Investor Presentation Feb 2013
Agenda Overview of HMI Group Mahkota Medical Centre Regency Specialist Hospital Training Institutes 2
Overview of HMI Group Health Management International (HMI) is a regional healthcare services provider headquartered in Singapore Established in 1998 and listed on SGX Mainboard 1 of 2 hospital operators approved for overseas use of Singapore Medisave Owns and operates tertiary care hospitals in Malaysia (> 500 licensed inpatient beds) Mahkota Medical Centre a premier hospital located in Malacca Regency Specialist Hospital a newly developed hospital in Iskandar, Johor Strong hospital referral network across Southeast Asia (21 Patient Service Centres) Unique partnership model attracts and retains top specialist doctors for HMI hospitals Sale of medical suites to specialist doctors Strategy to continue to build on and grow hospital operations 3
Extensive regional network Headquarters Health Management International Ltd, Singapore Hospitals Mahkota Medical Centre, Malacca Regency Specialist Hospital, Johor Training Institutes HMI Institute of Health Sciences, Singapore Mahkota Institute of Health Sciences and Nursing, Malacca Patient Service Centres Aceh Bali Bandung Batam Batu Pahat Jakarta Selatan Jakarta Utara Jambi Kwantan Makassar Medan Padang Palembang Pekan Baru Phnom Penh Semarang Singapore Surabaya Tanjung Balai Karimun Yogyakarta 4
Corporate milestones FY1998 Incorporation of HMI FY2007 Acquired a 35% equity stake in Regency Specialist Hospital ( Regency ) Raised interest in Mahkota to 49% FY2000 Completed acquisition of 20% interest in Mahkota FY2003 Acquired 2year management contract with Grand Hospital Bengkalis, Indonesia FY2009 Official opening of Regency FY2001 Achieved turnaround of Mahkota after years of losses Raised interest in Mahkota to 40% FY1999 Listing of HMI on SGXSesdaq Obtained agreement to manage Mahkota Medical Centre ( Mahkota ) FY2005 Shift of core business in Singapore to healthcare education and training FY2008 Commissioning of Regency Raised interest in Regency to 61% Upgraded to SGXMainboard FY2010 HMI hospitals approved for use of Medisave overseas for hospitalisation & day surgeries 5
Corporate structure (simplified) Representative Offices Hospitals Others PATIENT REFERRAL CENTRE 21 Centres in Indonesia, Malaysia, Singapore, Cambodia, Myanmar 49% 61% TRAINING & EDUCATION HMI Institute of Health Sciences Mahkota Institute of Health Sciences and Nursing HMI CONSULTING PROPERTY Available Land for Development: 350,000 sf in Johor Bahru 160,000 sf in Malacca *HMI is the single largest shareholder, and has board and management control of both hospitals 6
Strong management team Experienced team of healthcare professionals Dr Gan See Khem Executive Chairman Mr Timothy Chang CEO, Hospital Group > 30 years of experience in healthcare, management, strategic planning, and public services Serves on the Malaysia Singapore Business Council Former Nominated Member of Parliament of the Republic of Singapore > 7 years at Mahkota Medical Centre with last appointment as COO Elected Board Member of the Association of Private Hospitals Malaysia 7 years in Republic of Singapore s Navy as Executive Officer in operations Ms Chin Wei Jia CEO, RSH > 10 years of experience in healthcarerelated strategic planning and business development Led the setting up of healthcare education arm in Singapore Ms May Tan CFO, MMC > 15 years of experience in finance and accounting Previously served as Director at Ernst & Young (Melaka) Ms Sally Tan General Manager, MMC > 20 years of experience in nursing services Pioneer staff of Mahkota Medical Centre, starting as a Head Nurse 7
Financial performance Total Revenue (RM million) 250 200 150 100 50 120 141 174 209 118 Mahkota Regency Others EBITDA Margin EBITDA (RM million) 30 25 20 15 10 5 6 12 16 4.8% 8.6% 9.5% 12.0% 17.9% 25 21 PATMI (RM million) 4 2 (2) (4) (6) (8) (10) PATMI Margin (8.5) (2.9) 1.8 (0.5) 3.1 N/M N/M 1.0% N/M 2.6% Earnings Per Share (RM cents) 1.0 0.53 0.5 0.33 (0.08) (0.5) (0.57) (1.0) (1.5) (2.0) (1.78) * 30 June year end ; FY2009 figures directly translated using average MYRSGD exchange rate of 0.4315 and 0.4162 respectively **Drop in EBITDA and earnings in FY2009 and FY2010 largely due to the cost of commissioning new Regency Specialist Hospital 8
Strengthening balance sheet Total Assets (RM million) Total Liabilities (RM million) 300 250 200 202 224 243 245 258 300 250 200 150 100 150 100 92 124 131 127 130 50 50 Total Equity (RM million) 140 128 118 120 109 112 100 100 80 60 40 20 Total Borrowings (RM million) 140 120 100 72 77 80 63 70 73 60 40 20 *FY2008 figures translated using financial year end MYRSGD of 0.4165 9
Capital management Net Debt to EBITDA 12 10.6x Interest Coverage 10 9.0x 9.4x 10 8 8 6 4 2 5.8x 4.2x 2.4x 2.6x 6 4 2 2.3x 4.1x 5.0x Net Debt to Equity 0.7 0.6x 0.6 0.5x 0.5 0.4 0.3 0.2 0.6x 0.5x 0.5x Capital Structure Equity 63% ST Loan 21% LT Loan 16% HMI Equity 64% ST Loan 21% LT Loan 15% 0.1 FY2012 1H2013 *FY2008 and FY2009 figures directly translated using average MYRSGD exchange rate of 0.4315 and 0.4162 respectively 10
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011F 2012F 2013F 2014F 2015F Growing healthcare sector Healthcare is among the fastest growing sectors in Malaysia Malaysia Healthcare Spending 700 600 500 400 300 200 100 6 5 4 3 2 1 Identified as a key pillar for growth under Malaysia s Economic Transformation Plan Expected to contribute US$10.4B to Gross National Income ( GNI ) by 2020 Healthcare spending per head grew 10.6% over the last ten years Forecast CAGR of 12.3% from 2011 to 2015 Addressable market of US$30B on reaching Singapore s healthcare spending 0 0 Sector is tied to Malaysia's ambition to double GNI/capita to US$15,000 by 2020 Healthcare spending (USD per head) Healthcare spending (% of GDP) Matching Singapore s healthcare/capita requires 4x spending increase Possible with positive demographics, rising income levels and healthcare awareness Source: Economist Intelligence Unit, JPMorgan research report (Jan 2012) 11
Medical tourism potential Number of foreign patients coming to Malaysia increasing rapidly No. of foreign patients in Malaysia ('000) 500 450 400 350 300 250 200 150 100 50 0 2006 2007 2008 2009 2010 Healthcare expenditure in AsiaPacific estimated to grow at a CAGR of 15% from 2010 to 2014 Increasing wealth in Asia Increase in chronic diseases Growing population Malaysia amongst most favorable destinations for medical tourism Quality healthcare at affordable rates World class hotels and infrastructure Wide variety of tourism choices No. of foreign patients per country Year 2007 2008 2009 2010 Expected CAGR 2011 2015 Malaysia 341,288 370,000 425,500 489,325 11% Singapore 571,000 646,000 665,380 725,264 7% Source: Singapore and Malaysia Medical Tourism Outlook to 2015 (Jan 2012), Frost & Sullivan Healthcare Report 12
Our strategy HMI is focused on providing topquality healthcare services and aims to: Strengthen presence in Malaysia by increasing the capacity and capabilities of existing hospital assets Seek to expand healthcare operations to other urbanised parts of Malaysia and Indonesia Grow patient base by expanding and streamlining patient referral centres across Southeast Asia Become Hospitals of Choice for Indonesian patients by leveraging on the strong Mahkota brand name 13
Mahkota Medical Centre
Mahkota Medical Centre Premier hospital with > 18 years of operating history Strong brand recognition in Malaysia and Indonesia Largest hospital in South Peninsular Malaysia with 288 beds 370,000 sf of builtup area with available land for expansion c. 100 medical specialists (79 fulltime) > 70% internationallytrained doctors Full range of specialist healthcare services in diagnostic, radiology and clinical laboratory Growth plans over next 23 years Potentially expand bed capacity to cater to increasing patient demand Increase doctors in high valueadd disciplines Strategically located in city center of Malacca Growing medical tourism hub for Indonesian patients 45minute flight / 2hour ferry ride from Sumatra / 4 daily shuttles to KL 15
Strong brand recognition Mahkota has a market share of about 12% of all foreign patients in Malaysia in 2010 The BrandLaureate SMEs Chapter Awards (Corporate Branding) Best Brand in Wellness Medical Tourism 2010 MS ISO 15189 Accreditation Malaysia Society for Quality in Health (MSQH) Accreditation Best Tourism Attraction 2011 *Calculated based on Frost & Sullivan estimate of foreign patients in 2010 16
High profitability Mahkota s profit margin is the among the highest in Malaysia Net Profit (RM million) & Profit Margin (%) 30 25 20 15% 15% 14% 14% 12% 10% 18% 16% 14% 12% 15 10 9% 8% 5% 10% 8% 6% 5 4% 2% 0 Island Penang Mahkota MC Pantai KL Glenneagles Penang Glenneagles KL Pantai A. Keroh KPJ Johor Spec KPJ A. Puteri Sime Darby 0% Location Penang Melaka KL Penang KL Melaka Johor KL KL No. of Beds 240 288 332 227 330 250 213 230 393 Revenue (RM Mil) Revenue growth 163 149 139 95 164 106 174 178 303 15% 20% 1% 15% 13% 14% 9% 5% 8% *Source: Individual company s audited financial statements FY2010, company information and corporate website **Mahkota Medical Centre & Sime Darby s financial year ending 30 Jun 2011; Sri Kota & Prince Court 31 Mar 2011; others 31 Dec 2010 17
Financial performance 180 160 140 120 100 80 60 40 20 Net Profit Margin Total Revenue (RM million) 112 124 149 170 Net Profit (RM million) 35 30 25 20 15 10 5 0 * 30 June year end 15 15 22 13.5% 11.9% 14.6% 15.5% 15.2% 26 94 14 35 30 25 20 15 10 5 EBITDA Margin EBITDA (RM million) 18 21 27 16.0% 16.9% 18.0% 19.9% 22.2% Net Debt to EBITDA (times) 3.5 3.0 2.5 2.0 1.5 1.0 0.5 2.9x 2.8x 1.8x 34 1.0x 18 21 1.3x
Operating performance Total Outpatient Visits Total Inpatient Admissions 250,000 200,000 179,459 184,443 206,934 224,820 25,000 20,000 19,361 20,514 21,622 22,995 150,000 100,000 115,765 15,000 10,000 11,793 50,000 5,000 Occupancy Rate 57.5% 58.8% 56.3% 62.6% 64.1% Revenue per Outpatient and Inpatient 7,000 5,986 6,000 5,178 5,431 4,525 4,688 5,000 4,000 3,000 2,000 1,000 134 152 181 203 201 0 Rev per Visit Rev per Admission Patients by Nationality HMI 1% 24% 75% 1H2012 1% 26% Malaysia Indonesia Others 73% 1H2013 Indonesian patients historically spend 1.5x more than local patients 19
Regency Specialist Hospital
Regency Specialist Hospital 218bed capacity tertiary care hospital in operation since 2009 Provide quality healthcare to large but underserved Johor market Gross floor area of > 218,000 sf 24 full time, 9 part time, 19 visiting doctors (Total: 52) Conferred Malaysian Healthcare Travel Council (MHTC) certification 1 of 2 hospitals in Johor Bahru with a Cardiac Cathetherisation Lab First and only private hospital in Malaysia with a 24hour Emergency Specialist Centre Only private hospital with Interventional Radiologist, Paediatric Cardiologist and Paediatric Neurologist in Johor Strategically located in fastgrowing Iskandar region 15minute drive from Singapore Causeway > 350,000 sf land size available for development 21
Performance todate Total Revenue (RM million) 35 32 30 25 21 19 20 15 9 10 5 2 Total Outpatient Visits 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 3,397 15,611 28,241 44,181 24,829 Total Inpatient Admissions 6,000 5,500 5,000 4,000 3,429 3,825 3,000 2,059 2,000 1,000 325 Revenue per Visit and Admission 6,000 5,414 5,000 4,011 3,662 4,000 3,227 3,743 3,000 2,000 1,000 189 180 220 230 275 0 Rev per Visit Rev per Admission * 30 June year end 22
Training Institutes
Training Institutes Owns and operates two high standard healthcare training institutes: HMI Institute of Health Sciences a leading private healthcare education provider in Singapore Mahkota Institute of Health Sciences and Nursing nurse training institute at Mahkota established in 1995 Provide courses on healthcare e.g. nursing education, vocational training, healthcare management, etc Accredited by numerous agencies such as: Malaysia Nursing Board, Ministry of Education and Malaysian Qualifications Agency Singapore Nursing Board, National Resuscitation Council and Workforce Development Agency, Council of Private Education Training healthcare professionals to meet sector s growing demand Trained more than 2,800 graduates todate Provides training for Singapore Armed Forces 24
Disclaimer This is a presentation of general information relating to the current activities of the Health Management International Ltd ( HMI ). It is given in summary form and does not purport to be complete. In addition, the presentation may contain forwardlooking statements relating to financial trends for future periods, compared to the results for previous periods. Some of the statements contained herein are not historical facts but are statements of future expectations relating to the financial conditions, results of operations and businesses and related plans and objectives. The information is based on certain views and assumptions and would thus involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in these forwardlooking 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 companies, shifts in customer demands, customers and partners, 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. Such statements are not and should not be construed as a representation as to the future of HMI and should not be regarded as a forecast or projection of future performance. No reliance should therefore be placed on these forwardlooking statements, which are based on the current view of the management of HMI on future events. The presentation is also not to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. HMI accepts no responsibility whatsoever with respect to the use of this document or any part thereof. 25