Annual Results Presentation – 29 March 2019
Investing for a better life
Disclaimer
This communication contains statements that constitute "forward-looking statements". In this communication, such forward-looking statements include, without limitation, statements relating to our financial condition, results of operations and business and certain of our strategic plans and objectives. Because these forward-looking statements are subject to risks and uncertainties, actual future results may differ materially from those expressed in or implied by the statements. Many of these risks and uncertainties relate to factors which are beyond AEVIS VICTORIA SA's ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behavior of other market participants, the actions of governmental regulators and other risk factors detailed in AEVIS VICTORIA SA's past and future filings and reports and in past and future filings, press releases, reports and other information posted on AEVIS VICTORIA SA's group companies websites. Readers are cautioned not to put undue reliance on forward-looking statements, which speak only of the date of this communication. AEVIS VICTORIA SA disclaims any intention or obligation to update and revise any forward-looking statements, whether as a result of new information, future events or otherwise. This presentation does not constitute an offer to sell or a solicitation to purchase any securities of AEVIS VICTORIA SA.
AEVIS VICTORIA – HIGHLIGHTS 2018
CHF 70.5m profit AEVIS Holding
CHF 432.5m NAV Infracore
Net growth of
3.8%
Revenue growth of
6.5%
- Excellent result on AEVIS Holding level given the unlocking of value potential in 20 % sale of Infracore
- Substantial increase of distribution from CHF 0.55 to CHF 1.10 per share
- Significant progress in independence strategy of Infracore with entry of Bâloise as new minority shareholder
- Attractive market valuation and development potential confirmed
- Successful recruitment of medical talent
- Higher number of independent doctors already contributes to increased turnover in the first 12 weeks of 2019
- Hotels of Victoria-Jungfrau Collection performed very well
- Factoring out Eden au Lac, which is under construction, revenue increased by 6.5%
Strategy
Our long-term vision
AEVIS VICTORIA
- Investing for a better life – We invest in services to people
- Creating value – We grow and manage companies for long term value
- Partnerships – Our expertise and culture makes us a preferred investment partner
Our focus sectors
Transformation into a pure play investment company
Vision
- Investing for a better life (healthcare, hospitality & lifestyle, infrastructure)
- Portfolio of participations with stakes of 20% to 50%
Step plan
| 2018 |
H1 2019 |
From 2019 |
TARGET |
•
Transformation
process initiated
with 20% sale of
participation in
Infracore |
•
Deconsolidation
of Infracore
trough private
placement of
further shares
pursued |
•
Acquisition of various minority participations
in promising listed and non-listed companies
•
Preference for minority investments as
reference shareholder
•
Entry of other strategic investors into
subsidiaries' capital, in particular through the
combination with other market players |
•
No consolidated
operating
companies
•
Combination of
capital gains
and stable
annual returns
for shareholders |
|
|
|
•
Improvement of |
Strengthened equity, improved balance sheet structures and increased investment capacity
payout policy
Healthcare
Swiss Medical Network
100% participation of AEVIS
Organisational changes – New CEO
Dino Cauzza
1972 CEO Swiss Medical Network
- In early 2018, Beat Röthlisberger stepped down from his position as CEO of Swiss Medical Network
- As of 1 May 2018, Dino Cauzza took over his responsibilities
- Dino Cauzza initially joined Swiss Medical Network in April 2017 as Delegate of the Board of Directors of the Ticino-based subsidiary which operates Clinica Sant'Anna and Clinica Ars Medica
- He benefits of a long experience in the healthcare sector in Switzerland
Highlights 2018
• Successful recruitment of medical talent • Growing health center network with acquisition of two medical centers • Acquisition of the surgical activities of Siloah in Berne • Acquisition of Rosenklinik in Rapperswil in February 2019 • Heavy renovation activity in three hospitals − New day hospital at Clinique Générale-Beaulieu − New radiology and medical center at Clinique de Valère − New hospital building for Privatklinik Villa im Park • Excellent foundation for future growth Buy & build strategy Upgrading activity Continuation of growth path with attractive pipeline Phase of important renovation works completed in 2019
Operating improvements
- Execution of optimization strategy delivers first results
- Restructuring measures will continue to positively influence operating margins in 2019
- Ongoing implementation of more decentralized structures
- Establishment of strong regional platforms advancing well
CHF 15m annualized savings realized in 2018
A resilient operator in a dynamic market environment
- No pressure on patient mix - Listed hospitals treat at least 2/3 base insured patients otherwise, no listing was applied for (group strategy since 2011 in line with the expected trend over the next few years)
- No pressure on prices - Base rates pro-actively below cantonal and competitor averages (hence anticipating price pressure and preparing the entire group organization to work based on these lower levels)
- Independent doctor strategy - paying out with high new doctor admissions (mainly coming from key competitors)
- Stable situation with payors - Swiss Medical Network is the only swiss hospital group with contracts in place with all the major Swiss health insurers for all its hospitals
- No capex backlog (following extensive investments over the last years)
- Focus on digitalization (increasing efficiency of processes and investments in telemedicine)
- Increasing Margins - Cost cutting program implemented since end of 2017 with annualized savings of more than CHF 15m already realized (increasing financial flexibility)
The hospitals of Swiss Medical Network are well prepared to strive in a dynamic environment and to act as an active consolidator in the market
Financial results 2018
| Swiss Medical Network |
FY2018 |
|
FY2017 Change |
Swiss Medical Network
excl. hospitals under construction |
FY2018 |
|
FY2017 Change |
| (in CHF000) |
adj. |
adj. |
in % |
(in CHF000) |
adj. |
adj. |
in % |
| Income statement |
|
|
|
Income statement |
|
|
|
Total revenue
Net revenue |
580'840
501'361 |
581'436
501'510 |
-0.1%
0.0% |
Total revenue
Net revenue |
463'048
397'467 |
442'850
380'948 |
4.6%
4.3% |
EBITDAR
EBITDAR margin |
89'909
17.9% |
91'046
18.2% |
-1.2%
n.a. |
EBITDAR
EBITDAR margin |
71'053
17.9% |
66'428
17.4% |
7.0%
n.a. |
Solid activity increase leads to stable results despite heavy construction works and a lower TARMED as of 1 January 2018
4.3% net revenue and 7.0% EBITDAR increase in hospitals without negative impacts from construction activity
Note:
For comparison reasons, financial figures have been adjusted for the extraordinary TARMED activation in 2017 and subsequent write-down in 2018 following the judgment of the Federal Court regarding a retroactive TARMED reduction
Positive trend in quarterly results
- Quarterly results show a vey positive trend
- While activity was somewhat low in early 2018, it picked up significantly in the second half of 2018
- Since Q4 2018 a very encouraging growth trend could be observed with EBITDAR surpassing the levels of 2017
- Early 2019 also shows very promising results in Q1 2019 with an indicative increase in EBITDAR by 24.4% compared to Q1 2018
*indicative
Medgate 40% participation of AEVIS
Basel
90
Hospitality & Lifestyle
Victoria-Jungfrau Collection 100% participation of AEVIS
Organisational changes – New CEO
Raouf Finan
1964 CEO Victoria-Jungfrau Collection
- Beat Sigg retired from his position as CEO in August 2018 after many years at the helm of Victoria-Jungfrau Collection; his position was taken over by Raouf Finan
- Following an international hotel career in New York, Basel, Monte Carlo and South East Asia, Raouf Finan joined Michel Reybier Hospitality in 1998, where he opened and managed several hotels and acted as managing director since 2015
- Beat Sigg will continue to serve on the Board of Directors and contribute his extensive knowledge of the hotel industry
Highlights 2018
Significant investment activity
- Decline in revenue 2018 due to full-year closure of Hotel Eden au Lac for renovation
- Good progress of construction works and refurbishment under the lead of Philippe Starck
- Reopening of the Eden au Lac is planned for summer 2019
- Around 20 million expected revenues at maturity
Results of modernization program
- Completion of extensive renovation program at Victoria-Jungfrau Grand Hotel & Spa in Interlaken
- Modernization of last 42 rooms in Interlaken
- Materialization of first positive results : rise in number of guests from North America and China
Performance of ongoing operations
- Increased occupancy at Bellevue Bern for the third consecutive year
- New restaurant Noumi very well received
- Activity pick-up at Hotel Crans Ambassador in its second year of operation
- Increase in ARR to CHF 398 (from CHF 391 in 2017 excluding Eden au Lac)
Temporary revenue decrease due to intensive investment activity
Solid growth expected going forward
Hotels in operation improve results
Financial results 2018
Victoria-Jungfrau Collection
(in CHF000) |
FY2018 |
|
FY2017 Change
in % |
Victoria-Jungfrau Collection
excl. hotels under construction
(in CHF000) |
FY2018
adj. |
adj. |
FY2017 Change
in % |
|
|
|
|
|
|
|
|
| Income statement |
|
|
|
Income statement |
|
|
|
| Total revenue |
62'393 |
64'318 |
-3.0% |
Total revenue |
61'578 |
57'801 |
6.5% |
| Net revenue |
62'393 |
64'318 |
-3.0% |
Net revenue |
61'578 |
57'801 |
6.5% |
EBITDAR
EBITDAR margin |
12'612
20.2% |
12'286
19.1% |
2.7%
n.a. |
EBITDAR
EBITDAR margin |
12'175
19.8% |
10'445
18.1% |
16.6%
n.a. |
Ongoing construction activity and the expiration of the management contract in Lucerne weighs on net revenue, but EBITDAR margin surpassed 20% again
On a like for like basis, net revenue of Victoria-Jungfrau Collection increased by a solid 6.5% in 2018
Infrastructure
Infracore 80% participation of AEVIS
MARKET VALUE 2018
IN CHF MIO |
PROPERTIES INCL.
DEV. PROJECTS |
| 891.4 |
35 |
|
|
| NET REVENUE 2018 |
|
| IN CHF MIO |
SITES |
| 44.5 |
15 |
|
|
|
|
WAULT*
IN YEARS |
RENTAL SURFACE
IN SQM |
| 23.6 |
157'499 |
|
|
*weighted average unexpired lease term
Organisational changes – New CEO
Daniel Jandric 1977 CEO Infracore
- In January 2019, Daniel Jandric was appointed as CEO of Infracore
- Daniel Jandric graduated from Lausanne Commercial School and went on to further studies in accounting and finance
- He joined Swiss Medical Network in 2014 and is Chief Operating Officer from AEVIS VICTORIA since May 2018
- Infracore will benefit from Daniel Jandric's extensive experience in the healthcare and real estate sectors as well as from his broad financial and operational know-how
Highlights 2018
Future growth Sale of minority participation
- Baloise has acquired a 20% stake in Infracore
- Baloise's participation marks the first step towards Infracore's complete independence
- From an economic perspective, the sale resulted in a gain on book value of CHF 76.8m for AEVIS VICTORIA
- Opening of capital to other investors to reduce the stake of AEVIS VICTORIA to below 50%
Progress in development projects
More independence to Infracore
No CAPEX back-log given continuous investment activity
Tap into growth potential within portfolio and market
29.03.2019 24
A leading Swiss healthcare infrastructure group
Current infrastructure portfolio
Hospitals and adjacent buildings
Clinica Ars Medica Clinique de Genolier Clinique de Montchoisi Clinique de Valère Clinique Générale Clinique Montbrillant Clinica Sant' Anna Clinique Valmont Privatklinik Bethanien Privatklinik Lindberg Privatklinik Obach Privatklink Villa im Park Klinik Siloah
Other buildings
Rue de l'Aéroport, Sion (hangar) Rue de la Chocolatière, Echandens (office)
Portfolio strategy
Constant yield generation on existing resilient assets – further growth and diversification of portfolio
| Strong portfolio |
Attractive pipeline |
Promising opportunities |
|
Swiss Medical Network
hospital buildings |
Prime hospital buildings |
Growing consciousness for
health, wellbeing & quality |
|
|
Public hospital infrastructure |
Growing concentration of
wealth |
|
| High cash yielding assets |
Total value of potential
acquisitions > CHF 300m |
Convergence of hospitality,
wellbeing and health care |
|
|
|
|
|
•
Extensive renovation
programs concluded
•
Long term rental agreements
•
Large development reserves
of around 45'000 sqm |
•
Trends in the healthcare
industry expected to fuel
upcoming consolidation
•
Best positioned to invest in
public hospital infrastructure |
•
Grow and diversify asset
base to reap benefits of
future market opportunities |
|
Financial results 2018
Infracore (AEVIS conso)
Group values
(in CHF000) |
FY2018 |
|
FY2017 Change
in % |
Infracore (stand alone)
accounted for at market values
(in CHF000) |
FY2018 |
|
FY2017 Change
in % |
| Income statement |
|
|
|
Income statement |
|
|
|
| Net revenue |
44'522 |
43'999 |
1.2% |
Net revenue |
44'522 |
43'999 |
1.2% |
| Result from revaluation |
n.a. |
n.a |
n.a. |
Result from revaluation |
24'572 |
17'475 |
40.6% |
| EBITDAR |
36'058 |
36'460 |
-1.1% |
EBITDAR |
60'630 |
53'935 |
12.4% |
| EBITDAR margin |
81.0% |
82.9% |
n.a. |
EBITDAR margin |
136.2% |
122.6% |
n.a. |
Stable net revenue compared to 2017, further growth as the rental income of Privatklinik Siloah in Berne will be included for full 12 months in 2019
Based on market values, which would be applicable if Infracore were not consolidated, a result from revaluation of CHF 24.6m and an EBITDAR of CHF 60.6m was achieved
Swiss Hospitality Properties – Générale Beaulieu Immobilière 100% participation of AEVIS – 69% participation of AEVIS
9
3
Highlights 2018
Swiss Hospitality Properties
- Major investments were completed in Interlaken:
- − Renovation of 42 rooms at the Hotel Victoria-Jungfrau
- − Upgrade of the technical installations
- Complete makeover of the Eden au Lac in Zurich ongoing as one of the most comprehensive projects of the entire Group
Portfolio value increase after completion of renovation projects
Générale Beaulieu Immobilière
- Substantial investments were made int the modernization of medical practices, medical infrastructure and specialized centers:
- − New urology center opened in March 2018
- − A gynecology center was inaugurated in autumn 2018
- − Modernization of restaurant and kitchen
- − New day hospital with two operating blocks and an upgraded recovery room extension expected to opened in 2019
CHF 6m invested into Geneva properties
Corporate venture capital activities
Venture capital involvements
Financials AEVIS VICTORIA
AEVIS key figures
| Consolidated key figures |
Actual |
Adjusted |
Actual |
Adjusted |
| (in CHF000) |
2017 |
2017 |
2018 |
2018 |
| Income statement |
|
|
|
|
| Total revenue |
663'069 |
658'523 |
657'205 |
661'751 |
| External services |
(80'575) |
(80'575) |
(80'177) |
(80'177) |
| Net revenue |
582'494 |
577'948 |
577'028 |
581'574 |
EBITDAR
EBITDAR margin |
93'066
16.0% |
88'520
15.3% |
84'682
14.7% |
89'228
15.3% |
|
|
|
|
|
| EBITDA |
79'406 |
74'860 |
70'088 |
74'634 |
| EBITDA margin |
13.6% |
13.0% |
12.1% |
12.8% |
| EBIT |
26'276 |
21'730 |
16'672 |
21'218 |
| EBIT margin |
4.5% |
3.8% |
2.9% |
3.6% |
| Income taxes |
(6'793) |
(6'793) |
(4'206) |
(4'206) |
| Profit/(loss) for the period |
1'142 |
(3'404) |
(6'615) |
(2'069) |
| Balance sheet |
|
|
|
|
| Total assets |
1'750'640 |
|
1'854'878 |
|
| Total liabilities |
1'372'485 |
|
1'409'852 |
|
| Total equity |
378'155 |
|
445'026 |
|
Note:
For comparison reasons, financial figures have been adjusted for the extraordinary TARMED activation in 2017 and subsequent write-down in 2018 following the judgment of the Federal Court regarding a retroactive TARMED reduction
AEVIS bridge analysis – actual to adjusted figures
Adjusted for the one-off TARMED effect in the past two years, EBITDAR 2018 remains stable on 2017 level
AEVIS bridge analysis – pro forma excluding entities under construction
Exclusion of full year activity in 2017 and 2018 of all hotel and hospital entities under construction in 2018 including Eden au Lac, Villa im Park, Valère and Générale Beaulieu
The pro forma analysis at hand shows that the fully active entities of AEVIS were able to increase their activity in 2018
Segment reporting
Hospitals Hospitality Real estate Others & Corporate Eliminations Total
LifeWatch – analysis of overall transaction
Transaction
- In 2016, AEVIS started to build up a participation in SIX listed LifeWatch in the scope of its focus on telemedicine
- Early 2017, AEVIS published a tender offer for all publicly held LifeWatch shares to stabilize the company's shareholder base and consolidate its strategy - the tender offer triggered a counteroffer from Cardiac Monitoring/BioTelemtry Inc (BEAT)
- In June 2017, AEVIS concluded an agreement with BEAT to tender its LifeWatch shares to the higher offer of BEAT
- In 2018, AEVIS concluded the divestment of the transaction which generated a total capital gain of CHF 14.3m
Strategic milestones
- Supported LifeWatch with a backstop line in capital increase
- Active work on company's strategy via board participation
- Launched tender offer to clean up shareholder structure
- Sold participation to main competitor in the US
Advantages for AEVIS
- Attractive investment for AEVIS' healthcare sector
- In line with telemedicine strategy
- Best solution for LifeWatch was achieved securing its future sustainability
- Attractive financial gain for AEVIS of CHF 14.3m with an ROI of 57.2%
Infracore – analysis of sale of 20% participation to Bâloise
Transaction
Strategic milestones
in Switzerland
Infracore's portfolio
Medical Network
independence to Infracore
• Goal to create the leading
- In December 2018, AEVIS sold a stake of 20% of Infracore to Bâloise for a price of CHF 86.5m
- The transaction hence valued Infracore at an NAV of CHF 432.5m
- At the same time, Bâloise also provided a 3 year CHF 100m, 1.5% bond to finance future growth
9'737 76'763 86'500 Book value 20%* Gain from sale Purchase price 20% • Bâloise transaction marks a first step of the strategy to give more healthcare infrastructure platform • Confirmation of the valuation of • Reinforcement of the strategic focus of its main tenant, Swiss Statutory economic profit * incl. transaction costs
Advantages for AEVIS
- Positive effect on AEVIS's balance sheet – on the level of gearing and equity ratio
- In a consolidated view, the effect of the transaction is only visible on the balance sheet (equity)
- From an economic perspective however, the sale amounted to a gain on book value of CHF 77m (statutory)
Indicative value decomposition / simulation
Nonconsolidated Consolidated
Outlook
Outlook 2019
| AEVIS |
•
Transformation process into an investment company initiated in 2018
•
Vision to actively invest in healthcare, hospitality & lifestyle and
infrastructure mainly via minority participations
•
Improve equity ratio to 40-50% level
•
Reduce net debt to 300m |
| Infracore |
•
Deconsolidation of Infracore by further expanding the shareholder base
•
Positioning as independent healthcare infrastructure platform to tap the
vast growth opportunities in both public and private sector |
Swiss
Medical
Network |
•
Completion of construction activities in Geneva, Sion and Rothrist
•
Completion of cost saving program until end of 2019
•
Continuation of organic growth
•
Further build up of medical centers footprint in Switzerland |
| VJC |
•
Completion of construction activity and launch of Eden au Lac in Zurich in
summer 2019
•
Continued improvements in the offering in every hotel of the group |
AEVIS VICTORIA SA
Thank you for your attention