LHC: LIFE HEALTHCARE GROUP HOLDINGS LIMITED - Updated trading statement

2017-05-03 09:53:00
LHC: LIFE HEALTHCARE GROUP HOLDINGS LIMITED - Updated trading statement
Updated trading statement
LIFE HEALTHCARE GROUP HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2003/002733/06)
ISIN: ZAE000145892
Share Code: LHC
("Life" or "the Group")
UPDATED TRADING STATEMENT
Further to the announcement released on the Stock Exchange News Service ("SENS") of the JSE
Limited on 5 April 2017, and leading up to the interim results release on or around 12 May 2017, the
Company is able to provide additional clarity on the estimated results for the six months ended 31
March 2017. Shareholders are therefore advised that the previously estimated reversal of contingent
consideration (income) related to the acquisition of Alliance Medical of between R180 million - R220
million will change to an estimated expense of R12million - R20million as a result of Alliance Medical
performing better than anticipated and signing six Community Diagnostic Centre contracts, two more
than the initial estimate of four contracts. This will result in an estimated GBP21 million of the
contingent consideration being payable. The fair value of the GBP40 million contingent consideration
at acquisition was estimated at GBP20 million. The final amount will be subject to audit and is a non-
trading related item.
The Group updated estimated results for the six months ended 31 March 2017 are as follows:
Measure                          Estimated       Six months       Estimated        Six months       Six months   Note
                                 Range           ended 31         Range            ended 31         ended 31
                                                 March 2017                        March 2017       March 2016
                                                                                                    
                                                                                                  
                                                                                                    
                                          As communicated                          Updated
                                          5 April 2017
Normalised EBITDA                +11% to          R2 330m to    +13.5% to          R2 382m to       R2 099m       1
                                 +15%             R2 414m       +17.5%             R2 466m
Earnings per share (cents)       -60% to -70%     37.2 to 27.9  -80% to -90%       18.6 to 9.3      93.0          2
                                                                
Headline earnings per share      -50% to -60%     46.5 to 37.2  -70% to -75%       27.9 to 23.3     93.0          2
(cents)                                                 
Notes:
   1. Normalised EBITDA is the primary measure the Group uses to assess underlying financial
      performance. The impact of the acquisition and the trading of Southern Africa and Poland
      resulted in an increase in Normalised EBITDA of between 13.5% to 17.5% (previously
      estimated to be 11% to 15% higher).
      -    Normalised EBITDA for the Southern Africa operations will be between 1.5% to 2.5%
           below last year (previously estimated to be 2.5% to 3.5% lower) primarily due to the lower
           trading in the Southern Africa operations and the impact of the loss of the Gauteng Mental
           Health contract in the healthcare services division in July 2016.
      -    Alliance Medical has performed to Life Healthcare´s expectations. The business has
           performed well against the comparative period with normalised EBITDA up between 4.5%
           to 5.5% on a constant currency basis.
   2. Earnings per share ("EPS") and Headline earnings per share ("HEPS") are below the
      comparative period last year primarily due to the impact of the acquisition of Alliance Medical
      and once off items related to the investment in Poland. The impact of these once off non-
      trading related items are:
      Relating to the Alliance Medical acquisition:
       -   Transaction costs relating to the acquisition are estimated to be between R240m -
           R260m;
       -   Interest costs related to the acquisition funding are estimated to be between R370m -
           R390m for the period. Debt funding of approximately R9 billion has been repaid in April
           2017 from the equity raised as part of the rights offer and will reduce the interest cost
           going forward correspondingly;
       -   The additional contingent consideration expense related to the acquisition of Alliance
           Medical is estimated to be between R12m - R20m;
       Relating to the Poland investment:
       -   A further impairment required in Poland of up to R150m as a result of the additional
           reduction in tariffs in cardiology from 1 January 2017; and
       -   The release of contingent consideration relating to the Poland business in the
           comparative period last year has not reoccurred during the six months ended 31 March
           2017.
Headline earnings per share for the six months ended 31 March 2017 will also be impacted by the
updated contingent consideration and is estimated to be between 23.3 cps and 27.9 cps, a
movement of between a decline of 75% and 70.0% below the headline earnings per share for the
six months ended 31 March 2016 of 93.0 cps.
The financial information on which this trading update is based has not been reviewed and reported
on by the Company´s external auditors.
The Company expects to release its interim financial results for the six months ended 31 March 2017
on SENS on or about 12 May 2017.
Illovo
Wednesday, 3 May 2017
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 03/05/2017 09:53:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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Source: JSE News Service (SENS)

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