Wrap Text
Reviewed condensed consolidated annual financial statements for the year ended 30 June 2018
ADVANCED HEALTH LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2013/059246/06)
(“the Company” or “Advanced”)
ISIN Code: ZAE000189049 JSE Code: AVL
REVIEWED CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
Note Year ended Year ended
R’000 30 June 2018 30 June 2017
ASSETS
Non-current assets 418 273 349 700
Property, plant and equipment 6 282 744 251 184
Goodwill 5 30 185 26 597
Intangible assets 5/7 33 520 28 458
Operating lease asset 8 478 1 240
Other financial assets 9 10 586 5 894
Deferred taxation 10 60 760 36 327
Current assets 96 709 88 640
Inventories 11 13 958 10 038
Trade and other receivables 12 33 393 26 576
Operating lease asset 8 5 634 5 412
Other financial assets 9 2 298 5 777
Current tax receivable 107 354
Cash and cash equivalents 13 41 319 40 483
Total assets 514 982 438 340
EQUITY AND LIABILITIES
Capital and reserves 193 831 141 875
Stated capital 2 221 956 137 378
Share-based payment reserve 14 1 880 4 016
Foreign currency translation reserve 15 34 363 28 898
Retained earnings (64 368) (28 417)
Non-controlling interest 3 53 459 43 507
Total equity 247 290 185 382
Reviewed Audited
Year ended Year ended
R’000 30 June 2018 30 June 2017
Non-current liabilities 170 084 184 738
Other financial liabilities 16 127 495 142 630
Finance lease obligations 17 19 497 25 408
Operating lease liability 8 22 101 16 320
Provisions 991 -
Deferred taxation 10 - 380
Current liabilities 97 608 68 220
Other financial liabilities 16 18 239 13 630
Finance lease obligations 17 18 718 8 820
Trade and other payables 18 45 919 36 658
Provisions 7 366 3 645
Current tax payable 19 5 000 2 326
Operating lease liabilities 8 2 366 3 141
Total equity and liabilities 514 982 438 340
Notes to statement of financial position
Total number of shares in issue ('000) 287 988 221 615
Net asset value per share (cents) 85.87 83.65
Net tangible asset value per share (cents) 63.75 58.81
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Audited
Year ended Year ended
R’000 30 June 2018 30 June 2017
Revenue 20 409 290 309 109
Cost of sales 20 (199 304) (154 857)
Gross profit 209 986 154 252
EBITDA (earnings before interest, impairment, tax, 21
depreciation and amortisation) (8 122) (22 866)
Investment income 807 725
Depreciation and amortisation 22 (32 451) (28 779)
Finance costs (14 702) (15 097)
Loss before taxation (54 468) (66 017)
Taxation 19 18 223 17 834
Loss for the period (36 245) (48 183)
Other comprehensive income / (expense) for the period, 15 6 500 (11 761)
net of tax
Total comprehensive loss for the period (29 745) (59 944)
Loss attributable to: (36 245) (48 183)
Owners of the parent (39 588) (48 176)
Non-controlling interest 3 343 (7)
Total comprehensive loss attributable to: (29 745) (59 944)
Owners of the parent (34 123) (59 658)
Non-controlling interest 4 378 (286)
Per share information:
Loss per share (cents) (14.12) (21.74)
Diluted loss per share (cents) (14.12) (17.08)
Notes to the statement of comprehensive income
Headline loss for the period attributable to ordinary
shareholders:
Headline loss per share (cents) (14.12) (21.75)
Diluted headline loss per share (cents) (14.12) (17.08)
- Total number of shares in issue (‘000) 287 988 221 615
- Weighted average number of shares (‘000) 280 351 221 615
Reconciliation of headline earnings calculation:
Loss for the period attributable to ordinary shareholders (39 588) (48 176)
Profit on sale property, plant and equipment (10) (36)
Tax effects of adjustments 3 10
Headline loss for the period attributable to ordinary
shareholders (39 595) (48 202)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Audited
Year ended Year ended
30 June 2018 30 June 2017
Cash flows used in operating activities
Cash generated / (utilised) by operations 21 5 772 (19 574)
Investment income 807 725
Finance cost (13 895) (15 097)
Taxation paid 19 (5 863) (10 511)
Net cash used in operating activities (13 179) (44 457)
Cash flows from investing activities
Acquisition of property, plant and equipment 6 (54 104) (52 090)
Proceeds on the sale of property, plant and equipment 6 1 693 19 093
Acquisition of intangible assets 7 (1 658) (3 344)
Acquisition of 100 % shares in Madison Day Surgery 5 (8 439) -
Financial assets advanced 9 (4 147) -
Financial assets received 9 3 126 2 595
Net cash used in investing activities (63 529) (33 746)
Cash flows from financing activities
Issue of shares in subsidiary 2/3 20 232 2 867
Financial liabilities raised 16 97 648 89 234
Financial liabilities repaid 16 (32 964) (10 728)
Dividends paid – non-controlling interest (5 958) (3 374)
Finance costs (807) -
Finance lease payments 17 (1 422) (7 381)
Net cash from financing activities 76 729 70 618
Net increase / (decrease) in cash and cash equivalents 21 (7 585)
Cash and cash equivalents at beginning of year 40 483 52 844
Effect of foreign currency translation 815 (4 776)
Cash and cash equivalents at end of year 13 41 319 40 483
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Foreign
Share based currency Non-
Net stated payment translation Retained Controlling
capital reserve reserve earnings interest Total equity
R'000 R'000 R'000 R'000 R'000 R'000
Audited 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
Transfer between reserves - (2 791) - 2 791 - -
Dividends - - - - (3 374) (3 374)
Issue of shares - - - - 2 867 2 867
Audited Balance at 1 July 2017 137 378 4 016 28 898 (28 417) 43 507 185 382
Loss for the year - - - (39 588) 3 343 (36 245)
Other comprehensive income for
the year - - 5 465 - 1 035 6 500
Share-based payment expense - 1 501 - - - 1 501
Transfer between reserves - (3 637) - 3 637 - -
Change in interest of subsidiary - - - - 11 532 11 532
Dividends - - - - (5 958) (5 958)
Issue of shares 84 578 - - - - 84 578
Reviewed balance at 30 June 2018 221 956 1 880 34 363 (64 368) 53 459 247 290
Note 2 14 15 3
NOTES TO THE REVIEWED PROVISIONAL CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR THE
YEAR ENDED 30 JUNE 2018
1. 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 condensed consolidated financial statements have been prepared under the supervision of CP Snyman
CA (SA) in his capacity as Chief Financial Officer.
The reviewed 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 condensed
consolidated financial statements for the year ended 30 June 2018 and that the contents of this announcement has
been correctly extracted from the underlying reviewed condensed consolidated financial statements.
Statements contained in this announcement, regarding the prospects of the Group, have not been reviewed or audited
by the Group’s auditors.
The reviewed condensed consolidated financial statements for the year were authorised for issue by the board of
directors on 28 August 2018.
2. STATED CAPITAL
The issued stated capital of Advanced Health is 287 988 433 shares amounting to R221 956 000 (June 2017: 221 614
801 amounting to R137 378 000) being the legal entity listed on the JSE AltX.
Reconciliation of stated capital
Shares Stated Equity Group
R’000 capital reserve* stated
R’000 R’000 capital
R’000
Balance as at 1 July 2017 221 615 225 845 (88 467) 137 378
Rights issue** 66 373 86 286 - 86 286
Share issue expenses - (1 708) - (1 708)
Balance as at 30 June 2018 287 988 310 423 (88 467) 221 956
* The equity reserve arose in 2014 as a result of accounting for the reverse acquisition in terms of IFRS 3 Business
Combination.
**During August 2017, the Company concluded a successful rights issue whereby 66 373 632 new Advanced Health
Shares were issued to raise R86.3 million before share issue expenses.
3. TRANSACTIONS WITH NON-CONTROLLING INTEREST
On 22nd of June 2018, Advanced Health’s (“AVL”) major Australian subsidiary, Presmed Australia (Pty) Limited “PMA”
conducted a fund raising to raise AUD 1.675 million (R16.74 million) by way of loans from certain PMA and AVL
directors or their associated companies (the “Parties”). A portion of the loans amounting to AUD 0.75 million (R7.5
million) were converted to equity at a share price of AUD 23.37 (based on a valuation performed) per PMA share which
diluted AVL’s shareholding in PMA from 94.64% by 3.8% to 90.84%, which is a non-categorizable disposal in terms of
the Listings Requirements of the JSE Limited.
Consideration received from non-controlling interests during the year was R7 492 400, which corresponds to the
increase in non-controlling interest.
There were no transactions with non-controlling interests in 2017.
4. SEGMENTAL REPORTING
Segment information is presented only at group level, where it is most meaningful. Operating segments are identified
on the basis of internal reports about components of the group that are regularly reviewed by the chief operating
decision-maker in order to allocate resources to the segment and to assess its performance. The Group decided to
change the composition of the segments from the previous year. The segments are still based on the geographical
location with corporate now only including Advanced Health Limited “the company” unlike previously where
Corporate included the parent companies from South Africa and Australia. The change on segment reporting has no
impact on the net profit or loss of the Group. To enable comparisons with prior year period performance, historical
segment information for the period ended 30 June 2017 has been included.
Reviewed Audited
Year ended Year ended
June - 18 June-17
R’000 R’000
REVENUE 409 290 309 109
South Africa 117 430 90 315
Australia 291 860 218 794
Corporate - -
INTEREST INCOME 807 725
South Africa 592 428
Australia 215 297
Corporate - -
INTEREST EXPENSE 14 702 15 097
South Africa 10 580 12 501
Australia 3 315 2 596
Corporate 807 -
DEPRECIATION & AMORTISATION 32 451 28 779
South Africa 17 915 16 948
Australia 13 869 11 468
Corporate 667 363
PROFIT / (LOSS) FOR THE PERIOD (36 245) (48 183)
South Africa (42 758) (45 153)
Australia 7 544 1 177
Corporate (1 031) (4 207)
SEGMENT ASSETS 514 982 438 340
South Africa 266 663 236 138
Australia 237 900 192 989
Corporate 10 419 9 213
SEGMENT LIABILITIES 267 692 252 958
South Africa 162 260 174 264
Australia 98 901 72 168
Corporate 6 531 6 526
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.
5. BUSINESS COMBINATION
On 1 July 2017, Presmed Australia acquired 100 % of the ordinary shares of Madison Day Surgery Proprietary Limited
‘’MDS’’ and Madison Day Surgery Unit Trust thereby achieving control. MDS is a one theatre ophthalmic specific day
hospital, accredited and with contracts in place with most of the Health Funds. PMA subsequently sold shares on the
30th of September 2017 in the hospital to doctors performing at the facility resulting in PMA’s equity interest being
reduced to a 57.5% equity interest and control still maintained.
The primary reasons of the business combination were to acquire a medical licence and an accredited facility with
the right to operate an Ophthalmic specific day hospital situated in Hornsby, New South Wales, Australia.
The total consideration was settled in cash of AUD 850 000 (R 8 439 710).
Goodwill of AUD 319 515 (R 3 172 487) arising from the acquisition relates to
• accredited and licenced facility, contracts in place with the majority of Health Funds
• MDS is situated in the heart of Hornsby which has a growing population.
• MDS facility is also surrounded by seven Hornsby based Ophthalmologists.
None of the goodwill is expected to be deductible for income tax purposes.
Recognised amounts of identifiable assets acquired and liabilities
AUD R
Fixed assets 36 714 364 536
Intangible assets 721 122 7 160 071
Deferred Tax liability (227 351) (2 257 384)
Total identifiable net assets 530 485 5 267 223
Goodwill 319 515 3 172 487
Cash paid 850 000 8 439 710
From the date of acquisition, Madison Day Surgery has contributed AUD 2 220 419 (R 22 147 614) of revenue and
AUD 143 683 (R 1 433 169) to the net profit after tax from the continuing operations of the Group.
Due to the purchase of MDS, goodwill increased by AUD 319 515 (R 3 172 487). Acquisition costs amounted to AUD
182 531 (R 1 812 370).
6. PROPERTY, 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. PMA established a one theatre facility in August 2017 in an existing day
hospital premises in Coffs Harbour, capital costs amounting to R10.8 million were incurred. Purchases were made
relating to MDS amounting to R5.0 million. In South Africa assets to the value of R15.0 million were purchased for the
East Rand facility which became operational during February 2018. There was a decrease in assets disposed of in the
current year under review.
7. INTANGIBLE ASSETS
Intangible assets increased due to business combination with MDS amounting to R7.5 million. South Africa’s intangible
assets increased by R1.7 million which relates to the license of the East Rand facility which started operating in the
current year.
8. 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.
9. OTHER FINANCIAL ASSETS
Other financial assets increased due to loans advanced to related parties in Australia.
10. DEFERRED TAX
Deferred tax increased during the period under review - due to the tax losses incurred by the group for the year ended
30 June 2018. These losses 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.
11.INVENTORIES
The increase in inventory is due to additional 3 hospitals that were established/acquired in the current year.
12. TRADE AND OTHER RECEIVABLES
Trade and other receivables increased during the year mainly attributed to the increase in revenue. Revenue increased
by 32% whilst trade and other receivables increased by 25%.
13. CASH AND CASH EQUIVALENTS
Cash from investing activities increased from the prior year due to the acquisition of MDS in the current year and a
decrease in disposals of property, plant and equipment.
14. SHARE BASED PAYMENT RESERVE
As at 30 June 2018, share option scheme 3 expired. This led to the transfer of share-based payment reserve to retained
earnings as shown on the Statement of Changes in Equity.
15. FOREIGN CURRENCY TRANSLATION RESERVE
The Foreign Currency Translation Reserve has increased as a result of the weakening of the South African Rand. The
rate has fluctuated between AUD1: R9.92907 and AUD1: R10.1426.
16. OTHER FINANCIAL LIABILITIES
The movements in the current and non-current other financial liabilities are due to:
- Additional loans obtained in South Africa and Australia.
- An increase in loans to PMA from related parties to the value AUD 775 000 (R 7 860 515) included in both non-
current liabilities and current liabilities.
- The rights issue during August 2017 whereby 58.4 million shares were not settled in cash, but a loan account
outstanding was converted into shares amounting to R75.9 million.
17. FINANCE LEASE OBLIGATIONS
Additional finance lease obtained in South Africa and Australia amounting to R4.8 million. Finance lease payments
amounting to R1.5 million.
18. TRADE AND OTHER PAYABLES
Trade and other payables increased during the year ended 30 June 2018 due to equipment purchases for MDS, Coffs
and East Rand facilities.
19. CURRENT TAX PAYABLE
Tax payable increased by more than 100% to R5.0 million. This is due to a combination of tax due to both Australian
authorities and South Africa authorities. During the year a total of R5.9 million was paid over in cash.
20. REVENUE & COST OF SALES
Revenue increased by 32% to R409 million (2017: R309 million). This is largely attributed to the increase of 41% in
patient numbers (both in South Africa and Australia) due to organic growth as well as the establishment of the two
new facilities in Australia and one in South Africa. Madison Day Surgery contributed a total of R22.0 million for a full
12-month period. Advanced East Rand contributed revenue amounting to R5.1 million (operational for 5 months).
Coffs day hospital contributed revenue of R2.7 million. The increase in cost of sales in line with the increase in revenue.
21. EBITDA
EBITDA improved from the prior year. Although the total operating expenses increased from the prior year this was
lower than the increase in revenue and thus led to the improvement of the EBITDA. Improvement in EBITDA means
improvement in cash generated by operations.
22. DEPRECIATION AND AMORTISATION
The increase in depreciation and amortisation relates to the increase in property, plant and equipment purchased
during the year together with amortisation of intangibles.
23. RELATED PARTIES
During the year ended 30 June 2018, 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.
24. CLAIMS
A patient has issued summons in the High Court relating to a claim where Advanced Health is co-respondent. The
attorneys are of the opinion that based on the information available, the liability rests with the physician and not the
hospital.
25. SUBSEQUENT EVENTS
The directors are not aware of any significant matter or circumstance arising since the end of the financial year, not
otherwise dealt with in this report or the annual financial statements, which significantly affect the financial position
of the company or the results of its operations to the date of this report.
EXCHANGE RATES
The following exchange rates were used in foreign interest and foreign transactions during the periods:
Rand/Australian Dollar 30 June 2018 30 June 2017
Closing rate 10.1426 9.92907
Average rate 9.97452 10.2634
INVESTOR PRESENTATION
There will be an investor presentation on 30 August 2018 and the presentation will be available on the Company’s
website, hosted at www.advancedhealth.co.za.
COMMENTARY
HIGHLIGHTS
- Revenue increased by 32% to R409 million.
- Headline loss per share improved by 35% to 14.12 cents
- 66 373 632 new Advanced shares issued through a rights issue to raise R86.3 million in additional capital.
- Net debt less cash to equity ratio improved by 23% to 58% (2017: 81%).
- Two new clinics became operational in Australia.
- One new clinic became operational in South Africa.
INTRODUCTION
Advanced is establishing itself as a leader in day surgery in South Africa and Australia. Private healthcare is currently
in a very exciting stage of development, and Advanced is positioning itself within the existing healthcare system, filling
a gap in the market for day surgery. Medical schemes are aligning themselves to the day hospital model, and we are
gradually seeing traction in surgical procedures towards day hospitals as an alternative, more cost-effective option.
FINANCIAL RESULTS
The Company remained in a loss-making position, however there has been an improvement from the comparative
year ended 30 June 2017 as evidenced by a 32% increase in revenue from R309 million. The Presmed Group in which
Advanced holds a 90.84% interest, contributed 71% to revenue which is in line with the prior year and continued
earning profits amounting to R7.5 million (2017: R1.1 million) for the period ending 30 June 2018.
OVERVIEW
Australia
During this past financial year, Presmed Australia acquired two-day hospitals bringing the group total to five facilities
with a total of 12 operating theatres and Management contracts in place, including the only laser vision clinic in the
central coast of New South Wales.
The existing facilities of Central Coast Surgery Centre, Epping Surgery Centre and Chatswood Private Hospital have all
exceeded expectations. Whilst Madison Day Surgery performed well ahead of expectations, Coffs Harbour Day
Hospital has been below expectations and requires greater doctor/surgeon support to be successful.
Currently the Group’s revenue is in excess of AUD29.2 million (R291.2 million) with over 15,000 patient surgeries. The
consolidated group EBITDA has grown from AUD2.4 million (R24.6 million) in FYE 2017 to AUD3.6 million (R35.9
million) in FYE 2018.
The Presmed Group of day hospitals has recently been approved as a Teaching Hospital through the prestigious
University of Sydney. In addition, Chatswood Private Hospital – the largest day hospital in Australia for eye, ear, nose,
throat and facial surgeries – has become the first Australian private hospital member of the World Association of Eye
Hospitals, as well as being approved by the Royal Australian and New Zealand College of Ophthalmologists (RANZCO)
for Ophthalmic registrar training.
South Africa
In South Africa the company continued incurring losses due to the nine facilities (one opened in February 2018) that
have been commissioned in a relatively short space of time. In total, eleven facilities are operational in South Africa.
Management is now focussed on marketing strategies aimed at growing patient numbers and increasing earnings. The
equipment purchases have decreased compared to historic levels which should bode well for the future cash flow
position of the business.
DIVIDEND DECLARATION
No dividend is proposed or recommended for the year ended 30 June 2018.
PROSPECTS
Advanced 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, staff and medical schemes.
In South Africa the group will focus on achieving stability in new facilities and ensuring they become profitable.
Advanced East Rand Day Hospital became operational in February 2018.
The PMA group has maintained its key strategic focus on driving up patient numbers through attracting both new and
existing doctor support at all its facilities, whilst maintaining the highest levels of patient excellence. By utilising the
group strength in negotiations with the Health Funds (medical schemes), as well as ensuring ongoing cost controls and
doctor support objectives are met, Management are confident of achieving its targets.
Investors are reminded that day hospitals are long term investments and the settling-in periods varies from facility to
facility.
Any forward-looking statements in this announcement have not been reviewed and reported on by the Company's
auditors.
On behalf of the board
FA van Hoogstraten CA Grillenberger CP Snyman
Chairman Chief Executive Officer Chief Financial Officer
28 August 2018
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
Dr WT Mthembu
Dr J Oelofse
YJ Visser (alternate)
# Australian
Company Secretary: M Janse van Rensburg
Auditors: Mazars
Transfer Secretaries: Terbium Financial Services Proprietary Limited
Date of announcement: 30 August 2018
Designated Advisor
Grindrod Bank Limited
Date: 30/08/2018 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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