Interim financial results Interim financial results For the period ended For the period ended 31 December 2018 31 December 2018
Operational overview Bibi Goss-Ross Chief Operations Officer
Advanced overview Advanced Health’s 2018 financial year characterised by significant changes in the healthcare industry We made mistakes - to turn a start-up business into profitable ventures takes longer than we anticipated Compared to previous years, this year only added one additional hospital to the group in Boksburg, Advanced East Rand bringing the total to 11 day hospitals. Harbour Bay, Simon’s Town will join the group in the fourth quarter of 2019.
Growth Revenue and case numbers for 2018 increased by 35 and 40% when compared to 2017 Ophthalmology and orthopaedic revenue increased by 20% when compared to same time in 2017 Endoscopy surgery increased by 30% Dentistry, ENT and cosmetic surgery increased by 5 and 10%
Day hospital industry Change which took place years ago in the rest of the world, is becoming reality in South Africa Enforcement of Discovery Health to channel day procedures to appropriate same day surgical facilities will increase theatre utilization Specialists remunerated at a higher rate when operating at a day hospital is evidence that day hospitals are financially cost effective alternative to hospitalization What Discovery starts, others follow
Advanced Health’s challenges and views Many challenges - yet exciting times ahead Healthcare providers cannot fight the system of smart hospitalization – change is difficult, but to the benefit of all in the SA healthcare Encourage all role-players to work with day hospitals – not against Co-payments / penalties to patients when admitted to an acute hospital is evidence of cost effective surgery in same-day facilities
Our opportunities Out migration of day cases from acute care driven by preferred provider networks Under utilization of theatre time currently Expanding network of different surgeries
Our opportunities Increase further medical scheme support and medical funder networks Increase theatre capacity due to growing medical scheme network - Saturday lists and evening lists Patients want convenience – day hospitals are the convenient smart alternative to hospitalization.
Plan of action Retain and recruit quality operating specialists where the case-mix is dominated by day cases and build loyalty Build relationship with specialists and referring doctors Increase shareholding of doctors working at AHSA (loyalty) Continue to appoint staff with the skill and experience required – nursing staff are core attraction to specialists Continue to control costs and purchase the right product at the right price
Financial overview Carel Petrus Snyman Chief Financial Officer
Overview *Excluding East Rand which started operating in February 2018 – Profit after tax increased by 16% within the South African segment.
Exchange rate fluctuations Due to the continuous volatility of the currency markets, it is impossible to forecast the exchange rates. As at 31 December 2018, the closing ZAR weakened against the AUD closing rate compared to Q1 2019. The average ZAR rate for the period under review (Q2 2019) strengthened against the AUD compared to Q2 2018.
Number of cases per quarter The increase in patient numbers compared to Q2 2018 is 10% and 32% for PMA and AHSA respectively. The increase in the patient numbers from Q2 2018 is due to organic growth for existing facilities as well as the new facility East Rand that became operational in February 2018.
Group statement of financial position as at 31 December 2018 Dec'18 Jun'18 Jun'17 ₁ Other financial assets increased due to the Unaudited Audited Audited loan advanced to Epping Surgery Centre(ESC) R'000 R'000 R'000 Assets Property Unit Trust by ESC. Non-current Assets 424 525 418 273 349 700 Property, plant and equipment 280 448 282 744 251 184 Goodwill 30 175 30 185 26 597 ₂ Deferred tax increased due to the taxable Intangible assets 32 256 33 520 28 458 Operating lease asset 476 478 1 240 losses incurred in South Africa for the 6 month Other financial assets 1 10 690 10 586 5 894 period. Deferred taxation 2 70 480 60 760 36 327 Current Assets 93 917 96 709 88 640 Inventories 13 868 13 958 10 038 Trade and other receivables decreased both in Trade and other receivables 3 20 806 33 393 26 576 3 Other financial assets 1 4 791 2 298 5 777 South Africa and Australia. This is attributed to Operating lease asset 3 064 5 634 5 412 Current tax receivable 4 1 621 107 354 two factors: Cash and cash equivalents 49 767 41 319 40 483 *Revenue in December was low compared Total Assets 518 442 514 982 438 340 to the other months due to the holiday season. *Improvement in the collection period in South Africa by more than 100% from 17 days to 7 days. Increase in current tax receivable due to 4 income tax paid by Presmed Australia.
Group statement of financial position as at 31 December 2018 - continue Dec'18 Jun'18 Jun'17 Other financial liabilities increased due to 5 Unaudited Audited Audited loans advanced from: R'000 R'000 R'000 Equity and Liabilities *Eenhede Konsultante amounting to Capital and reserves 175 599 193 831 141 875 R24,3 million for South Africa and R0,6 Stated capital 221 956 221 956 137 378 Foreign currency translation reserve 34 281 34 363 28 898 million for Australia. Retained earnings (82 671) (64 368) (28 417) Share based payment reserve 2 033 1 880 4 016 *Other financial institutions amounting to Non-controlling interest 53 376 53 459 43 507 R4,4 million for South Africa. Total Equity 228 975 247 290 185 382 Non-current Liabilities 197 061 170 084 184 738 Other financial liabilities 5 153 672 127 495 142 630 No additional finance leases were obtained. Finance lease obligations 6 19 156 19 497 25 408 6 Operating lease liability 23 212 22 101 16 320 An amount of R4,8 million was re-paid with Provisions 1 021 991 - R0,9 million relating to repayments in South Deferred tax - - 380 Current Liabilities 92 406 97 608 68 220 Africa. Other financial liabilities 5 20 697 18 239 13 630 Finance lease obligations 6 14 325 18 718 8 820 Trade and other payables 7 41 466 45 919 36 658 Trade and other payables decreased during Provisions 8 124 7 366 3 645 7 Current tax liability 6 139 5 000 2 326 the 6 months under review mainly due to a Operating lease liability 1 655 2 366 3 141 decrease in capex purchases. Total Equity and Liabilities 518 442 514 982 438 340 Notes to Statement of Financial Position Total number of shares in issue 287 988 287 988 221 615 Net asset value per share (cents) 79.51 85.87 83.65 Net tangible asset value per share (cents) 57.83 63.75 58.81
Group statement of profit or loss and other comprehensive income for the period ended 31 December 2018 Dec'18 Dec'17 Dec'16 Revenue increased by 22% - from 6 months 6 months 6 months Unaudited Unaudited Unaudited Q2 2018. Increase attributable to R'000 Var % R'000 Var % R'000 organic growth amounts to 20%. Revenue 244 079 22 199 463 33 149 751 Cost of sales (114 055) 13 (100 750) 35 (74 651) Gross profit 130 024 32 98 713 31 75 100 Gross profit percentage improved Gross profit % 53% 8 49% <100 50% by 8% from 49% to 53% which is an Other income 2 121 >100 902 55 581 Other operating expenses (99 591) 17 (85 235) 30 (65 572) indication of improvement in EBITDAR 32 554 >100 14 380 42 10 109 management of direct costs both Investment income 219 (23) 286 (1) 290 Finance costs (9 048) 32 (6 865) 10 (6 255) in South Africa and Australia. Rental paid (27 970) 20 (23 222) (0) (23 236) Depreciation and amortisation (17 131) 7 (15 939) 26 (12 636) Loss before taxation (21 376) (32) (31 360) (1) (31 728) Loss after taxation improved by Taxation 5 899 (32) 8 716 (4) 9 048 32%. South Africa experienced a Loss after taxation (15 477) (32) (22 644) (0) (22 680) Other comprehensive income for the (134) <100 (2 714) (79) (13 202) 6% increase in losses whilst Total comprehensive loss for the period/year (15 611) (38) (25 358) (29) (35 882) Presmed Australia's profit Loss attributable to: increased by more than 100%. Owners of the parent (17 888) (23) (23 332) 0 (23 311) Non-controlling interest 2 411 >100 688 9 631 (15 477) (32) (22 644) (0) (22 680) Positive EBITDA amounting to R4,6 Total comprehensive loss attributable to: million. Owners of the parent (17 970) (27) (24 696) (31) (35 793) Non-controlling interest 2 359 >100 (662) >100 (89) (15 611) (38) (25 358) (29) (35 882) Loss per share Basic (cents per share) (6.21) (27) (8.55) (19) (10.52) Diluted (cents per share) (6.21) (27) (8.55) (19) (10.52)
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