| Fri 26 Mar 2010, 15:53 | | ACT/ACTP - AfroCentric Investment Corporation Limited - Unaudited Interim |
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ACT ACTP
ACT
ACT/ACTP - AfroCentric Investment Corporation Limited - Unaudited Interim
Results for the Six Months Ended 31 December 2009
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")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2009
HEADLINES
- 21,7% increase in diluted EPS
- 49,5% increase in diluted HEPS
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 Dec 31 Dec 30 Jun
2009 2008 2009
Revenue 682 684 - 519 867
Operating costs (602 835) (1 377) (454 688)
Operating profit 79 849 (1 377) 65 179
Other income 185 - 8 325
Net investment income 1 277 6 759 8 097
Share of profit from associates 4 906 3 390 9 151
Profit before depreciation and 86 217 8 772 90 752
impairments
Depreciation (26 052) - (16 265)
Amortisation and impairment of (31 539) - (7 963)
intangibles
Profit before tax 28 626 8 772 66 524
Income tax expense (13 100) - (13 607)
Profit from continued operations 15 526 8 772 52 917
Profit/(loss) from discontinued 1 653 - (2 379)
operations
Profit for the period 17 179 8 772 50 538
Attributable to:
Equity holders of the Company 19 187 8 772 34 701
Minority interest (2 008) - 15 837
17 179 8 772 50 538
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
31 Dec 31 Dec 30 Jun
2009 2008 2009
ASSETS
Non-current assets 1 014 449 209 745 1 000 008
Property, plant and equipment 135 391 - 110 639
Intangible assets 590 673 - 600 151
Unlisted investment 280 280 280
Investment in associates 131 091 109 465 127 435
Investment in preference shares 100 000 100 000 100 000
Deferred tax assets 57 014 - 61 503
Current assets 235 012 18 643 228 411
Trade and other receivables 139 793 7 673 156 215
Receivables from associates and - - 6 642
joint venture
Cash and cash equivalents 95 219 10 970 65 554
Non-current assets held-for-sale - - 515 288
Total assets 1 249 462 228 388 1 743 707
EQUITY AND LIABILITIES
Capital and reserves 674 309 221 119 653 960
Issued capital 385 698 196 720 382 528
Contingent shares to be issued 188 540 - 188 540
Share based payment reserve 624 - 624
Distributable reserves 69 516 24 399 50 329
644 378 221 119 622 021
Minority interests 29 931 - 31 939
Non-current liabilities 350 898 - 349 128
Deferred income tax liabilities 53 389 - 66 532
Borrowings 194 590 - 183 523
Provisions 56 059 - 55 875
Post-employment medical 4 518 - 3 930
obligations
Accrual for straight lining of 42 342 - 39 268
lease
Current liabilities 224 255 7 269 318 195
Borrowings 1 592 - 11 176
Provisions 17 864 - 71 784
Trade and other payables 112 928 1 020 102 385
Bank overdraft 5 282 5 821 53 661
Receiver of revenue 18 177 428 15 037
Employee benefit provisions 68 412 - 64 152
Non-current liabilities held-for- - - 422 424
sale
Total equity and liabilities 1 249 462 228 388 1 743 707
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
Six months Six months Year
Ended ended ended
31 Dec 31 Dec 30 Jun
2009 2008 2009
Balance at beginning of the 653 960 212 347 212 348
period
Issue of share capital 3 170 - 185 808
Contingent shares to be issued - - 188 540
Acquisition of subsidiary - - 17 953
Dividends paid - - (1 851)
Revaluation of share based - - 624
payment - equity settled
Profits attributable to equity 19 187 8 772 34 701
shareholders of the Company
Losses/(profits) attributable to (2 008) - 15 837
minorities
Balance at end of period 674 309 221 119 653 960
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
Six months Six months Year
Ended ended ended
31 Dec 31 Dec 30 Jun
2009 2008 2009
Net cash generated/(utilised) in 77 008 (5 541) 47 222
operating activities
Net cash inflow/(outflow) from (447) 5 382 (165 667)
investing activities
Net cash inflow from financing 1 483 - 179 225
activities
Net cash flow from continuing 78 044 (159) 60 780
operations
Net cash flow from discontinuing - - 9 951
operations
Net increase in cash and cash 78 044 (159) 70 731
equivalents
Cash and cash equivalents at 11 893 5 308 5 308
beginning of period
Cash and cash equivalents at end 89 937 5 149 76 039
of period
Reconciled as follows:
Cash and cash equivalents on hand 95 219 10 970 65 554
Bank overdraft (5 282) (5 821) (53 661)
Assets held for sale - - 64 146
89 937 5 149 76 039
EARNINGS ATTRIBUTABLE TO EQUITY HOLDERS
Unaudited Unaudited Audited
Six months Six months Year %
ended ended ended improvement
31 Dec 31 Dec 30 Jun from prior
2009 2008 2009 interim period
Number of 259 659 874 143 954 741 257 999 496
ordinary shares
in issue
Number of 16 638 000 16 638 000 16 638 000
preference shares
in issue
Weighted average 258 829 685 143 954 741 182 627 122
number of
ordinary shares
Weighted average 304 505 512 169 358 519 214 855 438
number of
ordinary shares
and potential
ordinary shares
Basic earnings 19 187 8 772 34 701
Adjusted by
- Profit/(Loss) (1 653) - (1 600)
from discontinued
operation
- Impairment of 6 052 - 287
goodwill
- Loss on - - 154
disposal of
property, plant
and equipment
Headline earnings 23 586 8 772 33 542
Earnings per
share (cents)
Attributable to 7,41 6,09 19,00 21,7
ordinary shares
(cents)
Diluted earnings 6,30 5,18 16,15 21,7
per share (cents)
Headline earnings
per share (cents)
Attributable to 9,11 6,09 18,37 49,5
ordinary shares
(cents)
Diluted headline 7,75 5,18 15,61 49,5
earnings per
share (cents)
INTRODUCTION
The Board of Directors has pleasure in presenting the Company`s interim results
for the six month period ended 31 December 2009.
Notwithstanding the generally depressed state of global economies and business
confidence in South Africa, the performance of our investment portfolio
nevertheless enabled the Company to report increases in headline earnings per
share and diluted headline earnings per share in excess of 50%, this despite the
significant increase in the number of shares in issue applied in these
computations.
The Board maintained a guarded approach to further corporate action during the
period, rather providing guidance and support to management of the businesses in
the existing investment portfolio.
While the Company`s investments would certainly perform far better under
different economic conditions, the overall results are considered highly
satisfactory.
ACCOUNTING POLICIES AND BASIS OF PREPARATION
The condensed consolidated financial statements for the six months ended 31
December 2009 are prepared in accordance with International Financial Reporting
Standards ("IFRS"), International Accounting Standard 34, The JSE Limited
Listings 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 and the accounting policies are consistent with those
adopted and applied for the year ended 30 June 2009 in terms of IFRS.
NATURE OF BUSINESS
AfroCentric is a black owned diversified investment holding company, its major
investments being in healthcare administration, electronics and the
communications industries. AfroCentric also has a relationship agreement with
Rio Tinto Plc for mineral prospecting and exploration projects and more recently
concluded a distribution agreement with Hanwha Corporation, one of the largest
industrial conglomerates in South Korea. The Company`s subsidiary, Lethimvula
Investments Limited ("LIL") owns 100% of the shares in Medscheme Holdings (Pty)
Limited, a multi medical scheme administrator. Medscheme is the largest black
owned medical scheme administrator in South Africa covering approximately 2
million lives in the private healthcare administration market.
OPERATIONAL REVIEW
AfroCentric`s investment in listed Jasco Electronics Holdings Limited ("Jasco")
yielded earnings and investment income for the six months ended 31 December 2009
of R8,2 million (2008: R9,6 million).
Jasco`s various business units were severely affected by the economic downturn,
but there is a degree of optimism which prevails for the industry sector in
general and the Company in particular going forward. The results of Jasco were
released on SENS on 4 February 2010 and more information on Jasco`s earnings,
operations and prospects are available on SENS under JSE Code: JSC. The
reduction in interest rate across the comparable periods also accounts for lower
net investment income.
LIL`s operating profits amounted to R81 million during the period under review
(2008: not a subsidiary of the Company), these being marginally better than
operating profit expectations and seemingly in line with the target profit
warranty thresholds on which the purchase price of LIL shares will finally be
determined.
The sale of Medscheme Life to Old Mutual was approved by the Financial Services
Board during July 2009 and management of both Medscheme and Old Mutual are
actively finalising the substance and features of their co-operative marketing
relationship.
AfroCentric`s exploration and prospecting relationship with Rio Tinto Plc
continues in terms of the Reciprocal Strategic Co-Operation Agreement.
FINANCIAL RESULTS
For the six month period ended 31 December 2009, earnings per share (EPS)
increased by 21,7% to 7,41 cents (2008: 6,09 cents) and diluted EPS increased by
21,7% to 6,30 cents (2008: 5,18 cents). Headline earnings per share (HEPS)
increased by 49,5% to 9,11 cents (2008: 6,09 cents) and diluted HEPS increased
by 49,5% to 7,75 cents (2008: 5,18 cents).
PROSPECTS
The Board Investment Committee will maintain the principles of the existing
investment policy on all new propositions and will continue to provide advice
and direction to management in each case. Since 31 December 2009 there are a few
encouraging signs of recovery in market conditions in South Africa and
notwithstanding the challenges the country faces on a number of fronts, there
are some signs which suggest that the various business units within the
investment portfolio will positively extract value from any improved
circumstances.
PRE AND POST PERIOD END EVENTS
One of the more material events is that the Council for Medical Schemes
commenced an investigation inter alia, into breaches of governance by the
Principal Officer of Bonitas Medical Scheme. The Principal Officer has since
resigned from that office. These investigations were predicated on allegations
that Medscheme may not have dealt firmly enough in relation to such breaches.
However in a clarification to its report, Deloitte reiterated the confirmation
that Medscheme had at all times carried out its duties in terms of its mandate.
Given the above, it is relevant to note that Medscheme has, for the second
consecutive year, achieved the highest overall scores across all three of
PMR.africa`s medical scheme-related surveys. In addition, the Bonitas unit
within Medscheme was awarded the ISO 9000 certification for quality in
administration processing.
DIRECTORS
There were no changes in the constitution of the Board of Directors during the
period under review.
DIVIDENDS
No dividends were declared or paid during the six month period under review.
By order of the Board
Motty Sacks CA (SA) AICPA (ISR)
Company Secretary
Johannesburg
26 March 2010
Directors
NB Bam* (Chairperson), NMJ Canca*, MSV Gantsho*
JM Kahn**, MI Sacks**#, Prof DI Swartz*, B Joffe**
*independent non-executive **non-executive #company secretary
Registered Office
42 Wierda Road West
Sandton 2196
Sponsor
Sasfin Capital
(A division of Sasfin Bank Limited)
Date: 26/03/2010 15:53:06 Produced by the JSE SENS Department.
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