AUSTRALIA'S RAMSAY HEALTH CARE POSTS 13PCT FALL IN NET PROFIT

MELBOURNE, Aug 25, 2008 (AsiaPulse via COMTEX) -- RHCRF | Quote | Chart | News | PowerRating -- Private hospitals operator Ramsay Health Care Ltd (ASX:RHC) says it is targeting core earnings per share (EPS) growth of 10 to 12 per cent this financial year.

Ramsay today booked a net profit for the year ended June 30, 2008, of $A92.2 million ($US79.85 million), down 13.88 per cent on the prior year.

But core net profit from continuing operations lifted 11.54 per cent to $123.1 million.

"Ramsay is targeting core EPS growth of 10-12 per cent for the total group for the 2009 financial year, with strong health care fundamentals and organic growth set to continue," the company said today.

Ramsay said it was operating in a growth industry with strong fundamentals at home and abroad and was confident of its future.

Future growth would be underpinned by the ageing population and increasing life expectancy.

Ramsay was focused on organic growth, brownfields expansion and acquisitions.

"Ramsay remains committed to undertaking brownfields investment opportunities in Australia," the company said.

"All major brownfield projects have been reassessed in light of recently announced changes to the healthcare environment.

"Following this reassessment, Ramsay remains confident about the program and the future earnings it can deliver."

Ramsay said that in the United Kingdom, it was focused on developing and strengthening the business and would continue to investigate opportunities for capacity expansion and bolt-on acquisitions.

Ramsay said the UK group had outperformed expectations in the 2008 financial year and was expected to be EPS-accretive in the 2009 financial year - one year ahead of schedule.

Ramsay said that core net profit, which included a 7.5 month contribution from Ramsay UK, delivered core earnings per share of 60.7 cents for the full year, up 11.8 per cent on the prior year and at the upper end of Ramsay's guidance of 10-12 per cent.

Ramsay's bottom-line result included specific items of $26.5 million, comprising the non-cash portion of rental expense for the UK hospitals, restructuring and integration costs and a write-off of unamortised capitalised borrowing costs from an earlier refinancing.

Operating revenue from continuing operations rose 27.38 per cent to $2.67 billion.

The company declared a final dividend of 17.5 cents per share, compared to 16 cents in the prior year.

The total dividend for the year was 32.5 cents per share, compared to 29 cents in the prior year.

Ramsay managing director Chris Rex said the result was "very solid", reflecting strong organic growth across the Australian and Indonesian portfolio and a better-than-expected performance from the UK.

"Overall, we are very pleased with the underlying performance of the business and Ramsay is very well positioned for future growth," he said.

On a like-for-like basis, Ramsay's Australian and Indonesian core net profit rose 12.5 per cent to $124.2 million.

Mr Rex said the contribution from Ramsay UK exceeded expectations, with NHS (National Health Service) activity coming in ahead of budget.

"With the government's firm commitment to NHS reforms and `patient choice' to be enshrined in legislation, we are very excited about our future in the UK, and we will continue to look for capacity expansion and bolt-on acquisition opportunities that add value to our business," he said.

Ramsay said that operations in Australia and Indonesia had achieved solid earnings before interest and tax (EBIT) growth of 11.0 per cent, reflecting an improved performance across the portfolio

Earnings before interest, tax, depreciation and amortisation (EBITDA) hospital margins for Australia and Indonesia were steady at 15.3 per cent.

Total admissions in Australia grew 4.5 per cent during the period.

"A number of Ramsay's Australian hospitals are now operating at capacity and cannot meet demand," the company said.

Integration of Ramsay UK was proceeding well and the business was performing better than expected, with NHS work continuing to grow in private hospitals and now comprising more than 30 per cent of admissions, up from ten per cent a year ago.

Growing NHS demand and the government's commitment to its reforms has bolstered Ramsay's confidence to expand capacity.

Brownfield capital expenditure of STG28 million ($A59.83 million) had already been committed since the acquisition of Ramsay UK.

Operating margins before rent remained strong, at more than 20 per cent.

Ramsay said it had a board-approved commitment of $550 million for improvements and capacity expansion in Australia, of which about $200 million already had been spent.

(AAP)

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