Unaudited Group Results and Cash Dividend Declaration for the six month period ended 31 March 2014 13 May 2014 www.lifehealthcare.co.za
Agenda Financial Operational Future Review Review Guidance André Meyer André Meyer Pieter van der Westhuizen CFO CEO CEO 2
Financial Review Pieter van der Westhuizen CFO 3 www.lifehealthcare.co.za
Highlights Good Revenue Strong cash Increased normalised Growth generation dividend EPS growth To + 10.2% +16.0% +15.7% 63 cps Revenue to R6 211m + 10.2% Normalised EBITDA to R1 738m + 12.5% Attributable Profit + 140.5% R1 813m EPS + 140.8 % to 174.8 cents Normalised EPS + 16.0% to 82.7 cents Dividend to 63 cps + 16.7% PPD growth + 2.7% Occupancy to 70.6% + 2.3% Previous years’ numbers where used for comparative purposes have been re -stated 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. 4
Financial results Mar Mar 2013 % 2014 REVENUE 6 211 5 634 10.2% Normalised EBITDA 1 738 1 545 12.5% Normalised EBITDA margin 28.0% 27.4% Operating profit excluding one off items 1 501 1 312 14,4% One off items 985 (4) Operating profit 1 308 90,1% 2 486 JMH profit is R982 million before taxes of R28 million 5
Five year review Revenue Normalised EBITDA CAGR : 10.4% CAGR : 15.3% R’000 m R’000 m 7.000 2.000 Hospital HCS NLB 1 7 38 248 6.000 1.545 208 441 1.600 166 1.370 410 99 5.000 365 3 327 1.166 324 81 1.200 982 4.000 326 2 907 2 548 3.000 800 5 522 2 173 5 016 4 740 4 295 2.000 3 779 400 1.000 0 0 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Hospital revenue includes other revenue Full year numbers Consistent growth in revenue – Group benefitting from faster growth in NLB Continued improvement in efficiencies assisted growth in normalised EBITDA Continued operational leverage assisting margin growth 6
Financial results Revenue breakdown H1 2013 H1 2014 1,3% 8,4% 1,1% 8,9% 3,2% 3,2% 27,4% 28,0% 10,0% 10,0% 15,6% 15,6% 33,6% 33,4% Normalised Ebitda Employee benefits COS Surgicals COS Ethicals Occupational expenses Repairs & maintenance Other Employee benefits efficiency improvement derived from operational leverage and the introduction of new lines of business (mental health, acute rehabilitation, renal dialysis), this is despite a 7% increase in nursing salary costs Excellent management of procurement despite the depreciation of the Rand 7
Financial results Mar Mar 2013 % 2014 REVENUE 6 211 5 634 10.2% Normalised EBITDA 1 738 1 545 12.5% Normalised EBITDA margin 28.0% 27.4% Operating profit 2 486 1 308 90.1% Associates 37 27 37.0% Attributable earnings 754 140.5% 1 813 ASSOCIATES JMH 42 -2.4% 41 MHC -7 -17 58.8% Attributable earnings is defined as earnings attributable to ordinary shareholders 8
India : Max Healthcare Revenue & EBITDA Growth Rs Rs Revenue EBITDA in Cr in Cr 400 40 30 350 20 300 10 250 0 200 -10 150 -20 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Phase 1 Phase 2 Phase 1 Phase 2 REVENUE (RS.CRORE) H2 13 % H2 14 EBITDA (RS.CRORE) H2 14 H2 13 % Revenue – Phase 1 EBITDA – Phase 1 hospitals 69 65 6.2% 541 504 7.3% hospitals EBITDA – Phase 2 hospitals -20 -4 Revenue – Phase 2 EBITDA – Total 169 92 83.7% 65 45 44.4% hospitals EBITDA margin – Phase 13% 13% Revenue Total 710 596 19.1% 1hospitals EBITDA margin – Total hospitals 9% 7% Financial year end: March 9
Financial results Mar Mar 2013 % 2014 EPS 72.6 140.8% 174.8 Profit on disposal of business / Loss on 0.3 (92.1) de-recognition of finance lease HEPS 82.7 72.9 13.4% Gain on de-recognition of finance lease liability - (1.6) Normalised EPS 71.3 16.0% 82.7 2014: new accounting standards impact EPS and Normalised EPS cps HEPS. The retirement fund surplus will not form part 100,0 of the EPS & HEPS calculation 82,7 80,0 71,3 62,3 60,0 51,1 CAGR : 21.8% 37,6 40,0 20,0 - 2010 2011 2012 2013 2014 10
Financial results Segmental review Mar Mar 2013 % 2014 REVENUE 6 211 5 634 10.2% Hospital division 5 769 5 222 10.5% Healthcare services 441 410 7.6% Other 1 2 Hospital Division: 2.7% increase in PPDs 7.3% increase in revenue/ppd 19% growth in NLB revenue (Mental Health, Acute Rehab, Renal Dialysis) HCS division: 16% growth in Occupational Health 11
Financial results Segmental review Mar Mar 2014 2013 % REVENUE 6 211 5 634 10.2% Hospital division 5 769 5 222 10.5% Healthcare services 410 7.6% 441 Other 2 1 Operating profit before amortisation, profit on 1 558 1 369 13.8% disposals and impairment of intangible assets Hospital division 1 222 15.2% 1 408 Healthcare services 97 83 16.9% Other 53 64 -17.2% 12
Cash generated vs normalised EBITDA R 000m 1.600 100% 90% 1.443 90% 83% 1.400 1 247 80% 73% 83% 1.200 81% 1.069 70% 1.003 1.000 60% 821 800 50% 40% 600 30% 2 233 2 562 3 042 3 414 400 20% 200 10% 0 0% 2010 2011 2012 2013 2014 Cash generated from operations Cash generated as % of normalised EBITDA 13
Summarised statement of financial position Assets Sept Mar Mar 2013 2013 2014 Re-stated Re-stated 8 212 8 350 7 884 Non-current assets 4 690 4 517 4 142 PPE 2 031 2 084 2 131 Intangibles 1 491 1 749 1 611 Other 1 618 1 323 1 402 Current assets (excl. cash) 298 297 247 Cash 10 128 9 970 9 533 Total assets Proceeds from the sale of our 49.3% in JMH: Payment of a special dividend – 100cps R300m being utilised for investment opportunities 14
Summarised statement of financial position Equity and liabilities Mar Sept Mar 2014 2013 2013 Total shareholders equity 5 650 5 607 5 090 Non-current liabilities 2 547 2 150 2 269 Interest bearing borrowings 2 036 1 657 1 797 Other non-current liabilities 511 493 472 Current liabilities 1 931 2 213 2 174 Total equity and liabilities 10 128 9 970 9 533 Net debt (as per covenants) 2 229 2 115 2 497 Net debt to normalised EBITDA (covenant 2.75 x) 0.62 0.63 0.81 Term debt 793 695 836 IFRS debt 647 667 655 Preference shares 820 820 820 Net cash on hand (31) (67) 186 15
Dividend % of Normalised Distributions Cents/share Rand EBITDA Cover* Interim 2012 45 R469 million 34.2% 1.47 Final 2012 60 R625 million 40.7% 1.34 Total 2012 105 R1 094 million 37.6% 1.39 Interim 2013 54 R563 million 36.4% 1.39 Final 2013 72 R750 million 42.1% 1.32 Total 2013 126 R1 313 million 39.4% 1.35 Special Dividend 100 R1 042 million Interim 2014 63 R657 million 37.7% 1.38 * Cover calculated on normalised EPS excluding amortisation 16
Five year review Interim dividends % Cents 37,7 90 2,00 40,0 82,7 36,4 34,2 1,80 80 35,0 71,3 1,60 70 27.7 62,3 30,0 1,40 24.4 60 51,1 63 25,0 1,20 50 54 1,00 20,0 37,6 40 1,77 1,78 45 0,80 15,0 1,47 1,39 1,38 30 0,60 31 10,0 20 0,40 23 5,0 10 0,20 0,00 0,0 0 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Cover % Ebitda Normalised EPS DPS Dividend cover: Normalised EPS CAGR: 1.38 times 21.8% % of EBITDA: Normalised DPS CAGR: 37.7% 28.7% 2014 Dividend numbers exclude the special dividend of 100 cps Normalised EPS excluding amortisation 17
International: Poland Scanmed Multimedis Acquisition Life Healthcare purchased 80.7% of Scanmed Multimedis Price per share: PLN4.18 per share R14.42 per share (3.45 exchange rate) Purchase multiple: 14 x Forward EBITDA Earnings impact: negligible for 2014 Revenue Split 2013 2012 PLZ M PLZ M 41% PC & Outpatient Revenue 94.9 84.0 Hospital 59% 18
Operational Review André Meyer CEO www.lifehealthcare.co.za
H1 2014 Highlights SA Growth: PPD Growth 2.7% New beds 142 Growth International Growth: Good revenue and EBITDA growth in MHC Acquisition of 80.7% of Scanmed Multimedis in Poland Occupancy 70.6% Efficiency Normalised EBITDA margin 28.0% Continued improvement in clinical outcomes Sustainability Programme to recruit specialised nurses from India 20
SA : Growth PPDs 1.100 CAGR: 4.1% 1.050 2.7% 1.000 1.5% 6.0% 950 PPDs 900 6.4% 850 800 2010 2011 2012 2013 2014 New beds only operational in February and March Benefited with the timing of the public holidays in March vs 2013 21
SA : Growth New beds - Brownfield New beds WIP Approved Applications New beds Category H1 2014 H2 2014 beds beds * pending Capacity expansion 120 93 210 595 142 at existing facilities * Approved : received Health department licence approval. In the process H1 2014 beds: of obtaining Municipal approvals before commencing building No of hospitals ICU/HC beds General beds No of beds 142 9 37 105 Timeframe: 38 beds were added in February 104 beds added in March Broad based growth to take advantage of areas with strong demand H2 2014 beds: No of hospitals ICU/HC beds General beds No of beds 120 8 45 75 22
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