Interim ResultsInterim ResultsBriefing Briefing –– 33 March 2003March 2003

Overview

Profit increase for the period follows two full years of near doubling in profit growth

All divisions contributed to strong EBIT growth

Strong occupancy levels maintained:admissions up 9%, compared with previous year (up 5% excluding Cairns and Lake Macquarie)

Interim dividend 6.5 cents, fully franked

Cautiously optimistic about outlook - double digit profit growth targeted for foreseeable future

Financial Highlights

NPAT up 25% to $18.5m

Group Revenue up 21% to $320.2m

Group EBIT up 14% to $32.9m

EBIT margin of 10.5% (excluding new hospital acquisitions)

EPS up 23% to 14.4 cents per share

Financial Performance

Int. Dividend (cents/share)

EPS (cents/share)

NPAT

Profit before tax

EBIT

EBITDA

44%6.5¢(Franked)

4.5¢(Unfranked)

23%14.4¢ 11.7¢

25%18.514.8

23%26.021.2

14%32.928.9

12%45.140.2

21%320.2264.8Operating Revenue

% Inc.2002

$m2001

$m

Half-year Ended 31 December

EBIT Growth

18.4

21.1

28.9 29.4

32.9

10.0

15.0

20.0

25.0

30.0

35.0

$m

Dec'00 Jun'01 Dec'01 Jun'02 Dec'02

Half-year

EBIT up 14% for the half-yearEBIT margin 10.5% (excluding new hospital acquisitions)

Net Profit Growth

6.5

9.5

14.816.3

18.5

0.0

5.0

10.0

15.0

20.0$m

Dec'00 Jun'01 Dec'01 Jun'02 Dec'02

Half year

NPAT up 25% for half-year

Earnings per share

6.0

8.2

11.712.8

14.4

0.0

5.0

10.0

15.0

Ce

nts

per

share

Dec'00 Jun'01 Dec'01 Jun'02 Dec'02

Half-year

Basic EPS up 23% for the half-yearDouble digit growth anticipated for the full-year

Cash Flow

Except for operating movements in working capital, the half-year EBITDA has translated into strong gross operating cash flow. The effective cash flow management is consistent with prior financial years.

0

15

30

45

60

75

90

2000 FY 2001 FY 2002 FY Dec'02

EBITDACash Flow

Annual

$m

Half-Year2003 FY

Operations Overview

Profit rise achieved despite challenging environment

Underlying growth in EBIT and NPAT strong, demonstrating organic growth opportunities

Management initiatives result in higher occupancy levels, above industry average

Extra capacity from expansion program being matched with increased demand for beds

Operations Overview (cont’d)

10.5% EBIT margin, excluding recent acquisitions

Above industry average

Slight reduction in margin reflects higher medical indemnity cost, hospital disruptions from capacity expansion programme

Margins also reflecting ongoing change in revenue mix, e.g. prostheses

Cost containment still a major focus

Occupancy – Patient Days

200

250

300

350

400

Jun'00 Dec'00 Jun'01 Dec'01 Jun'02 Dec'02

Half-year Ended

Inpatient

Total (Inpatient & DayPatients)

Strong occupancy levels maintained with admissions up 9% (5% excluding new hospital acquisitions, Cairns and Lake Macquarie)

Industry Challenges

ResponseIssue

Preferred employer status, seek to recover higher wage costs from health funds.

Nursing shortage & increased cost of wages:

Emphasis upon risk management enhancement programme.

Increased cost of medical indemnity insurance:

Quality and strategic position of hospital portfolio, seeking to at least cover higher costs.

Health fund negotiations:

Long-term strategy on track

Developing a quality portfolio of strategically positioned hospitals

Managing our business well• Experienced management team maximising opportunities,

managing challenges, micro-management (appropriate decentralised management)

• Sustainable cost management

Investing in existing business• Targeting 15% return on assets

Long-term strategy on track

Developing a quality portfolio of strategically positioned hospitals (continued)

Acquisitions based on strict investment criteria

• Strategic fit

• Moderate to low operating risk

• EPS positive and 15% ROI in short-medium term

• Delivering competitive advantage, consumer demand, reasonable health fund reimbursement rates

Pursuing sustainable growth, maximising returns, including opportunities outside private hospital sector, close to core competencies

Aged Care

Sector benefitsAgeing population = growing demand, particularly for high quality services

Secure revenue stream

Fragmented industry provides opportunity for rationalisation

StrategyTarget high end, profitable segment

Focus on quality service

Develop broad portfolio of services

Capitalise on core competencies

Outlook

Comfortable with market consensus for NPAT of approximately $37m for FY 2003

Scope exists for continuing organic growth of existing business

Acquisitions provide opportunity to enhance growth and profit outlook

Targeting double-digit growth foreseeable future

AppendixAppendixAppendix

Revenue Growth Time Line

0

50

100

150

200

250

300

350

400

450

500

550

600

$m

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002Financial Years ended 30 June

PerthVeteran HospPrivatisation

Feb’94

BrisbaneVeteran Hosp Privatisation

Jan’95

RHC listed on the ASX

Sept’97

Co-located North ShorePrivate Hosp

Opened Jul’98

Alpha Hosp Group

Acquired May’01

Financial Indicators

(1) Alpha (acquired May’01) excluded as only one month of trading for the period(2) Cairns (acquired Nov’02) excluded as only one month of trading for the period(3) Calculated using rolling 12 months figures

14.313.912.18.0ROE (3)

(NPAT/Shareholder Funds) %

14.314.914.411.7ROIC (3)

(EBIT/Funds Employed) %

78737083Net Gearing %

31 Dec’02(2)

30 Jun’0231 Dec’0130 Jun’01(1)

Six months ended

Facility Portfolio

O p e r a t i n g D i v i s i o n s

N u m b e r

o f F a c i l i t i e s

L i c e n c e d

B e d s

V e t e r a n 2 8 3 0

C o - l o c a t e d 3 3 7 6

R e g i o n a l M e d i c a l – S u r g i c a l * 1 0 8 5 9

P s y c h i a t r i c 8 5 5 2

R e h a b i l i t a t i o n 2 1 1 9

T o t a l s 2 5 2 , 7 3 6

* Including the Coffs Harbour Day Surgery

Revenue Analysis

Revenue byPayor Source

6%

52%

7%

35%

Health Insurance Dept. Veteran Affairs

Government Other

Revenue by Operating Division

29%22%

36%10% 3%

Veteran Medical-SurgicalCo-located PsychricatricRehabilitation