Slide 1: Audited Group Results for the Year Ended 30 September 2015
Netcare Limited AUDITED GROUP RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2015
Slide 2: Group overview, South Africa, United Kingdom, Financial review, Guidance
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 | Overview
Group | Overview South Africa Good Significant Further (SA) operating expansion of margin expansion performance hospital network, from operational across all two new hospitals efficiency divisions opened in programmes Ongoing focus September on improving clinical quality outcomes United Kingdom Stro
Slide 5: Group | A comprehensive network of healthcare services
Group | A comprehensive network of healthcare services 113 13 206 95 83 Hospitals Hospital Primary healthcare Retail beds facilities/clinics pharmacies 59 85 7 28 423 Renal dialysis Netcare 911 Netcare Employees facilities emergency bases training colleges CARE • DIGNITY • TRUTH • PARTICIPATION • PA
Slide 6: Group | Financial overview for 2015
Group | Financial overview for 2015 South Africa Adjusted 51% Revenue 49% 97% 3% United Kingdom HEPS Revenue EBITDA Adjusted HEPS Final dividend R33 711m R4 981m 189.0 cents 54.0 cents ▲6.1% ▲13.1% ▲12.6% ▲12.5% Total dividend 92.0 cents ▲15.0% CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION 6
Slide 7: Group | Quality strategy underpins results
Group | Quality strategy underpins results 8.62 out of 10 81.3% Overall rating of Netcare SA Medicross patients hospital services by patients “definitely recommend” score Sample size = 276 696 Best patient experience 98.1% 88.2% BMI Healthcare (UK) Netcare 911 patients patient satisfaction score “de
Slide 8: South Africa
South Africa CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION 8
Slide 9: SA | Healthcare network
SA | Healthcare network 52 5 10 421 92 Hospitals Public Private Beds¹ PHC² centres, travel Partnership hospitals clinics, day hospitals 740 85 83 3 999 Renal dialysis Emergency Retail Nursing and stations bases/sites pharmacies paramedic students 1. SA = 9 996; Lesotho = 425 2. PHC: Primary healthca
Slide 10: SA | Financials
SA | Financials 30 Sep 30 Sep Rm 2014 2015 % Revenue 16 273 17 289 6.2 Pricing growth consistent with historic trends but volume growth EBITDA 3 597 3 948 9.8 pressure specifically in Q4 Operating profit 3 110 3 411 9.7 Ongoing operating efficiency EBITDA margin (%) 22.1 22.8 programs deliver good r
Slide 11: SA | Hospital and Emergency Services
SA | Hospital and Emergency Services ▲6.1% New beds ▼1.2% weekday hospital beds to contribute occupancy (584 new beds) from 2016 to 73.8% to 9 996 as most were ▼1.1% full week opened towards to 67.8% year end 154 additional ▲0.2% ▲70 bps doctors patient days¹ EBITDA (78 in existing Weaker activity m
Slide 12: SA | Hospital and Emergency Services
SA | Hospital and Emergency Services 30 Sep 30 Sep Rm 2014 2015 % Revenue 15 171 16 119 6.2 • ▲6.0% revenue per patient day EBITDA 3 499 3 837 9.7 • ▲1.7% in patient days Q1-Q3 • Q4 volume fall specific to Operating profit 3 045 3 335 9.5 Gauteng North East region • In the period post year-end to EB
Slide 13: SA | Hospital and Emergency Services
SA | Hospital and Emergency Services Established long-term efficiency programmes, 290 bps increase in EBITDA margin 23.8% 23.1% 22.1% 21.4% 20.9% 2 529 2 826 3 093 3 499 3 837 2011 2012 2013¹ 2014 2015 EBITDA (Rm) EBITDA margin Compound annual growth in revenue of 7.5% vs. EBITDA of 11.0% 1. Restate
Slide 14: Netcare Pholoso Hospital (Polokwane, Limpopo)
Netcare Pholoso Hospital (Polokwane, Limpopo) CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION 14
Slide 15: SA | Netcare Pholoso Hospital
SA | Netcare Pholoso Hospital CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION 15
Slide 16: Netcare Pinehaven Hospital (West Rand, Gauteng)
Netcare Pinehaven Hospital (West Rand, Gauteng) CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION 16
Slide 17: SA | Netcare Pinehaven Hospital
SA | Netcare Pinehaven Hospital CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION 17
Slide 18: Netcare Christiaan Barnard Memorial Hospital, Cape Town – artist impression
Netcare Christiaan Barnard Memorial Hospital, Cape Town – artist impression CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION 18
Slide 19: SA | Netcare Christiaan Barnard Memorial Hospital
SA | Netcare Christiaan Barnard Memorial Hospital Construction in progress CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION 19
Slide 20: SA | Primary Care
SA | Primary Care 30 Sep 30 Sep Rm 2014 2015 % Revenue 1 102 1 170 6.2 Stable demand notwithstanding mild winter season EBITDA 98 111 13.3 Operating profit 65 76 16.9 Margin enhancement from structural and operational EBITDA margin (%) 8.9 9.5 refinements to business model Operating profit margin (%
Slide 21: SA | Outlook
SA | Outlook We expect higher growth in demand across our network of services in 2016 Opportunity to leverage existing capacity and pursue targeted investments for future growth 2016 investments include 44 new beds, ongoing expenditure on the new Netcare Christiaan Barnard Memorial Hospital and a su
Slide 22: United Kingdom
United Kingdom CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION 22
Slide 23: UK | Hospital network
UK | Hospital network 56 3 2 785 Hospitals Clinics Beds 32 7 439 90% Cancer care sites Employees of PMI population live within 60 minutes of a BMI facility CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION 23
Slide 24: UK | Business update
UK | Business update Strong New Economy improvement management continues in trading team to improve – performance in place not translated into increased PMI demand Strong growth ▲3.5% self-pay, Significant in NHS caseload as economy operational ▲13.5% strengthens and process and NHS efficiencies und
Slide 25: UK | BMI OpCo
UK | BMI OpCo 30 Sep 30 Sep £m 2014 2015 % Revenue 886.2 886.0 • ▲2.3% caseload growth • Revenue per case impacted by EBITDA (before items below) 52.2 64.0 22.6 payor mix change to NHS Restructure costs (11.9) Relating to efficiency programmes • Redundancy costs Fair value gain 3.1 • Contract renego
Slide 26: UK | Interventions to address EBITDA margin pressure
UK | Interventions to address EBITDA margin pressure 24% 28% 32% 35% 39% Growing volume and complex caseload 7.2% Streamlining patient pathways Continued focus to drive 6.3% efficiencies in all areas of the 5.9% business 5.6% 5.6% Re-engineering the workforce to address agency staff issues 76% 72% 6
Slide 27: UK | NHS financial health deteriorating
UK | NHS financial health deteriorating 1 000 NHS trusts end of year financial results (£m) 0 Q1 (1 000) (2 000) 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 F Surplus Deficit Forecast deficit Source on historic data: Department of Health Source on forecast: Monitor and Trust Development
Slide 28: UK | Capital Investment
UK | Capital Investment CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION 28
Slide 29: UK | Outlook
UK | Outlook Overall demand for health services will continue to grow given highly favourable underlying market dynamics Growing NHS deficits will put pressure on waiting lists, which may grow demand for private care from NHS funded patients as well as self-pay and PMI patients over time Ongoing foc
Slide 30: Financial review
Financial review CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION 30
Slide 31: Group | Financial overview
Group | Financial overview Improved Large scale margins and restructuring good operational completed and leverage in SA margins enhanced in UK Significant 584 new beds Healthy Group investment in including balance sheet expanding commissioning and strong SA portfolio of 2 new cash generation hospita
Slide 32: Group | Summarised income statement
Group | Summarised income statement 30 Sep 30 Sep Rm 2014 2015 % Revenue 31 783 33 711 6.1 • ▲90 bps margin from 13.9% to 14.8% EBITDA 4 404 4 981 13.1 • GHG PropCo rent R2 683m (2014: R2 464) Operating profit 3 253 3 728 14.6 ▲90 bps margin from 10.2% Net financial expenses (431) (467) to 11.1% Ear
Slide 33: Group | Constant currency performance
Group | Constant currency performance Revenue EBITDA 916 62 3.2% 11.7% 15 506 971 15 510 807 16 273 17 289 3 597 3 948 2014 2015 2014 2015 SA UK Exchange rate impact Average exchange rate of R18.55: £1 (2014: R17.49: £1) CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION 33
Slide 34: Group | Headline earnings per share (HEPS)
Group | Headline earnings per share (HEPS) Adjusted HEPS¹ (cents) 30 Sep 30 Sep Rm 2014 2015 % HEPS 158.2 174.1 10.1 98.2 96.1 SA 158.6 180.4 13.7 91.9 88.5 UK (0.4) (6.3) 78.1 76.9 Adjusted HEPS¹ 167.8 189.0 12.6 SA 161.8 182.9 13.0 UK 6.0 6.1 1.7 62.1 73.3 86.8 63.5 75.9 90.8 2013 2014 2015 2013 2
Slide 35: Group | Summarised statement of financial position
Group | Summarised statement of financial position 30 Sep 30 Sep Forex Other Rm 2014 2015 effect movement Assets Group capex R2 653m (2014: R1 945m) PPE¹, goodwill and intangible assets 15 820 18 501 1 078 1 603 • SA: R1 895m (2014: R1 195m) • UK: R758m (2014: R750m) Other non-current assets 3 479 4
Slide 36: Group | SA debt
Group | SA debt 30 Sep 30 Sep Facility utilisation (Rm) Rm 2014 2015 4 200 Gross debt 3 589 4 637 Cash (622) (1 345) 1 345 Net debt 2 967 3 292 4 637 Net debt to EBITDA (times) 0.8 0.8 Utilised Cash Available Cost of debt (%) 7.9 8.2 Net interest paid 128 72 Strong cash flow has contained increase i
Slide 37: Group | UK debt: BMI Healthcare
Group | UK debt: BMI Healthcare 30 Sep 30 Sep Facility utilisation (£m) £m 2014 2015 54.0 Gross debt 168.9 173.3 Cash (59.3) (54.0) 14.0 Net debt 109.6 119.3 173.3 Net debt to EBITDA (times)¹ 2.1 1.9 Utilised Cash Available Cost of debt² 6.9 7.5 Net interest paid 12.8 13.9 • Repaid £23.1m maturing d
Slide 38: Group | GHG PropCo debt: restructure complete
Group | GHG PropCo 1 debt: restructure complete Restructure Netcare Long-term leases 10-year of £1.5bn GHG no longer remain intact renewal option PropCo 1 holds any across these debt facility equity interest in 35 hospitals completed on GHG PropCo 1 to 2031 29 May 2015 GHG PropCo 1 deconsolidated fr
Slide 39: Guidance
Guidance CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION 39
Slide 40: Guidance | SA outlook
Guidance | SA outlook Resilient Increase in 584 new beds Continue to demand for depreciation charge will temporarily affect evaluate potential private healthcare due to 2015 occupancy levels international services despite expansionary capex (more pronounced opportunities weakening economy in H1 2016
Slide 41: Guidance | UK outlook
Guidance | UK outlook Expect growth Continued Uncertainty Capex: in self-pay demand growth in NHS on NHS pricing ±£40m but no indication of underpinned by - Monitor to announce recovery in PMI Choose & Book* NHS tariffs in January 2016, (effective April) * Rebranded to NHS ebookings CARE • DIGNITY •
Slide 42: Thank you
Thank you November 2015 You’re in safe hands
Slide 43: Appendix I | UK income statement - segmental analysis
Appendix I | UK income statement - segmental analysis £m BMI OpCo GHG PropCo WholeCo Revenue 886.0 886.0 EBITDA (before GHG PropCo rent and items below) 208.6 208.6 GHG PropCo rent (144.6) (144.6) EBITDA (before items below) 64.0 64.0 Non-recurring costs (8.8) (8.8) EBITDA 55.2 55.2 Operating profit
Slide 44: Appendix II | Group borrowings at 30 September 2015
Appendix II | Group borrowings at 30 September 2015 Gross borrowings Net borrowings 30 Sep 30 Sep 30 Sep 30 Sep Rm 2014 2015 2014 2015 SA 3 589 4 637 2 967 3 292 BMI OpCo 3 089 3 629 2 005 2 498 Group 6 678 8 266 4 972 5 790 £m BMI OpCo 168.9 173.3 109.6 119.3 Closing exchange rate 18.29 20.94 CARE
Slide 45: Disclaimer
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, forward-looking statement