Afrocentric Investment Corporation Limited · JSE:ACT
Afrocentric Investment — H1 FY2023 Earnings Presentation
25 slides from Afrocentric Investment's earnings presentation, Mar 14, 2023
Slide 1: Interim results for the six months ended 31 December 2022
For the six months ended 31 December 2022 14 MARCH 2023
Slide 2: Business Context
BUSINESS CONTEXT Group CEO I Ahmed Banderker
Slide 3: Tougher Economic Times
TOUGHER ECONOMIC TIMES Membership retention likely to be increasingly more challenging 11 10.5 R10 152 10 9.5 26% 9 Increase in bond costs since 8.5 2022 8 7.5 R8 056 7 Jan 2022 Jan 2023 Monthly Net Instalment Due Monthly Fuel Cost Monthly Insurance Monthly Running Cost Total Monthly Cost* % YoY Cha
Slide 4: Tougher Economic Times: Retrenchments
TOUGHER ECONOMIC TIMES Membership retention likely to be increasingly more challenging Labour Unions Possible Economists see a 45% shocked by Sibanye retrenchments chance of a South Stillwater’s plans to loom at Denel African recession in retrench 2 000 workers 2023 SA Post Office plans Telkom retre
Slide 5: Strategic Business Review
STRATEGIC BUSINESS REVIEW Contracts IT System Won CCMDD tender modernisation Gauteng and North West added Architecture refresh Sanlam deal Won Polmed tender Medicine capitation and Future synergies and management collaboration Successful client retention INTERIM RESULTS HEALTHIER TOGETHER For period
Slide 6: Sanlam Deal
SANLAM DEAL Transaction rationale Timeline Affordable and reliable healthcare is important for 12 January 2023 General meeting - Shareholders accepted partial offer consumers Level of acceptances 46.4% of issued share capital of AfroCentric 16 February 2023 Confirmation of partial offer as unconditi
Slide 7: Sanlam Collaboration
SANLAM COLLABORATION Greater integration for rapid innovation and efficiencies Rollout to Bonitas & Fedhealth Sanlam Gap Cover Sanlam clients Distribution Primary Care • Health and wellness • Ongoing healthcare • Clinics for affordability • Unique product • Holistic broker accreditation drive • Off-
Slide 8: Medscheme Observations
MEDSCHEME OBSERVATIONS Positive COVID tests In-hospital elective Cholera outbreak Measles on the rise again procedures • 6 confirmed cases outbreak • Significant in Gauteng aged • 371 confirmed postponement 19 - 44 (2 locally measles cases during height of acquired) - 28 Feb - Q4 2022 pandemic 2023
Slide 9: Medscheme
MEDSCHEME Operating margin improved by 6.7% Membership Continued Digital Sustainability through Transformation IT Systems Modernisation 3.8 million lives Mature decisioning and Straight through processing automation + 70 063 GEMS lives Self-enabled, provider directed July to December 2022 Natural la
Slide 10: Pharma Cluster
PHARMA CLUSTER CCMDD – impact of new DOH tender Activo dossiers Script volumes Revenue per script • 14 new molecules registered July - December 2022 1,400,000 25.00 • Another 11 molecules undergoing registration 1,200,000 20.00 1,000,000 800,000 15.00 Forrester only 600,000 • 80 registered lines, no
Slide 11: Summary View of Results
SUMMARY VIEW OF RESULTS SERVICE (Rm) RETAIL (Rm) TOTAL (Rm) Revenue 2 167.5 2 154.7 4 322.1 Change to prior year 2.7% (0.2%) 1.2% Operating profit 305.9 136.3 442.2 Change to prior year (7.0%) (18.4%) (10.8%) Normalised operating profit 373.9 136.3 510.2 R Change to prior year 14.0% (18.4%) 2.9% INT
Slide 12: Financial Performance at a Glance
FINANCIAL PERFORMANCE AT A GLANCE Current year on year performance Pre and post COVID performance 2 500 Dec 2019 Dec 2022 Revenue R4 322.1m 1.2% 2 000 33.1% 45.3% Operating profit (IFRS 16 adjusted) R484.0m 9.4% 1 500 1 000 Headline earnings R125.7m 18.7% 500 13.5% 8.2% 5.9% Normalised headline earn
Slide 13: Segmental Review & Financial Results
SEGMENTAL REVIEW & FINANCIAL RESULTS Group CFO I Hannes Boonzaaier
Slide 14: Segmented Operating Profit and Diversification Drive
SEGMENTED OPERATING PROFIT AND DIVERSIFICATION DRIVE Sustained performance Corporate activity – Once off non-recurring items (R’Million) Healthcare Services Healthcare Retail R26m R496 R469 R442 Pharma trade and market CAGR R398 32% 34% R27m 31% R295 32% 12% IT modernisation net of +8.4% Medscheme g
Slide 15: Normalised Trading View Excluding Non-Recurring Items
NORMALISED TRADING VIEW EXCLUDING NON-RECURRING ITEMS SANLAM NHA- LEGAL TRANSACTION 12.2m COST 14.0m COSTS Normalised view (R’Million) '31 December 2022 '31 December 2022 '31 December 2022 Trading '31 December 2022 Post adjustment % Change from Reported adjustments Post adjustment % Change from prio
Slide 16: 5-Year View
5-YEAR VIEW Operating profit Net cash finance income / cost R484.0m R’m R’m 20 600 6% -11% 18% 10 Group EBITDA 400 35% - 11 (10) 295 -184% (4) 200 (9) (2021 – R534.1 m) 295 398 469 496 442 (20) 398 -53% 496 442 - (21) (30) 368% Dec 18 Dec 19 Dec 20 Dec 21 Dec 22 31% (27) Operating profit stated afte
Slide 17: Service Cluster - Scheme Membership
SERVICE CLUSTER - SCHEME MEMBERSHIP Distribution of beneficiaries by large schemes Scheme membership GEMS 3 900 000 2200 000 2 143 099 3 850 000 3 879 893 2100 000 2 035 424 3 846 394 2000 000 1 963 134 3 829 461 3 800 000 1 891 952 3 786 733 3 788 324 1900 000 3 750 000 1800 000 3 700 000 1700 000
Slide 18: 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 Revenue Operating costs Membership is stable and thus revenue 2 167 1 781 1 862 increased by 2.7% 2 110 1 825 1 509 4.5%
Slide 19: Retail Cluster - Scripts Dispensed
RETAIL CLUSTER - SCRIPTS DISPENSED Monthly Average Ave DOH Scripts Ave Private Scripts Ave DOH Ave Private New DOH contract 2018 - 2022 2018 - 2022 Scripts 2023 Scripts 2023 1600 000 now inclusive of GP and KZN 1400 000 141 216 1200 000 125 684 Higher volumes in 1000 000 162 636 146 704 2023 800 000
Slide 20: Segmented Financial Reporting Structure - Retail
SEGMENTED FINANCIAL REPORTING STRUCTURE - RETAIL Pharma: Performance supported by diverse customer base in private and public sector. DOH Revenue Operating costs • Tender success - additional provinces Medicine Capitation Other Retail Medicine Capitation Other Retail (Gauteng and North West) 2 500 2
Slide 21: 2022 Restructure of Borrowing Facilities
2022 RESTRUCTURE OF BORROWING FACILITIES Borrowing Facilities (R’Million) Old Facility Structure 2021 New Facility Structure RCF - Revolving credit facility (Effective March 2022) (5 year loan) 300 Overdraft 298 Overdraft used 900 Total RCF Improved utilisation of the group's cash flow cycle 600 Tot
Slide 22: Statement of Financial Position
STATEMENT OF FINANCIAL POSITION Significant Movement Total Borrowings 2021 2022 2021 2022 1 000 000 942 577 787 420 787 420 800 000 604 976 604 976 600 000 523 907 514 843 93 259 88 602 400 000 298 670 63 210 44 717 200 000 120 000 0 Long term Short term Overdraft Total Cash Net debt Net debt Net de
Slide 23: Statement of Financial Position: Working Capital
STATEMENT OF FINANCIAL POSITION Working Capital Dec 2021 June 2022 Dec 2022 Inventory 462 432 464 0 100 200 300 400 500 600 700 800 900 1000 Trade and other payables - 516 - 613 - 793 -800 -700 -600 -500 -400 -300 -200 -100 -0 Trade and other receivables 505 • DOH Overdue • Suppliers in R125m 724 Ph
Slide 24: Outlook
OUTLOOK Medical scheme administration business remains sound with membership stabilized and favourable increases from clients IT modernisation and support to enable a more efficient Medscheme operating model continues Sanlam transaction positively received by market - to be finalised in May 2023 Pha
Slide 25: Thank You
AfroCentric GROUP
AfroCentric Investment — H1 FY2023 Earnings Presentation on 6ix