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AFROCENTRIC INVESTMENT CORPORATION LIMITED - Operational continuity during Covid -19

Release Date: 03/04/2020 11:45
Code(s): ACT     PDF:  
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Operational continuity during Covid -19

AfroCentric Investment Corporation Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1988/000570/06)
JSE Code: ACT ISIN: ZAE000078416
(“AfroCentric”)


Operational continuity during Covid -19


Afrocentric wish to advise shareholders of the activities and services the Group will continue
to deliver during the period of the lockdown in South Africa.

As a diversified group of healthcare enterprises, the services and products we provide are
now more important than ever before. The private and state sector medical scheme patients
we serve, will continue to enjoy and experience the same service available before lockdown
and we wish to assure our members, with peace of mind, of the continuing delivery of
prescribed medication, including all services provided to and by our client medical schemes.

The sustainable wellbeing of our staff is one of our most important priorities and providing
broad support for our staff, is a significant element of our value system, appreciably applied
through each of the group’s operating business units. All precautionary measures, social
distancing, protective devices and where possible, work from home (“WFH”) protocols were
planned and implemented before the lockdown started on 27 March.

We would also like to bring to your attention issues relevant to certain of our subsidiaries:

    •   Pharmacy Direct (PD) continues to function with a full staff compliment. PD has
        introduced resolute and deliberate safety precautions for all of its staff, through the
        use of appropriate distancing and the necessary protective gear at both of our
        warehouses in Centurion. Inventory levels were purposely increased in February in
        advance of the March pharmaceutical price increases. This additional inventory now
        enables PD to prepare chronic medication packs for two months – April and May to
        provide even greater peace of mind regarding their medications for the months ahead.

    •   Activo Health, our pharmaceutical manufacturing division, has experienced an
        unprecedented increase in sales volumes of its range of multi vitamins in March and
        it is expected to continue into April. As member reliance and certainty is essential
        about chronic medication and anti-retroviral deliveries, both the courier services and
        commercial pharmacies, have been ordering greater quantities of Activo products to
        cope with their current and expected demands. The company comfortably holds
        inventory in excess of three months due to potential delays in deliveries from overseas
        manufacturers in Europe and India. It is likely that Activo will always be in a position
        to promptly serve its network of clients in the months ahead.

    •   MMED, our surgical and product retailer has similarly seen a dramatic increase in the
        demand for their masks, their protective gear and even ventilators. Available volumes
        in each case are being procured and supplied to the existing client base, as well as
        several new healthcare entities not having previously engaged with MMED and/or the
        Afrocentric Group.

    •   Medical Scheme services delivered by Medscheme continue to be delivered in the
        normal course, inter alia, claims management, contribution/premium collection and
        members services. Through the use of our technology capabilities, our WFH staff,
        represent almost 58% of our total staff compliment in this servicing area.


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    •   Member/Provider claims continue to be paid weekly by our client Medical Schemes in
        order to assist healthcare providers with timely cash flows during this time. Member
        access and communication is recommended through more efficient digital
        applications, the use of chatbots, telemedicine subscriptions, electronic authorization
        platforms, which alleviates pressure on our traditional call centre capacity. The use of
        these and the increasing adoption of these methodologies by our member base,
        bodes well for the future use of such technology models to provide more efficient
        responses and value-added service for our scheme members.

The Afrocentric Group is therefore well positioned to provide sustainable services and even
grow its client/member base, during this challenging time. The Afrocentric Group remains
more than mindful of the need for staff and citizen healthcare and that corporate wellness
generally, becomes an imperative requirement for consideration by all employers.

Balance Sheet liquidity

Our group enterprises are well capitalised and our medical scheme administration business
enjoys relatively short working capital cycles. Our group liquidity therefore remains strong and
our client medical schemes have the required solvency ratios to sustain member claims and
services through the present economic cycle.

Cash generation in the pharmaceutical cluster continues to be within contractual terms of sale
agreements and we do not expect any inventory shortages for the next quarter.

Although the Afrocentric Group is presently gaining additional advantage from the increased
pharma and related device volumes, it is nevertheless cognizant of the adverse macro-
economic environment in South Africa. As indicated in our recent interim results presentation,
the benefits, of acquisitions and projects commenced in 2018, together with our established
business units, will likely support the growth and progress of the Group, hopefully well into
2021.



Johannesburg

03 April 2020

Sponsor: Sasfin Capital (a member of the Sasfin Group)




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Date: 03-04-2020 11:45:00
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