ADVANCED HEALTH LIMITED (Incorporated in the Republic of South Africa) (Registration number 2013/059246/06) ( the Company or Advanced Health ) ISIN Code: ZAE000189049 JSE Code: AVL PROVISIONAL SUMMARY AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014 HIGHLIGHTS Revenue is at R155.8 million EBITDA is at R31.8 million Operating profit is at R23.9 million Headline earnings at R7.7 million translating into diluted earnings per share of 6.44 cents COMMENTARY INTRODUCTION The Company is an investment holding company that provides short-procedures surgical facilities and services in day hospitals in South Africa and Australia. The Company s shares were listed on the Alternative Exchange ( AltX ) of the Johannesburg Stock Exchange Limited ( JSE ) on 25 April 2014. The Group delivered satisfactory trading results in its maiden year with profit performance that was materially in line with the prospectus. OVERVIEW In Australia, construction on the largest ophthalmic day hospital in the country has commenced. The six-theatre facility is scheduled for completion towards the end of 2015. Sundry negotiations with different role players within the day hospital environment are ongoing and, if successful, will provide Presmed Australia with an improved coverage of day hospitals in the greater Sydney area and the eastern sea board of New South Wales. These initiatives will provide the Australian subsidiaries with additional growth opportunities. The South African activities were focussed mainly on transactions to develop additional day hospitals through negotiations with like-minded partners, as outlined in the pre-listing prospectus. Subsequent to the listing of the shares, the Company entered into an agreement to develop five day hospitals, one in Gauteng and four in the Western Cape in addition to the Soweto facility which was being developed at the time of listing. Management is confident that, by the end of June 2016, the South African subsidiary will be in control of at least seven day hospitals compared to the current two operational units.
Five of these facilities are in an advanced stage of planning: the Soweto day hospital, completion is scheduled for the last quarter of 2015; the a day hospital in Durbanville, Western Cape, should be operational by July 2015; and three day hospitals, construction of which will start from January 2015 onwards. The board remains committed to achieving the Group s long-term objective to implement and continuously refine a strategy which is focussed on the achievement of the business goals. These include growing the Company s share in the short procedure day-surgery market to become the Group of choice in offering quality cost-effective healthcare to the benefit of patients, surgeons and medical funds. The board is committed to sound corporate governance, in line with the recommendations of King III Report on Corporate Governance in South Africa and the Australian Council on Healthcare Standards (ACHS) in Australia. Given the current size of the South African subsidiary and the maturity of the Australian subsidiary, the board will remain compact. FINANCIAL RESULTS COMMENTARY The Group s revenue is up by 23.5% to R155.8 million from the prior year. Approximately 95.3% of the revenue was generated in Australia and the balance in South Africa. In terms of IFRS 3 (International Financial Reporting Standards), only five months of the South African operations are reported on in these results. EBITDA amounted to R31.8 million (2013: R26.9 million) reflecting an increase of 17.7%. The Group posted headline earnings of R7.7 million (2013: R8.8 million) translating into headline earnings per share of 6.44 cents (2013: 9.83 cents) in line with the 6.09 cents forecasted in the prospectus. DIVIDEND DECLARATION No dividend is proposed or recommended. After a period of approximately three years, the Board of Directors will consider the payment of a maiden dividend. AUDIT OPINION The auditors, Mazars (Gauteng) Inc., have issued their unmodified opinion on the Group s annual financial statements for the year ended 30 June 2014. A copy of the auditor s report together with a copy of the audited financial statements is available for inspection at the Company s registered office. These summary audited consolidated financial statements have been derived from the Group s annual financial statements. The content of this announcement is extracted from audited information, although the announcement is not audited. The directors take full responsibility for the preparation of the provisional report and the financial information has been correctly extracted from the underlying annual financial statements. The auditor s report does not necessarily report on all the information contained in this announcement. Shareholders are therefore advised that, in order to obtain a full understanding of the nature of the auditor s engagement, they should obtain a copy of the auditor s report together with the accompanying financial information from the Company s registered office.
PROSPECTS The prospects for the Group remain positive. SUMMARY AUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION Audited Audited Year ended Year ended 30-June-14 30-June-13 R 000 R 000 ASSETS Non-current assets 82 537 52 300 Property, plant and equipment 60 601 49 607 Goodwill 10 411 - Intangible assets 7 992 - Deferred taxation 3 533 2 693 Current assets 164 997 40 245 Inventories 3 820 2 689 Trade and other receivables 13 976 8 600 Other financial assets 3 318 - Cash and cash equivalents 143 883 28 956 Total assets 247 535 92 545 EQUITY AND LIABILITIES Capital and reserves 172 874 40 277 Stated capital 120 378 467 Foreign currency translation reserve 31 297 26 354 Retained earnings 17 876 10 136 Revaluation reserve 2 037 2 037 Share-based payment reserve 1 286 1 283 Non-controlling interest 15 462 5 489 Total equity 188 336 45 766 Non-current liabilities 24 235 28 241 Other financial liabilities 14 512 15 401 Finance lease obligations 3 971 10 277 Provisions 1 264 1 269 Deferred taxation 4 488 1 294 Current liabilities 34 964 18 538 Other financial liabilities 7 852 4 141 Finance lease obligations 7 796 6 408 Trade and other payables 13 540 5 278 Provisions 1 612 924 Operating lease liabilities 141 105 Current tax payable 4 023 1 682 Total equity and liabilities 247 535 92 545 Notes to statement of financial position Total number of shares in issue ('000) 211 615 90 467 Net asset value per share (cents) 89.00 50.59
Net tangible asset value per share (cents) 80.30 50.59 SUMMARY AUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Audited Audited Year ended Year ended 30-June-14 30-June-13 R 000 R 000 Revenue 155 791 126 153 Cost of sales (77 842) (49 584) Gross profit 77 949 76 569 EBITDA (earnings before interest, impairment, tax, depreciation and 31 758 26 982 amortisation) Investment income 1 451 - Depreciation (7 449) (5 296) Amortisation of intangible assets (329) (108) Net finance costs (2 101) (3 669) Profit before taxation 23 330 17 909 Taxation (7 851) (4 211) Profit for the year 15 479 13 698 Other comprehensive income/ for the year, net of tax 4 943 3 240 Total comprehensive income for the year 20 422 16 938 Profit attributable to: Owners of the parent 7 740 8 894 Non-controlling interest 7 739 4 804 Total comprehensive income attributable to: Owners of the parent 12 683 12 135 Non-controlling interest 7 739 4 804 Earnings per share (cents) 6.44 9.83 Diluted earnings per share (cents) 6.44 9.83 Notes to the statement of comprehensive income Headline earnings for the year attributable to ordinary shareholders: Headline earnings per share (cents) 6.44 9.83 Diluted headline earnings per share (cents) 6.44 9.83 - Total number of shares ( 000) 211 615 90 467 - Weighted average number of shares ( 000) 120 272 90 467 - Diluted weighted average number of shares ( 000) 120 273 90 467 Reconciliation of headline earnings calculation: Earnings for the year attributable to ordinary shareholders 7 740 8 894 Headline earnings for the year attributable to ordinary shareholders 7 740 8 894
SUMMARY AUDITED CONSOLIDATED STATEMENT OF CASH FLOW Audited Audited Year ended Year ended 30-June-14 30-June-13 R 000 R 000 Net cash flows from operating activities 33 249 22 514 Net cash flows from investing activities (7 305) (3 648) Net cash flows from financing activities 92 930 (38 976) Net increase/(decrease) in cash and cash equivalents 118 874 (20 110) Effect of translation of foreign operations (3 947) (2 897) Cash and cash equivalents at beginning of year 28 956 51 963 Cash and cash equivalents at end of year 143 883 28 956 SUMMARY AUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Audited Audited Year ended Year ended 30-June-14 30-June-13 R 000 R 000 Equity opening balance 45 766 30 459 Profit for year 7 740 8 894 Non-controlling interest 7 739 4 804 Foreign Currency Translation Reserve 4 943 3 240 Share issue for acquisition of subsidiaries 21 864 - Specific issue of shares 20 000 - General issue of shares 81 284 - Capital raising fees (3 237) - Share-based payment expense 3 - Dividend paid to non-controlling interest (2 166) (1 631) Change of interest in NCI 1 581 - Increase in NCI on reverse acquisition 2 819 - Equity closing balance 188 336 45 766 BASIS OF PREPARATION The summary audited consolidated financial statements are prepared in accordance with the requirements of the JSE Limited, Listings Requirements for provisional reports, and the requirements of the Companies Act applicable to summary financial statements. The JSE Listings Requirements require provisional reports to be prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and the South African Institute of Chartered Accountants (SAICA) Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting. The accounting policies applied in the preparation of the summary consolidated financial statements from which the summary financial statements were derived are in terms of IFRS and are consistent with those accounting policies applied in the preparation of the previous consolidated annual financial statements, except as disclosed in the changes in accounting policies note.
The summary audited consolidated financial statements have been prepared under the supervision of CJPG Van Zyl CA (SA) in his capacity as Chief Financial Officer and are the full responsibility of the directors. The summary audited consolidated financial statements for the year were authorised for issue by the directors on 29 September 2014. CHANGES IN ACCOUNTING POLICIES The Group adopted the new, revised or amended accounting pronouncements as issued by the IASB, which were effective and applicable to the Group from 1 June 2013, none of which had any material impact on the Group's financial results for the year. IFRS 10 Consolidated Financial Statements The objective of IFRS 10 is to establish principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities. The Group has revised its accounting policies on the consolidation of subsidiaries and concluded that the adoption of IFRS 10 did not result in any material change in the consolidation of the Group. IFRS 13 Fair value measurement IFRS 13 aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRS. IFRS 13 was adopted and applied prospectively and it was assessed that the adoption did not result in any material impact on the financial results of the Group. STATED CAPITAL The issued stated capital of Advanced Health is 211 614 801 shares amounting to R208 377 305 (2013: 3) being the legal entity listed on the JSE AltX. Shares 000 Shares issued to acquire subsidiaries 110 331 Specific share issued for cash 20 000 General issue of shares for cash 81 284 Total 211 615
Reconciliation: Stated capital R 000 Equity Reserve* R 000 Total Issued capital R 000 Balance as at 1 July 2013 467 467 Shares issued to acquire subsidiaries 110 331 (88 467) 21 864 Specific share issue 20 000 20 000 General issue of shares 81 284 81 284 Capital raising fee (3 237) (3 237) Balance as at 30 June 2014 208 845 (88 467) 120 378 * The equity reserve arose as a result of accounting for the reverse acquisition in terms of IFRS 3 Business Combination. This standard requires the share capital disclosed to be that of the legal parent or accounting subsidiary (being Advanced Health) whilst the net issued capital has to be that of the accounting acquirer or legal subsidiary (Presmed Australia) as adjusted for the number of equity instruments it would have had to issue to acquire the various accounting subsidiaries as determined when calculating the purchase consideration for the acquisition, and shares issued subsequent to the acquisition transactions. The following share issues were made from 1 January 2014 to 30 June 2014: On 27 January 2014 the company issued 110 331 411 shares to Eenhede Konsultante and former minority shareholders in the various subsidiaries ahead of the listing for the acquisition of the subsidiaries; On 27 January 2014 the company issued 500 000 shares to Arcay Moela Sponsors for services rendered in connection with the listing; On 28 February 2014 the company issued 20 000 000 shares by means of a specific issue for cash as per the list below: Name: Number of shares Bradley Norman Elliot 1 000 000 Bremer Investments (Pty) Ltd 5 000 000 CJPG van ZYL 300 000 Deborah Patricia Viljoen 1 000 000 Jamie Teagan Hansen (Minor) 750 000 Joanne Elliot 1 000 000 Lene Trust 50 000 Leon Abraham Viljoen 50 000 PA &LR Laubscher Gesinstrust 50 000 Presmedical Witbank (Pty) Ltd 8 250 000 Sandra Comfort 1 000 000 Solly Hyman Family Holdings (Pty) Ltd 1 250 000 The Frans and Louise van Hoogstraten Family Trust 50 000 The Savadier Family Trust 250 000 Total 20 000 000 Upon Listing Advanced Health on 25 April 2014 the company issued 81 283 387 shares at R1.00 per share raising R81 283 387 from the offer.
Subsequent to year end the Company issued 10 million shares at R1.70 per share to acquire an interest in five companies. BUSINESS COMBINATIONS On 27 January 2014, the Group purchased 100% of emalahleni Day Hospital (Pty) Ltd and 100% of Medgate Day Clinic (Pty) Ltd by way of reverse listing of Advanced Health. The application of IFRS, in particular IFRS 3 Business Combinations, results in Presmed Australia (Pty) Ltd (the legal acquiree) being recognised as the acquirer for accounting purposes, and in the transaction being accounted for as reverse acquisition. Accordingly, the consolidated annual financial statements prepared following the reverse acquisition are issued in the name of Advanced Health (the legal parent and accounting acquiree), but are prepared as a continuation of the financial statements of Presmed Australia (Pty) Ltd (the legal subsidiary and accounting acquirer), with one adjustment, which is the retroactive adjustment of Presmed Australia (Pty) Ltd s legal capital to reflect Advanced Health Limited's legal capital. The comparative financial information presented in the consolidated annual financial statements has also been retrospectively adjusted to reflect Advanced Health s legal capital. % Held 2014 R'000 emalahleni Day Hospital 100 9 243 Medgate Day Clinic 100 10 622 The controlling shareholders before and after the restructure have not changed The following Advanced Health shares have been issued for the acquisition of the above subsidiaries: - 9 243 000 shares were issued to the emalahleni Day Hospital Vendors on 27 January 2014 at R1.00 per share - 10 621 875 shares were issued to the Medgate Day Clinic Vendors on 27 January 2014 at R1.00 per share The Company s core business is providing short-procedures surgical facilities and services in day hospitals. The acquisition is consistent with the Company s growth strategy. In the five months to 30 June 2014, emalahleni Day Hospital (Pty) Ltd contributed revenue of R3 763 858 and a loss of R178 089 to the Group's results and Medgate Day Clinic (Pty) Ltd contributed revenue of R3 495 269, and a loss of R652 188 to the Group's results. If the acquisition had occurred on 1 July 2013, management estimates that Medgate Day Clinic (Pty) Ltd and emalahleni Day Hospital (Pty) Ltd would have contributed R17 452 780 revenue to the Group. In determining these amounts management assumed that the fair value adjustments, determined provisionally, that arose on acquisition date would have been the same if the acquisition had occurred on 1 July 2013.
Fair value of assets acquired and liabilities assumed: emalahleni Day Hospital (Pty) Ltd Medgate Day Clinic (Pty) Ltd Recognised values on acquisition R 000 R 000 R 000 Property, plant & equipment 3 282 5 771 9 053 Inventories 362 338 699 Trade & other receivables 1 021 1 519 2 540 Cash & cash equivalents 569 101 670 Borrowings (21) (4 365) (4 386) Trade and other payables (494) (549) (1 043) Deferred tax (585) 1 045 460 Net identifiable assets and liabilities 4 134 3 860 7,993 Intangible assets identified 7 907 Deferred taxation on intangible assets (2 214) Goodwill on acquisition 10 411 Non-controlling interest (2 233) Total net consideration 21 865 Consideration settled in shares 21 865 Cash acquired 670 Net cash inflow 670 The consideration transferred of R21 864 919 has been determined based on the number of shares Presmed Australia would have had to issue in order to give the owners of Advanced Health the same percentage equity interest in the combined entity that results from the reverse acquisition. The value (determined using a discounted cash flow model based on estimated future cash flow) of each business subject to this transaction was determined by an independent valuer appointed by management, and the values contained in his report were used for the purposes of these pro formas without adjustment. These values were used to determine the fair value per share for the shares exchanged in the reverse acquisition and ultimately to calculate the purchase consideration transferred to acquire emalahleni Day Hospital (Pty) Ltd and Medgate Day Clinic (Pty) Ltd. Based on the assessment, intangible assets relating to the customer base and specific service level contracts were identified. The acquired assets and assumed liabilities have been valued at their estimated fair values at the acquisition date. The goodwill is mainly attributable to the skills and technical talent of the Medgate Day Clinic (Pty) Ltd and emalahleni Day Hospital (Pty) Ltd work force, and the synergies expected to be achieved from integrating Medgate Day Clinic (Pty) Ltd and emalahleni Day Hospital (Pty) Ltd into the Group s existing business. The carrying amount of trade and other receivables estimate their fair value and there are no contractual accounts receivable acquired.
SEGMENTAL REPORTING Geographical Information The group operates in two main areas: 2014 2013 2014 2013 2014 2013 South Africa South Africa Australia Australia Total Total R 000 R 000 R 000 R 000 R 000 R 000 External revenue 7 259-148 532 126 153 155 791 126 153 Intersegmental revenue 38 320 24 127 38 320 24 127 Profit / (loss) for the year (2 618) - 18 097 13 698 15 479 13 698 Segment assets 128 278-119 257 92 544 247 535 92 544 Segment liabilities 14 856-44 343 46 779 59 199 46 779 The revenue from external parties and all other items of income, expenses, profits and losses reported in the segment report are measured in a manner consistent with that in the statement of comprehensive income. COMPARISON WITH PROFIT FORECAST In accordance with the JSE Listings Requirements, Advanced Health has set out a comparison between the profit forecast as contained in the Company s prospectus dated 31 March 2014 and the audited report for the year ended 30 June 2014 below: Audited Year ended 30-June-14 Forecast 30-June-2014 R 000 R 000 Revenue 155 791 154 928 Cost of sales (77 842) (72 724) Gross profit 77 949 82 204 Other income - 1 Operating expenses (53 969) (59 882) Operating profit/(loss) 23 980 22 323 Investment revenue 1 451 174 Finance cost (2 101) (1 988) Profit before taxation 23 330 20 509 Taxation (7 851) (5 497) Profit after taxation 15 479 15 012 Other comprehensive income for the year 4 943 -
Total comprehensive income for the year 20 422 15 012 Profit attributable to: Equity holders of parent 7 740 7 536 Non-controlling interest 7 739 7 476 15 479 15 012 Total comprehensive income attributable to: Owners of parent 12 683 7 536 Non-controlling interest 7 739 7 476 20 422 15 012 Earnings per share - Basic (cents per share) 6.44 6.09 - Diluted (cents per share) 6.44 6.09 Weighted average number of shares 120 272 123 700 Diluted weighted average number of shares 120 273 123 700 EXCHANGE RATES The following exchange rates were used in foreign interest and foreign transactions during the periods: Rand/Australian Dollar 2014 2013 Prospectus Closing Rate 9.9844 9.0118 9.8000 Average Rate 9.5257 9.0605 9.8000 RELATED PARTIES During the year, certain subsidiaries, in the ordinary course of business, entered into loans and transactions with related parties under terms that are no less favourable than those arranged with third parties. CORPORATE INFORMATION Advanced Health Limited Registered Address (Incorporated in the Republic of South Africa) Ground Floor One Health Building Registration number: 2013/059246/06 Woodmead North Office Park ISIN: ZAE000189049 JSE Code: AVL Woodmead, 2157 PO Box 1476, Silverton, 0127 Transfer Secretaries: Trifecta Capital Services (Proprietary) Limited Designated Advisor: Arcay Moela Sponsors (Proprietary) Limited trading as Arbor Capital Sponsors Directors: Executive directors CA Grillenberger (Chief Executive Officer) CJPG van Zyl (Chief Financial Officer) MC Resnik# (Chief Operational Officer Australia)
NON-EXECUTIVE DIRECTORS PJ Jaffe# FA van Hoogstraten (Chairman) WT Mthembu YJ Visser (alternate) J Oelofse # Australian Company Secretary: M Janse van Rensburg Auditors: Mazars (Gauteng) Inc. ANNUAL GENERAL MEETING Audited results were finalised and approved on 29 September 2014 and the annual report will be posted to shareholders in due course. The date of the Annual General Meeting is 27 November 2014. By order of the board Woodmead 29 September 2014 Designated Advisor Arcay Moela Sponsors (Pty) Ltd t/a Arbor Capital Sponsors Auditor and Reporting Accountants Mazars (Gauteng) Inc.