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 example of transformation and empowerment in the South African healthcare sector.

The Board is pleased to present comments on AfroCentric’s (“ACT”) summary interim results for the six months ended 31 December 2018. The period under review has been characterised by investment in new and growing contracts/entities as well as certain complementary acquisitions. The earnings are stable and all the Group enterprises have contributed to the Group’s growing operations and earnings. In addition, the prior and continued investment in system development and increased IT capacity, has already contributed favourably towards the current year results, thereby anticipating repeated cost savings through greater scale and procedural efficiencies into the 2020 financial year and beyond.

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. The Group continues in its rapid expanding activity and application in its pharmaceutical wholesale supply, chronic medication distribution networks, specialised disease management, information technology (IT) solutions, transactional switching, fraud detection, the development and marketing of tailored health 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 Interim Financial Reporting. The accounting policies applied in the preparation of these summarized 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.

The group adopted the following new accounting pronouncements, during the current period.

Accounting pronouncement   Adoption impact

IFRS 15 Revenue from Contracts with Customer (IFRS 15)

IFRS 15 replaces the previous revenue recognition guidance applied by the group as contained in IAS 18 Revenue.

  All contracts within the Group have been assessed against the new revenue standard and the application of IFRS 15 did not have a significant impact on the group’s results or financial position.

IFRS 9 Financial Instruments (IFRS 9)

IFRS 9 replaces the previous financial instrument recognition and measurement guidance applied by the group as contained in IAS 39 Financial Instruments: Recognition and Measurement.

  The group has applied IFRS 9 from 1 July 2018 and elected not to restate comparatives on transition, with the impact of adoption recognised as an adjustment to the opening balance of retained earnings as at 1 July 2018. The most significant impact of adoption was an increase in impairment allowances on trade receivables due to the IFRS 9 requirement to consider forward looking information when determining impairment allowances. The cumulative net impact of adopting IFRS 9 was an increase of R 2.1m in impairment allowances and a corresponding decrease of R2.1m in retained earnings.

IFRS 16 Leases (IFRS 16)

IFRS 16 replaces the previous Leases recognition guidance applied by the group as contained in IAS 17 Leases.

  The Group has elected to early adopt IFRS 16 from 1 July 2018 and elected the Modified retrospective approach. This resulted in the cumulative impact of applying IFRS 16 being accounted for as an adjustment to equity at the start of the current accounting period. The most significant impact of the adoption was the right of use asset recognised on the balance sheet and the corresponding lease liability (NOTE 3).

Industry highlights

  • AfroCentric Health (Pty) Ltd, the main operating subsidiary within the Group, achieved a level 1 B-BBEE in December 2018.
  • Medscheme Holdings (Pty) Ltd was awarded the “Service Excellence: Administration and Managed Care Award”, at the 2018 BHF Titanium Awards ceremony.
  • AfroCentric Investment Corporation Limited was awarded a Merit Award (small cap) at the CSSA/JSE Integrated Reporting Awards.
  • Pharmacy Direct opened a new Centralised Chronic Medicines Dispensing and Distribution “CCMDD” Centre on 13 August 2018, specifically to cater for the Department of Health (DOH) contract, an event that was graced by the Minister of Health.

Financial performance

Profit before tax decreased by 3.6% for the period under review amounting to R239.5 million (2017: 248.6million). Profit after tax (PAT) increased by 2.1% compared to prior financial period.

  • The amount in non-recurring development and establishment costs in excess of R9 million was incurred and absorbed during the period, creating the expansion platforms for the renewed PD/DOH chronic medication distribution contract.
  • Scriptpharm and MMed’s initial setup costs represent a R3million investment in each business up to 31 December 2018.
  • Due to less cash in the Group as a result of investments made in the past (e.g. Tranche 2 payment in September 2017), new acquisitions (e.g. Private Health Administrators “PHA”), continuing projects like Fusion, investment in IFM (fraud detection system) and stock funding provided to MMed, cash reserves are less and therefore lower interest earned levels.

Core business however continues to perform well with operating profit for Healthcare services growing at 7%. Earnings per share (EPS) increased slightly in this period by 1.0% and headline earnings per share (HEPS) increased by 3.1%.

Growth initiatives

AfroCentric has for some time been focused on opportunities which will serve to create a platform, designed to establish a value chain of healthcare services, to optimise the purchasing power of every healthcare Rand spent. This is done 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 publishing these results, the following positive contributing contracts are in progress or have been concluded:

  • Acquisition of the iThrive Business Solution Group, main subsidiary Private Health Administrators (“ PHA”), effective 1 October 2018 (an administration company)
  • Scriptpharm has secured the Polmed Chronic Medicine Management contract, effective 1 January 2019.
  • Medscheme has secured the Medshield Hospital Benefit Management contract, effective 1 October 2018.
  • Medscheme Forensic Services secured the Medshield Fraud Prevention and Recovery contract, effective 1 January 2019.
  • Medscheme has secured the Hosmed Medicine Management contract, effective 1 July 2019.
  • The acquisition of an additional 25% stake in AFA Botswana was concluded effective 1 March 2019, this will effectively increase Medscheme’s shareholding to 49%.
  • Acquisition of 100% shareholding of Sanlam Health was concluded effective 1 March 2019.
  • In line with Afrocentric’s growth objective of expanding its activity and application in its pharmaceutical supply and medicine distribution network, the call option to acquire the remaining 74% in Activo Health was exercised. The shareholders’ approval was obtained at a Company general meeting on 10 January 2019 and the approval of the Competition Commission on 26 February 2019. The acquisition has now become unconditional and will be implemented according to its terms. The effective date of the acquisition was 1 March 2019.

The Group has continued to invest in Pharmacy Direct, to support it as it implements the DOH contract in KwaZulu Natal (KZN) – this programme will substantially alleviate 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 1million. This is one of the ways that reflect that AfroCentric will continue to participate in the various government initiatives as the NHI is being rolled out.

AfroCentric’s Insurance Fraud Manager (“IFM”) continues as a great developmental success, with direct savings and recoveries to our clients in excess of R500million. Through the success of our existing clients, this has created an opportunity for other Medical Schemes to procure the services of our forensics team.

In the prior year, Sanlam and AfroCentric management diligently worked towards the finalisation of a portfolio of healthcare, life and lifestyle products to be jointly introduced to the broader market – this was successfully concluded, and these products are offered to the various medical aid members from January 2019.


AfroCentric has once again delivered a solid operating result, particularly during an interim period laced with challenging political and economic uncertainty. It was a period characterised by a lack of economic growth and declining consumer disposable incomes. Notwithstanding the above, 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 were utilised to acquire PHA, 1 October 2018 and continued investments in the IT capabilities within the Group. At corporate and operational level, management is assessing and implementing plans for real growth and pursuing selective local and international 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.

We wish to advise shareholders that the Group CEO (Antoine Van Buuren) will be retiring at the end of March 2019. The Board would like to thank him for his invaluable contribution to the Group. His experience, guidance and wisdom will certainly be missed both from an executive level and Board level. We wish him well in his retirement. Antoine will be available until the end of May 2019 to ensure a smooth handover to the new CEO.

Ahmed Banderker will take over as the AfroCentric Group CEO effective 1 April 2019.


The Board has pleasure in announcing that an interim dividend of 17 cents per ordinary share (gross) has been declared for the six months ended 31 December 2018. Dividends are subject to Dividends Withholding Tax. The payment date for the dividend is Monday, 13 May 2019. This interim dividend will constitute part of the Group’s annual dividend, to be considered in due course with the results for the year ending on 30 June 2019.

  • Dividends have been declared out of profits available for distribution.
  • Local Dividends Withholding Tax rate is 20%.
  • Gross dividend amount is 17 cents per ordinary share.
  • Net cash dividend amount is therefore 13.6 cents per ordinary share.
  • Company has 554 377 328 ordinary shares in issue as at the declaration date.
  • 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 Monday, 6 May 2019
Shares commence trading ex-dividend Tuesday, 7 May 2019
Dividend record date Friday, 10 May 2019
Dividend payment date Monday, 13 May 2019

Share certificates for ordinary shares may not be dematerialised or rematerialised between Wednesday, 8 May 2019 and Friday, 11 May 2018, both days inclusive.

Basis of preparation

The unaudited unreviewed interim results have been prepared under the supervision of Mr JW Boonzaaier CA(SA), in his capacity as the Group Chief Financial Officer. This announcement does not include the information required pursuant to paragraph 16A(j) of IAS 34. This is however available on our website (, or at our offices upon request.

On behalf of the Board

Dr ATM Mokgokong

Mr AV Van Buuren
Group Chief Executive Officer

13 March 2019