Flat headline earnings hurt AfroCentric’s share price

flat headline earnings hurt afrocentrics share price - Flat headline earnings hurt AfroCentric's share price

DURBAN – Afrocentric Investment Corporation’s share price declined by more than 7 percent on Friday as the investment holding company reported muted growth in headline earnings for the year to the end of June.

The share closed 2.94 percent down at R3.30.

Headline earnings increased by 1.6 percent to R265.2 million, up from R269.9m compared to last year. The group attributed the flat headline earnings to increased gearing and the higher amortisation costs of intangible assets.

This comes after the group made some notable acquisitions during the year. AfroCentric acquired an additional 25 percent stake in AFA Botswana, effective March 1. The acquisition will effectively increase Medscheme’s shareholding to 49 percent. 

It also acquired a further 74 percent stake in Activo Health, also effective March. The group holds a 100 percent stake in the company as well as the acquisition of Sanlam Health, which represents an administrator with specialised skills in combined corporate health offerings and an administration system.

AfroCentric operates in and provides specialised services to the public and private healthcare sectors and has Medscheme as its principal subsidiary. Medscheme has 3.7 million members.

Having concluded the acquisitions, the group said its financial position remained sound, cash reserves were adequate with some gearing having been implemented to acquire Activo Health.

“At corporate and operational level, management is assessing and implementing plans for real growth and pursuing selective local opportunities to complement the existing product and service offerings,” the group said.

The group reported a 25.7 percent increase in revenue to R5.3 billion, boosted by its acquisitions. However, profit before tax declined by 1.8 percent to 528.5m.

“The earnings results depict a picture of transition as the group is transforming its healthcare offerings and composition of earnings. The healthcare services business experienced increased membership and additional managed care contracts but operating profit was depressed by take on costs for the initial uptake,” the group said.

Healthcare retail operating profit increased by 90.6 percent to R129.2m, but the group’s operating profit was only up by 8.8 percent to R677.7m.

Normalised headline earnings per share increased by 3.1 percent to 49.13 cents a share. The group declared a final gross dividend of 17c, in addition to the 17c declared during the interim period.

113270956 - Flat headline earnings hurt AfroCentric's share price


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