Life Healthcare had a strong trading performance for the period ended 31 March 2020. The underlying business performance, excluding the estimated negative impact of the COVID-19 pandemic (the pandemic) and the implementation of the new leases accounting standard (IFRS 16), reflected Group revenue growth of 8.9% and normalised EBITDA growth of 8.7% against the corresponding prior period (six months ended 31 March 2019). The results have, however, been impacted by the pandemic from February 2020 and this resulted in Group revenue growing by 6.8% while normalised EBITDA pre-IFRS 16 increased by 2.7% and normalised earnings per share grew by 12%.

The Group's normalised EBITDA margin pre-IFRS 16 has been impacted by:

  • Increased operational costs due to the pandemic
  • Loss of operational leverage due to lower activity volumes from March 2020 in all the markets in which we operate
  • Continued operational challenges in isotope delivery due to the maintenance programme of cyclotrons in the UK

The margin has been positively impacted by the successful efficiency programmes the Group launched in the last quarter of FY2019.

The Group has successfully refinanced its term debt in the international operations during March 2020 and this extended the debt maturities that were due in November 2020 out to 2023 and 2025. In addition, banking facilities have been increased and the committed undrawn facilities as at 31 March 2020 are R3.8 billion. The Group is also in the process of increasing these facilities by a further R3.9 billion.



The impact of COVID-19 has varied across the Group's geographic regions and business lines due to the timing of the spread of the disease and the responses of the various governments. Stakeholders are referred to the Group's detailed COVID-19 narrative contained in the trading statement released on 20 April 2020.

The estimated impact of the pandemic for the period to 31 March 2020 is lower revenue of R264 million, a decrease in normalised EBITDA of R166 million and earnings have been negatively impacted by R132 million.

The southern Africa business performed well up to mid-March 2020 but has seen significant reduction in hospital admissions since then. The average hospital occupancies from mid-March to end April 2020 were approximately 40%. The estimated impact of COVID-19 on normalised EBITDA for southern Africa has been R67 million for the period ended 31 March 2020.

The Alliance Medical diagnostic imaging business has experienced significant reductions in volumes (circa 60% reduction on average) since February 2020 across all major geographies. The reduction in volumes is due to national healthcare systems prioritising urgent and emergency cases as well as country-specific self-isolation and social distancing guidelines, resulting in significant increases in patient cancellations and non-attendance for appointments. The pandemic had a minimal impact on Scanmed for the period under review. The estimated impact of COVID-19 on normalised EBITDA for our international operations has been R99 million for the period ended 31 March 2020.

The Group's operational response to the pandemic includes:

In southern Africa

  • Establishment of COVID-19 committees across the organisation with representation from internal leadership and management teams as well as various medical specialities, and where possible, leveraging scarce expertise across the hospitals to drive consistent best practice
  • Strict access management and entrance screening
  • Sourcing of personal protective equipment (PPE) and implementation of standards and protocols across all facilities, including the implementation of universal masking
  • Implementation of a dynamic forecasting model that the hospitals are using for logistical, capacity and staff planning, including, where practical, designation of COVID-19 and non-COVID-19 teams and areas
  • Suspension of visitors to patients
  • Extensive workforce management, including redeployment of permanent employees and reduction in the use of agencies
  • Representation on various national and provincial structures as well as participating in the Business Unity for South Africa initiatives in order to ensure broader alignment

Subsequent to the release of the trading statement on 20 April 2020, South Africa has come out of lockdown level 5 enabling the return of medically necessary surgery and other admissions which have been postponed. The Group has implemented plans across its facilities to ensure that the COVID-19 risk is appropriately managed. These plans include but are not limited to:

  • Testing of patients before admission
  • Screening for symptoms of employees, doctors and support services personnel on a daily basis
  • Random testing of employees and doctors
  • Facility plans covering:
    • Staggered admission times
    • The split of facilities between COVID-19 and non-COVID-19 patients
    • Bed capacity management to ensure social distancing
    • Appropriate protocols in theatre covering utilisation, cleaning and social distancing
    • Revised PPE protocols
    • Employee rotation
  • Guidelines from various medical societies as well as international best practice have been considered in the approach that has been adopted


  • Introduced restricted opening hours and limited site closures in all regions
  • Establish rapid deployment of employees to manage opening and closing of sites as the need arises
  • Training employees in different modalities in the scanning business to enable redeployment where the need arises
  • Prepare sites and employees for increase in scanning ability post-lockdowns
  • Introducing screening and treatment protocols in all facilities to manage in a COVID-19 environment
  • Review of post-COVID-19 opportunities including permanent changes to practices, continuation of new clinical services, and revised customer and supplier relationships

As the lockdowns start to ease in some countries (mainly in Italy and Spain from the end of April 2020) a slow week-on-week growth in scanning volumes was seen.



Southern Africa

Southern Africa includes hospitals and complementary services, healthcare services and corporate.

as reported 
Pre-IFRS 16 
   Hospitals and complementary services  8 745    6.2    8 745    6.2    8 238   
   Healthcare services  657    7.9    657    7.9    609   
    9 402    6.3    9 402    6.3    8 847   
Normalised EBITDA                     
   Hospitals and complementary services  2 010    9.8    1 916    4.7    1 830   
   Healthcare services  71    1.4    71    1.4    70   
   Recoveries  623    (0.3)   683    9.3    625   
   Corporate costs  (468)   11.2    (468)   11.2    (421)  
    2 236    6.3    2 202    4.7    2 104   


Revenue from southern Africa increased by 6.3% to R9.4 billion (2019: R8.8 billion). Revenue from hospitals and complementary services grew by 6.2% mainly due to a 5.8% increase in revenue per paid patient day (PPD) and a 0.2% increase in PPDs (2019: -0.3%). The increase in revenue per PPD is made up of a 4.5% tariff increase and a 1.3% positive case mix change. The Group experienced lower activity volumes in March 2020 due to the impact of the pandemic. Activities for the period to the end of February 2020 were strong with overall PPD growth of 2.0%, with acute PPDs growing by 1.3% and complementary services PPDs growing by 8.0%. The overall weighted occupancy for the period decreased to 67.1% (2019: 67.7%). Overall weighted occupancy for the period ended February 2020 was 67.3% (2019: 66.8%).

Normalised EBITDA pre-IFRS 16 increased by 4.7% with a normalised EBITDA margin pre-IFRS 16 of 23.4% for the period (2019: 23.8%). The normalised EBITDA margin was affected by the impact of lower activity in March 2020 due to the pandemic and the additional costs incurred. Normalised EBITDA margin excluding the estimated COVID-19 impact was 23.8%.

The Group made good progress with its patient quality scores, improving the healthcare associated infection (HAI) rate and the patient safety adverse event rate.


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

as reported 
Pre-IFRS 16 
   Diagnostic services  2 945    7.4    2 945    7.4    2 742   
   Healthcare services  740    11.4    740    11.4    664   
    3 685    8.2    3 685    8.2    3 406   
Normalised EBITDA                     
   Diagnostic services  625    (0.5)   566    (9.9)   628   
   Healthcare services  101    >100    79    88.1    42   
    726    8.4    645    (3.7)   670   


Revenue in diagnostic services increased by 7.4% to R2.9 billion (2019: R2.7 billion). This increase was driven by the strong growth of the volumes within our
PET-CT centres (13.9%) in the UK, the acquisition of scanning facilities in December 2018 within the UK (contributing R16 million) and the weakening of the rand against the pound sterling and the euro. Revenue in diagnostic services has been negatively impacted by the pandemic from February 2020 but more acutely in the month of March 2020. Up to the end of February 2020 revenue in pound sterling was 8.4% ahead against the prior period. However, revenue in pound sterling for the six months ended 31 March 2020 only increased by 4.3% compared to the prior year.

Within our UK business, our fourth cyclotron site in Preston was re-opened in March 2020. By having four sites operational again, we have excess capacity over current demand, providing a more reliable PET-CT service. The fifth site, Dinnington, is expected to become operational later this year and this will enhance our delivery.

The growth in PET-CT scan volumes in the UK was 13.9% for the six-month period, and for the month of March 2020 the growth reduced to 4.4% as a result of the pandemic.

Normalised EBITDA pre-IFRS 16 was R566 million (2019: R628 million). The normalised EBITDA margin pre-IFRS 16 for Alliance Medical of 19.2% (2019: 22.9%) was impacted by the pandemic and increased costs related to the continued supply challenges with our radiopharmacy production during the planned refurbishment programme. These two items impacted the normalised EBITDA margin by 3.0%, of which an estimated 2.0% is attributed to the impact of the pandemic.

Healthcare services' revenue for the period increased by 11.4% to R740 million (2019: R664 million).

The normalised EBITDA margin pre-IFRS 16 increased to 10.7% (2019: 6.3%), on the back of operational efficiencies and backdated NFZ pricing increases. The pandemic had a minimal impact on Scanmed for the period under review.

The Group has decided to suspend the process of potentially disposing of Scanmed due to the uncertainty and market volatility brought on by the pandemic. The process is expected to restart towards the latter part of 2020, dependent on market conditions at that point in time.

Growth initiatives

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

The Group has progressed on its radiology project in South Africa but has decided to delay the execution of its first few transactions due to the pandemic. This opportunity remains exciting.

The outpatient business model continues to evolve and we have two standalone clinics, and four in partnership with Pick n Pay. The management team has successfully developed a COVID-19 symptom checker, as well as a telemedicine tool with the ability to offer direct-to-patient doctor virtual consultations.

LMI (formerly Piramal Imaging), our primary international growth initiative, performed better than expected and contributed revenue of R156 million (2019: R146 million) and a normalised EBITDA of R1 million (2019: loss of R13 million).



The Group is in a strong financial position with net debt to normalised EBITDA as at 31 March 2020 at 2.24 times (30 September 2019: 1.96 times). The banks' covenant for net debt to EBITDA is 3.50 times.

The Group has implemented additional structures and processes to forecast, monitor and mitigate liquidity risks. The Group's current base and bear case forecasts indicate that the Group will still be within its covenants for the next reporting period. As it is not feasible to accurately forecast longer term, the Group is engaging with its lenders for dispensation on the measurement of covenants for the following reporting period.

The refinance of the term debt in the international operations has increased the committed facilities by approximately GBP55 million. In the southern Africa operations the Group increased its banking facilities by R750 million and is in the process of increasing these facilities by a further R3.9 billion. The available undrawn facilities as at 31 March 2020 amounted to R3.8 billion.

To ensure the Group has sufficient cash reserves, in addition to securing additional bank facilities, management has implemented a number of mitigating actions and cash preservation levers across the Group's operations. These levers include the reduction and deferral of capex projects, suspending the interim dividend, placing an interim embargo on non-critical spend, reducing temporary employee costs through increased utilisation of permanent employees, negotiating extended payment terms with suppliers, negotiating rent payment holidays with landlords, and utilising government incentive programmes, as far as possible. The Group's executive team has also agreed to suspend their short-term incentives.


Group revenue increased by 6.8% to R13.2 billion (2019: R12.4 billion) consisting of a 6.3% increase in southern African revenue to R9.4 billion (2019: R8.8 billion), an 8.2% increase in international revenue to R3.7 billion (2019: R3.4 billion) and R157 million revenue contribution from growth initiatives (2019: R146 million).

Normalised EBITDA pre-IFRS 16 increased by 2.7% to R2.8 billion (2019: R2.7 billion).

Normalised EBITDA was negatively impacted by the pandemic and related costs.

Normalised EBITDA             
As reported             
   Operating profit   1 847     2.4    1 803    
   Depreciation on property, plant and equipment  768     24.1    619    
   Amortisation of intangible assets  308     (1.0)    311    
Normalised EBITDA as reported  2 923     7.0    2 733    
Impact of IFRS 16   (117)        –   
Normalised EBITDA pre-IFRS 16  2 806     2.7    2 733    
   Southern Africa  2 202     4.7    2 104    
   International  645     (3.7)    670    
   Growth initiatives  (41)    –    (41)   



During the current financial period, the Group invested approximately R1 146 million (2019: R1 161 million), comprised mainly of capital projects of R1 145 million (2019: R925 million) and a new acquisition (net of cash acquired) by Alliance Medical of R1 million. The maintenance capex for the period was R598 million (2019: R527 million).


EPS increased by 119.2% to 53.7 cps (2019: 24.5 cps).

HEPS increased by 100.0% to 53.8 cps (2019: 26.9 cps). NEPS, which excludes non-trading-related items listed below, increased by 12.0% to 55.0 cps (2019: 49.1 cps). The presentation of normalised earnings is a non-IFRS measure.

EPS, HEPS and NEPS for the period 31 March 2020 includes the impact of IFRS 16 (2019: no impact).

Earnings have been positively impacted (+24.0 cps) by the reduction of post-tax interest cost of R94 million as a result of the repayment of debt in Q4 FY2019, following the disposal of our investment in Max Healthcare (Max disposal) and the inclusion of an option contract hedge loss (R256 million, net of tax) relating to the Max disposal in the corresponding prior period, that is non-recurring.

Earnings were negatively impacted by an estimated R132 million (-9.1 cps) due to the pandemic.

Weighted average number of shares in issue (million) 1 455    (0.1)   1 456   
Normalised earnings             
Profit attributable to ordinary equity holders  781        357   
Adjustments (net of tax)            
   Fair value adjustments to contingent consideration  34        38   
   Fair value loss on the Max foreign exchange option contracts  –        256   
   Gain on derecognition of lease asset and liability  (54)       –   
   Impairment of assets and investments  –        37   
   Loss/(profit) on disposal of property, plant and equipment        (3)  
   Transaction costs        30   
   Other  –         
   Unwinding of discounting of contingent consideration (included in finance cost) 32        –   
Normalised earnings  800    11.7    716   
NEPS (cents) 55.0    12.0    49.1   
NEPS pre-IFRS 16 (cents) 55.5    13.0    49.1   



Dr Shrey Viranna resigned from the Company and the board with effect from 17 January 2020 and has relocated to Australia for personal reasons. Dr Viranna has in his tenure established strong management teams in the Group and worked with these teams to put in place a dual strategy of integrated healthcare in southern Africa and growing the international diagnostic opportunity. The Group will continue to execute on these strategies. We thank Dr Viranna for his contribution and wish him well in his endeavours.

Pieter van der Westhuizen, the current Group CFO, has been appointed as acting Group CEO. The board initiated a recruitment process which has been put on hold due to the pandemic.

The board is pleased to welcome Dr Victor Litlhakanyane to the board from 15 April 2020.


The board has decided, considering the current trading conditions and in order to preserve cash, not to pay an interim dividend. This position will be reviewed for the full year.


We expect tough trading conditions for at least the next six months due to the continued impact of the pandemic on business operations as well as a general slowdown in the economies we are trading in. Management teams have taken steps to protect revenue streams, reduce costs and preserve cash in all the countries we operate in and will focus on bringing operations to full capacity as quickly as possible once lockdown conditions in the various countries are lifted. The Group has reviewed its capex commitments in light of the pandemic and the total capex for the year is expected to be approximately R1.6 billion (2019: R2.1 billion).

The Group is evaluating the applicability of the growth initiatives in the current trading environment and its view of the trading conditions post-COVID-19. All investments will be evaluated based on cash availability and the impact on the business model post-COVID-19.

COVID-19 introduces a high degree of uncertainty surrounding the impact on activity levels and the timing of the return to previous trading environments, therefore it is not possible to provide guidance for the full year results.


Life Healthcare's results for the 12 months ending 30 September 2020 are expected to show a decrease of more than 20% in EPS (minimum decrease of 35.3 cps to at least 141.1 cps) from those reported for the financial year ended 30 September 2019 (EPS: 176.4 cps). This expected decrease is mainly due to the impact of the disposal of Life Healthcare's equity investment in Max Healthcare during Q4 FY2019 (a non-recurring net profit on disposal in FY2019 of 68.5 cps) and the resultant benefit in FY2020 of reduced finance cost as a result of the repayment of debt with the net proceeds. The pandemic will further impact the results for the full year but the extent thereof is uncertain.

A detailed trading statement will be released in early November 2020. The forecast financial information on which this trading statement is based has not been reviewed or reported on by the Group's external auditors.

Shareholders are advised that the investor presentation for the six months ended 31 March 2020 is published on Life Healthcare's website (


Our ability to effectively respond to the pandemic and provide quality care to our patients in this time of crisis is largely due to the dedication and unwavering support of all our front-line employees, including our doctors. The Company takes this opportunity to acknowledge your invaluable contribution and to thank you sincerely.

Worldwide 12 May 2020 is International Nurses Day. This carries additional significance as 2020 is also the World Health Organization's year of the nurse. Nurses across the world have been at the forefront of looking after patients during the COVID-19 pandemic and we would like to thank them for their valuable role and sacrifice in these times. Their contribution to society is immense and we thank them for it.

Approved by the board of directors on 8 May 2020 and signed on its behalf:

Mustaq Brey
Pieter van der Westhuizen
Acting Group Chief Executive Officer

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