Ramsay Générale de Santé SA (GDS) Earnings Call Transcript & Summary

Good day, and welcome to the conference call relating to Ramsay Santé annual provisional results at the year end of June 2021. This conference is being recorded. And now at this time, I would like to turn the conference over to Marcus Nord. Please go ahead.

Thank you, and hi all. And welcome to this conference call, covering the provisional annual results for the Ramsay Santé Group for the financial year ending on June 30, 2021. The Presenters today will be our CEO, Pascal Roche; and myself, Marcus Nord, acting CFO. We will organize the conference call into 3 sections. Firstly, a business update and comments to the overall results and achievements by the Ramsay Group for the last financial year. Secondly, I will make a short overview of the financial numbers for the year. And after this, we will open up the floor for questions. And when asking questions, please state your name and what company you represent. And by that, I'm handing over to Pascal for the business update section.

Thanks a lot, Marcus, and welcome, everybody. We are really very pleased to sharing with you this evening our results. So I'm going to give you some context in which I would say these results are coming from. And I clearly do remember a year ago when opening this call, to say that, of course, the last month from March to June 2020 have been dramatic unique due to COVID. So of course, when looking back at these last 12 months, I'm not sure to find the right English words to describe the context. We have been through a second wave of COVID, a third wave, a fourth wave. We have been closing wards, reopening, reclosing, et cetera, transferring people; a real rollercoaster. We have been opening vaccination center, creating critical care, additional beds and so forth. So a terrible year, and at the same time, really very, very proud of what the team has done regarding what is the role of DNA, meaning taking care of patients, even more in this very complex context. Just to give you a couple of figures regarding the role of Ramsay Santé in Europe and how we do consider we have built a relationship, long-term relationship with all the government in each country in which we operate. If I say, one second, in Sweden, for example, in Stockholm area, we have taken care in the last 12 months to close to 20% of all the COVID patients. In France, in the last 12 months, once again, more than 11,000 COVID patients have been taking care of in more than 60 ,6-0, for hospital and above 4,000 in critical care. Just by the way, in this third wave that took place from March to May, that was terrible in the Paris 12 million inhabitants area, 1 out of 6 COVID patient was taken charge in one of the Ramsay Santé hospital. If I go to the vaccination center, each and everywhere, our team has been able to create new, brand new from scratch vaccination centers, and thus, vaccinating tens and tens of thousands of our citizens in Stockholm, to giant vaccination centers have been treated very rapidly in Oslo. Our Norwegian team is a key player regarding vaccination of the Norwegian citizen. So once again, an incredible, very specific context. And in spite of that, we'd like to share with you with Marcus that in spite of this context, we have kept on transforming, moving forward the company and developing. And so reserved, Marcus is going to comment to you. We really think demonstrate the relevance of a move as a global, as provider. Of course not only a hospital player, we've got 250 hospitals in Europe, but much more, I would say, by being a key player in primary care, in imaging, creating digital solutions, new models of care. In a nutshell, orchestrating, coordinating the patient pathway to build loyalty, to build accessibility. And once again, to develop our business with a very good quality of care and profitability. Just that over on quality, just to give you the fact that in France, for the very first time in any public or private group, all of France hospital people are certified with the best level of rankings, which is a first on the French market. And so in this context of saying that we have kept on moving, we had have to refinance the company a couple of months ago with very good outcomes. And as we are going to see, our volume have increased by roughly 8% in terms of activity, leading to a very solid organic growth around 8%. And I will close this introduction on the context to share with you that out of the 9 million-plus -- million of patients we took care during last year, more than 6 million of patients were out of hospital and digital patients. Just to illustrate this global move as a global operator, we want to be and we will be in Europe. So that being said, I'm handing over to Marcus regarding the half figures.

Thank you, Pascal. And yes, let's come back to the figures as well. For the financial year 2021, our total reported turnover came above EUR 4 billion for the first time, and that represents a reported growth of 7.4% to last year. And if we clear out exchange rates and structural changes, that leads to an organic sales growth of 8.3% for the year, and that organic sales growth was positively impacted and driven by the 7% patient growth in the year. And I would also like to mention that throughout the year, we have received and recognized support in the form of revenue guarantee in France for a total amount of EUR 103 million for 2021, and that relevant figure for last year was EUR 137 million. And we will look at EBITDA under the IFRS 16 reporting requirements. The amount for 2021 came out at EUR 644 million compared to EUR 547 million last year, and that represents a total growth of 17.7% to last year. And on the constant parameter, that represents a growth of 18.3%. And then we come to the current operating profit that amounted to EUR 272 million for the year, and that represents a growth of 47% to last year. And as you can see, the further down we go, the higher leverage we have on the higher turnover. And we also want to mention that the results for the year was also positively impacted by the group realizing synergies above the initial estimate of EUR 20 million from the now fully integrated Capio acquisition. Results were also positively impacted by the business development from the higher volumes, but also supported by the government in the Nordics and France, covering and compensating us for the extra costs we are incurring to manage the COVID situation. And as Pascal mentioned, we completed the refinancing of the group in April, and that came with improved terms, meaning that financing cost was slightly lower than last year. And also, we are positively impacted by a reduction in business tax and some income tax rate. And then turning to the balance sheet and cash flow, you can see that we have a solid cash flow generation from the operations in 2021, and that is despite the fact that the growth advances that we have received in France has been reduced from EUR 330 million as of 30th of June last year to EUR 181 million as of June 30, 2021. And if we then deduct the receivables we have from the revenue guarantee in the net amount due for advances end of June is EUR 121 million. And that amount is estimated to be settled over the coming financial year, subject to any new regulation and depending on the development of the pandemic. We should also note that during the year, we have completed 9 bolt-on acquisitions in both France and Nordics, and they were complementary in both geography and specialty. We have completed the divestment of the German business during the year. And as Pascal mentioned, we have completed the refinancing of the group, and for the first time, we have introduced CSR measurement into the terms of the loan, and we have also reduced the financing costs and increased the maturity. At end of the year, our reported net debt amounted to EUR 3.23 billion, which was down from EUR 3.37 billion last year. And looking at our financing documentation, the financial leverage under those rules are estimated to be just below 3x end of June 2021. And by that, we open up the floor for questions. And we -- please remind to state your name and your company before asking your questions.

So thanks a lot, Marcus. So please for any questions, any clarification you may need, we will try to answer. I would say, of course, to do our best. So I'm coming back to the operator. To you, sir.

[Operator Instructions] We will hear first from...

It's Olivia from Bain Capital. Just wanted to have a quick update on the COVID situation in your various geographies. It seems like the situation is kind of worsening in France. So I just wanted to know where you are. And if there has been any extension of any of the schemes, given you -- I think last time we spoke, you were saying it extended to June, now we are in August. So just trying to understand if you will be receiving more government support in any of your geographies.

Okay. Thanks a lot for your questions. So to summarize, the current situation in France overall is as follows: As at yesterday evening, there were 2,200 people in resuscitation bed in France due to COVID. It is considered that the plateau should take place roughly in the week time. Just to remind that during the first and the third wave, the number of French person in resuscitation bed was over 7,000. The situation is very serious, but nothing to compare to the previous wave. The only part of France -- well, in France mainland, it's tough. In Toulouse, Southwest, where we are -- we play a key role with 3 very large hospitals. And it's quite tough too in Marseille, where we are, too, involved. The situation is dramatic in the French West Indies, Guadeloupe, Martinique, but we are not involved there. Regarding the second part of your question, the government has committed to extending the current guarantee, the French revenue guarantee scheme put in place from January to June. So French government is committed to extending this guarantee up to end of December. The decree has not yet published, but it should be the case, and we are very, very confident it will be the case to answer to your question.

Okay. And just to follow up on any extension of any schemes. Will the condition be the same setup for the latest schemes? Or do you expect any change in the conditions?

We expect the extension of the guarantee to be exactly on the same pattern, same one that has been put in place from January to June 2021. Exactly the same one. By the way, to complete our answer, we should say that in the other geography, the fourth wave has nothing to compare. In the case of Sweden, as at yesterday evening, we had 3 COVID patients in resuscitation bed and roughly 15 in over, let's say, in bed. So nothing to compare, fingers crossed, in the other geography.

We will now hear from...

It's [ Abby ] from Oak Hill. Just a quick housekeeping question for me. Could you please provide the pre-IFRS 16 EBITDA for the year, please?

The pre-IFRS figure is around EUR 430 million, around that number.

Great. And do you have the number for the half year?