AUDITED SUMMARISED CONSOLIDATED RESULTS FOR THE YEAR ENDED 30 - PowerPoint PPT Presentation

AUDITED SUMMARISED CONSOLIDATED RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2017 , DECLARATION OF SCRIP DISTRIBUTION WITH CASH DIVIDEND ALTERNATIVE AND TRADING STATEMENT. Life Health Care Well-being and quality Clinical excellence in Quality, service, respect of life and empathy for those entrusted world-class facilities to our care OUR MISSION IS TO IMPROVE THE LIVES OF PEOPLE THROUGH THE DELIVERY OF HIGH QUALITY COST-EFFECTIVE CARE www.lifehealthcare.co.za

FY 2017 overview Group Life Healthcare Group: • Good overall performance – revenue up 26.8% and EBITDA up 15.9% against last year • Acquisition of Alliance Medical Group represents an expansion of our complementary lines of business and further diversifies the Group internationally • Group results impacted by the one-off transaction and funding costs related to the Alliance Medical transaction Southern Africa: • Satisfactory results with an improvement in business performance in H2 • A challenging operating environment, however, changes made to the business should see positive growth in 2018 Alliance Medical Group (Alliance Medical): • Good overall performance for the 10 months • Acquisition of approximately 94% of Alliance Medical in November 2016 with an enterprise value of R13.9 billion • Completed a R9 billion rights issue in April 2017 to fund part of the transaction 2

FY 2017 overview Group Scanmed (S.A.): • Completed the signing of 4-year contracts with the NFZ covering 85% of the business with better overall pricing. This will add stability to the business going forward • Changes made to the business to cater for the tariff cuts in cardiology revenue • Normalised EBITDA excluding over quota under-provision is R87 million Max Healthcare: • Acquired an equal share of the IFC stake in Max Healthcare at Rs105 per share (R428 million) increasing the LHC shareholding to 49.7% • Good performance in an environment with increased regulatory headwinds – revenue growing 8% and EBITDA 7% 3

FY 2017 overview Group NORMALISED EPS REVENUE NORMALISED EBITDA +26.8% -44.6% +15.9% to R20.8 billion to R5.0 billion 93.9 cents EBITDA (%) Acute vs non-acute revenue (%) Revenue (%) 19 24 28 72 76 81 SA International SA International Non-acute Acute 30 September 2016: 30 September 2016: 30 September 2016: • Southern Africa: 93% • Southern Africa: 97% • Acute: 89% • International: 7% • International: 3% • Non-acute: 11% 4

Life Healthcare business Group Our vision: To be a market leading, international, diversified healthcare provider. Our mission: We improve the lives of people through the delivery of high quality cost-effective care. SA UK Europe India ✓ 12 facilities ✓ 50 facilities ✓ 12 cardiac units Acute hospitals ✓ 2 375 ✓ 8152 beds ✓ 624 beds operational beds ✓ 7 Acute rehab facilities (319 beds) ✓ Oncology Complementary ✓ 8 Mental health facilities (512 beds) ✓ Renal dialysis ✓ 303 Renal dialysis stations services ✓ Pathology ✓ 4 Oncology units ✓ MRI / CT ✓ MRI / CT ✓ PET-CT ✓ PET-CT Diagnostics ✓ Radiopharmacy ✓ Radiopharmacy ✓ 436 000 Occupational health / Healthcare wellness lives services ✓ 3 080 PPD beds European countries 5

Life Healthcare business CEO Appointment Appointment of Group CEO: • Appointment of Dr Shrey Viranna as Group Chief Executive Officer • Effective 1 February 2018 ‒ a medical doctor by training ‒ was a partner at a global management consulting firm where he spent 12 years working across the pharmaceutical, private and public healthcare industries as well as focusing on operational transformation. He had strong international exposure including advising on M&A transactions ‒ moved to Discovery in 2013 serving as the CEO for Discovery Vitality and Discovery Card (the latter role was moved to Discovery Bank) and was responsible for supporting profitable growth in these businesses 6

Life Healthcare business Cautionary announcement Cautionary announcement: • Life Healthcare shareholders are advised that the Company is in discussions regarding a potential transaction which, if successfully concluded, may have a material effect on the price of the Company’s shares. Accordingly, Life Healthcare shareholders are advised to exercise caution when dealing in their shares until a further announcement is made. • 21 November 2017 7

OPERATIONAL REVIEW PIETER VAN DER WESTHUIZEN ACTING GROUP CEO ADAM PYLE GROUP IR & STRATEGY EXECUTIVE 8

Operational review Southern Africa 30 Sept 30 Sept Change 2017 2016 % Revenue R15 890m R15 230m 4.3 Normalised EBITDA R4 049m R4 194m (3.5) Normalised EBITDA margin 25.5% 27.5% PPD growth -1.7% +4.0% • Revenue per PPD: + 6.3% ‒ Tariff increase: + 6.1% ‒ Case mix impact: + 0.2% • Pressure on acute hospital growth with the economy under pressure, no growth in privately insured lives and increased case management by medical aids • Normalised EBITDA margins negatively impacted by the decrease in acute PPDs and the resultant impact on operational leverage 9

Operational review Southern Africa PPD (%) Positive impact of Easter falling in H2 2 • Improved PPD 1 0.40 performance during 0 H2 finishing with a -1 -0.50 +0.4% PPD growth -1.00 -2 -1.70 in Q4 -3 • Improved outlook -2.70 -2.70 Oct-Feb H1 2017 Oct-Apr May-Sept Jul-Sept 2017 FY for 2018 PPD (%) excluding KZN 2 1.50 • Group PPDs 0.70 1 excluding KZN 0 down -0.7% -0.30 -1 -0.70 • Stronger H2 with -2 PPDs growing 1.5% -1.80 -2.20 -3 in Q4 Oct-Feb H1 2017 Oct-Apr May-Sept Jul-Sept 2017 FY 10

Operational review Southern Africa Revenue* (R’m) Total CAGR: 7.9% • Complementary services: 853 16 000 720 − Strong growth in complementary 871 614 14 000 849 536 866 services revenue (+18.5%) 444 12 000 864 734 − Driven by additional mental health 10 000 beds, 2 new oncology centres and 8 000 14 166 13 661 strong demand in acute rehabilitation 12 519 6 000 11 471 10 553 and renal dialysis 4 000 − 4-year CAGR: 17.7% 2 000 − Expect continued complementary 0 2013 2014 2015 2016 2017 services growth 2013 Revenue* (%) 2017 Revenue* (%) • Healthcare services: 3.8 5.4 − 4-year CAGR: 4.4% 6.2 5.5 • Acute care: − Consistent growth over a 5-year period − 2017 impacted by decline in PPDs − 4-year CAGR: 7.6% 89.1 90.0 Acute HCS Complementary * from continuing operations 11

Operational review Southern Africa H1 H2 Total • Life Flora Capacity growth 2017 2017 2017 • Life Queenstown • Life Kingsbury Capacity expansion at existing facilities 22 29 51 • Life Peninsula Eye Mental health 60 22 82 • Life St Dominic’s • Life Hilton Private Total beds 82 51 133 • Life Fourways Renal dialysis stations 11 11 22 Oncology units - 2 2 • Life Carstenview • Life Riverfield Occupancy (%) 78.9 80 • Overall improvement in H2 occupancy 74.4 74.0 73.6 75 • Increased mental 72.5 71.9 71.6 71.4 health capacity by 30% 70.0 69.6 70 68.4 through the addition of 67.8 117 new beds since 65 September 2016 to cater for future growth 60 2016 H1 2017 H2 2017 2017 Acute Complementary Combined 12

Operational review Southern Africa TOTAL medical / surgical split as a % of PPDs 54.9% 56% 54.5% 53.4% 53.1% 52.8% • Continued growth 52.4% 53% of medical cases 50% on the back of 47.6% 47.2% 46.9% 46.6% faster 47% 45.5% 45.1% complementary 44% growth 2012 2013 2014 2015 2016 2017 Medical Surgical ACUTE medical / surgical split as a % of PPDs 54% • Swing towards 52% 51.0% 50.9% 50.8% surgical cases in 50.4% 50.3% 50.1% the acute business 50% 49.9% • Reflected in the 49.7% 49.6% 49.2% 48% 49.1% 49.0% positive case mix pricing 46% 2012 2013 2014 2015 2016 2017 Medical Surgical 13

Operational review Southern Africa PPDs (000) • The shift in ageing 300 continues to impact 250 our PPDs. In a flat 200 market this trend is 150 expected to 100 continue 50 • Ageing impacts the 0 LOS – the average 0 1-5 6-10 11-15 16-20 21-25 26-30 31-35 36-40 41-45 46-50 51-55 56-60 62-65 66-70 71-75 >75 LOS for patients over 50 is over 30% Age bands 2010FY 2017FY higher than patients under 50 Category 2017 2016 2010 PPD %: patient > 50 years 47.5% 45.9% 40% Rev %: patient > 50 years 54.0% 52.7% 46% 14