Annual Report and Financial Statements 2018 Highlights
Total Page:16
File Type:pdf, Size:1020Kb
MEDICLINIC ANNUAL REPORT AND FINANCIAL STATEMENTS AND FINANCIAL STATEMENTS REPORT ANNUAL 201 8 ANNUAL REPORT AND FINANCIAL STATEMENTS for the year ended 31 March 2018 HIGHLIGHTS SUCCEEDING IN THE TURNAROUND OF THE ABU DHABI BUSINESS with continued strong performance in Southern Africa and Dubai 740 000+ INPATIENT ADMISSIONS across all operating divisions as the demand for quality healthcare services continues to increase £245M – SIGNIFICANT ONGOING CAPEX INVESTMENT across the Group supporting patient experience, clinical excellence, maintenance, upgrades and expansion REVENUE UP 4% to £2 870m; up 3% in constant currency terms ADJUSTED EBITDA UP 3% to £515m; flat in constant currency EARNINGS LOSS OF £492M impacted by non-cash Hirslanden and Spire impairment charges and other exceptional items ADJUSTED EARNINGS PER SHARE UP 1% to 30.0 pence TOTAL DIVIDEND FOR THE YEAR 7.90 PENCE The Group uses adjusted income statement reporting as non-IFRS measures in evaluating performance. Refer to the Financial Review on page 29 for an explanation. CONTENTS STRATEGIC REPORT 3 Report Profile Business Overview 4 Performance Highlights 6 Chairman’s Statement 10 At a Glance 12 Business Model 14 Our Strategy, Progress and Aims 18 Investment Case 19 Five-Year Summary Performance and Future Outlook 20 Chief Executive Officer’s Review 24 Financial Review 33 Value Added Statement 34 Clinical Services Overview Risk Management 44 Risk Management, Principal Risks and Uncertainties 50 Viability Statement Divisional Reviews 52 Divisional Review – Switzerland 56 Divisional Review – Southern Africa 60 Divisional Review – UAE Non-financial Performance 68 Sustainable Development Highlights GOVERNANCE AND REMUNERATION 85 Chairman’s Introduction 86 Board of Directors 90 Senior Management 93 Corporate Governance Statement 112 Nomination Committee Report 116 Clinical Performance and Sustainability Committee Report 120 Audit and Risk Committee Report 130 Directors’ Remuneration Report 160 Statement of Directors’ Responsibilities FINANCIAL STATEMENTS 162 Group Financial Statements 248 Company Financial Statements ADDITIONAL INFORMATION 262 Shareholder Information 266 Company Information 267 Glossary IBC Forward-looking Statements EXPERTISE YOU CAN TRUST. Mediclinic is focused on providing acute care, specialist-orientated, multi-disciplinary healthcare services. Our core purpose is to enhance the quality of life of our patients by providing comprehensive, high-quality healthcare services in such a way that the Group will be regarded as the most respected and trusted provider of healthcare services by patients, doctors and funders of healthcare in each of its markets. MEDICLINIC HAS THREE OPERATING DIVISIONS IN SWITZERLAND, SOUTHERN AFRICA AND 75 THE UNITED ARAB EMIRATES With continuing regulatory HOSPITALS changes during the year in Switzerland, Hirslanden continues to focus on adapting to the evolving outpatient environment whilst delivering 28 SWITZERLAND cost savings and operational CLINICS efficiencies. Read more about Hirslanden AR from page 52. Mediclinic Southern Africa, once again, delivered steady 10 684 revenue growth and managed its cost base despite pressure PATIENT BEDS SOUTHERN on patient volumes in the AFRICA current environment. Read more about Mediclinic AR Southern Africa from page 56. 411 The Middle East division reached an inflection point THEATRES this year with a strong second half performance delivering marginal improvement in revenue and adjusted EBITDA margin for the year; succeeding 31 504 with the turnaround of the Abu UNITED ARAB Dhabi business and laying the EMPLOYEES EMIRATES foundation for further growth. Read more about Mediclinic AR Middle East from page 60. CONTRIBUTION TO CONTRIBUTION TO CONTRIBUTION TO REVENUE ADJUSTED EBITDA* ADJUSTED EARNINGS* Switzerland (1%) (2%) 1% 16% Southern Africa 22% 20% Middle East TOTAL £2 870M TOTAL £515M TOTAL £221M 47% 48% 48% 37% Corporate 31% 33% United Kingdom AR * The Group uses adjusted income statement reporting as non-IFRS measures in evaluating performance. Refer to the Financial Review on page 24 for an explanation and for a reconciliation to the equivalent IFRS measures. OUR STRATEGIC OBJECTIVES Mediclinic seeks to generate long-term shareholder value through: • putting Patients First; • improving Group and operational effi ciencies; • pursuing attractive growth opportunities; and • leveraging our global scale, while continuing to invest in employees, information and communications technology AR “WE ARE and analytics. Read more about Our Strategy, Progress and Aims from page 14. DETERMINED TO MEET AND FURTHER INFORMATION This Annual Report is published as part of a suite of reports, as listed below. The icons EXCEED THE below are used as a cross-referencing tool to refer to the relevant pages of these reports EXPECTATIONS or within this Annual Report. AR Annual Report and Financial OF OUR Statements 2018 CSR PATIENTS IN Clinical Services Report 2018 SDR EVERY MARKET Sustainable Development Report 2018 AGM WHERE WE Notice of Annual General Meeting 2018 These reports are available on the Company’s OPERATE.” website at www.mediclinic.com from the date of distribution of this Annual Report and the Company’s Notice of Annual General Meeting by no later than 22 June 2018. DANIE MEINTJES CHIEF EXECUTIVE GLOSSARY OFFICER Please refer to the glossary of terms used in AR this report from page 267. APPROVAL OF ANNUAL REPORT This Annual Report and Financial Statements, including the Strategic Report herein, was approved by the Board on 23 May 2018. Edwin Hertzog Non-executive Chairman 23 May 2018 MEDICLINIC | ANNUAL REPORT 2018 1 2 MEDICLINIC | ANNUAL REPORT 2018 REPORT PROFILE Scope, boundary and reporting cycle This Annual Report and Financial Statements (“Annual Report”) of Mediclinic International plc (the “Company” or “Mediclinic”) presents the fi nancial results, and the economic, social and environmental performance of the Mediclinic Group for the fi nancial year ended 31 March 2018 (the “reporting period”), REPORT STRATEGIC REPORT PROFILE REPORT and covers the Company’s operations in Switzerland, Southern Africa and the United Arab Emirates (the “Group”). Reporting principles The information in this Annual Report is deemed to be useful and relevant to our stakeholders, with due regard to their expectations through continuous engagement, or that the Board believes may infl uence the perception or decision-making GOVERNANCE AND REMUNERATION GOVERNANCE of our stakeholders. The information provided aims to provide our stakeholders with an understanding of the Group’s fi nancial, social, environmental and economic impacts to enable them to evaluate the ability of Mediclinic to create and sustain value. This Annual Report was prepared in accordance with the International Financial Reporting Standards, the LSE Listing Rules, the JSE Listings Requirements, the UK Corporate Governance Code, and the UK Companies Act (including the Companies, Partnerships and Group (Accounts and Non-Financial STRATEGIC Reporting) Regulations 2016 aimed at improving the transparency of companies regarding non- fi nancial and diversity information), where relevant. FINANCIAL STATEMENTS REPORT The Company complied with all the provisions of the UK Corporate Governance Code, other AR “The Group’s strategic focus ensures that it than the exceptions explained in the Corporate consistently delivers high-quality healthcare and Governance Statement on page 93 of this Annual optimal patient experience across the operating Report. The Company’s reporting on sustainable development included in this report, supplemented divisions in Switzerland, Southern Africa and the SDR by the Sustainable Development Report, available Middle East.” on the Company’s website at www.mediclinic.com, was done in accordance with the GRI Sustainability Danie Meintjes Reporting Standards 2016 and the non-fi nancial Chief Executive Offi cer reporting regulations referred to above. External audit and assurance ADDITIONAL INFORMATION The Company’s annual fi nancial statements and the AR Group’s consolidated annual fi nancial statements were audited by the Group’s independent external auditors, PricewaterhouseCoopers LLP, in accordance with International Standards of Auditing (UK). The Group follows various other voluntary external accreditation, certifi cation and assurance initiatives, complementing the Group’s combined assurance AR model, as reported on in the Risk Management section of this Annual Report. The Group believes that this adds to the transparency and reliability of information reported to our stakeholders. MEDICLINIC | ANNUAL REPORT 2018 3 PERFORMANCE HIGHLIGHTS GROUP FINANCIAL RESULTS OPERATIONAL HIGHLIGHTS STRONG FINANCIAL POSITION REVENUE (£’m) The strong financial position of the Group supported the overall performance of the three divisions in 2018. In Switzerland, Hirslanden was faced with a number of regulatory changes that came into effect during the year and the division will need to continue adapting to 2 870 the evolving outpatient environment whilst delivering cost savings 2 749 and operational efficiencies. The division recognised an impairment 2 107 charge on intangible assets and properties of £644m. The Southern 1 977 1 892 Africa division, once again, produced steady revenue growth and managed its cost base despite pressure on patient volumes in the 2014 2015 2016 2017 2018 current environment. The Middle East division reached an inflection point this year with a strong second half performance delivering marginal improvement