| Tue 27 Sep 2011, 16:21 | | ACT/ACTP - AfroCentric Investment Corporation Limited - Full year audited |
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ACT ACTP
ACT
ACT/ACTP - AfroCentric Investment Corporation Limited - Full year audited
results and cash distribution declaration for the year ended 30 June 2011
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" or "the Group")
FULL YEAR AUDITED RESULTS AND CASH DISTRIBUTION DECLARATION
for the year ended 30 June 2011
HEADLINES
Operating profit up 72%
Basic headline earnings per share up 70%
Diluted headline earnings per share up 70%
Increase in distribution up 20%
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
year ended year ended
30 June 2011 30 June 2010
R`000 R`000
ASSETS
Non-current assets 951 923 958 794
Property, plant and equipment 101 083 125 311
Investment property 10 100 8 543
Intangible assets 609 552 576 438
Unlisted investments 280 280
Investment in associates 63 859 69 788
Investment in preference shares 100 000 100 000
Deferred income tax assets 67 049 78 434
Current assets 291 064 216 871
Trade and other receivables 93 010 80 123
Receivables from associates and joint 18 039 14 224
ventures
Cash and cash equivalents 180 015 122 524
Total assets 1 242 987 1 175 665
EQUITY AND LIABILITIES
Capital and reserves 726 849 620 286
Issued capital 372 060 389 440
Contingent shares to be issued 188 540 188 540
Treasury shares (1 162) (610)
Foreign currency translation reserve 241
Distributable reserve 167 171 42 916
Minority interests 20 786 21 777
Total equity 747 635 642 063
Non-current liabilities 304 128 306 575
Deferred income tax liabilities 37 273 42 443
Borrowings 200 000 162 072
Provisions 41 600 66 067
Post-employment medical obligations 3 821 3 866
Accrual for straight lining of leases 21 435 32 127
Current liabilities 191 224 227 027
Provisions 20 378 18 347
Trade and other payables 76 336 108 546
Taxation 8 495 3 224
Bank overdraft 7 304 7 987
Employment benefit provisions 78 711 88 923
Total liabilities 495 352 533 602
Total equity and liabilities 1 242 987 1 175 665
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
year ended year ended
% 30 June 2011 30 June 2010
change R`000 R`000
Revenue 1 351 254 1 356 331
Operating costs (1 128 140) (1 226 759)
Operating profit 72 223 114 129 572
Other income 31 978 23 425
Net finance cost 1 478 (2 350)
Share of profit from associates 10 888 14 017
Profit before impairment and 267 457 164 664
amortisation
Impairment of investment (10 266) (67 313)
Impairment of intangible assets (4 958) (8 405)
Depreciation (44 170) (42 995)
Amortisation of intangible assets (35 542) (30 291)
Profit before income tax 172 521 15 660
Income tax expense (45 982) (18 027)
Profit/(loss) for the year from 126 539 (2 367)
continued operations
Profit/(loss) from discontinued (847)
operations
Profit/(loss) for the year 126 539 (3 214)
Total comprehensive income for 126 539 (3 214)
the year
Attributable to:
Equity holders of the parent 117 248 (7 413)
Non-controlling interest 9 291 4 199
126 539 (3 214)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Audited Audited
year ended year ended
30 June 2011 30 June 2010
R`000 R`000
Balance at beginning of the year 642 063 653 960
Issue of share capital 5 996 6 912
Revaluation of share-based payment (624)
liability
Revaluation of treasury shares issued (552) (610)
Foreign currency translation reserve 241
Share buyback from minorities (14 361)
Dividends paid (26 652)
Net profit/(loss) for the year 117 248 (7 413)
Profit/(loss) attributable to minorities 9 291 4 199
Balance at end of year 747 635 642 063
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Audited
year ended year ended
30 June 2011 30 June 2010
R`000 R`000
Net cash generated/(utilised) in operating 103 994 115 834
activities
Net cash inflow/(outflow) from investing (88 869) (68 554)
activities
Net cash inflow/(outflow) from financing 43 050 (8 782)
activities
Net cash flow from continuing operations 58 175 38 498
Net cash flow from discontinued operations
Net increase in cash and cash equivalents 58 175 38 498
Cash and cash equivalents at beginning of 114 536 76 039
the year
Cash and cash equivalents at end of the 172 712 114 537
year
Reconciled as follows:
Cash and cash equivalents on hand 180 016 122 524
Bank overdraft (7 304) (7 987)
172 712 114 537
EARNINGS ATTRIBUTABLE TO EQUITY HOLDERS
Audited Audited
year ended year ended
% 30 June 2011 30 June 2010
change R`000 R`000
Number of ordinary shares in issue 265 947 672 262 432 568
Number of preference shares in 16 638 000 16 638 000
issue
Weighted average number of 264 561 839 259 670 381
ordinary shares
Weighted average number of 311 493 781 305 199 704
ordinary shares and potential
ordinary shares
Headline earnings calculation
Basic earnings 117 248 (6 566)
Adjusted by:
- Shareholders for dividends (185)
written off
- Impairment of property, plant 146 5 020
and equipment
- Impairment of intangible assets 4 958 8 405
- Impairment of investment in 10 266 67 313
associate
- Profit on disposal of assets (1 226)
- Fair value gains (4 466)
- Profit/(loss) from discontinued (847)
operation
Headline earnings 126 926 73 140
Basic earnings per share (cents)
- Attributable to ordinary shares 44,32 (2,53)
(cents)
- Diluted earnings per share 37,64 (2,15)
(cents)
Headline earnings per share
(cents)
- Attributable to ordinary shares 70 47,98 28,17
(cents)
- Diluted earnings per share 70 40,75 23,96
(cents)
SEGMENTAL ANALYSIS
Audited results
for the year ended 30 June 2011
Profit before Total
Revenue tax assets
R`000 R`000 R`000
Healthcare administration 1 351 254 185 094 874 384
Electronics (including - 2 147 -
investment income)
Treasury activities - 8 049 110 272
Other (including inter-segment - (22 768) 258 331
eliminations)
1 351 254 172 521 1 242 987
Audited results
for the year ended 30 June 2010
Profit before Total
Revenue tax assets
R`000 R`000 R`000
Healthcare administration 1 356 331 17 144 836 519
Electronics (including - 8 657 -
investment income)
Treasury activities - 9 034 110 388
Other (including inter-segment - (19 175) 228 758
eliminations)
1 356 331 15 660 1 175 665
COMMENTARY
INTRODUCTION
The Board of Directors has pleasure in presenting the Group`s audited
results for the year ended 30 June 2011.
The volatile commercial and economic conditions which existed throughout the
year in South Africa demanded absolute focus and careful risk management of
the Group`s investment entities. The Board of Directors followed this simple
prescript, ranking consolidation and sustainability as the preferred path.
Accordingly, subsidiary and associate management diligently applied
themselves to the challenges presented in each case and by year end, could
look back with immense satisfaction at the outcome of their efforts.
Further detail on each of the Group`s more meaningful investments are set
out in the review that follows.
ACCOUNTING POLICIES AND BASIS OF PREPARATION
The condensed consolidated financial statements for the year ended 30 June
2011 are prepared in accordance with International Financial Reporting
Standards ("IFRS"), International Accounting Standard 34 (AC 500 Standards
as issued by the Accounting Practices Board or its successor), the JSE
Limited Listings Requirements and the South African Companies Act 71 of 2008
as amended. The condensed 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 2010.
NATURE OF BUSINESS
AfroCentric is a black-owned, diversified investment holding company. It is
listed on the Johannesburg Securities Exchange ("JSE") in the Healthcare
Sector under the code: ACT. The Group`s preference shares are also listed on
the JSE under the code: ACTP.
AfroCentric holds a substantial majority stake in Lethimvula Investments
Limited ("Lethimvula") and, during the year, increased its holding to 91,56%
(2010: 87,53%) through the purchase of minority shareholdings in that
company. AfroCentric continues to engage those Lethimvula shareholders who
offer their Lethimvula shares for sale. Lethimvula owns 100% of the
shareholding in Medscheme Holdings (Pty) Limited, a multi-medical scheme
administrator.
In 2010, Lethimvula acquired Old Mutual Healthcare and during this financial
year successfully integrated the divisional services of this business with
Medscheme Administration and Medscheme Managed Care respectively.
AfroCentric has a 27,1% minority interest in JSE-listed Jasco Electronics
Holdings Limited ("Jasco"). During the year under review, Jasco acquired
100% of the issued share capital of Spescom Limited, a company previously
listed on the JSE. Jasco has successfully integrated the operations of
Spescom and delisted the Spescom entity. Jasco also has an investment in
Malesela Taihan Electric Cables (Pty) Limited ("M-Tec").
Jasco provides solutions, services and products to customers through three
core verticals: Information and Communication Technologies, Industry
Solutions and Energy Solutions. M-Tec is a leading manufacturer and
distributor of fibre-optic cable and a wide range of power and telecom
cables, serving inter alia, the infrastructural development demands in the
South African and African continental markets.
AfroCentric`s exploration and prospecting relationship with Rio Tinto Plc
continues in terms of the Reciprocal Strategic Co-Operation Agreement.
OPERATIONAL REVIEW
Operating profit increased 72% to R223 million (2010: R130 million) due to
an absence of prior non-recurring restructuring and integrations costs.
Organic growth and the increased scale and rationalisation of overheads
arising through the Old Mutual Healthcare acquisition also significantly
contributed to improved efficiencies and profitability during the year.
Lethimvula`s profitability is substantially on target with its forecasts,
positively trending towards the profit warranty thresholds on which the
price of Lethimvula`s shares will finally be determined.
During the year, Lethimvula acquired all of the shares not already owned by
Lethimvula in Administrators and Consultants Limited whose main operations
are the administration of medical schemes in Mauritius.
AfroCentric`s investment in Jasco yielded earnings of R2,1 million (2010:
R8,7 million) and investment income of R7,4 million (2010: R8,3 million) for
the year ended 30 June 2011. Notwithstanding challenging times in the
telecommunications industry, Jasco sustained its core profitability after
removing once-off costs associated with the acquisition of Spescom
Limited.Jasco has also transitioned to a new era of leadership and with
refocused management across the three core verticals referred to above,
Jasco is today a much larger business, well positioned to take advantage of
accelerated growth in energy and industrial services. 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. The
nickel prospect in the North West Province has shown promising
electromagnetic conductors which could be related to nickel mineralisation.
Drill testing is scheduled to commence in the next quarter.
FINANCIAL RESULTS
For the year ended 30 June 2011, basic earnings per share ("EPS") increased
to 44,32 cents (2011: -2,53 cents) and diluted EPS increased to 37,64 cents
(2010: -2,15 cents). Headline earnings per share ("HEPS") increased by 70%
to 47,98 cents (2010: 28,17 cents) and diluted HEPS increased by 70% to
40,75 cents (2010: 23,96 cents).
PROSPECTS
The Board has consistently adopted a cautious approach to the approval of
new acquisitions. However, the positive trend in profitability and the
renewed growth potential in each of the Group`s more material investments
has already prompted the Investment Committee to consider further investment
opportunities.
PRE- AND POST-YEAR END EVENTS
In the 2010 annual report, the Board reported on the various processes in
progress with the Council for Medical Schemes ("CMS") in regard to
administration services provided by Medscheme to Bonitas Medical Scheme. The
Board is pleased to advise shareholders that in a letter received from the
CMS on 30 August 2011, the CMS confirmed that all administrative issues had
been resolved.
In addition, Medscheme have proudly reported that two further contracts have
been concluded for the provision of administration and managed care services
to the Government Employee Medical Scheme ("GEMS") taking the total number
of contracts with GEMS to six.
AUDIT OPINION
The Group`s annual financial statements have been audited by SizweNtsaluba
VSP and their unqualified audit report is available for inspection at the
registered office of the company.
DIRECTORS
The Board is pleased to advise that Mrs Yasmin Masithela and Mr Garth Napier
have been appointed as independent non-executive directors of the company
with effect from 1 September 2011.
CASH DISTRIBUTION DECLARATION BY WAY OF A CAPITAL REDUCTION OUT OF SHARE
PREMIUM
The Board has declared a cash distribution of 9 cents (2010: 7,5 cents) per
ordinary share for the year ended June 2011 to all ordinary shareholders of
AfroCentric.
The salient dates relating to the cash distribution are as follows:
Last day to trade "cum" the cash Friday, 18 November 2011
distribution
Ordinary shares commence trading ex the cash Monday, 21 November 2011
distribution
The cash distribution record date Friday, 25 November 2011
Payment date of the cash distribution Monday, 28 November 2011
Ordinary share certificates may not be dematerialised or rematerialised
between Monday, 21 November 2011 and Friday, 25 November 2011 both days
inclusive.
By order of the Board
Michael I Sacks CA (SA) AICPA (ISR)
Company secretary
Johannesburg
27 September 2011
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")
Directors
NB Bam** (Chairperson)
JM Kahn**
MI Sacks**#
B Joffe**
MJ Madungundaba**
Y Masithela*
AT Mokgokong**
G Napier*
WRC Holmes***
*independent non-executive
**non-executive
***executive
#company secretary
Registered Office
10 Muswell Road South, Bryanston 2191
Sponsor
Sasfin Capital (A division of Sasfin Bank Limited)
Date: 27/09/2011 16:21:08 Produced by the JSE SENS Department.
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