Life Healthcare Group Holdings Limited (LHC) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to the Life Healthcare Unaudited Group Interim Results for the 6 Months Ended March 31, 2021. [Operator Instructions] Please note that this call is being recorded. I would now like to hand the conference over to the Head of Investor Relations, Mark Wadley. Please go ahead, sir.

Good morning. Thank you, Irene, and thank you, everyone, for joining us this morning. We're delighted to present a very positive set of results for the 6 months to 31st of March 2020. The order of precedents today will be led by Peter Wharton-Hood, our group Chief Exec, who will take us through an overview of the business; followed by Mark Chapman, who will give us an overview of the international operations, which saw very, very good results for the period; Adam Pyle will then take us through the South African operations; Pieter van der Westhuizen will then take us through the financials; and we will close up again with Peter Wharton-Hood on growth initiatives and the outlook for the rest of the year. And then we'll have an opportunity to take questions. So it gives me a great pleasure to hand over to Peter Wharton-Hood, our group Chief Exec.

Thank you, Mark, and a warm welcome to all of you on the call, as you join us for our interim results presentation. At the outset, please let me express my thanks and appreciation to all our teams around the world for their tireless efforts during the course of the 6 months, taking care of our patients and delivering this strong set of results. At a headline level, I think you'll see our story tells that Life Healthcare has benefited from its geographical and business line diversification strategy, an excellent international result, a strong and improving South African result and a very strong balance sheet and financial position. Our strategic focus areas and vision remains unchanged. As global, we see ourselves as Southern African with a strong presence in Western Europe. As integrated, we see acute and complementary services to the diagnostic capability with our CT, MRI and PET/CT -- I think someone needs to go on mute, and PET/CT scanning capabilities to Alliance Medical and Life Molecular, a balanced global organization. Yes, we are a diversified offering with a move away from non-acute sources. You'll see our revenue outside of the hospital settings, increases in complementary services, diagnostic and imaging, taking on ever-increasing proportions in our company. But our focus on clinical excellence and our people focus remains unchanged. We put the patient first. We rely heavily on our nurses and our doctors and clinicians to deliver these results and with measurable quality, clinical excellence as an outcome. We're very proud of the results we now produce. Moving on to our strategic pillars. You'll see that quality underpins everything that we do and the key indicators will be described to you by both Mark and Adam in sufficient detail later on. From an efficiency perspective, we're seeing improved margins, both domestically and abroad. From a sustainability perspective, our engagement with stakeholders domestically and internationally, more specifically with government, has taken on new level -- new and increasing levels of proportion from the COVID-19 cooperation in South Africa, the vaccine rollout in South Africa, the progress with radiology in South Africa and also the delivery of an increased level of service to the NHS in the U.K. We'll talk about our growth initiatives later on in the presentation, and we do -- we are flattered by the number of growth opportunities that this business has at its disposal. If we then move to the group overview. You'll see that revenue increased to ZAR 13 billion, by just a shade over 4%, that a direct beneficiary of our diversification strategy. Earnings per share from continuing operations, up 4.1% to ZAR 0.559, and that off the back of a strong performance by Alliance Medical, with the revenue increased by 17% and the normalized EBITDA by 38%, supporting the South African performance, which improved in Southern Africa, despite the severe impact of the second wave, which Adam will describe in detail for us later. All wrapped up a very strong financial position, undrawn banking facilities of ZAR 6.4 billion and a normalized debt-to-EBITDA ratio of 2.78. If we then look at the key objectives, they also remain unchanged and our progress that we can report for the period, with higher margins in AMG and margin improvement in South Africa, consistent clinical quality outcomes across the spectrum. From a radiology perspective, we are the partner of choice in U.K. and Europe, with additional contracts during the period for COVID-19 solutions provided, more specifically to the NHS. Domestically, we made good progress with our SA radiology project and our HPSCA application to employ radiographers has gained momentum. And as previously reported, our Scanmed disposal has been completed. If we then move on to the picture that is painted from a diversification perspective, revenue moves close -- has achieved that 70-30 split between Southern Africa and international revenue outcomes. From an EBITDA perspective, international moving closer to a 40% contribution during the period. And the split between acute and non-acute revenue getting closer to that 60-40 split that we spoke about 6 months ago. I'm now going to hand over to the 2 Chief Executives of our major business units, Mark Chapman, first up, CEO of our International Business, to take us through the strong set of results posted during the 6 months. Over to you, Mark.

Okay. Thank you, Pete, and good morning, everybody. I'd like to go through an overview of the international business and moving on. It's only the Alliance Medical Group. That picture was actually one of our expandable mobiles, which we do have the exclusivity in the U.K., and we're seeing very high demand for it. And it's hard to see, it's all in a mobile. But if I move on to H2, and what I think it's shown is how resilient the diagnostic business has been and delivered a very strong overall performance. Alliance Medical continues to see an improvement in demand for its services across all territories, and this is during the pandemic and seeing many restrictions throughout the regions. I draw your eyes to the chart on the right. This is the activity from the beginning of the pandemic. And you'll see in wave 1, where we saw a classic V effect when a majority of our clinics were closed. Volumes in Italy actually went down to 15%. But I'm pleased to say it was almost a classic V effect, and the volumes and activities came back as restrictions were released. And indeed, joined the wave 2 and wave 3 that we saw in Ireland, you can see how resilient the business has been. The last lockdown and restrictions, you can see to the right, and certainly for Italy, Ireland and the U.K., we're having -- experiencing the volumes that were below the pre-COVID levels. But pleasingly, at the end of March, you can see the trending as restrictions were easing and the activity was going ahead of the pre-COVID. This was supported by, to what Pete said, the ongoing sort of supply of choice to a number of government provisions across Europe, predominantly the NHS, HSA in Ireland and also the ASL budgets in Italy. It was also supported by robust and continuing growth within the PET/CT business, which I'll come on to shortly. We did see diagnostic imaging having a little bit of a lag below the line. But again, that's now coming forward and to pre-COVID levels. Ireland has had a very strong performance throughout the year and has continued to grow and in addition, has been awarded public contracts from the HSE to support their waiting lists. In Italy, which had very strong lockdowns in wave 2, and that's now subsequently rebounded and seeing volumes above the pre-COVID levels in March. I think it's also important to say that our staff, circa 72% across the group have now been vaccinated with the first vaccine. And indeed, in the U.K., circa 84% of staff are now fully vaccinated. Moving on. The overall performance, I know Pete will go through this in a lot more detail. But I just wanted to draw your eyes to make strong set of results. And importantly, you'll see that the revenue growth at 17% year-on-year is strong. And more importantly, the conversion to EBITDA at 38% is very encouraging. Again, this has been supported by the resilience of the PET/CT volumes coming through the U.K., the strong growth in Ireland. And across Europe, we've seen high demand for CT imaging. And this isn't just around the CT support that we mobilize very quickly for the NHS. It's across all our regions. And the mobile business, again, across the regions, has become very buoyant, as there's been an increased need for scanning capability, whilst waiting lists are being stretched across most of the region. Also very encouraging is to see the EBITDA margin growing to 25.4%. And and that's with Dinnington coming on board, which has had a dilution effect of about 1% to margin. But I'm also pleased to report with Dinnington, with that side coming on board, the reliability of the radiopharmacy in the U.K. at the end of March was at 98.7%. That's certainly a record that we're seeing within that part of the business. Moving on. So I just wanted to highlight the impact of COVID in this half year results. And it's in 4 main blocks really. We have seen a drain still on the volumes coming through. And predominantly, that was in the U.K. and Italy, which you saw in the previous slides with the chart, and they were tracking at pre-COVID level around 90%. Encouraging, it's now coming back at the end of March, but it has had an impact of about ZAR 3.5 million over this period. We are also starting to see pent-up demand and solutions being supported there. And again, when we look at our mobile provisions in the U.K. and Ireland, you can see that the expectations are slightly ahead of what we'd have expected. Hence, we're starting to feel this pent-up demand and need to provide solutions to governments coming through, and that contributed ZAR 2.7 million. We then got the bigger sort of support systems that we have with the health care providers across Europe. You've heard me talk about the CT mobiles in the U.K., and I'll come on to that shortly. The HSE contract that's been awarded in Ireland and also [indiscernible] in Italy, working with the ASL. We've also mobilized very quickly early on with COVID-19 blood testing in Italy, which remained strong, and certainly supported that part of the business while some of the activities in diagnostic imaging were below the line. And the last point is that we continue to see costs due to COVID around the PPE and also the time to clean the facilities in between patients. And another example is within Italy, where we have to have a triage of the front of all our clinics before patients can enter the facilities, all bearing costs, but are being managed accordingly and appropriately. So overall, that was leading to an EBITDA margin of ZAR 45.1 million, which is very encouraging. Moving on. I think what this is that we have a very strong platform to work with public health services. And you'll know from the very early stages moving into COVID, we have reacted with pace and delivered a very robust service to the NHS, which is the first time we've offered a 24/7 provision across England. And we also mobilized the diagnostic facilities within the Nightingale hospitals. In Italy, the team introduced blood testing very quickly and robust solutions were put in place across a number of centers. And in Ireland, when the clinics were closed, Malcolm and the team offered services, and our staff to go and work within the government hospitals. I think this early support, certainly, cemented the relationships that we have across a number of the national health care providers. And this is now showing further opportunities as we continue to support the NHS with CT mobiles, not on a 24/7 basis, but more on a 12-hour rotor. We've also seen awards and significant awards of activity coming through the Irish business with the HSE. And I think what is also now tell you is we're moving into a position where we see very high weighting lists across all regions. And the short-term solutions are being put in place. There's further conversations now looking at the medium- to long-term opportunities of how we can support these health economies and services and systems to provide support around the pent-up demand and the waiting lists. And you'll see, as we move away from the short-term COVID-19 support measures, that's probably going to be more normalized in 2022, but we are now in discussions about how we can become more business as usual to support services to address the pent-up demand. Next slide, please. I'll just move on to sort of the key regions. And I think everybody's seen this slide before. I think the subtleties here is that you'll see the mobile numbers increasing in the U.K. as we support the solutions required there. And also across most of the regions, that public-private split is increasing to the public, which is no surprise when we've had a year of supporting the National Health Services across the regions with COVID solutions. Next slide. Dialing down a little bit more into the U.K. and the Molecular Imaging part of the business, which is the PET/CT. And again, you've heard me say, it's been a very strong half year for PET/CT. What we have seen though is that the percentage of revenues, which were growing and the marginal economics were coming through, that business over the 50% has gone down to 47%. That skew us through the short-term solutions for COVID-19, which is to be expected. But very encouraging, if you look at the bottom right chart, the average growth rate across the PET/CT volumes over the last 4 years has remained at 10%, and that's including the impact of COVID-19 in last 12 months. The bottom left, I'll just draw your eyes to that really as well. If you look at the half year, and the growth on the previous year was at 6.1%. What were encouraging is that the figures in March were at 19% growth against the previous period. I think it's also worth noting that within PET/CT, there is no waiting list because the service from a referral is reported to that patient within 7 days. But we do know, certainly in the U.K., that estimated patients not having their cancer treatment is touching 50,000 and beyond. So again, we do expect as GP practice and primary care start opening up the facilities, we expect further volumes to come through accordingly. Next slide, please. Staying in the U.K., looking at the Diagnostic Imaging part of the business, the strategy is still very firmly looking at how we focus on long-term partnership solutions with the hospitals and also the ICSs now which is the integrated care systems within the U.K. If you look at the chart to the right, you can see how we were growing that long-term contract. And again, in the last 12 months, that's been skewed by the solutions that we've offered for the COVID-19 and certainly within the U.K. and NHS. But those conversations remain about looking at long-term partnerships. If you look at the chart to the right, I think this is certainly a powerful picture. You can see how the waiting lists are now touching 52 weeks in the U.K., and number of patients on that waiting list is touching to 5 million, and that's expected to increase over the coming months as full restrictions are eased. What's that telling us that the NHS is going to have pressure points. And they are looking to create a number of community diagnostic hubs. And this is where this 44 integrated care systems, ICSs, are looking to commission those: one, to support the long-term diagnostic plan, but I think it's become an accelerator due to the pressure points within the system around the waiting list. And I'm pleased to say, Richard and the team in the U.K. are having a number of conversations with the ICSs because, again, through this COVID experience what we have seen, is relationships between public-private partnerships strengthening. And I'd like to see over the next 12 months, there'll be some positive results coming out of that. Moving on to the next slide, if I could. Just a quick overview, just trying to pull out the main highlights within the sort of the key territories. Within Italy, Patricia and the team have had a strong recovery in volumes. Overall, 13.7% growth in revenue. You heard me talk about the bit of a lag on the DI and tracking at 90%. But the Italian team have supported that revenue with supplementary blood testing for COVID-19, as I explained. The focus remains on growing the volumes back to the pre-COVID levels and starting to see the growth come through, and they continue to support the public volumes accordingly. I think it's also worth noting and very encouraging that the previous acquisitions, they are performing very well, and the team are now looking at the consolidation of activities across clinics and also driving the cost base and the efficiencies that come with that. In Ireland, Malcolm and the team, as I explained, had a very strong 12 months, growth at 22.6% across the period, which is very encouraging. And there's still strong demand, and we are seeing the self-pay market increase slightly as patients are looking to bypass the waiting list, which in parts of Republic of Ireland again is over 12 months. And on the back of that, the team have worked very closely with the HSE and have been awarded additional contracts to support the waiting list that we know will be growing in the Republic of Ireland and Northern Ireland as well. And then looking just broadly on some of the other regions, excellent team within Northern Europe, have had a very robust business throughout this with the radiopharmacy and the cyclotrons across the region, and again minimum impact and starting to see some growth come through. Likewise, within the U.K. and Ireland, we're seeing very strong demand for the intra-mobile solutions. No surprise, that's around CT and also growing within the MRI business. I'm pleased to say, during this period, we've also had an acquisition of a further cyclotron to support the Molecular Imaging strategy within the group, and we acquired that facility in January of this year. And I'm pleased to say this is performing very well and on business case. Next slide, please. Last but not least, our quality indicators. It's very important to say that the quality does underpin all our operational decisions, and I'm pleased to say that every quality indicator within this chart is ahead of the target. Also, very pleasing to see is the patients experience indicator that can pull people's eyes to that across all levels and across all the regions. The patient experience data is very encouraging. And I think this just supports the high-quality services that all the businesses are delivering and continue to deliver in these very difficult COVID times. Okay. Thank you for that. And I'd now like to pass you over to Adam.

Thank you, Mark, and good morning, everyone. I'll go through and give an overview of the operations of the Southern African business. You can move on to the next slide, thank you. So what this slide shows is it gives a brief overview in terms of the COVID numbers that we experienced in the South African business within Life Healthcare. And you can see in the graph on the left is the familiar sort of graph and look of the COVID waves. I just want to point out that the -- between wave 1 and wave 2, what we saw in wave 2 was a far more intense wave with an increase of over 25% in terms of COVID admissions that came through in wave 2 and certainly placed the business under considerable stress and strain in the months of December and January. And what we are seeing now is that if we look on the right-hand side of the graph, you see a concerning upward trend in hospital admissions. And whether we are in a -- technically in a third wave or not, what we are seeing as a current increase in admissions. And what we saw in both wave 1 and wave 2, it plays out differently across each of the provinces in our country. And so wave 1 started in the Western Cape, and wave 2 for us started in the Eastern Cape. And what we see now, if you look at the graph on the right-hand side is an increase admissions, and it's really playing out in Gauteng, the Free State and the Northwest and Mpumalanga with still a low number of COVID admissions happening along the coast. So those are the provinces where we are seeing the current increase in COVID admissions. If you move on to the next slide, so what this slide shows is actually trying to show something slightly different in terms of how COVID has played out in H2 '20 and H1 '21. So if you look at the -- first of all, you look at the graph on the top left, and that shows our total PPDs over a 12-month period from April 2020 to March 2021. And the difference between our COVID PPDs and non-COVID PPDs, and you can see the sort of waves in between. So you can see the increase in wave 1 in July. And the COVID PPDs increasing and the decrease in the non-COVID PPDs. And then as the sort of COVID PPDs dropped and the increase in the non-COVID PPDs and it flows through in September, October. And then eventually -- and then the pickup into COVID wave 2 in the high number of COVID PPDs that played out in January and then dropping off again. But what you can also see from the graph on the top left is the, overall, the high number of PPDs the group has had in H1 '21 versus H2 '20. If you look at the graph on the bottom left, what's interesting for us is over these 6-month periods is actually the COVID waves played out in a very similar fashion. So in both periods, the COVID waves peaked in months 3 and 4. So in other words, months June and July in H2 '20 and the months of December and January in H1 '21. And what you can see from that is the more rapid increase in wave 2 of the number of admissions and also a faster drop-off in months 5 and 6, in other words, in months, February and March, compared to August and September in the prior 6 months. And what you can also see from the graph is the high number of COVID admissions we've had to deal with. So when we look at the business and compare these 2 halves, actually, in fact, they were quite similar in terms of the COVID timing. And what we saw in the last 6 months is a far more intense number of COVID admissions. And so when we go through and discuss some of the numbers, I think what we've seen across our business is a -- what you see is a business that has learned, it's adapted. And certainly, the results we've come out with H1 '21 are far improvement in terms of H2 '20. Just the graph on the top right shows the theater minutes. And that for us is a good indication of the sort of underlying surgical activity outside of COVID. And again, you can see the high number of COVID with theater minutes that took place in H1 '21 versus H2 '20. And in particular, with the high-intensity of COVID wave 2 in months 3 and 4, and that was December and January, what we did see was a drop in theater minutes. But what's interesting is, as we adapt to our business, we saw a much faster ramp-up of theater minutes. So you see that coming through in months 5 and 6, that's February and March this year versus August and September prior year. And that's as a business learned and adapted how to deal with COVID in terms of turning on the theaters. And it's -- and for us, it's a good sign in terms of how you learn and adapt. If you go to the next slide, please. It just shows the overall improvement in our business. And if you look at the graph on the bottom left in terms of occupancies, so you can see our occupancies have improved from H2 '20 to H1 '21 across all the lines of business. We still offer we want to be, and you can look at the H1 2020 occupancies, and you can see where we'd like to get back to. But this improvement in occupancies feeds into our revenue numbers. And you look at the chart on the right, you can see an overall improvement from H2 '20 to H1 '21 in terms of our revenue. And if you look at the actual lines of business, you can see that Healthcare Services is actually higher than it was in H1 '20. Our complementary lines of business are where they were in H1 '20. So good improvement for those 2 businesses. And it's only the acute business, which is lagging behind H1 '20. But that business has shown a really good improvement we were in H2 '20. So across all 3 lines of business, a good performance over the last 6 months. We go into the next slide, please. This is -- I'll touch briefly on the numbers because I Pieter van der Westhuizen will deal with these numbers in more detail. And I also know he gets a little bit nervous when I was talking -- when I start talking about numbers in detail. So I'll be fairly brief on this slide. What you see is that our PPDs are 14.9% down on H1 '20. And what we continue to see is sort of a fundamental underlying change in our case mix. And that's reflected by an over 12% increase in our revenue per day. And that results in our revenue only being roughly 3% down on the prior period. And that feeds down into a normalized EBITDA of ZAR 1.5 billion, which is over 30% down on prior period and a margin of -- a normalized margin of 16.6%. And this is a function of the sort of lower activity as well as the increased costs associated with COVID. And we are doing a lot better at managing these costs, and I'll touch on that in terms of the next slide. We move to the next slide now. Thank you. So this is a slightly busy slide. And I'll just start -- in the next few slides talk about split of business between acute, the complementary and the health care service businesses. So we just touch you on the acute business first. So you can see from the acute PPDs graph, how the business was impacted by the drop in PPDs from H1 '20 to H2 '20. And you can see the recovery that's come through now into H1 '21 with a 14.5% improvement. And then if we -- I've just taken 2 parts of theater minutes and cath lab cases as a reflection of the underlying sort of surgical activity. And again, you can see for both of those, the sharp drop off we experienced from H1 '20 to H2 '20. But again, the good improvement in theater minutes of 16.7%, and the cath lab case of 21%. So you can see that improvement coming through in the last 6 months. Then what we've shown on the table on the right is, if we just take the month of March, because the month of March is probably the most normal month we had in the last 6 months. And I do use a term normal very carefully because we're not exactly in a normal environment. But it was the month with the lowest number of COVID-19 PPDs. So in that particular month, it's interesting because our revenue for that month was 0.6% higher than March 2020. And I know March 2020 numbers were impacted by the start of the -- the stop of surgical procedures. But our revenue was also higher than March 2019 as well. And what was pleasing was our SA operational EBITDA percentage was around the 22% mark, which is a good improvement, and it shows the lessons the business has learned in terms of trying to manage additional PPE costs that come through because of COVID, how to change your activities within the COVID environment. And this is despite that our PPDs being down 11% in March 2020. But what you see underneath that is the change in activity. So theater minutes 22% down, but our cath lab cases were nearly 2% up on the prior month -- or the prior period. And what's interesting is our length of stay came down to roughly 3.8 days, which is a more normalized length of stay for the period, which is at 4.32. Our normal length of stay is around 3.6 days. So the -- having a length of stay of 3.8 is a good reflection of heading back to a more normalized environment. And just a point on that minus 11% PPDs, it does show a change in case mix. And the biggest impact for us here is the drop in medical cases. And we talk about the surgical cases, but the biggest impact for us here is the drop in medical cases. And that's medical outside COVID. And for us, that's reflective of what's going on in society, increased social distancing, the hand washing, and the fact that the society is still not back to normal. And that's the primary reason we see behind our reduction in PPDs. Move on to the next slide, please. We just touched on the complementary services business. And we just show the 4 businesses, the mental health, the acute rehab, the renal and the oncology business. And what you see here is that mental health business is really, really severely impacted by COVID. So we saw the 30% decrease into H2 '20. And despite the severe COVID wave 2, we have easily seen an 18% increase in our mental health PPDs over H1 '21, which is pleasing to see. In terms of the acute rehab business, we saw a smaller drop-off in terms of -- from H1 '20 to H2 '20, but we have seen a slower increase in terms of the recovery. That improvement has continued to increase in the months of April and May. In terms of both renal dialysis treatments and oncology treatments, it's pleasing to note for both those businesses, we now have higher underlying activities than what we saw in H1 '20. And so both those businesses are performing extremely well. Move on to the next slide. And finally, in terms of our Healthcare Services overview. What we see is a really strong performances from Life Esidimeni and the Life Employee Health Solutions businesses. Esidimeni had a stable growth in revenue and stable margins. And what we saw in Life Employee Health Solutions was a good increase in revenue based on the increased number of services we offered to cover the COVID-19 epidemic, and that has resulted in a 12% increase in our revenue. And pleasingly, a good management of cost because what you see is a 72% increase in the normalized EBITDA for those businesses. So the Healthcare Services business is although fairly small in the overall SA business, have really performed exceptionally well under a difficult 6 months. Move on to the next slide. Thank you. And lastly, the quality slide for the Southern African business. And what you see in a difficult 6 months, I think what you see is a really good set of quality scores. Our patient adverse event rates are down. We see -- and our patient experience rates were stable on prior year despite the difficult circumstances. And what we see in our clinical outcomes is a number of them are impacted by COVID. For example, your VAP, your CLABSI and your CAUTI, those measures being impacted by COVID. But what you see overall is an improvement in the overall trends, and those trends heading in the right direction. And the last point we put up a slide is when I should talk about the employee safety measures. So you can see the improvement, but that chart excludes COVID. If you include the COVID scores on our employees, that number jumps from -- it's roughly 3.8 to over 11. And that shows the burden that COVID-19 has placed on the health care workers in this country. And on that note, I just want to say that the -- I'd like to thank the Life Healthcare staff for the role they played in dealing with this COVID pandemic over the last 6 months. It has been a difficult 6 months. And in particular, I'd like to thank the frontline workers and the frontline doctors. They worked under extreme pressure. They showed amazing resilience and courage, and they delivered outstanding care under difficult circumstances. So I wanted to thank them before I hand over to Pieter van der Westhuizen. Thank you very much.

Thank you, Adam. Good morning, all. Just in summary, we had a strong H1, considering the environment that we're trading in. And it's a testament to what Adam has said in terms of our people. Under difficult circumstances, the SA business has continued to improve performance against H2 2020 and an exceptional good performance from the international team. And just to remind us as well, in terms of last year at the end of the year, we had the vicious cyber attack and it put pressure on our working capital as well as on the finance teams in the Southern Africa business. And the recovery of that has been exceptional, and that resulted in our cash generated from operations at ZAR 2.3 billion, roughly 95% of EBITDA. And normally for the first half of the year, we're between 85% to 90% of EBITDA, and this has been an exceptional performance. Also net debt to normalized EBITDA improvement. So the financial strength of our balance sheet has strengthened in the first half from around 2.96 at the end of September to 2.78, largely driven by 2 or 3 factors. One is for improved performance from the operations; two is the impact of exchange rates, to some extent, where we benefited; and thirdly, the disposal of Scanmed where we had net proceeds of ZAR 680 million that we then applied to reduce our debt levels. Next slide, please. Just to put the results in context. Firstly, the comparative numbers for 2020 have been adjusted to take into account the disposal of Poland -- or Scanmed, and that's reflected as a one-line item. You'll see at almost at the bottom of a slide, profit and loss from discontinued operations, profit in the current year and a loss in the prior year. So all the numbers are now comparable, excluding Poland. And secondly, the results for 2020 reflected the impact of COVID only for roughly about a month compared to in the current year where it's been in for 4, 6 months. We had strong revenue growth, and that's driven by good recovery in scan volumes, as Mark showed, in the international operations as well as the benefit that we received through our partnership with providing pandemic solutions to the various customers internationally. And then the higher activity of cases that we've seen in South Africa that resulted in a higher revenue per activity in the SA operations resulted in the revenue growing at 4%. Normalized EBITDA down by 14%, due to the impact of COVID. And that's largely because of the higher costs associated with COVID, I mean, the SA operations as well as the loss in operational leverage because of our activity levels being lower and the high fixed cost nature of our business. Normalized EBITDA margin at 18.6% down against last year, but showing good improvement from H2 of 2020, a testament to the learnings that we've taken out of the first wave, but also a good management in both our segments, international as well as South Africa. Lastly, just in terms of this, you will see that interest costs coming down because of a reduction in our debt levels, but also because of improved performance of the international as well as the Southern Africa operations. Attributable profit up 4% at ZAR 812 million against ZAR 781 million for the prior financial year. Next slide, please. This slide, we tried to show what the estimated impact of COVID has been on our business for 2021 as well as for a competitive period for 2020. Current year, the impact is roughly ZAR 400 million at attributable profit loss compared to the prior year of ZAR 120 million. As you can note that is a significant impact. Underlying business good results at a 36% improvement against prior year, if we strip out COVID. Obviously, you can't do that because it's part of the business, but just to show you that the underlying business have done well except for COVID. Next slide, please. Total EPS up 4%. That includes the impact of Poland at 55.9% against 53.7%. Stripping out the discontinued operation, EPS from continuing operations at ZAR 0.499 against ZAR 0.551, 9.4% down against the prior year. We look at the business at a normalized EPS from continuing operations basis, consistent treatment in terms of the prior year, ZAR 0.528 per share compared to ZAR 0.541 per share, 2.4% down against the prior year. Next slide, please. Just -- I just want to start on the right-hand side, the graph, showing the good recovery in the international as well as in the Southern African operations between H1 2020 -- H2 2020 and then H1 2021. We can see that the EBITDA margin in the Southern African business is now north of 15% compared to just below 10% for H2 2020. SA business, biggest impact has been COVID at 53.6% down against last year for the same period. But the international business on actual exchange rates roughly 50% up against last year. Constant currency, it's 58.7% up. Included in the results is also, you'll note that the corporate costs increased by 17%, driven by largely the increase in cost related to IT spend. After the cyber incident, we increased some of our IT spend. And then also the cost of licensing is mainly denominated in foreign currency, and that had an impact on the results. That resulted in our costs increasing by 8.8%. Income is down -- or is up 2.2%, but that's a factor of revenue in the SA operations. If revenue was down, the head office charges and management fee and its revenue link. And hence, it's got an impact on the income that's generated by COVID. Overall, normalized EBITDA margin at 18.6%. The SA business, including the corporate, is at 16.6% EBITDA margin. And the international operations just south of 25% -- at 24.8%, exceptional performance for international operations. Next slide, please. As I said, the balance sheet strengthened, with net debt-to-EBITDA at now 2.78 against 2.96 at the end of last year, financial year. We still have all the bank facilities that we arranged during the COVID period available. Total bank facilities as of the end of March was undrawn at ZAR 6.4 billion. We are now in the process of reviewing those facilities to make sure that we've got sufficient facilities only what we need for the next 6 months, although it's difficult to forecast. Also in terms of our bank covenants, amendment to the bank covenants came to end at the end of March. It was amended to 4.5x, and it's now back to the 3.5x net debt to EBITDA. In terms of our latest forecast, no concern in terms of meeting these bank covenants. Next slide, please. Overall, debt improved due to 3 factors. You'll see on this slide that debt at the end of September last year was ZAR 16.4 billion roughly, and it's now down to ZAR 13.6 billion. This is gross debt, driven by good performance in the business as well as benefiting from the exchange rates, so a strengthening of rand against the pound. And then largely, also because of applying the proceeds from Poland to reduce our debt levels. There's a small improvement in the weighted average cost of debt from 2.85% at the end of last year and 2.84% in the current year. Next slide, please. So lastly, in terms of our debt repayment profile, we've got another roughly ZAR 1 billion that comes up for repayment in the current period. As I've shown earlier, we do have bank facilities -- short-term bank facilities available to repay these. But in addition to that, we're in the process of entering into additional term debt, but we will then apply to extend our maturity profile, but also to reduce our banking facilities overdraft position of ZAR 1.8 billion. We expect that to be completed within the next few weeks. Thank you. I'm now going to hand you over to Pete to take you through the outlook.

Thank you very much, Pieter, and to Mark and Adam. As far as growth initiatives are concerned, the one we do want to just reexplain in some detail relates to Life Molecular Imaging. In red, you'll see that the June 7, 2021, is a key date in our company. And this goes to the heart of an approval process currently being assessed by the FDA as to whether or not to approve Neuraceq, yes or no. So we might liken it to account to us. But in advance of that decision, important for us to just reexplain exactly what it is. Neuraceq is a trademark-approved amyloid imaging tracer, which we own in Life Molecular. And amyloid imaging tracer is used in a PET/CT scan to help diagnose Alzheimer's disease. The currently discussions on how this would be reimbursed, the equivalent of medical aids, and we are currently in conversations around commercial sales contracts for the use of Neuraceq, both in research and hopefully in diagnostics. So what then happens is if this is then approved on the 7th of June, we can move into a more commercial stage of the deployment and sale of Neuraceq on a further and more a widespread basis. But while the current focus sits on Neuraceq, it's important also to see that Life Molecular has a pipeline of other products, which we've tabulated below. You'll see that the 8 different products, spanning dementia, cardiovascular and oncology diagnostic profiles, and they're all in various stages of development. So it's important for us to see that Life Molecular is not just -- it hasn't just got 1 trick. Certainly, at the 7th of June rules in our favor, we're onto a commercialization path. If that goes against us, there are other competing products being developed for the treatment of Alzheimer's, and there's certainly other opportunities that rest along the other 3 categories that I have described. Moving along into Southern Africa, you'll see the growth initiatives across the whole spectrum span, the business lines that we have spoken about in some detail. We see good growth opportunities within our existing South African market, but our focus is not to explore for new ones. Our focus is now on execution. We will invest in our IT infrastructure to enable further digital innovation at the clinical and nonclinical level. Our SA imaging project has not gone quite as fast as we would have hoped, but we're making good progress. And you would have seen some of our public profile statements on bringing skill sets and technologies home, continuing to exert some influence in the local market. And we're hopeful for a positive outcome in our discussions with the HPCSA, and we expect operations to commence during the balance of the 6 months of this year. Other growth prospects, at the acute hospital level, we are reinitiating some of them that we put on hold due to COVID. We see significant growth opportunities in mental health, acute rehab, renal dialysis and oncology. And rounding that off, as you saw from Adam's graph, our Healthcare Services business in Esidimeni and EHS also are demonstrating future potential. It would be -- we do need to complete our vaccination update to you. From an international perspective, Mark did give you the update that they've made good progress, and approximately 72% of all AMG's health care workers have received their first vaccine locally. 75% or thereabouts of our health care workers, employees, doctors and contractors have been vaccinated. We have volunteered assistance to government in the countrywide vaccination program in phase 2, and you'll see the annotated the 22 hospital vaccination sites, in addition to 9 secondary sites and 20 EHS sites that we volunteered into the program, which should get up and running at scale towards the end of this month. From an outlook perspective, we can see from -- in international, we are looking towards a more normalized operating environment as the vaccination efforts across the continent start to normalize the incidence of COVID. We see a continued growth in scans. We've reported that Dinnington is operational and commenced with the maintenance program within Sutton, which will stabilize our radiopharmacy production capability. Of course, we're investing in LMI, given the update that I provided to you a little bit earlier, to drive the sales of Neuraceq and we've annotated the CapEx spend of just short of ZAR 1 billion for FY '21. In Southern Africa, the business is well prepared for the third COVID wave. Adam has said that the learnings in wave 1 and 2 have been translated into an operational plan in anticipation of this third wave. We do expect a continued improvement in both PPDs and margins, but we're not sure exactly how the wave 3 will pan out as the timing of that is somewhat under review. And we will continue to focus on our internal optimization programs, execute the radiology project and deliver on the growth opportunities discussed a little bit earlier. CapEx for the year in South Africa will be just over ZAR 1 billion. So in aggregate, the group's outlook is somewhat cautious, but it's mixed with the optimism that our diversification strategy is working. We do expect a continued improvement in underlying business, we have and will enjoy a renewed focus in executing on growth opportunities, but we are also continuing with our cash preservation strategies. With that in mind, the dividend distribution at the half year, we have set to 0. But of course, we will review that at the end of the financial year when we have some more certainty around the impact of wave 3. Our outlook and future is, therefore, all focused on people. We put our patients first. Our quality scores, which we have proudly reported to you, and our patient experience scores are certainly in the vein of making life better. We strive to deliver and will continue to deliver these quality clinical outcomes and patient experience. But irrespective of the geography or business lines we choose to pursue, growth opportunities cannot be delivered without our people. Adam and Mark and I and all of the executive team, once again, express our appreciation to our nurses, our clinicians and appreciation for our partnerships with doctors and our key relationships with government and other key stakeholders around the world. We remain focused on our strategy and will be execution oriented to deliver on our promises. And with that, we'll take questions.

Thank you. Operator, could we take questions from the dial-in call first and -- as we collect our questions from the webcast. Thank you.

[Operator Instructions] Our first question is from Anuja Joshi of Absa.

Just a few questions. The first is on revenue per PPD growth. And the second is on recovery in non-COVID cases. So your revenue per PPD growth was 12% in the first half. And your peers have reported around 9%. Could you please elaborate what is driving your revenue per PPD, your case mix, better NPS? And what sort of trend do you anticipate in the second half and beyond? And the second question is on recovery in non-COVID cases. So I just want to understand like where do South African hospitals stand compared to other countries? And what is driving that trend? I'm asking because if I look at the graph shared by one of your peers, so recovery in their non-COVID cases in South Africa was lower compared to other countries. So I'm sure if you will be following what's happening to other hospitals in other geographies. So I just want to understand where South African hospitals stand compared to other countries in terms of recovery in non-COVID cases? And what is driving that trend? And what kind of trend do you anticipate over the next 1 to 3 years?

Thank you, Anuja. Adam, do you want to take revenue per PPD and non-COVID cases, please.

Okay. I was hoping to get the second question for Mark, but I'll deal with the first question. So the revenue per PPD at 12%, as I said, it reflects sort of a fundamental change in the underlying case mix. So the -- and that's based on a number of factors. So firstly, you've got a high number of longer theater stay showing that more complicated cases in theater, one. And secondly, what it does shows a lower percentage of medical cases. And we know that medical cases come in at lower revenue per PPD than a surgical case. And that's why you get a sort of a high revenue PPD. And I do think, as a business, we've always had, I think, probably more exposure to medical cases. Look, I don't know what other groups present in terms of the medical cases. But certainly, in terms of the profile of our membership, the network deals we have and the location of hospitals and the mix in hospitals, typically, we have -- on a PPD basis, historically, 54%, 55% of our PPDs are medical, and that includes mental health and acute rehab. And what we've seen over the last sort of 6 to 12 months is a drop in that ratio. And so it's -- and that feeds into why revenue per PPD is higher, probably higher than our peers and that's coming through in terms of the increase. In terms of the recovery in non-COVID cases, I'm not sure what international or other hospital groups have seen in other countries. I suppose how we recover non-COVID cases is reflective in terms of where we are as a country in terms of dealing with COVID. And what we see is we're still behind other countries in terms of vaccine rollout. We are -- excuse me, we still have even like a low form of lockdown, we still have a society which is not back to normal. And so we -- for example, we still see our admissions into accident or emergency units is still well down on what it is in the pre-COVID world. And you still have a society, which is social distancing, not everyone's going to the office, et cetera, et cetera. And so that I think it all plays through into what we see in the non-COVID environment. But as for trends, we're not sure. I don't know how the COVID wave 3 plays off. But I do think that as the vaccines start to happen and more population vaccinated, hopefully, we will return to more of a sort of the pre-COVID world and then hopefully back to more of a pre-COVID type of environment. But there are so many factors, Anuja, which impact that.

Yes. Yes, I think that helped. I'm just asking because I look at the recovery of non-COVID cases in other countries because before the vaccination started in those countries, the cases over there were -- recovery was like high as compared to South Africa. So I was just wondering if there is something beyond the COVID-19 wave or vaccination or is it anything specific to South Africa that is affecting that.

We don't have any other questions on the conference call at the moment.

Thank you, operator. Perhaps while we wait for further dial-in questions, we do have a few on the webcast. I'll start. There are 2 for Mark Chapman. The first is from [indiscernible] at Investec. Please, could you give us a sense of how sustainable revenue and profits from National Health Care support are in the medium term? And are these likely to decline once we return to a more normal operating environment? And then allied to that question from Victoria Lambert at Bank of America. Does EBITDA margin in the range of 23% to 24% looks sustainable going forward for AMG?

Okay. Thanks, Mark. Yes. To answer the first question, the sustainability of the National Health Care support, we are seeing, and I think the story with the first 6 months on a 24/7 contract, then up to the end of this year, that requirement is still the -- if you think about the pent-up demand, I do see the reliance on services going forward. The amount of scanning activity going through that provision of services is very high. So they will be very hard-pressed to stop that activity and turn that top half. One of the things that we did do for this contract was to acquire additional scanners and also do an intense training program with our radiographers from MRI to CT. That did incur costs, and that was reflected in the first 6 months worth of revenues. That will be normalized going through the period. Obviously, it's being sustained for the second half of the year. Going into next financial year, I think there will be some pressure points on that. Hard to say what bigger at this stage. But the actual demand for scanning, I think, will still be there. So those are conversations we need to have. So it does link into the margin as well. And on question with sustainability of the margin around the 23%, 24%, I think that is deliverable. Yes, we'll see some pressure to the point I've just talked about. But actually, as we start continuing to managing the cost base and some of the costs associated to COVID as we normalize, I think that will help the margin as well. So relatively confident around those levels. I think there's also -- just a question from Roy as well around the 50,000 backlog of cancer patients in the U.K. being asked if that's starting to come through, I don't feel it's coming through at the pace it should at the moment. But I think what is encouraging, if you look at some of the activities in the last 2 to 3 weeks, there have been record levels of activity on a daily basis. So I think that just starts to show that level of activity and need coming through the service and the system, which is encouraging. I also see a question from Grant as well. And I think I'll pass back to you, Mark. There's a question around what does AMG see as a long-term and a short-term partnership. The long-term partnerships, which we look at are similar to culture of this world where it's a community diagnostic center, where it's a 10-year contract. Now there are some that sort of form from sort of a 5 plus 5. So that's what we start seeing as a sort of a medium- to long-term contracts. The short-term provisions are very much similar to what we're seeing with some of the mobile contracts at the moment, which are sort of 6 months. Some of them are up to 12 months, which is classed as the short term. And as we move through to the opportunity that I think community diagnostic hubs will bring to the business, they are certainly long-term provisions integrated into the integrated care system of a region and very much integrated into the infrastructure of the NHS and to support their diagnostic challenges that I'm sure they're going to have over the next 18 to 2 years -- 18 months to 2 years. Hopefully, that's answered those questions. Thank you.

Thank you, Mark. One further question from Victoria Lambert at Bank of America. What occupancies did Life Southern Africa see in May? Adam, do you want to take that, please?

Yes. So look, our occupancies in May are sort of, I think, it's 61-odd percent at the moment. So we pretty expect that to continue through the rest of the month. So certainly an improvement from what we've seen in H1 '21. And hopefully, that's a continued trend. But look, let's see how the COVID wave 3 if we're there yet not plays out, but it's roughly 61%.

Okay. Thank you, Adam. Operator, do we have any further questions from the call?

We don't have any other questions on the conference.

Okay. Thank you. That does appear to be end of the questions at the moment. Peter Wharton-Hood, do you want to make any remarks in the closing?

Yes. Thank you very much, Mark, I think it was all wrapped up in a quick statements for the team. And to those who may not have had all your questions answered, we do remain available as a team. If you contact, Mark, we will address your questions. But thank you to all.

Ladies and gentlemen, that does conclude this event. Thank you for joining us. You may now disconnect.