Slide 1: Interim results for six months ended 31 March 2009
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION IInterim t i resultslt for six months ended 31 March 2009 Richard Friedland | Group CEO Vaughan Firman | Group CFO
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, the Group’s operations including those made are described under i
Slide 3: Presentation outline
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION Presentation outline Group highlights South Africa (SA) United Kingdom (UK) Financial review Guidance 3
Slide 4: Group highlights
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION Group highlights S lid operating Solid i performance f in i both b h SA and d UK Strong volume driven organic growth in SA GHG maintains growth and expands UK footprint Acquisition of Community Hospital Group passed by Competition Ap
Slide 5: Group financial highlights
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION Group financial highlights 31 Mar 31 Mar Revenue growth driven by: % 2008 2009 • Strong organic growth in SA • Strong operational performance Revenue (Rm) 10 343 11 619 12 and inclusion of Nuffield for full six months in UK EBITDA (R
Slide 6: Geographic contributions
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION Geographic contributions Revenue Operating profit Net interest paid HEPS 52% 59% 78% 11% 89% 22% 48% 41% SA UK 6
Slide 7: South Africa
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION South Africa Financial and operating review
Slide 8: South Africa
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION South Africa 31 Mar 31 Mar Organic growth driven by high Rm 2008 2009 % demand for private healthcare services Revenue 4 907 5 616 14,4 EBITDA 803 927 15 4 15,4 Margin M i iimprovementt iin h hospitals it l tempered by losses in Prim
Slide 9: SA Hospitals and Emergency services
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION SA Hospitals and Emergency services • Bedded down extensive changes made to business model in 2008 • Strong organic growth of 6 6,3% 3% in patient days – weekday occupancies >70% • Tight working capital focus – debtors’ days at recor
Slide 10: SA Hospitals and Emergency services
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION SA Hospitals and Emergency services 31 Mar 31 Mar • Strong patient day growth of Rm 2008 2009 % 6,3% • New hospitals reaching maturity Revenue 4 275 4 873 14,0 and benefit of additional beds EBITDA 751 943 25 6 25,6 • Operating lever
Slide 11: Primary Care
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION Primary Care • Solid revenue growth of 17,6% - Driven by 15,6% growth in managed care lives (lower income) - 5,4% growth in patient visits to Medicross centres • Results negatively impacted by - Underwriting provision (IBNR) increase
Slide 12: Primary Care
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION Primary Care 31 Mar 31 Mar Revenue growth driven by: Rm 2008 2009 % • 15,6% growth in Prime Cure managed lives Revenue 632 743 17,6 • 5,4% growth in patient visits to 1,7 million R Reported t d EBITDA 52 (16) IBNR shortfall (16) 11 E
Slide 13: United Kingdom
Living our values DIGNITY | CARE | PARTICIPATION | TRUTH | PASSION United Kingdom Geographical coverage Financial and operating review
Slide 14: Geographical coverage
Living our values DIGNITY | CARE | PARTICIPATION | TRUTH | PASSION Geographical coverage 4 new sites it added dd d to t portfolio tf li (total (t t l 63), 63) iincreasing i GHG’ GHG’s national ti l coverage 2006/07 48 existing BMI hospitals 2006/07 3 Netcare UK NHS sites 2006/07 1 mobile ophthalmic
Slide 15: Highlights
Living our values DIGNITY | CARE | PARTICIPATION | TRUTH | PASSION Highlights Revenue growth of 8% EBITDA growth of 12% Quality metrics remain at an all time high Network of facilities expanded at low capital cost Increased NHS volumes offset self pay volume decline Debt covenants met with growing h
Slide 16: UK income statement
Living our values DIGNITY | CARE | PARTICIPATION | TRUTH | PASSION UK income statement 31 Mar 31 Mar £m 2008 2009 % Revenue 376,2 407,4 8,3 • Static PMI levels • Strong NHS growth EBITDA before b f items it below b l 98 8 98,8 109 4 109,4 10 7 10,7 • Nuffield integration complete Non-recurring and c
Slide 17: Growth trajectory
Living our values DIGNITY | CARE | PARTICIPATION | TRUTH | PASSION Growth trajectory EBITDA* h lf half-year th (%) growth EBITDA growth of 11% in 24 2009 notwithstanding 20 economic slowdown: • Caseload growth • Positive tariff settlements 12 • Further efficiencies across 11 business Acquisition 7 •
Slide 18: Growth trajectory
Living our values DIGNITY | CARE | PARTICIPATION | TRUTH | PASSION Growth trajectory EBITDA margin* i *h lf /f ll year (%) half-year/full 26,9 26,3 26,2 Margin has grown by almost 3 percentage points since 25,6 25 6 acquisition through i iti th h ongoing i focus on top line growth combined with an e
Slide 19: GHG leveraged growth
Living our values DIGNITY | CARE | PARTICIPATION | TRUTH | PASSION GHG leveraged growth R Revenue (£ (£m)) EBITDAR (£ (£m)) 109 407 310 70 H2 06 H1 07 H2 07 H1 08 H2 08 H1 09 H2 06 H1 07 H2 07 H1 08 H2 08 H1 09 The structure of the business’ cost base Revenue growth since Netcare’s acquisition (oper
Slide 20: GHG leveraged growth
Living our values DIGNITY | CARE | PARTICIPATION | TRUTH | PASSION GHG leveraged growth O C EBITDA (£ OpCo (£m)) P C rentt (£ PropCo (£m)) 46 63 55 16 H2 06 H1 07 H2 07 H1 08 H2 08 H1 09 H2 06 H1 07 H2 07 H1 08 H2 08 H1 09 The fixed nature of the lease increments to PropCo (which increase at 2,5% pe
Slide 21: Revenue mix
Living our values DIGNITY | CARE | PARTICIPATION | TRUTH | PASSION Revenue mix Th There h has b t l offset been a natural ff t b t between NHS and d self lf pay (%) 100 Static revenue mix other than NHS/ lf pay NHS/self 80 Our outlook on NHS use of the 60 private i t sector t remains i cautiously ti
Slide 22: Total patient volumes
Living our values DIGNITY | CARE | PARTICIPATION | TRUTH | PASSION Total patient volumes G th iin patient Growth ti t volumes l (000 (000s)) iis accelerating l ti Organic Including acquisitions Total cases 6% and total patient visits 3% 6% 3% continue ti tto grow both b th overall and excluding the
Slide 23: Operational efficiencies
Living our values DIGNITY | CARE | PARTICIPATION | TRUTH | PASSION Operational efficiencies In-year benefits achieved Ward labour hours 333 Nurse skill and agency mix 33 The efficiency program remains on track Theatre utilisation 33 Fixed cost rationalisation 33 This should continue to support Finan
Slide 24: Financial review
Living our values PARTICIPATION | CARE | DIGNITY | TRUTH | PASSION Financial review Structural factors impacting results Summary financials Group debt Cash generation Capital reduction
Slide 25: Structural factors impacting results
Living our values PARTICIPATION | CARE | DIGNITY | TRUTH | PASSION Structural factors impacting results Sale of Ampath • Gross proceeds of R1 027m (proceeds of R897m plus interest for 13 months) • Per IFRS: - Ampath proportionately consolidated until 28 February 2009 - Capital profit of R678m and ca
Slide 26: Summarised group income statement
Living our values PARTICIPATION | CARE | DIGNITY | TRUTH | PASSION Summarised group income statement 31 Mar 31 Mar Rm 2008 2009 % • Strong operational performance Revenue 10 343 11 619 12,3 and inclusion of Nuffield hospitals for full 6 months O Operating ti profit fit 1 584 1 822 15 0 15,0 • Strong
Slide 27: Historical financial performance
Living our values PARTICIPATION | CARE | DIGNITY | TRUTH | PASSION Historical financial performance 24 000 4 000 3 370 2 990 18 000 3 000 12 000 1 822 1 578 2 000 1 584 1 444 947 1 190 6 000 554 1 000 488 3 586 4 009 8 938 10 343 11 619 6 853 7 534 11 152 18 607 21 735 0 0 H1 05 H1 06 H1 07 H1 08 H1
Slide 28: Operating profit margin over 3 years
Living our values PARTICIPATION | CARE | DIGNITY | TRUTH | PASSION Operating profit margin over 3 years H Hospitals it l and d Emergency E services i UK 1 200 20 18 4% 18,4% 1 000 17,8% 17,7% 17,8% 17,3% 18 17,2% 800 16 16,0% 16,1% 600 15,6% 14 400 13,9% 580 748 593 821 781 843 803 933 1 046 1 068 2
Slide 29: Headline earnings per share
Living our values PARTICIPATION | CARE | DIGNITY | TRUTH | PASSION Headline earnings per share 31 Mar 31 Mar Cents per share 2008 2009 % • Profit on sale of Ampath Basic earnings per share 25,3 79,4 213,8 • Impairment of land and buildings H dli adjustments Headline dj t t (1 6) (1,6) (46 1) (46,1)
Slide 30: Summarised group balance sheet | assets
Living our values PARTICIPATION | CARE | DIGNITY | TRUTH | PASSION Summarised group balance sheet | assets 30 Sep 31 Mar Rm 2008 2009 Movement Non-current assets 48 993 45 214 (3 779) • Cu Currency e cy impact pact o of R1 8 876m 6 P Property, t plant l t & equipment i t 29 732 27 818 (1 914) Goodwi
Slide 31: Summarised group balance sheet | equity and liabilities
Living our values PARTICIPATION | CARE | DIGNITY | TRUTH | PASSION Summarised group balance sheet | equity and liabilities 30 Sep 31 Mar Rm 2008 2009 Movement Total shareholders’ equity 8 851 6 246 (2 605) N Non-current t liabilities li biliti 39 864 39 066 (798) • Currency impact of R2 102m Long-te
Slide 32: Group debt
Living our values PARTICIPATION | CARE | DIGNITY | TRUTH | PASSION Group debt 30 Sep 31 Mar Fixed versus floating Rm 2008 2009 Facilities interest rate UK gross debt* (£m) 1 939 1 936 2 012 South Africa UK gross d debt bt (R (Rm)) 28 621 26 371 30 170 SA gross debt (Rm) 4 930 4 556 7 506 44% 56% Gro
Slide 33: UK debt position
Living our values PARTICIPATION | CARE | DIGNITY | TRUTH | PASSION UK debt position UK OpCo (56 hospitals) PropCo 1 (36 hospitals) PropCo 2 (8 hospitals) • £227m gross debt • £1 628m gross debt • £81m gross debt • 88% fixed @ 7,6% • 100% fixed @ 6,25% • 100% fixed @ 6,9% • Interest: £18m • Interest:
Slide 34: UK debt covenants
Living our values PARTICIPATION | CARE | DIGNITY | TRUTH | PASSION UK debt covenants • Property primary covenant - Interest cover ratio (rental income:interest expense) - Rent escalations and interest rates are fixed - No risk of co covenant enant breach • Property secondary covenant - Loan to value
Slide 35: Covenants – growing headroom
Living our values PARTICIPATION | CARE | DIGNITY | TRUTH | PASSION Covenants – growing headroom P C (£ PropCo (£m)) Strong revenue growth 200 + operational efficiencies = widening rental cover ** 160 1.70** Fixed annual rental 1.52** escalation of 2.5% 1.44** 120 Interest rate fixed Debt reducing vi
Slide 36: Cash generated from operations
Living our values PARTICIPATION | CARE | DIGNITY | TRUTH | PASSION Cash generated from operations G Group (R (Rm)) SA and d UK (R ) M (Rm), h 2009 March 72%* 65%* 2 400 72%* 1 600 2 000 1 200 1 600 84% 84%* 1 200 800 800 400 400 2 186 1 579 2 474 1 788 926 778 1 549 1 010 0 0 H1 08 H1 09 SA UK EBITD
Slide 37: Offshore swaps
Living our values PARTICIPATION | CARE | DIGNITY | TRUTH | PASSION Offshore swaps Net derivative instruments 30 Sep 31 Mar Rm 2008 2009 Movement Net interest rate swaps (UK) (1 108) (3 874) (2 766) • UK interest rates decreased resulting in R2 766m transferred N t iinterest Net t t rate t swaps (SA)
Slide 38: Growth in capital reductions
Living our values PARTICIPATION | CARE | DIGNITY | TRUTH | PASSION Growth in capital reductions • Distribution cover of 2,1 times Capital reductions (cents per share) Capital reductions determined after having regard for • Degearing benefits 18 • SA leverage ratios • Investment opportunities • HPFL
Slide 39: Guidance 2009
Living our values PASSION | CARE | DIGNITY | PARTICIPATION | TRUTH Guidance 2009 Guidance South Africa United Kingdom
Slide 40: Guidance 2009 - unchanged
Living our values PASSION | CARE | DIGNITY | PARTICIPATION | TRUTH Guidance 2009 - unchanged SA UK Revenue Estimated revenue growth Estimated revenue growth >10% growth of between 5% and 7% Operating Expecting improvement Expect to maintain efficiencies in EBITDA margins 17% to 18% EBITDA margins Ca
Slide 41: Interim results for six months ended 31 March 2009
Living our values CARE | DIGNITY | PARTICIPATION | TRUTH | PASSION IInterim t i resultslt for six months ended 31 March 2009 Richard Friedland | Group CEO Vaughan Firman | Group CFO