GROUP PROSPECTS APPENDIX - ShareDataCash flows from operating activities 68 419 (35 593) Cash flows...
Transcript of GROUP PROSPECTS APPENDIX - ShareDataCash flows from operating activities 68 419 (35 593) Cash flows...
Agenda
FINANCIAL REVIEW
DIVISIONAL REVIEW AND PROSPECTS
GROUP PROSPECTS
APPENDIX
1
INTRODUCTION
CONSOLIDATED INTERIM RESULTS for period ended 30 June 2011
INTRODUCTION
2
Shared Services:
Logistics, Finance, Corporate Affairs, Corporate Marketing, HR, IT & Legal
Public Private
Partnership through The
Biovac Institute to supply
vaccines
Litha Vaccines provides
adult vaccines
Supplier of medical
devices, equipment and
single use medical
consumables to private
& public sectors
Sells, markets and
distributes pharma-
ceutical, generic, OTC
& ancillary medicines
Pharmafrica and Goldex
provide platform
A diversified healthcare business providing services, products and solutions
to public and private hospitals and government healthcare programmes in
Southern Africa – creation dating back to 1992
Litha Healthcare Group
3
LITHA MEDICAL
PHARMAFRICA
52.5%
100%
77.5%* 100%
100%
LITHA BIOTECH LITHA PHARMA
Litha Healthcare Group Legal Structure
LITHA HEALTHCARE GROUP
12.5%
35%
DST** THROUGH
CAPE BIOTECH
SA GOVERNMENT
THROUGH DoH
100%
BIOVAC CONSORTIUM
THE BIOVAC INSTITUTE
4
GOLDEX
100%
* Increased to 85% effective 1 July 2011
** Dept. of Science and Technology
Context to results
Acquisition of remaining 49% of Litha (LHH)* effective 1 January 2011
- R177 million - 60% shares (48 million shares) and 40% cash
100% consolidation of LHH and Pharmafrica for full 6 months
6 months to June 2010, LHH and Pharmafrica only consolidated for two
months and LHG** owned 51% of LHH
Increased stake in The Biovac Consortium from 62.5% to 77.5%,
effective1 January 2011
Acquisition of Goldex Healthcare, effective 1 May 2011
* Litha Healthcare Holdings ** Litha Healthcare Group Limited 5
Summary of results
June
2011
%
Change
June
2010
Dec 2010
Turnover (R000) 888 983 116% 412 060 1 254 873
Operating profit (Rm) 79 364 88% 42 299 122 275
Operating margin (%) 8.9% 10.3% 9.7%
EPS (cps) 11.8 57% 7.5 16.6
HEPS (cps) 11.8 26% 9.4 18.1
Weighted avg no. of
Shares 372 198 148 232 681 697 279 582 073
6
FINANCIAL REVIEW
7
R (000) June
2011
%
Change
June
2010
Dec 2010
Turnover 888 983 116% 412 060 1 254 873
Statement of Comprehensive Income
Biotechnology 645 817 73%
Medical 192 175 22%
Pharma 50 991 5%
8
R (000) June
2011
%
Change
June
2010
Dec 2010
Turnover 888 983 116% 412 060 1 254 873
Operating profit 79 364 88% 42 299 122 275
Biotechnology* and Cold Chain Logistics 22 633 25%
Medical 58 098 64%
Pharma 10 214 11%
Head office (11 581)
Statement of Comprehensive Income
9 * Includes The Biovac Institute (TBI) - shareholding 40.7%, effective 1 January 2011
R (000) June
2011
%
Change
June
2010
Dec 2010
Turnover 888 983 116% 412 060 1 254 873
Operating profit 79 364 88% 42 299 122 275
Operating margin 8.9% 10.3% 9.7%
• Change in product mix from higher-margin medical devices to a broader
product basket consisting of both higher and lower margin products.
• Foreign exchange losses on revaluation of creditors and outstanding
FECs of R11.2 million incurred in current year, of which R10 million
incurred in TBI
Statement of Comprehensive Income
10
June 2011
June 2010 Dec 2010
Core
Dec 2010
Biotechnology 3.5% 7.7% 6.0% 4.1%
Medical 30.2% 20.5% 23.2% 24.4%
Pharmaceutical 20.0% 25.6% 20.9% 20.9%
Total 8.9% 10.3% 9.7% 9.8%
Operating Margin Analysis
11
• The Biotech division, which contributed 25% to net operating profit, has
a low margin as it is currently purely an importer and distributor.
However, as manufacturing commences in 2013 at TBI, margin is
expected to gradually increase from 2014 onwards.
R (000) June
2011
%
Change
June
2010
December
2010
Turnover 888 983 116% 412 060 1 254 873
Operating profit 79 364 88% 42 299 122 275
Operating margin 8.9% 10.3% 9.7%
Non-op. interest expense (7 054) (1 111) (6 912)
Effective tax rate 30% 30% 29%
Profit after tax 50 374 76% 28 652 81 358
Profit attrib. to shareholders 43 790 150% 17 548 46 360
EPS (cents per share) 11.8 57% 7.5 16.6
HEPS (cents per share) 11.8 26% 9.4 18.1
Weighted average
number of shares 372 198 148 232 681 697 279 582 073
Statement of Comprehensive Income
12
Summarised Statement of Cash Flows
Cash portion of LHH 49% acquisition (70 800)
Cash paid to Goldex vendors (33 000)
Cash paid for other acquisitions of minority
shareholders
( 8 912)
Net cash effect of movement in assets and
intangibles
(18 202)
Total (130 914)
(R000) June 2011 June 2010
Cash generated by operating activities 94 558 (28 076)
Cash flows from operating activities 68 419 (35 593)
Cash flows from investing activities (130 914) (134 963)
13
Summarised Statement of Cash Flows
(R000) June 2011 June 2010
Cash generated by operating activities 94 558 (28 076)
Cash flows from operating activities 68 419 (35 593)
Cash flows from investing activities (130 914) (134 963)
Cash flows from financing activities 67 506 94 323
Cash raised from term loan 80 000
Settlement of Pharmafrica vendor
liability
(21 425)
Settlement of existing term loan (25 096)
Draw down on IDC loan 34 027
Total 67 506 14
Summarised Statement of Cash Flows
(R000) June 2011 June 2010
Cash generated by operating activities 94 558 (28 076)
Cash flows from operating activities 68 419 (35 593)
Cash flows from investing activities (130 914) (134 963)
Cash flows from financing activities 67 506 94 323
Net increase in cash 5 011 (76 233)
Cash acquired on acquisition of
subsidiaries (320) 173 641
Cash at beginning of period 231 513 8 363
Cash at end of period 236 204 105 771
15
Summarised statement of financial position
Assets (R000) June 2011 December
2010
Non current 429 065 394 643
Property, plant and equipment 85 098 79 134
Biotechnology 78 203 92%
Medical 5 473 6%
Pharmaceutical 1 422 2%
• As a PPP, The Biovac Institute operates as stand alone company
- Secured funding for capex requirements over the next four years
(R100m) – 75% sourced from IDC
16
Assets (R000) June 2011 December 2010
Non current 429 065 394 643
Property, plant and equipment 85 098 79 134
Goodwill and intangibles 325 333 294 925
Other non current assets 18 634 20 584
• Purchase price allocation on Goldex Healthcare not yet
complete
Opening balance 294 925
Goodwill on acquisition of Goldex 24 886
Goldex intangible assets 5 522
Closing balance 325 333
Summarised statement of financial position
17
Assets (R000) June 2011 December 2010
Non current 429 065 394 643
Property, plant and equipment 85 098 79 134
Goodwill and intangibles 325 333 294 925
Other non current assets 18 634 20 584
Current 1 088 138 821 047
Inventory 337 481 233 795
Trade receivables 484 288 352 079
Other current assets 10 143 2 955
Cash and cash equivalents 256 226 232 218
Non-current assets held for sale 2 815 2 815
Total Assets 1 520 018 1 218 505
Equity and Liabilities
Summarised statement of financial position
Opening balance 197 447
Acquisition of controlling interest in subsidiary 103 453
Share issue 1 500
Closing balance 302 400 18
Equity 465 010 502 256
Share Capital and Premium 302 400 197 447
Reserves attributable to holders of the Parent 98 487 123 756
Non controlling interest 64 123 181 053
June 2011
(R000)
2010
(R000)
Days
June 2011
Days
2010
Inventory 337 481 233 795 89 69
Debtors 484 288 352 079 99 79
Creditors (800 265) (559 787) (213) (166)
Net working capital
invested 21 504 26 087 (25) (18)
• Large quantities of back orders on EPI vaccines which were supplied
towards end of period affected working capital cycle
• Stock levels have normalised post period end
Working Capital
19
Assets (R000) June 2011 December 2010
Non current 429 065 394 643
Property, plant and equipment 85 098 79 134
Goodwill and intangibles 325 333 294 925
Other non current assets 18 634 20 584
Current 1 088 138 821 047
Inventory 337 481 233 795
Trade receivables 484 288 352 079
Other current assets 10 143 2 955
Cash and cash equivalents 256 226 232 218
Non-current assets held for sale 2 815 2 815
Total Assets 1 520 018 1 218 505
Equity and Liabilities
Equity 465 010 502 256
Reserves attributable to holders of the Parent 400 887 321 203
Non controlling interest 64 123 181 053
Non current liabilities 182 546 102 723
Other financial liabilities 162 204 80 901
Deferred taxation liability 20 342 21 822
Current liabilities 872 462 613 526
Accounts payable and provisions 800 265 558 787
Other current liabilities 72 197 54 739
Total equity and liabilities 1 520 018 1 218 505
Summarised statement of financial position
Gearing
June 2011
(Excl TBI)
June 2010
(Incl TBI)
December
2010
(Excl TBI)
Interest bearing debt
(R000) 109 783 180 790 89 870
Equity (R000) 359 901 465 010 408 501
% 31% 39% 22%
• Gearing is calculated excluding The Biovac Institute as it is ring fenced and
operates as a stand alone company
21 Note: Debt equity ratio is calculated using interest bearing debt
DIVISIONAL REVIEW & PROSPECTS
22
LITHA BIOTECH
23
Litha Biotech: Business overview
Litha Biotech
business units
• The Biovac Institute: Manufacturing facility (in
progress) in Cape Town.
• Litha Vaccines and Litha Medical Logistics: Cold
storage and distribution facility in Johannesburg
Principals
(agencies)
• Sanofi Pasteur GSK
• Heber Biotec Pfizer
• Novartis
• SSI (Staten Serum Institute)
Distribution • South Africa Botswana
• Namibia Mozambique
• Swaziland
Key vaccines
coverage
• Tuberculosis, Polio, Tetanus, Hepatitis B, Pertussis,
Measles, Diphtheria, Pneumonia, Rotavirus, Haemophilus
Influenza b
Top customer
profile • Department of Health, private immunisation clinics
24
Strategy
Manufacturing facility at The Biovac Institute to be operational by 2013
• Manufacture affordable, quality vaccines
• Product to ultimately be World Health Organisation pre-qualified
• Attract and improve skills
Partnering with NGOs for vaccine development in Africa and cold chain
distribution in the region
Securing technology transfers with major suppliers
Uninterrupted paediatric supply of vaccines
Ongoing increase of effective shareholding in The Biovac Institute
Litha Biotech: Strategy
25
26
Focus remains on manufacture readiness in 2013
• Development programme towards manufacturing on track
- The Biovac Institute investment currently dragging down margin - to be rectified gradually post 2013 manufacture
• LHG increased its effective shareholding in The Biovac Institute from 33% to 41%
- Meets strategy of increasing stake and becoming a meaningful vaccine manufacturer
• Stock turn lumpy in this business
- Temporary stock build-up rectified post period end
• Focus on capacity utilisation of facility until manufacture
- Geared for potential technology transfers, R&D pipeline projects
R(000)
June
2011
June
2010
Dec
2010
Revenue* 645 817 243 976 842 751
Operating Profit 22 633 18 721 50 446
Operating Margin 3.5% 7.7% 6.0%
Litha Biotech: Overview and prospects
* Excludes inter-company sales and interest received
The Biovac Institute
27
Manufacturing Facility
28
LITHA MEDICAL
29
Litha Medical: Business overview
Litha Medical
business units • Filterworks, Litha Critical Care, Manta Medical,
Litha Cardiac, ICU Medical S.A, Earth Medical, Manta
Forensic
Principals
(agencies) • 44
Key
therapeutic
focus
• Anaesthesiology, Cardiology, Infection control,
Orthopaedics, ICU and Theatre, Women’s Health/Urology,
Forensics, Wound care, Infusion therapy, Gynaecology
and Obstetrics
Top customer
profile • Life Healthcare, Netcare, MediClinic
Distribution • South Africa, Botswana & Namibia
30
Strategy
Delivery of cost-effective products and solutions to public and private
sectors
Exploit government and export opportunities and expand existing,
local assembly and packaging to address price competitiveness
Drive cross-selling within group to optimise product offering
Litha Medical: Strategy
31
Litha Medical: Overview and prospects
32
• Operating margins improved due to more favourable mix, despite continued
pressure on pricing from hospital groups
• Careful management of operating costs
• Principals (agencies) secured in 2010, bedded down
• Continued focus on adding more agencies and therapeutic areas as well as
expanding footprint in Africa
* Excludes inter-company sales and interest received
R(000)
June
2011
June
2010
Dec 2010
Revenue* 192 175 157 295 332 922
Operating Profit 58 098 32 233 77 135
Operating Margin 30% 20% 23%
Exceptional performance due to unusual demand in Forensic BU
LITHA PHARMA
33
Litha Pharma: Business overview
Business units • Branded/detailing doctor business unit - Pharmafrica
• Generic/pharmacy/dispensing doctor business unit –
Goldex Healthcare
Principals
(agencies)
• 10
Distribution • South Africa, Botswana & Namibia
Key product
categories • Cold and Flu preparations, NSAIDS/Analgesics,
Cardiovascular agents, Anti-histamines, Ophthalmic agents,
Anti-microbials, Anti-psychotics, Anti-depressants
Top customer
profile • Prescribing GPs and specialists, dispensing doctors,
corporate and independent pharmacies
34
Strategy
Product expansion to commodity and niche branded generic products, new
technologies and novel drug delivery systems from pipeline through Cpoint Inc.
Identifying key acquisitions which will grow product portfolios as well as
agreements with international suppliers of generic pharmaceuticals
Expand retail pharmacy footprint for further growth in prescription and OTC
market
Litha Pharma: Strategy
35
R(000)
June
2011
June
2010
Dec 2010
Revenue* 50 991 10 789 79 200
Operating Profit 10 214 2 759 16 567
Operating Margin 20% 26% 21%
Litha Pharma: Overview and prospects
36 * Excludes inter-company sales and interest received
Focus primarily on improving business scale
• Integration of Pharmafrica and Goldex Healthcare
• Two business units created to optimise market penetration -
branded/detailing doctor & generic/dispensing/pharmacy doctor
• Partnership with Cpoint Inc. continues to expand pharma pipeline
• Agreements with Indian and European manufacturers will allow registration of
50 products during the next 12 months for commercial rollout in 2014
• Product rationalisation, improved listings and implementing of operational
systems
• Products for submission to MCC by end of 2012: 102
CONCLUSION
37
Conclusion
Litha well positioned to:
- Benefit from increased government spend (NHI & revitalisation of public
healthcare)
- Grow market share in the private sector through quality products and
services
Key management focus areas:
- Increase scale to compete effectively in healthcare market
- Skills development and talent acquisition
- Cross-selling opportunities within the group
- Improve cost savings and reduce duplication
- Rolling out shared services strategy
- Increase footprint in Africa
- Improve BBBEE rating
Eight business units moving into one facility by Q1 2012 (Medical and
Pharma)
38
Contact details
39
Litha Healthcare Group Limited Tel: +27 11 516 1700
Fax: +27 11 516 1745
Manta Place, Turnberry Office Park,
48 Grosvenor Road, Bryanston,
Sandton, Gauteng, South Africa
P O Box 68837, Bryanston, 2021,
South Africa
Group CEO: Selwyn Kahanovitz
Tel : +27 11 516 1700
Fax : +27 11 516 1745
Email: [email protected]
Group Deputy CEO: Morena Makhoana
Tel: +27 21 514 5000
Fax: + 27 086 518 1127
Email: [email protected]
Group CFO: Martin Kahanovitz
Tel : +27 11 516 1700
Fax : +27 11 516 1745
Email : [email protected]
Website: www.lithahealthcare.co.za
This presentation contains forward-looking statements about the company’s operations
and financial conditions. They are based on Litha Healthcare Group Limited’s best
estimates and information at the time of writing. They are nonetheless subject to
significant uncertainties and contingencies many of which are beyond the control of the
company. Unanticipated events will occur and actual future events may differ materially
from current expectations due to new business opportunities, changes in priorities by the
company as well as other factors. Any of these factors may materially affect the
company’s future business activities and its ongoing financial results.
DISCLAIMER
40
APPENDIX
41
LITHA Group fact file
Established in 1992
Headquartered in Johannesburg,
South Africa
Over 348 employees nationally
374 million shares in issue
Three divisions namely, Litha Biotech,
Litha Medical & Litha Pharma
Sound, highly experienced
management team
Litha’s Executive Management
Selwyn Kahanovitz
Group CEO
Vast experience in medical and pharmaceutical industry. Founded the
Group in the early 1990’s and has been the CEO of Litha Healthcare
Holdings and The Biovac Institute since inception (28 years experience)
Morena Makhoana
Group Deputy CEO
Qualified doctor with experience in the Government Health system.
Executive Committee member of Developing Country Manufacturers
Network (DCVMN) . CEO of The Biovac Institute – Litha Healthcare
Group’s largest investment (8 years experience)
Martin Kahanovitz
Group CFO
Highly qualified and experienced Financial Director of the group. Building
the administration and financial infrastructure from inception to cater for the
rapid development of the group (13 years experience)
Grant Parker
Group COO
An entrepreneur and a qualified Pharmacist. The newly appointed Group
Chief Operating Officer and currently the Divisional CEO of Litha Medical.
He is also the Managing Director of Filterworks (Pty) Ltd, formerly
Managing Director of the Life Sciences Division of Pall SA
43
Litha’s Executive Team
Mpumulelo Sowazi
Corporate Affairs
Executive
Over 25
years
experienc
e
Served in the legal departments of a number of large South
African corporations including Anglovaal and IBM. Responsible
for corporate affairs and stakeholder management
Sipho Mdleleni
HR Executive
17 years
experienc
e
Group Human Resources head responsible for the development
of HR systems and implementation for the group
Barry Budler
Finance Executive
Head of Group Financial Reporting CA(SA), formerly Group
Financial Controller at two listed companies and Audit Manager
at Deloitte
44
Assets (R000) June 2011 December 2010
Non current 429 065 394 643
Property, plant and equipment 85 098 79 134
Goodwill and intangibles 325 333 294 925
Other non current assets 18 634 20 584
Current 1 088 138 821 047
Inventory 337 481 233 795
Trade receivables 484 288 352 079
Other current assets 10 143 2 955
Cash and cash equivalents 256 226 232 218
Non-current assets held for sale 2 815 2 815
Total Assets 1 520 018 1 218 505
Equity and Liabilities
Equity 465 010 502 256
Reserves attributable to holders of the Parent 400 887 321 203
Non controlling interest 64 123 181 053
Non current liabilities 182 546 102 723
Other financial liabilities 162 204 80 901
Deferred taxation liability 20 342 21 822
Current liabilities 872 462 613 526
Accounts payable and provisions 800 265 558 787
Other current liabilities 72 197 54 739
Total equity and liabilities 1 520 018 1 218 505
Summarised statement of financial position
Litha’s Evolution
46
Litha Biotech
90 106 135 155 164 235
669
1,000
0
200
400
600
800
1000
1200
2003 2004 2005 2006 2007 2008 2009 2010
Growth in EPI Paediatric Vaccine spend
Rm
Source: Litha Healthcare Group 47
Litha Medical
0.80 0.84 0.88 0.95
1.03 1.11
1.20
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
2006 2007 2008 2009 2010 2011 2012
Market Metrics:
Medical Devices Market Growth Forecast Rm 7.0% CAGR
Source: Frost 2007 48
Litha Medical: Market Size and Growth
49
SA medical equipment & supplies market estimated at US$1,035bn in 2010
Ranks among top 30 biggest markets in the world, per capita spending low
at just ± US$21 (due population size)
Very little medical devices produced in SA
• 91% supplied by imports (estimated)
Summary of the SA Medical Device Market, 2010
Market size US$ 1,035 billion
As % of total health expenditure 4.1%
As % of GDP 0.4%
As % of world market 0.4%
Supplied by imports 90.8%
Growth rate 7.1%
Per capita US$21
Source: Espicom estimates
Litha Medical: Therapeutic Areas
Source: Litha Healthcare Group
24
38
15
14 5 2 2
Infection control
Infusion therapy
Anaesthesia
Orthopaedics
Wound therapy
Incontinence Forensics
Therapeutic Products
50
Value – MAT* June 2010 Value – MAT* July 2011
Litha Pharma: Market Size and Growth
* MAT = Moving Annual Total (last 12 month’s)
** ‘Other’ = unscheduled medicines sold through pharmacy
Therapeutic Products
TOTAL Market growth: 10%
Non-generic
Generic
Other **
13.433 55.6%
7.379 30.5%
3.350 13.9%
(+5.7%) (+15.7%)
(+16%)
Source: TPM 12 month MAT June 2010
& July 2011 51
12.702 58%
6.377 29%
2.887 13%
(+5.2%)
(+9.5%)
(+14.3%)