Fribourg, 14 September 2018
AEVIS VICTORIA - Growth and optimisation strategy continued in first semester 2018 while results were affected by one-off factors
AEVIS VICTORIA continued with the implementation of its investment strategy, which is based on mergers & acquisitions combined with a long-term and entrepreneurial approach to restructure and grow companies and business concepts. In the reporting period, AEVIS VICTORIA's participations achieved important milestones: extensive restructuring, standardisation and important investments within the hospital segment, steady improvements in the running hotels as well as on schedule refurbishment of the hotel in Zurich, attractive options for the real estate segment and further clean ups in the other participations segment.
Swiss Medical Network: measures to increase efficiency take effect from the second semester 2018 onwards
The results in the hospital segment were influenced by a challenging market environment as well as several hospitals currently being under construction, which temporarily lowers capacity. Regardless, the growth strategy of Swiss Medical Network continued and is highlighted by the 100% integration of Medgate Health Centers AG as of 30 June 2018, after which the network became the operator of two health centres in Solothurn and Zurich. After the reporting period, Swiss Medical Network announced the acquisition of the surgical hospital of Siloah AG as of 1 October 2018, offering a strengthened and high-quality range of services in the Berne region. Swiss Medical Network is thereby extending its footprint in a new canton as well as its activity in general (45 beds, 38 affiliated physicians, approx. 2'400 interventions per year). These two acquisitions will contribute an additional annual turnover of more than CHF 30 million. Additional very interesting potential acquisitions are being negotiated in both the German- and French-speaking parts of the country.
Total revenues of Swiss Medical Network reached CHF 283.2 million (2017: CHF 301.7 million). Net revenues (excluding medical fees) decreased by 6.1% to CHF 245.0 million (2017: CHF 260.8 million). EBITDAR amounted to CHF 42.2 million, 22.4% less than in the first half-year 2017, representing a margin of 17.2% (2017: 20.9%). The lower activity and operational profitability were mainly impacted by lower TARMED tariffs applied since the beginning of 2018, a one-off write-down following a judgment of the federal court allowing a retroactive TARMED reduction for the fiscal years 2014 to 2017 and a temporarily reduced activity due to construction works in the hospitals in Rothrist, Geneva and Sion. Factoring out these one-off factors revenues experienced a slight organic growth and profitability remained on the level of 2017. Swiss Medical Network initiated a cost-saving program in September 2017, which is expected to reduce operating expenses by around CHF 15 million. The restructuring measures will start to show a positive impact on the results in the second half of 2018.
Victoria-Jungfrau Collection: further margin improvements
The Victoria-Jungfrau Collection hotels performed very well during the reporting period and results improved compared to last year in terms of sales, operational profits and margins. The three hotels achieved net revenues of CHF 28.2 million in the first half-year of 2018 compared to CHF 28.8 million in 2017. Factoring out a CHF 3.5 million contribution in the 2017 figures from the Eden au Lac in Zurich, which is closed since late 2017, revenues surged by more than 11% in the reporting period. In particular, the hotels in Interlaken and Crans-Montana achieved better results based on a well-diversified customer portfolio, intensified marketing activities and new amenities in the hotels. Overall, overnight stays rose to 56'393. The gross operating profit surged, as the Average Room Rate increased from CHF 354 to CHF 364. EBITDAR reached CHF 3.9 million, corresponding to a margin of 13.7%, up from CHF 3.3 million and 11.3%, respectively. Results in the second semester are expected to be positively impacted by seasonality effects, the strong results during the summer and efficiency gains based on the completion of extensive restructuring program which was initiated in 2017.
Healthcare and Hospitality Properties: portfolio value reaches CHF 1.2 billion
In the real estate segment, net revenues amounted to CHF 28.9 million (2017: CHF 29.3 million), to which healthcare real estate contributed CHF 26.0 million, while the hospitality-related buildings contributed CHF 2.9 million. The hotel Eden au Lac in Zurich remains closed for a complete makeover and refurbishment and thus did not contribute any rent in the reporting period. EBITDAR reached CHF 24.9 million, corresponding to an EBITDAR margin of 86.1%, compared to CHF 24.8 million and 84.7%, respectively, in the previous year. The 45 properties are very well located and have an above-average standard because of the intensive investment activity in the last few years. The market value of the entire property portfolio amounts to CHF 1.2 billion. The loan to value remained very low at 35.0% and the average interest on mortgages was 1.66% at the end of the reporting period.
After having analysed several strategic options for the healthcare real estate portfolio, AEVIS VICTORIA believes that important value can be created by increasing the independence of Swiss Healthcare Properties SA to allow the company to continue growing its healthcare infrastructure portfolio in Switzerland. Therefore, Swiss Healthcare Properties SA is renamed Infracore SA, a new Board of Directors and management will be appointed while a partial spin-off is evaluated.
Substantial gain from LifeWatch/BioTelemetry investment
AEVIS VICTORIA SA sold its 1.6% stake in US-based BioTelemetry, Inc. (BEAT), obtained as a result of their public acquisition and exchange offer on LifeWatch AG. This transaction led to a financial gain of CHF 6.6 million, which has positively impacted first half-year results in 2018.
Total revenues on Group level grow 3.0% on a comparable basis
Overall, reported total revenues of AEVIS VICTORIA decreased by 5.2% to CHF 319.1 million (2017: CHF 336.6 million). Factoring out the various described one-off effects, total revenues would have grown by 3.0%. Net revenues (medical fees excluded) reached CHF 280.6 million (2017: CHF 295.2 million). On a Group level, EBITDA amounted to CHF 31.8 million, representing an EBITDA margin of 11.3% (2017: CHF 42.9 million, 14.5%). Factoring out the described one-off effects, the consolidated EBITDA margin would have reached 12.8%. A net loss of CHF 1.6 million was achieved for the period, in comparison to a net profit of CHF 12.2 million in the first half of 2017 (of which CHF 11.7 million was generated by two divestments). Without one-offs, a net profit of CHF 2.0 million would have resulted in the first six months 2018.
AEVIS VICTORIA will pursue its growth and collaboration strategy in the various Group segments whilst improving and optimising operational excellence. The acquisition pipeline of the Group is attractive, and several projects are being evaluated. Based on an unchanged portfolio and excluding one-off factors, AEVIS VICTORIA expects to realise single-digit revenue growth and improve profitability in the current business year 2018 by pursuing the initiated cost reduction programmes. The cost-savings measures will be fully effective as of fiscal year 2019 with an expected annual contribution of CHF 25 million on Group level.
The AEVIS VICTORIA SA Half-Year Report 2018 can be downloaded via this link:
Conference Call today at 10.00 CET
We invite you to our Half-Year Results 2018 conference call on Friday, 14 September 2018 at 10:00 (CET). The call will be held in English and be headed by Antoine Hubert, Delegate of the Board.
Link to live audio webcast: https://webcasts.eqs.com/aevis20180914
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AEVIS VICTORIA SA - Investing for a better life
AEVIS VICTORIA SA invests in services to people, healthcare, hospitality, life sciences and lifestyle. AEVIS VICTORIA′s main shareholdings are Swiss Medical Network SA, the second largest group of private hospitals in Switzerland, Victoria-Jungfrau Collection AG, a luxury hotel group managing luxury hotels in Switzerland, a hospitals and hospitality real estate division, Medgate, the leading telemedicine provider in Switzerland, and NESCENS SA, a brand dedicated to better aging. AEVIS is listed on the Swiss Reporting Standard of the SIX Swiss Exchange (AEVS.SW). www.aevis.com.