Download Integrated Report 2015

100 Pages·2015·2.09 MB·English

2015
INTEGRATED
ANNUAL
REPORT
GROUP
Revenue
up 7% to exceed
R2 billion
Profit before tax
up 13.4% to
R279 million
Cash flow
from operations up 24%
to R397 million
YEAR IN REVIEW
Dividend
up 11% to 20 cents per share
Level 2 B-BBEE
status achieved for third
successive year
Sanlam Limited
acquires 28.7% shareholding in
AfroCentric Healthcare Assets
Acquisition of healthcare assets
from WAD Holdings,
including Pharmacy Direct
Medscheme
appointed as administrator and managed care
provider to SA Police Medical Scheme (“Polmed”)
Year in review ..............................................Inside front cover
About this report ....................................................................2
1 4
BUSINESS REVIEW OPERATIONS REVIEW
Business philosophy ...............................................................6 Administration and managed care .......................................38
Group profile ..........................................................................7 Information technology ........................................................42
Group structure ......................................................................8 Africa ...................................................................................44
Products and services .............................................................9
Business model and strategy................................................10
Material issues, risks and opportunities ...............................12
Strategy................................................................................14
2 5
LEADERSHIP GOVERNANCE
Board of Directors ................................................................18 Corporate governance report ...............................................48
Chairperson’s report .............................................................20 Remuneration report ............................................................56
Executive Committee ...........................................................24 Social and Ethics Committee report .....................................58
Chief Executive Officer’s report ............................................26
3 6
SHAREHOLDER
FINANCIAL PERFORMANCE
INFORMATION
Chief Financial Officer’s report .............................................30
Shareholder analysis ............................................................66
Three-year summarised audited financial results .................32
Financial calendar ................................................................67
Notice of Annual General Meeting .......................................68
Form of proxy .............................................................Attached
Appendix – Extract from Section 58 of
the Companies Act ...............................................................79
Annexure A: Memorandum of
Incorporation amendment ...................................................80
Administration and contacts .........................Inside back cover
1
ABOUT THIS REPORT
AfroCentric Investment Corporation is pleased to present The Framework has introduced the concept of the six capitals
its Integrated Annual Report to shareholders for the 2015 of value creation on which a business depends for its success.
financial year. This report addresses in a balanced way how These capitals comprise financial, manufactured, intellectual,
the Group’s vision of “facilitating the delivery of sustainable human, social and relationship, and natural capital.
healthcare services” has and will hopefully continue to These capitals are addressed throughout the report, although
enhance value in the short, medium and long term. the Group has chosen not to apply this terminology or to
structure the report according to the capitals, but will expand
The content of this year’s report will align more closely with its reporting on these capitals in future years.
the guiding principles outlined in the Integrated Reporting
MATERIALITY
Framework (“Framework”) of the International Integrated
Reporting Council (“IIRC”). This includes adopting a more In line with the guiding principles of the IIRC Framework,
intense future focus, outlining the nature of our business materiality has been applied in determining the disclosure
model in value creation and certain first-time disclosures of and content in the report. This ensures that the report remains
material issues, risks and opportunities. concise and relevant to investors. As part of this process
of determining materiality, management has identified the
The report will also focus on the needs and interests of material issues that could impact positively or negatively on
shareholders. In addition, management recognises that a the Group’s ability to create value and are likely to have a
number of other stakeholders influence the Group’s business. material impact on revenue and profitability.
These include clients, employees, suppliers, service providers,
EXTERNAL ASSURANCE
government and regulators, and their needs are being
The content of the Integrated Annual Report has been
addressed through other forms of communication.
reviewed by the Directors and management, but has not
REPORT SCOPE AND BOUNDARIES been externally assured as recommended by King III. External
The report covers the consolidated performance of the assurance of the Integrated Annual Report will be considered
AfroCentric Group of companies and its subsidiaries in future reporting periods.
(“the Group”) for the financial year 1 July 2014 to 30 June 2015.
The joint external auditors, SizweNtsalubaGobodo Inc. and
There has been no material change in the scope of the report
PricewaterhouseCoopers Inc., have provided assurance
and all significant matters are reported on a like-for-like basis,
on the Annual Financial Statements and expressed an
with no material restatements.
unmodified audit opinion. This is confirmed in the Report
The Group operates primarily in South Africa, but has an of the Independent Auditors contained in the Annual
established presence in neighbouring African countries Financial Statements.
and Mauritius.
APPROVAL OF THE REPORT
REPORTING PRINCIPLES The Board acknowledges its responsibility to ensure the
The Group Annual Financial Statements have been prepared integrity of the Integrated Annual Report. The Directors
according to International Financial Reporting Standards confirm they have collectively reviewed the content of the
(“IFRS”), the SAICA Financial Reporting Guides as issued report and believe it addresses the material issues and is a fair
by the Accounting Policies Committee, the Financial presentation of the integrated performance of the Group. The
Pronouncements as issued by the Financial Reporting Audit and Risk Committee, which has oversight responsibility
for integrated reporting, recommended the report for
Standards Council, the Companies Act and the JSE Listings
approval by the Directors. The Board accordingly approved the
Requirements. The Group has applied the King Code of
2015 Integrated Annual Report for release to shareholders in
Governance Principles (“King III”) and also sought to align
December 2015.
with best local reporting practices.
Summarised financial statements have been published in
the Integrated Annual Report and the audited Group Annual
Financial Statements are available on the Group’s website,
www.afrocentric.za.com, and from the Company Secretary Dr Anna Mokgokong Dewald Dempers
on written request. Chairperson Group Chief Executive Officer
2
AfroCentric INTEGRATED ANNUAL REPORT 2015
3
4
AfroCentric INTEGRATED ANNUAL REPORT 2015
B U S I N E S S
R E V I E W
6 Business philosophy
7 Group profile
8 Group structure
9 Products and services
10 Business model and strategy
12 Material issues, risks and opportunities
14 Strategy
5
BUSINESS PHILOSOPHY
OUR VISION
To facilitate the delivery of sustainable healthcare services through world-class
and professional programmes to optimise scale and revenue.
OUR MISSION
To efficiently and seamlessly apply our innovation and
expertise to enhance the access to affordable, quality
healthcare rendered to clients and qualifying members.
OUR PURPOSE
To promote a rational healthcare delivery
system that focuses on quality while
controlling unsustainable medical
inflation, improving people’s lives
and the quality of care.
OUR STRATEGY
To strive for quality, affordable healthcare for everyone
in our country is fundamental not only to our economic
future, but also important to our nation. We use advanced
and professional modes of administration to identify
healthcare risks, procure effective care and healthcare services.
We identify and prioritise health problems and confront them
through planning, designing, implementing, monitoring and
evaluating solutions and programmes.
OUR VALUES
(cid:273)(cid:427)(cid:13)(cid:49)(cid:48)(cid:49)(cid:28)(cid:40)(cid:427)(cid:46)(cid:33)(cid:47)(cid:44)(cid:33)(cid:31)(cid:48) (cid:273)(cid:427)(cid:1)(cid:31)(cid:31)(cid:33)(cid:47)(cid:47)(cid:37)(cid:30)(cid:37)(cid:40)(cid:37)(cid:48)(cid:53)
(cid:273)(cid:427)(cid:1)(cid:31)(cid:31)(cid:43)(cid:49)(cid:42)(cid:48)(cid:28)(cid:30)(cid:37)(cid:40)(cid:37)(cid:48)(cid:53) (cid:273)(cid:427)(cid:3)(cid:43)(cid:41)(cid:41)(cid:37)(cid:48)(cid:41)(cid:33)(cid:42)(cid:48)
(cid:273)(cid:427)(cid:5)(cid:41)(cid:44)(cid:43)(cid:51)(cid:33)(cid:46)(cid:41)(cid:33)(cid:42)(cid:48) (cid:273)(cid:427)(cid:5)(cid:254)(cid:31)(cid:37)(cid:33)(cid:42)(cid:31)(cid:53)
(cid:273)(cid:427)(cid:9)(cid:42)(cid:48)(cid:33)(cid:35)(cid:46)(cid:37)(cid:48)(cid:53) (cid:273)(cid:427)(cid:16)(cid:46)(cid:43)(cid:28)(cid:31)(cid:48)(cid:37)(cid:50)(cid:37)(cid:48)(cid:53)
(cid:273)(cid:427)(cid:9)(cid:42)(cid:42)(cid:43)(cid:50)(cid:28)(cid:48)(cid:37)(cid:43)(cid:42) (cid:273)(cid:427)(cid:16)(cid:46)(cid:43)(cid:34)(cid:33)(cid:47)(cid:47)(cid:37)(cid:43)(cid:42)(cid:28)(cid:40)(cid:37)(cid:47)(cid:41)
6
AfroCentric INTEGRATED ANNUAL REPORT 2015
GROUP PROFILE
AfroCentric Investment Corporation Limited (“AfroCentric”) is a black-owned,
investment holding company which is substantially invested in healthcare. AfroCentric
was established in 2008 and is listed in the healthcare sector on the JSE.
Through its operating subsidiaries, AfroCentric provides health AfroCentric acquired a 100% interest in Pharmacy Direct,
administration and health risk management solutions to the a courier pharmacy; 100% of Curasana, a pharmaceutical
healthcare funding industry. In addition, AfroCentric provides wholesaler; and a 26% stake in Activo Health, a
a range of complementary services to its traditional medical southern African distributor of generic medicines as
scheme clients as well as a portfolio of healthcare-related well as complementary nutraceutical products effective
enterprises. These services include IT solutions, transactional 1 August 2015. These acquisitions should not only improve the
switching and specialised disease management. Group’s earnings, but will provide greater access to the wider
healthcare delivery value chain and greater visibility in the
AfroCentric seeks to invest in related businesses that
relevant markets.
demonstrate prospects for growth, while contributing to the
sustainable health and welfare of South African communities. Sanlam Limited concluded its acquisition of a 28.7% stake
in ACT Healthcare Assets, a wholly-owned subsidiary of
Medscheme is the Group’s largest subsidiary and is one
the Group, subsequent to year-end. This strategic alliance
of South Africa’s largest medical scheme administrators
with one of the country’s foremost financial institutions will
and managed care providers. Founded over four decades
enhance the Group’s marketing and distribution initiatives and
ago, Medscheme has more than 3.2 million lives under
position certain divisions within the Group on an improved
management through its 15 client medical schemes in
growth path.
South Africa. It is the largest black-owned medical scheme
administrator, with a national footprint of 16 offices in all the Growth and diversification outside South Africa has always
major centres in South Africa, employing over 3 000 staff. been a strategic imperative. Medscheme has a presence in
Botswana, Namibia, Swaziland, Kenya and Zimbabwe, and
In striving to achieve its vision of “facilitating the delivery
through its business process outsourcing centre in Mauritius
of sustainable healthcare services” AfroCentric continues to
provides services to several large European and UK-based
provide the healthcare sector with practical strategies for
health insurance companies.
expanding the membership of its medical scheme clients,
and new initiatives that promote more efficient and effective AfroCentric was founded on the core philosophy of
patient care and treatment management. transformation and empowerment, and is one of very few
black-owned and controlled companies on the JSE. As a level 2
These new initiatives include:
B-BBEE-rated company it is also the most empowered health-
(cid:116)(cid:1) (cid:1)(cid:73)(cid:70)(cid:66)(cid:77)(cid:85)(cid:73)(cid:68)(cid:66)(cid:83)(cid:70)(cid:1)(cid:71)(cid:86)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:71)(cid:80)(cid:68)(cid:86)(cid:84)(cid:70)(cid:69)(cid:1)(cid:85)(cid:70)(cid:68)(cid:73)(cid:79)(cid:80)(cid:77)(cid:80)(cid:72)(cid:90)(cid:1)(cid:84)(cid:80)(cid:77)(cid:86)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:85)(cid:73)(cid:83)(cid:80)(cid:86)(cid:72)(cid:73)(cid:1) related business on the JSE.
Helios IT Solutions;
(cid:116)(cid:1) (cid:1)(cid:85)(cid:83)(cid:66)(cid:79)(cid:84)(cid:66)(cid:68)(cid:85)(cid:74)(cid:80)(cid:79)(cid:66)(cid:77)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:68)(cid:77)(cid:74)(cid:79)(cid:74)(cid:68)(cid:66)(cid:77)(cid:1)(cid:69)(cid:66)(cid:85)(cid:66)(cid:1)(cid:84)(cid:88)(cid:74)(cid:85)(cid:68)(cid:73)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:83)(cid:80)(cid:86)(cid:72)(cid:73)(cid:1)(cid:34)(cid:77)(cid:77)(cid:70)(cid:72)(cid:83)(cid:66)(cid:1)
(51% subsidiary);
(cid:116)(cid:1) (cid:1)(cid:84)(cid:81)(cid:70)(cid:68)(cid:74)(cid:66)(cid:77)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:69)(cid:74)(cid:84)(cid:70)(cid:66)(cid:84)(cid:70)(cid:1)(cid:78)(cid:66)(cid:79)(cid:66)(cid:72)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:84)(cid:80)(cid:77)(cid:86)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:85)(cid:73)(cid:83)(cid:80)(cid:86)(cid:72)(cid:73)(cid:1)(cid:34)(cid:74)(cid:69)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)
Aids Management Services; and
(cid:116)(cid:1) (cid:1)(cid:66)(cid:68)(cid:82)(cid:86)(cid:74)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:83)(cid:70)(cid:72)(cid:74)(cid:80)(cid:79)(cid:66)(cid:77)(cid:1)(cid:77)(cid:74)(cid:68)(cid:70)(cid:79)(cid:68)(cid:70)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:37)(cid:35)(cid:36)(cid:1)(cid:67)(cid:66)(cid:68)(cid:76)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:79)(cid:70)(cid:68)(cid:76)(cid:1)
rehabilitation programme.
7
(cid:7)(cid:19)(cid:15)(cid:22)(cid:16)(cid:427)(cid:20)(cid:21)(cid:19)(cid:22)(cid:3)(cid:21)(cid:22)(cid:19)(cid:5)
GROUP
HEALTH
AfroCentric is a black-owned, diversified
investment holding company established AfroCentric holds a majority equity
stake in AfroCentric Health Limited
in 2008 and listed on the JSE.
(“AHL”).
AfroCentric has specifically invested
in businesses that demonstrate
favourable prospects for
growth while actively
contributing to the
upliftment of South
Africa’s people in
a meaningful and
sustainable
manner.
TECHNOLOGY
8
AfroCentric INTEGRATED ANNUAL REPORT 2015