Slide 1: Netcare Limited Results Presentation for the year ended 30 September 2017
NETCARE LIMITED RESULTS PRESENTATION for the year ended 30 September 2017
Slide 2: Audited Group Results for the Year Ended 30 September 2017
32 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION AUDITED GROUP RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2017 NETCARE LIMITED
Slide 3: Presentation Outline
33 NETCARE LIMITED Results presentation for the year ended 30 September 2017 PRESENTATION OUTLINE Group Overview South Africa United Kingdom Financial Review Guidance
Slide 4: Group Overview
34 NETCARE LIMITED Results presentation for the year ended 30 September 2017 GROUP OVERVIEW
Slide 5: Group | A comprehensive network of healthcare services
35 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | A comprehensive network of healthcare services 4 115 13 403 621 96 Hospitals Hospital Theatres Primary beds healthcare centres¹ 63 84 7 30 056 Renal dialysis Netcare
Slide 6: Group | Overview
36 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | Overview 5 Market Experienced SA Hospitals Earnings conditions funder-led experienced negatively presented demand an improved impacted by challenges initiatives secon
Slide 7: Group | Financial overview
37 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | Financial overview 6 ▲1.2% Group revenue Normalised Adjusted Final dividend SA revenue R34 125m EBITDA¹ HEPS from maintained at ▼0.9% ▼9.6% R4 265m continuing 57.0 ce
Slide 8: South Africa
38 NETCARE LIMITED Results presentation for the year ended 30 September 2017 SOUTH AFRICA
Slide 9: SA | Healthcare network
39 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | Healthcare network 8 54 5 10 606 425 Hospitals Public Private Beds¹ Theatres Partnership hospitals 15 93 843 84 Day theatres PHC² and Renal dialysis Netcare 911 sub-acut
Slide 10: SA | Overview
40 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | Overview 9 Number of beneficiaries per year¹ (000) A challenging trading period characterised by low economic growth 8 809 8 878 8 845 0.4% increase in medical scheme be
Slide 11: SA | Overview financials
41 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | Overview financials 10 30 Sep 30 Sep + ▲3.9% in Hospital and Rm 2016¹ 2017 % Emergency Services offset by ▼39.6% in Primary Care Revenue 18 891 19 114 1.2 + Positive EBI
Slide 12: SA | Hospital and Emergency Services business update
42 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | Hospital and Emergency Services business update 11 ▼1.0% Impact due to Occupancy: patient days demand Full week 65.5% with growth management of (H1: 63.2%, H2: 67.8%) ex
Slide 13: SA | Hospital and Emergency Services
43 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | Hospital and Emergency Services 12 30 Sep 30 Sep + Results impacted by Emergency Rm 2016¹ 2017 % Services non-cash prior year accounting error and weaker Revenue 17 713
Slide 14: SA | Hospital and Emergency Services: underlying trading
44 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | Hospital and Emergency Services: underlying trading 13 30 Sep 30 Sep + Adjusted for Emergency Rm 2016¹ 2017 % Services non-cash prior year accounting error Revenue 17 63
Slide 15: SA | Primary Care
45 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | Primary Care 14 30 Sep 30 Sep + Outsourcing of retail pharmacies Rm 2016 2017 % + Wind-down of managed care Revenue 1 178 711 (39.6) administration services EBITDA 118 1
Slide 16: SA | New developments for H2 2017
46 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | New developments for H2 2017 15 Cancer Services Mental Health + Netcare Milpark: + Acquisition of Akeso Clinics (12 facilities) is › Gamma Knife: international gold stan
Slide 17: SA | Strategic focus areas
47 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | Strategic focus areas 16 Adapting to a lower growth environment Electricity usage per bed Completed restructure of Emergency Services – centralised administration, (kWh)
Slide 18: SA | 'Asset lighter' approach
48 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | ‘Asset lighter’ approach 17 Transfer of beds across hospitals Investment 2018 Netcare Netcare Selective Milpark Pinehaven investment From From In areas Rand Protea Day w
Slide 19: SA | Netcare's Ncelisa Programme
49 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | Using “liquid gold” to create miracles: Netcare’s Ncelisa¹ Programme 18 First in Africa This is offered Recruited, trained 56 premature Smallest to offer through four an
Slide 20: United Kingdom
50 NETCARE LIMITED Results presentation for the year ended 30 September 2017 UNITED KINGDOM
Slide 21: UK | Hospital network
51 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION UK | Hospital network 20 Flagship hospital Large hospital 59 196 Hospitals¹ Theatres London area 2 797 8 884 Beds Employees 1. 56 hospitals, 3 clinics
Slide 22: UK | Overview
52 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION UK | Overview 21 Private acute market started contracting in 2017 Caseload mix as funders became more active in demand management BMI continued to experience a reduction in P
Slide 23: UK | Effect of NHS financial constraints
53 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION UK | What changed in the last 6 months? Effect of NHS financial constraints intensified 22 NHS under + “We have a Health Service under real pressure from rising demand within
Slide 24: UK | A market-wide decline
54 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION UK | What changed in the last 6 months? A market-wide decline 23 Growth in NHS admissions NHS admissions NHS delivered admissions Total NHS by Private delivered admissions pr
Slide 25: UK | Business update
55 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION UK | Business update 24 Caseload growth (%) ▼0.9% ▼5.5% revenue PMI caseload driven by with a 2,0% ▲0.5% caseload weaker H2 0,5% and lower revenue per case ▲9.6% ▲4.9% Self-p
Slide 26: UK | BMI Healthcare (OpCo)
56 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION UK | BMI Healthcare (OpCo) 25 30 Sep 30 Sep £m 2016 2017 % + H2 ▼5.0% + Lower revenue per admission Revenue 895.5 887.1 (0.9) EBITDAR¹ (before items below) 224.5 191.6 (14.7)
Slide 27: UK | Strategy and focus areas
57 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION UK | Strategy and focus areas 26 New CEO, Achieving Site specific Implementation Dr Karen Prins, consistently high remedial of enterprise-wide to drive quality ratings interv
Slide 28: UK | Market outlook – still appears attractive over long term
58 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION UK | Market outlook – still appears attractive over long term 27 Laing & Buisson projected independent hospital revenue growth + UK private hospital market is attractive over
Slide 29: UK | Offer to GHG minorities
59 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION UK | Offer to GHG minorities 28 Acquisition of No upfront Selling parties … subject to minority interests cash payment will receive right BMI Healthcare subject to certain to
Slide 30: Financial Review
60 NETCARE LIMITED Results presentation for the year ended 30 September 2017 FINANCIAL REVIEW
Slide 31: Group | Financial overview
61 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | Financial overview 30 ZAR/GBP exchange rate (Rand) Capital profit Discontinuation 25 on sale of old of Mozambique CBMH land emergency and buildings services business
Slide 32: Group | Exceptional items
62 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | Exceptional items 31 30 Sep 2016 30 Sep 2017 30 Sep 2016 30 Sep 2017 £m £m Rm Rm SA 169 Profit on sale of CBMH land and buildings 203 Tax effect (34) UK Impairment an
Slide 33: Group | Summarised statement of profit or loss
63 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | Summarised statement of profit or loss 32 30 Sep 30 Sep Rm 2016¹ 2017 % Revenue 37 729 34 125 (9.6) + Market conditions presented challenges to top-line growth EBITDA
Slide 34: Group | Constant currency performance
64 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | Constant currency performance 33 Revenue (Rm) Normalised EBITDA (Rm) 18 838 ▲0.1% 3 650 1 392 ▼21.1% 15 011 18 661 87 290 377 SA UK Exchange rate impact 18 891 19 114
Slide 35: Group | Headline earnings per share (HEPS)
65 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | Headline earnings per share (HEPS)¹ 34 30 Sep 30 Sep Cents per share 2016 2017 % Adjusted HEPS² (cents) HEPS 118.0 113.3 (4.0) 108,3 SA 183.1 169.2 (7.6) 96,1 98,7 98
Slide 36: Group | Summarised statement of financial position
66 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | Summarised statement of financial position 35 30 Sep 30 Sep Exceptional Other Rm 2016 2017 items movement Assets PPE¹, goodwill and intangible assets 18 677 15 945 (3
Slide 37: Group | SA debt
67 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | SA debt 36 30 Sep 30 Sep Rm 2016¹ 2017 Facility utilisation (Rm) Gross debt 4 535 5 490 8 350 Cash (948) (1 582) Net debt 3 587 3 908 Net debt to EBITDA² (times) 0.9
Slide 38: Group | UK debt: BMI Healthcare
68 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | UK debt: BMI Healthcare 37 30 Sep 30 Sep £m 2016 2017 Facility utilisation (£m) Gross debt 167.9 188.5 52,0 Cash (57.9) (52.0) 50,0 Net debt 110.0 136.5 Net debt to E
Slide 39: Guidance
69 NETCARE LIMITED Results presentation for the year ended 30 September 2017 GUIDANCE
Slide 40: Guidance | SA outlook
70 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Guidance | SA outlook 39 Growth in Q4 2017 Benefits of IT digitisation of front Reduction patient days Emergency Services end services and in capex expected to restructuring
Slide 41: Guidance | UK outlook
71 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Guidance | UK outlook 40 40 Private healthcare 2018 expected Self-pay volumes Restructuring market remains to be a year of expected to increase programme to address challengi
Slide 42: Thank You
72 NETCARE LIMITED Results presentation for the year ended 30 September 2017 November 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION THANK YOU
Slide 43: Appendices
73 NETCARE LIMITED Results presentation for the year ended 30 September 2017 APPENDICES
Slide 44: Appendix | UK income statement – segmental analysis
74 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Appendix | UK income statement – segmental analysis 43 BMI Exceptional GHG United £m Healthcare items PropCo 2¹ Kingdom Revenue 887.1 887.1 EBITDAR 184.5 (221.1) (36.6) GHG P
Slide 45: Appendix | Group borrowings at 30 September 2017
75 NETCARE LIMITED Results presentation for the year ended 30 September 2017 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Appendix | Group borrowings at 30 September 2017 44 Gross borrowings Net borrowings Rm 30 Sep 2016 30 Sep 2017 30 Sep 2016 30 Sep 2017 SA 4 535 5 490 3 587 3 908 BMI Healthca
Slide 46: Netcare Limited Results presentation for the year ended 30 September 2017
76 NETCARE LIMITED Results presentation for the year ended 30 September 2017
Slide 47: Administration
77 NETCARE LIMITED Results presentation for the year ended 30 September 2017 ADMINISTRATION NETCARE LIMITED COMPANY SECRETARY (Registration number 1996/008242/06) L Bagwandeen JSE ordinary share code: NTC ISIN: ZAE000011953 SPONSOR JSE preference share code: NTCP Deutsche Securities (SA) Proprietary
Slide 48: www.netcare.co.za
www.netcare.co.za Investor relations: ir@netcare.co.za