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Chairperson's report

As we reflect on the profound and significant changes since the acquisition in 2009, and look forward to entering a new era for AfroCentric, we remain confident that the Group is well-positioned for growth and we are committed to leveraging attractive growth opportunities which offer steady returns across varied and widespread sectors.

Introduction

Twenty years have passed since May 1994, when South Africa was able to include all of its citizens, both black and white, in the country's first democratic elections. That was a truly unique milestone in the history of South Africa and yet in that period of 20 years, AfroCentric, which was only constituted in 2006, is still one of very few black controlled companies listed on the JSE Limited (“JSE”). As a Level 2 BBBEE rated company and with a commencing market capitalisation of R100 million, AfroCentric focused its investments mainly in private healthcare. Today I can humbly record, but with a sense of pride, that AfroCentric enjoys a market capitalisation value in excess of R2 billion. The healthcare sector in South Africa generally presents many exciting opportunities, yet from a corporate and commercial perspective, the industry remains firmly under the control of South Africa's traditional institutions, where regrettably, little progress has been made towards real BEE transformation.

Competition Commission Inquiry into Private Healthcare

The recently announced Competition Commission Inquiry into Private Healthcare is aiming to determine an understanding of market forces and those features and dynamics of private healthcare, which cause above inflation pricing, the high costs of medical services and the increasing level of claims and expenditures that occur in the sector. The inquiry is likely to focus on medical specialists, hospital services, medical aid schemes and administrators.

AfroCentric is fully supportive of the Competition Commission Inquiry and has formally made submissions and expressed its cooperation and endorsement for the inquiry.

Activity report and corporate developments

The Group has once again posted satisfactory results for the year under review and respectfully there is sufficient information in this Integrated Annual Report to, inter alia, provide shareholders with the more detailed financial statistics.

Nevertheless, it behoves me to specifically record my appreciation to those shareholders who confidently joined us in the 2009 "share based" option at the time of the disposal of AfroCentric Health Limited (formerly Lethimvula) to AfroCentric. I would also like to thank the management who had the vision of what could be achieved and substantially fulfilled the warranty threshold, successfully triggering not only the second tranche payments in AfroCentric shares, but also the "agterskot" cash payment arising through the same achievement.

The Group has made excellent progress since the acquisition and today, AfroCentric is one of South Africa's largest medical scheme administrators and managed care providers, providing services to a range of well supported open medical schemes and many closed schemes of eminent South African corporates and institutions. I am proud to include in our impressive portfolio of clients, the Government Employees Medical Scheme ("GEMS") as well as South Africa's Road Accident Fund ("RAF").

Sanlam

The work and reputation of the Group over the past five years has put AfroCentric on the radar of many institutions and the strategic relationship recently concluded with Sanlam Limited bears testimony to the respect and recognition of AfroCentric by South Africa's pre-eminent financial institution. We could not have chosen a better partner to enhance our marketing and distribution channels and are delighted with the joint strategic alliance, the consequence of which can only expand the Group's value proposition and position the Group for accelerated growth going forward.

WAD Holdings

I would also like to welcome the WAD Group into the AfroCentric family, this proud moment arising through the acquisition of WAD's pharmaceutical businesses specialising in the wholesaling, dispensing and delivery of chronic medication for and on behalf of private and public sector clients and patients. AfroCentric looks forward to providing the WAD businesses with a broader platform, more efficiently integrated to optimise the profitability of WAD enterprises and the resultant contribution towards AfroCentric's overall performance in the year ahead.

Jasco

The Group's investment in Jasco has not yet fulfilled the promise indicated during the three-year reconstruction period. The reconstruction growth model for Jasco is now in place and there is a stripe of cautious confidence in the future outlook for Jasco's operations. The company posted a small profit during this reporting period reversing losses incurred in the previous year. We look forward to better economic conditions, particularly through the commencement of the National Development Plan, an initiative that would certainly be helpful to the prospects of Jasco's various business units.

RIO TINTO

There is little to report on AfroCentric's Relationship Agreement with Rio Tinto, save to advise that certain joint venture applications await approval from departmental authorities. Rio Tinto is fully committed to the agreement and to the extent that any of the potential initiatives after prospecting, are categorised as tier 1 assets, AfroCentric will participate as Rio Tinto's BEE partners.

Outlook

There are several challenges within the South African economy at the present time and it would be inappropriate to provide any guidance in regard to the outcomes for the year ending 30 June 2015. All I can say with a degree of confidence is that AfroCentric's performance to date has been impressive, management have advised the Board that save for circumstances that may be beyond their control, they are expecting certain growth in revenues, group expenditure is substantially under control and while margins could come under pressure from January 2015, the new initiatives with WAD and Sanlam, both expected to be planned and ready for implementation after certain resolutive conditions have been fulfilled, could well reveal some positive consequences towards the end of the financial year.

Acknowledgements

I would like to thank the Board of Directors for their consistent support during the past year. Their astute guidance and counsel on company affairs has been extremely helpful in general, and their application to the initiatives on the WAD and Sanlam matters is greatly appreciated. To all our stakeholders, I extend my gratitude for your ongoing support and confidence in our business.

Dr A Mokgokong
Chairperson