Life Healthcare takes profit hit from hedging contract
Private hospital group Life Healthcare said on Thursday hedging losses on the proceeds from its disposal of Indian hospital group Max Healthcare had taken a bite out of its profits for the year to end-September.
The disposal of Max Healthcare would result in profit on the sale of about R1.5bn, the company said, but this was reduced by the effect of the mark-to-market loss on the foreign exchange contracts, taken out to protect the proceeds.
This resulted in an after-tax loss of R406m, with headline earnings per share expected to fall as much as 21.9% during the period, while earnings per share could rise as much as 65.7%.
Life Healthcare bought a 26% stake in Max Healthcare for R820m in 2011 and later increased its share to 49.7% as part of efforts by then CEO Michael Flemming to branch out of SA, where a weak economy and job losses had led to a slowdown in demand for private health care.
The company said it was expecting good results for 2019, considering the challenging operating conditions, with revenue expected to rise by between 7.9% and 10.3%.
Revenue in the group’s Southern Africa segment was expected to rise in a range of 6.1% and 7.9%. International revenue was expected to rise by between 10% and 13.2%.
At 10.27am on Thursday, the group’s share price was down 0.69% to R24.49, having fallen 7.23% so far in 2019.