Healthscope has outlined a plan to set up a new property trust to hold its hospital properties and release capital, after posting a 50 per cent drop in full-year net profit.

The private hospitals operator reported Net profit fell to $75.8 million for the year ended June 30, hit by an onerous lease provision for a private hospital in Victoria, as well as an impairment charge and hospital closure costs.

Revenue for the year was up 3.7 per cent to $2.34 billion.

“FY18 was a year of transition for Healthscope. We have made significant progress on a number of fronts to reset the business for improved operating performance and growth,” Managing Director Gordon Ballantyne said.

The company also said will set up a new unlisted property trust, following a strategic review of its hospital property assets in the wake of two takeover approaches.

The trust would hold most of the company’s freehold hospital property assets, which would be leased back to the parent company.

The hospital properties would have a book value for land and buildings of about $1.0 billion , Healthscope said, adding it is seeking a new co-investor to hold an interest of up to 49 per cent.

The company earlier this year turned down two takeover offers – one from from Canada’s Brookfield Asset Management and another jointly by private equity firm BGH Capital and AustralianSuper, which owns 14 per cent in Healthscope.

It had then announced plans to review its hospital property portfolio and said it would look at the merits of a sale-and-leaseback transaction to unlock value for shareholders.

The businesses to be transferred generated over half of Healthscope’s fiscal 2018 operating core earnings from hospitals.

Healthscope said the property trust would receive rental payments from Healthscope of about $80 million to $90 million in the first year.

It declared a final dividend to 3.5 cent a share, steady from a year earlier and also said it is targeting at least 10 per cent growth in hospital operating earnings for the 2018/19 financial year.

By 1200 AEST, Healthscope shares were down 0.5 per cent to $2.16 in a weak Australian market.


* Net profit down 50pct to $75.8m

* Revenue up 3.7pct to $2.34b

* Unfranked final dividend 3.5 cents, unchanged.