AfroCentric Investment Corporation Limited · JSE:ACT
AfroCentric Investment — FY2018 Earnings Presentation
38 slides from AfroCentric Investment's earnings presentation, 2018
Slide 1: Investor Day: Audited Final Results, Dividend Declaration
A» AfroCentric Investor Day Audited Final Results, Dividend Declaration and Cautionary Statement. FOR THE YEAR ENDED 30 JUNE 2018
Slide 2: Dr. Anna Mokgokong, Group Chairperson
‘a AfroCentric Dr. Anna Mokgokong Group Chairperson
Slide 3: Our purpose
Our purpose We believe that every person, regardless of their circumstances, should have the opportunity to improve and protect their health.
Slide 4: Antoine van Buuren, Group CEO
‘a AfroCentric Antoine van Buuren Group CEO
Slide 5: Introduction to the group
AfroCentric GROUP Introduction to the group OA Q Sanlam LY AfroCentric __ activo I _ hee yee = 1 Pharmacy AfroCentric oO Caring Reliable & Affordable HEALTH curasanawholesale T AlreCentri | welh Centr ~ Pr _ A rcentic (P) DBC THM "SDSSey BM (RJMMed searrmere ‘allégra |
Slide 6: Health-focused revenue streams
Health-focused Revenue Streams 3" Pharmacy _SDirect Caring, Reliable & Affordable oO curasanawholesaler Se 6 activo mete timisaz; soo Oa OT ha Arocentrc AfroCentric < A Member of AfroCentric Group medscheme a MMed Sregeame Distribution ® DBC SCRPTFHSRM RISK MANAGEMENT (PTY) LTD welhess ODYSSEY
Slide 7: Our clients
OUR CLIENTS pBartoworld Cy roimen Qoyedtad Ge reoxeacrn g => @|MeDSHIELD gems saBcr your kind of care omsmaf, Som MEDICAL SCHEME OA=CI SAMWUMED hosmed™ IN MEDICAL AID SOCIETY Re Poe Fe ¢ see ee medical Scheme NEDGROUP MEDICAL AID ‘SCHEME fonsan [EMM «= sasolmec = PARMED Todecteeheme SA’s Largest Man
Slide 8: Medscheme
Anthony Pederson Dr. Lungi Nyathi Executive Director: Executive Director: Medscheme CEO Health Management Healthcare Funding Largest policies and Black Owned protocols Health Administrator Actuarial Active Scheme Client centricity benefit Hospital & Disease Risk uniqueness design and Medicine Managm
Slide 9: Manufacturer, Wholesaler, Retail
Manufacturer Wholesaler Retail Doreen Kagiso Ansie van Debbie Nchabeleng Kekane der Merwe Parker Principal National Coordinator: Principal Executive Pharmacist: CCMDD Pharmacist: Pharmaceutical CCMDD programme programme Private sector Affairs and Supply Chain Retailer
Slide 10: Comprehensive ICT-related services supporting healthcare businesses
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 diseases, network connectivity, outsourced technolo
Slide 11: AfroCentric, an African Group
AfroCentric, an African Group Providing IT, managed care and administration solutions to local and international clients from countries on the continent Mauritius, Eswatini, Zimbabwe, Namibia and growing... AfroCentric GROUP
Slide 12: Regulatory environment: Medical Schemes Amendment Bill
Medical HMI Provisional National Health Schemes Report Insurance Bill Amendment Bill Recommends Proposed Seeks to improve seeking healthcare reduction in tax and align value to counter credits for regulation medical inflation medical scheme members
Slide 13: We are already in alignment...
We are already in alignment... Our strategy Reducing the costs of healthcare through value chain optimisation How each part of the business lives the VCO strategy... AfroCentric GROUP
Slide 14: Year on year hospital inflation contained to +1%
Year on year hospital inflation contained to +1%!
Slide 15: Diabetes Related Hospital Admissions
Diabetes Related Hospital Admissions (May – April) 16/17 17/18 Change Large Scheme A Admits/1000 lives 1.80 1.40 -22.1% Cost plpm 3.28 2.79 -14.8%
Slide 16: Viral load suppression for patients on ART
Percentage viral load suppression per year for patients on ART
Slide 17: Reducing the need for back and neck surgery
Reducing the need for back and neck surgery Patient Sessions over time 2018 2016 2017 Patient Sessions over time 4 845 4 651 4 641 Unaudited Clinic Billings per Scheme 71% Growth 2017 (Jun 17 vs Jun 18 (millions) 3 831 June 2017 3 095 3 097 2 707 2016 2017 2018 2018 2017 2018 2018 2018 2018 2018 201
Slide 18: Drop in Billing Behaviour
Drop in Billing Behaviour 1400 1243 1200 Forecast (Prior +8%) Actual Post Intervention 983 1000 Billing Rm 800 668 849 600 491 678 353 400 503 172 210 379 200 271 0 IFM forensic system rollout – effectiveness trajectory 151 173 0 Pre 2016 2016 Jan-17 Apr-17 Jun-17 Oct-17 Dec-17 Mar-18
Slide 19: R626 million recoveries and savings
Recoveries Change in behaviour (Accumulative) 2016 R35million R21million 2017 R108million R82million 2018 R89million R394million (as at 27 Aug 18) (as at 31 Mar 18) Total Recoveries & Savings R232million + R394million = R626million
Slide 20: R413 million recoveries and savings per member
Per Member per year recoveries & savings Administrator C 256 Medscheme 2017 Medscheme 622 R108 million physically recovered R305 million saving in direct change of behaviour Administrator B 347 R413 million in recoveries and recoveries Administrator A 0 0 100 200 300 400 500 600 700
Slide 21: Dispensing chronic medication
Dispensing chronic medication 80% Government business NEW TENDER WON National Department of Health - 70% CCMDD volumes NEW Dedicated building CCMDD Central Chronic Medicines Dispensing and Distribution
Slide 22: Inside Pharmacy Direct's new CCMDD Centre
Inside Pharmacy Direct’s new CCMDD Centre in Louwlardia
Slide 23: Members get 10% extra invested each month
Members gets 10% extra invested each month into their bounty investment
Slide 24: Hannes Boonzaaier, Group CFO
‘a AfroCentric Hannes Boonzaaier Group CFO
Slide 25: Financial Year 2018 events impacting numbers
JUL 17 Purchase Wellness Odyssey R38m IMPACT ON NUMBERS SEP 17 Sanlam Profit Warranty Indemnity Expense WAD Tranche 2 R195m with Sanlam contributing 28.7% (R55m) Acquire administration contract for Hosmed OCT 17 2018 (Open Scheme) - 22 000 members 5 000 Commed members merge into Bonitas Financial Op
Slide 26: Revenue Diversification – Strategic Driver
Revenue Diversification – Strategic Driver MARKETING MARKETING 2% 2% OTHER 1% IT IT 6% 6% OTHER ADMIN 8% HEALTH ADMIN 32% HEALTH 38% MANAGED CARE MANAGED 25% CARE 23% 2018 RETAIL RETAIL 2017 29% 28% Revenue Revenue
Slide 27: Revenue Drivers: Membership per Scheme
Revenue Drivers 800000 Membership per Scheme 700000 600000 500000 400000 300000 200000 ~ ae ; Mal _L) hal Bonitas | _Fedhealth Closed Schemes Polmed | Africa | GEMS 2016 294783 | 71529 111676 174269 [ 54789 [ 672899 | 58830 | 690261 | | 2017) 330198 | 72725 103194 175297 2018 336060 72122 118908 175
Slide 28: Revenue Drivers: Total Membership
Revenue Drivers TOTAL MEMBERSHIP 1560000 1,551,699 1550000 1,541,969 1540000 1530000 1520000 1510000 1500000 1,492,717 1490000 1480000 1470000 1460000 2016 2017 2018 Total lives managed: 3.7 million
Slide 29: Revenue Drivers: Number of Scripts
Revenue Drivers 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 Number of Scripts 6.4 Million 4.1 Million 2 Million 2016 2017 2018 = DOH Private
Slide 30: Client Concentration
Client Concentration Client revenue mix across all services 8% 2% 3% 5% 7% 47% 8% 10% 10%
Slide 31: Operating Profit Trend
Operating Profit Trend 2018 2017 2016 R’m R’m R’m Healthcare Service Revenue 2 982 10% 2 715 13% 2 399 Healthcare Services Operating Costs* 2 470 10% 2 251 8% 2 080 Healthcare Service Operating Profit 512 10% 464 45% 319 Healthcare Retail Revenue 1 267 15% 1 100 42% 773 Total Operating Costs (1 156)
Slide 32: 3 Year Net Margin
3 Year Net Margin 2018 2017 2016 R’m R’m R’m Total Revenue 4 212 3 784 3 147 Adjusted Profit After Tax 541 487 296 Profit Before Tax 538 366 271 Conditioned PUT Option 46 25 Fair Value Tranche 2 60 Indemnity Expense 3 15 Margin 12.84% 12.87% 9.41% Group margins being maintained whilst Retail/Pharma
Slide 33: Significant movements in Statement of Financial Position
2018 2017 Significant R’million R’million movements in Property & Equipment 255 179 • R40m New PD warehouse fit Statement out/pharmacy of Financial • R15m own disaster recovery site/IT at PD warehouse Position • General growth in IT hardware assets Land & Building 121 32 • R60m New PD warehouse for
Slide 34: Capital Expenditure
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1% - 55% 13% 2015 18% 27% 16% 2016 17% 20% 10% 2017 AfroCentric GROUP 29% 20% 11% 2018 ™ Fusion Development * Facilities / Land and Buildings ™ Development = Software ™ Hardware
Slide 35: Investor Dashboard
Investor Dashboard Sanlam acquisition 15 Dec 15 2018 2017 2016 2015 2014 5 Year R’m R’m R’m R’m R’m CAGR Total Revenue (R’million) 4 213 3 785 3 148 2 098 1 958 21.1% Operating Profit (R’million) 623 564 376 372 356 15.0% Comprehensive Headline Earnings 392 346 230 205 201 18.2% (R’million) Normalis
Slide 36: Investor Dashboard
Investor Dashboard Sanlam acquisition 15 Dec 15 2018 2017 2016 2015 2014 5 Year R’m R’m R’m R’m R’m CAGR* Dividends (cents) 32 28 24 20 18 15.5% Share Price (30 Jun 18) 5.70 6.20 5.25 5.15 4.45 6.5% Dividend Yield (5) 5.6% 4.5% 4.6% 3.9% 4.0% Return on Equity 14.59% 13.7%* 12.7% 15.38% 15.2% * Adjus
Slide 37: In a year…
In a year… 65.6 million Member/Provider emails sent 64.8m in 2017 7.4 million 719 000 Phone Calls Customer Surveys 51.2 million SMS’s sent 43.5m in 2017 R40.9 billion 5 million Value of claims Mobi Statements 100 million processed R70.2 billion sent out Claims Processed 30.8 million in Contributions
Slide 38: AfroCentric Investor Day
A» AfroCentric Investor Day
AfroCentric Investment — FY2018 Earnings Presentation on 6ix