AfroCentric Group - Summary of annual results and dividend declaration for the year ended 30 June 2020

NOTES

NOTE 1

	Carrying value 2020 R’000	Carrying value 2019 R’000	Amortisation for the year 2020 R’000	Amortisation for the year 2019 R’000
Goodwill	1 373 350	1 336 842	–	–
Goodwill – AfroCentric Health	474 932	460 460	–	–
Goodwill – WAD Healthcare Assets	473 954	473 954	–	–
Goodwill – Activo*	424 464	402 428	–	–
Intangible Assets	1 321 837	1 219 170	(164 153)	(110 941)
Customer relationships – Retail cluster	38 498	46 708	(8 206)	(10 591)
Activo Dossiers	271 911	286 365	(14 454)	(3 613)
AfroCentric Health intangible assets	292 761	332 146	(54 131)	(44 570)
AfroCentric Health intangible PPA	39 733	55 149	(15 418)	(8 367)
AfroCentric Health intangible Software	253 028	276 997	(38 713)	(36 203)
Administration Systems – Self Generated	638 673	448 317	(61 722)	(21 393)
Nexus & Other Healthcare Administration Systems	461 250	253 152	(43 980)	(21 393)
AfroCentric Health Fusion	177 423	195 165	(17 742)	–
Insurance Fraud Manager (Fraud Management Sofware)	79 994	105 634	(25 640)	(30 774)

	2 695 187	2 556 012	(164 153)	(110 941)

Post the acquisition of Activo Health in March 2019, a pre-acquisition dividend to the value of R22 million was declared and payment effected in December 2019. In terms of IFRS 3: Business Combination, the provisional accounting applied to the acquisition of Activo Health is finalised in December 2019, resulting in an increase in the trade and other payables by R22 million, with a corresponding increase in Goodwill.

NOTE 2

Borrowings

	% change	Year ended 30 June 2020 R’00	Year ended 30 June 2019 R’000
Borrowings (non-current)		266 311	371 566
Borrowings (current)		120 000	120 000
	21.4	386 311	491 566

NOTE 3 RESTATEMENT OF JUNE 2019 RESULTS

Note 3.1

Statement of financial position

In the 2019 financial period, the Group had presented the taxation receivable net of its taxation payable obligations.

The restatement has been performed to comply with the requirements of IAS 12 as AfroCentric does not have a legal enforceable right to set off these amount, and does not intend to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

Table below illustrates the impact of the statement of financial position restatement:

Consolidated statement of financial position	2019 As previously reported R’000	Adjustment increase/ (decrease) R’000	2019 Restated R’000
Current assets	1 085 620	32 279	1 117 899
Trade and other receivables	531 494	–	531 494
Cash and cash equivalents	265 296	–	265 296
Inventory	283 732	–	283 732
Current tax asset	5 098	32 279	37 377
Current liabilities	686 046	32 279	718 325
Trade and other payables	415 836	–	415 836
Borrowings	120 000	–	120 000
Employment benefit liability	88 659	–	88 659
Lease liability	61 551	–	61 551
Taxation	–	32 279	32 279

Note 3.2

Statement of comprehensive income

In the 2019 financial period, the Group had presented the courier costs associated with the delivery of medication by Pharmacy Direct to its clients as "Healthcare operating expenses".

Due to the nature of these expenses, being associated with the final products, they have been reclassified to "Healthcare retail cost of sales".

This has been corrected as follows:

Statement of comprehensive income	2019 As previously reported R'000	Adjustment (increase)/ /decrease R'000	2019 Restated R'000
Healthcare retail operating profit	129 233	–	129 233
Healthcare retail revenue	2 038 135	–	2 038 135
Healthcare retail cost of sales	(1 565 338)	(75 941)	(1 641 279)
Healthcare retail operating costs	(343 563)	75 941	(267 622)

Note 3.3

Cashflow restatement

On the early adoption and implementation of IFRS 16: Leases, the cash flows relating to the lease liability (i.e. lease liability interest repayment and lease liability capital repayment) were incorrectly accounted for on the cash flow statement disclosed on the annual results.

The total lease liability repayment (capital and interest) was incorrectly incorporated on the computation of the cash generated from operations, and the interest on the lease liability was not deducted from the cash generated from operations in computing the cash flows from operating activities.

The resultant impact is that the lease liability capital repayment was incorrectly recognised as a cash flow from operating activities instead of recognition as a cash flow from financing activities.

This has been corrected as follows:

Extract of the cash flows from operating activities

Financial Statement Lime	2019 As previously reported R'000	Adjustment (increase)/ decrease R'000	2019 Restated R'000
Cash generated from operations	569 062	94 474	663 536
Net finance income/ (cost)	4 471	(31 822)	(27 351)
Distribution to shareholders	(196 662)	–	(196 662)
Dividends received	4 168	–	4 168
Tax and other payments	(136 924)	–	(136 924)
Net cash flows from operating activities	244 115	62 652	306 767

Extract of the cash flows from financing activities

Financial Statement Lime	2019 As previously reported R'000	Adjustment (increase)/ decrease R'000	2019 Restated R'000
Increase in borrowings	491 566	–	491 566
Lease liability capital repayment	–	(62 652)	(62 652)
Net cash flows from financing activities	491 566	(62 652)	428 914

The net impact of the restatement is the correct disclosure of the lease liability capital repayment as a cash flow from financing activities. This correction has not had an impact on the cash and cash equivalents.