Opportunity Full year financial results 2018 Page 3 Large - PowerPoint PPT Presentation

Opportunity Full year financial results 2018 Page 3

Large hospitals vs day hospitals 90% 82.46% 80% 70% 60% 52.76% 52.53% 47.47% 47.24% 50% 40% 30% 17.54% 20% 10% 0% Australia USA South Africa Day Hospitals General Hospitals Full year financial results 2018 Page 4

The danger Our SA healthcare system is in crisis mode Medical schemes paid R51.4-billion to hospitals - 9.36% increase on the previous year. HMI found that the conduct of some of the healthcare stakeholders has an adverse effect on competition. Stakeholders interact with one another in an imperfect environment with a lack of transparency which harms competition. Medical aids and administrators continue to pay more for cases where there is a SMART alternative . Medical scheme premiums will not be sustainable going forward. Everyone lacks information to direct patients for best possible treatment in terms of cost and expected outcomes. Full year financial results 2018 Page 5

The danger continues Specialists feel uncomfortable to move cases from larger hospitals to day hospitals. This could be due to : Pressures from large hospitals to bring more cases convenience, consulting room privileges, threat of large hospital recruiting another specialist Larger hospitals focus on length of stay – day hospitals focus on theatre cases. Mindset of “Why worry, the medical aid pays” Insanity: “Doing the same thing over and We keep quiet and carry on as we always do… over again and expecting different results.” Albert Einstein Full year financial results 2018 Page 6

The danger continues The big 3 groups are dominating the market Full year financial results 2018 Page 7

Growth Opportunities South Africa was NOT ripe and ready for the day hospital market previous years, the time is NOW AHSA - increase in activity levels across the board during the last financial year and every discipline is showing an increase in numbers Most hospitals within Advanced reached and improved on previous best theatre cases East Rand only joined our group in February Harbour Bay in Simonstown opening soon with specialists already committed to theatre slots Full year financial results 2018 Page 8

More opportunities Same day surgery today has expanded into more than dental and minor procedures Due to enhanced technology – more procedures can be performed in a day hospital Definite increase in doctors moving same-day cases to day hospitals in general Channelling of appropriate care will take place from medical funders If majority of surgery abroad takes place in a day hospital – why not in SA? Full year financial results 2018 Page 9

@ Advanced Health Doctors build a trust relationship with the staff in a day hospital – small, unique set-up and doctors appreciate the effective turn-around, no wait, no fuss Wards and theatres are in close proximity to each other and child friendly environment Theatre-lists are on time , convenient hours, state- of-art equipment At AHSA - no red-tape on decision making Day hospitals are not utilised to the fullest potential it offers. Full year financial results 2018 Page 10

@ Advanced Health Advanced health case mix dominates with general and laparoscopic surgery cases, then ophthalmology, orthopaedic, maxilla-facial and dental. Cosmetic, ear-nose-throat surgery, urology, gynaecology are on the increase. Day hospitals offer convenience to patients - less waiting time – fast and effective Fast effective admissions , short stay and quick discharge Should a case complicate, the patient is transfer to an acute hospital and same specialist continues with the treatment in the larger hospital. Full year financial results 2018 Page 11

Danger vs Opportunity DANGERS OPPORTUNITY Day hospitals utilized between 7 – 14% 3 groups = 90% of hospital admissions Day hospital costs can bring down SA has one of the most expensive pvt systems in the world healthcare costs Over- servicing Limited chances of over servicing Fraud, waste, corruption in private sector Limited fraud, waste and corruption due ( R22 billion per annum : 7-15% of expenditure) to short procedures Infection (increase stay in hospital and risk Limited chances of infection due to to healthier patients) short stay Full year financial results 2018 Page 12

Danger vs Opportunity DANGERS OPPORTUNITY Auxiliary services add costs to an event based Limited use of auxiliary services on SID – Supply Induce Demand Rarely have these units on site in a day Pathology and radiology units add costs to an hospital event – SID – Supply Induce Dea Mindset and incentives are on longer stay in Doctors have to discharge – behaviour change hospital (PPD) Patients do not have the ability to choose Patients must have the right to choose Full year financial results 2018 Page 13

Change is inevitable At Advanced Health, we are well aware of the dangers in our healthcare system BUT we recognise the OPPORTUNITY for day hospitals – the one aspect that can make a difference. Join the drive for day hospitals De La Vie Durbanville East Rand Groenkloof Knysna Harbour Bay Medgate Panorama Worcester Soweto Vergelegen Full year financial results 2018 Page 14

Highlights Loss per share Revenue 409 290 -14.12 cent 2018 2018 2017 2017 309 109 -21.74 cent 32% 35% Net borrowing (cash flow) EBITDAR 40 089 64 684 2018 2018 2017 23 027 2017 78 506 74% 18% Earning before interest, tax, depreciation, amortisation and rent Patient numbers Cash generated from operations 2018 2018 5 772 2017 2017 -19 574 41% Positive Full year financial results 2018 Page 16

Exchange rate fluctuations Exchange rate : ZAR to AUD It is impossible to forecast the exchange 12.00 rate due to the 11.50 current fluctuations in the currency market. 11.00 10.50 Exchange rate Average rate for the 10.00 year is 9.97. 9.50 Year end closing rate 9.00 is 10.14. 8.50 8.00 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Quarter Average rate Closing rate Description Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Average rate 9.74 9.83 10.35 10.56 10.58 10.56 10.38 10.26 10.38 10.43 10.07 9.97 Closing rate 9.79 11.24 11.53 11.13 10.54 9.86 9.94 9.93 10.61 9.64 9.05 10.14 Full year financial results 2018 Page 17

Number of cases per quarter Total increase in Number of cases per quarter patient numbers of 41% compared to the previous financial year. Number of cases Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 Quarter Presmed Australia Advanced Health South Africa Total Cases AVL Full year financial results 2018 Page 18

Group statement of financial position as at 30 June 2018 ₁ The increase in property, plant and equipment is due to Jun'18 Jun'17 capital expenditure, mostly due to the establishment of new Reviewed Audited clinics: R'000 R'000 - expenditure of R 10.8 mil was incurred for Coffs Day Hospital Assets (“Coffs”); and - expenditure of R 5.0 mil was incurred for Madison Day Non-current Assets 418 273 349 700 Surgery (“MDS”), both in Australia. Property, plant and equipment ₁ 282 744 251 184 For Advanced East Rand Day Hospital (“East Rand”), situated in Goodwill ₂ 30 185 26 597 Boksburg, the capital expenditure amounts to R 15.0 mil. Intangible assets 3 33 520 28 458 - Medgate refurbishments amounting to R 3.8 mil. Operating lease asset 478 1 240 Other financial assets 4 10 586 5 894 ₂ Goodwill relates to the purchase of MDS to the value of AUD Deferred taxation 5 60 760 36 327 850k (R 8.4mil) on the 1st of July 2017.Total increase in Current Assets 96 709 88 640 goodwill is AUD 320k (R 3.1mil). Inventories 6 13 958 10 038 3 Intangible assets generated due to the business combination Trade and other receivables 7 33 393 26 576 with MDS to the value of R 7.5 mil. Other financial assets 4 2 298 5 777 Operating lease asset 5 634 5 412 4 Other financial assets increased due to a loan advanced to Current tax receivable 107 354 Epping Property Trust. Cash and cash equivalents 41 319 40 483 5 Deferred tax increased due to losses incurred during the year Total Assets 514 982 438 340 under review. 6 The increase in inventory is due to the additional 3 hospitals that were established/acquired. 7 Trade receivables increased with 26%, due to the 32% increase in revenue generated from greenfield and organic Full year financial results 2018 Page 19 expansion.