Wrap Text
Unaudited Condensed Consolidated Interim Financial Statements for the six months ended 31 December 2018
ADVANCED HEALTH LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2013/059246/06)
(“the Group” or “Advanced”)
ISIN Code: ZAE000189049 JSE Code: AVL
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX
MONTHS ENDED 31 DECEMBER 2018
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
Six months Six months Year ended
R’000 Note 31 Dec 2018 31 Dec 2017 30 June 2018
ASSETS
Non-current assets 424 525 378 842 418 273
Property, plant and equipment 4 280 448 263 847 282 744
Goodwill 30 175 30 947 30 185
Intangible assets 32 256 27 498 33 520
Operating lease asset 5 476 1 217 478
Other financial assets 6 10 690 7 943 10 586
Deferred taxation 7 70 480 47 390 60 760
Current assets 93 917 84 853 96 709
Inventories 13 868 11 235 13 958
Trade and other receivables 8 20 806 20 010 33 393
Operating lease asset 5 3 064 4 841 5 634
Other financial assets 6 4 791 5 645 2 298
Current tax receivable 9 1 621 1 358 107
Cash and cash equivalents 10 49 767 41 764 41 319
Total assets 518 442 463 695 514 982
EQUITY AND LIABILITIES
Capital and reserves 175 599 203 322 193 831
Stated capital 221 956 222 297 221 956
Retained earnings (82 671) (51 749) (64 368)
Foreign currency translation reserve 34 281 27 534 34 363
Share-based payment reserve 11 2 033 5 240 1 880
Non-controlling interest 53 376 40 596 53 459
Total equity 228 975 243 918 247 290
Unaudited Unaudited Audited
Six months Six months Year ended
R’000
31 Dec 2018 31 Dec 2017 30 June 2018
Non-current liabilities 197 061 129 253 170 084
Other financial liabilities 12 153 672 82 507 127 495
Finance lease obligations 13 19 156 26 918 19 497
Operating lease liability 23 212 18 796 22 101
Provisions 1 021 1 032 991
Current liabilities 92 406 90 524 97 608
Other financial liabilities 12 20 697 41 509 18 239
Finance lease obligations 13 14 325 9 938 18 718
Trade and other payables 41 466 27 056 45 919
Provisions 8 124 5 414 7 366
Current tax payable 6 139 3 540 5 000
Operating lease liabilities 1 655 3 067 2 366
Total equity and liabilities 518 442 463 695 514 982
Notes to statement of financial position
Total number of shares in issue ('000) 287 988 287 988 287 988
Net asset value per share (cents) 79.51 84.70 85.87
Net tangible asset value per share (cents) 57.83 64.40 63.75
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months Six months Year ended
R’000 31 Dec 2018 31 Dec 2017 30 June 2018
Revenue 15 244 079 199 463 409 290
Cost of sales 15 (114 055) (100 750) (199 304)
Gross profit 130 024 98 713 209 986
EBITDA* 16 4 584 (8 842) (8 122)
Investment income 219 286 807
Depreciation and amortisation 4 (17 131) (15 939) (32 451)
Net finance costs 12 (9 048) (6 865) (14 702)
Loss before taxation (21 376) (31 360) (54 468)
Taxation 5 899 8 716 18 223
Loss for the period (15 477) (22 644) (36 245)
Other comprehensive expense for the (134) (2 714) 6 500
period, net of tax
Total comprehensive loss for the period (15 611) (25 358) (29 745)
Loss attributable to: (15 477) (22 644) (36 245)
Owners of the parent (17 888) (23 332) (39 588)
Non-controlling interest 2 411 688 3 343
* Earnings before interest, impairment, tax, depreciation and amortisation
Total comprehensive loss attributable to: (15 611) (25 358) (29 745)
Owners of the parent (17 970) (24 696) (34 123)
Non-controlling interest 2 359 (662) 4 378
Per share information:
Loss per share (cents) (6.21) (8.55) (14.12)
Diluted loss per share (cents) (6.21) (8.55) (14.12)
Notes to the statement of comprehensive
income
Headline loss for the period attributable
to ordinary shareholders:
Headline loss per share (cents) (6.21) (8.56) (14.12)
Diluted headline loss per share (cents) (6.21) (8.56) (14.12)
- Total number of shares in issue (‘000) 287 988 287 988 287 988
- Weighted average number of shares 287 988 272 838 280 351
(‘000)
Reconciliation of headline earnings
calculation:
Loss for the period attributable to ordinary (17 888) (23 332) (39 588)
shareholders
Profit on sale property, plant and - (14) (10)
equipment
Tax effects of adjustments - 4 3
Headline loss for the period attributable
to ordinary shareholders (17 888) (23 342) (39 595)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
Year ended
Six months Six months 30 June
31 Dec 2018 31 Dec 2017 2018
Cash flows from operating activities
Cash generated from / (used in) operations 8/10 16 796 (4 357) 5 772
Investment income 219 286 807
Finance cost 12 (8 720) (6 865) (13 895)
Taxation paid 9 (4 200) (3 277) (5 863)
Net cash inflow / (outflow) from operating activities 4 095 (14 213) (13 179)
Cash flows from investing activities
Acquisition of property, plant and equipment 4 (13 441) (27 469) (54 104)
Proceeds on the sale of property, plant and equipment - 73 1 693
Acquisition of intangible assets (159) (323) (1 658)
Acquisition of 100 % shares in Madison Day Surgery (MDS) 10 - (8 440) (8 439)
Financial assets advanced (2 634) (1 306) (4 147)
Financial assets received - 57 3 126
Net cash outflow from investing activities (16 234) (37 408) (63 529)
Cash flows from financing activities
Issue of shares in subsidiary 695 11 349 20 232
Proceeds from subsequent sale of shares in MDS - 3 481 -
Financial liabilities raised 12 30 958 47 286 97 648
Financial liabilities repaid (2 298) (2 991) (32 964)
Dividends paid – non-controlling interest (3 552) (4 214) (5 958)
Finance costs (328) - (807)
Finance lease payments 13 (4 764) (915) (1 422)
Net cash inflow from financing activities 20 711 53 996 76 729
Net increase in cash and cash equivalents 8 572 2 375 21
Cash and cash equivalents at beginning of period / year 41 319 40 483 40 483
Effect of foreign currency translation (124) (1 094) 815
Cash and cash equivalents at end of period / year 49 767 41 764 41 319
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Foreign
Share based currency Non-
Net stated payment translation Retained controlling Total
capital reserve reserve earnings interest equity Non-
R'000 R'000 R'000 R'000 R'000 R'000
Balance at 1 July 2016 137 378 4 465 40 380 16 968 44 300 243 491
Loss for the year - - - (48 176) (7) (48 183)
Other comprehensive loss for the
year - - (11 482) - (279) (11 761)
Share-based payment expense - 2 342 - - - 2 342
Change in subsidiary interest - - - - 2 867 2 867
Transfer between reserves - (2 791) - 2 791 - -
Dividends - - - - (3 374) (3 374)
Balance at 30 June 2017 137 378 4 016 28 898 (28 417) 43 507 185 382
(Loss)/Profit for the year - - - (39 588) 3 343 (36 245)
Other comprehensive income for
the year - - 5 465 - 1 035 6 500
Share-based payment expense - 1 501 - - - 1 501
Transfer of revaluation - (3 637) - 3 637 - -
Change in subsidiary interest - - - - 11 532 11 532
Dividends - - - - (5 958) (5 958)
Issue of shares - net 84 578 - - - - 84 578
Balance at 30 June 2018 221 956 1 880 34 363 (64 368) 53 459 247 290
(Loss)/Profit for the period - - - (17 888) 2 411 (15 477)
Other comprehensive loss for the
period - - (82) - (52) (134)
Share-based payment expense - 153 - - - 153
Dividends - - - - (3 552) (3 552)
Transfer between reserves - - - (415) 415 -
Issue of shares - - - - 695 695
Balance at 31 December 2018 221 956 2 033 34 281 (82 671) 53 376 228 975
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
The unaudited condensed consolidated results for the period ended 31 December 2018 have been prepared
in accordance with the requirements of the JSE Listing Requirements for interim reports, the requirements of
Companies Act applicable to summary financial statements and the requirements of IAS 34: Interim Financial
Reporting as well as the Financial Reporting Pronouncements as issued by the Financial Reporting Standards
Council. The accounting policies applied in the preparation of the unaudited condensed consolidated results
for the period are in terms of IFRS and are materially consistent with the accounting policies applied in the
preparation of the previous unaudited condensed consolidated results for the period except for the mandatory
adoption of IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers which became
effective 1 January 2018. The adoption of IFRS 9 and IFRS 15 did not have a significant impact on the amounts
recognised or disclosed in the unaudited condensed consolidated interim financial statements therefore
Advanced elected not to restate prior years.
The unaudited condensed consolidated interim financial statements are presented in South African Rand,
which is the Group's functional and presentation currency.
There are no significant reportable matters arising since the end of the period under review.
The unaudited condensed consolidated results for the period ended 31 December 2018 have been prepared
under the supervision of CP Snyman CA (SA), in his capacity as Chief Financial Officer.
The results were approved by the board of directors on 26 February 2019 and have not been reviewed or
audited by the Group’s external auditors Mazars.
1.1 Implementation of IFRS 9
IFRS 9 introduces new classification categories for financial instruments. Under IFRS 9, financial assets are
classified by reference to the business model within which they are held and their contractual cash flow
characteristics, while the classification of financial liabilities remains largely the same as that under IAS 39.
There have been no changes to the classification, and therefore the measurement criteria, of financial assets
and financial liabilities, except for the naming conventions, Loans and Receivables are now called financial
assets at amortised cost.
The adoption of IFRS 9 has led to the change in the calculation of impairment of trade and other receivables
from the incurred credit loss to the expected credit loss model (ECL). Under the incurred credit loss model, the
provision for impairment of trade receivables was made when there was objective evidence that the Group
would not collect the debt as per the original term of receivables whilst the expected credit loss model takes
into account forward looking information such as macroeconomic factors.
Considering that the trade and other receivables have been assessed not to have a significant financing
component, the Group elected to use the simplified approach for the calculation of lifetime ECLs. In
determining the ECL, the receivables were grouped together based on similar credit risks, thereby applying the
practical expedient available by using a provision matrix. ECLs were calculated by applying a historic loss ratio
to the revenue received in the different aging groups at the two reporting dates analysed, i.e. 2017 and 2018
financial years.
The Group made use of the historical actual trade receivables write offs and the sum of debt accounts that
were handed over to the debt collectors to determine the potential write off. The debtors book consists mainly
of medical aid schemes and thus the historical loss rates have not been adjusted for any forward-looking
information at this point in time. This is mainly due to the fact that there have been no changes that have
taken place in the industry that could threaten paying capacity of the schemes on behalf of their members.
The Group's impairment of trade receivables using the incurred loss model under IAS 39 for the year ended
30 June 2018 was R1,04 million. The ECLs for the year ending 30 June 2018 under IFRS 9 was calculated to be
R0,63 million. The difference was considered to be immaterial and thus not been processed as an adjustment
to retained earnings using the modified retrospective approach.
2. STATED CAPITAL
The issued stated capital of Advanced is 287 988 433 shares amounting to R221 956 000 (December 2017:
287 988 433 amounting to R221 956 000) being the legal entity listed on the JSE AltX.
Reconciliation of stated capital
Shares Stated Equity Group
’000 capital reserve* stated
R’000 R’000 capital
R’000
Balance as at 1 July 2018 287 988 310 423 (88 467) 221 956
Balance as at 31 December 2018 287 988 310 423 (88 467) 221 956
* The equity reserve arose in 2014 as a result of accounting for the reverse acquisition in terms of IFRS 3
Business Combination.
3. SEGMENTAL REPORTING
Segment information is presented only at Group level, where it is most meaningful. Operating segments are
identified on the basis of internal reports about components of the Group that are regularly reviewed by the
chief operating decision-maker in order to allocate resources to the segment and to assess its performance.
The segments are based on the geographical location with corporate only relating to Advanced “the company”.
Unaudited Unaudited Audited
Six months Six months Year ended
Dec-18 Dec-17 June-18
R’000 R’000 R’000
REVENUE 244 079 199 463 409 290
South Africa 78 386 52 561 117 430
Australia 165 693 146 902 291 860
Corporate - - -
INTEREST INCOME 219 286 807
South Africa 118 186 592
Australia 101 100 215
Corporate - - -
INTEREST EXPENSE 9 048 6 865 14 702
South Africa 7 182 4 772 10 580
Australia 1 538 1 653 3 315
Corporate 328 440 807
DEPRECIATION & AMORTISATION 17 131 15 939 32 451
South Africa 9 517 9 128 17 915
Australia 7 310 6 444 13 869
Corporate 304 367 667
LOSS FOR THE PERIOD (15 477) (22 644) (36 245)
South Africa (23 584) (22 345) (42 758)
Australia 8 344 1 986 7 544
Corporate (237) (2 285) (1 031)
SEGMENT ASSETS 518 442 463 425 514 982
South Africa 269 298 238 534 266 663
Australia 239 166 214 320 237 900
Corporate 9 978 10 571 10 419
SEGMENT LIABILITIES 289 471 219 778 267 692
South Africa 188 766 115 974 162 260
Australia 92 321 97 251 98 901
Corporate 8 384 6 553 6 531
The revenue from external parties and all other items of income, expenses, profits and losses reported in the
segment report are measured in a manner consistent with that in the statement of comprehensive income.
4. PROPERTY, PLANT AND EQUIPMENT
During the year, the Group incurred costs amounting to R13,44 million for the capital expenditure, a total of
R3,5 million was incurred in Australia whilst R10,0 million related to South Africa with the bulk relating to
Harbour Bay Surgical Centre in Simonstown where R4 million was spent. Depreciation was higher for the six
months under review due to higher capital expenditure.
5. OPERATING LEASE ASSETS AND LIABILITIES
The operating lease assets and liabilities relate to the lease straight lining required by IFRS. The additional new
facilities also contributed to the increase in the lease assets and liabilities.
6. OTHER FINANCIAL ASSETS
Other financial assets increased due to the loan advanced to Epping Surgery Centre Property Unit Trust by
Epping Surgery Centre Proprietary Limited.
7. DEFERRED TAX
Deferred tax increased during the period under review - this is due to the increase in assessed losses incurred
by the Group for the six months.
8. TRADE AND OTHER RECEIVABLES
Trade and other receivables decreased both in SA and Australia. This is attributed to two factors;
- Revenue in December was low as compared to the other months due to the holiday season.
- Improvement in the collection period in South Africa by more than 100% from 17 days to 7 days.
9. CURRENT TAX RECEIVABLE
Increase in current tax receivable is due to income tax paid in Australia.
10. CASH AND CASH EQUIVALENTS
There has been a substantial increase in cash and cash equivalent as compared to December 2017 and
June 2018. The Group has engaged less in investing activities and more emphasis placed on cash generated
from operations. Advanced is at present, less reliant on debt to manage its day to day operations.
11. SHARE BASED PAYMENT RESERVE
As at 30 June 2018, share option scheme 3 expired. Share option scheme 4 has still not yet been exercised and
the option is to lapse at the end of June 2019.
12. OTHER FINANCIAL LIABILITIES
The movements in the current and non-current other financial liabilities are due to:
- Loans advanced from Eenhende Konsultante amounting to R24,3 million for South Africa and R0,6
million for Australia.
- Other financial institutions advanced loans amounting to R4,4 million.
The loans listed above are interest bearing debt and thus have an effect on the finance costs which increased
by 31%.
13. FINANCE LEASE OBLIGATIONS
No additional finance leases were obtained within the six months under review. An amount of R4,8 million was
repaid.
14.RELATED PARTIES
During the six months ended 31 December 2018, certain subsidiaries, in the ordinary course of business,
entered into loans and transactions with related parties under terms that are no less favourable than those
arranged with third parties.
15. REVENUE AND COST OF SALES
The increase in revenue is due to an increase in patient numbers from organic growth as well as new facilities
that became operational in the prior year. Increase attributable to organic growth amounts to 20%. Revenue
increased by 22% from R199,5 million to R244,0 million in the period under review.
Gross profit percentage improved by 8% from 49% to 53% arising from improvement in management of direct
costs both in South Africa and Australia.
Revenue is derived from the provision of same day surgical procedures being, the rendering of services, and
same day medication and medical supplies being, sale of goods. Revenue from rendering of services for the
period was R24,5 million (2017: R14,6 million) that from sale of goods was R219,5 million (2017: R188,7
million). Revenue recognition is on completion of the day case upon discharge of the patient. Refer to note 3
for segmental information that discloses the revenue disaggregation as per the requirements of IFRS 15.
16. EBITDA
Positive EBITDA for the six months period under review. A marked improvement from both the comparative
period and the last published results due to cost controls.
EXCHANGE RATES
The following exchange rates were used in foreign interest and foreign transactions during the periods:
Rand/Australian Dollar 31 Dec 2018 31 Dec 2017 30 Jun 2018
Closing rate 10.1374 9.64302 10.1426
Average rate 10.2669 10.4312 9.97452
INVESTOR PRESENTATION
There will be an investor presentation on 28 February 2019 and the presentation will be available on the
Advanced’s website, hosted at www.advancedhealth.co.za and on YouTube at
https://www.youtube.com/channel/UCA_6wZhEXdG72PmblWRqBKw
COMMENTARY
HIGHLIGHTS
- Revenue increased by 22% to R244,0 million.
- Positive EBITDA of R4,584 million.
- Reduction in net losses by 32%.
BACKGROUND ON DAY HOSPITAL INDUSTRY
Advanced is establishing itself as a leader in day surgery across South Africa and Australia. Private healthcare
is currently in a very exciting stage of development, and Advanced is positioning itself within the existing
healthcare system, filling a gap in the market for day surgery. Medical schemes are aligning themselves to our
model, and we are gradually seeing traction in them directing surgical procedures towards day hospitals as an
alternative, more cost-effective option. The Discovery Health Medical Scheme as of 2019 has introduced the
Discovery Day Surgery Network. Advanced Group of hospitals is part of this network and this is viewed as a
channel to increase patient numbers going forward.
FINANCIAL RESULTS
The Group remained in a loss-making position, however there has been an improvement from the comparative
six months ended 31 December 2017 as evidenced by a 32% reduction in losses.
The Australian operations have performed better than last year, being 17% up on patient surgery numbers and
13% up on revenue. The main focus has been on cost controls, efficiencies and good cash collections resulting
in more than a 100% increase in profits compared to the December 2017. Performance exceeded expectations
at Central Coast Surgery Centre, Madison Day Surgery and Chatswood Private Hospital. There is a continued
emphasis on strengthening its financial position with its current business entities.
South African operations continued incurring losses but nevertheless revenue increased by 49% whilst patient
numbers increased by 42%. Revenue increase attributable to organic growth was 39%. The capital expenditure
decreased in South Africa which is bound to have less adverse pressure on the cash flows of the business.
OVERVIEW
Australia
The Ophthalmic Registrar training program at Chatswood Private Hospital has successfully commenced. This
together with being recognised as a Teaching Hospital affiliated with the University of Sydney, as well as its
retention as the only Australian private member of the World Association of Eye Hospitals, maintains its
position as setting premium standards within the day hospital market.
The Presmed Australia Board made a decision on 5 February 2019 to cease funding Coffs Harbour Day Hospital
and various options are currently being explored namely; selling the day hospital to an interested party or close
and discontinue the operations. This decision is due to insufficient doctor support.
South Africa
Management continues its focus on marketing strategies aimed at growing patient numbers and increasing
earnings. Regardless of the losses incurred during the reporting period there has been a notable increase in
patient numbers. Efforts are currently being directed on the commencement of operations at the Harbour Bay
Surgical Centre in Simonstown. Capital expenditure to the value of R4,8 million has been incurred to this effect.
DIVIDEND DECLARATION
No dividend is proposed or recommended for the six-month period ended 31 December 2018.
PROSPECTS
Advanced is firmly on track to achieve its aim of growing its footprint of independent, quality and cost-effective
day-hospitals, to the benefit of patients, doctors and medical schemes.
In South Africa the Group will focus on achieving stability in all facilities and ensuring they become profitable.
The Australian operation’s core strategy is to grow and increase its portfolio in the Day Hospital industry in
Australia through investing in and/or acquisition of profitable day hospitals.
Investors are reminded that it takes up to 18 months to establish a new day hospital, which then requires a
settling-in period of up to 36 months or longer before profit is achieved.
On behalf of the board
FA van Hoogstraten CA Grillenberger CP Snyman
Chairman Chief Executive Officer Chief Financial Officer
28 February 2019
CORPORATE INFORMATION
Advanced Health Limited Registered Address:
(Incorporated in the Republic of South Africa) Building 2, Walker Creek Office Park
Registration number: 2013/059246/06 90 Florence Ribeiro Avenue
ISIN: ZAE000189049 JSE Code: AVL Muckleneuk
0002
Postnet Suite 668, Private Bag X1
The Willows, 0041
Executive directors Non-Executive Directors
CA Grillenberger (Chief Executive Officer) FA van Hoogstraten (Chairman)
CP Snyman (Chief Financial Officer) PJ Jaffe#
MC Resnik# (Chief Executive Officer Presmed Australia) CJPG van Zyl
D Goss-Ross (Chief Operating Officer South Africa) (alternate) Dr WT Mthembu
Dr J Oelofse
YJ Visser (alternate)
# Australian
Company Secretary: M Janse van Rensburg
Auditors: Mazars
Transfer Secretaries: Link Market Services Proprietary Limited
Designated Advisor
Grindrod Bank Limited
Date: 28/02/2019 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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