group unaudited financial results for the six months ended
TRANSCRIPT
Group unaudited financial results
for the six months ended
31 December 2016(Presentation done in South African rand)
We develop and manage day hospitals in
South Africa and Australia
22 February 2017 l 23 February 2017
Johannesburg l Cape Town
Welcome
Highlights Carl Grillenberger
Financial performance Carel Snyman
Australia Marc Resnik
South Africa Management
Industry overview Carl Grillenberger
Questions
Highlights
Carl Grillenberger
Financial
0%
50%
100%
150%
200%
250%
Aus SA Total
24%
175%
45%
11%
207%
60%
Increase %
Turnover Patient Numbers
-
20 000
40 000
60 000
80 000
100 000
120 000
140 000
160 000
Aus SA Total
110 261
39 490
149 751
89 220
14 343
103 563
Turnover R'000
Dec 16 Dec 15
0
20
40
60
80
100
Dec 16 Dec 15
7483
2617
Segmental turnover contributionTarget 50 : 50
Aus SA
Operational
South Africao Ten operational day hospitals, target of 20 by 2020 achievable.o Growing medical-schemes support.o Increasing healthcare partners’ participation.
Australiao Four operational day hospitals.o Flagship Chatswood Private Hospital: Associate membership of World
Association of Eye Hospitals.o Target of six day hospitals by 2020 achievable.
Financial
Carel Snyman
Exchange rate fluctuations
Impossible to forecast theexchange rates.
The average rate fromJune’16 to December’16remained consistent butweakened in comparison toDecember’15. A weakeningin exchange rates has apositive impact on the profitsrealised in Australia.
The closing ratestrengthened in comparisonto both December’15 andJune’16 impacting negativelyon the Australian figures.
An strengthening inexchange rates has a positiveimpact on the equipmentprices for the South Africanoperations.
Description Dec-14 Jun-15 Dec-15 Jun-16 Dec-16
Average Rate 9.46 9.55 9.83 10.56 10.56
Closing Rate 9.47 9.41 11.24 11.13 9.86
Budget 10.82 10.82 10.00 10.00 10.00
Statement of financial position:
31st December 2016
¹ Property, plant and equipmentincreased due to additionalequipment purchased.
² Increase in deferred tax due tolosses incurred in the SouthAfrican operations.
³ Included in trade and otherreceivables are amounts due fromthe South African RevenueServices for Value Added Tax -Advanced De La Vie: R2mil,Advanced Worcester R1,8mil andAdvanced Vergelegen R1,9.Subsequent to the reporting datethe full refund for AdvancedVergelegen was received.
Dec 2016 Dec 2015 June 2016
Unaudited Unaudited Audited
R'000 R'000 R'000
Assets
Non-current Assets 337 254 242 909 329 078
Property, plant and equipment ¹ 253 669 182 340 251 317
Goodwill 26 487 28 054 28 561
Intangible assets 29 073 28 881 28 333
Other financial assets 6 391 - 7 789
Deferred taxation ² 21 634 3 634 13 078
Current Assets 87 354 155 475 109 869
Inventories 8 965 6 345 9 093
Trade and other receivables ₃ 20 429 22 487 36 970
Other financial assets 5 738 7 354 6 477
Operating lease asset 763 737 2 381
Current tax receivable 1 418 3 094 2 104
Cash and cash equivalents 50 041 115 458 52 844
Total Assets 424 608 398 384 438 947
Statement of financial position:
31st December 2016
¹ The FCTR variance is due to theRand strengthening against theAustralian Dollar.Closing rate at 31 December’16 –9,86 vs. a closing rate of 11,13 asat 30 June’16.
² Other financial liabilities includeloans from our major shareholderof R66 mil and ABSA Bank ofR52mil.
³ Finance leases include a leasefrom the Bank of Queensland tothe value of R24 mil.
⁴ The decrease in the tradepayable figure compared to 30June’16 is due to a decrease inthe purchase of capitalequipment during the periodunder review.
Dec 2016 Dec 2015 June 2016
Unaudited Unaudited Audited
R'000 R'000 R'000
Equity and Liabilities
Capital and Reserves 164 622 223 218 199 191
Stated capital 137 378 137 378 137 378
Foreign currency translation reserve ¹ 27 898 46 243 40 380
Retained earnings (6 343) 36 204 16 968
Share based payment reserve 5 689 3 393 4 465
Non-controlling interest 45 995 48 784 44 300
Total Equity 210 617 272 002 243 491
Non-current Liabilities 154 652 72 940 112 660
Other financial liabilities ₂ 116 244 65 478 71 169
Finance lease obligations ₃ 32 846 381 31 701
Operating lease liability 5 338 1 560 6 947
Provisions 94 2 526 2 013
Deferred tax 130 2 995 830
Current Liabilities 59 339 53 442 82 796
Other financial liabilities ₂ 9 603 8 458 9 240
Finance lease obligations ₃ 4 366 1 682 7 823
Trade and other payables ₄ 29 862 34 959 51 303
Operating lease liability 3 696 - 1 175
Provisions 3 092 2 023 3 688
Current tax liability 8 720 6 320 9 567
Total Equity and Liabilities 424 608 398 384 438 947
Statement of comprehensive income:
31st December 2016
¹ Revenue increased due to higheractivities and more facilities becomingoperational.
² Gross profit percentage in line with theprevious periods.
³ Other operating expenses areimpacted by additional facilitiesbecoming operational.
⁴ Decrease in investment income due tocash utilised in the financing of the newfacilities rather than being invested.
⁵ Finance costs increased as a result ofthe increase in loans.
⁶ Increase in depreciation is due to newequipment brought into use.
⁷ Other comprehensive income consistsof foreign currency translation. TheRand strengthened against theAustralian Dollar.
6 months 6 months 12 months
Dec 2016 Dec 2015 June 2016
Unaudited Unaudited Audited
R'000 R'000 R'000
Revenue ₁ 149 751 103 563 241 192
Cost of sales (74 651) (47 266) (118 430) Gross profit ₂ 75 100 56 297 122 762
Other income 581 163 207
Other operating expenses ₃ (88 808) (48 741) (127 397)
EBITDA (13 127) 7 719 (4 428)
Investment income ₄ 290 2 107 2 881
Finance costs ₅ (6 255) (916) (4 531)
Depreciation ₆ (12 636) (5 461) (16 152)
(Loss) / Profit before taxation (31 728) 3 449 (22 230)
Taxation 9 048 (1 067) 6 501
(Loss) / Profit after taxation (22 680) 2 382 (15 729)
Other comprehensive income/(expense) for
the period ₇ (13 202) 24 411 14 506
(35 882) 26 793 (1 223) Total comprehensive (expense) / income
for the period
Statement of comprehensive income:
31st December 2016
6 months 6 months 12 months
Dec 2016 Dec 2015 June 2016
Unaudited Unaudited Audited
R'000 R'000 R'000
(Loss) / Profit attributable to:
Owners of the parent (23 311) 925 (18 311)
Non-controlling interest 631 1 457 2 582
(22 680) 2 382 (15 729)
Total comprehensive (loss) / profit attributable to:
Owners of the parent (35 793) 19 935 (5 164)
Non-controlling interest (89) 6 858 3 941
(35 882) 26 793 (1 223)
Condensed statement of cash flows:
31st December 2016
Cash outflow from operating activities of R22 mil.
Investment activities resulted in a cash outflow of R29 mil.
Above cash outflows were financed by means of loans to the value of R52 mil.
Dec Dec Jun
2016 2015 2016
R'000 R'000 R'000Net cash flows (used in) / from operating activities (22 071) 18 589 4 334 Net cash flows (used in) / from investing activities (29 352) (96 610) (135 743) Net cash flows from financing activities 52 112 66 719 62 407 Net increase / (decrease) in cash and cash equivalents 689 (11 302) (69 002) Cash and cash equivalents at the beginning of the period 52 844 115 274 115 274 Effect of translation of foreign operations (3 492) 11 486 6 572 Cash and cash equivalents at the end of the period 50 041 115 458 52 844
Financial ratio’s
¹ The increase in the gearing percentage is due to the increase in theother liabilities and the increase in finance leases.
6 months 6 Months
Unaudited Unaudited Audited
Dec 2016 Dec 2015 June 2016
Quick ratio 1.32 2.67 1.22
Current ratio 1.47 2.79 1.33
Gearing % ¹ 81.56 23.34 53.18
HEPS (cps) (10.52) 0.51 (8.02)
Weighted average shares ('000) 221 615 221 615 221 615
Segmental reporting
The South African operationsincurred start-up losses for the newfacilities that became operational.
The Australian operationsgenerated profits close to R3 mil.
The number of cases generated inSouth Africa increased due to theincreased activities and nowconstitute 48% of the total casesgenerated by the Group.
Due to exchange rate fluctuationsand higher activities the SouthAfrican operations contributed 26%of the revenue for the period underreview. The South African revenuegenerated during the 2016 financialyear was 17% of the total Grouprevenue.
Revenue (R'000)
PAT (R'000)
% Revenue of Total
Dec 2016
110 261
2 914
74%
39 490
(25 594)
26%
Australia (PMA)
South Africa Group Total
149 751
(22 680)
100%
Australia
Marc Resnik
Australia
Presmed Australia (PMA): Leading day hospital company, establishes and manages day hospitals.
Four day hospitals in Australia:o Ophthalmic Surgery Centre (OSC)o Epping Surgery Centre (ESC) o Central Coast Surgery Centre (CCDH) o Sydney ENT (SENT), Sydney’s only ENT-specific Day Hospital. o Merged SENT with the OSC to establish Chatswood Private Hospital
(CPH) as Australia’s largest day hospital.
Management contract Laser Vision Clinic Central Coast (LVCCC).
Associate Membership to the World Association of Eye Hospitals granted to CPH, a first for private hospital provider in Australia.
Australia
CPH Year one: continues to grow, 59 accredited surgeons, patient numbers increasing, expanded into surgery disciplines of plastic, dental and OMF.
ESC Year 12, 18 accredited surgeons, considering expansion into dental, OMF.
CCDH Continued growth, 13 of the 14 ophthalmologists in the CC area, introduced OMF.
ESC
CPH
LVCCC CCDH
Epping
Chatswood
Central Coast
OSC
SENT
Australia
Facilities strategy
• Driving up patient numbers through attracting doctor support, whilst maintaining the highest levels of patient excellence.
• Expanding the portfolio through the several opportunities in discussion.
• Achieving a first in Australia by providing specific peer-to-peer clinical teaching interventions between referrers and doctor specialists.
• Continuing to drive business concerns, ensuring ongoing cost controls are met and efficient cash collections remain in place.
Australia
Investment opportunities
o An ophthalmic-specific day hospital with 11 accredited surgeons and strong earnings.
o A day hospital in a sought-after location in the heart of a business district, surrounded by ophthalmic, plastic and dermatologist surgeons, adjacent to a large shopping mall.
o A day-hospital management group with six facilities across Australia.
o Two endoscopic-specific day hospitals with 14 surgeons in the north of Sydney and 11 surgeons in the east of Sydney.
South Africa
Operational management
Present
o Eight new day hospitals developed and commissioned.
o Ten day hospitals fully operational January 2017 (Gauteng, Western Cape and Mpumalanga)
Future possibilities
o Western Cape
o Gauteng
o KwaZulu-Natal
Other provinces under discussion
o Limpopo
o Mpumalanga
o Free State
South African operations
South African operations
Jul Aug Sep Oct '2015
Nov Dec Jan Feb Mar Apr May Jun '2016
Jul Aug Sep Oct Nov Dec Jan'2017
Feb Mar Apr May Jun
Advanced Health South Africa - Theatre cases
Actual / Target
Operational focus
Increase patient numbers and specialist participation by:
encouraging more medical-scheme support centrally;
marketing the day-hospital concept locally and centrally; and
living our service mantra of working:
as a team, from the heart, and
in partnership with participating doctors,
to achieve patient satisfaction.
South African operations
Patient feedback in a nutshello “Entire team was welcoming and friendly.”o “Never thought I’d say this: It was a delightful experience.”o “What a lovely hospital with remarkable staff.”o “Fresh approach to healthcare, great business model for the future.”
Doctor feedback focus on facilities and service:o “A brilliant first list in a new, world-class facility with state-of-the-art
equipment and superb staff.”o “My patients and I are very happy and I plan to increase admissions and
procedures. Management acts on specialist treatment requests, withoutbureaucratic delays. Nursing is focused on patient needs. Architecture, designand trendy interiors substantiates the impression of service excellence. Theymaintain a two-way communication system based on trust with specialists andpatients.”
South African operations
Industry overview
Carl Grillenberger
The day-hospital concept in South Africa is gaining ground because of:o Cost considerations:
o Competition Commission, medical schemes, private patients;o State-of-the-art equipment;o High standards of service:
o Specialistso Patients
The introduction of new medical-scheme benefits as from January 2017 saw an acceleration in day-hospital utilisation.
More than 70% of surgical procedures performed as same-day cases in acute hospitals can be channeled to a day hospital.
Industry
Discovery day-surgery remuneration for 2017“Day-surgery facilities offer medical scheme members an option for safe,convenient care in cost-effective settings for the relevant procedures. We wouldlike to remind you about the day-surgery benefit that offers you preferentialremuneration when you perform procedures in such units. Any willing surgeonwho performs a procedure in a day-surgery facility will benefit from a significantincrease in their chosen direct payment arrangement rate:”
Medical schemes
Gems Promotion of “Day Case” Procedures
“We have identified that a significant percentage of surgical and other procedures can be
performed safely and efficiently on an outpatient basis.
These procedures currently take place on an inpatient basis in traditional, acute hospitals and
the associated costs are far greater than what
outpatient services would dictate.
Outpatient-based procedures are known to be cost effective and are encouraged in principle. “
Please contact us by using the following details:
Email: [email protected]
Medical schemes
Advantages as summarised by Medscheme to doctors
o “The percentage elective cases done as same-day cases in day clinics and
acute hospitals combined was 43%, while the percentage same-day cases
done in day clinics was a mere 12%.”
o “It is more cost-effective to have certain elective procedures done at day
clinics.”
o “A cost per event cost comparison between day clinics and acute
hospitals shows that it is 4% more cost-effective in day clinics. If cataract
and lens procedures are excluded, the differential increases to 13%.”
“Possible reasons for low day clinic utilisation in South Africa
It might be that the fact that there is no clear understanding in the market of
the vast role of day clinics or what they have contributed to the significant
difference between the South African experience and the international
experience.”
South African Operations:Why day hospitals?
Planned capital raising
Objectives:
o Raise R100 million in the form of a rights issue togetherwith a BEE investment of a further R100 million.
o Secure support from a BEE partner to acquire a 25.1%interest in Advanced Health Limited.
o The BEE consortium will include supporting doctors.o Capital raising to be implemented during the second
quarter of 2017.
Disclaimer• Statements contained throughout this presentation regarding the prospects of the group have not been
reviewed or reported on by die group’s external auditors.
• Forward-looking statements involve known and unknown risks, uncertainties and other important factors that
could cause the actual results, performance or achievements of the company to be materially different from the
future results, performance or achievements expressed or implied by such forward-looking statements. These
forward looking statements may be identified by word such as “expect, believe, anticipate, plan, estimate,
intend, project, target, predict, outlook” and words of similar meeting.
• Forward looking statements are not statements of fact but statements by management of Advanced Health
Limited based on its current estimates, projections, beliefs, assumptions and expectations regarding the group’s
future performance.
• No assurance can be given that forward-looking statements will prove to be correct and undue reliance should
not be placed on such statements.
• The risks and uncertainties inherent in the forward-looking statements contained in this presentation include,
but are not limited to; domestic and international business and market conditions; changes in the domestic or
international regulatory and legislative environment in the countries in which the Group operates; changes to
domestic and international operational, economic, political and social risks; changes to IFRS and the
interpretations, applications and practices subject thereto as they apply to past, present and future periods; and
the effects of both current and future litigation.
• The company undertakes no obligation to update publically or release any revisions to these forward-looking
statements contained in this presentation and does not assume responsibility for any loss or damage
whatsoever and howsoever arising as a result of the reliance of any part thereon, including, but not limited to,
loss of earnings, profits or consequential loss or damage.
