Robust strategic decision-making requires careful consideration of which trade-offs to pursue and which to avoid, particularly when these decisions might negatively impact certain stakeholder groups while ensuring sustained value creation for others.
We recognise that in improving access to quality healthcare, value is created, preserved or eroded across the six capitals. The alignment of our core purpose with national and global goals positions the business well within a changing South African healthcare context but requires the Group to make decisions regarding the pursuit of long-term direction over short-term gains.
This central trade-off plays out in all the decisions listed below.
- Access to healthcare and medicine
- Business continuity and adaptation
- Climate change
Analysing the trade-off
Investment in renewable energy infrastructure, particularly solar panels, has significantly reduced our reliance
on electricity from the grid, measured by reduced MWh consumption. Although this required a substantial upfront
investment, the resulting operational efficiencies and sustainability gains align with our strategic objective
of evolving our culture and operating model, ensuring long-term resilience and environmental responsibility.
Central capital trade-off
- Digital transformation and resilience
- Cybersecurity and information security
- Member satisfaction
Analysing the trade-off
Significant investments in IT systems and infrastructure upgrades have notably enhanced our processing efficiency and client experience, achieving a customer effort score of 83% and moving steadily towards our target range of 85% – 90%. Though these initiatives carry a substantial immediate financial impact, they are essential for achieving our strategic objectives of leveraging digital and technological advancements to support innovation and ensure robust data security and improved member experiences.
Central capital trade-off
- Legal, regulatory, and compliance management
- Economic, transformation, political and societal risk
- Employee wellbeing and retention
Analysing the trade-off
The pharmaceutical cluster plays a critical role in reducing medicine costs and improving access to quality healthcare. However, the cluster has faced headwinds due to declining private patient script volumes, regulatory-driven pricing constraints in key product lines, and ongoing margin erosion within Activo. These factors have placed pressure on short-term financial performance, necessitating a strategic impairment.
While this decision impacts immediate profitability, it enables AfroCentric to maintain long-term sustainability by preserving financial resilience and ensuring continued market competitiveness. We are actively pursuing new revenue streams to offset these challenges, including product launches in 2025, operational synergies, cost-saving initiatives, and enhanced strategic integration. These measures position the pharmaceutical cluster to navigate evolving market conditions while sustaining our commitment to affordable, quality healthcare.
Central capital trade-off
Short term
Long term
- Business continuity and adaptation
- Economic, transformation, political, and societal risk
Analysing the trade-off
The Board has been closely monitoring AfroCentric’s share price, which has been impacted by small trades at significantly lower prices. To address this, a share repurchase programme of up to 1% of issued share capital was initiated, with an initial buyback of 403 649 shares. However, recognising the risk of artificially supporting the share price, the repurchase was halted to allow the stock to reflect true market dynamics.
This decision balances short-term interventions for share price stability with long-term investor confidence, ensuring a sustainable and market-driven valuation of the Group.
Central capital trade-off
- Business continuity and adaptation
- Employee wellbeing and retention
Analysing the trade-off
AfroCentric’s long-term share incentive scheme has historically led to the dilution of investor shareholding due to additional share issuances. To mitigate this, the Board approved a revised vesting mechanism in November 2024, using a book-over mechanism that repurchases shares from the market before reallocating them to employees, either as a cash payment or share allocation.
This approach safeguards shareholder value by avoiding dilution while continuing to offer meaningful incentives that align key employees with long-term strategic success.
Central capital trade-off
- Business continuity and adaptation
- Economic, transformation, political, and societal risk
Analysing the trade-off
As part of AfroCentric’s strategic refresh, significant capital investment is required to drive long-term growth. The Board carefully considered the dividend declaration in this context, balancing financial performance with cash flow availability. Given the 5% increase in cash and cash equivalents, the Group determined that it could declare a dividend while still allocating funds to strategic investments.
This decision ensures that shareholders continue to see returns while maintaining financial flexibility to fund the Group’s long-term strategic initiatives.
Central capital trade-off
- Business continuity and adaptation
- Employee wellbeing and retention
Analysing the trade-off
To strengthen employee alignment with AfroCentric’s long-term strategy, the Board approved the allocation of Sanlam shares as part of the long-term share incentive scheme, with an investment of R64.4 million. The vesting conditions are directly linked to AfroCentric’s strategic performance, ensuring that employee incentives remain fully aligned with the Group’s long-term objectives.
This move incentivises key personnel to remain invested in the Group’s future success, reinforcing commitment to executing the strategy refresh. While this represents a financial outlay, it is a strategic investment in retaining and motivating top talent, ensuring leadership stability and long-term organisational resilience.
Central capital trade-off
