NMC.L Regulatory News (NMC)

London, 19 August 2014: NMC Health plc (LSE:NMC) ('NMC'), the leading integrated private healthcare network operator in the United Arab Emirates, today announces its interim results for the six months ended 30 June 2014.

Financial Summary

Notes:

· Total cash is represented by short term bank deposits and bank balances

· Group financials are presented net of intercompany trading

· Adjusted Earnings per share is calculated on a like for like basis for both periods using the number of shares in issue as at 30 June 2014 and after adjusting net income for non-operating one-off expenses. Non-operating one-off expenses consisted of unamortised finance fees in H1 2013.

H1 2014 Highlights - A strong start to the year

· Group Revenues increased by 15.1% year-on-year (YoY, compared to H1 2013) to reach US$ 314.3m

· Group EBITDA was US$ 52.0m (+12.7% YoY) resulting in a Group EBITDA margin of 16.5%

· Healthcare division patients increased by 13.7% YoY, achieving a good increase in occupancy despite a rise in operational beds to 277 (+16 beds) and delivered a moderate expansion in revenue per patient to US$ 114

· Distribution division's growth was supported by new product introductions and increased sales effort with stock keeping units (SKU's) exceeding 81,000

· Operating cash flow increased by 21.7% YoY to US$ 41.4m

· Net debt increased to US$ 99.6m on project development progress and remained in line with management expectations. Cash and cash equivalents amounted to US$ 227.5m with a total debt balance at US$ 327.1m

· Two major milestones were achieved with the opening of Brightpoint Women's Hospital and NMC Dubai Investment Park General Hospital immediately after the end of H1 2014, in July 2014

Dr B.R. Shetty, Chief Executive Officer, commented:

"I am pleased with the strong start to this year, as NMC crossed the US$ 50m EBITDA mark for the first time by midway through the financial year and simultaneously delivered substantial growth in key performance indicators. The opening of both the Brightpoint and DIP hospitals in early July is also a major positive milestone for the company and management team. We expect these two major additions to our hospital portfolio to make significant contributions to our future growth.

With our home market economy still growing strongly, I view the remainder of 2014 with confidence and look forward to the addition of new assets to our portfolio including the Al Ain Medical Centre in H2 2014 and the Khalifa City Hospital in H1 2015."

Analyst and investor meeting

A conference call and webcast for analysts and investors will take place today, Tuesday 19 August 2014, at 14.00 BST.

A copy of this report will be available on the Company's Investor Relations website which can be accessed from www.nmc.ae.

Contacts

Investors

NMC

Prasanth Manghat, Chief Financial Officer +971 50 522 5648

Roy Cherry, Head of Strategy and Investor Relations +971 50 667 0184

Media

Brunswick London

Justine McIlroy / Azadeh Varzi

+44 20 7404 5959

Brunswick Gulf

Steve Martin Wajih Halawa

+971 5 6696 9232 +971 5 0100 9207

Cautionary statement

These Interim Results have been prepared solely to provide additional information to shareholders to assess the Group's performance in relation to its operations and growth potential. These Interim Results should not be relied upon by any other party or for any other reason. Any forward looking statements made in this document are done so by the directors in good faith based on the information available to them up to the time of their approval of this report. However, such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

About NMC

NMC Health plc group is the leading integrated private sector healthcare operator in the United Arab Emirates, with a nation-wide network of hospitals and operations in the country since 1975. The Healthcare division currently operates or manages seven hospitals, two day-care patient centres, one medical centre and eight pharmacies. The company received 2.1m patients in 2013. The group also operates a significant UAE wide Distribution business supplying product lines across several key market segments, including: Pharmaceutical, FMCG, Food and Scientific and Medical Equipment. NMC Health plc group reported revenues of US$ 550.9m in 2013.

In April 2012 NMC Health plc was listed on the Premium Segment of the London Stock Exchange. At the time of its IPO, the group raised funds to enable it to pursue a further growth plan with a number of capital projects for new healthcare facilities in Abu Dhabi and Dubai. NMC Health plc is a constituent of the FTSE 250 Index.

Business Review

Healthcare Division

NMC Health's Healthcare division revenues reached US$ 160.9m during H1 2014, a strong 12.3% Year on Year (YoY) growth. Divisional EBITDA totaled US$ 45.5m (+12.5% YoY) as healthcare margins remained in line with the same period of 2013 at 28.3% (+5bps).

Key performance indicators:

* Note: Includes outpatient and diagnostic services

The key drivers include:

· Strong outpatient (+13.7%) and inpatient (+12.1%) growth, as NMC's strategy and market positioning continues to deliver in terms of meeting demand trends

· Increase in occupancy to 70.1% (+650bps) despite rise in operational bed capacity to 277 (+6.1%)

· Hired 102 doctors in the past 12 months taking the total number to 542 as at 30 June 2014

· An increase in average revenue per patient to US$114

We continue to emphasize our strategy and market positioning as a high quality and affordable healthcare services provider in the UAE and back this with the expansion in our teams of medical professionals and support staff coupled with general enhancements in our service platform, all within the context of an expanding UAE economy and population. As a result, the number of patient visits to NMC hospitals and other medical facilities has increased by a strong 13.7% to 1.15m in the first half of 2014 compared market estimates on population growth in the 3-6% range. Patient growth has been particularly strong in our Dubai, Al Ain and Sharjah medical assets.

Dubai Specialty Hospital, which delivered a 13% YoY increase in patients, expanded occupancy by 1110bps to 69% during the same period despite an increase in operational beds to 94 (+3 beds) out of 100 licensed. Meanwhile, patient visits increased by 5% at the much smaller Dubai General Hospital in Deira and by 94% at the more specialised BR Medical Suites in Dubai Healthcare City where we broadened our service offering to include more general medical services. It should be noted, that this growth is before the roll-out of mandatory insurance in Dubai being introduced on phased basis from October 2014 and the positive effects it is expected to have on demand growth, particularly within the market segments NMC is focused on. Consequently, the opening of NMC General Hospital in DIP in July 2014 brings the needed additional capacity (+55% in bed terms) to our fast growing Dubai operations.

At Al Ain Hospital, patient numbers grew by 12% YoY and operational beds increased by 22% to 73 (out of the total capacity of 100). In the Sharjah Medical Centre, patient numbers expanded by 16%.

Meanwhile, Abu Dhabi Specialty hospital continued its positive trend and NMC was able to fine tune services to sustain an even higher capacity utilisation rate, as patient numbers increased by 9% and bed occupancy reached 77% (+50bps). In parallel, the NMC Day Surgery Centre in Mohammad bin Zayed City in Abu Dhabi, which opened in July 2013, continued to ramp up and saw patient numbers expand by a very strong 65% compared to the second half of FY 2013 as community awareness of its availability and NMC services increased.

During the period, we continued to achieve high client satisfaction with our operation and management services at Sheikh Khalifa General Hospital in Umm Al Quwain, which NMC manages on behalf of the UAE Ministry of Presidential Affairs. NMC has recorded management fees in respect of this contract of US$ 2.9m during the first half of 2014.

NMC Health opens new hospitals in Abu Dhabi and Dubai

As announced in our H1 2014 pre-close statement made on 26 June 2014, regulatory approval was obtained in relation to our Brightpoint Women's Hospital (Abu Dhabi) and DIP General Hospital (Dubai). As a result, both facilities commenced operations in early July 2014.

Brightpoint Women's Hospital has a licensed capacity of 100 beds and will start initial inpatient operations with 60 beds. DIP General Hospital holds a 60 bed licensed capacity with operations commencing with 30, leaving the balance for future market introduction based on demand. Both Abu Dhabi and Dubai have proven to be highly rewarding markets for NMC with rapidly expanding demand.

The Brightpoint Women's Hospital will be the first private sector women's hospital in Abu Dhabi and will bring increased specialisation to the market and our group offering. The opening of the DIP General Hospital in Dubai is also a timely addition to our portfolio in a strategic location within the emirate (in the proximity of Dubai World Central, Jebel Ali Port and Dubai Expo area) ahead of the full roll out of mandatory healthcare insurance. The sharp rise in capacity utilisation over the past year within our Dubai assets, ahead of the impact from the introduction of mandatory insurance, has further increased the Group's need for this addition to cope with upcoming growth potential.

Total capital expenditure on the development costs and initial equipment for these facilities amounted to US$ 131.4m as at 30 June 2014.

Healthcare facilities under development

Khalifa City Hospital

Construction on our new Khalifa City Hospital (250 beds), which will be our largest facility when fully open, is also progressing on schedule. The building shell and core are almost fully completed and work on the interior has commenced. We continue to expect the opening of this hospital in H1 2015.

Khalifa City is a growing suburb of Abu Dhabi and along with other neighbouring suburbs of Mussafah, Baniyas and Shahama, is anticipated to house around 20% of the population of Abu Dhabi by 2030.

We currently expect the hospital to open with an initial 75 beds in H1 2015, with the remaining capacity becoming operational on a phased basis. Total capital expenditure for the entire development costs and equipment within the facility will be up to US$ 200m and this will be phased until full capacity for the facility is reached.

Al Ain Medical Centre

Work is progressing well at Al Ain Medical Centre and we continue to expect to open the facility in H2 2014. The Al Ain Medical Centre will expand NMC's reach within the region, increase referrals to our specialty hospital in the city and boost our medium to long-term growth prospects.

The total capital expenditure for the new facility is expected to be up to US$ 7m which will be financed from existing resources.

New investments

The management team continues to look at a number of areas for further business expansion in the Healthcare sector, including reviews of new sites for potential owned and managed facilities which the Group considers will add to its existing healthcare network.

Distribution Division

The 12.3% H1 2014 revenue growth in our Distribution division to US$ 165.2m was a continuation of recent trends and benefitted from the introduction of new product lines during the past year, which have started to deliver substantial market demand. EBITDA at the division reached US$ 16.5m with margins of 10.0% (+12bps YoY).

The FMCG segment, which remains by far the largest revenue contributor in this division, achieved a 7% growth YoY. Sales increased by a particularly strong 53% in the Food & Catering segment and 16% in Pharmaceuticals. Meanwhile, revenue contribution from Scientific Equipment dropped by 12% as a direct result of recently allowing our hospitals to procure equipment from any distributor, as opposed to being restricted to our Distribution division.

Population growth, new products introductions, price increases and increased shelf space of our products by the distribution team in an expanding retail market were all material reasons behind this growth.

Distribution division's growth was supported by new product introductions and increased sales effort with stock keeping units (SKU's) at 81,230 as of 30 June 2014 (71,250 SKU's as of 31 December 2013).

Board and Management

As announced on 26 June 2014, six new Directors joined the Board following the Annual General Meeting. Mrs Salma Hareb, CEO of Economic Zones World in the UAE and Dr Ayesha Abdullah, Managing Director of Dubai Healthcare City Authority Regulator in the UAE, join the Board as Independent Non-Executive Directors.

Mr Keyur Nagori, CFO of KBBO Group in the UAE and Dr Nandini Tandon, Vice Chairman of El Camino Hospital, Silicon Valley, California, USA, joined the Board as Non-Executive Directors.

In addition, Mr Binay Shetty, COO, and Mr Prasanth Manghat, CFO, joined the board as Executive Directors.

Principal Risks and Uncertainties

The Board considers the risks and uncertainties associated with delivery of key projects on time as one of the key risks faced by the Group. This has been significantly overcome with the commencement of operations of two of the projects under construction, Bright Point Women's Hospital and DIP General Hospital in July 2014.

The detailed list of the principal risks and uncertainties faced by the Group are listed on pages 27 to 30.

Summary and Outlook

The general macro-economic outlook in the UAE remains positive. The on-going population growth, which is led by the inflow of expatriates, coupled with increasing medical insurance penetration rates continue to expand the UAE healthcare market size and thus the prospects for NMC Health.

The roll-out of mandatory healthcare insurance in Dubai is expected to be another catalyst for growth from 2015 onwards. Dubai Health Authority estimates that around 66% of the almost 3m residents in Dubai stand to benefit from this decision in the coming years as the roll-out is phased over almost two years starting from end of H2 2014.

The Board view the outlook for the remainder of FY 2014, and FY 2015, with confidence. 

Financial Review

During the first half of the 2014 financial year, the Group continued to demonstrate good growth at both the Group and divisional level. Group revenues increased by 15.1% to US$ 314.3m (H1 2013: US$ 273.1m). Group EBITDA improved by 12.7% to US$ 52.0m (H1 2013: US$46.1m).

Revenue in the Healthcare division for the first half of 2014 increased by 12.3% to US$ 160.9m (H1 2013: US$ 143.3m). Healthcare division EBITDA was US$ 45.5m for the first half of the year, which represented growth of 12.5% compared to same period last year (H1 2013: US$ 40.5m). The EBITDA margin was 28.3% compared with 28.2% for the comparative period in 2013.

Revenue in the Distribution division grew by 12.3% to US$ 165.2m (H1 2013: US$ 147.1m) compared to the same period last year. Distribution division EBITDA was US$16.5m (H1 2013: US$ 14.5m), with an EBITDA margin of 10.0% (H1 2013: 9.9%).

Adjusted Earnings per share were US$ 0.22 during the period, a growth of 13.0% from US$ 0.19 in the same period in 2013. Adjusted Earnings per share is calculated on a like for like basis for both periods using the number of shares in issue as at 30 June 2014 and after adjusting net income for non-operating one-off expenses. Non-operating one-off expenses consisted of unamortised finance fees in H1 2013.

Dividends

The Board remains committed to its previously stated policy to target a dividend payout ratio of 20-30% of profit after tax. The Board believes that this is a progressive dividend policy, whilst maintaining an appropriate level of dividend cover. The dividend policy reflects the strong cash flow characteristics of the Group, but also allows the retention of cash to fund the ongoing operating requirements and continued investment which the Company has highlighted for its long-term growth.

A dividend of 4.4 pence per share was approved and paid as a final dividend for the full year to 31 December 2013. The Board has determined that an interim dividend will not be declared but that any dividend for the 2014 financial year will be paid fully as a final dividend.

Capital expenditure

Total capital expenditure in the six months ended 30 June 2014 was US$ 60.8m (H1 2013: US$ 33.6m), in line with our expectations. Of the total capital expenditure spend during the period H1 2014, US$ 50.0m related to new capital projects and US$ 10.8m related to further capital investment in our existing facilities. The phasing of capital expenditure spend on our largest new development, the 250 bed Khalifa City Hospital, together with continued work on the construction of Al Ain Medical Centre, will result in an expected increased capital expenditure in the second half of 2014.

The Group continues to have sufficient cash or debt facilities to progress its current capital projects programme.

Cash

The level of cash in the Group as at 30 June 2014 was inline with management expectations. During the period we made a good improvement in the number of average receivable days which declined from 101 days at 31 December 2013 to 90 days at 30 June 2014. This is primarily a result of reducing the payment period previously taken to settle amounts due by the Group's principal health insurance partners.

Debt

The total debt of the Group of US$ 327.1m remained in line with the levels as at 31 December 2013 of US$ 332.4m.

The Group's net debt position reached US$ 99.6m at 30 June 2014 compared with a net debt position of the Group at 31 December 2013 of US$ 63.7m. This level of net debt increased in line with progress on our hospital development projects and management expectations. The ratio of net debt to EBITDA is 0.99 times.

Going Concern

The directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly the directors continue to adopt the going concern basis in preparing the condensed financial statements.

Statement of directors' responsibilities

The Interim report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Interim Report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority. The Disclosure and Transparency Rules ("DTR") require that the accounting policies and presentation applied to the half-yearly figures must be consistent with those applied in the latest published annual accounts, except where the accounting policies and presentation are to be changed in the subsequent annual accounts, in which case the new accounting policies and presentation should be followed, and the changes and the reasons for the changes should be disclosed in the Interim Report, unless the United Kingdom Financial Conduct Authority agrees otherwise.

The directors confirm that this condensed set of financial statements has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting' as adopted by the European Union, and that to the best of their knowledge, the Business and Finance Reviews contained herein includes a fair review of:

• the important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements as required by DTR 4.2.7R;

• the principal risks and uncertainties for the remaining six months of the year as required by DTR 4.2.7R; and

• related party transactions that have taken place in the first six months of the current financial year that have materially affected the financial position or performance of the Group during the first six months of the current financial year as required by DTR 4.2.8R.

For and on behalf of the Board of Directors:

Prasanth Manghat

Chief Financial Officer

18 August 2014

Independent review report to NMC Health plc

Introduction

We have been engaged by the Company to review the condensed set of consolidated financial statements in the half-yearly financial report for the six months ended 30 June 2014 which comprises the condensed consolidated statement of comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated statement of changes in equity, and the condensed consolidated statement of cash flows and related notes 1 to 20. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.

Directors' Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 2, the annual consolidated financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2014 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Ernst & Young LLP

London

Date: 18 August 2014

NMC Health plc

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2014

Unaudited

These results relate to continuing operations of the Group. There are no discontinued operations in the current and prior period.

The attached notes 1 to 20 form part of the condensed consolidated financial statements.

NMC Health plc

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2014

The attached notes 1 to 20 form part of the condensed consolidated financial statements.

NMC Health plc

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2014

Attributable to the equity holders of the Parent

The attached notes 1 to 20 form part of the condensed consolidated financial statements.