Slide 1: Netcare Limited Unaudited Interim Group Results Six Months Ended 31 March 2016
NETCARE LIMITED UNAUDITED INTERIM GROUP RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2016 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION
Slide 2: Group Overview, South Africa, United Kingdom, Financial Review, Guidance
Group Overview South Africa United Kingdom Financial Review Guidance
Slide 3: Group Overview
GROUP OVERVIEW
Slide 4: Group | A comprehensive network of healthcare services
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | A comprehensive network of healthcare services 4 113 13 218 93 87 Hospitals Hospital Primary healthcare Retail beds facilities/clinics pharmacies 60 85 7 30 309 Renal dialysis Netcare 911 Netcare Employees facilities emergency bases training c
Slide 5: Group | Overview
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | Overview 5 South Africa Good demand Integration of Margin Primary Care for services 584 new beds impact of focus on (SA) across all added at expense inflation, expanding divisions end FY 2015 new builds, day theatre change in and sub-acute cas
Slide 6: Group | Financial overview
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | Financial overview 6 Adjusted 48% Revenue 52% 74% EBITDA 26% 96% HEPS 4% 97% 3% HEPS South Africa United Kingdom Revenue EBITDA HEPS Adjusted HEPS Interim dividend R18 814m R2 663m 90.3 cents 91.0 cents maintained at ▲15.4% ▲13.6% ▲10.9% ▲0.2%
Slide 7: South Africa
SOUTH AFRICA
Slide 8: SA | Healthcare network
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | Healthcare network 8 52 5 10 421 90 Hospitals Public Private Beds¹ PHC², sub-acutes, Partnership hospitals day theatres 773 85 87 3 345 Renal dialysis Emergency Retail Nursing and stations bases/sites pharmacies paramedic students 1. SA = 9 996;
Slide 9: SA | Financials
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | Financials 9 31 Mar 31 Mar Rm 2015 2016 % Revenue 8 307 9 011 8.5 + Volume and pricing growth impacted by case mix shift in EBITDA 1 893 1 957 3.4 favour of medical admissions Operating profit 1 640 1 655 0.9 + Margin decline in Hospital and EBIT
Slide 10: SA | Hospital and Emergency Services business update
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | Hospital and Emergency Services business update 10 ▲2.8% 64.4% Polokwane patient days; full week and Pinehaven ▲4.0% occupancy; hospitals’ to April 2016 ▼2.2% occupancies due to new exceeding capacity expectations Shift in mix Cost pressures Net
Slide 11: SA | Hospital and Emergency Services
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | Hospital and Emergency Services 11 31 Mar 31 Mar + ▲2.8% patient days Rm 2015 2016 % + ▲5.2% revenue per patient day + Surgical patients contributed Revenue 7 749 8 438 8.9 61.5% of admissions EBITDA 1 847 1 904 3.1 (H1 2015: 62.9%) Operating pro
Slide 12: SA | Quality: sustaining improvement over years
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | Quality: sustaining improvement over 5 years 12 Reduce antibiotic consumption 84.9 (DDD¹ per 100 bed days) 94.2 Medical QUALITY CULTURE QUALITY SYSTEM outcomes AMI² in-hospital mortality rate 5.0% per 100 AMI patients discharged 7.7% FY 2016 YTD
Slide 13: Netcare Christiaan Barnard Memorial Hospital
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION 13 13 Netcare Christiaan Barnard Memorial Hospital
Slide 14: SA | Primary Care
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | Primary Care 14 31 Mar 31 Mar Rm 2015 2016 % Revenue 558 573 2.7 + Stable performance across Medicross family medical and EBITDA 46 53 15.2 dental centres + Solid result at Prime Cure Operating profit 29 34 17.2 EBITDA margin (%) 8.2 9.2 + Refine
Slide 15: SA | Primary Care business update
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | Primary Care business update 15 Change in strategy to FY 2016 FY 2017/18 growth projects: focus on expanding acquisitions: + 4 new day theatres in Kimberley, Upington, Primary Care’s + 16 bed sub-acute Cape Town and Richards Bay national network
Slide 16: SA | Regulatory update
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | Regulatory update 16 + Government released the NHI White paper in December 2015 + The proposed NHI changes the way public healthcare is funded National Health + Introduces capacity to contract private sector, starting with private Insurance (NHI)
Slide 17: United Kingdom
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Slide 18: UK | BMI Healthcare's hospital network
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION UK | BMI Healthcare’s hospital network 18 UK’s largest Offer a Widest private hospital broad range network of group with of complex critical care beds 59 sites¹ and healthcare in the private 2 797 beds services sector and 32 cancer units ± 6 500 90% o
Slide 19: UK | Market
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION UK | Market 19 Overall demand Specific demand Self-pay Sources of funding for private for healthcare funded by private demand hospitalisation and clinics, UK 2015² (£m) continues medical cover continues to to increase remains strengthen as challenging
Slide 20: UK | Business activity
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION UK | Business activity 20 Total NHS Private ▲2.6% ▲5.4% ▼2.9% overall activity¹; caseload; privately funded ▲3.3% impacted by slow down caseload to April 2016 in Spot purchases ▲0.4% ▲8.5% ▲4.6% caseload² e-Referrals caseload Self-pay ▲3.1% (Choose &
Slide 21: UK | Change in payor profile
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION UK | Change in payor profile 21 Caseload per payor group Current caseload per payor group: + NHS 41.1% + Self-pay 11.5% + Insured 47.4% 72% H1 2012 28% 41% H1 2016 59% Ongoing migration from inpatient procedures to day case and outpatient procedures N
Slide 22: UK | Changes at BMI Healthcare
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION UK | Changes at BMI Healthcare 22 Strengthened Clear vision Disciplined senior supported by operating model leadership detailed with a focus on team corporate and growth, people operational plans efficiencies and governance Recruited >6 700 marketing
Slide 23: UK | BMI Healthcare stakeholder satisfaction trends
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION UK | BMI Healthcare stakeholder satisfaction trends 23 Overall Quality of Care 2016 98.4% Satisfaction with overall quality of care is at its highest 2015 98.2% for the last two years having risen to 98.4% up from 98.2% this time last year 2014 97.6%
Slide 24: UK | BMI Healthcare
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION UK | BMI Healthcare 24 31 Mar 31 Mar £m 2015 2016 % Revenue 450.2 444.0 (1.4) + Revenue per case impacted by: › Payor mix change to NHS EBITDA (before items below) 31.5 30.1 (4.4) › Ongoing shift to day and outpatient environment Restructure costs (6.
Slide 25: UK | Capital investment
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION UK | Capital investment 25 BMI Bishops Wood BMI Three Shires BMI Clementine Churchill BMI Clementine Churchill Refurbished New MRI scanner New endoscopy suite New ICUs cancer care facility
Slide 26: Financial Review
FINANCIAL REVIEW
Slide 27: Group | Financial overview
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | Financial overview 27 Pleasing Absorption Strong group Comfortable performance of depreciation balance sheet gearing and in period of and finance costs leverage integration on 2015 of new beds new capacity
Slide 28: Group | Summarised statement of profit or loss
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | Summarised statement of profit or loss 28 + Growth in SA + Impact of currency conversion 31 Mar 31 Mar in UK Rm 2015 2016 % Revenue 16 304 18 814 15.4 + GHG PropCo rent R1 633m (2015: R1 276m) EBITDA 2 344 2 663 13.6 + Non-recurring costs of U
Slide 29: Group | Constant currency performance
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | Constant currency performance 29 Revenue (Rm) EBITDA (Rm) 3.6% 1 916 7.8% 136 7 887 570 7 997 451 SA UK 8 307 9 011 1 893 1 957 Exchange rate impact H1 2015 H1 2016 H1 2015 H1 2016 Average exchange rate of R22.10: £1 (Mar 2015: R17.76: £1) Clo
Slide 30: Group | Headline earnings per share (HEPS)
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | Headline earnings per share (HEPS) 30 31 Mar 31 Mar Rm 2015 2016 % Adjusted HEPS¹ (cents) HEPS 81.4 90.3 10.9 SA 85.2 86.7 1.8 96.1 98.2 88.5 91.9 UK (3.8) 3.6 Adjusted HEPS¹ 90.8 91.0 0.2 SA 86.8 87.9 1.3 H1 UK 4.0 3.1 73.3 86.8 87.9 75.9 90.
Slide 31: Group | Summarised statement of financial position
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | Summarised statement of financial position 31 30 Sep 31 Mar Forex Other Rm 2015 2016 effect movement Assets PPE¹, goodwill and intangible assets 18 501 19 012 120 391 Group capex R1 088m (2015: R747m) Other non-current assets 4 215 4 270 10 45
Slide 32: Group | SA debt
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | SA debt 32 31 Mar 30 Sep 31 Mar Facility utilisation (Rm) Rm 2015 2015 2016 7 100 Gross debt 4 971 4 637 4 647 Cash (1 397) (1 345) (494) Net debt 3 574 3 292 4 153 494 4 647 Net debt to EBITDA (times) 0.9 0.8 1.1 Utilised Cash Available Cost
Slide 33: Group | UK debt: BMI Healthcare
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | UK debt: BMI Healthcare 33 31 Mar 30 Sep 31 Mar Facility utilisation (£m) £m 2015 2015 2016 Gross debt 148.2 173.3 168.5 47.4 Cash (38.6) (54.0) (47.4) Net debt 109.6 119.3 121.1 168.5 Net debt to EBITDA (times)¹ 1.7 1.9 2.0 Utilised Cash Cost
Slide 34: Guidance
GUIDANCE
Slide 35: Guidance | SA outlook
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Guidance | SA outlook 35 Improvement Focus on 85 new hospital beds Continue to in occupancy levels optimising capacity to be added evaluate potential as new capacity and initiatives in H2 2016 international gains traction to drive operational opportun
Slide 36: Guidance | UK outlook
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Guidance | UK outlook 36 36 Growth in NHS BMI Healthcare Capex ± £43m NHS caseload tariff increase is well positioned to enhance driven by effective April 2016 for volume growth hospital infrastructure e-Referrals and focused on and keep abreast opera
Slide 37: Thank You
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION THANK YOU May 2016
Slide 38: Appendices
APPENDICES
Slide 39: Appendix | UK income statement – segmental analysis
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Appendix | UK income statement – segmental analysis 39 BMI GHG £m Healthcare PropCo2¹ WholeCo Revenue 444.0 444.0 EBITDA (before GHG PropCo rent and items below) 106.0 106.0 GHG PropCo rent (73.9) (73.9) EBITDA (before items below) 30.1 30.1 Reversal
Slide 40: Appendix | Group borrowings at 31 March 2016
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Appendix | Group borrowings at 31 March 2016 40 Gross borrowings Net borrowings 31 Mar 30 Sep 31 Mar 31 Mar 30 Sep 31 Mar Rm 2015 2015 2016 2015 2015 2016 SA 4 971 4 637 4 647 3 574 3 292 4 153 BMI OpCo 2 664 3 629 3 572 1 969 2 498 2 568 Group 7 635