31 December 2016 (Presentation done in South African rand) We - - PowerPoint PPT Presentation

Group unaudited financial results for the six months ended

31 December 2016

(Presentation done in South African rand)

We develop and manage day hospitals in South Africa and Australia

22 February 2017 l 23 February 2017 Johannesburg l Cape Town

Welcome Highlights Carl Grillenberger Financial performance Carel Snyman Australia Marc Resnik South Africa Management Industry overview Carl Grillenberger Questions

Highlights Carl Grillenberger

Financial

0% 50% 100% 150% 200% 250% Aus SA Total 24% 175% 45% 11% 207% 60%

Increase %

Turnover Patient Numbers

• 20 000

40 000 60 000 80 000 100 000 120 000 140 000 160 000 Aus SA Total 110 261 39 490 149 751 89 220 14 343 103 563

Turnover R'000

Dec 16 Dec 15 20 40 60 80 100 Dec 16 Dec 15 74 83 26 17

Segmental turnover contribution

Target 50 : 50

Aus SA

Operational

South Africa

• Ten operational day hospitals, target of 20 by 2020 achievable.
• Growing medical-schemes support.
• Increasing healthcare partners’ participation.

Australia

• Four operational day hospitals.
• Flagship Chatswood Private Hospital: Associate membership of World

Association of Eye Hospitals.

• Target of six day hospitals by 2020 achievable.

Financial Carel Snyman

Exchange rate fluctuations

Impossible to forecast the exchange rates. The average rate from June’16 to December’16 remained consistent but weakened in comparison to December’15. A weakening in exchange rates has a positive impact on the profits realised in Australia. The closing rate strengthened in comparison to both December’15 and June’16 impacting negatively

• n the Australian figures.

An strengthening in exchange rates has a positive impact

• n

the equipment prices for the South African

• perations.

Description Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Average Rate 9.46 9.55 9.83 10.56 10.56 Closing Rate 9.47 9.41 11.24 11.13 9.86 Budget 10.82 10.82 10.00 10.00 10.00

Statement of financial position: 31st December 2016

¹ Property, plant and equipment increased due to additional equipment purchased. ² Increase in deferred tax due to losses incurred in the South African operations. ³ Included in trade and other receivables are amounts due from the South African Revenue Services for Value Added Tax - Advanced De La Vie: R2mil, Advanced Worcester R1,8mil and Advanced Vergelegen R1,9. Subsequent to the reporting date the full refund for Advanced Vergelegen was received.

Dec 2016 Dec 2015 June 2016 Unaudited Unaudited Audited R'000 R'000 R'000 Assets Non-current Assets 337 254 242 909 329 078 Property, plant and equipment ¹ 253 669 182 340 251 317 Goodwill 26 487 28 054 28 561 Intangible assets 29 073 28 881 28 333 Other financial assets 6 391

• 7 789

Deferred taxation ² 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 ₃ 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

Statement of financial position: 31st December 2016

¹ The FCTR variance is due to the

Rand strengthening against the Australian Dollar. Closing rate at 31 December’16 – 9,86 vs. a closing rate of 11,13 as at 30 June’16. ² Other financial liabilities include loans from our major shareholder

• f R66 mil and ABSA Bank of

R52mil. ³ Finance leases include a lease from the Bank of Queensland to the value of R24 mil. ⁴ The decrease in the trade payable figure compared to 30 June’16 is due to a decrease in the purchase

• f

capital equipment during the period under review.

Dec 2016 Dec 2015 June 2016 Unaudited Unaudited Audited R'000 R'000 R'000 Equity and Liabilities Capital and Reserves 164 622 223 218 199 191 Stated capital 137 378 137 378 137 378 Foreign currency translation reserve ¹ 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 210 617 272 002 243 491 Non-current Liabilities 154 652 72 940 112 660 Other financial liabilities ₂ 116 244 65 478 71 169 Finance lease obligations ₃ 32 846 381 31 701 Operating lease liability 5 338 1 560 6 947 Provisions 94 2 526 2 013 Deferred tax 130 2 995 830 Current Liabilities 59 339 53 442 82 796 Other financial liabilities ₂ 9 603 8 458 9 240 Finance lease obligations ₃ 4 366 1 682 7 823 Trade and other payables ₄ 29 862 34 959 51 303 Operating lease liability 3 696

• 1 175

Provisions 3 092 2 023 3 688 Current tax liability 8 720 6 320 9 567 Total Equity and Liabilities 424 608 398 384 438 947

Statement of comprehensive income: 31st December 2016

¹ Revenue increased due to higher activities and more facilities becoming

• perational.

² Gross profit percentage in line with the previous periods. ³ Other

• perating

expenses are impacted by additional facilities becoming operational. ⁴ Decrease in investment income due to cash utilised in the financing of the new facilities rather than being invested. ⁵ Finance costs increased as a result of the increase in loans. ⁶ Increase in depreciation is due to new equipment brought into use. ⁷ Other comprehensive income consists

• f foreign currency translation. The

Rand strengthened against the Australian Dollar. 6 months 6 months 12 months Dec 2016 Dec 2015 June 2016 Unaudited Unaudited Audited R'000 R'000 R'000 Revenue ₁ 149 751 103 563 241 192 Cost of sales (74 651) (47 266) (118 430) Gross profit ₂ 75 100 56 297 122 762 Other income 581 163 207 Other operating expenses ₃ (88 808) (48 741) (127 397) EBITDA (13 127) 7 719 (4 428) Investment income ₄ 290 2 107 2 881 Finance costs ₅ (6 255) (916) (4 531) Depreciation ₆ (12 636) (5 461) (16 152) (Loss) / Profit before taxation (31 728) 3 449 (22 230) Taxation 9 048 (1 067) 6 501 (Loss) / Profit after taxation (22 680) 2 382 (15 729) Other comprehensive income/(expense) for the period ₇ (13 202) 24 411 14 506 (35 882) 26 793 (1 223) Total comprehensive (expense) / income for the period

Statement of comprehensive income: 31st December 2016

6 months 6 months 12 months Dec 2016 Dec 2015 June 2016 Unaudited Unaudited Audited R'000 R'000 R'000 (Loss) / Profit attributable to: Owners of the parent (23 311) 925 (18 311) Non-controlling interest 631 1 457 2 582 (22 680) 2 382 (15 729) Total comprehensive (loss) / profit attributable to: Owners of the parent (35 793) 19 935 (5 164) Non-controlling interest (89) 6 858 3 941 (35 882) 26 793 (1 223)

Condensed statement of cash flows: 31st December 2016

Cash outflow from operating activities of R22 mil. Investment activities resulted in a cash outflow of R29 mil. Above cash outflows were financed by means of loans to the value of R52 mil.

Dec Dec Jun 2016 2015 2016 R'000 R'000 R'000 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 the beginning of the period 52 844 115 274 115 274 Effect of translation of foreign operations (3 492) 11 486 6 572 Cash and cash equivalents at the end of the period 50 041 115 458 52 844

Financial ratio’s

¹ The increase in the gearing percentage is due to the increase in the

• ther liabilities and the increase in finance leases.

6 months 6 Months Unaudited Unaudited Audited Dec 2016 Dec 2015 June 2016 Quick ratio 1.32 2.67 1.22 Current ratio 1.47 2.79 1.33 Gearing % ¹ 81.56 23.34 53.18 HEPS (cps) (10.52) 0.51 (8.02) Weighted average shares ('000) 221 615 221 615 221 615

Segmental reporting

The South African

• perations

incurred start-up losses for the new facilities that became operational. The Australian

• perations

generated profits close to R3 mil. The number of cases generated in South Africa increased due to the increased activities and now constitute 48% of the total cases generated by the Group. Due to exchange rate fluctuations and higher activities the South African operations contributed 26%

• f the revenue for the period under
• review. The South African revenue

generated during the 2016 financial year was 17% of the total Group revenue.

Revenue (R'000) PAT (R'000) % Revenue of Total

Dec 2016

110 261 2 914 74% 39 490 (25 594) 26% Australia (PMA) South Africa Group Total 149 751 (22 680) 100%

Australia Marc Resnik

Australia

Presmed Australia (PMA): Leading day hospital company, establishes and manages day hospitals. Four day hospitals in Australia:

• Ophthalmic Surgery Centre (OSC)
• Epping Surgery Centre (ESC)
• Central Coast Surgery Centre (CCDH)
• Sydney ENT (SENT), Sydney’s only ENT-specific Day Hospital.
• Merged SENT with the OSC to establish Chatswood Private Hospital

(CPH) as Australia’s largest day hospital. Management contract Laser Vision Clinic Central Coast (LVCCC). Associate Membership to the World Association of Eye Hospitals granted to CPH, a first for private hospital provider in Australia.

Australia

CPH Year one: continues to grow, 59 accredited surgeons, patient numbers increasing, expanded into surgery disciplines of plastic, dental and OMF. ESC Year 12, 18 accredited surgeons, considering expansion into dental, OMF. CCDH Continued growth, 13

• f the 14 ophthalmologists

in the CC area, introduced OMF.

ESC CPH LVCCC CCDH

Epping Chatswood Central Coast

OSC SENT

Australia

Facilities strategy

• Driving up patient numbers through attracting doctor support, whilst

maintaining the highest levels of patient excellence.

• Expanding the portfolio through the several opportunities in discussion.
• Achieving a first in Australia by providing specific peer-to-peer clinical

teaching interventions between referrers and doctor specialists.

• Continuing to drive business concerns, ensuring ongoing

cost controls are met and efficient cash collections remain in place.

Australia

Investment opportunities

• An ophthalmic-specific day hospital with 11 accredited surgeons and

strong earnings.

• A day hospital in a sought-after location in the heart of a business

district, surrounded by ophthalmic, plastic and dermatologist surgeons, adjacent to a large shopping mall.

• A day-hospital management group with six facilities across Australia.
• Two endoscopic-specific day hospitals with 14 surgeons in the north of

Sydney and 11 surgeons in the east of Sydney.

South Africa Operational management

Present

• Eight new day hospitals developed and commissioned.
• Ten day hospitals fully operational January 2017 (Gauteng,

Western Cape and Mpumalanga) Future possibilities

• Western Cape
• Gauteng
• KwaZulu-Natal

Other provinces under discussion

• Limpopo
• Mpumalanga
• Free State

South African operations

South African operations

Jul Aug Sep Oct ' 2015 Nov Dec Jan Feb Mar Apr May Jun ' 2016 Jul Aug Sep Oct Nov Dec Jan '2017 Feb Mar Apr May Jun

Advanced Health South Africa - Theatre cases

Actual / Target

Operational focus Increase patient numbers and specialist participation by:



encouraging more medical-scheme support centrally;



marketing the day-hospital concept locally and centrally; and



living our service mantra of working:

 as a team, from the heart, and  in partnership with participating doctors,  to achieve patient satisfaction.

South African operations

Patient feedback in a nutshell

• “Entire team was welcoming and friendly.”
• “Never thought I’d say this: It was a delightful experience.”
• “What a lovely hospital with remarkable staff.”
• “Fresh approach to healthcare, great business model for the future.”

Doctor feedback focus on facilities and service:

• “A brilliant first list in a new, world-class facility with state-of-the-art

equipment and superb staff.”

• “My patients and I are very happy and I plan to increase admissions and
• procedures. Management acts on specialist treatment requests, without

bureaucratic delays. Nursing is focused on patient needs. Architecture, design and trendy interiors substantiates the impression of service excellence. They maintain a two-way communication system based on trust with specialists and patients.”

South African operations

Industry overview Carl Grillenberger

The day-hospital concept in South Africa is gaining ground because

• f:
• Cost considerations:
• Competition Commission, medical schemes, private patients;
• State-of-the-art equipment;
• High standards of service:
• Specialists
• Patients

The introduction of new medical-scheme benefits as from January 2017 saw an acceleration in day-hospital utilisation. More than 70% of surgical procedures performed as same-day cases in acute hospitals can be channeled to a day hospital.

Industry

Discovery day-surgery remuneration for 2017

“Day-surgery facilities offer medical scheme members an option for safe, convenient care in cost-effective settings for the relevant procedures. We would like to remind you about the day-surgery benefit that offers you preferential remuneration when you perform procedures in such units. Any willing surgeon who performs a procedure in a day-surgery facility will benefit from a significant increase in their chosen direct payment arrangement rate:”

Medical schemes

Gems Promotion of “Day Case” Procedures

“We have identified that a significant percentage of surgical and other procedures can be performed safely and efficiently on an outpatient basis. These procedures currently take place on an inpatient basis in traditional, acute hospitals and the associated costs are far greater than what

• utpatient services would dictate.

Outpatient-based procedures are known to be cost effective and are encouraged in principle. “ Please contact us by using the following details: Email: enquiries@gems.gov.za

Medical schemes

Advantages as summarised by Medscheme to doctors

• “The percentage elective cases done as same-day cases in day clinics and

acute hospitals combined was 43%, while the percentage same-day cases done in day clinics was a mere 12%.”

• “It is more cost-effective to have certain elective procedures done at day

clinics.”

• “A cost per event cost comparison between day clinics and acute

hospitals shows that it is 4% more cost-effective in day clinics. If cataract and lens procedures are excluded, the differential increases to 13%.” “Possible reasons for low day clinic utilisation in South Africa It might be that the fact that there is no clear understanding in the market of the vast role of day clinics or what they have contributed to the significant difference between the South African experience and the international experience.”

South African Operations: Why day hospitals?

Planned capital raising

Objectives:

• Raise R100 million in the form of a rights issue together

with a BEE investment of a further R100 million.

• Secure support from a BEE partner to acquire a 25.1%

interest in Advanced Health Limited.

• The BEE consortium will include supporting doctors.
• Capital raising to be implemented during the second

quarter of 2017.

Disclaimer

• Statements contained throughout this presentation regarding the prospects of the group have not been

reviewed or reported on by die group’s external auditors.

• Forward-looking statements involve known and unknown risks, uncertainties and other important factors that

could cause the actual results, performance or achievements of the company to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. These forward looking statements may be identified by word such as “expect, believe, anticipate, plan, estimate, intend, project, target, predict, outlook” and words of similar meeting.

• Forward looking statements are not statements of fact but statements by management of Advanced Health

Limited based on its current estimates, projections, beliefs, assumptions and expectations regarding the group’s future performance.

• No assurance can be given that forward-looking statements will prove to be correct and undue reliance should

not be placed on such statements.

• The risks and uncertainties inherent in the forward-looking statements contained in this presentation include,

but are not limited to; domestic and international business and market conditions; changes in the domestic or international regulatory and legislative environment in the countries in which the Group operates; changes to domestic and international operational, economic, political and social risks; changes to IFRS and the interpretations, applications and practices subject thereto as they apply to past, present and future periods; and the effects of both current and future litigation.

• The company undertakes no obligation to update publically or release any revisions to these forward-looking

statements contained in this presentation and does not assume responsibility for any loss or damage whatsoever and howsoever arising as a result of the reliance of any part thereon, including, but not limited to, loss of earnings, profits or consequential loss or damage.