Group Results and Cash Dividend Declaration Unaudited Group results for the six month period ended 31 March 2015 www.lifehealthcare.co.za
Operational review André Meyer CEO 2
Highlights Group SA: International: • 3.5% PPD growth • India: − Increase in shareholding to 46.25% • 90 additional beds − Strong revenue growth and continued • ±450 additional beds planned improvement in EBITDA margins over next 18 months − Additional 78 active beds • EBITDA margins stable at 28% • Poland: • Continued improvement in clinical − Acquisitions of Sport Klinika and KKA quality metrics − Good revenue and EBITDA growth • Good progress implementing energy − Business integration on track saving initiatives 3
Highlights Group +14.1% to R7 089m • Revenue +10.8% to R1 926m • Normalised EBITDA • Normalised EPS from continued operations +10.4% to 88.9 cents excluding funding +7.9% to 68 cps • Dividend 4
SA: Growth PPDs PPDs (000) 1 100 1 050 3.5% 2.7% 1 000 1.5% 950 900 850 800 2012 2013 2014 2015 H1 bed growth 154 80 142 90 FY bed growth 292 95 249 268 est 5
SA: Growth Acute bed growth 2015 H1 H2 Total Category 2015 2015 2015 Capacity expansion at existing facilities 76 84 160 New facilities - 94 94 Acquisition 14 - 14 Total 90 178 268 • Life Entabeni • Life Eugene Marais • Life Westville • Life Mt Edgecombe • Life Roseacres • Life Kingsbury • Life Peglerae • Life Robinson • Life Peglerae • Life Springs Parklands Life Hilton Life Genesis 6
SA: Growth Complementary growth 2015 H1 H2 Total Category 2015 2015 2015 Mental Health - - - Acute Rehabilitation - - - Renal stations 25 57 82 Oncology units 1 unit 1 unit • Life Mercantile • Life Midmed • Life Gaborone • Life St James • Life Knysna • Life Hilton • Life Carstenhof • Life LCM • Life Bayview • Life Brenthurst • Life Wilgeheuwel • Life Empangeni Life Vincent Pallotti: Mental Health Life Vincent Pallotti: Oncology 7
SA: Growth Group business pipeline Total Forecast Approved Applications Category 2015 2016 beds* pending Capacity expansion at existing acute facilities 160 174 495 314 New acute facilities 94 - 394 88 Acquisition 14 - - - Mental Health - 90 222 259 Acute Rehabilitation - - 25 112 Total 268 264 1 136 773 Renal stations 82 32 - Oncology units 1 unit 1 unit - • Life Bayview • Life Crompton • Life Vincent Pallotti • Life St Mary’s • Life Mt Edgecombe • Life Carstenhof • Life Kingsbury • Life Midmed • Approved: received Health department licence approval. In the process of obtaining municipal approvals before commencing building • 8 Applications pending: awaiting approval from the Health departments for bed applications made
SA: Efficiency Effective use of assets Group occupancy 72% ICU occupancy: 75.3% ICU occupancy: 74.8% 70% 68% 66% 69,0% 70,6% 70,7% 64% 2013 2014 2015 Bed growth 95 249 90 - H1 2013: Bed occupancy split 2015: Bed occupancy split 12% 13% 16% 16% <60% 60-69% Beds 70%+ Beds 70%+ occupancy occupancy 70-79% 32% 30% 46% 57% 80%+ 44% 38% 9
SA: Efficiency Effective use of assets Occupancy split between Acute and Complementary * 76 72 68 64 68,9 70,2 69,0 70,1 74,9 70,6 70,3 74,8 70,7 60 2013 2014 2015 Bed growth 75 20 95 249 - 249 90 - 90 Acute occupancy Complementary occupancy Group occupancy 10 * Complementary business includes Mental Health and Acute Rehabilitation in the occupancy calculation
SA: Efficiency H1 Normalised EBITDA margin 30% 28% 26% 24% 22% 27,4% 28,0% 28,0% 20% 2013 2014 2015 • Good management of costs in a difficult environment • Pressure from the weakening Rand, salaries and overhead costs • Continued focus on driving efficiencies offset increased costs 11
SA: Quality Measuring clinical outcomes Outcome 31 Mar 2015 31 Mar 2014 Standard Patient incident rate 2.72 2.99 Per 1 000 PPDs HAI (Healthcare Associated Infection) 0.33 0.49 Per 1 000 PPDs VAP (Ventilator Associated Pneumonias) 1.27 1.95 Per 1 000 VAP days SSI (Surgical Site Infections) 0.55 0.77 Per 1 000 theatre cases CLABSI (Central Line Associated Blood Stream Infections) 0.59 1.01 Per 1 000 central line days CAUTI (Catheter-related Urinary Tract Infections) 0.46 0.44 Per 1 000 catheter days FIM/FAM score 1.18 1.16 >0.9 MHQ14 efficiency (average gain/PPD) 2.48 2.36 >1.6 4 3 2 1 0 VAP SSI CLABSI CAUTI Patient incident rate 2013 2014 2015 12
SA: Sustainability Competition Commission (CC) Healthcare Market Inquiry • Made a detailed submission on the subject matter of the Inquiry • Submitted a further response to the public submissions as requested by the Panel focusing on the following key themes: − Market power / medical scheme bargaining power − Profitability − Pricing & Price regulation − Hospital formularies − Quality − Regulations • Next steps: − The CC has requested further information − The scheduled public hearings have been delayed until the CC has reviewed all the data − CC due to publish a new timetable 13
SA: Sustainability Environmental management system • Environmental Certification: − on track to obtain an ISO 14001:2004 environmental certification in 2016 • Load shedding has had limited operational impact as hospitals have necessary back-up facilities • Energy saving initiatives: − Solar: › Life Anncron Clinic: largest hospital solar project in Africa with over 1 700 solar panels. Generate 836 215MWh/annum of solar electricity with an estimated saving of R1million/annum. Considering expansion to 10 further hospitals − Heat Pumps: › Converted 33 acute hospitals and 9 Life Esidimeni sites - annual saving of 7.7GWh (approx R8 million). A further 12 sites have been identified for conversion in 2015 − Life Hilton Private Hospital: › designed according to our green design policy - target of being 20% more efficient 14
International: India MHC India • Strong economic growth outlook • Fast growing private healthcare market driven by: − Growing middle class − Increasing disease burden − Limited public sector provision • Fragmented and under-developed private hospital market represents an excellent growth opportunity MHC Shareholding equalisation: • In November completed the MHC shareholding equalisation • Increased shareholding to 46.25% from 26% for R1.34bn • Joint control with Max India • Concluded through a 50% primary issue of new MHC shares and a 50% secondary acquisition of MHC shares held by Max India. H1 2015: • Good revenue growth • Consistent improvement in EBITDA (margin improved to 10.3% from 8.3% in March 2014) • Transformation office is managing key operational improvement projects 15
International: India MHC bed growth Operational Operational Operational Bed beds beds beds capacity 31 Mar 2015 30 Sep 2014 31 Mar 2014 Phase 1 hospitals 1 123 1 101 1 079 1 066 Phase 2 hospitals Shalimar Bagh 288 235 185 158 Mohali 213 213 203 179 Bathinda 186 70 80 59 Dehradun 168 136 130 109 Total Phase 2 855 654 598 505 Combined total 1 978 1 755 1 677 1 571 Consistent bed growth 16
International: India MHC occupancy Operational Operational Bed beds Occupancy beds Occupancy capacity 31 Mar 2015 31 Mar 2015 31 Mar 2014 31 Mar 2014 Phase 1 hospitals 1 123 1 101 76% 1 066 76% Phase 2 hospitals Shalimar Bagh 288 235 74% 158 77% Mohali 213 213 71% 179 71% Bathinda 186 70 57% 59 57% Dehradun 168 136 66% 109 69% Total Phase 2 855 654 69% 505 70% Combined total 1 978 1 755 73% 1 571 74% Consistent occupancies 17
International: Poland Scanmed growth Poland: • Fastest growing economy in Europe • Strong National Health system funding private sector delivery • Fragmented private hospital market providing a consolidation opportunity • Good long-term private sector growth Strategy to build an integrated countrywide network of healthcare facilities • Completed two acquisitions: − Sport Klinika: › 46 bed orthopaedic clinic − Kardiologii Kliniki Allenort (KKA): › 6 in-patient cardiology centres with 83 beds • Business benefiting from the fast oncology therapy regulations: 70% increase in oncology patients • Currently reviewing further acquisition opportunities 18
International: Poland Scanmed growth Scanmed business: • Outpatient services: − Primary Healthcare: › 130 000 registered people › Profitable structure of registered PHC population groups with low medical loss ratio − Medical centres: › 29 centres in 15 locations › Facilities with treatment rooms, including » Rehabilitation, dentistry, psychiatry and diagnostic services • Inpatient services: › St. Raphael Hospital: 135 beds › Weiss Clinic: 22 beds › Gastromed: 8 beds › Sport Klinika: 46 beds › KKA: 83 beds and 6 in-patient cardiac facilities 19
International: Poland Scanmed integration Good integration progress made covering key business functions Weiss Gastromed Sport Klinika KKA IT System Finance and Accounting Personnel and Payroll Organisation and Communication Occupational Health and Safety Sales and Marketing HR Epidemiology Sterilisation Drug Management Infrastructure Management Medical Procurement 20
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