Wrap Text
Unaudited group results for the period ended 31 March 2019, cash dividend declaration and trading statement
LIFE HEALTHCARE GROUP HOLDINGS LIMITED
Registration number: 2003/002733/06
Income tax number: 9387/307/15/1
ISIN: ZAE000145892
Share code: LHC
UNAUDITED GROUP RESULTS FOR THE PERIOD ENDED 31 MARCH 2019,
CASH DIVIDEND DECLARATION AND TRADING STATEMENT
HIGHLIGHTS
- Revenue
+9.5%
to R12.4 billion
- Normalised EBITDA
+2.2%
to R2.7 billion
- Interim dividend of 40 cents per share
+5.3%
- Investments for future growth
R74 million
(including opex and capex)
- Normalised earnings per share
-9.4%
to 49.1 cents
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
for the period ended 31 March 2019
2019 % 2018
R'm change R'm
Revenue 12 399 9.5 11 323
Operating expenses (10 596) (9 453)
Operating profit 1 803 (3.6) 1 870
Fair value adjustments to contingent consideration (38) -
Fair value loss on derivative financial instruments (370) (2)
Impairment of assets and investments (37) (17)
Profit on disposal of property, plant and equipment 4 39
Transaction costs (30) (8)
Other (2) -
Finance income 13 26
Finance cost (525) (488)
Share of associates' and joint ventures' net 4 (64)
profit/(loss) after tax
Profit before tax 822 1 356
Tax expense (324) (419)
Profit after tax 498 (46.9) 937
Other comprehensive income/(loss), net of tax
Items that may be reclassified to profit or loss
Movement in foreign currency translation reserve 466 (911)
Items that will not be reclassified to profit or loss
Retirement benefit asset and post-employment medical aid (4) (4)
Total comprehensive income for the period 960 >100 22
Profit after tax attributable to:
Ordinary equity holders of the parent 357 (54.1) 777
Non-controlling interest 141 160
498 (46.9) 937
Total comprehensive income/(loss) attributable to:
Ordinary equity holders of the parent 812 >100 (126)
Non-controlling interest 148 148
960 >100 22
Weighted average number of shares in issue (million) 1 456 2.3 1 423
Earnings per share (cents) 24.5 (55.1) 54.6
Headline earnings per share (cents) 26.9 (49.9) 53.7
Diluted earnings per share (cents) 24.4 (55.1) 54.4
Diluted headline earnings per share (cents) 26.8 (49.9) 53.5
Headline earnings (R'm)
Profit attributable to ordinary equity holders 357 777
Adjustments (net of tax)
Impairment of assets and investments 37 17
Profit on disposal of property, plant and equipment (3) (30)
Headline earnings 391 (48.8) 764
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 March 2019
31 March 30 September
2019 2018
Note R'm R'm
ASSETS
Non-current assets 31 229 30 558
Property, plant and equipment 12 338 12 243
Intangible assets 17 504 17 084
Other non-current assets 1 387 1 231
Current assets 9 047 8 584
Cash and cash equivalents 1 691 1 494
Other current assets 2 4 515 4 249
Asset classified as held for sale 2 841 2 841
Total assets 40 276 39 142
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 13 523 13 510
Reserves 1 499 1 406
Non-controlling interest 1 277 1 286
Total equity 16 299 16 202
LIABILITIES
Non-current liabilities 14 496 14 764
Interest-bearing borrowings 1 12 650 12 870
Other non-current liabilities 2 1 846 1 894
Current liabilities 9 481 8 176
Bank overdraft 1 710 488
Interest-bearing borrowings 1 3 017 3 086
Other current liabilities 2 4 754 4 602
Total liabilities 23 977 22 940
Total equity and liabilities 40 276 39 142
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the period ended 31 March 2019
Total
capital Non-
and controlling Total
reserves interest equity
R'm R'm R'm
Balance at 1 October 2018 (as previously reported) 14 916 1 286 16 202
Transition adjustment relating to IFRS 9 20 - 20
Balance at 1 October 2018 (restated) 14 936 1 286 16 222
Total comprehensive income for the period 812 148 960
Profit for the period 357 141 498
Other comprehensive income 455 7 462
Transactions with non-controlling interests (35) (7) (42)
Distributions to shareholders (734) (150) (884)
Share-based payment charge for staff benefit schemes 43 - 43
Balance at 31 March 2019 15 022 1 277 16 299
Balance at 1 October 2017 14 380 1 171 15 551
Total comprehensive (loss)/income for the period (126) 148 22
Profit for the period 777 160 937
Other comprehensive loss (903) (12) (915)
Issue of new shares as a result of scrip distribution 360 - 360
Transactions with non-controlling interests (107) 21 (86)
Distributions to shareholders (652) (150) (802)
Share-based payment charge for staff benefit schemes 46 - 46
Balance at 31 March 2018 13 901 1 190 15 091
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the period ended 31 March 2019
2019 % 2018
R'm change R'm
Cash generated from operations 2 591 (3.3) 2 679
Transaction costs paid (30) -
Interest received 13 26
Tax paid (477) (548)
Net cash from operating activities 2 097 (2.8) 2 157
Capital expenditure (925) (882)
Investments (net of cash acquired) and contingent
considerations paid (236) (24)
Other (97) (72)
Net cash utilised in investing activities (1 258) (978)
Proceeds from interest-bearing borrowings 2 076 5 102
Repayment of interest-bearing borrowings (2 610) (5 386)
Dividends paid (734) (292)
Finance costs paid (467) (519)
Other (153) (161)
Net cash utilised in financing activities (1 888) (1 256)
Net decrease in cash and cash equivalents (1 049) (77)
Cash and cash equivalents - beginning of the period 1 006 726
Effect of foreign currency rate movements 24 (141)
Cash and cash equivalents at end of the period 1 (19) 508
1 Cash and cash equivalents at end of the period are net of bank overdrafts.
SEGMENTAL INFORMATION
for the period ended 31 March 2019
The Group's segments are aligned to those business units that are evaluated regularly by the chief operating
decision maker (CODM) in deciding how to allocate resources and in assessing performance.
In southern Africa, the hospitals and complementary services segment comprises all the acute hospitals and
complementary services which include mental health, acute rehabilitation, renal dialysis and oncology.
The healthcare services segment comprises Life Esidimeni and Life Employee Health Solutions while growth
initiatives comprise new outpatient models and radiology.
International comprises diagnostic services, healthcare services (Scanmed) as well as growth initiatives,
which comprise product development, across Europe and United Kingdom.
Corporate is an additional non-operating segment.
The comparative information has been restated to adjust for the current change in the composition of the
reportable segments.
The operating businesses have been aggregated into different segments based on the similar nature of
products and services, similar economic characteristics, similar type of customers and operating in a
similar regulatory environment.
Inter-segment revenue of R2 million (2018: R2 million) is eliminated and relates to revenue between
Life Employee Health Solutions and the southern Africa business.
2019 2018
R'm R'm
Operating segments
Revenue 1
Southern Africa
Hospitals and complementary services 8 238 7 796
Healthcare services 609 568
International
Diagnostic services 2 742 2 315
Healthcare services 664 644
Growth initiatives 146 -
12 399 11 323
Normalised EBITDA 2
Southern Africa
Hospitals and complementary services 1 830 1 774
Healthcare services 70 71
Growth initiatives (10) -
International
Diagnostic services 628 518
Healthcare services 42 60
Growth initiatives (13) -
Corporate
Recoveries 625 602
Corporate before growth initiatives (421) (352)
Corporate growth initiatives (18) -
2 733 2 673
1 Revenue of approximately 23% (2018: 23%) is derived from one external customer. The revenue
is attributable to the southern Africa segment.
2 Life Healthcare defines normalised EBITDA as operating profit before depreciation on property,
plant and equipment, amortisation of intangible assets and non-trading-related costs or income.
2019 2018
R'm R'm
Depreciation
Southern Africa
Hospitals and complementary services (284) (261)
Healthcare services (8) (10)
International
Diagnostic services (266) (226)
Healthcare services (32) (29)
Growth initiatives (4) -
Corporate
Corporate before growth initiatives (24) (22)
Corporate growth initiatives (1) -
(619) (548)
EBITA 3
Southern Africa
Hospitals and complementary services 1 546 1 513
Healthcare services 62 61
Growth initiatives (10) -
International
Diagnostic services 362 292
Healthcare services 10 31
Growth initiatives (17) -
Corporate
Corporate before growth initiatives 180 228
Corporate growth initiatives (19) -
2 114 2 125
3 EBITA is defined as normalised EBITDA less depreciation.
Amortisation
Southern Africa
Hospitals and complementary services (55) (55)
International
Diagnostic services (203) (180)
Healthcare services (9) (10)
Growth initiatives (32) -
Corporate before growth initiatives (12) (10)
(311) (255)
Operating profit before items detailed below
Southern Africa
Hospitals and complementary services 1 491 1 458
Healthcare services 62 61
Growth initiatives (10) -
International
Diagnostic services 159 112
Healthcare services 1 21
Growth initiatives (49) -
Corporate
Corporate before growth initiatives 168 218
Corporate growth initiatives (19) -
1 803 1 870
Fair value adjustments to contingent consideration (38) -
Fair value loss on derivative financial instruments (370) (2)
Impairment of assets and investments (37) (17)
Profit on disposal of property, plant and equipment 4 39
Transaction costs (30) (8)
Other (2) -
Finance income 13 26
Finance costs (525) (488)
Share of associates' and joint ventures' net profit/(loss) after tax 4 (64)
Profit before tax 822 1 356
Operating profit before items detailed includes the segment's share of shared services and rental
costs. These costs are all at market-related rates.
31 March 30 September
2019 2018
R'm R'm
Total assets before items below
Southern Africa 13 256 12 998
International 22 877 22 078
36 133 35 076
Asset classified as held for sale 2 841 2 841
Employee benefit assets 390 401
Deferred tax assets 851 700
Derivative financial assets 6 100
Income tax receivable 55 24
Total assets per the balance sheet 40 276 39 142
Net debt
Southern Africa 8 445 8 018
International 7 241 6 932
15 686 14 950
Cash and cash equivalents (net of bank overdraft)
Southern Africa (1 089) (82)
International 1 070 1 088
(19) 1 006
Net debt is a key measure for the Group, which comprises all interest-bearing borrowings, overdraft
balances and cash on hand.
ACQUISITIONS AND DISPOSALS OF INVESTMENTS
Transactions with non-controlling interests
Increases and decreases in ownership interest in subsidiaries
The Group had marginal increases and decreases in its percentage shareholdings in some of its
southern Africa and Polish subsidiary companies due to transactions with minority shareholders.
The individual transactions are immaterial.
Business combinations
The following material acquisition took place during the current financial period.
European Scanning Centre
Limited (ESC)
Acquirer Alliance Medical
Country of incorporation United Kingdom
Acquisition date 21 December 2018
Percentage voting equity interest acquired 100%
Primary reasons for business combination This is in line with
Life Healthcare's
strategy to establish a
sizeable international
business, and complements
the Group's existing
diagnostic services segment
Qualitative factors that make up goodwill recognised Attributable to future earnings
potential and synergies
Contingent liabilities at acquisition None
Details of the fair values of net assets acquired and goodwill are as follows:
R'm ESC
Total purchase consideration (213)
Cash portion (195)
Contingent consideration 1 (18)
Fair value of net assets acquired 2 60
Property, plant and equipment 68
Trade and other receivables 17
Cash and cash equivalents 8
Interest-bearing borrowings (4)
Trade and other payables (29)
Goodwill (153)
1 Contingent consideration is based on performance and is expected to become payable between six to
12 months from the date of acquisition.
2 The fair values identified on acquisition are provisional and subject to further review.
R'm ESC
Cash outflow to acquire business, net of cash acquired
Initial cash consideration 195
Less: Cash at acquisition (8)
187
Impact on consolidated information from date of acquisition
Revenue 19
Net profit 7
Impact on consolidated information if business combination took place
on 1 October 2018 (six months)
Revenue 29
Net profit 10
NOTES
1. Interest-bearing borrowings
R'm
Balance at 30 September 2018 15 956
Proceeds from interest-bearing borrowings 1 576
Proceeds from preference shares 500
Repayment of interest-bearing borrowings (2 122)
Repayment of preference shares (488)
Arising on acquisition of subsidiary 4
Amortisation of debt raising fees capitalised 14
Other movements 58
Exchange differences 169
Balance at 31 March 2019 15 667
2. Financial instruments
Fair value
Other non-current liabilities, other current assets and liabilities as presented in the
statement of financial position, include contingent consideration liabilities and derivative
financial instruments (assets and liabilities) at fair value (through profit of loss).
The derivative assets and liabilities used for hedging, as presented in the statement of financial
position, are the financial assets and liabilities that are measured at fair value.
The fair values of quoted investments are based on current bid prices. If the market for a financial
asset is not active and for unlisted securities, the Group establishes fair value by using valuation
techniques. These include the use of recent arm's length transactions, reference to other instruments
that are substantially the same, discounted cash flow analysis and option pricing models, making
maximum use of market inputs and relying as little as possible on entity-specific inputs.
The Group's financial instruments held at fair value, are measured subsequent to their initial
recognition and are grouped into levels 1 to 3 based on the extent to which the fair values are
observable. All of the resulting fair value estimates for the derivative financial instruments used
for hedging are included in level 2. The contingent considerations are included in level 3. The fair
value of interest rate swaps is calculated as the mark-to-market valuation, which represents the
mid-market value of the instrument as determined by the financial institution at 31 March 2019.
The fair value of forward exchange contracts is determined using forward exchange rates at the
statement of financial position date, with the resulting value discounted back to the present value,
as determined by the financial institution at 31 March 2019.
There were no transfers between levels 1, 2 and 3 during the period.
Basis of presentation and accounting policies
The condensed consolidated interim financial statements contained in the interim report are prepared
in accordance with the requirements of the JSE Limited (JSE) Listings Requirements for preliminary
reports, and the requirements of the South African Companies Act No 71 of 2008 (as amended) applicable
to summary financial statements. The accounting policies are consistent with those applied in the
previous consolidated annual financial statements, except for the adoption of the new standards as
set out below. The Listings Requirements require preliminary 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 Financial
Pronouncements as issued by the Financial Reporting Standards Council and to also, as a minimum,
contain the information required by IAS 34 Interim Financial Reporting.
These interim financial results have been prepared under the supervision of PP van der Westhuizen (CA(SA)),
the Group Chief Financial Officer.
Unaudited results
The results for the period ended 31 March 2019 have not been reviewed or audited by the Group's auditors.
The directors take full responsibility for the preparation of the interim report.
New accounting standards
The Group has adopted IFRS 9 and IFRS 15 from 1 October 2018, and changed its accounting policies accordingly.
The Group elected not to restate any comparative information. The impact of adopting these new standards
has been applied retrospectively with an adjustment to the Group's opening retained earnings.
IFRS 15 Revenue from Contracts with Customers
All contracts within the Group have been assessed against the new standard, and the implementation does
not have an impact on the Group's recognition and measurement of revenue. Therefore, no adjustment to
opening retained earnings was required.
IFRS 9 Financial Instruments
IFRS 9 replaces the provisions of IAS 39 that relate to the recognition, classification and measurement
of financial assets and financial liabilities, derecognition of financial instruments, impairment of
financial assets and hedge accounting.
Classification and measurement
The Group currently carries the following financial assets – trade and other receivables, cash and cash
equivalents, other assets and derivative financial instruments. Trade and other receivables, as well as
other assets, are measured at amortised cost as the objective of the business model is to hold these
financial assets for the collection of the contractual cash flows, and the contractual cash flows
under the instrument represent payments of principal and interest. Reclassification is therefore not
required. Derivative financial assets are measured at fair value through profit or loss, and no
reclassification is required.
Impairment of financial assets
The Group was required to revise its impairment methodology under IFRS 9 for each class of financial
asset. The impact on the Group is a decrease in the provision for receivables of R20 million. The Group
applied the simplified approach to measure the expected credit losses (ECL) which uses a lifetime
expected loss allowance. The impact of the change on the Group's retained earnings is disclosed in
the table below. While cash and cash equivalents are also subject to the impairment requirements of
IFRS 9, the impairment loss will be immaterial.
The impact of the changes on the Group's retained earnings is as follows:
R'm
Opening balance as at 1 October 2018 (as previously reported) 1 569
Decrease in provision for receivables (under IFRS 9) 20
Opening balance as at 1 October 2018 (restated) 1 589
Transition
The Group has elected to apply the new standard retrospectively without restating comparatives, with
the impact recognised as an adjustment to opening retained earnings. As a result of the decrease in
the provision other current assets increased by R20 million.
Impact of standards issued but not yet applied by the Group
IFRS 16: The Group will adopt IFRS 16 Leases from 1 October 2019. Under the new standard, Life Healthcare
as lessee will recognise right-of-use assets and lease liabilities for all lease contracts (with limited
exceptions) on the statement of financial position. Property lease contracts have the most significant
impact on the Group. The assessment is ongoing and an update will be provided at year end. An initial
assessment was included in the previous consolidated annual financial statements.
COMMENTARY
Overview
Despite a challenging healthcare trading environment, our focus on operational excellence has delivered a
healthy overall performance. The Group experienced a positive six months for the period ended 31 March 2019,
with Group revenue growing by 9.5% while normalised Group EBITDA increased by 2.2%.
While we expect tough operating conditions to remain, we are optimistic about the Group's growth prospects
both in southern Africa and internationally. In South Africa, we are broadening our business lines across the
healthcare continuum. We are also engaging positively with government to explore ways to improve access to
quality healthcare in the country, and look forward to strengthening these efforts in the coming months.
Internationally, we are expanding our radiology product development business within Alliance Medical through
Life Molecular Imaging (LMI). We remain optimistic about our international business despite the uncertainty
posed by Brexit, as we have considered the potential business impact and implemented plans to mitigate
material risks.
To complement our growth focus, we have initiated several efficiency programmes for sustainability.
These include nursing optimisation, procurement, and a focus on cost of sales and other administrative costs.
In addition, we are progressing on our integration effort.
Operational review
Southern Africa
Southern Africa includes hospitals and complementary services, healthcare services and growth initiatives but
excludes corporate.
Revenue from southern Africa increased by 5.8% to R8.8 billion (2018: R8.4 billion). Revenue from hospitals
and complementary services grew by 5.7% mainly due to a 5.9% increase in revenue per paid patient day (PPD)
and a 0.3% decline in PPDs (2018: +2.0%). The increase in revenue per PPD is made up of a 5.1% tariff increase
and a 0.8% positive case mix change. The lower activity volumes are due to a quiet Q1 FY2019, ongoing
funder-managed care initiatives and lower admissions for respiratory diseases which commenced in H2 FY2018.
The overall weighted occupancy for the period decreased slightly to 67.7% (2018: 68.3%), with 41 brownfield
expansion beds being added. Complementary services continued to show good growth with revenue increasing by
7.7%. Healthcare services performed well due to new contracts gained by Life Employee Health Solutions.
Normalised EBITDA increased by 2.4% with an EBITDA margin of 21.4% for the period (2018: 22.1%). The EBITDA
margin was affected by the impact of lower activity on the operational leverage of the acute business,
increased growth in the healthcare services business at lower margins and investments in growth initiatives.
We continue to focus on efficiency initiatives covering nursing optimisation, procurement, cost of sales and
administrative costs to mitigate the impact. If the impact of the growth initiatives is excluded, normalised
EBITDA increased by 3.0%. We remain confident that these growth initiatives are key to our sustainability and
relevance, as they aim to broaden Life Healthcare's exposure across the healthcare continuum, and include
expanding the new outpatient models business and developing the diagnostic opportunity.
Quality remains of paramount importance for the Group, and we continue to focus on improving our quality
outcomes, with patient safety adverse events declining. In line with the our strategy to increase transparency
around quality outcomes, the southern Africa business became the first hospital group in South Africa to publish
quality scores on a per hospital basis from October 2018. These scores can be viewed on Life Healthcare's
website.
International
Diagnostic services' revenue grew by 18.4% to R2.7 billion (2018: R2.3 billion) driven by growth in PET-CT
scan volumes (up 17.2%), the acquisition of the Italian clinics during H2 FY2018, an acquisition of three
scanning facilities in the UK in the current period, and a solid underlying performance in Ireland. Normalised
EBITDA increased by 21.2% to R628 million (2018: R518 million) and comes off the back of continued operational
and clinical excellence and improved performance in the PET and mobile business in the UK. The normalised
EBITDA margin improved to 22.9% (2018: 22.4%) but was negatively impacted by supply challenges within our
radiopharmacy production units, resulting in increased costs. The results were positively impacted by
the weakening of the rand against the pound sterling and euro.
Healthcare services' (Scanmed) revenue for the period increased by 3.1% to R664 million (2018: R644 million).
Normalised EBITDA decreased to R42 million (2018: R60 million) resulting in the normalised EBITDA margin
decreasing to 6.3% (2018: 9.3%). Healthcare services' performance was impacted by reduced overquota referrals
in H1 FY2019, increased competition in orthopaedics and costs relating to IT automation projects and the
strengthening of the management team.
LMI (formerly Piramal Imaging), our primary international growth initiative, performed better than expected
and contributed revenue of R146 million and a normalised EBITDA loss of R13 million.
Corporate
Corporate was impacted by the additional cost of human resource capacity created at a Group level to support
the growth initiatives in South Africa and internationally. A number of efficiency programmes have been
initiated which are expected to result in future efficiency gains, and in addition the Group has invested
in data analytics capabilities to assist in delivering growth initiatives.
Sale of equity investment in Max Healthcare Institute Limited (Max)
The disposal of Max is expected to conclude by the end of June 2019 and funds are expected to flow by
financial year end. The results for the period include the impact of the mark-to-market loss on the
foreign exchange option contracts, taken out to protect the proceeds. These option contracts resulted in
a loss of R256 million, net of tax. The loss will be offset by the higher proceeds and related profit
on the disposal.
Financial performance
Group revenue increased by 9.5% to R12.4 billion (2018: R11.3 billion) consisting of a 5.8% increase in
southern African revenue to R8.8 billion (2018: R8.4 billion); and a 20.0% increase in international revenue to
R3.6 billion (2018: R3.0 billion).
Normalised EBITDA increased by 2.2% to R2.73 billion (2018: R2.67 billion).
Normalised EBITDA was impacted by tough trading conditions and investments in growth initiatives. Normalised
EBITDA excluding growth initiatives increased by 3.8%.
2019 % 2018
R'm change R'm
Normalised EBITDA
Operating profit 1 803 (3.6) 1 870
Depreciation on property, plant and equipment 619 13.0 548
Amortisation of intangible assets 311 22.0 255
Normalised EBITDA 2 733 2.2 2 673
Southern Africa 1 890 2.4 1 845
International 657 13.7 578
Corporate 186 (25.6) 250
Growth initiatives (South Africa and international) 41 -
Normalised EBITDA excluding growth initiatives 2 774 3.8 2 673
Cash flow
The Group produced good cash flows from operations and continues to anticipate positive free cash flow.
Financial position
Net debt to normalised EBITDA as at 31 March 2019 was 2.83 times (30 September 2018: 2.73 times).
The banks' covenant for net debt to EBITDA is 3.50 times.
Capital expenditure
During the current financial period, Life Healthcare invested approximately R1.2 billion (2018: R1.0 billion),
comprised mainly of capital projects of R925 million (2018: R882 million) and a new acquisition (net of cash
acquired) by Alliance Medical of R187 million. The maintenance capex for the period was R527 million
(2018: R309 million).
Headline earnings per share (HEPS) and normalised earnings per share (EPS)
HEPS decreased by 49.9% to 26.9 cps (2018: 53.7 cps). EPS on a normalised basis, which excludes
non-trading-related items listed below, decreased by 9.4% to 49.1 cps (2018: 54.2 cps). The presentation
of normalised earnings is a non-IFRS measure.
EPS and HEPS have been negatively impacted by the mark-to-market loss of R256 million (net of tax) on the
Max foreign exchange option contracts, diluting EPS and HEPS by 17.6 cps.
2019 % 2018
R'm change R'm
Weighted average number of shares in issue (million) 1 456 2.3 1 423
Normalised earnings
Profit attributable to ordinary equity holders 357 777
Adjustments (net of tax)
Fair value adjustments to contingent consideration 38 -
Fair value loss on Max foreign exchange option contracts 256 -
Impairment of assets and investments 37 17
Profit on disposal of property, plant and equipment (3) (30)
Transaction costs 30 8
Other 1 -
Normalised earnings 716 (7.3) 772
Normalised EPS (cents) 49.1 (9.4) 54.2
Normalised EPS was impacted by the investments in growth initiatives and by the additional cost
of human resource capacity at Group level to support the growth initiatives. Normalised EPS
excluding the current losses on these initiatives is 54.0 cents, which is in line with the
prior period.
Changes to board of directors
There have been no changes to the board of directors for the period ended 31 March 2019.
Cash dividend declaration
The board approved an interim gross cash dividend of 40 cents per ordinary share for the period ended
31 March 2019. The dividend has been declared from income reserves. A dividend withholding tax of 20% will
be applicable to all shareholders not exempt therefrom, after deduction of which the net cash dividend is
32 cents per share.
The Company's total number of issued ordinary shares is 1 467 349 162 as at 29 May 2019.
The Company's income tax reference number is 9387/307/15/1.
In compliance with the requirements of the JSE, the following salient dates are applicable:
Last date to trade cum dividend Tuesday, 18 June 2019
Shares trade ex the dividend Wednesday, 19 June 2019
Record date Friday, 21 June 2019
Payment date Monday, 24 June 2019
Share certificates may not be dematerialised or rematerialised between Wednesday, 19 June 2019 and
Friday, 21 June 2019, both days inclusive.
Outlook
Southern Africa
Based on current trends we expect H2 FY2019 PPD growth to be marginally positive. The Group will
continue to take a cautious approach with regard to bed expansion, adding a further 80 mental health
beds. Organic capex for the year is expected at approximately R1.1 billion. We will continue to focus
on improving clinical quality and delivering value via our operational efficiency programmes.
International
Diagnostic services will complete the roll-out of the PET 2 contract and continue to roll-out integrated
diagnostic centres (IDCs) through signing additional long-term contracts. We expect continued good growth
in PET-CT volumes. The Italian operations will focus on growing the clinic business through acquisitions
and consolidation of certain clinics. Capex for the year is expected at approximately R1.1 billion.
Scanmed will continue to focus on aligning its business to best operating practices, and driving further
efficiencies to manage costs. Capex for the year is expected at approximately R87 million.
Growth initiatives
The Group will invest further into its growth initiatives (new outpatient models, radiology and LMI).
Trading statement for the 12 months ending 30 September 2019
Life Healthcare's results for the 12 months ending 30 September 2019 are expected to show an increase of
more than 20% in EPS (minimum increase of 21.7 cps to at least 130.3 cps) from those reported for the
financial year ended 30 September 2018 (EPS: 108.6 cps). This is primarily due to the impact of the
expected disposal of Life Healthcare's equity investment in Max by the financial year end.
A detailed trading statement will be released in early November 2019. The forecast financial information
on which this trading statement is based has not been reviewed and reported on by the Group's external
auditors.
Shareholders are advised that the investor presentation for the six months ended 31 March 2019 is published
on Life Healthcare's website (www.lifehealthcare.co.za).
Thanks
The contribution of the doctors, nurses and employees of Life Healthcare have greatly enhanced the quality
of our performance. We thank them for their contributions.
Approved by the board of directors on 29 May 2019 and signed on its behalf:
Mustaq Brey Shrey Viranna
Chairman Group Chief Executive Officer
ADMINISTRATION
Executive directors
SB Viranna (Group Chief Executive Officer)
PP van der Westhuizen (Group Chief Financial Officer)
Non-executive directors
MA Brey (Chairman), PJ Golesworthy, ME Jacobs,
AM Mothupi, JK Netshitenzhe, MP Ngatane,
M Sello, GC Solomon, RT Vice
Company secretary
A Parboosing
Registered office
Oxford Manor, 21 Chaplin Road, Illovo
Private Bag X13, Northlands 2116
Sponsors: Rand Merchant Bank, a division of FirstRand Bank Limited
Date: 30 May 2019
Note regarding forward-looking statements
Any forward-looking statements or projections made by the Company, including those made in this
announcement, are subject to risk and uncertainties that may cause actual results to differ
materially from those projected.
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