AfroCentric Investment Corporation Limited · JSE:ACT
AfroCentric Investment — H1 2018 Earnings Presentation
41 slides from AfroCentric Investment's earnings presentation, 2018
Slide 1: Investor Day 2018 Interim Results
A AfroCentric Investor Day 2018 INTERIM RESULTS Unaudited Interim Results and Dividend Declaration FOR THE SIX MONTHS ENDED 31 DECEMBER 2017
Slide 2: Dr. Anna Mokgokong, Group Chairperson
A AfroCentric Dr. Anna Mokgokong Group Chairperson
Slide 3: Antoine van Buuren, Group CEO
A AfroCentric Antoine van Buuren Group CEO
Slide 4: AfroCentric Group
AfroCentric GROUP @ iG @Sanlam —. A Becenre active | Pharmacy @ AfroCentric oO Caring, Reliable & Affordable HEALTH curasanawholesaler 51% | cull ! medacheme fi © delios a i a TCHM welhess. essential MMed seqe teens
Slide 5: Achieving sustainable growth through integrated healthcare solutions
ACHIEVING SUSTAINABLE GROWTH THROUGH INTEGRATED HEALTHCARE SOLUTIONS
Slide 6: Achieving sustainable growth through integrated healthcare solutions
ACHIEVING SUSTAINABLE GROWTH THROUGH INTEGRATED HEALTHCARE SOLUTIONS
Slide 7: Medscheme figures versus industry
45 40 Medscheme figures actual; industry from latest CMS Annual Report 35 30 R100 000’s 25 20 15 10 5 0 Discovery Medscheme excl. GEMS Medscheme incl. GEMS GEMS MMI excl. GEMS Self-Admin 2010 2011 2012 2013 2014 2015 2016 2017 ACHIEVING SUSTAINABLE GROWTH THROUGH INTEGRATED HEALTHCARE SOLUTIONS
Slide 8: Anthony Pederson and Lungi Nyathi
Anthony Pederson Lungi Nyathi Executive Director: Executive Director: Medscheme CEO Healthcare Management ACHIEVING SUSTAINABLE GROWTH THROUGH INTEGRATED HEALTHCARE SOLUTIONS
Slide 9: Actuarial benefit design and healthcare management
Healthcare Actuarial Predictive Funding benefit data policies and design and modeling protocols pricing Active Oncology Medicine Disease Risk Management- Management Managment Personalised - Including - Focus on risk support ambulatory stratification PMB Healthcare Hospital Provider Rules based Risk
Slide 10: Year on year hospital inflation contained to +1%
Year on year hospital inflation contained to +1%! ACHIEVING SUSTAINABLE GROWTH THROUGH INTEGRATED HEALTHCARE SOLUTIONS
Slide 11: Client and member centric business model
Level 2 B-BBEE Largest Black Seamless owned Health integration Administrator Member and Single point of access provider for Administration and Quality Focus communication Managed care entire business services services Enquiries ISO9001:2008 accredited Fund incl. appeals management processes and secr
Slide 12: Recoveries and drop in claiming behaviour
2016 2017 Change R 108.9 Recoveries R 35.1 million million 209% Drop in claiming R 20.8 million R 164.6 million 691% behaviour (as at Sept 2016) (as at Sept 2017) R 273.5 TOTAL R 56 million 388% million Interventions against providers, pharmacies 540 654 21% or facilities HPCSA cases lodged 33 48 45
Slide 13: Spotlight on forensic services
Spotlight on forensic services Cracking down on fraud, waste and abuse. just getting started... Recovery Analysis 2017 Annusi Healthcare Forensic Report
Slide 14: Spotlight on forensic services
4 Spotlight on forensic services Cracking down on fraud, waste and abuse. just getting started... Recoveries % Distribution by province
Slide 15: Chronic medication clients
Chronic medication clients Medical schemes • Designated Service Provider for 9 large schemes National Department of Health • CCMDD* programme • 7 out of 8 provinces Compensation Fund *Central Chronic Medicines Dispensing and Distribution Kagiso Kekane Ansie van Debbie Parker National Coordinator: de
Slide 16: Pharmaceutical businesses
National courier pharmacy with a vast delivery network in both urban and rural areas offering affordable, convenient, reliable and safe delivery of prescribed chronic medication Procurement of pharmaceutical stock through its system integration which allows for robust planning, execution and measure
Slide 17: Technology: ICT services and IT platforms
Vijay Pillay Executive Director: Technology Comprehensive ICT-related services supporting healthcare businesses Offers innovative technology solutions, integrated medical scheme administration and health risk management systems, healthcare management systems for those affected by specialised disease
Slide 18: Achieving sustainable growth through integrated healthcare solutions
ACHIEVING SUSTAINABLE GROWTH THROUGH INTEGRATED HEALTHCARE SOLUTIONS
Slide 19: Managed care, distribution and insurance offerings
Broker management, growth and mergers, distribution of products HIV/AIDS managed care programme for medical schemes and corporates Reducing pain, increasing mobility Reducing back and neck surgery Lifestyle interventions for non-communicable diseases Chronic medication capitation Surgical, device an
Slide 20: Digital health and new acquisition
More under development… Watch this Digital space… Occupational health health 1 March New acquisition Primary care Health insurance ACHIEVING SUSTAINABLE GROWTH THROUGH INTEGRATED HEALTHCARE SOLUTIONS
Slide 21: Hannes Boonzaaier, Group CFO
A AfroCentric Hannes Boonzaaier Group CFO
Slide 22: Group business segments
Other Healthcare Services Distribution & Administration Healthcare & Managed Insurance Care Services Information Managed Care Technology & Wellness Solutions Pharmaceutical ACHIEVING SUSTAINABLE GROWTH THROUGH INTEGRATED HEALTHCARE SOLUTIONS
Slide 23: Managed Care & Wellness: nature of business
Administration & Managed Managed Care & Wellness Care Services Nature of Medical Scheme Management of Management Health Risk administrator and Musculoskeletal of HIV/AIDS Assessments/ business managed care Disorders protocol/ Screenings provider diagnosis Revenue % 57% 0.12% 2% 1% Contribution Fee F
Slide 24: Pharmaceutical
Pharmaceutical Nature of Courier Wholesale Pharmaceutical Management Medical and Pharmacy Pharmaceuticals Manufacturer of chronic surgical business medication distribution through a capitation arrangement Revenue % 29% Internal Revenue Approx. R20m 1% NEW contribution Pre Tax Profits Contribution (2
Slide 25: IT Solutions
IT Solutions Nature of ICT Solutions and Pharmacy & Clinic Services Software business Administration Medicine claims systems switching Revenue % 6.88% 1% Contribution Fee Structure Per member per Fee per month fees transactional switch Monthly software Fixed fees fees Services IT services: Hosting,
Slide 26: Brokerage & Health Insurance
Brokerage & Health Insurance Nature of Sales / Broker FSP offering Health insurance Management healthcare provider services business brokerage service Revenue % 2% New New Contribution Fee Per member per Commission on its Fixed fee per month fee products month Structure Services Marketing and Broker
Slide 27: Other Healthcare Networks & Technology
Other Healthcare Networks & Technology Hospitals ? ? Optometry Pathology ? ?
Slide 28: Strategic scorecard: shareholder value, transformation, efficiencies
Enhance shareholder value Promote transformation (Annual) B-BBEE level: 2 (2016: 2) HEPS (cents): 21.67 (2016: 18.21) Enterprise & supplier development (R'm): 14 (2016: 10.9) Dividend yield annualised (%): 4.38 (2016: 3.94) Enterprise development spend (R'm): 3.5 (2016: 3.4) Socioeconomic developmen
Slide 29: Bonitas membership growth
340000 330000 320000 339,570 310000 321,961 300000 + Growth in 2016 attributed to the amalgamation with the LMS 296,636 290000 Medical Fund in October 2016 280000 270000 + Increase in members from 2016 - annual impact of the amalgamation with the LMS Medical Fund. + Effective August 2017, the Commed
Slide 30: Fedhealth membership decline
340000 75000 330000 70000 320000 + Fedhealth has seen a 74,867 65000 339,570 73,162 72,551 310000 decline in the members over 321,961 300000 60000 the past 3 years - reflective 296,636 290000 55000 of the economic climate 280000 270000 50000 ACHIEVING SUSTAINABLE GROWTH THROUGH INTEGRATED HEALTHCARE
Slide 31: Polmed membership
+ Polmed contract commenced in January 2016 + Slight growth in members from 2016 340000 75000 175000 330000 70000 170000 320000 174,999 74,867 65000 174,555 339,570 165000 73,162 72,551 310000 321,961 300000 60000 160000 296,636 290000 55000 155000 280000 270000 50000 150000 0 ACHIEVING SUSTAINABLE
Slide 32: Corporate Schemes membership
Corporate Schemes 114000 112000 110000 108000 113,754 106000 111,244 104000 102000 103,033 100000 + Decrease in members in 2016 attributed to the loss of the Wits 98000 96000 and Glencore schemes in December 2015 + Growth in 2017 attributed to the Hosmed contract, effective November 2017 ACHIEVING S
Slide 33: GEMS membership
Corporate Schemes 114000 112000 695000 690000 110000 685000 108000 113,754 680000 690,561 106000 111,244 689,965 687,084 675000 104000 670000 102000 103,033 665000 100000 660000 98000 655000 96000 650000 + Disappointingly, there has been no growth in the GEMS membership ACHIEVING SUSTAINABLE GROWTH
Slide 34: Africa corporate schemes membership
+ Decrease in 2016 attributed to the reduction in Mauritius members + Decrease in 2017 members attributed to the loss of the Swazimed scheme Corporate Schemes Africa 114000 185000 112000 695000 690000 180000 110000 685000 108000 175000 184,041 113,754 680000 178,833 690,561 106000 111,244 689,965 17
Slide 35: Scripts dispensed, six months to December 2015-2017
Six months ended 31 December, 2015 - 2017 3,000,000 2,500,000 2,938,892 2,000,000 + Growth in the private sales scripts 1,500,000 + Growth in the DOH scripts - mainly 1,436,198 attributed to the 2 additional provinces 1,000,000 won by Pharmacy Direct for the dispensing of chronic medicines in 759,58
Slide 36: Revenue, profit before tax and headline EPS growth
12.59% 13.10% 19.00% 14.29% 24.61% Revenue Profit before tax Headline EPS Dividends Diluted Headline EPS ACHIEVING SUSTAINABLE GROWTH THROUGH INTEGRATED HEALTHCARE SOLUTIONS
Slide 37: Headline earnings and HEPS
140,000 30 26.09 Shares in issues 120,000 25 21.84 21.67 Issue Balance 100,000 2013 467,797,446 18.21 20 Rand value 17.16 2014 87,655 467,885,101 80,000 cents 2015 86,492,227 120,108 15 554,377,328 102,169 100,942 60,000 2016 94,640 - 554,377,328 78,976 10 2017 - 554,377,328 40,000 5 During 2015, Af
Slide 38: 2016 to 2017 change
2016 to 2017 change R ’000 31 Dec ‘15 31 Dec ‘16 31 Dec ‘17 + Inflationary increase in healthcare service revenue (R91m) + Increase in retail private sales & DOH Revenue 1,442,067 1,809,933 2,037,800 contract dispensing fees (R79m) + Take-on of new medical aid schemes (Hosmed) (R6m) Operating Profit
Slide 39: 2016 to 2017 change: balance sheet
2016 to 2017 change + Capitalisation of the Nexus/ Gexus systems (R47m) / (amortisation: R9.1m) + Fusion programme costs (R29.3m) + Goodwill and PPA (R46.9m) R ’000 31 Dec ‘15 31 Dec ‘16 31 Dec ‘17 attributed to the acquisition of Wellness Odyssey in July 2017 / (amortisation R7.1m) Assets + Compute
Slide 40: Intangible assets and amortisation
100% 100% 17% 90% 41,667 1,571,435 90% 7% 5% 56% 17% 61% 22% 3% 12% 80% 80% 18% 70% 70% 6% 60% 60% 42,135 1,440,173 61% 50% 7% 50% 3% 21% 20% 55% 10% 40% 40% 47% 30% 30% 14% 50,716 1,417,866 20% 62% 20% 38% 3% 15% 4% 11% 7% 10% 10% 0% 0% 0% Nexus Gexus Computer Goodwill PPA Total Nexus Gexus Compute
Slide 41: Thank you for your time
A AfroCentric Investor Day 2018 INTERIM RESULTS Thank you for your time
AfroCentric Investment — H1 2018 Earnings Presentation on 6ix