religare health trust results presentation for the quarter ... › 1.0.0 ›...

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Religare Health Trust Results presentation for the quarter ended 30 June 2014

Disclaimer

This presentation is focused on comparing actual results from the period from 1 April 2014 to 30 June 2014 (“1Q FY15”).

Other than the comparative figures presented, no other comparative figures will be presented as the acquisition of the

Portfolio of RHT as well as listing on the Singapore Stock Exchange was completed on 19 October 2012.

This presentation may contain forward-looking statements that involve risks and uncertainties. Actual future performance,

outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of

risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) general industry

and economic conditions, interest rate trends, cost of capital and capital availability, competition from other developments or

companies, shifts in expected levels of income and occupancy rate, changes in operating expenses (including employee

wages, benefits and training), governmental and public policy changes and the continued availability of financing in the

amounts and the terms necessary to support future business. Investors are cautioned not to place undue reliance on these

forward-looking statements. For further information, please also refer to RHT’s press release which is released in conjunction

with this set of presentation.

The Indian Rupee and Singapore Dollar are defined herein as “₹” and “S$” respectively. Any discrepancy between individual

amounts and total shown in this presentation is due to rounding.

2

RHT yield, gearing and P/B are based on unit price of S$0.905 as at 12 August 2014

Figures for Current Yield of FY15 based on a total number of Common Units of 793,123,944.

*Net Service Fee and Hospital Income excludes straight lining, depreciation and ammortisation

Current Yield (annualised)

8.0%

Gearing ratio, 15.1%

P/B, 1.06

RHT

Q1FY15

Financial Highlights

3

7.8%

9.0%

8.0%

FY13 (annualised) FY14 (actual) FY15 (annualised)

Yield

1Q FY15 Total Revenue and Net Service Fee and Hospital Income were both up 30.0% in SGD against the last quarter

(4Q FY15) DPU remains competitive at 1.80 cents in 1Q FY15 despite the expiry of the Sponsor Waiver An increase of 14.8% in ARPOB in 1QFY15

9.0%

Notes: (1) Exchange rate for actual FY14 was S$ 1 = ₹ 49.62, Exchange rate for annualised FY15 was S$1 = ₹47.81 (2) Includes straight lining of Base Service Fee. Figures for Actual Year 2014 excludes GST. Figures for FY 2015 excludes gain on acquisition of the Mohali CE (3) DPU calculated based on unit price of S$ 0.905 as at 30 June 2014

Revenue (1)(2) (S$m)

106.9

129.8

Distributable Income (1)

(S$m)

97.7

119.8

2.3

7.2

6.9

2.8

Actual Year 2014(annualised)

FY 2015 (annualised)

Service Fee Hospital Income Other Income

46.7

57.4

Actual FY 2014 FY 2015 (annualised)

Clinical Establishment Occupancy for 1Q FY2015

4

Portfolio

Clinical Establishment Performance for 1Q FY2015

6

87

36

57 54 51 41 35

27 26

99 83

64 65 61 45 44

32 29

Mohali Gurgaon Mulund Noida BG Road Jaipur ShalimarBagh

Kolkata Malar

Revenue (Rs Cr) 1Q FY14 1Q FY15

134%

12% 19%

19%

11% 25%

18%

Source: Fortis presentation slides for 1Q FY15 Revenue figures based on information released by Fortis Healthcare Limited for their Top 10 best performing hospitals in terms of revenue

Average 1QFY14^ 2Q FY14^ 3Q FY14^ 4Q FY14^ 1Q FY15* 4Q FY14 v 1Q FY15 % increase

ARPOB (INR Mn)

10.02 9.93 10.44 10.72 12.31 14.83

Occupancy

78% 86% 78% 73% 74% 1.37

13%

10%

^excluding Gurgaon *including Mohali and Gurgaon

Gurgaon Operational Performance

7

• Ranked second in a recent world-wide study of the

‘30 Most Technologically Advanced Hospitals in the

World’ by topmastersinhealthcare.com

• Third largest revenue contributor

• Second highest ARPOB in the Fortis network

• Occupancy ~57% vs ~37% in the corresponding

quarter

36

62 68 74 83

1Q FY14 2Q FY14 3Q FY14 4Q FY14 1Q FY15

Revenue (Rs Cr)

Holistic patient care

Exceptional clinical talent

World-class infrastructure

Cutting edge technology

Personalized Service

Source: Fortis 1Q FY15 presentation slides

Current Portfolio for the Quarter ended 30 June 2014

8

Hospitals Current Operational Bed Capacity Current Installed Bed Capacity*

Amritsar 153 166

Anandapur, Kolkata 182 373

BG Road, Bengaluru 250 255

Gurgaon 272 450

Faridabad 210 210

Jaipur 233 320

Kalyan, Mumbai 49 52

Malar, Chennai 167 178

Mohali 298 355

Mulund, Mumbai 254 567

Nagarbhavi, Bengaluru 45 62

Noida 191 200

Rajajinagar, Bengaluru 46 52

Shalimar Bagh, New Delhi 200 350

Total 2,550 3,590

*Installed Bed Capacity defined as the maximum number of beds that can be operated at each hospital without any expansion, renovation and/or upgrading of the civil structure of the building, but which may necessitate certain works such as interior, electrical, heat ventilation and air-conditioning works

Ground Breaking Ceremony held on 16 January 2014

Ludhiana BG Road

Estimated Time of Completion

2016 2016

No. of Beds Planned 79 200

Specialities Obstetrics & Gynaecology, IVF services, Cosmetology, Neonatology, Health Checks

Oncology, OT

Current Status Process for government approvals initiated. Demolition works were completed. Groundbreaking Ceremony was held on 16 January 2014.

Process for government approvals initiated.

Estimated Cost S$24 million S$25 million

Development Project Status

9 Cost converted at an exchange rate of S$1 = ₹47.81

Financials

Actual 1Q FY14 against 1Q FY15

Actual 1Q FY14

Actual 1Q FY15 Variance Actual 1Q FY14 Actual 1Q

FY15 Variance

S$’000 S$’000 % INR’000 INR’000 %

Total Revenue^ 24,400 31,079 27 1,104,017 1,485,923 35

Net Service and Hospital Income# 16,408 21,924 34 742,401 1,048,222 41

Distributable Income 11,352 14,325 26 - - -

Exchange rate for actual 1Q FY15 was S$ 1 = ₹ 47.81, Exchange rate for actual 4Q FY14 was S$1 = ₹48.53. Exchange rate for actual 1Q FY14 was S$1 = ₹45.25. ^Excludes straight lining and gain on acquisition in connection with the acquisition of Mohali clinical establishment . * Excludes one off stamp duty and gain on acquisition in connection with Mohali establishment.

Actual 4Q FY14 against 1Q FY15

Actual 4Q FY14

Actual 1Q FY15 Variance Actual 4Q FY14 Actual 1Q

FY15 Variance

S$’000 S$’000 % INR’000 INR’000 %

Total Revenue^ 23,468 31,079 32 1,138,883 1,485,923 30

Net Service and Hospital Income# 16,375 21,924 34 773,293 1,048,222 36

Distributable Income 11,413 14,325 26 - - -

11

Review of 1Q FY15 Performance

FY 15

Q1 FY14

Q1 Variance S$'000 S$'000 S$'000 Service fee 29,943 25,734 4,209 Hospital income 1,799 1,706 93 Other income 1,612 532 1,080 Total revenue 33,354 27,972 5,382

Total service fee and hospital expenses (18,231) (11,717) (6,514) Finance income 143 342 (199) Finance expenses (1,279) (692) (587) Trustee-Manager fee (2,101) (1,230) (871) Other trust expenses (750) (243) (507)

Foreign exchange loss (197) (1,143) 946 Total expenses (22,415) (14,683) (7,732) Profit before changes in fair value of financial derivatives 10,939 13,289 (2,350)

Fair value gain on financial derivatives (546) 3,326 (3872) Profit Before Taxes 10,393 16,615 (6,222) Taxes (5,420) (3,365) (2055) Net Profit 4,973 13,250 (8,277)

Financial Results for 1Q FY15

12

Income Statement For the quarter ended 30 June 2014

Converted at an exchange rate of S$1 = ₹47.81 for 1Q FY15. Exchange rate for actual 1Q FY14 was S$1 = ₹45.25.

Financial Results for 1Q FY15

13

Reconciliation to Unitholders Distribution

FY 15

Q1 FY 14

Q1 Variance S$'000 S$'000 S$'000 Net profit for the period attributable to unitholders of the Trust 4,973 13,250 (8,275) Distribution Adjustments: Impact of non-cash Straight Lining (1,092) (3,131) 2,039 Technology Renewal Fee (169) (166) (3) Depreciation and Amortisation 3,939 3,726 213 Amortisation of debt arrangement fee 151 130 21 Trustee-Manager Fees payable in Units 1,341 644 697

Foreign exchange differences (1,104)

(3,090) 1,986 Capital expenditure (224) - (224) Deferred Tax 1,895 - 1,895

Transaction cost capital in nature 5,559 - 5,559

Gain on acquisition – Mohali Clinical Establishment (904) - (904)

Unrealized gain on financial asset (40) (11) (29) Total distributable income attributable to the unitholders of the Trust 14,325 11,352 2,973

Income Statement For the quarter ended 30 June 2014

Converted at an exchange rate of S$1 = ₹47.81 for 1Q FY15. Exchange rate for actual 1Q FY14 was S$1 = ₹45.25.

Balance Sheet

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(S$'000) 30-Jun-14 31-Mar-14Intangibles 133,768 135,501 PPE 726,857 676,070 Other Long term Assets 49,396 46,449 Long Term Liabilities (228,076) (166,121) Net Current Assets (1,961) 13,336 Total Net Assets attributable to Unit Holders

679,984 705,235

As at 30 June 2014

Converted at an exchange rate of S$1 = ₹48.19 for 30 June 2014. Exchange rate for 31 March 2014 was S$1 = ₹47.73.

Particulars Minimum Hedging (percentage to total exposure)

Indian rupee-denominated cashflows received from India 100% (on one year forward basis)

RHT has hedged the following foreign exchange exposures

Contracted rate Settlement

INR 53.19 to SGD 1 Dec-14

INR 51.38 to SGD 1 Jun-15

Forward contracts already entered

Hedging – Foreign Currency Exposure

15

Average contracted rate INR 52.28 to SGD 1

Gearing remains low with ample headroom for future growth opportunities

^Based on financial statements of RHT Group as of 30 June 2014

Post-acquisition of the Mohali CE

Actual^ (S$ millions)

122.06

Debt Headroom (without credit rating) to 40%

Current Gearing: 15.1%

Headroom of approximately

S$ 337.95 million

Debt Headroom (with credit rating) to 60%

Headroom of approximately

S$907.94million

Ample Debt Headroom

16

Market Performance

Source: Miraqle

Name Open Close Change %

Religare Health Trust 0.845 0.925 9.47

Ascendas India Trust 0.77 0.835 8.44

Parkway Life REIT 2.43 2.36 (2.88)

First REIT 1.075 1.185 10.23

FTSE ST All-Share Index - Real Estate Investment Trusts REIT 720.18 766.61 6.45

Unit Price Performance

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For the period 1 April 2014 to 30 June 2014

90%

95%

100%

105%

110%

115%

01 Apr 14 10 Apr 14 22 Apr 14 02 May 14 14 May 14 23 May 14 03 Jun 14 12 Jun 14 23 Jun 14

RHT FTSE- REIT First REIT Plife REIT AIT

Comparative Analysis – Financial Analysis

19

5.9% 4.9% 7.0% 8.0%

22.0%

35.3% 32.9%

15.1%

1.38 1.48

1.27

1.06

AIT Plife First Reit RHT

Yield Gearing ratio P/B

Yield figures as at 29 July 2014 (OCBC Investment Research Weekly SREITs),

RHT figures based on actual numbers, annualised yield and using share price of $0.905 as at 12 August 2014.

Gearing figures for First Reit, Ascendas India Trust and Parkway Life Reit are based on their respective presentation slides and press releases.

Appendix

Awards & Accolades

Jaipur CE - Six Sigma Healthcare Excellence Awards – 2013 ‘Best Hospital in Patient Care, Best Hospital in Patient Safety and Best Hospital in Quality Initiatives

Anandpur CE - No. 2 Best Hospital in Multi-specialty category in Kolkata in a survey conducted by AC Nielson for The Week Magazine

BG Road CE - Joint Commission International (JCI) accreditation - Awarded the JCI accreditation for the 3rd term in a row in May 2014 - No. 4 on 2013 World’s Best Hospitals list for Medical Tourists - Recognized for the 4th consecutive year by the Medical Travel

Quality Alliance (MTQUA)

21

Awards & Accolades

Mulund CE - JCI Accreditation - Stars of the Industry Healthcare Leadership Award (Patient Safety) - FICCI Healthcare Award (Operational Excellence) - FICCI ‘Special Jury Recognition Award’ - Won 3 awards at the prestigious Asian Hospital Management Awards,

2014 in categories of ‘Human Resources’ and ‘Patient Safety’

Mohali CE - JCI Accreditation - Won ‘Best Multispecialty Hospital (Non Metro)’ Award

during the first edition of “Doc N Doc Gammex Saviour Awards”

Gurgaon CE - Recognized as a Green Building and received a 4 Star rating by

TERI GRIHA (Green Rating for Integrating Habitat Assessment) - No. 2 globally on ‘30 Most Technologically Advanced Hospitals in

the World’ by ‘topmastersinhealthcare.com’

Shalimar Bagh CE - Received a 3 Star rating by TERI GRIHA

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: RHT Clinical Establishments : Greenfield Clinical Establishments : Operating Hospitals

Notes: (1) No. of beds and installed capacities as of March 31, 2014. Potential bed capacity assumes all planned phases of

development and construction are completed in respect of the Greenfield Clinical Establishments (2) Independently valued by DTZ in INR as at March 31, 2014 (except for Mohali as at March 20, 2014) based on S$1

= INR 47.73. Valuation of operating assets based on DCF and Hospital and Medical Services Agreements (“HMSAs”) as relevant; valuation of greenfield assets based on Market Value.

Portfolio valued at S$857m (1)(2)

12 RHT Clinical Establishments (S$822m)

4 Greenfield Clinical Establishments ($29m)

2 hospitals managed and operated by RHT ($5m)

Approximately 3.6 million sq ft of built-up area across 10 states

Sizeable Population Catchment

Located Close to Major Transportation Nodes

400 Potential Bed Capacity

Amritsar

Ludhiana

153 Operational Beds 166 Installed Bed Capacity


Faridabad

Gurgaon

Jaipur 233 Operational Beds 320 Installed Bed Capacity


272 Operational Bed Capacity 450 Installed Bed Capacity

Mumbai, Mulund

Mumbai, Kalyan


49 Operational Beds 52 Installed Capacity


Bengaluru, BG Road

Bengaluru, Nagarbhavi 45 Operational Beds 62 Installed Bed Capacity

Bengaluru, Rajajinagar 46 Operational Beds 52 Installed Bed Capacity

Chennai, Malar

Chennai



Hyderabad

Noida

Kolkata

New Delhi, Shalimar Bagh




Greater Noida 350 Potential Bed Capacity

Mohali 298 Operational Beds 355 Installed Bed Capacity

18 Quality Assets Geographically Diversified Across India

23


Fortis and Religare Partnership

24

Fortis – A Stronger Balance Sheet

25

Sale of international assets in 2013

Australia- Dental Corp for AUD 270 million

Vietnam- Hoan My Medical Medical Corp for US$80 million

Hong Kong- Quality Healthcare for US$355 million

Public Issue of Foreign Currency Convertible Bonds (FCCBs)

Issue of US$30 million listed on Singapore Exchange Ltd (SGX)

International Financial Corporation (IFC)

Invested a total of US$100 million through a mix of preferential allotment and FCCBs

Preferential Allotment of Equity Shares – Standard Chartered

3.7 million equity shares to Standard Chartered Pvt Equity Mauritius III (SCPE)

US$5.5 million raised

Gearing

Net Debt-to-Equity ratio stands at 0.21 (1Q FY15) vs 0.70 (1Q FY14)1

1 Source: Fortis Q1 FY15 Presentation Slides

• 0.5% - 1.0% of acquisition price

• 0.5% of the sale price (Divestment to 3rd party)

• No divestment fee (Divestment to

Sponsor)

Performance based management fees designed to align Management’s interests with Unitholders

Base fee Performance fee Acquisition / divestment fee

• 0.4% p.a. of the value of the Trust Property

• 50% to be paid in Units

• 4.5% p.a. of Distributable Income

• 50% to be paid in Units

• 2.0% of total development project costs • Payable in the form of cash and/ or units

Development fee Asset management fee

• 1.0% of gross revenue • Paid quarterly in arrears • No asset management fee paid for assets

operated by Sponsor

Fee Structure

26

27

Income Secured Through Long Term Agreements

Term of Agreement

15 years with option to extend by another 15 years by mutual consent

Primary Obligations of HSCos

Making available and maintaining the Clinical Establishments

Provision of outpatient services

Provision of radio diagnostic services

Primary Obligations of FOCs

Provision of healthcare services at the Clinical Establishments

Pay to RHT the Services Fees and Commitment Deposits

Services Fee

Base Service Fee – Increased by 3% p.a. – Upward revision for any capex / expansion – Provision for capex to replace medical equipment

(“Technology Renewal Fee”) added to Base Fee (2)

– RHT entitled to request for an advance of up to 60% of the Base Service Fee

Variable Service Fee – 7.5% of the operating income of Fortis

Commitment Deposits

Fortis to pay to RHT 25% of cost for expansions of capacity / modification of Fortis Hospitals as an interest free refundable commitment deposit

A

B

C

D

Key Terms of the HMSA

Prior to listing, the Hospital Services Companies (“HSCos”) will enter into Hospital and Medical Services Agreements (“HMSAs”) with the Fortis Operating Companies (“FOCs” ) to operate the healthcare infrastructure assets (1).

A

B

C

D

Public

Efficient Trust Structure

28

Note: (1) Including Fortis Healthcare International which owns 28% of RHT.

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