Wrap Text
Reviewed provisional condensed consolidated annual financial statements for the year ended 30 June 2017
ADVANCED HEALTH LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2013/059246/06)
(“the Company” or “Advanced Health” or the “Group”)
ISIN Code: ZAE000189049 JSE Code: AVL
REVIEWED PROVISIONAL CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR
THE YEAR ENDED 30 JUNE 2017
PROVISIONAL CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
Year ended Year ended
R’000 30 June 2017 30 June 2016
ASSETS
Non-current assets 349 700 329 078
Property, plant and equipment 251 184 251 317
Goodwill 26 597 28 561
Other financial assets 5 894 7 789
Intangible assets 28 458 28 333
Operating lease asset 1 240 -
Deferred taxation 36 327 13 078
Current assets 88 640 109 869
Inventories 10 038 9 093
Trade and other receivables 26 576 36 970
Other financial assets 5 777 6 477
Operating lease asset 5 412 2 381
Current tax receivable 354 2 104
Cash and cash equivalents 40 483 52 844
Total assets 438 340 438 947
EQUITY AND LIABILITIES
Capital and reserves 141 875 199 191
Stated capital 137 378 137 378
Share-based payment reserve 4 016 4 465
Foreign currency translation reserve 28 898 40 380
Retained earnings (28 417) 16 968
Non-controlling interest 43 507 44 300
Total equity 185 382 243 491
Non-current liabilities 184 738 112 660
Other financial liabilities 142 630 71 169
Finance lease obligations 25 408 31 701
Operating lease liability 16 320 6 947
Provisions - 2 013
Deferred taxation 380 830
Current liabilities 68 220 82 796
Other financial liabilities 13 630 9 240
Finance lease obligations 8 820 7 823
Trade and other payables 36 658 51 303
Provisions 3 645 3 688
Operating lease liabilities 3 141 1 175
Current tax payable 2 326 9 567
Total equity and liabilities 438 340 438 947
Notes to statement of financial position
Total number of shares in issue ('000) 221 615 221 615
Net asset value per share (cents) 83.65 109.87
Net tangible asset value per share (cents) 58.81 84.20
PROVISIONAL CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Audited
Year ended Year ended
R’000 30 June 2017 30 June 2016
Revenue 309 109 241 192
Cost of sales (154 857) (118 430)
Gross profit 154 252 122 762
EBITDA (earnings before interest, impairment, tax, depreciation and
amortisation) (22 866) (4 428)
Investment income 725 2 881
Depreciation and amortisation (28 779) (16 152)
Net finance costs (15 097) (4 531)
Loss before taxation (66 017) (22 230)
Taxation 17 834 6 501
Loss for the year (48 183) (15 729)
Other comprehensive (expense)/income for the year, net of tax (11 761) 14 506
Total comprehensive loss for the year (59 944) (1 223)
(Loss) / income attributable to: (48 183) (15 729)
Owners of the parent (48 176) (18 311)
Non-controlling interest (7) 2 582
Total comprehensive (loss) / income attributable to: (59 944) (1 223)
Owners of the parent (59 658) (5 164)
Non-controlling interest (286) 3 941
Per share information:
Loss per share (cents) (21.74) (8.26)
Diluted loss per share (cents) (17.08) (8.25)
Notes to the statement of comprehensive income
Headline loss for the year attributable to ordinary shareholders:
Headline loss per share (cents) (21.75) (8.02)
Diluted headline loss per share (cents) (17.09) (8.00)
- 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) 281 988 221 983
Reconciliation of headline earnings calculation:
Loss for the year attributable to ordinary shareholders (48 176) (18 311)
(Profit) / loss on sale property, plant and equipment (36) 1 181
Tax effects of adjustments 10 (375)
Non-controlling interest effects of adjustments - (262)
Headline loss for the year attributable to ordinary shareholders (48 202) (17 767)
PROVISIONAL CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
Reviewed Audited
Year ended Year ended
R’000 30 June 2017 30 June 2016
Cash generated (used in) from operating activities (19 574) 12 630
Interest received 725 2 881
Finance cost (15 097) (4 531)
Tax refunded (10 511) (6 646)
Net cash flows from operating activities (44 457) 4 334
Purchase from property, plant and equipment (52 090) (161 395)
Proceeds from property, plant and equipment 19 093 705
Purchase of intangible assets (3 344) (4 343)
Financial assets repaid (raised) 2 595 (10 212)
Proceeds on sale of non-current asset - 39 502
Net cash flows used in investing activities (33 746) (135 743)
Financial liabilities raised 89 234 61 031
Financial liabilities repaid (10 728) (4 447)
Dividends paid – non-controlling interest (3 374) (1 567)
Finance lease payments (7 381) (9 686)
Issue of shares in subsidiary 2 867 17 076
Net cash flows from financing activities 70 618 62 407
Net decrease in cash and cash equivalents (7 585) (69 002)
Cash and cash equivalents at beginning of year 52 844 115 274
Effect of translation (4 776) 6 572
Cash and cash equivalents at end of year 40 483 52 844
PROVISIONAL CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share- Foreign
Non-
Stated based currency Retained Total
controlling
capital payment translation earnings equity
interest
reserve reserve
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
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 1 July 2016 137 378 4 465 40 380 16 968 44 300 243 491
Loss for the year - - - (48 176) (7) (48 183)
Other comprehensive income for
the year - - (11 482) - (279) (11 761)
Share-based payment expense - 2 342 - - - 2 342
Change in interest in subsidiary - - - - 2 867 2 867
Transfer of revaluation - (2 791) - 2 791 - -
Dividends declared - - - - (3 374) (3 374)
Balance at 30 June 2017 137 378 4 016 28 898 (28 417) 43 507 185 382
NOTES TO THE REVIEWED PROVISIONAL CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PREPARATION
The reviewed provisional 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.
The reviewed provisional condensed consolidated financial statements have been prepared under the
supervision of CP Snyman CA (SA) in his capacity as Chief Financial Officer.
The reviewed provisional condensed consolidated financial statements have been reviewed by the Group’s
auditors, Mazars who have issued an unmodified review opinion, available for inspection at the Company’s
registered office. The contents of this announcement are extracted from reviewed information, but is not itself
reviewed.
The board of directors of Advanced Health takes full responsibility for the preparation of the reviewed
provisional condensed consolidated financial statements for the year ended 30 June 2017. Statements
contained in this announcement, regarding the prospects of the Group, have not been reviewed or audited by
the Group’s auditors.
The reviewed provisional condensed consolidated financial statements for the year were authorised for issue
by the board of directors on 29 August 2017.
SEGMENTAL REPORTING
Geographical Information
The Group operates in two main regions, namely Australia and South Africa:
Reviewed Audited
Year ended Year ended
30-June-17 30-June-16
R’000 R’000
REVENUE 309 109 241 192
South Africa 90 186 39 579
Australia 218 178 200 740
Corporate 745 873
PROFIT/LOSS FOR THE YEAR (48 183) (15 729)
South Africa (22 533) (20 498)
Australia 21 354 5 736
Corporate (47 004) (967)
SEGMENT ASSETS 438 340 438 947
South Africa 217 903 214 497
Australia 178 721 222 815
Corporate 41 716 1 635
SEGMENT LIABILITIES 252 958 195 456
South Africa 171 955 100 816
Australia 45 289 94 056
Corporate 35 714 584
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.
COMMENTARY ON FINANCIAL INFORMATION
DEFERRED TAXATION
Deferred taxation increased due to the increased losses realised in South Africa. This will be utilised when the
group starts generating profits. The increase in the trend of patient numbers and the support from the medical
schemes indicate that the deferred tax asset will be recovered.
TRADE AND OTHER RECEIVABLES
Included in trade and other receivables for 2016 was VAT to the value of R14 million that was due from the
South African Revenue Services. These refunds have been received during the year and the only outstanding
VAT currently is about R3,7 million. It is expected that this amount will be recovered within the next quarter.
The current and quick ratios of the Group improved indicating that the working capital cycle of the Group has
improved.
OPERATING LEASE ASSETS AND LIABILITIES
The operating lease assets and liabilities relate to the lease straight lining required by IFRS. The additional new
facilities also contributed to the increase in the lease assets and liabilities.
CASH AND CASH EQUIVALENTS
Cash utilised for operational costs totalled R44,4 million and R33,7 million for investments, due to more
facilities becoming operational. This created a shortfall that was financed by R70,6 million in loans.
OTHER FINANCIAL LIABILITIES
Other financial liabilities increased due to the additional loans acquired to fund expansion of operations. This
also contributed to an increase in finance cost.
FINANCE LEASE LIABILITIES
The variance is due to the short-term portion repaid during the year under review. The South African
operations entered into a new finance lease during the period and was mitigated by the repayments done in
Australia.
TRADE AND OTHER PAYABLES
With the facilities, already being operational, fewer new capital purchases were required and resulted in the
decrease.
REVENUE
An increase in the number of facilities in South Africa as well as organic growth within existing facilities resulted
in additional patients.
EBITDA
Included in EBITDA is rental paid of R45,9 million compared to R27,0 million for the year ending June 2016.
These rentals have also been straight lined as required by IFRS. The increase is due to the additional facilities
being operational compared to the previous period.
DEPRECIATION AND AMORTIASION
The increase in depreciation and amortisation is in line with the increase in facilities becoming operational
during the year.
FINANCE COST
The increase in finance cost is due to additional funding for the expansion of facilities and the operational costs
involved.
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.
EXCHANGE RATES
The following exchange rates were used in foreign interest and foreign transactions during the year:
Rand/Australian Dollar 30 June 2017 30 June 2016
Closing rate 9.92907 11.1343
Average rate 10.2634 10.5601
INVESTOR PRESENTATION
An investor presentation will be held on 30 August 2017 and the presentation will be made available on the
Company’s website hosted at www.advancedhealth.co.za. This was not reviewed by the auditors.
COMMENTARY
HIGHLIGHTS
- Revenue increased by 28% to R309,1 million.
- Patient numbers increased by 55%.
INTRODUCTION
Losses incurred as a result of eight Greenfields facilities which have become operational over the past two
years, having a negative impact on the results for the year ending June 2017.
Although losses have been incurred, Advanced Health has made substantial progress in that:
- eight new facilities have been built and became operational over a short period of time;
- The development, other than two new facilities which will become operational during the first half of
the 2018 calendar year, of further facilities in South Africa has been placed on hold until the existing
facilities have become profitable; and
- R85 million raised via the company’s Rights Offer will be used to repay debt and to fund the new
facilities planned for 2018, as well as working capital.
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 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 71% of
income (2016: 83%). The shift in contribution is as a result of more South African day-hospitals becoming
operational and the increase in patient numbers.
OVERVIEW
In South Africa management is now focussed on marketing strategies aimed at growing our patient
throughput. A number of medical schemes have voiced their support for the treatment of patients in day
hospitals in view of the savings associated with these facilities.
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.
For the financial year ending June 2017, the PMA day hospitals have performed ahead of expectations in all
three facilities, inclusive of the new Chatswood Private Hospital which completed its first full year of
operation. The total number of patient operations over the period for the facilities was over 10,500 procedures
which was a 9% improvement over the previous year and annual revenue has broken the $20m mark, being
12% up on last year. The PMA group has more than 100 Accredited Surgeons associated with its facilities,
which shows increased growth, trust and recognition within the industry and stands the PMA group in good
stead going forward.
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.
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 during the first half of 2018. The Group’s objective to open 20
day hospitals by 2020 has been put on hold until the existing facilities have become profitable.
The PMA group, with its key focus areas of driving up patient numbers through attracting further doctor
support at all of our facilities, whilst maintaining the highest levels of patient excellence, and ensuring ongoing
cost controls objectives are met and efficient cash collections remain in place and remain on target to pursue
investment opportunities within the day hospital business and achieve six fully functioning day hospital
facilities in Australia by 2020.
SUBSEQUENT EVENTS
When Advanced Health listed on the AltX of the JSE during 2014, the aim was to raise equity capital to capitalise
on the window of opportunity to firmly establish itself as a leading day hospital group in South Africa. Since
coming to market, the Group embarked on a rapid development strategy and over the last two years the Group
successfully executed the development and commissioning of eight greenfields day hospital facilities bringing
the total number of day hospitals in South Africa to ten facilities.
Advanced Health is now at a point in its journey of bedding down and ensuring the optimisation of these newly
established facilities.
To this effect Advanced Health embarked to raise equity capital which will be used to settle certain existing
debt obligations enabling the Group to enhance its capital structure in such a way as to provide a financial
platform to drive future growth.
The Rights Offer was finalised in July 2017, with a total of 66 million shares that was offered and taken up by
Shareholders and the underwriter.
In July 2017, PMA acquired 100% of a one theatre ophthalmic day hospital, 25km north-west of Central Sydney.
This is the fourth day hospital in the PMA group. The acquired facility is accredited, licensed, has contracts with
the major medical schemes and is well positioned close to all ophthalmologists in the greater area. The
acquisition is not categorisable in terms of the JSE Listings Requirements.
On behalf of the board
FA van Hoogstraten CA Grillenberger CP Snyman
Chairman Chief Executive Officer Chief Financial Officer
30 August 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) WT Mthembu
CJPG van Zyl
J Oelofse
YJ Visser (alternate)
# Australian
Company Secretary: M Janse van Rensburg
Auditors: Mazars
Transfer Secretaries: Trifecta Capital Services Proprietary Limited
Designated Advisor
Grindrod Bank Limited
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