Slide 1: Unaudited Interim Group Results for the six months ended 31 March 2020
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Slide 2: Overview
Solid underlying operational performance 01 to the end of February 2020, in line with our guidance 9th March 2020 first Netcare COVID-19 case. March 2020 was a transitionary period and 02 materially impacted by extensive COVID-19 preparations and curtailed patient volumes Overview April 2020 signifi
Slide 3: Guidance
Impact of COVID-19 introduces significant 01 forecast risk Future margins will be impacted by 02 increased risk mitigation costs, lower volumes and case mix Guidance Withdrawal of full year guidance due to high degree of uncertainty in H2 2020 03 Interim dividend suspended to preserve cash Cash pres
Slide 4: Financial overview
Financial overview 1 Revenue R10 713m | ▲ 1.8% EBITDA R2 127m | ▲ 1.0% Adjusted HEPS 79.0 cents | ▼ 6.3% (from continuing operations) Net Debt/ EBITDA 1.5x ROIC 18.1% 1. Normalised to exclude impact of IFRS 16 and the exceptional item, comprising a once-off, non-cash share-based payment expense on t
Slide 5: Operational overview
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Slide 6: Key activity drivers
Key activity drivers Total Acute Mental health Acute Primary Care patient days patient days¹ patient days2 occupancy¹ visits Full week: 62.5% 5 MONTHS: (2019: 64.0%) ▼ 1.2% ▼ 1.7% ▲ 4.7% ▼5.3% Weekday: 67.7% (2019: 69.3%) Full week: 62.3% 6 MONTHS: (2019: 64.7%) ▼ 2.6% ▼ 3.2% ▲ 2.9% ▼4.8% Weekday: 6
Slide 7: Hospital and emergency services
Hospital and emergency services Financial performance 31 Mar 31 Mar Rm 2019 2020 % Revenue: Revenue 10,129 10,380 2.5 • ▲ 2.1% acute hospital revenue • ▲ 11.4% mental health revenue EBITDA1 2,110 2,076 (1.6) • ▲ 5.6% acute hospital revenue per Operating profit1 1,777 1,718 (3.3) patient day2 EBITDA:
Slide 8: Primary care
Primary care Financial performance 31 Mar 31 Mar Rm 2019 2020 % Revenue: Revenue 391 342 (12.5) • 15 Medicross day clinics integrated into Hospital Division from 1 October 2019 EBITDA 52 52 • Rationalisation of 7 loss-making clinics • ▲7.3% underlying revenue growth Operating profit 27 21 (22.2) EBI
Slide 9: Total COVID-19 cases
Categorisation of Netcare COVID-19 cases treated1 Inpatient Hospital emergency Medicross cases: department cases: GP cases: Total 337 166 140 COVID-19 Inpatient cases breakdown by ward: cases General ward 55% treated by High care 13% Netcare Intensive care unit 23% Subacute beds 9% 1. Total cases as
Slide 10: Impact of COVID-19 lockdown
Impact of COVID-19 lockdown Demand for healthcare has fallen significantly Proxy for medical admissions: Proxy for surgical admissions: Fall in respiratory viral cases SA weekly deaths from unnatural causes April 2019 vs. April 20201 1 Jan 2020 – 22 April 20203 1400 33% 33% 1200 25% 1000 Percentage
Slide 11: Impact of COVID-19 lockdown
Sun 01 Mar Tue 03 Mar Thu 05 Mar Sat 07 Mar Mon 09 Mar Wed 11 Mar Fri 13 Mar Total PDs Sun 15 Mar Tue 17 Mar Thu 19 Mar Sat 21 Mar Mon 23 Mar Wed 25 Mar National emergency Fri 27 Mar Sun 29 Mar Tue 31 Mar Thu 02 Apr Surgical PDs Sat 04 Apr Mon 06 Apr Wed 08 Apr Fri 10 Apr Sun 12 Apr Tue 14 Apr Thu 1
Slide 12: COVID-19 preparedness
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Slide 13: Netcare's "abundance of caution"
01 Principles of Disaster Management Netcare’s Principles of Occupational Health “abundance of 02 and Safety caution” approach to the pandemic is drawn from a 03 Principles of the Quadruple Aim combination of: Guidelines and policies of: o National Department of Health 04 o National Institute of Com
Slide 14: Netcare's pandemic framework
Netcare’s pandemic framework Principles of disaster management Establishment of command and control structures cascaded throughout the Group: • Gold command structure established to manage pandemic • 24-hour Central Joint Operations Centre (JOC) • JOC’s established at each hospital • Clinical COVID-
Slide 15: Occupational health and safety principles
Occupational health and safety principles Hierarchy of controls Removal of risk Elimination Limit spread through access control, pre-access screening, limited visitation and closure of retail pharmacy and coffee shops Mitigation of risk Substitution Interventions such as patient isolation, cohorting
Slide 16: Quadruple aim
Quadruple aim How are we ensuring the safety of our staff? Safe and healthy working conditions and environment For our staff: • Training on the application and removal of PPE • Increased awareness and focus on infection prevention control measures • Proactive and supportive communication to ensure c
Slide 17: Leveraging our digital capabilities
Leveraging our digital capabilities Using digital tools to ensure the safety of our staff, doctors and patients Digital access Remote Track and control surveillance trace An online screening tool to screen all staff, Pre-hospital clinical surveillance of chronic A mobile contact tracing tool that co
Slide 18: Leveraging our digital capabilities
Leveraging our digital capabilities Screening of Hospital division staff, doctors and patients 18 May 2020 Temperature screening Yellow - required approval Total screened Green by SEC1 Denied by SEC1 Total facilities completed 28,047 27,986 25,803 2,118 126 59 Visit type Staff type Contact method Al
Slide 19: COVID-19 has accelerated the need for telemedicine
Telemedicine enables clinicians to continue providing care to patients 01 without exposing people to unnecessary risks Allows for pre-screening and COVID-19 has 02 evaluation to determine whether a physical visit is necessary accelerated the need for Health Professions Council of South telemedicine
Slide 20: Netcare telemedicine
Netcare telemedicine We have developed a telemedicine solution with unique functionality 01 No need to download or install an app 02 Data is encrypted Dial-in option for patients who don’t have 03 access to data Integrates into electronic health record 04 and billing systems 05 No third-party bookin
Slide 21: Telemedicine implementation
Telemedicine implementation Rollout of telemedicine across the Netcare Group Rollout in Medicross in progress Today (to be complete end of May) June Rollout to specialists Rollout to Akeso, July Hospital emergency departments and Netcare Occupational Health 21
Slide 22: Financial review
NETCARE | Financial review
Slide 23: Group financial overview
Group financial overview Resilient financial Reporting period Adoption of Cost savings benefits performance in a comprises five months IFRS 16: Leases on the realised in payroll, rapidly changing of ‘business as usual’ modified basis, with catering and medical market and economic and one month of no
Slide 24: Summarised Group statement of profit or loss
Summarised Group statement of profit or loss 31 Mar 31 Mar Rm 2019 2020 % Results influenced by: Revenue 10,520 10,713 1.8 • Impact of COVID-19 on March EBITDA¹ 2,106 2,360 12.1 2020 trading Operating profit¹ 1,748 1,787 2.2 • Adoption of IFRS 16: Leases – comparative figures not Other net financial
Slide 25: IFRS 16 and COVID-19 lost volume impact
IFRS 16 and COVID-19 lost volume impact Estimated 31 Mar 2020 IFRS 16 COVID-19 31 Mar 2020 31 Mar 2019 Rm as reported impact impact underlying as reported % change Revenue 10,713 143 10,856 10,520 3.2 EBITDA1 2,360 (233) 64 2,191 2,106 4.0 Operating profit1 1,787 (49) 64 1,802 1,748 3.1 Other net fi
Slide 26: B-BBEE ownership transaction
B-BBEE ownership transaction Further allocation All HPFL shares Equal allotment of Strengthened Once-off, non-cash of 61.1 million fully paid up after 3,000 Netcare shares ownership share-based Netcare shares 2015 scheme to 20,350 employees component moving payment expense under Health restructure –
Slide 27: Headline earnings per share (HEPS)
31 Mar 31 Mar Cents per share 2019 2020 % HEPS 80.7 44.0 (45.5) Adjusted HEPS Including IFRS 16 impact 84.3 71.7 (14.9) Headline Add back: IFRS 16 impact 7.3 earnings per Excluding IFRS 16 impact 84.3 79.0 (6.3) share (HEPS) from continuing operations Adjusted HEPS (cents) Adjusted HEPS excluding IF
Slide 28: Summarised Group statement of financial position
Summarised Group statement of financial position 30 Sep 31 Mar Rm 2019 2020 PPE, goodwill and intangible Assets assets: • Capex of R451m (2019: R497m) PPE, goodwill and intangible assets 14,322 14,358 • Expansion R142m (2019: R218m) Right-of-use assets 3,780 • Replacement R309m Other non-current ass
Slide 29: Debt
Debt 31 Mar 30 Sep 31 Mar Rm 2019 2019 2020 GCR credit rating: Gross debt 7,495 6,846 8,195 • Long term AA- Cash (1,313) (1,732) (1,964) • Short term A1+ Net debt 6,182 5,114 6,231 Net debt to EBITDA: Net debt to EBITDA¹ (times)2 1.5 1.2 1.5 • Post IFRS 16: 1.3 times Cost of debt (%) 8.8 8.6 7.9 Int
Slide 30: Debt facilities and cash preservation initiatives
Debt facilities and cash preservation initiatives Facility utilisation at 31 Mar 2020 (Rm) Cash preservation initiatives: • Deferral of uncommitted capex • Suspension of interim dividend 2 139 • Secured further facilities 2 450 8 195 • Approximately R665m UK property 1 964 sale proceeds • Reduction
Slide 31: Potential future impact of COVID-19
Potential future impact of COVID-19 31
Slide 32: Predicting the impact of COVID-19 on Netcare
We have built an internally focused 01 model to try predict the impact of COVID-19 on Netcare Predicting the impact A myriad of factors and assumptions of COVID-19 02 influence our model (epidemiological and behavioural) on Netcare “All models are wrong, but some are useful” The model is dynamic and
Slide 33: How long could it take for the surge to impact Netcare?
How long could it take for the surge to impact Netcare? New COVID-19 cases per day Estimated cumulative COVID-19 cases 8 000 700 000 Scenario B Scenario B 7 000 600 000 6 000 500 000 Scenario A 5 000 400 000 Scenario A 4 000 300 000 3 000 200 000 2 000 100 000 1 000 - - 11 Jul 20 27 Jul 20 05 Mar 20
Slide 34: Will Netcare have enough capacity?
Demand for hospitalisation dependent on three key factors: 01 o Number of COVID-19 infections o % of infected people requiring hospitalisation o % of hospitalisations requiring critical care Estimated 20% of infected people will Will Netcare 02 require hospitalisation based on current SA experience
Slide 35: Split of adult critical care beds in South Africa
Split of adult critical care beds in South Africa1 2 053 1 260 284 831 294 570 280 338 131 22% 31% 38% 33% 45% 46% 44% 62% 70% 40% 50% 37% 43% 51% 67% 54% 26% Critical care 38% 18% 19% 24% 6% 12% 13% 11% beds in South GAUTENG MPUMALANGA NORTHERN CAPE FREE STATE KWA-ZULU NATAL EASTERN CAPE WESTERN CA
Slide 36: Will Netcare have sufficient capacity?
Will Netcare have sufficient capacity? Netcare’s total hospital and critical care COVID-19 patients per day Scenario A Scenario B 4 000 4 000 3 669 3 000 3 000 2 624 2 000 2 000 1 687 Netcare critical care Netcare critical care capacity: 1 393 capacity: 1 393 1 000 1 000 1 207 - - 30 Jul 20 02 Jul 2
Slide 37: When could we return to a 'normal' operating environment?
When could we return to a ‘normal’ operating environment? Netcare patient days Netcare expected COVID-19 (excl. COVID-19) patient days 250 000 140 000 120 000 COVID-19 patient days per month 200 000 FY19 Patient days per month 100 000 FY20 150 000 Scenario B 80 000 60 000 100 000 40 000 50 000 20 00
Slide 38: Thank you
Thank you 38
Slide 39: Annexure
Annexure 39
Slide 40: Health policy environment
Health policy environment Unified health Collaboration for Commitment on Contracting in effort COVID-19 cost recovery private capacity Collaborations between DTI&C1 granted an exemption Netcare committed to Contracting in of private National DOH, National from Competition Act for the sole assisting
Slide 41: Disclaimer
hid You're in safe hands Disclaimer Certain statements in this document constitute ‘forward-looking statements’. Forward-looking statements may be identified by words such as ‘believe’, ‘anticipate’, ‘expect, ‘plan’, ‘estimate’, ‘intend’, ‘project, ‘target, ‘predict’ and ‘hope’. By their nature, for