| Tue 10 May 2011, 7:05 | | LHC - Life Healthcare Group Holdings Limited - Unaudited group results and cash |
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LHC
LHC
LHC - Life Healthcare Group Holdings Limited - Unaudited group results and cash
distribution for the period ended 31 March 2011
LIFE HEALTHCARE GROUP HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2003/002733/06)
Share code: LHC ISIN: ZAE000145892
("Life Healthcare" or "the Company")
a world class provider of quality healthcare
UNAUDITED GROUP RESULTS AND CASH DISTRIBUTION FOR THE PERIOD ENDED 31 MARCH 2011
Revenue
+12.7%
Operating profit
+20.1%
Normalised earnings per share
+35.9%
Cash generated from operations
+30.2%
Interim distribution per share
31 cents
Paid patient day (PPD) growth
+6.4%
Increase in occupancy to
69.5%
Condensed consolidated interim statement of comprehensive income
for the period ended 31 March 2011
6 months 6 months 12 months
31 March 31 March 30 Sept.
2011 2010 2010
R`m Unaudited % Reviewed Audited
Revenue 4 718 12,7 4 186 8 786
Other income 50 51 94
Operating expenses (3 781) (3 415) (7 013)
Operating profit 987 20,1 822 1 867
Fair value gains (losses) on 8 (22) (26)
derivative financial
instruments
Finance income 30 24 41
Finance cost (144) (189) (342)
Share of associates` net 56 44 100
profit after tax
Profit before tax 937 679 1 640
Tax expense (297) (197) (805)
Profit after tax 640 32,8 482 835
Other comprehensive income
Currency translation (1) (2) (3)
differences
Total comprehensive income 639 480 832
for the year
Profit after tax attributable
to:
Ordinary equity holders of 552 37,3 402 664
the parent
Non-controlling interest 88 80 171
640 32,8 482 835
Total comprehensive income
attributable to:
Ordinary equity holders of 551 400 661
the parent
Non-controlling interest 88 80 171
639 480 832
Weighted average shares in 1 042 1 017 1 029
issue (`000) 210 138 883
Earnings per share (cents) 53,0 33,8 39,6 64,5
Headline earnings per share 52,6 35,2 38,9 63,5
(cents)
Diluted earnings per share 53,0 33,8 39,6 64,5
(cents)
Diluted headline earnings per 52,6 35,2 38,9 63,5
share (cents)
Earnings, headline earnings
and dividends per share
Profit after tax attributable 552 402 664
to the ordinary equity
holders of the parent
Headline earnings adjustable
items (net of tax)
Profit on disposal of (3) (7) (9)
businesses
Profit on disposal of - - (1)
property, plant and equipment
Headline earnings 549 39,0 395 654
Ordinary dividends per share
(cents)
Ordinary dividends per share
- Interim 31,0 23,0 23,0
- Final 29,0
Condensed consolidated interim statement of financial position
at 31 March 2011
30 March 31 March 30 Sept.
2011 2010 2010
R`m Unaudited Reviewed Audited
ASSETS
Non-current assets 6 266 5 827 6 194
Property, plant and equipment 3 346 2 986 3 258
Intangible assets 2 164 2 097 2 220
Other non-current assets 756 744 716
Current assets 1 624 1 524 1 678
Other current assets 1 360 1 315 1 196
Cash and cash equivalents 264 209 482
TOTAL ASSETS 7 890 7 351 7 872
EQUITY AND LIABILITIES
Capital and reserves
Capital and reserves 3 102 2 380 2 849
Non-controlling interest 686 620 667
TOTAL EQUITY 3 788 3 000 3 516
LIABILITIES
Non-current liabilities 2 292 2 192 2 566
Interest-bearing borrowings 1 786 1 487 2 024
Other non-current liabilities 506 705 542
Current liabilities 1 810 2 159 1 790
Other current liabilities 1 346 1 092 1 340
Current portion of interest-bearing 464 1 067 450
borrowings
TOTAL LIABILITIES 4 102 4 351 4 356
TOTAL EQUITY AND LIABILITIES 7 890 7 351 7 872
Condensed consolidated interim statement of changes in equity
for the period ended 31 March 2011
Total Non-
capital control-
and ling Total
R`m reserves interest equity
Balance at 1 October 2010 2 849 667 3 516
Total comprehensive income for the 551 88 639
year
Profit for the year 552 88 640
Other comprehensive income (1) - (1)
Movement on transactions with non- 4 - 4
controlling interest
Net other movement in non- - (69) (69)
controlling interests
Ordinary dividends paid (302) - (302)
Balance at 31 March 2011 3 102 686 3 788
Balance at 1 October 2009 2 320 610 2 930
Total comprehensive income for the 400 80 480
year
Profit for the year 402 80 482
Other comprehensive income (2) - (2)
Issue of shares 395 - 395
Share based payment reserve 26 - 26
movement
Realisation of share based payment (395) - (395)
Deferred tax on realisation of (56) - (56)
share based payment
Goodwill on acquisition of common (20) - (20)
control subsidiaries
Net other movement in non- - (70) (70)
controlling interest
Ordinary dividends paid (290) - (290)
Balance at 31 March 2010 2 380 620 3 000
Balance at 1 October 2009 2 320 610 2 930
Total comprehensive income for the 661 171 832
year
Profit for the year 664 171 835
Other comprehensive income (3) - (3)
Share based payment reserve 74 - 74
movement
Deferred tax on share based payment 20 - 20
reserve modification
Movement on transactions with non- (19) - (19)
controlling interests
Net other movement in non- - (114) (114)
controlling interests
Ordinary dividends paid (529) - (529)
Issue of shares at listing 4 341 - 4 341
Share repurchase (4 019) - (4 019)
Balance at 30 September 2010 2 849 667 3 516
Condensed consolidated interim statement of cash flows
for the period ended 31 March 6 months 6 months 12 months
2011
31 March 31 March 30 Sept.
2011 2010 2010
R`m Unaudited Reviewed Audited
Cash generated from operations 1 069 821 2 233
Income tax paid (301) (162) (396)
Net cash inflow from operating 768 659 1 837
activities
Net cash outflow from investing (207) (130) (695)
activities
Net cash outflow from financing (779) (421) (788)
activities
Net (decrease)/increase in cash (218) 108 354
and cash equivalents
Cash and cash equivalents - 482 101 101
beginning of the year
Cash balances acquired through - - 27
business combinations
Cash and cash equivalents - end 264 209 482
of the year
Segmental report
During the reporting periods all the operating segments operated in Southern
Africa and therefore no geographical segments are presented.
Assets and liabilities are not reviewed on an individual segment basis but
rather on a Group basis and are therefore not presented.
There are no inter-segment revenue streams.
6 months 6 months 12 months
ended ended ended
31 March 31 March 30 Sept.
2011 2010 2010
R`m Unaudited Reviewed Audited
Operating segments
Revenue
Southern Africa
Hospitals 4 393 3 857 8 140
Healthcare Services 324 326 636
Corporate 1 3 10
Total 4 718 4 186 8 786
Operating profit
Southern Africa
Hospitals 859 716 1 595
Healthcare Services 68 64 118
Corporate 93 74 161
Profit before items below 1 020 854 1 874
Amortisation of intangible (60) (59) (122)
assets
Profit on disposal of businesses 4 8 10
Retirement benefit asset 20 17 102
Post-retirement medical aid 3 2 3
Fair value gains (losses) on 8 (22) (26)
derivative financial instruments
Finance income 30 24 41
Finance costs (144) (189) (342)
Share of associates` net profit 56 44 100
after tax
Profit before tax 937 679 1 640
Disposal of investments
On 1 October 2010 the operations for the Cosmos Hospital and the Faerie Glen
Hospital were transferred to separate legal entities. The Group sold 20% of the
Cosmos Hospital and 40% of the Faerie Glen Hospital to non-controlling
interests.
Basis of presentation and accounting policies
The interim financial information for the six months ended 31 March 2011 has
been prepared in accordance with International Financial Reporting Standards
(IFRS), the Listings Requirements of the JSE Limited and the South African
Companies Act 61 of 1973, and are in compliance with IAS 34 Interim Financial
Reporting. The interim financial statements should be read in conjunction with
the annual financial statements for the year ended 30 September 2010, which have
been prepared in accordance with IFRS. The accounting policies applied are
consistent with those applied in preparation of the annual financial statements
for the year ended 30 September 2010.
Costs that occur unevenly during the year are anticipated or deferred in the
interim report only if it would also be appropriate to anticipate or defer such
costs at the end of the financial year.
Unaudited results
The results have not been reviewed or audited for the period 31 March 2011.
Commentary
The Group continued to grow during the half year ending 31 March 2011 with
continued expansion of its facilities and supported by the acquisition of the
Life Bay View Hospital in Mossel Bay in June 2010, increasing Group revenue by
12,7% to R4 718 million (2010: R4 186 million). Increased demand for hospital
services together with preferred network arrangements supplying additional
volumes resulted in Paid Patient Days (PPD`s) increasing by 6,4%.
This contributed to an improved occupancy of 69,5% (2010: 68,2%). The increase
in activity and a higher revenue per PPD resulted in hospital division revenue
increasing by 13,9%. Healthcare Services revenues declined marginally due to
reduced volumes in the Life Esidimeni business as result of the completion of
two contracts.
This was offset by the increase in value of contracts obtained in Life
Occupational Health.
The Group continues to focus on cost containment to ensure that services remain
affordable. The alternative re-imbursement model (ARM) provides an incentive to
actively manage input costs, which together with operating efficiencies, higher
occupancies and group leverage resulted in an operating profit increase of 20,1%
to R987 million (2010: R822 million). A key management measure which is a non-
IFRS measure of business performance is normalised EBITDA (Life Healthcare
defines normalised EBITDA as operating profit plus depreciation, amortisation of
intangibles, impairment of goodwill as well as excluding profit/loss on
disposal of businesses, surpluses/deficits on retirement benefits and the
accelerated employee trust charge) increased by 18,7% to R1 166 million (2010:
R982 million).
31 March 31 March 30 Sept.
2011 2010 2010
R`m Unaudited Unaudited Unaudited
Normalised EBITDA
Operating profit 987 822 1 867
Profit on sale of businesses (4) (8) (10)
Depreciation on property, plant 146 128 263
and equipment
Amortisation of intangible 60 59 122
assets
Employee Trust accelerated - - 36
charge
Retirement benefit asset (20) (17) (102)
movement
Post-retirement medical aid (3) (2) (3)
movement
Normalised EBITDA 1 166 982 2,173
Normalised EBITDA as % of 24,7 23,5 24,7
turnover
Earnings per share (EPS), headline earnings per share (HEPS) normalised earnings
per share and normalised earnings per share excluding amortisation
Net financing costs (Fair value gains (losses) on derivative financial
instruments and Finance income and Finance costs) of R106 million were R81
million lower than in the previous year (2010: R187 million) contributing to the
profit before tax rising 38,0% to R937 million (2010: R679 million) and earnings
per share and headline earnings per share increasing by 33,8% to 53,0 cents
(2010: 39,6 cents) and by 35,2% to 52,6 cents (2010: 38,9 cents) respectively.
The Group results include items not directly related to trading activities and
on a normalised basis earnings excluding amortisation of intangibles earnings
increased by 35,6% to R575 million (2010: R424 million), or by 32,4% to 55,2
cents per share (2010: 41,7 cents). This measure of the business performance
has been used to determine the dividend based on the board`s policy of a
dividend cover of 1,75 to 2,75 times.
31 March 31 March 30 Sept.
2011 2010 2010
R`m Unaudited % Unaudited Unaudited
Normalised earnings
Profit attributable to 552 402 664
ordinary equity holders
Adjustments (net of tax):
Retirement funds (17) (13) (76)
STC on listing - - 322
Employee Trust - - 36
accelerated charge
Listing cost - - 17
Profit on disposal of (3) (7) (9)
businesses
Normalised earnings 532 39,3 382 954
Amortisation of 43 42 88
intangible assets
Normalised earnings 575 35,6 424 1042
excluding amortisation
Normalised EPS (cents) 51,1 35,9 37,6 92,7
Normalised EPS - 55,2 32,4 41,7 101,2
excluding amortisation
(cents)
Cash flow
The business generated healthy cash flows. Streamlined administrative processes
contributed to tight working capital management resulting in cash generated from
operations before interest and taxes increasing by 30,2% to R1 069 million
(2010: R821 million).
Financial position
The Group is in a strong financial position with a low gearing. Net debt to
normalised EBITDA is 0,84 (2010: 1,17).
The Group has adequate facilities to meet expected needs with a working capital
facility of R250 million and an uncommitted revolving credit facility of R1
billion. The Group is well within the debt covenants.
Capital expenditure
During the first six months of 2011, Life Healthcare invested R235 million
(2010: R208 million) comprising capital projects and acquisitions. A further
R535 million has been allocated for capital projects for the remainder of the
2011 financial year. This investment in the Group`s facilities ensures that the
demand for services is met and the Group remains abreast of modern technology
and standards.
Growth
93 beds were added in the first six months of 2011 with an additional 260 beds
projected to be commissioned in the second six months. During 2010, the Life
Beacon Bay Hospital in East London and the Life Orthopaedic Hospital in Cape
Town were commissioned and the Life Bay View Hospital in Mossel Bay, was
acquired. These additional beds contributed to the increased number of PPDs in
2011.
Changes to board of directors
Dr JPF Dalmeyer and Ms YZ Cuba retired as non-executive directors on 27 January
2011.
Mr K Gordhan, Mr JK Netshitenzhe and Ms F du Plessis were appointed as
independent non-executive directors on 30 November 2010.
Lawrie Zev Brozin resigned as Mustaq Brey`s alternate with effect from 17
December 2010. Craig Warwick John Lyons resigned as Yolanda Cuba`s alternate
with effect from 17 December 2010.
Distribution to shareholders
The Directors approved an interim cash distribution of 31,0 cents per share on 9
May 2011 by way of a dividend of 11,0 cents per share and a capital reduction
out of share premium of 20,0 cents per share, in terms of the general authority
granted to directors at the annual general meeting held on 27 January 2011.
Distributions are only accounted for on the date of the declaration. As a
result, the interim distribution is not accounted for in the interim financial
statements. In compliance with the requirement of the JSE Limited, the following
dates are applicable:
Last day to trade cum the cash distribution Friday,27 May 2011
Trading ex the cash distribution commences Monday,30 May 2011
Record date Friday,3 June 2011
Payment date Monday,6 June 2011
Share certificates may not be dematerialised or rematerialised between Monday,
30 May 2011 and Friday, 3 June 2011, both days inclusive.
Outlook
Life Healthcare is investing in future bed capacity across it`s acute hospitals,
mental health and acute rehabilitation facilities to meet higher demand due to
the increasing disease burden, ageing population, the increase in private
insured lives and the preferred network arrangements negotiated with the
funders. Life Healthcare will continue to focus on improving it`s occupancy and
efficiency and cost savings programmes to ensure continued real growth in
normalised earnings.
Approved by the board of directors on 9 May 2011 and signed on its behalf:
Professor Jakes Gerwel Michael Flemming
Chairman Managing director
Executive directors: CMD Flemming (managing director) RJ Hogarth (financial
director)
Non-executive directors: Prof GJ Gerwel (chairman), MA Brey, K Gordhan, JK
Netshitenzhe, F du Plessis, GC Solomon. MP Ngatane, PJ Golesworthy, LM Mojela,
TS Munday
Company secretary: F Patel
Registered Office:
Oxford Manor, 21 Chaplin Road, Illovo
Private Bag X13, Northlands 2116
Sponsors: RAND MERCHANT BANK (a division of FirstRand Bank Limited)
Note regarding forward-looking statements: The Company advises investors that
any forward-looking statements or projections made by the Company including
those made in this announcement are subject to risk and uncertainties that may
cause actual results to differ materially from those projected.
CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE PERIOD ENDING 31 MARCH 2011 WILL
NOT BE DISTRIBUTED BUT WILL BE AVAILABLE ON THE WEBSITE
www.lifehealthcare.co.za
Date: 10/05/2011 07:05:01 Produced by the JSE SENS Department.
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