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Litha Healthcare Group Ltd FY 2013 financial results presentation
 

Litha Healthcare Group Ltd FY 2013 financial results presentation

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Litha Healthcare Group Ltd FY 2013 financial results presentation

Litha Healthcare Group Ltd FY 2013 financial results presentation

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Litha Healthcare Group Ltd FY 2013 financial results presentation Litha Healthcare Group Ltd FY 2013 financial results presentation Presentation Transcript

  • Summary of results R (000) Q4 2013 % change Q4 2012 Year 2013 % change Year 2012 Revenue 247 326 4.1% 237 502 1 045 332 -27.1% 1 434 460 • QTD increase due to strong sales on the forensic tender and new agencies in the medical division • YTD decrease primarily from deconsolidation of Biovac in mid 2012 Operating profit (2 315) - (10 311) 46 927 -79.8% 232 831 Operating margin (%) (0.9%) (4.3%) 4.5% 16.2% • Forex impact resulted in operating loss of (R2,3 m) for Q4 2013 - loss decreased by R8,0m from Q4 2012 • YTD 2012 included a once-off profit on deconsolidation of Biovac of R171m EBITDA 19 110 (12.4%) 21 823 110 450 (13.6%) 127 875 • Forex impacted EBITDA with the Rand depreciating at an average of 19.1%, since 31 December 2012. Almost all of the Group’s products are imported. • EBITDA further impacted by commoditisation of certain key generics in the Pharma division. EPS (cps) (1.6) 46.8% (3.1) 2.7 (92.5%) 36.2 HEPS (cps) (1.6) 45.3% (3.0) 2.7 (47.1%) 5.1 • Biovac deconsolidation at 30 June 2012 & Pharmaplan acquisition at 2 July 2012 – HEPS excludes once-off profit on deconsolidation of R171m 3 Weighted average no. of shares Q4 2013 - 543 725 904 (2012 – 541 528 868) YTD - 2013 542 168 100 (2012 – 456 751 782)
  • QTD • Pharma division – R127 492 (-5.8% vs Q4 2012) • Medical division – R95 366 (+21.4% vs Q4 2012) • Biotech division – R24 468 (+3.4% vs Q4 2012) YTD • Deconsolidation of TBI (R650,2 million in the first half of 2012) • Acquisition of Pharmaplan (R216,2 million in the first half of 2012) Statement of comprehensive income R (000) Q4 2013 % change Q4 2012 Year 2013 % change Year 2012 Revenue 247 326 4.1% 237 502 1 045 332 -27.1% 1 434 460 5
  • QTD operating loss driven by Loss on revaluation of FECs – R2,6 million Amortisation of intangibles – R14,4 million YTD operating margin decreased due to: • Profit on deconsolidation of Biovac in 2012 of R171,5 million • Increased amortisation of R21,8 million • Depreciation of the Rand • Commoditisation of certain key generics in Litha Pharma Statement of comprehensive income R (000) Q4 2013 % change Q4 2012 Year 2013 % change Year 2012 Revenue 247 326 4.1% 237 502 1 045 332 - 27.1% 1 434 460 Operating Profit (2 315) n/a (10 311) 46 927 - 79.8% 232 831 Operating Margin % (0.9%) (4.3%) 4.5% 16.2% 6
  • Statement of comprehensive income R (000) Q4 2013 Q4 2012 Year 2013 Year 2012 Revenue 247 326 237 502 1 045 332 1 434 460 Operating profit (2 315) (10 311) 46 927 232 831 Operating margin (0.9%) (4.3%) 4.5% 16.2% Finance income 2 373 2 428 10 304 13 447 Finance expense (8 370) (11 815) (32 793) (30 437) Effective tax rate* 1.7% 22.8% 37.5% 5.2% Volatility quarter over quarter is linked to lower profit before tax 7 * Excludes income from JV and income from associate
  • R (000) Q4 2013 Q4 2012 Year 2013 Year 2012 Cash flows from operating activities 21 700 2 547 64 125 153 921 Cash flows from investing activities (6 313) (5 776) (18 922) (179 968) Cash flows from financing activities 720 (2 616) (22 626) 83 491 Summarised statement of cash flows Investing activities: Investment in The Dental Warehouse (3 165) Investment in intangible assets (10 073) Financing activities: Repayment of loans (40 569) 8
  • Assets R (000) Dec 2013 Dec 2012 Non current 1 296 670 1 347 499 Property, plant and equipment 73 868 79 278 Goodwill and intangibles 821 892 869 657 Investment in joint venture 254 026 260 034 Other non current assets 146 884 138 530 Current 647 241 436 626 Inventory 328 789 194 964 Trade receivables 214 187 169 691 Other current assets 20 338 25 284 Cash and cash equivalents 83 927 46 687 Non-current assets held for sale 389 875 Total assets 1 944 300 1 785 000 Equity and liabilities Summarised statement of financial position Equity 1 148 521 1 107 596 Share capital and premium 792 263 760 473 Reserves attributable to holders of the parent 336 272 326 236 Non controlling interest 19 968 20 887 Opening balance 760 473 Exercise of stock options 31 790 Closing balance 792 263 9
  • R (000) Days Dec 2013 Dec 2012 Dec 2013 Dec 2012* Inventory 328 789 194 964 192 131 Debtors 214 187 169 691 68 62 Creditors (275 134) (139 111) (160) (185) Net working capital invested 267 842 225 544 100 8 Inventory up - increased lead times and minimum order quantities Actively managing to ensure optimal levels Debtors up - outsourcing arrangement for debtor collection Negotiating decrease in days Creditors up - extended payment terms due to increased lead times Working capital Net effect of working capital changes to cash generated from ops (R42,3m) 10 * Excludes first 6 months of Biovac and includes first 6 months of Pharmaplan
  • Gearing Excl. Biovac Incl. Biovac Dec 2013 Dec 2012 Dec 2013 Dec 2012 Interest bearing debt R (000) 275 398 308 425 392 723 407 919 Equity R (000) 1 148 521 1 107 596 1 148 521 1 107 596 % 24% 28% 34% 37% Most appropriate D:E ratio is to exclude Biovac as it is ring-fenced; operates as a stand alone company and is deconsolidated Management comfortable with less than 40% excl Biovac Interest cover ratio: 4.6 for the year ended 31 December 2013 Post year end, Litha has entered into negotiations with RMB to restructure its funding facilities. – should be finalised by the end of March 2014. 11
  • Strategy 2013 Progress Short-term focus (2013) Accelerate shared services strategy to improve efficiencies Finance and certain admin functions centralised; refocusing of strategy Increase accountability and cost elimination Tighter cost controls and stricter adherence to procurement policies Finalise black ownership transaction Evaluating potential partners Maintain and grow sales momentum in all divisions and sales channels QTD Group revenue +4.1% • Litha Pharma: -5.8% • Litha Medical: +21.4% • Litha Biotech: +3.4% Exploit cross-selling opportunities Cross-selling between Litha Pharma and Litha Medical, e.g. ophthalmology Progress on stated objectives 13
  • Strategy 2013 Progress Medium-to long-term focus (post 2013) African export strategy – second phase after SA integration Evaluating various markets and export partners Shared services: • Align and reduce legal entities to divisional reporting structure • Centralise warehousing and customer services • According to plan, but amending strategy in tough market conditions • Progress so far: • Litha Pharma & Medical: Consolidated divisional reporting • Litha Pharma: Warehousing & distribution - UTI • Litha Medical: Largely centralised warehouse/customer service in Midrand • Litha Vaccines: Relocated to Midrand Increase scale to ensure competitiveness & build product pipelines • Litha Pharma: Registered 25 products (14 molecules) with MCC in 2013 • Litha Medical: Signed 4 new agencies in 2013 Progress on stated objectives 14
  • Litha Pharma results R (000) Q4 2013 % change Q4 2012 Year 2013 % change Year 2012 Revenue 127 492 (5.8%) 135 275 543 544 55.2% 350 312 Operating profit (before HO costs) 6 547 20.1% 5 450 64 191 105.4% 31 256 Operating Margin 5.1% 4.0% 11.8% 8.9% QTD 51.5% of Group revenue 29.5% of Group operating profit before head office costs YTD 52% of Group revenue 47.2% of Group operating profit before head office costs 16
  • Litha Pharma review 17 Revenue decreased by 5.8% to R127,5m (Q4 2013) from R135,3m (Q4 2012) • Increased competition • Commoditisation of certain key generics • End of a tender Operating profit increased by 20.1% to R6,5m (Q4 2013) - R5,4m (Q4 2012) • More stringent cost controls against 7% Rand depreciation in the last 6 months and SEP increase of 5.8% in March 2013 Product pipeline growing • Registered 25 products/14 molecules and launched 15 products (2012 and 2013 approvals) • 28 molecules signed in 2013
  • Ecotrin (S0), Aspirin 81 mg, Reg: 29/2.7/0767 Pharmafrica; Avonex (S4), Inteferon beta-1a Injection, 6 mill.iu (30µg)/0.5 ml, Reg: A40/34/0502, Pharmaplan; Dazit, (S2) Desloratadine 5 mg Tablets, Reg: 41/5.7.1/0448, Pharmaplan; Oratane, (S5) Isotretinoin, 10 mg Reg: 35/13.4.2/0375, Pharmaplan; Pantocid IV (S4) Pantoprazole 40 mg per vial, Reg: A40/11.4.3/0072, Pharmaplan; Zobone (S4), Zoledronic Acid 4 mg, 1 x 5 ml vial, Reg. 42/34/0664, Pharmaplan; Escapelle (S2), Levonorgestrel, Reg: 41/21.8.2/0021, Pharmaplan Litha Pharma: Top 10 Products Top 10 Products Jan – Dec 2013 26.8% 7.3% 20.5% 22.5% -12.1% 42.3% 43.8% 92.9% 10.1% 43.5% -20.0% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% -5 000 000 5 000 000 15 000 000 25 000 000 35 000 000 45 000 000 55 000 000 Ecotrin Avonex Oratane Dazit Pantocid IV DS-24 Zobone Pantocid Tabs M.R.S Escapelle 2013 2012 2013 vs 2012 18 Top brands Ecotrin grew by 26.8%, Avonex 7.3% and Oratane 20.5% (Jan-Dec 2013)
  • Litha Pharma revenue analysis Revenue R544 m (Jan to Dec 2013) 117 Products/brands 46 Agencies 57.08 54.52 47.98 42.45 25.34 35.53 20.15 16.49 0 10 20 30 40 50 60 70 80 90 100 DOH tender Private market Other/Export Complementary Originator Generic 7.0% 91.3% 1.7% % of total revenue % Complementary Originator Generic 2013 Revenue R102m R145m R297m Revenue % of business 18.7% 26.7% 54.6% 19
  • Litha Medical results 21 QTD 38.6% of Group revenue 48.8% of Group operating profit before head office costs YTD 34.1% of Group revenue 32.3% of Group operating profit before head office costs R (000) Q4 2013 % change Q4 2012 Year 2013 % change Year 2012 Revenue 95 366 21.4% 78 584 356 263 23.3% 289 045 Operating profit (before HO costs) 10 816 9.3% 9 896 43 922 29.3% 33 977 Operating Margin 11.3% 12.6% 12.3% 11.8%
  • Litha Medical review Revenue increased by 21.4% to R95,4m (Q4 2013) from R78,5 (Q4 2012) • Mainly due to forensic tender sales & new agencies - 4 new agencies signed up Operating profit increased by 9.3% to R10,8m (Q4 2013) from R9,9m (Q4 2012) • Increased revenue • Improved cost management Margins continue to be impacted by competition, pricing and forex pressure Continued refinement of new structure • New CEO (designate) appointed in Q3 2013 Manufacturing of products – installation and validation of steriliser machine in progress 22
  • Litha Medical Revenue Analysis Manta Medical Earth Medical ICU Medical SA Filterworks Manta Forensic 2013 Revenue R71m R107m R85m R61m R32m Revenue % of division 20% 30% 24% 17% 9% Product categories • Medical devices • Surgical • Wound care •Orthopaedics •Ophthalmology •Women’s health •Infection control •Radiology •Robotics •Urology •Claves •IV admin sets •Catheter securement • Filters • Wound drains •Macerators & Pulp • Forensic kits 82 92 87 90 82 18 7 13 10 100 18 - 20 40 60 80 100 Manta Medical Earth Medical ICU Medical SA Filterworks Manta Forensic Total Public Private % of Private vs Public business Revenue R356m* (Jan – Dec 2013) 26 Agencies * Turnover includes discount allowed, but excludes discontinued operations & Litha Medical Consumables 2323
  • R (000) Q4 2013 % change Q4 2012 Year 2013 % change Year 2012 Revenue* 24 468 3.4% 23 643 145 525 (81.7%) 795 103 Operating Profit* (before HO costs) 4 810 2.1% 4 712 27 823 (87.7%) 226 702 Operating Margin 19.7% 19.9% 19.1% 28.5% Litha Biotech results 25 QTD 9.9% of Group revenue 21.7% of Group operating profit before head office costs YTD 13.9% of Group revenue 20.5% of Group operating profit before head office costs
  • Litha Biotech review Revenue increased by 3.4% to R24,5m (Q4 2013) from R23,6m (Q4 2012) • Mainly due to increase in Litha Logistics Operating profit increased by 2.1% in Q4 2014 Manufacture: • Construction of viewing, labelling and packaging facility completed • MCC inspection of manufacturing facility to be finalised in 2014 More technology transfers secured • Added new HPV (Human Papilloma Virus) to product portfolio 26
  • Business Revenue Analysis The Biovac Institute The Biovac Institute Export Litha Vaccines 2013 Revenue R1 237m R29m R100m Revenue % of division 91% 2% 7% Disease categories • Pneumonia • Rotavirus • Tuberculosis • Polio • Tetanus • Pertussis • Diphtheria • Measles • Hepatitis B • Influenza • Haemophilus • Polio • Rabies • Tetanus • Pertussis • Diphtheria • Snake anti-venom • Measles • Pneumonia • Yellow fever • Rotavirus • Tuberculosis • Tuberculosis • Influenza • Yellow Fever • Rabies • Hepatitis B Revenue R1 366m (Jan – Dec 2013) 5 Suppliers 27
  • Shared Services Review 2013 29 Objectives 2013 Outcome Generate savings through cost rationalisation and process optimisation Ongoing – improving of procurement and expenses Integrate finance, logistics, HR and IT internal functions for Litha Pharma & Litha Medical Finance and IT complete; HR in line with new strategy Provide in-house warehousing and logistics Litha Medical: Almost complete Litha Vaccines: Completed warehouse relocation Standardise financial reporting formats, policies and procedures Complete Ongoing review of IT Complete Finalise job profiling and grading Biovac, Litha Pharma and Vaccines: Complete Litha Medical: Almost complete In-house export department Become a sales function in each division Refinement of strategy in tough market conditions
  • Group Prospects: Key Risks 2013 Key risks Processes to address Pricing pressure, exchange rate volatility and tough economic environment Applying full SEP increase in Pharma Negotiate to share forex risk with suppliers Restructuring and cost cutting to be completed in H1 2014 Not maintaining BBBEE credentials Detailed evaluation of impact of new regulations complete; strategy in place to address Not achieving cGMP accreditation at Biovac facility MCC inspection completed in April 2013. Finalisation of MCC feedback due in Q1 2014 Loss of agencies Active relationship management in place Regulatory changes Actively managed by new regulatory department; CAMs particularly pertinent – will impact products in Litha Pharma Lack of skills Significant investment in training in 2013. High level of investment to continue in 2014 31
  • Litha Pharma Continue to advance product pipeline, with 70 molecules awaiting MCC approval Will apply for full SEP increases in April 2014 Litha Medical Forensic kit sales will continue into 2014 on public tender Two more da Vinci® Surgical Robotic Systems orders will be delivered in H1 2014 Continue to source products for assembly and packaging facility Litha Biotech Biovac to distribute HPV (Human Papilloma Virus) vaccine for Dept of Health national campaign MCC inspection of the manufacturing facility due to be finalised in 2014 32 Divisional Prospects
  • Short term focus (2014) Improve profitability Restructure of operations – reduced headcount and resource rationalisation Finalise cost reductions across the Group in H1 Refocus sales and production strategy Continue to evaluate a black ownership transaction Medium to long term focus (post 2014) African export strategy within each division Ensure competitiveness and build product pipelines Reduce dependency on imports and increase local assembly and manufacturing potential Change in ownership from Paladin to Endo mainly positive for the group Group Prospects: Conclusion 33 Key 2014 focus on improving profitability through restructuring, cost cutting and expanding and building our product base in revenue and pipeline
  • 36 The Biovac Institute
  • 37 Manufacturing Facility
  • Assets R (000) Dec 2013 Dec 2012 Non current 1 296 670 1 347 499 Property, plant and equipment 73 868 79 278 Goodwill and intangibles 821 892 869 657 Investment in joint venture 254 026 260 034 Other non current assets 146 884 138 530 Current 647 241 436 626 Inventory 328 789 194 964 Trade receivables 214 187 169 691 Other current assets 20 338 25 284 Cash and cash equivalents 83 927 46 687 Non-current assets held for sale 389 875 Total Assets 1 944 300 1 785 000 Equity 1 148 521 1 107 596 Share Capital and Premium 792 263 760 473 Reserves attributable to holders of the Parent 336 272 326 236 Non Controlling interest 19 968 20 887 Non current liabilities 346 250 393 735 Other financial liabilities 261 163 293 957 Deferred taxation liability 85 087 99 778 Current liabilities 449 329 283 468 Accounts payable and provisions 275 134 139 111 Other current liabilities 99 435 84 260 Bank overdraft 74 760 60 097 Liabilities of disposal groups 200 201 Total equity and liabilities 1 944 300 1 785 000 Summarised statement of financial position 38
  • R (000) Q4 2013 Q4 2012 Year 2013 Year 2012 Revenue 247 326 237 502 1 045 332 1 434 460 Operating profit (2 315) (10 311) 46 927 232 831 Operating margin (0.9%) (4.3%) 4.5% 16.2% Finance income 2 373 2 428 10 304 13 447 Interest expense (8 370) (11 815) (32 793) (30 437) Effective tax rate* 1.7% 22.8% 37.5% 5.2% Loss from discontinued operations (520) (1 668) 292 (7 626) Profit after tax (8 950) (16 734) 13 482 196 767 Non-controlling interest (239) 61 (901) 31 304 EPS (cents per share) (1.6) (3.1) 2.7 36.2 HEPS (cents per share) (1.6) (3.0) 2.7 5.1 Weighted average number of shares 543 725 904 541 528 868 542 168 100 456 751 782 Statement of comprehensive income 39* Excludes income from JV and income from associate
  • R (000) Q4 2013 Q4 2012 Year 2013 Year 2012 Cash flows from operating activities 21 700 2 547 64 125 153 921 Cash flows from investing activities (6 313) (5 776) (18 922) (179 968) Cash flows from financing activities 720 (2 616) (22 626) 83 491 Net increase in cash 16 107 (5 845) 22 577 57 444 Cash from deconsolidation - - - (179 337) Cash acquired on acquisition subsidiary - - - (2 970) Cash at beginning of period (6 940) (7 565) (13 410) 111 453 Cash at end of period 9 167 (13 410) 9 167 (13 410) Summarised statement of cash flows 40
  • This presentation contains forward-looking statements about the company’s operations and financial conditions. They are based on Litha Healthcare Group Limited’s best estimates and information at the time of writing. They are nonetheless subject to significant uncertainties and contingencies many of which are beyond the control of the company. Unanticipated events will occur and actual future events may differ materially from current expectations due to new business opportunities, changes in priorities by the company as well as other factors. Any of these factors may materially affect the company’s future business activities and its ongoing financial results. DISCLAIMER 41