Austock Austock Brokers Healthcare SeminarBrokers Healthcare Seminar24 March 200324 March 2003

Half-year Financial Highlights

NPAT up 25% to $18.5m

Group EBIT up 14% (almost 10% excluding new hospital acquisitions)

All divisions contributed to strong EBIT growth

EBIT Margin remains high at 10.5% (excluding new hospital acquisitions)

Strong occupancy levels maintained:

admissions up 9%, compared with previous year (up 5% excluding Cairns and Lake Macquarie)

Cautiously optimistic about outlook - double digit profit growth targeted for foreseeable future

Financial Performance

Int. Dividend (cents/share)

EPS (cents/share)

NPAT

Profit before tax

EBIT

EBITDA

44%6.5¢(Franked)

4.5¢(Unfranked)

23%14.4¢ 11.7¢

25%18.514.8

23%26.021.2

14%32.928.9

12%45.140.2

21%320.2264.8Operating Revenue

% Inc.2002

$m2001

$m

Half-year Ended 31 December

Net Profit Growth

6.5

9.5

14.816.3

18.5

0.0

5.0

10.0

15.0

20.0$m

Dec'00 Jun'01 Dec'01 Jun'02 Dec'02

Half year

NPAT up 25% for half-year

Earnings per share

6.0

8.2

11.712.8

14.4

0.0

5.0

10.0

15.0

Ce

nts

per

share

Dec'00 Jun'01 Dec'01 Jun'02 Dec'02

Half-year

Basic EPS up 23% for the half-yearDouble digit growth anticipated for the full-year

EBIT Growth

18.4

21.1

28.9 29.4

32.9

10.0

15.0

20.0

25.0

30.0

35.0

$m

Dec'00 Jun'01 Dec'01 Jun'02 Dec'02

Half-year

EBIT up 14% for the half-yearEBIT margin 10.5% (excluding new hospital acquisitions)

Occupancy – Patient Days

200

250

300

350

400

Jun'00 Dec'00 Jun'01 Dec'01 Jun'02 Dec'02

Half-year Ended

Inpatient

Total (Inpatient & DayPatients)

Strong occupancy levels maintained with admissions up 9% (5% excluding new hospital acquisitions, Cairns and Lake Macquarie)

2 Questions to be answered

Why is Ramsay performing better than most?

Why do we believe that the private hospital sector is still conducive to growth, for the better operators -despite industry challenges?

Operational & Strategic Direction

Commitment to micro-management Appropriate decentralised management

Experience management team

Strong staff recruitment and retention programme “The Ramsay Way”

Strong doctor and industry relationships

Focus on sustainable cost management

On going organic EBIT growth

Operational & Strategic Direction

Developing a quality portfolio of strategically positioned hospitals

Priority to investing in existing business

• Targeting 15% return on assets

Acquisitions based on strict investment criteria

• Strategic fit

• Moderate to low operating risk

• EPS positive and 15% ROI in short-medium term

Strong negotiating position with the Health Funds

Exploring opportunities outside the private hospital sector, close to core competencies

Industry Challenges

Moved from 30% to 45.6% to 44%; minimal drop out –sustainable high demand in key areas

Health Fund membership levels:

Quality and strategic position of hospital portfolio, seeking to at least cover higher costs.

Health fund negotiations:

Emphasis upon risk management enhancement programme.

Increased cost of medical indemnity insurance:

Preferred employer status, seek to recover higher wage costs from health funds.

Nursing shortage & increased cost of wages:

ResponseIssue

A Balance Health Care System

Both political parties acknowledge that they cannot afford to fund the rising cost of health care

Aging populationOver 65 years old - usage is 5 x higherEscalating cost increases

Who pays? The answer - encourage user paysAustralians prefer to be treated in a private hospital – by a ratio of two to one (TQA research 2000)

62% of Australians believe private hospitals should be given a greater role in the provision of overall health care. (TQA research 2000)

Success of Government Initiatives

In 2000/01 private hospitals treated an extra 245,000 patientsPublic hospital treatments fell by 5,000 patients, a reversal of all former trendsIn the same period public hospitals received an extra $362 millionAll figures show a surge of private hospital usage:e.g. between 1996 & 2001 an increase of 90% in

separations for patients over 75 years vs. public increase of 30%

Expanding role of the Private Sector

Private hospitals are now performing the majority of surgery in Australia – 52%Together private hospitals and day surgeries treat 4 out of every 10 hospital patients in AustraliaOver 2000/01 capital investment by private hospitals grew to $450 million – up 28% on the previous yearAustralia’s private hospital sector are now providers of complex, high-end acute care; doing the bulk of the work in a number of services and specialties

Industry Conducive to Growth

We believe that the private hospital sector is still conducive for growth for those operators with:

Good managementFocused strategic directionsA portfolio of hospitals in which Health Fund member demand, drives health fund negotiations

Outlook

Comfortable with market consensus for NPAT of approximately $37m for FY 2003

Scope exists for continuing organic growth of existing business

Acquisitions provide opportunity to enhance growth and profit outlook

Targeting double-digit growth foreseeable future

Exploring opportunities outside the private hospital sector, close to core competencies

QuestionsQuestionsQuestions

AppendixAppendixAppendix

Revenue Growth Time Line

0

50

100

150

200

250

300

350

400

450

500

550

600

$m

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002Financial Years ended 30 June

PerthVeteran HospPrivatisation

Feb’94

BrisbaneVeteran Hosp Privatisation

Jan’95

RHC listed on the ASX

Sept’97

Co-located North ShorePrivate Hosp

Opened Jul’98

Alpha Hosp Group

Acquired May’01

Cash Flow

Except for operating movements in working capital, the half-year EBITDA has translated into strong gross operating cash flow. The effective cash flow management is consistent with prior financial years.

0

15

30

45

60

75

90

2000 FY 2001 FY 2002 FY Dec'02

EBITDACash Flow

Annual

$m

Half-Year2003 FY

Financial Indicators

(1) Alpha (acquired May’01) excluded as only one month of trading for the period(2) Cairns (acquired Nov’02) excluded as only one month of trading for the period(3) Calculated using rolling 12 months figures

14.313.912.18.0ROE (3)

(NPAT/Shareholder Funds) %

14.314.914.411.7ROIC (3)

(EBIT/Funds Employed) %

78737083Net Gearing %

31 Dec’02(2)

30 Jun’0231 Dec’0130 Jun’01(1)

Six months ended

Facility Portfolio

O p e r a t i n g D i v i s i o n s

N u m b e r

o f F a c i l i t i e s

L i c e n c e d

B e d s

V e t e r a n 2 8 3 0

C o - l o c a t e d 3 3 7 6

R e g i o n a l M e d i c a l – S u r g i c a l * 1 0 8 5 9

P s y c h i a t r i c 8 5 5 2

R e h a b i l i t a t i o n 2 1 1 9

T o t a l s 2 5 2 , 7 3 6

* Including the Coffs Harbour Day Surgery

Revenue Analysis

Revenue byPayor Source

6%

52%

7%

35%

Health Insurance Dept. Veteran Affairs

Government Other

Revenue by Operating Division

29%22%

36%10% 3%

Veteran Medical-SurgicalCo-located PsychricatricRehabilitation