LHC: LIFE HEALTHCARE GROUP HOLDINGS LIMITED - Summary financial information of Alliance Medical Group Limited Summary financial information of Alliance Medical Group Limited Life Healthcare Group Holdings Limited Incorporated in the Republic of South Africa Registration Number: 2003/002733/06 JSE share Code: LHC ISIN: ZAE000145892 ("Life Healthcare" or the "Company") NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO CANADA, AUSTRALIA AND JAPAN SUMMARY FINANCIAL INFORMATION OF ALLIANCE MEDICAL GROUP LIMITED 1. Introduction Life Healthcare shareholders are referred to the SENS announcements dated 16 November 2016 and 20 December 2016, wherein Life Healthcare announced the acquisition of Alliance Medical Group Limited ("Alliance Medical") and a proposed renounceable rights offer to refinance a portion of the acquisition bridge facility. The purpose of this announcement is to provide Life Healthcare shareholders with further financial information in relation to Alliance Medical. For further information, Life Healthcare shareholders are also referred to the updated investor presentation available on the Company´s website (www.life.co.za). 2. Presentation of financial information Alliance Medical´s financial information as at and for the financial years ended 31 March 2016 and 2015 has been extracted, from Alliance Medical´s consolidated financial statements as at and for the financial year ended 31 March 2016, which have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS"). Alliance Medical´s financial statements as at and for the financial years ended 31 March 2016 and 2015 are currently being audited under IFRS. Alliance Medical´s financial statements as at and for the financial year ended 31 March 2015 have previously been audited under International Financial Reporting Standards as adopted by the EU. Alliance Medical´s financial information as at and for the six months ended 30 September 2016 and 2015 has been extracted, from Alliance Medical´s consolidated interim financial statements for the six months ended 30 September 2016 and has been prepared in accordance with IAS 34, Interim Financial Reporting. Alliance Medical´s consolidated interim financial statements as at and for the six months ended 30 September 2016 are currently being reviewed under IFRS in terms of IAS34. Until such time as the audit and review, as applicable, are complete and final numbers published, such financial information may be subject to amendment and the final numbers may differ from those set out herein. The directors take full responsibility for the extraction of the financial information from the underlying annual and interim financial statements. 3. Consolidated income statement For the six months ended 30 For the year ended 31 March September 2016 2015 %change 2016 2015 %change (£, in millions) Unaudited Unaudited (1) Unaudited Unaudited Revenue 218.8 210.7 3.8% 119.1 104.5 14.0% Cost of sales excluding depreciation (121.0) (112.0) 8.0% (67.4) (56.7) 18.9% Depreciation (18.1) (17.9) 1.1% (9.0) (8.1) 11.1% Gross profit 79.7 80.8 (1.4%) 42.7 39.7 7.6% Administrative expenses Overheads (37.6) (44.6) 15.7% (19.2) (19.6) (2.0%) Depreciation (1.1) (1.3) (15.4%) (1.4) (1.0) 40.0% Loss on disposal of property, plant and equipment (0.8) (0.4) 100.0% - (0.3) Amortisation (8.9) (8.9) - (4.9) (4.3) 14.0% Other administrative expenses (11.8) (6.5) 81.5% (2.5) (4.2) (40.5%) Profit before interest & taxation 19.5 19.1 2.1% 14.7 10.3 42.7% Finance costs (10.9) (19.2) (43.2%) (4.3) (7.3) (41.1%) Share of profit of joint ventures 0.3 0.3 - 0.2 0.2 - Profit before taxation 8.9 0.2 4350.0% 10.6 3.2 231.3% Taxation 0.1 (3.1) (1.3) (1.1) 18.2% Profit/(loss) for the period 9.0 (2.9) 9.3 2.1 342.9% Profit for the period attributable to: The equity shareholders of the Company 9.0 (2.9) 9.3 2.1 342.9% Non-controlling interests - - - - Profit for the period 9.0 (2.9) 9.3 2.1 342.9% 4. Consolidated balance sheet As at 31 March As at 30 September 2016 2015 2016 2015 (£, in millions) Unaudited Unaudited(1) Unaudited Unaudited ASSETS Non-current assets Property, plant and equipment 110.1 84.8 122.9 99.5 Goodwill 45.3 43.9 47.0 44.1 Other intangible assets 20.2 25.4 16.4 21.3 Investment in joint ventures 0.7 0.8 1.0 0.8 Deferred tax assets 0.4 0.2 0.1 0.2 176.7 155.1 187.4 165.9 Current assets Inventories 0.3 0.2 0.4 0.1 Trade and other receivables 58.6 50.6 60.3 63.7 Current income tax receivable 0.3 - - - Deferred tax assets 1.3 - 1.9 1.0 Cash and cash equivalents 38.8 60.3 31.8 26.6 99.3 111.1 94.4 91.5 TOTAL ASSETS 276.0 266.2 281.8 257.3 LIABILITIES Non-current liabilities Trade and other payables (2.2) (2.0) (2.9) (2.7) Borrowings (22.9) (181.5) (23.8) (160.5) Deferred tax liabilities (1.9) (4.6) - - Retirement benefit obligations (3.6) (3.3) (3.6) (3.0) Provisions (1.9) (2.2) (1.9) (2.2) (32.5) (193.6) (32.2) (168.4) Current liabilities Trade and other payables (63.4) (54.5) (55.4) (58.6) Borrowings (168.3) (9.2) (174.2) (17.2) Deferred tax liabilities (1.1) (0.6) (2.7) (5.6) Current income tax payable - (1.8) (1.5) (1.6) Provisions (1.1) (0.5) (0.4) (0.3) (233.9) (66.6) (234.2) (83.3) TOTAL LIABILITIES (266.4) (260.2) (266.4) (251.7) EQUITY Share capital - - - - Share premium account 127.4 126.6 127.4 126.6 As at 31 March As at 30 September 2016 2015 2016 2015 Translation reserve 4.8 8.0 1.3 7.5 Other reserves (126.6) (126.6) (126.6) (126.6) Retained earnings 3.8 (2.1) 13.1 (2.0) Equity attributable to shareholders of the Company 9.4 5.9 15.2 5.5 Non-controlling interests 0.2 0.1 0.2 0.1 TOTAL EQUITY 9.6 6.0 15.4 5.6 (1) These financial statements have previously been audited under International Financial Reporting Standards as adopted by the EU, these financial statements are currently being audited under IFRS as issued by the International Accounting Standards Board. 5. Alliance Medical EBITA and EBITDA reconciliation Alliance Medical historically defined EBITA as profit before interest, tax, amortisation of acquired intangibles, profit/(loss) on disposal of property, plant and equipment, and other administrative expenses and EBITDA as EBITA before depreciation. EBITDA and EBITA are non-IFRS financial measures and should not be considered as alternatives to Alliance Medical´s historical financial results based on IFRS. These non-IFRS measures are included because the directors believe that these measures enhance an investor´s understanding of Alliance Medical´s results of operations and financial performance as they present additional financial measures regularly used by the management to assess operating performance. These measures are not uniformly defined by all companies, including those in the healthcare and diagnostics industries. Accordingly, these measures may not be comparable with similarly titled measures and disclosures by other companies. The following table presents a reconciliation calculation from profit before interest and taxation to EBITA and EBITDA: Six months ended 30 Year ended 31 March September 2016 2015 2016 2015 (£, in millions) Profit before interest and taxation 19.5 19.1 14.7 10.3 Adjustments: Loss on disposal of property, plant and equipment 0.8 0.4 - 0.3 Amortisation 8.9 8.9 4.9 4.3 (1) Other administrative expenses 11.8 6.5 2.5 4.2 EBITA 41.0 34.9 22.1 19.1 Adjustments: Depreciation 18.1 17.9 9.0 8.1 Depreciation 1.1 1.3 1.4 1.0 EBITDA 60.2 54.1 32.5 28.2 (1) Other administrative expenses in the year ended 31 March 2016 comprise reorganisation and restructuring costs (£6.7 million), PET contract mobilisation (£3.3 million) and merger and acquisition costs (£1.8 million). Other administrative expenses in the year ended 31 March 2015 comprise reorganisation and restructuring costs (£3.4 million), Alliance Medical Molecular Imaging Limited gain on consolidation (£1.5 million) and loss on disposal (£4.6 million). 6. Commentary on the financial results for the financial year ended 31 March 2016 Revenue increased by 3.8% to £218.8 million for the financial year ended 31 March 2016. This increase was primarily due to volume growth at diagnostic imaging sites in the United Kingdom and Ireland as well as growth in PET-CT scanning volume under the 10-year PET-CT contract with the National Health Service in the United Kingdom (the "PET-CT National Contract"). Revenue growth was partially offset by declines in the Italy, Spain and Northern Europe segments. EBITDA increased by 11.3% to £60.2 million for the financial year ended 31 March 2016. This increase was primarily a result of revenue growth and a decrease in overhead expenses resulting from savings under Alliance Medical´s restructuring programme. This was partially offset by an increased cost of sales, which was impacted by the mobilisation costs incurred in connection with the PET-CT National Contract. Other administrative expenses of £11.8 million in the financial year ended 31 March 2016, comprised £6.7 million reorganisation and restructuring costs, £3.3 million PET-CT National Contract mobilisation costs in the United Kingdom and £1.8 million relating to professional fees. Other administrative expenses of £6.5 million in the financial year ended 31 March 2015, comprised £3.4 million for reorganising and restructuring costs, a gain of £1.5 million on consolidation of Alliance Medical Molecular Imaging Limited, following approval by the Competition and Markets Authority in August 2014, and a £4.6 million loss on disposal of the Spanish mobile scanning business. Alliance Medical reported a profit of £9.0 million for the financial year ended 31 March 2016, as compared to a loss of £2.9 million in the financial year ended 31 March 2015. The increased profitability was due in part to increased revenue and to a reduction in finance costs, following the repayment of a portion of Alliance Medical´s senior indebtedness in 2015, which was replaced in part by lease facilities. 7. Commentary on the financial results of the six months ended 30 September 2016 Revenue increased by 14.0% to £119.1 million for the six months ended 30 September 2016. This was primarily the result of revenue growth in the United Kingdom due to an increase in the number of PET- CT scans conducted pursuant to the PET-CT National Contract and in Ireland due to the revenue impact of new clinics. Revenue in the Spain and Northern Ireland segments also increased but remained relatively flat in Italy. EBITDA increased by 15.2% to £32.5 million for the six months ended 30 September 2016. This increase was primarily a result of revenue growth and a decrease in overhead expenses as a result of savings under Alliance Medical´s restructuring programme. Other administrative expenses of £2.5 million in the six months ended 30 September 2016 comprised £1.3 million costs in respect of the sale of Alliance Medical, £0.5 million reorganisation and restructuring costs, £0.4 million PET-CT National Contract mobilisation costs in the United Kingdom and other costs of £0.3 million. Other administrative expenses of £4.2 million in the six months ended 30 September 2015 comprised reorganisation and restructuring costs of £2.6 million, mobilisation of the PET-CT National Contract of £1.5 million and other costs of £0.1 million. Alliance Medical reported a profit of £9.3 million for the six months ended 30 September 2016, an increase of 342.9% from the comparable six month period in 2015. 8. Consolidation Alliance Medical has been consolidated as a subsidiary of Life Healthcare under IFRS since 21 November 2016, the effective date of the acquisition. Illovo 12 January 2017 Sponsor Rand Merchant Bank (A division of FirstRand Bank Limited) Important Notice The information contained herein is not for release, publication or distribution, directly or indirectly, in or into Canada, Australia or Japan or any other jurisdiction in which the distribution or release would be unlawful. These materials are not and do not contain an offer of securities for sale or a solicitation of an offer to purchase or subscribe for securities in any jurisdiction, including the United States, Australia, Canada or Japan or any other state or jurisdiction in which such release, publication or distribution would be unlawful. The securities to which these materials relate (the "Securities") have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States unless registered under the Securities Act or pursuant to an exemption from, or in a transaction not subject to, registration under the Securities Act. There will be no public offer of the Securities in the United States. Subject to certain exceptions, the Securities may not be offered or sold in Australia, Canada or Japan or to, or for the account or benefit of, any national, resident or citizen of such countries. These materials are only being distributed to and are only directed at: (i) persons who are outside the United Kingdom; or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2) of the Order; or (iv) persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any securities may otherwise lawfully be communicated; or (v) persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as "relevant persons"). The Securities are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this announcement or any of its contents. In any member state of the European Economic Area (other than the United Kingdom) that has implemented Directive 2003/71/EC (and amendments thereto, including Directive 2010/73/EU to the extent implemented in the relevant Member State, together with any applicable implementing measures in any Member State, the "Prospectus Directive") this announcement is only addressed to and is only directed at qualified investors in that Member State within the meaning of the Prospectus Directive. These materials do not constitute or form a part of any offer or solicitation or advertisement to purchase and/or subscribe for Securities in South Africa, including an offer to the public for the sale of, or subscription for, or the solicitation or advertisement of an offer to buy and/or subscribe for, shares as defined in the South African Companies Act, No. 71 of 2008 (as amended) or otherwise (the "Act") and will not be distributed to any person in South Africa in any manner that could be construed as an offer to the public in terms of the Act. These materials do not constitute a prospectus registered and/or issued in terms of the Act. Nothing in this announcement should be viewed, or construed, as "advice", as that term is used in the South African Financial Markets Act, No. 19 of 2012, as amended, and/or Financial Advisory and Intermediary Services Act, No. 37 of 2002, as amended. The contents of this announcement have not been verified by the banks appointed in connection with the Rights Issue or any of their respective affiliates (together, the "Banks"). The Banks are each acting exclusively for Life Healthcare and for no-one else in connection with any transaction mentioned in these materials and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to any such transaction and will not be responsible to any other person for providing the protections afforded to their respective clients, or for advising any such person on the contents of these materials or in connection with any transaction referred to in this announcement. No reliance may be placed for any purposes whatsoever on the information contained in this announcement or on its accuracy or completeness. No representation or warranty, expressed or implied, is given by or on behalf of Life Healthcare, Alliance Medical, the Banks or their respective affiliates, directors, officers or employees, advisors or any other person as to the accuracy or completeness of the information or opinions contained in this announcement, and no liability whatsoever is accepted for any such information or opinions or any use which may be made of them. Persons receiving this announcement should make all trading and investment decisions in reliance on their own judgement and not in reliance on the Banks or this document. None of the Banks is providing any such persons with advice on the suitability of the matters set out in this announcement or otherwise providing them with any investment advice or personal recommendations. Any presentations, research or other information communicated or otherwise made available in this document is incidental to the provision of services by the Banks to Life Healthcare and is not based on individual circumstances. All investment is subject to risk. The value of the securities offered may go down as well as up. Past performance is no guarantee of future returns. Potential investors are advised to seek expert financial advice before making any investment decision. Forward-Looking Statements This announcement includes certain forward-looking statements, beliefs or opinions, including statements with respect to Life Healthcare or Alliance Medical´s business, financial condition, results of operations and prospects. Forward-looking statements are typically identified by the use of forward looking terminology such as "believes", "expects", "may", "will", "could", "should", "intends", "estimates", "plans", "assumes", "anticipates", "annualized", "goal", "target" or "aim" or the negative thereof or other variations thereof or comparable terminology, or by discussions of strategy that involve risk and uncertainties. These statements reflect the directors' beliefs and expectations and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. No representation is made that any of these statements or forecasts will come to pass or that any forecast results will be achieved. There are a number of risks, uncertainties and factors that could cause actual results and developments to differ materially from those expressed or implied by these statements and forecasts. Past performance cannot be relied on as a guide to future performance. Forward-looking statements speak only as at the date of this announcement, and Life Healthcare expressly disclaims any obligations or undertaking to release any update of, or revisions to, any forward-looking statements in this announcement. No statement in this announcement is intended to be a profit forecast. As a result, you are cautioned not to place any undue reliance on such forward-looking statements. Please refer to the Life Healthcare´s Integrated Report for the financial year ended 30 September 2016 for a description of certain important factors, risks and uncertainties that may affect Life Healthcare´s businesses. Date: 12/01/2017 10:13:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.
Source: JSE News Service (SENS)
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