AfroCentric Group continues its boisterous run

The AfroCentric Group, recently rated as one of the top 40 fastest growing companies on the JSE, continued its boisterous run by posting a solid 45.88% growth in profit before tax in its interim results for the six months ended December 2016.

The group's results were driven by growth in the health business and the positive trajectory of its subsidiaries. The growth in the healthcare service business and the healthcare retail business contributed to a 25.51% increase in revenue and 24.06% increase in healthcare operating profit.

Group CEO, Antoine van Buuren, says: "A key milestone was our success in winning the Polmed administration and managed care contracts as well as our role in supporting the take-on of amalgamating Liberty Medical Scheme into Bonitas."

Van Buuren points out the group's efforts to diversify revenue streams beyond health administration are starting to yield positive results. "AfroCentric Group subsidiary, Pharmacy Direct, continues to make impressive progress – this business has secured further contracts to deliver chronic medication to patients and is now operating in seven of the nine provinces in the country," he explains.

"As a group, we expect the consolidation of the health sector to continue and are confident that our value proposition and experience will assist the group to play a role in amalgamation projects going forward. We also intend to expand our existing healthcare enterprises and to make acquisitions within the sector to broaden our role in the healthcare sector," says Van Buuren.

The group's results indicate that dilutionary impact on earnings, arising on the subscription by Sanlam for 28.7% of the shares in ACT Healthcare Assets and the WAD acquisition through the issue of AfroCentric shares in 2015, was almost exceeded with the group's earnings per share and headline earnings per share decreasing by 1.61% and 4.86% respectively.

Furthermore, another dilutionary non-cash-flow item that impacted earnings for the interim period is the deemed interest charge of R23 million on the Sanlam conditional Put Option Obligation that is recorded to the income statement.

"This significant accounting entry per IFRS is not expected to ever be incurred, as it is highly probable that the profit warranty will be met in the absence of any material event occurring in the next three months towards the financial year-end of 30 June 2017," adds Van Buuren. He adds: "This option is also a last resort for Sanlam to be refunded for its investment in the most extreme scenario, but had to be accounted for in this manner in compliance with the accounting standards."

With the prevalence of fraud in the healthcare sector, AfroCentric has launched the Insurance Fraud Manager (IFM) program. The software, acquired from FICO, is proving to be a game changer by identifying fraud, detecting waste and abuse in all administered schemes. "Through IFM, we intend to help clients to reduce fraud losses and grow revenues by making ourselves a preferred administrator," concludes Van Buuren.

AfroCentric is the most transformed listed entity in the healthcare sector of the JSE, with a B-BBEE rating of level 2 under the revised 2015 codes. The group is chaired by renowned entrepreneur, Dr Anna Mokgokong, who is a recipient of the SA Lifetime Award 2015 and was recently appointed as an honorary ambassador to Iceland.