Afrocentric Investment Corporation Limited · JSE:ACT

Afrocentric Investment — H1 2024 Earnings Presentation

23 slides from Afrocentric Investment's earnings presentation, March 2024

  1. Slide 1: Interim Results 2024

    INTERIM RESULTS 2024

  2. Slide 2: Group CEO Gerald Van Wyk

    Group CEO Gerald Van Wyk

  3. Slide 3: Operating Context

    Operating Context Material drivers impacting performance REGULATORY UNCERTAINTY STRUCTURAL MARKET ISSUES • NHI implementation • Muted growth o Funding mechanism • High medical inflation costs o Co-existence with • Rise in fraud activities medical schemes • LCBO CMS guidelines FACTORS IMPACTING MEDIC

  4. Slide 4: Summary View of Results

    Summary View of Results SERVICE (Rm) RETAIL (Rm) TOTAL (Rm) Total Revenue 2,296.4 2,087.9 4,384.3 Change to prior period 6.0% (3.1)% 1.4% Operating profit 343 121 464.7 Change to prior period (1.2%) (11.0)% (4.0)% Profit for the year 116.1 68.8 185.0 Change to prior period 2.2% (15.0)% (4.8)% 4 | IN

  5. Slide 5: Impact of Material Matters

    Impact of Material Matters PHARMA CLUSTER TECHNOLOGY SPEND • Shift in fundamentals • R 8,7 million reduction YoY o Creating a sustainable runway • Sanlam Collaboration • Capex - Final payment made for Forrester o Systems stability • Price pressure on the new DOH contract o Savings albeit higher volu

  6. Slide 6: DOH Contract in Pharma Cluster

    DOH Contract in Pharma Cluster Impact of New DOH Tender 1,400,000 25 R22.85 1,200,000 20 1,000,000 R17.02 R15.75 15 800,000 1,289,544 600,000 1,226,132 10 948,158 400,000 5 200,000 - 0 H1 Jul-Dec 22 H2 Jan-Jun 23 H1 Jul-Dec 23 AVE DOH Scripts AVE DOH Revenue per script New DOH contract effective 1 O

  7. Slide 7: Sanlam Acquisition – Strategic Refresh

    Sanlam Acquisition – Strategic Refresh ACHIEVE WINNING HEALTH OFFERING • A Sanlam strategic imperative • Collaborative and iterative creation process • Health contributor to largest non-banking financial services suite in Africa • Unlock the broader Sanlam product, distribution, rewards and brand ca

  8. Slide 8: Impact of Sanlam Integration

    Impact of Sanlam Integration • AfroCentric integration into Sanlam Corporate Cluster • AfroCentric Boards strengthened with Sanlam appointments • Close collaboration on Technology o Migrating infrastructure to Sanlam domain o Focus on Health Tech • Distribution game changers • Human Capital and Valu

  9. Slide 9: Corporate Cluster

    ESG - driving access to healthcare Corporate Cluster Future growth lever • Change in operating model LOW-COST BENEFIT OPTIONS (LCBOS) • Geared for growth • 9m paying cash for private primary o Corporate focus care o Capturing buydown trend • Must expand access to healthcare • Growth in policies • NH

  10. Slide 10: Matters Worth Noting

    Matters Worth Noting COO APPOINTMENT GROUP STRATEGIC PROJECTS • First focus: Operational efficiencies Mujeeb Bray Medscheme COO QUALIFICATIONS BCom, University of Western Cape CEO program - Saïd Business School, University of Oxford, UK High Performance Program - London Business NHA CASE School, Lon

  11. Slide 11: NHI Bill

    NHI Bill 24 MAY 2023 NHI Bill Published 13 JUNE 2023 Bill passed by National Assembly Bill passed by NCOP sent to President for 6 DECEMBER 2023 assent President can: NEXT • Sign Bill into law, or • Refer it to Parliament for amendment • Constitutionality CONCERNS RAISED • Funding Model • Implementat

  12. Slide 12: Group CFO Hannes Boonzaaier

    Group CFO Hannes Boonzaaier

  13. Slide 13: Segmented Operating Profit - Sustained Performance

    Segmented Operating Profit- Sustained Performance (R’m) Acquisitions not yet annualised for 600 5000 Activo and Denis 534 4 322 4 384 4 270 4500 Total 512 Revenue 500 3 898 484 465 4000 439 167 3 111 152 Medscheme SA 136 3500 400 121 • Stable Membership 129 • Low activity in covid – 3000 Improved pr

  14. Slide 14: Business Highlights

    Business Highlights 30 JUNE 2023 31 DECEMBER 2022 31 DECEMBER 2023 (12 Months) (6 Months) (6 Months) BUSINESS HIGHLIGHTS (R’M) Total Revenue 8,868.0 4,322.1 4,384.3 1.4% Healthcare Retail 4,464.3 2,154.7 2,087.9 (3.1)% Healthcare Services 4,403.7 2,167.4 2,296.4 6.0% Operating Profit 873.6 484.0 464

  15. Slide 15: 5-year View

    5-year View Operating Profit (R’m) Net Cash Finance Income / Cost (R’m) R465.0m 534 366% (53)% Group EBITDA 512 484 465 31% (5)% (2022 – R484.0 m) 439 (4) (9) • Profit before tax stable at 2019 17% 4% (9)% levels. (4)% (21) • Borrowing/acquisition financing (27) (26) costs stabilising. Dec-19 Dec-20

  16. Slide 16: Service Cluster - Scheme Membership

    Service Cluster - Scheme Membership Scheme Membership Distribution of Beneficiaries by Large Schemes 4,000,000 GEMS 3,957,662 2,500,000 2,274,733 2,300,000 2,143,099 2,100,000 2,035,424 3,900,000 3,879,893 1,963,134 1,891,952 1,900,000 3,846,394 3,829,461 1,700,000 1,500,000 Dec-19 Dec-20 Dec-21 Dec

  17. Slide 17: Segmented Financial Reporting Structure - Services

    Segmented Financial Reporting Structure - Services Medical Aid administration, Risk management & Technology: Concentrating on improving the operational delivery model of services CAGR CAGR Revenue (R’m) Operating Costs (R’m) 2,500 7.1% 2,500 8.2% 129 101 112 2,000 2,000 82 110 60 67 1,500 101 1,500

  18. Slide 18: Retail Cluster – Scripts Dispensed

    Retail Cluster – Scripts Dispensed 1,600,000 1,400,000 171,328 DOH 1,200,000 139,035 • Increased volumes due to Gauteng province 1,000,000 146,704 162,636 added. • Profitability per script 800,000 less due to multi- month 141,736 delivery. 1,289,544 600,000 Private Business 1,075,484 948,158 • Highe

  19. Slide 19: Segmented Financial Reporting Structure - Retail

    Segmented Financial Reporting Structure - Retail Pharma: Performance supported by diverse customer base in private and public sector Revenue (R’m) CAGR Operating Costs (R’m) CAGR 2,500 7.1% 2,500 7.7% 2,000 2,000 1,500 1,276 1,369 1,500 1,397 1,439 1,140 1,235 1,284 1,343 1,000 1,000 1,197 1,078 • P

  20. Slide 20: Capital Management (3-year view)

    Capital Management (3-year view) Current Asset (R’m) Current Liabilities (R’m) 2,000,000 1,500,000 1,361,133 1,660,811 1,500,000 1,472,208 1,221,158 980 604 1,000,000 830,168 1,000,000 500,000 500,000 - - Dec-21 Dec-22 Dec-23 Dec-21 Dec-22 Dec-23 Non-current Assets (R’m) Non-current Liabilities (R’m

  21. Slide 21: Statement of Financial Position

    Statement of Financial Position Working Capital INVENTORY Dec-22 Dec-22 464 Dec-23 Dec-23 464 Jun-23 Jun 23 445 420 430 440 450 460 470 480 TRADE AND OTHER PAYABLES -812 Dec-22 -609 Dec-23 -611 Jun-23 -1,000 -800 -600 -400 -200 - TRADE AND OTHER RECEIVABLES Dec-22 Dec-22 982 Dec-23 Dec-23 776 Jun 23

  22. Slide 22: Outlook

    Outlook • Pharma business; price pressure on the DOH contract, but we are exploring corrective measures together with the department • Service business; remains resilient in terms of membership growth and balanced option buydowns vs buy ups • Operating environment remains challenging, constraining t

  23. Slide 23: Thank You

    THANK YOU

AfroCentric Investment — H1 2024 Earnings Presentation on 6ix