Apprasail Report: Labs Cardiolab

Transcription

Fleury S.A.
Economic and Financial
Assessment Report
Base date: August 1, 2011
Deloitte Touche Tohmatsu Consultores Ltda.
Deloitte Touche Tohmatsu
Consultores Ltda.
Rua Alexandre Dumas, 1981
São Paulo – SP – 04717-906
Brazil
Tel: +55 (11) 5186-1000
Fax: +55 (11) 5181-1643
www.deloitte.com.br
October 10, 2011
To
Fleury S.A.
São Paulo – SP
C/O: Mr. Celso Ricardo Marciniuk
REF.: Economic and Financial Assessment Report
Dear Sirs,
As requested by you, we shall proceed to the economic and financial assessment services of
Labs Cardiolab Exames Complementares S.A. (“Labs Cardiolab” or “Company”), on the base
date of August 1, 2011, which results are presented in the following Report.
The purpose of this work is that of estimating the economic value of Labs Cardiolab’s total
shares, with the objective of providing subsidies to the Management of Fleury S.A. (“Fleury”)
in order to increase Fleury’s capital, in virtue of the incorporation of the Company’s shares, as
well as for the purposes of article 256 of Law No. 6,404/76. No other objective may be
presumed or inferred, and this document is intended to be used exclusively by you for the
purposes described above.
DEFINITION OF VALUE AND METHODOLOGY
When estimating the economic value of the Company, we based ourselves on the concept of
investment value, which is usually defined as the price (expressed in a currency or a value
equivalent to that of a currency) of an investment for a particular investor based on their
individual interests.
RESULTS OF THE ASSESSMENT
Based on the information provided, the mentioned analyses, in the main considerations and in
the premises described in the following report, the economic value of Labs Cardiolab is R$
1,269,779 thousand (one billion, two hundred and sixty-nine million, seven hundred and
seventy-nine thousand reais), on the base date of August 1, 2011, as presented below:
Results of the Assessment
Present Value Cash Flow
(+) Perpetuity
Company Operational Flow
(+) Miscellaneous Adjustments
Economic Value
in thousands of R$
491,675
809,602
1,301,277
(31,499)
1,269,779
Please, feel free to contact us for further clarification.
Yours sincerely,
DELOITTE TOUCHE TOHMATSU
Consultores Ltda.
Eduardo de Oliveira
Partner
Copyright ©Deloitte Touche Tohmatsu. All rights reserved._____________________________2
Summary
Important Notes
05
A Brief Description of the Company
08
Market of Interest
11
Assessment Methodology
18
Documents Received
21
Discount Rate
23
Assessment Premises
26
Assessment Results
33
Annexes
35
Copyright ©Deloitte Touche Tohmatsu Consultores Ltda. All rights reserved.
3
Important Notes
4
Important Notes
1. Deloitte Touche Tohmatsu Consultores Ltda. (“Deloitte
Consultores”) was hired by the Management at Fleury S.A.
(“Fleury”), to prepare the present Economic and Financial
Assessment Report (“Report”) of the totality of the shares of
ownership of Labs Cardiolab Exames Complementares S.A. (“Labs
Cardiolab”) on the base date of August 1, 2011. This Report was
prepared with the objective of subsidizing the Management at
Fleury for purposes of support to an increase in Fleury’s capital, in
virtue of the merging of the Company’s shares, as well as for
purposes of article 256 of Law No. 6,404/76;
2. The assessment work used as a base the following information or
documents, among others, made available to Deloitte
Consultores: (i) the Company’s Balance Sheet; (ii) public
information on Labs Cardiolab’s market of interest; (iii) the
Company’s Business Plan created by the Management at Fleury
relative to its past performance and to future expectations on the
Company’s businesses;
3. Our work does not include independent checking of dada and
information provided by the Management at Fleury and did not
constitute auditing according to generally accepted auditing
standards. Therefore, we are not expressing an opinion on the
financial statements of the company under assessment;
4. Estimates and projections discussed with the Management at
Fleury, especially those which occurrence depends on future and
uncertain events, reflect the best assessment of their
Management regarding their operational and financial
performance and that of their future market of interest;
5. It is relevant to emphasize that Deloitte Consultores is not
responsible and does not guarantee the accuracy of the
projections presented in this Report, as they are consubstantiated
into perspectives and strategic plans by the Management at
Fleury;
6. Through this assessment, Deloitte Consultores does not intend to
express any judgment regarding the distribution of economic
value among the several types and/or classes of actions by Labs
Cardiolab or by any other subsidiary, affiliated, or invested
company;
7. This Report does not represent a proposal, request, advisory, or
recommendation by Deloitte Consultores regarding investments,
and such a decision shall remain under the exclusive responsibility
of that who accesses it;
8. The referred shareholders must make their own analyses and
must consult with their own legal, tax, and financial consultants
with the purpose of setting forth their own opinions on the
operation and its risks. Thus both Deloitte Consultores and its
5
partners and professionals are exempted from the responsibility
over all and any eventual loss resulting from the transaction;
documents, or work methodologies relevant to the quality of our
conclusions.
Important Notes
9. Deloitte Consultores is neither responsible for direct or indirect
losses, nor for loss of profits eventually deriving from the use of
this Report;
10. This Report may be disclosed by Fleury pursuant to the applicable
legislation and/or regulation. This Report is neither intended for
general circulation, nor can it be reproduced or used for an end
other than the aforementioned purposes without our previous
authorization by writing. We do not assume any responsibility or
contingency for damages caused or for eventual loss incurred by
any party involved as a result of the circulation, publication,
reproduction, or use of this document for an end other than the
purposes defined in this Report and in our proposal;
11. We reserve the right, but are not obliged, to revise all calculation
included or referred to in this Report, should we judge it
necessary, in case we acquire further knowledge on unavailable
information by occasion of the issuance of this Report;
12. Deloitte Consultores has no direct or indirect interest in Fleury or
in the merger of Labs Cardiolab’s shares, or any other relevant
circumstance which may characterize conflict of interests; and
13. Fleury’s controller or its managers have not directed, limited, or
practiced actions which have or might have compromised the
access, the utilization, or the knowledge of information, assets,
6
7
Introduction
Operational and Financial Information
Labs Cardiolab is a medical diagnosis services provider company owned
by the D’Or Group founded in 1977.
In 2010, Labs Cardiolab obtained an EBITDA margin of 26.5%, with a net
income of R$ 381,720 thousand, as demonstrated below:
Labs Cardiolab operates in the medical diagnosis sector providing the
following services: (i) Clinical analysis (Hematology, Microbiology,
Immunology, clinical chemistry, among others) and (ii) Imaging diagnosis
(Magnetic resonance, tomography, ultrasonography, among others) in:
57 PSCs; and
Diagnostic operations in 21 hospitals located in Rio de Janeiro,
São Paulo metropolitan area, and Pernambuco.
Description
Volume of Tests
PSCs
% of Participation
Hospitals
% of Participation
Strongly present in the state of Rio de Janeiro (a leader in imaging
diagnosis), in seven different cities besides the capital, Labs Cardiolab
receives approximately 7,500 patients per day. The Company is certified
by the PALC (Accreditation Program for Clinical Laboratories), a certificate
granted by the Sociedade Brasileira de Patologia Clínica/Medicina
Laboratorial
(SBPC/ML)
[Brazilian
Society
for
Clinical
Pathology/Laboratory Medicine] and valid nationwide.
Description
Net Operating Income (in thousands of R$)
% of Participation
PSCs
Hospitals
% of Participation
Operating Costs and Expenses
% on ROL
Labs Cardiolab also participates in the PELM (Proficiency in Laboratory
Testing), a program for managing the performance of laboratories in
relation to their technical processes.
EBITDA
% on ROL
(in thousand units)
2010 (*)
13,623
5,586
41.0%
8,036
59.0%
(in thousands of R$)
2010 (*)
381,720
75.9%
289,625
92,095
24.1%
280,697
73.5%
101,023
26.5%
Source: Administração do Fleury
(*) Managerial information
8
Description of the Transaction
The purchase of the Company’s assets through the purchase of the
totality of Labs Cardiolab’s issued shares is divided in two phases:
Purchase, through Fleury, of shares representative of 50% of Labs
Cardiolab’s available and total capital, with payment of the
corresponding amount in cash in two installments: (i) payment on
August 1, 2011 of R$ 434,844,690.00 (four hundred and thirty-four
million eight hundred and forty-four thousand six hundred and ninety
reais), equivalent to 70% of the price; and (ii) payment of R$
186,362,010.00 (one hundred and eighty-six million three hundred and
sixty-two thousand and ten reais), equivalent to 30% of the price, by
February 13, 2012.
Merger of the totality of Labs Cardiolab’s issued shares by Fleury, with
a consequent increase in its share capital of R$ 546,065,878 (five
hundred and forty-six million sixty-five thousand eight hundred and
seventy-eight reais), through the issuance of 24,905,369 (twenty four
million nine hundred and nine thousand three hundred and sixty-nine)
new shares to be attributed to Labs Cardiolab’s shareholders, so that
such shareholders become holders of Fleury’s issued shares
representative, as a whole, of 15.94% of its available and total capital.
Description of the Transaction
Fleury’s simplified corporate structure after entering into the partnership
agreement with Labs Cardiolab is presented as follows:
Source: Administração do Fleury
9
Market of Interest
10
Market of Interest
An Introduction to the Health Sector
Brazil’s health sector is divided into two types of assistance system: public
system and private system.
Assistance through the public system is free and accessible to every
Brazilian citizen. Nonetheless, considering the low quality of the public
services provided, the private health assistance system has been
developing throughout the years, elevating Brazil to the level of biggest
private health services market in Latin America.
In 2010, the health sector in Brazil represented around 8.5% of its GDP,
registering an approximately R$ 302 billion revenue, and employed
around 10.0% of the active population. The private sector corresponded
to 53.0% of the sector’s global revenue.
According to the World Health Organization (WHO), Brazil is ranked 125 in
health systems in the world, considering a sample of 191 countries. In
addition, Brazil is the second biggest private medicine market, following
the United States.
According to the 2009 Medical and Sanitation Assistance Health Statistics
Research (AMS), conducted by IBGE (Instituto Brasileiro de Geografia e
Estatística [Brazilian Institute for Geography and Statistics]), over the past
years, there has been an increase in the amount of public and private
health units in Brazil, jumping from 77 thousand in 2005 to 94 thousand in
2009.
Meanwhile, Serviços de Apoio à Diagnose e Terapia (SADT) [Diagnosis and
Therapy Support Services] underwent significant expansion, increasing
the amount of units by 32.9% between 2005 and 2009.
The biggest increase occurred in the Northeast region (50.7%), followed
by the North region (35%). The smallest increase was in the Midwest
region (15.2%).
All 19.3 thousand SADT units corresponded to 20.5% of the total of active
health units in 2009, considering that 90.8% of them are private.
Public and private health units – 2009
Projection of Brazil Health Expenses
Health Units
SADT Units
Private
Health Expenses
a
b
Health Expenses (% GDP)
Real. Estimate by Economist Intelligence Unit.
Unit.Source: Economist Intelligence Unit.
c
Projection by Economist Intelligence
Source: IBGE – Assistência Médico Sanitária 2009
11
Market of Interest
An Introduction to the Health Sector (cont.)
The health plan market has undergone major restructuring over the past
years, especially due to more interference by the Agência Nacional de
Saúde Suplementar (ANS) [National Agency for Supplementary Health].
Changes, such as the increase in the range of procedures, minimum
compulsory services and coverage, and confirmation of the financial
health of health plan operators are forcing many smaller sized companies
to leave the market, which turned out to concentrate beneficiaries in a
few, better capitalized groups.
This scenery can be confirmed by the consecutive drop verified lately in
the number of active operators in Brazil. According to recent data
disclosed by ANS, the health plan sector included, in June, 2010, a total
1,632 operators, which represented a 3.72% drop over the closing of
2009.
Active Health Plan Operators (in units)
The existing concentration in this segment is even more evident when we
analyze the distribution of beneficiaries among the players. According to
ANS data, in June, 2010, there were 1,065 operators with users, 90% of
them were concentrated in only 358 companies:
Number of Beneficiaries
4,581,983
9,181,448
13,669,705
17,714,343
22,084,986
26,421,473
30,842,616
35,219,848
39,591,586
44,012,558
Percentage of Beneficiaries
10.4%
20.9%
31.1%
40.2%
50.2%
60.0%
70.1%
80.0%
90.0%
100.0
Number of Operators
2
6
12
21
38
69
116
200
358
1,065
Source: ANS
Although changes required by ANS were very positive for beneficiaries
(who, now, can count on more comprehensive services and more security
when hiring a health plan), for operators it turns out to be obstacle.
Therefore, verticalization becomes an alternative so that players manage
to stay competitive in the market, with lower costs and, consequently, a
more comfortable margin.
* until June/2010
Source: ANS
12
Market of Interest
Factors influencing the Health Sector
Generation of formal employment
Population income indicators
Based on data by the Cadastro Geral de Empregados e Desempregados
(“CAGED”) *General Registry of Employed and Unemployed], a body
linked to the Ministry of Labor and Employment, there was, between
2005 and September 2009, a net generation of formal employment of 6.5
million. Such an increment in formal employment contributes with an
increase in the consumption of health services, once private health plans
constitute one of the main benefits offered by companies to employees. A
drop in the monthly unemployment rate in Brazil, according to IBGE is
represented below.
The Brazilian economy underwent significant improvements over the past
years, with the actual income registering an average annual growth over
the past five years of approximately 4.1%. This increase in income allows
families to increment expenses with health, given the unfavorable
conditions of the public health system. The following is a graph including
the monthly actual average salary for the primary metropolitan areas in
Brazil according to the Brazilian Institute for Geography and Statistics
(“IBGE”). A trend of growth in the actual average salary can be observed.
The peaks in the graph refer to the month of December, which presents a
higher amount due to the benefits granted at the end of the year such as
year-end bonus.
Unemployment Rate (%)
Actual Average Salary (R$)
Unemployment Rate
Average Salary
Trend
Trend
Source: IBGE
Source: IBGE
13
Market of Interest
Factors influencing the Health Sector (cont.)
Rate of population aging
According to IBGE, the life expectancy of the Brazilian population has
increased nearly three years between 1999 and 2009. Therefore, it is
expected that a Brazilian lives an average 73 years. Within the assessed
period, life expectancy of women jumped from 74 years to 77 years.
Among men, it raised from 66 years to 69 years. People born in North
America have the possibility of living at least until they are 79.7 years old,
whereas those born in Africa have a life expectancy of only 55.0 years,
which implies a difference of almost 25 years.
The result of the 2010 Census indicated 190,732,694 people for the
Brazilian population on August 1, the date of reference. In comparison
with the 2000 Census, there was an increase of 20,933,524 people. This
number demonstrates that the growth in the Brazilian population during
that period was 12.3%. The age pyramid in 2010 is as follows:
2010 Age Pyramid – in thousands of inhabitants per age and sex range
Increases in life expectancy are related to advancements in medicine, as
well as to general improvements in the life quality of people. According to
estimates by IBGE, Brazil will continue increasing the average life
expectancy of its population, with a projection of an 81 year average life
in 2050.
Life Expectancy at Birth – 2010
Men
Women
Source: IBGE – Censo 2010
North
America
Oceania
Europe
Latin America
and Caribean
Brazil
Asia
Africa
Source: World population prospects: the 2008 revision. In: UNO, Population Division.
Population Database. New York, 2010.
14
Market of Interest
Prospects of the Sector
Factors influencing the Health Sector (cont.)
A study by IBGE shows an increase in the volume at the top of the age
pyramid projected to 2050 in comparison with the 2010 age pyramid,
demonstrating the long-term aging expectancy of the population:
2050 Age Pyramid – in thousands of inhabitants per age and sex range
Different than what happened in 2009, when the Brazilian economy
ended the first half year with high unemployment rates and a decrease in
the income of the people due to the effects of the world financial crisis,
during the same period, the optimism arising from the recovery of the
national economic situation were milestones in 2010. The positive
prospects for the economic activity, income, and formal employment
should continue increasing, while aging of people in Brazil should result in
more expenses in health, increasing the client base in the private health
sector.
Another relevant fact is that over the past years the sector was marked by
the occurrence of a significant number of acquisitions and mergers, which
have intensified the consolidation process of the Brazilian private health
market.
Women
Men
Source: IBGE
According to specialized consultancy, the process of paring down the
health sector will continue with the reduction in the number of active
health plan operators, increase in the operator network, and the creation
of big hospital groups.
A process of verticalization of operations by the operators in search of
efficiency gains and consequent reduction in costs has also been observed
within this context.
The period between 2011 and 2012 should still reflect the Brazilian
economy’s good results, so that companies show to be better capitalized,
allowing for higher investments in new acquisitions, increase in own
network, penetration in new markets, and creation of differentiated
products, capable of reaching more and more heterogeneous audiences.
15
Market of Interest
Prospects of the Sector (cont.)
The continuity of the verticalization process of health operators activities
is estimated for the coming years in line with a constant effort to reduce
costs, a consequence of the main of ANS requirements on the operators.
Increase in the assistance network, facilitating user access;
Target audience segmentation; and
Investment in new technologies and improvement in operational
systems.
It is relevant to emphasize that the coming years will be marked by an
elevated industrial activity in Brazil, especially due to the big sport events
to take place in Brazil, FIFA World Cup 2014 and the Olympic Games in
2016. The level of employment, income, and results of the economy
should benefit from it, thus generating a new audience to be reached by
companies in the health sector.
In order insure that the interest of health units and operators of medical
assistance plans, where the first seek to maximize income whereas the
latter seek to minimize expenses, is satisfied, they must review their plans
so as to adapt to this new scenery and, therefore, ensure competitiveness
and remain in the market. In order to satisfy these interests, some actions
must be mentioned:
Searching for more brand recognition, so as to ensure demand for
their services;
Focus on strategic partnerships which would allow value to be
aggregated to the services provided;
Expansion of services, such as specialization in specific areas, enabling
the unit to attain a high standard in assistance;
16
17
Income Approach
Application
Focuses
Primary
Advantages
Primary
Disadvantages
Assets Approach
Market Approach
Adopted when the entrepreneurship is
expected to have continuity aiming at its
future profit generating potential.
Adopted in the assessment of a holding
company (non operating) or a company
incapable of generating profit, and the
business must be settled.
Adopted when the entrepreneurship is
expected to have continuity aiming at its
future profit generating potential.
Future cash flow, generated by the
company’s operations, discounted at
present value;
Assessment of assets and liabilities at
settlement or market value, adjusting the
company’s equity.
Market multiples, obtained in the capital
market (e.g. Share price per profit);
Simple application
Obtaining market parameters;
Profit Capitalization, where normalized
historic profits are capitalized by index
(capitalization rate).
Relevant and intrinsic aspects to the
business are considered;
The best value indicator when stock control
is acquired.
A method accepted worldwide as the most
complete and appropriate.
A degree of subjectivity in premises and
projections;
It does not reflect the business potential of
value;
Calculation of appropriate discount rate;
Difficulties in assessing intangible assets.
The residual value may be relevant
(perpetuity)
Multiples of transactions made in the past,
of comparable companies , obtaining the
price paid for sales, EBITDA, etc.
Unavailability of public data;
Difficulties to analyze the comparability of
collected data;
Difficulties to define the sample.
18
The method of discounted cash flow assumes that the economic
value of a business is related to the present value of net cash flow
generated by future operations, as presented below:
Considering that the objective of the study, the characteristics of the
business, the expectations generation of profit and cash in the future
and even if there is no intention to terminate the business, the Income
Approach, based on the future cash flow discounted at present value.
Residual Amount
Deloitte
Projected Scenery
Based on the perpetuity of
the last cash flow projected
or on output multiple
Year 2
Strategy
Market
Investments
Expertise
Research
Year...
Projections
Experience
Historical Analysis
Projections
Knowledge
Operations
Client
Projections
(-)
(+)
(=)
(-)
(-)
(-)
Year 1
Net Operating Income
Depreciation and Amortization
EBITDA
Income Tax, Social Contribution Net Income
Investments
Need for Working Capital
Free Cash Flow Before Debt
Discount
Rate
Enterprise Value
Net
Debt
Equity Value
19
Documents Received
20
Documents Received
In our assessment process, we based our estimates on documents and
information, most of which was supplied by the Managements at Fleury.
These documents and information used by us, although not audited,
include, among others, the following:
Labs Cardiolab’s audited Balance Sheet of August 1, 2011;
The Company’s Business Plan created by the Management of Fleury;
Managerial income statement for year 2010; and
Public information and Deloitte database.
Besides using the aforementioned documents and information, meetings
with the Management at Fleury were convened to search data which
allowed improving the understanding of Labs Cardiolab’s operational
process, as well as discussing the main premises and considerations that
set the projections of the Company’s future cash flows.
21
Discount Rate
22
Discount Rate
Notes
Discount Rate
WACC*=Ke(E/E+D) + Kd(1-taxes)(D/D+E)
CAPM** = rf + β(ERP) + CRP + SP
Risk free rate
Market Premium (ERP)
Beta β
Country Risk (CRP)
Premium for the size of the company (SP)
Cost of Rated Equity (CAPM) – US$
Projected Inflation Rate (American)
Projected Inflation Rate (Brazilian)
Cost of Rated Equity (CAPM) – US$
Participation in Equity (E)
Cost of rated third party capital
Income tax rate
Cost of Rated third party capital (Kd)
Participation in third party capital (D)
Rated WACC – adopted discount rate
Actual WACC – for reference
4.01%
6.70%
0.67%
1.40%
1.98%
11.91%
2.25%
4.76%
14.66%
84.3%
10.9%
34.0%
7.21%
15.7%
13.49%
8.33%
* Weighted Average Cost of Capital
** Capital Assets Appreciation Model
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(h)
a) It represents the return required by the investor for investments in
conceptually risk free bonds. The historical arithmetic average of the
past 24 months of taxes offered by the North American government
(30 year North American T-Bond) was adopted as a parameter for risk
free rate. Source: Análises Deloitte.
b) It represents the return above the risk free rate which the investor
requires to invest (to be exposed to the risk) in the capital market
(Equity Risk Premium), due to its inherent risk. We adopted the
average premium verified for the shares (paid dividends valuation) of
big North American companies since 1926. }Source: Morningstar (exIbbotson Associates).
c) It represents the risk measure for the company or the sector under
analysis. The average unlevered Beta of companies in the same
segment as the Company, base on the capital structure and income tax
rate of each company, was used for the calculation of Beta. This
average Beta was re-levered by using the market average capital
structure and by the 34% average rate of income tax (IR) and social
contribution (CSLL). Source: Análises Deloitte.
d) It represents the additional premium required by the institutional
investor in order to invest in Brazil (Country Risk Premium).We have
adopted as premium the arithmetic average of the spread of the last
12 months practiced between Brazilian government bonds and North
American government bonds of similar term. Source: Análises Deloitte.
23
Discount Rate
Notes
e) It represents the additional premium required by the institutional
investor according to the size of the company (Size Premium). The
average premium verified for the shares (paid valuation and
dividends) of small North American companies since 1926 was
used. Source: Morningstar.
f) It represents North American long-term annual inflation
estimated based on the embedded expectation of inflation in
long-term bonds (30 year North American T-Bond) offered by the
North American government, with CPI-indexed (Consumer Price
Index) yield. Source: EIU (The Economist Intelligence Unit).
g) Average of Brazilian Projected Inflation. Source: Banco Central do
Brasil.
h) For the calculation of the financial leverage, the same companies
used for the calculation of Beta were considered. The calculation
of the arithmetic average of the debt/equity ratio of these
companies results in a structure of 84.3% of equity and 15.7% of
third party capital. Source: Análises Deloitte.
i)
The cost of third party capital was estimated based on the net
cost of funding informed by the Management at Fleury, for the
beneficiary of IR and CSLL of 34%. Source: Análise
Deloitte/Administração do Fleury.
24
Assessment Premises
25
Assessment Premises
General Considerations
The main premises and considerations that set the estimate of value were
provided by the Management at Fleury, which were discussed and
analyzed, and are fully described in the present report. A summary of the
main premises adopted is presented as follows:
Assessment base date is August 1, 2011;
The concept of investment value was adopted and it is generally
defined as the price (expressed in cash or in kind) of an investment for
a particular investor based on their individual interests;
Financial projections are presented in nominal terms, i.e. they
contemplate the inflation estimated along the projection period and
are expressed in thousands of reais (thousands of R$), except when
another unit is indicated;
A projected horizon comprehended between the period of August 1,
2011 to December 31, 2020 was considered for the economic and
financial assessment of Labs Cardiolab, calculating as of this year, the
perpetuity value based on the cash flow of the last projected year
adjusted based on the level of investments, depreciation, and working
capital, and considering a rated constant growth of 5.68% a year;
The balance sheet of August 1, 2011 was adopted as the starting point
for the projection of the balance of equity accounts;
This assessment considers the projection of operating results (DebtFree model), considering that non-operating assets and liabilities were
added to or deducted from the amount of Labs Cardiolab’s
operations; and
The macroeconomic indicators used in the creation of the present
study are based on projections disclosed by the Brazilian Central Bank
(Bacen), as demonstrated below:
Macroeconomic Indicators
Gross Domestic Product (GDP)
IPCA
2011
2012
2013
3.96%
6.31%
4.00%
5.30%
4.50%
4.51%
2014 –
2020
4.50%
4.50%
Source: Bacen
26
Assessment Premises
Volumes
According to the current Brazilian market for the medical diagnosis sector,
there is a growth trend in demand which considers:
Projection of Exams (in thousands)
A growth in formal employment resulting in enhancement of the base
of corporate health plan beneficiaries;
An increase in income and more consumption by class C, enabling
more access to private health;
Population aging and longevity representing an opportunity for the
development of new products and services with more focus on higher
age brackets; and
More health awareness due to an increase in income and more access
to information and media.
Thus the premises that set the projections for volume of exams are in line
with market prospects (as mentioned above) and with the strategies of
the Management at Fleury, which aimed to increment the portfolio of
exams offered and to optimize assistance.
No significant changes to the mix of services were considered during the
projected period.
Managerial
History
Projected
Growth %
Projections for volumes segregated in PSC and hospitals is presented as
follows:
27
Assessment Premises
Net Average Price
Net Income (in thousands of R$)
Net average prices were projected based on historical managerial prices,
segregated by nature of services provided and assistance channel,
considering, according to the Management at Fleury, a transfer of 75% of
the estimated inflation to the projected period.
It is relevant to emphasize the average prices considered as a base for the
projections are in line with the prices currently practiced by the Company.
Based on the previously described premises, we present below the
projections of the net operating income segregated in PSC and hospitals:
Managerial
History
Projected
Growth %
28
Assessment Premises
EBITDA
The following were considered as Operating Costs and Expenses:
The projected EBITDA is presented as follows:
(i) Costs and expenses with Personnel and third party services, (ii) Costs
with materials and medication, (iii) Costs with maintenance and
machinery and equipment rental, (iv) Costs with clinical Engineering, and
(v) Miscellaneous operating costs and expenses.
EBITDA (in thousands of R$)
Projections for these expenses were based on analyses of their own
nature (fixed/variable), also contemplating the expectations of the
Management of Fleury regarding the growth in operations, synergy gains,
and other aspects, as demonstrated below:
Operating Costs and Expenses (in thousands of R$)
Managerial
History
Projected
Net Income %
The EBITDA margin for the projected period is in accordance with the
main players and growth prospects for the preventive diagnosis health
market.
Managerial
History
Projected
Net Income %
29
Assessment Premises
Working Capital
Investments
Investments were projected according to estimates by the Management
at Fleury, considering the replacement of depreciated fixed assets and
investments in modernization and opening/enlargement of PSCs.
Depreciation
In order to calculate the working capital of operations, terms currently
practiced by the Company were considered.
Contingencies
Eventually existing tax and/or labor contingencies not provided for in the
Company’s financial statements were not considered.
Depreciation expenses of existing assets and new investments were
projected considering the same rates currently applied by the Company.
Income Tax and Social Contribution
The amounts projected were calculated according to the applicable
legislation effective on the base date of the assessment, which considers
rates as demonstrated in the following table:
Income Tax and Social Contribution
Total (%)
Income Tax
15%
Income Tax – Additional*
10%
Social Contribution
9%
Total
34%
*Applied only to the part of the profit exceeding the R$ 20,000/month
On the base date of the work, the Company did not present the tax loss
balance and the negative base of social contribution, as informed by the
Management of Fleury.
30
Assessment Premises
Economic Adjustments
Non-operating assets and liabilities added or reduced by the amount of
Lab Cardiolab’s operations were obtained from the Company’s financial
statement on the base date. Such adjustments are as follows:
Miscellaneous Adjustments
Cash and Cash Equivalents
Judicial Deposits
Income Tax and Social Contribution on deferred profit
Loans and Financing
Lease payable
Tax Installments
Accounts payable for acquisition
Lease payable
Provision for contingencies
in thousands of R$
19,930
4,479
11,296
(571)
(7,536)
(26,433)
(10,234)
(8,593)
(13,836)
Total Miscellaneous Adjustments
(31,499)
31
Assessment Results
32
Assessment Results
Economic Value
Based on the information supplied, the mentioned analyses, the main
considerations, and the premises described in the following Report, the
economic value of Labs Cardiolab is R$ 1,269,779 thousand (one billion
two hundred and sixty-nine seven hundred and seventy-nine reais), on
the base date of August 1, 2011, as presented below:
Assessment Results
in thousands of R$
Cash Flow at Present Value
491,675
(+) Perpetuity
809,602
Operational Flow of the Company
Economic Value
1,301,277
(31,499)
1,269,779
26
Annexes
27
Annexes
Projected Income Statement
Projected
Income Statement
Aug-Dec 2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
148,195
525,438
607,976
693,836
782,269
872,588
964,220
1,056,710
1,149,718
1,243,426
Growth %
-
18.2%
15.7%
14.1%
12.7%
11.5%
10.5%
9.6%
8.8%
8.2%
(108,466)
(376,570)
(426,635)
(476,713)
(526,231)
(586,957)
(648,546)
(710,691)
(773,161)
(836,092)
Net Revenue %
-73.2%
-71.7%
-70.2%
-68.7%
-67.3%
-67.3%
-67.3%
-67.3%
-67.2%
-67.2%
EBITDA
3 9,729
148,867
181,341
217,124
256,039
285,630
315,674
346,020
376,557
407,335
Net Revenue %
26.8%
28.3%
29.8%
31.3%
32.7%
32.7%
32.7%
32.7%
32.8%
32.8%
Depreciation and Amortization
(9,617)
( 31,875)
(36,693)
(42,884)
(53,642)
(68,085)
(57,756)
(74,491)
(87,856)
(103,685)
Profit/(Loss) Before Income Tax
3 0,112
116,992
144,648
174,240
202,397
217,546
257,918
271,529
288,700
303,650
Net Revenue %
20.3%
22.3%
23.8%
25.1%
25.9%
24.9%
26.7%
25.7%
25.1%
24.4%
Income Tax/Social Contribution
( 10,230)
(39,753)
(49,156)
(59,218)
(68,791)
(73,942)
(87,668)
(92,296)
(98,134)
(103,217)
% Income Tax/Social Contribution
34.0%
34.0%
34.0%
34.0%
34.0%
34.0%
34.0%
34.0%
34.0%
34.0%
Fiscal Year Profit/(Loss)
1 9,882
77,239
95,492
115,022
133,606
143,604
170,250
179,233
190,566
200,433
Net Revenue %
13.4%
14.7%
15.7%
16.6%
17.1%
16.5%
17.7%
17.0%
16.6%
16.1%
33
Annexes
Projected Cash Flow
Projected
Discounted Cash Flow - DCF
EBITDA
Aug-Dec
2011
39,729
2012
2013
2014
2015
2016
2017
2018
2019
2020
148,867
181,341
217,124
256,039
285,630
315,674
346,020
376,557
407,335
Variation in Working Capital
(3,895)
(14,910)
(15,318)
(15,990)
(16,522)
(16,612)
(16,850)
(17,002)
(17,089)
(17,207)
(Net Working Capital) EBITDA
35,834
133,957
166,023
201,134
239,517
269,018
298,824
329,018
359,468
390,127
Investments
(9,586)
(30,381)
(33,313)
(48,526)
(93,705)
(105,658)
(121, 214) (110,700)
(128,567)
(146,671)
Income Tax and Social Contributions
( 10,230)
(39,753)
(49,156)
(59,218)
(68,791)
(73,942)
(87,668)
(92, 296)
(98,134)
(103,217)
Cash Flow
1 6.018
63.822
83.554
93.391
77.022
89.419
89.941
126.022
132.767
140.240
Discount Rate
0.9791
0.8999
0.7929
0.6986
0.6156
0.5424
0 .4779
0 .4211
0.3710
0.3269
1 5,684
57,433
66,250
65,246
47,412
48,499
42,983
53,065
49,258
45,845
491,675
(+) Perpetuity
809,602
Operating Flow of the Company
1,301,277
( 31,499)
Economic Value
1,269,779
34
Deloitte
Deloitte offers services in Auditing, Tax Consulting, Corporate Risk Management Consulting, Corporate Finance, Corporate Consulting, Outsourcing, Human
Capital Consulting, and Actuarial Consulting for clients in several sectors. With a global network of member companies in more than 140 countries, Deloitte
unites outstanding skills and in-depth local knowledge to aid its clients in reaching the best performance, regardless of the segment or area of activity.
Deloitte’s 165 thousand professionals are committed to becoming a standard of excellence in the market and are united through a collaborative culture
which encourages integrity, behavior, power of diversity, and generation of value to clients. They experience an environment of continuous learning,
challenging experiences, and enriching career opportunities, dedicated to strengthening corporate responsibility, public confidence, and generating positive
impacts on its communities.
In Brazil, where it has been established since 1911, Deloitte is one of the market leaders and its more than 3,500 professionals are recognized for their
integrity, competence, and ability to transform their knowledge into solutions for their clients. Its operations have nationwide coverage, with offices in São
Paulo, Belo Horizonte, Brasília, Campinas, Curitiba, Fortaleza, Joinville, Porto Alegre, Rio de Janeiro, Recife, and Salvador.
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35

Apprasail Report: Labs Cardiolab

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