AfroCentric Investment Corporation Limited · JSE:ACT
AfroCentric Investment — Investor Day (September 2020)
29 slides from AfroCentric Investment's investor day presentation, Sep 15, 2020
Slide 1: Investor Day 2020 Annual results
Investor Day 2020 Annual results For the year end 30 June 2020
Slide 2: Welcome
Welcome Group Chairperson | Dr. Anna Mokgokong
Slide 3: Group Overview
Group Overview Group CEO | Ahmed Banderker
Slide 4: Agenda
AGENDA R Who we are and Progress on Group what we do strategic plan performance Segment Value driven 01 strategy 03 financial performance 05 02 04 2020 Annual results Group CEO | Ahmed Banderker Group CFO | Hannes Boonzaaier 4
Slide 5: Creating value through our purpose
CREATING VALUE THROUGH OUR PURPOSE PURPOSE Enhancing quality of life OUR VISION Transforming healthcare OUR MISSION To innovate a new integrated model of sustainable healthcare that 2020 Annual results measurably improves access to quality healthcare 5
Slide 6: Most diversified SA healthcare company
MOST DIVERSIFIED SA HEALTHCARE COMPANY GROUP STRUCTURE Our diversified business model and growth strategy enables us to achieve sustainable growth and value creation across the healthcare sector by leveraging our competitive advantages. Medical aid administration, risk Pharmaceutical Corporate manag
Slide 7: Our strategy and approach
OUR STRATEGY AND APPROACH TRANSFORMING HEALTHCARE Reduction in non-healthcare expenditure Lowering scheme healthcare costs Operational excellence Unlocking synergies for growth 2020 Annual results Disruptive delivery models Investing in our people 7
Slide 8: Focus on growth
FOCUS ON GROWTH Operating profit (R’m) Lives (’000) 1000 4 000 800 3 000 600 2 000 400 1 000 200 0 0 Market ~ 1million 49% Digitisation 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 leader scripts per revenue Service operating profit Retail operating profit Lives month from dispensed pharma
Slide 9: Strategic initiatives
STRATEGIC INITIATIVES PHARMACY AUTOMATION Proof of Concepts OPERATIONAL EFFICIENCIES STAFF TO MEMBER RATIO Reduced call time Improvements HOSPITAL BENEFIT MANAGEMENT IT OPERATING MODEL PROJECT Enhancement focus areas 1st phase – July 2020 OUR PURPOSE ROBOTICS CX Process automation ENHANCING Customer
Slide 10: Strategic initiatives: key highlights (Medscheme)
STRATEGIC INITIATIVES KEY HIGHLIGHTS (MEDSCHEME) REFRESHED OPERATING MODEL MARGIN IMPROVEMENT Operating costs down by 1% PHARMACY Operating profit up by 13% AUTOMATION Proof of Concepts HOSPITAL BENEFIT MANAGEMENT OPERATIONAL STAFF TO MEMBER RATIO EFFICIENCIES Improvements Phase 1 completed Reduced
Slide 11: Strategic initiatives: experienced new COO
STRATEGIC INITIATIVES KEY HIGHLIGHTS Johan van Rooyen, LLB EXPERIENCED NEW COO 24 years in healthcare COO of Discovery, Head of Vitality and Group Services, GM at Ping An Health (China), CEO at AIA Health (Hong Kong), CDO of Discovery Bank Project, CEO of Kaelo Significant exposure to Designing and
Slide 12: Focus area – Pharma cluster key highlights
FOCUS AREA – PHARMA CLUSTER KEY Activo HIGHLIGHTS 13 new products launched Another 13 by Dec 2020 – hospital, oncology, HIV Covid19 impact on sales Immune supplements - record sales Hydrocortisone Mositec - travel restrictions Supiroban – less operations Pharmacy Activo Scriptpharm MMed Direct Pharm
Slide 13: Further highlights
FURTHER HIGHLIGHTS ACQUISITION CONTRACTS DENIS NDOH MEDiPOS SASOLMED Group 100% contract with Contracts (ex EOH) Competition Tribunal Pharmacy approval Direct 2020 Annual results Dental benefit Extended by 12 months Administration and Given notice management specialist till 31 March 2022 Managed Car
Slide 14: Resilience during COVID-19: Power of PPPs
RESILIENCE DURING COVID-19 Power of PPPs Anticipated membership losses Private-public collaboration during Covid-19 Surprising stickiness Demonstrated PPPs can be answer in NHI Retrenchments take time to work through Courier pharmacy Depressed claims Proving it self during Covid-19 Due to delayed Ho
Slide 15: Client schemes during COVID: admissions
CLIENT SCHEMES DURING COVID ADMISSIONS Scheme performance Auths per 1000 2018 Auths per 1000 2019 Auths per 1000 2020 ~ 4.4% lower than budget as at June 2020 350 300 General utilisation trend Admissions per 1000 lives 250 ~ 8% lower annual claims 200 Solvency 150 Unrealised losses means solvency vo
Slide 16: Strategic plan – progress
3 YEAR STRATEGIC PLAN - PROGRESS Administration People skills and Aggressively target Platform (Cost and culture – Leadership Schemes with new performance) Excellence & Culture models Transformation Be the 01 02 03 BEST at what we 04 05 06 do… Exploring disruptive Digital Initiatives – UX Optimise B
Slide 17: Year End Financial Review
Year End Financial Review Group CFO| Hannes Boonzaaier
Slide 18: Financial focus points since 2016
FINANCIAL FOCUS POINTS SINCE 2016 Revenue diversification – less dependent on medical aid administration fees Growth in Pharmaceutical – organic growth in Pharmacy Direct and acquisition of 74% of Activo IT system investments (2016 – 2019) Turnaround of start-up businesses to profitability (since 20
Slide 19: Highlights for year end June 2020
HIGHLIGHTS FOR YEAR END JUNE 2020 REVENUE PROFIT AFTER TAX HEALTHCARE RETAIL HEALTHCARE SERVICES OPERATING PROFIT OPERATING PROFIT 2020 Annual results 19
Slide 20: Segmented financial reporting: Medical aid administration
SEGMENTED FINANCIAL REPORTING STRUCTURE Administration, Risk Management & Technology Medical Aid Administration, Risk Management and Operating Profit Review Technology 0% R3 194 R3 185 Revenue - R’m 2018/19 2019/20 - 2% R2 648 R2 590 Operating Costs - R’m Option mix of open schemes placing pressure
Slide 21: Segmented financial reporting: Pharma cluster
SEGMENTED FINANCIAL REPORTING STRUCTURE Pharma Cluster Pharma Cluster Operating Profit Review + 54% R3 136 R2 038 Revenue - R’m R123 million increase in 2018/19 2019/20 operating profit R13m + 51% R2 882 Pharmacy direct R1 909 18% increase in scripts Operating Costs - R’m Reduction in delivery costs
Slide 22: Segmented financial reporting: Corporate solutions
SEGMENTED FINANCIAL REPORTING STRUCTURE Corporate solutions Corporate solutions Operating Profit Review + 50% R110 R73 Revenue - R’m 2018/19 2019/20 R62 + 52% R94 Operating Costs - R’m Wellness mobility impacted by COVID-19 2018/19 2019/20 +45% R16 Health insurance impacted by regulation uncertainty
Slide 23: Three year view of profit before tax
THREE YEAR VIEW OF PROFIT BEFORE TAX R’m 2018 2019 2020 Operating Profit* 623.1 677.6 8.7% 874.6 29.1% Net Cash Finance Income / (Cost) 43.4 16.9 (61.0%) (17.1) (N/A) Depreciation / Amortisation (140.7) (166.8) 18.5% (226.6) 35.8% IFRS 16 (Leases) Net effect - (20.1) (13.6) Other (Activo conversion
Slide 24: New ventures additional considerations
NEW VENTURES OPERATING ADDITIONAL PROFIT CONSIDERATIONS A N A LY S I S EssentialMed (Health Insurance) R’m MMed (Surgicals / Consumables) R’m 8.6 3.8 Health insurance market impacted by 5.1 A regulatory uncertainty from December 2019 2018 2019 2020 Mmed benefited from PPE 2018 2019 2020 -5.2 B oppor
Slide 25: Statement of financial position: key changes
STATEMENT OF FINANCIAL POSITION|KEY CHANGES Jun-19 Jun-20 Jun-19 Jun-20 R’m R’m R 1 321,8 R531.5 R440.6 7,7% R1 219.1 R504,3 R283.7 R409.0 increase in R491.6 R297,8 R261.3 R265.3 R386.5 working R196.1 R185.5 capital to Land & Intangible Cash Net Inventory Trade Trade Net working R440.6m in buildings
Slide 26: 3 year earnings tracking
3 YEAR EARNINGS TRACKING Base Earnings (R’m) Earnings per share (cents) Headline Earnings per share (cents) +18% 303,57 +14% 52,87 +14% 53,42 +12% +10% +13% 269.80 48.12 256.60 46.29 47.06 47.29 2018 2019 2020 2018 2019 2020 2018 2019 2020 Headline Earnings (R’m) Net Asset Value per share (cents) We
Slide 27: Most diversified healthcare group
MOST DIVERSIFIED HEALTHCARE GROUP Pharmacy Cluster Pharmacy Direct Activo Operating profit (full year per circular) 2018 R 74.3m 2019 R 95m 2019 R 82.7m 2020 R 131m 2020 R 95.7m 2021 R 160m *New NDoH contract stabilization during 2019 and extended till March 2022 MMed integration with scheme procure
Slide 28: Group performance - investor dashboard
GROUP PERFORMANCE - INVESTOR DASHBOARD 5 year Compound Description 2015 2016 2017 2018 2019 2020 annual growth rate Total Revenue (R’m) 2 098 3 148 3 785 4 213 5 297 6 440 26% Operating Profit (R’m)* 372 376 564 613 677 875 16% Group Operating Profit Margin (%) 18% 12% 15% 15% 13% 14% Non-Controllin
Slide 29: Thank you
THANK YOU A Afrocentric
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