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LHC
LHC
LHC - Life Healthcare Group Holdings Limited - Unaudited group results and
cash dividend for the six month period ended 31 March 2012
LIFE HEALTHCARE GROUP HOLDINGS LIMITED
Incorporated in the Republic of South Africa
Registration number: 2003/002733/06
Income Tax number: 9557/379/154
ISIN: ZAE000145892
Share Code: LHC
("Life Healthcare" or "the Company")
UNAUDITED GROUP RESULTS AND CASH DIVIDEND FOR THE SIX MONTH PERIOD ENDED 31
MARCH 2012
Paid patient days (PPDs): +6,0%
Revenue: +11,7% to R5 271 million
Normalised EBITDA: +17,5% to R1 370 million
Operating profit: +22,4% to R1 208 million
Normalised earnings per share: +21,9% to 62,3 cents
Interim dividend: 45 cents
Condensed consolidated statement of comprehensive income
6 months 6 months 12 months
31 March 31 March 30 Sept
2012 Change 2011 2011
R Million Unaudited % Unaudited Audited
Revenue 5 271 11,7 4 718 9 812
Other income 50 50 102
Operating expenses (4 144) (3 785) (7 838)
(Loss)/Gain on (3) - 92
remeasuring of fair
value of equity
interest before
business combination
Additional receipt on 2 - 5
previous disposed
business
Profit on disposal of 32 4 -
businesses
Operating profit 1 208 22,4 987 2 173
Fair value gain on 8 8 14
derivative financial
instruments
Finance income 10 30 37
Finance cost (119) (144) (250)
Share of associates` 47 56 115
net profit after tax
Profit before tax 1 154 937 2 089
Tax expense (346) (297) (597)
Profit after tax 808 26,3 640 1 492
Other comprehensive
income, net of tax
Currency translation (2) (1) 2
differences
Total comprehensive 806 26,1 639 1 494
income for the period
Profit after tax
attributable to:
Ordinary equity holders 690 25,0 552 1 287
of the parent
Non-controlling 118 88 205
interest
808 26,3 640 1 492
Total comprehensive
income attributable to:
Ordinary equity holders 689 551 1 288
of the parent
Non-controlling 117 88 206
interest
806 26,1 639 1 494
Total shares in issue 1 042 210 1 042 210 1 042 210
(`000)
Weighted average shares 1 040 833 1 042 210 1 041 523
in issue (`000)
Diluted number of 1 041 057 1 042 210 1 041 523
shares (`000)
Earnings per share 66,3 25,1 53,0 123,6
(cents)
Headline earnings per 63,8 21,3 52,6 119,5
share (cents)
Diluted earnings per 66,3 25,1 53,0 123,6
share (cents)
Diluted headline 63,8 21,3 52,6 119,5
earnings per share
(cents)
Headline earnings
Profit attributable to 690 552 1 287
ordinary equity holders
Headline earnings
adjustable items (net
of tax)
Impairment of - - 54
intangible assets
Loss/(Gain)on 3 - (92)
remeasuring of fair
value of equity
interest before
business combination
Additional receipt on (2) - (4)
previous disposed
business
Profit on disposal of (27) (3) -
businesses
Profit on disposal of - - (1)
property, plant and
equipment
Headline earnings 665 21,1 549 1 244
Condensed consolidated statement of financial position
31 March 31 March 30 Sept
2012 2011 2011
R Million Unaudited Unaudited Audited
Assets
Non-current assets 7 582 6 266 6 775
Property, plant and equipment 3 791 3 346 3 753
Intangible assets 2 242 2 164 2 296
Other non-current assets1 1 549 756 726
Current assets 1 771 1 624 1 693
Other current assets 1 558 1 360 1 293
Cash and cash equivalents 213 264 400
TOTAL ASSETS 9 353 7 890 8 468
EQUITY AND LIABILITIES
Capital and reserves
Capital and reserves 3 629 3 102 3 518
Non-controlling interests 878 686 867
TOTAL EQUITY 4 507 3 788 4 385
LIABILITIES
Non-current liabilities 2 685 2 292 2 084
Interest-bearing borrowings2 2 213 1 786 1 565
Other non-current liabilities 472 506 519
Current liabilities 2 161 1 810 1 999
Other current liabilities 1 402 1 346 1 539
Current portion of interest- 474 464 460
bearing borrowings
Bank overdraft 285 - -
TOTAL LIABILITIES 4 846 4 102 4 083
TOTAL EQUITY AND LIABILITIES 9 353 7 890 8 468
1 The increase includes the investment made in Max Healthcare during the
current period.
2 The increase includes the new funding regarding the acquisition of Max
Healthcare during the current period.
Condensed consolidated statement of changes in equity
for the period ended 31 March 2012
Total
capital Non-
and Controlling Total
R Million reserves Interest equity
Balance at 1 October 2011 3 518 867 4 385
Total comprehensive income for 689 117 806
the year
Profit for the year 690 118 808
Other comprehensive income (1) (1) (2)
Share-based payment reserve 7 - 7
movement
Non-controlling interests arising - 2 2
on business acquisition
Distribution to shareholders (562) (108) (670)
Treasury shares (23) - (23)
Balance at 31 March 2012 3 629 878 4 507
Balance at 1 October 2010 2 849 667 3 516
Total comprehensive income for 551 88 639
the year
Profit for the year 552 88 640
Other comprehensive income (1) - (1)
Transactions with non-controlling 4 - 4
interests
Distribution to shareholders (302) (69) (371)
Balance at 31 March 2011 3 102 686 3 788
Balance at 1 October 2010 2 849 667 3 516
Total comprehensive income for 1 288 206 1 494
the year
Profit for the year 1 287 205 1 492
Other comprehensive income 1 1 2
Transactions with non-controlling 12 - 12
interests
Non-controlling interest arising - 128 128
on business acquisition
Change in ownership that does not - 16 16
result in loss of control
Distribution to shareholders (625) (150) (775)
Treasury shares (6) - (6)
Balance at 30 September 2011 3 518 867 4 385
Condensed consolidated statement of cash flows
6 months 6 months 12 months
31 March 31 March 30 Sept
2012 2011 2011
R Million Unaudited Unaudited Audited
Cash generated from operations 1 003 1 069 2 562
Tax paid (375) (301) (617)
Net cash inflow from operating 628 768 1 945
activities
Net cash outflow from investing (909) (207) (688)
activities1
Net cash outflow from financing (193) (779) (1 378)
activities2
Net decrease in cash and cash (474) (218) (121)
equivalents
Cash and cash equivalents - 400 482 482
beginning of the year
Cash balances acquired through 2 - 39
business combinations
Cash and cash equivalents - end (72) 264 400
of the year
1 The increase includes the investment made in Max Healthcare during the
current period.
2 The decrease includes the new funding regarding the acquisition of Max
Healthcare during the current period.
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
31 March 31 March 30 Sept
2012 2011 2011
R Million Unaudited Unaudited Audited
Operating segments
Revenue
Southern Africa
Hospitals 4 905 4 393 9 136
Healthcare Services 365 324 674
Other 1 1 2
Total 5 271 4 718 9 812
Profit before items below
Southern Africa
Hospitals 1 040 859 1 917
Healthcare Services 71 68 141
Other 100 93 191
Operating profit before 1 211 1 020 2 249
amortisation, disposals and
impairment of intangible assets
Amortisation of intangible (57) (60) (110)
assets
Impairment of intangible assets - - (65)
Profit on disposal of businesses 32 4 -
Retirement benefit asset 21 20 2
movement
Post-retirement medical aid 2 3 -
movement
(Loss)/Gain on remeasuring of (3) - 92
fair value of equity interest
before business combination
Additional receipt on previous 2 - 5
disposed business
Operating profit 1 208 987 2 173
Fair value gain on derivative 8 8 14
financial instruments
Finance income 10 30 37
Finance costs (119) (144) (250)
Share of associates` net profit 47 56 115
after tax
Profit before tax 1 154 937 2 089
Operating profit before amortisation, disposals and impairment of intangible
assets includes the segment`s share of shared services and rental costs.
These costs are all at market related rates.
Acquisition of investments
Increase in ownership interest in subsidiaries as a result of non-controlling
interest transactions
The Group had a marginal increase in its interest in Little Company of Mary
Trust.
Acquisition of shareholding in Max Healthcare Institute Limited, India (Max
Healthcare)
On 23 January 2012, the Group acquired a 26% shareholding in Max Healthcare
for a cash investment of R823 million. This is funded through a long-term
finance agreement of R820 million.
Decrease of ownership interest in subsidiaries as a result of non-controlling
interest transactions
The Group disposed of a marginal percentage of its holding in a subsidiary
company to a non-controlling interest, maintaining control.
Disposal of investments
Disposal of associates
On 1 December 2011, the Group disposed of its 50% interest in Occuli Trust
and Bloemfontein Eye Clinic.
Disposal of subsidiary
On 1 March 2012, the Group disposed of its total interest in Birchmed Day
Clinic Partnership and property.
Basis of presentation and accounting policies
These condensed consolidated interim financial statements for the six months
ended 31 March 2012 have been prepared in accordance with IAS 34, "Interim
Financial Reporting" and in the manner required by the Companies Act of South
Africa and Section 8.57 of the JSE Listings Requirements. The condensed
consolidated interim financial statements should be read in conjunction with
the annual financial statements for the year ended 30 September 2011 which
have been prepared in accordance with International Financial Reporting
Standards (IFRS).
The accounting policies applied are consistent with those applied in
preparation of the annual financial statements for the year ended 30
September 2011, unless otherwise stated.
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.
These interim financial results have been prepared under the supervision of
RJ Hogarth (CA)(SA), the Chief Financial Officer of the Group.
Unaudited results
The results for the period to 31 March 2012 have not been reviewed or audited
by the Group`s auditors.
Commentary
Overview
Life Healthcare continued to grow during the period under review and is in a
healthy financial position to deliver on its strategic objectives of growth,
efficiency and sustainability. Activities as measured by hospital paid
patient days (PPDs), increased by 6,0% as a result of an increased demand for
hospital services due to high incidence of disease together with a growing
and aging medical aid population and preferred network arrangements.
Additional beds have been added to the business to cater for this additional
demand including the opening of Life Glynnview (Mental Health) in April 2011,
the acquisition of Life Midmed in August 2011, the opening of Life Vincent
Palotti Rehabilitation in September 2011 and the addition of 154 beds in the
current period including the opening of Life Piet Retief Hospital and Life St
Josephs (Mental Health).
The total number of registered beds at 31 March 2012 is 8 212.
The Max Healthcare India investment of R823 million resulted in a 26%
shareholding.
Life Healthcare continued to improve on its clinical quality metrics during
the period under review resulting in an improvement in its hospital acquired
infection rate.
Financial performance
Group revenue increased by 11,7% to R5 271 million (2011: R4 718 million).
Hospital division revenue increased by 11,7% to R4 905 million (2011: R4 393
million) driven by the 6,0% increase in PPDs and higher revenue per PPD of
5,2%. Healthcare Services revenue increased by 12,7% to R365 million (2011:
R324 million). Life Esidimeni revenue grew in line with inflation while Life
Occupational concluded new contracts and provided additional services to
existing clients.
The Group continues to focus on efficiencies across the business to ensure
services remain affordable. The alternative reimbursement model (ARM)
provides an incentive to actively manage input costs, which together with
slightly higher occupancies of 70,3% (2011: 69,5%) allowed the Group to
leverage efficiencies across the existing base resulting in an operating
profit increase of 22,4% to R1 208 million (2011: 987 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 intangible assets, impairment of
intangible assets as well as excluding profit/loss and fair value adjustments
on disposal of businesses and surpluses/deficits on retirement benefits)
which increased by 17,5% to R1 370 million (2011: R1 166 million).
6 months 6 months 12 months
31 March 31 March 30 Sept
2012 2011 2011
R Million Unaudited Unaudited Audited
Normalised EBITDA
Operating profit 1 208 987 2 173
Profit on disposal of business (32) (4) -
Additional payment on previous (2) - (5)
disposed business
(Loss)/Gain on remeasuring of 3 - (92)
fair value of equity interest
before business combination
Depreciation on property, plant 160 146 299
and equipment
Impairment of intangible assets - - 65
Amortisation of intangible 57 60 110
assets
Retirement benefit asset (21) (20) (2)
movement
Post-retirement medical aid (2) (3) -
movement
Normalised EBITDA 1 370 1 166 2 548
Normalised EBITDA as % of 26,0% 24,7% 26,0%
turnover
Cash flow
The business generated solid cash flows, however, weak collections of
government related debt, contributed to a decrease of 6,2% in cash generated
from operations to R1 003 million (2011: R1 069 million).
Financial position
The Group is in a strong financial position with a low gearing at Net debt to
normalised EBITDA of 0,97 as of 31 March 2012 after the Max Healthcare
investment. The Group has the financial flexibility to continue investing in
the growth of the business.
Normalised earnings per share
The earnings on a normalised basis, which excludes non-trading related items
as set out below, increased by 21,9% to 62,3 cps (2011: 51,1 cps) and
excluding the amortisation of intangibles by 19,9% to 66,2 cps (2011: 55,2
cps).
6 months 6 months 12 months
31 March 31 March 30 Sept
2012 % 2011 2011
R Million Unaudited Change Unaudited Audited
Normalised earnings
Profit attributable to 690 552 1 287
ordinary equity holders
Adjustments (net of tax):
Profit on disposal of (27) (3) -
businesses
Additional payment on (2) - (4)
previous disposed
business
Loss/(Gain) on 3 - (92)
remeasuring of fair value
of equity interest before
business combination
Impairment of intangible - - 54
assets
Retirement funds (16) (17) (2)
Normalised earnings 648 532 1 243
Amortisation of 41 43 79
intangible assets (net of
tax)
Normalised earnings 689 575 1 322
(excluding amortisation
of intangible assets)
Normalised EPS (cents) 62,3 21,9 51,1 119,3
Normalised EPS - 66,2 19,9 55,2 126,9
excluding amortisation
(cents)
Dividend to shareholders
Notice is hereby given that the directors have declared an interim cash
dividend of 45 cents per ordinary share (2011: 31 cents per ordinary share)
out of income reserves in respect of the six months to 31 March 2012. The
Group has utilised STC credits amounting to 9.877 cents per share. The
balance of the dividend will be subject to a dividend withholding tax at a
rate of 15%, which will result in a net dividend of 39.732 cents per share to
those shareholders who are not exempt in terms of section 64F of the Income
Tax Act.
The issued share capital at the declaration date is 1 042 209 750 ordinary
shares. The salient dates for the dividend will be as follows:
Last day to trade cum the distribution Friday, 1 June 2012
Trading ex dividend commences Monday, 4 June 2012
Record date Friday, 8 June 2012
Payment date Monday,11 June 2012
Share certificates may not be dematerialised or rematerialised between
Monday, 4 June 2012 and Friday, 8 June 2012, both days inclusive.
Capital expenditure
During the current period, Life Healthcare invested R1 033 million (2011:
R235 million) including capital projects of R199 million (2011: R235 million)
and the Max Healthcare India investment of R823 million. The board has
approved a capital expenditure budget of R686 million for the financial year
and capital expenditure of R440 million has been approved as at 31 March
2012. This investment in the Group`s facilities is to ensure that the demand
for services is met and the Group remains abreast of modern technology and
standards.
An additional 141 beds are projected to be commissioned in the second six
months.
Changes to board of directors
There have been no changes to the board of directors during the period ended
31 March 2012.
Outlook
Subject to the current economic conditions prevailing for the rest of the
financial year, the Group expects continued growth in earnings.
Growth
The Group will continue to focus on its growth objectives in South Africa by
adding additional beds through brownfield expansion and mental healthcare,
including the 80 bed Life Poortview mental health facility in Gauteng. Life
Healthcare will assist Max Healthcare to improve its business operations.
Efficiency
The Group will continue to focus on driving operational efficiencies in South
Africa through; cost of sales, procurement, streamlined administrative
processes; the re-engineering of certain IT systems and improving hospital
occupancies to enable the leveraging of the fixed cost base.
Sustainability
The Group will continue to focus on and expand its quality management
programme which is a comprehensive, consistently applied and measured
programme which benchmarks clinical interventions against international best
practice with the aim of enhancing patient outcomes. In addition the Group
recognises the shortage of healthcare skills and will continue to invest
heavily in the training of doctors, nurses and pharmacists. In connection
with the development of healthcare policy and proposed healthcare reforms,
the Group will continue to actively engage with the South African government.
Thanks
The contribution of the doctors, nurses and employees of Life Healthcare have
greatly enhanced the quality of our performance. For their effort, we extend
our thanks.
Approved by the board of directors on 10 May 2012 and signed on its behalf:
Professor Jakes Gerwel Michael Flemming
Chairman Chief Executive Officer
10 May 2012
Executive Directors: CMD Flemming (Chief Executive Officer),
RJ Hogarth (Chief Financial Officer)
Non-executive Directors: Prof GJ Gerwel (Chairman), MA Brey,
FA du Plessis, PJ Golesworthy, KM Gordhan, LM Mojela, TS Munday JK
Netshitenzhe, MP Ngatane, GC Solomon
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.
For more information see: www.lifehealthcare.co.za
Illovo
10 May 2012
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 11/05/2012 07:05:01 Produced by the JSE SENS Department.
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