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6 December 2017 Disclaimer THIS PRESENTATION IS NOT AN OFFER OR - PowerPoint PPT Presentation

FY 2017 Results Presentation 6 December 2017 Disclaimer THIS PRESENTATION IS NOT AN OFFER OR SOLICITATION OF AN OFFER TO BUY OR SELL SECURITIES IN THE UNITED STATES OF AMERICA OR IN ANY OTHER JURISDICTION. IT IS PROVIDED AS INFORMATION ONLY.


  1. FY 2017 Results Presentation 6 December 2017

  2. Disclaimer THIS PRESENTATION IS NOT AN OFFER OR SOLICITATION OF AN OFFER TO BUY OR SELL SECURITIES IN THE UNITED STATES OF AMERICA OR IN ANY OTHER JURISDICTION. IT IS PROVIDED AS INFORMATION ONLY. This presentation is furnished only for the use of the intended recipient, and may not be relied upon for the purposes of entering any transaction. By attending the bond call presentation, you are agreeing to be bound by these restrictions. Any failure to comply with these restrictions may constitute a violation of applicable securities laws. Certain information herein (including market data and statistical information) has been obtained from various sources. We do not represent that it is complete or accurate. All projections, valuations and statistical analyses are provided to assist the recipient in the evaluation of the matters described herein. They may be based on subjective assessments and assumptions and may use one among alternative methodologies that produce different results and to the extent that they are based on historical information, they should not be relied upon as an accurate prediction of future performance. This presentation does not constitute an offer or an agreement, or a solicitation of an offer or an agreement, to enter any transaction (including for the provision of any services) and does not constitute an offer or invitation to subscribe for, or purchase any securities, and nothing contained herein shall form the basis of any contract or commitment whatsoever. The information contained herein does not constitute investment, legal, accounting, regulatory, taxations or other advice and the information does not take into account your investment objectives or legal, accounting, regulatory, taxation or financial situation, or particular needs. You are solely responsible for forming your own opinions and conclusion on such matters and the market and for making your own independent assessment of the information herein. You are solely responsible for seeking independent professional advice in relation to the information and any action taken on the basis of the information. Investors and prospective investors in the securities of any issuer mentioned herein are required to make their own independent investigation and appraisal of the business and financial condition of such issuer and the nature of the securities. This presentation includes certain financial data that are “non -IFRS financial measures” . These non-IFRS financial measures do not have a standardised meaning prescribed by IFRS and therefore may not be comparable to similarly titled measures presented by other entities, nor should they be construed as an alternative to other financial measures determined in accordance with IFRS. Although we believe these non-IFRS financial measures provide useful information to users in measuring the financial performance and condition of the business, you are cautioned not to place undue reliance on any non-IFRS financial measures included in this presentation. This presentation contains certain data and forward looking statements regarding the U.K. economy, the markets in which we operate and its position in the industry that were obtained from publicly available information, independent industry publications, and other third party data. We have not independently verified such data and forward looking statements and cannot guarantee their accuracy or completeness. 2

  3. Contents Overview  FY17 Financial Performance  Cash Flow  Funding and Leverage  Residential Care Services  Health Care  Outlook  Appendix - Revenue/Adjusted EBITDA Bridges  All figures and percentages included in this report are presented on a continuing operations basis unless stated otherwise. Discontinued operations comprise the Amicus ITS 3 business disposed of in February 2016. All prior periods have been represented accordingly.

  4. Overview Overall performance exceeded management expectations  Strong performance in Residential Care  Health Care performed well overall, albeit stronger first half than second  Net debt and leverage benefitting from progressive EBITDA improvement and strong working capital  Residential Care  Strong revenue growth due to maturing occupancy in new build homes  Five new build self-funded homes opened in FY17 with strong development pipeline  Best quality performance amongst large operators – 78% of homes rated good or outstanding by CQC  Key operational metrics driving continued financial improvement  Self-funded care home strategy now demonstrating strong and predictable financial returns from mature homes  Significant bed shortage expected over next 5 to 10 years  Beneficial to self-funded strategy  Increasing number of partnership approaches from local authorities  CMA have announced outcome of their review – we are evaluating impact  4

  5. Overview Health Care  Revenue growth mainly driven by new prison healthcare contracts  Urgent care market remains financially challenging though good progress being made in developing innovative primary  care solutions Strong first half of the year with second half impacted by weaker elective surgery referrals as NHS financial pressures  increase Secondary care (mainly elective surgery) showing year on year growth in revenue and profitability despite volume  challenges Exploring potential partnership structures with NHS Acute Trusts alongside developing a self-funding offering  Strategic focus  Started to identify and evaluate strategic options for the future of both businesses - will look at the full range of potential  scenarios which enable continued growth and further innovation Brexit  Minimal impact expected in Health Care with medically qualified staff expected to be protected  Potential impact for Residential Care care workers (13.5% of staff from EU)  5

  6. FY 2017 Financial Performance Continuing operations performance  Revenue of £658m (+10.3%) with growth in both Residential Care and Health Care  Adjusted EBITDA of £38.7m, £4.1m higher than FY 2016 and ahead of management expectations  FY16 included c£3m ISTC Wave 2 pricing and guaranteed volume benefit – like for like EBITDA  increase of c£7.1m (22%) Pro forma EBITDA (before new home start-up losses) of £43.6m up over 14% versus prior year  Finance costs  Net financing expenses of £16.3m, £2.5m lower than prior year due to one off items in FY16, lower  RCF drawdowns and reduction in LIBOR Net debt and leverage  Net debt better than expectations at £257m due to strong working capital and EBITDA progression  Reported leverage reduced from 7.6x in FY16 to 6.7x in FY17 (5.9x Pro forma basis)  Silver Sea repayment of £5m during the year  Non-recurring items  Total charge of £5.3m includes £1.5m of overhead reduction programme costs, £1.6m of procurement  programme costs and £1.7m due to increased stock capitalisation threshold 6

  7. FY 2017 Financial Performance Full Year Q4 £m 2017 2016 Movement 2017 2016 Movement Revenue Residential Care 300.7 272.0 28.7 78.4 72.3 6.1 Health Care 357.0 324.2 32.8 89.1 85.9 3.2 Continuing Operations 657.7 596.2 61.5 167.5 158.2 9.3 Adjusted EBITDA Residential Care 32.9 26.8 6.1 9.3 8.4 0.9 Health Care 12.2 12.3 (0.1) 3.3 3.8 (0.5) Other (6.4) (4.5) (1.9) (2.4) (1.1) (1.3) Reported Continuing Operations 38.7 34.6 4.1 10.2 11.1 (0.9) Start-up Losses 4.9 3.6 1.3 1.6 0.9 0.7 Pro forma Continuing Operations 43.6 38.2 5.4 11.8 12.0 (0.2) RCS: revenue up 11%, Adjusted EBITDA up 23%  HC: revenue up 10%, Adjusted EBITDA broadly flat year on year but up c£3m on an underlying basis (Wave 2 impact)  Other costs increase on prior year mainly due to staff incentive payments and project costs  Discontinued operations in FY16 related to Amicus ITS Ltd which was sold in February 2016 - excluded from financial performance above 1) 7

  8. Cash Flow £m FY 2017 FY 2016 Q4 2017 Q4 2016 Adjusted operating profit 13.9 12.0 3.4 5.5 Depreciation and other non-cash movements 25.0 21.6 7.4 5.6 Change in working capital and non-recurring items 7.5 5.5 7.0 1.8 Cash flow from operations 46.4 39.1 17.8 12.9 Cash flows resulting from financing activities and (15.9) (18.4) (3.3) (4.4) taxation Capital expenditure net of disposal proceeds (27.7) (23.7) (5.7) (7.3) Loans from/(to) related party undertakings 2.5 (4.2) - - Decrease/(increase) in net debt arising from cash 5.3 (7.2) 8.8 1.2 flows Other non-cash movements in net debt (1.4) (1.1) (0.5) (0.2) Total movement in net debt 3.9 (8.3) 8.3 1.0 Continued strong working capital management  Net loan benefit as a result of £5m cash repayment of cash by Silver Sea following two freehold sales  Capital expenditure totalling £28.4m before proceeds of £0.7m  Health Care: £10.1m (£4.8m expansionary, £5.3m maintenance) − Residential Care: £18.3m (£6.2m expansionary, £12.1m maintenance, including H&S review) − 8

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