Capitol Health : Appendix 4D and Half Year Report

Capitol Health Limited

ABN 84 117 391 812

Half-Year Ended 31 December 2021

For personal use only

Appendix 4D

RESULTS FOR ANNOUNCEMENT TO THE MARKET

The following information is provided to the ASX under listing rule 4.2A.3 for Capitol Health Limited (Capitol Health)

Reporting period		Comparative period
Half-Year Ended 31 December 2021	Half-Year Ended 31 December 2020
					Increase/
		Dec 2021	Dec 2020	(Decrease)
Results from Continuing Operations		$000	$000	%
Revenue from ordinary activities	94,831	85,305	11.2%
Profit from ordinary activities after tax attributable to equity	8,119	6,237	30.2%
holders of Capitol Health
Profit for the half-year attributable to equity holders of Capitol	7,996	6,274	27.4%
Health
					Franked
				Amount	amount
Dividends and Distributions	Record Date	Payment Date	per Security	per Security
Interim dividend 2022	4 March 2022	1 April 2022		0.5 cents	100%
Final dividend 2021	24 September 2021	22 October 2021	0.5 cents	100%

No foreign conduit is attributable to the dividends

Dividend Reinvestment Plan

Capitol Health's dividend reinvestment plan is currently suspended and will not be offered to ordinary shareholders with the Interim dividend 2022.

Net Tangible Asset Backing	Dec 2021	Dec 2020
Net tangible Assets per ordinary security (cents)	2.99	2.14

Change in Control Over Entities

There were no changes in control over entities during the period.

Other Information Regarding the Accounts

This report is based on the Condensed Consolidated Financial Statements for the Half-Year Ended 31 December 2021 which have been reviewed by Deloitte Touche Tohmatsu.

Additional information supporting the ASX Appendix 4D disclosure requirements can be found in the Consolidated Interim Financial Report for the Half-Year Ended 31 December 2021.

This Appendix 4D should be read in conjunction with the audited Annual Report for the year ended 30 June 2021 and public announcements made by Capitol Health in accordance with the continuous disclosure requirements of the Corporations Act 2001 and ASX Listing Rules.

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A B N 8 4 1 1 7 3 9 1 8 1 2

CONSOLIDATED INTERIM FINANCIAL REPORT

FOR THE HALF-YEAR ENDED

31 DECEMBER 2021

For personal use only

Page

Directors' Report	2
Auditor's Independence Declaration	5
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income	6
Condensed Consolidated Statement of Financial Position	7
Condensed Consolidated Statement of Cash Flows	8
Condensed Consolidated Statement of Changes in Equity	9
Notes to the Condensed Consolidated Financial Statements	10
Directors' Declaration	23
Independent Auditor's Review Report	24

This condensed consolidated interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the Annual Report for the year ended 30 June 2021 and any public announcements made by Capitol Health Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 and ASX Listing Rules.

For personal use only

Directors' Report

The Directors of Capitol Health Limited ("Capitol Health" or "Company") present their report, together with the financial statements, of the consolidated entity consisting of Capitol Health Limited and its controlled entities (the "Group"), for the half-year ended 31 December 2021, and the auditor's report thereon.

Directors

The Directors of the Company at any time during the half-year and up to the date of this report are:

Mr Andrew Demetriou

Non-Executive Director and Chairman

Mr Justin Walter

Managing Director and Chief Executive Officer

Mr Richard Loveridge

Non-Executive Director

Ms Laura McBain - appointed 1 July 2021

Non-Executive Director

Dr Kevin Shaw - appointed 10 September 2021

Non-Executive Director

Ms Nicole Sheffield - resigned 12 October 2021

Non-Executive Director

Operating and Financial Review

Principal Activities

The Group is principally engaged in the provision of diagnostic imaging services.

Performance

The Operating results for the half-year are driven from the ongoing delivery of the Group's strategic pillars.

The business continued its success in growing revenue 11.2% to $94.8m despite another extended lockdown in it's primary Victorian market and continuing Covid-19 impacts during the half-year.

The focus on strategy allowed the business to open another greenfield clinic in Pakenham, Victoria and complete the acquisition, with subsequent integration, of Womens' Imaging which has a specialist focus on women's health located in Hobart, Tasmania.

The Group continues to invest in new equipment with the planned replacement of clinical assets including CT scanners to improve service offering and cardiac capabilities and ultrasound systems with improvements in image quality and accuracy of diagnosis.

A safe working environment for staff was maintained through the pandemic with regular communication and provision of PPE. Staff have continued their professionalism by maintaining a high-quality service to patients and referrers, despite staff shortages due to isolation and furlough.

The focus on matching staffing levels to patient demand for services and operating cost control delivered an Operating EBITDA of $22.2 million with an Operating EBITDA Margin of 23.4%.

Two small clinics were closed during the Victorian lockdown period and were not reopened, with activities being permanently consolidated into larger nearby clinics.

The company received $4.3 million from the exercise of employee options.

Capitol Health Limited

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Half-Year Ended 31 December 2021

For personal use only

Directors' Report

Financial Highlights

Capitol Health achieved a statutory net profit after tax for the half-year ended 31 December 2021 of $8.1 million (2020: $6.2 million).

• Revenue from services provided increased 11.2% on the prior comparative period to $94.8 million driven by organic growth for services, a full six-month contribution from the acquisition of Direct Radiology, a one-month contribution from the acquisition of Womens' Imaging, an increase in Medicare rebates for certain services and the opening of greenfield clinics.
• Excluding revenue from the recent acquisitions, Direct Radiology and Womens' Imaging, the underlying organic growth rate for revenue was 5.8%.
• Profit Before Finance Costs, Income Tax, Depreciation and Amortisation ("EBITDA") increased 0.9% to $22.8 million compared to $22.6 million in the prior comparative period. This growth in EBITDA was achieved through strong growth in revenue, tight management of operating costs, reduced transaction costs and an unrealised foreign exchange gain. The prior comparative period included government funded Jobkeeper support of $5.8 million.
• Operating EBITDA (EBITDA prior to non-operating items including Transaction costs, Unrealised foreign exchange gain/(loss), and Movement in financial liabilities) decreased 16.4%, from $26.6 million in the prior comparative period, to $22.2 million. If the government funded Jobkeeper support of $5.8 million was excluded from the prior period comparison, then the Operating EBITDA of $22.2 million for the half-year to 31 December 2021 would have represented a 6.9% increase on the prior comparative period result of $20.8 million.
• Operating EBITDA Margin (Operating EBITDA as a percentage of Revenue from services provided) was 23.4% which is a decrease from the prior comparable period of 31.1%. If the prior comparable period excluded the government funded JobKeeper support of $5.8m it would have represented an Operating EBITDA Margin of 24.3%.
• Transaction costs of $0.3 million were incurred mostly in respect of the completed acquisition of Womens' Imaging.
• An Unrealised foreign exchange gain of $0.7 million was recognised in respect of the foreign currency exchange movement (AUD : USD) for the investment in Enlitic. This was in comparison to an Unrealised foreign exchange loss of $2.4 million in the prior comparable period.
• The effective Income tax rate for the period was 27.6% compared to 42.6% in the prior period.
• Cash at Bank was $27.9 million and Borrowings were $29.0 million as at 31 December 2021.

Acquisitions

On 29 November 2021, the Group acquired the business and assets of Womens' Imaging which operates a dedicated diagnostic imaging clinic with a specialist focus on women's health in Hobart, Tasmania.

The acquisition is aligned to the Group's strategic plan for long term organic growth and expanding its network of high-quality community imaging centres. The consideration for the acquisition amounted to $0.7 million funded from cash reserves.

Capital Management initiatives

During the half-year to 31 December 2021 the Group did not undertake any new capital management initiatives and the share buy-back facility was not utilised over this period.

Capitol Health Limited

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Half-Year Ended 31 December 2021