Ramsay Health Care Limited · ASX:RHC
Ramsay Health Care — H1 FY2008 Earnings Presentation
27 slides from Ramsay Health Care's earnings presentation, Feb 25, 2008
Slide 1: Financial Results Half Year ended 31 December 2007
For personal use only Briefing – 25 February 2008 Financial Results Half Year ended 31 December 2007
Slide 2: Agenda
For personal use only AGENDA • Ramsay Financial Performance Pre Capio UK (“Ramsay UK”) • Ramsay Financial Performance Including Ramsay UK • Operational Highlights Pre Ramsay UK • Ramsay UK ¾ Rationale, performance & growth strategy • Growth Strategy – Brownfields • Financial Year 2008 Outlook 1
Slide 3: Half Year Overview (Pre Ramsay UK)
HALF YEAR OVERVIEW For personal use only (PRE RAMSAY UK) • Strong half-year result on like-for-like basis ¾ Half-year core EPS growth tracking towards full-year guidance for low double-digit growth ¾ Strong organic growth across the portfolio with the minimal remaining Affinity synergies achieved ¾
Slide 4: Financial Performance (Pre Ramsay UK)
FINANCIAL PERFORMANCE For personal use only (PRE RAMSAY UK) Half Year ended 31 December 2007 2006 $m $m % Inc. Continuing Operations Operating Revenue 1,128.9 1,055.2 7.0% EBITDA 153.5 138.5 10.8% EBIT 120.4 108.5 11.0% Core NPAT – continuing operations 63.6 56.2 13.2% Core EPS – continuing operatio
Slide 5: Group Financial Performance (Including Ramsay UK)
GROUP FINANCIAL PERFORMANCE For personal use only (INCLUDING RAMSAY UK) Half Year ended 31 December 2007 2006 $m $m % Inc. Continuing Operations (including Ramsay UK) Operating Revenue 1,188.1 1,055.2 12.6% EBITDA 156.6 138.5 13.0% EBIT 120.1 108.5 10.7% Core NPAT – continuing operations 61.2 56.2 9
Slide 6: Specific Items and Amortisation of Intangibles (net of tax)
Specific Items and Amortisation of For personal use only Intangibles (net of tax) Half Year Ended 31 December Specific Items and Amortisation of Intangibles (Net of Tax) 2007 2006 $m $m Ramsay (Pre UK) Write off of capitalised borrowing costs (refinancing) 5.5 - Project costs, restructuring and inte
Slide 7: Interim Dividend Up 15.4%
INTERIM DIVIDEND UP 15.4 % For personal use only Final Dividend Interim Dividend 6
Slide 8: EBIT Growth (Pre Ramsay UK)
EBIT GROWTH For personal use only (PRE RAMSAY UK) • Group EBIT up 11% for half year 7
Slide 9: Revenue Analysis (Pre Ramsay UK)
REVENUE ANALYSIS For personal use only (PRE RAMSAY UK) • Strong EBIT growth in all states, except WA (marginally diluted by Hollywood) • Veteran hospitals represent 17% of total revenue – Veteran patients within these hospitals represent 50% of revenue 8 * On an annualised running rate, Ramsay UK to
Slide 10: Core Net Profit Growth (Pre Ramsay UK)
CORE NET PROFIT GROWTH For personal use only (PRE RAMSAY UK) • Core NPAT up 13.2% for the half year • Strong organic growth on a like-for-like basis 9
Slide 11: Core EPS Growth (Pre Ramsay UK)
CORE EPS GROWTH For personal use only (PRE RAMSAY UK) • Core EPS up 13.5% • Better than planned 10
Slide 12: Committed Debt Funding
For personal use only COMMITTED DEBT FUNDING • In November 2007 Ramsay signed a new underwritten senior debt facility agreement for A$1.535B and ₤290M. ¾ To refinance existing senior debt ¾ To fund the unspent balance of the $550M in brownfield capex ¾ To fund Capio UK acquisition ¾ To provide headr
Slide 13: Effective Balance Sheet Management
EFFECTIVE BALANCE For personal use only SHEET MANAGEMENT • Strong & consistent cash flow (generated in the private hospital industry) underwrites debt servicing • Additionally Ramsay is very focussed on cash flow and working capital management ¾ High cash conversion rate (see cash conversion slide)
Slide 14: High Cash Conversion
For personal use only HIGH CASH CONVERSION • Cash flow generation in the December 07 half year was consistent with profitability (EBITDA of $157M v gross operating cash flow of $145M) • This is particularly pleasing given that cash flow had been adversely affected in earlier periods by the impact of
Slide 15: Operational Highlights (Pre Ramsay UK)
OPERATIONAL HIGHLIGHTS For personal use only (PRE RAMSAY UK) • Group EBIT up 11% on strong performance across portfolio • Strong organic EBIT growth in all states except WA (marginally diluted by Hollywood) • Hospital EBIT growth 9% • Veterans’ hospitals improving ¾ Greenslopes turning around ¾ Holl
Slide 16: Operational Highlights (Pre Ramsay UK)
OPERATIONAL HIGHLIGHTS For personal use only (PRE RAMSAY UK) • Cost containment continues across the portfolio resulting in improved margins ¾ Supply costs ¾ Economies of scale • Group EBIT (ex. Ramsay UK) margin up to 10.7% from 10.3% 15
Slide 17: EBITDA Growth & Positive Margin Trends
EBITDA GROWTH & POSITIVE MARGIN TRENDS (PRE RAMSAY UK) For personal use only • Group EBITDA up 10.8% for the half year • Group EBITDA margin 13.6% vs 13.1% • Hospital EBITDA margin 17.9% vs 17.7% excl. prosthesis • Hospital EBIT margin 14.7% vs 14.5% excl. prosthesis 16
Slide 18: Ramsay's Revenue Growth Path
RAMSAY’S REVENUE GROWTH PATH For personal use only Capio UK Acq. 2007 Affinity Group Acq. Apr’05 Benchmark Group Acq. Jul’04 Greenslopes Major Expansion Opened May’03 Hollywood Major Expansion Opened Jul’02 Alpha Group Acq. May’01 North Shore Private Hosp Opened Jul’98 RHC Listed Sep’97 Greenslopes
Slide 19: Ramsay UK - Rationale
For personal use only RAMSAY UK - RATIONALE • Huge opportunity due to changing landscape • Ramsay UK well positioned to capitalise on market changes and capture outsourcing of National Health Service (NHS) to private sector • A strong, stand-alone business, completed Nov 23, 2007 – contributed 6 wee
Slide 20: Ramsay UK Profile
For personal use only RAMSAY UK PROFILE • 4th largest operator of private hospitals in the UK • Diverse business and revenue source ¾ 22 private hospitals across England with 854 beds and 48 operating theatres ¾ 9 Independent Sector Treatment Centres (ISTCs) ¾ 2 neurological rehabilitation homes ¾ 2
Slide 21: Ramsay UK – Performance
RAMSAY UK – PERFORMANCE For personal use only • 9 Independent Sector Treatment Centres (ISTCs) ¾ All Ramsay UK ISTCs experienced volume growth in calendar 2007 ¾ Already seeing high levels of contract activity in 2008 • Rising NHS activity encouraging ¾ Increasing number of spot contracts have been
Slide 22: Ramsay UK – Performance
For personal use only RAMSAY UK – PERFORMANCE • Integration process going well • Government remains fully committed to Choose & Book initiative ¾ Official launch supported by new website enabling GPs to access all providers on equal footing (public and private hospitals) ¾ ISTC Wave II reduction in
Slide 23: Ramsay UK - Growth Strategy
RAMSAY UK - GROWTH STRATEGY For personal use only • Well positioned to benefit from further government outsourcing in coming months • Full patient choice to be officially launched in April 2008 but staged use of Choose & Book already in place and increasing • Ramsay models forecast slow growth in pa
Slide 24: Growth Strategy Brownfields
GROWTH STRATEGY For personal use only BROWNFIELDS • Ramsay already committed $550M for improvements and capacity expansion • Approx 25% spent • Average construction profile 18 months • All projects are tracking well • Brownfield developments expected to deliver earnings growth towards the end of FY0
Slide 25: Additional Brownfield Opportunities
ADDITIONAL BROWNFIELD For personal use only OPPORTUNITIES • Opportunities exist to create additional mega referral centres across the country • Designed to attract increased referrals • Mega referral centres at various stages of planning: ¾ Warringal (well developed) ¾ St George (progressing well) ¾
Slide 26: FY 2008 Outlook
For personal use only FY 2008 OUTLOOK • Strong fundamentals of private hospital industry will continue to underpin Ramsay’s growth prospects ¾ Private Health Insurance membership continues to grow • Strong organic growth to continue • Ramsay UK performing to expectations,1.5-2.0 cents/share dilutive
Slide 27: Questions
For personal use only QUESTIONS