PROVISIONAL SUMMARY AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Transcription

1 ADVANCED HEALTH LIMITED (Incorporated in the Republic of South Africa) (Registration number 2013/059246/06) ( the Company or Advanced Health ) ISIN Code: ZAE JSE Code: AVL PROVISIONAL SUMMARY AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014 HIGHLIGHTS Revenue is at R155.8 million EBITDA is at R31.8 million Operating profit is at R23.9 million Headline earnings at R7.7 million translating into diluted earnings per share of 6.44 cents COMMENTARY INTRODUCTION The Company is an investment holding company that provides short-procedures surgical facilities and services in day hospitals in South Africa and Australia. The Company s shares were listed on the Alternative Exchange ( AltX ) of the Johannesburg Stock Exchange Limited ( JSE ) on 25 April The Group delivered satisfactory trading results in its maiden year with profit performance that was materially in line with the prospectus. OVERVIEW In Australia, construction on the largest ophthalmic day hospital in the country has commenced. The six-theatre facility is scheduled for completion towards the end of Sundry negotiations with different role players within the day hospital environment are ongoing and, if successful, will provide Presmed Australia with an improved coverage of day hospitals in the greater Sydney area and the eastern sea board of New South Wales. These initiatives will provide the Australian subsidiaries with additional growth opportunities. The South African activities were focussed mainly on transactions to develop additional day hospitals through negotiations with like-minded partners, as outlined in the pre-listing prospectus. Subsequent to the listing of the shares, the Company entered into an agreement to develop five day hospitals, one in Gauteng and four in the Western Cape in addition to the Soweto facility which was being developed at the time of listing. Management is confident that, by the end of June 2016, the South African subsidiary will be in control of at least seven day hospitals compared to the current two operational units.

2 Five of these facilities are in an advanced stage of planning: the Soweto day hospital, completion is scheduled for the last quarter of 2015; the a day hospital in Durbanville, Western Cape, should be operational by July 2015; and three day hospitals, construction of which will start from January 2015 onwards. The board remains committed to achieving the Group s long-term objective to implement and continuously refine a strategy which is focussed on the achievement of the business goals. These include growing the Company s share in the short procedure day-surgery market to become the Group of choice in offering quality cost-effective healthcare to the benefit of patients, surgeons and medical funds. The board is committed to sound corporate governance, in line with the recommendations of King III Report on Corporate Governance in South Africa and the Australian Council on Healthcare Standards (ACHS) in Australia. Given the current size of the South African subsidiary and the maturity of the Australian subsidiary, the board will remain compact. FINANCIAL RESULTS COMMENTARY The Group s revenue is up by 23.5% to R155.8 million from the prior year. Approximately 95.3% of the revenue was generated in Australia and the balance in South Africa. In terms of IFRS 3 (International Financial Reporting Standards), only five months of the South African operations are reported on in these results. EBITDA amounted to R31.8 million (2013: R26.9 million) reflecting an increase of 17.7%. The Group posted headline earnings of R7.7 million (2013: R8.8 million) translating into headline earnings per share of 6.44 cents (2013: 9.83 cents) in line with the 6.09 cents forecasted in the prospectus. DIVIDEND DECLARATION No dividend is proposed or recommended. After a period of approximately three years, the Board of Directors will consider the payment of a maiden dividend. AUDIT OPINION The auditors, Mazars (Gauteng) Inc., have issued their unmodified opinion on the Group s annual financial statements for the year ended 30 June A copy of the auditor s report together with a copy of the audited financial statements is available for inspection at the Company s registered office. These summary audited consolidated financial statements have been derived from the Group s annual financial statements. The content of this announcement is extracted from audited information, although the announcement is not audited. The directors take full responsibility for the preparation of the provisional report and the financial information has been correctly extracted from the underlying annual financial statements. The auditor s report does not necessarily report on all the information contained in this announcement. Shareholders are therefore advised that, in order to obtain a full understanding of the nature of the auditor s engagement, they should obtain a copy of the auditor s report together with the accompanying financial information from the Company s registered office.

3 PROSPECTS The prospects for the Group remain positive. SUMMARY AUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION Audited Audited Year ended Year ended 30-June June-13 R 000 R 000 ASSETS Non-current assets Property, plant and equipment Goodwill Intangible assets Deferred taxation Current assets Inventories Trade and other receivables Other financial assets Cash and cash equivalents Total assets EQUITY AND LIABILITIES Capital and reserves Stated capital Foreign currency translation reserve Retained earnings Revaluation reserve Share-based payment reserve Non-controlling interest Total equity Non-current liabilities Other financial liabilities Finance lease obligations Provisions Deferred taxation Current liabilities Other financial liabilities Finance lease obligations Trade and other payables Provisions Operating lease liabilities Current tax payable Total equity and liabilities Notes to statement of financial position Total number of shares in issue ('000) Net asset value per share (cents)

4 Net tangible asset value per share (cents) SUMMARY AUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Audited Audited Year ended Year ended 30-June June-13 R 000 R 000 Revenue Cost of sales (77 842) (49 584) Gross profit EBITDA (earnings before interest, impairment, tax, depreciation and amortisation) Investment income Depreciation (7 449) (5 296) Amortisation of intangible assets (329) (108) Net finance costs (2 101) (3 669) Profit before taxation Taxation (7 851) (4 211) Profit for the year Other comprehensive income/ for the year, net of tax Total comprehensive income for the year Profit attributable to: Owners of the parent Non-controlling interest Total comprehensive income attributable to: Owners of the parent Non-controlling interest Earnings per share (cents) Diluted earnings per share (cents) Notes to the statement of comprehensive income Headline earnings for the year attributable to ordinary shareholders: Headline earnings per share (cents) Diluted headline earnings per share (cents) Total number of shares ( 000) Weighted average number of shares ( 000) Diluted weighted average number of shares ( 000) Reconciliation of headline earnings calculation: Earnings for the year attributable to ordinary shareholders Headline earnings for the year attributable to ordinary shareholders

5 SUMMARY AUDITED CONSOLIDATED STATEMENT OF CASH FLOW Audited Audited Year ended Year ended 30-June June-13 R 000 R 000 Net cash flows from operating activities Net cash flows from investing activities (7 305) (3 648) Net cash flows from financing activities (38 976) Net increase/(decrease) in cash and cash equivalents (20 110) Effect of translation of foreign operations (3 947) (2 897) Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year SUMMARY AUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Audited Audited Year ended Year ended 30-June June-13 R 000 R 000 Equity opening balance Profit for year Non-controlling interest Foreign Currency Translation Reserve Share issue for acquisition of subsidiaries Specific issue of shares General issue of shares Capital raising fees (3 237) - Share-based payment expense 3 - Dividend paid to non-controlling interest (2 166) (1 631) Change of interest in NCI Increase in NCI on reverse acquisition Equity closing balance BASIS OF PREPARATION The summary audited consolidated financial statements are prepared in accordance with the requirements of the JSE Limited, Listings Requirements for provisional reports, and the requirements of the Companies Act applicable to summary financial statements. The JSE Listings Requirements require provisional reports to be prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and the South African Institute of Chartered Accountants (SAICA) Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting. The accounting policies applied in the preparation of the summary consolidated financial statements from which the summary financial statements were derived are in terms of IFRS and are consistent with those accounting policies applied in the preparation of the previous consolidated annual financial statements, except as disclosed in the changes in accounting policies note.

6 The summary audited consolidated financial statements have been prepared under the supervision of CJPG Van Zyl CA (SA) in his capacity as Chief Financial Officer and are the full responsibility of the directors. The summary audited consolidated financial statements for the year were authorised for issue by the directors on 29 September CHANGES IN ACCOUNTING POLICIES The Group adopted the new, revised or amended accounting pronouncements as issued by the IASB, which were effective and applicable to the Group from 1 June 2013, none of which had any material impact on the Group's financial results for the year. IFRS 10 Consolidated Financial Statements The objective of IFRS 10 is to establish principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities. The Group has revised its accounting policies on the consolidation of subsidiaries and concluded that the adoption of IFRS 10 did not result in any material change in the consolidation of the Group. IFRS 13 Fair value measurement IFRS 13 aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRS. IFRS 13 was adopted and applied prospectively and it was assessed that the adoption did not result in any material impact on the financial results of the Group. STATED CAPITAL The issued stated capital of Advanced Health is shares amounting to R (2013: 3) being the legal entity listed on the JSE AltX. Shares 000 Shares issued to acquire subsidiaries Specific share issued for cash General issue of shares for cash Total

7 Reconciliation: Stated capital R 000 Equity Reserve* R 000 Total Issued capital R 000 Balance as at 1 July Shares issued to acquire subsidiaries (88 467) Specific share issue General issue of shares Capital raising fee (3 237) (3 237) Balance as at 30 June (88 467) * The equity reserve arose as a result of accounting for the reverse acquisition in terms of IFRS 3 Business Combination. This standard requires the share capital disclosed to be that of the legal parent or accounting subsidiary (being Advanced Health) whilst the net issued capital has to be that of the accounting acquirer or legal subsidiary (Presmed Australia) as adjusted for the number of equity instruments it would have had to issue to acquire the various accounting subsidiaries as determined when calculating the purchase consideration for the acquisition, and shares issued subsequent to the acquisition transactions. The following share issues were made from 1 January 2014 to 30 June 2014: On 27 January 2014 the company issued shares to Eenhede Konsultante and former minority shareholders in the various subsidiaries ahead of the listing for the acquisition of the subsidiaries; On 27 January 2014 the company issued shares to Arcay Moela Sponsors for services rendered in connection with the listing; On 28 February 2014 the company issued shares by means of a specific issue for cash as per the list below: Name: Number of shares Bradley Norman Elliot Bremer Investments (Pty) Ltd CJPG van ZYL Deborah Patricia Viljoen Jamie Teagan Hansen (Minor) Joanne Elliot Lene Trust Leon Abraham Viljoen PA &LR Laubscher Gesinstrust Presmedical Witbank (Pty) Ltd Sandra Comfort Solly Hyman Family Holdings (Pty) Ltd The Frans and Louise van Hoogstraten Family Trust The Savadier Family Trust Total Upon Listing Advanced Health on 25 April 2014 the company issued shares at R1.00 per share raising R from the offer.

8 Subsequent to year end the Company issued 10 million shares at R1.70 per share to acquire an interest in five companies. BUSINESS COMBINATIONS On 27 January 2014, the Group purchased 100% of emalahleni Day Hospital (Pty) Ltd and 100% of Medgate Day Clinic (Pty) Ltd by way of reverse listing of Advanced Health. The application of IFRS, in particular IFRS 3 Business Combinations, results in Presmed Australia (Pty) Ltd (the legal acquiree) being recognised as the acquirer for accounting purposes, and in the transaction being accounted for as reverse acquisition. Accordingly, the consolidated annual financial statements prepared following the reverse acquisition are issued in the name of Advanced Health (the legal parent and accounting acquiree), but are prepared as a continuation of the financial statements of Presmed Australia (Pty) Ltd (the legal subsidiary and accounting acquirer), with one adjustment, which is the retroactive adjustment of Presmed Australia (Pty) Ltd s legal capital to reflect Advanced Health Limited's legal capital. The comparative financial information presented in the consolidated annual financial statements has also been retrospectively adjusted to reflect Advanced Health s legal capital. % Held 2014 R'000 emalahleni Day Hospital Medgate Day Clinic The controlling shareholders before and after the restructure have not changed The following Advanced Health shares have been issued for the acquisition of the above subsidiaries: shares were issued to the emalahleni Day Hospital Vendors on 27 January 2014 at R1.00 per share shares were issued to the Medgate Day Clinic Vendors on 27 January 2014 at R1.00 per share The Company s core business is providing short-procedures surgical facilities and services in day hospitals. The acquisition is consistent with the Company s growth strategy. In the five months to 30 June 2014, emalahleni Day Hospital (Pty) Ltd contributed revenue of R and a loss of R to the Group's results and Medgate Day Clinic (Pty) Ltd contributed revenue of R , and a loss of R to the Group's results. If the acquisition had occurred on 1 July 2013, management estimates that Medgate Day Clinic (Pty) Ltd and emalahleni Day Hospital (Pty) Ltd would have contributed R revenue to the Group. In determining these amounts management assumed that the fair value adjustments, determined provisionally, that arose on acquisition date would have been the same if the acquisition had occurred on 1 July 2013.

9 Fair value of assets acquired and liabilities assumed: emalahleni Day Hospital (Pty) Ltd Medgate Day Clinic (Pty) Ltd Recognised values on acquisition R 000 R 000 R 000 Property, plant & equipment Inventories Trade & other receivables Cash & cash equivalents Borrowings (21) (4 365) (4 386) Trade and other payables (494) (549) (1 043) Deferred tax (585) Net identifiable assets and liabilities ,993 Intangible assets identified Deferred taxation on intangible assets (2 214) Goodwill on acquisition Non-controlling interest (2 233) Total net consideration Consideration settled in shares Cash acquired 670 Net cash inflow 670 The consideration transferred of R has been determined based on the number of shares Presmed Australia would have had to issue in order to give the owners of Advanced Health the same percentage equity interest in the combined entity that results from the reverse acquisition. The value (determined using a discounted cash flow model based on estimated future cash flow) of each business subject to this transaction was determined by an independent valuer appointed by management, and the values contained in his report were used for the purposes of these pro formas without adjustment. These values were used to determine the fair value per share for the shares exchanged in the reverse acquisition and ultimately to calculate the purchase consideration transferred to acquire emalahleni Day Hospital (Pty) Ltd and Medgate Day Clinic (Pty) Ltd. Based on the assessment, intangible assets relating to the customer base and specific service level contracts were identified. The acquired assets and assumed liabilities have been valued at their estimated fair values at the acquisition date. The goodwill is mainly attributable to the skills and technical talent of the Medgate Day Clinic (Pty) Ltd and emalahleni Day Hospital (Pty) Ltd work force, and the synergies expected to be achieved from integrating Medgate Day Clinic (Pty) Ltd and emalahleni Day Hospital (Pty) Ltd into the Group s existing business. The carrying amount of trade and other receivables estimate their fair value and there are no contractual accounts receivable acquired.

10 SEGMENTAL REPORTING Geographical Information The group operates in two main areas: South Africa South Africa Australia Australia Total Total R 000 R 000 R 000 R 000 R 000 R 000 External revenue Intersegmental revenue Profit / (loss) for the year (2 618) Segment assets Segment liabilities The revenue from external parties and all other items of income, expenses, profits and losses reported in the segment report are measured in a manner consistent with that in the statement of comprehensive income. COMPARISON WITH PROFIT FORECAST In accordance with the JSE Listings Requirements, Advanced Health has set out a comparison between the profit forecast as contained in the Company s prospectus dated 31 March 2014 and the audited report for the year ended 30 June 2014 below: Audited Year ended 30-June-14 Forecast 30-June-2014 R 000 R 000 Revenue Cost of sales (77 842) (72 724) Gross profit Other income - 1 Operating expenses (53 969) (59 882) Operating profit/(loss) Investment revenue Finance cost (2 101) (1 988) Profit before taxation Taxation (7 851) (5 497) Profit after taxation Other comprehensive income for the year

11 Total comprehensive income for the year Profit attributable to: Equity holders of parent Non-controlling interest Total comprehensive income attributable to: Owners of parent Non-controlling interest Earnings per share - Basic (cents per share) Diluted (cents per share) Weighted average number of shares Diluted weighted average number of shares EXCHANGE RATES The following exchange rates were used in foreign interest and foreign transactions during the periods: Rand/Australian Dollar Prospectus Closing Rate Average Rate RELATED PARTIES During the year, certain subsidiaries, in the ordinary course of business, entered into loans and transactions with related parties under terms that are no less favourable than those arranged with third parties. CORPORATE INFORMATION Advanced Health Limited Registered Address (Incorporated in the Republic of South Africa) Ground Floor One Health Building Registration number: 2013/059246/06 Woodmead North Office Park ISIN: ZAE JSE Code: AVL Woodmead, 2157 PO Box 1476, Silverton, 0127 Transfer Secretaries: Trifecta Capital Services (Proprietary) Limited Designated Advisor: Arcay Moela Sponsors (Proprietary) Limited trading as Arbor Capital Sponsors Directors: Executive directors CA Grillenberger (Chief Executive Officer) CJPG van Zyl (Chief Financial Officer) MC Resnik# (Chief Operational Officer Australia)

12 NON-EXECUTIVE DIRECTORS PJ Jaffe# FA van Hoogstraten (Chairman) WT Mthembu YJ Visser (alternate) J Oelofse # Australian Company Secretary: M Janse van Rensburg Auditors: Mazars (Gauteng) Inc. ANNUAL GENERAL MEETING Audited results were finalised and approved on 29 September 2014 and the annual report will be posted to shareholders in due course. The date of the Annual General Meeting is 27 November By order of the board Woodmead 29 September 2014 Designated Advisor Arcay Moela Sponsors (Pty) Ltd t/a Arbor Capital Sponsors Auditor and Reporting Accountants Mazars (Gauteng) Inc.