Slide 1: Netcare Limited Unaudited Interim Group Results
Netcare Limited UNAUDITED INTERIM GROUP RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2015
Slide 2: Agenda
Group overview South Africa United Kingdom Financial review Guidance CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION 2
Slide 3: Group overview
Group overview CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION 3
Slide 4: Group | A comprehensive network of healthcare services
Group | A comprehensive network of healthcare services SA Hospitals 50 Public Private Partnership hospitals 4 Hospital beds 9 444 Primary healthcare facilities 84 Renal dialysis facilities¹ 58 Emergency bases/sites 86 Retail pharmacies 84 Netcare training colleges² 7 UK Hospitals 57 Hospital beds 2
Slide 5: Group | Overview
Group | Overview South Africa Good On-going focus Strong Quality (SA) operating on operational investment leadership performance efficiency pipeline coming and clinical across all translating into on-stream excellence divisions margin expansion in H2 remains our core foundation United Kingdom Improv
Slide 6: Group | Financial overview
Group | Financial overview Revenue (%) Adjusted HEPS (%) 50 49 3 4 Revenue R16 304m ▲5.8% EBITDA R2 344m ▲14.6% Adjusted HEPS 90.8 cents ▲19.6% Interim dividend 38.0 cents ▲18.8% 50 51 97 96 H1 2014 H1 2015 H1 2014 H1 2015 SA UK CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION 6
Slide 7: South Africa
South Africa CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION 7
Slide 8: SA | Business update
SA | Business update Sustained Systems Strong growth in On track demand for private improvements and cash generated to meet 2015 healthcare services cost containment from operations Quality Leadership despite pressures deliver benefits goals on SA economy CARE • DIGNITY • TRUTH • PARTICIPATION • PAS
Slide 9: SA | Financials
SA | Financials 31 Mar 31 Mar Rm 2014 2015 % Revenue 7 740 8 307 7.3 Business initiatives include: • Standardisation of EBITDA 1 658 1 893 14.2 consumables Operating profit 1 426 1 640 15.0 • Efficient procurement • Energy consumption management EBITDA margin (%) 21.4 22.8 • Nursing Ward Labour Tool
Slide 10: SA | Business update | Hospitals and Emergency Services
SA | Business update | Hospitals and Emergency Services Patient day Full week Acquisition Netcare hospitals equipped growth occupancy of 28-bed to ensure continuity of care of 1.4%¹ 66.6%; Ceres Hospital and patient outcomes weekday (Western Cape) despite significant instability occupancy of the nat
Slide 11: SA | Hospitals and Emergency Services
SA | Hospitals and Emergency Services 31 Mar 31 Mar Rm 2014 2015 % Revenue 7 221 7 749 7.3 • ▲1.4%¹ patient days • ▲6.2% revenue per patient day EBITDA 1 621 1 847 13.9 Operating profit 1 405 1 611 14.7 • Margin uplift of 140 bps EBITDA margin (%) 22.4 23.8 Operating profit margin (%) 19.5 20.8 Note
Slide 12: Hospital portfolio expansion
SA | R2bn capex investment for 2015 including 510 new beds and energy efficiency programmes of R130m Hospital portfolio expansion 9 934 9 424 Greenfield builds 2014 Ceres Netcare Netcare Netcare Netcare Netcare Netcare Netcare Netcare Optimed 2015F Ferncrest Kingsway N17 Pinehaven Polokwane Rehab St
Slide 13: SA | New hospital builds
SA | New hospital builds Netcare Polokwane Netcare Christiaan Barnard Memorial Netcare Polokwane: Opening September 2015 Netcare Pinehaven Netcare Pinehaven: Opening September 2015 Netcare Christiaan Barnard Memorial: Under construction CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION 13
Slide 14: SA | Update on sustainability strategy
SA | Update on sustainability strategy Secured R500m loan in 2014 Strategy targeting ±R1bn On track to achieve R27m of from Nedbank and AFD¹ accumulated savings accumulated saving in 2015, to fund sustainability strategy over next 10 years rising to R71m per annum and energy projects (based on real
Slide 15: SA | Response to the electricity crisis
SA | What patients need to know about Netcare’s response to the electricity crisis 8 National Ability to continue treating patients in case of a prolonged catastrophic Disaster regional or national blackout (transport/staff, diesel, water, sewerage, Management Plan security, medical supplies, commun
Slide 16: SA | Patient-centric quality performance vs. US HCAHPS benchmark
SA | Patient-centric quality performance vs. US HCAHPS¹ benchmark Definitely Medication Discharge Nursing Pain recommend information information score management 2012 2013 2014 H1 2015 US HCAHPS 1. HCAHPS: Hospital Consumer Assessment of Healthcare Providers and Services CARE • DIGNITY • TRUTH • PAR
Slide 17: SA | Primary Care
SA | Primary Care 31 Mar 31 Mar Rm 2014 2015 % Revenue 519 558 7.5 • 84 primary healthcare clinics • 36 pharmacies EBITDA 37 46 24.3 • 13 day theatres Operating profit 21 29 38.1 • Margin enhancement due to EBITDA margin (%) 7.1 8.2 cost efficiencies Operating profit margin (%) 4.0 5.2 • 1 new Medic
Slide 18: SA | Regulatory update
SA | Regulatory update Quality Norms and Standards Private Healthcare Market Inquiry • Netcare welcomes quality standards in SA • Netcare made comprehensive submissions • Draft Norms and Standards Regulations in October 2014 and April 2015 published 18 February 2015 • Process is currently in Phase I
Slide 19: United Kingdom
United Kingdom CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION 19
Slide 20: UK | Business update
UK | Business update Inpatient and day caseload 2.5% ▲14.8% No broad-based Outpatient activity NHS-funded improvement in continues to grow caseload private volumes in line with but pockets increasing range of growth of outpatient services -0.1% Shifting payor Optimisation ▲70 bps¹ and business mix a
Slide 21: UK | NHS-funded care in the private hospital sector
UK | NHS-funded care in the private hospital sector % of patients waiting more than 18 weeks² 14% Political stability Private sector following recent performs 12% election and only 4.4% of Conservative NHS elective 10% majority procedures vs. 0.4% in 2004¹ 8% NHS remains Patient 6% under significant
Slide 22: UK | Interventions to address EBITDA margin pressure
UK | Interventions to address EBITDA margin pressure 25% 28% 32% 35% 39% • Growing complex caseload 22.9% • Streamlining patient pathways 22.6% 22.2% • Continued focus to drive 20.9% efficiencies in all areas of the business 20.3% • Re-engineering the workforce to address agency issues 75% 72% 68% 6
Slide 23: UK | BMI OpCo
UK | BMI OpCo 31 Mar 31 Mar £m 2014 2015 % Revenue 446.8 450.2 0.8 • NHS-funded patients account for 39% of caseload EBITDA (before items below) 29.0 31.5 8.6 • Restructure costs relating to Restructure costs (6.1) efficiency programmes comprising redundancy costs, CC and site closure costs (6.6) co
Slide 24: UK | Considered investment strategy in hospital portfolio
UK | Considered investment strategy in hospital portfolio Expansion 30 sites E-prescribing for cancer services BMI Blackheath Critical care and interventional radiology BMI Ridgeway O-Arm scanner BMI Runnymede Theatre Upgrades 6 BMI sites Endoscopy - JAG¹ accreditation projects BMI Bishopswood Oncol
Slide 25: UK | Growth in complex procedures
UK | Growth in complex procedures BMI Group¹ BMI Alexandra Hospital (Manchester) 8.4% 2.0% 1.2% 5.0% 3.3% H1 2012 H1 2013 H1 2014 H1 2015 0.6% BMI Ross Hall (Glasgow) 9.0% 14.2% 13.9% H1 2012 H1 2013 H1 2014 H1 2015 H1 2012 H1 2013 H1 2014 H1 2015 1. Based on number of high acuity cases (major plus
Slide 26: UK | National BMI cancer care strategy
UK | National BMI cancer care strategy Cancer care services BMI hospitals offering cancer care services • Cancer services identified as core growth area for BMI (NHS £8bn; Private: £800m) • 32 BMI hospitals offer cancer care services • 14 BMI hospitals achieved the Macmillan Quality Environment Mark
Slide 27: UK | Quality update
UK | Quality update Patient feedback surveys Infection control • Patient satisfaction at highest level in 2 years • BMI compares favourably to NHS at 98.2% (2014: 97.3%) • No MRSA¹ superbug infections reported in last • 99% of NHS patients would recommend BMI six months to friends and family Overall
Slide 28: UK | Regulation
UK | Regulation Care Quality Commission (CQC) Competition Market Authority (CMA) • CQC regulates compliance of public and private • A long, demanding and expensive process that hospitals yielded limited benefits: • New quality inspection regime introduced › Private hospitals to collect, assess and ›
Slide 29: Financial review
Financial review CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION 29
Slide 30: Group | Financial overview
Group | Financial overview Solid Group Improving financial results operational results in SA and UK Efficiency Strong and process balance sheet improvements and deliver further cash generation operational leverage CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION 30
Slide 31: Group | Summarised income statement
Group | Summarised income statement 31Mar 31 Mar Local currency growth in SA Rm 2014 2015 % and UK Revenue 15 411 16 304 5.8 • GHG PropCo rent of R1 276m EBITDA 2 046 2 344 14.6 (2014: R1 202m) • Significant non-recurring costs Operating profit 1 490 1 758 18.0 on CC and UK restructure of R136m (201
Slide 32: Group | Constant currency performance
Group | Constant currency performance Revenue EBITDA 4.1% 268 11 7 729 14.0% 7 671 440 388 7 740 8 307 1 658 1 893 H1 2014 H1 2015 H1 2014 H1 2015 SA UK Exchange rate impact Average exchange rate of R17.76: £1 (Mar 2014: R17.15) CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION 32
Slide 33: Group | Headline earnings per share (HEPS)
Group | Headline earnings per share (HEPS) Adjusted HEPS¹ (cents) 31 Mar 31 Mar Cents per share 2014 2015 % HEPS 70.6 81.4 15.3 91.9 88.5 SA 72.2 85.2 18.0 78.1 76.9 UK (1.6) (3.8) Adjusted HEPS¹ 75.9 90.8 19.6 SA 73.3 86.8 18.4 UK 2.6 4.0 53.8 62.1 73.3 86.8 63.5 75.9 90.8 2013 2014 2015 2013 2014
Slide 34: Group | Summarised statement of financial position
Group | Summarised statement of financial position 30 Sep 31 Mar Forex Other Rm 2014 2015 effect movement Assets Group capex R747m (Mar 2014: R624m) PPE¹, goodwill and intangible assets 15 820 15 875 (134) 189 • SA: R531m (Mar 2014: R422m) Other non-current assets 3 479 3 760 (23) 304 • UK: R216m (M
Slide 35: Group | SA debt
Group | SA debt 31 Mar 30 Sep 31 Mar Rm 2014 2014 2015 Gross debt 4 197 3 589 4 971 Facility utilisation (Rm) Cash (544) (622) (1 397) 4 200 Net debt 3 653 2 967 3 574 1 397 Net debt to EBITDA (times) 1.1 0.8 0.9 4 971 Cost of debt (%) 7.5 7.9 7.8 Utilised Cash Available Net interest paid 71 128 62
Slide 36: Group | UK debt: BMI OpCo
Group | UK debt: BMI OpCo 31 Mar 30 Sep 31 Mar £m 2014 2014 2015 Gross debt 181.6 168.9 148.2 Facility utilisation (£m) Cash (72.7) (59.3) (38.6) 22.3 38.6 Net debt 108.9 109.6 109.6 Cost of debt¹ 6.5 6.9 7.4 148.2 Net interest paid 6.2 12.8 6.8 Utilised Available Cash Debt term 2014-18 Swap term 20
Slide 37: Group | GHG PropCo debt: restructure close to completion
Group | GHG PropCo 1 debt: restructure close to completion Consensual Global restructuring Finalisation short-term extensions agreement and implementation of maturity date concluded; of restructure to 15 June 2015 consents to proceed expected obtained on before 15 June 2015 22 April 2015 GHG PropCo
Slide 38: Guidance
Guidance CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION 38
Slide 39: Guidance | SA outlook
Guidance | SA outlook Demand for On-going Strong pipeline of Continue private healthcare business projects investment projects to evaluate services expected and initiatives 510 total new beds potential to remain resilient to drive operational for FY2015 international despite persistent excellence an
Slide 40: Guidance | UK outlook
Guidance | UK outlook UK Healthcare BMI hospitals Continued focus Actively investing market growth have a large footprint on excellence, in projects underpinned and spare capacity quality services and to enhance by strong to support growing driving operating revenue generation demand drivers supply
Slide 41: Thank you
Thank you
Slide 42: Appendices
Appendices
Slide 43: Appendix I | UK income statement - segmental analysis
Appendix I | UK income statement - segmental analysis £m BMI OpCo GHG PropCo WholeCo Revenue 450.2 450.2 EBITDA (before GHG PropCo rent and items below) 103.3 103.3 GHG PropCo rent (71.8) (71.8) EBITDA (before items below) 31.5 31.5 Non-recurring costs (6.1) (6.1) EBITDA 25.4 25.4 Operating profit 6
Slide 44: Appendix II | Group borrowings at 31 March 2015
Appendix II | Group borrowings at 31 March 2015 Gross borrowings Net borrowings 31 Mar 30 Sep 31 Mar 31 Mar 30 Sep 31 Mar Rm 2014 2014 2015 2014 2014 2015 SA 4 197 3 589 4 971 3 653 2 967 3 574 BMI OpCo 3 184 3 089 2 664 1 909 2 005 1 969 Group 7 381 6 678 7 635 5 562 4 972 5 543 £m BMI OpCo 181.6 1