Slide 1: Netcare Limited Audited Group Results
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION Netcare Limited Audited Group Results for the year ended 30 September 2008
Slide 2: Note regarding forward looking statements
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION Note regarding forward looking statements The Company advises investors that any forward looking statements Factors that may affect or projections made by the Company Company, the Group’s Group s operations including those made are d
Slide 3: Presentation format
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION Presentation format Group highlights South African operations United Kingdom operations Regulatory update Financial review Guidance 2009 3
Slide 4: Group highlights
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION Group highlights Treated over 4 million patients in SA and UK Acquired 14 hospitals (8 in the UK and 6 in SA) UK delivered strong operating performance Achieved Level 3 B-BBEE accreditation (dti) and Empowerdex AA rating Netcare 911
Slide 5: Group financial highlights
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION Group financial highlights 30 Sep 2007 30 Sep 2008 Revenue (Rm) 18 607 21 735 17% revenue growth, organic EBITDA (Rm) 4 034 4 614 growth of 12% Operating profit (Rm) 2 990 3 370 g ((%)) EBITDA margin 21,7 21,2 , 13% increase in opera
Slide 6: Geographic contributions
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION Geographic contributions 6
Slide 7: South African operations
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION South African operations Business overview Hospitals and Emergency Services Primary Care
Slide 8: Business overview
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION Business overview • Challenging operating environment in 2008 • Sub-inflationary tariff increases across all divisions • Significant regulatory challenges for the healthcare sector • Business units and head office restructured • Inte
Slide 9: South Africa consolidated
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION South Africa consolidated Financial highlights 30 Sep 30 Sep Rm 2007 2008 % Revenue 8 869 10 385 17,1 Growth driven by hospital acquisitions q and strong g Primary y EBITDA 1 685 1 739 3,2 Care growth Operating profit 1 406 1 401 (0,
Slide 10: SA Hospitals
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION SA Hospitals • Jacques du Plessis appointed MD - May 2008 • New tariff structure from January 2008 • Surgical consumables charged at cost • Pharmaceuticals charged at Single Exit Price (SEP) • 40% of billings on alternative reimburse
Slide 11: Emergency Services (Netcare 911)
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION Emergency Services (Netcare 911) • Tumi Nkosi appointed MD - January 2008 • Over 240 emergency, rapid response vehicles and ambulances • 7,5 , million insured members • 213 236 dispatched calls from new 100 seat call centre • Electro
Slide 12: SA Hospitals and Emergency Services
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION SA Hospitals and Emergency Services Financial highlights 30 Sep 30 Sep Strongg revenue g growth Rm 2007 2008 % • 11,6% organic growth • 4,3% acquisitive and new Revenue 7 782 9 020 15,9 hospitals growth EBITDA 1 584 1 735 9,5 Revenue
Slide 13: Primary Care
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION Primary Care Financial highlights 30 Sep 30 Sep Revenue growth driven by Rm 2007 2008 % • 32,5% growth in managed care lives (lower income) Revenue 1 087 1 365 25,6 • 8% growth in patient visits to 3,7 million in 101 centres EBITDA 1
Slide 14: Primary Care
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION Primary Care Growth in managed care lives Change in risk profile 14
Slide 15: Excellent progress on transformation
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION Excellent progress on transformation Empowerdex Empowerdex Element Weight rating 2007 rating 2008 Ownership 20 13,59 17,04 • Improved from level 5 to level 3 ((dti codes for B-BBEE)) Management control 10 5,12 6,24 • AA Empowerdex ra
Slide 16: United Kingdom operations
Living our values TRUTH | CARE | DIGNITY | PARTICIPATION | PASSION United Kingdom operations Geographical coverage Financial highlights Operational highlights
Slide 17: Geographical coverage
Living our values TRUTH | CARE | DIGNITY | PARTICIPATION | PASSION Geographical coverage 11 new sites added to portfolio, portfolio increasing GHG GHG’s s national coverage 48 existing BMI hospitals 3 Netcare UK NHS sites 8 new sites added in the year 3 sites added since year end 1 mobile ophthalmic
Slide 18: Highlights
Living our values TRUTH | CARE | DIGNITY | PARTICIPATION | PASSION Highlights • Strong, focused and aligned team in place • 8 new hospitals added within the year and 1 post year end • Revenue growth of 12% • Significant operational efficiencies achieved • Reported EBITDA growth of 18% • Quality metr
Slide 19: Income statement
Living our values TRUTH | CARE | DIGNITY | PARTICIPATION | PASSION Income statement 30 Sep 30 Sep £m 2007 2008 % Revenue 688,9 772,6 12 Strong revenue growth EBITDA before items below 176,4 202,3 15 Operational leverage resulting in Non-recurring items and capital 15% growth in EBITDA (8,5) (4,8) -
Slide 20: Existing and new business
Living our values TRUTH | CARE | DIGNITY | PARTICIPATION | PASSION Existing and new business 30 Sep 30 Sep % 2007 2008 Existing New Existing New £m Total sites sites Total sites sites Total Revenue 688,9 739,4 33,2 772,6 7% 5% 12% EBITDA before items below 176,4 196,6 5,7 202,3 11% 4% 15% Non-recurr
Slide 21: Growth trajectory
Living our values TRUTH | CARE | DIGNITY | PARTICIPATION | PASSION Growth trajectory EBITDA margin (%) EBITDA growth (%) 15,1% 2,7% Acquisition Acquisition 2004 2005 2006 2007 2008* 21 * Existing sites
Slide 22: Total patient volumes
Living our values TRUTH | CARE | DIGNITY | PARTICIPATION | PASSION Total patient volumes Growth in patient volumes is accelerating Caseload has grown by 7% (2% like-for-like) • This is well ahead of historical growth rates reflecting the success of GP referral activity • NHS volumes are being added
Slide 23: Utilisation
Living our values TRUTH | CARE | DIGNITY | PARTICIPATION | PASSION Utilisation The hospitals have significant surplus capacity to support growth Spare capacity (by site) Theatre 10% - 70% Wards | day 30% - 70% Wards | overnight 50% - 80% Consulting g rooms 15% - 70% Our efficiency drive Accommodate
Slide 24: Revenue mix
Living our values TRUTH | CARE | DIGNITY | PARTICIPATION | PASSION Revenue mix Static revenue mix other than NHS / Self Pay There has been a natural offset between NHS and Self Pay As cosmetic work is a small part of our business and our Self Pay and NHS case mixes are similar Our outlook on NHS use
Slide 25: Operational efficiencies
Living our values TRUTH | CARE | DIGNITY | PARTICIPATION | PASSION Operational efficiencies In-year benefits achieved Ward labour hours 333 Nurse skill mix 3 The efficiency programme remains on track Theatre utilisation 3 Non nursing headcount 333 Supported margin growth in 2007/08 Head office conso
Slide 26: Quality improvements
Living our values TRUTH | CARE | DIGNITY | PARTICIPATION | PASSION Quality improvements Total complaints by quarter Patient satisfaction Best Average Worst Unplanned returns to theatre rates MRSA Bacteraemias (%) Quality has improved despite the efficiency drive – best ever performance on all key me
Slide 27: Regulatory update
Living our values PARTICIPATION | CARE | DIGNITY | TRUTH | PASSION Regulatory update
Slide 28: Regulatory update
Living our values PARTICIPATION | CARE | DIGNITY | TRUTH | PASSION Regulatory update South Africa United Kingdom • Significant regulatory pressure in 2008 • Focus of legislation is on the quality of care • Draft National Health Bill deferred until 2009 and patient safety • NHRPL cost benchmarking st
Slide 29: Financial review
Living our values DIGNITY | CARE | PARTICIPATION | TRUTH | PASSION Financial review Factors impacting results Summary financials Group debt Cash generation C it l di Capital distributions t ib ti
Slide 30: Factors impacting results | acquisitions
Living our values DIGNITY | CARE | PARTICIPATION | TRUTH | PASSION Factors impacting results | acquisitions A Acquisition i iti off Community C it (667 b beds) d ) • Community was acquired in October 2007 for 14,2m Netcare shares issued at R11,89 • Netcare assumed R171m in debt and R53m in capital p
Slide 31: Factors impacting results | exchange rate and interest rate
Living our values DIGNITY | CARE | PARTICIPATION | TRUTH | PASSION Factors impacting results | exchange rate and interest rate Net derivative instruments 30 Sep 30 Sep Rm 2007 2008 Movement UK swap rates decreased resulting in R1 205m fair value Net interest rate swaps (UK) 109 (1 096) (1 205) loss
Slide 32: Summarised group income statement
Living our values DIGNITY | CARE | PARTICIPATION | TRUTH | PASSION Summarised group income statement 30 Sep 30 Sep Rm 2007 2008 % Revenue 18 607 21 735 16,8 • Impact of acquisitions 5,0% • New builds 2 2,3% 3% Operating profit 2 990 3,370 12,7 Net financial expense (2 135) (2 427) 13,7 • Impact of a
Slide 33: Non-recurring items | impact on earnings
Living our values DIGNITY | CARE | PARTICIPATION | TRUTH | PASSION Non-recurring items | impact on earnings South Africa 30 Sep 30 Sep UK 30 Sep 30 Sep Rm 2007 2008 Rm 2007 2008 Community 0 (8) Restructuring costs (79) (123) Retrenchments 0 (12) Nuffield transaction cost 0 (53) IBNR 20 (28) Pension
Slide 34: Headline earnings per share diluted by once off tax credit
Living our values DIGNITY | CARE | PARTICIPATION | TRUTH | PASSION Headline earnings per share diluted by once off tax credit 30 Sep 30 Sep Cents per share 2007 2008 % Basic earnings per share 75,4 63,5 (15,8) Headline adjustments 2,2 (2,0) Basic headline earnings Includes 15,9 cents deferred tax 77
Slide 35: Summarised group balance sheet | assets
Living our values DIGNITY | CARE | PARTICIPATION | TRUTH | PASSION Summarised group balance sheet | assets 30 Sep 30 Sep Currency Other Rm 2007 2008 Acquisitions Disposals impact¹ movements Non-current assets 45 328 49 211 2 969 (480) 2 064 (670) PPE 26 683 29 732 2 367 (480) 1 239 (77) Goodwill 16
Slide 36: Summarised group balance sheet | equity and liabilities
Living our values DIGNITY | CARE | PARTICIPATION | TRUTH | PASSION Summarised group balance sheet | equity and liabilities 30 Sep 30 Sep Currency Other Rm 2007 2008 Acquisitions Disposals impact¹ movements Total shareholders equity 8 582 8 851 304 (35) Non current liabilities Non-current 36 351 40 0
Slide 37: Group debt
Living our values DIGNITY | CARE | PARTICIPATION | TRUTH | PASSION Group debt Net debt at 30 Sep 2008 Facilities Utilised UK debt (£m) 2 068 1 880 UK debt (Rm) 30 518 27 752 SA debt (Rm) 7 335 4 837 Net debt (Rm) 37 853 32 589 Cost of debt (%) 30 Sep 30 Sep (inclusive of hedging costs) 2007 2008 UK
Slide 38: South African debt position
Living our values DIGNITY | CARE | PARTICIPATION | TRUTH | PASSION South African debt position Debt Cost Rm % SA debt at 30 September 2008* Convertible bond¹ 1 505 6,0 • Proceeds from the sale of Ampath in 2009 will substantially reduce debt DMTN 2 260 10,1 Pref shares 477 8,6 Cost of debt increased
Slide 39: UK debt position
Living our values DIGNITY | CARE | PARTICIPATION | TRUTH | PASSION UK debt position 30 Sep 30 Sep Cost £m 2007 2008 % Propco 1 644 1 634 6,3 UK debt financing in place for Opco 214 230 7,7 next 5 years • Property debt repayable in Nuffield 82 6,9 quarterly capital installments, increasingg annuallyy
Slide 40: Growth in capital distributions
Living our values DIGNITY | CARE | PARTICIPATION | TRUTH | PASSION Growth in capital distributions Distribution per share (cents per share) • Distribution cover of 1,9 times Capital distributions determined after having regard for • Degearing benefits • SA leverage ratios • Investment opportunities
Slide 41: Guidance 2009
Living our values PASSION | CARE | DIGNITY | PARTICIPATION | TRUTH Guidance 2009 Guidance South Africa United Kingdom
Slide 42: Guidance 2009
Living our values PASSION | CARE | DIGNITY | PARTICIPATION | TRUTH Guidance 2009 South Africa UK Revenue Estimated revenue growth Estimated revenue growth >10% 10% growth of between 5% and 7% Operating Expecting improvement Expect to maintain EBITDA margins efficiencies in EBITDA margins 17% to 18%
Slide 43: Netcare Limited Audited Group Results
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION Netcare Limited Audited Group Results for the year ended 30 September 2008