| Tue 8 Nov 2011, 14:00 | | MDC - Mediclinic - Unaudited interim group results and declaration of cash |
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MDC
MDC
MDC - Mediclinic - Unaudited interim group results and declaration of cash
dividend
Mediclinic International Limited
Incorporated in the Republic of South Africa
Reg. No. 1983/010725/06
Share code: MDC
ISIN code: ZAE000074142
("Mediclinic" or "the Company")
UNAUDITED INTERIM GROUP RESULTS OF MEDICLINIC INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2011 AND
DECLARATION OF CASH DIVIDEND
Solid performance by all three operating platforms
Headline earnings increased by 19%
Headline earnings per share increased by 10%
INTERIM DIVIDEND PER ORDINARY SHARE MAINTAINED AT 23.0 CENTS
CONDENSED CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
6 months to 6 months to Year to
30/9/2011 Increase 30/9/2010 31/3/2011
R`m % R`m R`m
Revenue 10 467 19% 8 768 18 625
Cost of sales (5 968) (5 009) (10 327)
Administration and other
operating expenses (2 320) (1 893) (4 112)
Operating profit before
depreciation (EBITDA) 2 179 17% 1 866 4 186
Depreciation and
amortisation (436) (351) (738)
Operating profit 1 743 1 515 3 448
Other gains and losses (29) - 13
Income from associates - - 4
Finance income 43 23 61
Finance cost (809) (732) (1 491)
Profit before tax 948 806 2 035
Income tax expense (357) (305) (654)
Profit for the period 591 501 1 381
Attributable to:
Equity holders of
the Company 484 410 1 177
Non-controlling interests 107 91 204
591 501 1 381
Earnings per ordinary
share - cents
- Basic 77.2 9% 70.7 195.3
- Diluted 74.2 67.4 186.9
Headline earnings per
ordinary share - cents
- Basic 77.2 10% 70.2 184.2
- Diluted 74.2 67.0 176.3
Normalised headline
earnings
per ordinary share - cents
- Basic 77.2 10% 70.2 179.6
- Diluted 74.2 67.0 171.9
EBITDA RECONCILIATION:
Operating profit before
depreciation (EBITDA) 2 179 1 866 4 186
Adjusted for:
Past service cost - - (33)
Impairment of property
and equipment - - 34
Insurance proceeds - - (84)
Normalised EBITDA 2 179 17% 1 866 4 103
EARNINGS RECONCILIATION:
Profit attributable to
shareholders 484 410 1 177
Re-measurements for
headline earnings - (3) (77)
Profit on sale of
property, equipment
and vehicles - (1) (4)
Gain on rights sold - (2) (2)
Gain on purchase of
business acquisition - - (21)
Impairment of property
and equipment - 34
Insurance proceeds - - (84)
Income tax effects - - 10
Headline earnings 484 19% 407 1 110
Re-measurements for
normalised headline
earnings
Past service cost - - (33)
Income tax effects - - 5
Normalised headline
earnings 484 19% 407 1 082
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months to 6 months to Year to
30/9/2011 30/9/2010 31/3/2011
R`m R`m R`m
Profit for the period 591 501 1 381
Other comprehensive income
Currency translation differences 2 009 115 488
Fair value adjustment to cash
flow
hedges (net of tax) (1 029) (437) 246
Actuarial gains and losses
(net of tax) (179) (183) (73)
Other comprehensive
income/(loss),
net of tax 801 (505) 661
Total comprehensive income/(loss)
for the year 1 392 (4) 2 042
Attributable to:
Equity holders of the Company 1 195 (70) 1 877
Non-controlling interests 197 66 165
1 392 (4) 2 042
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
30/9/2011 30/9/2010 31/3/2011
R`m R`m R`m
ASSETS
Non-current assets 43 830 34 504 36 929
Property, equipment and 36 019 28 844 30 409
vehicles
Intangible assets 6 684 5 398 5 565
Other investments and loans 893 22 712
Derivative financial - - 33
instruments
Deferred income tax assets 234 240 210
Current assets 7 132 6 362 6 608
Inventories 600 516 522
Trade and other receivables 4 037 3 241 3 796
Investment in money market 860 - 723
funds
Cash and cash equivalents 1 635 2 605 1 567
Total assets 50 962 40 866 43 537
EQUITY AND LIABILITIES
Total equity 11 572 8 646 10 560
Share capital and reserves 10 394 7 665 9 489
Non-controlling interests 1 178 981 1 071
Liabilities
Non-current liabilities 35 750 29 306 27 922
Borrowings 25 485 21 169 20 414
Deferred income tax liabilities 5 682 4 514 4 773
Retirement benefit obligations 595 564 383
Provisions 234 167 182
Derivative financial 3 754 2 892 2 170
instruments
Current liabilities 3 640 2 914 5 055
Trade and other payables 2 711 2 247 2 938
Borrowings 608 477 1 834
Provisions 117 71 89
Derivative financial 16 - 48
instruments
Current income tax liabilities 188 119 146
Total liabilities 39 390 32 220 32 977
Total equity and liabilities 50 962 40 866 43 537
Net asset value per ordinary
share - cents 1 656.8 1 227.2 1 516.7
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Unaudited
6 months to 6 months to Year to
30/9/2011 30/9/2010 31/3/2011
R`m R`m R`m
Cash flow from operating 858 864 2 316
activities
Cash generated from operations 1 913 1 742 4 179
Net finance cost (744) (669) (1 368)
Taxation paid (311) (209) (495)
Cash flow from investment
activities (530) (241) (2 563)
Investment to maintain (245) (216) (645)
operations
Investment to expand operations (318) (141) (778)
Proceeds on sale of property,
equipment and vehicles 11 3 24
Proceeds on disposal of
FVTPL assets 18 - -
Insurance proceeds 20 - 57
Proceeds from other investments
and loans 1 113 120
Purchases of FVTPL financial
assets (26) - (688)
Purchases of money market funds - - (672)
Interest received 9 - 19
Cash flow from financing (491) 929 688
activities
Distributions to shareholders (298) (261) (398)
Distributions to non-
controlling
interests (98) (51) (59)
Proceeds from shares issued - 1 364 1 364
Share issue costs - (33) (33)
Movement in borrowings (91) (105) (208)
Capitalised refinancing costs (11) - -
Proceeds from disposal of
treasury shares 14 15 23
Treasury shares purchased (9) - -
Acquisition of non-controlling
interests - - (1)
Proceeds on disposal of non-
controlling interests 2 - -
Net movement in cash, cash
equivalents and bank overdrafts (163) 1 552 441
Opening balance of cash, cash
equivalents and bank overdrafts 1 447 967 967
Exchange rate fluctuations on
foreign cash 160 (50) 39
Closing balance of cash, cash
equivalents and bank overdrafts 1 444 2 469 1 447
Cash and cash equivalents 1 635 2 605 1 567
Bank overdrafts (191) (136) (120)
1 444 2 469 1 447
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 months to 6 months to Year to
30/9/2011 30/9/2010 31/3/2011
R`m R`m R`m
Opening balance 10 560 7 616 7 616
Shares issued - 6 6
Premium on shares issued - 1 358 1 358
Share issue costs - (33) (33)
Movement in shares held in 5 15 23
treasury
Movement in share-based payment
reserve 3 - 6
Capital contributed by non-
controlling interests 3 - -
Non-controlling interests
acquired by the Group - - (1)
Total comprehensive income/(loss)
for the period 1 392 (4) 2 042
Distributed to shareholders (298) (261) (398)
Distributed to non-controlling
interests (93) (51) (59)
Closing balance 11 572 8 646 10 560
Comprising
Share capital 65 65 65
Share premium 6 066 6 066 6 066
Treasury shares (283) (296) (288)
Share-based payment reserve 132 123 129
Foreign currency translation
reserve 3 747 1 441 1 828
Hedge reserve (3 126) (2 780) (2 097)
Retained earnings 3 793 3 046 3 786
Shareholders` equity 10 394 7 665 9 489
Non-controlling interests 1 178 981 1 071
Total equity 11 572 8 646 10 560
CONDENSED SEGMENTAL REPORT
Unaudited Unaudited Unaudited
6 months 6 months to 6 months to
to
30/9/2011 30/9/2011 30/9/2011
R`m R`m R`m R`m
Adjustments
Hospital Hospital and
Services Properties eliminations Total
Revenue
Southern Africa 4 695 408 (408) 4 695
Middle East 771 28 (28) 771
Switzerland 5 001 776 (776) 5 001
EBITDA
Southern Africa 594 395 989
Middle East 92 28 120
Switzerland 349 721 1 070
Operating profit
Southern Africa 471 395 866
Middle East 47 28 75
Switzerland 157 645 802
Assets
Southern Africa 5 032 7 139 (5 833) 6 338
Middle East 1 185 863 2 048
Switzerland 11 304 29 532 40 836
Corporate 1 740
Liabilities
Southern Africa 2 416 4 050 (1 055) 5 411
Middle East 598 296 894
Switzerland 2 855 30 037 32 892
Corporate 1
Intersegmental
liabilities 192
Unaudited Unaudited Unaudited
6 months 6 months to 6 months to
to
30/9/2010 30/9/2010 30/9/2010
R`m R`m R`m R`m
Revenue
Southern Africa 4 244 378 (378) 4 244
Middle East 611 30 (30) 611
Switzerland 3 913 647 (647) 3 913
EBITDA
Southern Africa 543 367 910
Middle East 61 29 90
Switzerland 262 604 866
Operating profit
Southern Africa 431 367 798
Middle East 25 29 54
Switzerland 120 543 663
Assets
Southern Africa 4 510 6 380 (5 121) 5 769
Middle East 907 747 1 654
Switzerland 8 589 23 388 31 977
Corporate 1 466
Liabilities
Southern Africa 2 349 3 992 (931) 5 410
Middle East 438 283 721
Switzerland 2 479 23 610 26 089
Audited Audited Audited
Year to Year to Year to
31/3/2011 31/3/2011 31/3/2011
R`m R`m R`m R`m
Revenue
Southern Africa 8 632 760 (760) 8 632
Middle East 1 334 57 (57) 1 334
Switzerland 8 659 1 326 (1 326) 8 659
EBITDA
Southern Africa 1 150 737 1 887
Middle East 183 57 240
Switzerland 834 1 225 2 059
Operating profit
Southern Africa 921 737 1 658
Middle East 107 57 164
Switzerland 527 1 099 1 626
Assets
Southern Africa 4 937 6 872 (5 609) 6 200
Middle East 1 005 727 1 732
Switzerland 9 812 24 338 34 150
Corporate 1 455
Liabilities
Southern Africa 2 381 3 973 (1 059) 5 295
Middle East 473 263 736
Switzerland 3 176 23 923 27 099
Corporate 4
Intersegmental
liabilities (157)
ADDITIONAL INFORMATION
Unaudited Unaudited Audited
6 months to 6 months to Year to
30/9/2011 30/9/2010 31/3/2011
R`m R`m R`m
Capital commitments 2 054 1 901 2 393
Southern Africa 1 227 857 1 490
Middle East 15 13 9
Switzerland 812 1 031 894
Exchange rates R R R
Average Swiss franc (ZAR/CHF) 8.25 6.96 7.11
Closing Swiss franc (ZAR/CHF) 8.96 7.18 7.42
Average UAE dirham (ZAR/AED) 1.90 2.03 1.96
Closing UAE dirham (ZAR/AED) 2.20 1.90 1.85
Number Number Number
Shares `000 `000 `000
Number of ordinary shares 652 315 652 315 652 315
in issue
Number of ordinary shares
held in treasury (24 956) (27 704) (26 664)
Number of ordinary shares
in issue net of treasury shares 627 359 624 611 625 651
Weighted average number of
ordinary shares in issue 626 692 579 965 602 467
Diluted weighted average number
of ordinary shares in issue 651 921 607 912 629 488
In determining basic earnings per share and basic headline earnings per
share, the weighted average number of ordinary shares in issue were taken
into account.
COMMENTARY
We are pleased to report that the Group has maintained its consistent growth
pattern.
GROUP OVERVIEW
Trading results
Group revenue increased by 19% to R10 467m (2010: R8 768m) for the six
months under review. Operating profit before interest, tax, depreciation and
amortisation ("EBITDA") was 17% higher at R2 179m (2010: R1 866m). Headline
earnings rose by 19% to R484m (2010: R407m). Basic headline earnings per
ordinary share increased by 10% to 77.2 cents (2010: 70.2 cents).
These results were achieved despite the continuing tough global economic
conditions. The lower headline earnings per share growth of 10%, compared to
the headline earnings growth of 19% was due to the increased weighted
average number of ordinary shares in issue which resulted from last year`s
rights offer.
The average rand/Swiss franc (CHF) exchange rate was R8.25 compared to R6.96
for the comparative period, which had a positive effect on the reported
results, as detailed under Hirslanden`s financial performance section.
Finance cost
Included in the finance cost is an amount of R40m (2010: R36m), which is the
current period`s amortisation in respect of raising fees paid on the Group`s
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
Financial Instruments.
Cash flow
The Group`s cash flow continued to be strong. The Group converted 88% (2010:
93%) of EBITDA into cash generated from operations. Cash and cash
equivalents increased from R1 567m at 31 March 2011 to R1 635m at 30
September 2011.
Interest-bearing borrowings
Interest-bearing borrowings ("debt") increased from R22 248m at 31 March
2011 to R26 093m at 30 September 2011, mainly as a result of the increase in
the closing rand/CHF exchange rate. The CHF closing exchange rate moved from
R7.42 at 31 March 2011 to R8.96 at 30 September 2011. It is important to
note that the foreign debt of the Group`s Swiss and Middle Eastern
operations, amounting to R22 349m, is matched with foreign assets in the
same currencies. The foreign debt also has no recourse to the Southern
African operations` assets, as stipulated by the South African Reserve Bank
as well as applicable financing arrangements.
Assets
Property, equipment and vehicles increased from R30 409m at 31 March 2011 to
R36 019m at 30 September 2011 and intangible assets increased from R5 565m
at 31 March 2011 to R6 684m at 30 September 2011. These increases are mainly
as a result of the change in the closing rand/CHF exchange rate, as
mentioned above.
Dividend
As indicated previously, the Group is moving towards a targeted dividend
cover of three times based on Group headline earnings, over time. Therefore
the interim dividend per share is being maintained at 23.0 cents (2010: 23.0
cents) and the Board will review the final dividend based on the Group`s
results of the full financial year.
OPERATIONS IN SOUTHERN AFRICA
MEDICLINIC SOUTHERN AFRICA
Financial performance
The Southern African group revenue increased by 11% to R4 695m (2010: R4
244m) for the six months under review. EBITDA was 9% higher at R989m (2010:
R910m).
After incurring depreciation charges of R123m (2010: R112m), net finance
charges of R166m (2010: R174m), tax of R230m (2010: R195m) and deducting the
interest of minority shareholders in the attributable income of the Southern
African group amounting to R76m (2010: R73m), the Southern African
operations contributed R394m (2010: R356m) to the attributable income of the
Group.
BUSINESS PERFORMANCE
The 11% revenue growth was achieved through a 3.2% increase in bed-days
sold, a 5.5% increase in the average income per bed-day and 2.3% increase in
other revenue. The increase in utilisation was more evident in medical
rather than surgical cases. The number of patients admitted increased by
2.4%, while the average length of stay increased by 0.8%.
The Southern African operations` EBITDA margin decreased slightly from 21.4%
to 21.1%. The margin was negatively affected by 0.2% because of rental
income which is now shown as part of revenue; furthermore the margin was
negatively affected by another 0.2% which resulted from the straight-lining
of a major lease renewal.
During the reporting period the Southern African operations spent R145m
(2010: R86m) on capital projects and new equipment to enhance business, as
well as R139m (2010: R119m) on the replacement of existing equipment. In
addition, R125m (2010: R128m) was spent on the repair and maintenance of
property and equipment, charged through the income statement. For the
current financial year, R599m is budgeted for capital projects and new
equipment to enhance its business, R237m for the replacement of existing
equipment and R254m for repairs and maintenance. Incremental EBITDA
resulting from capital projects in progress or approved is budgeted to
amount to R43m and R65m in 2012 and 2013 respectively.
The number of licensed hospital beds increased from 7 103 to 7 115 during
the six months under review.
During the past six months building projects at Mediclinic Stellenbosch (10
additional beds), Mediclinic Paarl (2 additional beds and 1 theatre) and
Mediclinic Cape Town (new doctors consulting block) were completed.
Currently there are building projects in progress at Mediclinic Kimberley (8
additional beds), Mediclinic Kloof (32 additional beds), Mediclinic Welkom
(36 additional beds and upgrade), Mediclinic Legae (4 additional beds and
upgrade), Mediclinic Potchefstroom (13 additional beds), Mediclinic Highveld
(27 additional beds) and Mediclinic Otjiwarongo (2 additional beds), which
will be completed during the next six months. Projects at Mediclinic
Nelspruit (66 additional beds), Mediclinic Limpopo (60 additional beds and
upgrade), Mediclinic Cottage (14 additional beds and upgrade), Mediclinic
Louis Leipoldt (upgrade) and Mediclinic Hoogland (new doctors consulting
block and upgrade) will be completed during the 2013 financial year and
projects at Mediclinic Pietermaritzburg (new cardiology unit, 80 additional
beds, consulting rooms and upgrade), and Mediclinic Windhoek (26 additional
beds and consulting rooms) will be completed during the 2014 financial year.
Projects were approved for the establishment of a new hospital in Centurion
(174 beds), Mediclinic Stellenbosch (upgrade) and Mediclinic Milnerton (10
additional beds). These projects will start during the next 12 months.
The number of licensed beds is expected to increase from 7 115 to 7 237
during the next six months.
The Southern African operations` cash flow continued to be strong as it
converted 96% (2010: 115%) of EBITDA into cash generated from operations.
Cash and cash equivalents decreased from R755m at 31 March 2011 to R728m at
30 September 2011.
Interest-bearing borrowings decreased from R3 757m at 31 March 2011 to R3
744m at 30 September 2011.
Mediclinic Southern Africa continued its focus on transformation and
maintained its status as a Level 3 contributor in terms of the BBBEE
scorecard.
The long awaited Green Paper on the proposed introduction of a National
Health Insurance ("NHI") system for South Africa was published on 12 August
2011 for public comment by 30 December 2011. After the consultation process
government will finalise a White Paper, after which legislation will be
developed for public engagement. Mediclinic Southern Africa and the Hospital
Association of Southern Africa ("HASA") are preparing comprehensive
submissions to the Department of Health. The Green Paper provides reasonable
clarity on some issues, but there is a lack of clarity on certain major
issues, amongst others, the cost implications, the source of funding, human
resources, the benefit package, provider payment and price determination.
Mediclinic Southern Africa believes that the approach to the implementation
of the NHI is pragmatic and supports the phased implementation plan. The
initial focus on primary care and the proposed introduction of selected
pilot projects is appropriate. Mediclinic Southern Africa does not believe
that the proposed implementation of NHI should have any significant
implications for the group.
OPERATIONS IN SWITZERLAND
HIRSLANDEN
Financial performance
Hirslanden`s revenue increased by 28% (8% at constant foreign exchange
rates) to R5 001m (CHF606m) (2010: R3 913m (CHF562m)) for the six months
under review. EBITDA was 24% higher (4% at constant foreign exchange rates)
at R1 070m (CHF129m) (2010: R866m (CHF124m)).
After incurring depreciation charges of R268m (CHF33m) (2010: R203m
(CHF29m)), net finance charges of R605m (CHF73m) (2010: R517m (CHF74m)) and
tax of R128m (CHF15m) (2010: R110m (CHF16m)), Hirslanden contributed R69m
(CHF8m) (2010: R36m (CHF5m)) to the attributable income of the Group.
Business performance
Inpatient admissions increased by 6% during the reporting period. Although
the average length of stay remained fairly constant the average income per
bed-day increased by 3% because of a greater proportion of higher acuity
cases.
The EBITDA margin of the group decreased from 22.1% to 21.4%. The EBITDA
margin was influenced mainly by the newly acquired Klinik Stephanshorn`s
lower operating margin, as well as challenging conditions in the Western
Region which offset strong performances in most of the other group
hospitals.
During the reporting period, Hirslanden spent R136m (CHF16m) (2010: R51m
(CHF7m)) on capital projects and new equipment to enhance its business as
well as R99m (CHF12m) (2010: R86m (CHF12m)) on the replacement of existing
equipment. In addition, R132m (CHF16m) (2010: R104m (CHF15m)) was spent on
the repair and maintenance of property and equipment, charged through the
income statement. For the current financial year CHF72m is budgeted for
capital projects and new equipment, CHF53m for the replacement of existing
equipment and CHF33m for repairs and maintenance. Incremental EBITDA
resulting from capital projects in progress or approved is budgeted to
amount to CHF8m and CHF5m in 2012 and 2013 respectively.
Investment in new technology, that provides for new treatment options and
increased case load, includes a 3.0 tesla MRI machine at Klinik Hirslanden
as well as a 1.5 tesla MRI machine at Klinik St. Anna, both commissioned in
2011.
The number of fully operational inpatient beds increased from 1 457 to 1 471
during the period under review. Klinik Beau-Site opened the major part of
its new building in September 2011 which added 14 inpatient beds. Another 5
beds were opened in October 2011, with an option for 4 more beds for the
current financial year.
During the summer months major refurbishment projects for wards were
completed at Klinik Aarau and Klinik St. Anna. The extensive upgrade at
Klinik Beau-Site is ongoing. The new building at Klinik Hirslanden is still
proceeding well and should be commissioned in the European spring 2013. The
hospital will be expanded by 71 inpatient beds and 8 ICU beds and new
consulting rooms will be added. At Klinik Bois-Cerf the new radiology
department is expected to become operational in early 2012 and the
radiotherapy department towards the end of 2012.
Hirslanden converted 79% (2010: 70%) of EBITDA into cash generated from
operations. An IAS 19 pension fund adjustment of R53m (CHF6.4m) (2010: R46m
(CHF6.6m)), representing the employer contributions exceeding the current
service cost, was credited to the consolidated income statement. A decrease
in trade creditors of R104m (CHF12m) in respect of major building projects
had a negative effect on the cash conversion. If the IAS 19 non-cash flow
pension fund credit and the cash flows from the decrease in trade creditors
in respect of building projects are excluded, then the Hirslanden group
would have converted 92% EBITDA into cash from operations.
Cash and cash equivalents increased from R699m (CHF94m) at 31 March 2011 to
R775m (CHF86m) at 30 September 2011.
Interest-bearing borrowings increased from R18 083m (CHF2 437m) at 31 March
2011 to R21 837m (CHF2 437m) at 30 September 2011, mainly because of the
increase in the spot rate of the rand/CHF exchange rate.
The amendments to the Swiss Health Insurance Act ("KVG") decided by the
Parliament at the end of 2007 will become effective on 1 January 2012. There
are three areas in which major changes are to be introduced:
1) Hospital financing system: new rules governing the funding proportions of
the cantons versus the health insurance companies;
2) Compensation of service providers: introduction of a compensation system
based on diagnosis-related groups (DRGs) for the treatment of patients with
basic insurance; and
3) Allocation of service mandates: revision of the cantonal hospital lists
(service mandates) for the treatment of patients with basic insurance, which
gives a listed hospital the right to cantonal funding.
In all three areas, a number of questions regarding the implementation of
the new regulations still remain unanswered.
Regarding the new rules for the financing of hospitals, the invoicing and
payment process for the cantonal contributions have still not been finalised
yet in many cantons. To ensure correct, reliable and timely payments to the
service providers, the exact rules and mechanisms still need to be defined
before the end of December 2011.
While the preparations for the introduction of the Swiss DRG system are well
under way, the applicable base rates (base tariffs) have not been finalised.
Although some of the cantons have published a draft hospital list for 2012,
the rules for compiling these lists often deviate sharply from the criteria
specified by the federal legislator. For that reason Hirslanden has formally
objected to a number of the cantonal decisions. To date Hirslanden has been
awarded important service mandates in several cantons and is confident that
it will obtain additional mandates as a result of the objections filed.
Management is continually focusing on ensuring group hospitals are listed,
fair conditions are applied on hospitals with service mandates and that
reasonable base rates are implemented.
The implementation of the Inter-cantonal Agreement on Highly-Specialised
Medicine of 14 March 2008 is proceeding. Hirslanden has applied for mandates
in certain specialist fields and objected to rulings made in a number of
disciplines.
The moratorium on the licensing of new physicians will not be extended
beyond 31 December 2011. This is a very positive development for Hirslanden
as this means that a major inhibitor of growth will be removed and
cooperation agreements with new doctors can be concluded and put into
practice.
OPERATIONS IN UNITED ARAB EMIRATES
EMIRATES HEALTHCARE
Financial performance
Revenue increased by 26% (35% at constant foreign exchange rates) to R771m
(AED406m) (2010: R611m (AED301m)) for the six months under review. EBITDA
increased by 33% (40% at constant exchange rates) to R120m (AED63m) (2010:
R90m (AED45m)) and the EBITDA margin increased from 14.7% to 15.6%.
After incurring depreciation charges of R45m (AED24m) (2010: R36m (AED18m)),
net finance charges of R14m (AED8m) (2010: R18m (AED9m)) and the sharing of
minority shareholders in the attributable income of Emirates Healthcare
amounting to R30m (AED15m) (2010: R18m (AED9m)), Emirates Healthcare
contributed R31m (AED16m) (2010: R18m (AED9m)) to the attributable income of
the Group.
Business performance
During the reporting period inpatient admissions in the hospitals increased
by 25% (2010: 22%), while hospital outpatient consultations and visits to
the emergency units increased by 15% (2010: 6%). Clinic outpatient
consultations increased by 87% (2010: decreased by 2%) mainly because of the
addition of the three Emaar clinics during January 2011.
The number of licensed hospital beds remained constant at 336 beds during
the period under review.
During the reporting period Emirates Healthcare spent R8m (AED4m) (2010: R4m
(AED2m)) on capital projects and new equipment to enhance its business as
well as R6m (AED3m) (2010: R11m (AED5m)) on the replacement of existing
equipment. In addition, R15m (AED8m) (2010: R10m (AED5m)) was spent on the
repair and maintenance of property and equipment, charged through the income
statement. For the current financial year, AED8m is budgeted for capital
projects and new equipment to enhance its business, AED29m for the
replacement of existing equipment and AED18m for repairs and maintenance.
Emirates Healthcare converted 97% (2010: 97%) of EBITDA into cash generated
from operations. Cash and cash equivalents increased from R114m (AED61m) at
31 March 2011 to R132m (AED60m) at 30 September 2011.
Interest-bearing borrowings increased from R408m (AED221m) at 31 March 2011
to R512m (AED233m) at 30 September 2011, mainly as a result of the change in
the closing rand/AED exchange rate.
PROSPECTS
The Group is uniquely positioned across three diverse international
operating platforms with stable and experienced management teams in place.
It continues to focus on its core business to fulfil its vision of being
respected internationally and preferred locally. The Group continues to
consolidate its collective intellectual capital and strengths with the goal
of establishing a respected international hospital group with a very
specific focus on the delivery of quality health care cost effectively.
Although regulatory issues create uncertainties (at the moment especially in
Switzerland), we are optimistic about the future of our businesses in all
three platforms. This is supported by our continued substantial investments
in capacity building in all the platforms. The Group continuously monitors
the regulatory environment and pro-actively participates in discussions with
regulatory bodies to influence decision-making and to better understand
changes that might impact on the Group.
The availability of sufficient skilled medical resources in South Africa
remains a challenge and we continue to make substantial investments in the
training of our staff. We also support the Minister of Health`s recent
announcements to increase the capacity of medical and nursing schools to
train more professionals.
The Group remains positive about its operational prospects for the next six
months.
BASIS OF PREPARATION
The accounting policies applied in the preparation of these condensed group
interim financial statements, which are based on reasonable judgements and
estimates, are in accordance with International Financial Reporting
Standards (IFRS) and are consistent with those applied in the audited annual
financial statements for the year ended 31 March 2011. The condensed group
interim financial statements have been prepared in terms of IAS 34 Interim
Financial Reporting as well as in compliance with the Companies Act 71 of
2008 and the Listings Requirements of the JSE Limited. The preparation of
the condensed group interim financial statements was supervised by the Chief
Financial Officer, Mr CI Tingle (CA(SA)).
DIVIDEND TO SHAREHOLDERS
The board of directors declared an interim cash dividend of 23.0 cents per
ordinary share. In compliance with the requirements of STRATE, the following
dates are applicable:
Last date to trade cum dividend Friday, 2 December 2011
First date of trading ex dividend Monday, 5 December 2011
Record date Friday, 9 December 2011
Payment date Monday, 12 December 2011
Share certificates may not be dematerialised or rematerialised from Monday,
5 December 2011 to Friday, 9 December 2011, both days inclusive.
Signed on behalf of the board of directors:
E de la H Hertzog
Chairman
D P Meintjes
Chief Executive Officer
Stellenbosch
8 November 2011
Directors:
Dr E de la H Hertzog (Chairman), DP Meintjes (Chief Executive Officer),
CI Tingle (Chief Financial Officer), JC Cohen (British), Prof Dr RE Leu
(Swiss), Dr MK Makaba, ZP Manase, KHS Pretorius, AA Raath, Dr MA Ramphele,
DK Smith, CM van den Heever, Dr CA van der Merwe, Prof WL van der Merwe,
MH Visser, Dr TO Wiesinger (German)
Secretary:
GC Hattingh
Registered address:
Mediclinic Offices, Strand Road, Stellenbosch 7600, South Africa
PO Box 456, Stellenbosch 7599, South Africa
Tel +27 (0)21 809 6500
Fax +27 (0)21 886 4037
Website: www.mediclinic.com
Transfer secretaries:
Computershare Investor Services (Pty) Ltd
70 Marshall Street, Johannesburg 2001, South Africa
PO Box 61051, Marshalltown 2107, South Africa
Tel +27 (0)11 370 5000
Fax +27 (0)11 688 7716
Sponsor:
Rand Merchant Bank (A division of FirstRand Bank Limited)
Date: 08/11/2011 14:00:01 Produced by the JSE SENS Department.
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