| Tue 30 Sep 2008, 8:00 | | ACT / ACTP - AfroCentric - Reviewed Condensed Consolidated Group And Company |
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ACT ACTP
ACT
ACT / ACTP - AfroCentric - Reviewed Condensed Consolidated Group And Company
Results For The Year Ended 30 June 2008
AFROCENTRIC INVESTMENT CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1988/000570/06)
JSE Code: ACT, ACTP & ISIN: ZAE000078416, ZAE000082269
("AfroCentric" or "the Company")
REVIEWED CONDENSED CONSOLIDATED GROUP AND COMPANY RESULTS FOR THE YEAR ENDED
30 JUNE 2008
CONDENSED Group Group Company Company
CONSOLIDATED INCOME Reviewed 2008 Audited Reviewed Audited
STATEMENTS R`000 2007 2008 2007
R`000 R`000 R`000
Revenue - - - -
Administration (1,366) (1,144) (1,366) (1,144)
Expenses
Net Finance Income 11,346 7,826 11,346 7,826
Finance income 11,406 7,844 11,406 7844
Finance costs (60) (18) (60) (18)
Share of Profit of 3,490 - - -
Associates
Profit Before Tax 13,470 6,682 9,980 6,682
Income Tax Expense (2,660) (2,009) (2,660) (2,009)
Profit for the Year 10,810 4,673 7,320 4,673
Attributable to: 10,810 4,673 7,320 4,673
Equity Holders of the
Company
Reconciliation of
headline earnings:
Net profit for the 10,810 4,673 7,320 4,673
period
Headline earnings 10,810 4,673 7,320 4,673
Condensed
Consolidated Balance
Sheet
Assets
Non-current assets 205,409 - 201,919 -
Investment in - - ** **
Subsidiaries
Investment in 105,409 - 101,919 -
Associates
Investment in 100,000 - 100,000 -
Preference Shares
Current Assets 17,294 105,522 17,294 105,522
Other Receivables 6,872 - 6,872 -
Cash and Cash 10,422 105,522 10,422 105,522
Equivalents
Total Assets 222,703 105,522 219,213 105,522
Equity and
Liabilities
Capital and Reserves 212,348 103,127 208,858 103,127
Issued Capital 196,720 98,309 196,720 98,309
Distributable 15,628 4,818 12,138 4,818
Reserves
Current Liabilities 10,355 2,395 10,355 2,395
Other Payables 3,733 386 3,733 386
Bank Overdraft 5,114 - 5,114 -
Receiver of Revenue 1,508 2,009 1,508 2,009
Total Equity and 222,703 105,522 219,213 105,522
Liabilities
**amount less than
R1000
CONDENSED
CONSOLIDATED
STATEMENTS OF CHANGES
IN EQUITY
Balance at Beginning 103,127 239 103,127 239
of Year
Issue of Share 98,411 99,740 98,411 99,740
Capital
Rights Issue Expenses - (1,525) - (1,525)
Net Profit for the 10,810 4,673 7,320 4,673
Year
Balance at 30 June 212,348 103,127 20,858 103,127
2008
CONDENSED CASH FLOW
STATEMENTS
Net Cash Utilised in
Operating Activities (8,112) (802) (8,112) (802)
Net Cash Inflow from
Investing Activities (92,102) 7,844 (92,102) 7,844
Capital Raised - 99,740 - 99,740
Rights Issue Expenses - (1,525) - (1,525)
Net Increase (100,214) 105,257 (100,214) 105,257
(Decrease) in Cash
and Cash Equivalents
Cash and Cash 105,522 265 105,522 265
Equivalents at
Beginning of Year
Cash and Cash 5,308 105,522 5,308 105,522
Equivalents at
End of Year
Reconciled as
follows:
Cash and Cash 10,422 105,522 10,422 105,522
Equivalents on Hand
Bank Overdraft (5,114) - (5,114) -
5,308 105,522 5,308 105,522
EARNINGS ATTRIBUTABLE Group Group Company Company
TO Reviewed Audited Reviewed Audited
EQUITY HOLDERS
2008 2007 2008 2007
Number of Ordinary 143,954,741 94,000,000 143,954,741 94,000,000
Shares in Issue
Number of Preference 16,638,000 16,638,000 16,638,000 16,638,000
Shares in Issue
Weighted Average 97,958,163 83,801,644 97,958,163 83,801,644
Number of Ordinary
Shares
Weighted Average 123,361,940 98,433,967 123,361,940 98,433,967
Number of Ordinary
Shares and Potential
Ordinary Shares
Profit Attributable 10,810 4,673 7,320 4,673
to Equity Holders
(R`000)
Earnings per Share 11.04 5.58 7.47 5.58
(cents)
Attributable to
Ordinary Shares:
Diluted Earnings per 8.76 4.75 5.93 4.75
Share (cents)
Headline Earnings per 11.04 5.58 7.47 5.58
Share (cents)
Attributable to
Ordinary Shares:
Diluted Headline 8.76 4.75 5.93 4.75
Earnings per Share
(cents)
Accounting Policies and Basis of Preparation
The condensed consolidated and company financial statements for the year
ended 30 June 2008 were prepared in accordance with International Financial
Reporting Standards ("IFRS"), International Accounting Standard 34, the JSE
Limited listing requirements, and the S.A. Companies Act 61 of 1973 as
amended. The condensed consolidated and company financial statements are
prepared on the historical cost basis.
The Group implemented the following new and revised standards and
interpretations:
- IFR7 Financial Instruments: Disclosures; and
- Amendment to IAS1 Presentation of Financial Statements - Capital
Disclosures.
The implementation of IFRS7 did not result in a change in accounting policy
as the standard affected the disclosures made in the financial statements.
The principal accounting policies adopted for the year ended 30 June 2008
are consistent with those applied for the year ended 30 June 2007 in terms
of IFRS.
Nature of Business and Operational Review
AfroCentric is a black owned diversified investment holding company. During
the year ended 30 June 2007, the company raised approximately R100-million
for investment. Save for concluding a select and potentially rewarding Co-
operation Agreement with Rio Tinto Plc for BEE mining, prospecting and
exploration projects, numerous investment opportunities were considered,
none of which satisfied the selective criteria prescribed by the Board
Investment Committee. Accordingly, until 31 March 2008, AfroCentric`s
revenues were generated exclusively from interest earned on the Company`s
treasury funds.
On 31 March 2008, the Company concluded an agreement, effective from 1 June
2008, for the acquisition of a 34.9% minority interest in JSE-listed Jasco
Electronics Holdings Limited ("Jasco"). The purchase price of this
investment was satisfied by the issue of AfroCentric ordinary shares.
Simultaneously AfroCentric subscribed for R100 million of preference shares
in a wholly-owned subsidiary of Jasco to part facilitate the acquisition of
51% of the issued shares in Malesela Taihan Technologies (Pty) Limited
("MTech"). Jasco`s core focus of operations is in the electronics and
communications industry. MTech is a leading manufacturer and distributor of
fibre optic cable including a wide range of power and telecom cable, serving
inter alia, the infrastructural development demands in the South African and
African continental markets.
Financial Results
AfroCentric`s group profits after tax amounted to R10,810,000 (2007:
R4,673,000), an increase of 131% for the year under review. This increase
arises substantially as a result of the escalating yields on the Company`s
cash resources for eleven months of the year, equity accounted earnings of
Jasco for the month of June 2008, and the June month`s dividend on the
Company`s preference share investment amounting to R1,006-million.
While the monthly profits of Jasco (which now also include Jasco`s share of
earnings from MTech) could vary according to its industry business cycles,
and the month of June does not necessarily indicate an average month,
shareholders can nevertheless start to appreciate the effect Jasco profits
can have on AfroCentric`s basic and fully diluted earnings per share.
Subsequent to Year End Events
On 23 September 2008, the Board of AfroCentric announced that it had entered
into a Share Purchase Agreement dated 22 September 2008 to acquire 365 865
029 ordinary shares in the issued ordinary share capital of Lethimvula
Investments Limited ("Lethimvula") (the "Sale Shares"), representing 63.2%
of the entire issued share capital of Lethimvula (the "Acquisition"), from
certain Lethimvula shareholders (the "Sellers"). The Acquisition is subject
to the conditions precedent as set out in paragraph 5 of the formal
announcement. The purchase price for the Sale Shares (the "Purchase Price")
is a maximum amount of R568.9 million or R1.55 per Sale Share plus such
additional amount to be determined in accordance with paragraph 4 of the
formal announcement. The purchase price will be paid partly in cash and
partly in AfroCentric shares at R2.60 per share, subject to certain profit
warranties being attained.
Lethimvula is an investment holding company with its principal assets being
a 100% beneficial interest in Medscheme Limited and Rowan Angel
(Proprietary) Limited, both open and closed medical scheme administrators.
Should the agreement for the Lethimvula Sale Shares become unconditional,
the Acquisition will be an "affected transaction" as defined in the SRP Code
on Take-overs and Mergers ("SRP Code) and, accordingly, AfroCentric will be
obliged to make an offer to the shareholders of Lethimvula (other than the
Sellers) in accordance with the provisions of the SRP Code. AfroCentric
has, accordingly, undertaken to make the obligatory offer to the Offeree
Shareholders on the same terms and conditions as those on which the
Lethimvula shares are purchased from the Sellers.
Given the size of the formal announcement and the extent of the information
contained therein, it is not possible to include all of the relevant detail
in this results announcement. In the interim, AfroCentric shareholders and
interested parties are respectfully referred to the Business Day and Beeld
newspapers of 25 September 2008 which contained a paid advertisement
relating to the transaction. The appropriate circular will forwarded to
shareholders in due course.
Prospects
The Board of Directors and Board Investment Committee of AfroCentric are
satisfied with the general progress of AfroCentric to date. Given that
there is great economic uncertainty in both local and international
investment markets, the cautious and disciplined investment policy adopted
by the Board Investment Committee has served the best interests of
AfroCentric shareholders. The Board Investment Committee will continue to
follow the rigid principles of its investment policy, even though it is
becoming increasingly evident that investment opportunities now present
greater value than options proffered in the more feverish years of 2006 and
2007.
There is a measure of confidence that current economic conditions present a
more fertile landscape of opportunity for AfroCentric`s long term vision and
values, a typical example being the joint announcement between AfroCentric
and Lethimvula released on SENS on 23 September 2008 and more definitively
referred to above under "Subsequent to Year End Events".
In addition to the expected advantages arising through the Lethimvula
acquisition and the Jasco investment, progress was made during the year
completing the targets for consolidation of certain mineral rights, in
conjunction with Rio Tinto Plc. Notwithstanding the long term nature of
these mining related activities, including the normal feasibility risks in
such projects, the mineral exploration and prospecting presently being
undertaken with Rio Tinto Plc is encouraging.
Contingent Assets and Liabilities
There are no contingent assets and liabilities at 30 June 2008.
Directors
There were no changes in the constitution of the Board of Directors for the
year under review.
Dividends
No dividends were declared or paid during the year under review.
Review Report
The results for the year have been reviewed by the Groups` auditors, Sizwe
Ntsaluba VSP and their unmodified review report is available at the
Company`s registered office for inspection.
Cautionary Announcement
Given that the proforma financial effects of the acquisition described in
"Subsequent to Year End Events" above have yet to be communicated to
AfroCentric shareholders, shareholders are advised to exercise caution in
trading their shares until a further announcement is made.
By Order of the Board
M.I. Sacks, CA(SA), AICPA (ISR)
Company Secretary
Johannesburg
30 September 2008
Directors
N.B. Bam* (Chairperson) N.M.J. Canca* M.S.V. Gantsho* J.M. Kahn**
M.I. Sacks**^ Prof. D.I. Swartz* B. Joffe**
* Independent non-executive
** Non-Executive^ Company Secretary
Registered Office
42 Wierda Road West
Sandton
2196
Date: 30/09/2008 08:00:08 Produced by the JSE SENS Department.
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