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Unaudited Group results and cash dividend declaration for the six month period ended 31 March 2013
LIFE HEALTHCARE GROUP HOLDINGS LIMITED
Registration number: 2003/002733/06
Income tax number: 9387/307/15/1
ISIN: ZAE000145892
Share code: LHC
Unaudited Group results and cash dividend declaration for the six month period ended 31 March 2013
Paid patient days (PPDs):
+1,5%
Revenue:
+7,0% to R5 638 million
Operating profit:
+12,7% to R1 361 million
Normalised earnings per share:
+14,5% to 71,3 cents
Interim cash dividend:
+20% to 54 cents
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the period ended 31 March 2013
6 months 6 months 12 months
31 March 31 March 30 Sept
2013 Change 2012 2012
R Million Unaudited % Unaudited Audited
Revenue 5 638 7,0 5 271 10 937
Other income 57 50 114
Operating expenses (4 330) (4 144) (8 540)
Loss on remeasuring of fair value of equity interest before business combination - (3) (3)
Additional receipt on previous disposed business - 2 2
Profit on disposal of businesses - 32 30
Loss on derecognition of finance lease asset (4) - -
Gain on bargain purchase - - 2
Operating profit 1 361 12,7 1 208 2 542
Fair value gain/(loss) on derivative financial instruments 5 8 (2)
Gain on derecognition of finance lease liability 22 - -
Finance income 6 10 22
Finance cost (119) (119) (235)
Share of associates' net profit after tax 25 47 85
Profit before tax 1 300 1 154 2 412
Tax expense (373) (346) (669)
Profit after tax 927 14,7 808 1 743
Other comprehensive income, net of tax
Items that may be reclassified subsequently to profit or loss
Currency translation differences 4 (2) -
Total comprehensive income for the period 931 15,5 806 1 743
Profit after tax attributable to:
Ordinary equity holders of the parent 790 14,5 690 1 496
Non-controlling interest 137 118 247
927 14,7 808 1 743
Total comprehensive income attributable to:
Ordinary equity holders of the parent 792 689 1 496
Non-controlling interest 139 117 247
931 806 1 743
Weighted average shares in issue (million) 1 039 1 041 1 040
Earnings per share (cents)* 76,1 14,8 66,3 143,9
Headline earnings per share (cents)* 76,4 19,8 63,8 140,7
Diluted earnings per share (cents)* 76,0 14,6 66,3 143,7
Diluted headline earnings per share (cents)* 76,3 19,6 63,8 140,5
Headline earnings
Profit attributable to ordinary equity holders 790 690 1 496
Headline earnings adjustable items (net of tax)
Loss on remeasuring of fair value of equity interest before business combination - 3 3
Additional receipt on previously disposed business - (2) (2)
Profit on disposal of businesses - (27) (25)
Gain on bargain purchase - - (2)
Profit on disposal of property - - (7)
Loss on derecognition of finance lease asset 3 - -
Headline earnings 793 665 1 463
* Calculated on actual figures.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 March 2013
31 March 31 March 30 Sept
2013 2012 2012
R Million Unaudited Unaudited Audited
Assets
Non-current assets 7 881 7 582 7 771
Property, plant and equipment 4 144 3 791 4 010
Intangible assets 2 131 2 242 2 181
Other non-current assets 1 606 1 549 1 580
Current assets 1 652 1 771 1 485
Other current assets 1 403 1 558 1 239
Cash and cash equivalents 249 213 246
Total Assets 9 533 9 353 9 256
Equity and Liabilities
Capital and reserves
Capital and reserves 4 101 3 629 3 941
Non-controlling interests 989 878 937
Total Equity 5 090 4 507 4 878
Liabilities
Non-current liabilities 2 269 2 685 2 445
Interest-bearing borrowings 1 797 2 213 1 929
Other non-current liabilities 472 472 516
Current liabilities 2 174 2 161 1 933
Other current liabilities 1 287 1 402 1 473
Current portion of interest-bearing borrowings 454 474 460
Bank overdraft 433 285 -
Total Liabilities 4 443 4 846 4 378
Total Equity and Liabilities 9 533 9 353 9 256
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the period ended 31 March 2013
6 months 6 months 12 months
31 March 31 March 30 Sept
2013 2012 2012
R Million Unaudited Unaudited Audited
Cash generated from operations 1 247 1 003 3 042
Tax paid (393) (375) (748)
Net cash inflow from operating activities 854 628 2 294
Net cash utilised in investing activities1 (183) (909) (1 268)
Net cash utilised in financing activities2 (1 101) (193) (1 182)
Net decrease in cash and cash equivalents (430) (474) (156)
Cash and cash equivalents - beginning of the year 246 400 400
Cash balances acquired through business combinations - 2 2
Cash and cash equivalents - end of the period (184) (72) 246
1 Net cash utilised in investing activities includes the investment made in Max Healthcare, India during the prior period.
2 Net cash utilised in financing activities include the new funding regarding the acquisition of Max Healthcare, India
during the prior period.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the period ended 31 March 2013
Total
capital Non-
and controlling Total
R Million reserves interest equity
Balance at 1 October 2012 3 941 937 4 878
Total comprehensive income for the year 792 139 931
Profit for the year 790 137 927
Other comprehensive income 2 2 4
Distribution to shareholders (625) (87) (712)
Treasury shares (26) - (26)
Long-term incentive scheme charge 15 - 15
Life Healthcare Employee Share Trust charge 4 - 4
Balance at 31 March 2013 4 101 989 5 090
Balance at 1 October 2011 3 518 867 4 385
Total comprehensive income for the year 689 117 806
Profit for the year 690 118 808
Other comprehensive income (1) (1) (2)
Share-based payment reserve movement 7 - 7
Transactions with non-controlling interests - 2 2
Distribution to shareholders (562) (108) (670)
Treasury shares (23) - (23)
Balance at 31 March 2012 3 629 878 4 507
Balance at 1 October 2011 3 518 867 4 385
Total comprehensive income for the year 1 496 247 1 743
Profit for the year 1 496 247 1 743
Other comprehensive income - - -
Transactions with non-controlling interests 5 (5) -
Non-controlling interest arising on business acquisition - 2 2
Distribution to shareholders (1 031) (174) (1 205)
Treasury shares (76) - (76)
Long-term incentive scheme charge 26 - 26
Life Healthcare Employee Share Trust charge 3 - 3
Balance at 30 September 2012 3 941 937 4 878
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
2013 2012 2012
R Million Unaudited Unaudited Audited
Operating segments
Revenue
Southern Africa
Hospitals 5 226 4 905 10 185
Healthcare Services 410 365 748
Other 2 1 4
Total 5 638 5 271 10 937
Profit before items below
Southern Africa
Hospitals 1 224 1 040 2 242
Healthcare Services 83 71 121
Other 64 100 235
Operating profit before items detailed below 1 371 1 211 2 598
Amortisation of intangible assets (57) (57) (124)
Profit on disposal of businesses - 32 30
Loss on derecognition of finance lease asset (4) - -
Gain on bargain purchase - - 2
Retirement benefit asset 41 21 42
Post-retirement medical aid 10 2 (5)
Loss on remeasuring of fair value of equity interest before business combination - (3) (3)
Additional receipt on previous disposed business - 2 2
Operating profit 1 361 1 208 2 542
Operating profit before items detailed above includes the segments share of shared services and rental costs.
These costs are all at market related rates.
ACQUISITION OF INVESTMENTS
Changes in ownership interest in subsidiaries as a result of non-controlling interest transactions
The Group had marginal decreases in its shareholdings in some of its subsidiary companies due to transactions with minority
shareholders.
Basis of presentation and accounting policies
These condensed consolidated interim financial statements for the six months ended 31 March 2013 have been prepared in accordance
with IAS 34, Interim Financial Reporting and in the manner required by the Companies Act of South Africa, the JSE Listings
Requirements and comply with International Financial Reporting Standards (IFRS). The condensed consolidated interim financial statements
should be read in conjunction with the annual financial statements for the year ended 30 September 2012 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 2012, 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 ended 31 March 2013 have not been reviewed or audited by the Groups auditors.
COMMENTARY
Overview
Life Healthcare continued to grow during the six months ended 31 March 2013 adding 80 (2012: 154 beds) acute care
hospital and mental health beds during the period to meet the growing demand for services.The growth in hospital paid
patient days (PPDs) of 1,5% was adversely impacted by the number of public holidays in the second half of March compared
to 2012. Efficiencies remain a priority with an occupancy of 69,0% (2012 - 70,3%) being achieved on an increased number
of active beds, supported by cost containment programmes. The clinical quality programmes continue to deliver improved
medical outcomes as measured by our key clinical indicators as well as decreasing our Healthcare Acquired Infection (HAI)
rate.
The Groups investment in Max Healthcare, India resulted in a negative contribution of 4 cps for the six-month period
(2012: 2 cps for the two-month period). Max Healthcare, India however, showed a good improvement in revenue for the last
six months as occupancies improved and additional beds at the new facilities became operational. Business efficiency
programmes resulted in EBITDA margins improving at hospital level.
Financial performance
Group revenue increased by 7,0% to R5 638 million (2012: R5 271 million). Hospital division revenue increased by 6,5%
to R5 226 million (2012: R4 905 million) driven by the 1,5% increase in PPDs and higher revenue per PPD of 5,0%. The
six months to 31 March resulted in a higher proportion of medical cases over surgical cases which diluted the revenue
growth per PPD by approximately 1,5%. Healthcare Services revenue increased by 12,3% to R410 million (2012: R365 million)
due to improved performances from both Life Esidimeni and Life Occupational Health.
The Group continues to focus on driving efficiencies across the business to ensure services remain affordable and to
improve margins. The alternative reimbursement model (ARM) provides an incentive to actively manage input costs, which
together with the strong management in procurement, employment costs and overheads allowed the Group to leverage
efficiencies across its fixed cost base resulting in an operating profit increase of 12,7% to R1 361 million (2012: 1 208
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 12,9% to R1 547 million (2012: R1 370 million). The higher proportion
of medical cases contributed to the EBITDA margin increasing to 27,4% (2012: 26,0%).
6 months 6 months 12 months
31 March 31 March 30 Sept
2013 2012 2012
R Million Unaudited Unaudited Audited
Normalised EBITDA
Operating profit 1 361 1 208 2 542
Profit on disposal of businesses - (32) (30)
Loss on derecognition of finance lease asset 4 - -
Profit on disposal of property - - (9)
Gain on bargain purchase - - (2)
Additional receipt on previous disposed business - (2) (2)
Loss on remeasuring of fair value of equity interest before business combination - 3 3
Depreciation on property, plant and equipment 176 160 318
Amortisation of intangible assets 57 57 124
Retirement benefit asset (41) (21) (42)
Post-retirement medical aid (10) (2) 5
Normalised EBITDA 1 547 1 370 2 907
Normalised EBITDA as % of turnover 27,4% 26,0% 26,6%
Cash flow
Streamlined administrative processes contributing to tighter working capital management in combination with improved
collections of government related debt resulted in cash generated from operations increasing by 24,3% to R1 247 million
(2012: R1 003 million), representing 80,6% (2012: 73,2%) of normalised EBITDA.
Financial position
The Group is in a strong financial position with a low gearing. Net debt to normalised EBITDA as of 31 March 2013 is
0,8 times, well within the bank covenants of three times. The Group has the financial flexibility to continue to invest
both locally and internationally.
Headline earnings per share (HEPS) and normalised earnings per share
Headline earnings per share increased by 19,8% to 76,4 cps (2012: 63,8 cps). Earnings per share on a normalised basis,
which excludes non-trading related items, increased by 14,5% to 71,3 cps (2012: 62,3 cps). Normalised earnings per
share excluding the impact of Max Healthcare, India increased by 18,8% to 75,3 cps (2012: 63,4 cps).
31 March 31 March 30 Sept
2013 Change 2012 2012
R Million Unaudited % Unaudited Audited
Normalised earnings
Profit attributable to ordinary equity holders 790 690 1 496
Adjustments (net of tax):
Profit on disposal of businesses - (27) (25)
Loss on derecognition of finance lease asset 3 - -
Profit on disposal of property - - (7)
Gain on bargain purchase - - (2)
Additional receipt on previous disposed business - (2) (2)
Loss on remeasuring of fair value of equity interest before business combination - 3 3
Gain on derecognition of finance lease
liability (16) - -
Retirement funds (36) (16) (27)
Normalised earnings 741 648 1 436
Normalised EPS (cents)* 71,3 14,5 62,3 138,1
Capital expenditure
During the current financial year, Life Healthcare invested R216 million (2012: R1 033 million, R210 million in
Southern Africa and the investment in Max Healthcare, India R823 million). A further R536 million has been allocated for
capital projects for the remainder of the 2013 financial year. A number of these projects timing of the cash flow spend
is dependent on local and regional authorities planning approvals. This investment in the Groups facilities ensures that
the demand for services is met and the Group remains abreast of modern technology and standards.
Cash dividend
The directors approved an interim cash dividend of 54 cents per ordinary share (2012: 45 cents per ordinary share)
amounting to R562 793 265 (2012: R468 994 388) out of income reserves. R23 689 800 of the dividend is subject to secondary
tax on companies (STC) (2,27304 cps). The balance of the dividend amounting to R539 103 465 will be subject to dividend
withholding tax at a rate of 15%, which will result in a net dividend of 46.24096 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.
In compliance with the requirements of the JSE Limited, the following dates are applicable:
Last day to trade cum the dividend Friday, 31 May 2013
Trading ex the dividend commences Monday, 3 June 2013
Record date Friday, 7 June 2013
Payment date Monday, 10 June 2013
Share certificates may not be dematerialised or rematerialised between Monday, 3 June 2013 and Friday, 7 June 2013,
both days inclusive.
Changes to the board of directors
Professor GJ Gerwel passed away on 28 November 2012, MA Brey was appointed as chairman of the board on 14 February
2013 and K Gordhan resigned as director on 22 February 2013. RJ Hogarth will retire as an executive director on 31 May
2013 and will be replaced by PP van der Westhuizen who will take over as the new Chief Financial Officer.
Outlook
Despite a tougher economic environment the Group expects to see increased demand for hospital services and the
additional growth in medical cases is expected to continue. The Group plans to add an additional 1 000 acute hospital,
mental health and acute rehabilitation beds in South Africa over the next three to four years.
The Group will continue to focus on driving operational efficiency through the management of cost of sales,
streamlining administrative processes, and the completion of the Impilo modules.
The underlying fundamentals in India for private hospital services are strong and the Group is confident that Max
Healthcare, India will continue to show improved revenues and EBITDA margins. The Group will continue to look for
additional growth opportunities in India and Africa.
Thanks
The contribution of the doctors, nurses and other employees of Life Healthcare have greatly enhanced the quality of
our performance. We thank them for their contributions.
Approved by the board of directors on 13 May 2013 and signed on its behalf:
Mustaq Brey Michael Flemming
Chairman Chief Executive Officer
13 May 2013
Executive directors: CMD Flemming (Chief Executive Officer), RJ Hogarth (Chief Financial Officer)
Non-executive directors: MA Brey (Chairman), FA du Plessis, PJ Golesworthy, 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
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