DIRECTORS’ REPORT for the year ended 30 June 2024
The directors have pleasure in presenting their report on the consolidated and separate financial statements of AfroCentric for the year ended 30 June 2024.
NATURE OF BUSINESS
AfroCentric Group is a JSE-listed investment holding company which operates in and provides specialised services to the public and private healthcare sectors, making quality healthcare more accessible and affordable to members and beneficiaries in both sectors. The principal objective of the Group is to ensure the delivery of efficient health management services and the distribution of quality products – all at a manageable and affordable cost for the benefit of our stakeholders. AfroCentric successfully broadened its interests in the industry by continuing to pursue new opportunities to expand and rationalise its presence across the healthcare sector.
The consolidated annual financial statements as at 30 June 2024 and for the year then ended, comprise AfroCentric and its subsidiaries (i.e. the Group), and the Group's, investments in associates and joint ventures.
AFROCENTRIC SHARED VALUE
The Group's operating subsidiaries continue to provide value-added complementary services to its traditional medical scheme clients as part of the Group's strategy. Through this, the Group continues to preserve shareholder value and provide solutions to healthcare client needs. This has further enabled us to understand both our clients and competitor environment, and we can confirm that the Group is geared towards being sustainable into the future.
Our strategy is to optimise our Group's products and services in order to offer organisations and medical aid scheme members a seamless healthcare service. As part of our growth strategy, the Group contributes to South Africa's sustainable health and welfare by investing in healthcare-related businesses that grow and diversify its revenue sources. We remain passionate about promoting access to care and supporting meaningful progress in the universal healthcare journey.
With the Sanlam Group owning 59% of AfroCentric, the broad goals include sharing of assets and capabilities, and developing a complete and integrated client value proposition for retail and corporate clients.
The long-term synergies include, inter alia:
- Improving client experiences by offering a complete product value proposition ranging from health to wealth, and insurance protection;
- A new holistic corporate wellness model that partners with client schemes as well as Sanlam Corporate Services;
- Growth and retention in client scheme membership; and
- Growth and retention in Gap and Primary Health Insurance (PHI) books.
DEVELOPMENTS
During the financial year, AfroCentric Health (RF) Proprietary Limited acquired the remaining 49% shares in Essential Group Proprietary Limited, effective 22 February 2024. Refer to Note 16 for further details.
FINANCIAL RESULTS
Group consolidated total income increased by 0.69% to R8 936 million (2023: R8 875 million).
Group headline earnings increased by 54.07% to R334.8 million (2023: R217.3 million).
Profit before tax decreased by (51.57%) to R207.0 million (2023: R427.4 million).
Profit for the year decreased by (74.86%) to R74.3 million (2023: R295.5 million).
GOING CONCERN
The Group Annual Financial Statements have been prepared on a going concern basis. The Board performed a review of the Group's ability to continue as a going concern in the foreseeable future and therefore, based on this review, considers the preparation of the Annual Financial Statements on this basis to be appropriate.
DIVIDENDS
The Group declared a gross dividend of 11 cents per share during the current year. Refer to Note 26 for further details.
SHARE CAPITAL
The Company's share capital increased to 841 088 241 ordinary shares in the year under review. As per section 38 of the Companies Act, the Board may resolve to issue shares of the Company at any time, but only within the classes, and to the extent, that the shares have been authorised by or in terms of the Company's Memorandum of Incorporation.
The directors are authorised, by resolution of the shareholders and until the forthcoming Annual General Meeting (AGM), to issue the unissued shares in accordance with the limitation set by AGM resolutions.
SHARE REPURCHASES
During the year, no share repurchases were made by the Company.
AUDIT AND RISK COMMITTEE
The information relating to the Audit and Risk Committee is set out here.
DIRECTORS
The table below sets out the directors of AfroCentric for the year ended 30 June 2024.
| Directors’ name | Date of appointment | Designation | ||
| Dr ATM Mokgokong (Chairman) | 10 June 2010 | Non-executive | ||
| MJ Madungandaba | 10 June 2010 | Non-executive | ||
| JB Fernandes | 23 November 2018 | Lead Independent Non-executive | ||
| AM le Roux | 25 May 2020 | Independent Non-executive | ||
| M Chauke | 1 June 2020 | Independent Non-executive | ||
| JW Boonzaaier | 8 January 2015 | Executive – salaried | ||
| A Banderker* | 15 December 2015 | Executive – salaried | ||
| GN Van Wyk | 1 August 2023 | Executive – salaried | ||
| WH Britz** | 1 August 2015 | Non-executive | ||
| Dr ND Munisi | 7 December 2015 | Non-executive | ||
| K Mkhize | 20 June 2022 | Non-executive | ||
| PB Hanratty | 12 June 2023 | Non-executive | ||
| MK Dippenaar | 12 June 2023 | Non-executive |
| * | Resigned 31 October 2023. |
| ** | Resigned 1 February 2024. |
During the year under review, no material contracts in which directors have an interest were entered into which significantly impacted the business of the Company, other than those disclosed in Note 29 of the annual financial statements.
Directors' ordinary shareholdings as at 30 June 2024
| DIRECTOR | Direct beneficial |
Indirect beneficial |
Total | % |
|---|---|---|---|---|
| ATM Mokgokong (Chairman) | – | 33 344 402 | 33 344 402 | 3.96 |
| MJ Madungandaba | – | 41 509 017 | 41 509 017 | 4.94 |
| JW Boonzaaier | 739 | – | 739 | 0.00 |
| ND Munisi | 7 000 | 37 124 619 | 37 131 619 | 4.41 |
| AM le Roux | 17 924 | – | 17 924 | 0.00 |
| 25 663 | 111 978 038 | 112 003 701 | 13.31 | |
There were no changes in the directors' interests between the end of the financial year and date of approval of annual financial statements.
Directors' ordinary shareholdings as at 30 June 2023
| DIRECTOR | Direct beneficial |
Indirect beneficial |
Total | % |
|---|---|---|---|---|
| Dr ATM Mokgokong (Chairman) | – | 33 344 402 | 33 344 402 | 4.04 |
| MJ Madungandaba | – | 41 509 017 | 41 509 017 | 5.03 |
| A Banderker | 232 258 | – | 232 258 | 0.03 |
| JW Boonzaaier | 739 | – | 739 | 0.00 |
| WH Britz | 13 357 287 | 13 479 468 | 26 836 755 | 3.25 |
| Dr ND Munisi | 7 000 | 37 124 619 | 37 131 619 | 4.50 |
| AM le Roux | 17 924 | – | 17 924 | 0.00 |
| 13 615 208 | 125 457 506 | 139 072 714 | 16.85 |
DIRECTORS' REMUNERATION
Remuneration of Executive and Non-executive Directors
Details of the remuneration are set out in Note 20 of the Group Financial Statements.
Remuneration of Non-executive Directors and Board Committee members
Non-executive Directors received the following total remuneration in the year under review:
| DIRECTOR | Fees R’000 |
|---|---|
| Dr ATM Mokgokong (Chairman) | 1 847 |
| MJ Madungandaba | 2 091 |
| M Chauke | 675 |
| MK Dippenaar | 409 |
| JB Fernandes | 1 247 |
| PB Hanratty* | – |
| AM le Roux | 735 |
| K Mkhize* | – |
| Dr ND Munisi | 599 |
| WH Britz** | 298 |
| * | Sanlam Group executive directors do not get remunerated for their services as directors on the AfroCentric board of directors. |
| ** | Mr. Britz resigned as an executive director of AfroCentric, effective 10 March 2022 but remained on the AfroCentric Board as a non-executive director until
1 February 2024. Due to the effective date of Mr. Britz's resignation as an executive director not falling on the last working day of a calendar month, he was erroneously paid his full salary for March 2022. This resulted in an overpayment of R249 954. During his tenure as a non-executive director of AfroCentric, Mr. Britz was owed Board fees amounting to R547 659 which amount was outstanding as at the date of his resignation as a non-executive director. On 23 June 2024, an amount of R297 706 was paid to Mr Britz in settlement of the outstanding Board fees less the March 2022 salary overpayment |
The director's remuneration highlighted above reflects their total gross directors' fees received across various subsidiaries within the Group.
Remuneration of the five highest paid subsidiary executives as at 30 June 2024 who are not directors of AfroCentric
| EMPLOYEE | Annual cost to company and incentives R’000 |
|---|---|
| AD Schwulst | 8 833 |
| AA Mahmood | 4 071 |
| MV Makoe | 3 394 |
| FV Nompumza | 3 016 |
| S Mbele | 3 016 |
Remuneration of the five highest paid subsidiary executives as at 30 June 2023 who are not directors of AfroCentric
| EMPLOYEE | Annual cost to company and incentives R’000 |
| AA Mahmood | 5 919 |
| J van Rooyen | 5 698 |
| T du Preez | 4 004 |
| G Erasmus | 3 745 |
| MV Makoe | 3 314 |
LITIGATION STATEMENT
In terms of the JSE Listings Requirements, the directors note that they are not aware of any legal or arbitration proceedings that are pending or threatened, that may have or have had in the recent past, being at least the previous 12 months, a material effect on the Group's financial position, apart from the matters per Note 28 of the Financial Statements.
BORROWING POWERS
In terms of the Memorandum of Incorporation, the borrowing powers of the Company are unlimited. The Company has no restrictive funding arrangements.
INSURANCE
The Group protects itself and the directors against crime and civil liability by maintaining a comprehensive insurance policy and ensuring that professional indemnity is in place.
COMPLIANCE
Other than late filing of annual returns to the Companies and Intellectual Property Commission (CIPC) for certain subsidiaries, no events or actions during the financial year have led to the Group being non-compliant with the required laws and regulations relevant to the individual business units.
EXTERNAL AUDITOR
KPMG Inc. served as external auditor of the Group for the 2024 financial year.
| # | Associate companies |
| * | Dormant companies |
| ^ | Joint Venture |