| Wed 5 Nov 2008, 17:00 | | MDC - Medi-Clinic - Unaudited interim group results for the six months ended |
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MDC
MDC
MDC - Medi-Clinic - Unaudited interim group results for the six months ended
30 September 2008 and cash dividend declaration
Medi-Clinic Corporation Limited
Incorporated in the Republic of South Africa
Registration number: 1983/010725/06
Share code: MDC
ISIN code: ZAE000074142
("Medi-Clinic" or "the company")
UNAUDITED INTERIM GROUP RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2008
AND CASH DIVIDEND DECLARATION
SALIENT FEATURES
- The financial performance of the Hirslanden group in Switzerland
exceeded expectations
- Medi-Clinic Southern Africa maintained operating margins
- The City Hospital commissioned in Dubai
- Interim dividend per ordinary share increased by 12% to 21.6 cents
Consolidated abridged BALANCE SHEET
Unaudited Unaudited Audited
30/09/08 30/09/07 31/03/08
R`m R`m R`m
ASSETS
Non-current assets 35 090 4 005 37 251
Property, equipment and vehicles 29 265 3 391 30 972
Intangible assets 5 652 474 6 079
Investments - unlisted 31 6 34
Derivative financial instruments - - 43
Deferred income tax assets 142 134 123
Current assets 4 036 1 343 4 326
Inventories 452 190 448
Trade and other receivables 2 689 873 3 077
Cash and cash equivalents 895 280 801
Total assets 39 126 5 348 41 577
EQUITY AND LIABILITIES
Total equity 8 915 2 291 9 687
Share capital and reserves 8 093 1 593 8 880
Minority interest 822 698 807
Total liabilities 30 211 3 057 31 890
Long-term interest-bearing 21 847 928 23 266
borrowings
Retirement benefit obligations 200 146 177
Provisions 189 20 190
Derivative financial instruments 655 677 595
Deferred income tax liabilities 4 772 4 5 187
Short-term interest-bearing 280 248 131
borrowings
Short-term interest-free 2 268 1 034 2 344
borrowings
Total equity and liabilities 39 126 5 348 41 577
Number of ordinary shares (`000) 558 695 361 120 560 260
Weighted number of ordinary shares 559 408 360 038 421 437
(`000)
Diluted number of ordinary shares 591 944 395 014 455 748
(`000)
Net asset value per ordinary share - 1 449 441 1 585
cents
Directors` valuation of unlisted 31 6 34
investments
Consolidated abridged INCOME STATEMENT
Unaudited Change Unaudited Audited
6 months % 6 months Year to
to to 31/03/0
30/09/08 30/09/07 8
R`m R`m R`m
Revenue 7 496 132 3 228 9 579
Cost of sales (4 367) (1 748) (5 381)
Administration and other (1 575) (819) (2 138)
operating expenses
Operating profit before 1 554 135 661 2 060
depreciation (EBITDA)
Depreciation (300) (86) (341)
Profit on sale of equipment 1 - 2
Operating profit 1 255 118 575 1 721
Finance income 33 15 49
Finance cost (724) (53) (685)
Profit before taxation 564 537 1 085
Taxation (230) (157) (364)
Profit for the period 334 380 721
Attributable to:
Shareholders of the company 288 322 610
Minority interest 46 58 111
334 380 721
Earnings per ordinary share -
cents
- Basic 51.5 (42) 89.3 144.9
- Diluted 48.6 81.4 134.0
Headline earnings per ordinary
share - cents
- Basic 51.2 (43) 89.3 144.5
- Diluted 48.4 81.4 133.6
Earnings reconciliation:
Profit attributable to 288 322 610
shareholders
Profit on sale of equipment (1) - (2)
Headline earnings 287 (11) 322 608
Consolidated abridged STATEMENT OF RECOGNISED INCOME AND EXPENSE
Unaudited Unaudited Audited
6 months to 6 months to Year to
30/09/08 30/09/07 31/03/08
R`m R`m R`m
Currency translation differences (668) (43) 2 186
Fair value adjustment to cash flow (132) (661) (254)
hedges (net of tax)
Actuarial losses - - (21)
Net (loss)/income recognised (800) (704) 1 911
directly in equity
Profit for the period 334 380 721
Total recognised (loss)/income for (466) (324) 2 632
the period
Attributable to:
Equity holders of the Company (512) (382) 2 521
Minority interest 46 58 111
(466) (324) 2 632
Consolidated abridged CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months 6 months Year to
to to 31/03/08
30/09/08 30/09/07 R`m
R`m R`m
Cash flow from operating activities 906 620 738
Cash generated from operations 1 815 803 1 517
Net finance costs (665) (38) (419)
Taxation paid (244) (145) (360)
Cash flow from investment activities (687) (466) (16 898)
Cash flow from financing activities (167) (353) 16 461
Proceeds from issuance of - - 4 500
ordinary shares
Distributions to shareholders (224) (127) (189)
Distribution to minorities (38) (29) (41)
Movement in borrowings 142 (203) 12 219
Treasury shares purchased (55) - -
Share issue costs - - (28)
Other 8 6 -
Net movement in cash, cash 52 (199) 301
equivalents and bank overdrafts
Opening balance of cash, cash 787 357 357
equivalents and bank overdrafts
Exchange rate fluctuations on (30) (5) 129
foreign cash
Closing balance of cash, cash 809 153 787
equivalents and bank overdrafts
Cash and cash equivalents 895 280 801
Bank overdrafts (86) (127) (14)
809 153 787
Consolidated abridged SEGMENTAL REPORT
Unaudited Unaudited Audited
6 months 6 months to Year to
to 30/09/07 31/03/08
30/09/08 R`m R`m
R`m
Revenue
Southern Africa 3 357 3 000 6 056
Middle East 312 228 482
Switzerland 3 827 - 3 041
EBITDA
Southern Africa 715 638 1 302
Middle East - 23 50
Switzerland 839 - 708
Operating profit
Southern Africa 631 565 1 143
Middle East (16) 10 22
Switzerland 640 - 556
Cash generated from operations
Southern Africa 839 716 1 226
Middle East (46) 87 165
Switzerland 1 022 - 126
Unaudited Unaudited Audited
30/09/08 30/09/07 31/03/08
R`m R`m R`m
Asset
Southern Africa 4 644 4 185 4 545
Middle East 1 825 1 163 1 576
Switzerland 32 657 - 35 456
Liabilities
Southern Africa 4 769 2 789 4 643
Middle East 764 268 511
Switzerland 24 678 - 26 736
OTHER FINANCIAL INFORMATION
Unaudited Unaudited Audited
30/09/08 30/09/07 31/03/08
R`m R`m R`m
Capital commitments
Southern Africa 606 632 798
Middle East 32 91 98
Switzerland 235 - 103
Exchange rates R R R
Average Swiss Franc (ZAR/CHF) 7.40 - 6.60
Closing Swiss Franc (ZAR/CHF) 7.50 - 8.14
Average UAE Dirham (ZAR/AED) 2.12 1.93 1.94
Closing UAE Dirham (ZAR/AED) 2.25 1.87 2.20
COMMENTARY
This is the second reporting period reflecting the effect of the Hirslanden
acquisition done in October 2007. The Group`s operating results as well as
attributable income and headline earnings per share reflect the significant
change that the acquisition represented for the Group. A new international
basis with geographic diversification and income generation potential has
been created from which the consistent growth pattern, which the Group is
known for, should continue.
GROUP OVERVIEW
Hirslanden acquisition
The Group acquired 100% of Hirslanden, the holding company of the largest
private hospital group in Switzerland, with effect from 26 October 2007.
Hirslanden is the leading private hospital group in Switzerland, comprising
13 private acute care facilities located in nine cantons. The purchase
consideration for the total issued share capital of Hirslanden was CHF2 556
million, which represented an enterprise value of CHF3 364 million. CHF2 450
million of new debt with a term of seven years was arranged by Barclays
Capital ("Barclays"), the investment banking division of Barclays Bank plc
("the Barclays facility"). This was fully underwritten by Barclays Bank plc
on a non-recourse basis to Medi-Clinic`s Southern African operations. The
base interest rate in respect of this facility was fixed for ten years at
the time of the transaction. The interest payable on debt of CHF1 610
million, raised to finance the purchase consideration, will not be tax
deductible for a period of five years.
The remainder of the purchase consideration together with expenses, interest
accrued on the purchase price and other costs, amounted to CHF1 114 million
and was funded by Medi-Clinic by way of a rights offer of R4 500 million
("the rights offer") and existing debt facilities within the Group. The
rights offer was for a total of 198 675 497 Medi-Clinic shares.
For more information about the transaction, see the company announcement of
2 August 2007, the detailed acquisition circular by Medi-Clinic to
shareholders dated 17 August 2007 ("the Circular"), the company
announcements of 10 September 2007 and 26 October 2007, as well as the
company announcement relating to the rights offer of 26 October 2007. All
these documents are available on the company`s website,
www.mediclinic.co.za.
Group financial performance
Trading results
Due to the Hirslanden acquisition, the current period`s results are not
directly comparable with those of the comparative period.
Group revenue increased by 132% to R7 496 million (2007: R3 228 million) for
the six months under review. Operating income before interest, taxation,
depreciation and amortisation ("EBITDA") was 135% higher at R1 554 million
(2007: R661 million). Notwithstanding the above, headline earnings decreased
by 11% to R287 million (2007: R322 million) after incurring higher finance
charges, mainly resulting from the Hirslanden transaction. Headline earnings
per ordinary share decreased by 43% to 51.2 cents (2007: 89.3 cents), due to
the higher finance charges and the 55% increase in the weighted number of
ordinary shares for the period resulting from the rights offer. The decline
in the Group`s headline earnings per share was therefore mainly as a result
of the Hirslanden acquisition, as anticipated and communicated at the time
of the acquisition.
The interim dividend per ordinary share at 21.6 cents (2007: 19.3 cents) is
12% higher than the previous period, in line with the Southern African
EBITDA growth.
During the reporting period, the Group, through a wholly owned subsidiary,
acquired 3 009 622 of its own shares in the market for about R55 million to
be held as treasury shares. It utilised 278 587 of the treasury shares for
the Group`s executive share option scheme.
Finance cost
Included in the finance cost is an amount of R30.5 million (2007: RNil),
being the current period`s amortisation in respect of raising fees paid on
the local and offshore debt. These amounts are amortised over the terms of
the relevant loans in line with future cash payments as prescribed in IAS
39.
The margin applicable to the Barclays facility remained subject to a market
flex to facilitate the syndication process. Barclays has now settled the
margin finally, which brings the total interest rate payable on the Barclays
facility to 5.62%, effective from 1 August 2008. Prior to 1 August 2008, a
total interest rate of 5.27% was charged. Barclays communicated the increase
in their margin to the Group on 14 October 2008.
Foreign exchange rates
The Rand displayed some volatility during the reporting period against the
Swiss Franc ("CHF") and the United States Dollar (to which the UAE Dirham
("AED") is pegged at AED3.675 to the US Dollar). The spot rate of the CHF
moved from R8.14 at 31 March 2008 to R7.50 at 30 September 2008, with an
average rate of R7.40 for the reporting period. The spot rate of the AED
moved from R2.20 at 31 March 2008 to R2.25 at 30 September 2008, with an
average rate of R2.12 for the reporting period. In terms of accounting
convention, the offshore balance sheets are converted at the spot rate,
while the trading results in the offshore income statements are converted at
the average rate. The difference between the spot rate and the average rate
results in a distortion when ratios between the balance sheet and the income
statement are calculated in Rand. Therefore, the spot rate should also be
used for translating earnings metrics to achieve comparatively calculated
ratios.
The resulting currency translation difference, being the amount by which the
Group`s interest in the equity of the two foreign platforms decreased merely
as a result of the movement in the spot rate, amounted to R668 million and
was debited to the Statement of Recognised Income and Expense.
Subsequent to the end of the reporting period, the Rand depreciated
materially against both currencies, which, if maintained, will lead to a
substantial reversal to this charge.
Cash flow
The Group`s cash flow continued to be strong mainly due to efficient working
capital management. The Group converted 117% (2007: 121%) of EBITDA into
cash generated from operations. Cash and cash equivalents increased to R895
million from R801 million at 31 March 2008.
Interest-bearing borrowings
Interest-bearing borrowings ("debt") decreased from R23 397 million at 31
March 2008 to R22 127 million, almost exclusively due to foreign exchange
rate fluctuations during the reporting period, as alluded to above. It is
important to note that the offshore debt amounting to R18 418 million is
matched with foreign assets in the same currency. The offshore debt also has
no recourse to South African assets, as stipulated by the South African
Reserve Bank as well as applicable financing arrangements.
OPERATIONS IN SOUTHERN AFRICA
Financial performance
The Southern African revenue increased by 12% to R3 357 million (2007:
R3 000 million) for the six months under review. EBITDA was 12% higher
at R715 million (2007: R638 million).
Business performance
The 12% revenue growth was achieved through a 3.3% increase in bed-days
sold, an 8.3% increase in the average income per bed-day and a 0.4% change
in the profile of patients treated. The increase in utilisation was evident
in both surgical and medical cases. The number of patients admitted
increased by 2.4%, while the average length of stay increased by almost
1.0%.
The Southern African operations managed to maintain its EBITDA margin at
21.3%.
In line with international best practices, the Southern African business
activities were reorganised during the previous year into operational and
property groups. The property group raised R2 750 million to finance the
acquisition of the hospital properties.
The construction of the new 140-bed Cape Gate Medi-Clinic in the Western
Cape has commenced and is expected to be completed during March 2010.
Extensive upgrade projects are in progress at Panorama Medi-Clinic and
Hermanus Medi-Clinic, the latter of which includes the addition of 31 beds.
Projects have also been approved for Constantiaberg Medi-Clinic and
Bloemfontein Medi-Clinic.
The Southern African operations` cash flow continued to be strong during the
period under review. The group converted 117% (2007: 112%) of EBITDA into
cash generated from operations. Cash and cash equivalents decreased to R316
million from R361 million at 31 March 2008 after financing capital
expenditure and investments.
Debt increased from R3 699 million at 31 March 2008 to R3 710 million.
Industry matters
Affordability will always remain a critical issue in the healthcare industry
internationally, and especially in developing countries. Throughout the
world increased healthcare costs are driven by increased utilisation
resulting from factors such as the ageing population, new technology,
patient expectations and the increased burden of disease. The situation is
exacerbated by an international shortage of skilled nursing staff. This
leads to, and will for the foreseeable future continue to lead to, sustained
pressure for higher nursing salaries.
The private hospital industry in South Africa plays a significant role in
the delivery of healthcare services and is the biggest local investor in the
healthcare industry. The group will continue to strive for the sector to
play a meaningful role in broadening access to healthcare and continues to
engage with representatives of Government on this issue.
The past months saw a change in ANC and government leadership, including the
appointment of a new Minister of Health who recognised the importance of the
private hospital industry and that proper consultation with the private
healthcare sector is required. We sincerely welcome these events.
The process to develop a National Health Insurance ("NHI") system for South
Africa was initiated at the ANC congress in Polokwane during December 2007
and has gained much momentum since then. The ANC task group set up to
develop the NHI is largely represented by the ANC and to date has provided
very limited opportunity for the private sector to participate. The inputs
of other stakeholders, including the private sector, are canvassed through a
task group sponsored by the Development Bank of Southern Africa. The views
as to how the NHI should be structured and the process to achieve this are
still very divergent.
Due to the momentum behind the development of the NHI system, all health
related bills will be reviewed in the medium term to ensure it supports the
aims of the NHI. The Health Portfolio Committee of the National Assembly
consequently decided not to proceed with the National Health Amendment Bill
and the Medical Schemes Amendment Bill processes.
OPERATIONS IN SWITZERLAND
Financial performance
The Group consolidated Hirslanden`s results from the effective date of its
acquisition, being 26 October 2007. Although not included in the Group`s
results for the comparative period under review, the comparative figures and
statements below are provided to give shareholders a better understanding of
the results as well as the seasonal flow of revenue and EBITDA at Hirslanden
where the European winter period from November to January has a stronger
patient flow than the European summer.
The Hirslanden revenue increased by 39% (10% at constant foreign exchange
rates) to R3 827 million (CHF517 million) (2007: R2 758 million (CHF469
million)) for the six months under review. EBITDA was 46% (16% at constant
foreign exchange rates) higher at R839 million (CHF114 million) (2007: R576
million (CHF98 million)).
During the six months, Hirslanden`s inpatient admissions increased by 5.7%
while day surgery admissions improved by 12.6%. The average length of stay
remained fairly constant.
The EBITDA margin for the period under review improved to 21.9% from 20.9%
for the comparable period. The margin during the period under review is
typically lower than during the second six months due to seasonal effects.
The number of fully operational beds increased to 1 334 beds (based on the
average number of beds for the six months), with the addition of 35 beds at
Klinik Hirslanden and 13 beds at Klinik St Anna.
With reference to the developments discussed in previous reports, a second
LINAC oncology machine was commissioned during the period under review,
while the CyberKnife is expected to be commissioned at Klinik Hirslanden
during the first quarter of 2009. The state-of-the-art centre for neurology,
neurosurgery and neuroradiology at Klinik Hirslanden opened on 1 October
2008, with the neurology component still under development. An international
centre for laparoscopic neuro-functional pelvic surgery with two renowned
surgeons opened at Klinik Hirslanden on 1 October 2008. In addition,
projects for the increase of capacity at Klinik Aarau (from 117 to 145 beds)
and Klinik Im Park (2 additional ICU beds, 4 additional intermediate care
beds and an additional operating theatre) were approved to be commissioned
towards the end of 2009 and early in 2010 respectively.
The Hirslanden group converted 122% of EBITDA into cash generated from
operations. Cash and cash equivalents increased to R559 million (CHF75
million) from R400 million (CHF49 million) at 31 March 2008 after financing
capital expenditure and investments.
Debt decreased from R19 481 million (CHF2 393 million) at 31 March 2008 to
R17 954 million (CHF2 394 million) due to foreign exchange rate
fluctuations.
Integration of the Hirslanden group
As reported earlier, management, together with members of the Hirslanden
Board, where appropriate, undertook a strategy review which included an
analysis of measures to extract value from synergies between Medi-Clinic and
Hirslanden. The result was an eight point plan of which implementation has
commenced to extract value from immediate synergies. A longer term process
of further detailed benchmarking between the two groups so as to create an
integrated international platform running according to best practices and
defined by common definitions (as far as it is possible) across borders has
also commenced. Activities in the UAE form part of this process.
Renewal of leadership and strengthening of the management structure
Dr Robert Bider, who will be reaching the compulsory retirement age in June
2009, announced in June this year that he would resign from his position as
Chief Executive Officer on 1 October 2008. He will remain as the non-
executive vice chairman of Hirslanden, but retired from the board of Medi-
Clinic on 5 November 2008.
Along with the above, the Board of Hirslanden approved a change in
leadership and a concomitant strengthening of its Executive Committee with
effect from 1 October 2008. Dr Ole Wiesinger has been appointed as the new
Chief Executive Officer and will be nominated for appointment to the Board
of Directors of Medi-Clinic on 5 November 2008. Formerly, Dr Wiesinger was
the Managing Director of Klinik Hirslanden. The Executive Committee was
strengthened by increasing the membership from three to six. Apart from the
Chief Executive Officer and the Chief Financial Officer, three regional
operational officers were appointed, providing hospitals with more direct
representation at this level. The remaining newly appointed member is
responsible for the Corporate Services and Hospital Services departments.
It is appropriate at this stage to thank the following senior management
members for their excellent contributions over many years at Hirslanden:
- Reto Heierli, Chief Financial Officer, who played an important role with
the acquisition and integration of hospitals added to the Hirslanden group.
He will be leaving on 31 December 2008.
- Joseph Rohrer, Chief Operating Officer, who played an important role in
growing Hirslanden operationally and provided the background for dividing
the operations into three regions. He left the company on 30 September 2008.
OPERATIONS IN THE UNITED ARAB EMIRATES ("UAE")
Financial performance
Revenue increased by 37% (24% at constant foreign exchange rates) to R312
million (AED147 million) (2007: R228 million (AED118 million)) for the six
months under review. EBITDA was RNil (AEDNil) (2007: R23 million (AED11.8
million)), mainly due to anticipated start-up losses at The City Hospital.
After incurring depreciation charges of R15 million (AED7 million) (2007:
R13 million (AED7 million)) and net finance costs of R1 million (AED0.6
million) (2007: R7 million (AED3.7 million)), Emirates Healthcare incurred
an attributable loss of R6 million (AED3 million) net of minority interests.
During the comparative period Emirates Healthcare broke even.
Business performance
The fully operational units, being the Welcare Hospital, the Emirates
Diagnostic Clinic ("EDC"), the Welcare Ambulatory Care Centre ("WACC") and
the Welcare Eye Clinic ("WEC"), produced revenue of R304 million (AED143
million) (2007: R227 million (AED118 million)) and EBITDA of R52 million
(AED25 million) (2007: R36 million (AED19 million)).
The Welcare Clinic Al Qusais which opened for business on 7 July 2007 and
EHL Management Services (previously Welcare World Healthcare Systems) had
turnover of R5 million (AED2 million) (2007: R1 million (AED0.4 million)),
but generated start-up operating losses at EBITDA level of R13 million (AED6
million) (2007: R10 million (AED5 million)). The City Hospital, commissioned
after the period under review, and the Welcare Clinic Mirdiff incurred start-
up costs of R39 million (AED18 million) (2007: R3 million (AED1.7 million)).
Start-up losses for The City Hospital alone amounted to R36 million (AED17
million) for the period under review.
The Welcare Hospital performed very well and increased its revenue by 34%
(22% at constant foreign exchange rates) and EBITDA by 48% (35% at constant
foreign exchange rates), against the same period last year. Its EBITDA
margin increased from 14.3% to 15.8%. The three clinics in full operation,
namely EDC, WACC and WEC, also exceeded expectations and increased their
combined EBITDA margin from 24.1% to 24.7%.
The City Hospital was commissioned on 15 October 2008, after successfully
passing rigorous international accreditation processes. The Deputy Ruler of
Dubai conducted the official opening ceremony on 22 October 2008. The
recruitment of doctors and nurses for phase 1 is almost complete with the
last staff joining during the next three months. It is pleasing to report
that within the first week after opening, several in-patients were admitted
and a number of successful surgeries as well as the first angioplasty were
conducted. The level of interest in the facility and the enquiries by
community-based specialists for admission rights are encouraging. The timing
of all the aspects of the commissioning and opening of the hospital posed a
substantial financial risk which, as anticipated, impacted on the earnings
of the Group during this reporting period. Substantial risk remains in the
unpredictability of occupancy levels during the start-up period.
Emirates Healthcare, through a subsidiary EHL Management Services, continues
to make a significant investment in infrastructure, mainly in systems and
human capital, to ensure a solid platform from which to take advantage of
the many growth opportunities in the region.
It is not meaningful to comment on the cash flow of Emirates Healthcare
since there are distortions flowing from the commissioning of The City
Hospital due to cash advances in respect of equipment to be commissioned as
well as retentions outstanding. Cash and cash equivalents decreased to R20
million (AED 9 million) from R40 million (AED18 million) at 31 March 2008,
while interest-bearing debt increased from R217 million (AED98 million) at
31 March 2008 to R464 million (AED206 million). This was mostly utilised to
finance the final phases of The City Hospital.
Interest payments of R10.5 million (AED4.7 million) were capitalised against
The City Hospital project costs in terms of accounting convention during the
period under review. The interest accrued on all debt will be expensed after
the commissioning of The City Hospital. Additional capital will be required
to fund further start-up losses and the additional investment in working
capital resulting from the activities of The City Hospital. Committed
banking facilities are available. The current average interest rate is about
8% and it is expected that debt will increase to about AED290 million by
year end.
PROSPECTS
Three well-defined platforms for growth have been established within the
Group. The South African private hospital industry is one of the most
developed and mature in the world. It offers a great deal to the
international world specifically in terms of cost-effectiveness and quality
of care. The Hirslanden group could act as a solid platform for future Swiss
and European expansion. The investment in Emirates Healthcare which is more
greenfield by nature, offers a platform for incremental growth in the Middle
East where a growing need for cost-effective quality private healthcare
continues to exist.
The Group has invested over many years in infrastructure to enable it to
better measure the quality and outcomes of its care. Although still
developing, it firmly believes that this knowledge can now be applied on an
international level to gain market share and to fulfil its vision of being
regarded as the most respected and trusted provider of hospital services by
patients, doctors and funders of healthcare.
The Medi-Clinic and Hirslanden management teams have already extracted
certain identified high-level synergies. These are included in the business
plan and will, if successfully implemented, have a positive effect on the
EBITDA originally projected by the Hirslanden management. Some of these
synergies will also have a positive effect on both the Southern African and
UAE operations. In addition, the two management teams will embark on an in-
depth benchmarking exercise to identify best practices between the two
groups with a view to implement such best practices throughout the combined
group. These synergies should benefit shareholders in future.
In Dubai our sincere thanks and congratulations are extended to the hospital
management, staff and doctors, as well as the management of Emirates
Healthcare, for the endless hours they put in to obtain the necessary
rigorous accreditation and regulatory approvals which allowed The City
Hospital to be commissioned so successfully. Now is the time to create the
respect and trust of the patients who use the facilities at the hospital.
Inflationary cost pressures are experienced at all three platforms including
Switzerland. The Group has been successful in the past to manage these
pressures and will continue to try and do the same.
Although further start-up costs at The City Hospital will be incurred and
the international markets are in turmoil, the Group remains optimistic about
its operational prospects for the next six months. The full dilutive effect
of the additional shares issued pursuant to the rights offer in December
last year has now also been fully accounted for in the headline earnings per
share.
CHANGES TO THE BOARD OF DIRECTORS
Mr J du T Marais, who served as an executive director (technical) of Medi-
Clinic since 1985, retired on 30 July 2008. We are immensely grateful and
proud of Mr Marais for his outstanding service and dedication to the Group
and the industry over the past 23 years.
Ms S Dakile-Hlongwane retired on 30 July 2008. Dr V E Msibi, who served as a
non-executive director since 2005 representing Phodiso Holdings, one of the
Group`s strategic black partners, tragically passed away on 12 July 2008. Dr
R H Bider, who served as an executive director of Medi-Clinic since 2007 (in
his capacity as the Chief Executive Officer of Hirslanden) also retired and
resigned from the Board of Medi-Clinic with effect from 5 November 2008. Dr
Bider has 33 years of experience in the Swiss healthcare industry. His
involvement and support of the Hirslanden acquisition by the Group, as well
as during the critical first year after the transaction, was instrumental to
the success thereof.
The valuable inputs of all of these past members of the Board are greatly
appreciated and will be long remembered.
Ms Z P Manase was co-opted as an independent non-executive director with
effect from 16 September 2008. Dr M K Makaba was also co-opted as a non-
executive director with effect from 16 September 2008 representing Phodiso
Holdings. The Board of Medi-Clinic today approved the co-option of Dr T O
Wiesinger, the new Chief Executive Officer of Hirslanden, as an executive
director with effect from 5 November 2008.
BASIS OF PREPARATION
The interim financial results have been prepared in accordance with the
recognition and measurement requirements of International Financial
Reporting Standards ("IFRS") and the disclosure requirements of IAS 34. The
accounting policies are consistent with those adopted in previous financial
statements.
CASH DIVIDEND TO SHAREHOLDERS
The board of directors declared an interim dividend of 21.6 cents per
ordinary share.
In compliance with the requirements of STRATE, the following dates are
applicable:
Last date to trade cum dividend Friday, 28 November 2008
First date of trading ex dividend Monday, 1 December 2008
Record date Friday, 5 December 2008
Payment date Monday, 8 December 2008
Share certificates may not be dematerialised/rematerialised from Monday,
1 December 2008 to Friday, 5 December 2008, both days inclusive.
Signed on behalf of the board of directors:
E DE LA H HERTZOG L J ALBERTS
Chairman Chief Executive Officer
Stellenbosch, 5 November 2008
Date: 05/11/2008 17:00:01 Produced by the JSE SENS Department.
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information disseminated through SENS.
