H1 2019 Results Presentation · 8/22/2019 · network of fertility clinics in the world NMC’s...
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H1 2019 Results Presentation 22 August 2019
Transcript of H1 2019 Results Presentation · 8/22/2019 · network of fertility clinics in the world NMC’s...
H1 2019 Results Presentation
22 August 2019
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Safe harbour statement
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Strong first half, delivering double-digit revenue growth
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Continued market leading
performance
Investment in verticals delivered
organic and inorganic growth
Progressed with integration while
maintaining quality standards
Strengthened the balance sheet
and improved leverage
Provided growth opportunities for
NMC’s network
Continued successful execution of
strategy in H1 2019
Key H1 2019 Highlights
Evolved our Multispecialty vertical
with nephrology becoming a key
focus area in Centres of Excellence
Reinforced the Fertility business’ #1
position as a global leader by
leveraging Harvard relationship
Expanded the Long-term care
business to provide outpatient
rehabilitation care
Generated higher revenue through
cross referrals to other segments
from the O&M vertical
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Good progress against strategic growth drivers
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DRG implementation in
Dubai from this year
Positive reforms
catalyzing healthcare
market in Abu Dhabi
Government
Initiatives
KSA Partnership
Completion of KSA
Partnership
Creation of one of the
largest healthcare
operations in KSA
One of the top landmark
events in history of NMC
since inception
Raising acuity
Internationally
associated paediatric
offerings gaining
momentum
Centre of Excellence at
trauma (NMC Royal)
attracting complex
patients
Medical tourism focused
on elective cases in
NMC Royal DIP
Affiliation with Harvard
Medical School uplifting
NMC’s IVF platform
Mandatory insurance
Oman started
implementing mandatory
insurance on limited
scale
Sharjah and Northern
Emirates expected to
launch mandatory
insurance imminently
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Evolution from a family owned business to a FTSE-100 company
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Management and Board committed to balancing business growth, enhancing transparency, improving
governance and adherence to ESG standards
• Aligning management and shareholder interest
• Consideration being given to most appropriate management KPIs to further align with shareholder
interest
• Consultation period will take place to give consideration to appropriate metrics
• E.g. shift in focus from EBITDA to EPS, cash flow or returns metrics
• Commitment to enhance transparency
• Already actively engage with shareholders
• Increased depth and frequency of communications
• Established related party committee
• Investing in and promoting the highest standards in ESG
COO Presentation
22 August 2019
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NMC Group H1 – 2019 at a glance
Revenue Per Patient Growth (y.o.y)
17%
26% y.o.y growth in
LTC patients across GCC
NMC Health patients in H1 2019:
>4mn 16.7% y.o.y
Growth in patient volume
in UAE (y.o.y.):
6.4%
55% y.o.y growth in
IVF cycles across the
Group
26% y.o.y growth
in operational beds
across the Group
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Healthcare – Strong platform continues to deliver growth
Multispecialty Maternity &
Fertility
Long-term &
Home care
Operation &
Management
Total
Healthcare
No. of Countries 4 11 2 10 20
Revenue (US$ ‘000) 695,975 164,495 82,567 14,650 957,687
% Growth (YoY) 33.6% 43.9% 30.8% 89.1% 35.7%
% of Healthcare revenue 72.7% 17.2% 8.6% 1.5% -
Revenue / patient (US$) 168 1,419 20,637 224
% Growth (YoY) 15.7% 32.4% 3.4% 16.8%
Capacity
Licensed beds 1,599 106 502 2,207
% Growth (YoY) 16.5% 0.0% 3.5% 12.4%
Operational beds 1,395 100 427 1,922
% Growth (YoY) 26.4% 0.0% 31.0% 25.6%
% Spare capacity 13% 6% 15% 13%
Patients 3,905,390 115,889 4,001 4,025,280
% Growth (YoY) 17.0% 8.7% 26.5% 16.7%
% Bed occupancy 61.2% 79.7% 86.1% 67.7%
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H1 2019
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Dubai
NMC UAE Business Continues to Achieve Year over Year Growth
Abu Dhabi
13% yoy growth in outpatient volume and 30% yoy
growth in inpatient volume
Hub of centralization initiatives -laboratory, CSSD,
CV services
Over 300 critical patients received under 999
Emergency contract since March 2019
14.8% yoy growth in pediatric outpatient services
NMC Royal Hospital, Khalifa City
71% reduction in average OPD waiting time
43% reduction in average pharmacy turnaround
time
16% decline in annual expenses resulting in
savings of $13mn against budget
NMC Ruwais Hospital
13% yoy growth in outpatient volume
Recognized as COE in Hernia Surgery and
Gastroenterology by Asia Pacific Hernia Society
and World Endoscopy Society respectively
NMC Specialty Hospital,
Abu Dhabi
Received the Best Vendor Award for the
3rd time for the management of UAE
University project
8% yoy increase in Emirati patients
NMC Specialty Hospital, Al Ain
32% yoy growth in outpatient volume and
11.5% yoy growth in inpatient volume
Exclusive MOU with Dubai Corporation
Ambulance Services
Launched the Centre for Digestive Diseases
NMC Royal Hospital, DIP
6.7% and 6.2% YoY total patient growth seen in Abu Dhabi and Dubai regions
Dubai facilities have been practicing shadow billing for 18 months and are fully equipped to handle the upcoming changes from
DRG implementation
54% yoy increase in cardiac surgeries volume
8% yoy increase in inpatient volume
NMC Specialty Hospital, Al Nahda
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Highly profitable O&M vertical reaps benefits in multiple areas
Additional O&M benefits
Cost optimization and revenue enhancement in various areas through cross utilization of resources
Distribution revenue in Pharmacy, Consumables and Devices, and Turnkey projects for Medical Equipment Supply
Optimization of Infrastructure by reduction of CapEx
Data management through the use of our own IT software
In H1 19, we have dedicated additional senior leadership resources generating O&M income of US$15m (with 70-80% net
profit conversion), as believe we have the capacity and capability to continue sourcing O&M opportunities across the
region
Major O&M Contracts
Ministry of Presidential Affairs Abu Dhabi National Oil Company Emirates Hospital Group UAE University
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Operational Highlights: ProVita and CosmeSurge
19% yoy growth in patient volume across UAE
142 operational beds in UAE (14% yoy growth)
Provita / LTC
+80 additional bed capacity in UAE and Oman by H1 2020
Launch of 2 new facilities (Bareen & NMC Ruwais) with 5
upcoming units in H2 2019 and 2020
Impressive yoy growth in patient volume across all
facilities
CosmeSurge
Launched new service lines and technology
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NMC Fertility: From Spain to IVF around the Globe
NMC’s Fertility business has transformed from a two clinic situation in 2015 to become the largest and most diverse
network of fertility clinics in the world
NMC’s solid expertise in Europe, coupled with
inhouse resources, operational expertise and
clinical research serve as the right ingredients for
the group’s global expansion
A conglomeration of over 70 fertility clinics with a
pan continental presence across Europe, GCC,
East Africa, Latin America and North America
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Fertility business – Key Operational Highlights
Recognized best
Our European clinics continue to leverage its capacity and
expertise as the world’s largest oocyte donation program,
with the opening of cross border links from Spain between
Denmark, Italy, Sweden and Latvia
Created a global R&D program, consolidating the activities of
more than 25 full-time equivalents (FTE) dedicated to R&D
worldwide producing around 40 studies and 150 active
communications per year in 175 congresses
Launched Eugin Education which encompasses:
• EBART congresses every two years
• Campus EBART every six months
• Masters Degree in Human ART
Reached global agreements with 2 top industry suppliers to
leverage on Group’s purchasing capacity
Fakih IVF continues to be the leading provider of fertility
services in the GCC region
• Fakih IVF Oman has become the preferred infertility
treatment partner for MOH Oman IPC (International
Patient Care) Department, Oman Royal Police and GHQ
(Ministry of Defence)
• Collaboration with Cleveland Clinic Abu Dhabi oncology
department for fertility preservation through
cryopreservation
Introduced the ROSI (Round Spermatid Injection) treatment,
an innovative method to enhance the success rate for male
patients
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NMC Healthcare KSA – Updates and Milestones
Over 300,000 patients were seen across KSA
The average occupancy rates across all KSA legacy portfolio assets is above 75%
CCSMC in Jeddah continues to outperform expectations, with 96% occupancy, additional service
lines, and licensing of additional beds
Salam Hospital Riyadh has rebranded to NMC Specialty Hospital, and improved occupancy rates
from less than 40% to 76%
Cross-clinical resource program involving
sharing and utilization of existing clinical
resources
Centralization of procurement functions and
standardization of suppliers is progressing
well
Key support staff from UAE have been
deployed to aid and expedite the integration
process with CARE
NMC Trading is helping replicate the UAE
cost optimization benefits model
Progress on Synergies
Appointment of key new personnel: COO &
CFO
Ongoing centralization of all key functions
including HR, treasury, finance, marketing,
and RCM
The restructuring of CARE board is in
process and the Annual General Board
meeting has been scheduled for 15th
September
Improved Corporate Structure
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NMC Healthcare KSA: Operational Highlights
Ha’il
Najran
Jeddah
Riyadh
Al Khobar
Al Qadhi Specialty
Chronic Care
Above 80% YoY increase in revenue
Introduced Home healthcare service, securing
SAR 250k/month
Recognized as one of the safest hospitals in
KSA through the national Essential Safety
Requirements (ESR) program
Phenomenal 46% yoy revenue growth
The only CBAHI accredited facility in Najran
Ophthalmology service launched and positioned as COE for region
Preferred private hospital of choice for MOH patient referrals
NMC Hospital, Hail
Signed 3 contracts with referring polyclinics
and thereby a 6% increase in OP volume
Dialysis and Dermatology services added
which improved the acceptance criteria for
MOH referred patients
NMC Specialty Hospital
Rebranded to NMC Specialty Hospital, with
improved occupancy rates from less than
40% to 76%
Strengthened the relation with MOH with over
1,200 referred across different specialties
Preparation for JCI started in H1, achieving
JCI will have a positive impact on structuring
the price list by 15%
As Salama Hospital
Obtained CBAHI accreditation and thereby
10% increase in reimbursement prices for MOH
services
Started new service lines; Home health care
and Long-Term care
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H2 2019 – Way Forward
Continued focus on achieving the 2019 strategy to drive growth with increased capacity,
addition of subspecialty services and expansion across multiple geographies
Clinical Governance model will remain strong with emphasis on improved outcomes,
patient safety, and standardization of clinical best practice across the organization
Saudi Arabia business will continue to rapidly grow in H2 2019 with additional bed
capacity and the addition of more sub-specialty services
Strong growth expected in H2 2019 driven by sustained ramp-up, integration and
expansion of acquisitions and continued operational excellence
NMC will focus on specific areas of improvement for CARE with immediate emphasis on
clinical services enhancement, infrastructure improvement and business enhancement
NMC is focused on diversifying revenue away from GOSI reliance to improve Quality of
Earnings with the introduction of NMC’s model for clinical and business success; IVF,
Cosmetics, Long-term care & Rehab, Pediatrics, Obstetrics and Oncology
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CFO Presentation
22 August 2019
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Maintaining an unbroken track record of delivering on promised growth
Post-IFRS 16 Pre-IFRS 16
(US$m) H1 2019*FY 2019
guidanceH1 2019
FY 2019
guidanceH1 2018
% growth
(YoY)
Revenues 1,236.0 2,500 - 2,540 1,236.0 2,500 - 2,540 932.0 32.6%
EBITDA 323.5 665 - 675 276.3 575 - 585 225.5 22.5%
EBITDA margin 26.2% 26.6% 22.4% 23.0% 24.2% (180bps)
Net income to equity
holders138.1 297 - 305 151.0 320 - 330 116.5 29.6%
EPS - Basic 0.66 - 0.72 - 0.56 29.1%
Net debt - to - EBITDA 3.4x 3.4 - 3.5x 2.7x - 3.4x
* H1 2019 is the first period to reflect the adoption of IFRS 16. As a result, an unadjusted comparison with H1 2018 is not meaningful
• The healthcare market remains highly predictable
• NMC’s track record of guidance and delivery now extends to six years, with management confident that 2019 will
prove to be no different
• In line with guidance, EBITDA margin compressed in H1 2019 due to 1) contribution from Aspen Healthcare, which
is associated with lower margins and 2) increased contribution from assets in early stages of ramp up (particularly
in KSA)
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H2 consistently records higher share of annual of top and bottom lines
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47% 48%
45%
53% 52%
55%
0%
10%
20%
30%
40%
50%
60%
FY 2016 FY 2017 FY 2018
H1 H2
Share of FY revenues
47%
48%
46%
53%
52%
54%
42%
44%
46%
48%
50%
52%
54%
56%
FY 2016 FY 2017 FY 2018
H1 H2
Share of FY EBITDA
47%
44%
47%
53%
56%
53%
0%
10%
20%
30%
40%
50%
60%
FY 2016 FY 2017 FY 2018
H1 H2
Share of Net Income to equity holders
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H1 2019 segmental data
H1 2019 segmental data
(US$m) Healthcare Distribution Adj/Elimination Group
Revenue 957.7 304.4 (26.1) 1,236.0
% Revenue growth 35.7% 19.4% 32.6%
% Contribution to Group Revenue 75.9% 24.1%
EBITDA 313.4 43.6 (33.5) 323.5
% EBITDA Margin 32.7% 14.3% 26.2%
% contribution to Group EBITDA 87.8% 12.2%
Without IFRS 16 Impact
EBITDA 271.6 41.4 (36.7) 276.3
% EBITDA Growth 19.8% 36.5% 22.5%
% contribution to Group EBITDA 86.8% 13.2%
% EBITDA Margin 28.4% 13.6% 22.4%
EBITDA Margin YoY change (380) bps 170 bps (180) bps
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• In line with guidance, Healthcare EBITDA margin compressed in H1 2019 due to 1) contribution from Aspen
Healthcare, which is associated with lower margins and 2) increased contribution from assets in early stages of ramp
up (particularly in KSA)
• The sharp growth in revenues, as well as margin improvement, for the Distribution division was supported by new
contracts, including one-off contracts across government and private sectors. Additionally, referrals and cross-sales
on the back of O&M contracts have translated into sizable revenue growth for the Distribution division
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One of highest FCF conversion for H1 historically
Free Cash Flow details
Significant portion of operational beds in ramp-up phase
(H1 2019 operational beds)
Cash Conversion % based on Free Cash flow Adjusted for
growth CAPEX
18.8%
46.7%
36.9%
2.1%
51.1%
34.3%
50.5%
56.3%
50.9%
2015 2016 2017 2018 2019
H1 FY
31%
69%
Beds in ramp-up phase
US$’000 30-Jun-16 30-Jun-17 30-Jun-18 30-Jun-19
Profit for the year before tax 71,173 99,306 118,717 140,594
Add/(Less): Net Working
Capital Movement(42,351) (77,042) (151,441) (63,353)
Add: Dep & Amortisation 26,342 35,303 43,409 59,377
Less: Total Capex (37,032) (23,377) (56,414) (96,520)
Growth Capex (27,297) (10,049) (17,242) (63,356)
Maintenance Capex (9,735) (13,328) (39,172) (33,164)
Add/(Less): IFRS 16
Impact --
- 11,133
Add: Non cash charge to PL 8,721 18,754 33,201 26,540
Free Cash Flow (A) 26,853 52,944 (12,527) 77,771
Free Cash Flow (Adjusted for
Growth Capex) (B)54,150 62,993 4,715 141,127
Cash Flow Conversion based
on (B)46.7% 36.9% 2.1% 51.1%
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Cash Bridge (US$m)
491
574
324
92(63)
(51)
(97)
(49)
(78) 5
2018 cash &bank balance
Add: EBITDA Add: Increasein gross debt
(Less):Workingcapital
(Less): Netfinance cost
(Less): Capex(net of
disposals)
(Less): Leaseliability paid
(Less):Acquisitions& investment
(Less): Others H1 2019 cash& bankbalance
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Outlook and key takeaways from trends in H1 2019
FY 2019 guidance remains intact
Guidance
US$m Post-IFRS 16 Pre-IFRS 16
Revenues 2,500 - 2,540 2,500 - 2,540
EBITDA 665 - 675 575 - 585
Net income to equity
holders297 - 305 320 - 330
IFRS 16 lease liabilities 680 – 690 -
Net debt-to-EBITDA Below 3.4x -
Strength of legacy assets
13%
15%
12.0% 12.5% 13.0% 13.5% 14.0% 14.5% 15.0% 15.5%
Revenues
EBITDA
YoY growth for assets that existed as at end 2017
Demonstration of the ability of business to deleverage
3.1
2.7
2.5
2.6
2.7
2.8
2.9
3.0
3.1
3.2
2018 H1 2019
Pre-IFRS 16 net debt to EBITDA (x)
Growth vs. value extraction now?
51%55%
2%
52%
C A S H F L O W C O N V E S I O N N E T I N C O ME - T O - E B I T D A
H1 2019 H1 2018
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Appendix: H1 2019 Results in Charts and Tables
22 August 2019
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1 Group P&L items
2 Segmental information
3 Cash flow items
4 Balance sheet items
Table of Contents
5 Other disclosure
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Maintaining an unbroken track record of delivering on promised growth
Post-IFRS 16 Pre-IFRS 16
(US$m) H1 2019*FY 2019
guidanceH1 2019
FY 2019
guidanceH1 2018
% growth
(YoY)
Revenues 1,236.0 2,500 - 2,540 1,236.0 2,500 - 2,540 932.0 32.6%
EBITDA 323.5 665 - 675 276.3 575 - 585 225.5 22.5%
EBITDA margin 26.2% 26.6% 22.4% 23.0% 24.2% (180bps)
Net income to equity
holders138.1 297 - 305 151.0 320 - 330 116.5 29.6%
EPS - Basic 0.66 - 0.72 - 0.56 29.1%
Net debt - to - EBITDA 3.4x 3.4 - 3.5x 2.7x - 3.4x
* H1 2019 is the first period to reflect the adoption of IFRS 16. As a result, an unadjusted comparison with H1 2018 is not meaningful
• The healthcare market remains highly predictable
• NMC’s track record of guidance and delivery now extends to six years, with management confident that 2019 will
prove to be no different
• In line with guidance, EBITDA margin compressed in H1 2019 due to 1) contribution from Aspen Healthcare, which
is associated with lower margins and 2) increased contribution from assets in early stages of ramp up (particularly
in KSA)
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Strong top and bottom-line growth
932.0 1,236.00
200
400
600
800
1,000
1,200
1,400
H1 2018 H1 2019
225.5 276.30
50
100
150
200
250
300
H1 2018 H1 2019*
116.5 151.00
20
40
60
80
100
120
140
160
H1 2018 H1 2019*
Revenue US$m EBITDA US$mNet income to equity
holders US$m
* Excluding impact of IFRS 16
• On a pre-IFRS 16 basis, EBITDA-to-net income to equity holder’s conversion ratio stood at 55% vs. 52% for H1 2018
• As utilization of existing assets continues to improve, combined with extraction of synergies from acquired assets,
we expect the trend of improvement in the conversion ratio is expected to sustain in the near to medium term
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Analysing revenue and EBITDA growth
910.4 1,029.6
H1 2018 H1 2019
Revenues from assets that existed at end of 2017 (US$m)
Revenues
248.8 286.8
H1 2018 H1 2019
EBITDA (excluding IFRS 16 impact) from assets that existed at end of 2017 (US$m)
EBITDA
• In order to demonstrate the strong growth profile of NMC’s legacy portfolio, the charts above illustrate revenue and
EBITDA growth for assets that existed as at the end of 2017
• Note that all assets acquired during 2018 are excluded for this exercise
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Key P&L items: Details of financial expenses & instruments
(US$m) HY 2019 FY 2019 guidance
Bank interest 36.9
Bank charges 3.1
Total bank interest & charges 40.0 77.0
Coupon payment on convertible bond 4.2
Interest on sukuk 12.5
Sukuk & Bond interest 16.7 32.0
Notional interest on convertible bond 6.6
Financial instruments fair value adjustments 0.7
Amortization and re-measurement of option redemption liability 3.6
Non-cash financial charges 10.3 15.0
• Financial charges remained in line with management’s expectations and full year guidance provided for FY 2019
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Key P&L items: Other income
Other Income (US$m) H1 2019 H12018
Reimbursement of advertisement & promotional expenses for distribution
business30.6 27.4
Reimbursement of expenses for O&M contracts 13.5 1.3
Other ancillary income 11.5 12.4
Total 55.6 41.1
• Only US$11.5m (H1 2018: US$12.4m) of other income impacted EBITDA in H1 2019
• Other income includes US$44.1m (H1 2018: US$ 28.7m) reimbursement of costs incurred by NMC on behalf of other
parties, with corresponding expenses reported in direct costs and general and administrative expenses
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1 Group P&L items
2 Segmental information
3 Cash flow items
4 Balance sheet items
Table of Contents
5 Other disclosure
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Group revenue split by geography
79.9%
7.5%
4.4%8.2%
UAE UK KSA Other
• The UAE posted 15.6% YoY revenue growth, demonstrating the continued strength of NMC’s home market
• KSA posted the highest growth on a country-by-country basis. Revenues jumped 71.8% YoY as a number of assets,
both existing and newly acquired in 2018, recorded a rapid increase in utilization
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H1 2019 segmental data
H1 2019 segmental data
(US$m) Healthcare Distribution Adj/Elimination Group
Revenue 957.7 304.4 (26.1) 1,236.0
% Revenue growth 35.7% 19.4% 32.6%
% Contribution to Group Revenue 75.9% 24.1%
EBITDA 313.4 43.6 (33.5) 323.5
% EBITDA Margin 32.7% 14.3% 26.2%
% contribution to Group EBITDA 87.8% 12.2%
Without IFRS 16 Impact
EBITDA 271.6 41.4 (36.7) 276.3
% EBITDA Growth 19.8% 36.5% 22.5%
% contribution to Group EBITDA 86.8% 13.2%
% EBITDA Margin 28.4% 13.6% 22.4%
EBITDA Margin YoY change (380) bps 170 bps (180) bps
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• In line with guidance, Healthcare EBITDA margin compressed in H1 2019 due to 1) contribution from Aspen
Healthcare, which is associated with lower margins and 2) increased contribution from assets in early stages of ramp
up (particularly in KSA)
• The sharp growth in revenues, as well as margin improvement, for the Distribution division was supported by new
contracts, including one-off contracts across government and private sectors. Additionally, referrals and cross-sales
on the back of O&M contracts have translated into sizable revenue growth for the Distribution division
34
Growth charts – Healthcare & Distribution
Revenue and EBITDA (pre-IFRS 16)
706.0 957.70
200
400
600
800
1,000
1,200
H1 2018 H1 2019
Healthcare Revenue US$m
255.0 304.4230
240
250
260
270
280
290
300
310
H1 2018 H1 2019
Distribution Revenue US$m
30.3 41.40
5
10
15
20
25
30
35
40
45
H1 2018 H1 2019
Distribution EBITDA US$m
226.8 271.6200
210
220
230
240
250
260
270
280
H1 2018 H1 2019
Healthcare EBITDA US$m
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Healthcare – Strong platform continues to deliver growth
Multispecialty Maternity &
Fertility
Long-term &
Home care
Operation &
Management
Total
Healthcare
No. of Countries 4 11 2 10 19
Revenue (US$ ‘000) 695,975 164,495 82,567 14,650 957,687
% Growth (YoY) 33.6% 43.9% 30.8% 89.1% 35.7%
% of Healthcare revenue 72.7% 17.2% 8.6% 1.5% -
Revenue / patient (US$) 168 1,419 20,637 224
% Growth (YoY) 15.7% 32.4% 3.4% 16.8%
Capacity
Licensed beds 1,599 106 502 2,207
% Growth (YoY) 16.5% 0.0% 3.5% 12.4%
Operational beds 1,395 100 427 1,922
% Growth (YoY) 26.4% 0.0% 31.0% 25.6%
% Spare capacity 13% 6% 15% 13%
Patients 3,905,390 115,889 4,001 4,025,280
% Growth (YoY) 17.0% 8.7% 26.5% 16.7%
% Bed occupancy 61.2% 79.7% 86.1% 67.7%
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1 Group P&L items
2 Segmental information
3 Cash flow items
4 Balance sheet items
Table of Contents
5 Other disclosure
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Substantial Working capital improvement in H1 2019…
Working capital improvement
H1 2019 FY 2018
Receivables
Inventory
Receivables & Inventories Split
Group working capital cycle improved to 90 days in H1
2019, despite of reduction in payables days
The improvement in Group working capital cycle was
driven by reduction in receivables days and inventory
days in particular
In terms of business divisions, the Healthcare segment
continues to benefit from a shorter working capital cycle
37Note: Includes related parties’ trade and non-trade receivables and payables
10799
89
6874
565767
56
118
106
90
H1 2018 FY 2018 H1 2019
Receivables Days Inventory Days
Payables Days Working Capital Cycle (days)
76.1%
23.9%
30.5%
69.5%
77.1%
22.9%
36.2%
63.8%
Improved Revenue Cycle (RCM) management
Increased contribution from cash-based businesses,
including IVF, cosmetics and Aspen Healthcare
Sharp focus on improving receivables collection in KSA
Reduction in receivable days driven by focused strategy
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…supporting one of highest FCF conversion for H1 historically
Free Cash Flow details
Significant portion of operational beds in ramp-up phase
(H1 2019 operational beds)
Cash Conversion % based on Free Cash flow Adjusted for
growth CAPEX
18.8%
46.7%
36.9%
2.1%
51.1%
34.3%
50.5%
56.3%
50.9%
2015 2016 2017 2018 2019
H1 FY
31%
69%
Beds in ramp-up phase
US$’000 30-Jun-16 30-Jun-17 30-Jun-18 30-Jun-19
Profit for the year before tax 71,173 99,306 118,717 140,594
Add/(Less): Net Working
Capital Movement(42,351) (77,042) (151,441) (63,353)
Add: Dep & Amortisation 26,342 35,303 43,409 59,377
Less: Total Capex (37,032) (23,377) (56,414) (96,520)
Growth Capex (27,297) (10,049) (17,242) (63,356)
Maintenance Capex (9,735) (13,328) (39,172) (33,164)
Add/(Less): IFRS 16
Impact --
- 11,133
Add: Non cash charge to PL 8,721 18,754 33,201 26,540
Free Cash Flow (A) 26,853 52,944 (12,527) 77,771
Free Cash Flow (Adjusted for
Growth Capex) (B)54,150 62,993 4,715 141,127
Cash Flow Conversion based
on (B)46.7% 36.9% 2.1% 51.1%
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Growth capex: UAE & Oman the main recipients
Breakdown of H1 2019 CWIP on balance sheet (US$138.1m)
67.0%
28.8%
4.2%
UAE Oman Other
H1 2019 growth capex breakdown (US$63.4m)
87.2%
6.6%6.2%
UAE Oman Other
2018 growth capex breakdown (US$101.2m)
50.4%
45.9%
3.7%
UAE Oman Other
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Growth capex: Key projects under way
Region / Asset Capacity addition CountryExpected Completion
Date
NMC Royal DIP expansion 70 beds UAE H2 2020
NMC Specialty Dubai expansion 140 beds UAE H1 2020
Mirdiff Hills Hospital 100 beds UAE H2 2021
New Sharjah Hospital 70 beds UAE H2 2020
Al Hail Hospital 70 beds Oman H1 2020
Al Khoud Hospital Up to 100 beds Oman H2 2020
IVF, cosmetics and multispecialty clinics 12-15 clinics UAE, Oman & Europe H2 2019 -H1 2020
Up to 560 beds being added across multiple assets, increasing existing capacity by up to 25%
The above mentioned expansions have a total capex budget of US$300-325m, a portion of which has already been
incurred
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New clinics being developed will help expand the reach of various verticals into their respective targeted geographies
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1 Group P&L items
2 Segmental information
3 Cash flow items
4 Balance sheet items
Table of Contents
5 Other disclosure
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Key Balance Sheet items: Other receivables
(US$m) H1 2019
O&M related receivables* 9.0
Accounting reclassification on closing of acquisition 9.5
Other receivables arising from normal course of business (guarantees, bond payments etc) 6.4
* Receivables from non-related party O&M contracts (fees as well as reimbursement of expenses) entered into late 2018
• Other receivables stood at US$61.2m, compared to US$36.3m in FY 18. The increase can largely be explained by the
inclusion of the above items in H1 ‘19
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1 Group P&L items
2 Segmental information
3 Cash flow items
4 Balance sheet items
Table of Contents
5 Other disclosure
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Acquisitions & Investments
Detail US$m
Consideration Paid for 10.32% CARE shares 65.0
Transaction cost relating to overall GOSI transaction 2.4
Total amount paid for strategic partnership with GOSI 67.4
Purchase of minorities in KSA-based subsidiaries 7.4
Deferred/Contingent consideration paid for previous acquisitions 2.8
Total 77.6
NMC KSA* Ownership %
As on June 2019 As on June 2018
As Salama Hospital, Al Khobar 99% 99%
NMC Specialty Hospital, Al Salam, Riyadh 95% 80%
Chronic Care Specialty Medical Centre, Jeddah 100% 100%
New Medical Center Hospital, Hail 100% 100%
Al Qadi Specialty Hospital, Najran 80% 60%
* Following its partnership with GOSI, NMC owns 53% of NMC KSA
• Recognizing the inherent value of its assets in KSA, NMC has been increasing its stake in previously acquired
hospitals through the purchase of outstanding minorities
• Following an active year in terms of M&A in 2018, management has been focusing on integration and extraction of
synergies during the current year
• Excluding the acquisition of CARE shares, there has been no significant investment activity during H1 2019
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IFRS 16 reconciliation
Income statement impact (US$m) Pre-IFRS 16 IFRS 16 impact As reported (post-IFRS 16)
Revenues 1,236.0 - 1,236.0
EBITDA 276.3 47.2* 323.5
Financial expenses (67.6) - (67.6)
Finance cost relating to Lease liabilities - (24.3) (24.3)
Depreciation & Amortization (59.4) - (59.4)
Depreciation (right of use assets) - (36.0) (36.0)
Profit for the period 153.1 (13.1) 140.0
Net income to equity holders 151.0 (12.9) 138.1
* rental expense removed from operating costs
• The group recorded an opening lease liability of US$729.3m (see note 2.2 to the Financial Statements for details)
under IFRS 16. As on 30th June 2019, the total closing lease liability is US$706.9m
• The Group’s estimates of closing lease liability by December 2019 is in line with the guidance of US$690m
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Related party transactions
Key P&L items H1 2019 H1 2018
Purchases of healthcare inventory 39,920 58,940
Management fees 5,350 2,450
Key Balance Sheet items H1 2019 2018
Amounts due to related parties 24,518 47,737
Amounts due from related parties 13,102 7,346
• Purchases include pharmaceutical products manufactured by Neopharma* for various companies and purchased
by NMC Trading division for distributing to various retailers, hospitals, clinics etc in UAE. These purchase are
made at regulated prices fixed by the Ministry of Health in the UAE
• Less than 15% of purchases from Neopharma are utilized by NMC’s own healthcare business
• In terms of management fees, NMC manages all healthcare assets of the Emirates Healthcare Group under an O&M
contract signed in 2017
• Amounts due to related parties are mostly due against purchases from Neopharma
• Amounts due from related parties include trade receivables against O&M fees and pharmaceutical sales, as well as
reimbursable expenses under O&M contracts
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* Neopharma is owned by Dr. B.R. Shetty
