Introduction and review

AfroCentric is a majority black-owned JSE listed investment holding company which operates in and provides specialised services to the public and private healthcare sectors. AfroCentric has and continues to maintain its deliberate objective of being the leading exemplar of transformation and empowerment in the South African healthcare sector.

The Board is pleased to present comments on AfroCentric’s (“ACT”) summary results for the twelve months ended 30 June 2019. The period under review has been characterised by investment in new and growing contracts/entities, certain complementary acquisitions, consolidation and rationalisation of several processes within Group enterprises. The earnings are stable, and majority of the Group enterprises have contributed to the Group’s growing operations and earnings. AfroCentric’s vision of being the most diversified healthcare group in South Africa is being realised through its earnings diversification and continuous acquisition strategies.

Apart from ACT’s principal subsidiary Medscheme providing healthcare administration and managed care services to the membership of a growing number of prominent institutional clients, (having memberships of 3.7 million lives), the Group is also heavily invested in other essential segments of the public and private healthcare markets in South Africa, with rapidly expanding activity and application in its pharmaceutical wholesale supply, its chronic medication distribution networks, specialised disease management, information technology (IT) solutions, transactional switching, fraud detection and not least, the development and marketing of tailored health and insurance solutions and products, in partnership with Sanlam.

Accounting policies and basis of preparation

The summary consolidated financial statements are prepared in accordance with the requirements of the JSE Limited Listings Requirements for summary financial statements, and the requirements of the Companies Act applicable to summary financial statements.

The Listings Requirements require summary financial statements to be prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 Financial Reporting. The accounting policies applied in the preparation of these summarised interim financial statements are in terms of International Financial Reporting Standards and are consistent with those accounting policies applied in the preparation of the previous consolidated annual financial statements.

Industry highlights

  • AfroCentric Health (Proprietary) Limited, the main operating subsidiary within the Group, achieved a level 1 B-BBEE in December 2018.
  • AfroCentric Investment Corporation Limited was awarded a Merit Award (small cap) at the CSSA/JSE Integrated Reporting Awards.

Financial performance

Profit before tax decreased by 1.8% for the period under review amounting to R528.5 million (2018: R538.4 million). Profit after tax (PAT) decreased by 0.1% compared to prior financial period.

The earnings results depict a picture of transition as the group is transforming its healthcare offerings and composition of earnings.

The Healthcare services business experienced increased membership and additional managed care contracts but operating profit was depressed by take on costs for the initial uptake. Our open schemes under administration have seen combined growth in total membership but the composition of members has changed. The affordability of healthcare in the economy has had an effect on revenue earned by Medscheme as members select lower options upon which the group earns lower fees.

The Retail Cluster has expanded with the addition of the 74% interest in Activo, Scriptpharm and MMed. Pharmacy Direct grew its operating profit by 11% year-on-year on the back of no growth at interim results stage due to the take on costs of the additional volumes from the DOH contract.

The two startup companies, Scriptpharm and MMed have also turned profitable in the last 6 months as the uptake on their contracts got traction and efficiencies started being realised.

The relatively flat headline earnings is therefore mainly attributable to increased gearing (interest paid and less interest received) and higher amortisation costs of the intangible assets.


AfroCentric has for some time been focused on opportunities which will serve to create a platform, designed to establish affordable healthcare services, to optimise the purchasing power of every Rand through models of integration, mergers, partnerships and economic incentives devised to improve the effectiveness of patient care and viable treatment outcomes, within the broader healthcare delivery system.

During the period under review and prior to the publishing of these results, the following projects have been concluded:

  • Acquisition of a further 74% interest in Activo Health, which now has become 100% held, effective 1 March 2019.
  • Acquisition of the iThrive Business Solutions Group, main subsidiary PHA, effective 1 October 2018 (a smaller administration company).
  • Scriptpharm has secured the Polmed Chronic Medicine Management contract valued at R500 million, effective 1 January 2019.
  • Medscheme has secured the Medshield Hospital Benefit Management contract valued at R30 million, effective October 2018.
  • Medscheme Forensic Services secured the Medshield Fraud Prevention and Recovery contract, effective 1 January 2019.
  • Medscheme has secured the Hosmed Hospital Benefit Management contract effective 1 July 2019.
  • Acquisition of an additional 25% stake in AFA Botswana, pending regulatory approvals in Botswana. This effectively increases Medscheme’s shareholding to 49%.
  • Acquisition of Sanlam Health, which represents an administrator with specialised skills in combined corporate health offerings and an administration system.

The Group has continued to invest in Pharmacy Direct, to support it as it implemented the DOH CCMDD contract in KwaZulu-Natal (KZN) – this programme has substantially alleviated the congestion at public hospitals and clinics. Through this KZN contract, the number of scripts that are dispensed per month is now in excess of 0.8 million.

AfroCentric’s Insurance Fraud Manager (“IFM”) continues as a great developmental success, with direct savings and recoveries to our clients in excess of R1.6 billion over the past 3 years. Through the success of our existing clients, this has created an opportunity for other Medical Schemes to procure the services of our forensics team.

The Fusion project in our IT business unit, AfroCentric Technologies, was successfully completed in various phases in 2019. The project entailed the replacement of certain modules in our core administration system which are being rolled out to various schemes over a 12 month period ending April 2020. The enhanced system will drive efficiencies in administration costs that will start materialising in the last quarter of the 2020 financial year.


The benefits of the Group’s maintained programme of expansion, including the general and sustained quality of earnings from within the underlying businesses, all contributed to the satisfactory financial outcome of the Group during this period under review.

The Group’s financial position remains sound, cash reserves are adequate with some gearing having been implemented to acquire Activo Health from 1 March 2019. At corporate and operational level, management is assessing and implementing plans for real growth and pursuing selective local opportunities to complement the existing product and service offering.


The following changes were made to the Board during the period under review:

  • Professor SA Zinn was appointed as an Independent Non-Executive Director effective 23 November 2018.
  • Mr JB Fernandes was appointed as an Independent Non-Executive Director effective 23 November 2018.
  • Mr SE Mmakau resigned as an Independent Non-Executive Director effective 1 December 2018 as he accepted the position of Group Chief Information Officer on the same day.
  • Ms LL Dhlamini was appointed as the Lead Independent Non-Executive Director effective 23 November 2018.
  • Mr A Banderker was appointed as the Group CEO effective 1 April 2019, and thus resigned as a Non-Executive Director.
  • Mr AV van Buuren retired as the Group CEO effective 31 March 2019.
  • Mr T Alsworth-Elvey was appointed as a Non-Executive Director effective 1 July 2019.
  • Mr I Kirk retired as a Non-Executive Director effective 12 September 2019, he was replaced by Mr G Allen on the same date (a Sanlam representative with Healthcare experience).


The Board has pleasure in announcing that in addition to the interim gross dividend per ordinary share of 17 cents, a final gross dividend of 17 cents per ordinary share has been declared for the year ended 30 June 2019. Dividends are subject to Dividends Withholding Tax. The payment date for the dividend is 4 November 2019.

  • Dividends have been declared out of profits available for distribution.
  • Local Dividends Withholding Tax rate is 20%.
  • The gross dividend amount is 17 cents per ordinary share.
  • The net cash dividend amount is therefore 13.6 cents per ordinary share.
  • The Company has 574 241 248 ordinary shares in issue as at the declaration date.
  • The Company’s income tax reference number is 9600/148/71/3.

The salient dates relating to the dividend are as follows:

Last day to trade cum dividend Tuesday, 29 October 2019
Shares commence trading ex-dividend Wednesday, 30 October 2019
Dividend record date Friday, 1 November 2019
Dividend payment date Monday, 4 November 2019

Share certificates for ordinary shares may not be dematerialised or rematerialised between Wednesday, 30 October 2019 and Friday, 1 November 2019, both days inclusive.

Basis of preparation

The financial information contained in this report is extracted from audited information, but is itself not audited. This announcement does not include the information required pursuant to paragraph 16A(i) of IAS34. The full provisional report is available on our website (, or at our offices upon request. The Directors take full responsibility for the preparation of this report and the financial information has been correctly underlying annual financial statements. The annual financial statements were audited by PricewaterhouseCoopers Inc. who expressed an unmodified opinion thereon. The audited annual financial statements and the auditor’s report thereon are available for inspection at the Company’s registered office.

On behalf of the Board

Dr ATM Mokgokong

Mr AV Van Buuren
Group Chief Executive Officer

13 September 2019