|
Medi-Clinic - Unaudited results for the six months ended 30 September 2005
MEDI-CLINIC CORPORATION LIMITED
Reg. No. 1983/010725/06
Share code: MDC
ISIN-code: ZAE000004370
(Incorporated in the Republic of South Africa)
INTERIM REPORT
Unaudited results of Medi-Clinic Corporation Limited and its subsidiaries for
the six months ended 30 September 2005
HIGHLIGHTS
- Growth in revenue: 14%
- Headline earnings per share growth: 14%
- Distribution per share up: 24%
CONSOLIDATED INCOME STATEMENT
6 months to 6 months to Year to
30/09/05 Increase 30/09/04 31/03/05
R"000 % R"000 R"000
Revenue 2,278,021 14 2,002,263 4,039,907
Cost of sales (1,258,035) (1,124,189) (2,236,117)
Administration
and other
operating (548,079) (479,441) (984,603)
expenses --------- --------- ---------
Operating profit
(EBITDA) 471,907 18 398,633 819,187
Dividends 964 821 1,705
Interest
received 37,873 26,944 57,051
Income from
associates 13,299 12,567 24,776
Profit on sale
of equipment 331 768 667
Consideration
for the
termination of
agreements 50,000
Goodwill
Impairment (2,410) (2,913)
Depreciation (56,348) (46,420) (97,117)
Finance cost
(12,091) (15,141) (29,450)
--------- --------- ---------
Net profit
before taxation 455,935 375,762 823,906
Taxation 133,288 103,712 214,154
--------- ---------
Net profit for
the period 322,647 272,050 609,752
--------- ---------
Attributable to:
Shareholders of
the company 276,270 238,255 543,227
Minority 46,377 33,795 66,525
interests --------- ---------
322,647 272,050 609,752
--------- ---------
Headline
earnings
reconciliation:
Attributable
earnings 276,270 238,255 543,227
Goodwill 2,410 2,913
Profit on sale
of equipment (331) (768) (667)
After tax
consideration
for the
termination of
agreements (42,500)
---------
Attributable
headline
earnings
275,939 15 239,897 502,973
--------- --------
Headline
earnings per
ordinary share -
cents 80.3 14 70.2 146.9
Earnings per
ordinary share -
cents 80.4 69.7 158.7
Distribution per
ordinary share -
cents
Dividend 16.5 18.8
Capital 13.3 26.2
distribution --------- ---------
16.5 24 13.3 45.0
--------- ---------
CONSOLIDATED BALANCE SHEET
30/09/05 30/09/04 31/03/05
R"000 R"000 R"000
Assets
Non-current
assets 2,346,459 2,195,345 2,246,880
Property,
plant and
equipment 2,104,773 1,967,510 1,997,278
Intangible
assets 47,829 47,449 48,144
Investments - 109,209
unlisted 107,105 113,856
Deferred
taxation 84,648 73,281 87,602
Current assets 1,616,656 1,207,768 1,510,170
Inventories 140,039 137,579 136,434
Receivables
and prepayments 495,609 481,284 525,211
Cash and cash 848,525
equivalents 981,008 588,905
--------- --------- ---------
Total assets 3,963,115 3,403,113 3,757,050
--------- --------- ---------
Equity and
liabilities
Total equity 3,125,446 2,640,208 2,928,346
Share capital
and reserves 2,868,243 2,427,080 2,693,411
Minority
interests 257,203 213,128 234,935
Total
liabilities 837,669 762,905 828,704
Long-term
interest-bearing
debt 144,357 174,482 159,214
Long-term
interest-free
debt 82,170 63,892 72,870
Short-term
interest-bearing
debt 51,271 63,922 80,362
Interest-free
debt and
provisions 559,871 460,609 516,258
Total equity and --------- --------- ---------
liabilities 3,963,115 3,403,113 3,757,050
--------- --------- ---------
Number of
ordinary shares 344,659 342,646 343,618
("000)
Weighted number
of ordinary
shares ("000) 343,817 341,834 342,368
Net asset value
per ordinary
share - cents 832 708 784
Directors"
valuation of
unlisted 142,112 152,479 153,333
investments --------- --------- ---------
STATEMENT OF CHANGES IN EQUITY
30/09/05 30/09/04 31/03/05
R"000 R"000 R"000
Opening balance 2,928,346 2,480,459 2,480,459
Distributed to
shareholders (108,930) (96,022) (141,594)
Distributed to
minorities (24,133) (21,388) (33,786)
Net profit for
the period 322,647 272,050 609,752
Movement in
shares held in
treasury 6,050 5,659 11,439
Other movements 1,466 (550) 2,076
--------- --------- ---------
3,125,446 2,640,208 2,928,346
--------- --------- ---------
CONSOLIDATED CASH FLOW STATEMENT
30/09/05 30/09/04 31/03/05
R"000 R"000 R"000
Cash flow from
operating
activities 320,664 255,431 584,064
Cash generated
from operating
activities 562,204 493,636 922,813
Net finance
income 25,782 11,803 29,306
Consideration
for the
termination of
agreements 50,000
Taxation paid (134,259) (132,598) (242,675)
Distributions
to shareholders (108,930) (96,022) (141,594)
Distributions
to minorities 24,133) (21,388) (33,786)
Cash flow from
investment
activities (150,283) (100,773) (178,394)
Cash flow from
financing (37,898) (16,821) (8,213)
activities --------- --------- ---------
Net movement in
cash and cash
equivalents 132,483 137,837 397,457
Opening balance
of cash and cash
equivalents 848,525 451,068 451,068
Closing balance --------- --------- ---------
of cash and cash 981,008 588,905 848,525
equivalents --------- --------- ---------
COMMENTARY
We are pleased to report that the group has maintained its consistent growth
pattern. It has increased revenue and its distribution to shareholders while
implementing strategic initiatives and investments aimed at expanding the
group"s operations in South Africa and abroad.
FINANCIAL PERFORMANCE
Revenue, which consists mainly of hospital fees levied, increased by 14% to R2
278 million (2004: R2 002 million) for the six months under review. Operating
income before interest, taxation, depreciation and amortisation (EBITDA) was 18%
higher at R472 million (2004: R399 million). Headline earnings rose by 15% to
R276 million (2004: R240 million) resulting in an increase of 14% in headline
earnings per ordinary share to 80,3 cents (2004: 70,2 cents). The interim
distribution per ordinary share at 16,5 cents (2004: 13,3 cents) is 24% higher.
BUSINESS PERFORMANCE
ER24 became a wholly-owned subsidiary of the group with effect from 1 April
2005. The current period"s results are, therefore, not directly comparable with
those of the previous period. Excluding ER24"s revenue, the group"s revenue
growth amounted to 12%.
The revenue growth of 12% was achieved through a 6,6% increase in bed-days, a 4%
increase in the average income per bed-day and a 1,4% change in the case profile
of patients treated. The increase in utilisation was evident in both surgical
and medical cases. The number of patients admitted to our hospitals increased
by 6,3% while the average length of stay increased slightly mainly due to an
increase in the average length of stay of medical cases.
The increase in the average income per bed-day sold of only 4% is, as alluded to
in earlier reports, the result of the successful implementation of the fully
transparent net acquisition price model ("NAP model") on all pharmaceutical
items. The NAP model enabled the group to focus on both medicines and scheduled
drugs and surgical consumables as cost items, which resulted in a significant
slowdown in pharmaceutical price inflation and in some instances a lowering of
cost in the pharmaceutical usage mix. This increase is well below the general
and the healthcare inflation experienced over the comparable period and is a
trend, which is expected to continue.
The group"s EBITDA margin increased from 19,9% to 20,7% mainly due to improved
operational efficiencies. The improving performance of the Curamed group in
Pretoria further contributed to the increased margin.
The group commenced paying dividends instead of making capital distributions out
of share premium in the previous reporting period. This resulted in the payment
of Secondary Tax on Companies (STC) on the dividends which contributed to the
increase in the group"s effective tax rate from 27,6% to 29,2%. Although the
tax rate payable by companies decreased by 1% to 29%, this decrease had the
result that there was an additional once-off charge of 0,7% to the taxation line
to adjust the balance of deferred tax, which in the group"s case is a debit
balance, to the lower tax rate. The payment of STC will have a permanent impact
on the group"s effective tax rate and will depend on the group"s future dividend
policy.
Cash flow continued to be strong during the period under review, mainly due to
more efficient working capital management. The group converted 119% (2004:
124%) of EBITDA into cash generated from operating activities. Cash and cash
equivalents increased to R981 million from R849 million at 31 March 2005 after
financing capital expenditure and investments. Interest-bearing debt decreased
from R240 million at 31 March 2005 to R196 million resulting in a strengthening
of the debt: equity ratio from 8% to 6%. The group"s strong cash flow continues
to underline the quality of its earnings.
Capital expenditure for the period under review was R144 million (2004: R98
million). Capital commitments (including amounts approved but not yet
contracted for) amounted to R373 million (2004: R354 million).
STRATEGIC ISSUES
The group set itself three strategic objectives at the beginning of the year,
namely to implement its Black Economic Empowerment (BEE) initiative, to explore
alternatives aimed at optimising the capital structure of the group and to
intensify its investigation into meaningful opportunities in other countries.
Significant progress has been made on each of these issues.
BEE
The group views itself as an integral part of the South African political,
social and economic community and as such, embarked on a process aimed at
achieving the following objectives:- transforming Medi-Clinic as a growing
company while continuing to fulfil a leadership role in the healthcare sector in
South Africa;
- active participation by black partners in the management of Medi-Clinic;-
participation by employees in a share ownership programme;- maintaining to the
extent possible, financial neutrality to existing shareholders; and - building
on a commitment by all shareholders to the joint creation of wealth within Medi-
Clinic.
In fulfilment of these objectives, the group has announced an initial BEE
transaction with a total value of R1.1 billion, through which an effective 15%
of the group will now be owned by a broad-based group of black entities,
including Medi-Clinic staff.
The BEE transaction involves the proposed introduction of two strategic black
partners, Phodiso Holdings Limited ("Phodiso") and Circle Capital Ventures
(Proprietary) Limited ("Circle Capital"), which will together acquire 11% of the
group. The Mpilo Trust, an employee share trust, will hold a further 4%. The
trust will benefit an estimated 11 000 employees of whom 52% are black and 89%
are women.
It is proposed that the BEE transaction, which was announced on 4 October 2005,
be implemented at market value, being R18.40 per share, which was calculated as
the 30-day volume weighted average price of the group"s shares traded on the JSE
Limited to close of business on 30 September 2005.
Upon implementation of the initiative, which is expected to be 19 December 2005,
Phodiso will hold 6,875% and Circle Capital 4, 125% of the group. Their
ownership will be effected partly through the purchase of existing shares
(4.25%) from shareholders of the group in terms of a scheme of arrangement ("the
scheme") in the amount of some R280 million, and partly through the issue of new
shares at par valued at about R525 million. The purchase of the existing shares
will be financed by the strategic partners themselves by providing R80 million
of their own capital and by Standard Bank in the amount of R200 million. In
respect of the shares issued at par, the group will be entitled to receive all
dividends earned by the strategic partners on their interest of 11% in the group
until the R525 million less the par value of the shares so acquired has been
repaid to the group.
The Mpilo Trust will be funded through capital contributions by the group"s
operating subsidiaries in the amount of R290 million which will enable the trust
to acquire 4% in the group at market value. The capital contributions plus a
coupon of 70% of the prime interest rate from time to time will be recovered by
the operating subsidiaries by way of the vesting in them of 80% of all ordinary
dividends and 100% of all special dividends earned by the trust on its
shareholding in the group. 20% of all ordinary dividends earned by the trust
will be paid to participating employees.
A ten-year lock-in period is applicable to both the strategic black partners and
the participating employees in the Mpilo Trust.
The BEE transaction remains subject to a number of conditions precedent, being,
inter alia, the approval of the scheme by the shareholders of the group and the
sanctioning thereof by the Court, as well as shareholder approval of the issue
of shares and the creation of the Mpilo Trust. On 27 October 2005, the Cape
Town High Court ordered the scheme meeting to be held on 23 November 2005. A
circular providing full details of the BEE transaction, the financial effects
thereof as well as the proposed timetable was posted to shareholders on 1
November 2005.
To fulfil one of the group"s key BEE objectives, namely the active participation
by black partners in the management of the group, Dr Nkaki Matlala (a surgeon by
training and an executive director of Phodiso) has joined the group on a
fulltime basis as Director: Clinical Relations with representation on the
Executive Committee. He quickly settled in and has already made positive
contributions to the group at various levels and we look forward to his ongoing
input and participation.
As previously stated, Medi-Clinic supports the formulation of a Health Charter
and will comment on the second draft through the Hospital Association of South
Africa ("HASA").
Capital restructuring
Medi-Clinic also announced a capital restructuring programme on 4 October 2005
with the objective of increasing the return on the group"s shareholder equity.
It entails the introduction of debt funding in the amount of R700 million. The
debt will be used to pay down existing inter company indebtedness in the group.
The introduction of such debt in relation to the facilities arranged with
Standard Bank will leave sufficient capacity to allow the group to fund future
strategic initiatives and respond to expansion opportunities.In addition, a
special dividend in the amount of about R1.6 billion was declared which equates
to R4.02 per share.
Further details of the capital restructuring, the financial effects thereof as
well as the indicative timetable for the special dividend are incorporated in a
circular posted to shareholders on 1 November 2005.
Opportunities in other countries
Progress has been made in the group"s efforts to investigate opportunities
abroad. On 24 September 2005 the group signed a co-operation agreement with the
United Eastern Medical Services of Abu Dhabi. It is foreseen that a successful
completion of all the necessary studies within a couple of months, could lead to
the development of at least one new private hospital in Abu Dhabi.Further
opportunities in Africa and other countries are also being investigated.
AFFORDABILITY OF HEALTHCARE
Affordability will always remain a critical issue in the healthcare industry
especially in developing countries.
The group will therefore continue its efforts to improve the affordability of
healthcare in South Africa. Medi-Clinic"s initiative in relation to the NAP
model (referred to above) for medicines and scheduled drugs as well as surgical
consumables promotes transparency in the pricing of these items and has gone a
long way to bring the spiralling inflation of these prices to an effective
standstill.
The private hospital industry has recognised the need to place private hospital
costs in proper perspective and to explain the fundamental cost drivers in a
typical private hospital in South Africa. To this end, HASA, of which Medi-
Clinic has always been a member, has commissioned independent research into the
cost drivers and other variable factors influencing private hospital
expenditure. The results of this in-depth, comprehensive study are expected to
be finalised in the first quarter of 2006. Once completed, the findings and
outcomes of this research will be made public.
CHANGES TO THE BOARD OF DIRECTORS
Dr Vincent E Msibi, the chairman of Phodiso, was co-opted to the Board on 9
November 2005 as a non-executive director. We welcome him and look forward to
his positive contribution to the group.
PROSPECTS
The group plans to continue its track record of consistent growth based on
meeting the needs of the market. This implies increasing the use and expansion
of facilities and services in its core competencies along with further
efficiency improvements. Apart from these internally driven growth focus areas,
initiatives by government aimed at broadening the membership base of medical
schemes should have a positive impact on growth in the industry in the longer
term. It is, however, still too early to predict the likely outcome of these
initiatives.
The transaction whereby the group acquired 49.9% of the 190 bed Witwatersrand
University Donald Gordon Medical Centre for R60 million along with a management
agreement, was approved by the Competition Authorities on 12 October
2005.Phodiclinics (Proprietary) Limited a company owned 51% by Medi-Clinic and
49% by Phodiso acquired the hospitals of the 200 bed Protector group consisting
mainly of the Medivaal MediCentre in Vanderbijlpark. This transaction is still
subject to the approval of, inter alia, the Competition Authorities.Major
upgrades at Morningside Medi-Clinic and Sandton Medi-Clinic each involving about
R100 million are in progress so as to ensure their competitiveness in this
particularly high income area. Expansions at Durbanville Medi-Clinic and
Pietermaritzburg Medi-Clinic are also taking place while a project at Nelspruit
Medi-Clinic consisting of additional consulting rooms and the upgrade of the
original hospital is underway. Routine upgrades continue at various hospitals,
while strategic upgrades at the Pretoria hospitals are in the planning phase.The
group remains optimistic about its prospects for the next six months.
BASIS OF PREPARATION
The interim results are prepared in accordance with International Financial
Reporting Standards (IFRS) and IAS 34 - Interim Financial Reporting, the
requirements of the South African Companies Act and the Listings Requirements of
the JSE.
In terms of the Listings Requirements of the JSE the group is required to
prepare its consolidated financial statements in accordance with IFRS from 1
April 2005. The date of transition to IFRS is 1 April 2004, which represents
the start of the earliest period of comparative information presented and thus
the group"s opening balance sheet at 1 April 2004 has been restated to reflect
all existing IFRS statements expected to be applicable on 31 March 2006.
The effect of the transition from South African Statements of Generally Accepted
Accounting Practice (SA GAAP) to IFRS on the group"s assets, equity and its net
profit are due to adjustments to:
- property, plant and equipment - following the adoption of IAS 16 Property,
Plant and Equipment the useful lives of property, plant and equipment have been
reassessed resulting in an increase in retained income with a corresponding
increase in property, plant and equipment;
- IFRS 2 expense relating to share options - the group has elected not to apply
the provisions of IFRS 2 Share-based Payments to employee share option scheme
awards granted on or before 7 November 2002. The fair value at the date of
granting the options is charged to income over the relevant option vesting
periods, adjusted to reflect actual and expected levels of vesting; and
- post-retirement medical benefit obligation - the group has elected to
recognise all cumulative actuarial gains and losses as at 1 April 2004
(previously not recognised).
RECONCILIATION OF INCOME STATEMENT (R"000)
6 months to 30/09/04
SA GAAP IFRS effects IFRS
Revenue 2 002 263 2 002 263
Cost of sales (1 124 189) (1 124 189)
Administration
and other
operating (475 091) (4 350) (479 441)
expenses --------- --------- ---------
Operating
profit (EBITDA) 402 983 (4 350) 398 633
Dividends 821 821
Interest
received 26 944 26 944
Income from
associates 12 567 12 567
Profit on sale
of equipment 768 768
Consideration
for the
termination of
agreements
Goodwill
Impairment (2 410) (2 410)
Depreciation (53 034) 6 614 (46 420)
Finance cost (15 141) (15 141)
--------- ---------
Net profit
before taxation 373 498 2 264 375 762
Taxation (102 693) (1 019) (103 712)
Net profit for --------- --------- ---------
the period 270 805 1 245 272 050
--------- --------- ---------
Attributable
to:
Equity holders
of the company 237 842 413 238 255
Minority
interests 32 963 832 33 795
--------- --------- ---------
270 805 1 245 272 050
--------- --------- ---------
RECONCILIATION OF INCOME STATEMENT (R"000)
Year to 31/03/05
SA GAAP IFRS effects IFRS
Revenue 4 039 907 4 039 907
Cost of sales (2 236 117) (2 236 117)
Administration
and other
operating (981 088) (3 515) (984 603)
expenses --------- --------- ---------
Operating
profit (EBITDA) 822 702 (3 515) 819 187
Dividends 1 705 1 705
Interest
received 57 051 57 051
Income from
associates 24 776 24 776
Profit on sale
of equipment 667 667
Consideration
for the
termination of
agreements 50 000 50 000
Goodwill (2 913) (2 913)
Depreciation (109 886) 12 769 (97 117)
Finance cost (29 450) (29 450)
--------- ---------
Net profit 814 652 9 254 823 906
before taxation
Taxation (210 673) (3 481) (214 154)
Net profit for --------- --------- ---------
the period 603 979 5 773 609 752
--------- --------- ---------
Attributable
to:
Equity holders
of the company 539 076 4 151 543 227
Minority
interests 64 903 1 622 66 525
--------- --------- ---------
603 979 5 773 609 752
--------- --------- ---------
RECONCILIATION OF BALANCE SHEET (R"000)
6 months to 30/09/04
SA GAAP IFRS effects IFRS
Assets
Non-current 2 158 023 37 322 2 195 345
assets
Property, 1 914 216 53 294 1 967 510
plant and
equipment
Intangible 47 449 47 449
assets
Investments - 107 105 107 105
unlisted
Deferred 89 253 (15 972) 73 281
taxation
Current assets 1 207 768 1 207 768
Inventories 137 579 137 579
Receivables 481 284 481 284
and prepayments
Cash and cash 588 905 588 905
equivalents
--------- --------- ---------
Total assets 3 365 791 37 322 3 403 113
--------- --------- ---------
Equity and
liabilities
Total equity 2 602 886 37 322 2 640 208
Share capital 2 393 311 33 769 2 427 080
and reserves
Minority 209 575 3 553 213 128
interests
Total 762 905 762 905
liabilities
Long-term 174 482 174 482
interest-
bearing debt
Long-term 63 892 63 892
interest-free
debt
Short-term 63 922 63 922
interest-
bearing debt
Interest-free 460 609 460 609
debt and
provisions
Total equity --------- --------- ---------
and liabilities 3 365 791 37 322 3 403 113
--------- --------- ---------
RECONCILIATION OF BALANCE SHEET (R"000)
Year to 31/03/05
SA GAAP IFRS effects IFRS
Assets
Non-current 2 203 879 43 001 2 246 880
assets
Property, 1 935 843 61 435 1 997 278
plant and
equipment
Intangible 48 144 48 144
assets
Investments - 113 856 113 856
unlisted
Deferred 106 036 (18 434) 87 602
taxation
Current assets 1 510 170 1 510 170
Inventories 136 434 136 434
Receivables 525 211 525 211
and prepayments
Cash and cash 848 525 848 525
equivalents
--------- --------- ---------
Total assets 3 714 049 43 001 3 757 050
--------- --------- ---------
Equity and
liabilities
Total equity 2 885 345 43 001 2 928 346
Share capital 2 654 753 38 658 2 693 411
and reserves
Minority 230 592 4 343 234 935
interests
Total 828 704 828 704
liabilities
Long-term 159 214 159 214
interest-
bearing debt
Long-term 72 870 72 870
interest-free
debt
Short-term 80 362 80 362
interest-
bearing debt
Interest-free 516 258 516 258
debt and
provisions
Total equity --------- --------- ---------
and liabilities 3 714 049 43 001 3 757 050
--------- --------- ---------
INTERIM DIVIDEND TO SHAREHOLDERS
The board of directors is pleased to announce that an interim dividend of 16,5
cents per ordinary share was declared.
In compliance with the requirements of STRATE, the following dates are
applicable:
Last date to trade cum dividend Friday, 2 December 2005
First date of trading ex dividend Monday, 5 December 2005
Record date Friday, 9 December 2005
Payment date Monday, 12 December 2005
Share certificates may not be dematerialised or rematerialised from Monday, 5
December 2005 to Friday, 9 December 2005, both days inclusive.
Signed on behalf of the board of directors:
E DE LA H HERTZOG LJ ALBERTS
Chairman Managing Director
Stellenbosch, 9 November 2005
Date: 09/11/2005 03:05:20 PM Produced by the JSE SENS Department
| Profile Group (Pty) Ltd. has taken care in preparing all information on this website, but does not accept any liability for errors or out-of-date information. | |||||||||||||
| Other Profile Group sites: FundsData Online (unit trust data) | Profile Group corporate site | |||||||||||||
| [ Terms of Use | Privacy Policy | PAIA manual | FAQs/Help | Site Map | © Copyright Reserved 2026 ] | |||||||||||||
|
|||||||||||||
