Life Healthcare Group Holdings Limited · JSE:LHC
Life Healthcare — Merger or Acquisition (January 2017)
42 slides from Life Healthcare's merger presentation, January 2017
Slide 1: Acquisition of Alliance Medical Group
Acquisition of Alliance Medical Group 1
Slide 2: Legal Disclaimer
Legal Disclaimer IMPORTANT NOTICE: THIS PRESENTATION IS NOT AND DOES NOT CONTAIN AN OFFER OF SECURITIES FOR SALE OR A SOLICITATION OF AN OFFER TO PURCHASE OR SUBSCRIBE FOR SECURITIES IN ANY JURISDICTION, INCLUDING THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN. THE SECURITIES MENTIONED IN THIS PRESEN
Slide 3: Today's Presenters
Today's Presenters André Meyer Pieter van der Guy Blomfield Adam Pyle Westhuizen Group Strategy and IR CEO Life Healthcare CFO Life Healthcare CEO Alliance Medical Life Healthcare 3
Slide 4: Table of Contents
Table of Contents 1. Transaction Overview and Rationale 2. Alliance Medical Group Overview 3. Financial Information and Effects 4. Proposed Rights Offer 5. Supplementary Information 4
Slide 5: Transaction Overview and Rationale
Transaction Overview and Rationale 5
Slide 6: Acquisition of Alliance Medical Group Limited
Acquisition of Alliance Medical Group Limited Transaction Overview Life Healthcare acquired approximately 95% of Alliance Medical Group Limited (“AMG”) effective 21 November 2016 Initial cash consideration of approximately GBP553m Deferred cash consideration of up to GBP40m dependent on AMG’s
Slide 7: Life Healthcare's Strategic Acquisition Objectives
Life Healthcare’s Strategic Acquisition Objectives Life’s Objectives What AMG Offers Strong underlying demand driven by demographics, disease burden High growth markets and advances in medical technology Complementary service MRI, CT, PET-CT; strong linkages into high growth therapeutic line
Slide 8: Benefits of Combination
Benefits of Combination Accelerates Life’s geographic diversification Revenue outside of South Africa increased from 7%(1) to 29%(2)(3) AMG operates in 10 European countries Positions Life firmly in diagnostics A strategically important high growth business Further growth from underlying
Slide 9: Alliance Medical Group Overview
Alliance Medical Group Overview 9
Slide 10: Western European Healthcare Markets
Western European Healthcare Markets Key Themes Scan Penetration Levels(1) Demand growth Scans per Million Population (15E) MRI Scans (000s) Demographics 8 Increased focus on early diagnosis Germany 6 France Increasing incidence of cancer 4 Italy Spain England 2 Medical technology advanceme
Slide 11: AMG's Geographic Split
AMG’s Geographic Split £233.4m / ~R4.9bn Revenue(1)(2) £64.5m / ~ R1.36bn EBITDA(1)(2) UK Italy Ireland Other Geographies Spain Netherlands Germany Territorial Coverage Finland Bulgaria DI static sites: 37 Owned clinics: 13 Operating sites: 19 France PET-CT national contract sites: Static sites: 22
Slide 12: Fully Integrated Diagnostics Platform
Fully Integrated Diagnostics Platform Proven track record of partnering with national health services e.g. NHS England Overview of End-to-End Service Provision 1 2 3 4 5 6 7 8 9 Radiotracer Staffing, Equipment Contract Contract Production and Radiography and Interim Flexible Facility Design Provisio
Slide 13: AMG's Diagnostic Imaging Business Models
AMG’s Diagnostic Imaging Business Models In Diagnostic Imaging (“DI”), AMG has leveraged its international experience to develop a range of business models which provide operational flexibility and are aligned with local market dynamics Setting Description Number of CT and MRI scanners AMG is able
Slide 14: AMG: Italy Market
AMG: Italy Market Majority of Italian Diagnostic Imaging is publicly funded with a proportion privately Under the Italian delivery delivered; public patients typically co-pay for their scans model, a proportion of Diagnostic Imaging Examinations in Diagnostic Imaging publicly funded scans are Ital
Slide 15: AMG: Italy Market
AMG: Italy Market Consistent growth rate in total imaging volumes between c.50% of outpatient diagnostics are delivered by 2010 and 2015 privately owned outpatient clinics Imaging volumes Italian market is a fragmented market with over Millions 1,200 providers 20 Many of these are ‘owner/manag
Slide 16: AMG: UK Diagnostic Imaging Market – Scan Rates
AMG: UK Diagnostic Imaging Market – Scan Rates MRI Procedures in England CT Procedures in England MRI Procedures/1,000 (2013)(1) (2016)(2) (2016)(2) Turkey 119 Percent of Examinations Percent of Examinations United States 107 France 91 100 100 Luxembourg 81 Belgium 77 Iceland 75 Spain 70 Greece 68 8
Slide 17: AMG: UK Diagnostic Imaging Market – Growth
AMG: UK Diagnostic Imaging Market – Growth NHS CT Activity in England NHS MRI Activity in England Number of scans Number of scans (millions) (millions) 5 CAGR(1) 4 10.1% CAGR(1) 9.5% 4 3 3 2 2 1 1 0 0 2013 2014 2015 2016 2013 2014 2015 2016 For 12 months ending 31 March For 12 months ending 31 March
Slide 18: UK Molecular Imaging Market – Landmark NHS England PET-CT Contract
AMG: UK Molecular Imaging Market – Landmark Contract to Collaborate with NHS England on PET-CT at a National Level PET-CT Scans 5-year Survival is Markedly Lower PET-CT scans per million population (2014) 2,900 UK is targeting the European 5 year cancer survivorship rate of 67% by 2020 1,257 Dem
Slide 19: AMG is a Market Leading Player with Strong Growth Potential
AMG is a Market Leading Player with Strong Growth Potential A market leader in Europe Increasing focus on Focus on quality out-of-hospital and collaboration community settings Broad national Strong growth footprint in core potential markets Long term partner Integrated platform with healthcare provi
Slide 20: Financial Information and Effects
Financial Information and Effects 20
Slide 21: Summary Financial Performance of AMG
Summary Financial Performance of AMG Financial year ended 31 March(1) Six months ended 30 September(2) Revenue up 3.8% Revenue up 14.0% 130 £210.7m £218.8m 110 90 £119.1m £104.5m 70 2015 2016 2015 2016 90 Gross profit down 1.4% 40.0% Gross profit up 7.6% 38.3% 36.4% 80 30.0% 60 38.0% 35.9% 40.
Slide 22: Impact of the Combination
Impact of the Combination Accelerates Internationalisation of Life Healthcare’s Revenue Streams Revenue (R’ million) Combination N.Europe Spain International 7% 5% 3% Other 9% Ireland South Africa 71% UK Italy 7% 9% 54% UK 13% Increased offshore revenue contribution from Italy 7% to 29% 29% South Af
Slide 23: Summary Balance Sheet of AMG
Summary Balance Sheet of AMG (as at 30 September 2016) Total Assets: £281.8 million Property, plant and equipment: £122.9 million Goodwill and other intangibles: £63.4 million Trade and other receivables: £60.3 million Cash and cash equivalents: £31.8 million Total Liabilities: £266.4 millio
Slide 24: Proposed Rights Offer
life. Proposed Rights Offer I 24
Slide 25: Proposed Rights Offer
Proposed Rights Offer Offer size Up to R10.7 billion Use of proceeds Repay a portion of the ZAR bridge facility together with associated financing costs Offered to shareholders outside the United States in compliance with Regulation S Distribution Offered to Qualified Institutional Buyers (“QIBs”) i
Slide 26: Timing and Next Steps
Timing and Next Steps Annual General Meeting 25 January 2017 (“AGM”) In order to proceed with the rights offer, Life Healthcare requires the following shareholder approvals to be passed at the AGM: Ordinary resolution to place the authorised but unissued shares in the Company Shareholder approvals
Slide 27: Supplementary Information
Supplementary Information 27
Slide 28: Italy
life... Italy I 28
Slide 29: Italian Market Dynamics
Italian Market Dynamics Italian Population is Ageing Increasing the Need for Imaging Public Sector Capacity is Constrained by Old Equipment Population of Italy by Age Group (2015–30F) Distribution of all MRI Equipment by age in Italy vs. Europe (2014) Percent CAGR % Percentage (2015–30F) 47% 100% 50
Slide 30: Italian Market Structure
Italian Market Structure Majority of Italian Diagnostic Imaging is publicly funded with a Complex Imaging Scanners are Split Fairly Evenly Between proportion privately delivered; public patients typically co-pay the Public and Private Sector, with a High Level of for their scans Fragmentation Within
Slide 31: AMG Presence Spread Across Italy
AMG Presence Spread Across Italy ..With a skew towards northern regions AMG DI Sites Piedmont Veneto Lombardy Emilia Romagna Liguria Tuscany Lazio Basilicata Sardinia Key AMG Core Region AMG Other Region MRI Only CT Only MRI & CT Multimodality ___________________________ Source: Third party consulta
Slide 32: UK – Diagnostic Imaging
life. UK — Diagnostic Imaging I 32
Slide 33: UK Market Dynamics
UK Market Dynamics Barriers to NHS Investment in Scanning Equipment Present Ageing Population(1) Opportunities for the Independent Sector to Partner with the NHS (1) UK Population Aged Over 65(1) (2012–30F) Age of NHS Scanner Asset Base (2014) Millions of People Percent CAGR % 100 c.50% of scanner
Slide 34: AMG Service Offering
AMG Service Offering AMG Sites AMG Coverage Overview AMG offers MRI and CT at 43 sites across England and Scotland There are three types of location for these sites: NHS sites (c.21 sites) Private hospitals/clinics (c.18 sites) Standalone clinics (c.4 sites) Services are offered through
Slide 35: UK – Molecular Imaging
life. UK — Molecular Imaging I 35
Slide 36: UK Molecular Imaging Overview
UK Molecular Imaging Overview PET-CT in England is Underprovided Compared to Other European Countries England is behind other developed countries for PET-CT scanning and AMG National PET-CT Contract this has been identified as a contributing factor to relatively low cancer survival rates Improvi
Slide 37: AMG Service Offering & PET-CT Coverage
AMG Service Offering & PET-CT Coverage PET-CT Coverage & Sites AMG Sites Overview AMG offers PET-CT services at 30 sites across England Majority (28 of 30) of these sites are co-located on NHS sites, with a further one private hospital/clinic location and one standalone clinic Services are off
Slide 38: Ireland
life... Ireland I 38
Slide 39: Ireland Market Structure
Ireland Market Structure 60% of MRI and 70% of CT scans in Ireland in 2015 were publicly funded, with the remainder funded through private medical insurance Funding Sources (Public vs. Private) Drivers of Demand DI Scan Provision (2015E) Ageing Population Percentage 314K 529K An ageing population
Slide 40: AMG Service Offering
AMG Service Offering In Ireland and Northern Ireland, AMG operates 21 MRI scanners, 6 CT scanners and 1 PET-CT scanner under a single management team AMG Complex Imaging Scanners by Modality in AMG Presence in Ireland (2016) Ireland and Northern Ireland (2016) x # of Sites Scanners 1 Ballykelly 24 2
Slide 41: Share Information
Share Information Share Key Facts Number of shares(1) 1,073,592,935 WKN/ISIN A1CZC2/ZAE000145892 Ticker Symbol LHC Bloomberg Symbol LHC SJ Reuters Symbol LHCJ.J ___________________________ 1. As of 10 January 2017 41
Slide 42: Contact
Financial Contact Contact Investor Relations: Adam Pyle Life Healthcare Group Holdings Limited Phone: 011 219 9000 For further information and current news: http://www.life.co.za/ 42
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