Q2 2026 Afrocentric Investment Corp Ltd Earnings Call

September 2, 2026

Speaker #1: With that, I hand over to Group CEO, Jeroen Veig. Thank you.

Operator: With that, I will now hand over to Group CEO, Gerald Van Wyk. Thank you.

Speaker #2: Good morning, and thank you, Sean. Good morning and welcome, everyone, to the Afrocentric Group's interim results presentation for the period ended 30 June 2026.

Gerald Van Wyk: Good morning, and thank you, Shaun, and good morning and welcome everyone to the Afrocentric Group's interim results presentation for the period ended 30 June 2026. The H1 of the year represents the beginning of a fundamental reset of Afrocentric. The loss of the Bonitas contracts has materially changed the scale and earnings capacity of the group, and our immediate responsibility is to resize the business, protect the core, and establish a credible path back to sustainable profitability. I would like to provide an update on what changed, how the business performed during this transition, what actions we have taken, and the milestones against which we are measuring our progress. With the contract loss, the obvious impact was the loss of the revenue and earnings directly associated with the contract. The deeper issue was that much of the group's infrastructure had been built for a larger business.

Gerald Van Wyk: Good morning, and thank you, Sean, and good morning and welcome everyone to the AfroCentric Group's interim results presentation for the period ended 30 June 2026. The H1 of the year represents the beginning of a fundamental reset of AfroCentric. The loss of the Bonitas contracts has materially changed the scale and earnings capacity of the group, and our immediate responsibility is to resize the business, protect the core, and establish a credible path back to sustainable profitability.

Speaker #2: The first half of the year represents the beginning of a fundamental reset for AfroCentric. The loss of the Bonitas contracts has materially changed the scale and earnings capacity of the group, and our immediate responsibility is to resize the business, protect the core, and establish a credible path back to sustainable profitability.

Speaker #2: I'd like to provide an update on what has changed: how the business performed during this transition, what actions we've taken, and the milestones against which we are measuring our progress.

Gerald Van Wyk: I would like to provide an update on what changed, how the business performed during this transition, what actions we have taken, and the milestones against which we are measuring our progress. With the contract loss, the obvious impact was the loss of the revenue and earnings directly associated with the contract. The deeper issue was that much of the group's infrastructure had been built for a larger business.

Speaker #2: With the contract loss, the obvious impact was the loss of the revenue and earnings directly associated with the contract. But the deeper issue was that much of the group's infrastructure had been built for a larger business.

Speaker #2: If you think about it, our technology platform, our management structures, our shared services functions, our facilities, and even our supplier arrangements—they don't automatically reduce with the loss of a contract.

Gerald Van Wyk: If you think about it, our technology platform, our management structures, our shared services functions, our facilities, and even our supplier arrangements, they do not automatically reduce with the loss of a contract because it serves the rest of the organization as well. That is what caused the structural mismatch between our future revenue and the current cost base. The choice between trying to then preserve the existing organization by replacing the lost revenue or resetting the organization for its new scale reality became an obvious one. We have set out to redesign the operating model, to simplify the portfolio, to protect the core client base, and to also invest selectively in capabilities that will improve our competitiveness. I consider the results as transitional, as it still contained Bonitas wind-down activity, the restructuring costs, and only a limited period of the full contract losses.

Speaker #2: Because it serves the rest of the organization as well, that is what caused the structural mismatch between our future revenue and the current cost base.

Speaker #2: And so the choice between trying to then preserve the existing organization by replacing the lost revenue, or resetting the organization for its new scale reality, became an obvious one.

Speaker #2: And so, we have set out to redesign the operating model—to simplify the portfolio, protect the core client base, and also invest selectively in capabilities that will improve our competitiveness.

Gerald Van Wyk: We have set out to redesign the operating model, to simplify the portfolio, to protect the core client base, and to also invest selectively in capabilities that will improve our competitiveness. I consider the results as transitional, as it still contained Bonitas wind-down activity, the restructuring costs, and only a limited period of the full contract losses.

Speaker #2: And so I consider the results as transitional, as they still contained Bonitas Wine Down activity, the restructuring costs, and only a limited period of the full contract loss, as we still earned 5 of the 6 months of the contract revenue in the reporting period.

Gerald Van Wyk: We still earned 5 of the 6 months of the contract revenue in the reporting period. Throughout this transition, we have also been quite deliberate at maintaining our service delivery, keeping our systems stable, and ensuring that we perform against our regulatory compliance objectives. That has also been a critical part of stabilizing the business throughout this transition, because we cannot restructure the business at the expense of our clients or the members that we serve. In relation to the cash flow discipline, the restructuring, the modernization, and the implementation of the future operating model will place pressure on cash flow before we will see the full financial benefits emerge. This is something that we are managing quite closely. We have structured the plan around the resources that is available to us and not having to rely then on any speculative future growth as assumptions.

Speaker #2: And throughout this transition, we have also been quite deliberate in maintaining our service delivery—keeping our systems stable and ensuring that we perform against our regulatory compliance objectives—and that's also been a critical part of stabilizing the business throughout this transition.

Speaker #2: Because we cannot restructure the business at the expense of our clients or the members that we serve. In relation to cash flow discipline, the restructuring, the modernization, and the implementation of the future operating model will place pressure on cash flow before we see the full financial benefits emerge.

Gerald Van Wyk: In relation to the cash flow discipline, the restructuring, the modernization, and the implementation of the future operating model will place pressure on cash flow before we will see the full financial benefits emerge. This is something that we are managing quite closely. We have structured the plan around the resources that is available to us and not having to rely then on any speculative future growth as assumptions.

Speaker #2: And this is something that we are managing quite closely, and we have structured the plan around the resources that are available to us, and not having to rely then on any speculative future growth assumptions.

Speaker #2: So really, the plan is built around our new scale and our new reality, making sure we create a sustainable pathway, and then seeing growth as additional upside that just accelerates that recovery back to sustainable profits.

Gerald Van Wyk: The plan is built around our new scale and our new reality, and making sure we create a sustainable pathway, and then seeing growth as additional upside that just accelerates that recovery back to sustainable profits. Lastly, I think linked to that is to also just call out as an overview that this is a multi-year recovery. Savings will build progressively over the next 18 months, and 2027 will remain a transitional year as the structural benefits annualize. Our current objective is to reach a monthly break-even run rate by the end of 2027. When we look at the financial results, they show that the business remained profitable and cash generative for the reporting period, but they also reflect the initial impact of operating at this lower scale that I have referenced just now.

Speaker #2: And then lastly, I think linked to that is to also just call out, as an overview, that this is a multi-year recovery. Savings will build progressively over the next 18 months, and 2027 will remain a transitional year, as the structural benefits annualize. Really, our current objective is to reach a monthly break-even run rate by the end of 2027.

Speaker #2: When we look at the financial results, they show that the business remained profitable and cash-generative for the reporting period, but they also reflect the initial impact of operating at this lower scale that I've referenced just now.

Speaker #2: Revenue declined by 5.6% to R3.485 billion, and the primary driver was the loss of the Bonitas-related pharmacy business following the termination of the designated service provider (DSP) arrangements back in 2025, which was in the prior year base.

Gerald Van Wyk: The revenue declined by 5.6% to ZAR 3.485 billion, and the primary driver was the loss of the Bonitas-related pharmacy business, following the termination of the designated service provider or DSP arrangements back in 2025, which was in the prior year base. These numbers still include, like I said earlier, five months of the Bonitas revenue together with the wind-down revenue associated with it. When we look at the operating profit, it declined by 8.7% to ZAR 282 million, and this reduction was primarily attributable to the impact of the Bonitas transition, as well as the restructuring costs incurred as part of the response strategy. This was also partially offset by a recovery in the pharma profitability and improved earnings from the Healthcare Africa business.

Speaker #2: And these numbers still include, like I said earlier, five months of the Bonitas revenue together with the Wine Down revenue associated with it. When we look at the operating profit, it declined by 8.7% to R282 million, and this reduction was primarily attributable to the impact of the Bonitas transition, as well as the restructuring costs incurred as part of the response strategy.

Speaker #2: This was also partially offset by a recovery in pharma profitability and improved earnings from the Healthcare Africa business. If we look at the retail business, for instance, the cost of sales reduced by 18.4% as the Bonitas pharmacy volumes came out of the business, but the business also responded by adjusting the cost base quite effectively.

Gerald Van Wyk: If we look at the retail business, for instance, the cost of sales reduced by 18.4% as their Bonitas pharmacy volumes came out of the business. But the business also responded by adjusting the cost base quite effectively. The pharma business also delivered a meaningful earnings recovery with improved product mix and the benefits of earlier cost actions, supporting profitability despite the lower revenue base. When Thato takes you through the pharma financials, you will be able to spot that particular improvement. However, looking overall, the employee cost base did increase by 7.6% to approximately ZAR 1.5 billion, which were mainly related to the upfront costs associated with what we call the phase 1 restructuring as part of the right sizing recovery plan. HEPS did decline by 26.9%, to ZAR 0.0854.

Speaker #2: And the pharma business also delivered a meaningful earnings recovery, with improved product mix and the benefits of earlier cost actions supporting profitability, despite the lower revenue base. When Taut takes you through the pharma financials, you'll be able to spot that particular improvement.

Speaker #2: However, looking overall, the employee cost base did increase by 7.6% to approximately R1.5 billion, which was mainly related to the upfront costs associated with what we call the phase one restructuring as part of the right-sizing recovery plan.

Speaker #2: And perhaps the decline by 26.9% to 8.54 cents, and that larger reduction in HEPS relative to the operating profit reduction, reflects, I guess, the impact of items below the operating profit line, which Tata will also point out for us.

Gerald Van Wyk: That larger reduction in HEPS relative to the operating profit reduction reflects, I guess the impact of items below the operating profit line, which Thato will also point out for us. From an operational perspective, the lives under management reduced by 644,000 to 3.28 million. The loss of that approximately 657,000 Bonitas lives were partially offset by the addition of approximately 29,000 lives from the Sisonke Health Medical Scheme that came on board during the reporting period as well. From a CCMDD perspective, the monthly script volumes declined by 2%, while private pharmacy script declined by 12%. Despite all of this, the group remained cash generative with cash from operations sitting at ZAR 262 million, which represents a cash conversion of approximately 93%.

Speaker #2: From an operational perspective, the lives under management reduced by 644,000 to 3.28 million, and the loss of approximately 657,000 Bonitas lives was partially offset by the addition of approximately 29,000 lives from the Sisonke Medical Scheme that came on board during the reporting period as well.

Speaker #2: From a CCMDD perspective, the monthly script volumes declined by 2%, while private pharmacy scripts declined by 12%. And despite all of this, the group remained cash generative, with cash from operations sitting at R262 million, which represents a cash conversion of approximately 93%.

Speaker #2: We also ended the period with net cash of $84 million, which we will now need to fund the restructuring, make essential investments, and manage the period before the savings are fully reflected in the earnings on an annualized basis.

Gerald Van Wyk: We also ended the period with net cash of ZAR 84 million, which we will now need to fund the restructuring and to make essential investments and manage the period before the savings are fully reflected in the earnings through an annualized basis. Really from a financial highlights perspective, for me, the key takeaway from the H1 numbers is that the group remained profitable and cash generative throughout this initial transition, but the reported result is not yet the steady state position as we move forward. The H2 will reflect more of the contract revenue loss, while the benefits of the cost reset will really only build progressively over the next 18 months. That is the picture that we see as we look ahead.

Speaker #2: So really, from a financial highlights perspective, for me the key takeaway from the first-half numbers is that the group remained profitable and cash generative throughout this initial transition. However, the reported result is not yet the steady-state position as we move forward, and the second half will reflect more of the contract revenue loss, while the benefits of the cost reset will really only build progressively over the next 18 months.

Speaker #2: And that's the picture that we see as we look ahead. I just wanted to pause for a moment to talk through the scale of this reset that we are referencing, and that's taking shape within the organization.

Gerald Van Wyk: I just wanted to stand still a little bit to talk through the scale of this reset that we are referencing and that is taking shape within the organization. I guess the size of the challenge from this slide is quite clear. The annualized revenue impact of the contract loss is approximately ZAR 2 billion. At this new reduced scale, we estimate that ZAR 1.3 billion in annual savings would be required to restore the business to break even over the short to medium term. It is not a gap that one can close through just iterative normal efficiencies. Although we saw the benefit of that out of the pharma business because they really have been on that journey for the last 18 to 24 months. It is starting to come through now in this reporting period. What it really means is we have to, at scale, take out costs.

Speaker #2: I guess the size of the challenge from this slide is quite clear. You know, the annualized revenue impact of the contract loss is approximately $2 billion, and at this new reduced scale, we estimate that $1.3 billion in annual savings would be required to restore the business to break even over the short to medium term.

Gerald Van Wyk: At this new reduced scale, we estimate that ZAR 1.3 billion in annual savings would be required to restore the business to break even over the short to medium term. It is not a gap that one can close through just iterative normal efficiencies. Although we saw the benefit of that out of the pharma business because they really have been on that journey for the last 18 to 24 months. It is starting to come through now in this reporting period. What it really means is we have to, at scale, take out costs.

Speaker #2: And it's not a gap that one can close through just iterative, normal efficiencies. Although we saw the benefit of that out of the Pharma business, because they really have been on that journey for the last 18 to 24 months, and it's starting to come through now in this reporting period.

Speaker #2: But what it really means is we have to, at scale, take out costs; we have to simplify the operating model; we have to release capital from non-core assets; and we have to invest selectively in capabilities that will protect and strengthen the core business, which is still 3.3 million lives held under our care.

Gerald Van Wyk: We have to simplify the operating model. We have to release capital from non-core assets, and we have to invest selectively in capabilities that will protect and strengthen the core business, which is still 3.3 million lives held under our care. We are not simply trying to make Afrocentric smaller. We are trying to build a more focused and efficient business that can operate sustainably at its new scale. What have we done and been able to realize against this plan so far? Well, we have now identified and validated more than ZAR 900 million of this targeted ZAR 1.3 billion savings that we require, which represents around 72% of the target. We are continuously working on a monthly basis, to find opportunities to continuously close that gap. But I want to be clear about what that means. It is identified savings, it is validated, but they are not yet earnings.

Speaker #2: And so, we are not simply trying to make Afrocentric smaller; we are trying to build a more focused and efficient business that can operate sustainably at its new scale.

Speaker #2: So what have we done and been able to realize against this plan so far? Well, we've now identified and validated more than 900 million of this targeted 1.3 billion in savings that we require, which represents around 72% of the target. We are continuously working on a monthly basis to find opportunities to further close that gap.

Gerald Van Wyk: Well, we have now identified and validated more than ZAR 900 million of this targeted ZAR 1.3 billion savings that we require, which represents around 72% of the target. We are continuously working on a monthly basis, to find opportunities to continuously close that gap. But I want to be clear about what that means. It is identified savings, it is validated, but they are not yet earnings.

Speaker #2: But I want to be clear about what that means. You know, it's identified savings, it's validated, but they're not yet earnings. What matters now is the implementation.

Gerald Van Wyk: What matters now is the implementation. The timing of that implementation, and then also ensuring that the savings actually come through in our monthly run rate. It really is about disciplined execution, which is now consuming our focus at the moment. We have already, as you can see on the slide, completed the two phases of the right-sizing activities. We have locked in and signed off the future organizational structure, and we have developed the plans and the retention mechanisms to retain the critical skill sets that are required to execute and enable this plan. At the same time, I think it is important to continuously highlight this as a service business, because part of the risk we need to manage is preserving and protecting the remaining client base. It is important that the service within the organization through this transition remains resilient.

Speaker #2: The timing of that implementation, and then also ensuring that the savings actually come through in our monthly run rate—so it really is about disciplined execution, which is now consuming our focus at the moment.

Speaker #2: As you can see on the slide, we have already completed the two phases of the right-sizing activities. We have locked in and signed off on the future organizational structure, and we have developed the plans and retention mechanisms to keep the critical skill sets required to execute and enable this plan.

Speaker #2: And at the same time, I think it's important to continuously highlight this as a service business, because part of the risk we need to manage is preserving and protecting the remaining client base.

Gerald Van Wyk: At the same time, I think it is important to continuously highlight this as a service business, because part of the risk we need to manage is preserving and protecting the remaining client base. It is important that the service within the organization through this transition remains resilient.

Speaker #2: And so it's important that the service within the organization, through this transition, remains resilient, and so far we are able to do that. If you look at our customer and operational measures, they remain above target.

Gerald Van Wyk: So far, we are able to do that. If you look at our customer and operational measures, they remain above target. System availability was maintained at 100%, and there were no regulatory breaches throughout the organization. On a portfolio perspective, the Activo disposal has now been concluded, and we continue to assess further opportunities to simplify the portfolio. Where we are investing, we will do so selectively. We are directing the funding towards modernization, data and digital capabilities, customer experience and clinical innovation with clear governance and measurable returns, to deploy our limited resources towards. I've sort of alluded to it, but really, for this plan to be successful, we need to execute. There are significant execution risks, and these are the things that we are managing quite closely.

Speaker #2: System availability was maintained at 100%, and there were no regulatory breaches throughout the organization. From a portfolio perspective, the active disposal has now been concluded, and we continue to assess further opportunities to simplify the portfolio.

Speaker #2: And where we are investing, we will do so selectively. We are directing the funding towards modernization, data and digital capabilities, customer experience, and clinical innovation.

Gerald Van Wyk: We are directing the funding towards modernization, data and digital capabilities, customer experience and clinical innovation with clear governance and measurable returns, to deploy our limited resources towards. I've sort of alluded to it, but really, for this plan to be successful, we need to execute. There are significant execution risks, and these are the things that we are managing quite closely.

Speaker #2: With clear governance and measurable returns to deploy our limited resources towards, I've sort of alluded to it, but really, for this plan to be successful, we need to execute.

Speaker #2: There are significant execution risks, and these are things that we are managing quite closely. The savings may take longer to deliver, and we could face further pressure on our client retention and cash flow management, as that will come under pressure before the full benefits of the reset are realized. We are also asking a lot of the organization at the moment because we're asking them to deliver several major changes at the same time, and that's something that needs to be managed.

Gerald Van Wyk: The savings may take longer to deliver, and we could face some further pressure on our client retention and cash flow management, as that will come under pressure before the full benefits of the reset are realized. We are also asking a lot of the organization at the moment because we're asking them to deliver several major changes at the same time, and that's something that needs to be managed. How we are responding to these risks is really through disciplined implementation tracking, executive ownership of these key clients, very tight cash governance and cash management, and really being careful about how we sequence our initiatives and how we retain the critical skills across the organization. But I think an important call-out from me is also that we are still pursuing, and we are very much active and aggressive in pursuing new business pipeline of opportunities.

Speaker #2: And how we are responding to these risks is really through disciplined implementation tracking, executive ownership of these key clients, very tight cash governance and cash management, and really being careful about how we sequence our initiatives and how we retain the critical skills across the organization.

Gerald Van Wyk: How we are responding to these risks is really through disciplined implementation tracking, executive ownership of these key clients, very tight cash governance and cash management, and really being careful about how we sequence our initiatives and how we retain the critical skills across the organization. But I think an important call-out from me is also that we are still pursuing, and we are very much active and aggressive in pursuing new business pipeline of opportunities. But we are not assuming that that growth will compensate for any of the shortfall if we don't execute well on the turnaround year. So the plan really has to work on the existing revenue base with any of these growth initiatives seen as additional upside.

Speaker #2: But I think an important call-out for me is also that we are still pursuing—and we are very much active and aggressive in pursuing—a new business pipeline of opportunities.

Speaker #2: But we are not assuming that that growth will compensate for any of the shortfall if we don't execute well on the turnaround here. So the plan really has to work on the existing revenue base, with any of these growth initiatives seen as additional upside.

Gerald Van Wyk: But we are not assuming that that growth will compensate for any of the shortfall if we don't execute well on the turnaround year. So the plan really has to work on the existing revenue base with any of these growth initiatives seen as additional upside. From a milestones perspective and what we really track and measure and hold ourselves accountable against is that the recovery is quite deliberately phased. We've had the H1 of that now behind us, which was about mobilizing the plan and beginning the reset. We are now in the throes of the H2 of that plan, which is about stabilizing the business, completing the organizational changes, beginning to realize the savings, and protecting our clients and our cash position.

Speaker #2: And then, from a milestones perspective—and what we really track, measure, and hold ourselves accountable against—is that the recovery is quite deliberately phased.

Gerald Van Wyk: From a milestones perspective and what we really track and measure and hold ourselves accountable against is that the recovery is quite deliberately phased. We've had the H1 of that now behind us, which was about mobilizing the plan and beginning the reset. We are now in the throes of the H2 of that plan, which is about stabilizing the business, completing the organizational changes, beginning to realize the savings, and protecting our clients and our cash position.

Speaker #2: We've had the first half of that now behind us, which was about mobilizing the plan and beginning the reset. We are now in the throes of the second half of that plan, which is about stabilizing the business, completing the organizational changes, beginning to realize the savings, and protecting our clients and our cash position.

Speaker #2: And then, as we look ahead to 2027, those structural benefits must increasingly come through into the earnings run rate as we start realizing those opportunities.

Gerald Van Wyk: As we look ahead during 2027, those structural benefits must then increasingly come through into the earnings run rate, as we start realizing those opportunities. Again, the objective being to reach a monthly break even by the end of 2027 with a key business like Medscheme. We are targeting to reach their monthly break even at the beginning of 2027. In summary, I guess the three measures we will remain focused on, throughout, as a management team, are the savings realization, the client retention, and the liquidity management. So yeah, in summary, I guess our recovery, again, just for the obvious call-out, is not dependent on speculative growth. It depends on delivering the ZAR 1.3 billion cost reset, protecting that approximately 3.3 million lives already under our care and management, and releasing capital from non-core assets and investing them selectively where we can actually demonstrate value.

Speaker #2: And again, the objective is to reach a monthly break-even by the end of 2027. With a key business like MedScheme, we are targeting to reach their monthly break-even at the beginning of 2027.

Speaker #2: And in summary, yeah, I guess the three measures we will remain focused on throughout as a management team are the savings realization, the client retention, and the liquidity management.

Gerald Van Wyk: In summary, I guess the three measures we will remain focused on, throughout, as a management team, are the savings realization, the client retention, and the liquidity management. So yeah, in summary, I guess our recovery, again, just for the obvious call-out, is not dependent on speculative growth. It depends on delivering the ZAR 1.3 billion cost reset, protecting that approximately 3.3 million lives already under our care and management, and releasing capital from non-core assets and investing them selectively where we can actually demonstrate value. And whilst we have already identified and validated a significant part of what is now being executed into the organization, we are continuously doing the work to close the remaining gap. The latest of the organizational reset that is in progress is where we are looking to capture the balance of what is required.

Speaker #2: So, yeah, in summary, I guess our recovery again—just for the obvious call-out—is not dependent on speculative growth. It depends on delivering the R1.3 billion cost reset, protecting the approximately 3.3 million lives already under our care and management, and releasing capital from non-core assets and investing then selectively where we can actually demonstrate value. Whilst we've already identified and validated a significant part of what is now being executed into the organization, we are continuously doing the work to close the remaining gap, and the latest of the organizational reset that's in progress is where we're looking to capture the balance of what is required.

Gerald Van Wyk: And whilst we have already identified and validated a significant part of what is now being executed into the organization, we are continuously doing the work to close the remaining gap. The latest of the organizational reset that is in progress is where we are looking to capture the balance of what is required. The balance sheet does give us the capacity now to complete this work. The core business, as you have seen through service and operational metrics, has remained resilient. But yes, there is still a great deal to execute, but the path at least is clear, the milestones are measurable, and our focus now is on turning all of these opportunities into actions, to really take us into sustainable earnings and cash generation, at our new scale and our new reality, while still actively pursuing new business opportunities.

Speaker #2: And the balance sheet does give us the capacity now to complete this work, and the core business, as you have seen through service and operational metrics, has remained resilient.

Gerald Van Wyk: The balance sheet does give us the capacity now to complete this work. The core business, as you have seen through service and operational metrics, has remained resilient. But yes, there is still a great deal to execute, but the path at least is clear, the milestones are measurable, and our focus now is on turning all of these opportunities into actions, to really take us into sustainable earnings and cash generation, at our new scale and our new reality, while still actively pursuing new business opportunities. I will now hand you over to Thato Moloi, to take you through the detailed financials, and whereafter I will join him again for the Q&A. Thank you very much.

Speaker #2: But yes, there's still a great deal to execute. However, the path is clear, the milestones are measurable, and our focus now is on turning all of these opportunities into actions to really take us into sustainable earnings and cash generation at our new scale and our new reality, while still actively pursuing new business opportunities.

Speaker #2: I'll now hand you over to Tatu Molueli, who will take you through the detailed financials. Thereafter, I'll join him again for the Q&A. Thank you very much.

Gerald Van Wyk: I will now hand you over to Thato Moloi, to take you through the detailed financials, and whereafter I will join him again for the Q&A. Thank you very much.

Speaker #1: Thank you, Gerald. Good morning, and thank you for joining us. The first half of 2026 has been a period of transition for the group.

Thato Moloele: Thank you, Gerald. Good morning, and thank you for joining us. The H1 of 2026 has been a period of transition for the group, as we continue to navigate the impact of lower benefits volumes across our various businesses while executing a comprehensive turnaround and cost reset program. Despite these headwinds, the group delivered revenue of ZAR 3.48 billion, operating profit of ZAR 282 million, and maintained a steady operating margin of 7.9%. Most importantly, we generated ZAR 262 million in cash from operations, representing cash conversion of approximately 93%, and closed the period with net cash position of ZAR 84 million, a significant improvement from the net debt position reported in the prior period. At a high level, the decrease in group operating earnings can be attributed to non-recurring restructuring costs of ZAR 65 million, severance costs of ZAR 65 million, and CPI-related cost adjustments.

Speaker #1: As we continue to navigate the impact of global needs volumes across our various businesses, we're executing a comprehensive turnaround and cost reset program. Despite these headwinds, the group delivered revenue of R3.48 billion, operating profits of R282 million, and maintained a steady operating margin of 7.9%.

Speaker #1: Most importantly, we generated R262 million in cash from operations, representing cash conversion of approximately 93%, and closed the period with a net cash position of R84 million—a significant improvement from the net debt position reported in the prior period.

Thato Moloele: Most importantly, we generated ZAR 262 million in cash from operations, representing cash conversion of approximately 93%, and closed the period with net cash position of ZAR 84 million, a significant improvement from the net debt position reported in the prior period. At a high level, the decrease in group operating earnings can be attributed to non-recurring restructuring costs of ZAR 65 million, severance costs of ZAR 65 million, and CPI-related cost adjustments.

Speaker #1: At a high level, the decrease in group operating earnings can be attributed to non-recurring restructuring costs of R65 million, severance costs of R65 million, and CPR-related cost adjustments.

Speaker #1: These downward effects were partially offset by temporary operating service efficiencies in our managed care business units of R60 million. There was also once-off wind-down revenue from Benites of R65 million as well.

Thato Moloele: These downward effects were partially offset by temporary operating service efficiencies in our managed care business unit of ZAR 60 million. Once-off wind down revenue from benefits of ZAR 65 million as well. Importantly, operating results were shielded from further erosion arising from the prior year Pharma DSP terminations, being the main contributor to the ZAR 202 million decline in group revenue, which was offset by lower cost of goods and operating overheads. Excluding all the once-offs, normalized operating earnings would have increased to ZAR 360 million, representing a 16.5% growth from the prior year, driven by Pharma's recovery. Healthcare SA generated revenue of approximately ZAR 2.8 billion, an operating profit of ZAR 174 million, maintaining a margin of 6.2%, despite membership pressures across several schemes.

Speaker #1: Importantly, operating results were shielded from further erosion arising from the prior year farmer DSP terminations, which were the main contributor to the R202 million decline in group revenue. This was offset by lower cost of goods and operating overheads.

Speaker #1: Excluding all the once offs, normalized operating earnings would have increased to 360 million rand, representing 60 and a half percent growth from the prior year, driven by farmers recovery.

Speaker #1: Healthcare South Africa generated revenue of approximately R2.8 billion and operating profits of R174 million, maintaining a margin of 6.2% despite membership pressures across several schemes.

Speaker #1: Membership attrition attributable to Benites and other closed schemes reduced volumes by approximately 675,000 lives, partially offset by 15% growth in corporate schemes driven by the Sisonka take-on of 29,000 lives.

Thato Moloele: Membership attrition attributable to Bonitas and other closed schemes reduced volumes by approximately 675,000 lives, partially offset by 15% growth in corporate schemes, driven by the Sisonke take-on of 29,000 lives. 2.2% revenue growth was therefore mainly driven by CPI related fee increases across several schemes, with the H1 Bonitas impact being limited to a net revenue loss of ZAR 55 million after adjusting for wind down revenue of ZAR 44 million. Profitability in the admin and managed care businesses were impacted by the severance costs, which I previously mentioned. Excluding these once-off costs, the underlying operational performance was more resilient than what was reflected in the reported basis, supported by improved managed care earnings of ZAR 60 million. DENIS continued to deliver strong performance, reporting a 4% improvement in revenue, which increased to ZAR 314 million and 55% growth in operating earnings, which increased to ZAR 31 million.

Speaker #1: 2.2% revenue growth was, therefore, mainly driven by CPR-related fee increases across several schemes, with the H1 Benites impact being limited to a net revenue loss of 55 million rand after adjusting for wind-down revenue of 44 million rand.

Speaker #1: Profitability in the admin and managed care businesses was impacted by the severance costs, which I previously mentioned. Excluding these once-off costs, the underlying operational performance was more resilient than what was reflected on a reported basis, supported by improved managed care earnings of R60 million.

Thato Moloele: Excluding these once-off costs, the underlying operational performance was more resilient than what was reflected in the reported basis, supported by improved managed care earnings of ZAR 60 million. DENIS continued to deliver strong performance, reporting a 4% improvement in revenue, which increased to ZAR 314 million and 55% growth in operating earnings, which increased to ZAR 31 million.

Speaker #1: Dennis continues to deliver strong performance, reporting a 4% improvement in revenue, which increased to R314 million, and 55% growth in operating earnings, which increased to R31 million.

Speaker #1: Performance in Dennis was supported by membership growth of 111,000 lives, representing 2.8% growth and favorable claims experience. Healthcare Africa contributed R121 million of revenue and operating profit of R47 million to the group, translating to an improved operating margin of 39.2%, compared to 33% in the prior period.

Thato Moloele: Performance in DENIS was supported by membership growth of 111,000 lives, representing 2.8% growth and favorable claims experience. Healthcare Africa contributed ZAR 121 million of revenue and operating profit of ZAR 47 million to the group, translating to an improved operating margin of 39.2% compared to 33% in the prior period. The profitability uplift in the segment was supported by preliminary cost containment and rightsizing efforts following the loss of the NHP managed care contract, which accounts almost entirely for top-line revenue regression. The most encouraging aspect of the results is the continued recovery within the Pharma cluster. Although retail revenue declined by 16.1% to ZAR 1.1 billion following the prior year Bonitas DSP terminations, operating profit increased by 72% to ZAR 60.4 million, with operating margins improving from 2.6% to 5.4%.

Speaker #1: The profitability uplift in the segment was supported by preliminary cost containment and right-sizing efforts, following the loss of the NHP managed care contract, which accounts almost entirely for top-line revenue regression.

Speaker #1: The most encouraging aspect of the results is the continued recovery within the farmer cluster. Although retail revenue declined by 16.1% to R1.1 billion following the prior year Benites DSP terminations, operating profit increased by 72% to R60.4 million, with operating margins improving from 2.6% to 5.4%.

Speaker #1: Pharma's recovery was a function of our prior year cost optimization initiatives and current year sales optimization to more favorable generic and ARV lines. These efforts improved profitability by R35 million in the Pharmacy Direct private business, which has attained break-even 12 months on from the prior period DSP terminations.

Thato Moloele: Pharma's recovery was a function of our prior year cost optimization initiatives and current year sales mix optimization to more favorable generic and ARV lines. These efforts improved profitability by ZAR 35 million in the Pharmacy Direct Private business, which has attained break-even 12 months on from the prior period DSP terminations. Alongside PD, CCMDD produced a modest earnings growth of 1% due to six-monthly dispensing, which reduced script volumes by 2%. This was offset by inflation linked fee increases and operating efficiency improvements. Scriptpharm generated revenue of ZAR 642 million and operating profit of ZAR 24 million, reflecting an 8% decrease in revenue and 27% decrease in earnings. These numbers are predominantly linked to the Bonitas transition, which resulted in the loss of one million members split across Bonitas scheme members and oncology members.

Speaker #1: Alongside PD, CCMDD produced modern earnings growth of 1% due to six-monthly dispensing, which reduced script volumes by 2%. This was offset by inflation-linked fee increases and operating efficiency improvements.

Speaker #1: Script Farm generated revenue of R642 million and operating profit of R24 million, reflecting an 8% decrease in revenue and a 27% decrease in earnings.

Speaker #1: These numbers are predominantly linked to the Benites transition, which resulted in the loss of 1 million members, split across Benites scheme members and oncology members.

Speaker #1: Overall, the farmer turnaround program is beginning to demonstrate tangible results, with improved profitability anchored in a lower revenue base. Despite the decline in revenue and earnings, Afrocentric continued to demonstrate strong cash-generative characteristics, generating R262 million in revenue, R262 million in operating cash flow, and converting 93% of operating profit into cash during the period.

Thato Moloele: Overall, the Pharma turnaround program is beginning to demonstrate tangible results with improved profitability anchored in a lower revenue base. Despite the decline in revenue and earnings, Afrocentric continued to demonstrate strong cash generative characteristics, generating ZAR 262 million operating cash flow and converting 93% of operating profit into cash during the period. This performance reflects the resilience of the group's underlying business model and management's disciplined focus on cash preservation and working capital management. In particular, the cash generation uptick can be attributed to working capital improvements across Pharma following the disposal of Activo and due to prudent stock management in the private business. In addition, disciplined capital allocation strategy, which is also focused on preserving liquidity and prioritizing capital expenditure that supports operational resilience and long-term value enhancements.

Thato Moloele: Overall, the Pharma turnaround program is beginning to demonstrate tangible results with improved profitability anchored in a lower revenue base. Despite the decline in revenue and earnings, AfroCentric continued to demonstrate strong cash generative characteristics, generating ZAR 262 million operating cash flow and converting 93% of operating profit into cash during the period. This performance reflects the resilience of the group's underlying business model and management's disciplined focus on cash preservation and working capital management. In particular, the cash generation uptick can be attributed to working capital improvements across Pharma following the disposal of Activo and due to prudent stock management in the private business. In addition, disciplined capital allocation strategy, which is also focused on preserving liquidity and prioritizing capital expenditure that supports operational resilience and long-term value enhancements.

Speaker #1: This performance reflects the resilience of the group's underlying business model, and management's disciplined focus on cash preservation and working capital management. In particular, the cash generation uptick can be attributed to working capital improvements across Pharma, following the disposal of Activo, and due to prudent stock management in the private business.

Speaker #1: In addition, disciplined capital allocation strategy is also focused on preserving liquidity and prioritizing capital expenditure that supports operational resilience and long-term value enhancement.

Speaker #1: As we continue to execute the post-Benites transition, cash generation is expected to come under pressure as the restructuring advances, strategic initiatives progress, and the business settles into a new, lower operating baseline.

Thato Moloele: As we continue to execute the post-Bonitas transition, cash generation is expected to come under pressure as the restructuring advances, strategic initiatives progress, and the business settles into a new, lower operating baseline. Our balance sheet remains a key source of strength and reflects meaningful progress over the past 12 months in embedding financial resilience in the business following the loss of several client contracts. Seasonally, the group ended the period with net cash of ZAR 84 million, representing an improvement of approximately ZAR 255 million compared to the prior corresponding period. From a leverage perspective, our key metrics of borrowings to equity and debt to equity have regressed from June 2025 levels, following the December impairments of ZAR 1.3 billion. Relative to December, however, these metrics have since improved as a function of our cash generation.

Speaker #1: Our balance sheet remains a key source of strength and reflects meaningful progress over the past 12 months in embedding financial resilience in the business, following the loss of several client contracts.

Speaker #1: Easingly, the group ended the period with net cash of R84 million, representing an improvement of approximately R255 million compared to the prior corresponding period.

Thato Moloele: Seasonally, the group ended the period with net cash of ZAR 84 million, representing an improvement of approximately ZAR 255 million compared to the prior corresponding period. From a leverage perspective, our key metrics of borrowings to equity and debt to equity have regressed from June 2025 levels, following the December impairments of ZAR 1.3 billion. Relative to December, however, these metrics have since improved as a function of our cash generation.

Speaker #1: From a leverage perspective, our key metrics of borrowings to equity and debt to equity have regressed from June 2025 levels, following the December impairments of R1.3 billion.

Speaker #1: Relative to December, however, these metrics have since improved as a function of our cash generation. While maintaining liquidity remains our primary concern, we have made decisions to allocate R250 million in capital across five critical strategic projects over the short to medium term. In particular, capital will be allocated to the AfroCentric group-wide restructuring project and accelerating funding for business-critical modernization, digital data, automation, and value-based care initiatives.

Thato Moloele: While maintaining liquidity remains our primary concern, we have made decisions to allocate ZAR 250 million in capital across five critical strategic projects over the short to medium term. In particular, capital will be allocated to the Afrocentric group-wide restructuring project and accelerating funding for business-critical modernization, digital, data, automation, and value-based care initiatives. Collectively, these projects are anticipated to exceed our target hurdle rates of 20%, which will support our planned financial recovery from 2028 onwards. Looking ahead, trading conditions are expected to remain challenging as the business absorbs the impact of the Bonitas membership losses. The recovery remains a multi-year journey with management's focus on progressively rebuilding a more defendable earnings base. That said, our priorities are clear. Firstly, we will continue to protect and optimize the group's revenue base through client retention, operational excellence, and value-added managed care offerings.

Speaker #1: Collectively, these projects are anticipated to exceed our target hurdle rate of 20%, which will support our planned financial recovery from 2028 onwards. Looking ahead, trading conditions are expected to remain challenging as the business absorbs the impact of the Benites membership losses.

Thato Moloele: Looking ahead, trading conditions are expected to remain challenging as the business absorbs the impact of the Bonitas membership losses. The recovery remains a multi-year journey with management's focus on progressively rebuilding a more defendable earnings base. That said, our priorities are clear. Firstly, we will continue to protect and optimize the group's revenue base through client retention, operational excellence, and value-added managed care offerings.

Speaker #1: The recovery remains a multi-year journey, with management's focus on progressively rebuilding a more defensible earnings base. That said, our priorities are clear. Firstly, we will continue to protect and optimize the Group's revenue base through client retention, operational excellence, and value-added managed care offerings.

Speaker #1: Secondly, we remain committed to delivering the next phase of our cost reset program, targeting annualized savings of between R360 million and R400 million for 2026.

Thato Moloele: Secondly, we remain committed to delivering the next phase of our cost reset program, targeting annual life savings of between ZAR 360 million and ZAR 400 million for 2026. Finally, we will continue advancing strategic initiatives focused on portfolio simplification, data and digital enablement, value-based care, and long-term earnings sustainability. In closing, while the H1 results still reflect the preliminary impact of Bonitas transition, they also provide increasing evidence that the group's recovery strategy is gaining traction. The balance sheet is stable. Healthcare Africa continues to defend earnings. DENIS remains strong. Pharma profitability has recovered materially, and the benefits of our cost reset program are beginning to emerge. We remain confident that these actions will position Afrocentric to deliver a more sustainable earnings profile, coupled with the improved shareholder returns from 2028 onwards. Thank you. That concludes our presentation, and we will now move to Q&A.

Speaker #1: Finally, we'll continue advancing strategic initiatives focused on portfolio simplification, data and digital enablement, value-based care, and long-term earnings sustainability. In closing, while the first half results still reflect the preliminary impact of Benite's transition, they also provide increasing evidence that the group's recovery strategy is gaining traction.

Speaker #1: The balance sheet is stable. Healthcare Africa continues to defend earnings. Dennis remains strong. Farmer profitability has recovered materially, and the benefits of our cost reset program are beginning to emerge.

Thato Moloele: Pharma profitability has recovered materially, and the benefits of our cost reset program are beginning to emerge. We remain confident that these actions will position AfroCentric to deliver a more sustainable earnings profile, coupled with the improved shareholder returns from 2028 onwards. Thank you. That concludes our presentation, and we will now move to Q&A.

Speaker #1: We remain confident that these actions will position AfroCentric to deliver a more sustainable earnings profile, coupled with improved shareholder returns from 2028 onwards.

Speaker #1: Thank you. That concludes our presentation, and we will now move to the Q&A.

Operator: Thank you, Thato. Gerald, if you could just join Thato so we could kick it off with the Q&A. At this point, there do not seem to be any questions, so I might just kick it off with one or two. Perhaps, just on the gearing front, managing of net debt and covenants. Maybe just refresh us if there are any covenants and maybe just quantify the sort of liquidity on hand and how you are thinking about managing that, obviously, in the next 18 months.

Speaker #2: Thank you, Dr. Gerald. If you could just join Todd so we can kick off the Q&A. At this point, there do not seem to be any questions, so I might just start with one or two.

Speaker #2: Perhaps just on the gearing front—sort of managing net debt and covenants—maybe just refresh us if there are any covenants, and maybe just quantify the sort of liquidity on hand, and sort of how you're thinking about managing that, obviously, in the next 18 months.

Speaker #1: Okay. Thank you for that question, Sean. So yes, there are currently debt covenants in place: an EBITDA to net debt covenant of 2.5 times and an interest cover covenant of 4 times as well.

Thato Moloele: Okay. Thank you for that question, Sean. Yes, there currently are debt covenants in place. EBITDA to net debt covenants of 2.5x and an interest cover covenant of 4x as well. As mentioned, liquidity will come under pressure over the next 12 months. With regards to that, the main areas of pressure will come from the obvious loss of revenue linked to the Bonitas contract. In addition to that, we will be reinvesting into the business' strategic initiatives. That said, we do have sufficient liquidity to take us through this period, as you have seen with the balance sheet position and net cash, which is available to us.

Speaker #1: As mentioned, liquidity will come under pressure over the next 12 months. With regards to that, the main areas of pressure will come from the obvious loss of revenue linked to the Benites contract.

Speaker #1: In addition to that, we'll be reinvesting into the business's strategic initiatives. That said, we do have sufficient liquidity to take us through this period, as you've seen with the balance sheet position—a net cash position which is available to us.

Speaker #2: Okay, excellent. And then just a quick one on capex. I think you've outlined that roughly $20 million was spent in H1, if I'm correct.

Operator: Okay, excellent. Just a quick one on CapEx. I think you have outlined that I think roughly 20-odd million was spent in H1 now, if I am correct, with a balance of ZAR 250 million to be spent in the next 18 months. How should we think about the phasing of that versus FY26 versus FY27?

Speaker #2: With a balance of $250 million to be spent in the next 18 months, how should we think about the phasing of that versus FY26 and FY27?

Speaker #1: So, I think quite a substantial portion will be spent in the second half of the year, which is what we tried to emphasize. In relation to that, there are obviously the returns which are then anticipated to be realized from that capex spend.

Thato Moloele: A substantial portion will be spent in the second half of the year, which is what we tried to emphasize. In relation to that, there is obviously the returns which are then anticipated to be then realized from that CapEx spend. In terms of those returns, we then anticipate that from H2 next year onwards, then forming a critical path towards the recovery, filling up the gap of the balance between the cost reset, and the 1.3.

Speaker #1: In terms of those returns, we then anticipate that from H2 next year onwards, they're forming quite a critical part towards the recovery, filling up the gap of the balance between the cost reset and the 1.3.

Speaker #2: So, Sean, if I may add, around $100 million of that is ring-fenced for spend in H2 of this year, predominantly or primarily linked to the replatforming of the IT infrastructure.

Gerald Van Wyk: Sean, if I may add, around ZAR 100 million of that is ring-fenced for spend in H2 of this year, predominantly or primarily linked towards the re-platforming of the IT infrastructure. That would give you a good sense of how to think about the overall investment over the next 18 months.

Speaker #2: And so, that would give you a good sense of how to think about the overall investment over the next 18 months. Okay, perfect. And then, just maybe a point of clarification, Gerald, around the sort of breakeven commentary.

Operator: Okay, perfect. And then just maybe a point of clarification, Gerald, around the break-even commentary. I think it was monthly exit break even by the end of 2027 for Afrocentric as a group. But then you made a comment around early 2027 for Medscheme.

Operator: Okay, perfect. And then just maybe a point of clarification, Gerald, around the break-even commentary. I think it was monthly exit break even by the end of 2027 for AfroCentric as a group. But then you made a comment around early 2027 for Medscheme.

Speaker #2: I think it was monthly exit breakeven by the end of 2027 for Afrocentric as a group, but then you made a comment about early 2027 for Med Scheme.

Gerald Van Wyk: Correct.

Speaker #2: Maybe just split that out to give us a bit more insight on that.

Operator: Maybe just split that out. Just give us a bit more insight on that.

Speaker #1: Yes, no, that's exactly it. So overall, as we now reorganize the group, we are targeting that monthly breakeven towards the end of 2027, beginning of 2028.

Gerald Van Wyk: Yes. No, that is exactly it. Overall, as we now reorganize the group, we are targeting that monthly break even towards the end of 2027, beginning 2028. But within that, given the targeted initiatives, including the strategic spend, we are looking at the core business, that being Medscheme, where we have the 3.3 million lives under care, accelerating their monthly break-even run rate at the beginning of 2027. And that is really what we are targeting, is to ensure that the core business gets to its profitability pathways much quicker than the rest of the group whilst we do the rationalization across the group over the 2027 period.

Speaker #1: But within that, given the targeted initiatives—including the strategic spend—we are looking at the core business, that being Med Scheme, where we have the 3.3 million lives under care, accelerating their monthly breakeven run rate at the beginning of 2027.

Speaker #1: And that is really what we are targeting—to ensure that the core business gets to its profitability pathways much quicker than the rest of the group, whilst we do the rationalization across the group over the 2027 period.

Speaker #2: Thanks, Gerald. And then just in terms of the identified savings, I think the sort of run rate over the target that has been identified so far is 72% of that $1.3 billion.

Operator: Thanks, Gerald. And then just in terms of the identified savings, I think the sort of run rate or the target that has been identified so far, 72% of that ZAR 1.3 billion, can you give us any sort of level of comfort when we should expect an update on the balance, I guess? Or how are you thinking about the balance?

Speaker #2: I'd sort of—can you give us any sort of level of comfort on when we should expect an update in the balance, I guess, or how you're thinking about the balance?

Speaker #1: Yes, Dr. can also comment on it, but most certainly I think we'll update every six months to the market in terms of the progress we're making.

Gerald Van Wyk: Yes. Thato can also comment on it, but most certainly, I think we will update every six months to the market in terms of the progress we are making. The business has a new cadence, a new rhythm. On a weekly basis, culminating in a monthly basis, the plan is a board-approved plan, right, Sean? We provide the board with that run rate update on a monthly basis. We are quite close to tracking that. In terms of where we are looking and the focus and the opportunities that we see, I think Thato also tried to allude to it in one of his slides. We still see opportunities in terms of the portfolio simplification that could release value for us over the next 12 months, that is a key focus.

Speaker #1: But the business has a new cadence, a new rhythm. And so, on a weekly basis, culminating in a monthly basis, the plan is a board-approved plan, right, Sean?

Speaker #1: So we provide the Board with that run-rate update on a monthly basis, and so we're quite close to tracking that. In terms of where we're looking and the focus, and the opportunities that we see, I think Tatu also tried to allude to it in one of his slides.

Speaker #1: We still see opportunities in terms of portfolio simplification that could release value for us over the next 12 months, and so that's a key focus.

Speaker #1: And we do anticipate that at least between $100 million and $180 million of that could still be realized in H2, with the close at 72, gap then to closer to 90%, and then finding the rest in 20 throughout 2027.

Gerald Van Wyk: We do anticipate that at least between ZAR 100 million and ZAR 180 million of that could still be realized in H2 with the closer 72 gap then to closer to 90% and then finding the rest throughout 2027. I think the key thing, Sean, is the timing, right? That is also a key area of risk that we are tracking. We would like to bring those opportunities to realization as soon as Q1, Q2 of next year, so that we give ourselves a chance to hit the 2027 end-of-year run rate.

Speaker #1: I think the key thing, Sean, is the timing, right? And so that's also a key area of risk that we are tracking. So, we would like to bring those opportunities to realization as soon as Q1 or Q2 of next year, so that we give ourselves a chance to hit the 2027 end-of-year run rate.

Speaker #2: Perfect. Thanks, Gerald. We have a question on the line here from Eden Neneh: Is there any other major contract that could hurt the company if lost, similarly to the Benites contract?

Operator: Perfect. Thanks, Gerald. We have a question on the line here from Eden Nene. Is there any other major contract that could hurt the company if lost similarly to the Bonitas contract? If so, what steps has management taken to avoid such a situation?

Speaker #2: And if so, what steps has management taken to avoid such a situation?

Speaker #1: Yeah, I'll take that question. Thank you. As I shared with the market in our last market update in March, we painted a picture of our contract renewal universe.

Gerald Van Wyk: Yeah, I will take that question. Thank you. As I shared with the market in our last market update in March, we painted a picture of our contract renewal universe. At the time, we had the Government Employees Medical Scheme contract that we have now successfully renewed for a three-year renewal on our managed care contract and a five-year renewal on our contribution and debt contract. That was a key contract that we needed to retain. The next one that we also shared at the time was the Polmed contract. That contract does come up for renewal or expiry at the end of December 2026. We have, since the last update, been successful in securing a one-year extension of that contract. That contract will now extend to the end of December 2027.

Speaker #1: And at the time, we had the government employee medical scheme contract that we have now successfully renewed—for a three-year renewal on our managed care contract and a five-year renewal on our contribution and debt contract.

Speaker #1: And so that was a key contract that we needed to retain. The next one that we also shared at the time was the police medical schemes contract, Polmed.

Speaker #1: That contract does come up for renewal or expiry at the end of December 2026. But we have, since the last update, been successful in securing a one-year extension of that contract.

Speaker #1: So that contract will now extend to the end of December 2027. And so, it obviously follows that from a management perspective, there's been significant focus and effort in realizing this current development, but also to ensure that we are able to then focus on securing that contract more long-term when the extension runs out.

Gerald Van Wyk: And so it obviously follows that, from a management perspective, there's been significant focus and effort in realizing this current development, but also to ensure that we are able to then focus on securing that contract more longer term, when the extension runs out. Then I think, also worth mentioning is the CCMDD contract with the National Department of Health. That contract is up for renewal now in September, having completed its five-year tenure. We are currently in negotiations and discussions with the department for a significant extension of that contract, which has not gone out on tender, and we continue to provide the services. So we should be in a position to gain clarity around that particular contract within the next coming weeks.

Speaker #1: And then I think it's also worth mentioning the CCMDD contract with the National Department of Health. That contract is up for renewal now in September.

Speaker #1: Having completed its five-year tenure, we are currently in negotiations and discussions with the department for a significant extension of that contract, which has not gone out on tender, and we continue to provide the services.

Speaker #1: So we should be in a position to gain clarity around that particular contract within the next few weeks.

Speaker #2: Thanks, Gerald. We have a question on the line from Ellen—Tatu. It's regarding free cash flow for the next six months and going into 2027.

Operator: Thanks, Gerald. We have a question on the line from Ellen Totoy. It's around free cash flow for the next 6 months and going into 2027. We'd like to know, is the company going to have negative free cash flow for the next 6 months? Then how is that going to evolve into 2027? That's the first question.

Speaker #2: Would you like to know if the company is going to have negative free cash flow for the next six months? And then, how is that going to evolve into 2027?

Speaker #2: That's the first question.

Speaker #3: Yeah, sure. I mean, I think that's exactly what we've been trying to flag at this moment in time. If you look at the contribution from Benites, that's quite a significant contributor to our overall revenue base—the $2 billion.

Thato Moloele: Yeah, sure. I think that's exactly what we've been trying to flag at this moment in time. If you look at the contribution from Bonitas, it is quite a significant contributor to our overall revenue base, the ZAR 2 billion. The fact that we've got to then strip ZAR 1.3 billion of costs out of the cost base, just reflects the kind of pressure which we thus anticipate to receive over the next few years. I think if you add and overlay the various efforts without implementing now, it's exactly for that reason why we had to go and take such significant actions to reset the cost base, and go invest in strategic initiatives to offset that impact. So I think if you're asking the question about H2, we are definitely foresee a cost pressure and liquidity pressure within the group.

Speaker #3: And the fact that we've got to then strip 1.3 billion round of costs, outside of the costs, out of the cost base, just reflects the kind of pressure which we thus anticipate to receive over the next few years.

Speaker #3: I think if you add and overlay the various efforts throughout implementation now, it's exactly for that reason why we had to go and take such significant actions to reset the cost base and go invest in strategic initiatives to offset that impact.

Thato Moloele: I think if you add and overlay the various efforts without implementing now, it's exactly for that reason why we had to go and take such significant actions to reset the cost base, and go invest in strategic initiatives to offset that impact. So I think if you're asking the question about H2, we are definitely foresee a cost pressure and liquidity pressure within the group. But that will taper as our action starts to yield progress.

Speaker #3: So I think, if you're asking the question about H2, we definitely foresee a cost pressure and liquidity pressure within the group, but that will taper as our actions start to yield progress.

Thato Moloele: But that will taper as our action starts to yield progress.

Speaker #2: Great, thanks, Tatu. The second question from Ellen is about the forest acquisition—specifically regarding the losses that have occurred on acquisitions in the last three years.

Operator: Great. Thanks, Totoy. The second question from Ellen is around the Forest acquisition. Just around the losses that the acquisitions incurred in the last 3 years. If you'd like a bit more color on that and who's involved in that.

Speaker #2: If you'd like a bit more color on that, and on who's sort of involved in that.

Speaker #3: Yeah, I mean, I think that it's been quite widely published within our financial statements that we've taken a series of impairments—not with regards to Forest alone, but also with regards to Activo.

Thato Moloele: Yeah. I think that it's been quite widely published out within our financial statements that we've taken a series of impairments, not with regards to Forest alone, but also with regards to Activo. That's primarily or partially part of the reason why we made the decision to exit the asset. That transaction is now complete. We've received the first tranche of the purchase consideration, and we're actively monitoring and engaging to receive the further tranches of the purchase consideration. So from a further earnings perspective, there will most likely be a loss on disposal, reflected, in the current financial year. But that'll obviously then be the end of the impact of that business.

Speaker #3: So, and that's primarily or partially part of the reason why we made the decision to exit the asset. That transaction is now complete. We've received the first tranche of the purchase consideration, and we're actively monitoring and engaging to receive the further tranches of the purchase consideration.

Speaker #3: So, from a further earnings perspective, there will most likely be a loss on disposal, reflected in the current financial year. But then that will obviously be the end of the impact of that business.

Operator: Perfect. Thanks, Totoy. Gerald, as you close your remarks, we might wrap up.

Speaker #2: Perfect. Thanks, Tatu.

Speaker #1: Yes, no, thank you, Sean. I think before we close, I would like to acknowledge the colleagues who have left the organization on May 31st and August 31st.

Gerald Van Wyk: Yes. No, thank you, Sean. I think before we close, I would like to acknowledge the colleagues who have left the organization on 31 May and 31 August. The actions we've taken as we've taken you through this presentation and as you can see in the results, are obviously necessary, but they haven't been easy. Behind all of these numbers are people who've made a meaningful contribution to the Afrocentric Group over many years. On behalf of the group, we would just like to extend our greatest gratitude to our staff and our former colleagues, and wish them every success in their future endeavors, and thank them for the contribution and the service to the group and to the investors and the analysts. Also, thank you for joining us, and we look forward to further engagements post the presentation and the results session.

Speaker #1: The actions we've taken, as we've taken you through this presentation and as you can see in the results, are obviously necessary, but they haven't been easy.

Speaker #1: Behind all of these numbers are people who've made a meaningful contribution to their AfroCentric group over many years. And on behalf of the group, we would just like to extend our greatest gratitude to our staff and our former colleagues, and wish them every success in their future endeavors.

Gerald Van Wyk: On behalf of the group, we would just like to extend our greatest gratitude to our staff and our former colleagues, and wish them every success in their future endeavors, and thank them for the contribution and the service to the group and to the investors and the analysts. Also, thank you for joining us, and we look forward to further engagements post the presentation and the results session. Thank you for your time.

Speaker #1: And thank them for their contribution and their service to the group, to the investors, and to the analysts as well. Thank you for joining us, and we look forward to further engagements after the presentation and the results session.

Gerald Van Wyk: Thank you for your time.