| Thu 1 Mar 2018, 11:45 | | ADVANCED HEALTH LIMITED - Unaudited condensed consolidated interim financial statements for the six months ended 31 December 2017 |
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AVL 201803010048A
Unaudited condensed consolidated interim financial statements for the six months ended 31 December 2017
ADVANCED HEALTH LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2013/059246/06)
(?the Company? or ?Advanced?)
ISIN Code: ZAE000189049 JSE Code: AVL
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX
MONTHS ENDED 31 DECEMBER 2017
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
Six months Six months Year ended
R?000 31 Dec 2017 31 Dec 2016 30 June 2017
ASSETS
Non-current assets 378 842 337 254 349 700
Property, plant and equipment 263 847 253 669 251 184
Goodwill 30 947 26 487 26 597
Other financial assets 7 943 6 391 5 894
Intangible assets 27 498 29 073 28 458
Operating lease asset 1 217 - 1 240
Deferred taxation 47 390 21 634 36 327
Current assets 84 853 87 354 88 640
Inventories 11 235 8 965 10 038
Trade and other receivables 20 010 20 429 26 576
Other financial assets 5 645 5 738 5 777
Operating lease asset 4 841 763 5 412
Current tax receivable 1 358 1 418 354
Cash and cash equivalents 41 764 50 041 40 483
Total assets 463 695 424 608 438 340
EQUITY AND LIABILITIES
Capital and reserves 203 322 164 622 141 875
Stated capital 222 297 137 378 137 378
Foreign currency translation reserve 27 534 27 898 28 898
Retained earnings (51 749) (6 343) (28 417)
Share-based payment reserve 5 240 5 689 4 016
Non-controlling interest 40 596 45 995 43 507
Total equity 243 918 210 617 185 382
Unaudited Unaudited Audited
Six months Six months Year ended
R?000
31 Dec 2017 31 Dec 2016 30 June 2017
Non-current liabilities 129 253 154 652 184 738
Other financial liabilities 82 507 116 244 142 630
Finance lease obligations 26 918 32 846 25 408
Operating lease liability 18 796 5 338 16 320
Provisions 1 032 94 -
Deferred taxation - 130 380
Current liabilities 90 524 59 339 68 220
Other financial liabilities 41 509 9 603 13 630
Finance lease obligations 9 938 4 366 8 820
Trade and other payables 27 056 29 862 36 658
Provisions 5 414 3 092 3 645
Operating lease liabilities 3 067 3 696 3 141
Current tax payable 3 540 8 720 2 326
Total equity and liabilities 463 695 424 608 438 340
Notes to statement of financial position
Total number of shares in issue ('000) 287 988 221 615 221 615
Net asset value per share (cents) 84.70 95.04 83.65
Net tangible asset value per share (cents) 64.40 69.97 58.81
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months Six months Year ended
R?000 31 Dec 2017 31 Dec 2016 30 June 2017
Revenue 199 463 149 751 309 109
Cost of sales (100 750) (74 651) (154 857)
Gross profit 98 713 75 100 154 252
EBITDA (earnings before interest, impairment, tax,
depreciation and amortisation) (8 842) (13 127) (22 866)
Investment income 286 290 725
Depreciation and amortisation (15 939) (12 636) (28 779)
Net finance costs (6 865) (6 255) (15 097)
Loss before taxation (31 360) (31 728) (66 017)
Taxation 8 716 9 048 17 834
Loss for the period (22 644) (22 680) (48 183)
Other comprehensive expense for the period, net of tax (2 714) (13 202) (11 761)
Total comprehensive loss for the period (25 358) (35 882) (59 944)
Loss attributable to: (22 644) (22 680) (48 183)
Owners of the parent (23 332) (23 311) (48 176)
Non-controlling interest 688 631 (7)
Total comprehensive loss attributable to: (25 358) (35 882) (59 944)
Owners of the parent (24 696) (35 793) (59 658)
Non-controlling interest (662) (89) (286)
Per share information:
Loss per share (cents) (8.55) (10.52) (21.74)
Diluted loss per share (cents) (8.55) (10.52) (17.08)
Notes to the statement of comprehensive income
Headline loss for the period attributable to ordinary
shareholders:
Headline loss per share (cents) (8.56) (10.52) (21.75)
Diluted headline loss per share (cents) (8.56) (10.52) (17.09)
- Total number of shares in issue (?000) 287 988 221 615 221 615
- Weighted average number of shares (?000) 272 838 221 615 221 615
Reconciliation of headline earnings calculation:
Loss for the period attributable to ordinary shareholders (23 332) (23 311) (48 176)
Profit on sale property, plant and equipment (14) (8) (36)
Tax effects of adjustments 4 2 10
Headline loss for the period attributable to ordinary
shareholders (23 342) (23 317) (48 202)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
Six months Six months Year ended
31 Dec 2017 31 Dec 2016 30 June 2017
Cash flows used in operating activities
Cash generated by operations (4 357) (16 288) (19 574)
Investment income 286 290 725
Finance cost (6 865) (6 255) (15 097)
Taxation (paid) / received (3 277) 182 (10 511)
Net cash used in operating activities (14 213) (22 071) (44 457)
Cash flows from investing activities
Acquisition of property, plant and equipment (27 469) (29 401) (52 090)
Proceeds on the sale of property, plant and equipment 73 122 19 093
Acquisition of intangible assets (323) (2 210) (3 344)
Acquisition of 100 % shares in Madison Day Surgery (8 440) - -
Financial assets advanced (1 306) - -
Financial assets received 57 2 137 2 595
Net cash used in investing activities (37 408) (29 352) (33 746)
Cash flows from financing activities
Issue of shares in subsidiary 11 349 2 100 2 867
Proceeds from subsequent sale of shares in Madison Day
Surgery 3 481 - -
Financial liabilities raised 47 286 54 009 89 234
Financial liabilities repaid (2 991) - (10 728)
Dividends paid ? non-controlling interest (4 214) (434) (3 374)
Finance lease payments (915) (3 563) (7 381)
Net cash from financing activities 53 996 52 112 70 618
Net increase / (decrease) in cash and cash equivalents 2 375 689 (7 585)
Cash and cash equivalents at beginning of period / year 40 483 52 844 52 844
Effect of foreign currency translation (1 094) (3 492) (4 776)
Cash and cash equivalents at end of period / year 41 764 50 041 40 483
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Foreign
share based currency non-
Net Stated payment translation Retained controlling Total equity
capital reserve reserve earnings interest
R'000 R'000 R'000 R'000 R'000 R'000
Balance at 1 July 2016 137 378 4 465 40 380 16 968 44 300 243 491
Loss for the period - - - (23 311) 631 (22 680)
Other comprehensive income for
the period - - (12 482) - (720) (13 202)
Share-based payment expense - 1 224 - - - 1 224
Change in subsidiary interest - - - - (464) (464)
Dividends - - - - (464) (464)
Issue of shares in subsidiary - - - - 2 713 2 713
Balance at 31 December 2016 137 378 5 689 27 898 (6 343) 45 995 210 617
Loss for the period - - - (24 865) (638) (25 503)
Other comprehensive income for
the period - - 1 000 - 441 1 441
Share-based payment expense - 1 118 - - - 1 118
Transfer of revaluation - (2 791) - 2 791 - -
Change in subsidiary interest - - - - 465 465
Dividends - - - - (2 910) (2 910)
Issue of shares in subsidiary - - - - 154 154
Balance at 30 June 2017 137 378 4 016 28 898 (28 417) 43 507 185 382
Loss for the period - - - (23 332) 688 (22 644)
Other comprehensive income for
the period - - (1 364) - (1 350) (2 714)
Share-based payment expense - 1 224 - - - 1 224
Dividends - - - - (4 214) (4 214)
Issue of shares 84 919 - - - 1 965 86 884
Balance at 31 December 2017 222 297 5 240 27 534 (51 749) 40 596 243 918
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
The unaudited condensed consolidated results for the period ended 31 December 2017 have been prepared
in accordance with the requirements of the JSE Listing Requirements for interim reports, the requirements of
Companies Act applicable to summary financial statements and the requirements of IAS 34: Interim Financial
Reporting as well as the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee.
The accounting policies applied in the preparation of the unaudited condensed consolidated results for the
period were derived, are in terms of IFRS and are consistent with the accounting policies applied in the
preparation of the previous unaudited condensed consolidated results for the period and are presented in
South African rand, which is the Group's functional and presentation currency.
There are no significant reportable matters arising since the end of the period ended 31 December 2017 under
review.
The unaudited condensed consolidated results for the period ended 31 December 2017 have been prepared
under the supervision of CP Snyman CA (SA), in his capacity as Chief Financial Officer.
The results were approved by the board of directors on 27 February 2018 and have not been reviewed or
audited by the Group?s external auditors Mazars (Gauteng) Inc.
2. STATED CAPITAL
The issued stated capital of Advanced Health is 287 988 433 shares amounting to R310 764 305 (December
2016: 221 614 801 amounting to R225 377 305) being the legal entity listed on the JSE AltX.
Reconciliation of stated capital
Shares Stated Equity Group
?000 capital reserve* stated
R?000 R?000 capital
R?000
Balance as at 1 July 2017 221 615 225 845 (88 467) 137 378
Rights issue** 66 373 84 919 - 84 919
Balance as at 31 December 2017 287 988 310 764 (88 467) 222 297
* The equity reserve arose in 2014 as a result of accounting for the reverse acquisition in terms of IFRS 3
Business Combination.
**During August 2017, the Company concluded a successful rights issue whereby 66 373 632 new Advanced
Health Shares were issued to raise R84.9 million.
3. SEGMENTAL REPORTING
The Group during the year decided to change the composition of the segments. The segments are still based
on the geographical location with corporate now only including Advanced Health Limited ?the company? unlike
previously where Corporate included the parent companies from South Africa and Australia. The change on
segment reporting has no impact on the net profit or loss of the Group. To enable comparisons with prior
period performance, historical segment information for the periods ended 31 December 2016 and 30 June
2017 have been included.
Unaudited Unaudited Audited
Six months Six months Year ended
Dec-17 Dec-16 June-17
R?000 R?000 R?000
REVENUE 199 463 149 751 309 109
South Africa 52 561 39 490 90 315
Australia 146 902 110 261 218 794
Corporate - - -
INTEREST INCOME 286 290 725
South Africa 186 90 428
Australia 100 171 297
Corporate - 29 -
INTEREST EXPENSE 6 865 6 255 15 097
South Africa 4 772 4 892 12 501
Australia 1 653 1 363 2 596
Corporate 440 - -
DEPRECIATION & AMORTISATION 15 939 12 636 28 779
South Africa 9 128 6 803 16 948
Australia 6 444 5 833 11 468
Corporate 367 - 363
LOSS FOR THE PERIOD (22 644) (22 680) (48 183)
South Africa (22 345) (21 894) (45 153)
Australia 1 986 924 1 177
Corporate (2 285) (1 710) (4 207)
SEGMENT ASSETS 463 695 424 608 438 340
South Africa 238 804 224 879 236 138
Australia 214 320 197 996 192 989
Corporate 10 571 1 733 9 213
SEGMENT LIABILITIES 219 777 213 991 252 958
South Africa 115 973 131 036 174 264
Australia 97 251 82 577 72 168
Corporate 6 553 378 6 526
The revenue from external parties and all other items of income, expenses, profits and losses reported in the
segment report are measured in a manner consistent with that in the statement of comprehensive income.
4. BUSINESS COMBINATION
On 1 July 2017, Presmed Australia acquired 100 % of the ordinary shares of Madison Day Surgery Proprietary
Limited ??MDS?? and Madison Day Surgery Unit Trust thereby achieving control. MDS is a one theatre
ophthalmic specific day hospital, accredited and with contracts in place with most of the Health Funds. PMA
subsequently sold shares on the 30th of September 2017 in the hospital to doctors performing at the facility
resulting in PMA?s equity interest being reduced to a 57.5% equity interest and control still maintained.
The primary reasons of the business combination were to acquire a medical licence and an accredited facility
with the right to operate an Ophthalmic specific day hospital situated in Hornsby, New South Wales,
Australia.
The total consideration was settled in cash of AUD850 000 (R8 439 710).
Goodwill of AUD879 080 (R8 728 447) arising from the acquisition consists of
- accredited and licenced facility, contracts in place with the majority of Health Funds
- MDS is situated in the heart of Hornsby which has a growing population.
- MDS facility is also surrounded by seven Hornsby based Ophthalmologists.
None of the goodwill is expected to be deductible for income tax purposes.
Acquisition costs amounting to AUD116 700 (R1 217 320) have been included in the results for Presmed
Australia for the year ended 30 June 2018.
Recognised amounts of identifiable assets acquired and liabilities
AUD Rand
Fixed assets 1 10
Leave provision (29 081) (288 747)
Total identifiable net liabilities (29 080) (288 737)
Goodwill 879 080 8 728 447
Cash paid 850 000 8 439 710
From the date of acquisition, Madison Day Surgery has contributed AUD860 474 (R8 975 772) of revenue and
AUD23 555 (R245 706) to the net profit after tax from the continuing operations of the Group.
Due to the purchase of MDS, goodwill increased with AUD879 080 (R8 728 447). Adjustment to goodwill due
to sale of shares to doctors on the 30th of September 2017 resulted in a net reduction in goodwill of
AUD379 080 (R3 908 447). Total increase in goodwill therefore AUD500 000 (R4 820 000).
5. PROPERTY, PLANT AND EQUIPMENT
The increase in plant and equipment relates to capital costs incurred to expand operations in relation to
specifically the development of the new day clinics. Presmed Australia established a one theatre facility in
August 2017 (Coffs Day Hospital) in an existing day hospital premises in Coffs Harbour, capital costs amounting
to R9 million were incurred where in South Africa assets to the value of R3 million were purchased for East
Rand Day Hospital to become operational during February 2018.
6. DEFERRED TAX
Deferred tax increased during the period under review - this is due to the increase in assessed losses incurred
by the group for the period ended 31 December 2017.
7. TRADE AND OTHER RECEIVABLES
Trade and other receivables decreased due the VAT refunds received from the South African Revenue Services
amounting to R5,8 million.
8. OTHER FINANCIAL LIABILITIES
The movements in the current and non-current other financial liabilities are due to:
- The rights issue during August 2017 whereby 58,4 million shares were not settled in cash, but a loan
account outstanding was converted into shares ? amount of R75,9 million.
- Additional loans obtained in South Africa and Australia.
- Bank of Queensland in Australia provided a bridge loan to PMA to the value AUD1,14 million (R11,01
million) included in current liabilities.
9. TRADE AND OTHER PAYABLES
Trade and other payables decreased during the period ended 31 December 2017 due to fewer equipment
purchases.
10. RELATED PARTIES
During the period ended 31 December 2017, certain subsidiaries, in the ordinary course of business, entered
into loans and transactions with related parties under terms that are no less favourable than those arranged
with third parties.
11. OTHER FINANCIAL ASSETS
Other financial assets increased due to loans advanced to related parties in Australia.
12. REVENUE
Revenue increased by 33% to R199.5 million from R149.7 million and this is largely attributed to the increase
in patient numbers and two more facilities opened in Australia which are Madison Day Surgery and Coffs Day
Hospital.
EXCHANGE RATES
The following exchange rates were used in foreign interest and foreign transactions during the periods:
Rand/Australian Dollar 31 Dec 2017 31 Dec 2016 30 Jun 2017
Closing rate 9.64302 9.8617 9.92907
Average rate 10.4312 10.5586 10.2634
INVESTOR PRESENTATION
There will be an investor presentation on 1 March 2018 and the presentation will be available on the
Company?s website, hosted at www.advancedhealth.co.za.
COMMENTARY
HIGHLIGHTS
- Revenue increased by 33% to R199.5 million.
- Headline loss per share decreased by 18.7% to 8.56 cents
- 66 373 632 new Advanced shares issued through a rights issue to raise R84.9 million in additional capital.
- Net debt less cash to equity ratio decreased by 36% to 49% (2016: 77%)
- The acquisition of two new day hospitals in Australia.
INTRODUCTION
Advanced is establishing itself as a leader in day surgery across South Africa and Australia. Private healthcare
is currently in a very exciting stage of development, and Advanced is positioning itself within the existing
healthcare system, filling a gap in the market for day surgery. Medical schemes are aligning themselves to the
day hospital model, and we are gradually seeing traction in them directing surgical procedures towards day
hospitals as an alternative, more cost-effective option. The involvement of specialists toward day surgeries is
growing with 33 new surgeons having joined the Presmed Group in the period ended 31 December 2017.
FINANCIAL RESULTS
The Company remained in a loss-making position, however there has been an improvement from the
comparative period ended 31 December 2016 as evidenced by a 33% increase in revenue from R149.7 million.
The Presmed Group in which Advanced holds a 94.65% interest, contributed 74% to revenue and continued
earning profits amounting to R1.99 million for the period ending 31 December 2017.
The Presmed Group has performed better than last year, being 38% up on patient surgery numbers and 35%
up on revenue, supporting the strategy of new surgeons joining the group and bringing surgery to the facilities.
OVERVIEW
Australia
Presmed Australia recently acquired another two day hospitals bringing the group total to five facilities. The
existing facilities of Chatswood Private Hospital, Central Coast Surgery Centre and Epping Surgery Centre have
exceeded expectations. The new Madison Day hospital is performing ahead of expectation, whilst Coffs
Harbour Day Hospital has recently opened for surgery. The Presmed Group is now focusing on strengthening
its financial position with its current business entities, and continuing to build and grow.
Chatswood Private Hospital, the largest Ophthalmic and ENT day hospital in Australia, has become the first
Australian private member of the World Association of Private Hospitals, as well as being approved as a
Teaching Hospital and approved for Ophthalmic Registrar training.
South Africa
In South Africa the company continued incurring losses which is due to the nine facilities (one opened in
February 2018) that have been commissioned in a relatively short space of time. Management is now focussed
on marketing strategies aimed at growing patient numbers and increasing earnings. There has been a steady
improvement in patient numbers of 35%, compared to the period ended 31 December 2016. The equipment
purchases have decreased compared to historic levels which should bode well for the future cash flow position
of the business.
DIVIDEND DECLARATION
No dividend is proposed or recommended for the period ended 31 December 2017.
PROSPECTS
Advanced is firmly on track to achieve its aim of growing its footprint of independent, quality and cost-effective
day-hospitals, to the benefit of patients, doctors and medical schemes.
In South Africa the group will focus on achieving stability in new facilities and ensuring they become profitable
and also opening two new hospitals in 2018. Advanced East Rand Day Hospital became operational in February
2018.
The PMA group, with its key focus areas of driving up patient numbers through attracting further doctor
support at all of our facilities, whilst maintaining the highest levels of patient excellence, and ensuring ongoing
cost controls objectives are met and efficient cash collections remain in place and remain on target to pursue
investment opportunities within the day hospital business and achieve six fully functioning day hospital
facilities in Australia by 2020.
Stakeholders are reminded that it takes up to 18 months to establish a new day hospital, which then require a
settling-in period of up to 36 months before profit is achieved.
Any forward-looking statements in this announcement have not been reviewed and reported on by the
Company's auditors.
On behalf of the board
FA van Hoogstraten CA Grillenberger CP Snyman
Chairman Chief Executive Officer Chief Financial Officer
1 March 2018
CORPORATE INFORMATION
Advanced Health Limited Registered Address:
(Incorporated in the Republic of South Africa) Building 2, Walker Creek Office Park
Registration number: 2013/059246/06 90 Florence Ribeiro Avenue
ISIN: ZAE000189049 JSE Code: AVL Muckleneuk
0002
Postnet Suite 668, Private Bag X1
The Willows, 0041
Executive directors Non-Executive Directors
CA Grillenberger (Chief Executive Officer) FA van Hoogstraten (Chairman)
CP Snyman (Chief Financial Officer) PJ Jaffe#
MC Resnik# (Chief Operational Officer Australia) CJPG van Zyl
WT Mthembu
J Oelofse
YJ Visser (alternate)
# Australian
Company Secretary: M Janse van Rensburg
Auditors: Mazars
Transfer Secretaries: Terbium Financial Services Proprietary Limited
Designated Advisor
Grindrod Bank Limited
Date: 01/03/2018 11:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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