AfroCentric Investment Corporation Limited · JSE:ACT
AfroCentric Investment — H1 2019 Earnings Presentation
36 slides from AfroCentric Investment's earnings presentation, 2019
Slide 1: AfroCentric Investor Day: 2019 Interim Results
A AfroCentric Investor Day. 2019 INTERIM RESULTS
Slide 2: Dr. Anna Mokgokong, Group Chairperson
Dr. Anna Mokgokong Group Chairperson
Slide 3: Sanlam track record and board changes
Sanlam track record CE of Sanlam Strategic Business Development since 2011 Non-executive Director of AfroCentric since 2015 Non-Executive Director of Medscheme Growth focus Recent acquisitions * Maximise value through Group integration Enhancing AfroCentric growth prospects * Value Chain Optimisatio
Slide 4: Antoine van Buuren, Group CEO: Delivering on focus areas
AfroCentric Antoine van A Buuren Group CEO Delivering on focus areas Lowering the cost of healthcare
Slide 5: Delivering on focus areas: AI and digital transformation
Delivering on focus areas Md Afrocentric Artificial Intelligence (Al) Al and neural networks for real-time identification of high risk hospital cases and outliers requiring intervention Data FICO Service Delivery AWARDS 2018 Expansion of Robotic Process Automation Innovative new benefit design imple
Slide 6: Delivering on focus areas: digital service delivery and RPA
Delivering on focus areas ee, Dhroconinc Easy access to a variety of AfroCentric services Digital Service Delivery = Pharmacy Direct Ss i “ss ES Robotic Process Automation (RPA) More time to talk to patients Items processed by RPA nearing 1m * Claims FAN, Rog Applications
Slide 7: Delivering on focus areas: beyond traditional models
Delivering on focus areas AfroCentric Developed and developing Pilot success Beyond traditional models for } clinical outcomes * Integrated Chronic Care M A. | hospital admissions Programmes + Healthcare outcomes we ge ¢ Value linked reimbursement | costly complications Beyond utilization management
Slide 8: Beyond traditional programmes: examples and outcomes
Delivering on focus areas| Beyond traditional programmes Examples Mental health programme Reducing costs HF inpatient admission cost WW 2102.21 (€62.37) saving plpm A Ambulatorycosts AB 832,102) increase pipm €& cchronicmedicine costs AB 215764 981) increase plpm SZ Tora cost 4B 812.47 (€50.56) savi
Slide 9: Delivering on focus areas: integration and growth
AfroCentric Delivering on focus areas yeahs gration and growth acquisition 1 Oct 18 ition 1 Mar 19 |MMed isumables and surgicals) in to 6 hospitals and clinics Ok pm to R71m between Oct 18-Jan 19 nic and oncology medication TPHARM RISK MANAGEMENT (PTY) LTO ion from 51 000 to 552 370 lives covered d
Slide 10: Health-focused revenue streams
Health-focused revenue streams AfroCentric Reducing healthcare costs — We are currently making a living here We aim to make an impact i an ‘“\ Saving money for our medical scheme members by reducing inefficiencies and strategic purchasing throughout the healthcare value chain @ Healthcare expenditur
Slide 11: Primary care, Hospitalisation, Medication, Specialist care
Primary care Hospitalisation Medication Specialist care
Slide 12: Reducing primary care costs
educing primary care costs Future focus Expand electronic record Primary care delivery capability (with clinical pathways and decision support) on Coordination of care Population health Risk sharing models ow V AfroCentric IN GRATED ORATE SOLUTIONS col Detail on next slide , toe ESSENTIAL MED Health
Slide 13: Unlocking value from acquisitions
Unlocking value from acquisitions Sanlam Health bay V afroCentric (> festpulse INTEGRATED col ATE SOLUTIONS AfroCentric ESSENTIALMED ntegrated Corporate health and Health wellness Insurance EssentialMed , Health Clinics products yN and clinic: health and wellbeing so fi . for the workplace Utions Pr
Slide 14: Owning the pharma value chain
↑ ↑ ↓ ↓ ↓ ↓ Owning the pharma value chain, reducing overall medicine prices AND cost
Slide 15: Reducing hospital costs
AfroCentric GROUP Reducing the need for back and neck surgery through conservative treatment ‘M|MMed trange of movement = Bletybuton | back and neck pain Distribution of affordable admission rates + Medical products + Surgical consumables, Posen AfA Clinical guidelines still the industry standard af
Slide 16: 3.5 30,000 20,000
3.5 260 240 3 220 30,000 20,000
Slide 17: Fraud, Waste & Abuse
Fraud Waste & Abuse Neotel December? Pharmacy gives cash to patients for fake medicine claims 1 <3 Oy 201 6-8 go R790m quantified R538m claims reduction : i Waste & Improving R283m recovered billing patterns . and behaviour $31.20 hearing aids sold for R12 500
Slide 18: AfroCentric Financial Services
Already Sold! Discounted Vouchers financial Premium, services free & win AfroCentric GROUP AfroCentric FINANCIAL SERVICES
Slide 19: Hannes Boonzaaier, Group CFO
Hannes Boonzaaier Group CFO
Slide 20: The AfroCentric journey
The AfroCentric journey last 20 months
Slide 21: Acquisition timeline
JUL 17 SEP 17 OCT 17 JAN-MAR 18 MAR 18 APR 18 MAY 18 • • OCT 18 OCT 18-Jan 19 Jan 19 • • MAR 19 •
Slide 22: Diversification Strategy: How are we tracking?
Diversification Strategy: How are we tracking?
Slide 23: Per member per month fees versus other revenue sources
Per member per month fees versus other revenue sources
Slide 24: Client Concentration
Client Concentration
Slide 25: Client revenue mix across all services
Client revenue mix across all services December 2018 December 2017 3% 2% 47% 8% 8%
Slide 26: Operational trends
Operational trends Total revenue Operating profit 2500 > 400 > 350 > 2000 > 300 > 1500 > < 280 > 5 2 2 200 > £ — iw 1000 > & 150 > 100 > 500 > 50 > o> o= 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
Slide 27: Key message: startups, investment income and cash balances
Pharmacy Direct Startup Investment Income Businesses Group cash balances • Volumes (average) • June 2017 (R805 million) - Dec 2017: December 2017 (R451 million) • Mmed • 480K per • June 2018 (R429 million) month • R2.8 million • December 2018 (R275 million) - Dec 2018: 825K per • Scriptpharm Most si
Slide 28: Healthcare Services and Retail results
2018 2017 % Change R'm R'm Healthcare Services 7% 260.3 243.3 Healthcare Retail (15%) 34.4 40.4 Healthcare Retail Gross Profit 181.9 153.3 Healthcare Retail Operating Costs (147.5) (112.9)
Slide 29: Operating Profit Trend
Operating Profit 31 Dec 18 31 Dec 17 31 Dec 16 31 Dec 15 Growth Growth Growth R’m R’m R’m R’m 2018 2017 2016 Trend % % % Healthcare Service Revenue 1 607 1 4421 1 300 1 122 11% 11% 16% Healthcare Service Operating (1 347) (1 198) (1 069) (913) 12% 12% 17% Costs Healthcare Service Operating 260 243 2
Slide 30: Key notes at interim stage
Key notes at interim stage
Slide 31: Revenue, operating profit and 2017 to 2018 change
2017 to 2018 change + Inflationary increase in healthcare service revenue R ’million 31-Dec-18 31-Dec-17 31-Dec-16 31-Dec-15 (R93m) + Increase in retail private sales & DOH contract dispensing fees (R37m) Revenue 2 307 2 038 1 810 1 442 + Revenue from start-up companies, MMed (R56.9m) and Scriptphar
Slide 32: Assets: 2017 to 2018 change
2017 to 2018 change + Capitalisation of the Nexus/ Gexus systems (R88m) / (amortisation: R8.5m) R ’million 31-Dec-18 31-Dec-17 31-Dec-16 31-Dec-15 + Increase in PPA attributed to the customer relationships on the acquisition of PHA: R24.8m / (amortisation: R14.9m) Assets + Fusion programme costs (R4
Slide 33: Key notes at interim stage
Key notes at interim stage 1. Group have early adopted IFRS16 for lease 4. Cash resources declining and being contracts (impacts noted) used for expansion/growth 2. Property and equipment increase due to new Pharmacy Direct warehouse ; purchased in April 2018 = Outstanding funds from DOH of R55 mill
Slide 34: Investor Dashboard
INVESTOR DASHBOARD 31 Dec 31 Dec 31 Dec 31 Dec 4 Year 18 17 16 15 CAGR R’m R’m R’m R’m Total Revenue (R’million) 2 307 2 038 1 810 1 442 17.0% Operating Profit (R’million) 358 284 259 209 19.8% Comprehensive Headline Earnings (R’m) 178 177 176 110 15.5% Normalised Headline Earnings (R’million) 124 1
Slide 35: Prospects and Growth Areas
Prospects and Growth Areas Pharmacy @Direct Caring, Reliable & Affordable Stabilisation of DOH volumes and profitability Occupational Pharmacy Health & Safety WY Direct = oe J + Medical Scheme ‘w/MMed i consolidation within large © Distribution AfroCentric activo open schemes ‘ welness he “hy oo + A
Slide 36: Thank you
A AfroCentric Thank you
AfroCentric Investment — H1 2019 Earnings Presentation on 6ix