Ramsay Health Care Macquarie Australia Conference 2 May Christopher Rex, Managing Director

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1 Ramsay Health Care Macquarie Australia Conference 2 May 2013 Christopher Rex, Managing Director

2 AGENDA 1. Ramsay Health Care Overview 2. Growth Story & Formula for Success 3. Half-year Group Operational & Financial Highlights 4. Half-year Operational & Financial Highlights - by Region 5. Development Update: Ramsay Sime Darby joint venture Peel Health Campus Brownfield capacity expansion 6. Outlook 2

RAMSAY HEALTH CARE OVERVIEW One of the largest & most successful private hospital operators in the world: Operating 118 hospitals & facilities across 4 countries 10,000 beds 30,000 staff Treating

3 RAMSAY HEALTH CARE OVERVIEW One of the largest & most successful private hospital operators in the world: Operating 118 hospitals & facilities across 4 countries 10,000 beds 30,000 staff Treating over 1 million patients per annum Extensive education & training, including Ramsay Training Institute, Graduate Employment & Future Leaders Programmes Revenue running at over A$4 billion Market capitalisation over A$6 billion Enterprise value over A$7 billion 3

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5 CONSISTENTLY DELIVERING STRONG TOTAL SHAREHOLDER RETURNS (TSR) Compound Annual Rate of Growth over 15½ years Ramsay Health Care TSR 24.6% 11-Apr-13 2,959% Vs. S&P/ASX 100 Acc. Index 9.2% 11-Apr % * * Ramsay Health Care listed on ASX 23 September 1997 Source: FactSet, Macquarie Research 5

6 RAMSAY HEALTH CARE TSR ALPHA TM PERFORMANCE Ramsay ranked (1) third in a survey of Australian ASX100 companies, in terms of TSR Alpha TM performance over the five-year period to 31 December 2012 The TSR Alpha TM scorecard is a stand alone metric that takes into account : Total shareholder return The market value of the investment The consistency of a company s performance in creating shareholder wealth The scorecard acknowledges the quality and capability of the company s management team in continually delivering positive TSR Alpha TM (1) SOURCE: Alpha Performance & Reward, February

7 OUR FORMULA FOR SUCCESS Management and culture Long term, stable management team, special culture ( The Ramsay Way ) Ramsay can export proven management model and blend it with local expertise Modus operandi and strong growth strategy Ramsay s growth strategy has remained clear and consistent Focused solely on operating & managing private hospitals Manage and invest for the long term Focus is on the provision of quality care profits will follow Financially disciplined Growth only pursued if financial and strategic criteria and investment hurdles (15% ROIC) are satisfied 7

STRONG GROWTH STRATEGY Sustainable growth enhanced by

acquisitions Organic Brownfield Capacity Expansion

Creation of Shareholder Value Underpinned by

business improvement Unmet demand driving Ramsay s

more partnerships to develop/manage/ provide hospital

Exploring further acquisitions in existing and other

8 STRONG GROWTH STRATEGY Sustainable growth enhanced by focusing on hospitals and taking a prudent approach to acquisitions Organic Brownfield Capacity Expansion Public/Private Collaborations Acquisitions Creation of Shareholder Value Underpinned by demographics, quality portfolio of hospitals, ongoing business improvement Unmet demand driving Ramsay s ongoing investment in capacity expansion Potential for more partnerships to develop/manage/ provide hospital services in changing political and demographic landscape Exploring further acquisitions in existing and other markets Ramsay has proven it can export its management model Must add longterm value to shareholders 8

GEOGRAPHICAL SEGMENTS Operating Revenue EBITDAR 13% 5% 19% 4% 82% 77% Asia Pacific* United Kindom France Asia Pacific* United Kingdom France Strong Australian business is the largest

9 GEOGRAPHICAL SEGMENTS Operating Revenue EBITDAR 13% 5% 19% 4% 82% 77% Asia Pacific* United Kindom France Asia Pacific* United Kingdom France Strong Australian business is the largest contributor to earnings and cash flow * Asia Pacific currently includes Australia and Indonesia. Post 1 July 2013 our share of the Ramsay Sime Darby joint venture will be equity accounted. 9

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FINANCIAL HIGHLIGHTS - 1 ST HALF FY 2013 Group Revenue $2.1 billion 5.2% Group EBIT $248.4 million 8.8% Core NPAT $148.2 million 12.3% Core EPS 69.1 cents/share 13.

11 FINANCIAL HIGHLIGHTS - 1 ST HALF FY 2013 Group Revenue $2.1 billion 5.2% Group EBIT $248.4 million 8.8% Core NPAT $148.2 million 12.3% Core EPS 69.1 cents/share 13.7% Interim Dividend (fully franked) 29.0 cents/share 13.7% Guidance for Core NPAT and Core EPS growth was upgraded to 13% - 15% for FY2013 (previously 10% - 12%) Notes: Results for the six months ended 31 December 2012 All amounts are in Australian dollars unless otherwise stated 11

12 OPERATIONAL HIGHLIGHTS Results reflect solid performance across worldwide portfolio Completed brownfield capacity expansion projects meeting growing demand and adding to EBIT and EPS In Australia, private health insurance membership remains strong (46.9% with hospital treatment insurance) despite recent changes to private health care policy Selected in the 2013 Global 100 Most Sustainable Companies in the World for the second year in a row 12

13 LEVERAGE & CASH MANAGEMENT Leverage Cash Flow 6X Affinity Acquisition $1.4b $m 5X 4X 5.1 Capio UK Acquisition 193m Ramsay Santé Acquisition 87m X 2X Dec'11 Dec'12 1X FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 Dec'12 Leverage = Net Debt EBITDA Gross Operating Cash Flow EBITDA Continuing strong operating cash flow has allowed Ramsay to invest significantly in brownfields whilst maintaining a low leverage ratio Effective working capital management delivered a high cash conversion rate for the Group of more than 100% of operating profit (EBITDA) to gross operating cash flow 13

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15 OPERATIONAL/FINANCIAL HIGHLIGHTS AUSTRALIA Revenue up 7% to $1.66 billion EBIT up 10% to $219 million Australian hospital EBITDA margin up 50 bpts to 18.6% Private health insurance (PHI) membership remains strong despite challenges presented by changes to PHI policy recently Demand for health care continues to increase with ageing and expanding population which drives our investment in brownfield capacity expansion Strong indications that State Governments will procure more input from private sector in planning, building and operating public hospitals 15

16 OPERATIONAL/FINANCIAL HIGHLIGHTS EUROPE Ramsay UK Revenue up 1.5% to 179 million EBITDAR up 1.5% to 45 million EBITDAR margin remains strong at 25% Private Medical Insured admissions remain subdued but continued growth from NHS admissions with 9% growth over the previous corresponding period NHS now comprises almost 70% of total admissions Competition Commission process is ongoing however, health care reform expected to provide continuing opportunities for the private sector Ramsay Santé France Ramsay Santé performed to expectations Revenue up 1.5% to 80 million EBITDAR up 3.4% to 13 million EBITDAR margin up 30 bpts to 15.8% 16

17 Sunshine Coast University Private Hospital 17

FURTHER EXPANSION OF FOOTPRINT INTO ASIA Joint venture agreement with Sime Darby announced on 26 March 2013 The joint venture will combine Ramsay s three hospitals in Indonesia with Sime Darby s

18 FURTHER EXPANSION OF FOOTPRINT INTO ASIA Joint venture agreement with Sime Darby announced on 26 March 2013 The joint venture will combine Ramsay s three hospitals in Indonesia with Sime Darby s healthcare portfolio under a new JV company to be known as Ramsay Sime Darby Health Care Ramsay will achieve a 50% equity interest through the contribution of its Indonesian assets and total cash payments of approximately A$120 million The deal presents a significant opportunity for Ramsay to expand its healthcare portfolio in Asia Subject to regulatory approvals, the deal is expected to complete on or before 1 July

19 JOINT VENTURE WITH SIME DARBY Ramsay Health Care 50% Sime Darby 50% JV Company Ramsay Sime Darby Health Care RS Premier Jatinegara SDMC Subang Jaya Ramsay Health Care Sime Darby Healthcare RS Premier Bintaro 3 Indonesian Hospitals 3 Malaysian Hospitals Nursing & Health Science College SDMC Ara Damansara RS Premier Surabaya JV enterprise value of approximately A$500 million and revenue in excess of A$200 million SDMC Park City 19

20 EXPANSION INTO ASIA - STRATEGIC RATIONALE First major step into Asia since acquiring Indonesian hospitals in 2005 Aim of the joint venture will be to build a quality portfolio of hospitals throughout Asia 600 million people in ASEAN with rising middle class demanding quality healthcare Leverages off Ramsay s management expertise & Sime Darby s Asian networks Opportunities for value creation via key synergies such as procurement; medical tourism and productivity benchmarking 20

presentations pa EPS neutral in FY 2014 and mildly accretive thereafter Opportunity to further develop site Fits with Ramsay s

21 PEEL HEALTH CAMPUS WA Ramsay has entered into agreement to acquire Peel Health Campus in South Perth, WA: 152 bed public hospital Located 70km south of Perth Offers medical, surgical, maternity and rehabilitation services Over 40,000 emergency presentations pa EPS neutral in FY 2014 and mildly accretive thereafter Opportunity to further develop site Fits with Ramsay s broader strategy of seeking public/private collaborations Subject to State government approval, the deal is expected to complete end May

22 BROWNFIELD (CAPACITY EXPANSION) DEVELOPMENTS Proven track record of undertaking successful brownfield expansion Extensive programme of hospital redevelopments & expansions currently underway Approximately $95 million spent on brownfield projects in the half year. A further $91 million for brownfield capacity expansion approved during the six month period Projected ongoing pipeline of brownfield investments of at least $100 million pa to increase capacity, required to provide services to the ageing and growing population Completed brownfield developments adding to earnings at the EBIT & EPS level & on track to achieve 15% ROI 22

Warringal Private Hospital will have 205 private beds and 11 operating theatres

23 BROWNFIELD DEVELOPMENT UPDATE Warringal Private Hospital, Melbourne: $56 million Re-development and major expansion 62 new private beds When completed, Warringal Private Hospital will have 205 private beds and 11 operating theatres Completion October additional operating theatres Day surgery, recovery units 23

MAJOR PROJECTS New 145-bed private hospital at Joondalup Health

on this site $47 million expansion of Greenslopes Private with

opened March 2013 200 bed Sunshine Coast University Private

24 MAJOR PROJECTS New 145-bed private hospital at Joondalup Health Campus opened March 2013, completing the final stage development on this site $47 million expansion of Greenslopes Private with additional 60 beds, 4 operating theatres and obstetric services opened March bed Sunshine Coast University Private Hospital a public/private collaboration with Queensland Health opens December

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26 GLOBAL MARKET TRENDS IN HEALTH CARE Growing and ageing population will continue to drive demand for health care Governments increasingly concerned about the rising costs of health care Patients demanding and willing to pay for higher quality health care Increasing GDP and affordability driving growth for private operators Significant growth in health care spend expected in emerging markets 26

27 OUTLOOK Positive market dynamics indicate strong upside for Ramsay Growing and ageing population will continue to drive our investment in capacity expansion Remain positive about opportunities overseas including emerging markets and the opportunity to apply our proven health care management expertise in these markets Continue to investigate acquisition opportunities in existing markets in both the private and public sectors Given strong industry fundamentals and continuing implementation of our successful growth strategy and barring unforeseen circumstances, Ramsay reaffirms FY 2013 upgraded guidance for Core NPAT and Core EPS growth for the Group to 13% - 15% 27

28 Questions Macquarie Australia Conference - 2 May 2013

Ramsay Health Care Deutsche Bank Australia Corporate Day London 12 March 2013

Ramsay Health Care Deutsche Bank Australia Corporate Day London 12 March 2013 Christopher Rex, Managing Director Bruce Soden, Chief Financial Officer AGENDA 1. Ramsay Health Care Overview 2. Growth Story