Wrap Text
Mediclinic International plc - audited results for the year ended 31 March 2016 and proposed final dividend
Mediclinic International plc ("Mediclinic" or the "Company")
(Incorporated in England and Wales)
Company Number: 08338604
LSE Share Code: MDC
JSE Share Code: MEI
NSX Share Code: MEP
ISIN: GB00B8HX8Z88
MEDICLINIC INTERNATIONAL PLC REPORTS ITS AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2016 AND PROPOSED FINAL DIVIDEND
SUMMARY GROUP RESULTS FOR THE YEAR ENDED 31 MARCH 2016
(GBP million) 2016 2015 Variance
%
Revenue 2 107 1 977 7%
EBITDA(1) 382 406 (6%)
Underlying EBITDA(1) 428 403 6%
Operating profit 288 345 (17%)
Earnings(2) 177 241 (27%)
Underlying earnings(1) 219 193 13%
Basic earnings per share, pence 29.6 44.6 (34%)
Underlying basic earnings per share, pence(1) 36.7 35.8 3%
Dividend per share, pence* 7.90 9.33 (15%)
Net debt at the year end 1 536 1 353 14%
*The total dividend for the year ended 31 March 2016 in pound sterling comprises the proposed final dividend of 5.24 pence per share and the
equivalent interim dividend (adjusted for the 0.625 exchange ratio) of 2.66 pence per share, paid in December 2015 by Mediclinic International
Limited.
GROUP FINANCIAL AND OPERATING HIGHLIGHTS
Strong patient growth across all the operating platforms
Continued investments in patient experience and clinical quality initiatives
Successful completion of Mediclinic and Al Noor Combination and acquisition of 29.9% stake in Spire Healthcare Group
Solid financial performance with stable margins and good cash generation
Revenue growth of 7% with stable margins at 20.3% driving strong underlying earnings growth
Underlying basic earnings per share increased by 3% to 36.7 pence
Proposed final dividend per ordinary share of 5.24 pence
NOTES
1 See the reconciliations between the statutory and the non-GAAP earning measures in the financial review below.
2 Earnings refer to profit attributable to equity holders.
The Al Noor acquisition has been classified as a reverse takeover in terms of IFRS3. Since Mediclinic International Limited has been identified
as the acquirer, the comparative figures are those of Mediclinic International Limited's 2015 group results excluding Al Noor and are re-
presented in pounds sterling. Al Noor's results have been consolidated from the effective date of the acquisition (15 February 2016).
Group results are subject to movements in foreign currency exchange rates. Refer to the financial review below for exchange rates used to convert the operating
platforms' results to pound sterling.
Danie Meintjes, CEO of Mediclinic International, commented:
"We are pleased to announce trading for the year has been in line with management's expectations. The Group continues to deliver against its key
performance indicators with growth in patient activity across all platforms at stable margins. With the Al Noor transaction completing on 15
February, we are now focused on the smooth integration of the business.
We expect an increase in demand for cost-effective quality hospital services and increasingly complex clinical services to continue leading to
further volume growth. In line with industry trends, we are continuing to see the impact on our business of on-going regulatory initiatives and
increasing competition. We strive to differentiate ourselves from our peers in terms of our focus on patients, quality and safety. Leveraging on
our Group strength, our platform distribution and our combined knowledge will allow us to unlock further benefits for both patients and
shareholders."
For further information please contact:
Mediclinic International
Craig Tingle, Chief Financial Officer
Gert Hattingh, Group Services Executive
+27 (0)21 809 6500
Bell Pottinger
Liz Morley/Aarti Iyer
+44 (0)203 772 2468
Registered address: 1st Floor, 40 Dukes Place, London, EC3A 7NH, United Kingdom
Website: www.mediclinic.com
JSE sponsor: RAND MERCHANT BANK (A division of FirstRand Bank Limited)
NSX sponsor: Simonis Storm Securities (Pty) Ltd
ABOUT MEDICLINIC
Mediclinic is an international private healthcare group with three operating platforms in Southern Africa (South Africa and Namibia), Switzerland
and the United Arab Emirates. Its core purpose is to enhance the quality of life of patients by providing acute care, specialist-orientated,
multi-disciplinary healthcare services. Mediclinic also holds a 29.9% interest in Spire Healthcare Group plc ("Spire"), a LSE listed and UK-based
private healthcare group.
During February 2016 the reverse takeover (the "Combination") by the Company (previously named Al Noor Hospitals Group plc), with operations
mainly in Abu Dhabi in the United Arab Emirates, by Mediclinic International Limited was completed. Mediclinic International Limited was a South
African based international private healthcare group founded in 1983 and listed on the JSE, the South African stock exchange, since 1986, with
operations in South Africa, Namibia, Switzerland and the United Arab Emirates (mainly in Dubai). The Combination resulted in the enlarged
Mediclinic group, renamed Mediclinic International plc comprising 73 hospitals and 45 clinics.
Today, Mediclinic Southern Africa operates 49 hospitals and 2 day clinics throughout South Africa and 3 hospitals in Namibia with more than 8 000
inpatient beds in total; Hirslanden operates 16 private acute care facilities and 4 clinics in Switzerland with more than 1 600 inpatient beds;
and Mediclinic Middle East operates 5 hospitals and 39 clinics with more than 700 inpatient beds in the United Arab Emirates.
Mediclinic puts science at the heart of its care approach, focusing on providing the best possible facilities with international-standard
technology, backed-up by sound medical expertise and the empathy of its nursing staff.
Mediclinic has a primary listing on the Main Market of the LSE, with secondary listings on the JSE in South Africa and the NSX in Namibia.
CAUTIONARY STATEMENT
This preliminary announcement contains certain forward-looking statements relating to the business of the Company and its subsidiaries
(collectively, the "Group"), including with respect to the progress, timing and completion of the Group's development, the Group's ability to
treat, attract, and retain patients and customers, its ability to engage consultants and GPs and to operate its business and increase referrals,
the integration of prior acquisitions, the Group's estimates for future performance and its estimates regarding anticipated operating results,
future revenue, capital requirements, shareholder structure and financing. In addition, even if the Group's actual results or development are
consistent with the forward-looking statements contained in this preliminary announcement, those results or developments may not be indicative of
the Group's results or developments in the future. In some cases, you can identify forward-looking statements by words such as "could," "should,"
"may," "expects," "aims," "targets," "anticipates," "believes," "intends," "estimates," or similar words. These forward-looking statements are
based largely on the Group's current expectations as of the date of this preliminary announcement and are subject to a number of known and
unknown risks and uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any
future results, performance or achievement expressed or implied by these forward-looking statements. In particular, the Group's expectations
could be affected by, among other things, uncertainties involved in the integration of acquisitions or new developments, changes in legislation
or the regulatory regime governing healthcare in Switzerland, South Africa, Namibia and the UAE and poor performance by healthcare practitioners
who practice at our facilities, unexpected regulatory actions or suspensions, competition in general, the impact of global economic changes, and
the Group's ability to obtain or maintain accreditation or approval for its facilities or service lines. In light of these risks and
uncertainties, there can be no assurance that the forward-looking statements made in this preliminary announcement will in fact be realised and
no representation or warranty is given as to the completeness or accuracy of the forward-looking statements contained in this preliminary
announcement.
The Group is providing the information in this preliminary announcement as of this date, and we disclaim any intention or obligation to publicly
update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
ANALYST AND INVESTOR MEETING
There will be an analyst and investor meeting on Wednesday, 25 May 2016 at 09:00 BST Aldersgate, London, EC1A 4HD. A live audiocast of the
presentation will be available at 9am BST (10am SAST) on www.mediclinic.com.
https://secure.emincote.com/client/mediclinic/mediclinic003/
Enquiries:Aarti Iyer, Bell Pottinger
+44 (0)203 772 2468
aiyer@bellpottinger.com
OPERATING REVIEW
The period under review was one of the most significant in Mediclinic's three-decade history. Through the Combination of the businesses of
Mediclinic International Limited and the Al Noor Hospitals Group, we boosted our presence on an international scale, doubled the size of our UAE
business in a fast-growing market, and secured a listing as a FTSE 100 company on the London Stock Exchange. With the investment in Spire
Healthcare, we also established a footprint in the dynamic UK healthcare markets.
Our financial performance for the year was good. Increased patient volumes in all our operating platforms led to overall revenue growth of 7% and
underlying EBITDA growth of 6%. This growth was supported by investments in selected capacity projects as well as new service lines. A strong
focus on efficiencies has ensured stable margins.
Overall, the developments during the period under review enabled us to accelerate progress against our strategic priorities, in all our key
markets. Our main strategic focus remains in ensuring high-quality care and optimal patient experience. To this end, we continue to invest
heavily in our people, their training, the facilities in which they work, and the technology they use. Our growing international scale also
enables us to unlock further value through promoting collaboration and best practice transfer between our operating platforms and to leverage the
benefits of scale through synergies and cost-efficiencies.
The 2016/17 financial year is set to be another exciting year for Mediclinic. Our number one priority is to stay focused on patients, and to
remain their demonstrable first choice. Despite the uncertain economic environment, the market fundamentals remain sound, and we anticipate
continued capacity and footprint expansion at attractive returns across all of our operating platforms. The Group is well positioned to deliver
long-term value to our shareholders - a well-balanced portfolio of operations, a leading position across a mix of attractive healthcare markets
and a strong management team at the helm.
OPERATIONS IN SWITZERLAND
HIRSLANDEN
Key highlights
Inpatient numbers increased by 4.9% and total revenue by 6%. Inpatient revenue per case increased by 0.5% as a result of increased case
complexity. Underlying EBITDA margin increased to 19.7% mainly as a result of cost-containment measures implemented during the year.
Financial performance
Mediclinic Switzerland contributed GBP101m (2015: GBP88m) to the Group's underlying earnings. Financial highlights include:
Revenue increased by 8% from GBP1 044m to GBP1 130m
Underlying EBITDA increased by 9% from GBP203m to GBP221m
In local currency:
Revenue increased by 6% from CHF1 563m to CHF1 657m
Underlying EBITDA increased by 7% from CHF303m to CHF325m
Underlying earnings increased by 12% from CHF132m to CHF148m
Projects and capital expenditure
During the period under review, Hirslanden invested GBP47m in expansion capital projects and new equipment and GBP51m on the replacement of existing
equipment. Projects concluded include the Lausanne Radiology Institute (IROL - Institut de radiologie de l'ouest lausannois), the radiology and
doctor office complex at Hirslanden Klinik Birshof, a hybrid operating theatre and outpatient surgical centre at Hirslanden Clinique Cecil, an
enlarged emergency unit, ICU and cath lab at Hirslanden Klinik Aarau and Praxiszentrum Düdingen with an outpatient clinic with an integrated
radiology institute in Fribourg canton. Technology investments include new linear accelerators at Klinik Hirslanden and Hirslanden Klinik Aarau,
a surgical imaging system at Clinique La Colline, MRI's at Hirslanden Clinique Bois-Cerf and Hirslanden Klinik St. Anna and a CT scanner at
Klinik Hirslanden.
The number of inpatient beds increased from 1 655 to 1677 during the period under review with the opening on new beds at Hirslanden Klinik
Stephanshorn and Hirslanden Klinik Aarau.
Regulatory environment
The national outpatient tariff ("TARMED") is being revised and expected to be implemented in 2017 or 2018. The canton of Zurich is considering
cost saving measures which might in due course have an impact on private healthcare.
OPERATIONS IN SOUTHERN AFRICA
MEDICLINIC SOUTHERN AFRICA
Key highlights
Admissions increased by 1.3%, bed days sold by 2.9% and revenue per bed day by 6.3%. This resulted in total revenue growth of 9% in South African
rand. Underlying EBITDA margin increased to 21.4%
Financial performance
Mediclinic Southern Africa contributed GBP63m (2015: GBP63m) to the Group's underlying earnings. Financial highlights include:
Revenue declined by 6% from GBP691m to GBP649m
Underlying EBITDA declined by 5% from GBP147m to GBP139m
In local currency:
Revenue increased by 9% from R12 323m to R13 450m
Underlying EBITDA increased by 10% from R2 625m to R2 877m
Underlying earnings increased by 17% from R1 118m to R1 305m
Projects and capital expenditure
During the period under review, the Southern African operations spent GBP37m on expansion capital projects and new equipment and GBP15m on the
replacement of existing equipment.
The number of beds increased from 7 885 to 8 017 during the period under review. This comprised of the development of two new day clinics
(Mediclinic Limpopo Day Clinic and Mediclinic Durbanville Day Clinic) as well as the expansion of existing hospitals.
Regulatory environment
The South African Government is seeking to address the shortcomings of the public health system through the phased introduction of a National
Health Insurance system over the next 14 years. A White Paper outlining the financing and design of the envisaged system has been released for
consultation and Mediclinic will be submitting comprehensive comments.
The South African Competition Commission is currently undertaking a market inquiry into the private healthcare sector in South Africa to both
understand whether there are features of the sector that prevent, distort or restrict competition, and how competition in the sector can be
promoted. The enquiry is due to publish its recommendations in December 2016.
OPERATIONS IN UNITED ARAB EMIRATES
MEDICLINIC MIDDLE EAST
Key highlights
The Al Noor business was acquired on 15 February 2016 and the financial results include Al Noor trading for this period. The operational
statistics below exclude the Al Noor business, except where otherwise stated due to the short period involved and the mid-month effective date.
Admissions increased by 3.0%, bed days occupied by 5.7% and outpatient and accident and emergencies attendance by 1.8%. This resulted in a
revenue increase of 8%. Al Noor revenue for the period was AED 258.7m (GBP50m).
Financial performance
Mediclinic Middle East contributed GBP57m (2015: GBP42m) to the Group's underlying earnings (including GBP5m contribution by Al Noor).
Excluding Al Noor the financial highlights include:
Revenue increased by 15% from GBP242m to GBP279m
Underlying EBITDA increased by 17% from GBP53m to GBP62m
In local currency:
Revenue increased by 8% from AED1 430m to AED1 544m
Underlying EBITDA increased by 11% from AED312m to AED345m
Underlying earnings increased by 15% from AED252m to AED291m
Projects and capital expenditure
During the period under review, Mediclinic Middle East invested GBP30m in expansion capital projects and new equipment and GBP5m on the replacement
of existing equipment. The major component of the capex spend was on the Mediclinic City Hospital North Wing expansion.
The total number of beds in the group is now 721, comprising 371 beds in the Mediclinic Middle East facilities and 350 in the Al Noor group
facilities.
Regulatory environment
The regulatory environment in the UAE continues to be dynamic with major developments during the year being the rollout of mandatory health
insurance in Dubai as well as the announcement of a planned limited DRG inpatient tariff implementation during 2017.
BOARD CHANGES
After the successful completion of the Al Noor Combination, the newly formed Mediclinic International plc Board consists of the following
individuals:
Name Date of appointment
Ian Tyler 5 June 2013
Seamus Keating 5 June 2013
Dr Edwin Hertzog* 15 February 2016
Danie Meintjes* 15 February 2016
Craig Tingle* 15 February 2016
Jannie Durand* 15 February 2016
Alan Grieve* 15 February 2016
Prof Dr Robert Leu* 15 February 2016
Nandi Mandela* 15 February 2016
Trevor Petersen* 15 February 2016
Desmond Smith* 15 February 2016
*These directors were members of the Mediclinic International Limited Board prior to the Combination with Al Noor.
NEW CHIEF FINANCIAL OFFICER
Since the year end, Craig Tingle, Chief Financial Officer, announced his early retirement and will be leaving Mediclinic on 15 June 2016. On 11
May 2016 Mediclinic announced that Jurgens Myburgh will be appointed as Executive Director and Group Chief Financial Officer and will join the
Company effective 1 August 2016.
OVERVIEW AND OUTLOOK
Notwithstanding the on-going changes in the global and regional economies and the regulatory changes that continue to impact healthcare and its
affordability, we are continuing to see a strong demand for quality private healthcare services across our three operating platforms.
Mediclinic has continued to deliver strong revenue and profit growth. Our three operating platforms in Southern Africa, Switzerland and United
Arab Emirates have all achieved good growth in patient numbers and we continue to invest in buildings, technology and people to ensure we offer
high quality private healthcare service to both in and out patients.
At Hirslanden, given our high occupancy levels we anticipate modest growth at stable margins.
In Mediclinic Southern Africa, we expect continued growth, notwithstanding macro-economic challenges and increased competition anticipated in the
year ahead. In line with our key strategic initiatives we will continue to make additional investment in our operations to drive competitive
advantage.
In Mediclinic Middle East, following the Combination with Al Noor we expect to deliver continued strong growth supported by increased capacity
and beneficial underlying demographics. Successful integration of the business is well underway and cost synergies have been identified, which
will be partially offset by new project start-up costs and incremental operational investment.
We will continue to focus on our patients' needs by improving our value proposition in terms of technology, care and the latest improvements in
medicine and surgery. With three operating platforms and a significant investment in the UK, we can leverage best practice in terms of
experience, knowledge and skills. Mediclinic remains well positioned for future growth.
FINANCIAL REVIEW
Group revenue increased by 7% to GBP2 107m (2015: GBP1 977m) for the period under review.
Underlying operating profit before interest, tax, depreciation and amortisation ("underlying EBITDA") was 6% higher at GBP428m (2015: GBP403m) and
basic underlying earnings per share were 3% higher at 36.7 pence (2015: 35.8 pence).
Effective from 24 August 2015, the Group acquired a 29.9% shareholding in Spire. As Spire's financial year end is 31 December, the income from
associate was not recognised for the 3 months from January 2016 to March 2016. Underlying pro-forma earnings was adjusted to include the income
from associate for that period. Basic underlying pro-forma earnings per share were 5% higher at 37.5 pence (2015: 35.8 pence).
Underlying margins remained stable at 20.4%.
EARNINGS RECONCILIATION
Total Corporate Switzerland Southern Africa Middle East United Kingdom
2016 STATUTORY RESULTS GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Revenue 2 107 - 1 130 649 328 -
Operating profit 288 (44) 165 109 58 -
Profit attributable to equity holders 177 (50) 113 53 55 6
RECONCILIATIONS
Operating profit 288 (44) 165 109 58 -
Add back:
- Other gains and losses 1 1 - - - -
- Depreciation 93 - 63 20 10 -
EBITDA 382 (43) 228 129 68 -
One-off and exceptional items:
Transaction cost (Al Noor acquisition) 41 41 - - - -
Accelerated share-based payment charges 10 - - 10 - -
Pre-acquisition Swiss tariff provision release (7) - (7) - - -
Restructuring cost 2 - - - 2 -
Underlying EBITDA 428 (2) 221 139 70 -
Profit attributable to equity holders 177 (50) 113 53 55 6
One-off and exceptional items: 41 41 - - - -
Tax - - - - - -
Accelerated share-based payment charges 10 - - 10 - -
Tax - - - - - -
Pre-acquisition Swiss tariff provision release (7) - (7) - - -
Tax 2 - 2 - - -
Restructuring cost 2 - - - 2 -
Tax - - - - - -
Fair value gains on ineffective cash flow hedges (8) - (8) - - -
Tax 1 - 1 - - -
Other gains and losses 1 1 - - - -
Tax - - - - - -
Underlying earnings 219 (8) 101 63 57 6
Weighted average number of shares (millions) 598.4
Underlying earnings per share (pence) 36.7
Total Corporate Switzerland Southern Africa Middle East United Kingdom
2015 STATUTORY RESULTS GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Revenue 1 977 - 1 044 691 242 -
Operating profit 345 2 161 137 45 -
Profit attributable to equity holders 241 2 124 73 42 -
RECONCILIATIONS -
Operating profit 345 2 161 137 45 -
Add back: -
- Other gains and losses (24) (2) (13) (9) - -
- Depreciation 85 - 55 22 8 -
EBITDA 406 - 203 150 53 -
One-off and exceptional items: -
Impairment of property and equipment 2 - - 2 - -
Profit on sale of property, equipment and vehicles (5) - - (5) - -
Underlying EBITDA 403 - 203 147 53 -
Profit attributable to equity holders 241 2 124 73 42 -
One-off and exceptional items: -
Impairment of property 2 - - 2 - -
Tax - - - - - -
Insurance proceeds (9) - - (9) - -
Tax 1 - - 1 - -
Gain on disposal of subsidiary (2) - (2) - - -
Tax - - - - - -
Profit on disposal of property, equipment and vehicles (5) - - (5) - -
Tax 1 - - 1 - -
Realised gain on foreign currency forward contract (2) (2) - - - -
Tax - - - - - -
Ineffective cash flow hedges 19 - 19 - - -
Tax (4) - (4) - - -
Swiss tax rate charges relating to prior years (40) - (40) - - -
Tax - - - - - -
Discount on loan repayment (11) - (11) - - -
Tax 2 - 2 - - -
Underlying earnings 193 - 88 63 42 -
Weighted average number of shares (millions) 540.3
Underlying earnings per share (pence) 35.8
The current Group results include the following exceptional and one-off items which were adjusted to determine underlying earnings:
One-off transaction costs of GBP41m (GBP41m after tax) relating to the Al Noor acquisition. The transaction cost is mainly comprised of advisor fees
and South African securities transfer tax.
A one-off non-cash IFRS 2 accelerated share-based payment charge of GBP10m (GBP10m after tax) relating to employee share trusts for Southern African
employees.
After the announcement of the proposed Mediclinic/Al Noor Combination, the trustees of the employee trusts and the relevant participating
employer companies agreed to accelerate the vesting of the underlying assets of the trusts to the beneficiaries and to close down the trusts. The
underlying shares were sold in two book building exercises previously announced in December 2015 and January 2016.
GBP7m (GBP5m after tax) was released in respect of a pre-acquisition Swiss tariff provision. When Mediclinic acquired the Hirslanden business in
2007, a provision relating to a specific tariff dispute was included in the opening accounts. After lengthy judicial processes and a court ruling
in the 2013 financial year an increased provision was made which was excluded in the measurement of underlying performance for the year. The
dispute has now been finally settled and the balance of the provision released. Given that the exceptional charge was adjusted from underlying
earningsin 2013, its release has been treated consistently by being excluded from underlying earnings in 2016.
GBP8m (GBP7m after tax) mark-to-market fair value gain, relating to the ineffective Swiss interest rate swaps. The group uses floating-to-fixed
interest rate swaps on certain loan agreements to hedge against interest movements which have the economic effect of converting floating rate
borrowings to fixed rate borrowings. The group applies hedge accounting and therefore fair value adjustments are booked to the consolidated
statement of comprehensive income.
With the removal of the Swiss franc/euro peg during January 2015 and the introduction of negative interest rates in Switzerland, the Swiss
interest rate hedges became ineffective once Libor is below zero as bank funding at Libor plus relevant margins is subject to a zero rate Libor
floor. Effective from 1 October 2014, the mark-to -market movements are charged to the income statement. As these are non-cash flow items and to
provide balanced operational reporting the group excluded the charge in the measurement of underlying performance in the 2015 financial year and
consistently excludes the gain arising this year. The swaps expire in 2017 and 2018.
Al Noor post acquisition restructuring costs of GBP2m.
Loss of GBP1m on foreign currency forward contracts.
Foreign exchange rates
Although the Group reports its results in pound sterling, the underlying operation segments earnings are generated in Swiss franc, UAE dirham and
the South African rand. Consequently, movement in exchange rates affected the reported earnings and reported balances in the statement of
financial position. The impact of a 10% change in the GBP/South African rand exchange rates for a sustained period of one year is: profit for the
year would increase/decrease by GBP7m (2015: increase/decrease by GBP10m) due to exposure to the GBP/South African Rand exchange rate.
During the period under review, the average exchange rates were the following:
2016 Variance 2015
Average rates:
GBP/Swiss franc 1.47 (2.0%) 1.50
GBP/UAE dirham 5.54 (6.4%) 5.92
GBP/South African rand 20.73 16.3% 17.82
Period end rates:
GBP/Swiss franc 1.38 (4.2%) 1.44
GBP/UAE dirham 5.28 (2.8%) 5.43
GBP/South African rand 21.21 17.7% 18.02
Mediclinic / Al Noor Combination
The Combination became effective on 15 February 2016. The results of Al Noor have been consolidated from that date. The integration of Al Noor is
on-going and the performance until now is in line with expectations.
The fair value exercise over the opening balance sheet of Al Noor remains provisional at 31 March 2016 as permitted by IFRS 3.
Since the Group is in discussions with UAE medical insurance funders and other third parties about conforming Al Noor’s commercial
practices with the rest of the Group, there is still a degree of uncertainty about the fair value of certain acquired assets and liabilities.
This is expected to be finalised during the next year.
Cash flow
The Group continued to deliver strong cash flow. The Group converted 96% (2015: 109%) of underlying EBITDA into cash generated from operations.
Cash and cash equivalents increased from GBP265m to GBP305m.
Interest-bearing borrowings
Interest-bearing borrowings increased from GBP1 618m to GBP1 841m. The increase is mainly because of the bridge facility which was utilised to fund
the tender offer to Al Noor Hospitals Group plc shareholders. The refinancing of the bridge is underway and details will be provided on
conclusion thereof.
2016 2015
GBP'm GBP'm
Interest-bearing 1 841 1 618
Less: cash and cash equivalents (305) (265)
Net debt 1 536 1 353
Total equity 3 570 1 840
Debt-to-equity capital ratio 0.4 0.7
Assets
Intangible assets increased from GBP642m at 31 March 2015 to GBP1 927m at 31 March 2016 mainly because of the goodwill recognised in respect of the
Al Noor acquisition.
Tax
The Group's effective tax rate was increased from 4.3% to 22.4%. In the prior year, the tax rate was impacted by the release of GBP43m Swiss income
tax liabilities in relation to historic uncertain tax positions. For the period under review, the transaction cost relating to the Al Noor
Combination was non-deductible for tax purposes and this had a tax effect of GBP10m. Furthermore, the non-deductibility of the accelerated IFRS 2
charges affected the tax charge by GBP3m.
Weighted average number of shares adjustment
During the period under review, shares were issued at a discount. As required by the accounting standards (IAS 33 paragraph 26), an adjustment
was made to the weighted average number of shares in issue for the current and the prior year. Basic earnings per share for the prior year was
adjusted and decreased by 1.1 pence from 45.7 pence to 44.6 pence and basic underlying earnings per share for the prior year decreased by 0.8
pence from 36.6 to 35.8 pence.
Underlying non-IFRS financial measures
The Group uses underlying income statement reporting as non-IFRS measures in evaluating performance and as a method to provide shareholders with
clear and consistent reporting.
The Group's non-IFRS measures are intended to remove from reported earnings volatility associated with the following types of one-off income and
charges:
restructuring provisions;
- profit/loss on sale of significant assets;
- past service cost charges / credits in relation to pension fund conversion rate changes;
- significant prior year tax and deferred tax adjustments;
- accelerated IFRS 2 charges;
- significant tariff provision charges / releases;
- mark-to-market fair value gains / losses, relating to ineffective interest rate swaps;
- significant impairment charges;
- significant insurance proceeds; and
- significant transaction costs incurred during acquisitions.
The Group has consistently applied this definition of underlying measures as it has reported on its financial performance in the past as the
directors believe this additional information is important to allow shareholders to better understand the Group's trading performance for the
year. It is the Group's intention to continue to consistently apply this definition in the future.
INVESTMENT IN ASSOCIATE AND CORPORATE EXPENDITURE
On 24 August 2015, the Group acquired a 29.9% shareholding in Spire for GBP447m. The investment in Spire contributed GBP6m to the Group's underlying
earnings.
In addition, corporate expenditure was incurred amounting to GBP8m, of which GBP6m relates to the finance charges in respect of the bridge facility.
DIVIDEND POLICY AND DIVIDEND
Following the completion of the Combination of Mediclinic International Limited and Al Noor, the Board has reviewed and amended the dividend
policy to target a pay-out ratio of between 25% and 30% of underlying earnings. The Board may revise the policy from time to time.
Shareholders on the South African register will be paid the ZAR cash equivalent of 119.5244 cents (101.59574 cents net of
dividend withholding tax) per share. The ZAR cash equivalent has been calculated using the following exchange rate: £1:
ZAR 22.81, being the 5 day average ZAR/GBP exchange rate at 3:00pm GMT Bloomberg.
Shareholders on the South African register will be paid the ZAR cash equivalent of 119.52 cents per share. The ZAR cash equivalent has been
calculated using the following exchange rate: GBP1: ZAR 22.81,being the 5 day average ZAR/GBP exchange rate at 3:00pm GMT Bloomberg.
The final dividend will be paid on Friday, 25 July 2016 to all ordinary shareholders who are on the register of members at the close of business
on the record date of Friday, 17 June 2016.
The salient dates for the dividend will be as follows:
Dividend announcement date Wednesday, 25 May 2016
Last date to trade cum dividend (SA register) Thursday, 9 June 2016
First date of trading ex-dividend: SA Friday, 10 June 2016
First date of trading ex-dividend: UK Thursday, 16 June 2016
Record date Friday, 17 June 2016
AGM approval Wednesday, 20 July 2016
Payment date Monday, 25 July 2016
No dematerialisation or rematerialisation within Strate and no transfers between the UK and SA registers may take place between Friday, 10 June
2016 and Friday, 17 June 2016, both dates inclusive.
By order of the Board.
Danie Meintjes Craig Tingle
Chief Executive Officer Chief Financial Officer
25 May 2016
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 March 2016
GROUP
(Restated) (Restated)
2016 2015 2014
Notes GBP'm GBP'm GBP'm
ASSETS
Non-current assets 5 604 3 654 3 368
Property, equipment and vehicles 3 199 2 985 2 817
Intangible assets 1 927 642 523
Equity accounted investments 3 455 4 4
Other investments and loans 4 5 4
Receivables 2 - -
Derivative financial instruments 1 1 3
Deferred income tax assets 16 17 17
Current assets 945 742 637
Inventories 75 60 51
Trade and other receivables 561 415 384
Current income tax assets 2 2 2
Derivative financial instruments 2 - -
Cash and cash equivalents 305 265 200
Total assets 6 549 4 396 4 005
EQUITY
Capital and reserves
Share capital 4 74 994 821
Share premium reserve 4 690 - -
Treasury shares 4 (2) (23) (22)
Retained earnings 5 5 320 485 321
Other reserves 4, 6 (2 573) 323 268
Attributable to equity holders of the Company 3 509 1 779 1 388
Non-controlling interests 61 61 51
Total equity 3 570 1 840 1 439
LIABILITIES
Non-current liabilities 2 192 2 114 2 096
Borrowings 7 1 524 1 550 1 630
Deferred income tax liabilities 446 429 412
Retirement benefit obligations 179 87 34
Provisions 24 22 18
Derivative financial instruments 19 26 2
Current liabilities 787 442 470
Trade and other payables 431 335 288
Borrowings 7 317 68 95
Provisions 19 24 20
Retirement benefit obligations 9 1 1
Derivative financial instruments 1 1 -
Current income tax liabilities 10 13 66
Total liabilities 2 979 2 556 2 566
Total equity and liabilities 6 549 4 396 4 005
These consolidated financial statements and the accompanying notes were approved for issue by the Board of Directors on 25 May 2016 and were
signed on its behalf by:
D Meintjes
Chief Executive Officer
CI Tingle
Chief Financial Officer
CONDENSED CONSOLIDATED INCOME STATEMENT
for the year ended 31 March 2016
GROUP
(Restated)
2016 2015
Notes GBP'm GBP'm
Revenue 2 107 1 977
Cost of sales (1 264) (1 184)
Administration and other operating expenses (554) (472)
Other gains and losses (1) 24
Operating profit 288 345
Finance income 9 6
Finance cost 9 (58) (85)
Share of profit of equity accounted investments 6 -
Profit before tax 245 266
Income tax expense 10 (55) (12)
Profit for the year 190 254
Attributable to:
Equity holders of the Company 177 241
Non-controlling interests 13 13
190 254
Earnings per ordinary share attributable to the equity holders of the Company - pence
Basic 11 29.6 44.6
Diluted 11 29.5 43.8
Profit for the year 190 254
Other comprehensive income
Items that may be reclassified to the income statement
Currency translation differences 92 59
Fair value adjustment - cash flow hedges 2 (5)
94 54
Items that may not be reclassified to the income statement
Actuarial gains and losses (56) (31)
Other comprehensive income, net of tax 38 23
Total comprehensive income for the year 228 277
Attributable to:
Equity holders of the Company 224 264
Non-controlling interests 4 13
228 277
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2016
Capital redemption Share premium Reverse acquisition Share-based
Share capital reserve reserve reserve Treasury shares payment reserve
(note 4) (note 4) (note 4) (note 4) (note 4) (note 6)
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Balance at 31 March 2014 (restated in GBP) 821 - - - (21) 13
Profit for the year - - - - - -
Other comprehensive income/(loss) for the year - - - - - -
Total comprehensive income for the year - - - - - -
Shares issued 177 - - - - -
Share issue costs (4) - - - - -
Treasury shares purchased (Forfeitable Share Plan) - - - - (1) -
Share-based payment expense - - - - - 1
Transactions with non-controlling shareholders - - - - - -
Dividends paid - - - - - -
Balance at 31 March 2015 (restated in GBP) 994 - - - (22) 14
Profit for the year - - - - - -
Other comprehensive income/(loss) for the year - - - - - -
Total comprehensive income for the year - - - - - -
Shares issued (August 2015) 479 - - - - -
Share issue costs (August 2015) (4) - - - - -
Reverse acquisition (1 402) 6 4 862 (3 014) - -
Share subscription (February 2016) 7 - 593 - - -
Reduction of share premium - - (4 765) - - -
Utilised by the Mpilo Trusts - - - - 21 -
Treasury shares purchased (Forfeitable Share Plan) - - - - (1) -
Share-based payment expense - - - - - 10
Transactions with non-controlling shareholders - - - - - -
Dividends paid - - - - - -
Balance at 31 March 2016 74 6 690 (3 014) (2) 24
GROUP
Foreign currency
translation reserve Hedging reserve Retained earnings Shareholders' Non-controlling Total
(note 6) (note 6) (note 5) equity interests equity
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Balance at 31 March 2014 (restated in GBP) 247 7 321 1 388 51 1 439
Profit for the year - - 241 241 13 254
Other comprehensive income/(loss) for the year 59 (5) (31) 23 - 23
Total comprehensive income for the year 59 (5) 210 264 13 277
Shares issued - - - 177 - 177
Share issue costs - - - (4) - (4)
Treasury shares purchased (Forfeitable Share Plan) - - - (1) - (1)
Share-based payment expense - - - 1 - 1
Transactions with non-controlling shareholders - - 1 1 4 5
Dividends paid - - (47) (47) (7) (54)
Balance at 31 March 2015 (restated in GBP) 306 2 485 1 779 61 1 840
- -
Profit for the year - 177 177 13 190
Other comprehensive income/(loss) for the year 101 2 (56) 47 (9) 38
Total comprehensive income for the year 101 2 121 224 4 228
Shares issued (August 2015) - - - 479 - 479
Share issue costs (August 2015) - - - (4) - (4)
Reverse acquisition - - (6) 446 - 446
Share subscription (February 2016) - - - 600 - 600
Reduction of share premium - - 4 765 - - -
Utilised by the Mpilo Trusts - - - 21 - 21
Treasury shares purchased (Forfeitable Share Plan) - - - (1) - (1)
Share-based payment expense - - - 10 - 10
Transactions with non-controlling shareholders - - 3 3 3 6
Dividends paid - - (48) (48) (7) (55)
Balance at 31 March 2016 407 4 5 320 3 509 61 3 570
CONDENSED CONSOLIDATED SUMMARISED STATEMENT OF CASH FLOWS
for the year ended 31 March 2016
GROUP
(Restated)
2016 2015
GBP'm GBP'm
Notes Inflow/(outflow) Inflow/(outflow)
Cash flow from operating activities
Cash received from customers 2 078 1 980
Cash paid to suppliers and employees (1 667) (1 540)
Cash generated from operations 411 440
Interest received 9 6
Interest paid (55) (57)
Tax paid (45) (52)
Net cash generated from operating activities 320 337
Cash flow from investment activities (1 549) (257)
Investment to maintain operations (72) (68)
Investment to expand operations (114) (124)
Business combinations (17) (81)
Al Noor Hospitals Group plc shares repurchased (530) -
Special dividend to existing Al Noor Hospitals Group plc shareholders (383) -
Proceeds on disposal of property, equipment and vehicles 1 5
Disposal of subsidiary - 3
Acquisition of investment in associate (446) -
Dividends received from equity accounted investment 2 -
Proceeds from money market fund 10 -
Insurance proceeds - 9
Loans advanced - (1)
Net cash (utilised)/generated before financing activities (1 229) 80
Cash flow from financing activities 1 242 (23)
Proceeds of shares issued 479 177
Share issue costs (4) (4)
Share subscription (February 2016) 600 -
Distributions to non-controlling interests (7) (7)
Distributions to shareholders (48) (47)
Proceeds from borrowings 302 279
Repayment of borrowings (85) (417)
Refinancing transaction costs (6) (7)
Settlement of Al Noor Hospitals Group plc share option scheme (2) -
Shares purchased (Forfeitable Share Plan) (1) (1)
Proceeds from disposal of treasury shares 12 -
Acquisition of non-controlling interest (2) -
Proceeds on disposal of non-controlling interest 4 4
Net increase in cash and cash equivalents 13 57
Opening balance of cash and cash equivalents 265 198
Exchange rate fluctuations on foreign cash 27 10
Closing balance of cash and cash equivalents 305 265
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 BASIS OF PREPARATION
The condensed consolidated financial statements included in the preliminary results announcement for the year ended 31 March 2016 have been
extracted from the full Annual Report which was approved by the Board of Directors on 25 May 2016. The consolidated financial statements within
the full Annual Report are prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union
('EU'), the Companies Act 2006 and Article 4 of the EU IAS Regulations.
The auditor's report on those consolidated financial statements was unqualified, did not draw attention to any matters by way of emphasis
without qualifying their report, and did not contain statements under section 498(2) or 498(3) of the Companies Act 2006. The preliminary results
do not comprise statutory accounts within the meaning of section 434(3) of the Companies Act 2006. The Annual Report for the year ended 31 March
2016 will be delivered to the Registrar of Companies following the Company's annual general meeting to be held on 20 July 2016.
Following the combination of Al Noor Hospitals Group plc and Mediclinic International Limited on 15 February 2016, the comparatives relate to
the consolidated results of Mediclinic International Limited, previously a South African registered group listed on the Johannesburg Stock
Exchange and the auditor's report on those financial statements was unqualified. The combination has been accounted for as a reverse acquisition
by the Group.
The condensed consolidated financial statements included in this preliminary announcement do not itself contain sufficient information to comply
with IFRS. The Company will publish full financial statements that comply with IFRS in June 2016.
This preliminary results announcement has been prepared applying consistent accounting policies to those applied by the Group in the comparative
period, except as described below. The Group has prepared the consolidated financial statements on a going concern basis.
Functional and presentation currency
The financial statements and financial information are presented in pound sterling, rounded to the nearest million. The functional currency of
the majority of the Group's entities, and the currencies of the primary economic environments in which they operate, is the South African rand,
Swiss franc and United Arab Emirates dirham. The United Arab Emirates dirham is pegged against the United States dollar at a rate of 3.6725 per
US Dollar. Due to the reverse acquisition which occurred during the financial year, the Group's presentation currency changed from the South
African rand in 2015 to pound sterling in 2016. A change in presentational currency is a change in accounting policy which is accounted for
retrospectively. Financial information reported in rand in the prior year's financial statements has been translated to sterling using the
procedures outlined below:
- Assets and liabilities were translated at the closing sterling rates;
- Income and expenses were translated at average sterling exchange rates; and
- Differences resulting from retranslation have been recognised in the foreign currency translation reserve.
The comparative numbers have been restated for the change in presentation currency.
Within the consolidated income statement certain line items were reclassified for the year ended 31 March 2015. The reclassifications had no
impact on the reported profit or net asset measures of the Group.
The following reclassifications have been made to the consolidated income statement:
1) The mark-to-market loss of GBP19m relating to the ineffective cash flow hedge has been reclassified from other gains of losses to finance cost
as the ineffective portion of the hedge should match the classification of the hedged item.
2) Operating profit includes other gains of GBP24m. Previously it was shown below operating profit to present the income statement by function in
terms of IAS 1.
3) Depreciation and amortisation of GBP68m and GBP17m has been included in cost of sales and administration and other operating expenses
respectively in order to present the income statement by function in terms of IAS1.
The following reclassification has been made to the statement of financial position:
The UAE end of service benefit obligation of GBP15m was reclassified from provisions to retirement benefit obligations
The table below shows the impact on the consolidated income statement and statement of financial position:
Financial statement line item 2015 figures 2015 figures
as presented as presented
in prior in current
year Reclassification year
Consolidated income statement
Cost of sales (1 116) (68) (1 184)
Administration and other operating expenses (455) (17) (472)
Other gains and losses 5 19 24
Depreciation and amortisation (85) 85 -
Finance cost (66) (19) (85)
Effect on profit before tax (1 717) - (1 717)
Consolidated statement of financial position
Retirement benefit obligations 72 15 87
Provisions 37 (14) 23
Non current liabilities 109 1 110
Provisions 24 (1) 23
Current liabililties 24 (1) 23
Total liabilities 133 - 133
2 GOING CONCERN
Having assessed the principal risks and the other matters discussed in connection with the viability statement, the directors considered it
appropriate to adopt the going concern basis of accounting in preparing the financial statements.
3 EQUITY ACCOUNTED INVESTMENTS
GROUP
2016 2015
GBP'm GBP'm
Investment in associates 452 -
Investment in joint venture 3 4
455 4
Investment in associates:
Listed investments 451 -
Unlisted investments 1 -
452 -
Reconciliation of carrying value at the beginning and end of the period
Listed investment
Total cost of equity investment 447 -
Share of profit of associated companies 6 -
Dividends received from associated companies (2) -
451 -
Set out below are details of the associate which is material to the group:
Name of entity Country of incorporation and place of business % ownership
Spire Healthcare Group plc United Kingdom 29.9%
Spire Healthcare Group plc is listed on the London Stock Exchange. It does not issue publicly available quarterly financial information and has
a December year-end. The associate was acquired on 24 August 2015. The investment in associate was equity accounted for the 4 months to 31
December 2015. No significant events occurred since 1 January 2016 to the reporting date.
A provisional notional purchase price allocation assessment did not identify any significant intangible assets other than goodwill.
4 SHARE CAPITAL
Capital Reverse
Numbers Share Redemption Share aquisition
of capital Reserve**premium reserve***
Ordinary shares shares GBP'm GBP'm GBP'm GBP'm Total
At 1 April 2014 516 851 655 821 - - - 821
Shares issued 25 625 000 177 - - - 177
Share issue costs - (4) - - - (4)
At 31 March 2015 542 476 655 994 - - - 994
Shares issued (August 2015) 69 444 444 479 - - - 479
Share issue costs (4) - - - (4)
At 14 February 2016 611 921 099 1 469 - - - 1 469
Reverse acquisition* 53 207 327 (1 402) 6 4 862 (3 014) 452
Combined capital structure on 15 February 2016 665 128 426 67 6 4 862 (3 014) 1 921
Share subscription 72 115 384 7 - 593 600
Reduction of share premium - - - (4 765) - (4 765)
737 243 810 74 6 690 (3 014) (2 244)
*The company received legal advice on the scheme of arrangement and the premium on issue of share capital to Mediclinic International Limited
shareholders did not qualify as merger relief under United Kingdom law.
Reverse acquisition
The prior number of shares from 1 April 2015 to 14 February 2016 represents equivalent number of Mediclinic International Limited shares
converted using the Mediclinic scheme of arrangement conversion ratio of 0.625. From 15 February 2016 the capital structure of the Group
represents that of Mediclinic International plc.
**The Companies Act provides that where shares of a company are repurchased and funded by a new issue of shares, the amount by which the
Company's issued share capital is diminished on cancellation of the shares are transferred to a capital redemption reserve to maintain capital.
The reduction of the company's share capital shall be treated as if the capital redemption reserve were paid up capital of the Company.
***The reverse acquisition reserve represents the net of the following adjustments resulting from the Al Noor reverse acquisition:
- adjustment of the capital structure (share capital and share premium) of the Group to that of the legal parent;
- adjustment to account for the premium on shares issued to the Mediclinic International Limited shareholders;
- the share value component of the total consideration.
Number
Treasury shares of shares Total
At 1 April 2014 8 450 612 (21)
Repurchase of shares - Forfeitable Share Plan 155 454 (1)
Utilised by the Mpilo Trusts (178 875) -
At 31 March 2015 8 427 191 (22)
Repurchase of shares - Forfeitable Share Plan 129 927 (1)
Disposal of shares - Forfeitable Share Plan (46 091) -
Utilised by the Mpilo Trusts (8 238 246) 21
At 31 March 2016 272 781 (2)
The balance of the treasury comprises:
Forfeitable Share Plan 239 290
Mpilo Trusts 33 491
272 781
*The prior year number of shares have been converted using the Mediclinic scheme of arrangement conversion
ratio of 0.625 Mediclinic International plc shares for each Mediclinic International Limited share held.
GROUP
2016 2015
GBP'm GBP'm
5 RETAINED EARNINGS
Opening balance 485 321
Profit for the year 177 241
Dividends paid (48) (47)
Capital redemption on tender offer (6) -
Reduction of share premium 4 765 -
Actuarial gains and losses (56) (31)
Transactions with non-controlling shareholders 3 1
Balance at the end of the year 5 320 485
6 OTHER RESERVES
Share-based payment reserve 24 14
Opening balance 14 13
Forfeitable Share Plan 1 -
Mpilo trusts 11 1
Al Noor share option scheme (2) -
The balance of the share-based payment reserve comprise:
Executive share option scheme 1 1
Forfeitable share plan 1 -
Al Noor share option scheme (2) -
Mpilo trusts (Employee share trusts) 17 6
Strategic South African black partners* 7 7
24 14
* During the financial year ending 31 March 2006, the difference between the fair value of the equity instruments issued in a BEE transaction
and the fair value of the cash and other assets received was recognised as an expense (grant date) and this corresponding increase in equity was
booked.
GROUP
2016 2015
GBP'm GBP'm
Foreign currency translation reserve 407 306
Opening balance 306 247
Currency translation differences 101 59
Hedging reserve 4 2
Opening balance 2 7
Fair value adjustments of cash flow hedges, net of tax 2 (6)
Recycling of fair value adjustments of derecognised cash flow hedge, net of tax - 1
7 BORROWINGS
Secured long-term bank loans* 140 166
Long-term portion 139 165
Short-term portion 1 1
Capitalised financing costs - long-term - -
* The long-term bank loan bears interest at the 3 month Jibar variable rate plus a margin of 1.51%
(31 March 2015: 1.51%) compounded quarterly, and is repayable on 2 June 2019.
Preference shares* 90 111
Long-term portion 85 105
Short-term portion 5 6
* Dividends are payable monthly at a rate of 69% of prime overdraft rate.
GBP5m shares must be redeemed on 1 September 2016 and 1 September 2017 and the balance of GBP85m on 2 June 2019.
Secured long-term bank loan* 10 18
Long-term portion 5 12
Short-term portion 5 6
* The long-term bank loan bears interest at the 3 month Jibar variable rate plus a margin of 1.06%
(31 March 2015: 1.06%) compounded. GBP5m must be redeemed on 1 September 2016 and the balance of GBP5m on 8 October 2017.
Secured long-term bank loan* 9 11
Long-term portion 9 11
Short-term portion - -
* The long-term bank loan bears interest at the 3 month Jibar variable rate plus a margin of 1.51%
(31 March 2015: 1.31%) compounded quarterly, and is repayable on 2 June 2019.
Secured long-term bank loans 5 7
Long-term portion 4 6
Short-term portion 1 1
These loans bear interest at variable rates linked to the prime overdraft rate and are repayable in periods
ranging between one and twelve years. Property, equipment and vehicles with a book value of GBP12m
(31 March 2015: GBP15m) are encumbered as security for these loans. Net trade receivables of GBP1m
(31 March 2015: GBP1m) has also been ceded as security for these loans.
Borrowings in Southern African operations 254 313
* Property and equipment with a book value of GBP160m (31 March 2015: GBP150m), cash and cash equivalents of GBP12m
(31 March 2015: GBP10m) and trade receivables of GBP41m (31 March 2015: GBP46m) have been ceded as security for
these borrowings.
Secured long-term bank loans 53 56
Long-term portion 50 38
Short-term portion 3 19
Capitalised financing costs - long-term - (1)
This loan bears interest at variable rates linked to the 3M LIBOR and a margin of 2.0% (31 March 2015: 2.75%)
and is amortising until 31 March 2020 (31 March 2015: June 2017). Properties with a book value of GBP100m
(31 March 2015: GBP83m) are encumbered as security for this loan.
Borrowings in Middle East operations 53 56
Secured long-term bank loans 1 098 1 084
Long-term portion 1 088 1 079
Short-term portion 36 35
Capitalised financing costs - long-term (26) (30)
These loans bear interest at a variable rate linked to the 3M LIBOR plus 1.5% and 2.85%
(31 March 2015: 3M LIBOR plus 2.0% and 3.5%) and is repayable by July 2020. The loan is secured by:
Swiss properties with a book value of GBP2 248m (31 March 2015:GBP2 161m); and Swiss bank accounts with a
book value of GBP128m (31 March 2015: GBP138m).
Listed bonds 170 164
Long-term portion 170 164
Short-term portion - -
The Swiss operating segment issued CHF145m 1.625% Swiss francs bonds and CHF 90m 2.0% Swiss francs bonds
to finance its expansion programme andworking capital requirements. The bonds are repayable on
25 February 2021 and 25 February 2025 respectively.
Secured long-term finance - 1
Long-term portion - 1
Short-term portion
and are repayable in equal monthly payments in periods ranging from one to seven years. Equipment with
a book value of GBP1m (31 March 2015: GBP1m) is encumbered as security for these loans.
Borrowings in Swiss operations 1 268 1 249
Secured long-term bank loans 266 -
Long-term portion - -
Short-term portion 266 -
Capitalised financing costs - long-term - -
This loan bears interest at variable rates linked to LIBOR with a minimum base rate of 1% plus 3.75%.
The facility is secured in favour or lenders over the shares in Mediclinic International Limited and of
Mediclinic CHF Finco Limited, Mediclinic Middle East Holdings Limited andMediclinic Holdings Netherlands B.V.
Borrowings in the United Kingdom 266 -
Total borrowings 1 841 1 618
Short-term portion transferred to current liabilities (317) (68)
Non-current borrowings 1 524 1 550
8. SEGMENTAL REPORT
The reportable operating segments are identified as follows: Mediclinic Southern Africa,
Mediclinic Switzerland, Mediclinic Middle East, United Kingdom and an additional reporting segment
is shown for Corporate. The comparatives have been changed to conform with current presentation.
United Kingdom and Corporate is shown as operating segments.
Southern Middle United
Africa Switzerland East Kingdom Corporate Total
Year ended 31 March 2016 GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Revenue 649 1 130 328 - - 2 107
EBITDA 129 229 68 - (51) 375
EBITDA before management fee 133 230 70
Management fees included in EBITDA (4) (1) (2) 7 7
Other gains and losses - - - - (1) (1)
Depreciation and amortisation (20) (63) (10) - - (93)
Operating profit 109 166 58 - (45) 288
Income from associate - - - 6 - 6
Finance income 8 1 - - - 9
Finance cost (21) (46) (2) - (6) (75)
Taxation (31) (24) - - (55)
Segment result 65 97 56 6 (51) 173
At 31 March 2016
Investments in associates - 1 - 451 - 452
Investments in joint venture 3 - - - - 3
Capital expenditure 52 98 36 - - 186
Total segment assets 485 3 809 1 800 451 4 6 549
Segment liabilities 370 2 940 243 - 272 3 825
Year ended 31 March 2015
Revenue 691 1 044 242 - - 1 977
EBITDA 150 203 53 - (6) 400
EBITDA before management fee 154 204 54 - - -
Management fees included in EBITDA (4) (1) (1) - 6 6
Other gains and losses 9 13 - - 2 24
Depreciation and amortisation (22) (55) (8) - - (85)
Operating profit 137 161 45 - 2 345
Income from associate - - - - - -
Income from joint venture - - - - - -
Finance income 5 - - - - 5
Finance cost (23) (74) (3) - - (100)
Taxation (33) 21 - - - (12)
Segment result 86 108 42 - 2 238
At 31 March 2015
Investments in associates - - - - - -
Investments in joint venture 4 - - - - 4
Capital expenditure 80 94 17 - - 191
Total segment assets 527 3 615 252 - 2 4 396
Segment liabilities 436 2 511 127 - - 3 074
Reconciliation of segment result, assets and liabilities 2016 2015
GBP'm GBP'm
Segment result
Total profit from reportable segments 173 238
Elimination of intersegment loan interest 17 15
Profit for the year 190 253
Liabilities
Total liabilities from reportable segments 3 825 3 074
Elimination of intersegment loan (846) (520)
2 979 2 554
GROUP
2016 2015
GBP'm GBP'm
9 FINANCE COST
Interest expense 44 49
Interest rate swaps 11 4
Amortisation of capitalised financing costs 5 8
Fair value (gains)/losses on ineffective cash flow hedges (8) 19
Preference share dividend 6 7
Less: amounts included in the cost of qualifying assets - (2)
58 85
10 INCOME TAX EXPENSE
Current tax
Current year (41) (44)
Previous year (1) 44
Deferred tax (13) (12)
Taxation per income statement (55) (12)
Composition
UK tax - -
Foreign tax (55) (12)
(55) (12)
Reconciliation of rate of taxation:
Standard rate for companies (UK) 20.0% 21.0%
Adjusted for:
Capital gains tax 0.1% (0.6)%
Non-taxable income (0.3)% (0.6)%
Non-deductible expenses* 5.6% 2.0%
Non-controlling interests' share of profit before tax (0.3)% (0.3)%
Effect of different tax rates*** (4.3)% (1.4)%
Income tax rate changes (0.2)% -
Non-recognition of tax losses in current year 1.8% 0.6%
Recognition of tax losses relating to prior years (0.4)% -
Prior year adjustment** 0.4%(16.4)%
Effective tax rate 22.4% 4.3%
*Non-deductible expenses in the current year were impacted by:
- Transaction costs in relation to the Al Noor transaction were not deductible for tax purposes as these costs are capital of nature. The tax
effect of this amounted GBP10m which resulted in an increase in the effective tax rate.
- Non-deductible accelerated IFRS 2 charges increased the tax charge by GBP3m.
**In the prior year, Swiss income tax liabilities were released in respect of historical uncertain tax positions after settlement with tax
authorities. This reduced the tax charge by GBP43m.
***The effect of different tax rates is mainly because of profit earned from South Africa which is subject to income tax rate of 28%, reduced by
profit earned from the UAE which is not subject to income tax.
****The statutory income tax rate in the UK reduced from 21% to 20% since 1 April 2015.
The income tax liability includes an amount of approximately GBP8m (2015: GBP7m) relating to unresolved tax matters.
The range of possible outcomes relating to this liability is not considered to be material.
GROUP
(Restated)
2016 2015
GBP'm GBP'm
11 EARNINGS PER ORDINARY SHARE
Earnings per ordinary share (pence)
Basic (pence) 29.6 44.6
Diluted (pence) 29.5 43.8
Number of shares reconciliation
2016 2015***
Weighted average number of ordinary shares in issue for basic earnings per share
Number of ordinary shares in issue at the beginning of the year 542 473 328 516 848 328
Al Noor Hospitals Group plc shares prior to reverse acquisition 14 688 077 -
Al Noor Hospitals Group plc shares repurchased (8 000 842) -
Weighted average number of ordinary shares issued during the year (August 2015) 41 742 562 -
Weighted average number of ordinary shares issued during the year (February 2016) 9 063 634 -
Weighted average number of ordinary shares issued during the year (June 2014) - 19 868 151
Adjustment for equity raising - Private placement (June 2014) (IAS 33 para 26)** - 378 641
Adjustment for equity raising - Rights Offer (2015) (IAS 33 para 26)** 5 239 773 13 135 323
Weighted average number of treasury shares (6 764 447) (9 957 753)
BEE shareholder (521 142) (1 503 618)
Mpilo Trusts (5 995 653) (8 377 728)
Forfeitable Share Plan (247 652) (76 407)
598 442 085 540 272 690
Weighted average number of ordinary shares in issue for diluted earnings per share
Weighted average number of ordinary shares in issue 598 442 085 540 272 690
Weighted average number of treasury shares held in terms of the BEE initiative not yet released from treasury stock 768 793 9 957 753
BEE shareholder* 521 141 1 503 618
Mpilo Trusts - 8 377 728
Forfeitable Share Plan 247 652 76 407
599 210 878 550 230 443
The prior year number of shares have been converted using the Mediclinic scheme of arrangement conversion ratio of 0.625 Mediclinic
International plc shares for each Mediclinic International Limited share held.
* Represents the equivalent weighted average number of shares for which no value has been received from the BEE shareholder (Mpilo Investment
Holdings 2 (RF) (Pty) Ltd) in terms of the Group's black ownership initiative. To date, no value was received for an equivalent of 521 141 (2015:
1 158 198) shares issued to the strategic black partner.
Mpilo Investment Holdings 1 (RF) (Pty) Ltd and Mpilo Investment Holdings 2 (RF) (Pty) Ltd are structured entities that are not consolidated due
to the group not having control. These companies are investment holding companies and were incorporated as part of the Mediclinic BEE
transaction. The companies hold ordinary shares in Mediclinic International plc (2015: Mediclinic International Limited) on which it receives
dividends. These dividends are used to repay the outstanding debt of the companies. The outstanding debt referred to is provided by third parties
with no recourse to the group.
** The shares were issued at a price lower than the fair value of the shares before the equity capital raised in June 2014 and Rights Offer in
August 2015. As a result, the weighted average number of shares was adjusted in accordance with IAS 33 paragraph 26.
*** The 2015 number of shares has been adjusted with the exchange ratio of 0.625 (1 Mediclinic International Limited share was exchanged for
0.625 AL Noor Hospitals Group plc share in terms of the Mediclinic scheme of arrangement).
Headline earnings per ordinary share
The Group is required to calculate headline earnings per share (HEPS) in accordance with the JSE Limited (JSE) Listing Requirements, determined
by reference to the South African Institute of Chartered Accountants' circular 02/2013 (Revised) 'Headline Earnings'. The table below sets out a
reconciliation of basic EPS and HEPS in accordance with that circular. Disclosure of HEPS is not a requirement of IFRS, but it is a commonly used
measure of earnings in South Africa. The table below reconciles the profit for the financial year attributable to equity holders of the parent to
headline earnings and summarises the calculation of basic HEPS:
GROUP
(Restated)
2016 2015
GBP'm GBP'm
Profit for the financial period attributable to equity holders of the parent 177 241
Adjustments
Impairment of property - 2
Insurance proceeds - (8)
Gain on disposal of subsidiary - (2)
Profit on disposal of property, equipment and vehicles - (4)
Headline earnings 177 229
Headline earnings per share (pence) 29.6 42.4
Diluted headline earnings per share (pence) 29.5 41.6
12 BUSINESS COMBINATIONS
GROUP
(Restated)
2016 2015
GBP'm GBP'm
Cash flow Cash flow
on on
acquisition acquisition
Al Noor Hospitals Group plc 17 -
Clinique La Colline - 75
Swissana Clinic AG Meggen - 6
17 81
Al Noor Hospitals Group plc
On 15 February 2016, Mediclinic completed the Combination between Al Noor Hospitals Group plc and Mediclinic
International Limited. The Combination of Al Noor Hospitals Group plc and Mediclinic International became unconditional
on 15 February 2016. The directors recognise the strong strategic merit in the transaction, with an excellent strategic
fit between the operations in the UAE and the creation of a leading international private healthcare operator
with a well-balanced geographic profile. The Combination is classified as a reverse take-over.
Following implementation of the Combination, it is expected that Al Noor, as enlarged by the acquisition of
Mediclinic (the ''Enlarged Group''),will be one of the world's leading international private healthcare groups,
with deep operational expertise and a well-balanced geographic profile in Southern Africa, Switzerland,
the United Arab Emirates and in the UK through a minority stake in Spire.
The goodwill of GBP1 189m arising from the acquisition is attributable to the earnings potential of the established
Al Noor business with a geographical footprint in Abu Dhabi. None of the goodwill recognised is expected to be
deductible for income tax purposes.
The fair value exercise over the opening balance sheet of Al Noor remains provisional at 31 March 2016 as permitted by IFRS 3.
Since the Group is in discussions with UAE medical insurance funders and other third parties about conforming Al Noor’s commercial
practices with the rest of the Group, there is still a degree of uncertainty about the fair value of certain acquired assets and liabilities.
This is expected to be finalised during the next year.
The following table summarises the consideration paid for Al Noor Hospital Group and the provisional fair value of assets acquired and liabilities
assumed at the acquisition date.
Purchase consideration at 15 February 2016
Special dividend (GBP3.28 per share) 383
Tender offer (limited to GBP1bn with special dividend, GBP8.32 per share) 530
Value of share element* 446
Total consideration transferred 1 359
* The value of the share element represents the equivalent fair value of the shares at date of acquisition that the acquirer
(Mediclinic International Limited), would have issued to the shareholders of Al Noor Hospitals Group plc if equity
instruments of the acquirer had to be issued.
Recognised amounts of identifiable assets acquired and liabilities assumed (provisional purchase price allocation)
Assets
Property, equipment and vehicles 61
Intangible assets 65
Non-current receivable 2
Inventories 14
Trade and other receivables 111
Derivative financial instruments 2
Investment in money market funds 10
Cash and cash equivalents 24
Total assets 289
Liabilities
Retirement benefit obligations 22
Trade and other payables 92
Total liabilities 114
Total identifiable net assets at fair value 175
Non-controlling interest (5)
Goodwill 1 189
Total 1 359
Acquisition-related costs of GBP41m have been charged to administrative expenses in the consolidated income statement.
The fair value of trade and other receivables is GBP111m and includes trade receivables with a fair value of GBP95m. The gross contractual amount
for trade receivables due is GBP121m, of which GBP95m is expected to be collectible.
From the date of acquisition, Al Noor Hospitals Group has contributed GBP50m of revenue and GBP4m 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 GBP333m and the
net profit for the Group would have been GBP56m.
Analysis of cash flow on acquisition
Transaction costs incurred in reverse acquisition (41)
Net cash acquired with the subsidiary 24
Net cash flow on acquisition (17)
13. EVENTS AFTER THE REPORTING DATE
At the time the financial statements were authorised for issue, the following events had taken place which have not been recognised as at 31
March 2016:
During May 2016 the Group obtained additional bank facilities in the amount of R1.2 billion (approximately GBP54m). The loans will carry interest
at 3 month Jibarplus a margin of 1.69% and is fully repayable in June 2019.
Date: 25/05/2016 08:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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