Commentary

Introduction and review

AfroCentric “ACT” is a Level 1 B-BBEE JSE-listed investment holding company focused on advancing access to affordable healthcare across Southern Africa. Through a diversified portfolio of subsidiaries, the Group delivers integrated health management solutions, including medical scheme administration, managed care, medicine provision, wellness services, and digital health innovations. The Group operates across public and private sector environments and remains focused on strengthening operational execution, leveraging technology and clinical innovation, and building partnerships that support inclusive, value-based healthcare.

The Board presents commentary on the Group’s operating performance for the six months ended 30 June 2026. The period was defined by a material change in the Group’s operating environment following the termination of the Bonitas administration and managed care contracts with effect from 31 May 2026.

The loss represents a material strategic and operational inflection point for the Group. It reduced the scale of the business, placed pressure on future revenue and earnings, and required management to accelerate a comprehensive reset of the Group’s operating model, cost base, and portfolio focus.

The immediate priority is no longer growth at legacy scale, but stabilisation, service continuity, cash preservation, and the restoration of sustainable earnings. This includes aligning the cost base to the Group’s reduced operating scale, protecting key client relationships, maintaining service levels through transition, simplifying the portfolio, and investing selectively in capabilities that strengthen AfroCentric’s long-term relevance in administration, managed care, digital health, data and clinically led innovation.

The strategic intent of building a differentiated healthcare platform remains intact, but the path to execution has changed. The Group must now sequence investment more carefully, prioritise initiatives with measurable operating benefits, and demonstrate disciplined execution before scale can be rebuilt.

Management’s focus is therefore on delivering a leaner, more focused and financially sustainable AfroCentric, while continuing to support the 3.3 million lives continued to be serviced by the Group’s core business.

Financial performance

The Group delivered a profit for the period of R70.8 million compared with R106.7 million in the prior period. Revenue from continuing operations declined by 5.6% to R3.485 billion largely reflecting lower private patient script volumes following the loss of designated service provider contracts in the prior period and the early impact of the Bonitas contract termination on capitation funds, administration, and managed care fees.

The period also included transition-related costs associated with the turnaround programme, the Section 189A of the Labour Relations Act (Section 189A) process affecting employees, previously servicing Bonitas, and legal costs relating to the Bonitas procurement matter. These costs were necessary to protect the Group’s position, manage the transition responsibly, and accelerate the restructuring required to align the organisation with its future revenue base.

Cost containment measures that were implemented as part of the turnaround strategy, coupled with cost-containment initiatives implemented by management in the prior period to proactively mitigate the impact of lower revenue across the private pharmaceutical business, resulted in a reduction in operating expenditure. This contributed to a 25.9% increase in profit before tax from continuing operations from R88.4 million to R111.4 million.

Capital management and cash flow remained a focus for the period. Cash and Cash Equivalents, excluding cash held by assets classified as Held for Sale, increased to R710.9 million (June 2025: R483.1 million). Borrowings slightly decreased to R626.7 million (June 2025: R654.2 million) reflecting a capital repayment of the mortgage bond in Namibia.

Management remains focused on:

• Strengthening its diversified healthcare offerings;
• Restoring revenue momentum through new business development;
• Enhancing operational efficiencies; and
• Effecting a cost-reset to scale down expenses to more sustainable levels.

STRATEGIC RESPONSE AND TURNAROUND EXECUTION

The Bonitas contract termination materially changed the Group’s revenue and earnings outlook. Management’s response has been to implement an integrated turnaround and stabilisation programme focused on protecting the retained business, resetting the cost base, simplifying the operating model, preserving liquidity, and strengthening the Group’s longer-term strategic focus.

The programme is being executed across six practical priorities:

1. Protecting service delivery and client confidence across existing clients;
2. Completing the Bonitas wind-down responsibly in line with contractual obligations;
3. Realigning the cost base to the Group’s future scale;
4. Redesigning organisational structures and support functions to improve accountability, efficiency, and speed of execution;
5. Simplifying the portfolio to focus on business with strategic relevance, ownership advantage, and sustainable financial contribution; and
6. Sequencing strategic investment according to affordability, execution capacity, and measurable value creation.

BUSINESS HIGHLIGHTS

Medscheme celebrated 55 years of service on 1 March 2026. This milestone reflects a long operating history in medical scheme administration and managed care, and reinforces the importance of Medscheme within the Group’s future core business.

Medscheme was appointed as the administrator and managed care provider for Sisonke Health Medical Scheme with effect from 1 May 2026. The appointment is an important new business win and supports the Group’s position as a trusted provider of administration and managed care services in the healthcare sector.

Health Rewards by Sanlam was launched for Fedhealth members through the Fedhealth member app, providing a digital platform for health activities, engagement, and rewards. The rewards and loyalty roadmap continues to be developed, with an enhanced rewards and loyalty programme milestone planned for 2027.

On 16 July 2026, Medscheme withdrew its High Court application seeking an interdict to prevent Bonitas from awarding or implementing contracts for administration and managed care services, pending the outcome of a Council for Medical Schemes (CMS) investigation into the appointment of alternative service providers of Bonitas. The application was withdrawn following assurances from the CMS that the evidence and information placed before the court would form part of its ongoing investigation. The Group will continue to cooperate with the regulatory process and remains focused on the responsible wind-down of the contract and the protection of stakeholders through the transition.

Cluster review

Services Cluster

The Services Cluster remains the Group’s core earnings engine and the primary platform through which AfroCentric delivers administration, managed care, and health risk management services.

Revenue for the six months ended 30 June 2026 was R2.9 billion, broadly in line with the prior period, despite the Bonitas administration and managed care contracts terminating with effect from 31 May 2026 and lower membership in some schemes.

Operating profit decreased by 19.2% to R221.7 million from R274.2 million, mainly reflecting the impact of transition-related costs and termination payments associated with the Section 189A process for employees who rendered services to Bonitas.

The Cluster’s immediate focus is on further strentheing key client relationships, maintaining service quality, improving operational efficiency, and demonstrating measurable value through managed care, clinical innovation and data digital enablement. In a market characterised by heightened procurement risk and tighter renewal cycles, the ability to deliver measurable outcomes for schemes and members remains central to the Group’s competitive position.

Retail Cluster

The Retail Cluster seeks to participate throughout the pharmaceutical value chain to reduce medicine and related costs and improve adherence to medication. Through its subsidiary Pharmacy Direct, the Cluster continues to position itself as a key partner for the government in the National Health Insurance (NHI) environment. Despite the net decline in price per script and noted challenges, Pharmacy Direct has demonstrated significant success in driving access to care by increasing the script volumes on the Central Chronic Medicines Dispensing and Distribution (CCMDD) programme.

Through cost-containment initiatives implemented by management in the prior period to proactively mitigate the impact of lower revenue across the private pharmaceutical business, the Cluster’s performance has significantly improved.

The increase in operating earnings from R35.1 million in the prior period to R60.4 million has however been diluted by the decrease in operating earnings in the Scriptpharm business due to the impact of the loss of the medicine management contract with Bonitas, effective 1 June 2026.

PORTFOLIO SIMPLIFICATION AND STRATEGIC FOCUS

On 23 April 2026, ACT Healthcare Assets entered into a revised sale and purchase agreement with the FHC Group for the disposal of its entire shareholding in Activo, together with a related cession agreement in respect of sale claims against Activo.

The consideration in respect of the disposal will comprise the sum of an upfront payment of R100 million, a deferred payment calculated on Activo’s receivables and net debt working capital amounts as at the closing date, and an earnout payment limited to an amount of R90 million.

The transaction is aligned with the Group’s strategic focus on health administration, managed care, and corporate solutions. It is intended to strengthen the balance sheet through increased cash and reduced debt. This will further reduce complexity at a time when capital and management attention must be focused on stabilising and rebuilding the core business.

Subsequent to the reporting date, all suspensive conditions relating to the Activo transaction were fulfilled on 31 July 2026. The disposal was subsequently implemented on 31 August 2026 in accordance with the terms of the sale agreement.

The broader portfolio simplification agenda will continue to assess assets against strategic relevance, ownership advantage, financial sustainability, and contribution to the Group’s future operating model. This approach is intended to support sharper management focus, improved capital allocation, and more sustainable earnings over time.

Outlook

The Board expects the operating environment to remain challenging as the Group completes the Bonitas wind-down, implements organisational redesign initiatives, realises the benefits of the cost reset programme, and progresses its portfolio simplification agenda. While the full financial impact of the contract loss will continue to be reflected in future reporting periods, management remains focused on executing the actions required to reposition the Group for long-term sustainability.

The immediate priorities remain the preservation of liquidity, protection of client relationships, maintenance of service delivery standards, and delivery of identified turnaround initiatives. Management’s focus is on converting these actions into measurable operational and financial outcomes while ensuring that strategic investments are prioritised and sequenced appropriately.

Despite these near-term challenges, the Board believes the Group retains strong core capabilities in healthcare administration, managed care, pharmacy services, and data and digital enablement. The successful execution of the turnaround programme is expected to position AfroCentric as a more focused, efficient, and sustainable organisation over the medium term.

Directors and Committee Members

The following changes were made to the Board:

• Effective 24 February 2026, Dr Nkateko Munisi resigned from his position as a member of the Investment Committee and was appointed as a member of the Remuneration Committee.
• Effective 6 March 2026, Ms Marinda Dippenaar resigned from her position as a non-executive director and member of the Investment Committee.

Basis of preparation

The Condensed Consolidated interim financial statements for the six months ended 30 June 2026 have been prepared in accordance with and containing the information required by IAS 34: Interim Financial Reporting, the Financial Pronouncements as issued by the Financial Reporting Standards Council, the SAICA Financial Reporting Guides as issued by Accounting Practices Committee, the JSE Listings Requirements, and the Companies Act of South Africa.

The accounting policies applied in the Condensed Consolidated Financial Statements are the same as those applied in the Group’s Audited Consolidated and Separate Financial Statements for the year ended 31 December 2025.

The Board of Directors (the Board) takes full responsibility for the preparation of this report. These unaudited and unreviewed Condensed Consolidated Financial Statements have been prepared under the supervision of Thato Moloele CA (SA), the Group Chief Financial Officer. This announcement does not include the information required pursuant to paragraph 16A(j) of IAS 34 and this is available on our website (www.afrocentric.za.com/investor-centre/), or at our offices upon request.

Responsibility statement

The AfroCentric Board, individually and collectively, accepts responsibility for the information contained in this announcement insofar as it relates to AfroCentric. In addition, the AfroCentric Board confirms that, to the best of its knowledge and belief, the information contained in this announcement, as it relates to AfroCentric, is true and correct and, where appropriate, does not omit anything that is likely to affect the importance of the information contained herein, and that all reasonable enquiries to ascertain such information have been made.

On behalf of the Board

Johannesburg
1 September 2026