Spire Healthcare Group PLC Post-close Trading Update (9875T)
12 January 2017 - 6:00PM
UK Regulatory
TIDMSPI
RNS Number : 9875T
Spire Healthcare Group PLC
12 January 2017
Spire Healthcare Group plc
Post-close Trading Update
12 January 2017
Spire Healthcare Group plc (LSE: SPI), the major UK independent
hospital group, provides the following update for Financial Year
2016 and preliminary guidance for Financial Year 2017.
Overview of expected outturn for Financial Year 2016
Management expect Group revenues for the Financial Year ended 31
December 2016 of approximately GBP925m (2015: GBP885m) and Group
EBITDA of approximately GBP162m (2015: GBP160m).
While the overall results for Financial Year 2016 were adversely
impacted by recent trading performance at St Anthony's hospital,
the Group's underlying performance (excluding St Anthony's) is
expected to be towards the top end of the revenue and EBITDA
guidance for 2016 (which guided to a range for revenue growth of
between 3% and 5% over Financial Year 2015 at a circa 18%
margin).
In addition, cash flow has remained strong throughout the year
and the Group expects year-end net debt leverage of circa 2.7 times
EBITDA, against guidance of 3.0 times EBITDA.
Redevelopment of Spire St Anthony's hospital
St Anthony's is currently undergoing a redevelopment and
reconfiguration process which is expected to take longer than
initially anticipated by management. Although much of the building
programme to establish a new 6 surgical theatre complex was
successfully completed on time in the second half of 2016, the work
to reconfigure staffing levels, clinical processes and competencies
to take full advantage of this additional capacity is still ongoing
and is not now expected to be completed until the second half of
2017.
Because of this delay St Anthony's is expected to report an
EBITDA loss of approximately GBP1.5m for Financial Year 2016 (2015:
GBP5m EBITDA profit) on revenues of approximately GBP30m (2015:
GBP32m), with the majority of the expected EBITDA loss accumulating
over the last 2 months of 2016. However, management believes it has
fully identified the further requirements at St Anthony's and
remains confident of the delivery of the investment case over the
medium term.
NHS tariff
NHS Improvement has recently finalised its consultation on NHS
tariff for the fiscal year commencing 1 April 2017. The impact of
these changes to prices for the weighted basket of services
currently delivered to the NHS by Spire Healthcare is an overall
reduction of circa 3.9%, which for the Financial Year ending 31
December 2017 has an adverse 9 months revenue impact of GBP7m
(based on an adverse annualised revenue impact of GBP11m). As in
previous years, management will pursue strategies to mitigate these
pricing pressures over the medium term.
Outlook for Financial Year 2017
Management will provide detailed guidance for the Financial Year
ending 31 December 2017 at the Financial Year 2016 results
presentation on 2 March 2017. This guidance will take account of
the continuing strength of the trading performance in Spire
Healthcare's underlying business, the impact of the recovery plan
for St Anthony's, the start- up effects of our two new hospitals in
Manchester and Nottingham (on track to open in January 2017 and
April 2017 respectively) and the impact of the NHS tariff changes,
net of efficiency savings.
Management expect the net effect of these factors to result in
an EBITDA outcome for 2017 in line with 2016, before the Group
returns to mid to high single digit EBITDA growth from Financial
Year 2018 onwards.
Chairman's statement
Garry Watts, Executive Chairman, said:
"While it is disappointing that St Anthony's return to
profitability has been delayed, we are nevertheless pleased with
the robust underlying performance of our established hospitals and
remain very positive about the prospects for Spire's business
overall. Spire's fundamental business proposition is solid and we
continue to be well placed to benefit from opportunities arising
from constrained NHS funding and capacity."
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
For further information please contact:
Spire Healthcare:
Antony Mannion, Investor
Relations Director +44 (0)20 7427 9160
Simon Gordon, Chief Financial
Officer +44 (0)20 7427 9004
Maitland:
Tom Eckersley +44 (0)20 7379 5151
This information is provided by RNS
The company news service from the London Stock Exchange
END
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