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Reviewed Condensed Consolidated Annual Financial Statements for the year ended 30 June 2022
ADVANCED HEALTH LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2013/059246/06)
(“the Group” or “Advanced”)
ISIN Code: ZAE000189049 JSE Code: AVL
REVIEWED CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED
30 JUNE 2022
GROUP OVERVIEW
Advanced is an important role player in day surgery across South Africa and Australia. Private
healthcare is currently in an exciting stage of development. Advanced is positioning itself within this
environment, filling a gap in the market for day surgery.
In Australia, the day hospital industry remains a strong and viable business sector in the healthcare
system, with over 40% of the Australian population having private healthcare cover. Day hospitals
remain the competitive option for private patients compared to overnight hospitals, with Presmed
Australia (“PMA”) positioning itself well in this industry.
During the year PMA increased its shareholding in Metwest Surgical (Hereward) and Eye Centre
(Kingham) (Collectively called Metwest) by 19% increasing the total shareholding to 57%. Metwest
operates a day surgery and an ophthalmology practice in Western Sydney. As of the date of acquiring
a 57% holding in the Metwest group of companies, PMA obtained control and derecognised the equity
accounted investment.
During the year PMA acquired a 40% shareholding in Devonport group of companies (DEH) which
operates a day surgery in Devonport, Tasmania.
In South Africa, medical schemes are aligning themselves to the day hospital model and we are seeing
traction in them directing surgical procedures towards day hospitals as an alternative, more cost-
effective option.
IMPACT OF COVID-19
South Africa
In the 2022 financial year the effects of the COVID-19 pandemic were substantially less than what was
experienced in the prior two financial years. All of the restrictive measures and lockdown regulations
were lifted. The result thereof was a partial reverse of a positive impact caused by COVID-19 that was
experienced in the 2021 financial year. In South Africa challenges such a load shedding had a twofold
impact – additional cost and less efficiency.
Australia
During the 2022 financial period, the Australian healthcare sector was also impacted by the Delta and
Omicron variants. The COVID-19 Delta strain hit Australia in the beginning of July 2021. There were
several implications on the business with nation-wide lockdowns, patient hesitation and surgery
cancellations occurred as well as Government imposed directive capping surgery throughput based
on the low 8-week average prior to the lockdown up to 25 October 2021.
After the Omicron variant was picked up in South Africa on 24 November 2021, this quickly spread
around the world. On 30 November 2021, the Australian National Cabinet met and released
statements to try and combat this. The Australian Health Protection Principal Committee followed
international developments closely and advised the Government on how to respond to the Omicron
variant. Restrictions were put in place, which caused further patient hesitation and surgery
cancellations. In addition, many staff and patients have contracted this strain, delaying surgery.
PMA Management recognised that these effects were largely temporary and a matter of timing, with
the backlog starting to flow back into surgery through the day hospitals for the remaining part of the
2022 financial year.
FINANCIAL PERFOMANCE
OVERVIEW
The Group reported a profit of R31.6million (2021: R24.4million) before tax and R13.4million (2021:
R0.6million) after tax. The results were driven by a good performance of the Australian segment which
contributed R62.6million (2021: R62.5million) in profit after tax. South African operations continue to
be in a loss situation, however the losses before tax have been reduced to R41.1million when
compared to the prior period losses of R44.3million.
Australia
The Australian operations remain profitable, a profit after tax of R62.6million (2021: R62.5million) was
reported for the year ended 30 June 2022. Included in the current year’s profits was R17.7million gain
on fair value on derecognition of Metwest as an associate. EBIDTA of R108.0million (2021:
R133.6million) is R25.6million lower than the prior year. Factors influencing the profits of PMA
included a decline in the number of theatre cases that were performed when compared to the prior
year. This is because the backlog of patients that could not be operated in the period ending 30 June
2020 as per government COVID-19 restrictions, was included in the prior year results, causing a non-
recurring increase in revenue for that period. This surge in theatre cases did not occur for the year
ended the 30 June 2022.
PMA continues to be recognised as a key player within the industry, maintaining its position as the
premium standard setter within the day hospital market, through the successful introduction of an In-
House Ophthalmic Nurse Program, the Ophthalmologist Registrar Training Program, affiliation with
the University of Sydney as a Teaching Hospital group and the retention of Chatswood Private Hospital
as the only Australian private hospital member of the World Association of Eye Hospitals.
South Africa
Management continues its focus on marketing strategies aimed at growing patient numbers and
increasing earnings. Results from South African operations improved year on year with a loss after tax
of R41.0million when compared to a loss after tax of R47.7million in the previous year. A profit before
tax, interest, depreciation, amortization and impairment of R27.4million (R37.3million) was reported
for the South African operations in the current year. The decrease in EBIDTA was as a result of a
decrease in revenue when compared to the prior year.
Cash flow challenges continue to exist within the South African operations as a result of the ongoing
losses within this business segment.
Soweto Day Hospital Proprietary Limited is classified and disclosed as a disposal group as was the case
in the prior year. The company’s creditors lodged a request for the company to be liquidated which
was initially opposed by the landlord. The landlord subsequently withdrew its opposition to the
liquidation and on 11 August 2022 a court order was issued whereby the company was formally placed
in liquidation.
FINANCIAL RESULTS HIGHLIGHTS
- Revenue decreased to R664.8million (2021: R680.7million).
- EBITDA decreased to R134.3million (2021: R162.6million).
- Profit after tax for the year is reported at R13.4million (2021: R0.6million).
- Basic loss per share was reported at 4.04 cents (2021: 8.14 cents).
- Headline loss per share was reported at 5.89 cents (2021: 6.82 cents).
Going concern
Advanced Health draws attention to the fact that as at 30 June 2022, the Group had accumulated
losses of R294.8 million (2021: R265.3million) after a profit of R13.4million (2021: R0.6million). The
Group’s current ratio is 1.27:1 (2021: 1.20:1). The South African operations within the Group however
continued to incur significant losses R41.0million (2021: R47.7million) and had negative cashflows
from operations taking into account lease payments. The current liabilities of the South Africa
Operations exceed current assets by (R40.9million) (2021: R3.55million). These events and conditions
indicate that a material uncertainty exists that may cast doubt on the group’s ability to continue as a
going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in
the normal course of business.
The reviewed condensed consolidated financial statements have been prepared on the basis of
accounting policies applicable to a going concern. This basis presumes that funds will be available to
finance future operations and the realisation of assets and settlement of liabilities, contingent
obligations and commitments will occur in the ordinary course of business.
The ability of the Group to continue as a going concern is dependent on the directors continuing to
procure funding for the South African operations, either through a sale of strategic investments or by
procuring funding through other options. As stated in note 23 inbound approaches were received
from parties interested in a potential acquisition of shares that the group holds in PresMed Australia.
A sub-committee has been appointed to evaluate these approaches.
Management has put into place different plans to turn the South African operations around. This
includes:
• A strategic partnership with the medical specialists through the sale of shares in the South
Africa operating hospitals.
• Proactively engaging funders during the tariff negotiations to ensure reasonable tariff
increases are achieved. Advanced Health forms part of the DHASA (Day Hospital of South
Africa) and the DHASA has been permitted to negotiate tariffs as a group with the medical
schemes for 2023. Advanced Health will utilize this unity to strengthen its already established
relationship in the funder market and to channel more volumes to the day hospital group.
• Focus on marketing strategies which include engagement with doctors, recruiting new
specialists, focus on service delivery differentiation which includes excellent nursing care.
• A key focus in competitive pricing in both the private market as well as the low income medical
schemes. The fee structure within Advanced Health is attractive to both the funders and
private patients.
Events after the reporting date
The liquidation of Advanced Soweto Day Hospital was granted by the court on 11 August 2022, a
liquidator has been appointed.
AVL received unsolicited approaches from several parties interested in a potential acquisition of its
shares within PMA. On 15 June 2022 the board of directors appointed an internal sub-committee to
conduct a strategic review of the Advanced Health group to assess options available to maximise
shareholder value in Advanced Health. An Australian advisory firm, Monash Advisory was appointed
to advise and assist on the potential transaction. The recommendations of the sub-committee will be
evaluated by the board.
Dividend declaration
No dividend is proposed or recommended for the financial year ended 30 June 2022 (2021: Rnil).
Changes to directors
During the period under review the following changes happened:
Dr J Oelofse’s term ended – 12/11/2021.
D Goss-Ross was appointed as a director, previously was an alternate director – 01/12/2021.
Short-form announcement
The contents of the short-form announcement are the responsibility of the Board of Directors of
Advanced Health Limited. The information in the short-form announcement is a summary of the full
announcement and accordingly does not contain full or complete details. The full announcement is
available for inspection at no charge, Monday to Friday, during office hours at the company’s
registered office, the office of the Designated Advisor and on the Company’s website on
http://www.advancedhealth.co.za/ from 8 August September 2022. The full announcement is
available on SENS on 8 September 2022 at
https://senspdf.jse.co.za/documents/2022/jse/isse/AVL/YE2022AVL.pdf. The information in this
announcement has been extracted from the reviewed condensed consolidated financial results, but
the short-form announcement itself has not been reviewed by the Company’s auditors. Any
investment decisions by shareholders/investors should be based on the full announcement released
to the JSE and published on the Company’s website.
The reviewed condensed consolidated financial statements have been reviewed by the Group’s
Auditors, Mazars who have issued an unmodified review opinion with an emphasis of matter included
for material uncertainty of Going Concern (refer above). The review opinion is available for inspection
at the Company’s registered office and on the Company’s website http://www.advancedhealth.co.za/
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
GJ van Emmenis (Chief Executive Officer) CA Grillenberger (Chairman)
MC Resnik# (Managing Director Australia) FA van Hoogstraten (Lead Independent)
D Goss-Ross (Managing Director South Africa) PJ Jaffe #
S Chonco (Chief Financial Officer) CJPG van Zyl
Dr WT Mthembu
YJ Visser
Dr KE Legodi
# Australian
Company Secretary: M Janse van Rensburg
Auditors: Mazars
Transfer Secretaries: JSE Investor Services
Date of announcement: 8 September 2022
Designated Advisor
Grindrod Bank Limited
Date: 08-09-2022 04:30:00
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