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Unaudited Group Results, cash dividend declaration and trading statement for the period ended 31 March 2014
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, cash dividend declaration and trading statement for the period ended 31 March 2014
Highlights
+10.2%
Revenue increased by 10.2% to R6 211 million
+90.1%
Operating profit increased by 90.1% to R2 486 million
+2.7%
Paid patient days (PPDs) were up 2.7%
+13.4%
Headline earnings per share increased by 13.4% to 82.7 cents per share
+16.0%
Normalised earnings per share increased by 16.0% to 82.7 cents per share
+16.7%
Interim dividend increased by 16.7% to 63 cents per share
Condensed consolidated statement of comprehensive income
for the period ended 31 March 2014
R Million Six months Change Six months 12 months
31 March % 31 March 30 September
2014 2013 2013
Unaudited Unaudited Audited
Restated Restated
Revenue 6 211 10.2 5 634 11 834
Other income 50 55 117
Operating expenses (4 760) (4 377) (9 090)
Profit on disposal of businesses 985 - -
Loss on derecognition of finance lease asset - (4) (4)
Operating profit 2 486 90.1 1 308 2 857
Fair value gain on derivative financial instruments (8) 5 9
Gain on derecognition of finance lease liability - 22 22
Finance income 12 6 15
Finance cost (106) (119) (226)
Share of associates’ and joint ventures net profit after tax 37 27 70
Profit before tax 2 421 1 249 2 747
Tax expense (449) (358) (755)
Profit after tax 1 972 121.3 891 1 992
Other comprehensive income, net of tax
Items that may be reclassified subsequently to profit or loss
Currency translation differences 1 4 11
Items that will not be reclassified to profit or loss
Retirement benefit asset 36 36 62
Total comprehensive income for the period 2 009 115.8 931 2 065
Profit after tax attributable to:
Ordinary equity holders of the parent 1 813 140.5 754 1 699
Non-controlling interest 159 137 293
1 972 121.3 891 1 992
Total comprehensive income attributable to:
Ordinary equity holders of the parent 1 850 792 1 767
Non-controlling interest 159 139 298
2 009 931 2 065
Weighted average shares in issue (million) 1 037 1 039 1 038
Earnings per share (cents)* 174.8 140.8 72.6 163.7
Headline earnings per share (cents)* 82.7 13.4 72.9 163.7
Diluted earnings per share (cents)* 174.5 140.7 72.5 163.5
Diluted headline earnings per share (cents)* 82.6 13.5 72.8 163.5
Headline earnings
Profit attributable to ordinary equity holders 1 813 754 1 699
Headline earnings adjustable items (net of tax)
Profit on disposal of businesses (955) - -
Profit on disposal of property - - (3)
Loss on derecognition of finance lease asset - 3 3
Headline earnings 858 757 1 699
*Calculated on actual figures
Condensed consolidated statement of financial position
as at 31 March 2014
R Million 31 March 31 March 30 September
2014 2013 2013
Unaudited Unaudited Audited
Restated Restated
ASSETS
Non-current assets 8 212 7 884 8 350
Property, plant and equipment 4 690 4 142 4 517
Intangible assets 2 031 2 131 2 084
Other non-current assets 1 491 1 611 1 749
Current assets 1 916 1 649 1 620
Other current assets 1 618 1 402 1 323
Cash and cash equivalents 298 247 297
TOTAL ASSETS 10 128 9 533 9 970
EQUITY AND LIABILITIES
Capital and reserves
Capital and reserves 4 579 4 102 4 526
Non-controlling interest 1 071 988 1 081
TOTAL EQUITY 5 650 5 090 5 607
LIABILITIES
Non-current liabilities 2 547 2 269 2 150
Interest-bearing borrowings 2 036 1 797 1 657
Other non-current liabilities 511 472 493
Current liabilities 1 931 2 174 2 213
Other current liabilities 1 501 1 287 1 528
Current portion of interest-bearing borrowings 163 454 452
Bank overdraft 267 433 233
TOTAL LIABILITIES 4 478 4 443 4 363
TOTAL EQUITY AND LIABILITIES 10 128 9 533 9 970
Condensed consolidated statement of changes in equity
for the period ended 31 March 2014
R Million Total Non- Total
capital and controlling equity
reserves interest
Balance at 1 October 2013 4 526 1 081 5 607
Total comprehensive income for the year 1 850 159 2 009
Profit for the year 1 813 159 1 972
Other comprehensive income 37 - 37
Distribution to shareholders (1 793) (169) (1 962)
Treasury shares (23) - (23)
Long-term incentive scheme charge 13 - 13
Life Healthcare Employee Share Trust charge 6 - 6
Balance at 31 March 2014 4 579 1 071 5 650
Balance at 1 October 2012 3 941 937 4 878
Total comprehensive income for the year 792 139 931
Profit for the year 754 137 891
Other comprehensive income 38 2 40
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
Movements relating to changes in accounting policy 1 (1) -
Balance at 31 March 2013 4 102 988 5 090
Balance at 1 October 2012 3 941 937 4 878
Total comprehensive income for the year 1 767 298 2 065
Profit for the year 1 699 293 1 992
Other comprehensive income 68 5 73
Transactions with non-controlling interests 10 (10) -
Distribution to shareholders (1 188) (143) (1 331)
Treasury shares (67) - (67)
Profit on disposal of treasury shares 31 - 31
Tax on profit on disposal of treasury shares (6) - (6)
Long-term incentive scheme charge 28 - 28
Life Healthcare Employee Share Trust charge 9 - 9
Movements relating to changes in accounting policy 1 (1) -
Balance at 30 September 2013 4 526 1 081 5 607
Condensed consolidated statement of cash flows
for the period ended 31 March 2014
R Million Six months Six months 12 months
31 March 31 March 30 September
2014 2013 2013
Unaudited Unaudited Audited
Cash generated from operations 1 443 1 247 3 414
Tax paid (459) (393) (804)
Net cash inflow from operating activities 984 854 2 610
Net cash utilised in investing activities 997 (183) (772)
Net cash utilised in financing activities (2 014) (1 101) (2 017)
Net decrease in cash and cash equivalents (33) (430) (179)
Cash and cash equivalents - beginning of the year 64 246 246
Cash balances no longer proportionately consolidated - (2) (3)
Cash and cash equivalents - end of the year 31 (186) 64
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.
R Million Six months Six months 12 months
31 March 31 March 30 September
2014 2013 2013
Unaudited Unaudited Audited
Restated Restated
Operating segments
Revenue
Southern Africa
Hospitals 5 769 5 222 11 001
Healthcare Services 441 410 831
Other 1 2 2
Total 6 211 5 634 11 834
Profit before items below
Southern Africa
Hospitals 1 408 1 222 2 689
Healthcare Services 97 83 167
Other 53 64 121
Operating profit before items detailed below 1 558 1 369 2 977
Amortisation of intangible assets (57) (57) (116)
Profit on disposal of businesses 985 - -
Loss on derecognition of finance lease asset - (4) (4)
Operating profit 2 486 1 308 2 857
Operating profit before items detailed above includes the segment’s share of shared services and rental costs. These costs
are all at market related rates.
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.
The full 49.3% associate shareholding in Joint Medical Holdings Limited (JMH) was sold with an effective date of 24
February 2014. It was sold for R1.365 billion, resulting in a profit on sale of associate of R982 million, attracting
capital gains tax of R28 million. The year to date equity accounted earnings, net of tax, up until the date of sale amounted
to R41 million (2013: R42 million). The Group declared a special dividend of 100 cents per share from the proceeds of
this sale on 17 March 2014.
Basis of presentation and accounting policies
These condensed consolidated interim financial statements for the period ended 31 March 2014 have been prepared in
accordance with IAS 34, “Interim Financial Reporting” and in the manner required by the Companies Act of South Africa and
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 2013 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 2013, except for as disclosed below.
In terms of IAS 1 “Presentation of Financial Statements”, the relevant comparative information has been restated as
follows:
The adoption of IAS 19 (Revised) “Employee Benefits” has resulted in comparative figures being restated to recognise
actuarial gains and losses through other comprehensive income. The related tax charge has also been reclassified.
The adoption of IAS 28 (Revised) “Investments in Associates and Joint Ventures” has resulted in comparative figures
being restated so as to account for joint ventures in terms of equity accounting, where they had previously been
proportionately consolidated.
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 PP van der Westhuizen (CA)(SA), the Chief
Financial Officer of the Group.
Unaudited results
The results for the period ended 31 March 2014 have not been reviewed or audited by the Group’s auditors.
Commentary
Overview
Life Healthcare performed well during the period ended 31 March 2014 and is in a strong financial position to continue
delivering its strategic objectives of growth, efficiency and sustainability. The Group added 142 (2013: 80) acute
care hospital beds during the period to meet the growing demand for services. These beds were only added during the last
two months and therefore had little impact of the PPD growth in the period. Activities as measured by hospital paid
patient days (PPDs) increased by 2.7% compared to the prior period. The Group benefited from the reduction in public holidays
in March as compared to 2013. The Group’s occupancy for the period was 70.6%, the highest occupancy the Group has had
for this six-month period since listing in 2010. This high occupancy enabled the Group to leverage operational
efficiencies across a fixed cost base and the focus on managing overheads and the cost of pharmaceutical items in a difficult
environment with the depreciation of the Rand resulted in a marginal improvement in normalised EBITDA margin to 28.0% from
27.4% in the comparative period. The clinical quality programmes continue to deliver improved medical outcomes as
measured by our key clinical indicators as well as decreasing our Healthcare Associated Infection (HAI) rate.
The performance of Max Healthcare Institute Limited (Max) in India continues to improve as revenues grow and cost
saving initiatives result in margin improvement. In line with the Group’s strategy of growing in select emerging markets,
the Group in April 2014 purchased 80.7% of Scanmed Multimedis (Scanmed) a leading private healthcare company in Poland
for R427 million. Scanmed’s business comprises a 130 bed multidisciplinary acute hospital located in Krakow, a 22 bed
specialist ophthalmology hospital near Krakow, and 23 medical centres which provide outpatient care (primary healthcare and
specialist consultations) and diagnostic services located in major cities across Poland.
Financial performance
Group revenue increased by 10.2% to R6 211 million (2013: R5 634 million). Hospital division revenue increased by
10.5% to R5 769 million (2013: R5 222 million) driven by the 2.7% increase in PPDs. Healthcare Services revenue increased by
7.6% to R441 million (2013: R410 million).
Total comprehensive income for the period increased by 115.8% to R2 009 million (2013: R931 million), largely due to
the Group’s disinvestment of its 49.3% shareholding in JMH.
The Group continues to focus on driving efficiencies across the business to ensure services remain affordable and to
improve margins. 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 on disposal of assets
and businesses and associated costs) increased by 12.5% to R1 738 million (2013: R1 545 million).
R Million Six months Six months 12 months
31 March 31 March 30 September
2014 2013 2013
Unaudited Unaudited Audited
Restated Restated
Normalised EBITDA
Operating profit 2 486 1 308 2 857
Profit on disposal of businesses (985) - -
Loss on derecognition of finance lease asset - 4 4
Profit on disposal of property - - (4)
Depreciation on property, plant and equipment 180 176 354
Amortisation of intangible assets 57 57 116
Normalised EBITDA 1 738 1 545 3 327
Normalised EBITDA as % of turnover 28.0 27.4 28.1
Cash flow
The business continued to generate healthy cash flows. Streamlined administrative processes contributed to tight
working capital management resulting in an increase of 15.7% to R1 443 million (2013: R1 247 million) in cash generated from
operations, representing 83.0% (2013: 80.7%) of normalised EBITDA.
Financial position
The Group is in a strong financial position with a low gearing. Net debt to normalised EBITDA as at 31 March 2014 was
0.62 times (2013: 0.8 times), well within the bank covenants. This low gearing provides the Group with the financial
flexibility to continue to invest locally and internationally.
Headline earnings per share (HEPS) and normalised earnings per share
Headline earnings per share increased by 13.4% to 82.7 cps (2013: 72.9 cps). Earnings per share on a normalised basis,
which excludes non-trading related items, increased by 16.0% to 82.7 cps (2013: 71.3 cps).
R Million Six months Change Six months 12 months
31 March % 31 March 30 September
2014 2013 2013
Unaudited Unaudited Audited
Restated Restated
Normalised earnings
Profit attributable to ordinary equity holders 1 813 754 1 699
Adjustments (net of tax):
Profit on disposal of businesses (955) - -
Loss on derecognition of finance lease asset - 3 3
Profit on disposal of property - - (3)
Gain on derecognition of finance lease liability - (16) (16)
Normalised earnings 858 741 1 683
Normalised EPS (cents)* 82.7 16.0 71.3 162.1
Capital expenditure
During the current financial year, Life Healthcare invested R343 million (2013: R216 million). A further R500 million
has been allocated for capital projects for the remainder of the 2014 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.
Cash dividend
The directors approved an interim cash dividend of 63 cents per ordinary share (2013: 54 cents per ordinary share) for
the six months ending 31 March 2014 amounting to R656 592 142 (2013: R562 793 265) out of income reserves on 12 May 2014. The
total interim dividend amounting to R656 592 142 will be subject to dividend withholding tax at a rate of 15%, which will result
in a net dividend of 53.55 cents per ordinary share to those shareholders who are not exempt in terms of section 64F of the Income Tax Act.
The Company’s tax reference number is 9387/307/15/1. 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, 30 May 2014
Trading ex the dividend commences Monday, 2 June 2014
Record date Friday, 6 June 2014
Payment date Monday, 9 June 2014
Share certificates may not be dematerialised or rematerialised between Monday, 2 June 2014 and Friday, 6 June 2014,
both days inclusive.
Changes to board of directors
The following changes took place during the period under review:
ME Jacobs and RT Vice were appointed to the board from 1 January 2014.
TS Munday retired from the board with effect from 30 January 2014 at the annual general meeting.
CMD Flemming retired from the board with effect 31 March 2014 and A Meyer was appointed as the new Chief Executive
Officer with effect from 1 April 2014.
Outlook
To meet increased demand for private hospital services, the Group plans to add an additional 120 brownfield acute
hospital beds in the next six months. In addition, the Group has over 180 beds which are under construction which will be
operational within the next 12 months, over 540 beds where health department license approval has been obtained but where
local and municipal approvals are outstanding and over 1 100 beds where licence applications are pending.
The Group will continue to focus on driving operational efficiency through the management of cost of sales and the
streamlining of administrative and IT processes and systems.
Life Healthcare will focus on bedding down its acquisition in Poland in the next six months and working with Max to
improve its profitability.
Life Healthcare’s results for the full financial year ended 30 September 2014 are expected to show an improvement of
more than 20% from those reported for the financial year ended
30 September 2013. This expected improvement is largely due to Life Healthcare’s disinvestment of its
49.3% holding in JMH.
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.
A special word of thanks from the board and the company to Michael Flemming for his contribution to the success of the
Group over a number of years and all the best wishes to him.
Approved by the board of directors on 12 May 2014 and signed on its behalf:
Mustaq Brey André Meyer
Chairman Chief Executive Officer
12 May 2014
Executive directors
A Meyer (Chief Executive Officer), PP van der Westhuizen (Chief Financial Officer)
Non-executive directors
MA Brey (Chairman), FA du Plessis, PJ Golesworthy,
ME Jacobs, LM Mojela, JK Netshitenzhe, MP Ngatane, GC Solomon, RT Vice
Company secretary
F Patel
Registered office
Oxford Manor, 21 Chaplin Road, Illovo. Private Bag X13, Northlands 2116
Sponsor
Rand Merchant Bank, a division of FirstRand Bank Limited
Date 13 May 2014
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
Date: 13/05/2014 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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