Group Results and Cash Dividend Declaration Unaudited Group results for the six month period ended 31 March 2015

Transcription

1 Group Results and Cash Dividend Declaration Unaudited Group results for the six month period ended 31 March 2015

2 Operational review André Meyer CEO 2

3 Highlights Group SA: 3.5% PPD growth 90 additional beds ±450 additional beds planned over next 18 months EBITDA margins stable at 28% Continued improvement in clinical quality metrics Good progress implementing energy saving initiatives International: India: Increase in shareholding to 46.25% Strong revenue growth and continued improvement in EBITDA margins Additional 78 active beds Poland: Acquisitions of Sport Klinika and KKA Good revenue and EBITDA growth Business integration on track 3

4 Highlights Group Revenue +14.1% to R7 089m Normalised EBITDA +10.8% to R1 926m Normalised EPS from continued operations excluding funding +10.4% to 88.9 cents Dividend +7.9% to 68 cps 4

5 SA: Growth PPDs PPDs (000) % % 2.7% H1 bed growth FY bed growth est 5

6 SA: Growth Acute bed growth 2015 Category H H Total 2015 Capacity expansion at existing facilities New facilities Acquisition Total Life Entabeni Life Mt Edgecombe Life Peglerae Life Eugene Marais Life Roseacres Life Robinson Life Westville Life Kingsbury Life Peglerae Life Springs Parklands Life Hilton Life Genesis 6

7 SA: Growth Complementary growth 2015 Category H H Total 2015 Mental Health Acute Rehabilitation Renal stations Oncology units 1 unit 1 unit Life Mercantile Life St James Life Carstenhof Life Brenthurst Life Midmed Life Knysna Life LCM Life Wilgeheuwel Life Gaborone Life Hilton Life Bayview Life Empangeni Life Vincent Pallotti: Mental Health Life Vincent Pallotti: Oncology 7

8 SA: Growth Group business pipeline Category Total 2015 Forecast 2016 Approved beds* Applications pending Capacity expansion at existing acute facilities New acute facilities Acquisition Mental Health Acute Rehabilitation Total Renal stations Oncology units 1 unit 1 unit - Life Bayview Life St Mary s Life Kingsbury Life Crompton Life Mt Edgecombe Life Midmed Life Vincent Pallotti Life Carstenhof 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 8

9 SA: Efficiency Effective use of assets Group occupancy 72% 70% ICU occupancy: 75.3% ICU occupancy: 74.8% 68% 66% 64% 69,0% 70,6% 70,7% Bed growth H1 2013: Bed occupancy split 2015: Bed occupancy split 16% 16% <60% 13% 12% 30% Beds 70%+ occupancy 46% 38% 60-69% 70-79% 80%+ 44% Beds 70%+ occupancy 57% 32% 9

10 SA: Efficiency Effective use of assets Occupancy split between Acute and Complementary * ,9 70,2 69,0 70,1 74,9 70,6 70,3 74,8 70, Bed growth Acute occupancy Complementary occupancy Group occupancy * Complementary business includes Mental Health and Acute Rehabilitation in the occupancy calculation 10

11 SA: Efficiency H1 Normalised EBITDA margin 30% 28% 26% 24% 22% 20% 27,4% 28,0% 28,0% Good management of costs in a difficult environment Pressure from the weakening Rand, salaries and overhead costs Continued focus on driving efficiencies offset increased costs 11

12 SA: Quality Measuring clinical outcomes Outcome 31 Mar Mar 2014 Standard Patient incident rate Per PPDs HAI (Healthcare Associated Infection) Per PPDs VAP (Ventilator Associated Pneumonias) Per VAP days SSI (Surgical Site Infections) Per theatre cases CLABSI (Central Line Associated Blood Stream Infections) Per central line days CAUTI (Catheter-related Urinary Tract Infections) Per catheter days FIM/FAM score >0.9 MHQ14 efficiency (average gain/ppd) > VAP SSI CLABSI CAUTI Patient incident rate

13 SA: Sustainability Competition Commission (CC) Healthcare Market Inquiry Made a detailed submission on the subject matter of the Inquiry Submitted a further response to the public submissions as requested by the Panel focusing on the following key themes: Market power / medical scheme bargaining power Profitability Pricing & Price regulation Hospital formularies Quality Regulations Next steps: The CC has requested further information The scheduled public hearings have been delayed until the CC has reviewed all the data CC due to publish a new timetable 13

14 SA: Sustainability Environmental management system Environmental Certification: on track to obtain an ISO 14001:2004 environmental certification in 2016 Load shedding has had limited operational impact as hospitals have necessary back-up facilities Energy saving initiatives: Solar: Life Anncron Clinic: largest hospital solar project in Africa with over solar panels. Generate MWh/annum of solar electricity with an estimated saving of R1million/annum. Considering expansion to 10 further hospitals Heat Pumps: Converted 33 acute hospitals and 9 Life Esidimeni sites - annual saving of 7.7GWh (approx R8 million). A further 12 sites have been identified for conversion in 2015 Life Hilton Private Hospital: designed according to our green design policy - target of being 20% more efficient 14

15 International: India MHC India Strong economic growth outlook Fast growing private healthcare market driven by: Growing middle class Increasing disease burden Limited public sector provision Fragmented and under-developed private hospital market represents an excellent growth opportunity MHC Shareholding equalisation: In November completed the MHC shareholding equalisation Increased shareholding to 46.25% from 26% for R1.34bn Joint control with Max India Concluded through a 50% primary issue of new MHC shares and a 50% secondary acquisition of MHC shares held by Max India. H1 2015: Good revenue growth Consistent improvement in EBITDA (margin improved to 10.3% from 8.3% in March 2014) Transformation office is managing key operational improvement projects 15

16 International: India MHC bed growth Bed capacity Operational beds 31 Mar 2015 Operational beds 30 Sep 2014 Operational beds 31 Mar 2014 Phase 1 hospitals Phase 2 hospitals Shalimar Bagh Mohali Bathinda Dehradun Total Phase Combined total Consistent bed growth 16

17 International: India MHC occupancy Bed capacity Operational beds 31 Mar 2015 Occupancy 31 Mar 2015 Operational beds 31 Mar 2014 Occupancy 31 Mar 2014 Phase 1 hospitals % % Phase 2 hospitals Shalimar Bagh % % Mohali % % Bathinda % 59 57% Dehradun % % Total Phase % % Combined total % % Consistent occupancies 17

18 International: Poland Scanmed growth Poland: Fastest growing economy in Europe Strong National Health system funding private sector delivery Fragmented private hospital market providing a consolidation opportunity Good long-term private sector growth Strategy to build an integrated countrywide network of healthcare facilities Completed two acquisitions: Sport Klinika: 46 bed orthopaedic clinic Kardiologii Kliniki Allenort (KKA): 6 in-patient cardiology centres with 83 beds Business benefiting from the fast oncology therapy regulations: 70% increase in oncology patients Currently reviewing further acquisition opportunities 18

19 International: Poland Scanmed growth Scanmed business: Outpatient services: Primary Healthcare: registered people Profitable structure of registered PHC population groups with low medical loss ratio Medical centres: 29 centres in 15 locations Facilities with treatment rooms, including» Rehabilitation, dentistry, psychiatry and diagnostic services Inpatient services: St. Raphael Hospital: 135 beds Weiss Clinic: 22 beds Gastromed: 8 beds Sport Klinika: 46 beds KKA: 83 beds and 6 in-patient cardiac facilities 19

20 International: Poland Scanmed integration Good integration progress made covering key business functions Weiss Gastromed Sport Klinika KKA IT System Finance and Accounting Personnel and Payroll Organisation and Communication Occupational Health and Safety Sales and Marketing HR Epidemiology Sterilisation Drug Management Infrastructure Management Medical Procurement 20

21 Financial review Pieter van der Westhuizen CFO 21

22 Highlights Normalised EBITDA +10.8% to R1 926m Normalised EPS from southern Africa continued operations +9.8% to 89.2 cents Headline earnings per share -2.9% to 80.3 cents Dividend +7.9% to 68.0 cents Increase in investments in India and Poland R1.9 billion India and Poland improved EBITDA margins 22

23 Financial results Group 31 Mar 2015 R m 31 Mar 2014 R m % Change Revenue Southern Africa continued Southern Africa discontinued - 58 Poland Normalised EBITDA Southern Africa continued Southern Africa discontinued - 10 Poland 42 - Normalised EBITDA margin 27.2% 28.0% Southern Africa continued 28.0% 28.1% Southern Africa discontinued % Poland 11.8% - Polish EBITDA margin 2014: 9.1% 23

24 Financial results Group 31 Mar 2015 R m 31 Mar 2014 R m % Change Revenue Normalised EBITDA Normalised EBITDA margin 27.2% 28.0% Operating profit: (33.8) Southern Africa continued Southern Africa discontinued - 9 Poland 18 - Transaction costs on international acquisitions (11) - Once-off

25 Financial results Group 31 Mar 2015 R m 31 Mar 2014 R m % Change Revenue Normalised EBITDA Normalised EBITDA margin 27.2% 28.0% Operating profit (33.8) Associates and joint ventures: 2 37 (94.6) JMH - 41 MHC (1) (7) Other 3 3 JMH sold February 2014 Max 46.25% (2014: 26%) 25

26 Financial results Group 31 Mar 2015 R m 31 Mar 2014 R m % Change Revenue Normalised EBITDA Normalised EBITDA margin 27.2% 28.0% Operating profit (33.8) Associates and joint ventures 2 37 (94.6) Attributable earnings: (52.2) Southern Africa continued Southern Africa discontinued - 48 Profit on disposals International (3) (7) Transaction costs on international acquisitions (11) - Currency translation differences 42 1 Funding costs for international acquisitions (90) (25) 26

27 Financial results Group segmental review 31 Mar 2015 R m 31 Mar 2014 R m % Change Revenue Southern Africa Hospital division Healthcare services (5.4) Other - 1 International Hospitals Operating profit before amortisation, profit/loss on disposals, impairment of intangible assets, transaction costs and surpluses on retirement benefits Southern Africa Hospital division Healthcare services (21.6) Other International Hospitals 18 - Matikwana Hospital: Revenue contributed in 2014 is R55m 27

28 Financial results Southern Africa: segmental revenue 31 Mar 2015 R m 31 Mar 2014 R m % Change Revenue Southern Africa Southern Africa Hospital division Healthcare services continued Healthcare services discontinued - 55 Other - 1 Hospital division: PPD growth: +3.5% Revenue/ppd: +6.2% Tariff impact: +6.3% Case mix: -0.1% Complementary revenue growth: +16.0% 28

29 Financial results Southern Africa: segmental balance sheet 31 Mar 2015 R m 31 Mar 2014 R m 30 Sep 2014 R m Assets Southern Africa International Total Net debt Southern Africa International Total % of book value now in international assets 29

30 Five year review Southern Africa: continued Revenue* (R m) Normalised EBITDA (R m) CAGR 9.3% CAGR 13.0% Hospital HCS NLB Full year numbers Consistent growth in revenue Group benefits from faster growth in NLB Continued improvement in efficiencies assisted growth in normalised EBITDA Continued operational leverage assisting margin growth Efficiency programme enables the Group to stabilise margins in difficult environment * Hospital revenue includes other revenue 30

31 Financial results Poland Revenue PLN m Apr 14 to Sep 14 Oct 14 to Mar 15 (incl new acquisitions) Oct 14 to Mar 15 (incl new acquisitions, as if acquisition took place 1 Oct 14) 1PLN = ZAR3.8 31

32 Financial results Poland EBITDA PLN m 15 13,8% EBITDA margin % 15% 11,8% 10 9,1% 10% 5 5% 0 4,6 11,0 13,6 Apr 14 to Sep 14 Oct 14 to Mar 15 (incl new acquisitions) Oct 14 to Mar 15 (incl new acquisitions, as if acquisition took place 1 Oct 14) 0% 1PLN = ZAR3.8 32

33 Financial results India: Max Healthcare revenue growth 2014: Rs Crore 2015: Rs Crore September 2013 March 2014 September 2014 March 2015 Phase 1 Phase 2 Net revenue MHC 2015 Rs Crore MHC 2014 Rs Crore % Change Net revenue Phase 1 hospitals Net revenue Phase 2 hospitals Net revenue total Financial year-end: March Total net revenue excludes revenue from the SBU 1 Rs. Crore = R1.8 million 33

34 Financial results India: Max Healthcare EBITDA growth : 113 Rs Crore 2015: 173 Rs Crore (9) (5) (2) September 2013 March 2014 September 2014 March 2015 Phase 1 Phase 2 EBITDA MHC 2015 Rs Crore MHC 2014 Rs Crore % Change EBITDA Phase 1 hospitals EBITDA Phase 2 hospitals 7 (14) EBITDA total EBITDA margin Phase 1 hospitals EBITDA margin total hospitals Financial year-end: March EBITDA total operations excludes a once-off 3 Rs. Crore negative impact 1 Rs. Crore = R1.8 million 34

35 Financial results Group 31 Mar 2015 cents 31 Mar 2014 cents % Change EPS (54.1) Profit/loss on disposal of property, plant and equipment and disposal of businesses 0.1 (92.1) HEPS (2.9) Retirement funds (0.9) - Transaction costs on international acquisitions Fair value gain on foreign exchange hedge contract (0.3) - Normalised EPS (3.0) Discontinued operations - (4.6) Funding costs for international acquisitions Normalised EPS from continued operations (excluding funding costs)

36 Financial results Group 31 Mar 2015 cents 31 Mar 2014 cents % Change Normalised EPS (3.0) Southern Africa continued Southern Africa discontinued Poland (0.2) - Max (0.1) (0.7) Funding costs for international acquisitions (8.7) (2.4) 36

37 Cash generated vs normalised EBITDA Southern Africa R 000m % 100% % 81% 83% 81% 80% % % % % Cash generated from operations Cash generated as % of normalised EBITDA Full year numbers 37

38 Condensed statement of financial position Assets 31 Mar 2015 R m 30 Sep 2014 R m 31 Mar 2014 R m Non-current assets PPE Intangibles Other Current assets (excl cash) Cash Total assets

39 Condensed statement of financial position Equity and liabilities 31 Mar 2015 R m 30 Sep 2014 R m 31 Mar 2014 R m Total shareholders equity Non-current liabilities Interest-bearing borrowings Other non-current liabilities Current liabilities Total equity and liabilities Net debt Net debt to normalised EBITDA (covenant 2.75x) Unsecured borrowings Secured borrowings IFRS debt Preference shares Debt in Poland Overdraft (net cash on hand) 201 (267) (31) 39

40 Net debt Funding 31 Mar 2015 R m Weighted average cost of capital Acquisition funding (post-tax) Capex funding (pre-tax) Poland (pre-tax) IFRS debt (pre-tax) Working capital (pre-tax)

41 Dividend Distributions Cents/share R million Cover* Interim Final Total Special dividend Interim Dividend cover DPS (cents) 2,0 1, , ,5 20 Normalised DPS CAGR: 21.7% 0,0 1,78 1,47 1,39 1,38 1, Dividend numbers exclude the special dividend of 100 cps Normalised EPS excluding amortisation 41

42 Outlook André Meyer CEO 42

43 Outlook SA SA: Addition of 178 beds in H2 ±450 beds in the next 18 months PPD growth of between 3-4% Stable margins Continued focus on improving clinical quality outcomes Continue to participate in the CC healthcare inquiry 43

44 Outlook International India: Well positioned to take advantage of the rapidly developing private healthcare sector Leveraging off the existing base and growing by: Brownfield expansions Greenfield projects Acquisitions Next 3-4 years: Poland: Strong visibility to ±3 000 beds EBITDA margin improvement to ±15% on existing business (2 000 beds) Continued revenue and EBITDA growth Focus on completing integration of acquired businesses to drive efficiencies Positioning of the business to maximise our growth in new national health contracts in 2016 Continue M & A activity 44

45 Thank you 45