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ADVANCED HEALTH LIMITED - Provisional summary audited consolidated financial statements for the year ended 30 June 2016

Release Date: 30/08/2016 15:24
Code(s): AVL     PDF:  
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Provisional summary audited consolidated financial statements for the year ended 30 June 2016

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 2016

SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION


                                                                              Audited       Restated*
                                                                           Year ended     Year ended
R’000                                                                    30 June 2016   30 June 2015
ASSETS
Non-current assets                                                            329 078        112 857
Property, plant and equipment                                                 251 317         59 487
Goodwill                                                                       28 561         25 461
Other financial assets                                                          7 789              -
Intangible assets                                                              28 333         25 788
Deferred taxation                                                              13 078          2 121
Current assets                                                                109 869        142 942
Inventories                                                                     9 093          6 587
Trade and other receivables                                                    36 970         16 053
Other financial assets                                                          6 477          3 382
Operating lease asset                                                           2 381            185
Current tax receivable                                                          2 104          1 450
Cash and cash equivalents                                                      52 844        115 285
Non-current assets held for sale                                                    -         39 035
Total assets                                                                  438 947        294 834

EQUITY AND LIABILITIES
Capital and reserves                                                          199 191        207 501
Stated capital                                                                137 378        137 378
Share-based payment reserve                                                     4 465          2 323
Foreign currency translation reserve                                           40 380         27 233
Retained earnings                                                              16 968         40 567
Non-controlling interest                                                       44 300         19 562
Total equity                                                                  243 491        227 063
Non-current liabilities                                                       112 660         25 809
Other financial liabilities                                                    71 169         14 152
Finance lease obligations                                                      31 701            849
Operating lease liability                                                       6 947            634
Provisions                                                                      2 013          1 993
Deferred taxation                                                                 830          8 181
Current liabilities                                                            82 796         41 962
Other financial liabilities                                                     9 240          5 597
Finance lease obligations                                                       7 823          6 792
Trade and other payables                                                       51 303         26 143
Provisions                                                                      3 688            779
Operating lease liabilities                                                     1 175             41
Current tax payable                                                             9 567          2 599
Bank overdraft                                                                      -             11
Total equity and liabilities                                                  438 947        294 834

Notes to statement of financial position
Total number of shares in issue ('000)                                        221 615        221 615
Net asset value per share (cents)                                              109.87         102.46
Net tangible asset value per share (cents)                                      84.20          79.33

* No third statement of financial position is presented as the restatement has no effect on the opening balances.

SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                                                                         Audited             Restated
                                                                                      Year ended           Year ended
R’000                                                                               30 June 2016         30 June 2015
Revenue                                                                                  241 192              180 144
Cost of sales                                                                           (118 430)             (80 529)
Gross profit                                                                             122 762               99 615
EBITDA (earnings before interest, impairment, tax, depreciation and
amortisation)                                                                             (4 428)              37 898
Investment income                                                                          2 881                6 861
Depreciation and amortisation                                                            (16 152)              (8 342)
Net finance costs                                                                         (4 531)              (1 805)
(Loss) / profit before taxation                                                          (22 230)              34 612
Taxation                                                                                   6 501              (10 773)
(Loss) / profit for the year                                                             (15 729)              23 839
Other comprehensive (expense)/income for the year, net of tax                             14 506                 (897)
Total comprehensive (loss) / income for the year                                          (1 223)              22 942

(Loss) / profit attributable to:                                                         (15 729)              23 389
Owners of the parent                                                                     (18 311)              17 487
Non-controlling interest                                                                   2 582                6 352

Total comprehensive (loss) / income attributable to:                                      (1 223)              22 942
Owners of the parent                                                                      (5 164)              16 590
Non-controlling interest                                                                   3 941                6 352

Per share information:
Earnings per share (cents)                                                                 (8.26)                7.89
Diluted earnings per share (cents)                                                         (8.25)                7.87

Notes to the statement of comprehensive income
Headline (loss) / earnings for the year attributable to ordinary
shareholders:
Headline (loss) / earnings per share (cents)                                               (8.02)                4.00
Diluted headline (loss) / earnings per share (cents)                                       (8.00)                3.99
- Total number of shares in issue (‘000)                                                 221 615              221 615
- Weighted average number of shares (‘000)                                               221 615              221 615
- Diluted weighted average number of shares (‘000)                                       221 983              222 086


Reconciliation of headline earnings calculation:
Earnings for the year attributable to ordinary shareholders                              (18 311)              17 487
Net fair value gain on Investment properties                                                   -              (15 417)
Loss on sale property, plant and equipment                                                 1 181                  223
Tax effects of adjustments                                                                  (375)               4 558
Non-controlling interest effects of adjustments                                             (262)                 451
Headline (loss) / earnings for the year attributable to ordinary
shareholders                                                                             (17 767)               7 302


ABRIDGED SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOW

                                                                        Audited         Restated
                                                                     Year ended       Year ended
R’000                                                              30 June 2016     30 June 2015

Net cash flows from operating activities                                   4 334          26 333
Net cash flows from investing activities                                (135 743)        (43 175)
Net cash flows from financing activities                                  62 407          (9 124)
Net decrease in cash and cash equivalents                                (69 002)        (25 966)
Cash and cash equivalents at beginning of year                           115 274         143 883
Effect of translation                                                      6 572          (2 643)
Cash and cash equivalents at end of year                                  52 844         115 274
   
SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                                                          Share      Foreign
                                    Net  Revaluation      based     currency    Retained          Non-  
                                 stated           on    payment  translation    earnings   controlling      Total 
                                capital      reserve    reserve      reserve                  interest     Equity
                                  R'000        R'000      R'000        R'000       R'000         R'000      R'000

Balance at 30 June 2014         120 378        2 037      1 286       31 297      17 876        15 462    188 336
Restated profit for the year          -            -          -            -      17 487         6 352     23 839
Other comprehensive
income for the year                   -        3 167          -       (4 064)          -             -       (897)
Shares issued for
acquisition of intangibl
assets                           17 000            -          -             -          -             -     17 000
Share-based payment
expense                               -            -      1 037             -          -             -      1 037
Transfer of revaluation to
retained earnings                     -       (5 204)         -             -      5 204             -          -
Acquisition of subsidiary             -            -          -             -          -           273        273
Dividends declared                    -            -          -             -          -        (2 525)    (2 525)
Restated balance at
30 June 2015                    137 378            -      2 323        27 233     40 567        19 562    227 063
Loss for the year                     -            -          -             -    (18 311)        2 582    (15 729)
Other comprehensive
income for the year                   -            -          -        13 147          -         1 359     14 506
Share-based payment
expense                               -            -      2 142             -          -             -      2 142
Change in interest in
subsidiary                            -            -          -             -     (5 288)        5 288          -
Issue of shares in
subsidiary                            -            -          -             -          -        17 076     17 076
Dividends declared                    -            -          -             -          -        (1 567)    (1 567)
Balance at 30 June 2016         137 378            -      4 465        40 380     16 968        44 300    243 491

NOTES TO THE AUDITED SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS

BASIS OF PREPARATION
The summary audited consolidated financial statements are prepared in accordance with the Listings
Requirements of the JSE Limited 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 to also,
as a minimum, contain the information required by IAS 34 Interim Financial Reporting. The accounting
policies and computations 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 and computations applied in the preparation of the previous consolidated annual
financial statements except for the restatement noted below.

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.

The summary audited consolidated financial statements for the year were authorised for issue by the
directors on 30 August 2016.

The auditors, Mazars (Gauteng) Inc., have issued their unmodified opinion on the Group’s annual financial
statements for the year ended 30 June 2016. 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 contents of this announcement are extracted from audited information, although
the announcement is not itself 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.

STATED CAPITAL
The issued stated capital of Advanced Health is 221 614 801 shares amounting to R225 377 305 (2015:
R225 377 305) being the legal entity listed on the JSE AltX.

Reconciliation of stated capital
                                                                                     Shares      Share Value
                                                                                       ’000            R’000
 Balance as at 1 July 2015                                                          221 615          225 845
 IFRS 3 reverse acquisition adjustments                                                   -          (88 000)
 Balance as at 30 June 2016                                                         221 615          137 378


SEGMENTAL REPORTING
Geographical Information

The group operates in two main regions, namely Australia and South Africa:
                                                                                      Audited        Restated
                                                                                   Year ended      Year ended
                                                                                 30 June 2016    30 June 2015
                                                                                        R’000           R’000

REVENUE                                                                               241 192         180 144
South Africa                                                                           39 579          26 446
Australia                                                                             200 740         183 011
Corporate                                                                                 873         (29 313)
 
INTEREST INCOME                                                                         2 881           6 861
South Africa                                                                               98              57
Australia                                                                                 414             909
Corporate                                                                               2 369           5 895

INTEREST EXPENSE                                                                        4 531           1 805
South Africa                                                                            1 886              95
Australia                                                                               2 645           1 710
Corporate                                                                                  -                -

DEPRECIATION & AMORTISATION                                                            16 152           8 342
South Africa                                                                            6 118           1 899
Australia                                                                               8 988           5 608
Corporate                                                                               1 046             835

PROFIT/LOSS FOR THE YEAR                                                              (15 729)         22 206
South Africa                                                                          (20 498)           (754)
Australia                                                                               5 736          23 789
Corporate                                                                                (967)           (829)

SEGMENT ASSETS                                                                        438 947         293 201
South Africa                                                                          214 497          24 602
Australia                                                                             222 815         142 939
Corporate                                                                               1 635         125 660

SEGMENT LIABILITIES                                                                   195 454          67 771
South Africa                                                                          100 814          17 707
Australia                                                                              94 056          55 012
Corporate                                                                                 584          (4 948)

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.


PLANT AND EQUIPMENT
The increase in plant and equipment relate capital costs incurred to expand operations in relation specifically
to the development of the new day clinics.

ASSETS HELD FOR SALE
An investment property, being Presmed Australia’s New South Wales’ property, to CC No 1 Pty Ltd and CC No
2 (Pty) Ltd that was kept as an asset held for sale has been disposed of in the current financial year for a total
consideration of AUD$4,1 million.

FINANCIAL LIABILITIES
Financial liabilities increased due to loans from financial institutions in both Australia and South Africa for the
procurement of fixed assets.

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.

RESTATEMENT OF FIGURES (2015)
The nature of the restatement relates to the accounting method used for investment property reflected
under non-current assets held for sale, which included transaction costs to dispose of the investment
property, which is not in accordance with the requirements of IFRS 5. The transaction costs for the year
ended 30 June 2015 amounted to R2,3 million before taxation and R1,6 million after taxation.

The net fair value gain on investment properties was thus understated.

The restated information as compared to the previously published information has been set out below:

                                                                                                     Previously
                                                                                      Restated        Published
                                                                                    Year ended       Year ended
 R’000                                                                            30 June 2015     30 June 2015
 ASSETS
 Non-current assets                                                                    112 857          113 556
 Deferred taxation                                                                       2 121            2 820
 Current assets                                                                        142 942          142 942
 Non-current assets held for sale                                                       39 035           36 703
 Total assets                                                                          294 834          293 201

 EQUITY AND LIABILITIES
 Capital and reserves                                                                  207 501          205 868
 Retained earnings                                                                      40 567           38 934
 Non-controlling interest                                                               19 562           19 562
 Total equity                                                                          227 063          225 430

 Non-current liabilities                                                                25 809           25 809

 Current liabilities                                                                    41 962           41 962
 Total equity and liabilities                                                          294 834          293 201
Effect on the consolidated statement of comprehensive income
                                                                                                     Previously
                                                                                      Restated        Published
                                                                                    Year ended       Year ended
 R’000                                                                            30 June 2015     30 June 2015

 Revenue                                                                               180 144          180 144
 Cost of sales                                                                         (80 529)         (80 529)
 Gross profit                                                                           99 615           99 615
 EBITDA (earnings before interest, impairment, tax, depreciation and
 amortisation)                                                                          37 898           35 566
 Profit before taxation                                                                 34 612           32 280
 Taxation                                                                              (10 773)         (10 074)
 Profit for the period                                                                  23 839           22 206
 Total comprehensive income for the period                                              22 942           21 309
 Profit attributable to:
 Owners of the parent                                                                   17 487           15 854
 Non-controlling interest                                                                6 352            6 352

 Total comprehensive income attributable to:
 Owners of the parent                                                                   16 590           14 957
 Non-controlling interest                                                                6 352            6 352

The restatement has no effect on the consolidated statement of cash flow for the financial year ending
30 June 2015.

Effect on the earnings per share

                                                                                                Previously
                                                                                 Restated        Published
                                                                               Year ended       Year ended
                                                                             30 June 2015     30 June 2015

Earnings per share (cents)                                                           7.89             7.15
Diluted earnings per share (cents)                                                   7.87             7.14
Headline earnings per share (cents)                                                  4.00             3.26
Diluted headline earnings per share (cents)                                          3.99             3.26

EXCHANGE RATES
The following exchange rates were used in foreign interest and foreign transactions during the year:

Rand/Australian Dollar                                                       30 June 2016     30 June 2015
Closing rate                                                                      11.1343           9.4062
Average rate                                                                      10.5601           9.5515

INVESTOR PRESENTATION
There will be an investor presentation on 31 August 2016 and the presentation will be available on the
Company’s website.

COMMENTARY
HIGHLIGHTS
-    The successful opening of 7 new facilities in South Africa.
-    The completion of the largest ophthalmic and ENT day hospital in Australia.
-    Revenue increased by 34% to R241,1 million.
-    Patient numbers increased by 26%.

INTRODUCTION
The Advanced Health philosophy is in line with the changes which are taking place in the hospital industry,
where the move to compact and custom-designed short-procedure facilities are being accelerated by
technology, the latest being the key-hole surgery, which complements modern anaesthesiological techniques
in both South Africa and Australia.

FINANCIAL RESULTS
Key performance indicators aptly reflect the state of business in the two operating regions. There has been
good growth in both turnover and patients. Presmed Australia (PMA) operations contributed some 83% of
income (2015: 87%). The shift in contribution is as a result of more South African day-hospitals becoming
operational, in line with management intentions to target equal income from the two regions.

OVERVIEW
PMA, in which Advanced Health holds a 94.65% interest, has had an exciting, yet challenging year.

In January 2016, PMA completed the planned build of the largest ophthalmic and ENT day hospital in
Australia, the Chatswood Private Hospital (CPH), consisting of six theatres with femtosecond cataract laser
procedure room, and four private-warded overnight beds. A strategic decision was taken to merge the
recently acquired Sydney ENT Day Surgery Centre with Ophthalmic Surgery Centre (OSC), and move into
CPH. It is recognised that the first few years of operation of a new facility will be challenging before the
rewards of financial benefits materialise. The other PMA facilities of Central Coast Surgery Centre and
Epping Surgery Centre continue to perform to expectations.

Management continues to evaluate additional day-hospital investment opportunities in the greater Sydney
area and across Australia.

In South Africa, the aggressive expansion of the group’s footprint continued and, shortly after year-end, the
objective of having nine day hospitals operational was achieved four months ahead of target. A tenth
hospital is scheduled for opening in eMalahleni in October 2016.

The nine day hospitals are:

-     Advanced Medgate Day Hospital in Roodepoort;
-     Advanced eMalahleni Day Hospital in eMalahleni;
-     Advanced Durbanville Surgical Centre in Cape Town;
-     Advanced Panorama Surgical Centre in Cape Town;
-     Advanced Groenkloof Day Hospital in Pretoria;
-     Advanced Soweto Eye Day Hospital in Soweto;
-     Advanced Worcester Surgical Centre in the Worcester;
-     Advanced Knysna Surgical Centre in Knysna; and
-     Advanced Vergelegen Surgical Centre in Somerset West;

The strong growth prompted a strengthening of staff at central level, to continue meeting objectives in line
with the growth in facilities and to realise long-term succession targets.

The success of the Advanced Health business model is based on strong day-hospital teams and partnerships
with participating medical practitioners to ensure that medical and quality objectives are met. These teams
are supported by an expert central team to ensure effective management, staffing and shared services such
as information technology, marketing and administration. Properties are developed and owned by property
developers, and tenure secured through a long-term lease agreement with Advanced Health.


DIVIDEND DECLARATION
No dividend is proposed or recommended.

PROSPECTS
Advanced Health 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 two new day hospitals will open before the end of the 2017 calendar year. Other day
hospitals are in various stages of construction or negotiation, signalling that Advanced Health is on track to
achieve its objective of managing 20 day hospitals in South Africa and 6 in Australia by 2020 for which capital
will be raised. Investors are reminded of the nature of the roll-out of day hospitals, namely that the initial
building development of the hospital takes up to 18 months, depending on circumstances for the completion
of the construction and the commissioning process. The day hospitals then require a settling-in period of up
to 36 months before the envisaged financial advantages fully materialise.

On behalf of the board


FA van Hoogstraten               CA Grillenberger                 CJPG van Zyl
Chairman                         Chief Executive Officer          Chief Financial Officer
30 August 2016

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)
CJPG van Zyl (Chief Financial Officer)                            PJ Jaffe#
MC Resnik# (Chief Operational Officer Australia)                  WT Mthembu
                                                                  J Oelofse
                                                                  YJ Visser (alternate)
# Australian

Company Secretary:       M Janse van Rensburg
Auditors:                Mazars (Gauteng) Inc.
Transfer Secretaries:    Trifecta Capital Services Proprietary Limited

Designated Advisor
Arbor Capital Sponsors Proprietary Limited

Date: 30/08/2016 03:24:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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