In the media

AfroCentric interim operating profit jumps 7%

25 March 2014

BLACK-owned investment holding company AfroCentric on Monday reported a 7% increase in operating profit to R145m for the six months ended December, thanks to organic revenue growth from its Medscheme subsidiary.

Group revenue was up 14% to R937m, while diluted headline earnings per share jumped 48% to 26.09c. This was, in part, a result of lower international financial reporting standards costs compared with the prior interim period.

Listed technology company Jasco Electronic Holdings, in which AfroCentric has a 27.3% stake, returned to profitability during the period. But the fall in Jasco's share price in the period required a negative fair value adjustment of R7.9m.

AfroCentric director Motty Sacks said yesterday the group was "very happy" with the result, given that Medscheme and AfroCentric's earnings were usually higher in the second half of the year.

The growth in revenue was primarily because of organic revenue growth under Medscheme, which is held under AfroCentric's subsidiary, AfroCentric Health.

Medscheme is a multi-medical-scheme administrator and managed-care provider.

Further, the group said AfroCentric Health's efficiency gains through a focus on cost containment and overhead rationalisation, arising from economies of scale, helped boost operating profit.

After the interim period under review, Medscheme was appointed to assess and validate third party road accident claims for the Road Accident Fund.

AfroCentric said it remained "vigilant" about Jasco's performance and would look to support the company in its intended disposal of its investment in M-Tec.

Jasco has been a troubled investment for AfroCentric, which has no management control in the company.

Jasco has been looking to sell its M-Tec business, which has been behind its underperformance.

AfroCentric reported that there had been no further development in the status of the its proposed iron-ore joint venture project with Rio Tinto. The group was waiting for the relevant approval of rights from the Department of Mineral Resources.

AfroCentric's share price fell 4.35% after the release of its results on Monday and closed at R4.40.

Mr Sacks said the company's growth in the six years of existence had benefited its black economic empowerment shareholders, "which has given us a lot of satisfaction".

The group reported that during the interim period, the profit warranty undertakings by AfroCentric Health vendors in 2008 "were finally measured".