AfroCentric Investment Corporation - Interim Results for the period ending 31 December 2019
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AfroCentric Investment Corporation
Interim Results for the period ending 31 December 2019
2020 Interim Review
Group CEO: Ahmed Banderker
STATE OF THE MEDICAL SCHEMES INDUSTRY
Premium increases > CPI
Buy-down trend to continue
Low Cost Benefit Options
Limited overall membership growth
14m taxpayers vs. 8.9m medical aid lives
NHI uncertainty remains
COVID-19
OUR VISION AND PURPOSE OUR VISION Transforming healthcare OUR PURPOSE Enhancing the quality of life
GROUP STRUCTURE
Most focused and diversified
Healthcare company in
Southern Africa
Medical Aid Administration, Risk
Pharma Cluster Corporate Solutions
Management and Technology
3.7m lives Largest SA courier pharmacy Primary Care & Occupational
39% market share Full value chain acquired Health Clinics
Bonitas positive growth Highly impactful on overall Reduces healthcare costs
Scheme mergers and acquisitions healthcare spend Medical scheme integration
NHI potential
OUR STRATEGY AND APPROACH
Transitioning to Phase 2
Phase 1 Phase 2
• Operational Excellence
• Unlocking Synergies for
growth
• Disruptive Models
• Creating value and delivering
the returns
Acquisition of • Investing in our People
building blocks
TRANSFORMING HEALTHCARE
3 YEAR STRATEGIC PLAN
Be the BEST at what we do…
Administration Platform (Cost and performance)
People skills and culture – Leadership Excellence & Culture Transformation
Aggressively target Schemes with new models
Explore new structures for small Schemes
Exploring disruptive models
Digital Initiatives – UX and Self Service
Optimise Business Processes
STRATEGIC INITIATIVES
ROBOTICS HOSPITAL OPERATIONAL STAFF TO IT OPERATING PHARMACY
Process automation BENEFIT EFFICIENCIES MEMBER RATIO MODEL AUTOMATION
MANAGEMENT Reduced call time Improvements Enhancement focus Proof of Concepts
areas
PROJECT
1st phase – July 2020
BUSINESS TEAM SPLIT RISK CX CULTURE
OPPORTUNITY Customer journey ACT First
REVIEW RESTRUCTURE maps
Performance based Medscheme COO Employees want
role still vacant choiceRECENT ACHIEVEMENTS
Approach already yielding positive results…
NEW BUSINESS
Acquisition of DENIS
Winning MEDiPOS contracts
Scriptpharm
Primary Care and Occupational Health
CLIENTS RETAINED
PHA retained 2 Hosmed contracts
Pharmacy Direct retained Medshield
AWARDS
FICO Decisions Award ceremony
PMR AwardA TRACK RECORD OF GROWTH
OPERATING
PROFIT
R’m - LIVES
1 000
1000 4 500 000
900
900 4 000 000
800
800 3 500 000 21.1%
Compound
700
700 3 000 000 Annual
600
600 Growth over
2 500 000
10 years
500
500
2 000 000
400
400
1 500 000
300
300
1 000 000
200
200
100 500 000
100
00 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Services operating profit Retail operating profit Lives
Interim results annualisedCOVID 19 - OFFER OF ASSISTANCE
AfroCentric has offered its services to the National Minister of Health
BASIS FOR ASSISTANCE
ACT’s Pharmacy Direct has been a holder of contracts for the Centralised Chronic Medicine Dispensing
and Distribution (CCMDD) programme of the National Department of Health since inception in 2014
Current CCMDD Previous CCMDD contract
contract (2014 - 2018)
Pharmacy Direct until recently delivered
Pharmacy Direct delivers chronic Pharmacy Direct is currently
medication to district health facilities in chronic medication to district health facilities
four provinces: in four provinces: delivering 1 million parcels
Limpopo
per month between private and
North West Province
public contracts
Northern Mpumalanga Gauteng
Cape
Free State
KwaZulu-Natal
Eastern CapeCOVID 19 - OFFER OF ASSISTANCE
AfroCentric has offered its services to the National Minister of Health
Containing this airborne virus requires: ACT offered distribution to all CCMDD patients or
bulk delivery to facilities of:
• Awareness
Information flyers / booklets
• Use of hand sanitisers
Hand sanitisers
• Masks covering nose and mouth Masks
(where necessary) Activo acquired immune boostersInterim Financial Review
Group CFO: Hannes BoonzaaierMedical Aid Administration, Risk
Pharma Cluster Corporate Solutions
Management and Technology
Medscheme SA Pharmacy Direct AfroCentric Integrated Corporate
AfroCentric Technologies Activo Solutions
Marketing Scriptpharm Wellness Odyssey
Group head office MMed EssentialMed
Revenue - R’m Revenue - R’m Revenue - R’m
2018 R 1 828 2018 R 700 2018 R 23
8% 112% 2019 R 52 127%
2019 R 1 950 2019 R 1 483
Operating Costs - R’m Operating Costs - R’m Operating Costs - R’m
2018 R 1 564 2018 R 666 2018 R 26
7% 2019 R 1 368
106% 2019 R 46
76%
2019 R 1 672
Operating Profit* - R’m Operating Profit* - R’m Operating Profit* - R’m
2018 R 264 2018 R 34 2018 R (3.6)
2019 R 277 5% 2019 R 115 233% 2019 R 5.3 249%
PD R25m
Efficiency projects starting to yield results Activo R43m R81m Anticipating first significant primary care
Diversification within the membership base Scriptpharm R 13m client
* Operating profit excluding IFRS 16 lease reversals per segmental analysis.2019 2018 2017
R’m R’m R’m
398.0 294.8 283.6
Operating Profit*
35.0% 3.9%
(9.4) 20.1 20.8
Net Finance Income / (Cost)
n/a 3.3%
(106.4) (82.0) (67.3)
Depreciation / Amortisation
29.7% 21.8%
IFRS 16 (Leases) Net effect (10.0) (4.5) -
(3.5) 11.2 11.5
Other
(n/a) 2.6%
268.7 239.6 248.6
Profit before tax
12.2% (3.6)%
*2018 and 2019 operating profit stated after actual lease costs to be in line with 2017 standard pre IFRS 16.Operating Profit 2019 2018 2017
R’m R’m R’m
EssentialMed (Health Insurance) 2.0 (2.5) -
Mmed (Surgicals / Consumables) (2.7) (2.9) -
Eswatini (Administration) (4.4) (3.4) (6.7)
Scriptpharm (Pharma Managed Care) 9.5 3.5 -
TOTAL 4.4 (11.8) (6.7)Most notable changes
31 Dec 2019 31 Dec 2018
Notes
R’m R’m
Land and Buildings 263.3 119.0 Medscheme purchase of office block - R77m
Activo acquisition - R278m
Intangible Assets 1 265.2 937.3
Cash 205.9 275.5 Cash utilised to reduce borrowings
R98 million capital reduction in less than 9 months
Net Borrowings 452.5 -
(max drawing R550 million)
Activo acquisition brought R162m into group; MMed
Inventory 331.4 100.6
inventory levels at R90m
Trade Payables (534.0) (306.5) Activo and MMed supplier accounts
Trade Receivables 559.5 445.2 Activo R83m
Net Working Addition of Activo and growth in Pharmaceutical
Capital
356.5 239.2 cluster2019 2018 2017
574 241 554 377 554 377
Weighted average number of shares (‘000)
3.6% 0%
134.8 120.9 119.9
Base Earnings (R’000)
11.4% 0.8%
134.8 123.9 120.1
Headline Earnings (R’000)
8.7% 3.2%
23.48 21.83 21.62
Earnings per share (cents)
7.6% 1.0%
23.47 22.35 21.67
Headline Earnings per share (cents)
5.0% 3.1%
523 487 456
Net Asset Value per share (cents)
7.4% 6.8%CORPORATE SOLUTIONS
PHARMA CLUSTER
EssentialMed
Health Insurance CMS Circular 80 Pharmacy Direct
2018 R 40.5m
Wellness R 65.1m
2019
• 2018 R 4.0m *New NDoH contract stabilization
• 2019 R 5.2 m
MEDICAL AID ADMINISTRATION, during 2019
Other RISK MANAGEMENT AND Scriptpharm contracts
• Home Based Nursing 2018 – Nedgroup R 40m
• Occupational Health TECHNOLOGY
2019 – Add POLMED R 500m
offering 2020 – Add Bonitas R 780m
- Anticipating first Medscheme client base
significant contract Activo (full year per circular)
Bonitas members 8 000 2019 R 95m
Fedhealth members 7 000 2020 R 131m
MMed integration with scheme
Closed schemes 19 000
procurement??
GEMS members 21 000 *Dental offering via DENIS acquisition
awaiting Competition Commission
*MEDiPOS joining 1 April 2020 approval
(approximately 12 000 members)Thank You Interim Results for the period ending 31 December 2019
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