Georgia Healthcare Group PLC (“GHG” or the “Group” – LSE: GHG LN), announces the Group’s fourth quarter and full year 2016 preliminary consolidated financial results. Unless otherwise mentioned, comparatives are for the fourth quarter of 2015. The results are based on International Financial Reporting Standards (“IFRS”) as adopted in the European Union (“EU”), are unaudited and extracted from management accounts.
The information in the preliminary results announcement for the year ended 31 December 2016, which was approved by the Board of Directors on 14 February 2017, does not constitute statutory accounts as defined in Section 435 of the UK Companies Act 2006.
HIGHLIGHTS
GHG announces today the Group’s 4Q16 and FY16 consolidated results, reporting a full year profit of GEL 61.3 million (US$ 23.2 million/GBP 18.8 million) and earnings per share (“EPS”) of GEL 0.39 (US$ 0.15 per share/GBP 0.12 per share).
GHG – the leading integrated player in the Georgian healthcare ecosystem of GEL 3.4 billion aggregate value
FY16 financial performance
§ Net profit was GEL 61.3 million (US$ 23.2 million / GBP 18.8 million), (up 159.7% y-o-y)
§ Normalised net profit was GEL 39.6 million1 (US$ 14.9 million / GBP 12.1 million), (up 117.8% y-o-y)
§ EPS was GEL 0.39 (US$0.15 / GBP 0.12 per share)
§ Normalised EPS was GEL 0.242 (US$0.09 / GBP 0.07 per share)
§ Revenue was GEL 426.4 million (up 73.4% y-o-y)
§ EBITDA was GEL 78.0 million (up 39.0% y-o-y)
§ Return on Average Equity (“ROAE”), normalised, was 11.5%3
4Q16 financial performance
§ Net profit was GEL 6.3 million (US$ 2.4 million / GBP 1.9 million), (up 25.3% y-o-y, down 35.2% q-o-q)
§ Normalised net profit was GEL 11.6 million4 (US$ 4.4 million / GBP 3.6 million), (up 130.6% y-o-y, up 19.2% q-o-q)
§ EPS was GEL 0.04 (US$0.02 / GBP 0.01 per share)
§ Normalised EPS was GEL 0.085 (US$0.03 / GBP 0.02 per share)
§ Revenue was GEL 136.0 million (up 95.1% y-o-y, up 17.1% q-o-q)
§ EBITDA was GEL 24.3 million (up 47.0% y-o-y, up 23.1% q-o-q)
§ ROAE, normalised, was 12.5%6
Healthcare services – the largest healthcare services provider in the fast-growing, predominantly privately-owned, Georgian healthcare services market
FY16 financial performance
§ Revenue was GEL 246.1 million (up 26.2% y-o-y)
§ Organic revenue growth was 16.3% y-o-y
§ Gross profit was GEL 113.1 million (up 34.4% y-o-y)
§ EBITDA was GEL 74.3 million (up 38.8% y-o-y)
§ EBITDA margin was 30.2% (up 280 bps y-o-y)
§ Operating leverage was positive at 17.5 percentage points y-o-y
§ Net profit was GEL 64.5 million (up 195.1% y-o-y)
§ Net profit, normalised, was 41.6 million7 (US$ 15.7 million / GBP 12.8 million), (up 145.2% y-o-y)
4Q16 financial performance
§ Revenue was GEL 67.6 million (up 21.9% y-o-y, which was fully organic; up 14.0% q-o-q)
§ Gross profit was GEL 32.0 million (up 31.3% y-o-y, up 16.9% q-o-q)
§ EBITDA was GEL 21.5 million (up 30.2% y-o-y, up 21.0% q-o-q)
§ EBITDA margin was 31.9% (up 210 bps y-o-y, up 190 bps q-o-q)
§ Operating leverage was positive at 10.0 percentage points y-o-y
§ Net profit was GEL 7.6 million (up 35.3% y-o-y, down 18.4% q-o-q)
§ Net profit, normalised, was 12.0 million8 (US$ 4.5 million / GBP 3.7 million), (up 111.7% y-o-y, up 27.7% q-o-q)
Pharma business – the third largest pharmaceutical retailer and wholesaler in Georgia
Financial performance since the acquisition of JSC GPC (“GPC”) in May 20169
§ Revenue was GEL 133.0 million
§ Gross profit was GEL 27.5 million
§ Gross margin was 20.7%
§ EBITDA was GEL 5.7 million
§ EBITDA margin was 4.3%
§ Net profit was GEL 1.9 million
4Q16 financial performance
§ Revenue was GEL 56.6 million (up 23.8% q-o-q)
§ Gross profit was GEL 12.1 million (up 23.2% q-o-q)
§ Gross margin was 21.4% (flat q-o-q)
§ EBITDA was GEL 3.4 million (up 89.8% q-o-q)
§ EBITDA margin was 6.0% (up 2.1 percentage points q-o-q)
§ Net profit was GEL 1.7 million (up 174.1% q-o-q)
Medical insurance business – the largest medical insurance provider in Georgia
FY16 financial performance
§ Net insurance premiums earned were GEL 61.5 million (up 5.0% y-o-y)
§ Gross profit was GEL 5.7 million (down 37.7% y-o-y)
§ Loss ratio was 84.1% (up 5.4 percentage points y-o-y)
§ Expense ratio was 20.6%10 (up 2.6 percentage points y-o-y)
§ Combined ratio was 104.7% (up 8.0 percentage points y-o-y)
§ EBITDA was negative at GEL 2.0 million
§ Net loss was GEL 4.9 million
4Q16 financial performance
§ Net insurance premiums earned were GEL 16.3 million (up 5.0% y-o-y, up 1.6% q-o-q)
§ Gross profit was GEL 1.3 million (down 18.6% y-o-y, down 37.8% q-o-q)
§ Loss ratio was 85.3% (up 2.2 percentage points y-o-y, up 5.4 percentage points q-o-q)
§ Expense ratio was 20.0% (up 1.4 percentage points y-o-y, down 0.5 percentage points q-o-q)
§ Combined ratio was 105.3% (up 3.6 percentage points y-o-y, up 4.9 percentage points q-o-q)
§ EBITDA was negative GEL 0.6 million
§ Net loss was GEL 2.8 million
1 Normalised net profit for the full year 2016, is the net profit adjusted for one-off non-recurring gain due to deferred tax adjustments (in the aggregate amount of GEL 24.0 million for GHG, which resulted from the Group’s healthcare services – positive GEL 25.0 million, medical insurance business – negative GEL 0.8 million and pharma business – negative GEL 0.2 million) and adjusted for one-off currency translation loss in June (“translation loss”) (in the amount of GEL 2.1 million). For details on the deferred tax adjustments in FY16, see the explanation in the third bullet point in “Operating performance highlights and notable developments in 2016, GHG”, on page 13 of this Announcement.
2 Normalised EPS is calculated as net profit for the period attributable to shareholders adjusted as explained in “footnote 1” divided by the weighted average number of shares outstanding during the same period.
3Normalised ROAE is calculated as net profit for the period attributable to shareholders adjusted as explained in “footnote 1”, divided by average equity attributable to shareholders for the same period net of unutilised portion of IPO proceeds.
4Normalised net profit for the fourth quarter 2016, is the net profit adjusted for one-off non-recurring gain due to deferred tax adjustments (in the amount of GEL 5.3 million for GHG, which resulted from the Group’s healthcare services – GEL 4.3 million, medical insurance business –GEL 0.8 million and pharma business –GEL 0.2 million). For details on the deferred tax adjustments in 4Q16, see the explanation in the third bullet point in “Operating performance highlights and notable developments in 2016, GHG”, on page 13 of this Announcement.
5Normalised EPS is the net profit for the period attributable to shareholders adjusted as explained in “footnote 4” divided by the weighted average number of shares outstanding during the same period.
6 Normalised ROAE is calculated as net profit for the period attributable to shareholders adjusted as explained in “footnote 4”, divided by average equity attributable to shareholders for the same period net of unutilised portion of IPO proceeds.
7 Normalised net profit for the full year 2016, is the net profit adjusted for one-off non-recurring gain due to deferred tax adjustment, positive GEL 25.0 million and adjusted for one-off currency translation loss in June (“translation loss”) (in the amount of GEL 2.1 million). For details on the deferred tax adjustments in FY16, see the explanation in the third bullet point in “Operating performance highlights and notable developments in 2016, GHG”, on page 13 of this Announcement.
8 Normalised net profit for the fourth quarter 2016, is the net profit adjusted for one-off non-recurring gain due to deferred tax adjustment, negative GEL 4.3 million. For details on the deferred tax adjustments in 4Q16, see the explanation in the third bullet point in “Operating performance highlights and notable developments in 2016, GHG”, on page 13 of this Announcement
9 Pharma business financials are included from 1 May 2016, as GHG completed the first acquisition of the pharma business in May 2016 and started consolidation from that month. The consolidation of the second pharma acquisition, JSC ABC, will commence 1 January 2017.
10 In the FY 2015 and prior period GHG financial statements, the Group had offset agents’ commission fees paid for attracting insurance premiums from insurance revenue, so that insurance revenue was presented on a net basis. The Group reconsidered the presentation and decided to separate presentation of agents’ commission in 2016.
