interim report january june 2016 - capio€¦ · total sales growth impacted by the divestment in...
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Interim report January – June 2016
Telephone conference
July 22, 2016
Thomas Berglund, CEO
Olof Bengtsson, CFO
Capio AB (publ) 2
Strong development in all segments – France on track for
full price decrease compensation in 2016
Highlights January – June 2016
• Strong development:
3.8% organic sales growth
12.2% EBITA growth
68.8% adj. profit growth1
Net debt at MSEK 2,941 with a financial leverage of 2.8x
• Continued strong result growth in Nordic and Germany
driven by organic sales growth and productivity
improvements
• Good volume growth in France and the 2015 price
reduction was compensated for with the trend for margin
development improving during the second quarter – on
track for full price decrease compensation in 2016
Continued productivity improvements 1 Refer to page 28 in the interim report for definition.
2016-07-22
Capio Group APR - JUN
JAN - JUN
FULL YEAR
2016 2015 ∆, % 2016 2015 ∆, % RTM 2015
Net sales 3,573 3,441 3.8
7,176 6,919 3.7
13,743 13,486
Organic sales growth, % 4.0 3.5
3.8 3.2
3.2 2.9
Operating result (EBITDA) 276 237 16.5
572 528 8.3
1,045 1,001
Margin, % 7.7 6.9
8.0 7.6
7.6 7.4
Operating result (EBITA) 172 136 26.5
367 327 12.2
632 592
Margin, % 4.8 4.0
5.1 4.7
4.6 4.4
Adj. profit for the period3 123 60 105.0
260 154 68.8
432 326
Adj. EPS, SEK 0.87 0.47
1.84 1.22
3.06 2.44
Net capital expenditures -113 -90
-209 -145
-455 -391
In % of net sales 3.2 2.6
2.9 2.1
3.3 2.9
Net debt 2,941 3,031
2,941 3,031
2,941 2,936
Financial leverage 2.8 2.9
2.8 2.9
2.8 2.9
Capio AB (publ) 3
Group financial development
• Organic sales growth from volume growth as overall price increases were limited
• Continued result and margin improvement in Nordic and Germany driven by
productivity improvements. France compensated for the 2015 price reduction and
the trend for margin development improved during the second quarter
• Adj. profit improved from the higher operating result, improved finance net and a
lower effective income tax rate
• Net capex RTM 2016 at 3.3%, impacted by timing of expansion projects and
divestments2016-07-22
Capio AB (publ) 4
Implementation of the Modern Medicine strategy – resulting
in improved AVLOS
• Continued AVLOS (Average Length Of Stay) improvement in
all segments
• AVLOS improvement in Nordic positively impacted by shorter
stays for hip and knee replacements – the quarter impacted by
a lower case mix
• The positive AVLOS trend continued in France – driven by
improvements in many specialties
• AVLOS in Germany impacted by a higher case mix in the
quarter
2016-07-22
APR - JUN JAN - JUN FULL YEAR
AVLOS by segment, Days 2016 2015 % 2016 2015 % RTM 2015 2014 % 2013 %
Capio Nordic 3.90 4.21 -7.4 4.01 4.22 -5.0 4.01 4.12 4.16 -1.0 4.21 -1.2
Capio Nordic excluding geriatrics 2.78 3.04 -8.6 2.86 3.02 -5.3 2.85 2.93 3.01 -2.7 3.11 -3.2
Capio France 4.35 4.57 -4.8 4.40 4.66 -5.6 4.48 4.61 4.75 -2.9 4.93 -3.7
Capio Germany 4.63 4.72 -1.9 4.46 4.62 -3.5 4.53 4.61 4.82 -4.4 4.82 0.0
Capio Group 4.29 4.51 -4.9 4.32 4.55 -5.1 4.37 4.49 4.63 -3.0 4.75 -2.5
Capio AB (publ) 5
Modern Medicine shows the way forward
• First total knee replacement in day surgery in France
(2011)
• First total hip replacement in day surgery in France
(2012)
• First colectomy cancer patient treated in day surgery in
France (2013)
• First TAVI operation (cardiac valve insertion) in day
surgery in France (2016)
Several medical breakthroughs gained
over the recent years
2016-07-22
News report about the TAVI operation
(https://www.youtube.com/watch?v=HlCSQr0yDkE)
49
44
33
19
117
2
0
10
20
30
40
50
60
70
1,000
0
7,000
6,000
5,000
4,000
3,000
2,000
2011
4,911
2010
4,066
2016
RTM
6,613
2013
5,529
2012
5,296
2015
6,305
2014
5,949
Number of proceduresDischarged, % <= 4 days
Number of in- and outpatients %
0 1 8 26 160 450 510Provided in day care:Number
Capio AB (publ) 6
France – Modern Medicine and Rapid Recovery
reducing AVLOS
• Capio growth of hip and knee
replacements well above market
growth
• Continued significant AVLOS
reduction for hip and knee
replacements also in the first six
months 2016. 9% more patients
discharged within four days in RTM
June 2016 compared with the same
period 2015
• Steady growth in the number of
procedures performed in day care
Source: French market data; Scansanté (ATIH), Swedish market data; Socialstyrelsen
AVLOS development hip and knee replacements 2011-2015
Rapid Recovery strategy
continues to deliver
Days 2011 2014 2015 2011-14, % 2011-15, %
Capio France 8.2 5.6 5.0 -32 -39
The French market 10.2 9.0 8.4 -12 -18
Capio Sweden 3.9 3.3 2.7 -15 -31
The Swedish market - 4.7 -
Capio France Jan-Jun 2016
AVLOS at 4.6 days
Capio France – hip and knee prosthesis surgery
2016-07-22
Capio Nordic APR - JUN
JAN - JUN
FULL YEAR
2016 2015 ∆, % 2016 2015 ∆, % RTM 2015
Net sales 1,950 1,856 5.1
3,854 3,697 4.2
7,400 7,243
Organic sales growth, % 4.7 4.8
3.8 5.1
4.0 4.6
Operating result (EBITDA) 137 103 33.0
249 207 20.3
500 458
Margin, % 7.0 5.5
6.5 5.6
6.8 6.3
Operating result (EBITA) 98 68 44.1
175 138 26.8
353 316
Margin, % 5.0 3.7
4.5 3.7
4.8 4.4 Net capital expenditures -51 -33
-95 -53
-177 -135
In % of net sales 2.6 1.8
2.5 1.4
2.4 1.9
• Improved performance in Proximity Care, positively impacted
by the ongoing productivity program (-90 FTE) – on plan
• Continued positive development in Capio S:t Göran’s
Hospital and Specialist Clinics
• Clinics acquired in Norway 2015 contributed positively
• Focus on Modern Management to drive patient time and
productivity
• Net capex impacted by the new A&E at Capio S:t Göran
Capio AB (publ) 7
Segment – Capio Nordic
The quarter impacted by timing of Easter
2016-07-22
Capio France APR - JUN
JAN - JUN
FULL YEAR
2016 2015 ∆, % 2016 2015 ∆, % RTM 2015
Net sales 1,336 1,304 2.5
2,723 2,617 4.1
5,204 5,098
Organic sales growth, % 2.0 1.8
3.5 1.2
1.9 0.7
Operating result (EBITDA) 143 143 0.0
313 313 0.0
529 529
Margin, % 10.7 11.0
11.5 12.0
10.2 10.4
Operating result (EBITA) 85 85 0.0
196 195 0.5
287 286
Margin, % 6.4 6.5
7.2 7.5
5.5 5.6
Net capital expenditures -57 -46
-98 -75
-233 -210
In % of net sales 4.3 3.5
3.6 2.9
4.5 4.1
• Good volume development in all seven regions with a total
patient growth of 7.9%
• The result was impacted by a price effect of MSEK -48 in H1
• Additional actions to also fully compensate for the 2016 price
reduction being implemented
• Main actions relate to further FTE reorganizations from produc-
tivity improvements combined with more efficient procurement
• Net capex impacted by the timing of expansion projects and
divestments
Capio AB (publ) 8
Segment – Capio France
Pace for margin development improved in the
second quarter
2016-07-22
• Outpatient growth and pricing support organic sales growth.
Total sales growth impacted by the divestment in Q2 2015
• The timing of Easter holidays impacted the Specialized
hospitals positively in the second quarter
• The hospital in Dannenberg continued to develop in line with
plan
• Net capex impacted by the timing of an ongoing construction
project at one of the general hospitals – to be completed
during H2 2016
Capio AB (publ) 9
Segment – Capio Germany
Increased focus on Modern
Medicine drives AVLOS reduction
Capio Germany APR - JUN
JAN - JUN
FULL YEAR
2016 2015 ∆, % 2016 2015 ∆, % RTM 2015
Net sales 287 281 2.1
599 605 -1.0
1,139 1,145
Organic sales growth, % 8.6 2.6
4.9 1.1
4.0 2.0
Operating result (EBITDA) 19 12 58.3 57 52 9.6
99 94
Margin, % 6.6 4.2
9.5 8.6
8.7 8.2
Operating result (EBITA) 13 5 160.0 45 40 12.5 79 74
Margin, % 4.5 1.8
7.5 6.7
6.9 6.4
Net capital expenditures -5 -11
-15 -16
-39 -40
In % of net sales 1.7 3.9
2.5 2.6
3.4 3.5
2016-07-22
Capio AB (publ) 10
Cash flow
• Net capex RTM at 3.3% – the quarter impacted by investments related to the new
A&E at Capio S:t Göran and expansion projects in France. Q1 2015 included a
divestment of non-core assets in France (MSEK 25)
• Working capital impacted by seasonal effects in H1. A change in timing of payment
of social security charges in France combined with an improved DSO in Nordic
explain the main part of the change compared to 2015
• Financial items and tax positively impacted by lower net debt and interest rates
whilst higher tax instalments in France impact the opposite way
Cash flow impacted by seasonal and
timing effects
APR - JUN
JAN - JUN
FULL YEAR
Capio Group 2016 2015 2016 2015 RTM 2015
Net debt opening -3,009 -3,426
-2,936 -3,440
-3,031 -3,440 Operating result (EBITA) 172 136
367 327
632 592
Capital expenditure -114 -94
-211 -174
-469 -432 Divestments of fixed assets 1 4 2 29 14 41
Net capital expenditure -113 -90
-209 -145
-455 -391
In % of net sales 3.2 2.6
2.9 2.1
3.3 2.9 Add-back depreciation 104 101 205 201 413 409
Net investments -9 11
-4 56
-42 18
Change in working capital 93 96 -88 -40 -84 -36
Operating cash flow 256 243
275 343
506 574
Cash conversion, % 148.8 178.7 74.9 104.9 80.1 97.0
Free cash flow after financial items and tax 214 198
203 233
349 379
Cash conversion, % 124.4 145.6
55.3 71.3
55.2 64.0
2016-07-22
Capio AB (publ) 11
Capital employed & financing
• Operating capital employed above year-end 2015, mainly due
to seasonal effects, a change in the payment pattern of social
contributions in France and an improved DSO in the Nordic
• Changes in exchange rates increased capital employed and
net debt compared with year-end 2015
• ROCE impacted by higher capital employed and the increased
RTM EBITA
• Financial leverage at 2.8x impacted by cash flow (incl.
dividend paid of MSEK 71) and the improved RTM EBITDA
Solid financial position –
ready for acquisitions
2016
2015
Capio Group 30 Jun 31 Dec 30 Jun
Operating capital employed 1,472
1,388 1,371
In % of net sales 10.7
10.3 10.2
Other capital employed 6,734
6,549 6,492
Capital employed 8,206 7,937 7,863
Return on capital employed, % 7.7
7.5 7.8
Net debt 2,941
2,936 3,031
Financial leverage 2.8
2.9 2.9
Equity 5,265
5,001 4,832
Financing 8,206 7,937 7,863
2016-07-22
Net debt and financial leverage
2.0
2.5
3.0
3.5
4.0
2,000
2,500
3,000
3,500
4,000
Q2 Q3 Q4 Q1 Q2
2015 2016
Net debt
Financial leverage
MSEK x
Capio AB (publ) 12
Financial targets
1 Development adjusted for structural changes made in June 2014. Refer to Capio Annual Report 2015 note 33.
Net sales and organic sales growth (RTM) Operating result (EBITDA) and margin (RTM)1 Net capital expenditure and in % of sales (RTM)
1B1BNet sales growth
The target is to grow organically at least in line with the market and add acquisition growth at least at a similar rate over time
2B2BOperating result (EBITDA)
The target is to grow operating result at a higher rate than sales growth through increased productivity and operational leverage
3B3BNet capital expenditure
The target with present business mix is to keep net capex around 3% of net sales per year including Modern Medicine and expansion related capex
0
1
2
3
4
5
9,000
10,000
11,000
12,000
13,000
14,000
Q2 Q3 Q4 Q1 Q2
2015 2016
Net sales, RTM
Organic sales growth, % RTM
MSEK %
4
5
6
7
8
9
600
700
800
900
1,000
1,100
Q2 Q3 Q4 Q1 Q2
2015 2016
Operating result (EBITDA), RTM
Operating margin (EBITDA), % RTM
MSEK %
0
1
2
3
4
5
0
100
200
300
400
500
Q2 Q3 Q4 Q1 Q2
2015 2016
Net capital expenditure, RTM
In % of sales, RTM
MSEK %
2016-07-22
• Organic sales growth well in line with market growth – limited acquisition growth
• Operational leverage from volume and productivity improvements increase margins
• Net capex above target following timing of expansion projects and divestments
Capio AB (publ) 13
Convertible debenture loans to employees
• All employees in the Group were offered to
subscribe for convertible bonds
• In total 731 employees signed up for an
amount of MSEK 155
• All six members of Group management
participate with a total amount of MSEK 23
• Dilution of 2.08% (equal to 2,935,322 new
shares)
• Five year duration – conversion between
July 25 and August 15, 2021
2016-07-22
Capio AB (publ) 14
Financial calendar
• Interim report January – September 2016 due
November 3, 2016
• Full year report January – December 2016 due
February 10, 2017
2016-07-22
Capio AB (publ) 15
Questions and Answers
2016-07-22
www.capio.com