NETCARE LIMITED Unaudited Interim Group Results - for the six months ended 31 March 2021
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NETCARE LIMITED Unaudited Interim Group Results for the six months ended 31 March 2021
Overview 1
Emergence of a more contagious COVID-19
variant resulted in 2nd wave
More efficient bed allocation despite
2 higher volume of COVID-19 patients
admitted
Netcare front line worker vaccinations
3 nearing completion
4 Resilient medical aid membership
5 Key strategic projects back on track
Strong recovery in H1 2021 against
6 H2 2020
NETCARE LIMITED
7 Raised first Green Bond in Africa
2
Financial Overview
CASH &
ADJUSTED NET DEBT/ INTERIM
REVENUE EBITDA COMMITTED
HEPS EBITDA DIVIDEND
FACILITIES
R10 081m R1 493m 27.3 cents 2.0x R6.6bn Suspension
H1 2020:▼ 5.9% H1 2020:▼ 36.7% H1 2020: ▼ 61.9% H1 2020: 1.3x of interim
dividend
H2 2020:▲ 24.0% H2 2020: ▲654.0% H2 2020: ▲169.6% H2 2020: 2.5x
NETCARE LIMITED
3
Operational
Overview
NETCARE LIMITED
4
Key activity drivers
TOTAL ACUTE MENTAL ACUTE
PATIENT HOSPITAL1 HEALTH2 PRIMARY HOSPITAL1
DAYS PATIENT DAYS PATIENT DAYS CARE VISITS 3 OCCUPANCY 4
H1 2021 vs. H1 2020
▼ 13.6% ▼ 13.7% ▼ 12.6% ▼11.8%
Full week: 53.8%
(H1 2020: 62.3%)
(H2 2020: 42.8%)
H1 2021 vs. H2 2020 Weekday: 57.1%
(H1 2020: 67.5%)
(H2 2020: 45.1%)
▲ 26.2% ▲ 24.4% ▲ 46.9% ▲ 18.6%
NETCARE LIMITED
1. Excluding Port Alfred and Settlers hospitals | 2. Akeso clinics | 3. Like-for-like basis | 4. Based on beds in use
5
6 months ended
31 Mar 31 Mar 30 Sep
Rm 2021 2020 % 2020 %
FINANCIAL PERFORMANCE Revenue 9 794 10 380 (5.6) 7 870 24.4
Hospital and
EBITDA ¹ 1 439 2 285 (37.0) 180 699.4
emergency
Operating profit/(loss) ¹ 905 1 765 (48.7) (362) 350.0
services
EBITDA margin (%) 14.7 22.0 2.3
Operating profit margin (%) 9.2 17.0 (4.6)
MARGIN REVENUE
18.9% EBITDA margin excluding: Acute hospitals:
• COVID-19 additional operating costs: • H1 2020: ▼ 5.6%
R316m • H2 2020: ▲ 25.0%
• Strategic investment cost: R96m
Mental health revenue:
• H1 2020: ▼ 12.0%
• H2 2020: ▲ 48.2%
NETCARE LIMITED
1. Normalised to exclude 2020 exceptional items
6
Acute hospital patient days
Pre-national National Level 5 Level 4 Level 3 Level 2 Level 1 Level 3 Level 1
disaster disaster Lockdown Lockdown Lockdown Lockdown Lockdown Lockdown Lockdown
October March July September January March
2019 2020 2020 2020 2021 2021
NETCARE LIMITED
H1 2020 H2 2020 H1 2021
Non-COVID-19 COVID-19
7
Total acute patient day trend during pandemic
250 000 150%
104%
93% 90%
77% 80% 82% 100%
73% 68% 73%
200 000 63%
51% 54%
50%
150 000
0%
-50%
100 000
-100%
50 000
-150%
- -200%
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
NETCARE LIMITED
FY 2020 FY 2021
Non-COVID-19 COVID-19 % of prior year
8
6 months ended
31 Mar 31 Mar 30 Sep
Rm 2021 2020 % 2020 %
FINANCIAL PERFORMANCE
Revenue 293 342 (14.3) 269 8.9
Primary EBITDA 54 75 (28.0) 18 200.0
Care Operating profit/(loss) 10 22 (54.5) (32) 131.3
EBITDA margin (%) 18.4 21.9 6.7
Operating profit margin (%) 3.4 6.4 (11.9)
REVENUE EBITDA PATIENT VISITS
225 000
Lower patient Strong recovery 180 000
visits and in activity and
occupational stringent cost
135 000
health contract management
90 000
revenue vs. assisted H1 2021 45 000
H1 2020 due to performance '-
November
December
April
October
January
March
May
February
June
July
September
August
COVID-19
NETCARE LIMITED
2019 2020 2021
9
Update on
COVID-19
NETCARE LIMITED
10COVID-19
1 2 3
73 379 COVID-19 26% of patients 39% higher patient
impact on patients treated
44% (32 197) of
admitted to hospital
required High Care
admissions during
H1 2021 vs. FY 2020
our business
or Intensive Care
these patients treatment
admitted to our
hospitals 3 396 patients in
hospital at peak of
2nd wave
4 5 6
±60% of total beds Elective surgery 76 frontline
allocated to suspended in healthcare heroes
COVID-19 patients December 2020 and sacrificed their lives
at peak of 2nd resumed in
wave vs. ±80% at February 2021, only
peak of 1st wave allowing for
medically necessary
NETCARE LIMITED
and time-sensitive
surgeries
11Percentage of beds dedicated to COVID-19 patients
100%
90%
80%
70%
60%
% of beds
50%
80% of
40%
capacity
at peak of
1st wave 60% of
30% capacity
at peak of
2nd wave
20%
10%
0%
June July January May
2020 2020 2021 2021
NETCARE LIMITED
Red zone: COVID-19 Yellow zone: Patients undergoing Green zone: COVID-19 free
positive patients investigation for COVID-19 patients
12Vaccination of Netcare’s frontline
workers near complete
1 2 3
Most Netcare frontline Sisonke J&J vaccination Preparation for Phase 2
healthcare workers programme: public vaccination
vaccinated based on a programme:
65 000 vaccines
risk stratification administered to SA’s o Hospital sites
prioritisation plan healthcare workers
o 30 Medicross sites
across 4 Netcare
vaccination sites during o Occupational Health
Phase 1a sites
Completion of
healthcare worker
vaccination with Pfizer
NETCARE LIMITED
vaccine
13In the midst of COVID-19, tragedy struck …
On 21 January 2021, Netcare 1,
Netcare 911’s emergency rescue
helicopter crashed on route to
KwaZulu-Natal
The ECMO1 team from Netcare Milpark
Hospital, a Netcare 911 paramedic and
the pilot tragically lost their lives
We express our heartfelt and sincere
condolences to all who lost their loved
NETCARE LIMITED
ones in this tragic accident
1. Extracorporeal Membrane Oxygenation (ECMO)
14Financial
Review
NETCARE LIMITED
15Group Financial
Overview 1
Second wave of COVID-19 adversely
impacted financial performance for
H1 2021
Steadily improving performance led to
2 strong growth against H2 2020
Statement of financial position remains
3 strong allowing ongoing investment in
key strategic projects
Improved net debt position and R6.6bn
4 of cash and committed undrawn facilities
available
NETCARE LIMITED
16Estimated impact
of COVID-19
during H1 2021
01 02 03 04
EBITDA impact Additional Rental1 and Impact on
of decline in operational costs parking income capex:
patient days: incurred: foregone: .
±R700m R316m R23m R29m
NETCARE LIMITED
1. Including: doctors’ rooms, imaging and diagnostics, coffee shops and
retail pharmacies
17Recovering Revenue (Rm) EBITDA (Rm)
performance
10 713
10 081
(24.1)%
24.0%
8 130
half on half 2 360
1 493
(91.6)%
654.0%
198
H1 2020 H2 2020 H1 2021 H1 2020 H2 2020 H1 2021
Operating profit/(loss) (Rm) Net debt (Rm)
6 423
3.1%
1 787
6 231 (5.5)%
(122.0)% 915 6 072
332.2%
(394)
NETCARE LIMITED
H1 2020 H2 2020 H1 2021
H1 2020 H2 2020 H1 2021
18Summarised Group statement of profit or loss
6 months ended
REVENUE
31 Mar 31 Mar 30 Sep
Rm 2021 2020 % 2020 % • H1 2021 and H2 2020 impacted by
COVID-19
Revenue 10 081 10 713 (5.9) 8 130 24.0
• H1 2020 largely free of COVID-19
EBITDA ¹ 1 493 2 360 (36.7) 198 654.0
Operating profit/(loss) ¹ 915 1 787 (48.8) (394) 332.2
EBITDA
Other net financial expenses (206) (241) (281) • R22m CareOn costs
Interest on lease liability (186) (185) (186) • R10m on development of data
platform and analytics capabilities
Earnings of associates and JVs 19 26 30
• R64m on new business development
Profit/(loss) before taxation ¹ 542 1 387 (60.9) (831) 165.2
Taxation (167) (404) 161
OTHER NET FINANCIAL
Profit/(loss) after taxation¹ 375 983 (61.9) (670) 156.0 EXPENSES
Exceptional items – net of taxation: • Higher average debt levels at lower
average cost of debt
Profit on disposal of investment in associate 474
Share-based payment expense on B-BBEE transaction (348)
NETCARE LIMITED
TAXATION
Profit/(loss) for the period 375 635 (196) • Effective tax rate 30.8%
(H1 2020: 29.1%)
1. Normalised to exclude impact of 2020 exceptional items, comprising once-off non-cash share-based payment expense on B-BBEE transaction and net
profit on disposal of associate
19Headline earnings per
share (HEPS)
6 months ended
31 Mar 31 Mar 30 Sep
Cents per share 2021 2020 % 2020 %
HEPS 26.6 44.0 (39.5) (47.6) 155.9
Adjusted HEPS 27.3 71.7 (61.9) (39.2) 169.6
Adjusted HEPS (cents)
71.7
27.3
NETCARE LIMITED
(39.2)
H1 2020 H2 2020 H1 2021
20Summarised Group statement of financial position
31 Mar 30 Sep
Rm 2021 2020
1
Assets PPE , GOODWILL AND
INTANGIBLE ASSETS
PPE 1, goodwill and intangible assets 14 532 14 469
• Capex of R473m (2020: R451m)
Right of use assets 3 593 3 755
- Expansion R201m
Other non-current assets 1 740 1 670 (2020: R142m)
Current assets 4 758 4 600 - Replacement R272m
(2020: R309m)
Cash and cash equivalents 2 413 1 450
Total assets 27 036 25 944
WORKING CAPITAL
Equity and liabilities • ▼ R282m inventory holdings
Total shareholders’ equity 10 207 9 799
Borrowings 8 485 7 873
Lease liabilities 3 989 4 045 TOTAL SHAREHOLDERS’ EQUITY
NETCARE LIMITED
Other liabilities 4 355 4 227 • ▲ R408m from improved trading
Total equity and liabilities 27 036 25 944
1. Property, Plant and Equipment
21Debt position
31 Mar 31 Mar 30 Sep
Rm 2021 2020 2020
Gross debt 8 485 8 195 7 873
GCR CREDIT RATING
Cash (2 413) (1 964) (1 450) • Long term AA-
• Short term A1+
Net debt 6 072 6 231 6 423
Net debt to EBITDA ¹ (times) 2.0 1.3 2.5
• Bank covenant waivers secured for
Cost of debt (%) 6.1 7.9 6.4 31 March 2021
• 44% of borrowings at fixed rates
Net interest expense:
Other net interest expense 209 240 504
AFRICA’S FIRST GREEN BOND
Interest on lease liability 186 185 371
• R1.0bn raised from issue of ESG Bond
395 425 875 in March 2021
• To be used to refinance maturing debt
NETCARE LIMITED
• Neutral impact on net debt
Interest cover ¹ (times) 2.3 4.2 1.6
1. Normalised to exclude 2020 impact of exceptional items, comprising once-off non-cash share-based payment expense on B-BBEE transaction and net profit on disposal of associate
22Debt facilities
Cash and debt facilities Debt maturity profile (Rm)
31 March 2021 (Rm)
2 823
1 655
2 413
2 122
1 585
1 222
4 155
715
Uncommitted
Cash
facilities
NETCARE LIMITED
Committed
H2 2021 FY 2022 FY 2023 FY 2024 FY 2025
facilities
23Selective CAPEX 1 2 3
investment in New Netcare
Alberton Hospital:
Akeso
Richards Bay:
Akeso
Gqeberha:
FY2021 427 beds for
completion
36 beds for
completion
72 beds for
completion
April 2022 September 2021 September 2022
R400m R30m R40m
H1 2021: R137m H1 2021: R6m H1 2021: R28m
4 5
CareOn: Wi-Fi and
firewalls:
R30m R70m
NETCARE LIMITED
H1 2021: R18m H1 2021: R15m
24FY 2021
Focus Areas
NETCARE LIMITED
25Update on key strategic initiatives
Occupational health
Akeso
Customer
centricity
Hospitals
+
Medicross
Digitisation
Employee wellness
NetcarePlus NRC
Data
NETCARE LIMITED
Netcare 911
Cancer Care
26Netcare’s
digitisation and
data strategy
NETCARE LIMITED
27Update: digital
enablement and data
driven strategy across
Netcare’s ecosystem
01 02 03 04 05
COVID-19 has Digitisation and Capital costs of R150m Continued focus
confirmed the data programmes R650m for entire expenditure to on cybersecurity
relevance of our back on track and programme spread date with most and POPIA
strategy within budget over 10 years of remainder to compliance
despite extensive be spent over
NETCARE LIMITED
COVID-19 delays next 2 years
28Rollout of 01 Hospital digitisation: CareOn
Netcare • 3 Western Cape hospitals completed in May 2021
Electronic
• Netcare Milpark and Netcare Rehabilitation in Gauteng
to be completed in September 2021
Medical Records
• Further 3 hospitals to begin in October 2021
• 9 hospitals undergoing infrastructure preparations
02 Akeso digitisation
• Pilot commenced in April 2021 and rollout to be completed
by September 2022
03 NRC digitisation
NETCARE LIMITED
• Rollout to be completed by March 2022
29Creating a new,
more affordable
way to access
private healthcare
NETCARE LIMITED
30Unique products
providing affordable
access to quality
private healthcare
01 02 03 04
Offering excellent Integrated Easily No hidden
value through our healthcare journey accessible costs
expanded network
NETCARE LIMITED
Using the expanded Netcare Our products ensure an integrated Available through multiple channels Our products deliver quality care
ecosystem and network of trusted healthcare journey for our patients, with a strong focus on digital at an affordable, predetermined
partners, our products provide access including sourcing, funding and enablement. Consumers can buy price
to the highest quality of care receiving the best care products online in under 5 minutes
31GP vouchers
Virtual GP vouchers GP vouchers GP + Medication vouchers
The Virtual GP voucher gives you The GP voucher gives you access The GP + Medication voucher gives you
NETCARE LIMITED
access to a private, virtual doctor to a private doctor consultation access to a private doctor consultation
consultation and includes acute medication
32Prepaid
procedures
NETCARE LIMITED
All-in affordable cost for select healthcare procedures
33Accident and
Trauma
Innovative insurance product
packaged with the provision of
healthcare
Providing unlimited medical
treatment for accidents and trauma
NETCARE LIMITED
34ACCIDENT AND TRAUMA COVER
Excellent value packaged
with quality care
Unlimited hospital treatment in Netcare and
our network of hospitals
Emergency medical transport by Netcare 911
Family Care Benefit with daily lump sum
payments
24/7 trauma counselling
Road Accident Fund (RAF) claims assistance
NETCARE LIMITED
This is not a medical scheme and the cover is not the same as that of a medical scheme.
This insurance product is not a substitute for medical scheme membership.
35Transforming
our society
NETCARE LIMITED
3601 YES (Youth Employment Scheme)
Addressing youth unemployment by equipping learners with skills to
enter labour market at Netcare and broader healthcare sector
• 1 007 youths enrolled in learning programmes
• 329 learners completed learnership and internship programmes
• >95% of these learners have been permanently employed (78% at Netcare)
02 The Netcare YES Hub
Construction of innovation hub in Alexandra sponsored by Netcare
• Includes cut, make and trim factory, culinary school and restaurant, 3D printing lab, and Yes
for Youth enrolment programme
•
NETCARE LIMITED
3 387 youths from Alexandra have already registered for work opportunities at the Netcare Yes
Hub
• 38 youths currently employed within the hub
37Guidance
NETCARE LIMITED
38Pattern of potential
recovery
Return to a “new normal" will be influenced by:
01 02 03
3rd wave SA vaccine rollout Economy
• Probability • Ability to scale • Lockdown levels
• Timing • Herd immunity • Unemployment
• Severity • Efficacy against current • Medical scheme
• Emergence of new strains and new variants membership
variants
NETCARE LIMITED
• Geographic distribution
39Guidance
01 02 03 04
Occupancies Trend expected to Refined approach to Vaccination of frontline
increased into continue dependent minimise disruption workers will contribute to
May 2021 on severity of 3rd from potential 3rd wave safer operating
wave environment and
improved patient
sentiment
05 06 07 08
COVID-19 costs to remain Margins expected Capital expenditure Dividend payments
into FY 2022 but at lower to improve off a of R1.2bn expected to resume
levels low base once operating
environment has
NETCARE LIMITED
normalised
40THANK
YOU
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