and
SizweNtsalubaGobodo Inc. who expressed an unmodified opinion thereon. The
audited annual financial statements and the auditor’s report thereon are
available for inspection at the company’s registered office.
On behalf of the Board
Dr ATM Mokgokong Mr D Dempers
Chairperson Group Chief Executive Officer
Johannesburg
22 September 2015
Directors
ATM Mokgokong** (Chairperson), D Dempers (CEO)***, JW Boonzaaier (CFO)***,
NB Bam**, JM Kahn*, MJ Madungandaba**, Y Masithela*, GL Napier*,
JG Appelgryn**, MI Sacks*, WH Britz***
*independent non-executive **non-executive ***executive
Group Investor Relations
Shivani Ramdhani CA(SA)
Tel: 011 – 671 2475
shivanir@afrocentrichealth.com
Registered Office
37 Conrad Road
Florida North
Roodepoort, 1709
www.afrocentric.za.com
Sponsor
Sasfin Capital
(A division of Sasfin Bank Limited)
Company Secretary
S Lutchan
Date: 22/09/2015 11:08:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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