Group Segmental Income and Profit Analysis
for the year ended 31 March 2016

The group measures segments based on operating income net of direct expenses and profit from operations before non-trading and capital items.

The above segmental view reflects the reporting segments as used by the group’s key decision-makers and is consistent with the prior year.

The following summary describes each of the group’s reportable segments:

• SA Financial Services – is the leading retirement funds consulting and administration provider and corporate health consulting business in South Africa. The divisions include Institutional, which provides retirement fund administration, consulting and actuarial services; Retail, which provides financial and wealth advice and solutions to individuals; Healthcare, which provides medical scheme and health-related advice and actuarial services.
• Investment Solutions – is a multi-manager investment manager. The company selects appropriate asset managers and portfolios and monitors and reports on manager performance. The operations are currently in South Africa and Namibia.
• AF Insurance (AFI) – provides short-term motor and household insurance cover to retail clients. In addition, assets insurance cover and various other business-related short-term insurance cover is provided to small businesses.
• AfriNet (Africa excluding South Africa) – offers financial services products in Africa (outside South Africa). It focuses on and meets the demands of each local market, as well as adapts business products to local legislation.
• International Financial Services – pan-European employee benefits consultants and actuaries, providing solutions across all aspects of employee benefits to employers and their employees, pensions, investments, healthcare and risk solutions and business analytics of insurance products.

Since April 2016, the group has formally moved to a new basis of allocating resources and managing performance which is aligned with the group’s strategy. This has resulted in a change in the responsibilities with internal management reports being presented in line with four strategic clusters.

From 1 April 2016, the group will present these strategic segments which are managed through specific cluster executive committees and are reported to the key decision-makers. The cluster units provide strategic direction for the underlying business units, with particular focus on the common client base which are served by these units. The cluster executive committees meet monthly and specifically focus on project implementation and review internal management reports. The ‘strategic’ segments are:

• Institutional Cluster – with particular focus on our core institutional clients, the strategic focus of this cluster includes the continuous growth of the core businesses with fanatical discipline.
• Retail Cluster – with particular focus on our retail clients, the strategic focus of this cluster includes leveraging the core institutional businesses to provide financial well-being through a comprehensive holistic product offering.
• Operations & Technology – this cluster will focus on operational modernisation and strategic prioritisation. This cluster is not a profit centre and costs are allocated to the institutional and retail clusters.
• Shared Services – this cluster is responsible for all corporate administrative functions such as human resources, risk and compliance, marketing and finance. These service costs are allocated to profit centres.

Within the cluster units above, business units offer different products and services, and require different technology and marketing strategies.

The new ‘strategic’ analysis for the year ended 31 March 2016 has been included in the directors’ report.