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LHC - Life Healthcare Group Holdings Limited - Unaudited group results and

Release Date: 11/05/2012 07:05
Code(s): LHC
Wrap Text

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 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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