Divisional performance

The Market Access business – in which close to 100% of revenue is generated in Africa – is integral to our 'Gateway to Africa' strategy. Our market access solutions see us taking ownership of inventory and responsibility for the full order-to-cash function. We build complex route-to-market solutions that provide our principals with access to patients and consumers through comprehensive channel strategies that integrate sourcing, sales, demand generation, distribution, marketing and promotions. Our solutions also create opportunities to leverage our freight and contract logistics capabilities.

Operating context

The operating environment is showing signs of slow recovery as COVID-19 lockdown restrictions were eased in most of our key markets. However, a third wave of infections is weighing on many countries in Africa, where vaccination rates are currently very low. In addition, certain of our markets were negatively impacted by restrictions relating to the sale of alcohol. Economic activity in the sub-Saharan African region is, however, expected to strengthen if countries act quickly to contain new waves of the pandemic and speed up vaccine rollouts. Sub-Saharan Africa's recovery is expected to vary significantly from country to country.

Despite the challenging macro environment, we remain optimistic about the future of our Market Access business. Recent acquisitions are being successfully integrated and provide good cross-selling opportunities. In Africa, the trend continues in rising consumerism, urbanisation, population growth and the strengthening of healthcare systems by governments, which are all good indicators and will have a positive impact on our Market Access business.

As demonstrated through our recent acquisitions and organic growth initiatives, we continue to build on our capability to offer integrated commercial solutions across multiple markets in Africa.

Operating performance (continuing operations)

Pro forma Market Access segment results

	Half year 1					Half year 2*					Full year
MARKET ACCESS	2021	2020	%  change			2021	2020	%  change			F2021	F2020	%  change
Revenue (Rm)^	7 415	5 480	35			7 712	6 181	25			15 127	11 661	30
EBITDA (Rm)^	500	566	(12)			456	286	59			956	852	12
Operating profit (Rm)^	422	506	(17)			384	205	87			806	711	13
Operating margin (%) ^	5,7	9,2				5,0	3,3				5,3	6,1
Return on invested capital (%)^	11,4	19,2									14,1	14,5
Weighted average cost of capital (%)^	12,2	14,1									11,5	13,1
Net debt including lease obligations (Rm)	1 830	1 416	29								1 500	1 650	(9)
Lease obligations included above (Rm)	334	262	27								304	348	(13)
Net debt (Rm)	1 496	1 154	30								1 196	1 302	(8)
Net working capital (Rm)	1 803	1 724	5								1 726	1 689	2

^	Excluding businesses held for sale.
*	Half year 2 numbers are unaudited and derived from deducting the half year 1 results from the full year published results of 30 June 2021

Note: Continuing operations.

Our strong position as a leading healthcare and consumer market access player in sub-Saharan Africa continues to stand us in good stead, particularly during the COVID-19 pandemic. The Market Access business delivered excellent results in F2021, growing revenue and operating profit by 30% and 13% respectively, supported by successful integration of acquisitions, a strong recovery in most businesses, particularly in consumer, and good contract gains. Operating margin continued to be under pressure mainly in the Healthcare business in Nigeria, the Consumer business in Mozambique, and the Healthcare medical supplies and kitting business (Imres), decreasing overall from 6,1% in F2020 to 5,3% in F2021. COVID-19 resulted in supply chain disruptions with the procurement cost of certain product categories increasing significantly during the year, impacting Imres (our medical supplies and kitting business).

Investment in the new Market Access organisational structure is proving its success with new business being converted and a healthy pipeline of new opportunities being built. New business revenue of c.R1,7 billion (p.a.) was secured on a rolling 12-month basis to the end of June 2021. The contract renewal rate on existing contracts remains strong at c.100%. The commercial efforts to drive integrated solutions across our Consumer and Healthcare businesses are gaining traction and are positively contributing to our performance.

The Healthcare business continued to benefit positively from the integration of acquisitions, organic growth in the Multi Market Aggregation business, as well as excellent growth in revenue and operating profit in the Healthcare business in Kenya. Imres continues to benefit from a strong order book but performance was negatively impacted by COVID-19, as mentioned earlier.

In the Consumer business, Imperial gained a material consumer contract for P&G's route to market of consumer goods in Nigeria, which became effective on 1 January 2021. The Consumer business contributed strongly to results mainly due to the inclusion of this contract and the integration benefits gained post the acquisition of the Consumer business in Ghana. Our Consumer business in Namibia delivered a resilient performance in a tough economic environment. Lower activity was recorded in our Consumer business in Mozambique, with margins under pressure, mainly resulting from restrictions on alcohol trading due to COVID-19. Our newly formed Market Access Consumer business in South Africa is contributing positively.

Excellent net working capital management resulted in an increase of 2% in working capital to R1 726 million as at June 2021 compared to a growth in revenue for the year of 30%. ROIC decreased from 14,5% to 14,1% and is higher than WACC of 11,5%, slightly below the targeted hurdle rate of WACC +3%.