Briefing 25 February 2008 Financial Results Half Year ended 31 December 2007

Transcription

1 Briefing 25 February 2008 Financial Results Half Year ended 31 December 2007

2 AGENDA Ramsay Financial Performance Pre Capio UK ( Ramsay UK ) Ramsay Financial Performance Including Ramsay UK Operational Highlights Pre Ramsay UK Ramsay UK Rationale, performance & growth strategy Growth Strategy Brownfields Financial Year 2008 Outlook 1

3 HALF YEAR OVERVIEW (PRE RAMSAY UK) Strong half-year result on like-for-like basis Half-year core EPS growth tracking towards full-year guidance for low double-digit growth Strong organic growth across the portfolio with the minimal remaining Affinity synergies achieved Greenslopes turnaround started, Hollywood still being stabilised Brownfields expansion program progressing well 2

4 FINANCIAL PERFORMANCE (PRE RAMSAY UK) Half Year ended 31 December $ m $ m % Inc. Continuing Operations Operating Revenue 1, , % EBITDA % EBIT % Core NPAT continuing operations % Core EPS continuing operations % Interim dividend fully franked % (Core NPAT - continuing operations and Core EPS continuing operations are before specific items, amortisation of intangibles and divested operations) 3

5 GROUP FINANCIAL PERFORMANCE (INCLUDING RAMSAY UK) Continuing Operations (including Ramsay UK) Half Year ended 31 December $ m $ m % Inc. Operating Revenue 1, , % EBITDA % EBIT % Core NPAT continuing operations % Core EPS continuing operations % Group Items NPAT divested operations (0.7) 0.1 Specific items and amortisation of intangibles (net of tax) (9.6) (1.3) Net Profit after Tax (7.0%) (Core NPAT - continuing operations is before specific items, amortisation of intangibles and divested operations) 4

6 Specific Items and Amortisation of Intangibles (net of tax) Half Year Ended 31 December Specific Items and Amortisation of Intangibles (Net of Tax) $ m $ m Ramsay (Pre UK) Write off of capitalised borrowing costs (refinancing) Project costs, restructuring and integration Amortisation of intangibles Ramsay UK Restructuring and Integration costs

7 INTERIM DIVIDEND UP 15.4 % Final Dividend Interim Dividend 6

8 EBIT GROWTH (PRE RAMSAY UK) Group EBIT up 11% for half year 7

9 REVENUE ANALYSIS (PRE RAMSAY UK) Strong EBIT growth in all states, except WA (marginally diluted by Hollywood) Veteran hospitals represent 17% of total revenue Veteran patients within these hospitals represent 50% of revenue * On an annualised running rate, Ramsay UK to form approx 25% of group revenues 8

10 CORE NET PROFIT GROWTH (PRE RAMSAY UK) Core NPAT up 13.2% for the half year Strong organic growth on a like-for-like basis 9

11 CORE EPS GROWTH (PRE RAMSAY UK) Core EPS up 13.5% Better than planned 10

12 COMMITTED DEBT FUNDING In November 2007 Ramsay signed a new underwritten senior debt facility agreement for A$1.535B and 290M. To refinance existing senior debt To fund the unspent balance of the $550M in brownfield capex To fund Capio UK acquisition To provide headroom for future growth opportunities Committed senior debt funding until November 2012 with predetermined interest margins (according to leverage grid) Ramsay is therefore not exposed to any refinancing risk for the next 5 years. 11

13 EFFECTIVE BALANCE SHEET MANAGEMENT Strong & consistent cash flow (generated in the private hospital industry) underwrites debt servicing Additionally Ramsay is very focussed on cash flow and working capital management High cash conversion rate (see cash conversion slide) Ramsay has a risk averse philosophy to interest rate exposure and hedges a significant amount of total interest payable Approximately 85 % of interest rate exposure is currently hedged for periods of 2-5 years Replacement capex spend aligned to depreciation charge 12

14 HIGH CASH CONVERSION Cash flow generation in the December 07 half year was consistent with profitability (EBITDA of $157M v gross operating cash flow of $145M) This is particularly pleasing given that cash flow had been adversely affected in earlier periods by the impact of the transition out of the DVA 13 contracts. These past shortfalls have largely been made up.

15 OPERATIONAL HIGHLIGHTS (PRE RAMSAY UK) Group EBIT up 11% on strong performance across portfolio Strong organic EBIT growth in all states except WA (marginally diluted by Hollywood) Hospital EBIT growth 9% Veterans hospitals improving Greenslopes turning around Hollywood still being stabilised Total admissions up 3.7% 14

16 OPERATIONAL HIGHLIGHTS (PRE RAMSAY UK) Cost containment continues across the portfolio resulting in improved margins Supply costs Economies of scale Group EBIT (ex. Ramsay UK) margin up to 10.7% from 10.3% 15

17 EBITDA GROWTH & POSITIVE MARGIN TRENDS (PRE RAMSAY UK) Group EBITDA up 10.8% for the half year Group EBITDA margin 13.6% vs 13.1% Hospital EBITDA margin 17.9% vs 17.7% excl. prosthesis Hospital EBIT margin 14.7% vs 14.5% excl. prosthesis 16

18 RAMSAY S REVENUE GROWTH PATH Capio UK Acq Affinity Group Acq. Apr 05 Benchmark Group Acq. Jul 04 Greenslopes Major Expansion Opened May 03 Hollywood Major Expansion Opened Jul 02 Alpha Group Acq. May 01 North Shore Private Hosp Opened Jul 98 RHC Listed Sep 97 Greenslopes Acq. Feb 95 Hollywood Acq. Jan 94 Financial Year ended 30 June Pro-forma 12-Mth Run Rate 17

19 RAMSAY UK - RATIONALE Huge opportunity due to changing landscape Ramsay UK well positioned to capitalise on market changes and capture outsourcing of National Health Service (NHS) to private sector A strong, stand-alone business, completed Nov 23, 2007 contributed 6 weeks to results Business underpinned by stable Private Medical Insurance (PMI) market 18

20 RAMSAY UK PROFILE 4th largest operator of private hospitals in the UK Diverse business and revenue source 22 private hospitals across England with 854 beds and 48 operating theatres 9 Independent Sector Treatment Centres (ISTCs) 2 neurological rehabilitation homes 22-apartment retirement village In-hospital pathology services Fixed & mobile radiology units Day surgery unit London-based ophthalmology unit 19

21 RAMSAY UK PERFORMANCE 9 Independent Sector Treatment Centres (ISTCs) All Ramsay UK ISTCs experienced volume growth in calendar 2007 Already seeing high levels of contract activity in 2008 Rising NHS activity encouraging Increasing number of spot contracts have been negotiated Choose & Book rising through improved marketing Number of NHS patients treated at Ramsay UK hospitals in calendar 2007 more than double

22 RAMSAY UK PERFORMANCE Integration process going well Government remains fully committed to Choose & Book initiative Official launch supported by new website enabling GPs to access all providers on equal footing (public and private hospitals) ISTC Wave II reduction in contracts not reflective of government commitment to the private sector 21

23 RAMSAY UK - GROWTH STRATEGY Well positioned to benefit from further government outsourcing in coming months Full patient choice to be officially launched in April 2008 but staged use of Choose & Book already in place and increasing Ramsay models forecast slow growth in patient choice. Current activity suggests models are conservative PMI stable, self pay increasing with improved marketing Additional capacity may be required Acquisition opportunities Classic Hospitals expensive Other opportunities will be investigated to enhance the value of Ramsay UK 22

24 GROWTH STRATEGY BROWNFIELDS Ramsay already committed $550M for improvements and capacity expansion Approx 25% spent Average construction profile 18 months All projects are tracking well Brownfield developments expected to deliver earnings growth towards the end of FY08 and beyond 23

25 ADDITIONAL BROWNFIELD OPPORTUNITIES Opportunities exist to create additional mega referral centres across the country Designed to attract increased referrals Mega referral centres at various stages of planning: Warringal (well developed) St George (progressing well) Westmead (well developed) Pindarra (master planning stage) 24

26 FY 2008 OUTLOOK Strong fundamentals of private hospital industry will continue to underpin Ramsay s growth prospects Private Health Insurance membership continues to grow Strong organic growth to continue Ramsay UK performing to expectations, cents/share dilutive in FY08 Ramsay UK expected to be Core EPS accretive in FY10 and beyond Including Ramsay UK, Ramsay is targeting low double-digit growth for the total group for FY08, on the back of strong growth in Australia 25

27 QUESTIONS