Directors' report
for the year ended 30 September 2020
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for the year ended 30 September 2020
The directors have pleasure in submitting their report on the annual financial statements of the Group and the Company for the year ended 30 September 2020. The directors are of the opinion that stakeholders' interests are best served by presenting the Group's annual financial statements separately from those of the Company. The latter financial statements appear in the Company financial statements.
Life Healthcare Group Holdings Limited is an investment holding company and through its subsidiaries, associates and joint ventures operates and has extensive interests in private healthcare facilities and healthcare services companies in southern Africa and Poland and provides diagnostic-related services and sells radiopharmaceuticals in the United Kingdom and various European countries. The Group is listed on the main board of the JSE Limited.
Life Healthcare's 2020 financial year was a year of vastly different halves. The Group delivered an excellent performance during H1 FY2020 but trading was significantly impacted in H2 FY2020 by the COVID-19 pandemic (the pandemic).
Revenue for the year ended 30 September 2020 decreased by 1.1% against last year and Group normalised EBITDA* is 24.1% down against last year. The H2 FY2020 performance was significantly impacted by the pandemic. Normalised EBITDA* was impacted to a greater extent, due to additional costs associated with the pandemic and lower activity levels, resulting in negative operational leverage.
Earnings per share (EPS) decreased by more than 100% to -6.4 cps (2019: 176.4 cps). The impairment of R793 million relating to Scanmed reduced EPS by 54.5 cps. Headline earnings per share decreased by 45.1% to 48.7 cps (2019: 88.7 cps).
Normalised earnings per share (NEPS*), which excludes non-trading-related items, decreased by 47.6% to 61.0 cps (2019: 116.4 cps).
Earnings in the prior year included a non-recurring profit on the disposal of our equity investment in Max Healthcare (net profit on the disposal in FY2019 of 68.5 cps).
The Group had strong working capital management despite the challenging environment in which the Group operated.
The capex for the year was R2.0 billion (2019: R2.3 billion), comprising mainly of capital projects of R2.0 billion (2019: R2.1 billion) and a new acquisition (net of cash acquired) by Alliance Medical of R6 million. The maintenance capital expenditure (capex) for the year was R1.2 billion (2019: R1.2 billion).
The financial statements fully set out the financial results of the Group and Company.
* Normalised EBITDA and NEPS are non-IFRS measures.
The following special resolutions were passed during the course of the year:
The Company considers an interim and final distribution in respect of each financial year.
The Company had the following cash distributions during the current financial year:
| Date dividend paid | R'm | Cents per share | Type of distribution | |||
| 17 December 2019 | 7781 | 53.0 | Final 2019 | |||
| n/a2 | – | – | Interim 2020 |
| 1 | The dividends were subject to dividend withholding tax at a rate of 20%, except where exempted. |
| 2 | The board of directors decided, considering the trading conditions during the year and in order to preserve cash, not to pay an interim dividend. |
The board of directors has decided, considering the current trading conditions and in order to preserve cash, not to pay a final dividend for the year. This position will be reviewed for the period ending 31 March 2021.
The names of the directors in office at the date of this report are set out on here. The remuneration and interests of the directors are set out in note 27 to the annual financial statements.
Shrey Viranna resigned from the Company and the board with effect from 17 January 2020 and relocated to Australia for personal reasons.
Peter Wharton-Hood was appointed as Chief Executive Officer effective 1 September 2020.
Victor Litlhakanyane was appointed to the board from 15 April 2020 and as Chairman-designate from 27 July 2020.
There have been no changes in the interests as set out in note 27 between 30 September 2020 and the date of this report other than:
No arrangements to which the Company is a party existed at year-end that would enable the directors or their families to acquire benefits by means of the acquisition of shares in the Company, other than the long-term incentive scheme in respect of executive directors.
There were no contracts of any significance during or at the end of the financial year in which any director of the Company had a material interest.
The address of the Group Company Secretary is the same as the Company's registered address.