Slide 1: Unaudited Interim Group Results for the six months ended 31 March 2018
NETCARE LIMITED Unaudited Interim Group Results for the six months ended 31 March 2018 HEALTH & CARE Centered around you
Slide 2: Significant changes over the last 6 months
Significant changes over the last 6 months SA healthcare market Acquisition of Akeso Designing the Netcare Strategic decision to returned to growth and Clinics enabling growth of tomorrow through exit UK market Netcare grew market in mental health and digitisation of clinical, share care services nu
Slide 3: Review of investment in United Kingdom
Review of investment in United Kingdom 3
Slide 4: Original UK investment rationale and market changes
Original UK investment rationale and market changes Acquisition - May 2006 2008/9 global financial crisis GHG PropCo 1 • Paid £219m1 for 52.6% of GHG2 • PMI4 membership impacted by • Near-zero interest rates pushed • Payor mix: 97.5% Private; 2.5% large scale job losses swaps out-of-the-money NHS3 •
Slide 5: Strategic decision to exit UK market
Strategic decision to exit UK market Strategic review of UK Rent negotiations BMI funding Conclusion market • > 5 years of • Inadequate return for • Netcare acceded to • Constrained negotiations Netcare if further lenders’ demands healthcare landscape • Not able to conclude funds invested • Strategi
Slide 6: So what's the story…
So what’s the story…
Slide 7: Our core purpose and strategy
OUR CORE PURPOSE AND STRATEGY Driving improved economic value whilst contributing to the transformation and sustainability of our society • Portfolio of quality healthcare • Advancement in medical technology assets • Brownfield and Greenfield expansion • Clinical excellence • New verticals: • Patien
Slide 8: Financial overview – continuing operations
FINANCIAL OVERVIEW – CONTINUING OPERATIONS Revenue Normalised EBITDA1 Adjusted HEPS2 from Interim dividend continuing operations R9 966m R2 080m 44.0 cents ▲8.2% ▲8.1% 87.7 cents ▲15.8% ▲8.5% 1. Normalised to exclude impairment of contractual economic interest in BMI Healthcare debt and profit on sa
Slide 9: Global industry fundamentals driving local growth
Global industry fundamentals driving local growth Aging, chronic illness and cancer continue to drive increased utilisation of healthcare Aging Diabetes Mental health Cancer The number of people Globally, the number Depression is the leading On a global level, the aged over 60 of people with cause o
Slide 10: Our local market mirrors the global trend
Our local market mirrors the global trend Aging, chronic illness and cancer continue to drive increased utilisation of healthcare Chronic diseases are expected to increase by 57% by 20201 79% of deaths worldwide attributable to chronic diseases occur in developing countries – World Health Organisati
Slide 11: Netcare's operating platform
Netcare’s operating platform 21 297 66 EMPLOYEES HOSPITALS 7 5 PUBLIC PRIVATE TRAINING PARTNERSHIP COLLEGES HOSPITALS 79 11 416 NETCARE 911 BEDS1 SITES 860 422 RENAL DIALYSIS THEATRES STATIONS 15 10 CANCER CARE DAY THEATRES CENTERES 1. 2. SA = 10 180; Lesotho = 425; Akeso = 811 Medicross medical and
Slide 12: Hospital and emergency services
HOSPITAL AND EMERGENCY SERVICES Expansion hospitals have shown growth above market Occupancy: Full week: 65.0% Revenue growth ▲3.5% (H1 2017: 63.2%) 20.0% patient days Weekday: 70.8% (H1 2017: 69.0%) 15.0% 10.0% No new beds 5.0% commissioned 30 ▲51 0.0% specialists with beds moved to higher FY13 FY1
Slide 13: Hospital and emergency services - financial performance
HOSPITAL AND EMERGENCY SERVICES - FINANCIAL PERFORMANCE 31 MAR 31 MAR Rm 2017 1 2018 % • ▲ 5.1% revenue per patient day • ▲ 3.5% patient days Revenue 8 818 9 637 9.3 • Restructure of emergency services EBITDA 1 874 2 068 10.4 completed and Mozambican operations Operating Profit 1 577 1 745 10.7 clos
Slide 14: Primary care - financial performance
PRIMARY CARE - FINANCIAL PERFORMANCE 31 MAR 31 MAR Rm 2017 2018 % • • Major structural changes in FY2017 Underlying revenue growth of 7.4% Revenue 389 329 (15.4) • 3 new Medicross medical and dental centres EBITDA 50 51 2.0 • New day theatres in Upington and Kimberley ramping up in-line with Operati
Slide 15: Enabling Netcare's participation in mental health
Enabling Netcare’s participation in mental health
Slide 16: Akeso's unique mental health & care offering
Akeso’s unique mental health & care offering 12 hospitals1 Specialised programmes: 811 beds 28% market share Akeso’s ultimate aim is to • Integrated and family-oriented treatment for a range of psychiatric, psychological and addictive disorders change the direction of patients’ • Run by multi-discip
Slide 17: Established person centered clinical programmes delivered by multidisciplinary clinicians
Established person centered clinical programmes delivered by multidisciplinary clinicians 17
Slide 18: Akeso's history of continued growth
AKESO’S HISTORY OF CONTINUED GROWTH Arcadia - 2018 Total number of beds 2017 - Nelspruit 928 Umhlanga - 2016 872 811 2016 - George 741 Milnerton - 2015 654 2015 - Montrose Manor Stepping Stones - 2013 529 2013 - Kenilworth Clinic 432 404 Parktown - 2012 2011 - Alberton 290 Pietermaritzburg - 2011 21
Slide 19: Quality, innovation and sustainability
Quality, innovation and sustainability
Slide 20: Driving safer & improved quality of care through innovation
Driving safer & improved quality of care through innovation Multi-resistant organisms or “super bugs” pose the greatest threat to global healthcare Pulsed-ultraviolet light robots Mobile app development • Netcare is the first in Africa to introduce Hand hygiene App: pulsed-ultraviolet light robots t
Slide 21: Person centered care, digitally enabled
Person centered care, digitally enabled Global partnership to deliver mobile electronic patient records on Apple iOS platform Improves patient care Allows doctors to Downloads all clinical Improves World leading drug and safety, accuracy of access records offsite information directly administration
Slide 22: Why digital matters
Why digital matters 22
Slide 23: Committed to enhancing sustainability
Committed to enhancing sustainability Update on Netcare’s 10 year sustainability programme, started in 2013 Now in year 5, achieved 20% reduction in energy Several other initiatives rolled out such as more intensity, on track to achieve 30-35% over 10 year efficient domestic hot water systems and ai
Slide 24: Self sustainable water provision in the Western Cape
Self sustainable water provision in the Western Cape Programme to ensure Desalination plant Boreholes sunk at all Water saving initiatives sustainability in the installed at Netcare Western Cape have significantly event of CBMH1 hospitals, several reduced water Day Zero Medicross and NRC2 utilisatio
Slide 25: Committed to enhancing sustainability
Committed to enhancing sustainability 14 000 hospitals represented - Netcare one of two groups globally to receive awards in all categories Netcare is included in: Dow Jones Dow Jones Sustainability World Sustainability Market Index Emerging Markets Index FTSE Russell/JSE FTSE4 Good Responsible Emer
Slide 26: Contributing to alleviating youth unemployment
Contributing to alleviating youth unemployment Playing our role in optimising the potential of our society Anchor participant in YES campaign Have already partnered with HWSETA1 launched by President Ramaphosa and trained and employed 51 previously unemployed and unskilled youths Committed to train
Slide 27: Driving sustainability and enterprise development
Driving sustainability and enterprise development New joint venture with Adcock Ingram Critical Care to make shoes for school children from recycled drip bags Not for profit JV established to recycle drips and other PVC products Creates employment and enterprise development opportunities in areas of
Slide 28: Financial review
Financial review
Slide 29: Group financial overview
GROUP FINANCIAL OVERVIEW Robust performance UK exit: Akeso acquisition: Strong Group statement from SA operations • Results consolidated • Effective of financial position and for H1 2018 but 27 March 2018 solid cash generation reclassified as a • Included in Group discontinued statement of financial
Slide 30: Discontinued operations and exceptional items
DISCONTINUED OPERATIONS AND EXCEPTIONAL ITEMS 31 MAR 31 MAR Rm 2017 2018 Discontinued operations • Decline in underlying UK trading performance Trading losses (5) (388) RPI swap fair value adjustment (net of tax)1 651 (85) 646 (473) • Economic and contractual rights remain Exceptional items intact –
Slide 31: UK - BMI Healthcare
UK - BMI HEALTHCARE 31 MAR 31 MAR £m 2017 2018 % • ▼4.5% NHS cases Revenue 458.0 438.9 (4.2) • ▼9.6% PMI cases EBITDAR¹ (before items below) 107.1 88.2 (17.6) • ▲2.3% Self-pay cases Property rentals (83.1) (85.1) (2.4) • GHG PropCo 1 EBITDA¹ (before items below) 24.0 3.1 (87.1) £73.8m (2017: £72.1m)
Slide 32: Summarised group statement of profit or loss
SUMMARISED GROUP STATEMENT OF PROFIT OR LOSS 31 MAR 31 MAR Rm 2017 1 2018 % Revenue 9 207 9 966 8.2 • EBITDA margin EBITDA2 1 924 2 080 8.1 20.9% (2017: 20.9%) Operating profit2 1 605 1 733 8.0 • Interest on economic Net financial expenses (91) (86) interest in BMI debt: R104m (2017: R77m) Earnings
Slide 33: Headline earnings per share (HEPS)
HEADLINE EARNINGS PER SHARE (HEPS)¹ 31 MAR 31 MAR Cents per share 2017 2018 % ADJUSTED HEPS² (CENTS) HEPS 80.3 (10.6) (113.2) H1 H2 Adjusted HEPS² 80.8 87.7 8.5 89.8 Contribution from Netcare’s interest in BMI debt (cents per share) 2017 2018 H1 4.1 5.4 H2 6.3 Full year 10.4 5.4 80.8 87.7 2017 2018
Slide 34: Summarised group statement of financial position
SUMMARISED GROUP STATEMENT OF FINANCIAL POSITION 30 SEP 31 MAR FOREX AKESO OTHER Rm 2017 2018 EFFECT UK EXIT ACQUISITION MOVEMENT Assets PPE, goodwill and intangible assets 15 945 13 488 (349) (3 704) 1 489 107 Other non-current assets 4 008 1 401 (192) (2 389) (26) Current assets 8 116 4 741 (223)
Slide 35: SA debt
SA DEBT FACILITY UTILISATION (Rm) 31 MAR 30 SEP 31 MAR Rm 2017¹ 2017 2018 Utilised Cash Available Gross debt 5 047 5 490 6 211 6 689 Cash (323) (1 582) (629) Net debt 4 724 3 908 5 582 Net debt to EBITDA² (times) 1.2 1.0 1.3 629 Cost of debt (%) 8.9 8.9 8.7 Net interest paid: 6 211 Other net interes
Slide 36: Guidance
Guidance
Slide 37: Guidance
Guidance FY 2018 organic growth Impact of Akeso in H2 Modest EBIDTA margin FY 2018 capital in patient days 2018 is expected to be expansion expected expenditure between 2% - 3%; earnings neutral ±R1.4 billion including Akeso 5% - 6% 37
Slide 38: Thank you
Thank you