TIDMMDC
RNS Number : 0335G
Mediclinic International plc
24 May 2017
Mediclinic International plc
(Incorporated in England and Wales)
Company Number: 08338604
LSE Share Code: MDC
JSE Share Code: MEI
NSX Share Code: MEP
ISIN: GB00B8HX8Z88
LEI: 2138002S5BSBIZTD5I60
South African income tax number: 9950122714
("Mediclinic", the "Company" or the "Group")
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.
MEDICLINIC INTERNATIONAL PLC - 2017 FULL YEAR RESULTS AND
PROPOSED FINAL CASH DIVID
Good performance in Switzerland, Southern Africa and Dubai
Middle East platform impacted by Abu Dhabi business
Strong operating cash flow generation
Robust balance sheet
Proposed final dividend of 4.70 pence; total dividend for the
year 7.90 pence
Mediclinic, an international private healthcare group, announces
its results for the year ended 31 March 2017 (the "reporting
period" or "FY17").
Group financial results
-- Revenue up 30% to GBP2 749m; up 15% compared
to pro forma FY16 revenue including Al
Noor (GBP2 391m)
-- Underlying EBITDA up 17% to GBP501m; underlying
EBITDA margin decreased to 18.2% from 20.4%
-- Operating profit up 26% to GBP362m
-- Underlying earnings per share down 19%
to 29.8 pence
-- In constant currency, revenue and underlying
EBITDA increased by 15% and 3% respectively
-- Cash flow conversion at 101% of underlying
EBITDA
-- Proposed final dividend of 4.70 pence per
share; in line with dividend policy
OPERATING PERFORMANCE
-- Hirslanden revenue up 3% to CHF1 704m;
underlying EBITDA up 5% to CHF340m; underlying
EBITDA margin of 20.0%
-- Southern Africa revenue up 7% to ZAR14
367m; underlying EBITDA up 6% to ZAR3 049m;
underlying EBITDA margin of 21.2%
-- Middle East revenue up 72% to AED3 109m;
revenue down 8% versus pro forma for the
Al Noor combination; underlying EBITDA
down 5% to AED364m; underlying EBITDA margin
of 11.7%
Danie Meintjes, CEO of Mediclinic, today commented:
"During the financial year, our two largest operating platforms,
Switzerland and Southern Africa, and the Dubai business, performed
well growing revenues and patient volumes. Our focus has been on
steering the business in Abu Dhabi towards a more sustainable
long-term growth path. We expect a gradual improvement in the
Middle East platform as we progress through the 2018 financial year
and beyond.
"This year, regulatory matters weighed on the Group more so than
in the past and I'm pleased that in recent weeks we've made
progress with some key issues in Switzerland and Abu Dhabi. We will
continue to monitor the regulatory landscape and engage with
authorities to offer quality and cost-efficient services towards
the long-term sustainability of healthcare provision.
"We continue to see growing demand for quality healthcare
services which is underpinned by an ageing population, growing
disease burden and technological innovation. This is why we place
such an emphasis on our Patients First strategy and continue to
invest in our facilities and people. With this focus and our
leading positions in core markets, Mediclinic is well-positioned to
deliver sustainable long-term growth."
Group financial SUMMARY
GBPm 2017 2016 Variance
%
Revenue 2 749 2 107 30%
EBITDA(1) 509 382 33%
Underlying EBITDA(1) 501 428 17%
Operating profit 362 288 26%
Earnings(2) 229 177 29%
Underlying earnings(1) 220 219 -
Earnings per share
(pence) 31.0 29.6 5%
Underlying earnings
per share (pence)(1) 29.8 36.7 (19%)
Total dividend per
share (pence) (3) 7.90 7.90 -
Net debt 1 669 1 536 9%
1 The Group uses underlying income statement
reporting as non-IFRS measures in evaluating
performance and as a method to provide
shareholders with clear and consistent
reporting. The reconciliations between
the statutory and the non-IFRS measures
are in the 'Financial Review' section below.
2 Earnings refer to profit attributable to
equity holders.
3 The total dividend per share for the year
ended 31 March 2017 in British pound comprises
the proposed final dividend of 4.70 pence
per share (FY16: 5.24 pence) and the interim
dividend of 3.20 pence per share, paid
in December 2016 (FY16: 2.66 pence).
The Group delivered financial results for FY17 in line with
guidance. The Swiss and Southern African platforms generated good
revenue and underlying EBITDA growth. Mediclinic's reported
financial results for FY17 benefited from the addition of Al Noor's
operations, however, the Middle East platform did not meet our
expectations, impacted by the Abu Dhabi business. The combination
of the Al Noor and Mediclinic businesses was completed on 15
February 2016 with only 46 days of consolidated reporting included
in the twelve months ended 31 March 2016 (the "prior year" or
"FY16"). The Group's FY17 financial results, reported in pounds
("GBP"), benefited from the translation impact of the weaker GBP
compared to all three platform local currencies.
Group revenue grew by 30% and underlying EBITDA grew by 17%.
When compared to pro forma FY16 revenue (including Al Noor for the
twelve months ended 31 March 2016), revenue increased by 15%. On a
constant currency basis, the Group's revenue and underlying EBITDA
for the reporting period increased by 15% and 3% respectively. The
Group's underlying EBITDA margin declined to 18.2% (FY16: 20.4%),
impacted by the Middle East platform.
Depreciation and amortisation increased by 56% to GBP145m (FY16:
GBP93m). The increase was mainly due to Al Noor operations being
included for twelve months compared to 46 days in the prior year.
Included in amortisation is an accelerated charge of GBP7m in
relation to the Al Noor trade name.
Finance cost increased by 28% to GBP74m (FY16: GBP58m). The
increase was mainly driven by the Mediclinic bridge facility, which
was refinanced with new borrowing facilities in Southern Africa and
the Middle East, announced in June 2016. Included in finance cost
is a non-cash fair value gain on the ineffective Swiss interest
rate swap of GBP13m (FY16: GBP8m).
The Group's effective tax rate decreased from 22.4% in the prior
year to 20.8% for the period under review mainly due to one-off
non-deductible expenses incurred in the prior year, offset by a
reduced contribution from Middle East non-taxable earnings.
Underlying earnings of GBP220m were flat (FY16: GBP219m), with
Spire Healthcare Group ("Spire") contributing GBP12m (FY16: GBP6m).
Underlying earnings per share decreased by 19% to 29.8p (FY16:
36.7p), largely impacted by the shares issued to acquire and
adverse operating performance of Al Noor. Earnings per share, which
includes one-off and exceptional income and charges, increased by
5%. The proposed final dividend per share is 4.70p, representing a
27% pay-out ratio to underlying earnings, in line with the Groups
dividend pay-out ratio target of 25% to 30%.
Group results are subject to movements in foreign currency
exchange rates. Refer to the 'Financial Review' section below for
exchange rates used to convert the operating platforms' results and
financial position to British pounds.
Details of the FY17 results analyst presentation in London in
addition to the webcast and conference call registration
information are available at the end of this report or visit the
Group's website at www.mediclinic.com.
OPERATING REVIEW
HIRSLANDEN
2017 2016 Variance
%
Movement in bed days
sold (0.7%) 3.4%
Movement in revenue
per bed day sold 3.0% 1.9%
Inpatients (000's) 100 99 1.7%
Revenue (CHFm) 1 704 1 657 3%
Underlying Revenue
(CHFm) 1 704 1 647 3%
Underlying EBITDA
(CHFm) 340 325 5%
Underlying EBITDA
margin 20.0% 19.7%
Expansion capex (CHFm) 74 68 9%
Maintenance capex
(CHFm) 89 76 17%
Underlying EBITDA
converted to cash 101% 88%
Average GBP/CHF exchange
rate 1.29 1.47 (12%)
Revenue (GBPm) 1 321 1 130 17%
Underlying revenue
(GBPm) 1 321 1 123 18%
Underlying EBITDA
(GBPm) 264 221 19%
Hirslanden accounted for 48% of the Group's revenues (FY16: 54%)
and 53% of its underlying EBITDA (FY16: 52%).
As at the end of the reporting period, Hirslanden operated 16
hospitals and 4 clinics with a total of 1 677 inpatient beds and 9
402 employees (6 760 full-time equivalents). It is the largest
private acute care hospital group in Switzerland servicing
approximately one third of inpatients treated in Swiss private
hospitals.
During the period under review, revenues increased by 3% to CHF1
704m (FY16: CHF1 657m). This was driven by a 1.7% growth in
inpatient admissions. The reduction in both bed days sold (-0.7%)
and the average length of stay (-2.3%) was offset by an increase of
3.0% in the average revenue per bed day sold. This is largely due
to an increase in the average severity of cases, with an increasing
number of doctors performing complex procedures at Hirslanden
hospitals. Outpatient revenues increased by 9% and now contributes
nearly 20% to overall Hirslanden revenues.
Underlying EBITDA increased by 5% to CHF340m (FY16: CHF325m)
with the underlying EBITDA margin increasing to 20.0% from 19.7%
due to several productivity measures and cost savings initiatives
implemented during the year and an underlying tariff provision
release of CHF8m. These were offset by continued investment in
Hirslanden 2020 and the ongoing shift in patient mix from semi and
private to basic insured. Operating profit increased by 7% to
CHF259m (FY16: CHF243m). Hirslanden contributed GBP121m to the
Group's underlying earnings compared to GBP101m in the prior
year.
Hirslanden invested CHF74m in expansion capital projects and new
equipment and CHF89m on the replacement of existing equipment and
upgrade projects as well as investments in Hirslanden 2020 and
relocation of the corporate head office. In April 2016, Hirslanden
Clinique Cecil in Lausanne opened a new hybrid operating theatre
and an outpatient surgery unit. In August 2016, Hirslanden Klinik
Aarau opened its third cardiac catheterisation laboratory. At
Hirslanden Klinik St. Anna and Hirslanden Klinik Stephanshorn, two
new modular operating theatres were completed in October and
December 2016, respectively. Further important development projects
completed included new doctors' consulting rooms for Hirslanden
Clinique La Colline, restructuring of radiology for Hirslanden
Klinik Stephanshorn and restructuring of the sterilisation unit for
Hirslanden Klinik Permanence. Hirslanden Klinik Im Park in Zurich
opened its new outpatient surgery centre in April 2017, which
includes a ward for procedures requiring short inpatient stays.
Building work commenced on an expanded emergency department for
Klinik Hirslanden in Zürich and there are plans for a range of
other expansion projects to increase the business' capacity.
During the year, Hirslanden increased efficiency in various
areas of the business. Supply costs and labour costs were
successfully reduced, while more focused management led to
increased utilisation of our infrastructure. Hirslanden is focused
on achieving further efficiency gains and optimisation, leveraging
off the broader Group's economies of scale to manage cost
pressures.
There were a number of regulatory developments in Switzerland
during the year. In April 2017, the Zurich Cantonal Parliament
voted not to approve the proposed VVG levy. As part of a Cantonal
budget review and cost savings initiative, the Canton had proposed
a levy to be introduced based on the proportion of privately
insured patients treated in listed hospitals. This complex matter
went through an extended legislative process and Hirslanden engaged
with the relevant public authorities to raise concerns regarding
the process, equality and the impact the proposed levy would have
had on the business. Hirslanden will continue to monitor
developments in the canton whilst maintaining its dialogue and
engagement with the relevant public authorities to ensure that it
can, on a sustainable basis, deliver high-quality, cost-efficient,
healthcare to patients.
The national outpatient tariff ("TARMED") is still in revision
and the current tariff structure is valid until the end of the 2017
calendar year. The Swiss Federal Government has released proposed
adjustments to TARMED as a transitional solution whilst healthcare
providers and funders continue to negotiate and agree a revised
tariff structure. The government proposal is targeting annual
savings of around CHF700m across the public and private outpatient
sectors. Outpatient services contributed approximately 20% of
Hirslanden revenues, at around CHF300m in FY17. Based on initial
analyses of the complex proposal, the expected annualised impact on
Hirslanden outpatient revenues is around CHF30m before any
mitigating actions are considered. These mitigations could include
improved utilisation and increased efficiencies that would help to
reduce the impact of the transitional solutions proposed by the
Federal Government on the underlying EBITDA and margins of the
business. Due to its implementation date on 1 January 2018, the
impact on Hirslanden is expected to be limited in the FY18
financial year.
There continues to be a significant focus on the shift of basic
medical treatments from the inpatient to the outpatient sector
("outmigration"). The Federal Government is preparing a framework
for the outmigration of services, likely to be ready for
implementation from 1 January 2018, across Switzerland. The Zurich
Cantonal Parliament, in April 2017, approved an amendment to the
cantonal hospital law, providing a legal basis for the cantonal
government to create a list of interventions that in future should
generally be treated as outpatient rather than inpatient services.
The final list of interventions will be agreed following a working
group review. In the Canton of Lucerne similar measures are
expected to be implemented from 1 July 2017.
Hirslanden is responding to the trend of outmigration with the
opening of new outpatient facilities and the creation of an
integrated medical network that facilitates the access to
healthcare for patients. This is also important because outpatient
clinics are a well-established route for the subsequent allocation
of patients to hospitals and specialists. The establishment of
outpatient facilities is part of the Hirslanden 2020 strategic
programme. This programme has two main goals: to increase the
efficiency of the existing business by implementing standardised
systems and processes; and to develop new areas of business, such
as outpatient facilities. Having opened the new outpatient surgery
centre at Klinik Im Park, Hirslanden will also open two new medical
centres in Zurich (Seefeldstrasse) and Cham (canton of Zug) in
spring 2018 and a further one at Schuppis (canton of St. Gallen) in
2019.
MEDICLINIC SOUTHERN AFRICA
2017 2016 Variance
%
Movement in bed days
sold 0.8% 2.9%
Movement in revenue
per bed day sold 5.8% 6.3%
Admissions ('000s) 579 575 0.6%
Revenue (ZARm) 14 367 13 450 7%
Underlying EBITDA
(ZARm) 3 049 2 877 6%
Underlying EBITDA
margin 21.2% 21.4%
Expansion capex (ZARm) 790 758 4%
Maintenance capex
(ZARm) 515 317 62%
Underlying EBITDA
converted to cash 104% 109%
Average GBP/ZAR exchange
rate 18.41 20.73 (11%)
Revenue (GBPm) 780 649 20%
Underlying EBITDA
(GBPm) 165 139 19%
Mediclinic Southern Africa accounted for 28% of the Group's
revenues (FY16: 31%) and 33% of its underlying EBITDA (FY16:
32%).
In Southern Africa (including South Africa and Namibia), as at
the end of the reporting period, Mediclinic operated 52 hospitals
and 2 day clinics with a total of 8 095 beds and 16 848 employees.
The platform is the third largest private hospital provider in
Southern Africa.
During the period under review, revenue increased by 7% to ZAR14
367m (FY16: ZAR13 450m). Bed days sold and average revenue per bed
day increased by 0.8% and 5.8%, respectively. Admissions increased
by 0.6% with growth in medical cases partially offset by a decrease
in surgical day cases as the outmigration trend continues. The
average length of stay increased by 0.2%.
Underlying EBITDA increased by 6% to ZAR3 049m (FY16: ZAR2 877m)
resulting in the underlying EBITDA margin decreasing to 21.2% from
21.4% due to the ongoing shift in mix towards medical versus
surgical cases, wage and cost inflation, including higher price
increases on pharmaceuticals (sold at zero margin) and investment
in additional clinical personnel. Operating profit increased by 15%
to ZAR2 584m (FY16: ZAR2 252m). Mediclinic Southern Africa
contributed GBP67m to the Group's underlying earnings compared to
GBP63m in the prior year, impacted by an additional ZAR182m
(GBP10m) interest charge on additional debt following the refinance
of the Group's bridge loan.
Mediclinic Southern Africa invested ZAR790m on expansion capital
projects and new equipment and ZAR515m on the replacement of
existing equipment and upgrade projects. The number of beds
increased by 78 taking the total number of beds to 8 095. Key
projects completed during the year were at Mediclinic Upington,
Mediclinic Worcester, Mediclinic Emfuleni and Mediclinic Windhoek.
The building projects in progress are expected to add some 54
additional beds by the end of FY18, taking the total number of
licensed beds across the operating platform to 8 149. Several
additional building projects are due for completion in FY19 and
FY20, which are expected to add some 350 additional beds in both
existing facilities and new day clinics.
During FY16, Mediclinic Southern Africa announced the proposed
acquisition of a controlling share in Matlosana Medical Health
Services Proprietary Limited ("MMHS"), based in Klerksdorp in the
North-West Province of South Africa. MMHS owns two
multi-disciplinary hospitals, Wilmed Park Hospital (144 licensed
beds) and Sunningdale Hospital (62 licensed beds), as well as a 51%
share in Parkmed Neuro Clinic, a psychiatric hospital (50 licensed
beds). This proposed acquisition supports Mediclinic's core focus
of providing acute care, multi-disciplinary specialist hospital
services. Although substantially completed, the transaction remains
subject to approval by the competition authorities. In January
2017, Mediclinic Southern Africa also announced the proposed
acquisition of a 50% + 1 share interest in Life Path Health, which
operates seven mental health facilities and is in the process of
establishing three further facilities, with applications approved
by Department of Health for further facilities. This transaction is
subject to a number of conditions precedent.
The Competition Commission is currently undertaking a market
inquiry into the private healthcare sector in South Africa to
understand both whether there are features of the sector that
prevent, distort or restrict competition and how competition in the
sector can be promoted. The inquiry was due to publish its
recommendations in December 2016, but has advised of further delays
with the HMI now guiding that the final publication is expected at
the end of the 2017 calendar year. Mediclinic has submitted
documentation to the inquiry and will continue to engage with all
stakeholders as draft documents are published through the year to
achieve an agreeable outcome.
The South African Government is seeking to address the
shortcomings of the public health system through the phased
introduction of a National Health Insurance system over a 14-year
period. A draft White Paper outlining the financing and design of
the envisaged system has been released for consultation and
Mediclinic has submitted comprehensive comments. However, there
remain a large number of obstacles that still need to be addressed
before greater clarity about the outcomes can be communicated.
The results above were delivered against a continued weak
macro-economic environment, stagnant medical scheme membership and
increased competition in the private hospital sector. However, some
incremental growth opportunities remain in Southern Africa as a
result of the ageing population, new technology and services and an
increase in the proportion of cases with chronic disease codes.
These include the expansion of Mediclinic Southern Africa's
existing hospitals, the establishment of new day clinics and
investment in related business opportunities such as mental
health.
MEDICLINIC MIDDLE EAST
2017 2016 Variance
%
Inpatients ('000s)
(1) 69 73 (4.8%)
Outpatients ('000s)
(1) 3 173 3 514 (9.7%)
Movement in bed days (6.2%) n/a
sold(1)
Revenue (AEDm) 3 109 1 802 72%
Underlying EBITDA
(AEDm) 364 384 (5%)
Underlying EBITDA
margin 11.7% 21.3%
Expansion capex (AEDm) 188 171 10%
Maintenance capex
(AEDm) 57 32 78%
Underlying EBITDA
converted to cash 120% 99%
Average GBP/AED exchange
rate 4.80 5.54 (13%)
Revenue (GBPm) 648 328 98%
Underlying EBITDA
(GBPm) 76 70 9%
1. Operational metrics are reported on a
pro forma basis combining Al Noor and
Mediclinic for FY16.
Mediclinic Middle East accounted for 24% of the Group's revenues
(FY16: 16%) and 15% of its underlying EBITDA (FY16: 16%).
In the Middle East, as at the end of the reporting period, the
combined business operated 6 hospitals and 31 clinics with a total
of 714 beds and 6 375 employees. The platform is one of the largest
private healthcare providers in the UAE with the majority of its
operations in Dubai and Abu Dhabi (including Al Ain).
The Mediclinic Middle East financial results represent the
combined business for FY17. In FY16, Al Noor's results were only
consolidated from 15 February 2016.
During the period under review, revenue increased by 72% to AED3
109m (FY16: AED1 802m). The existing Dubai business increased
revenue by 5% including the related ramp up benefit from the new
City Hospital North Wing. However, the Abu Dhabi business
underperformed, down 19% compared to the prior year pro forma
revenue. On a pro forma basis, inpatient admissions and day cases
declined by 4.8% and outpatient attendance decreased by 9.7%. Bed
days sold decreased by 6.2%. Abu Dhabi inpatient and outpatient
volumes were down 12% and 14% respectively versus the prior year
due to the unforeseen changes in the regulatory environment with
the introduction of a co-payment on local "Thiqa" insurance card
holders, a need to align Al Noor with the sustainable business and
operational practices of the Group, doctor vacancies, increased
competition and the sale of several non-core assets. Thiqa patient
volume declines were greater than other insurance categories in Abu
Dhabi with inpatients down 33% and outpatients down 31%.
Underlying EBITDA decreased by 5% to AED364m (FY16: AED384m) and
the underlying EBITDA margin decreased to 11.7% from 21.3%. Despite
good progress made in respect of the integration benefits from the
combination, this was more than offset by the revenue shortfall.
Operating profit decreased by 58% to AED134m (FY16: AED321m).
Mediclinic Middle East contributed GBP33m to the Group's underlying
earnings compared to GBP57m in the comparative period.
In early June 2016, the platform amended and increased the
existing debt facilities to AED1 079bn (of which AED220m remains
undrawn) from AED282m in the prior year, to refinance the Group
bridge loan facility, as well as to continue to fund existing
expansion projects across the UAE.
The provision for impairment of receivables increased by AED113m
(AED89m relating to Abu Dhabi receivables) and was charged to the
income statement. In FY16, AED25m (AED9m relating to Abu Dhabi
receivables) was charged to the income statement. Furthermore, an
opening balance sheet adjustment of AED73m was made to the Al Noor
receivables to finalise the Al Noor purchase price allocation.
Mediclinic Middle East invested AED188m on expansion capital
projects and new equipment and AED57m on the replacement of
existing equipment and upgrade projects. The major components of
the expansion capital expenditure were the Mediclinic City Hospital
North Wing and Mediclinic Parkview Hospital projects in Dubai. The
former was successfully opened in September 2016 and houses,
amongst other disciplines, the Comprehensive Cancer Centre, Dubai's
most advanced facility for the diagnosis and treatment of cancer,
built in association with Hirslanden in Switzerland. Patient
volumes since opening the North Wing have been encouraging.
Construction of the Parkview Hospital, the seventh hospital of the
platform, is progressing well and is on track to be completed in
the fourth quarter of the financial year ending 31 March 2019.
As part of the ongoing investment in the region, a partner was
selected for an Electronic Health Record system which will be
implemented over the coming years. By creating unified records for
patients, regardless of which facility they receive treatment at,
the system will enable the business to deliver improved service
quality and seamless care for patients.
The regulatory environment in the Middle East had a significant
impact on the platform's performance this year. On 30 June 2016,
the Health Authority Abu Dhabi ("HAAD") announced a number of
amendments to Abu Dhabi's health insurance programmes with
immediate effect as of 1 July 2016. Changes to the Thiqa plan
(health insurance for UAE Nationals or others of similar status in
Abu Dhabi) stipulated that patients receive 80% coverage of the
fees for outpatient and inpatient services provided by private
healthcare facilities in Abu Dhabi (previously 100% for most
services). It was mandatory for private healthcare providers to
collect the full co-payment from patients, which Mediclinic adhered
to with immediate effect. A further change saw the Thiqa plan cover
only 50% of the cost if patients sought medical services outside
Abu Dhabi (including Dubai and the Northern Emirates). In Dubai,
UAE nationals are covered under the ENAYA and SAADA health
insurance programme, under the supervision of the Dubai Health
Authority, with a 10% co-payment for inpatient and outpatient
services in public and private sector. As mentioned, these changes
had a significant impact on the Thiqa patient volumes in the Abu
Dhabi business. However, on 26 April 2017, following a period of
engagement with various authorities and stakeholders, His Highness
Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and
Deputy Supreme Commander of the UAE Armed Forces, ordered the
waiving of the 20% Thiqa co-payment when receiving treatment at
private healthcare facilities in Abu Dhabi, with immediate effect.
It was also confirmed that the co-payment for services provided to
Thiqa patients outside of Abu Dhabi would be reduced from 50% to
10%. Preparations are ongoing for the introduction of Diagnosis
Related Groups in Dubai expected to be implemented in April 2018.
The platform continues to maintain an active dialogue with
government authorities on regulatory changes within the UAE
healthcare sector.
A key focus during the year has been integrating the Abu
Dhabi-based Al Noor Hospitals Group with the established Mediclinic
Middle East business in Dubai. The regional management team
successfully addressed a number of key issues including the
establishment of a clear operational and clinical strategy in Abu
Dhabi, doctor vacancies, integrating the functional departments of
the two businesses, conforming revenue cycle management with the
Middle East business, identifying synergies in procurement and
headcount and consolidating the two corporate offices and executive
management teams. The Group remains on track to generate annualised
synergies of AED75m from the combined Middle East business. Some
136 new doctor appointments were made in the Middle East during
FY17 and a further 52 doctors are currently in the process of
recruitment helping to fill the vacant positions that resulted from
the departure of doctors in the twelve months leading up to the Al
Noor combination and at the start of FY17.
As part of an extensive review of the Abu Dhabi business,
certain units, non-core to the central strategy of the platform,
were identified for divestment. The Group has classified AED42m
assets and AED9m liabilities as held for sale in relation to these
units. The platform completed the sale of Rochester Wellness,
consisting of two clinics in Dubai and Oman, to Emirates Health
during the year. In November 2016, the platform completed the sale
of Gulf International Cancer Centre to Proton Partners
International. The construction of a new hospital in the Western
Region was postponed.
Several new facilities were opened in Abu Dhabi during the year.
These included the Mediclinic Al Jowhara Hospital (formerly Al Noor
Hospital - Al Jowhara), a 51-bed multi-disciplinary hospital in Al
Ain that was delayed by several months, clinics in Ghayati (Western
Region) and Al Yahar (Al Ain), as well as the Aspetar Clinic (Al
Ain). The Khalifa City A clinic was opened in April 2017. Areas of
opportunity were identified in Abu Dhabi, including the expansion
and redevelopment of Mediclinic Al Noor Hospital (formerly Al Noor
Hospital - Khalifa Street) and the creation of a new Comprehensive
Cancer Centre at Mediclinic Airport Road Hospital (formerly Al Noor
Hospital - Airport Road). In September 2016, the platform completed
the purchase of the remaining 25% interest in the Al Madar group of
clinics, based in Abu Dhabi. The important strategic decision to
re-brand Al-Noor facilities to Mediclinic was taken in February
2017 reflecting the ongoing and future investment in the Abu Dhabi
business. The project commenced in April 2017 and due to regulatory
requirements, is expected to take approximately one year to
complete. As a result of the re-branding decision, an accelerated
amortisation charge of AED36m in connection with the acquired Al
Noor trade name asset has been recognised in FY17. The remaining
balance of the trade name will be fully amortised in FY18. The
accelerated amortisation charge has been excluded in determining
underlying earnings.
Although the region faces a low oil price environment and
softening of consumer sentiment, the Middle East remains a growth
market, where the combination of Mediclinic and Al Noor has created
one of the leading private healthcare providers in the region.
Recent regulatory changes provide support for the gradual recovery
in performance of the Abu Dhabi business and future investment
decisions. Opportunities include the provision of services for a
growing and ageing population, which is facing an increased
incidence of lifestyle-related medical conditions, in a region
where governments are seeking to diversify their economies away
from dependence on oil revenues. Mediclinic has confidence in its
long-term Middle East growth strategy and continues to focus on
building a high quality, multi-disciplinary clinical service
offering in Abu Dhabi that emulates the Group's market leading
Dubai operation.
SPIRE HEALTHCARE GROUP
Mediclinic has a 29.9% investment in Spire. The investment in
Spire is accounted for on an equity basis recognising the reported
profit of GBP53.6m for the twelve months to 31 December 2016
("Spire's FY16"). The equity accounted share of profit from Spire
recognised by Mediclinic in FY17 was GBP12m (FY16: GBP6m) after
adjusting for the amortisation of intangible assets recognised in
the notional purchase price allocation for the Group's acquisition
of its equity investment.
Spire's FY16 saw solid growth with adjusted revenue up 5.8%,
adjusted EBITDA up 5.4% and comparable EPS (excluding exceptionals
and tax one-offs) up 4.9%. Total patient admissions grew 2.3%
driven by self-pay and NHS volume growth. After adjusting for St
Anthony's and prior year disposals, Spire's adjusted EBITDA margin
remained stable at 18.2%, while EBITDA conversion to operating cash
flow increased to 115% before exceptional items and tax.
OUTLOOK
The Group's main strategic focus remains to ensure high-quality
care and optimal patient experience. To this end, Mediclinic
continues to invest in its people, patient facilities and the
technology within the facilities. The Group's growing international
scale also enables it to unlock further value through promoting
collaboration and best practice between its operating platforms and
to extract further synergies and cost-efficiencies. The Group is
well-positioned to deliver long-term value to its shareholders with
a well-balanced portfolio of global operations, a leading position
across all four attractive healthcare markets and a platform for
future growth.
Demand for Mediclinic's services across its platforms remains
robust, underpinned by an ageing population, growing disease burden
and technological innovation. However, the increase in demand
across the platforms is impacted by lower economic growth and
greater competition. In addition, there is an increased focus on
the affordability of delivering healthcare which is resulting in
changing care delivery models and greater regulatory oversight.
The Group provides the following guidance for the financial year
ending 31 March 2018 ("FY18"):
-- Hirslanden: Given the already high occupancy
rates and stable bed numbers the Group
anticipates modest revenue growth. The
underlying EBITDA margin is expected to
be lower. This is due to the tariff and
regulatory environment including the impact
from the proposed national TARMED adjustment
and outmigration framework coming in the
fourth quarter FY18, increasing costs relating
to several major projects including Hirslanden
2020 and assumes no further tariff provision
releases that benefited FY17. The impacts
of these will partially be offset by ongoing
efficiency gains.
-- Mediclinic Southern Africa: The Group expects
revenue growth in line with inflation despite
the challenging macro-economic environment,
greater competition and funder constraints.
Despite cost inflation running above tariff
increases, the underlying EBITDA margin
is expected to remain broadly stable through
increased efficiencies.
-- Mediclinic Southern Africa and Hirslanden
business days will be impacted by two Easter
holiday periods in the current year.
-- Mediclinic Middle East: The Dubai operating
performance is expected to remain stable
despite the competitive landscape. A gradual
improvement is expected in the Abu Dhabi
business over the next couple of years.
As a result, the Group expects only a marginal
improvement in Middle East revenues for
the full year and a gradual improvement
in underlying EBITDA margins over time,
including the impact associated with the
opening of new facilities. First half FY18
Middle East performance versus the prior
year comparator is expected to be lower
largely due to the higher patient volumes
and revenues in Abu Dhabi prior to the
regulatory changes, asset sales and business
and operational alignment initiatives during
FY17.
-- The Group's budgeted capital expenditure
is GBP281m in constant currency. This comprises
of GBP118m in Hirslanden, GBP71m in Mediclinic
Southern Africa and GBP92m in Mediclinic
Middle East.
FINANCIAL REVIEW
Underlying non-IFRS financial measures
The Group uses underlying income statement reporting as non-IFRS
measures in evaluating performance and as a method to provide
shareholders with clear and consistent reporting. The underlying
measures are intended to remove volatility associated with certain
types of one-off income and charges from reported earnings.
Historically EBITDA and underlying EBITDA were disclosed as
supplemental non-IFRS financial performance measures because they
are regarded as useful metrics to analyse the performance of the
business from period to period. Measures like underlying EBITDA are
used by analysts and investors in assessing performance.
The rationale for using non-IFRS measures:
-- it tracks the underlying operational performance
of the Group and its operating segments
by separating out one-off and exceptional
items;
-- non-IFRS measures are used by management
for budgeting, planning and monthly financial
reporting; and
-- non-IFRS measures are used by management
in presentations and discussions with investment
analysts.
The Group's policy is to adjust, inter alia, the following types
of income and charges from the reported IFRS measures to present
underlying results:
-- restructuring costs;
-- profit/loss on sale of significant assets;
-- past service cost charges / credits in
relation to pension fund conversion rate
changes;
-- significant prior year tax and deferred
tax adjustments;
-- accelerated IFRS 2 charges;
-- accelerated amortisation charges;
-- mark-to-market fair value gains / losses,
relating to ineffective interest rate swaps;
-- significant impairment charges;
-- significant insurance proceeds; and
-- significant transaction costs incurred
during acquisitions.
EBITDA is defined as operating profit before depreciation and
amortisation, excluding other gains and losses.
Non-IFRS financial measures should not be considered in
isolation from, or as a substitute for, financial information
presented in compliance with IFRS. The underlying measures used by
the Group are not necessarily comparable with those used by other
entities.
The Group has consistently applied this definition of underlying
measures as it has reported on its financial performance in the
past as the directors believe this additional information is
important to allow shareholders to better understand the Group's
trading performance for the reporting period. It is the Group's
intention to continue to consistently apply this definition in the
future.
Earnings reconciliations
Total Switzerland Southern Middle United Corporate
Africa East Kingdom
2017 STATUTORY GBPm GBPm GBPm GBPm GBPm GBPm
RESULTS
-------- ------------ --------- ------- --------- ----------
2
Revenue 749 1 321 780 648 - -
Operating profit 362 201 140 28 - (7)
Profit attributable
to equity holders* 229 141 67 22 12 (13)
RECONCILIATIONS
Operating profit 362 201 140 28 - (7)
Add back:
- Other gains
and losses 2 - - (1) - 3
- Depreciation
and amortisation 145 76 25 44 - -
-------- ------------ --------- ------- --------- ----------
EBITDA 509 277 165 71 - (4)
One-off and
exceptional
items:
Past service
cost credit (13) (13) - - - -
Restructuring
costs 5 - - 5 - -
Underlying EBITDA 501 264 165 76 - (4)
-------- ------------ --------- ------- --------- ----------
Profit attributable
to equity holders* 229 141 67 22 12 (13)
One-off and
exceptional
items:
Past service
cost credit (13) (13) - - - -
Restructuring
costs 5 - - 5 - -
Fair value gains
on ineffective
cash flow hedges (13) (13) - - - -
Other gains
and losses (1) - - (1) - -
Accelerated
amortisation 7 - - 7 - -
Tax on one-off
and exceptional
items 6 6 - - - -
-------- ------------ --------- ------- --------- ----------
Underlying earnings 220 121 67 33 12 (13)
-------- ------------ --------- ------- --------- ----------
Weighted average
number of shares
(millions) 736.9
Underlying earnings
per share (pence) 29.8
*Profit attributable to equity holders in Switzerland is shown
after the elimination of intercompany loan interest of GBP16m.
Total Switzerland Southern Africa Middle East United Kingdom Corporate
2016 STATUTORY GBPm GBPm GBPm GBPm GBPm GBPm
RESULTS
-------- ---------------- ---------------- ------------ --------------- ----------
Revenue 2 107 1 130 649 328 - -
Operating profit 288 165 109 58 - (44)
Profit attributable
to equity holders* 177 113 53 55 6 (50)
RECONCILIATIONS
Revenue 2 107 1 130 649 328 - -
Pre-acquisition
Swiss tariff provision
release (7) (7) - - - -
-------- ---------------- ---------------- ------------ --------------- ----------
Underlying revenue 2 100 1 123 649 328 - -
-------- ---------------- ---------------- ------------ --------------- ----------
Operating profit 288 165 109 58 - (44)
Add back:
- Other gains and
losses 1 - - - - 1
- Depreciation
and amortisation 93 63 20 10 - -
-------- ---------------- ---------------- ------------ --------------- ----------
EBITDA 382 228 129 68 - (43)
One-off and exceptional
items:
Transaction cost
(Al Noor acquisition) 41 - - - - 41
Accelerated share-based
payment charges 10 - 10 - - -
Pre-acquisition
Swiss tariff provision
release (7) (7) - - - -
Restructuring costs 2 - - 2 - -
Underlying EBITDA 428 221 139 70 - (2)
-------- ---------------- ---------------- ------------ --------------- ----------
Profit attributable
to equity holders* 177 113 53 55 6 (50)
One-off and exceptional
items:
Transaction cost
(Al Noor acquisition) 41 - - - - 41
Accelerated share-based
payment charges 10 - 10 - - -
Pre-acquisition
Swiss tariff provision
release (7) (7) - - - -
Restructuring costs 2 - - 2 - -
Fair value gains
on ineffective
cash flow hedges (8) (8) - - - -
Other gains and
losses 1 - - - - 1
Tax on one-off
and exceptional
items 3 3 - - - -
-------- ---------------- ---------------- ------------ --------------- ----------
Underlying earnings 219 101 63 57 6 (8)
-------- ---------------- ---------------- ------------ --------------- ----------
Weighted average
number of shares
(millions) 598.4
Underlying earnings
per share (pence) 36.7
*Profit attributable to equity holders in Switzerland is shown
after the elimination of intercompany loan interest of GBP17m.
Group financial performance
Group revenue increased by 30% to GBP2 749m (2016: GBP2 107m)
for the reporting period.
Underlying operating profit before interest, tax, depreciation
and amortisation ("underlying EBITDA") was 17% higher at GBP501m
(2016: GBP428m), underlying margins declined from 20.4% to 18.2%,
and basic underlying earnings per share were 19% lower at 29.8
pence (2016: 36.7 pence).
During the reporting period, the following exceptional and
one-off items were adjusted for in determining underlying
earnings:
-- GBP13m (GBP10m after tax) mark-to-market
fair value gain, relating to the ineffective
Swiss interest rate swaps. The Group uses
floating-to-fixed interest rate swaps on
certain loan agreements to hedge against
interest movements which have the economic
effect of converting floating rate borrowings
to fixed rate borrowings. The Group applies
hedge accounting and therefore fair value
adjustments are booked to the consolidated
statement of comprehensive income.
With the removal of the Swiss franc/Euro
peg during January 2015 and the advent
of negative interest rates in Switzerland,
the Swiss interest rate hedges became ineffective
once Libor moved below zero as bank funding
at Libor plus relevant margins is subject
to a zero rate Libor floor. Effective from
1 October 2014, the mark-to-market movements
are charged to the income statement. As
these are non-cash flow items and to provide
balanced operational reporting, the Group
excluded the charge in the measurement
of underlying performance in the 2015 financial
year and consistently excludes the gain
arising this year. The swaps expire in
2017 and 2018.
-- A past-service cost credit of GBP13m (GBP10m
after tax) arising in the main Hirslanden
pension fund. This relates to a change
in the pension fund conversion rate advised
by an independent professional. The underlying
income statement has been adjusted as the
credit is not related to the current year
underlying performance of the Swiss hospital
operations.
-- Accelerated amortisation of GBP7m relating
to the Al Noor trade name.
-- Restructuring costs of GBP5m relating to
the integration of the Al Noor operations.
Consistent with last year's treatment,
the underlying income statement has been
adjusted for these costs following the
combination in 2016. Currently, no further
restructuring costs associated with this
transaction are expected to be adjusted
beyond 31 March 2017.
-- GBP1m gain on the mark-to-market of a put
option.
Foreign exchange rates
Although the Group reports its results in British pound, the
operating segments profits are generated in Swiss franc, UAE dirham
and the South African rand. Consequently, movement in exchange
rates affected the reported earnings and reported balances in the
statement of financial position.
Foreign exchange rate sensitivity:
-- The impact of a 10% change in the GBP/CHF
exchange rate for a sustained period of
one year is that profit for the year would
increase/decrease by GBP14m (2016: increase/decrease
by GBP11m) due to exposure to the GBP/CHF
exchange rate.
-- The impact of a 10% change in the GBP/ZAR
exchange rate for a sustained period of
one year is that profit for the year would
increase/decrease by GBP8m (2016: increase/decrease
by GBP7m) due to exposure to the GBP/ZAR
exchange rate.
-- The impact of a 10% change in the GBP/AED
exchange rate for a sustained period of
one year is that profit for the year would
increase/decrease by GBP2m (2016: increase/decrease
by GBP6m) due to exposure to the GBP/AED
exchange rate.
During the period under review, the average and closing exchange
rates were the following:
2017 Variance 2016
%
Average rates:
GBP/CHF 1.29 (12%) 1.47
GBP/AED 4.80 (13%) 5.54
GBP/ZAR 18.41 (11%) 20.73
Period end rates:
GBP/CHF 1.25 (9%) 1.38
GBP/AED 4.59 (13%) 5.28
GBP/ZAR 16.74 (21%) 21.21
Cash flow
The Group continued to deliver strong cash flow converting 101%
(2016: 96%) of underlying EBITDA into cash generated from
operations. Cash and cash equivalents increased from GBP305m to
GBP361m.
Interest-bearing borrowings
Interest-bearing borrowings increased from GBP1 841m at 31 March
2016 to GBP2 030m at 31 March 2017. This increase is mainly as a
result of the change in the closing exchange rates, offset by a
loan amortisation payment. During the reporting period, the bridge
facility was repaid using additional financing facilities in South
Africa and the Middle East.
2017 2016
GBPm GBPm
Interest-bearing 2 030 1 841
Less: cash and
cash equivalents (361) (305)
------ ------
Net debt 1 669 1 536
------ ------
Total equity 4 164 3 570
Debt-to-equity
capital ratio 0.4 0.4
Assets
Property, equipment and vehicles increased from GBP3 199m at 31
March 2016 to GBP3 703m at 31 March 2017. This increase is mainly
as a result of additions as well as the change in closing exchange
rates.
Intangible assets increased from GBP1 941m at 31 March 2016 to
GBP2 156m mainly because of the change in closing exchange
rates.
Income tax
The Group's effective tax rate decreased from 22.4% in the prior
year to 20.8% for period under review predominantly due to the
following:
-- The tax rate decreased by 4.2% in respect
of prior year one-off non-deductible expenses
which were not incurred in the period under
review. This was related to Al Noor transaction
costs as well as an accelerated IFRS2 charge;
and
-- The tax rate increased by 3.0% due to a
reduced contribution by Middle East to
earnings.
Tax strategy
The Group is committed to conduct its tax affairs consistent
with the following objectives:
-- comply with relevant laws, rules, regulations,
and reporting and disclosure requirements
in whichever jurisdiction it operate; and
-- maintain mutual trust and respect in dealings
with all tax authorities in the jurisdictions
the Group do business.
Whilst the Group aims to maximise the tax efficiency of its
business transactions, it does not use structures in its tax
planning that are contrary to the intentions of the relevant
legislature. The Group interprets relevant tax laws in a reasonable
way and ensures that transactions are structured in a way that is
consistent with a relationship of co-operative compliance with tax
authorities. It also actively considers the implications of any
planning for the Group's wider corporate reputation.
In order to meet these objectives, various procedures are
implemented. The Audit and Risk Committee has reviewed the Group's
tax strategy and related corporate tax matters.
DIVID policy and PROPOSED dividend
The Group's dividend policy is to target a pay-out ratio of
between 25% and 30% of underlying earnings. The Board may revise
the policy at its discretion.
The Board proposes a final dividend of 4.70 pence per ordinary
share for the year ended 31 March 2017 for approval by the
Company's shareholders at the annual general meeting on Tuesday, 25
July 2017. Together with the interim dividend of 3.20 pence per
ordinary share for the six months ended 30 September 2016 (paid on
12 December 2016), the total final proposed dividend reflects a 27%
distribution of underlying Group earnings attributable to ordinary
shareholders.
Shareholders on the South African register will be paid the ZAR
cash equivalent of 80.60500 cents (64.48400 cents net of dividend
withholding tax) per share. A dividend withholding tax of 20% will
be applicable to all shareholders on the South African register who
are not exempt therefrom. The ZAR cash equivalent has been
calculated using the following exchange rate: GBP1: ZAR17.15, being
the 5-day average ZAR/GBP exchange rate on Friday, 19 May 2017 at
3:00pm GMT Bloomberg.
The final dividend will be paid on Monday, 31 July 2017 to all
ordinary shareholders who are on the register of members at the
close of business on the record date of Friday, 23 June 2017.
The salient dates for the dividend will be as follows:
Dividend announcement date Wednesday, 24
May 2017
Last date to trade cum dividend Tuesday, 20 June
(SA register) 2017
First date of trading ex-dividend Wednesday, 21
(SA register) June 2017
First date of trading ex-dividend Thursday, 22
(UK register) June 2017
Record date Friday, 23 June
2017
Shareholder approval at AGM Tuesday, 25 July
2017
Payment date Monday, 31 July
2017
Share certificates may not be dematerialised or rematerialised
within Strate from Wednesday, 21 June 2017 to Friday, 23 June 2017,
both dates inclusive. No transfers between the UK and SA registers
may take place from Wednesday, 24 May 2017 to Friday, 23 June 2017,
both days inclusive.
Tax treatment for shareholders on the South African register
South African tax resident shareholders on the South African
register:
In terms of the Company's Dividend Access Trust structure, the
following South African tax resident shareholders on the South
African register will receive a component of the dividend from the
Dividend Access Trust and therefore regarded as a local South
African dividend, with the remaining component from the Company and
therefore regarded as a foreign non-South African dividend. For
purposes of South African dividend withholding tax, the entire
dividend of 80.60500 cents per share is taxable at a rate of 20%,
unless an applicable exemption applies:
1. in the case of shares held in certificated
form, who are registered on the South
African register with an address in South
Africa (other than PLC Nominees Proprietary
Limited (or any successor entity through
which shares held in dematerialised form
are held)); and
2. in the case of shares held in dematerialised
form, in respect of whom the South African
transfer secretaries of the Company have
determined, in good faith and by reference
to the information provided to them by
the eligible shareholders and/or their
brokers and/or central securities depository
participants, that such eligible shareholders
are either (i) tax resident in South
Africa or (ii) have an address in South
Africa and have not expressly indicated
that they are not tax resident in South
Africa as at the dividend record date.
The component of the dividend payable by the Dividend Access
Trust and by the Company will be announced on the JSE's Stock
Exchange News Service and on the LSE's Regulatory News Service as
soon as possible after the record date, 23 June 2017, of the
dividend.
Non-South African tax resident shareholders on the South African
register:
Non-South African tax resident shareholders on the South African
register will be paid the dividend by the Company in the usual way
and not through the Dividend Access Trust. The entire dividend of
80.60500 cents per share payable to such shareholders will
therefore be regarded as a foreign dividend and exempt from South
African dividend withholding tax, provided that the relevant
exemption forms have been completed and submitted as
prescribed.
BOARD CHANGES
The following Board changes occurred during the reporting
period, as announced on 11 May 2016 and 22 February 2017
respectively:
-- Jurgens Myburgh was appointed as an executive
director and Chief Financial Officer of
the Company on 1 August 2016, following
the resignation of Craig Tingle as the
Chief Financial Officer on 15 June 2016.
-- Desmond Smith, being an independent non-executive
director of the Company, was appointed
as the Senior Independent Director in the
place of Ian Tyler who resigned as a director
of the Company on 21 February 2017.
DIRECTORS' RESPONSIBILITIES STATEMENT
Each of the Directors confirms that, to the best of their
knowledge:
-- the preliminary financial information,
which has been prepared in accordance with
International Financial Reporting Standards
as adopted by the European Union ('IFRS'),
give a true and fair view of the assets,
liabilities, financial position and profit
or loss of the Group; and
-- the preliminary announcement includes a
fair summary of the development and performance
of the business and the position of the
Group.
After making enquiries, the Directors considered it appropriate
to adopt the going concern basis in preparing the financial
statements.
The names and functions of the Company's directors are listed on
the Company's website.
By order of the Board.
Danie Meintjes Jurgens Myburgh
Chief Executive Chief Financial
Officer Officer
23 May 2017
Cautionary statement
This announcement contains certain forward-looking statements
relating to the business of the Company and its subsidiaries
(collectively, the "Group"), including with respect to the
progress, timing and completion of the Group's development, the
Group's ability to treat, attract, and retain patients and
customers, its ability to engage consultants and general
practitioners and to operate its business and increase referrals,
the integration of prior acquisitions, the Group's estimates for
future performance and its estimates regarding anticipated
operating results, future revenue, capital requirements,
shareholder structure and financing. In addition, even if the
Group's actual results or development are consistent with the
forward-looking statements contained in this preliminary
announcement, those results or developments may not be indicative
of the Group's results or developments in the future. In some
cases, you can identify forward-looking statements by words such as
"could," "should," "may," "expects," "aims," "targets,"
"anticipates," "believes," "intends," "estimates," or similar
words. These forward-looking statements are based largely on the
Group's current expectations as of the date of this preliminary
announcement and are subject to a number of known and unknown risks
and uncertainties and other factors that may cause actual results,
performance or achievements to be materially different from any
future results, performance or achievement expressed or implied by
these forward-looking statements. In particular, the Group's
expectations could be affected by, among other things,
uncertainties involved in the integration of acquisitions or new
developments, changes in legislation or the regulatory regime
governing healthcare in Switzerland, South Africa, Namibia and the
UAE and poor performance by healthcare practitioners who practice
at our facilities, unexpected regulatory actions or suspensions,
competition in general, the impact of global economic changes, and
the Group's ability to obtain or maintain accreditation or approval
for its facilities or service lines. In light of these risks and
uncertainties, there can be no assurance that the forward-looking
statements made in this preliminary announcement will in fact be
realised and no representation or warranty is given as to the
completeness or accuracy of the forward-looking statements
contained in this preliminary announcement.
The Group is providing the information in this announcement as
of this date, and we disclaim any intention or obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 March 2017
2017 2016
Notes GBPm GBPm
----------------------------------- ----- ------- -------
ASSETS
Non-current assets 6 353 5 618
------- -------
Property, equipment and vehicles 3 703 3 199
Intangible assets 2 156 1 941
Equity accounted investments 4 465 455
Other investments and loans 8 6
Derivative financial instruments - 1
Deferred income tax assets 21 16
------- -------
Current assets 1 069 931
------- -------
Inventories 90 75
Trade and other receivables 591 547
Other investments and loans 16 -
Current income tax assets 2 2
Derivative financial instruments - 2
Cash and cash equivalents 361 305
Assets classified as held for
sale 6 9 -
------- -------
Total assets 7 422 6 549
------- -------
EQUITY
Share capital 74 74
Share premium reserve 690 690
Treasury shares (2) (2)
Retained earnings 5 525 5 320
Other reserves (2 201) (2 573)
------- -------
Attributable to equity holders
of the Company 4 086 3 509
Non-controlling interests 78 61
------- -------
Total equity 4 164 3 570
------- -------
LIABILITIES
Non-current liabilities 2 668 2 192
------- -------
Borrowings 5 1 961 1 524
Deferred income tax liabilities 527 446
Retirement benefit obligations 154 179
Provisions 23 24
Derivative financial instruments 2 19
Cash-settled share-based payment
liability 1 -
------- -------
Current liabilities 590 787
------- -------
Trade and other payables 472 431
Borrowings 5 69 317
Provisions 22 19
Retirement benefit obligations 10 9
Derivative financial instruments 7 1
Current income tax liabilities 8 10
Liabilities classified as held
for sale 6 2 -
------- -------
Total liabilities 3 258 2 979
------- -------
Total equity and liabilities 7 422 6 549
------- -------
CONDENSED CONSOLIDATED INCOME STATEMENT
for the year ended 31 March 2017
2017 2016
Notes GBPm GBPm
------------------------------------ ----- ------- -------
Revenue 2 749 2 107
Cost of sales (1 696) (1 264)
Administration and other operating
expenses (689) (554)
Other gains and losses (2) (1)
Operating profit 362 288
Finance income 7 9
Finance cost 7 (74) (58)
Share of net profit of equity
accounted investments 12 6
------- -------
Profit before tax 307 245
Income tax expense 8 (64) (55)
Profit for the period 243 190
------- -------
Attributable to:
Equity holders of the Company 229 177
Non-controlling interests 14 13
------- -------
243 190
------- -------
Earnings per ordinary share
attributable to the equity holders
of the Company - pence
Basic 9 31.0 29.6
Diluted 9 31.0 29.5
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE
INCOME
for the year ended 31 March 2017
2017 2016
GBPm GBPm
-------------------------------------- ------ -----
Profit for the year 243 190
Other comprehensive income
Items that may be reclassified to the income
statement
Currency translation differences 388 92
Fair value adjustment - cash
flow hedges - 2
------ -----
388 94
Items that may not be reclassified to the income
statement
Remeasurements of retirement
benefit obligations 34 (56)
Other comprehensive income,
net of tax 422 38
------ -----
Total comprehensive income for
the year 665 228
------ -----
Attributable to:
Equity holders of the Company 635 224
Non-controlling interests 30 4
------ -----
665 228
------ -----
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2017
Foreign
Share currency
Capital premium Reverse Share-based trans- Share- Non-
Share redemp-tion reserve acqui-sition Treasury payment lation Hedging Retained holders' control-ling Total
capital reserve reserve shares reserve reserve reserve earnings equity interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------- ------- ------------ -------- ------------- --------- ----------- -------- ------- -------- -------- ------------- ------
Balance at 1 April
2015 994 - - - (22) 14 306 2 485 1 779 61 1 840
------------------- ------- ------------ -------- ------------- --------- ----------- -------- ------- -------- -------- ------------- ------
Profit for the year - - - - - - - - 177 177 13 190
Other comprehensive
income/(loss) for
the year - - - - - - 101 2 (56) 47 (9) 38
------- ------------ -------- ------------- --------- ----------- -------- ------- -------- -------- ------------- ------
Total comprehensive
income for the
year - - - - - - 101 2 121 224 4 228
------- ------------ -------- ------------- --------- ----------- -------- ------- -------- -------- ------------- ------
Shares issued
(August 2015) 479 - - - - - - - - 479 - 479
Share issue costs
(August 2015) (4) - - - - - - - - (4) - (4)
Reverse acquisition (1 402) 6 4 862 (3 014) - - - - (6) 446 - 446
Share subscription
(February 2016) 7 - 593 - - - - - - 600 - 600
Reduction of share
premium - - (4 765) - - - - - 4 765 - - -
Utilised by Mpilo
Trusts - - - - 21 - - - - 21 - 21
Treasury shares
purchased
(Forfeitable Share
Plan) - - - - (1) - - - - (1) - (1)
Share-based payment
expense - - - - - 10 - - - 10 - 10
Transactions with
non-controlling
shareholders - - - - - - - - 3 3 3 6
Dividends paid - - - - - - - - (48) (48) (7) (55)
------------------- ------- ------------ -------- ------------- --------- ----------- -------- ------- -------- -------- ------------- ------
Balance at 31 March
2016 74 6 690 (3 014) (2) 24 407 4 5 320 3 509 61 3 570
------------------- ------- ------------ -------- ------------- --------- ----------- -------- ------- -------- -------- ------------- ------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(continued)
for the year ended 31 March 2017
Foreign
Share currency
Capital premium Reverse Share-based trans- Share- Non-
Share redemp-tion reserve acqui-sition Treasury payment lation Hedging Retained holders' control-ling Total
capital reserve reserve shares reserve reserve reserve earnings equity interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- ------- ------------ -------- ------------- --------- ----------- -------- ------- -------- -------- ------------- ------
Balance at 1
April 2016 74 6 690 (3 014) (2) 24 407 4 5 320 3 509 61 3 570
---------------- ------- ------------ -------- ------------- --------- ----------- -------- ------- -------- -------- ------------- ------
Profit for the
year - - - - - - - - 229 229 14 243
Other
comprehensive
income for the
year - - - - - - 372 - 34 406 16 422
------- ------------ -------- ------------- --------- ----------- -------- ------- -------- -------- ------------- ------
Total
comprehensive
income for the
year - - - - - - 372 - 263 635 30 665
------- ------------ -------- ------------- --------- ----------- -------- ------- -------- -------- ------------- ------
Transactions
with
non-controlling
shareholders - - - - - - - - 4 4 (4) -
Dividends paid - - - - - - - - (62) (62) (9) (71)
---------------- ------- ------------ -------- ------------- --------- ----------- -------- ------- -------- -------- ------------- ------
Balance at 31
March 2017 74 6 690 (3 014) (2) 24 779 4 5 525 4 086 78 4 164
---------------- ------- ------------ -------- ------------- --------- ----------- -------- ------- -------- -------- ------------- ------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 March 2017
2017 2016
GBPm GBPm
Notes Inflow/(Outflow) Inflow/(Outflow)
------------------------------------------ ----- ----------------- -----------------
Cash flow from operating activities
Cash received from customers 2 735 2 078
Cash paid to suppliers and
employees (2 226) (1 667)
----------------- -----------------
Cash generated from operations 509 411
Interest received 7 9
Interest paid (77) (55)
Tax paid (45) (45)
----------------- -----------------
Net cash generated from operating
activities 394 320
----------------- -----------------
Cash flow from investment
activities (218) (1 549)
----------------- -----------------
Investment to maintain operations (109) (72)
Investment to expand operations (140) (114)
Business combinations - Al
Noor acquisition - (17)
Al Noor Hospitals Group plc
shares repurchased - (530)
Special dividend to existing
Al Noor Hospitals Group plc
shareholders - (383)
Proceeds on disposal of property,
equipment and vehicles - 1
Disposal of subsidiaries 10 44 -
Acquisition of investment
in associate (1) (446)
Dividends received from equity
accounted investment 4 2
Proceeds from money market
fund - 10
Acquisition of other investment
and loans (16) -
Net cash generated / (utilised)
before financing activities 176 (1 229)
Cash flow from financing activities (169) 1 242
----------------- -----------------
Proceeds of shares issued - 479
Share issue costs - (4)
Share subscription - 600
Distributions to non-controlling
interests (9) (7)
Distributions to shareholders (62) (48)
Proceeds from borrowings 247 302
Repayment of borrowings (327) (85)
Refinancing transaction costs (3) (6)
Settlement of Al Noor Hospitals
Group plc share options scheme - (2)
Shares purchased (Forfeitable
Share Plan) - (1)
Proceeds from disposal of
treasury shares - 12
Acquisition of non-controlling
interest (15) (2)
Proceeds on disposal of non-controlling
interest - 4
----------------- -----------------
Net increase in cash and cash
equivalents 7 13
Opening balance of cash and
cash equivalents 305 265
Exchange rate fluctuations
on foreign cash 49 27
----------------- -----------------
Closing balance of cash and
cash equivalents 361 305
----------------- -----------------
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Mediclinic International plc is a private hospital
group with operating platforms in Southern Africa
(South Africa and Namibia), Switzerland and
the United Arab Emirates with an equity investment
in the UK. Its core purpose is to enhance the
quality of life of patients by providing cost-effective
acute care specialised hospital services.
The Company is a public limited company, with
a primary listing on the London Stock Exchange
and secondary listings on the Johannesburg Stock
Exchange and the Namibian Stock Exchange and
incorporated and domiciled in the UK (registered
number: 08338604). The address of its registered
office is 40 Dukes Place, London, EC3A 7NH,
United Kingdom.
The condensed consolidated financial statements
for the year ended 31 March 2017 was approved
by the Board on 23 May 2017.
2. BASIS OF PREPARATION
The condensed consolidated financial statements
included in the results announcement for the
year ended 31 March 2017 have been extracted
from the full Annual Report which was approved
by the Board of Directors on 23 May 2017. The
condensed consolidated financial statements
are prepared in accordance with International
Financial Reporting Standards ('IFRS') as adopted
by the European Union ('EU'), the Companies
Act 2006 and Article 4 of the EU IAS Regulations.
The auditor's report on those consolidated financial
statements was unqualified, did not draw attention
to any matters by way of emphasis without qualifying
their report, and did not contain statements
under section 498(2) or 498(3) of the Companies
Act 2006. This results announcement does not
constitute statutory accounts of the Group within
the meaning of sections 434(3) and 435(3) of
the Companies Act 2006. The Annual Report for
the year ended 31 March 2017 will be delivered
to the Registrar of Companies following the
Company's annual general meeting to be held
on 25 July 2017.
The Group has prepared the condensed consolidated
financial statements on a going concern basis.
The condensed consolidated financial information
has been prepared in accordance with the Disclosure
Guidance and Transparency Rules of the Financial
Conduct Authority and with IAS 34 Interim Financial
Reporting, as adopted by the EU. They do not
include all the information required for full
annual financial statements and should be read
in conjunction with information contained in
the Group's Annual Report and Financial Statements
for the year ended 31 March 2017.
The condensed consolidated financial statements
included in this preliminary announcement do
not itself contain sufficient information to
comply with IFRS. The Company will publish full
financial statements that comply with IFRS in
June 2017.
This preliminary results announcement has been
prepared applying consistent accounting policies
to those applied by the Group in the comparative
period. The Group has prepared the consolidated
financial statements on a going concern basis.
Functional and presentation currency
The condensed consolidated financial statements
are presented in pound, rounded to the nearest
million. The functional currency of the majority
of the Group's entities, and the currencies
of the primary economic environments in which
they operate, is the South African rand, Swiss
franc and United Arab Emirates dirham. The United
Arab Emirates dirham is pegged against the United
States dollar at a rate of 3.6725 per US Dollar.
3. SEGMENTAL REPORT
The reportable operating segments are identified
as follows: Mediclinic Switzerland, Mediclinic
Southern Africa, Mediclinic Middle East and
additional reporting segments are shown for
the United Kingdom and Corporate.
--------------------------- ----------------------------------------------------------------------------
Southern Middle United
Year ended 31 March Switzerland Africa East Kingdom Corporate Total
2017 GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------- ------------------ ------------ --------- -------- --------- ---------
Revenue 1 321 780 648 - - 2 749
------------------ ------------ --------- -------- --------- ---------
EBITDA 277 165 71 - (4) 509
EBITDA before management
fee 279 170 74 - (14) 509
Management fees
included in EBITDA (2) (5) (3) - 10 -
------------------ ------------ --------- -------- --------- ---------
Other gains and
losses - - 1 - (3) (2)
Depreciation and
amortisation (76) (25) (44) - - (145)
------------------ ------------ --------- -------- --------- ---------
Operating profit 201 140 28 - (7) 362
Income from associate - - - 12 - 12
Finance income - 7 - - - 7
Finance cost (excluding
intersegment loan
interest) (28) (33) (7) - (6) (74)
------------------ ------------ --------- -------- --------- ---------
Total finance cost (44) (33) (7) - 10 (74)
Elimination of
intersegment loan
interest 16 - - - (16) -
------------------ ------------ --------- -------- --------- ---------
Taxation (32) (32) - - - (64)
------------------ ------------ --------- -------- --------- ---------
Segment result 141 82 21 12 (13) 243
------------------ ------------ --------- -------- --------- ---------
At 31 March 2017
Investments in
associates 2 - - 459 - 461
Investments in
joint venture - 4 - - - 4
Capital expenditure 128 70 51 - - 249
Total segment assets 4 258 676 1 987 459 42 7 422
Total segment liabilities
(excluding intersegment
loan) 2 235 650 372 - 1 3 258
------------------ ------------ --------- -------- --------- ---------
Total liabilities
from reportable
segment 3 140 650 372 - 1 4 163
Elimination of
intersegment loan (905) - - - - (905)
------------------ ------------ --------- -------- --------- ---------
3. SEGMENTAL REPORT (continued)
Southern Middle United
Year ended 31 March Switzerland Africa East Kingdom Corporate Total
2016 GBPm GBPm GBPm GBPm GBPm GBPm
------------- --------- ------ -------- --------- -----
Revenue 1 130 649 328 - - 2 107
------------- --------- ------ -------- --------- -----
EBITDA 229 129 68 - (44) 382
EBITDA before management
fee 230 133 70 - (51) 382
Management fees
included in EBITDA (1) (4) (2) - 7 -
------------- --------- ------ -------- --------- -----
Other gains and
losses - - - - (1) (1)
Depreciation and
amortisation (63) (20) (10) - - (93)
------------- --------- ------ -------- --------- -----
Operating profit 166 109 58 - (45) 288
Income from associate - - - 6 - 6
Finance income 1 8 - - - 9
Finance cost (excluding
intersegment loan
interest) (29) (21) (2) - (6) (58)
------------- --------- ------ -------- --------- -----
Total finance cost (46) (21) (2) - 11 (58)
Elimination of
intersegment loan
interest 17 - - - (17) -
------------- --------- ------ -------- --------- -----
Taxation (24) (31) - - - (55)
------------- --------- ------ -------- --------- -----
Segment result 114 65 56 6 (51) 190
------------- --------- ------ -------- --------- -----
At 31 March 2016
Investments in
associates 1 - - 451 - 452
Investments in
joint venture - 3 - - - 3
Capital expenditure 98 52 36 - - 186
Total segment assets 3 809 485 1 800 451 4 6 549
Total segment liabilities
(excluding intersegment
loan) 2 094 370 243 - 272 2 979
------------- --------- ------ -------- --------- -----
Total liabilities
from reportable
segment 2 940 370 243 - 272 3 825
Elimination of
intersegment loan (846) - - - - (846)
------------- --------- ------ -------- --------- -----
4. EQUITY ACCOUNTED INVESTMENTS
2017 2016
GBPm GBPm
------------------------ -----------
Investment in associates 461 452
Investment in joint venture 4 3
------------------------ -----------
465 455
------------------------ -----------
Investment in associates:
Listed investments 459 451
Unlisted investments 2 1
------------------------ -----------
461 452
------------------------ -----------
Reconciliation of carrying value at the beginning
and end of the period
Opening balance 452 1
Total cost of equity investment - 447
Additional investment in unlisted
associate 1 -
Share of net profit of associated
companies 12 6
Dividends received from associated
companies (4) (2)
461 452
------------------------ -----------
Set out below are details of the associate which
is material to the Group:
Name of entity Country of incorporation % ownership
and place of business
Spire Healthcare
Group plc United Kingdom 29.9%
Spire Healthcare Group plc is listed on the
London Stock Exchange. It does not issue publicly
available quarterly financial information and
has a December year-end. The associate was acquired
on 24 August 2015. The investment in associate
was equity accounted for the 12 months to 31
December 2016 (2016: 4 months to 31 December
2015). No significant events occurred since
1 January 2017 to the reporting date.
During the current year the notional purchase
price allocation was finalised and non-contractual
relationships with consultants (NCRC) was identified
as the only significant intangible asset. The
fair value of the NCRC was determined as GBP225m
and the remaining useful life was assessed as
22 years. The Group's 29.9% portion therefore
amounts to GBP68m. The NCRC intangible asset
will be amortised over its useful life and the
carrying value is included within the purchase
adjustment figure. The amortisation charge for
the current period is GBP4m (2016: GBPnil).
5. Borrowings
2017 2016
GBPm GBPm
----- -----
Bank loans 1 642 1 581
Preference shares 199 90
Listed bonds 189 170
2 030 1 841
----- -----
Non-current borrowings 1 961 1 524
Current borrowings 69 317
----- -----
Total borrowings 2 030 1 841
----- -----
2017 2017 2016 2016
Non Current Non Current
current GBPm current GBPm
GBPm GBPm
------------ ------------------------- --------- --------- --------- ---------
Southern Africa operations (denominated in
South African Rand)
The loan bears
interest at the
3 month JIBAR
variable rate
plus a margin
of 1.51% (2016:
Secured 1.51%) compounded
bank quarterly, and
loan is repayable on
one 3 June 2019. 176 1 139 1
Secured The loan bears
bank interest at the
loan 3 month JIBAR
two* variable rate
plus a margin
of 1.69% and is
repayable on 3
June 2019. 72 - - -
The loan bears
interest at the
3 month JIBAR
variable rate
plus a margin
of 1.06% (2016:
1.06%) compounded
quarterly. GBP7m
was repaid on
1 September 2016
Secured and the remaining
bank amount will be
loan repaid on 9 October
three 2017. - 7 5 5
The loan bears
interest at the
3 month JIBAR
variable rate
plus a margin
of 1.51% (2016:
Secured 1.51%) compounded
bank quarterly, and
loan is repayable on
four 3 June 2019. 30 - 9 -
These loans bear
interest at variable
rates linked to
the prime overdraft
Secured rate and are repayable
bank in periods ranging
loan between one and
five twelve years. 4 1 4 1
Dividends are
payable monthly
at a rate of 69%
of prime interest
rate (10.5%) (2016:
10.5%). GBP6m
shares was redeemed
on 1 September
2016 and the balance
Preference will be redeemed
shares on 3 June 2019. 108 1 85 5
Preference Dividends are
shares* payable semi-annually
at a rate of 73%
of the prime interest
rate (10.5%) (2016:
10.5%). The amount
is repayable on
29 June 2020. 90 - - -
Middle East operations (denominated in UAE
dirham)
The loan bears
interest at variable
rates linked to
the 3M LIBOR and
a margin of 2.75%
(2016: 2%) with
respective 4-year
Secured and 5-year amortising
bank terms, expiring
loan in June 2020 and
one* May 2021. 154 19 50 3
Swiss operations (denominated in Swiss franc)
These loans bear
interest at variable
rates linked to
the 3M LIBOR plus
1.5% and 2.85%
(2016: 3M LIBOR
plus 1.5% and
2.85%) and is
repayable by 31
July 2020. The
non-current portion
Secured includes capitalised
bank financing costs
loan of GBP22m (2016:
one GBP26m). 1 138 40 1 062 36
The listed bonds
consist of CHF145m
1.625% and CHF90m
2% Swiss franc
bonds. The bonds
are repayable
on 25 February
Listed 2021 and 25 February
bonds 2025 respectively. 189 - 170 -
United Kingdom operations (denominated in
pound)
The loan bears
interest at variable
Secured rates linked to
bank LIBOR with a minimum
loan base rate of 1%
one* plus 3.75%. - - - 266
--------- --------- --------- ---------
1 961 69 1 524 317
--------- --------- --------- ---------
* During the period, the bridge facility of GBP266m in the
United Kingdom was repaid. In South Africa, the Group entered a new
long term bank loan of GBP71m (ZAR1.2 billion) and issued
redeemable preference shares of GBP90m (ZAR1.5 billion) which are
classified as a financial liability. In the Middle East, the Group
entered a new long term bank loan of GBP181m (AED831m). Other than
these transactions and foreign currency movements on translation of
local currency borrowings to pound, there is no significant change
in the Group's borrowings.
6. DISPOSAL GROUP HELD FOR SALE
Before the end of the financial
year, management decided to sell
the following clinics within the
Mediclinic Middle East segment:
Mediclinic Beach Road Clinic, Mediclinic
Corniche Medical Centre, Lookwow
Oneday Surgery and Pharmacy, Al
Noor Sanaiya Clinic and Pharmacy,
Al Noor ICAD Clinic and Pharmacy,
Al Noor International Medical Centre
(Sharjah), Al Noor Hamdan Street
Pharmacy, Al Madar Ajman Clinic
and Pharmacy and Al Madar Diagnostic
Centre-Al Ain. Accordingly, assets
and liabilities of these are disclosed
as held for sale, as the classification
requirements of IFRS5 have been
met at 31 March 2017.
Property, equipment and vehicles 8
Inventories 1
Assets 9
---
Trade and other payables (1)
Retirement benefit obligations (1)
---
Liabilities (2)
---
7. FINANCE COST
2017 2016
GBPm GBPm
----- -----
Interest expense 58 44
Interest rate swaps 11 11
Amortisation of capitalised financing
costs 7 5
Fair value gains on ineffective
cash flow hedges (13) (8)
Preference share dividend 12 6
Less: amounts included in the
cost of qualifying assets (1) -
74 58
----- -----
8. Income tax expense
Current tax
Current year 46 41
Previous year (3) 1
Deferred tax 21 13
------ --------
Taxation per income statement 64 55
------ --------
Composition
UK tax - -
Foreign tax 64 55
------ --------
64 55
------ --------
Reconciliation of rate of taxation:
UK statutory rate of taxation 20% 20%
Adjusted for:
Capital gains taxed at different
rates - 0.1%
Benefits of tax incentives (0.2)% (0.2%)
Share of net profit of equity
accounted investments (0.8)% (0.5%)
Non-deductible expenses* 1.8% 5.6%
Non-controlling interests' share
of profit before tax (0.3)% (0.3)%
Effect of different tax rates** 0.7% (3.9)%
Income tax rate changes - (0.2)%
Non-recognition of tax losses
in current year 0.9% 1.8%
Recognition of tax losses relating
to prior years*** (0.5)% (0.4)%
Prior year adjustment (0.8)% 0.4%
------ --------
Effective tax rate 20.8% 22.4%
------ --------
*The impact of the following non-deductible
expenses on the tax rate in the prior year was
an increase of 4.2% (GBP10m):
- Transaction costs in relation to the Al Noor
transaction were not deductible for tax purposes
as these costs were
capital in nature. The tax effect of this amounted
GBP8m which resulted in an increase in the effective
tax rate.
- Non-deductible accelerated IFRS 2 charges
increased the tax charge by GBP2m.
**The effect of different tax rates is mainly
because of profit earned from South Africa which
is subject to an income tax rate of 28%, reduced
by profit earned from the UAE which is not subject
to income tax. Compared to the comparative period,
the effect of different tax rates increased
mainly due the proportional higher contribution
by the Southern Africa operating segment and
lower proportional contribution from the UAE.
***A deferred tax asset of approximately GBP3m
was recognised in respect of previously unrecognised
assessed tax losses in South Africa due to improvements
in local profitability.
The income tax liability includes an amount
of approximately GBP3m (2016: GBP8m) relating
to unresolved tax matters. The range of possible
outcomes relating to this liability is not considered
to be material.
9. EARNINGS PER ORDINARY SHARE
----------------------
2017 2016
GBPm GBPm
--------- -----------
Earnings per ordinary share (pence)
Basic (pence) 31.0 29.6
Diluted (pence) 31.0 29.5
2017 2016
Number Number
--------- -----------
Weighted average number of ordinary
shares in issue for basic
earnings per share
Number of ordinary shares in issue 737 243 542 473
at the beginning of the year 810 328
Al Noor Hospitals Group plc shares 14 688
prior to reverse acquisition - 077
Al Noor Hospitals Group plc shares (8 000
repurchased - 842)
Weighted average number of ordinary
shares issued during the year 41 742
(August 2015) - 562
Weighted average number of ordinary
shares issued during the year 9 063
(February 2016) - 634
Adjustment for equity raising
- Rights Offer (August 2015) 5 239
(IAS 33 para 26) - 773
Weighted average number of treasury (6 764
shares (303 656) 447)
--------- ---------
BEE shareholder (31 238) (521 142)
(5 995
Mpilo Trusts (33 128) 653)
Forfeitable Share Plan (239 290) (247 652)
--------- ---------
736 940 598 442
154 085
--------- ---------
Weighted average number of ordinary
shares in issue for diluted earnings
per share
Weighted average number of ordinary 736 940 598 442
shares in issue 154 085
Weighted average number of treasury
shares not yet released from
treasury stock 303 656 768 793
--------- -----------
BEE shareholder 31 238 521 141
Mpilo Trusts 33 128 -
Forfeitable Share Plan 239 290 247 652
--------- -----------
737 243 599 210
810 878
--------- -----------
Headline earnings per ordinary share
The Group is required to calculate headline
earnings per share (HEPS) in accordance with
the JSE Limited (JSE) Listing Requirements,
determined by reference to the South African
Institute of Chartered Accountants' circular
2/2015 (Revised) 'Headline Earnings'. The table
below sets out a reconciliation of basic EPS
and HEPS in accordance with that circular. Disclosure
of HEPS is not a requirement of IFRS, but it
is a commonly used measure of earnings in South
Africa. The table below reconciles the profit
for the financial year attributable to equity
holders of the parent to headline earnings and
summarises the calculation of basic HEPS:
2017 2016
GBPm GBPm
---------- -----
Profit for the financial period
attributable to equity holders
of the parent 229 177
Adjustments* - -
Headline earnings 229 177
---------- -----
*Adjustments to headline earnings are less than
GBP1m.
Headline earnings per share (pence) 31.0 29.6
Diluted headline earnings per
share (pence) 31.0 29.5
10. CASH FLOW ON DISPOSAL OF SUBSIDIARY
The Group disposed of the following
companies that were part of the Middle
East segment: Rochester Wellness LLC,
Emirates American Company for Medical
Services LLC, Abu Dhabi Medical Services
LLC and National Medical Services LLC.
2017
GBPm
----------
Cash flow
on
disposal
----------
Analysis of assets and liabilities over which
control was lost:
Property, equipment and vehicles 10
Goodwill 33
Trade and other receivables 10
Cash and cash equivalents 3
Retirement benefit obligations (1)
Trade and other payables (4)
Net assets and liabilities 51
----------
Consideration received in cash 47
Consideration receivable 1
Other non-cash items 3
Total consideration 51
----------
Net gain / (loss) -
----------
Net cash inflow 44
11. FINANCIAL INSTRUMENTS
Financial instruments that are measured at fair
value in the statement of financial position,
are classified using a fair value hierarchy
that reflects the significance of the inputs
used in the valuation. The fair value hierarchy
has the following levels:
-- Level 1 - Quoted prices (unadjusted) in active
markets for identical assets and liabilities
-- Level 2 - Input (other than quoted prices
included within Level 1) that is observable
for the asset or liability, either directly
(as prices) or indirectly (derived from prices)
-- Level 3 - Input for the asset or liability
that is not based on observable market data
(unobservable input).
Derivative financial instruments comprise interest
rate swaps and are measured at the present value
of future cash flows estimated and discounted
based on the applicable yield curves derived
from quoted interest rates. Based on the degree
to which the fair values are observable, the
interest rate swaps are grouped as Level 2.
The fair value for available-for-sale assets
(part of other investments and loans) is based
on appropriate valuation methodologies being
discounted cash flow or actual net asset value
of the investment. These assets are grouped
as Level 2.
12. RELATED PARTIES
There are no significant changes to the related
party transactions other than those disclosed
in note 33 of the Group's annual financial statements
for the year ended 31 March 2017.
13. EVENTS AFTER THE REPORTING DATE
The directors are not aware of any matter or
circumstance arising since the end of the financial
year that would significantly affect the operations
of the Group or the results of its operations.
ABOUT MEDICLINIC INTERNATIONAL PLC
Mediclinic is an international private healthcare group with
operating platforms in Southern Africa (South Africa and Namibia),
Switzerland and the United Arab Emirates. Its core purpose is to
enhance the quality of life of patients by providing acute care,
specialist-orientated, multi-disciplinary healthcare services.
Mediclinic also holds a 29.9% interest in Spire Healthcare Group
plc, a LSE listed and UK-based private healthcare group.
Mediclinic comprises 74 hospitals and 37 clinics. Mediclinic
Southern Africa operates 49 hospitals and 2 day clinics throughout
South Africa and 3 hospitals in Namibia with more than 8 000
inpatient beds in total; Hirslanden operates 16 private acute care
facilities and 4 clinics in Switzerland with more than 1 600
inpatient beds; and Mediclinic Middle East operates 6 hospitals and
31 clinics with more than 700 inpatient beds in the United Arab
Emirates.
The platforms' contributions to Group revenue for the financial
year ended 31 March 2017 were 48% by Hirslanden, 28% by Mediclinic
Southern Africa and 24% by Mediclinic Middle East.
During February 2016, the combination of the Company (previously
named Al Noor Hospitals Group plc), with operations mainly in Abu
Dhabi in the United Arab Emirates, and Mediclinic International
Limited was completed. Mediclinic International Limited was a South
African based international private healthcare group founded in
1983 and listed on the JSE, the South African stock exchange, since
1986, with operations in South Africa, Namibia, Switzerland and the
United Arab Emirates (mainly in Dubai). The combination resulted in
the renaming of the enlarged group to Mediclinic International
plc.
Mediclinic has a primary listing on the Main Market of the LSE,
with secondary listings on the JSE in South Africa and the NSX in
Namibia.
PRESENTATION WEBCAST AND CONFERENCE CALL DETAILS
In conjunction with these results Mediclinic is conducting a
London investor and analyst presentation at The Lincoln Centre, 18
Lincoln's Inn Fields, London, WC2A 3ED.
09:00 BST /10:00 SAST - Webcast and conference call
To join the live video webcast, or view the replay, please use
the following link:
https://secure.emincote.com/client/mediclinic/mediclinic009/
To access the call please dial the appropriate number below
shortly before the start of the event and ask for the Mediclinic
International plc conference call. A replay facility will be
available on the website shortly after the presentation. The
telephone numbers are:
UK: 020 305 98125
SA: 031 819 7008
UAE toll-free: 800 035 702413
Other: +44 20 3059 8125
For further information, please contact:
Mediclinic International plc
James Arnold, Head of Investor Relations
+44 (0)20 3786 8180
ir@mediclinic.com
FTI Consulting
Deborah Scott/Brett Pollard
+44 (0)20 3727 1000
Registered address: 1st Floor, 40 Dukes Place, London, EC3A 7NH,
United Kingdom
Website: www.mediclinic.com
Corporate broker: Morgan Stanley & Co International plc
JSE sponsor (South Africa): Rand Merchant Bank (A division of
FirstRand Bank Limited)
NSX sponsor (Namibia): Simonis Storm Securities (Pty) Ltd
This information is provided by RNS
The company news service from the London Stock Exchange
END
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