Wrap Text
Interim results and dividend declaration
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”)
AfroCentric Group
Unaudited Interim Results for the six months ended 31 December
2015 and interim dividend declaration
Operating profit up 19.42%
Sales and service revenue up 41.91%
Interim dividend growth up 20%
Summarised consolidated statement of financial position
Unaudited Reviewed Audited
six months six months year
ended ended ended
31 December 31 December 30 June
2015 2014 2015
R’000 R’000 R’000
Assets
Non-current assets 1 734 561 853 115 991 080
Property and equipment 159 689 96 522 102 639
Investment property 15 000 15 000 15 000
Intangible assets (Note 1) 1 417 866 623 314 744 487
Available for sale
investment 18 444 – 18 444
Investment in associates 33 039 66 115 14 873
Deferred income tax assets 90 523 52 165 95 637
Current assets 1 234 357 652 489 569 738
Trade and other receivables 348 628 216 770 228 884
Investment in preference
share – 90 000 –
Inventory 79 321 4 610 6 803
Current tax asset 27 916 20 585 –
Cash and cash equivalents 778 492 320 523 334 051
Asset held for sale 27 001 – 24 788
Total assets 2 995 919 1 505 604 1 585 606
Equity and liabilities
Capital and reserves 1 140 454 1 083 633 1 104 149
Issued ordinary share capital
and share premium (Note 4) 286 044 543 454 543 454
Share-based payment reserve 23 382 12 886 20 160
Treasury shares (2 324) (2 324) (2 324)
Foreign currency
translation reserve 7 370 2 350 2 204
Distributable reserve (Note 5) 825 982 527 267 540 655
Non-controlling interest 525 194 45 899 62 930
Total equity 1 665 648 1 129 532 1 167 079
Non-current liabilities 1 031 986 178 476 86 252
Deferred income tax
liabilities 163 518 11 024 54 822
Non-current borrowings – 150 000 –
Non-current provisions 8 350 8 350 8 350
Post-employment medical
obligations 3 134 3 440 3 134
Second tranche share issue
(Note 2) 135 970 – –
Right of redemption and
repurchase (Note 3) 703 000 – –
Accrual for straight lining
of leases 18 014 5 662 19 946
Current liabilities 298 285 197 596 332 275
Borrowings – – 61 224
Provisions 9 636 8 431 9 211
Trade and other payables 255 762 114 321 146 317
Taxation – – 4 418
Employment benefit
provisions 32 887 74 844 111 105
Total liabilities 1 330 271 376 072 418 527
Total equity and
liabilities 2 995 919 1 505 604 1 585 606
Note 1
Amortisation of intangible assets increased by R29.36 million arising
through the WAD asset acquisition and the IFM Fraud Detection Platform.
Amortisation Amortisation Carrying value
31 December 31 December 31 December
Intangible assets 2014 2015 2015
Goodwill –
AfroCentric Health – – 398 123
Goodwill – WAD – – 248 736
Customer
relationships – WAD – (16 824) 403 784
AfroCentric Health
intangible assets (21 177) (21 350) 275 202
IFM Fraud Detection
Platform – (12 542) 92 021
(21 177) (50 716) 1 417 866
Note 2
26 401 959 shares to the value of R135.9 million will be issued to
WAD vendors subject to certain profit thresholds being attained.
These shares will be issued during 2017 and the value thereof has
already been anticipated by inclusion in Intangible Assets.
Note 3
Sanlam acquired an effective 27% interest in AHL through AHA, for
R703 million. The acquisition agreement provides for a performance
warranty in AHL, any breach of which, entitles Sanlam to claim a
maximum additional 4.3% interest in the shares of AHA in
satisfaction of such claim. In the event that the claim
calculates at an amount in excess of 4.3%, Sanlam has a right to
require ACT to repurchase the shares owned by Sanlam at Sanlam’s
initial cost plus interest at the 90 day deposit rate from the
date of investment to the date of redemption. The Board do not
expect such conditions to arise, but International Accounting
Standards (IAS 32) dictates the disclosure of such circumstances
under Non-current liabilities, rather than Capital and reserves.
Note 4
The reduction in issued ordinary share capital and share premium,
while inclusive of the shares issued in connection with the
acquisition of the WAD assets, is reduced by the sum of
R703 million relating to the IAS 32 disclosure requirements
set out in Note 3 above.
Note 5
Distributable reserves increased by the extent of the period
profits including the amount of the profit on sale of the
AHA shares to Sanlam.
Summarised consolidated statement of comprehensive income
Unaudited Reviewed
six months six months Audited
ended ended year ended
31 December 31 December 30 June
% 2015 2014 2015
change R’000 R’000 R’000
Sales and service
revenue 41.91 1 442 067 1 016 170 2 098 312
Cost of sales and
operating costs (1 233 505) (841 520) (1 726 240)
Operating profit 19.42 208 562 174 650 372 072
Impairment of assets – (10 577) (36 697)
Net finance income 7 999 9 507 18 801
Fair value gain
on investment 3 231 – –
Share of associate
profits 2 469 1 642 19 037
Share-based
payment expense (3 222) (2 120) (9 395)
Profit before
depreciation and
amortisation 26.54 219 039 173 102 363 819
Depreciation (17 643) (17 990) (35 727)
Amortisation of
intangible assets
(Note 1) (50 716) (21 177) (48 734)
Profit before
income tax 12.50 150 680 133 935 279 358
Income tax expense (41 121) (36 862) (100 584)
Profit for the period 109 559 97 073 178 774
Other comprehensive
income 5 166 1 013 753
Total comprehensive
income for the period 16.96 114 725 98 086 179 527
Attributable to:
Equity holders
of the Parent 99 194 94 758 154 785
Non-controlling
interest 15 531 3 328 24 742
114 725 98 086 179 527
Earnings attributable to equity holders
Unaudited Reviewed
six months six months Audited
ended ended year ended
31 December 31 December 30 June
% 2015 2014 2015
change R’000 R’000 R’000
Number of ordinary
shares in issue 18.49 554 377 328 467 855 101 467 855 101
Weighted average
number of ordinary
shares 17.89 551 555 951 467 855 101 467 855 101
Weighted average
number of shares
for diluted EPS
(includes second
tranche share
issue) 577 957 910 467 855 101 467 855 101
Basic earnings 99 194 94 758 154 785
Adjusted by: 612 7 412 24 989
– Reversal of
impairment – 10 577 36 697
– Loss on disposal
of assets 928 108 186
Total tax effects
of adjustments (260) (3 273) (10 327)
Total NCI effects
of adjustments (56) – (1 567)
Headline earnings 99 806 102 170 179 774
Earnings per share
(cents)
– Attributable to
ordinary shares
(cents) 17.98 20.25 33.08
– Diluted earnings
per share (cents) 17.16 20.25 33.08
Headline earnings
per share (cents)
– Attributable to
ordinary shares
(cents) 18.10 21.84 38.43
– Diluted earnings
per share (cents) 17.27 21.84 38.43
Summarised consolidated statement of cash flows
Unaudited Reviewed
six months six months Audited
ended ended year ended
31 December 31 December 30 June
% 2015 2014 2015
change R’000 R’000 R’000
Cash generated
from operations 23 670 125 475 396 996
Net finance income 7 999 9 507 18 802
Distribution to
shareholders (64 969) (84 214) (145 445)
Tax and other
payments (69 893) (56 941) (92 958)
Net cash (outflow)/
inflow from operating
activities (103 193) (6 173) 177 395
Net cash outflow
from investing
activities (99 308) (55 943) (137 061)
Net cash inflow/
(outflow)from
financing
activities 641 776 (7 823) (96 599)
Effect of
foreign exchange
benefit 5 166 1 013 867
Net increase in
cash and cash
equivalents 444 441 (68 926) (55 398)
Cash and cash
equivalents at
beginning of the
period 334 051 389 449 389 449
Cash and cash
equivalents at
end of the
period 142.88 778 492 320 523 334 051
Summarised consolidated statement of changes in equity
Unaudited Reviewed
six months six months
ended ended
31 December 31 December
2015 2014
R’000 R’000
Balance at beginning of the
period 1 167 079 1 123 602
Issue of share capital (IFRS 3
measurement) 445 589 –
Share-based awards reserve 3 222 2 120
Distribution to shareholders (55 438) (84 214)
Net profit for the period 99 194 94 758
Profit attributable to minorities 15 531 3 328
Profit on sale of shares (AHA) 246 738 –
NAV attributable to Sanlam (AHA) 456 262 –
Right of redemption and
repurchase (703 000) –
Distribution to minorities (9 529) (10 063)
Balance at end of the period 1 665 648 1 129 531
Segmental analysis
Unaudited
six months ended
31 December 2015
Profit Total
Revenue before tax assets
R’000 R’000 R’000
Healthcare SA 968 743 110 414 3 342 946
Healthcare Africa 87 877 32 710 135 607
Healthcare Retail 355 515 13 582 236 146
Total Healthcare 1 412 135 156 706 3 714 699
Information technology 242 244 14 178 256 119
Other (including inter-
segment elimination) (212 312) (20 204) (974 899)
1 442 067 150 680 2 995 919
Reviewed
six months ended
31 December 2014
Profit Total
Revenue before tax assets
R’000 R’000 R’000
Healthcare SA 942 060 82 012 1 876 914
Healthcare Africa 77 166 25 724 102 690
Healthcare Retail – – –
Total Healthcare 1 019 226 107 736 1 979 604
Information technology 188 869 20 165 198 088
Other (including inter-
segment elimination) (191 925) 6 034 (672 088)
1 016 170 133 935 1 505 604
Audited
year ended
30 June 2015
Profit Total
Revenue before tax 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
Healthcare Retail – – –
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
Commentary
Introduction
The Board is pleased to present the Group’s interim results for
the six months ended 31 December 2015. The period under review was
characterised by the implementation of a number of activities within
the Group operations, permitting the finalisation of certain meaningful
and determining corporate actions. These included inter alia, the
accommodation, alignment and integration of the sizeable WAD Holdings
(Pty) Ltd (“WAD”) asset acquisitions, in particular, Pharmacy Direct,
the closing and pivotal admission of SANLAM Limited (“SANLAM”) into
the Group, the costly, but feasible acquisition and roll out of the
IFM Fraud Detection Platform and not least, the immense task and
expenditure incurred in preparation for the South African Police
Service Medical Scheme (“Polmed“) administration contract, which
went live and became income generative with effect from
1 January 2016. While each of these investment and operational
events are expected to be complementary and impact positively on
the Group’s principal business, the increased costs of investment
incurred for improved system and IT capacity, including the cost of
additional staff, accommodation and amortisation in the subject
period, makes it difficult to measure performance against that
reported in the prior comparable period.
Accounting policies and basis of preparation
The summarised consolidated financial statements for the six months
ended 31 December 2015 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. The summarised 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 2015 in terms of IFRS.
Nature of business
AfroCentric is a black-controlled investment holding company,
its investment portfolio primarily focused on services to the
healthcare sector. AfroCentric appears on the healthcare list
of companies on the exchange operated by the JSE Limited, under
the code ACT. The more significant Group assets include WAD
assets, the businesses of which, specialise in pharmaceutical
wholesaling and pharmaceutical courier distribution services.
The Group, inter alia, has a material controlling interest in
Medscheme through its interest in ACT Healthcare Assets (Pty)
Ltd (“AHA”). Medscheme is a multi-medical scheme administrator
and health risk solution provider. The Group also has a
meaningful presence in various African countries, as well
as Mauritius.
Recent developments
Reference has already been made about the WAD and SANLAM corporate
actions, including the appointment of Medscheme as the administrator
of POLMED. These enterprises, associates and new clients are expected
to add significant value to our South African businesses, providing
inter alia, user friendly medical scheme features and solutions by
delivering a more integrated offering, an example of which, is the
commencing SANLAM “Reality” loyalty programme to members of Bonitas
and Fedhealth. The POLMED medical scheme is Medscheme’s third largest
client with approximately 175 000 members.
Financial Performance
Profits before taxation increased by 12.5% for the period under review
amounting to R150.7 million (2014: R133.9 million). Apart from the
early unmatched cost to income deficiency in preparation for the
contractual services to POLMED, a significant increase in amortisation
was provided for the first time against the intangible asset value
arising on the WAD assets acquisition and the IFM Fraud Detection
Platform. Given the number of shares issued to WAD vendors for this
acquisition, diluted headline earnings per share for the period under
review declined by 20.92%. While forecasts of WAD stand-alone earnings
are likely to be marginally accretive, it is expected that the
intended synergetic co-operation within the Group, will more
meaningfully contribute to Group earnings going forward.
Other highlights
Below are some of the other notable achievements for the
AfroCentric Group:
* Swazimed administered by Medscheme in Swaziland has, for the
second consecutive year, won the PMR Diamond Arrow Award in the
Best Medical Aid in the country category.
* The Group has made great strides in the technology space such as the
Electronic Health Patient Record which will be implemented during 2016.
* The Group received the sum of R703 million, being the proceeds of
the sale to SANLAM of an effective 27% in AfroCentric Health
Limited (“AHL”).
* The implementation of the IFM Fraud Detection Platform to our
medical aid schemes to enhance the detection of fraudulent claims.
* The achievement of a level two BEE accreditation based on the
new BBBEE codes.
* The Group is completely debt free with significant cash resources to
finance future growth, potential mergers and acquisitions.
* An initiative has commenced to acquire all the shares in AHL, not already
owned by AHA, from the minority shareholders in AHL. A circular has been
prepared and every indication exists that the process will be successfully
completed by the financial year-end.
Prospects
Given all of the events and corporate actions that have occurred during the
period under review, the Group has positively positioned itself for future
growth and further development. It has taken some years to reach this point
of Group sustainability and absent some unforeseen circumstances, it is
expected that the Group will continue to make progress in all of its
enterprises. The relationship with SANLAM holds some exciting prospects
for expansion, not only in South Africa but in destinations on the
continent of Africa, where SANLAM already has a presence. Notwithstanding
the above, stakeholders will be acutely aware of the economic challenges
which lie ahead. Recent increases in interest rates, consequential inflation
and the volatile Rand exchange rates have all had an effect on the South
African economy and will likely impact disposable income and business
confidence. Our talented management team will nevertheless continue
to diligently manage the Group’s expanded and growing operating portfolio,
at the same time seeking to optimise the returns and opportunities that
present themselves for review and consideration.
Directors and officers
Since the last published set of Group results there were five new appointments
on the Board of Directors:
* Mr Antoine Van Buuren – Group Chief Executive Officer (effective
16 March 2016).
* Ms Lindani Dhlamini – Independent Non-executive Director.
* Dr Nkateko Munisi – Non-executive Director (representing Golden
Pond).
* Mr Ian Kirk – Non-executive Director (representing Sanlam).
* Mr Ahmed Banderker – Non-executive Director (representing
Sanlam).
During the period, Mr Dewald Dempers stepped down as Group CEO and the
position was temporarily filled by the Non-Executive Chairman,
Dr Anna Mokgokong. Mr Dempers will however continue to act as an
Executive Director on the Board.
Interim Dividend
Given the strong cash position and performance of the Group, the Board
of directors has pleasure in announcing that the Company’s
interim dividend of 12 cents per ordinary share (gross) has been
declared for the six months ended 31 December 2015. Dividends are
subject to Dividends Withholding Tax. The payment date for the dividend
is Monday, 16 May 2016. This interim dividend will constitute part of
the Group’s annual dividend, to be considered with the results for
the 30 June 2016 year-end.
* Dividends have been declared out of profits available for distribution.
* Local Dividends Withholding Tax rate is 15%.
* Gross dividend amount is 12 cents per ordinary share.
* Net cash dividend amount is therefore 10.2 cents per ordinary share.
* Company has 554 377 328 ordinary shares in issue as at the declaration date.
* 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, 6 May 2016
Shares commence trading ex-dividend Monday, 9 May 2016
Dividend record date Friday, 13 May 2016
Dividend payment date Monday, 16 May 2016
Share certificates for ordinary shares may not be dematerialised or
rematerialised between Monday, 9 May 2016 and Friday, 13 May 2016,
both days inclusive.
Basis of preparation
The unaudited interim results have been prepared under the supervision
of Mr JW Boonzaaier CA(SA), in his capacity as the Group Chief
Financial Officer.
On behalf of the Board
Dr ATM Mokgokong
Chairman
Johannesburg
16 March 2016
Directors
ATM Mokgokong** (Chairman), AV Van Buuren*** (CEO), JW Boonzaaier***
(CFO), JG Appelgryn**, NB Bam*, A Banderker**, WH Britz***,
D Dempers***, LL Dhlamini*, JM Kahn*, IM Kirk**, MJM Madungandaba**,
Y Masithela*, ND Munisi**, GL Napier*, 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)
www.afrocentric.za.com
Company Secretary
S Lutchan
Group Investor Relations
Shivani Ramdhani
shivanir@afrocentric.za.com
Tel: +27 11 671 2475
Date: 17/03/2016 01:37:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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