AfroCentric Group

NOTES

NOTE 1: INTANGIBLE ASSETS

	Carrying value			Amortisation
	Unaudited  six months  ended  31 December  2020  R’000	Restated  Unaudited  six months  ended  31 December  2019  R’000	Audited  year  ended  30 June  2020  R’000	Unaudited  six months  ended  31 December  2020  R’000	Unaudited  six months  ended  31 December  2019  R’000	Audited  year  ended  30 June  2020  R’000
Goodwill (NOTE 3.1)	1 396 316	1 380 500	1 373 350	–	–	–
Goodwill – AfroCentric Health	474 932	474 932	474 932	–	–	–
Goodwill – Pharmacy Direct and Curasana	473 954	473 954	473 954	–	–	–
Goodwill – Activo	424 464	431 614	424 464	–	–	–
Goodwill – Denis*	22 966	–	–	–	–	–
Intangible assets (NOTE 3.1)	1 404 977	1 250 747	1 321 837	(96 591)	(77 179)	(164 153)
Customer relationships – Pharmacy Direct and Curasana	34 024	49 963	38 498	(4 474)	(4 474)	(8 206)
Dossiers – Activo	271 890	278 920	271 911	(7 884)	(7 884)	(14 454)
Customer relationships – Denis*	59 587	–	–	(5 431)	–	–
AfroCentric Health intangible assets	320 600	345 554	292 761	(16 829)	(21 435)	(54 131)
AfroCentric Health intangible PPA	33 030	50 351	39 733	(6 703)	(5 638)	(15 418)
AfroCentric Health intangible Software	287 570	295 203	253 028	(10 126)	(15 797)	(38 713)
Administration Systems – Self Generated	654 687	480 549	638 673	(46 168)	(24 990)	(61 722)
AfroCentric Health Nexus	486 135	294 254	461 250	(37 297)	(16 119)	(43 980)
AfroCentric Health Fusion	168 552	186 295	177 423	(8 871)	(8 871)	(17 742)
Insurance Fraud Manager (Fraud Management Software)	64 189	95 761	79 994	(15 805)	(18 396)	(25 640)
	2 801 293	2 631 247	2 695 187	(96 591)	(77 179)	(164 153)

*	The fair values of the assets and liabilities used to calculate the amounts have only been determined provisionally as the independent valuations have not been finalised.

NOTE 2: BORROWINGS

	Unaudited six months ended 31 December 2020 R’000	Unaudited six months ended 31 December 2019 R’000	Audited year ended 30 June 2020 R’000
Borrowings (non-current)	508 140	366 218	266 311
Borrowings (current)	139 967	86 250	120 000
Total borrowings	648 107	452 468	386 311

NOTE 3: RESTATEMENT OF DECEMBER 2019 RESULTS

Further to the conclusion of the 2020 audited financials, the following changes were made to better reflect the nature of specific transactions:

Note 3.1: Statement of financial position

In the 2019 financial period, the Group had presented goodwill associated with Afrocentric Intergrated Corporate Solutions (R14m) as part of other intangible assets. This has been corrected by reclassifying from Intangible Assets to Goodwill.

The impact of the reclassification is depicted in the table below:

	As previously  reported  31 December  2019  R’000	Adjustment  increase/  (decrease) R’000	Restated  Unaudited  six months  ended  31 December  2019  R’000
Goodwill	1 366 027	14 473	1 380 500
Intangible assets	1 265 220	(14 473)	1 250 747
	2 631 247	–	2 631 247

Note 3.2: Statement of comprehensive income

3.2.1	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".
3.2.2	In the 2019 financial period, the Group erroneously eliminated the Activo dividend paid to ACT Healthcare Assets against the Healthcare Services segment.

The above errors have been corrected as follows:

	As previously  reported  31 December  2019  R’000	Adjustment  increase/  (decrease) R’000	Restated  Unaudited  six months  ended  31 December  2019  R’000
Healthcare retail operating profit	114 910	13 750	128 660
Healthcare retail operating revenue	1 483 392	–	1 483 392
Healthcare retail cost of sales	(830 421)	(38 742)	(869 163)
Healthcare retail operating costs	(538 061)	52 492	(485 569)
Healthcare services operating profit	283 119	(13 750)	269 369
Healthcare services revenue	1 627 878	–	1 627 878
Healthcare services operating costs	(1 344 759)	(13 750)	(1 358 509)
Total healthcare operating profit (excluding lease reversals)	398 029	–	398 029

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 disclosed on the cash flow statement on the interim results.

The interest relating to lease liability repayment was incorrectly incorporated on the computation of the cash generated from operations and the interest on the lease liability was not deducted from Net finance income line.

The lease capital repayment was incorrectly recognised as part of the increase in borrowings cash flow from financing activities instead of "Net lease liability repayment".

This has been corrected as follows:

Extract of the cash flows from operating activities

Financial statement line:	As previously  reported  31 December  2019  R’000	Adjustment  increase/  (decrease) R’000	Restated  Unaudited  six months  ended  31 December  2019  R’000
Cash generated from operations	432 124	38 265	470 389
Net finance income	14 009	(38 265)	(24 256)
Distribution to shareholders	(113 074)	–	(113 074)
Dividends received	4 626	–	4 626
Tax and other payments	(111 608)	–	(111 608)
Net cash inflow from operating activities	226 077	–	226 077
Extract of the cash flows from financing activities
(Decrease)/increase in borrowings	(53 771)	26 644	(27 127)
Net lease liability repayment*	–	(26 644)	(26 644)
Net cash outflow from financing activities	(53 771)	–	(53 771)
The net impact of restatement is the correct disclosure of lease liability repayment as cash flow from financing activities. This correction has not had an impact on the cash and cash equivalents.