| Tue 29 Mar 2011, 14:32 | | ACT - AfroCentric Investment Corporation Limited - Unaudited interim results for |
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ACT
ACT
ACT - AfroCentric Investment Corporation Limited - Unaudited interim results for
the six months ended 31 December 2010
AfroCentric Investment Corporation Limited
(Incorporated in the Republic of South Africa)
(Registration number 1988/000570/06)
JSE Code: ACT, ACTP
ISIN: ZAE 000078416, ZAE 000082269
("AfroCentric" or "the Company" or "the Group")
UNAUDITED INTERIM RESULTS
for the six months ended 31 December 2010
HEADLINES
- Operating profit up 86%
- Profit for the period up 196%
- Earnings per share up 243%
- Diluted headline earnings up 164% per share
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 December 31 December 30 June
2010 2009 2010
R`000 R`000 R`000
ASSETS
Non-current assets 970 061 1 014 449 958 794
Property, plant and equipment 118 169 126 848 125 311
Investment property 8 543 8 543 8 543
Intangible assets 592 865 590 673 576 438
Unlisted investments 280 280 280
Investment in associates 64 796 131 091 69 788
Investment in preference shares 100 000 100 000 100 000
Deferred income tax assets 85 408 57 014 78 434
Current assets 209 517 235 012 216 871
Trade and other receivables 98 706 129 990 80 123
Receivables from associates and 15 586 9 803 14 224
joint ventures
Cash and cash equivalents 95 225 95 219 122 524
Total assets 1 179 578 1 249 461 1 175 665
EQUITY AND LIABILITIES
Capital and reserves 670 268 638 550 620 286
Issued capital 393 181 385 698 389 440
Contingent shares to be issued 188 540 188 540 188 540
Share-based payment reserve - 624 -
Treasury shares (610) - (610)
Foreign currency translation (462) - -
reserve
Distributable reserve 89 619 63 688 42 916
Minority interests 25 021 35 759 21 777
Total equity 695 289 674 309 642 063
Non-current liabilities 346 550 350 898 306 575
Deferred income tax liabilities 39 698 53 389 42 443
Borrowings 200 000 194 590 162 072
Provisions 67 575 56 059 66 067
Post-employment medical 3 866 4 518 3 866
obligations
Accrual for straight lining of 35 411 42 342 32 127
leases
Current liabilities 137 739 224 254 227 027
Borrowings - 1 592 -
Provisions 2 790 17 864 18 347
Trade and other payables 67 515 112 927 108 546
Taxation 3 540 18 177 3 224
Bank overdraft 15 245 5 282 7 987
Employment benefit provisions 48 649 68 412 88 923
Total liabilities 484 289 575 152 533 602
Total equity and liabilities 1 179 578 1 249 461 1 175 665
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 December 31 December 30 June
2010 2009# 2010#
% R`000 R`000 R`000
Revenue 672 088 682 684 1 356 331
Operating costs (579 641) (633 009) (1 226 759)
Operating profit 86 92 447 49 675 129 572
Other income 15 714 15 730 23 425
Net finance cost 1 434 1 277 (2 350)
Share of profit from 2 211 4 906 14 017
associates
Profit before impairment 111 806 71 588 164 664
and amortisation
Impairment of investment - - (67 313)
Impairment of intangible (996) (8 405) (8 405)
assets
Depreciation (24 062) (20 939) (42 995)
Amortisation of (14 760) (13 618) (30 291)
intangible assets
Profit before income tax 151 71 988 28 626 15 660
Income tax expense (21 166) (13 100) (18 027)
Profit/(loss) for the 50 822 15 526 (2 367)
period from continued
operations
Profit/(loss) from - 1 653 (847)
discontinued operations
Profit/(loss) for the 196 50 822 17 179 (3 214)
period
Total comprehensive 50 822 17 179 (3 214)
income for the period
Attributable to:
Equity holders 250 46 704 13 359 (7 413)
Minority interest 4 118 3 820 4 199
50 822 17 179 (3 214)
# Certain comparative figures have been reallocated for a better appreciation of
comparable performance.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 December 31 December 30 June
2010 2009 2010
R`000 R`000 R`000
Balance at beginning of the 642 063 653 960 653 960
period
Issue of share capital 3 741 3 170 6 912
Revaluation of share based - - (624)
payment liability
Treasury shares issued - - (610)
Foreign currency translation (462) - -
reserve
Share buy back from minorities - - (14 361)
Dividends paid (875) - -
Net profit/(loss) for the 46 704 13 359 (7 413)
period
Profit attributable to 4 118 3 820 4 199
minorities
Balance at end of period 695 289 674 309 642 063
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 December 31 December 30 June
2010 2009 2010
R`000 R`000 R`000
Net cash (utlilised)/generated (29 196) 77 008 115 834
in operating activities
Net cash (outflow) from (43 289) (447) (68 554)
investing activities
Net cash inflow/(outflow) from 37 928 1 483 (8 782)
financing activities
Net cash flow from continuing (34 557) 78 044 38 498
operations
Net (decrease)/increase in (34 557) 78 044 38 498
cash and cash equivalents
Cash and cash equivalents at 114 537 11 893 76 039
beginning of the period
Cash and cash equivalents at 79 980 89 937 114 537
end of the period
Reconciled as follows:
Cash and cash equivalents on 95 225 95 219 122 524
hand
Bank overdraft (15 245) (5 282) (7 987)
79 980 89 937 114 537
EARNINGS ATTRIBUTABLE TO EQUITY HOLDERS
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 December 31 December 30 June
2010 2009 2010
% R`000 R`000 R`000
Number of ordinary 264 920 135 259 659 874 262 432 568
shares in issue
Number of preference 16 638 000 16 638 000 16 638 000
shares in issue
Weighted average number 263 744 652 258 829 685 259 670 381
of ordinary shares
Weighted average number 310 056 281 304 505 512 305 199 704
of ordinary shares and
potential ordinary
shares
Basic earnings 46 704 13 359 (6 566)
Adjusted by:
- Shareholders for - - (185)
dividends written off
- Impairment of - - 5 020
property, plant and
equipment
- Impairment of 996 6 052 8 405
intangible assets
- Impairment of - - 67 313
investment in associate
- Loss from - (1 653) (847)
discontinued operation
Headline earnings 47 700 17 758 73 140
Basic earnings per
share (cents)
- Attributable to 243 17,71 5,16 (2,53)
ordinary shares (cents)
- Diluted earnings per 243 15,06 4,39 (2,15)
share (cents)
Headline earnings per
share (cents)
- Attributable to 164 18,09 6,86 28,17
ordinary shares (cents)
- Diluted earnings per 164 15,38 5,83 23,96
share (cents)
SEGMENTAL ANALYSIS
Unaudited interim results
for the six months ended 31 December
2010
Profit before Total
Revenue tax assets
R`000 R`000 R`000
Healthcare administration 672 088 60 545 787 687
Electronics (excluding - 1 081 -
investment income)
Treasury activities - 4 182 110 208
Other (including inter- - 6 180 281 684
segment eliminations)
672 088 71 988 1 179 578
Unaudited interim results
for the six months ended 31 December
2009
Profit/(loss) Total
Revenue before tax assets
R`000 R`000 R`000
Healthcare administration 682 684 23 276 877 017
Electronics (excluding - 3 918 -
investment income)
Treasury activities - 4 613 110 198
Other (including inter- - (3 181) 262 246
segment eliminations)
682 684 28 626 1 249 461
Audited results
for the year ended 30 June 2010
Profit/(loss) Total
Revenue before tax assets
R`000 R`000 R`000
Healthcare administration 1 356 331 17 144 836 519
Electronics (excluding - 8 657 -
investment income)
Treasury activities - 9 034 110 388
Other (including inter- - (19 175) 228 758
segment eliminations)
1 356 331 15 660 1 175 665
COMMENTARY
INTRODUCTION
The Board of Directors has pleasure in presenting the Group`s interim results
for the six month period ended 31 December 2010.
Notwithstanding the generally challenging economic conditions in South Africa
during the period, the Group is able to report a significantly enhanced
performance.
ACCOUNTING POLICIES AND BASIS OF PREPARATION
The condensed consolidated financial statements for the six months ended 31
December 2010 are prepared in accordance with International Financial Reporting
Standards ("IFRS"), International Accounting Standard 34, AC 500 Standards, 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 2010.
NATURE OF BUSINESS
AfroCentric is a black owned diversified investment holding company.
The Company`s material investment is its subsidiary, Lethimvula Investments
Limited ("LIL") which 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 3
million lives in the private healthcare administration and managed care market.
The Company also owns 27,3% of Jasco Electronics Holdings Limited ("Jasco"), a
public company listed on the Johannesburg Securities Exchange. Jasco provides
solutions, services and products to the communications, security, power and
consumer goods industries. Jasco recently acquired the entire issued share
capital of Spescom Limited, a company which provides similar solutions, services
and products to the contact centre, media and telecommunications industries.
AfroCentric also has a relationship agreement with Rio Tinto Plc for mineral
prospecting and exploration projects. In addition the Company has a distribution
agreement with Hanwha Corporation, one of the largest industrial conglomerates
in South Korea.
OPERATIONAL REVIEW
Group profit before taxation increased by 151% from R28,6 million to R72 million
during the period. This significant increase was attributable substantially to
the performance of LIL having completed the reorganisation and rationalisation
of the healthcare businesses acquired from Old Mutual, its organic growth and
the extraction of greater operating efficiencies as a result of Medscheme`s
increased scale. LIL`s profitability is substantially on target with its
forecasts, positively trending towards the profit warranty thresholds on which
the price of LIL`s shares will finally be determined.
During the period LIL acquired all of the shares not already owned by LIL in
Administrators and Consultants Limited whose main operations are the
administration of medical aid schemes in Mauritius.
AfroCentric continues to acquire LIL shares from minority shareholders who
approach the Company to sell their shares. During the period, AfroCentric
acquired a further 3,25% to bring the Company`s ownership of the issued share
capital of LIL to 90,78%.
AfroCentric`s investment in Jasco yielded earnings and investment income for the
six months ended 31 December 2010 of R4,9 million (2009: R8,6 million). Jasco`s
performance for the period has been disappointing. However, given the recent
inclusion of Spescom`s businesses into the Jasco portfolio, the rationalisation
opportunities, the additional scale and an improvement in economic activity,
particularly infrastructural development, it is expected that Jasco`s collective
operations will start to fulfil its potential and generate improved earnings
going forward. Further information on Jasco`s earnings, operations and prospects
are available on SENS under JSE Code: JSC.
AfroCentric`s exploration and prospecting relationship with Rio Tinto Plc
continues in terms of the Reciprocal Strategic Co-Operation Agreement.
Investigation and market research into the appropriate selection of Hanhwa`s
vast range of products remains in progress.
FINANCIAL RESULTS
For the six month period ended 31 December 2010, basic earnings per share
("EPS") increased by 243% to 17,71 cents (2009: 5,16 cents) and diluted EPS
increased by 243% to 15,06 cents (2009: 4,39 cents). Headline earnings per share
("HEPS") increased by 164% to 18,09 cents (2009: 6,86 cents) and diluted HEPS
increased by 164% to 15,38 cents (2009: 5,83 cents).
PROSPECTS
The Board has deliberately and consistently adopted a cautious approach in the
past to the approval of new acquisition opportunities, preferring to secure the
growth and sustainability of its existing investments. However, the
profitability and renewed potential for growth of the more material investments
in the portfolio will no doubt inspire the Investment Committee and the Board to
give serious attention to further investment propositions which are regularly
presented for consideration.
PRE AND POST PERIOD END EVENTS
In the 2010 annual report, we commented on the various legal processes in
progress with the Council for Medical Schemes ("CMS") in regard to the Bonitas
Medical Scheme ("BMS") and the administration services provided by Medscheme.
The Board is pleased to advise shareholders that in an independent report by
Deloitte on BMS affairs, it was reconfirmed that breaches of administrative
governance interpreted by the CMS as being attributable to Medscheme were ill-
conceived and factually incorrect.
The "Bonitas Division" of Medscheme continues to hold the coveted ISO 9001: 2008
status for high quality administration, and "Fedhealth" and Medscheme`s "Closed
Schemes" divisions have also achieved this status.
DIRECTORS
There were no changes in the constitution of the Board of Directors during the
period.
DIVIDENDS AND DISTRIBUTIONS
The Group declared its maiden distribution, in the form of a capital reduction
out of share premium, of 7,5 cents per ordinary share for the year ended 30 June
2010. The AfroCentric Board will consider further distributions based on the
performance of the Group for the year ending 30 June 2011.
By order of the Board
Michael I Sacks CA (SA) AICPA (ISR)
Company secretary
Johannesburg
29 March 2011
Directors
NB Bam* (Chairperson)
JM Kahn**
MI Sacks**#
B Joffe**
MJ Madungundaba**
AT Mokgokong**
WRC Holmes
*independent non-executive
**non-executive
#company secretary
Registered Office
10 Muswell Road South
Bryanston, 2191
Sponsor
Sasfin Capital
(A division of Sasfin Bank Limited)
Date: 29/03/2011 14:32:01 Produced by the JSE SENS Department.
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