Ramsay Health Care Limited · ASX:RHC
Ramsay Health Care — Merger or Acquisition (April 2005)
35 slides from Ramsay Health Care's merger presentation, Apr 14, 2005
Slide 1: Ramsay Health Care: Acquisition of Affinity Health 2005
LN MSAY HEALTHC ARE (7 ae ) CHE a pene ffinity Health -2005
Slide 2: Agenda
» Transaction Overview > Strategy and Transaction > The New Ramsay inancials Offering Details cc Appendix Disclaimer Rationale Appendix A: Financial Statements RP Calculation
Slide 3: Transaction Overview
Transaction Overview
Slide 4: Overview of Acquisition
Overview of Acquisition Acquisition of Affinity Health, Australia’s largest private hospital operator Total acquisition outlay of $1,428m plus $71m transaction costs Acquired on CY04 EBITDA multiple of 9.7x vs Ramsay CY04 multiple of 10.7x (pre synergies/post divestment) Funding combination of equit
Slide 5: Key Benefits of Acquisition
Key Benefits of Acquisition Unique opportunity to significantly increase Ramsay’s presence in core business, creating nation’s largest private hospital operator Enhances Ramsay’s ability to take advantage of continuing demand for private hospital services Upside through application of key elements o
Slide 6: Profile of Affinity
Profile of Affinity « Largest Australian private hospital operator » 21% of private hospital beds » 25% of all patients admitted to private hospitals » Facilities provide comprehensive array of acute services Affinity Existing Portfolio Australia Indonesia Total Hospital Facilities 48 3 51 Beds! 5,3
Slide 7: Profile of Affinity
Profile of Affinity Hospitals across metropolitan and regional Australia Flagship hospitals include The Avenue Private, John Flynn, Strathfield Private and St George Private Strong reputations that extend beyond local communities Revenue (FY04) Hospitals Med/Surg (Australia) 45 Rehabilitation 2 Psyc
Slide 8: Affinity's financial performance has improved significantly but capacity to improve margins still exists
w Affinity’s financial performance has improved significantly but capacity to improve margins still exists Year Ended 30-Jun Year Ended 31-Dec $m 2003 2004 2004 Sales 1,198.2 1,276.8 1,304.3 EBITDA 110.8 149.0 162.2 Margin 9.2% 11.7% 12.4%
Slide 9: Strategy and Transaction Rationale
Strategy and Transaction Rationale
Slide 10: Cements Ramsay's position as the premier manager of private hospitals in Australia
» Cements Ramsay’s position as the premier manager of private hospitals in Australia a Ramsay will have capacity to reap considerable economies of scale Number of Beds ~ “For Profit” Group Healthscope’ Ramsay Affinity? New Ramsay* + Approximate figure from Healthscope website. 2 Inpatient beds only.
Slide 11: Australian private hospital industry is a growth industry
Australian private hospital industry is a growth industry a Acquisition positions Ramsay to capitalise on continuing strong demand for private hospital services Underpinned by favourable demographic trends (eg ageing population) Bipartisan support for policies that promote private health fund member
Slide 12: Ramsay recognised as Australia's leading private hospital manager
Ramsay recognised as Australia’s leading private hospital manager - strategically, operationally and financially Ramsay can apply key elements of its successful micro-management approach to the Affinity portfolio - “The Ramsay Way” Combined group well positioned to pursue growth both organically and
Slide 13: Synergies
Synergies Integration of corporate functions More efficient and cost effective labour management Scale advantages Pre-tax cost synergies of $35m per annum targeted by FYO08 - 45% by FY06 Pre-tax revenue synergies of $15m per annum targeted by FY08 - 50% by FYO7 One-off capex required to achieve syne
Slide 14: Integration Plan
Integration Plan Integration of Affinity substantially complete over next 24 months > Operations » Corporate functions Strategic review of hospitals » Divestrnent of 14 hospitals for $406m in net proceeds » Address potential ACCC competition issues » Rarnsay to “hold separate’ Affinity for period to
Slide 15: The New Ramsay
The New Ramsay
Slide 16: The New Ramsay
The New Ramsay a Acquisition and restructure creates premier private hospital portfolio in Australia « New portfolio to have 27% market sharet » 74 hospitals » 8,117 beds # Considerably improved risk-reward equation compared to previous opportunity >» Consortium > Medical malpractice >» Information
Slide 17: New Ramsay Portfolio
ee ss ALTA Cs RAMSAY New Ramsay Portfolio Operating Division Facilities* Licensed Beds* Medical Surgical 61 7,205 Psychiatric 9 648 Rehabilitation 4 264 Total 74 8,117 1Post planned divestment. 17
Slide 18: New Ramsay Revenue Split
New Ramsay Revenue Spli SAY ed ss VAS A s RA Pro Forma Revenue by State (FY04) Ivision Pro Forma Revenue by D (FY04) a Aged Care 1% MediSurg Other 60% Rehab Psychiatric 50, 4% ; 18
Slide 19: Financials
Financials
Slide 20: Acquisition Impact
Acquisition Impact » Ramsay existing business performing in line with increased FYO5 guidance » Value enhancing acquisition with high degree of strategic and business fit x Managing hospital facilities is Ramsay’s core competence Management Enhanced Core EPS ad Accretion Growth Synergies Profile Con
Slide 21: Pro Forma Financials
Pro Forma Financials Pro Forma Pro Forrna 12 mths to 31-Dec-2004 Ramsay? Affinity Adj. Combined Sales $1,044m $1,304m $(289)m $2,059m EBITDA 126 162 (57) 231 EBITA 91 118 (41) 167 EBIT 85 118 (69) 134 NPAT before unusual items 41 : Core NPAT2 46 a Maintenance capex for group? ~$74m in FY06, ~$77m in
Slide 22: Leverage
Leverage « Acquisition will be partly debt Pro Forma Combined as at funded with senior debt facility . . 1 of $1,049m 31-Dec-2004 » Proposed divestments will reduce debt by $406m Total Debt $948.5m » Ramsay has strong history of converting EBITDA to operating cash flow EBITDA / Interest 3.0x » Suppo
Slide 23: Uses and Sources of Funds
Uses of Funds ($m) Sources of Funds ($m) 71 1,499 1902 1,428 : as 2602 406 643 Acquisition Transaction Costs Ordinary Equity Hybrid (CARES) Asset Sales Bank Debt® Consideration 4 Consists of fees and starnp duty. 2 Final size of equity and hybrid raisings will depend on outcome of Institutional Plac
Slide 24: Offer Details
Offer Details
Slide 25: Offer of new shares to raise approximately $190m
Offer of new shares to raise approximately $190m, fully underwritten by Goldman Sachs JBWere » $97 through a New Share Entitlernent Offer by way of 1:9 Accelerated Renounceable Entitlement Offer CAREO") at $6.20 per Share, totaling 15.6m shares an Institutional Placement Offer by way of al Bookbuild
Slide 26: Offer Pricing
Offer Pricing a Issue price of $6.20 for New Shares attractive relative to historical price performance $9.00 5 $8.50 4 Price Analysis _ 38.004 g Issue Price $6.20 8 87.505 & = Theoretical ex-rights g $7.00 4 Price? $7.19 Qo = 36.50 4 Discount to $6.00 4 Theoretical ex-rights 13.8% Price $5.50 4 Dis
Slide 27: Key Equity Offer Times & Dates
a Sank RAM ‘ay Key Equity Offer Times & Dates Event Date Commencement of Trading Halt Wednesday 13 April Thursday 14 April - Institutional Entit! ff nstitutional Entitlement Offer Friday 15 April Book Opens for Placement & Renounced Institutional Rights Monday 18 April Book Closes for Placement & Re
Slide 28: Offer of Convertible Adjustable Rate Equity Securities (CARES)
Fully underwritten offer of Convertible Adjustable Rate Equity Securities (“CARES”) Approximately 2.6 million CARES offered at $100 each to raise ~$260 million » Final offer size will depend on arnount raised in placement of shares Key Features » WNon-cumulative frankec dividends set at a margin ove
Slide 29: Appendix A: Financial Statements
Appendix A: Financial Statements
Slide 30: Pro Forma Income Statement
ee ss sav Pro Forma Income Statement. AM 12 Months to 31-Dec-04 A$m Margin % Revenue 2,059.2 EBITDA 231.2 11.2% Depreciation (64.0) EBITA 167.2 8.1% Amortisation (33.3) EBIT 133.9 6.5% Net borrowing costs (77.8) Profit before tax and unusual items 56.1 2.7% Tax expense (28.4) NPAT before unusual ite
Slide 31: Pro Forma Balance Sheet
ee ss PRG? MSAY Pro Forma Financials RA Pro Forma as at 31-Dec-04 Asm Pro Forma as at 31~Dec-04 Ag$m Current Assets Current Liabilities Cash 13.2 Payables 228.7 Receivables 238.3 Interest Bearing Liabilities 7.5 Inventories 39.3 Current tax liabilities 12.9 Other 21.1 Provisions 110.1 Total Current
Slide 32: Appendix B: TERP Calculation
Appendix B: TERP Calculation
Slide 33: TERP Calculation
TERP Caiculation TERP Calculation Price per unit (A$) ‘Total Value (A$) 9 existing Units of RHC at current price $7.30 $65.70 1 Unit of RHC at Issue Price $6.20 $6.20 Total Investment (10 Units) $71.90 Total cost per Unit $7.19 Theoretical Ex-Rights Price $7.194 Current Price $7.30 Discount factor 0
Slide 34: Disclaimer
Disclaimer
Slide 35: Disclaimer
Disclaimer This presentation was prepared by Ramsay Health Care Limited (the “Company”) and should be viewed solely in conjunction with, and is incomplete without, the oral briefing to be provided by the Company on or about the date of this presentation. This presentation is provided for information
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