LIFE HEALTHCARE - REVIEWED PRELIMINARY CONDENSED GROUP RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2020

SEGMENTAL INFORMATION

for the year ended 30 September 2020

The Group's segments are aligned to those business units that are evaluated regularly by the chief operating decision maker (CODM) in deciding how to allocate resources and in assessing performance.

In southern Africa, the hospitals and complementary services segment comprises all the acute hospitals and complementary services which include mental health, acute rehabilitation, renal dialysis and oncology. The healthcare services segment comprises Life Esidimeni and Life Employee Health Solutions.

International comprises diagnostic services (Alliance Medical) and healthcare services (Scanmed) across Europe and the United Kingdom.

Growth initiatives comprise the new outpatient business model, developing the imaging services opportunity, investing in data analytics and clinical quality products within South Africa and product development internationally.

Corporate is a non-operating segment.

The operating businesses have been aggregated into different segments based on the similar nature of products and services, similar economic characteristics, similar type of customers and operating in a similar regulatory environment.

Inter-segment revenue of R5 million (2019: R5 million) is eliminated and relates to revenue between Life Employee Health Solutions and the southern Africa business.

		2020 Reported R'm	Impact of IFRS 16 R'm	2020 Pre-IFRS 16 Pro forma R'm	2019 R'm

Revenue¹
Southern Africa
	Hospitals and complementary services	15 899	–	15 899	17 213
	Healthcare services	1 346	–	1 346	1 259
International
	Diagnostic services	6 286	–	6 286	5 582
	Healthcare services	1 535	–	1 535	1 349
Growth initiatives		320	–	320	269
		25 386	–	25 386	25 672

¹	Revenue of approximately 31% (2019: 33%) is derived from two (2019: two) external customers. The revenue is attributable to the southern Africa segment.

		2020 Reported² R'm	Impact of IFRS 16 R'm	2020 Pre-IFRS 16² Pro forma R'm	2019 R'm

Normalised EBITDA^{1, 4}
Southern Africa
	Hospitals and complementary services	2 583	(219)	2 364	3 933
	Healthcare services	135	(1)	134	148
International
	Diagnostic services	1 311	(127)	1 184	1 253
	Healthcare services	191	(51)	140	97
Growth initiatives		(60)	(4)	(64)	(25)
Corporate
	Recoveries	1 205	154	1 359	1 292
	Corporate costs	(1 019)	–	(1 019)	(971)
		4 346	(248)	4 098	5 727
Depreciation
Southern Africa
	Hospitals and complementary services	(636)	33	(603)	(576)
	Healthcare services	(24)	5	(19)	(18)
International
	Diagnostic services	(732)	111	(621)	(521)
	Healthcare services	(118)	46	(72)	(62)
Growth initiatives		(17)	3	(14)	(10)
Corporate		(67)	10	(57)	(49)
		(1 594)	208	(1 386)	(1 236)
EBITA^{3, 4}
Southern Africa
	Hospitals and complementary services	1 947	(186)	1 761	3 357
	Healthcare services	111	4	115	130
International
	Diagnostic services	579	(16)	563	732
	Healthcare services	73	(5)	68	35
Growth initiatives		(77)	(1)	(78)	(35)
Corporate		119	164	283	272
		2 752	(40)	2 712	4 491

¹	Normalised EBITDA is defined as operating profit before depreciation on property, plant and equipment, amortisation of intangible assets and non-trading-related costs or income.
²	Difference between reported and pre-IFRS 16 totals relates to the impact of IFRS 16, which is a once-off adjustment in FY2020.
³	EBITA is defined as normalised EBITDA less depreciation.
⁴	The presentation of normalised EBITDA and EBITA is not an IFRS requirement, nor a JSE Listing requirement and is a measurement used by the CODM. Investors should not consider normalised EBITDA and EBITA in isolation or as an alternative to operating profit, profit after tax or any other measure of financial performance presented. Normalised EBITDA and EBITA as disclosed above may not be comparable to other similarly titled measures of performance of other companies.

		2020 Reported¹ R'm	Impact of IFRS 16 R'm	2020 Pre-IFRS 16¹ Pro forma R'm	2019 R'm

Amortisation of intangible assets
Southern Africa
	Hospitals and complementary services	(64)	–	(64)	(110)
International
	Diagnostic services	(466)	–	(466)	(411)
	Healthcare services	(14)	–	(14)	(17)
Growth initiatives		(20)	–	(20)	(18)
Corporate		(40)	–	(40)	(30)
		(604)	–	(604)	(586)
Operating profit before items detailed below
Southern Africa
	Hospitals and complementary services	1 883	(186)	1 697	3 247
	Healthcare services	111	4	115	130
International
	Diagnostic services	113	(16)	97	321
	Healthcare services	59	(5)	54	18
Growth initiatives		(97)	(1)	(98)	(53)
Corporate		79	164	243	242
		2 148	(40)	2 108	3 905
Retirement benefit asset and post-employment medical aid income		32	–	32	39
Operating profit²		2 180	(40)	2 140	3 944
Fair value adjustments to contingent consideration		(37)	–	(37)	2
Fair value loss on derivative financial instruments		(5)	–	(5)	(438)
Gain on derecognition of lease asset and liability		75	–	75	–
Impairment of assets and investments		(798)	–	(798)	(164)
Profit on disposal of investment in joint venture		–	–	–	1 501
Profit on disposal of investment in subsidiary		–	–	–	11
Loss on disposal of property, plant and equipment		(6)	–	(6)	–
Transaction costs relating to acquisitions and disposals		(17)	–	(17)	(148)
Other		–	–	–	(22)
Finance income		93	–	93	60
Finance cost		(918)	65	(853)	(1 058)
Share of associates' and joint ventures' net profit after tax		14	–	14	18
Profit before tax		581	25	606	3 706

¹	Difference between reported and pre-IFRS 16 totals relates to the impact of IFRS 16, which is a once-off adjustment in FY2020.
²	Operating profit before items detailed includes the segment's share of shared services and rental costs. These costs are all at market-related rates.

	Reported 2020 R'm	Impact of IFRS 16 R'm	Pre-IFRS 16 Pro forma 2020 R'm	2019 R'm

Total assets before items below
Southern Africa	14 659	(488)	14 171	13 550
International	26 332	(976)	25 356	22 342
	40 991	(1 464)	39 527	35 892
Employee benefit assets	379		379	448
Deferred tax assets	1 162	–	1 162	1 102
Income tax receivable	173	–	173	124
Total assets per the balance sheet	42 705	(1 464)	41 241	37 566
Net debt¹
Southern Africa	5 366	(558)	4 808	4 481
International	8 750	(1 011)	7 739	6 837
	14 116	(1 569)	12 547	11 318
Cash and cash equivalents (net)
Southern Africa	(1 463)	–	(1 463)	(141)
International	1 561	–	1 561	818
	98	–	98	677

¹	Net debt is a key measure for the Group, which comprises all interest-bearing borrowings, overdraft balances and cash on hand. Net debt is not an IFRS requirement, nor a JSE Listing requirement.

Pro forma information

The adoption of IFRS 16 from 1 October 2019 complicates performance comparison between the results of the year under review and the prior financial year. To provide a more meaningful assessment of the Group's performance, pro forma information has been presented for the year ended 30 September 2020. The pro forma financial information has been prepared for illustrative purposes and represents the impact on segmental information for FY2020 as if IFRS 16 had not been applied at 1 October 2019. This is a once-off adjustment in FY2020.

The tables above show the impact of IFRS 16 on the numbers disclosed on the segmental statement of profit or loss, total assets and net debt as at 30 September 2020. IFRS 16 balances have been removed from the reported figures in order to determine the pro forma figures to enable a like-for-like comparison to FY2019 where IFRS 16 had not been applied.

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