Wrap Text
Unaudited interim group results for the six months ended 30 September 2014 and declaration of cash dividend
MEDICLINIC INTERNATIONAL LIMITED
Incorporated in the Republic of South Africa
Reg. no: 1983/010725/06
Income tax no: 9950122714
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 2014 AND
DECLARATION OF CASH DIVIDEND
SALIENT FEATURES
- Continued strong growth in patient numbers
- Successful capital raise to fund growth opportunities
- Acquisition of Clinique La Colline in Geneva and Swissana Clinic Meggen in Lucerne
- Positive impact of currency movements
- Basic normalised headline earnings per share increased by 22% to 185.2 cents
- Interim dividend per ordinary share increased by 11% to 31.0 cents
CONSOLIDATED ABRIDGED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
as at as at as at
30/9/2014 30/9/2013 31/3/2014
R'm R'm R'm
ASSETS
Non-current assets 60 836 54 876 59 308
Property, equipment and vehicles 49 620 45 941 49 597
Intangible assets 10 787 8 307 9 210
Investments in associates 3 3 4
Investments in joint venture 65 67 67
Retirement benefit assets 25
Other investments and loans 67 65 68
Derivative financial instruments 16 235 60
Deferred income tax assets 278 233 302
Current assets 12 307 9 142 11 226
Inventories 972 803 904
Trade and other receivables 6 521 5 670 6 768
Current income tax assets 66 36 33
Cash and cash equivalents 4 748 2 633 3 521
Total assets 73 143 64 018 70 534
EQUITY AND LIABILITIES
Total equity 29 335 22 026 25 391
Share capital and reserves 28 374 21 208 24 468
Non-controlling interests 961 818 923
LIABILITIES
Non-current liabilities 35 707 35 239 36 899
Borrowings 27 202 27 135 28 704
Deferred income tax liabilities 7 312 7 233 7 251
Retirement benefit obligations 523 329 414
Provisions 544 479 492
Derivative financial instruments 126 63 38
Current liabilities 8 101 6 753 8 244
Trade and other payables 4 957 4 370 5 048
Borrowings 1 705 1 540 1 666
Provisions 465 288 376
Derivative financial instruments 16
Current income tax liabilities 974 539 1 154
Total liabilities 43 808 41 992 45 143
Total equity and liabilities 73 143 64 018 70 534
Net asset value per ordinary share cents 3 330.4 2 619.9 3 020.3
CONSOLIDATED ABRIDGED INCOME STATEMENT
Unaudited Unaudited Audited
6 months to 6 months to year to
30/9/2014 Increase 30/9/2013 31/3/2014
Notes R'm % R'm R'm
Revenue 16 828 19% 14 128 30 495
Cost of sales (9 742) (8 050) (17 189)
Administration and other operating expenses (3 626) (3 034) (6 562)
Operating profit before depreciation (EBITDA) 1 3 460 14% 3 044 6 744
Depreciation and amortisation (723) (574) (1 239)
Operating profit 2 737 2 470 5 505
Other gains and losses 2 32 2
Income from associates 3
Income from joint venture (2)
Finance income 52 38 73
Finance cost 3 (602) (610) (1 221)
Profit before tax 2 217 1 898 4 362
Income tax expense (428) (393) (776)
Profit for the period 1 789 1 505 3 586
Attributable to:
Equity holders of the Company 1 668 1 404 3 385
Non-controlling interests 121 101 201
1 789 1 505 3 586
Number Number Number
PER SHARE PERFORMANCE '000 '000 '000
Weighted average number of shares
Before equity raising 821 842 808 868 809 319
Adjustment for equity raising (IAS 33 para 26) 606 2 764 2 764
Weighted average number of ordinary shares in issue 822 448 811 632 812 083
Diluted weighted average number of shares
Before equity raising 838 403 826 957 826 956
Adjustment for equity raising (IAS 33 para 26) 606 2 764 2 764
Diluted weighted average number of ordinary shares in issue 839 009 829 721 829 720
Earnings per ordinary share cents cents cents
Basic earnings basis 202.8 17% 173.0 416.8
Diluted earnings basis 198.8 169.2 408.0
Basic headline earnings basis 189.0 9% 172.6 413.1
Diluted headline earnings basis 185.3 168.9 404.4
Basic normalised headline earnings basis 185.2 22% 151.4 375.8
Normalised diluted headline earnings basis 181.5 148.1 367.8
Dividends per ordinary share
interim 31.0 28.0 28.0
final n/a n/a 68.0
96.0
EARNINGS RECONCILIATION R'm R'm R'm
Profit attributable to shareholders 1 668 19% 1 404 3 385
Re-measurements for headline earnings (131) (4) (38)
Profit on sale of property, equipment and vehicles (4) (4) (4)
Impairment of property and equipment 31 8
Insurance proceeds (158) (40)
Gain from a bargain purchase (2)
Income tax effects 18 1 8
Headline earnings 1 555 11% 1 401 3 355
Re-measurements for normalised headline earnings (32) (215) (352)
Realised gain on forward contracts (32)
Swiss tax charges relating to prior years (111)
Past service cost (215) (241)
Income tax effects 43 49
Normalised headline earnings 1 523 24% 1 229 3 052
CONSOLIDATED ABRIDGED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months to 6 months to year to
30/9/2014 Increase 30/9/2013 31/3/2014
R'm % R'm R'm
Profit for the period 1 789 19% 1 505 3 586
Other comprehensive income
Items that may be reclassified to the income statement
Currency translation differences (204) 2 712 4 371
Fair value adjustment to cash flow hedges (net of tax) (102) 139 29
Items that may not be reclassified to the income statement
Actuarial gains and losses (net of tax) 2 201 138
Other comprehensive income, net of tax (304) 3 052 4 538
Total comprehensive income for the period 1 485 4 557 8 124
Attributable to:
Equity holders of the Company 1 364 4 455 7 922
Non-controlling interests 121 102 202
1 485 4 557 8 124
CONSOLIDATED ABRIDGED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 months to 6 months to year to
30/9/2014 30/9/2013 31/3/2014
R'm R'm R'm
Opening balance 25 391 18 002 18 002
Shares issued 3 178
Share issue costs (64)
Movement in shares held in treasury (20) 3 7
Movement in share-based payment reserve 11 10 19
Increase in non-controlling interests 12 24
Total comprehensive income for the period 1 485 4 557 8 124
Transactions with non-controlling shareholders 1 2
Distributed to shareholders (564) (467) (688)
Distributed to non-controlling interests (95) (79) (99)
Closing balance 29 335 22 026 25 391
Comprising
Share capital 14 141 11 027 11 027
Treasury shares (269) (253) (249)
Share-based payment reserve 170 150 159
Foreign currency translation reserve 8 994 7 539 9 197
Hedge reserve (93) 119 9
Retained earnings 5 431 2 626 4 325
Shareholders' equity 28 374 21 208 24 468
Non-controlling interests 961 818 923
Total equity 29 335 22 026 25 391
CONSOLIDATED ABRIDGED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
6 months to 6 months to year to
30/9/2014 30/9/2013 31/3/2014
Notes R'm R'm R'm
Cash flow from operating activities 2 726 2 134 4 615
Cash generated from operations 3 692 3 024 6 340
Net finance cost (455) (494) (982)
Taxation paid (511) (396) (743)
Cash flow from investment activities (2 386) (1 148) (2 539)
Investment to maintain operations (377) (426) (926)
Investment to expand operations 8 (2 151) (737) (1 684)
Proceeds on disposal of property,equipment and vehicles 7 17 32
Insurance proceeds 134 40
Proceeds from other investments and loans 1 1
Investment in joint venture (2) (2)
Cash flow from financing activities 876 (1 225) (1 605)
Proceeds from shares issued 3 178
Share issue costs (64)
Distributions to shareholders (564) (467) (688)
Distributions to non-controlling interests (95) (79) (99)
Proceeds from borrowings 5 206 223
Repayment of borrowings (1 577) (888) (1 074)
Proceeds from disposal of treasury shares 2 3 7
Treasury shares purchased (22)
Proceeds on disposal of non-controlling interest 13 26
Net movement in cash, cash equivalents and bank overdrafts 1 216 (239) 471
Opening balance of cash, cash equivalents and bank overdrafts 3 485 2 705 2 705
Exchange rate fluctuations on foreign cash 47 167 309
Closing balance of cash, cash equivalents and bank overdrafts 4 748 2 633 3 485
Cash and cash equivalents 4 748 2 633 3 521
Bank overdrafts (36)
4 748 2 633 3 485
ABRIDGED SEGMENTAL REPORT
Unaudited Unaudited Audited
6 months to 6 months to year to
30/9/2014 30/9/2013 31/3/2014
R'm R'm R'm
Revenue
Southern Africa 6 206 5 638 11 205
Switzerland 8 646 7 025 15 874
Middle East 1 976 1 465 3 416
16 828 14 128 30 495
EBITDA
Southern Africa 1 461 1 214 2 453
Switzerland 1 609 1 575 3 539
Middle East 390 255 752
3 460 3 044 6 744
Operating profit
Southern Africa 1 278 1 063 2 151
Switzerland 1 140 1 219 2 738
Middle East 319 188 616
2 737 2 470 5 505
NOTES TO THE ABRIDGED FINANCIAL STATEMENTS
Unaudited Unaudited Audited
6 months to 6 months to year to
30/9/2014 Increase 30/9/2013 31/3/2014
R'm % R'm R'm
1 EBITDA RECONCILIATION
Operating profit before depreciation (EBITDA) 3 460 3 044 6 744
Adjusted for:
Past service cost (215) (241)
Impairment of property and equipment 31 8
Insurance proceeds (158) (40)
Profit on sale of property, equipment and vehicles (4) (4)
Normalised EBITDA 3 329 18% 2 829 6 467
2 OTHER GAINS AND LOSSES
Realised gain on forward contracts 32
Gain on a bargain purchase 2
32 2
3 FINANCE COST
Interest 465 496 990
Amortisation of capitalised financing fees 73 63 133
Preference share dividend 64 62 125
Less: amounts included in the cost of qualifying assets (11) (27)
602 610 1 221
4 COMMITMENTS
Capital commitments 3 450 2 067 3 233
Southern Africa 1 897 1 640 1 717
Switzerland 927 410 833
Middle East 626 17 683
5 EXCHANGE RATES R R R
Average Swiss franc (ZAR/CHF) 11.82 10.40 11.05
Closing Swiss franc (ZAR/CHF) 11.82 11.12 11.96
Average UAE dirham (ZAR/AED) 2.90 2.65 2.76
Closing UAE dirham (ZAR/AED) 3.09 2.74 2.88
6 NUMBER OF SHARES ISSUED Number Number Number
'000 '000 '000
Ordinary shares in issue 867 957 826 957 826 957
Ordinary shares held in treasury (15 984) (17 474) (16 832)
Ordinary shares in issue net of treasury shares 851 973 809 483 810 125
7 FAIR VALUE MEASUREMENT
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. Level 2 means that input other than quoted prices included within level 1
that is observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices), whereas
level 1 refers to quoted prices (unadjusted) in active markets for identical assets or liabilities.
Unaudited Unaudited Audited
6 months to 6 months to year to
30/9/2014 30/9/2013 31/3/2014
R'm R'm R'm
8 INVESTMENTS TO EXPAND OPERATIONS
Property, equipment and vehicles purchased 711 737 1 679
Business combinations 1 440 5
2 151 737 1 684
Cash flow on business combination
Clinique La Colline 1 333
Swissana Clinic Meggen 107
Radiotherapie Hirslanden 5
1 440 5
On 25 June 2014, Hirslanden acquired a 100% interest in the operating company of Clinique La Colline. Clinique La Colline is a private
hospital based in Geneva, Switzerland.
The goodwill of R1 136m arising from the acquisition is attributable to the earnings potential of the business. None of the goodwill
recognised is expected to be deductible for income tax purposes.
Cash consideration for Clinique La Colline 1 361
Assets
Property, equipment and vehicles 123
Intangible assets 322
Inventories 23
Trade and other receivables 179
Cash and cash equivalents 28
Total assets 675
Liabilities
Borrowings 185
Derivative financial instrument 3
Other liabilities 3
Provisions 15
Pension liability 68
Deferred tax liabilities 81
Income tax payable 3
Trade and other payables 92
Total liabilities 450
Total identifiable net assets at fair value 225
Goodwill 1 136
Total 1 361
Analysis of cash flow on acquisition
Total consideration transferred 1 361
Net cash acquired with the subsidiary (28)
Net cash flow on acquisition 1 333
Acquisition-related costs of R6m have been charged to adminis-trative expenses in the consolidated income statement.
From the date of acquisition, Clinique La Colline has contributed R161m of revenue and R28m to the net profit before tax of the Group.
If the business combination had taken place at the beginning of the financial year, revenue from continuing operations would have
been R340m and the profit before tax for the Group would have been R55m.
On 8 August 2014, Hirslanden AG acquired a 100% interest in the operating company of Swissana Clinic Meggen. Swissana Clinic Meggen
is a private hospital based in Meggen,Switzerland.
The goodwill of R103m arising from the acquisition is attributable to the earnings potential of the business. None of the goodwill
recognised is expected to be deductible for income tax purposes.
Cash consideration for Swissana Clinic Meggen 108
Total assets 59
Total liabilities (54)
Total identifiable net assets at fair value 5
Goodwill 103
Total 108
Analysis of cash flow on acquisition
Total consideration transferred 108
Net cash acquired with the subsidiary (1)
Net cash flow on acquisition 107
Acquisition-related costs of R1m have been charged to adminis-trative expenses in the consolidated income statement.
From the date of acquisition, Swissana Clinic Meggen has contributed R15m of revenue and R1m to the net loss before tax of the Group.
If the combination had taken place at the beginning of the financial year, revenue from continuing operations would have been R48m
and the loss before tax from continuing operations for the Group would have been R8m.
COMMENTARY
Danie Meintjes, CEO of Mediclinic International commented:
"We are pleased to report the continued increase in patient numbers at all three platfroms. Our results have benefited from this
diverse geographic presence and we continue to invest to extend and further improve our service offering."
TRADING RESULTS
We are pleased to report that the Group has maintained its consistent growth pattern.
Group revenue increased by 19% to R16 828m (2013: R14 128m) for the period under review. Normalised operating profit before interest,
tax, depreciation and amortisation ("normalised EBITDA") was 18% higher at R3 329m (2013: R2 829m). Basic normalised headline
earnings per share increased by 22% to 185.2 cents (2013: 151.4 cents).
The Group's normalised EBITDA margin decreased slightly from 20.0% to 19.8% for the period under review.
The Group results include a one-off realised gain on forward contracts of R32m, which is excluded in determining normalised headline
earnings. In the comparative period, the Group results include a one-off past-service cost credit of R215m (R172m after tax).
Including the one-off item, headline earnings increased by 11% to R1 555m (2013: R1 401m) and basic headline earnings per ordinary share
increased by 9% to 189.0 cents (2013: 172.6 cents).
Movements in the exchange rates had a material effect on the reported results. The average ZAR/Swiss franc (CHF) exchange rate was R11.82
compared to R10.40 for the comparative period and the average ZAR/UAE dirham (AED) exchange rate was R2.90 compared to R2.65 for the
comparative period.
Finance cost
Finance cost includes amortisation of capitalised financing expenses of R73m (2013:R63m).
The capitalised financing expenses 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 111% (2013:107%) of normalised EBITDA into cash generated from
operations. Cash and cash equivalents increased from R3 521m at 31 March 2014 to R4 748m at 30 September 2014.
Interest-bearing borrowings
Interest-bearing borrowings decreased from R30 370m at 31 March 2014 to R28 907m at 30 September 2014, mainly as a result of the change
in the closing ZAR/CHF exchange rate and loan repayments. The closing ZAR/CHF exchange rate moved from R11.96 at 31 March 2014 to R11.82
at 30 September 2014. It is important to note that the foreign debt of the Group's Swiss and Middle Eastern operations, amounting to
R23 308m, is matched with foreign assets in the same currencies. The foreign debt has no recourse to the Southern African operations'
assets.
Assets
Intangible assets increased from R9 210m at 31 March 2014 to R10 787m at 30 September 2014 mainly as a result of the acquisition of
Clinique La Colline in Geneva, Switzerland in June 2014.
Equity capital raising
The Group successfully raised R3 114m after expenses through an accelerated bookbuild offering to fund acquisitions. Details of the
equity capital raising were released on SENS on 11 June 2014 and 12 June 2014.
Weighted average number of shares adjustment
The weighted average number of shares was adjusted in accordance with IAS 33 paragraph 26 as a result of the equity capital raising
completed in June 2014.
Normalised non-IFRS financial measures
The Group uses normalised revenue, normalised EBITDA, normalised headline earnings and normalised basic headline earnings per share as
non-IFRS measures in evaluating performance and as a method to provide shareholders with clear and consistent reporting. These
non-IFRS measures are defined as reportable EBITDA, headline earnings and basic headline earnings per share in terms of accounting
standards, excluding one-off items, as detailed above.
OPERATIONS IN SOUTHERN AFRICA
MEDICLINIC SOUTHERN AFRICA
Financial performance
Mediclinic Southern Africa's revenue increased by 10% to R6 206m (2013:R5 638m) for the period under review. Normalised EBITDA
was 10% higher at R1 332m (2013: R1 214m).
The Southern African operations contributed R571m (2013: R490m) to the normalised attributable income of the Group after:
- depreciation charges of R183m (2013: R151m);
- net finance charges of R173m (2013: R219m);
- loss from joint venture of R2m (2013: Rnil);
- taxation of R282m (2013: R253m); and
- minority interest amounting to R121m (2013: R101m).
Business performance
The 10% revenue growth was driven by a 4.8% increase in bed-days sold and a 5.7% increase in the average income per bed-day. The
number of patients admitted increased by 1.7%, while the average length of stay increased by 3.0%.
The normalised EBITDA margin of the Southern African operations was maintained at 21.5%.
Mediclinic Southern Africa's cash flow continued to be strong as it converted 88% (2013: 109%) of normalised EBITDA into cash
generated from operations.
Cash and cash equivalents increased from R1 359m at 31 March 2014 to R1 431m at 30 September 2014.
Interest-bearing borrowings decreased from R5 842m at 31 March 2014 to R5 598m at 30 September 2014.
Projects and capital expenditure
During the period under review, the Southern African operations invested the following amounts:
- R364m (2013: R326m) in capital projects and new equipment to enhance its business;
- R89m (2013: R117m) to replace existing equipment; and
- R158m (2013: R149m) to repair and maintain property and equipment, which was charged through the income statement.
For the current financial year, R937m is budgeted for capital projects and new equipment to enhance its business, R302m for the
replacement of existing equipment and R303m for repairs and maintenance. Incremental EBITDA resulting from capital projects in
progress or approved is budgeted to amount to R52m and R58m in 2015 and 2016, respectively.
The number of beds is expected to increase from 7 614 to 7 636 during the period under review.
During the past six months, a number of building projects were completed at various hospitals that created 22 additional beds as
well as a number of facility upgrades.
Building projects in progress, which should be completed during the next six months, will add 206 additional beds. The
establishment of the new Mediclinic Midstream (176 beds) is the most significant development.
Several building projects in progress should be completed during the 2016 financial year, which will create 101 additional beds.
Regulatory environment
Within the broader health sector context, the government maintains its commitment to achieve universal coverage through a National
Health Insurance (NHI) system. Mediclinic Southern Africa continues to support the underlying principle of universal coverage. A
White Paper on the NHI is still awaited. Mediclinic Southern Africa will continue to engage with both government and other relevant
stakeholders on the most appropriate design and mechanisms to pursue universal coverage within the South African context.
The Competition Commission's market inquiry into private healthcare has commenced, and stakeholders had to make comprehensive
written submissions by the end of October 2014. Mediclinic Southern Africa has a dedicated team working on the matter and
comprehensive submissions dealing with the nature and challenges of private healthcare were addressed therein.
OPERATIONS IN SWITZERLAND
HIRSLANDEN
Financial performance
Hirslanden's revenue increased by 23% to R8 646m (2013: R7 025m) for the period under review. Normalised EBITDA was 18% higher
at R1 607m (2013: R1 360m). In Swiss francs, revenue increased by 8% to CHF732m (2013:CHF675m) and normalised EBITDA increased
by 4% to CHF136m (2013: CHF131m).
Hirslanden contributed R537m (2013: R509m) to the attributable income of the Group after:
- depreciation charges of R468m (2013: R357m);
- net finance charges of R473m (2013: R397m); and
- normalised tax of R129m (2013: R97m).
In Swiss francs, Hirslanden contributed CHF45m (2013: CHF50m) to the attributable income of the Group after:
- depreciation charges of CHF40m (2013: CHF34m);
- net finance charges of CHF40m (2013: CHF38m); and
- normalised tax of CHF11m (2013: CHF9m).
Business performance
The 8% revenue growth was driven by inpatient admissions increasing by 6.5%, at a constant average length of stay and the
average revenue per case increased by 2.7%, mainly due to higher acuity levels.
The normalised EBITDA margin of Hirslanden decreased from 19.4% to 18.6% in line with expectations.
Hirslanden converted 134% (2013: 115%) of normalised EBITDA into cash generated from operations.
Cash and cash equivalents decreased from R1 138m (CHF95m) at 31 March 2014 to R1 115m (CHF94m) at 30 September 2014.
Interest-bearing borrowings reported in ZAR decreased from R23 040m (CHF1 926m) at 31 March 2014 to R21 870m (CHF1 850m) at
30 September 2014, mainly due to the change in the closing ZAR/CHF exchange rate and loan repayments.
Projects and capital expenditure
During the period under review, Hirslanden invested the following amounts:
_ R289m (CHF24m) (2013: R397m (CHF38m)) in capital projects and new equipment to enhance its business;
_ R274m (CHF23m) (2013: R283m (CHF27m)) to replace existing equipment; and
_ R217m (CHF18m) (2013: R184m (CHF18m)) to repair and maintain property and equipment, which was charged through the income
statement.
For the current financial year, CHF65m is budgeted for capital projects and new equipment to enhance its business, CHF75m for
the replacement of existing equipment and CHF37m for repairs and maintenance. Incremental EBITDA resulting from capital projects
in progress or approved is budgeted to amount to CHF6m and CHF8m in 2015 and 2016, respectively.
The number of inpatient beds increased from 1 567 to 1 650 during the period under review, mainly as a result of the acquisition
of Clinique La Colline (62 inpatient beds) and Swissana Clinic Meggen (22 inpatient beds).
The major building project completed during the period under review was the Klinik Hirslanden radiotherapy department within the
Männedorf public hospital which was commissioned in April 2014.
Building projects in process, which should be completed during the next six months, will add 24 additional beds at Klinik
Stephanshorn and upgrade a number of facilities. Investments in technology will also be made at a number of hospitals.
Regulatory environment
The consulting body of the cantonal authorities of the highly specialised medicine initiative has expanded and finally includes
two representatives from private medicine. Developments are expected to move at a slower tempo in the near future to avoid the
risk of new objections by service providers.
In June 2014, the Federal Council addressed the implementation of the mass immigration initiative adopted on 9 February 2014 and
approved an implementation concept. The concept outlines how the Federal Council will set the quantitative limits and quotas for
controlling migration to Switzerland from February 2017. Swiss hospitals will focus on the issue of the implementation of the
immigration initiative in view of the potential impact on staffing.
The vote on the initiative for a public statutory health insurer held on 28 September 2014 was rejected by the Swiss population.
Acquisition of Clinique La Colline and Swissana Clinic Meggen
Hirslanden acquired a 100% interest in the operating business of Clinique La Colline, a private hospital based in Geneva. Clinique
La Colline is a multi-disciplinary medical and surgical private hospital with 95 beds (including 62 inpatient and 33 outpatient and
specialised beds) and six operating theatres equipped for general, endoscopic, and navigation-assisted surgery. The acquisition
significantly strengthens Hirslanden's position in Western Switzerland by providing a footprint in the important market of Geneva.
The financial results of Clinique La Colline have been included in the Group financial results with effect from 25 June 2014.
Hirslanden also acquired a 100% interest in the operating business of Swissana Clinic Meggen, a private hospital based in the region
of Lucerne. Swissana Clinic Meggen has 22 inpatient beds, 11 day surgery beds and 3 operating theatres.
The financial results of Swissana Clinic Meggen have been included in the Group financial results with effect from 8 August 2014.
OPERATIONS IN UNITED ARAB EMIRATES
MEDICLINIC MIDDLE EAST
Financial performance
Mediclinic Middle East's revenue increased by 35% to R1 976m (2013: R1 465m) for the period under review. Normalised EBITDA
increased by 53% to R390m (2013: R255m). In UAE dirhams, revenue increased by 23% to AED681m (2013: AED553m) and normalised EBITDA
increased by 41% to AED135m (2013:AED96m).
Mediclinic Middle East contributed R295m (2013: R140m) to the attributable income of the Group after:
- depreciation charges of R71m (2013: R67m); and
- net finance charges of R24m (2013: R48m).
In UAE dirhams, Mediclinic Middle East contributed AED102m (2013: AED53m) to the attributable income of the Group after:
- depreciation charges of AED25m (2013: AED25m); and
- net finance charges of AED8m (2013: AED18m).
Business performance
The 23% revenue growth was driven by inpatient hospital admissions increasing by 11%, while hospital outpatient consultations and
visits to the emergency units increased by 12%. Clinic outpatient consultations increased by 19%.
The normalised EBITDA margin of Mediclinic Middle East increased from 17.4% to 19.7%.
Mediclinic Middle East converted 93% (2013: 50%) of normalised EBITDA into cash generated from operations.
Cash and cash equivalents increased from R724m (AED251m) at 31 March 2014 to R889m (AED288m) at 30 September 2014. Interest-bearing
borrowings decreased from R1 488m (AED517m) at 31 March 2014 to R1 438m (AED465m) at 30 September 2014, mainly because of loan
repayments.
Projects and capital expenditure
During the period under review, Mediclinic Middle East invested the following amounts:
- R57m (AED20m) (2013: R14m (AED5m)) in capital projects and new equipment to enhance its business;
- R14m (AED5m) (2013: R27m (AED10m)) to replace existing equipment; and
- R26m (AED9m) (2013: R21m (AED8m)) to repair and maintain property and equipment, which was charged through the income statement.
For the current financial year, AED177m is budgeted for capital projects and new equipment to enhance the business in the longer term,
AED15m for the replacement of existing equipment and AED20m for repairs and maintenance. EBITDA resulting from capital projects in
progress or approved is budgeted to amount to AED4m and AED5m in 2015 and 2016, respectively.
The number of beds remained at 382 during the reporting period, which includes 27 day beds available at the clinics.
The construction of the North Wing at Mediclinic City Hospital is under way and due to open at the end of 2015 at a total estimated
cost of AED265m.
Regulatory environment
Regulatory activity has increased steadily over the past few years with a number of changes implemented. These include the introduction
of the mandatory health insurance law and a number of e-initiatives. An electronic submission and publication of quality outcomes is
currently in the pilot phase for introduction in 2015.
PROSPECTS
We continue to invest in growth and development across our platforms in the delivery of cost-effective quality healthcare.
BASIS OF PREPARATION
The accounting policies applied in the preparation of these summarised 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 financial statements for the year ended 31 March 2014.
The summarised Group interim financial statements have been prepared in accordance with the Financial Reporting Guides issued by the
Accounting Practices Committee of the South African Institute of Chartered Accountants and in terms of IAS 34 Interim Financial Reporting
as well as in compliance with the Companies Act, 71 of 2008, as amended, and the Listings Requirements of the JSE Limited. The preparation
of the summarised Group interim financial statements was supervised by the Chief Financial Officer, Mr CI Tingle (CA(SA)).
CASH DIVIDEND TO SHAREHOLDERS
Notice is hereby given that the directors have declared an interim gross cash dividend in respect of the period under review of 31.0 cents
(2013: 28.0 cents) (26.35 cents (2013: 23.80 cents) net of dividend withholding tax) per ordinary share, an increase of 11%.
The dividend has been declared from income reserves and no secondary tax on companies credits have been utilised. A dividend withholding
tax of 15% will be applicable to all shareholders who are not exempt there from. The Company's issued share capital at the declaration
date is 867 957 325 ordinary shares.
The salient dates for the dividend will be as follows:
Last date to trade cum dividend Friday, 28 November 2014
First date of trading ex dividend Monday, 1 December 2014
Record date Friday, 5 December 2014
Payment date Monday, 8 December 2014
Share certificates may not be dematerialised or rematerialised from Monday, 1 December 2014 to Friday, 5 December 2014, both days inclusive.
For and on behalf of the board of directors:
E DE LA H HERTZOG D P MEINTJES
Chairman Chief Executive Officer
Stellenbosch
5 November 2014
DIRECTORS: Dr E de la H Hertzog (Chairman), DP Meintjes (Chief Executive Officer), CI Tingle (Chief Financial Officer), JJ Durand,
JA Grieve (British), Prof Dr RE Leu (Swiss), Dr MK Makaba, N Mandela, TD Petersen, KHS Pretorius, AA Raath, DK Smith, PJ Uys,
Dr CA van der Merwe, 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 21 809 6500
Fax +27 21 886 4037
Ethics line: 0800 005 316
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 11 370 5000
Fax +27 11 688 7716
SPONSOR: Rand Merchant Bank (A division of FirstRand Bank Limited)
Date: 06/11/2014 07:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
