GROUP RESULTS YEAR ENDED 30 SEPTEMBER 2014 Date: 14 November 2014 - PowerPoint PPT Presentation

GROUP RESULTS YEAR ENDED 30 SEPTEMBER 2014 Date: 14 November 2014

AGENDA Operational Financial Outlook Review Review André Meyer Pieter van der Westhuizen André Meyer CEO CFO CEO 2

HIGHLIGHTS GROUP TO Revenue +10.2% R13 046m TO Normalised EBITDA +8.2% R3 611m TO Normalised EPS +12.0% 168.6 cents Dividend +11.9% TO 141.0 cps Previous years’ numbers where used for comparative purposes have been restated for changes in accounting standards. Normalised earnings exclude non-trading related items such as profit/loss on disposal of assets and businesses and associated costs. 3

HIGHLIGHTS GROUP GROWTH QUALITY SUSTAINABILITY EFFICIENCY 4

HIGHLIGHTS GROUP Operational Review SA growth • PPD growth 2.0% • New beds 249 GROWTH International growth • Concluded shareholding equalisation with Max India • Strong H2 operational performance from MHC • Entered Polish market through acquisitions of Scanmed Multimedis, Weiss Clinic and Gastromed SA Efficiency • Occupancy 71.9% • Normalised EBITDA margin 27.9% EFFICIENCY Max Healthcare efficiency: • Occupancy 77.0% • Normalised EBITDA margin 9.9% • Normalised EBITDA 5 margin : Apr – Sept 10.7%

HIGHLIGHTS GROUP Operational Review • Continued improvement QUALITY in clinical outcomes • 94 specialised nurses recruited from India SUSTAINABILITY • 888 nurses graduated • 1 400 students enrolled for 2015 6

SA: GROWTH PPDS Operational Review PPDs (000) 2 200 2.0% 2 000 2.7% 1 800 1 600 1 400 2012 2013 2014 Bed growth 292 95 249 7

SA: GROWTH ACUTE BEDS Operational Review H1 2014 H2 2014 Total Category beds Capacity expansion at existing facilities 142 107 249 Number Number ICU/HC General Bed breakdown of beds of hospitals beds beds H1 142 9 37 105 H2 107 7 14 93 Total 249 16 51 198 • Majority of H2 beds added in August/September • Continued focus on increasing ICU beds • Broad based growth to take advantage of areas with strong demand 8

SA: GROWTH ACUTE BED PIPELINE Operational Review Approved Applications Category 2014 2015 beds* pending Capacity expansion at existing facilities 249 148 561 339 New facilities - 94 300 88 Acquisition - 50 - - Total 249 292 861 427 • Acquisition subject to CC approval – expect decision early 2015: − Operational beds: 50 − Licenced beds: 125 • Strong pipeline of acute beds – consistent growth • Good transition from Applications pending to Approved beds • Retained focus on brownfield growth • Approved: received Health department licence approval. In the process of obtaining Municipal approvals before commencing building • Applications pending: awaiting approval from the Health departments for bed applications made 9

SA: GROWTH COMPLEMENTARY BUSINESS Operational Review Redefined our New lines of business as our Complementary businesses: Mental Health 6 facilities 386 beds Acute Rehabilitation 7 facilities 319 beds Renal Dialysis 14 facilities 178 Stations Oncology 1 Radiosurgery and Chemotherapy unit at Life Vincent Pallotti Complementary revenue Renal treatments 600 R m CAGR 24.1% CAGR 40.0% 400 200 361 444 556 0 2012 2013 2014 2012 2013 2014 10

SA: GROWTH COMPLEMENTARY BUSINESS PIPELINE Operational Review Approved Applications Category 2014 2015 beds* pending Mental Health - - 61 249 Acute Rehabilitation - - 15 50 Total - - 76 299 Renal stations 56 34 Oncology units 1 unit 2 units - • Renal dialysis business continues to show good growth • Adding a Radiosurgery and Chemotherapy Oncology centre to the new Life Hilton hospital • Considering expanding the Oncology product into other major metropols • Approved: received Health department licence approval. In the process of obtaining Municipal approvals before commencing building • Applications pending: awaiting approval from the Health departments for bed applications made. 11

SA: GROWTH GROUP BUSINESS PIPELINE Operational Review Approved Applications Category 2014 2015 beds* pending Capacity expansion at existing facilities 249 148 561 339 New facilities - 94 300 88 Acquisition - 50 - - Mental Health - - 61 249 Acute Rehabilitation - - 15 50 Total 249 292 937 726 Renal stations 56 34 Oncology units - 1 unit 2 units - • Approved: received Health department licence approval. In the process of obtaining Municipal approvals before commencing building • Applications pending: awaiting approval from the Health departments for bed applications made. 12

SA: EFFICIENCY EFFECTIVE USE OF ASSETS Operational Review Group Occupancy 74% ICU occupancy: 77% 72% 70% 68% 66% 71,2% 71,7% 71,9% 64% 2012 2013 2014 Bed growth 292 95 249 2012: Bed occupancy split 2014: Bed occupancy split 13% 14% 21% 23% Beds 70%+ Beds 70%+ occupancy 24% occupancy 22% 63% 64% 42% 41% 13 <60% 60-69% 70-79% 80%+ <60% 60-69% 70-79% 80%+

SA: EFFICIENCY EFFECTIVE USE OF ASSETS Operational Review Occupancy split between Acute and Complementary occupancy* 80 76 72 68 71,3 69,2 71,2 71,5 72,2 71,7 71,5 76,7 71,9 64 2012 2013 2014 Acute occupancy Complementary occupancy Group occupancy Bed 158 134 292 75 20 95 249 - 249 growth * Complementary business includes Mental Health and Acute Rehabilitation in the occupancy calculation. 14

SA: EFFICIENCY EBITDA MARGIN – CONTINUING BASIS Operational Review 30% 28% 26% 24% 22% 26,6% 28,2% 27,9% 20% 2012 2013 2014 • Increase in Surgical cases negatively impacted margin • No bed growth in Mental Health and Acute Rehabilitation also negatively impacted the margin • Strong management of cost of sales procurement despite Rand weakness 15

EFFICIENCY IMPROVING AFFORDABILITY OF CARE Operational Review Cost of Care project: Number of tests 40 000 • Key project in driving healthcare efficiency - focus on the entire cost of a hospital event • Continuation of efficiency drive to reduce the cost of healthcare 30 000 Blood Gas project: 20 000 • Completed blood gas roll-out • Financial benefits are shared with medical schemes 10 000 • R50m of savings will be passed back to members of medical schemes in 2015 0 Jan Feb Mar Apr May Jun Jul Aug Sept 16

EFFICIENCY IMPILO RE-ENGINEERING Operational Review 2011-2013 2014 2015 2016 Deployed and completed: • e-Ward billing National rollout of complete Clinical information systems HIS system (CIS) • Patient administration • e-Claims • Case management • Inventory management • Accommodation billing • Accounts receivable • e-Pharmacy dispensing • Debt management • e-Theatre billing (pilot) 2015 Focus • Improving staff, doctor and • Reducing cost of care • Re-engineering current patient satisfaction manual processes • Reducing administrative burden • Leveraging off new technology 17

SA: QUALITY MEASURING CLINICAL OUTCOMES Operational Review Outcome Outcome Sep 2014 Sep 2013 Standard Patient incident rate 2.88 3.24 Per 1 000 PPDs HAI (Healthcare Associated Infection) 0.44 0.51 Per 1 000 PPDs VAP (Ventilator Associated Pneumonias) 1.91 2.69 Per 1 000 VAP days SSI (Surgical Site Infections) 0.76 0.74 Per 1 000 theatre cases CLABSI (Central Line Associated Blood Stream Infections) 0.85 0.83 Per 1 000 central line days CAUTI (Catheter-related Urinary Tract Infections) 0.40 0.57 Per 1 000 catheter days FIM/FAM score 1.14 1.14 >0.9 MHQ14 efficiency (average gain/PPD) 2.39 >1.6 5 4 3 2012 2 2013 1 2014 0 VAP SSI CLABSI CAUTI Patient incident rate 18

SA: SUSTAINABILITY REGULATORY ENVIRONMENT Operational Review Competition Commission (CC) Healthcare Market Inquiry • Recap: − Inquiry will entail an in-depth analysis of the healthcare industry with a focus on the drivers of healthcare costs − Conduct a regulatory impact assessment − Make recommendations on appropriate policy and regulatory mechanisms − Make recommendations with regards to competition policy • LHC has made a detailed submission on the subject matter of the Inquiry • Next steps: − 1 March to 30 April 2015: Public hearings − 1 May to 31 July 2015: Analysis and targeted public hearings and information requests 19

INTERNATIONAL: MAX HEALTHCARE OVERVIEW Operational Review Max Healthcare: • In July announced shareholding equalisation: − increasing shareholding to 46.25% from 26% − R1.35bn cost − Concluded on 10 November 2014 • In line with the Company’s growth strategy in India • The transaction concluded through a 50% primary issue of new MHC shares and a 50% secondary acquisition of MHC shares held by Max India. The primary issue will be used to reduce debt and to fund further expansion • LHC has joint control of MHC with Max India • A Transformation office has been set-up to manage key operational projects • A strong performance since March 2014 in terms of capacity growth, revenue and EBITDA margin improvement 20