Slide 1: Summarised Audited Group Results for the year ended 30 September 2020
Netcare Limited Summarised Audited Group Results for the year ended 30 September 2020
Slide 2: Overview
Overview Netcare privileged to play a role in supporting our country through the pandemic A solid first half before COVID-19 and a second half impacted by COVID-19 Positive signs of recovery post the surge in the pandemic COVID-19 has reaffirmed Netcare’s strategy 2
Slide 3: Financial Overview
Financial Overview 1 1 2 3 REVENUE EBITDA ADJUSTED HEPS R18 843m R2 088m 47.6 cents ▼ 12.7% ▼ 52.4% ▼ 72.2% 4 5 6 NET DEBT/ CASH & COMMITTED SUSPENSION EBITDA FACILITIES OF FINAL DIVIDEND 3.1x R5.6bn (2019: 1.2x) 1. Normalised to exclude impact of IFRS 16 and exceptional items, comprising a once-off
Slide 4: Operational Overview
Operational Overview 4
Slide 5: Key activity drivers
Key activity drivers TOTAL ACUTE HOSPITAL1 MENTAL HEALTH2 ACUTE HOSPITAL1 PRIMARY CARE PATIENT DAYS PATIENT DAYS PATIENT DAYS OCCUPANCY VISITS3 Full week: 62.5% (PRE-COVID-19) 5 MONTHS ▼ 1.2% ▼ 1.7% ▲ 4.7% ▼4.0% (2019: 64.0%) Weekday: 67.7% (2019: 69.3%) Full week: 45.5% 7 MONTHS ▼ 32.2% ▼ 31.6% ▼ 3
Slide 6: 2020 activity
2020 activity ACUTE HOSPITALS MENTAL HEALTH Patient Days Patient Days 90% 25,0 00.00 250 ,000.0 0 80% 80% 70% 20,0 00.00 70% 200 ,000.0 0 60% 60% 150 ,000.0 0 50% 15,0 00.00 50% 40% 40% 10,0 00.00 30% 100 ,000.0 0 30% 20% 20% 66% 65% 51% 62% 69% 62% 32% 37% 43% 49% 46% 49% 53% 72% 74% 52% 63% 80% 74
Slide 7: Hospital and emergency services
30 Sep 30 Sep Rm 2019¹ 2020 % Financial Performance Revenue 20 904 18 250 (12.7) Hospital and EBITDA² 4 273 2 052 (52.0) emergency Operating profit² 3 570 1 320 (63.0) services EBITDA margin (%) 20.4 11.2 Operating profit margin (%) 17.1 7.2 September 2020 reported on pre IFRS 16 basis REVENUE COVID
Slide 8: Primary Care
30 Sep 30 Sep Rm 2019¹ 2020 % Financial Performance Revenue 701 611 (12.8) Primary EBITDA 108 36 (66.7) Care Operating profit/(loss) 63 (17) (127.0) EBITDA margin (%) 15.4 5.9 Operating profit margin (%) 9.0 (2.8) September 2020 reported on pre IFRS 16 basis REVENUE EBITDA VIRTUAL CONSULTS • Rationa
Slide 9: Netcare's VirtualCare platform gets industry award
Netcare’s VirtualCare platform gets industry award The Netcare VirtualCare Platform 2nd place in the BCX 2020 During COVID-19 Netcare launched a telemedicine Corporate Category solution that would allow our doctors to conduct virtual video or voice consultations and Solution developed together with
Slide 10: The impact of COVID-19 on FY2020
The impact of COVID-19 on FY2020 10
Slide 11: The evolution of COVID-19 treatment
The evolution of COVID-19 treatment Beneficial learnings Patients requiring 28 016 COVID-19 from local and hospitalisation positive patients global experience have reduced to treated since on treatment 10-15% of those 9 March 2020 with regimes testing positive 13 436 admitted Initial assumptions: Av
Slide 12: Pivoting our organisation and leveraging off technology to deal with the pandemic
Pivoting our organisation and leveraging off technology to deal with the pandemic We adopted a risk-adjusted approach, drawing from a combination of the principles of Disaster Management, Quadruple Aim, Occupational Health and Safety, as well as the guidelines and policies of the NDoH, NICD and WHO1
Slide 13: Pivoting our organisation and leveraging off technology to deal with the pandemic
% OF BEDS 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0% 2020/06/01 2020/06/03 2020/06/05 2020/06/07 2020/06/09 2020/06/11 2020/06/13 2020/06/15 2020/06/17 2020/06/19 2020/06/21 2020/06/23 2020/06/25 2020/06/27 2020/06/29 2020/07/01 2020/07/03 2020/07/05 2020/07/07 2020/07/09 2020/07/11 2020/07/13 2020
Slide 14: Ensuring the safety of our hospitals and facilities
Ensuring the safety of our hospitals and facilities Pre-screening of all staff, doctors, patients, guests and contractors Total screened Average screenings Green per day Access granted Required approval by SEC1 Access denied by SEC1 Total facilities 5,582,924 27,776 5,045,015 380,458 3,351 243 Staff
Slide 15: The impact on our frontline
The impact on our frontline 2 781 (13%) staff have tested positive for COVID-19 (hospital and community acquired) 387 (14%) required hospitalisation 98.9% recovery rate 20 staff (0.7%) and 9 doctors passed away 15
Slide 16: What can we learn from COVID-19?
What can we learn from COVID-19? 1 2 3 4 The importance The need to The importance COVID-19 is not of worker and retain our of accelerating a pandemic, it’s healthcare humanity digital a syndemic worker safety 16
Slide 17: COVID-19 is not a pandemic, it's a syndemic
COVID-19 is not a pandemic, it’s a syndemic 1 The cause of the crisis However, the story is Two categories of In addition these are has been viewed as not so simple … disease are interacting aggregating in a only an infectious within specific background of social COVID-19 exposed disease with all po
Slide 18: Financial Review
Financial Review 18
Slide 19: Group Financial Overview
Group Financial Overview Emergence of COVID-19 in March 2020 resulted in a year of two halves H1: largely business as usual | H2: weathering the storm Cost savings from H1 outweighed by decline in activity and subsequent negative operating leverage in H2 Statement of financial position remains stron
Slide 20: The financial impact of COVID-19
The financial impact of COVID-19 1 2 3 Estimated Estimated Additional revenue impact: EBITDA impact: operational R3.7bn R2.3bn costs incurred: R300m 4 5 6 Rental1 and Impact on Impact on parking income capex: working capital2: foregone: R156m R700m R78m 1. Including: doctors’ rooms, imaging and diag
Slide 21: Summarised Group statement of profit or loss
Summarised Group statement of profit or loss 30 Sep 30 Sep Rm 2019 2020 % EBITDA Revenue 21 589 18 843 (12.7) o R15m CareOn costs EBITDA¹ 4 388 2 558 (41.7) o R22m on development of data platform and analytics capabilities Operating profit¹ 3 640 1 393 (61.7) o R63m on new business development Other
Slide 22: Impact of IFRS 16
Impact of IFRS 16 30 Sep 2020 IFRS 16 30 Sep 2020 30 Sep 2019 Rm as reported impact underlying as reported % change Revenue 18 843 18 843 21 589 (12.7) EBITDA1 2 558 (470) 2 088 4 388 (52.4) Operating profit1 1 393 (90) 1 303 3 640 (64.2) Other net financial expenses (522) (522) (486) Interest on le
Slide 23: Headline earnings per share (HEPS)
Headline earnings per share (HEPS) 30 Sep 30 Sep Adjusted HEPS (cents) Cents per share 2019 2020 % excluding IFRS 16 impact HEPS 165.9 (3.6) 171.2 Adjusted HEPS 47.6 Including IFRS 16 impact 171.2 32.5 (81.0) Add back: IFRS 16 impact 15.1 2019 2020 Excluding IFRS 16 impact 171.2 47.6 (72.2) 23
Slide 24: Summarised Group statement of financial position
Summarised Group statement of financial position 30 Sep 30 Sep PPE1, GOODWILL AND Rm 2019 2020 INTANGIBLE ASSETS Assets o Capex of R999m PPE1, goodwill and intangible assets 14 322 14 469 (2019: R1 429m) o Expansion R193m Right of use assets 3 755 (2019: R512m) Other non-current assets 1 569 1 670 o
Slide 25: Debt position
Debt position 30 Sep 30 Sep Rm 2019 2020 Gross debt 6 846 7 873 Cash (1 732) (1 450) Net debt 5 114 6 423 Net debt to EBITDA¹ (times)2 1.2 3.1 Cost of debt (%) 8.6 6.4 Net interest expense: Other net interest expense 484 504 Interest on lease liability 371 484 875 Interest cover¹ (times)2 7.5 2.6 GC
Slide 26: Debt facilities
Debt facilities Net debt and facilities Debt maturity profile 30 Sep 2020 (Rm) (Rm) 2,823 2 264 2,122 7 873 4 155 1,222 1 450 715 585 391 Uncommitted facilities Committed facilities Cash H1 H2 2022 2023 2024 2025 Utilised facilities 2021 2021 26
Slide 27: Disciplined capital allocation and distribution policies
Disciplined capital allocation and distribution policies Our ambition is to remain a world-class provider of healthcare and allocator of capital, while maintaining an optimal capital structure Our disciplined approach through the capital cycle involves: INVESTMENT STRATEGY CAPITAL INVESTMENT Identif
Slide 28: Robust returns in a sector under pressure
Robust returns in a sector under pressure CFROI1 (%) Netcare2 SA listed hospitals3 14.1 12.8 12.2 11.0 11.5 9.2 8.7 8.5 8.4 7.5 2015 2016 2017 2018 2019 1. CFROI: Cash Flow Return on Investment is a measure of real returns on capital (inflation adjusted) 2. Calculated by Fractal Value Advisors on Ne
Slide 29: Return on Invested Capital (ROIC)
1 Return on Invested Capital (ROIC) Netcare vs. SA healthcare2 2020 ROIC analysis 27.9% 24.7% 12.4% 0.5% 19.6% 19.7% 20.0% 20.1% 10.4% 9.6% 8.7% 8.5% 5.6% 1.1% 6.8% 2015 2016 2017 2018 2019 Reported Impact of Impact of Other3 Adjusted ROIC IFRS 16 Covid 19 ROIC Netcare SA healthcare 1. Calculated by
Slide 30: Major CAPEX projects
NETCARE Major CAPEX projects
Slide 31: Selective CAPEX investment in FY2021
Selective CAPEX investment in FY2021 1 2 3 New Alberton Akeso Richards Bay: Akeso Port Elizabeth: Hospital: 36 beds for 72 beds for 427 beds for completion completion end of completion February 2022 FY2021 September 2022 R400m R30m R40m 4 5 Upgrade of CareOn hospital Wi-Fi and R30m firewalls R70m 31
Slide 32: FY2021 Focus Areas
FY2021 Focus Areas 32
Slide 33: Our strategy – creating a sustainable competitive advantage for Netcare
Our strategy – creating a sustainable competitive advantage for Netcare Leverages off our unique Builds on three global megatrends ecosystem of assets and services Customer centricity Digitisation + Data 33
Slide 34: The result – grow above market, enhance returns and a differentiated care offering
The result – grow above market, enhance returns and a differentiated care offering Optimising seamless and integrated care across the full continuum of health and care Providing a person centred approach to the redesign of health and care delivery Empowering patients with their digital health record
Slide 35: Netcare's digitisation and data strategy
Netcare’s digitisation and data strategy + 35
Slide 36: Update: digital enablement and data driven strategy
Update: digital All digitisation programmes across Netcare enablement and put on hold in March 2020 during COVID-19 pandemic (no penalties incurred) data driven strategy across Netcare COVID-19 has confirmed the relevance of our strategy Projects across all divisions remain within budget Capital cos
Slide 37: Rollout of Netcare Electronic Medical Records
Rollout of Netcare Electronic Medical Records Akeso digitisation Hospital digitisation Primary Care o Rollout to be completed CareOn digitisation April 2022 o Rollout moved from Gauteng to o Rollout of HealthOne electronic Western Cape due to earlier recovery records complete in 9 clinics from COVID
Slide 38: CareOn: a number of digital firsts for South Africa
CareOn: a number of digital firsts for South Africa 1 2 3 4 DIGITAL HIGHEST VOICE-TO- COMPUTERISED SCRIPTING LEVEL OF TEXT NOTE PHYSICIAN Digital scripting MEDICATION DICTATION & ORDER ENTRY (e-scripting) SAFETY IN SA HANDWRITING (CPOE) approved by SA RECOGNITION Pharmacy Council All prescriptions a
Slide 39: CareOn: a number of digital firsts for South Africa
CareOn: a number of digital firsts for South Africa 5 6 7 ONLINE, CPD FULLY COMPLETELY ACCREDITED PAPERLESS DIGITAL TRAINING ENVIRONMENT SOLUTION Training of doctors A fully paperless Solution is mobile and and nurses takes place environment including: able to run off an iPad online through o All nu
Slide 40: New strategic initiatives
New strategic initiatives NetcarePlus Netcare appointmed™ ICAS + 40
Slide 41: Improving lives by enhancing access to affordable private healthcare
Improving lives by enhancing access to affordable private healthcare 41
Slide 42: Reaching households that are employed but do not have adequate health cover
Reaching households that are employed but do not have adequate health cover South African households by income1 The middle-income % Households: 4% segment is a third of % Households: 63% % Households: 33% South African 31% of total expenditure 51% of total expenditure 18% of total expenditure househ
Slide 43: NetcarePlus Vouchers
NetcarePlus Vouchers A selection of vouchers including GP consultations with or without medication Our first product aims and virtual consults to consumerise primary healthcare Using the Netcare ecosystem and the NetcarePlus Trusted Partner Network Underpinned by an assurance of reliable and quality
Slide 44: Pre-paid hospital procedures that provide complete certainty of costs
Pre-paid hospital A selection of pre-paid procedures procedures that provide starting with Ophthalmology complete certainty of costs at an affordable price Includes all costs related to the procedure – not just the hospital fees Urology, ENT and Orthopaedic procedures to be offered next We are looki
Slide 45: Netcare's convenient medical booking service designed to assist YOU
Netcare’s convenient medical booking service designed to assist YOU with all your medical appointments 45
Slide 46: How does it work?
How does it work? A convenient, Access to the No membership, Also provides national extensive Netcare no fees, just access to medical booking network of hassle-free doctors who service designed healthcare healthcare to suit charge scheme to assist the professionals at patients' unique contracted pub
Slide 47: ICAS: Employee wellness
NETCARE i~~aca ICAS> ICAS: Employee wellness
Slide 48: ICAS acquisition
Employee wellness Netcare acquired a 40% stake in ICAS effective March 2020 ICAS acquisition Comprehensive range of employee health and wellness programmes as well as absence, incapacity and disability management services The leading provider with over 600 clients covering over 700 000 lives ICAS is
Slide 49: Transformation and Sustainability
Transformation and Sustainability + 49
Slide 50: Transforming our society
Transforming our society EMPLOYMENT PROFILE SKILLS DEVELOPMENT PROCUREMENT o 19 007 permanent employees o R263m direct and indirect spend o R10.5bn measurable spend – 81.6% women (15,684) – 92.0% on black employees – 95.0% on B-BBEE compliant – 79.0% black South African o 865 Youth Employment Servic
Slide 51: In line with our strategy, we aim to become a global healthcare leader in sustainability
In line with our strategy, we aim to become a global healthcare leader in sustainability What we set out to achieve: We are on track: Targets to be updated in A 30% decrease in energy We have achieved a December 2020 in line with intensity over 10 years 21% decrease after new strategy for the next 1
Slide 52: Consistency of Care
Consistency of Care + 52
Slide 53: We measure the best and safest care for you
We measure the best and safest care for you We have committed to delivering and measuring These measures are across key categories: our quality care through a number of clinical https://www.netcare.co.za/ClinicalOutcomes measures: Clinical 37 measures published in 2019 PERSON-CENTRED BEST PRACTICE S
Slide 54: Guidance
Guidance cm.
Slide 55: Emerging from the surge – learning to live with COVID-19
Emerging from the surge – learning to live with COVID-19 Our digital systems, policies and COVID-19 will The importance of The current surge in procedures and remain a threat maintaining non- the Eastern Cape is changes in ways of until an effective pharmaceutical a sober reminder of working should
Slide 56: Guidance
Guidance 1 2 3 4 Performance Strategy to deliver Better placed to Volumes tempered by weak sustainable deal with a expected to macro-economic competitive advantage potential second recover into H2 outlook and threat firmly back on track wave FY2021 of second wave 5 6 7 8 Commitment to Job We expect
Slide 57: Thank You
AZ : ‘A \\) Thank You Bs ? BD Oe
Slide 58: Fallen, but not forgotten
FALLEN, BUT NOT FORGOTTEN Honouring our fallen heroes and fellow South Africans who have passed away due to COVID-19 Lalani Kahle Maqhawe.