Year End Results PresentationFor 12 months ended 30 September 2013

www.lifehealthcare.co.za

Agenda

Group Group FinancialFinancial Future Future ppReviewReview ReviewReview GuidanceGuidance

Michael Flemming Pieter van der Westhuizen Michael FlemmingMichael FlemmingCEO

Pieter van der WesthuizenCFO

Michael FlemmingCEO

2

Highlights

• SA growth:PPD l h 2 7%– PPD volume growth 2.7%

– Additional beds 95– Good pipeline of beds for next 3 years

Growth

• Occupancy 71.7%• Normalised Ebitda margin 28.1%• Group DSO 31 days

Efficiency

• Continued improvement in clinical outcomes • Focus on training of specialised nurses and doctors • Reduction in carbon footprint

Sustainability

3

SA : GrowthPPDs

2 100

2 200PPDs

3 8% PPD

1 900

2 000

2 1002.7%

6.1%

5 4%

3.8% PPD growth in H2

1 600

1 700

1 800

4.0%

5.4%

2.5%

1 400

1 500

1 600

2008 2009 2010 2011 2012 2013

Bed growth 101 148 475 234 292 95growth

4

SA : GrowthBeds

CategoryNew beds

2013WIP beds

Approvedbeds *

Applicationspending

Capacity expansion at existing facilities 75 231 374 364

New facilities - 94 150 338

*Approved : received Health department licence approval and are in the process of obtaining Municipal approvals before commencing building

Acute HospitalsB d b d th t t k d t f ith t d d Broad based growth to take advantage of areas with strong demand 94 bed Life Hilton Private hospital under construction

5

SA : GrowthBeds

CategoryNew beds

2013WIP beds

Approvedbeds *

Applicationspending

Capacity expansion at existing facilities 75 231 374 364

New facilities - 94 150 338

NLB - Mental Health / 20 35 432Acute Rehabilitation 20 - 35 432

*Approved : received Health department licence approval and are in the process of obtaining Municipal approvals b f i b ildibefore commencing building

New Lines of Business 20 Mental health beds added in 2013 Start construction of 35 bed mental health unit at Life Vincent Pallotti in early 2014 Current total of 703 NLB beds Aim to reach 1,000 NLB beds in 3 years

6

SA : Growth Beds

CategoryNew beds

2013WIP beds

Approvedbeds *

Applicationspending

Capacity expansion at existing facilities 75 231 374 364

New facilities - 94 150 338

Mental Health / 20 35 432Acute Rehabilitation 20 - 35 432

Total 95 325 559 1 134

Strong overall pipeline of beds Good combination of brownfield, greenfield and mental health / acute rehabilitation Cover 8 regions within SA

7

SA : GrowthOther

Renal Dialysis chronic stations added : 42 stationschronic stations added : 42 stations

total number of stations : 122 stations

Complete roll-out in 2014: to 180 stations

Acute renal dialysis coverage expanding

NLB (mental health, acute rehabilitation, renal dialysis) revenue growth

361

444

350400450500

CAGR : 37.2%R’000m

172216

150200250300350

050

100150

2010 2011 2012 2013

NLB Revenue

8

SA : GrowthOther

Oncology A new Oncology unit at Life Vincent Pallottigy

providing both chemotherapy & radiosurgery

Radiosurgery will be supplied through thenew R46m Novalis Radiosurgery machine g ywhich provides non-invasive shaped beam radiosurgery

Only machine in Africa

The chemotherapy unit opened in 2013 andthe radiosurgery unit will open in Q1 2014

Affordable Maternity ProductAffordable Maternity Product Started piloting the affordable

maternity product

O 50 ll d Over 50 women enrolled

Considering extending the pilot to2 additional facilities

9

SA : GrowthHealthcare Services

Healthcare Services Life Esidimeni

stable performance Renewal of Conradie (WC) : 220 beds and Shiluvana Care Centre (Limpopo) : 160 beds

(potential to add 40 paediatric beds)

Life Occupational Health Continued strong growth in a difficult environment

831.0

636.0674.0

748.0

600

800

CAGR : 9,3%R’000m

200

400

0

200

2010 2011 2012 2013

HCS Revenue

10

2010 2011 2012 2013

India : Max Healthcare Bed Growth

BedOperational

bedsOperational

bedsUnit

Bed Capacity

bedsSept 2013

bedsSept 2012

Existing Hospitals 1 080 1 040 1 014

New Hospitals:

Shalimar Bagh 288 150 78

Mohali 204 141 95

Bathinda 205 56 83

Dehradun 201 89 48

Total new 898 436 304

C bi d t t l 1 943 1 476 1 318Combined total 1 943 1 476 1,318

467 beds still to become operational

11

p

India : Max Healthcare Occupancy

BedOperational

bedsOperational

beds OccupancyOccupancy

atUnit

Bed Capacity

bedsSept 2013

bedsSept 2012

OccupancyQ2 2014

at30 Sept 2013

Existing Hospitals 1 080 1 040 1 014 79.1% 85%

New Hospitals:

Shalimar Bagh 288 150 78 84.2% 100%

Mohali 204 141 95 72.8% 80%

Bathinda 205 56 83 56.6% 55%

Dehradun 201 89 48 73.8% 73%

Total new 898 436 304 74.7% 82%

C bi d t t l 1 943 1 476 1 318 77 8% 84%Combined total 1 943 1 476 1,318 77.8% 84%

12

SA : EfficiencyEbitda Margin

Case mix change: positive margin impact

Strong management of consumables procurement g g p

Continued management of overheads and administrative costs

28

30%

28.1%

26

28

24.7%

26.0%26.6%

22

24

202010 2011 2012 2013

13

SA : EfficiencyCase Mix Impact

6%Asthma

Incidence of Chronic Diseases of Lifestyle Amongst LHC Admissions

4%

5%

Asthma

Coronary Artery Disease

Diabetes Mellitus Type 2

Hyperlipidaemia

3%

4%Diabetes Mellitus Type 1

Cardiac Failure

Epilepsy

H poth roidism

1%

2%Hypothyroidism

Dysrhytmias

Chronic Obstructive Pulmonary Disease

Chronic Renal Disease

0%

1%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Rheumatoid Arthritis

HIV

The overall incidence of chronic diseases of lifestyle (CDL) amongst patients admitted to LHC facilities has doubled from 16% in 2003 to 33% in 2012

14

SA : EfficiencyEffective use of assets

71.0 71.2 71.772% H2 occupancy:74.3%

69.5

68

7074.3%

64

66

2010 2011 2012 2013

924

2013: Bed Occupancy Split

1321

2012: Bed Occupancy Split

27

40

2413

24

42

21 < 60%60 - 69%70 - 79%80%+ 4042 80%

Beds above 70% occupancy: 63% Beds above 70% occupancy: 64%

15

EfficiencyAdministrative - Working capital management

5554 54

55

60

Consistent good performance in working capital management

4951

49

45

50

DSO Total DSO:

31 days (2012: 30)

3436

40

Hospital DSO:29 days (2012: 29 days)

Hospital DSO excluding COID:

25.824 6 25.5

3433

3130

31

30

35 25 days (2012: 25 days)

Stock cover Rigorous processes in place to ensure

23.7 24.3 24.6 24.3

20

25

2008 2009 2010 2011 2012 2013

Rigorous processes in place to ensure continuity of supply

008 009 0 0 0 0 0 3

Stock cover DSO Days payables outstanding

16

SA : EfficiencyPrograms

Cost of sales management Cost of Sales inflation: 2.2%

17.31520

Rand depreciation

%

Cost of Sales inflation: 2.2% Strong procurement performance

Product utilisation

5.92.2

05

10

Rand CPI LHC COS

Rand depreciation

CPI

LHC COS Inflation

Pathology - Blood Gas tests in ICU Completing roll out of the in-house delivery of blood gas pathology tests in ICUs

Fi i l b fit h d ith di l h

depreciation Inflation

Financial benefits shared with medical schemes

Positive contribution to Ebitda in 2014

Central LaundryCentral Laundry Opened in-house laundry for the Inland region, covering 28 hospitals (4 100 beds)

Centralised credit services Centralisation of Inland Credit services bringing operational efficiencies and

cost savings

17

SA : EfficiencyPrograms

Systems driven efficiency through Impilo

Focus on driving standardisation reduction in administrative costs & economiesFocus on driving standardisation, reduction in administrative costs & economiesof scale

Completion and rollout of the e-dispensing module using bar coding technology

e-theatre billing module will be ready for piloting at the end of the 2013. Using multi-touch technology the hospitals will benefit from a paperless real time billing process

Environment

Implementing Environmental Management system – objective of obtaining an ISO 14001 environmental certification

Energy efficiency projects Energy efficiency projects

A real-time, online electrical metering system has been installed

Converting existing geysers and gas-fired boilers to more efficient heat pump hot water ti t A d ti f 3 illi k f CO i i t d tgeneration systems. A reduction of over 3 million kg of CO2 emissions to date

Life Hilton Private Hospital will be the first greenfield hospital within Life Healthcare to be designed according to the new specifications - anticipate the hospital being 20% more efficient

18

SA : SustainabilityQuality - Measuring clinical outcomes

MeasureOutcome Sept 2013

OutcomeSept 2012 Standard

Patient incident rate 3.24 3.80 Per 1,000 PPDs

VAP (Ventilator Associated Pneumonias) 2.69 4.02 Per 1,000 VAP days

SSI(S i l Sit I f ti ) 0 74 0 97 P 1 000 th t(Surgical Site Infections) 0.74 0.97 Per 1,000 theatre cases

CLABSI(Central Line Associated Blood Stream Infections) 0.83 1.11

Per 1,000 central line days) y

CAUTI(Catheter-related Urinary Tract Infections) 0.57 0.68 Per 1,000 catheter days

FIM/FAM Score 1.14 1.00 > 0.9

Continuous improvement in clinical quality indicators A reduction in the HAI (Hospital associated infection) rate: 0.52 (2012: 0.65)

19

SA : SustainabilityRegulatory environment

Competition Commission (CC) market inquiry

To date the final terms of reference have not been released by the CC ExpectTo date the final terms of reference have not been released by the CC. Expect early December 2013

The Group believes that if the inquiry is to achieve it’s objectives it needs to: be an independent, factual and impartial inquiry which includes the participation of

all major stakeholders

cover the entire industry, including the public sector and not just review the hospital, co e t e e t e dust y, c ud g t e pub c secto a d ot just e e t e osp ta ,doctor and insurance sectors

have detailed analysis of the factors that drive healthcare expenditure

i th t t l i ffi i i f th i d t d k d ti t review the structural inefficiencies of the industry and make recommendations to remove them

20

SA : SustainabilitySkills development

Category DescriptionSpecialist training Year 2 of R78m 6 year funding program

Focus on Cardiology, Nephrology, Maternity, Paediatrics, Oncology

Nurse training Enrolled 920 students enrolled Life College of Learning now 15 years old – graduated over 10 000 nurses Set-up nursing academy in Delhi in conjunction with MHC. Focus onSet up nursing academy in Delhi in conjunction with MHC. Focus on

specialised nursing – critical care and theatre nurses.

Pharmacist training Life Healthcare launched the Clinical Pharmacy Practice certificate course in collaboration with NMMU

87 pharmacist assistants in training

Management training 107 participants graduated from The Life School of Management, an accredited UK based Institute of Leadership and Management (ILM) foraccredited UK-based Institute of Leadership and Management (ILM) for Front Line Management

21

FinancialFinancial ReviewPi t d W th iPieter van der WesthuizenCFO

www.lifehealthcare.co.za22

Highlights

Revenue Growth

Excellent normalised Strong cash

generationIncreased dividendGrowth EPS growth generation dividend

+17 4%+17 4%+17 4%+8 3%+8 3%+8 3% +12 2%+12 2%+12 2% ToToTo

Revenue +8 3% to R11 843m

+17.4%+17.4%+17.4%+8.3%+8.3%+8.3% +12.2%+12.2%+12.2% To126 cps

To126 cps

To126 cps

Revenue +8.3% to R11 843mOperating profit +16.0% to R2 948mProfit before tax +17.5% to R2 833m

EPS + 17.9% to 169.7 centsHEPS +20.6% to 169.7 centsNormalised EPS +17.4% to 162.1 centsDividend +20.0% to 126.0 cps

Normalised earnings exclude non-trading related items such as profit/loss on disposal of businesses and PPE, impairment of intangibles and ti t f d l /d fi it

23

retirement fund surpluses/deficits.

Financial results

Sept 2013

Sept2012 %

R 11 843 10 937 8 3%Revenue 11 843 10 937 8.3%

Normalised Ebitda 3 332 2 907 14.6%

Normalised Ebitda margin 28.1% 26.6%g

Revenue growth in hospitals 2 7% increase in PPDs (3 8% increase in H2)2.7% increase in PPDs (3.8% increase in H2) 5.3% increase in revenue/ppd Continued strong growth of medical cases - dilutes revenue/ppd

N li d Ebitd i Normalised Ebitda margin Positive impact on Ebitda margin due to growth in medical cases Excellent management of procurement and overheads Continue to leverage efficiencies across the group

24

Financial resultsMedical / Surgical split

Acute: Medical / Surgical split

525456

464850

404244

2008 2009 2010 2011 2012 2013

Surgical Medical

S f Since 2011 experienced a faster growth in medical cases in the acute hospitals Combination of LHC patient mix & the disease burden

25

Financial resultsMedical / Surgical split

Acute: Medical / Surgical split Group: Medical / Surgical split

525456

525456

464850

464850

404244

404244

2008 2009 2010 2011 2012 2013

Surgical Medical

2008 2009 2010 2011 2012 2013

Surgical Medical

f The impact of Mental Health and Acute Rehabilitation only increases the numberof medical cases

26

Four year review

Revenue Normalised Ebitda

44412000

14000 Hospital HCS NLB2 907

3 332

3 200

3 600

CAGR : 15.3%CAGR : 10.5%R’000 mR’000 m

636674

748831

172216

361

8000

10000

12000

2 1732548

2 000

2 400

2 800

7978 8922 9828 10568

2000

4000

6000

400

800

1 200

1 600

C

02010 2011 2012 2013

0

400

2010 2011 2012 2013Hospital revenue includes other revenue

Consistent growth in revenue Improvement in efficiencies assisted growth in normalised Ebitda

27

Financial resultsRevenue breakdown

2010 2013

24.7%2.7%

1.3% 8.9%

28.1%

10 2%

3.2%

1.1% 8.4%

12.1%10.2%

16.7%

33 3%

15.7%

33.6% 33.3%

Normalised EBITDA Employee benefits expense

COS Surgical COS Ethicals

Occupational expenses Repairs and maintenance

Other

Financial results

Sept2013

Sept2012 %

REVENUE 11 843 10 937 8.3%

Normalised Ebitda 3 332 2 907 14.6%

Normalised Ebitda margin 28 1% 26 6%Normalised Ebitda margin 28.1% 26.6%

Operating profit 2 948 2 542 16.0%

Associates 65 85

Attributable earnings 1 761 1 496 17.7%

Associates include JMHJMH MHC included for 12 months compared to last year 8 months

Attributable earnings is defined as earnings attributable to ordinary shareholders

29

Attributable earnings is defined as earnings attributable to ordinary shareholders

Financial results

Sept2013

Sept2012 %

EPS 169.7 143.9 17.9%

Profit on disposal of business / gain on re-measuring of fair value 0.4

(0 4)(2.5)(0 7)

Profit on disposal of property, plant and equipment (0.4) (0.7)

HEPS 169.7 140.7 20.6%

Retirement funds (6 0) (2 6)Retirement funds (6.0) (2.6)

Gain on de-recognition of finance lease liability (1.6) -

Normalised EPS 162.1 138.1 17.4%

Normalised EPS – excl. impact of MHC 170.1 144.2 18.0%

2014: new accounting standards impact EPS and HEPS. The retirement fund surplus will not form part of the EPS & HEPS calc lation If applied to 2013 EPS & HEPS o ld bothnot form part of the EPS & HEPS calculation. If applied to 2013, EPS & HEPS would both be 163.7 cps respectively.

30

Financial results

Normalised EPS

138.1

162.1 160.0

180.0 CAGR: 20.5%

92 7

119.3

138.1

100 0

120.0

140.0

92.7

60.0

80.0

100.0

20.0

40.0

-2010 2011 2012 2013

31

Financial resultsSegmental review

Sept2013

Sept2012 %

REVENUE 11 843 10 937 8.3%Hospital division 11 010 10 185 8.1%Healthcare services 831 748 11.1%Healthcare services 831 748 11.1%Other 2 4

Hospital Division: Improved H2 for hospital division with revenue growing 9.5% HCS division: Good overall performance from HCS despite slightly softer H2

32

Financial resultSegmental review

Sept2013

Sept2012 %

REVENUE 11 843 10 937 8.3%Hospital division 11 010 10 185 8.1%Healthcare services 831 748 11.1%Healthcare services 831 748 11.1%Other 2 4

Operating profit before amortisation, profit on disposals and impairment of intangible assets 2 982 2 598 14.8%

Hospital division 2 694 2 242 20.2%Healthcare services 167 121 38.0%Other 121 235 (48.5)%

Hospital Division: Improved operating efficiencies resulted in 22 3% growth in Hospital Division: Improved operating efficiencies resulted in 22.3% growth inOperating profit in H2

HCS Division: Impairment charge in Life Esidimeni of R20m in 2012. Other: Streamlining of property structures and internal rentals

33

Other: Streamlining of property structures and internal rentals

India : Max Healthcare Revenue Growth

350 350

Rsin Cr

Rsin Cr

270290310330

270290310330

190210230250

190210230250

150170

Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14Total

150170

Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14

Existing New

Revenue (Rs.Crore) H1 14 H1 13 % Q2 14 Q2 13 %Revenue – Existing hospitals 528 484 9.1% 271 242 12.0%Revenue Existing hospitals 528 484 9.1% 271 242 12.0%

Revenue – New hospitals 139 52 167.3% 78 32 143.8%

Revenue Total 667 536 24.4% 349 274 27.4%

Financial year end: March

34

Financial year end: March

India : Max Healthcare Ebitda Growth

40 40

Rsin Cr

Rsin Cr

20

30

10

20

30

0

10

-20

-10

0

Ebitd (R C ) H1 14 H1 13 % Q2 14 Q2 13 %

-10Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14

Total

-30Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14

Existing New

Ebitda (Rs.Crore) H1 14 H1 13 % Q2 14 Q2 13 %Ebitda – Existing hospitals 58 48 17.2% 33 18 83.3%

Ebitda – New hospitals (9) (23) 156% (1) (13) 1200%

Ebitd T t l 47 25 88 0% 32 5 540%Ebitda - Total 47 25 88.0% 32 5 540%

Ebitda margin – Existing hospitals 11.0% 9.9% 12.2% 7.4%

Ebitda margin – Total hospitals 7.0% 4.7% 9.2% 1.8%

Financial year end: March

35

Financial year end: March

Cash generated vs normalised EBITDA

120%4 000

R 000m

103% 101% 105% 103%100%

120%

3 000

3 500

4 000

60%

80%

2 000

2 500

3 000

2 2332 562

3 0423 414

40%

60%

1 000

1 500

2 000

0%

20%

0

500

1 000

%2010 2011 2012 2013

Cash generated from operations Cash generated as % of normalised EBITDA

36

Capital Expenditure

13% 14%1 600

R 000m

13%

12%

14%

1 200

1 400

1 600

9%8%

7% 8%

10%

800

1 000

1 200

813 780

1 433

829 4%

6%

400

600

800

813 780

0%

2%

0

200

400

%2010 2011 2012 2013

Capex as a % of revenue

37

Financial resultsCapex

1000

R 000m

650600

800

1000 75 acute new beds 20 mental health new beds Land for 94 bed Life Hilton hospital Property for Life Peglerae extension

105 111

488650

200

400

600 Property for Life Peglerae extension Oncology equipment at Life Vincent Pallotti

Capex on maintenance & equipment

188 157

105 111

0

200

2012 2013 Repairs & maintenance but not included

under Capex

Capex Upgrades expansion Capex Maintenance Repairs & Maintenance

Excludes Capex spent on acquisitions 2012: R823m of purchase of 26% shareholding in MHC 2013: R68m used to maintain 26% shareholding in MHC

38

2013: R68m used to maintain 26% shareholding in MHC

Summarised statement of financial positionAssets

Sept2013

Sept2012 Movement

NON-CURRENT ASSETS 8 343 7 771 572PPE 4 518 4 010 508Intangibles 2 084 2 181 (97)g ( )Other 1 741 1 580 161

Current assets (excl cash) 1 327 1 239 88Current assets (excl. cash) 1 327 1 239 88Cash 300 246 54Total assets 9 970 9 256 714

Non-current assets: Other includes Max Healthcare with an additional R68m investment made to maintain current shareholding

Own 84% of registered beds

39

Summarised statement of financial positionEquity and liabilities

Sept2013

Sept 2012 Movement

TOTAL SHAREHOLDERS EQUITY 5 607 4 878 729Non-current liabilities 2 150 2 445 (295)Interest bearing borrowings 1 657 1 929 (272)g g ( )Other non-current liabilities 493 516 (23)Current liabilities 2 213 1 933 280Total equity and liabilities 9 970 9 256 714Total equity and liabilities 9 970 9 256 714

Net debt (as per covenants) 2 115 2 205 (90)N t d bt t li d Ebitd ( t 3 ) 0 63 0 73Net debt to normalised Ebitda (covenant 3 x) 0.63 0.73

Max Healthcare acquisition financed through R820 million in five year redeemable preference sharesp

Finance cost of R49m for preference shares Preference shares are included in interest bearing borrowings

40

Dividend

Distributions Cents/share Rand% of Normalised

EBITDA Cover*

Interim 2012 45 R469 million 34.2% 1.47

Final 2012 60 R625 million 40.7% 1.34

Total 2012 105 R1 094 million 37.6% 1.39

Interim 2013 54 R563 million 36.4% 1.39

Final 2013 72 R750 million 42.1% 1.32

Total 2013 126 R1 313 million 39.4% 1.35

20% increase in DPS

41

* Cover calculated on normalised EPS excluding amortisation

Four year reviewDividends

39 445.02.00 162 1180

Cents%

34.737.6 39.4

30 0

35.0

40.0

1.401.601.80

119.3

138.1

162.1

120

140

160

1.92

1 50 1 39

24.9

20.0

25.0

30.0

0.801.001.20 92.7

85

105

126

80

100

120

1.50 1.39 1.35

5.0

10.0

15.0

0.200.400.60

52

20

40

60

0.00.002010 2011 2012 2013

Cover % Ebitda

02010 2011 2012 2013

Normalised EPS DPS

Dividend cover: 1.35 times % of Ebitda: 39.4%

Normalised EPS CAGR: 20.5% Normalised DPS CAGR: 34.3%

N li d EPS l di ti ti

42

Normalised EPS excluding amortisation

Future GuidanceMi h l Fl iMichael FlemmingCEO

www.lifehealthcare.co.za43

Future Guidance

CEO Change Time is rightTime is right Leave behind a company:

1. Excellent Management teamE i Experience Depth

44

Future Guidance

Executive16 years service

CEO

Operational Management(3)

Enabling Management(4)

Support Management(4)

Finance and AdminProcurement

LegalHR

Company Secretarial

Clinical Directorate Nursing and Pharmacy

Strategy, Business Development, Funder

Management &

2 Hospital Execs 1 Healthcare Services Exec

Company SecretarialInformation Management

Management &Health Policy

Hospital ExecInland

Hospital ExecCoast HCS Exec

Rms17 years service

RM WC RM KZNRM PE RM EL RM N RM CRM E RM W

750 beds 555 beds 1 403 beds751 beds 1 482 beds 1 316 beds 784 beds 1 238 beds

Life Occupational

Health

Life Esidimeni

45

Future Guidance

CEO Change Time is rightTime is right Leave behind a company:

2. Primed for growthh it l b d hospital beds business opportunities

» Renal dialysis» Affordable maternity

46

Geographic spreadRegistered beds 2013

MPBeds 2013: 419

Botswana

TotalBeds 2013: 8 279

NWB d 2013 354 GTN

Beds 2013: 132

Beds 2013: 354 GTNBeds 2013:3 617

KZNBeds 2013:1 403FS

Beds 2013: 298

WCB d 2013 750 EC

Beds 2013: 298

Beds 2013: 750 ECBeds 2013:1 306

Geographic spreadWIP beds 2013

MPBeds 2013: 419 WIP: 20Botswana

TotalBeds 2013: 8 279WIP: 325T t l 8 604

NWB d 2013 354 GTN

Beds 2013: 132 Total: 8 604

Beds 2013: 354 GTNBeds 2013:3 617WIP: 106

KZNBeds 2013:1 403WIP: 132

FSBeds 2013: 298

WCB d 2013 750 EC

WIP: 132Beds 2013: 298WIP: 16

Beds 2013: 750WIP: 12

ECBeds 2013:1 306WIP: 39

Geographic spreadApproved beds

MPBeds 2013: 419 WIP: 20Botswana

TotalBeds 2013: 8 279WIP: 325A d 559

NWB d 2013 354

Approved: 95

GTN

Beds 2013: 132 Approved: 559Total: 9 163

Beds 2013: 354Approved: 59

GTNBeds 2013: 3 617WIP: 106Approved: 23

KZNBeds 2013:1 403WIP: 132

FSBeds 2013: 298

WCB d 2013 750 EC

WIP: 132Approved: 107

Beds 2013: 298WIP: 16

Beds 2013: 750WIP: 12Approved: 235

ECBeds 2013:1 306WIP: 39Approved: 40

Geographic spreadLicence Pending beds – 50%

MPBeds 2013: 419 WIP: 20Botswana

TotalBeds 2013: 8 279WIP: 325A d 559

NWB d 2013 354

Approved: 95Pending: 75Total: 609

GTN

Beds 2013: 132 Approved: 559Pending: 567Total: 9 730

Beds 2013: 354Approved: 59Pending: 23Total: 436

GTNBeds 2013: 3 617WIP: 106Approved: 23Pending: 209

KZNBeds 2013:1 403WIP: 132

FSBeds 2013: 298

Total: 3 935 NCPending: 75

WCB d 2013 750 EC

WIP: 132Approved: 107Pending: 37Total 1 679

Beds 2013: 298WIP: 16Total: 314

Beds 2013: 750WIP: 12Approved: 235Pending: 10Total: 1 004

ECBeds 2013:1 306WIP: 39Approved: 40Pending: 138T t l 1 524Total: 1 524

Future Guidance

CEO Change Time is rightTime is right Leave behind a company:

2. Primed for growthI t ti l International

» India• Continued improvement in revenue – additional beds become

operational• Continued improvement in Ebitda due to cost saving initiatives • Equality shareholding with MHCq y g• Other growth opportunities

» Africa• Ghana• Ghana

» Eastern Europe• Poland

51

Future Guidance

CEO Change Time is rightTime is right Leave behind a company

3. Culture of continuous efficiency improvementC t t f Cost management focus Strong Procurement system ARM pricing and preferred network model Detailed analysis and reporting Impilo system – no need for an external IT platform Always reviewing efficiency opportunitiesy g y pp

» Blood gas

52

Future Guidance

CEO Change Time is rightTime is right Leave behind a company:

4. Sustainability focusW ld l lit t t World class quality management system

» Measurement, reporting & benchmarking of clinical outcomes» Continually reviewing outcome measures

D t h h ldi d l Doctor shareholding model» Doctors hold a non-controlling interest in 54% of registered beds

Emphasis on clinical training» R78m 6 year specialist training investment» 920 nurses in training» 87 pharmacist assistants in training

53

Future Guidance

CEO Change: Time is rightTime is right Leave behind a company:

5. History of performance

3000

3500Normalised Ebitda

12 000

14 000 Revenue Growth

CAGR: CAGR:

1500

2000

2500

6 000

8 000

10 000 12.9% 19.4%

0

500

1000

-

2 000

4 000

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Normalised Ebitda

-

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Revenue

54

Interim Results PresentationFor 12 months ended 30 September 2013

www.lifehealthcare.co.za

Shareholding

60

%

50

60

40

20

30

10

0SA N America UK Europe Rest

Sep-13 Mar-13Sep 13 Mar 13

56

Glossary of terms

AMI Acute myocardial infarction HEPS Headline earnings per share

AMS Antimicrobial stewardship ICU Intensive care unit

Approved Received Health department licence approval. Have not commenced building

MHQ 14 Mental Healthcare questionnaire 14

ARM Alternative reimbursement model NHI National Health Insurance

CAUTI Catheter-related urinary tract infections Normalised Ebitda Earnings before interest, depreciation and amortisation (defined as operating profit plus depreciation, amortisation of intangibles, impairment of goodwill as well as excluding profit/loss on disposal of business/property and surplus/deficits on retirement benefits)

CC Competition Commission NPS Net promoter score

CLABSI Central line associated bloodstream infections LOH Life Occupational Healthcare

COE Centre of excellence PPD Paid patient day

COID Compensation for occupational injuries and diseases

PROMS Patient reported outcomes measures

DSO Days sales outstanding SSI Surgical site infections

EBITDA Earnings before interest, depreciation and amortisation

STC Secondary tax on companies

FIM/FAM Functional Independence measureFunctional assessment measure

VAP Ventilator associated pneumonia

HAI Health associated infections WIP Work in progress

57

p g

Life Healthcare History

Phase Time Period Event

C ti 1983 Af i d A d 4 h it lCreation 1983 • Afrox acquired Ammed group – 4 hospitals

Phase 1 growth 1985 - 1998 • Acquisition of 14 additional individual hospitals• Acquisition of PE Hospital group (5 hospitals), including 1st

mental health nitmental health unit• Built The Glynnwood and Empangeni hospitals• Purchase of Gaborone Hospital• Started Occupational Health business

Opened 1st acute rehabilitation unit• Opened 1st acute rehabilitation unit

Listing 1999 • Merged with Presmed in a reverse listing and changed name to Afrox Healthcare LtdStarted management of Lifecare (now Life Esidimeni)• Started management of Lifecare (now Life Esidimeni)

Phase 2 growth 2000 - 2004 • Acquired 55% of Lifecare• Acquisition of 3 additional independent hospitals• Acquisition of Amahosp group (4 hospitals)Acquisition of Amahosp group (4 hospitals) • Launched renal dialysis• Built Roseacres and Humansdorp hospitals• Launched UK project – PHG JV

58

Life Healthcare History

Phase Time Period Event

D li ti d 2005 2009 D li t d Af H lthDe-listing and phase 3 growth

2005 - 2009 • Delisted Afrox Healthcare• Established Life Healthcare• Acquired remaining stake in Life Esidimeni• Sold 50% share in PHG JV

B ilt Lif F• Built Life Fourways• Built Life Cosmos

f GRe-listing and phase 4 growth

2010 - • Re-listed as Life Healthcare Group Holdings Ltd• Built Life Orthopaedic hospital• Built Life Beacon Bay• Acquired Life Bay View Private hospital

O d Lif Gl i Lif St J h d Lif P t i• Opened Life Glynnview, Life St Josephs and Life Poortviewmental health units

• Opened Life Vincent Pallotti acute rehabilitation• Built Life Piet Retief hospital

A i d 26% h i M H lth I tit t (MHC)• Acquired a 26% share in Max Healthcare Institute (MHC)• Added over 1,000 beds between 2010 and 2012

59

Private healthcare insurance Industry Growth in members

Medical scheme lives000

8 500

9 000

000

7 000

7 500

8 000

6 000

6 500

2004 2005 2006 2007 2008 2009 2010 2011 2012

Comment• Strong growth in covered lives since 2004

Source: Council of Medical Schemes

St o g g o t co e ed es s ce 00• Benefitting from growth in middle class• Big impact from GEMs and low income schemes (scheme options) such as Keycare

and Boncap

60

Source: Council of Medical Schemes

Growth in Middle Class

Middle class lives000

7 5008 0008 5009 000

000

5 5006 0006 5007 0007 500

4 0004 5005 0005 500

2004 2008 2012

Comment• Middle class defined as an adult living in a household with income between R16,000

Source: UCT Unilever Institute of Strategic Marketing

dd e c ass de ed as a adu t g a ouse o d t co e bet ee 6,000and R50,000 per month

• 54% growth since 2004• Driven by strong growth in black middle class (142% increase)

61

Source: UCT Unilever Institute of Strategic Marketing

Private healthcare insurance Industry Earnings breakdown of members

Individual taxpayers using medical expenses deduction in 2009

R0 and less, 2.1%

R1 to R2,500pm, 2.2%

R2,501 to R5,000pm, 5.9%R33,334 to R441,667pm,

R41,668 to R62,500pm, 3.5%

R62,501 and over, 2.4%

, , p ,

R5,001 to R7,500pm, 11.2%

R25,001 to R33,333pm, 7.1%

33,33 to ,66 p ,3.6%

R7,501 to R10,000pm, 14.2%

R16,668 to R25,000pm, 15.3%

R10,001 to R12,500pm, 15.1%R12,50` to R16,667pm,

17.3%

Source: IMSA Policy brief 21

Comment• Little over half of all members using tax deduction earn under R12 500 per month

62

Little over half of all members using tax deduction earn under R12,500 per month

Burden of DiseaseWorldwide

The 3 leading causes of Dalys (Disability Adjusted Life Year) in 2030 are projected to be: Unipolar depressive disorders Ischaemic heart disease Road traffic accidents

63

Global Burden of Disease Report - WHO

Burden of Disease South Africa

Germany Nearly 40% share of HIV/AIDS in total

Diseases as % of total burden

Brazil

Ghana

Indonesia

USA

UK

Germany Nearly 40% share of HIV/AIDS in total disease burden (very high even for developing countries) Tuberculosis, influenza and pneumonia as

major causes of deathHigh infection rate among the black

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

South Africa

HIV/Aids Other Communicable Non-communicable Injuries

g gpopulationHigh incidence of non communicable

disease such as heart disease, cancer and diabetesSource: Econex calculations from WHO 2009 data

40 000

50 000

0 of

the

on

Very high infection rate and disease burden, even compared with developing countries

Burden of disease vs. other countriesDeveloping markets Developed markets

0

10 000

20 000

30 000

S G C S C G

DALY

's/1

00,0

00po

pula

tio

countries Burden of HIV/AIDS expected to

continue to grow despite strong government funding for treatment & prevention programmes SA has substantially higher numbers ofSA Ghana Indonesia Thailand Brazil Colombia Tunisia USA UK Canada Germany SA has substantially higher numbers of

sick people who are also sicker than those in other countries

Source: Econex calculations from WHO 2009 data

On average South Africa’s disease burden is 2x larger than in developing countries and 4x larger than in developed countries

64

than in developed countries

Burden of Disease Growth in Chronic, Cancer, HIV/AIDS

The burden of CDL Chronic Diseases, Cancer and HIV/AIDS in South Africa,1985 to 2025

65

Source: IMSA

South Africa’s populationAgeing

Strong increase in 50-and-above-year-old population. Expected to reach 19.1% (10.4 m) of total population in 2030 (from 13.9% in 2005)

Ageing not only results in more hospital visits but the average income per visit for patients over 50 is 67% higher than the g g y p g p p gaverage for patients under 50

Ageing patterns and larger absolute population size are important demand drivers for healthcare services

South African population by ageSouth African population by age

74+70–7463–7360–6453–63

10.4 m6.7 m53 6350–5443–5340–4433–4330–3425–3320 24

7.0 5.0 3.0 1.0 1.0 3.0 5.0 7.0

20–2415–2310–145–13

0–4

2005A 2030E

Source: UN Population Division.TOTAL: 48.1 m 54.7 m

Inexorable demographic trends: Ageing population and growing share of pensionable citizens are helping drive demand for hospital services

66

helping drive demand for hospital services