NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS – NOTE 5

5. SEGMENT INFORMATION

The Group’s Chief Executive Officer and Chief Financial Officer have restructured the operating segments due to Jasco Electronics Holdings Limited being classified as a non-current asset held for sale in the prior year (please refer to note 12 for further detail) and on the purchase of the new WAD assets in the current year. The operating segments identified are examined from a service perspective (total healthcare vs information technology) and geographical perspective (SA vs Africa). The geographical segments identified include all businesses outside of South Africa which include Botswana, Mauritius, Namibia, Kenya, Swaziland and Zimbabwe. Individually, each business outside of South Africa is not material hence management has taken the decision to disclose all business outside of South Africa as a separate operating segment. All segments have been disclosed according to what the Chief Operating Decision Maker reviews.

NATURE OF BUSINESS SEGMENTS:
Healthcare SA – consists of medical scheme administration and health risk management services in South Africa. Please refer to note 11 which indicates Medscheme Holdings (Proprietary) Limited’s summarised financial information.
Healthcare Retail – consists of pharmaceutical sales/services from the WAD Acquisition. These services are rendered in South Africa.
Healthcare Africa – consists of all healthcare services outside of South Africa. This includes associate earnings (Botswana, Kenya, Namibia, Zimbabwe, Swaziland and Mauritius).
Information technology – This relates to all IT related services for the Group predominantly within South Africa.

Current year Healthcare 
SA 
R'000 
Healthcare 
Retail 
R'000 
Healthcare 
Africa 
R'000 
Total 
Healthcare 
R'000
Information 
Technology 
R'000 
Elimination 
R'000 
Group 
R'000 
 
Gross revenue 2 066 327  748 477  180 534  2 995 338  499 411  (346 603) 3 148 146    
Other income  –  –  –  –  –  –  –    
Administration expenses  (1 893 117) (701 287) (117 651) (2 712 055) (382 940) 306 599  (2 788 396)   
Amortisation of intangibles  (1 385) (8 171) ( 336) (9 892) (55 629) (13 811) (79 332)   
Depreciation  (11 935) (2 531) (2 242) (16 708) (21 302) ( 1) (38 011)   
Net finance income  21 348  2 343  3 508  27 199  640  –  27 839    
– Finance income  31 109  3 001  3 530  37 640  689  (5 943) 32 386    
– Finance cost  (9 761) ( 658) ( 22) (10 441) ( 49) 5 943  (4 547)   
Share-based payment expense  (6 444) –  –  (6 444) –  –  (6 444)   
Net fair value gain/impairment of assets  20 995  –  –  20 995  –  1 232  22 227    
– Fair value gain/ impairment of assets  25 853  –  –  25 853  –  1 232  27 085    
– Impairment of intangibles  (4 858) –  –  (4 858) –  –  (4 858)   
Net share of profit of associate  (713) 7 479  3 352  10 118  –  –  10 118    
– Share of profit of associate  (713) 7 479  3 352  10 118  –  –  10 118    
Profit/(loss) before taxation  195 076  46 310  67 165  308 551  40 180  (52 584) 296 147    
Income tax expense  (35 020) (14 545) (13 663) (63 228) (11 342) (3 003) (77 573)   
Profit/(loss) for the year  160 056  31 765  53 502  245 323  28 838  (55 587) 218 574    
Net segments assets  3 328 479  238 198  160 739  3 727 416  310 001  (996 701) 3 040 716    
Segments assets  3 328 479  238 198  160 739  3 727 416  310 001  (996 701) 3 040 716    
Segment liabilities  1 059 074  163 482  26 159  1 248 715  129 339  99 080  1 477 134   

ADJUSTED PROFIT (EBITDA) EARNINGS FOR MANAGEMENT EARNINGS
EBITDA excludes the effects from significant items of income and expenditure which may have an impact on the quality of earnings such as depreciation, amortisation and impairments. It also excludes the effects of equity-settled share-based payments.

Current year Healthcare 
SA 
R'000 
Healthcare 
Retail 
R'000 
Healthcare 
Africa 
R'000 
Total 
Healthcare 
R'000 
Information 
Technology 
R'000 
Elimination 
R'000 
Group 
R'000 
 
Profit/(loss) before taxation 195 076  46 310  67 165  308 551  40 180  (52 584) 296 147    
Depreciation and amortisation  13 320  19 323  2 578  35 221  76 932  5 190  117 343    
Reversal of impairment  (20 995) –  –  (20 995) –  (1 232) (22 227)   
Share-based payment expense  6 444  –  –  6 444  –  –  6 444    
Net finance income  (21 348) (2 343) (3 509) (27 200) (639) –  (27 839)   
Adjusted profit/(loss) for the year (EBITDA) 172 497  63 290  66 234  302 021  116 473  (48 626) 369 868   

Below is the restated operating segments that would have been disclosed if the decision was taken last year to change the operating segments as they are disclosed this year:

2015 Healthcare 
SA 
R'000 
Healthcare 
Retail 
R'000 
Total 
Healthcare 
R'000 
Information 
Technology 
R'000 
Elimination 
R'000 
Group 
R'000 
 
Gross revenue 1 913 529  157 818  2 071 347  401 454  (374 489) 2 098 312    
Other income  –  17 729  17 729  165  (165) 17 729    
Administration expenses  (1 682 750) (105 860) (1 788 610) (311 455) 373 825  (1 726 240)   
Amortisation of intangibles  (113) (267) (380) (34 448) (13 906) (48 734)   
Depreciation  (11 141) (1 906) (13 047) (22 680) –  (35 727)   
Net finance income  15 488  2 680  18 168  627  18 802    
– Finance income  33 531  2 724  36 255  681  (8 137) 28 799    
– Finance cost  (18 043) (44) (18 087) (54) 8 144  (9 997)   
Share-based payment expense  (9 395) –  (9 395) –  –  (9 395)   
Net fair value gain/impairment of assets  2 068  (14 904) (12 836) –  (23 861) (36 697)   
Fair value gain/impairment of assets  19 773  (14 904) 4 869  –  (19 774) (14 905)   
Impairment of Jasco  (17 705) –  (17 705) –  (4 087) (21 792)   
Net share of profit of associate  (105) 766  661  –  647  1 308    
Share of profit of associate  (105) 766  661  –  –  661    
Share of profit from Jasco  –  –  –  –  647  647    
Profit/(loss) before taxation  227 581  56 056  283 637  33 663  (37 942) 279 358    
Income tax expense  (73 024) (17 718) (90 742) (10 406) 564  (100 584)   
Profit/(loss) for the year  154 557  38 338  192 895  23 257  (37 378) 178 774    
Net segments assets  2 013 236  126 357  2 139 593  465 035  (1 019 022) 1 585 606    
Segment assets  1 988 448  126 357  2 114 805  465 035  (1 019 022) 1 560 818    
Held for sale asset  24 788  –  24 788  –  –  24 788    
Segment liabilities  314 999  24 254  339 253  314 834  (235 560) 418 527   

ADJUSTED PROFIT (EBITDA) EARNINGS FOR MANAGEMENT EARNINGS
EBITDA excludes the effects from significant items of income and expenditure which may have an impact on the quality of earnings such as depreciation, amortisation and impairments. It also excludes the effects of equity-settled share-based payments.

2015 Healthcare 
SA 
R'000 
Healthcare 
Retail 
R'000 
Total 
Healthcare 
R'000 
Information 
Technology 
R'000 
Elimination 
R'000 
Group 
R'000 
 
Profit/(loss) before taxation 227 581  56 056  283 637  33 663  (37 942) 279 358    
Depreciation and amortisation  11 254  2 173  13 427  57 128  13 906  84 461    
Reversal of impairment  (2 068) 14 904  12 836  –  23 861  36 697    
Share-based payment expense  9 395  –  9 395  –  –  9 395    
Net finance income  (15 488) (2 680) (18 168) (627) (7) (18 802)   
Adjusted profit/(loss) for the year (EBITDA) 230 674  70 453  301 127  90 164  (182) 391 109   

NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS – NOTE 5