ACCOUNTING POLICIES AND BASIS OF PREPARATION
The condensed consolidated financial statements for the year ended 30 June 2014 are prepared in accordance with the requirements of International Financial Reporting Standards (“IFRS”), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, 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 2013 in terms of IFRS.
NATURE OF BUSINESS
AfroCentric Investment Corporation Limited (“AfroCentric”) is a black-controlled, diversified investment holding company. It is listed on the Johannesburg Stock Exchange (“JSE”) in the Healthcare Sector under the code: ACT.
AfroCentric holds a substantial 94.10% majority stake in AfroCentric Health Limited (“AHL”). AHL owns 100% of the issued share capital in Medscheme Holdings (Pty) Limited (“Medscheme”), a multi-medical scheme administrator and managed care provider. As the largest health risk management services provider and third largest medical scheme administrator in South Africa, Medscheme’s focus is to achieve sustainability through innovation, effective health risk management, complemented by a relentless drive for operational efficiency and service excellence.. Medscheme has over 3.2 million lives under management. Medscheme’s healthcare management expertise has been gained over 42 years, which includes several years of experience with the Government Employees Medical Scheme (“GEMS”). Although Medscheme is essentially a South African enterprise, the Group has a meaningful presence in Botswana, Namibia, Mauritius, Swaziland, Kenya and Zimbabwe. Medscheme’s operations in Mauritius provide an excellent platform for further international expansion and AHL continues to explore other opportunities on the African continent and elsewhere.
AfroCentric has a 20.27% non-controlling interest in JSE-listed Jasco Electronics Holdings Limited (“Jasco”). Jasco provides solutions, services and products to customers through three core verticals: Information and Communication Technologies, Industry Solutions and Energy Solutions.. Further information on Jasco can be found on the JSE lists under the code: JSC.
AfroCentric’s exploration and prospecting relationship agreement with Rio Tinto PLC continues in terms of the Relationship and Strategic Cooperation Agreement (“RSCA”).
OPERATIONAL AND FINANCIAL REVIEW
AfroCentric’s profit before impairment and amortisation increased by 16.6% to R378 million during the period under review. (2013: R324 million). The improved profitability arises primarily from AHL’s increased revenue growth of 10.6% from incremental medical scheme membership across the total portfolio. In order to create greater IT capacity and the development of clinical skills, additional human resources were recruited to service the Group’s organic growth, including requirements arising through successful awards of additional contracts. In anticipation, the cost base of the Group increased disproportionately during the second half of the year. This increase in the cost base is expected to remain static for the remainder of 2014, with a more efficient recovery rate being attained in this period. During February 2014, Medscheme was awarded a claims administration contract from the Road Accident Fund (“RAF”). The contract entails the legal, medical and financial analysis of RAF claims. This contract is expected to generate more meaningful revenues in the 2015 financial year. In addition, Helios, AHL’s IT subsidiary, was appointed the IT systems service provider to CIMAS, the largest medical scheme in Zimbabwe. This contract was only effective from 1 January 2014 and should similarly make a greater contribution to Group revenues in the 2015 financial year. Over the past four years Medschemes’s core operations have enjoyed a compound average growth rate of 28.6%.
AfroCentric’s investment in Jasco has yielded a small profit of R2.8 million. The various business units in Jasco have been restructured over the past three years and hopefully given the recent recapitalization, the business will start to generate improved profits for the 2015 financial year.
Given the issue of shares for the redemption of the preference shares, as well as the issue of shares for the second tranche payments, both occurring during the year, the Board has always been of the view that headline earnings and diluted headline earnings per share, as a measurement, best represents the performance of the Group. Headline earnings increased by 41.89% to R184 million compared to R130 million in 2013. Diluted headline earnings per share increased from 28.62 cents in 2013 to 47.83 cents for this year.
AfroCentric has been under a Cautionary notice since 10 June 2014. The Board is now pleased to announce that the Company has concluded two material transactions, the broad nature of which are as follows:
Further information and details of the transactions were released on SENS on 30 September 2014.
Apart from the Group’s consistent past trends of growth, both transactions referred to herein, expand the Group’s value proposition for all stakeholders, materially enhances its marketing and distribution channels, significantly expands its capital base and positively positions the Group for accelerated growth.
Mr. Brian Joffe resigned as a Director on 3 March 2014. There have been no further changes to the AfroCentric Board during the year.
The Board of Directors has pleasure in announcing that a dividend of 18 cents per ordinary share (gross) has been declared for the year ended 30 June 2014. Dividends are subject to Dividends Withholding Tax. In accordance with the provisions of the JSE Listings Requirements, the following additional information is disclosed.
The salient dates relating to the ordinary dividend are as follows;
Share certificates for ordinary shares may not be dematerialised or rematerialised between Monday, 24 November 2014 and Friday, 28 November 2014, both days inclusive.
The information included in this report is extracted from audited information, but is not itself audited. The directors take full responsibility for the preparation of this report and the financial information has been correctly extracted from the underlying group’s financial statements.
The auditors, SizweNtsalubaGobodo Inc and PricewaterhouseCoopers Inc, (“the auditor”) have issued their unmodified opinion on the group’s financial statements for the year ended 30 June 2014. The audit was conducted in accordance with International Standards on Auditing. A copy of the auditor’s audit report together with the group’s financial statements is available for inspection at the company’s registered office. Any reference to future financial performance included in the announcement, has not been reviewed or reported on by the company’s auditors.
|AfroCentric Investment Corporation Limited|