Ramsay Health Care Limited · ASX:RHC
Ramsay Health Care — H1 FY2006 Earnings Presentation
23 slides from Ramsay Health Care's earnings presentation, Feb 27, 2006
Slide 1: Interim Financial Results, half-year ended 31 December 2005
pd WA HEALTH CARE Briefing - 27 February 2006 Interim Financial Results half-year ended 31 December 2005
Slide 2: Ramsay Overview
- RAMSAY OVERVIEW HEALTH CARE » Strong half year results from Ramsay and Affinity hospitals >» Focus on hospital micro-management delivers solid profit growth > Affinity hospitals under Ramsay management from Sept '05, pleased with half year results » Half year core EPS growth ahead of FY2006 guidan
Slide 3: Financial Highlights
FINANCIAL HIGHLIGHTS » Core Net Profit “) up 80% to $44.4m » Core EPS up 17% to 22.2 cents a» Revenue up 94% to $1,056m » EBITDA up 96% to $131.im » EBITDA margin 12.4% x» Fully franked interim Dividend 10.5 cents, up 24% Notes: @ Core Net Profit — before non-recurring items and divested operations
Slide 4: Ramsay Financial Performance
Es RAMSAY FINANCIAL PERFORMANCE HEALTH CARE | $ Operating Revenue 544.6 1,056.2 94% EBITDA 66.9 131.1 96% EBIT 48.9 98.4 101% Core Net Profit after Tax (©) 24.6 44.4 80% NPAT from divested operations ~ 4.8 Less non-recurring items (net of tax) (0.6) (7.8) Net Profit after Tax 24.0 41.4 72% @ Before
Slide 5: Financial Performance: EPS and Interim Dividend
a Financial Performance Pras EPS and Interim Dividend Core NPAT $24.6 m $44.4 m 80% Less Preference Dividend - $6.4 m NPAT used to Caiculate Core EPS $24.6 m $38.0 m 54% Shares on issue 129.8 m 171.3 m Core EPS 19.0 ¢ 22.2 ¢ 17% Interim dividend — fully franked 8.5 ¢ 10.5 ¢ 24% NPAT $24.0 m $41.4m 7
Slide 6: Financial Performance: Non-recurring Items
a FINANCIAL PERFORMANCE Pio Non-recurring Items $m Borrowing costs associated with divestment hospitals 2.6 Corporate restructuring costs associated with Affinity 4.4 acquisition 8.6* One-off malpractice insurance costs 4.2 11.2 Tax effect (3.4) Non-recurring items (net of Tax) $7.8 $m Reconciliatio
Slide 7: Financial Performance: Continuing Operations
Es FINANCIAL PERFORMANCE poiicans Continuing Operations Operating Revenue ($m) 567.9 488.3 _ EBITDAR ($m) 81.2 62.5 EBITDA ($m) 70.4 60.7. EBIT ($m) 53.1 45.3 Total Patient Days (000’s) 592.3 500.9 EBITDAR Margin 14.3% 12.8% |
Slide 8: Financial Performance: Continuing Ramsay (excluding Affinity)
Es FINANCIAL PERFORMANCE RAMSAY Continuing Operations Continuing Ramsay (excluding Affinity) 00. 005 517.8 567.9 Operating Revenue ($m) EBITDAR ($m) 76.6 $1.2 EBITDA ($m) 66.6 70.4 6% EBIT ($m) 49.4 53.1 7% Admissions (000’s) 164.5 174.8 6% Total Patient Days (000’s) 576.9 592.3 3% EBITDAR Margin 14
Slide 9: Financial Performance: Retained Affinity
a FINANCIAL PERFORMANCE RAMSAY Continuing Operations HEALTH CA Retained Affinity Operating Revenue ($m) 451.9 488.3 EBITDAR ($m) 52.0 62.5 EBITDA ($m) 46.2 60.7 32% EBIT ($m) 29.9 45.3 52% Admissions (000’s) 173.7 181.8 5% Total Patient Days (000’s) 486.6 500.9 3% EBITDAR Margin 11.5% 12.8% * Extrac
Slide 10: Half Year EBIT Growth
aS RAMSAY HEALTH CARE HALF YEAR EBIT GROWTH Continuing Operations $m 100 80 $69.1 60 $49.4 40 ° c pb 0 : : Jun'04 Dec'04 Jun'05 Dec'05 @ Continuing Ramsay 0 Retained Affinity (acq Apr’05) # EBIT up 101% for the half-year # Excluding Affinity, EBIT up 7% to $53.1m
Slide 11: Half Year Core Net Profit Growth
RAMSAY HEALTH CARE HALF YEAR CORE NET PROFIT GROWTH Continuing Operations $m 50 40 30 20 21.3 10 44.4 29.6 24.6 [ J Dec'03 Jun'04 Dec'04 Jun'05 Dec'05 # Core NPAT up 80% for the half-year
Slide 12: Half Year Core EPS Growth
RAMSAY HEALTH CARE HALF YEAR CORE EPS GROWTH Continuing Operations Cents /Share 24 22 20 18 16 5 19.8 Jun’ 04 Jun'05 a Core EPS up 17% for the half-year Dec’05
Slide 13: Delivering on FY06 Objectives
| RAMSAY DELIVERING ON FY06 OBJECTIVES HEAL CARE » Focus on core hospital management, deliver strong organic growth for Ramsay and Affinity hospitals «» Finalise ACCC negotiations and complete divestments » Focus on strong cash flow generation » De-leverage and debt reduction » Implementation of Aff
Slide 14: Strong Organic Growth in Ramsay Hospitals
as STRONG ORGANIC GROWTH IN RAMSAY HOSPITALS HEALTH CARE Admissions Up 6.3% Up 3.6% Up 15.4% EBIT Up 11.1% Up 9.3% Up 8.4% EBIT Margins 11.7% vs 11.3% 11.4% vs 11.2% | 20.9% vs 20.5% «» Strong growth relative to overall industry » Solid margin enhancement » Further growth opportunities particularly
Slide 15: ACCC & Divestments
RAMSAY ACCC & DIVESTMENTS HEALTH CARE » ACCC negotiations successfully finalised a Initially offered to sell 14, fo additional 3 hospitals » ACCC required divestment o additional hospitals x» Sale of 14 hospitals to Healt lowed by Fonly 2 nscope for $490m (vs initial expectations of $406m) a» Sale o
Slide 16: De-leverage and Debt Reduction
ae RAMSAY DE-LEVERAGE AND DEBT REDUCTION HEALTH CARE a» Sale proceeds applied against senior debt » Net debt reduced from approx $1.4bIn at time of Affinity acquisition to approx $850m at Dec’05 » Further reduction in net debt to approx $765m after financial close on remaining 5 hospitals » Net cash
Slide 17: De-leverage & Gearing
| RAMSAY DE-LEVERAGE & GEARING HEALTH CARE $m Affinity \ 1,500 Acquisition tt [ Divestment 1,200 J 14 Hospitals VA 600 Benchmark > Divestment wk Acquisition \ 5 Hospitals ] — =@=Net Debt (D) <™l® Shareholder Equity (E) o . . T T Jun'04 Dec'04 Jun'05 Dec'05 Mar’ 06 Projected (D/Dte ) 44% 48% 64% 51%
Slide 18: Integration Plan Proceeding Well
ie RAMSAY INTEGRATION PLAN PROCEEDING WELL. HRAL On track to achieve synergy targets for FY06 a» Timing of head office restructuring ahead of schedule >» Net corporate staff numbers reduced by 40% (Ramsay +14, Affinity -89) a On track to achieve pre-tax cost synergies of approx $35m by end 2008 (45%
Slide 19: Integration Plan Proceeding Well
ae RAMSAY INTEGRATION PLAN PROCEEDING WELL HEAL CARE a» Devolving central functions to hospitals - decentralised Ramsay management model > Transition to new management structure almost completed >» Renegotiation of supplier contracts underway > As previously foreshadowed, operational synergies are e
Slide 20: Strategic Review
| RAMSAY STRATEGIC REVIEW HEAL CARE » Ongoing portfolio review in light of Affinity acquisition a» Continue to explore sale of residential aged care business, investigating expressions of interest » Successful sale of home care business, Silver Circle, completed Feb 06
Slide 21: Brownfield Capacity Expansion
aS | RAMSAY BROWNFIELD CAPACITY EXPANSION | HEALTH CARE » Opportunities for expanded capacity, facilities enhancement identified in strategic review of portfolio » Faster debt reduction provides scope for additional brownfields investment a» Expansion provides additional growth potential on top of o
Slide 22: Outlook
aS OUTLOOK RAMSAY HEAL CARE » Targeting 2"¢ half core net profit and core EPS to match the level of 1°* half, translating to low double digit growth in core EPS for the year » Beyond FY2006, increased profit contribution from Affinity to further increase earnings » Over the 3-5 years, profit growth
Slide 23: Questions