DURBAN - Investment holding company AfroCentric Investment Corporation reported a double-digit growth in profits for the six months to end December on the back of its diversification strategy. The group’s profits increased by 14.6percent to R200.46million during the period, up from R385.01m compared to last year.
AfroCentric’s brands includes medical aid company Medscheme and Pharmacy Direct.
“The financial performance for the six-months period starts to present the benefits of the group’s deliberate diversification strategy, revealing the solid growth in the maturing trading cluster.
"The beneficial effect of the acquisition of the shares in Activo Health in 2019, the impressive growth in Scriptpharm, including the enduring volume activity in Pharmacy Direct, were the notable contributory factors, yielding growth in comparative operating profits in excess of 50percent,” the group said.
AfroCentric acquired the 74percent stake in Activio Health for R588m in 2018 through its subsidiary ACT Healthcare Assets.
Its services cluster, mainly supported by the medical scheme administration business, had also performed well with open scheme growth of a net 18000 members during 2019, but was offset by the loss of the Old Mutual Staff Medical Aid fund.
However, the growth in membership in Gems in excess of 22000 members supported a consistent operating profit performance.
AfroCentric had secured two important contracts for efficient chronic medical and HIV management.
Medscheme has secured the contract to administer Medipos Medical Scheme, effective at the beginning of next month, and it is in the process of acquiring 100percent of the Denis Group, which specialises in dental benefit management.
“The transaction enables the group to focus specifically on cost reduction and innovation in the dental treatment offerings to all SA medical schemes and their members. The transaction is subject to Competition Commission approval,” the group said.
Total revenue increased by 34.8percent to R3.11 billion while operating profit increased by 22.6 percent to R439.3m. Its normalised headline earnings per share increased by 11.8 percent to 24.36cents and the group declared an interim dividend of 17c.
“AfroCentric has once again delivered a very satisfactory operating result, particularly during a period of challenging political and economic uncertainty, not least a period characterised by a lack of economic growth and declining consumer disposable incomes,” the group said.
AfroCentric share closed 1.72percent lower at R2.85 on the JSE on Friday.