Who we are and what we offer to investors

Transcription

1 Investor Presentation September 2017

2 Who we are and what we offer to investors 2

3 We are headquartered in Ankara, where we are also the leading private care provider 3

4 We are a member of External Quality Control Programs administered by BIO-RAD LABS (United States) and RANDOX LABS (United Kingdom) 4

5 Our hospitals and medical centers in Turkey and Iraq Ankara Etlik Ankara Sincan Ankara Demet Ankara Akay Facility Hospital Current capacity 35 beds Planned capacity 100 beds Facility Hospital Current capacity 210 beds Planned capacity 220 beds Facility Policlinic Current capacity 10 beds Planned capacity 10 beds Facility Hospital Current capacity 121 beds Planned capacity 140 beds Van Van Hayat Erbil, Iraq Facility Hospital Current capacity 65 beds Planned capacity 75 beds Facility Hospital Current capacity 218 beds Planned capacity 235 beds Facility Imaging Centre Current capacity 5 beds Planned capacity 5 beds

6 Investments update Room upgrades in Akay near completion. The construction in Etlik has commenced. Demet now has a dental clinic. Akay Work is near completion to upgrade technology, infrastructure and service quality Demet The roll-out is nearing end with new dental clinics now up and running. We expect acceleration in admissions. Etlik Long Term The construction to build the facility adjacent to our existing facility, which should nearly treble the capacity, has commenced in September, in line with budget. We will continue working towards our objective to improve brand awareness and invest in underserved cities with promising growth prospects of Anatolia. 6

7 Investments and margin progression Gross, EBITDAR and EBITDA (%) 7

8 Investments and leverage progression Net debt to EBITDA Below-trend pickup in leverage post Akay and Demet 8

9 Investments and leverage progression Net debt to EBITDAR 9

10 Earnings update Earnings per share (TL) 10

11 Sales by quarter Akay has boosted sales the run rate of revenues is approaching TL70M a quarter mark TL in millions 11

12 Healthcare sales by location Ankara 39% 1Q16 Ankara 38% 2Q16 Etlik 20% Erbil 1% Van Hayat 7% Van 33% Etlik 20% Erbil 1% Van Hayat 8% Van 33% TL41.8M TL39.5M Etlik 14% Ankara 31% Demet 1% Akay 22% Van 25% Van Hayat 7% Erbil 0% 1Q17 Ankara 27% Etlik 12% Demet 2% Van 25% Akay 24% 2Q17 Van Hayat 8% Erbil 2% TL58.3M TL55.0M 12

13 Income statement summary 1H17 2Q17 1Q Q16 9M16 3Q16 1H16 2Q16 1Q16 Income statement summary (TLm) Sales Of which healthcare Cos t of s a l es Of which healthcare Cash gross income Of which healthcare OPEX EBITDA Of which healthcare Depreci a tion wri te off Net other i ncome EBIT Of which healthcare Net i nteres t EBT Ta xes a nd tax credi ts Net income Mi nori ties Income available for shareholders

14 Balance sheet summary Capital ratios and leverage metrics looking healthy. Net debt to EBITDA reads 2.6x and net debt to equity is 0.87x TL in millions 1H17 2Q17 1Q Q16 9M16 3Q16 1H16 2Q16 1Q16 Book and market equity (TLm) Book value of equity Net debt Market value of equity Minorities Enterpris e value Leverage and capital Net debt to s ales (x) Net debt to EBITDA (x) Net debt to equity (x) EV to s ales (x) EV to EBITDA (x)

15 Average Revenue Per Admission (TL) Blended ARPA strong in 2Q and trending up driven by growing share of PMI and cash in total sales

16 Sales and EBITDA margin Temporary contraction in EBITDA margin in the aftermath of acquisitions and upgrades 16

17 EBITDA margin plotted against the share of state medical insurance in total sales 17

18 Staff cost margin (%) Staff cost margin below 50% mark and should remain between 45% and 50% throughout

19 Staff cost margin plotted against total cost 19

20 Cost of supplies and total cost 20

21 2017 guidance - unchanged 2017 will be the first full year of our investments in Akay and Demet. We project 20-23% sales growth with % EBITDA margin Sales EBITDA TL million in consolidated revenues, up from TL195 million in 2016, consistent with 20-23% growth year on year TL million in EBITDA, up from TL27 million in 2016, consistent with 21-26% growth on the year Margin % in 2017 EBITDA margin versus 14% in We expect to reach 15% mark in 2018 DIV We do not foresee any change in our dividend policy 2017/

22 Lokman shares are quoted on Borsa Istanbul 22

23 Efficiency metrics in context Breakdown of sales by hospital Sales and EBITDA by physician (TL 000) Sales and EBITDA by treatment (TL) Sales and EBITDA by bed (TL 000) 23

24 Annual income statement highlights Lokman Hekim Engurusag Saglik financials and forecasts A 1 Sales Healthcare services Ankara Etlik Ankara Sincan Van Van Hayat Arbil Akay Demet Other sales Sales by payer 12 Social Security (SGK) SGK as pct of total sales Other Total Sales by treatment 17 Inpatient As percent of total (%) Outpatient Total Cash COGS Gross income Cash Opex EBITDA Depreciation EBIT Net interest Other income EBT Period tax Deferred taxes Net income Minorities Net income after minorities Dividends paid out Retained earnings

25 Share capital 24 million shares 25

26 Annual sales by location TL in millions 26

27 Longer- term objectives Our long term EBITDA margin objective is 15%. We intend to accomplish this target without compromising on service quality and brand name by 1 Turning regional cost differentials to our advantage Raising gradually the contribution of higher margin PMI business to our sales Improving pricing power with suppliers by taking advantage of economies of scale as we acquire and grow business Using our experience gathered in underpenetrated regions of the country to position in Central and Eastern Anatolia 27

28 Targeting underpenetrated cities in Turkey Cities underserved by healthcare providers Lowest 10 by private healthcare Lowest 10 by healthcare in total Number of private hospital beds per 10,000 Number of total hospital beds per 10,000 Sources: Turkish Ministry of Health, Industry reports, and Lokman Hekim Sources: Turkish Ministry of Health, Industry reports, and Lokman Hekim Sources: Turkish Ministry of Health, Industry reports, and Lokman Hekim 28

29 and cities with favourable demographics Young, old or fast The youngest 10 The oldest 10 Fastest growing Average age by major city as at 2014* Population growth from 2015 to 2023* (*) Turkish Statistics Institute (*) Official projections Sources: Turkish Ministry of Health, Industry reports, and Lokman Hekim 29

30 Turkey attractive healthcare demographics Healthcare spending as percent of GDP Obesity prevalence Percentage of population over Diabetes prevalence Turkey World Sources: WHO, Industry reports, and Lokman Hekim estimates 30

31 Turkish healthcare growth set to outperform The sector in context sales CAGR (%) Sources: WHO, Industry reports, and Lokman Hekim estimates Growth in Turkish healthcare sector is projected to outperform the world average significantly with a 3YR view 31

32 Turkish healthcare industry data Doctors, dentists and nurses per 100K population Number of hospitals consolidation ahead? FDI to Turkish healthcare sector (USD m) Healthcare tourists in Turkey ( 000) Sources: WHO, Industry reports, and Lokman Hekim estimates Sources: WHO, Industry reports, and Lokman Hekim estimates 32

33 Turkish healthcare providers Breakdown of hospitals by ownership and geography State v private (%) Geographical breakdown of private hospitals Total hospital count as at 2014: 1,493 Private hospital count as at 2014: 550 Sources: Turkish Ministry of Health, Industry reports, and Lokman Hekim 33

34 Turkish healthcare general v speciality Breakdown of hospital beds by speciality General v speciality (%) Breakdown of speciality (%) Total bed count as at 2014: 200.0K Speciality bed count as at 2014: 23.1K Sources: Turkish Ministry of Health, Industry reports, and Lokman Hekim 34

35 Turkish healthcare in context Who pays for healthcare Healthcare spending by payer across OECD (%) Sources: WHO, Industry reports, and Lokman Hekim estimates 35

36 Comps Lokman v Al Noor* Lokman Hekim Breakdown of revenues Al Noor Hospitals Breakdown of revenues Staff cost 50% Medicine and supplies 25% Staff cost 34% Medicine and supplies 21% Rent 4% Other cash cost 19% EBITDA 12% Other cash cost 9% Rent 4% EBITDA 22% Capacity investments and margins 100 Lokman Hekim Breakdown of cash cost 100 Al Noor Hospitals Breakdown of cash cost Any margin uplift depends more on revenues than cost. Better product mix and pricing are all the more important for the purposes of margins. Our EBITDA margins have been more volatile since 2012 because of our acquisitions and investments in value-added bed capacity. As capacity usage as well as value added services grow, we expect margins to widen. Lokman Hekim can and should earn EBITDA margins above 15% mark for the foreseeable future Staff cost Medicine and supplies Rent Other cash cost Staff cost Medicine and supplies Rent Other cash cost *Sources: Company reports, Al Noor numbers exclude Mediclinic 36

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38 Legal Notice This document contains " prospective statements". Except for retroactive information, all statements including but not limited to the statements about group s operations, financial position and business strategies may contain prospective statements. In addition, prospective statements may be specified with prospective terms like "possibly", "inevitable", "expecting", "aim", "plan", "foresee", "estimate", "believe" ve "continue" in general. Though the company believes that the expectations specified in prospective statements are reasonable as of today s expectations, it does not guarantee that these expectations will be realized. Due to this uncertainty, our readers should not take action based on the prospective statements in question. These cautionary explanations will be applied as a whole for all written or oral statements that may be stated by us from now on. Lokman Hekim Group Consolidated Financial Statements can be reached from the following website