Slide 1: Netcare Limited Audited Group Results for the Year Ended 30 September 2016
NETCARE LIMITED AUDITED GROUP RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2016 CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION
Slide 2: Presentation Outline
PRESENTATION OUTLINE Group Overview South Africa United Kingdom Financial Review Guidance
Slide 3: Group Overview
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Slide 4: Group | A comprehensive network of healthcare services
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | A comprehensive network of healthcare services 4 114 13 310 92 87 Hospitals Hospital Primary Retail beds healthcare centres¹ pharmacies 62 85 7 30 086 Renal dialysis Netcare 911 Netcare Employees facilities sites training colleges 1. Includes
Slide 5: Group | Overview
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | Overview 5 South Africa Good financial Integration of Competition Acquisition² performance 584 new beds Authority of Akeso Clinics, (SA) in line with added in approval of a national guidance FY 2015 retail pharmacy network of 12 outsourcing to
Slide 6: Group | Financial overview
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | Financial overview 6 Adjusted 6% 50% Revenue 50% 75% EBITDA 25% 94% HEPS South Africa United Kingdom Revenue EBITDA Adjusted HEPS Final dividend R37 796m R5 539m 199.5 cents 57.0 cents ▲12.1% ▲11.2% ▲5.6% ▲5.6% Total dividend 95.0 cents ▲3.3%
Slide 7: South Africa
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Slide 8: SA | Healthcare network
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | Healthcare network 8 53 5 10 513 14 Hospitals Public Private Beds¹ Day clinics Partnership hospitals 88 796 85 3 464 PHC² and Renal dialysis Netcare 911 Nursing and sub-acutes stations sites paramedic students 1. SA = 10 088; Lesotho = 425 2. PHC
Slide 9: SA | Financials
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | Financials 9 30 Sep 30 Sep Rm 2015 2016 % Revenue 17 289 18 958 9.7 + Strong revenue performance driven by volume growth EBITDA 3 948 4 147 5.0 Operating profit 3 411 3 548 4.0 Margin pressure: + Cost inflation running ahead of EBITDA margin (%)
Slide 10: SA | Hospital and Emergency Services business update
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | Hospital and Emergency Services business update 10 ▲4.7% Full week 92 new patient days; occupancy hospital beds + ▲2.8% H1 2016 of 67.2% including acquired + ▲6.6% H2 2016 + 64.4% H1 2016 uMhlanga + 70.1% H2 2016 Eye Institute (21 beds) ▲164 1.6%
Slide 11: SA | Hospital and Emergency Services
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | Hospital and Emergency Services 11 30 Sep 30 Sep + ▲2.4% patient days excluding Rm 2015 2016 % Netcare Polokwane and Netcare Pinehaven Revenue 16 119 17 780 10.3 + ▲5.2% revenue per patient day EBITDA 3 837 4 029 5.0 › Negatively impacted by high
Slide 12: SA | Patient satisfaction and customer service
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | Patient satisfaction and customer service 12 External survey Netcare awarded Ask Afrika’s Orange Index 1st place in private hospital category and 6th place overall across 33 industries Internal survey Patient experience: How many patients would r
Slide 13: SA | Netcare Christiaan Barnard Memorial Hospital
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | Netcare Christiaan Barnard Memorial Hospital 13 Phase 1: 2016 Phase 2: 2017-2018 Phase 3: 2018+ + Relocating to new site in + Medicross family medical + Conversion of 8th floor December 2016 and dental centre parking and other open + 248 register
Slide 14: SA | New business pipeline
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | New business pipeline 14 HOSPITALS ONCOLOGY 2017 + Gamma Knife - Netcare Milpark + Netcare Akasia 9 beds + Radiotherapy + Netcare Kingsway 4 beds › Netcare CBMH + Netcare Kuilsriver 22 beds › Netcare Montana + Netcare Margate 4 beds › Netcare Pin
Slide 15: SA | Primary Care
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | Primary Care 15 30 Sep 30 Sep Rm 2015 2016 % Revenue 1 170 1 178 0.7 Revenue impacted by fall in Prime Cure revenue as a result of EBITDA 111 118 6.3 strategy to downscale managed care division Operating profit 76 79 3.9 Higher margin due to term
Slide 16: SA | Primary Care business update
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | Primary Care business update 16 37 retail Focus on pharmacies expanding to be outsourced national network to Clicks as of of day clinics 1 December 2016 and sub-acute facilities Day clinics: Sub-acute + Kimberley¹ facilities: + Upington + Hillcre
Slide 17: SA | Regulatory update
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION SA | Regulatory update 17 National Health + Draft NHI White Paper published in December 2015 + Davis Tax Committee called for submissions on funding of NHI Insurance in October 2016 (NHI) + Market awaits final White Paper Private Healthcare + Netcare
Slide 18: United Kingdom
UNITED KINGDOM
Slide 19: UK | Hospital network
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION UK | Hospital network 19 Flagship hospital Large hospital 59 196 Hospitals¹ Theatres London area 2 797 9 101 Beds Employees 1. 56 hospitals, 3 clinics
Slide 20: UK | PMI and Self-pay
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION UK | PMI and Self-pay 20 PMI funder loss ratios² ▲1.8%¹ in PMI Insurance membership Premium Tax 80% in 2015 + Nov 2015: 9.5% PMI but payouts to + Nov 2016: 10.0% hospital providers 75% remain in decline Increase in Growth 70% Self-pay elective support
Slide 21: UK | NHS
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION UK | NHS 21 Department of Health capital expenditure NHS admissions in independent sector per financial year (£m)¹ hospitals² NHS has seen significant funding 5 183 constraints with 557 200 insufficient (5.3%) investment in 17.2% CAGR NHS estate CAGR
Slide 22: UK | NHS
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION UK | NHS 22 GP referrals to independent sector providers (rolling quarter) (>1 000 referrals) 45 000 40 000 35 000 30 000 25 000 20 000 15 000 10 000 Sep 15 Dec 15 Mar 16 Jun 16 Sep 16 Ramsay BMI Spire Care Circle Nuffield Source: NHS England
Slide 23: UK | Business update
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION UK | Business update 23 Caseload¹ and EBITDA margin (%) ▲3.2% ▼3.4% overall activity PMI caseload¹ ▲1.1% ▲2.8% revenue Self-pay caseload¹ 7.2% 7.1% ▲6.6% ▲3.7% NHS caseload¹ outpatient 5.9% activity ▲9.5% e-Referral PMI Self-pay NHS e-Referral NHS spo
Slide 24: UK | BMI Healthcare (OpCo)
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION UK | BMI Healthcare (OpCo) 24 30 Sep 30 Sep £m 2015 2016 % Revenue 886.0 895.5 1.1 + ▲1.1% inpatient and day caseload EBITDA (before items below) 64.0 63.8 (0.3) + 41.6% is NHS funded caseload Restructure costs (11.9) + GHG PropCo rent £148.5m Fair va
Slide 25: UK | Capital investment
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION UK | Capital investment 25 New 1.5T static New endoscopy New catheterisation MRI scanners at BMI New hybrid theatre decontamination lab and SPECT-CT at Goring Hall Hospital, and refurbishment at hubs in the refurbishment at BMI The Clementine BMI The
Slide 26: UK | BMI Healthcare Quality Indicators
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION UK | BMI Healthcare Quality Indicators 26 Patient satisfaction with overall quality of care 98.6% 99% of NHS of patients are patients would 98.3% 98.6% satisfied recommend 97.2% with the overall BMI Healthcare quality of care to their family and frien
Slide 27: Financial Review
FINANCIAL REVIEW
Slide 28: Group | Financial overview
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | Financial overview 28 Pleasing Exceptional Currency Strong performance non-cash impact on balance sheet driven by accounting Group and comfortable new capacity charge on asset base gearing added in 2015 RPI¹ swaps 1. RPI: Retail Price Index
Slide 29: Group | Summarised statement of profit or loss
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | Summarised statement of profit or loss 29 30 Sep 30 Sep Rm 2015 2016 % Revenue 33 711 37 796 12.1 + GHG PropCo rent R3 124m (2015: R2 683m) EBITDA 4 981 5 539 11.2 + EBITDA margin 14.7% (2015: 14.8%) Operating profit 3 728 4 148 11.3 Net finan
Slide 30: Group | Constant currency performance
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | Constant currency performance 30 Revenue (Rm) EBITDA (Rm) 149 5.5% 2 240 8.2% 16 598 1 243 16 422 1 033 SA UK 17 289 18 958 3 948 4 147 Exchange rate impact 2015 2016 2015 2016 Average exchange rate of R21.04: £1 (2015: R18.55: £1) Closing exc
Slide 31: Group | Headline earnings per share (HEPS)
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | Headline earnings per share (HEPS) 31 30 Sep 30 Sep Rm 2015 2016 % Adjusted HEPS¹ (cents) HEPS 174.1 119.0 (31.6) 108.5 SA 180.4 184.1 2.1 96.1 99.0 98.2 88.5 91.9 UK (6.3) (65.1) Adjusted HEPS¹ 189.0 199.5 5.6 SA 182.9 186.9 2.2 H1 UK 6.1 12.
Slide 32: Group | Summarised statement of financial position
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | Summarised statement of financial position 32 30 Sep 30 Sep Forex Other Rm 2015 2016 effect movement Assets PPE¹, goodwill and intangible assets 18 501 18 677 (1 354) 1 530 Group capex R2 822m (2015: R2 653m) Other non-current assets 4 215 3 9
Slide 33: Group | SA debt
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | SA debt 33 30 Sep 30 Sep Facility utilisation (Rm) Rm 2015 2016 Gross debt 4 637 4 535 8 099 Cash (1 345) (948) Net debt 3 292 3 587 948 4 535 Net debt to EBITDA (times) 0.8 0.9 Utilised Cash Available Cost of debt (%) 8.2 9.0 Net interest pai
Slide 34: Group | UK debt: BMI Healthcare
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | UK debt: BMI Healthcare 34 30 Sep 30 Sep Facility utilisation (£m) £m 2015 2016 57.9 Gross debt 173.3 167.9 Cash (54.0) (57.9) 6.0 Net debt 119.3 110.0 167.9 Net debt to EBITDA (times)¹ 1.9 1.7 Utilised Cash Available Cost of debt² 7.5 8.1 Net
Slide 35: Group | UK rent transaction
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Group | UK rent transaction 35 BMI has agreed BMI in process Rent transaction offers heads of terms of refinancing existing concrete value to BMI with its major debt facilities, external landlord including funding for the for a potential rent transact
Slide 36: Guidance
GUIDANCE
Slide 37: Guidance | SA outlook
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Guidance | SA outlook 37 Resilient demand for Netcare participation Capital expenditure Acquisition¹ of private healthcare in sizable ±R1.7bn: Akeso Clinics, despite low growth medical scheme + 49 new beds a national network in economy and ‘efficiency
Slide 38: Guidance | UK outlook
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Guidance | UK outlook 38 Further Continued growth in Ongoing Capital expenditure opportunities Self-pay caseload claims management ±£44m for NHS growth expected and additional Insurance Premium Tax continue to weigh on PMI outlook
Slide 39: Thank You
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION November 2016 THANK YOU
Slide 40: Appendices
APPENDICES
Slide 41: Appendix | UK income statement – segmental analysis
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Appendix | UK income statement – segmental analysis 41 BMI GHG United £m Healthcare PropCo 2¹ Kingdom Revenue 895.5 895.5 EBITDA (before GHG PropCo rent and items below) 214.9 214.9 GHG PropCo rent (148.5) (148.5) EBITDA (before items below) 63.8 63.8
Slide 42: Appendix | Group borrowings at 30 September 2016
CARE • DIGNITY • TRUTH • PARTICIPATION • PASSION Appendix | Group borrowings at 30 September 2016 42 Gross borrowings Net borrowings Rm 30 Sep 2015 30 Sep 2016 30 Sep 2015 30 Sep 2016 SA 4 637 4 535 3 292 3 587 BMI Healthcare 3 629 2 987 2 498 1 956 Group 8 266 7 522 5 790 5 543 Net debt to EBITDA (