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Currently viewing: Directors' report / Next: Report of the Audit Committee Directors' report The AfroCentric Board of Directors presents its annual report for the year ended 30 June 2014. Nature of business The Company is a blackowned, diversified investment holding company which is listed on the JSE and trades in the Healthcare Sector under code ACT. Business activities The business activities of the Group are segmented into three diversified areas: AfroCentric Health, AfroCentric Technology and AfroCentric Resources. AfroCentric Health The majority stake held by AfroCentric (“the Company”) in AHL as at 30 June 2014 was 94.1% (2013: 94.07%). AHL is one of the three areas of diversification for the Group. AHL owns 100% shareholding in the following subsidiaries: Medscheme Holdings (Pty) Ltd A wellknown and growing multimedical schemes administrator. Helios IT Solutions (Pty) Ltd Originally part of Medscheme, this business has now been independent and standalone for one financial year. The subsidiary provides healthcentric technology solutions. Aid for Aids Management (Pty) Ltd Specialists in AIDSrelated treatments for medical aids and corporate clients. The business received accreditation from the Council for Medical Schemes in May 2012 and has been transferred out of Medscheme to form a new subsidiary. AfroCentric Technology Jasco Electronics Holdings Ltd The Company holds a 20.27% minority interest in Jasco Electronics Holdings Limited (“Jasco”). Jasco is listed on the JSE and provides solutions, services and products to customers through three core divisions, namely Information and Communication Technologies (“ICT”), Industry Solutions (“Industry”) and Energy Solutions (“Energy”). ICT Solutions contains the telecommunications and information technology businesses of Jasco, Spescom, ARC Telecoms and the telecommunications arm of associate M-TEC. Industry Solutions contains the security business and FerroTech. Energy Solutions contains Electrical Manufacturers and Lighting Structures, as well as the energy arm of M-TEC. This associate business diversifies the AfroCentric Technology area of the Group’s interests. AfroCentric Resources Rio Tinto Plc Rio Tinto Plc is the third area of diversification for the Group under the AfroCentric Resources area. Rio Tinto is a world leader in exploration, mining and processing the earth’s mineral resources. AfroCentric has an exploration and prospecting relationship agreement with Rio Tinto in terms of the Reciprocal Strategic Cooperation Agreement. Financial review For the 2014 financial year, consolidated revenue increased by 10.62% to R1.96 billion. The Group headline earnings increased by 42% to R183.9 million compared to R129.6 million in the prior year and the diluted headline earnings per share increased by 67% to 47.83 cents per share (2013: 28.62 cents per share). The activities and results of the Group are presented on pages 123 to 188. Going concern The annual financial statements have been prepared on the going concern basis. The Board of Directors has performed a review of the Group’s ability to continue as a going concern in the foreseeable future and therefore, based on this review, considers the preparation of the annual financial statements on this basis to be appropriate. Dividends In respect of the 2013 financial year a final dividend of 15 cents per ordinary share (gross) was declared and no preference dividend was provided for as the ordinary dividend was paid after the date on which the preference shares were converted or redeemed. The Company declared a dividend of 18 cents per ordinary share for the year ended 30 June 2014. These dividends are subject to the Dividends Withholding Tax in terms of the Income Tax Act (Act No 58 of 1962, as amended) for which shareholders are liable. In accordance with the provisions of the JSE Listings Requirements, the following additional information is disclosed:
Share capital The Company’s share capital increased during the year from 270 010 639 to 467 855 101 ordinary shares due to the issuing of AfroCentric ordinary shares for the Executive Share Awards, second tranche transaction as well as the preference share redemption that took place during the year. The details of the Company’s share capital are set out on note 19 on pages 169 and 170 of this report. As per the Companies Act No 71 of 2008, section 38, the Board of Directors may resolve to issue shares of the Company at any time, but only within the classes, and to the extent, that the shares have been authorised by or in terms of the Company’s Memorandum of Incorporation. Share repurchases During the year, no share repurchases were made by the listed Company. AfroCentric Health Limited holds 1 072 451 treasury shares (2013: 580 874). Audit and Risk committees The information relating to the Audit and Risk committees is set out on pages 103 and 104. Directors The following information relates to the Directors of AfroCentric for the financial year ended 30 June 2014:
Re-election of directors Dr AT Mokgokong, Ms Y Masithela, Mr MJ Madungandaba and Mr G Napier will be standing for re-election at the forthcoming AGM. Directors' ordinary shareholdings 2014
Directors' ordinary shareholdings 2013
Since the end of the financial year to the date of this report, the interests of Directors have remained unchanged. A further detailed analysis of shareholders including majority shareholding is available on pages 119 to 120. At the date hereof, none of the Directors have entered into a service contract with the Company except for Mr J Appelgryn who provides consulting services to the Group. During the year under review, no material contracts in which Directors have an interest were entered into which significantly impacted the business of the Company. Directors’ remuneration Remuneration of Non-Executive Directors and Board Committee members Non-Executive Directors received the following total remuneration for the year under review:
Remuneration of Executive and Non-Executive Directors Details of the remuneration are set out fully in Note 30 of the Group annual financial statements. Remuneration of the three highest paid employees who are not Directors
Company Secretary and registered office The role of Company Secretary was outsourced to Statucor (Pty) Ltd (“Statucor”) and the appointment was approved by the Board on 3 June 2013. The Board was satisfied that Statucor was suitably qualified for the position. The Board was satisfied that Statucor (Pty) Ltd complied with section 87 of the Companies Act and that the Statucor team had the necessary skills and experience to be appointed as its Company Secretary. The Statucor team had an arm’s length relationship between itself and the Board, as required by the Companies Act. Statucor has since resigned as Company Secretary with effect from 28 February 2014. Wilbert Mhlanga has been appointed as the Company Secretary with effect from 1 March 2014 and the Board is satisfied that Wilbert has the necessary skills and experience to be appointed as the Company Secretary. Wilbert has an arms length relationship with the Board as he is not a Board member. Material resolutions In terms of the JSE Listings Requirements the Company noted the material resolutions passed at the prior Annual General Meeting and during the financial year under review:
Details of these resolutions can be obtained via the Company’s website or on request. Material commitments, lease payments and contingent liabilities No material capital commitments or lease payments have been contracted for or approved by the Board of Directors. No contingent liabilities exist at the balance sheet date. Litigation statement In terms of the JSE Listings Requirements the Directors note that they are not aware of any legal or arbitration proceedings that are pending or threatened, that may have or have had in the recent past, being at least the previous 12 months, a material effect on the Group’s financial position, apart from the matters per Note 38 of the annual Borrowing powers In terms of the Memorandum of Incorporation, the borrowing powers of the Company are unlimited. Insurance The Group protects itself and the Directors against crime and professional indemnity by maintaining a comprehensive insurance programme. Compliance No events or actions during the financial year have led to the Group being non-compliant with the required laws and regulations relevant to the individual business units. Auditor PricewaterhouseCoopers Inc. and SizweNtsalubaGobodo Inc. have been appointed as joint auditors of the Company. The Company’s interest in subsidiaries and associates:
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| AFROCENTRIC INTEGRATED ANNUAL REPORT 2014 |