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Chief Financial Officer's report

This report is intended to provide a high level overview of the financial performance of the AfroCentric Group for the year ended 30 June 2014. It should be read in conjunction with the consolidated annual financial statements and the notes detailed on pages 110 to 188.

Financial results

Revenue increased by 11% to R1.9 billion.

Operating profit of R356.4 million reflected an increase of 7% compared to the prior year, resulting in a slight margin decline, due substantially to costs incurred for the anticipated need for further clinical and IT capacity.

The Group incurred an IFRS 2 compliance charge of R10.7 million relating to extended Executive Share Awards granted in 2008 on the original acquisition of AfroCentric Health Limited (formerly Lethimvula Investments Limited).

During the period under review, the Group fully impaired a stand-alone, non-performing investment totalling R40 million.

Headline earnings

Headline earnings of R184 million reflect a satisfactory increase of 42%. Diluted headline earnings per share increased to 47.83 cents per share (2013: 28.62 cents per share). These statistics should be considered by further reference to the comments in this Integrated Annual Report on the nature and extent of the further shares issued during the 2014 financial year.

Cash flow

The Group generated cash from operations of R321 million again reflecting the very strong cash generating nature of the Group’s primary activities.

After tax and dividend payments, cash from operating activities totalled R142 million. Net cash outflow from investing activities totalled R63 million.

Cash and cash equivalents at June 2014 are R389 million compared to R360 million at June 2013.

Financial position

Total assets of the AfroCentric Group are R1.5 billion at 30 June 2014. Of significance is the Group's comfortable current ratio of 2.6 on 30 June 2014.

Ordinary shareholder's funds are approximately R1.1 billion, of which distributable reserves amount to R518 million.

Non-current borrowings of R113 million is the remaining amount owing on the original debt of R300 million raised on the acquisition of AHL.

Dividends

The Board of Directors has announced that a dividend of 18 cents per ordinary share (gross) has been declared for the year ended 30 June 2014 (2013: 15 cents).

Conclusion

Now that the acquisition of AHL has been successfully concluded, it is pleasing to reflect on the progress of AHL, having evolved over the past five years into a significant player in the private healthcare industry, with an experienced and talented management team and operating under a level 2 BBBEE rating.

The Group’s investment in Jasco has been somewhat disappointing, but after its recent restructuring and recapitalisation, hopefully the business will start to generate improved profits in the years ahead.

The Group’s balance sheet is largely ungeared, its cash flows have been consistantly strong and the Board remains confident in the Group’s positive direction for 2015.

Mr Wallace Holmes
Group CFO