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ACT ACTP
ACT
ACT/ACTP - Afrocentric Investment Corporation Limited - Unaudited Interim
Results for the Six Months Ended 31 December 2008
AFROCENTRIC INVESTMENT CORPORATION LIMITED
(Incorporated in the Republic of South Africa) (Registration number
1988/000570/06)
JSE Code: ACT, ACTP
ISIN: ZAE000078416, ZAE000082269
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2008
UNAUDITED 6 MONTHS ENDED AUDITED
YEAR ENDED
CONDENSED 31 DEC 31 DEC 2007 30 JUNE
CONSOLIDATED 2008 R`000 2008
INCOME STATEMENT R`000 R`000
Revenue
- - -
Administration (1,377) (631) (1,366)
Expenses
Net Investment
Income 6,759 5,235 11,346
Dividends
Received 6,230 - -
Finance
Income 982 5,235 11,406
Finance (453) (60)
Costs -
Share of Profit
of Associates 3,390 - 3,490
Profit Before
Tax 8,772 4,604 13,470
Income Tax (1,336) (2,660)
Expense -
Profit for the
Period 8,772 3,268 10,810
Attributable to:
Equity Holders 8,772 3,268 10,810
of the Company
CONDENSED
CONSOLIDATED
BALANCE SHEET
Assets
Non-current
assets 209,745 - 205,409
Unlisted
Investment 280 - -
Investment in
Associates 109,465 - 105,409
Investment in
Preference 100,000 - 100,000
Shares
Current Assets
18,643 - 17,294
Other
Receivables 6,271 - 6,872
Payments in
Advance 1,402 - -
Cash and Cash
Equivalents 10,970 108,024 10,422
Total Assets
228,388 108,024 222,703
Equity and
Liabilities
Capital and
Reserves 221,119 106,395 212,347
Issued Capital
196,720 98,309 196,720
Distributable
Reserves 24,399 8,086 15,627
Current
Liabilities 7,269 1,629 10,355
Other Payables
1,020 294 3,733
Bank Overdraft
5,821 - 5,114
Receiver of
Revenue 428 1,335 1,508
Total Equity and
Liabilities 228,388 108,024 222,703
CONDENSED
CONSOLIDATED
STATEMENTS OF
CHANGES IN
EQUITY
Balance at
Beginning of 212,347 103,127 103,127
Period
Issue of Share
Capital - - 98,410
Rights Issue
Expenses - - -
Net Profit for
the Period 8,772 3,268 10,810
Balance at End
of Period 221,119 106,395 212,347
CONDENSED CASH
FLOW STATEMENT
Net Cash (5541) (8,112)
Utilised in -
Operating
Activities
Net Cash Inflow (92,102)
from Investing 5,382 2,502
Activities
Capital Raised
- - -
Rights Issue
Expenses - - -
Net (Decrease) (159) (100,214)
Increase in Cash 2,502
and Cash
Equivalents
Cash and Cash
Equivalents at 5,308 105,522 105,522
Beginning of
Period
Cash and Cash
Equivalents at 5,149 108,024 5,308
End of Period
Reconciled as
follows:
Cash and Cash
Equivalents on 10,970 108,024 10,422
Hand
Bank Overdraft (5,114)
5,821 -
5,149 108,024 5,308
Audited
2008
EARNINGS
ATTRIBUTABLE TO
EQUITY HOLDERS
Number of
Ordinary Shares 143,954,741 94,000,000 143,954,741
in Issue
Number of
Preference 16,638,000 16,638,000 16,638,000
Shares in Issue
Weighted Average
Number of 143,954,741 94,000,000 97,958,163
Ordinary Shares
Weighted Average
Number of 169,358,518 110,638,000 123,361,940
Ordinary Shares
and Potential
Ordinary Shares
Profit
Attributable to 8,772 3,269 10,810
Equity Holders
(R`000)
Earnings per
Share (cents) 6.09 3.48 11.04
Attributable to
Ordinary Shares
Diluted Earnings
per Share 5.18 2.95 8.76
(cents)
Headline
Earnings per 6.09 3.48 11.04
Share (cents)
Attributable to
Ordinary Shares
Diluted Headline
Earnings per 5.18 2.95 8.76
Share (cents)
Accounting Policies and Basis of Preparation
The condensed consolidated interim financial statements for the six months ended
31 December 2008 were prepared in accordance with International Financial
Reporting Standards ("IFRS"), International Accounting Standard 34, the JSE
Limited listing requirements, and the South African Companies Act 61 of 1973 as
amended.
The condensed consolidated interim financial statements are prepared on the
historical cost basis.
The principal accounting policies adopted for the six months ended 31 December
2008 are consistent with those applied for the year ended 30 June 2008 in terms
of IFRS
Nature of Business and Operational Review
For a better appreciation of the Company`s business and in order to give meaning
to the operational review for the period under review, the following is
presented.
AfroCentric is a black owned diversified investment holding company. Until 31
March 2008, AfroCentric`s total 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 Jasco`s investment in
Malesela Taihan Technologies (Pty) Limited ("M-Tec"). Jasco`s core focus of
operations is in the electronics and communications industry. M-Tec 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 profits after tax for the period under review amounted to
R8,772,000 (2007: R3,268,000). This significant increase arises as a result of
the escalated net yield on the conversion of interest bearing securities into
the aforesaid preference shares. In addition, this is the first time that
AfroCentric reflects equity accounted earnings of Jasco for a six month period.
While operating divisions of Jasco performed relatively well under difficult
market conditions, the attributable earnings of MTec in Jasco were disappointing
during this period. The reasons are substantially the result of the declining
value of MTec`s copper based inventories and the provisions which were necessary
in such circumstances. Notwithstanding the difficult market and the volatile
commodity pricing, even at these levels of underperformance at MTec, the growth
in AfroCentric`s earnings per share has been positive
Subsequent to Period 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 was 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 multi-medical scheme administrators serving trustees and members
of both open and determinate corporate medical schemes. The Medscheme Group has
in excess of 1.5 million lives under administration and managed care contracts
On 9 January 2009, AfroCentric shareholders approved of the acquisition and the
agreement for the Lethimvula Sale Shares became unconditional on 30 January
2009. The Acquisition is an "affected transaction" as defined in the SRP Code on
Take-overs and Mergers ("SRP Code) and, accordingly, AfroCentric has made an
offer to the minority shareholders of Lethimvula (other than the Sellers) in
accordance with the provisions of the SRP Code and on the same terms and
conditions as those on which the Lethimvula shares were purchased from the
Sellers. The offer to the Lethimvula minority shareholders closes on 30 April
2009. The earnings impact of the Lethimvula acquisition will be accounted for
the first time in AfroCentric`s second six month trading period ending on 30
June 2009.
Given the terms of the Lethimvula acquisition, its relative size and the profit
warranties which form part of the vendor obligations, the Board of AfroCentric
consider the transaction as a defining milestone in AfroCentric`s growth and
development objectives
Rio Tinto Relationship
During the period under review, AfroCentric continued to source various mineral
prospecting and exploration rights through the Department of Minerals and Energy
and succeeded in registering certain awards of rights for future exploration.
Progress was also made during the year completing the targets for consolidation
of certain other mineral rights, in terms of AfroCentric`s co-operation
agreement with Rio Tinto Plc. Notwithstanding the long term nature of these
mining related activities, including regular risk reviews particularly in times
of such volatility, the consolidation and exploration programme continues with
AfroCentric fortunately having no immediate financing obligations.
Prospects
The Board of Directors and Board Investment Committee of AfroCentric are
satisfied with the progress of AfroCentric to date and will continue to follow
the cautious approach and rigid principles of its investment policy. The Board
of Lethimvula recently announced the acquisition by Medscheme of Old Mutual
Healthcare, and the appointment by the Oxygen Medical Scheme of Medscheme as its
new administrator. The Board of AfroCentric was party to these negotiations and
fully supported the acquisition, including the future relationship agreement
with Old Mutual
Contingent Assets and Liabilities
During the period under review, AfroCentric was allotted 8,452 ordinary shares
in Sasol Inzalo Public Limited. Given the compulsory long term nature of this
investment and the non recourse funding made available through the Sasol BEE
funding model, the valuation is presently indeterminate and is accordingly
reflected as an unlisted investment at its net cost. There were no other
contingent assets or liabilities at 31 December 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
By Order of the Board
M.I. Sacks, CA(SA), AICPA (ISR)
Company Secretary
Johannesburg
30 March 2009
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
Johannesburg
30 March 2009
Sponsor
Sasfin Capital (A division of Sasfin Bank Limited)
Date: 30/03/2009 09:59:00 Produced by the JSE SENS Department.
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