FY 2017 Results Presentation 6 December 2017
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Contents Overview FY17 Financial Performance Cash Flow Funding and Leverage Residential Care Services Health Care Outlook Appendix - Revenue/Adjusted EBITDA Bridges All figures and percentages included in this report are presented on a continuing operations basis unless stated otherwise. Discontinued operations comprise the Amicus ITS 3 business disposed of in February 2016. All prior periods have been represented accordingly.
Overview Overall performance exceeded management expectations Strong performance in Residential Care Health Care performed well overall, albeit stronger first half than second Net debt and leverage benefitting from progressive EBITDA improvement and strong working capital Residential Care Strong revenue growth due to maturing occupancy in new build homes Five new build self-funded homes opened in FY17 with strong development pipeline Best quality performance amongst large operators – 78% of homes rated good or outstanding by CQC Key operational metrics driving continued financial improvement Self-funded care home strategy now demonstrating strong and predictable financial returns from mature homes Significant bed shortage expected over next 5 to 10 years Beneficial to self-funded strategy Increasing number of partnership approaches from local authorities CMA have announced outcome of their review – we are evaluating impact 4
Overview Health Care Revenue growth mainly driven by new prison healthcare contracts Urgent care market remains financially challenging though good progress being made in developing innovative primary care solutions Strong first half of the year with second half impacted by weaker elective surgery referrals as NHS financial pressures increase Secondary care (mainly elective surgery) showing year on year growth in revenue and profitability despite volume challenges Exploring potential partnership structures with NHS Acute Trusts alongside developing a self-funding offering Strategic focus Started to identify and evaluate strategic options for the future of both businesses - will look at the full range of potential scenarios which enable continued growth and further innovation Brexit Minimal impact expected in Health Care with medically qualified staff expected to be protected Potential impact for Residential Care care workers (13.5% of staff from EU) 5
FY 2017 Financial Performance Continuing operations performance Revenue of £658m (+10.3%) with growth in both Residential Care and Health Care Adjusted EBITDA of £38.7m, £4.1m higher than FY 2016 and ahead of management expectations FY16 included c£3m ISTC Wave 2 pricing and guaranteed volume benefit – like for like EBITDA increase of c£7.1m (22%) Pro forma EBITDA (before new home start-up losses) of £43.6m up over 14% versus prior year Finance costs Net financing expenses of £16.3m, £2.5m lower than prior year due to one off items in FY16, lower RCF drawdowns and reduction in LIBOR Net debt and leverage Net debt better than expectations at £257m due to strong working capital and EBITDA progression Reported leverage reduced from 7.6x in FY16 to 6.7x in FY17 (5.9x Pro forma basis) Silver Sea repayment of £5m during the year Non-recurring items Total charge of £5.3m includes £1.5m of overhead reduction programme costs, £1.6m of procurement programme costs and £1.7m due to increased stock capitalisation threshold 6
FY 2017 Financial Performance Full Year Q4 £m 2017 2016 Movement 2017 2016 Movement Revenue Residential Care 300.7 272.0 28.7 78.4 72.3 6.1 Health Care 357.0 324.2 32.8 89.1 85.9 3.2 Continuing Operations 657.7 596.2 61.5 167.5 158.2 9.3 Adjusted EBITDA Residential Care 32.9 26.8 6.1 9.3 8.4 0.9 Health Care 12.2 12.3 (0.1) 3.3 3.8 (0.5) Other (6.4) (4.5) (1.9) (2.4) (1.1) (1.3) Reported Continuing Operations 38.7 34.6 4.1 10.2 11.1 (0.9) Start-up Losses 4.9 3.6 1.3 1.6 0.9 0.7 Pro forma Continuing Operations 43.6 38.2 5.4 11.8 12.0 (0.2) RCS: revenue up 11%, Adjusted EBITDA up 23% HC: revenue up 10%, Adjusted EBITDA broadly flat year on year but up c£3m on an underlying basis (Wave 2 impact) Other costs increase on prior year mainly due to staff incentive payments and project costs Discontinued operations in FY16 related to Amicus ITS Ltd which was sold in February 2016 - excluded from financial performance above 1) 7
Cash Flow £m FY 2017 FY 2016 Q4 2017 Q4 2016 Adjusted operating profit 13.9 12.0 3.4 5.5 Depreciation and other non-cash movements 25.0 21.6 7.4 5.6 Change in working capital and non-recurring items 7.5 5.5 7.0 1.8 Cash flow from operations 46.4 39.1 17.8 12.9 Cash flows resulting from financing activities and (15.9) (18.4) (3.3) (4.4) taxation Capital expenditure net of disposal proceeds (27.7) (23.7) (5.7) (7.3) Loans from/(to) related party undertakings 2.5 (4.2) - - Decrease/(increase) in net debt arising from cash 5.3 (7.2) 8.8 1.2 flows Other non-cash movements in net debt (1.4) (1.1) (0.5) (0.2) Total movement in net debt 3.9 (8.3) 8.3 1.0 Continued strong working capital management Net loan benefit as a result of £5m cash repayment of cash by Silver Sea following two freehold sales Capital expenditure totalling £28.4m before proceeds of £0.7m Health Care: £10.1m (£4.8m expansionary, £5.3m maintenance) − Residential Care: £18.3m (£6.2m expansionary, £12.1m maintenance, including H&S review) − 8
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