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CANCELLATION OF S381720 Unaudited condensed consolidated interim financial statements for the six months ended 32 December 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
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX
MONTHS ENDED 31 DECEMBER 2016
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited
Unaudited Restated Audited
Six months Six months Year ended
R’000 31 Dec 2016 31 Dec 2015 30 June 2016
ASSETS
Non-current assets 337 254 242 909 329 078
Property, plant and equipment 253 669 182 340 251 317
Goodwill 26 487 28 054 28 561
Intangible assets 29 073 28 881 28 333
Other financial assets 6 391 - 7 789
Deferred taxation 21 634 3 634 13 078
Current assets 87 354 155 475 109 869
Inventories 8 965 6 345 9 093
Trade and other receivables 20 429 22 487 36 970
Other financial assets 5 738 7 354 6 477
Operating lease asset 763 737 2 381
Current tax receivable 1 418 3 094 2 104
Cash and cash equivalents 50 041 115 458 52 844
Total assets 424 608 398 384 438 947
EQUITY AND LIABILITIES
Capital and reserves 164 622 223 218 199 191
Stated capital 137 378 137 378 137 378
Foreign currency translation reserve 27 898 46 243 40 380
Retained earnings (6 343) 36 204 16 968
Share-based payment reserve 5 689 3 393 4 465
Non-controlling interest 45 995 48 784 44 300
Total equity 210 617 270 002 243 491
Unaudited
Unaudited Restated Audited
Six months Six months Year ended
R’000
31 Dec 2016 31 Dec 2015 30 June 2016
Non-current liabilities 154 652 72 240 112 660
Other financial liabilities 116 244 65 478 71 169
Finance lease obligations 32 846 381 31 701
Operating lease liability 5 338 1 560 6 947
Provisions 94 2 526 2 013
Deferred taxation 130 2 995 830
Current liabilities 59 339 53 442 82 796
Other financial liabilities 9 603 8 458 9 240
Finance lease obligations 4 366 1 682 7 823
Trade and other payables 29 862 34 959 51 303
Provisions 3 092 2 023 3 688
Operating lease liabilities 3 696 - 1 175
Current tax payable 8 720 6 320 9 567
Total equity and liabilities 424 608 398 384 438 947
Notes to statement of financial position
Total number of shares in issue ('000) 221 615 221 615 221 615
Net asset value per share (cents) 95.04 122.00 109.87
Net tangible asset value per share (cents) 69.97 96.31 84.20
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months Six months Year ended
R’000 31 Dec 2016 31 Dec 2015 30 June 2016
Revenue 149 751 103 563 241 192
Cost of sales (74 651) (47 266) (118 430)
Gross profit 75 100 56 297 122 762
EBITDA (earnings before interest, impairment, tax,
depreciation and amortisation) (13 127) 7 719 (4 428)
Investment income 290 2 107 2 881
Depreciation and amortisation (12 636) (5 461) (16 152)
Net finance costs (6 255) (916) (4 531)
(Loss) / Profit before taxation (31 728) 3 449 (22 230)
Taxation 9 048 (1 067) 6 501
(Loss) / Profit for the period (22 680) 2 382 (15 729)
Other comprehensive (expense) / income for the period, (13 202) 24 411 14 506
net of tax
Total comprehensive (loss) / income for the period (35 882) 26 793 (1 223)
(Loss) / Profit attributable to:
Owners of the parent (23 311) 925 (18 311)
Non-controlling interest 631 1 457 2 582
Total comprehensive (loss) / income attributable to:
Owners of the parent (35 793) 19 935 (5 164)
Non-controlling interest (89) 6 858 3 941
Per share information:
Earnings per share (cents) (10.52) 0.42 (8.26)
Diluted earnings per share (cents) (10.52) 0.42 (8.25)
Notes to the statement of comprehensive income
Headline (loss) / earnings for the period attributable to
ordinary shareholders:
Headline (loss) / earnings per share (cents) (10.52) 0.51 (8.02)
Diluted headline (loss) / earnings per share (cents) (10.52) 0.51 (8.00)
- Total number of shares in issue (‘000) 221 615 221 615 221 615
- Weighted average number of shares (‘000) 221 615 222 164 221 983
Reconciliation of headline earnings calculation:
(Loss) / Earnings for the period attributable to ordinary (23 311) 925 (18 311)
shareholders
Net fair value gain on Investment properties - - -
(Profit) / Loss on sale property, plant and equipment (8) 403 1 181
Tax effects of adjustments 2 (121) (375)
Non-controlling-interest effects of adjustments - (79) (262)
Headline (loss) / earnings for the period attributable to
ordinary shareholders (23 317) 1 128 (17 767)
ABRIDGED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
Unaudited Unaudited Audited
Six months Six months Year ended
R’000 31 Dec 2016 31 Dec 2015 30 June 2016
Net cash flows (used in) / from operating activities (22 071) 18 589 4 334
Net cash flows (used in) / from investing activities (29 352) (96 610) (135 743)
Net cash flows from financing activities 52 112 66 719 62 407
Net increase / (decrease) in cash and cash equivalents 689 (11 302) (69 002)
Cash and cash equivalents at beginning of period 52 844 115 274 115 274
Effect of foreign difference on cash (3 492) 11 486 6 572
Cash and cash equivalents at end of period 50 041 115 458 52 844
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Foreign
Share based Currency Retained Non-
Net Stated payment translation earnings controlling Total
Capital reserve reserve (restated) interest equity
R'000 R'000 R'000 R'000 R'000 R'000
Balance at 1 July 2015 137 378 2 323 27 233 40 567 19 562 227 063
Profit for the period - - - 925 1 457 2 382
Other comprehensive income for
the period - - 19 010 - 5 401 24 411
Share-based payment expense - 1 070 - - - 1 070
Share buy back - - - - (936) (936)
Change in subsidiary interest - - - (5 288) 5 288 -
Issue of shares in subsidiary - - - - 18 012 18 012
Balance at 31 December 2015 137 378 3 393 46 243 36 204 48 784 270 002
Loss for the period - - - (19 236) 1 125 (18 111)
Other comprehensive income for
the period - - (5 863) - (4 042) (9 905)
Share-based payment expense - 1 072 - - - 1 072
Dividends - - - - (1 567) (1 567)
Balance at 1 July 2016 137 378 4 465 40 380 16 968 44 300 243 491
Loss for the period - - - (23 311) 631 (22 680)
Other comprehensive income for
the period - - (12 482) - (720) (13 202)
Share-based payment expense - 1 224 - - - 1 224
Change in subsidiary interest - - - - (464) (464)
Dividends - - - - (464) (464)
Issue of shares in subsidiary - - - - 2 713 2 713
Balance at 31 December 2016 137 378 5 689 27 898 (6 343) 45 995 210 617
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PREPARATION
The unaudited condensed consolidated results for the period ended 31 December 2016 have been prepared
in accordance with the requirements of the JSE Listing Requirements for interim reports, the requirements of
Companies Act applicable to summary financial statements and the requirements of IAS 34: Interim Financial
Reporting as well as the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee.
The accounting policies applied in the preparation of the unaudited condensed consolidated results for the
period were derived, are in terms of IFRS and are consistent with the accounting policies applied in the
preparation of the previous unaudited condensed consolidated results for the period and are presented in
South African rand, which is the Group's functional and presentation currency.
There are no significant reportable matters arising since the end of the period under review.
The unaudited condensed consolidated results for the period ended 31 December 2016 have been prepared
under the supervision of CP Snyman CA (SA), in his capacity as Chief Financial Officer.
The results were approved by the board of directors on 21 February 2017 and have not been reviewed or
audited by the Group’s external auditors Mazars (Gauteng) Inc.
STATED CAPITAL
The issued stated capital of Advanced Health is 221 614 801 shares amounting to R225 377 305 (December
2015: 221 614 801 amounting to R218 377 305) being the legal entity listed on the JSE AltX.
Reconciliation of stated capital
Shares Stated Equity Group
’000 capital reserve* stated
R’000 R’000 capital
R’000
Balance as at 1 July 2015 221 615 225 845 (88 000) 137 378
Balance as at 31 December 2016 221 615 225 845 (88 000) 137 378
* The equity reserve arose in 2014 as a result of accounting for the reverse acquisition in terms of IFRS 3
Business Combination.
SEGMENTAL REPORTING
Geographical Information
The group operates in two main regions, namely Australia and South Africa:
Unaudited Unaudited Audited
Six months Six months Year ended
31-Dec-16 31-Dec-15 30-June-16
R’000 R’000 R’000
REVENUE 149 751 103 563 241 192
South Africa 39 082 12 331 39 579
Australia 109 944 88 914 200 740
Corporate 725 2 318 873
INTEREST INCOME 290 2 107 2 881
South Africa 88 11 98
Australia 123 207 414
Corporate 79 1 889 2 369
INTEREST EXPENSE 6 255 916 4 531
South Africa 3 097 72 1 886
Australia 733 285 2 645
Corporate 2 425 559 -
DEPRECIATION & AMORTISATION 12 636 5 461 16 152
South Africa 6 704 1 633 6 118
Australia 5 786 3 378 8 988
Corporate 146 450 1 046
LOSS/PROFIT FOR THE PERIOD (22 680) 2 382 (15 729)
South Africa (17 708) (1 355) (20 498)
Australia 12 914 7 247 5 736
Corporate (17 886) (3 510) (967)
SEGMENT ASSETS 424 608 398 384 438 947
South Africa 211 828 94 793 214 497
Australia 192 257 198 817 222 815
Corporate 20 523 104 774 1 635
SEGMENT LIABILITIES 213 991 125 682 195 454
South Africa 130 117 26 978 100 814
Australia 79 351 68 500 94 056
Corporate 4 523 30 204 584
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 relates to capital costs incurred to expand operations in relation to
specifically the development of the new day clinics.
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 six months ended 31 December 2016, 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 THE RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
Shareholders are referred to the restatement of results for the year ended 31 June 2015 announcement that
was released on SENS on 15 April 2016. The nature of the restatement related 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. As a result, the
31 December 2015 condensed consolidated statement of financial position and statement of changes in
equity was adjusted to incorporate the restatement of retained earnings.
EXCHANGE RATES
The following exchange rates were used in foreign interest and foreign transactions during the periods:
Rand/Australian Dollar 31 Dec 2016 31 Dec 2015 30 Jun 2016
Closing rate 9.8617 11.2391 11.1343
Average rate 10.5586 9.8331 10.5601
INVESTOR PRESENTATION
There will be an investor presentation on 22 February 2017 and the presentation will be available on the
Company’s website, hosted at www.advancedhealth.co.za.
COMMENTARY
HIGHLIGHTS
- Opening eight new day hospitals in South Africa, bringing the total to ten.
- The completion of the largest ophthalmic and ENT day hospital in Australia.
- Revenue increased by 45% to R149,7 million (2015: R103,6 million) .
INTRODUCTION
The Advanced Health philosophy tracks the changes in the global hospitalisation industry, notably a move to
compact and custom-designed short-procedure facilities, accelerated by technological advances in key-hole
surgery and ever-more refined anaesthesiological techniques. The market potential is a 50:50 ratio between
ambulatory surgical centres and private acute hospitals, as is the case in the USA. In South Africa, the ratio is
now only moving towards 30:70.
FINANCIAL RESULTS
Key performance indicators aptly reflect the strong growth in new facilities, which require up to 36 months
to achieve profitability. Eight South African facilities are still in ramp-up, as are the new and merged facilities
in Australia. Revenue and patient numbers have increased in both operating regions and in South Africa
steps have been taken to expedite the achievement of capacity and profit. Australian operations contributed
some 74% of income in the first six months of the year (2015: 86%), again narrowing the gap towards the
planned target of equal income from both regions.
OVERVIEW
PresMed Australia, in which Advanced Health holds a 94.65% interest, achieved its objectives of stabilising
the business following the opening in January 2016 of the largest ophthalmic and ENT day hospital in
Australia, the Chatswood Private Hospital, and the merger of the Sydney ENT Day Surgery Centre with the
Ophthalmic Surgery Centre into Chatswood. The other facilities – the Central Coast Surgery Centre and
Epping Surgery Centre – continue to perform to expectations.
In South Africa, the business achieved its first growth objective, namely to manage ten day hospitals. This
first phase of growth provides the company with a base for further growth. In the next twelve months, the
focus will remain on increasing utilisation and the marketing team has been strengthened to expedite the
achievement of optimum utilisation in all units. January figures show a marked increase in utilisation,
attributed to increasing support from medical schemes based on cost and quality considerations. Key
succession appointments were made and key management has been strengthened to ensure optimum
results in the ten hospitals situated in three regions:
- Advanced Groenkloof Day Hospital in Pretoria;
- Advanced Soweto Eye Day Hospital in Soweto;
- Advanced Medgate Day Hospital in Roodepoort;
- Advanced Durbanville Surgical Centre in Cape Town;
- Advanced Panorama Surgical Centre in Cape Town;
- Advanced Worcester Surgical Centre in the Worcester;
- Advanced Knysna Surgical Centre in Knysna;
- Advanced Vergelegen Surgical Centre in Somerset West;
- Advanced eMalahleni Day Hospital in eMalahleni; and
- Advanced De la Vie in eMalahleni.
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 long-term lease agreements with Advanced Health.
DIVIDEND DECLARATION
No dividend is proposed or recommended for the six-month period ended 31 December 2016.
PROSPECTS
Advanced Health has completed its first phase of growth. During 2017, the group will focus on achieving
stability in new facilities and gearing for the second phase, namely to grow South Africa to 20 day-hospitals
and six in Australia by 2020. The board approved a capital raising of R200 million through a rights issue
together with a BEE consortium investment that includes supporting doctors. The capital raising is planned
for implementation during the second quarter of 2017.
The business model remains to provide a network of independent, quality and cost-effective day-hospitals,
to the benefit of patients, doctors and medical schemes. The execution of this model is supported by
substantive commitments to day hospital utilisation from a growing number of medical schemes. This change
in mind-shift is also evident amongst specialists and patients as many schemes now openly communicate
their support of day hospitals as a means of achieving savings without sacrifice to quality. In some instances,
patients carry no co-payments for surgery performed in a day hospital. Advanced Health will continue to
lobby the medical-scheme industry, in association with other independents, for an even greater recognition
of day hospitals as preferred providers.
Investors are reminded that it takes up to 18 months to establish a new day hospital, which then require a
settling-in period of up to 36 months before profit is achieved.
On behalf of the board
FA van Hoogstraten CA Grillenberger CP Snyman
Chairman Chief Executive Officer Chief Financial Officer
22 February 2017
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)
CP Snyman (Chief Financial Officer) PJ Jaffe#
MC Resnik# (Chief Operational Officer Australia) CJPG van Zyl
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
Grindrod Bank Limited
Date: 22/02/2017 03:02:59 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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