Year End Results Presentation For 12 months ended 30 September 2013 - PDF document

Year End Results Presentation For 12 months ended 30 September 2013 www.lifehealthcare.co.za

Agenda Group Group p Financial Financial Future Future Review Review Review Review Guidance Guidance Michael Flemming Michael Flemming Pieter van der Westhuizen Pieter van der Westhuizen Michael Flemming Michael Flemming CEO CFO CEO 2

Highlights • SA growth: – PPD volume growth PPD l h 2 7% 2.7% Growth – Additional beds 95 – Good pipeline of beds for next 3 years • Occupancy 71.7% Efficiency • Normalised Ebitda margin 28.1% • Group DSO 31 days • Continued improvement in clinical outcomes Sustainability • Focus on training of specialised nurses and doctors • Reduction in carbon footprint 3

SA : Growth PPDs 2 200 PPDs 3 8% PPD 3.8% PPD 2 100 2 100 growth in H2 2.7% 2 000 6.1% 1 900 5 4% 5.4% 1 800 2.5% 4.0% 1 700 1 600 1 600 1 500 1 400 2008 2009 2010 2011 2012 2013 Bed 101 148 475 234 292 95 growth growth 4

SA : Growth Beds New beds WIP Approved Applications Category 2013 beds beds * pending Capacity expansion at 75 231 374 364 existing facilities New facilities - 94 150 338 * Approved : received Health department licence approval and are in the process of obtaining Municipal approvals before commencing building  Acute Hospitals  Broad based growth to take advantage of areas with strong demand B d b d th t t k d t f ith t d d  94 bed Life Hilton Private hospital under construction 5

SA : Growth Beds New beds WIP Approved Applications Category 2013 beds beds * pending Capacity expansion at 75 231 374 364 existing facilities New facilities - 94 150 338 NLB - Mental Health / 20 20 - 35 35 432 432 Acute Rehabilitation * Approved : received Health department licence approval and are in the process of obtaining Municipal approvals b f before commencing building i b ildi  New Lines of Business  20 Mental health beds added in 2013  Start construction of 35 bed mental health unit at Life Vincent Pallotti in early 2014  Current total of 703 NLB beds  Aim to reach 1,000 NLB beds in 3 years 6

SA : Growth Beds New beds WIP Approved Applications Category 2013 beds beds * pending Capacity expansion at 75 231 374 364 existing facilities New facilities - 94 150 338 Mental Health / 20 20 - 35 35 432 432 Acute Rehabilitation Total 95 325 559 1 134  Strong overall pipeline of beds  Good combination of brownfield, greenfield and mental health / acute rehabilitation  Cover 8 regions within SA 7

SA : Growth Other  Renal Dialysis  chronic stations added : chronic stations added : 42 stations 42 stations  total number of stations : 122 stations  Complete roll-out in 2014: to 180 stations  Acute renal dialysis coverage expanding  NLB (mental health, acute rehabilitation, renal dialysis) revenue growth R’000m 500 444 450 CAGR : 37.2% 400 361 350 350 300 250 216 172 200 150 150 100 50 NLB Revenue 0 2010 2011 2012 2013 8

SA : Growth Other  Oncology  A new Oncology unit at Life Vincent Pallotti gy providing both chemotherapy & radiosurgery  Radiosurgery will be supplied through the new R46m Novalis Radiosurgery machine g y which provides non-invasive shaped beam radiosurgery  Only machine in Africa  The chemotherapy unit opened in 2013 and the radiosurgery unit will open in Q1 2014  Affordable Maternity Product Affordable Maternity Product  Started piloting the affordable maternity product  Over 50 women enrolled O 50 ll d  Considering extending the pilot to 2 additional facilities 9

SA : Growth Healthcare Services  Healthcare Services  Life Esidimeni  stable performance  Renewal of Conradie (WC) : 220 beds and Shiluvana Care Centre (Limpopo) : 160 beds (potential to add 40 paediatric beds)  Life Occupational Health  Continued strong growth in a difficult environment 831.0 800 748.0 R’000m 674.0 636.0 CAGR : 9,3% 600 400 200 200 HCS Revenue 0 2010 2010 2011 2011 2012 2012 2013 2013 10

India : Max Healthcare Bed Growth Operational Operational Bed Bed beds beds beds beds Unit Capacity Sept 2013 Sept 2012 Existing Hospitals 1 080 1 040 1 014 New Hospitals: Shalimar Bagh 288 150 78 Mohali 204 141 95 Bathinda 205 56 83 Dehradun 201 89 48 Total new 898 436 304 Combined total C bi d t t l 1 943 1 943 1 476 1 476 1 318 1,318 467 beds still to become operational p 11

India : Max Healthcare Occupancy Operational Operational Occupancy Occupancy Occupancy Bed Bed beds beds beds beds at at Unit Capacity Sept 2013 Sept 2012 Q2 2014 30 Sept 2013 Existing Hospitals 1 080 1 040 1 014 79.1% 85% New Hospitals: Shalimar Bagh 288 150 78 84.2% 100% Mohali 204 141 95 72.8% 80% Bathinda 205 56 83 56.6% 55% Dehradun 201 89 48 73.8% 73% Total new 898 436 304 74.7% 82% C Combined total bi d t t l 1 943 1 943 1 476 1 476 1,318 1 318 77.8% 77 8% 84% 84% 12

SA : Efficiency Ebitda Margin  Case mix change: positive margin impact  Strong management of consumables procurement g g p  Continued management of overheads and administrative costs 30 % 28.1% 28 28 26.6% 26.0% 26 24.7% 24 22 20 2010 2011 2012 2013 13

SA : Efficiency Case Mix Impact Incidence of Chronic Diseases of Lifestyle Amongst LHC Admissions 6% Asthma Asthma Coronary Artery Disease 5% Diabetes Mellitus Type 2 Hyperlipidaemia 4% 4% Diabetes Mellitus Type 1 Cardiac Failure 3% Epilepsy Hypothyroidism H poth roidism 2% Dysrhytmias Chronic Obstructive Pulmonary Disease Chronic Renal Disease 1% 1% Rheumatoid Arthritis HIV 0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012  The overall incidence of chronic diseases of lifestyle (CDL) amongst patients admitted to LHC facilities has doubled from 16% in 2003 to 33% in 2012 14

SA : Efficiency Effective use of assets 71.7 72 71.2 % H2 occupancy: 71.0 74.3% 74.3% 69.5 70 68 66 64 2010 2011 2012 2013 2012: Bed Occupancy Split 2013: Bed Occupancy Split 9 13 13 21 21 < 60% 24 24 60 - 69% 27 24 70 - 79% 80%+ 80% 42 42 40 40 Beds above 70% occupancy: 63% Beds above 70% occupancy: 64% 15

Efficiency Administrative - Working capital management 60  Consistent good performance in working 55 capital management 54 54 55 51  DSO 49 49 50  Total DSO: 31 days (2012: 30) 45  Hospital DSO: 29 days (2012: 29 days) 40 36  Hospital DSO excluding COID: 34 34 33 25 days (2012: 25 days) 35 31 31 30  Stock cover 30  Rigorous processes in place to ensure 25.8 Rigorous processes in place to ensure 25.5 24.6 24 6 24.3 24.3 23.7 continuity of supply 25 20 2008 008 2009 009 2010 0 0 2011 0 2012 0 2013 0 3 Stock cover DSO Days payables outstanding 16

SA : Efficiency Programs %  Cost of sales management 17.3 20  Cost of Sales inflation: 2.2% Cost of Sales inflation: 2.2% 15 Rand depreciation Rand depreciation 10 5.9  Strong procurement performance CPI 2.2 5 LHC COS Inflation  Product utilisation 0 Rand CPI LHC COS depreciation Inflation  Pathology - Blood Gas tests in ICU  Completing roll out of the in-house delivery of blood gas pathology tests in ICUs  Financial benefits shared with medical schemes Fi i l b fit h d ith di l h  Positive contribution to Ebitda in 2014  Central Laundry Central Laundry  Opened in-house laundry for the Inland region, covering 28 hospitals (4 100 beds)  Centralised credit services  Centralisation of Inland Credit services bringing operational efficiencies and cost savings 17

SA : Efficiency Programs  Systems driven efficiency through Impilo  Focus on driving standardisation reduction in administrative costs & economies Focus on driving standardisation, reduction in administrative costs & economies of scale  Completion and rollout of the e-dispensing module using bar coding technology  e-theatre billing module will be ready for piloting at the end of the 2013. Using multi-touch technology the hospitals will benefit from a paperless real time billing process  Environment  Implementing Environmental Management system – objective of obtaining an ISO 14001 environmental certification  Energy efficiency projects  Energy efficiency projects  A real-time, online electrical metering system has been installed  Converting existing geysers and gas-fired boilers to more efficient heat pump hot water generation systems. A reduction of over 3 million kg of CO 2 emissions to date ti t A d ti f 3 illi k f CO i i t d t  Life Hilton Private Hospital will be the first greenfield hospital within Life Healthcare to be designed according to the new specifications - anticipate the hospital being 20% more efficient 18