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Provisional summary audited consolidated financial statements for the year ended 30 June 2014
ADVANCED HEALTH LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2013/059246/06)
(“the Company” or “Advanced Health”)
ISIN Code: ZAE000189049 JSE Code: AVL
PROVISIONAL SUMMARY AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED 30 JUNE 2014
HIGHLIGHTS
- Revenue is at R155.8 million
- EBITDA is at R31.8 million
- Operating profit is at R23.9 million
- Headline earnings at R7.7 million translating into diluted earnings per share of 6.44 cents
COMMENTARY
INTRODUCTION
The Company is an investment holding company that provides short-procedures surgical facilities
and services in day hospitals in South Africa and Australia. The Company’s shares were listed on the
Alternative Exchange (“AltX”) of the Johannesburg Stock Exchange Limited (“JSE”) on 25 April 2014.
The Group delivered satisfactory trading results in its maiden year with profit performance that was
materially in line with the prospectus.
OVERVIEW
In Australia, construction on the largest ophthalmic day hospital in the country has commenced.
The six-theatre facility is scheduled for completion towards the end of 2015.
Sundry negotiations with different role players within the day hospital environment are ongoing
and, if successful, will provide Presmed Australia with an improved coverage of day hospitals in the
greater Sydney area and the eastern sea board of New South Wales. These initiatives will provide
the Australian subsidiaries with additional growth opportunities.
The South African activities were focussed mainly on transactions to develop additional day
hospitals through negotiations with like-minded partners, as outlined in the pre-listing prospectus.
Subsequent to the listing of the shares, the Company entered into an agreement to develop five day
hospitals, one in Gauteng and four in the Western Cape – in addition to the Soweto facility which
was being developed at the time of listing. Management is confident that, by the end of June 2016,
the South African subsidiary will be in control of at least seven day hospitals compared to the
current two operational units.
Five of these facilities are in an advanced stage of planning:
- the Soweto day hospital, completion is scheduled for the last quarter of 2015;
- the a day hospital in Durbanville, Western Cape, should be operational by July 2015; and
- three day hospitals, construction of which will start from January 2015 onwards.
The board remains committed to achieving the Group’s long-term objective to implement and
continuously refine a strategy which is focussed on the achievement of the business goals. These
include growing the Company’s share in the short procedure day-surgery market to become the
Group of choice in offering quality cost-effective healthcare to the benefit of patients, surgeons and
medical funds.
The board is committed to sound corporate governance, in line with the recommendations of King
III Report on Corporate Governance in South Africa and the Australian Council on Healthcare
Standards (ACHS) in Australia. Given the current size of the South African subsidiary and the
maturity of the Australian subsidiary, the board will remain compact.
FINANCIAL RESULTS COMMENTARY
The Group’s revenue is up by 23.5% to R155.8 million from the prior year. Approximately 95.3% of
the revenue was generated in Australia and the balance in South Africa. In terms of IFRS 3
(International Financial Reporting Standards), only five months of the South African operations are
reported on in these results.
EBITDA amounted to R31.8 million (2013: R26.9 million) reflecting an increase of 17.7%.
The Group posted headline earnings of R7.7 million (2013: R8.8 million) translating into headline
earnings per share of 6.44 cents (2013: 9.83 cents) in line with the 6.09 cents forecasted in the
prospectus.
DIVIDEND DECLARATION
No dividend is proposed or recommended. After a period of approximately three years, the Board
of Directors will consider the payment of a maiden dividend.
AUDIT OPINION
The auditors, Mazars (Gauteng) Inc., have issued their unmodified opinion on the Group’s annual
financial statements for the year ended 30 June 2014. A copy of the auditor’s report together with a
copy of the audited financial statements is available for inspection at the Company’s registered
office.
These summary audited consolidated financial statements have been derived from the Group’s
annual financial statements. The content of this announcement is extracted from audited
information, although the announcement is not audited. The directors take full responsibility for the
preparation of the provisional report and the financial information has been correctly extracted
from the underlying annual financial statements.
The auditor’s report does not necessarily report on all the information contained in this
announcement. Shareholders are therefore advised that, in order to obtain a full understanding of
the nature of the auditor’s engagement, they should obtain a copy of the auditor’s report together
with the accompanying financial information from the Company’s registered office.
PROSPECTS
The prospects for the Group remain positive.
SUMMARY AUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
Year ended Year ended
30-June-14 30-June-13
R’000 R’000
ASSETS
Non-current assets 82 537 52 300
Property, plant and equipment 60 601 49 607
Goodwill 10 411 -
Intangible assets 7 992 -
Deferred taxation 3 533 2 693
Current assets 164 997 40 245
Inventories 3 820 2 689
Trade and other receivables 13 976 8 600
Other financial assets 3 318 -
Cash and cash equivalents 143 883 28 956
Total assets 247 535 92 545
EQUITY AND LIABILITIES
Capital and reserves 172 874 40 277
Stated capital 120 378 467
Foreign currency translation reserve 31 297 26 354
Retained earnings 17 876 10 136
Revaluation reserve 2 037 2 037
Share-based payment reserve 1 286 1 283
Non-controlling interest 15 462 5 489
Total equity 188 336 45 766
Non-current liabilities 24 235 28 241
Other financial liabilities 14 512 15 401
Finance lease obligations 3 971 10 277
Provisions 1 264 1 269
Deferred taxation 4 488 1 294
Current liabilities 34 964 18 538
Other financial liabilities 7 852 4 141
Finance lease obligations 7 796 6 408
Trade and other payables 13 540 5 278
Provisions 1 612 924
Operating lease liabilities 141 105
Current tax payable 4 023 1 682
Total equity and liabilities 247 535 92 545
Notes to statement of financial position
Total number of shares in issue ('000) 211 615 90 467
Net asset value per share (cents) 89.00 50.59
Net tangible asset value per share (cents) 80.30 50.59
SUMMARY AUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
Year ended Year ended
30-June-14 30-June-13
R’000 R’000
Revenue 155 791 126 153
Cost of sales (77 842) (49 584)
Gross profit 77 949 76 569
EBITDA (earnings before interest, impairment, tax, depreciation and 31 758 26 982
amortisation)
Investment income 1 451 -
Depreciation (7 449) (5 296)
Amortisation of intangible assets (329) (108)
Net finance costs (2 101) (3 669)
Profit before taxation 23 330 17 909
Taxation (7 851) (4 211)
Profit for the year 15 479 13 698
Other comprehensive income/ for the year, net of tax 4 943 3 240
Total comprehensive income for the year 20 422 16 938
Profit attributable to:
Owners of the parent 7 740 8 894
Non-controlling interest 7 739 4 804
Total comprehensive income attributable to:
Owners of the parent 12 683 12 135
Non-controlling interest 7 739 4 804
Earnings per share (cents) 6.44 9.83
Diluted earnings per share (cents) 6.44 9.83
Notes to the statement of comprehensive income
Headline earnings for the year attributable to ordinary shareholders:
Headline earnings per share (cents) 6.44 9.83
Diluted headline earnings per share (cents) 6.44 9.83
- Total number of shares (‘000) 211 615 90 467
- Weighted average number of shares (‘000) 120 272 90 467
- Diluted weighted average number of shares (‘000) 120 273 90 467
Reconciliation of headline earnings calculation:
Earnings for the year attributable to ordinary shareholders 7 740 8 894
Headline earnings for the year attributable to ordinary shareholders 7 740 8 894
SUMMARY AUDITED CONSOLIDATED STATEMENT OF CASH FLOW
Audited Audited
Year ended Year ended
30-June-14 30-June-13
R’000 R’000
Net cash flows from operating activities 33 249 22 514
Net cash flows from investing activities (7 305) (3 648)
Net cash flows from financing activities 92 930 (38 976)
Net increase/(decrease) in cash and cash equivalents 118 874 (20 110)
Effect of translation of foreign operations (3 947) (2 897)
Cash and cash equivalents at beginning of year 28 956 51 963
Cash and cash equivalents at end of year 143 883 28 956
SUMMARY AUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Audited Audited
Year ended Year ended
30-June-14 30-June-13
R’000 R’000
Equity – opening balance 45 766 30 459
Profit for year 7 740 8 894
Non-controlling interest 7 739 4 804
Foreign Currency Translation Reserve 4 943 3 240
Share issue for acquisition of subsidiaries 21 864 -
Specific issue of shares 20 000 -
General issue of shares 81 284 -
Capital raising fees (3 237) -
Share-based payment expense 3 -
Dividend paid to non-controlling interest (2 166) (1 631)
Change of interest in NCI 1 581 -
Increase in NCI on reverse acquisition 2 819 -
Equity – closing balance 188 336 45 766
BASIS OF PREPARATION
The summary audited consolidated financial statements are prepared in accordance with the
requirements of the JSE Limited, Listings Requirements for provisional reports, and the
requirements of the Companies Act applicable to summary financial statements. The JSE Listings
Requirements require provisional reports to be prepared in accordance with the framework
concepts and the measurement and recognition requirements of International Financial Reporting
Standards (IFRS) and the South African Institute of Chartered Accountants (SAICA) Financial
Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements
as issued by the Financial Reporting Standards Council and to also, as a minimum, contain the
information required by IAS 34 Interim Financial Reporting. The accounting policies applied in the
preparation of the summary consolidated financial statements from which the summary financial
statements were derived are in terms of IFRS and are consistent with those accounting policies
applied in the preparation of the previous consolidated annual financial statements, except as
disclosed in the changes in accounting policies note.
The summary audited consolidated financial statements have been prepared under the supervision
of CJPG Van Zyl CA (SA) in his capacity as Chief Financial Officer and are the full responsibility of the
directors.
The summary audited consolidated financial statements for the year were authorised for issue by
the directors on 29 September 2014.
CHANGES IN ACCOUNTING POLICIES
The Group adopted the new, revised or amended accounting pronouncements as issued by the
IASB, which were effective and applicable to the Group from 1 June 2013, none of which had any
material impact on the Group's financial results for the year.
IFRS 10 Consolidated Financial Statements
The objective of IFRS 10 is to establish principles for the presentation and preparation of
consolidated financial statements when an entity controls one or more other entities. The Group
has revised its accounting policies on the consolidation of subsidiaries and concluded that the
adoption of IFRS 10 did not result in any material change in the consolidation of the Group.
IFRS 13 Fair value measurement
IFRS 13 aims to improve consistency and reduce complexity by providing a precise definition of fair
value and a single source of fair value measurement and disclosure requirements for use across
IFRS. IFRS 13 was adopted and applied prospectively and it was assessed that the adoption did not
result in any material impact on the financial results of the Group.
STATED CAPITAL
The issued stated capital of Advanced Health is 211 614 801 shares amounting to R208 377 305
(2013: 3) being the legal entity listed on the JSE AltX.
Shares ’000
Shares issued to acquire subsidiaries 110 331
Specific share issued for cash 20 000
General issue of shares for cash 81 284
Total 211 615
Reconciliation:
Stated capital Equity Reserve* Total Issued capital
R’000 R’000 R’000
Balance as at 1 July 2013 467 467
Shares issued to acquire
subsidiaries 110 331 (88 467) 21 864
Specific share issue 20 000 20 000
General issue of shares 81 284 81 284
Capital raising fee (3 237) (3 237)
Balance as at 30 June 2014 208 845 (88 467) 120 378
* The equity reserve arose as a result of accounting for the reverse acquisition in terms of IFRS 3
Business Combination. This standard requires the share capital disclosed to be that of the legal
parent or accounting subsidiary (being Advanced Health) whilst the net issued capital has to be
that of the accounting acquirer or legal subsidiary (Presmed Australia) as adjusted for the number
of equity instruments it would have had to issue to acquire the various accounting subsidiaries as
determined when calculating the purchase consideration for the acquisition, and shares issued
subsequent to the acquisition transactions.
The following share issues were made from 1 January 2014 to 30 June 2014:
- On 27 January 2014 the company issued 110 331 411 shares to Eenhede Konsultante and
former minority shareholders in the various subsidiaries ahead of the listing for the acquisition
of the subsidiaries;
- On 27 January 2014 the company issued 500 000 shares to Arcay Moela Sponsors for services
rendered in connection with the listing;
- On 28 February 2014 the company issued 20 000 000 shares by means of a specific issue for
cash as per the list below:
Name: Number of shares
Bradley Norman Elliot 1 000 000
Bremer Investments (Pty) Ltd 5 000 000
CJPG van ZYL 300 000
Deborah Patricia Viljoen 1 000 000
Jamie Teagan Hansen (Minor) 750 000
Joanne Elliot 1 000 000
Lene Trust 50 000
Leon Abraham Viljoen 50 000
PA &LR Laubscher Gesinstrust 50 000
Presmedical Witbank (Pty) Ltd 8 250 000
Sandra Comfort 1 000 000
Solly Hyman Family Holdings (Pty) Ltd 1 250 000
The Frans and Louise van Hoogstraten Family Trust 50 000
The Savadier Family Trust 250 000
Total 20 000 000
- Upon Listing Advanced Health on 25 April 2014 the company issued 81 283 387 shares at R1.00
per share raising R81 283 387 from the offer.
Subsequent to year end the Company issued 10 million shares at R1.70 per share to acquire an
interest in five companies.
BUSINESS COMBINATIONS
On 27 January 2014, the Group purchased 100% of eMalahleni Day Hospital (Pty) Ltd and 100% of
Medgate Day Clinic (Pty) Ltd by way of reverse listing of Advanced Health. The application of IFRS, in
particular IFRS 3 Business Combinations, results in Presmed Australia (Pty) Ltd (the legal acquiree)
being recognised as the acquirer for accounting purposes, and in the transaction being accounted
for as reverse acquisition. Accordingly, the consolidated annual financial statements prepared
following the reverse acquisition are issued in the name of Advanced Health (the legal parent and
accounting acquiree), but are prepared as a continuation of the financial statements of Presmed
Australia (Pty) Ltd (the legal subsidiary and accounting acquirer), with one adjustment, which is the
retroactive adjustment of Presmed Australia (Pty) Ltd’s legal capital to reflect Advanced Health
Limited's legal capital.
The comparative financial information presented in the consolidated annual financial statements
has also been retrospectively adjusted to reflect Advanced Health’s legal capital.
% Held 2014
R'000
eMalahleni Day Hospital 100 9 243
Medgate Day Clinic 100 10 622
The controlling shareholders before and after the restructure have not
changed
The following Advanced Health shares have been issued for the acquisition
of the above subsidiaries:
- 9 243 000 shares were issued to the eMalahleni Day Hospital Vendors on
27 January 2014 at R1.00 per share
- 10 621 875 shares were issued to the Medgate Day Clinic Vendors on
27 January 2014 at R1.00 per share
The Company’s core business is providing short-procedures surgical facilities and services in day
hospitals. The acquisition is consistent with the Company’s growth strategy.
In the five months to 30 June 2014, eMalahleni Day Hospital (Pty) Ltd contributed revenue of
R3 763 858 and a loss of R178 089 to the Group's results and Medgate Day Clinic (Pty) Ltd
contributed revenue of R3 495 269, and a loss of R652 188 to the Group's results. If the acquisition
had occurred on 1 July 2013, management estimates that Medgate Day Clinic (Pty) Ltd and
eMalahleni Day Hospital (Pty) Ltd would have contributed R17 452 780 revenue to the Group. In
determining these amounts management assumed that the fair value adjustments, determined
provisionally, that arose on acquisition date would have been the same if the acquisition had
occurred on 1 July 2013.
Fair value of assets acquired and liabilities assumed:
eMalahleni Day Hospital (Pty) Ltd
Medgate Day Clinic (Pty) Ltd
Recognised values on acquisition
R’000 R’000 R’000
Property, plant & equipment 3 282 5 771 9 053
Inventories 362 338 699
Trade & other receivables 1 021 1 519 2 540
Cash & cash equivalents 569 101 670
Borrowings (21) (4 365) (4 386)
Trade and other payables (494) (549) (1 043)
Deferred tax (585) 1 045 460
Net identifiable assets and liabilities 4 134 3 860 7,993
Intangible assets identified 7 907
Deferred taxation on intangible assets (2 214)
Goodwill on acquisition 10 411
Non-controlling interest (2 233)
Total net consideration 21 865
Consideration settled in shares 21 865
Cash acquired 670
Net cash inflow 670
The consideration transferred of R21 864 919 has been determined based on the number of shares
Presmed Australia would have had to issue in order to give the owners of Advanced Health the
same percentage equity interest in the combined entity that results from the reverse acquisition.
The value (determined using a discounted cash flow model based on estimated future cash flow) of
each business subject to this transaction was determined by an independent valuer appointed by
management, and the values contained in his report were used for the purposes of these pro
formas without adjustment. These values were used to determine the fair value per share for the
shares exchanged in the reverse acquisition and ultimately to calculate the purchase consideration
transferred to acquire eMalahleni Day Hospital (Pty) Ltd and Medgate Day Clinic (Pty) Ltd.
Based on the assessment, intangible assets relating to the customer base and specific service level
contracts were identified.
The acquired assets and assumed liabilities have been valued at their estimated fair values at the
acquisition date.
The goodwill is mainly attributable to the skills and technical talent of the Medgate Day Clinic (Pty)
Ltd and eMalahleni Day Hospital (Pty) Ltd work force, and the synergies expected to be achieved
from integrating Medgate Day Clinic (Pty) Ltd and eMalahleni Day Hospital (Pty) Ltd into the Group’s
existing business.
The carrying amount of trade and other receivables estimate their fair value and there are no
contractual accounts receivable acquired.
SEGMENTAL REPORTING
Geographical Information
The group operates in two main areas:
2014 2013 2014 2013 2014 2013
South Africa South Africa Australia Australia Total Total
R’000 R’000 R’000 R’000 R’000 R’000
External
revenue 7 259 - 148 532 126 153 155 791 126 153
Inter-
segmental
revenue 38 320 24 127 38 320 24 127
Profit / (loss)
for the year (2 618) - 18 097 13 698 15 479 13 698
Segment
assets 128 278 - 119 257 92 544 247 535 92 544
Segment
liabilities 14 856 - 44 343 46 779 59 199 46 779
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.
COMPARISON WITH PROFIT FORECAST
In accordance with the JSE Listings Requirements, Advanced Health has set out a comparison
between the profit forecast as contained in the Company’s prospectus dated 31 March 2014 and
the audited report for the year ended 30 June 2014 below:
Audited
Year ended Forecast
30-June-14 30-June-2014
R’000 R’000
Revenue 155 791 154 928
Cost of sales (77 842) (72 724)
Gross profit 77 949 82 204
Other income - 1
Operating expenses (53 969) (59 882)
Operating profit/(loss) 23 980 22 323
Investment revenue 1 451 174
Finance cost (2 101) (1 988)
Profit before taxation 23 330 20 509
Taxation (7 851) (5 497)
Profit after taxation 15 479 15 012
Other comprehensive income for the year 4 943 -
Total comprehensive income for the year 20 422 15 012
Profit attributable to:
Equity holders of parent 7 740 7 536
Non-controlling interest 7 739 7 476
15 479 15 012
Total comprehensive income attributable to:
Owners of parent 12 683 7 536
Non-controlling interest 7 739 7 476
20 422 15 012
Earnings per share
- Basic (cents per share) 6.44 6.09
- Diluted (cents per share) 6.44 6.09
Weighted average number of shares 120 272 123 700
Diluted weighted average number of shares 120 273 123 700
EXCHANGE RATES
The following exchange rates were used in foreign interest and foreign transactions during the
periods:
Rand/Australian Dollar 2014 2013 Prospectus
Closing Rate 9.9844 9.0118 9.8000
Average Rate 9.5257 9.0605 9.8000
RELATED PARTIES
During the year, 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.
CORPORATE INFORMATION
Advanced Health Limited Registered Address
(Incorporated in the Republic of South Africa) Ground Floor One Health Building
Registration number: 2013/059246/06 Woodmead North Office Park
ISIN: ZAE000189049 JSE Code: AVL Woodmead, 2157
PO Box 1476, Silverton, 0127
Transfer Secretaries: Trifecta Capital Services (Proprietary) Limited
Designated Advisor: Arcay Moela Sponsors (Proprietary) Limited trading as Arbor Capital Sponsors
Directors:
Executive directors
CA Grillenberger (Chief Executive Officer)
CJPG van Zyl (Chief Financial Officer)
MC Resnik# (Chief Operational Officer Australia)
NON-EXECUTIVE DIRECTORS
PJ Jaffe#
FA van Hoogstraten (Chairman)
WT Mthembu
YJ Visser (alternate)
J Oelofse
# Australian
Company Secretary: M Janse van Rensburg
Auditors: Mazars (Gauteng) Inc.
ANNUAL GENERAL MEETING
Audited results were finalised and approved on 29 September 2014 and the annual report will be
posted to shareholders in due course. The date of the Annual General Meeting is
27 November 2014.
By order of the board
Woodmead
29 September 2014
Designated Advisor Auditor and Reporting Accountants
Arcay Moela Sponsors (Pty) Ltd Mazars (Gauteng) Inc.
t/a Arbor Capital Sponsors
Date: 29/09/2014 01:08:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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