RAMSAY HEALTH CARE REPORTS 23.6% RISE IN FULL YEAR CORE NET PROFIT

Size: px

Start display at page:

Download "RAMSAY HEALTH CARE REPORTS 23.6% RISE IN FULL YEAR CORE NET PROFIT"

Lee Wade
5 years ago
Views:

ASX ANNOUNCEMENT 25 August 2011 RAMSAY HEALTH CARE REPORTS 23.6% RISE IN FULL YEAR CORE NET PROFIT Financial Highlights Core net profit 1 after tax up 23.6% to $220.6 million Core EPS 2 up 19.

1 ASX ANNOUNCEMENT 25 August 2011 RAMSAY HEALTH CARE REPORTS 23.6% RISE IN FULL YEAR CORE NET PROFIT Financial Highlights Core net profit 1 after tax up 23.6% to $220.6 million Core EPS 2 up 19.6% to cents Group revenue up 9.4% to $3.7 billion o Australia and Indonesia revenue up 8.7% to $2.9 billion o Europe (UK and France) revenue up 12.4% to $767.1 million Group EBIT up 18.5% to $395.5 million o Australia and Indonesia EBIT up 15.3% to $322.9 million o Europe EBIT 3 up 35% to $72.6 million Final dividend 29.5 cents fully franked, up 18.0% on the previous corresponding period, bringing the full-year dividend to 52.0 cents, up 19.5% Targeting core NPAT and core EPS growth for the Group of 10%-12% for FY12 Overview Australia s largest private hospital operator Ramsay Health Care today announced a Group core net profit after tax from continuing operations (before specific items and amortisation of intangibles) of $220.6 million for the year to 30 June 2011, a 23.6% increase on the previous corresponding period. Group core net profit delivered core earnings per share (EPS) of cents for the year, a 19.6% increase on the previous corresponding period and in line with upgraded guidance announced to the market in December The result was driven mainly by a strong performance across Ramsay s Australian hospitals and an increased contribution from completed brownfield developments. The result included the first full-year contribution from Ramsay Santé, managed and 57% owned by Ramsay, which was acquired at the end of March Ramsay recorded a reported net profit after tax of $198.4 million (up 33.8% on the prior year) after deducting net specific items and amortisation of intangibles of $22.2 million (net of tax), predominantly relating to the annual non-cash charges for deferred rent 1 Before specific items and amortisation of intangibles 2 Before specific items and amortisation of intangibles and after CARES dividends 3 Europe numbers include a full-year contribution from Ramsay Santé, acquired 29 March 2010

2 2 from the leasing of UK hospitals; and acquisition, restructuring and integration costs associated with Ramsay Santé. Directors are pleased to announce a fully-franked final dividend of 29.5 cents, up 18% on the previous corresponding period, taking the full year dividend to 52.0 cents, up 19.5% on the previous year. The dividend Record Date is 8 September 2011 and the Payment Date is 26 September The Dividend Reinvestment Plan will remain suspended. Ramsay Managing Director Christopher Rex said: The full year result shows our hospitals are performing strongly in all the markets in which we operate, particularly in Australia where the operational environment continues to be positive and our operating leverage has driven improved margins. Our capital investment in capacity expansion and improving our facilities continues to make a significant contribution to earnings growth, augmenting organic growth at our quality portfolio of hospitals. In Australia we recorded a significant increase in EBIT at the hospital level which reflects strong organic growth and shows an increasing contribution from our brownfield development programme. In the UK, the underlying business is performing well in a difficult environment and margins are holding up well under the normalised ISTC pricing regime. During the year, we successfully integrated Ramsay Santé, which is already marginally EPS accretive in the first full year of trading, slightly ahead of schedule. During the second half, we announced the purchase of the 178-bed Clinique Convert Hospital in Bourg-en-Bresse in the Rhône-Alpes region, in line with our strategy to pursue bolt-on acquisition opportunities in France to expand our presence there. Our brownfield development programme remains an integral part of our growth strategy and continues to contribute significantly to earnings. Since 2007, Ramsay has approved approximately a gross $830 million (net $730 million) in new capacity and improvements at our Australian hospitals. A number of projects were completed during the year and those still under development are on schedule. We continue to target a return on our brownfield investment of 15% approximately three years after completion when assessing the feasibility of individual projects. To date on average, we have achieved this target, with some projects hitting this return rate earlier than forecast, Mr Rex said. Operational highlights Australia Ramsay s Australian hospitals continued to perform strongly at an operational level. Ramsay achieved revenue growth of 8.5% during the year in Australia which helped drive EBIT 15.5% higher. Ramsay s Australian hospitals recorded EBITDA margins of 19.3% in the year, up from 18.3% the previous year.

3 3 Operational highlights Europe Ramsay s hospitals in the UK and France generated a 12.4% increase in revenue to $767.1 million and a 35% rise in EBIT to $72.6 million, mainly due to the first full-year contribution from Ramsay Santé. UK revenue (in local currency) rose slightly in a challenging environment. UK operating margins before rent (EBITDAR) remained strong at 25.4%, compared to 25.9% for the 2010 year, as the business adapted to a normalised ISTC pricing regime. The underlying business is performing well in a challenging environment. NHS admissions now comprise 60% of total Ramsay UK admissions. In an environment of reform, there continues to be bipartisan political support for private sector involvement in the provision of services to the NHS and potentially greater opportunities for Ramsay. Capacity Expansion Programme Ramsay s Australian brownfield development programme is well advanced with projects under development tracking to plan and completed projects meeting expectations, with some projects reaching return hurdles earlier than forecast. An additional $150 million was approved for brownfield developments during the year. Approximately $570 million (gross) of an approved $830 million (gross) has been spent on new capacity and facility improvements since 2007, of which $480 million (gross) has been spent on completed projects. The ageing population is driving growing demand for health care services and the need for increased capacity. Ramsay intends to meet this demand through continued investment in quality brownfield projects. Beyond current brownfield commitments, Ramsay expects to invest approximately $100 million annually on expanding capacity at its hospitals to meet the expected increases in demand. Key projects completed during the year include North Shore Private (Sydney), Cairns Clinic, Westmead Private (Sydney), Pindara (Gold Coast), North West (Brisbane), Kareena (Sydney) and Lake Macquarie. The $350 million Joondalup Health Campus project ($120 million to be funded by Ramsay) remains on track for completion in mid The first part of the project opened in March. In addition to these projects, in April, Queensland Health announced that Ramsay had been successful in its bid to build and operate a private hospital collocated on the campus with the future Sunshine Coast University Hospital. The private hospital facility, scheduled to be opened in late 2013, will have the capacity to treat up to 200 patients and will offer a wide range of medical and surgical services.

4 4 A key part of the deal is that the new private hospital will provide a significant range and volume of services to public patients through a service purchase arrangement with Queensland Health, whilst the Sunshine Coast University Hospital itself is being built and commissioned. Capital Management and Cash Flow Effective working capital management resulted in a high cash conversion rate for the Group of more than 100% of operating profit (EBITDA) to gross operating cash flow. As previously advised, Ramsay has committed senior bank debt facilities of $1.9 billion in place until November 2012 with headroom of $500 million to $600 million after allowing for funding of brownfield commitments. Discussions have commenced in relation to the debt refinancing with a view to refinance well ahead of maturity. Outlook The underlying strength of Ramsay s existing business and its clear strategy to expand via targeted brownfield developments and acquisitions means it is well positioned to capture growing demand for health care services. Ramsay s Australian business continues to achieve strong organic growth, coupled with a quality pipeline of brownfield developments which should keep adding to earnings and contribute positively to EPS. The UK business is performing well in a challenging economic environment and NHS activity remains a key source of growth. In France, Ramsay remains focused on identifying operational improvements and efficiencies at Ramsay Santé and growing the business there over time. Barring unforeseen circumstances Ramsay is targeting core NPAT and core EPS growth for the Group of 10%-12% for FY12. Contacts: For media enquiries: Christopher Rex Paula Hannaford Managing Director Kreab Gavin Anderson Ramsay Health Care About Ramsay Health Care Ramsay Health Care is Australia s largest private hospital operator and a growing global company. Established in Australia in 1964 and listed on the ASX in September 1997, Ramsay Health Care has grown to become a global hospital group operating 117 hospitals and day surgery facilities across Australia, the United Kingdom, France and Indonesia. Employing over 30,000 staff, Ramsay Health Care provides a range of health care needs from day surgery procedures to highly complex surgery as well as psychiatric care and rehabilitation. Ramsay Health Care expanded offshore in November 2007 with the acquisition of Capio UK and made its first acquisition in Continental Europe in March 2010 with the acquisition of a 57% interest in Group Proclif SAS (Proclif), a leading private hospital operator based in France now known as Ramsay Santé. For further information please visit:

5 5 Summary of Financial Performance Full Year Ended 30 June $ 000's FY2011 FY2010 Australia & Indonesia Europe Group Group(4) % Increase/ (Decrease) Continuing Operations Operating revenue 2,952, ,057 3,719,691 3,399, % EBITDA 421, , , , % EBIT 322,937 72, , , % Core Net Profit After Tax (1) 220, , % Net specific items and amortisation of intangibles, net of tax (2) (22,211) (30,205) Reported Net Profit After Tax 198, , % Earnings Per Share (cents) Core EPS (3) % Basic EPS % Dividends Per Share (cents) Final dividend, fully franked Full-year dividend, fully franked % 19.5% Notes (1) Core Net Profit After Tax is before specific items and amortisation of intangibles and from continuing operations. (2) In line with accounting standards, net specific items include the annual non-cash portion of rent expense of $18.9 million net of tax relating to the UK hospitals. (3) Core Earnings Per Share is before specific items and amortisation of intangibles and from continuing operations and after CARES Dividends. (4) FY2010 Group result include only three months of Ramsay Santé which was acquired on 29 March 2010.

For personal use only

For personal use only ASX ANNOUNCEMENT 23 August 2012 RAMSAY HEALTH CARE REPORTS 14.5% RISE IN FULL YEAR CORE NET PROFIT Financial Highlights Core net profit 1 up 14.5% to $252.6 million Reported statutory net profit after