NMC Health plc Annual ReportNMC Health 2018 and Accounts Continuing our strategic growth journey NMC Health plc Annual Report and Accounts 2018 WorldReginfo - 8ec90900-1eef-4328-a6bc-197d0a7f1415 NMC Health is the leading private healthcare operator in the GCC with international services across 19 countries. NMC believes in providing healthcare to all segments of society while upholding the highest ethical medical practices. Our patients are assured of receiving the highest standards of quality at affordable prices. Healthcare is not simply about detecting, diagnosing, informing or treating an individual, but it is about helping people to lead a wholesome and healthy life. Read the annual report and much more on our website: www.nmchealth.com WorldReginfo - 8ec90900-1eef-4328-a6bc-197d0a7f1415 At a Glance Our Business NMC has created regional clusters to aid the process of centralisation of key services to benefit from our strong growth over the past few years. We operate two business lines, Healthcare and Product Distribution, which are divided into five business verticals as indicated below: Healthcare Where we operate NMC has created regional clusters to aid the process of centralisation of key services to benefit from our strong growth over the past few years. Multi-specialty Maternity & Fertility Spain USA Long-term & Home Care Colombia Brazil Operations & Management Product Distribution Own and Operation & Management Own Operation & Management Products & Consumables WorldReginfo - 8ec90900-1eef-4328-a6bc-197d0a7f1415 Sweden Denmark UK Latvia Slovakia Italy Jordan Kuwait Egypt United Arab Emirates Saudi Arabia Yemen Oman Kenya Seychelles WorldReginfo - 8ec90900-1eef-4328-a6bc-197d0a7f1415 Group Strategic Financial Other Overview Report Governance Statements Information NMC focuses on underserved medical services and geographies within the countries it operates in and will continue to utilise organic and inorganic growth strategies to address these opportunities. Company Highlights Overview At a Glance 2 Joint Chairmen’s 2018 letter to Shareholders Group Strategic Report 6 Chief Executive Officer’s Review 8 Our Business Model 10 Our Strategy 12 Financial Summary and Operational Highlights Patients Licensed beds 13 Business and Financial Review 20 Key Performance Indicators 7.5m 2,186 22 Strategic Risk Management 26 Corporate Social Responsibility 2017: +5.7m 2017: 1,539 Governance 38 Board of Directors 40 Senior Management Team 42 Corporate Governance Report 62 Directors’ Remuneration Report 2018 79 Directors’ Report Financial Statements Doctors Employees 84 Directors’ Statements 87 Independent Auditor’s Report 96 Consolidated Income c.1,735 c.18,000 Statement 97 Consolidated Statement of Other Comprehensive 2017: c1,400 2017: c.14,000 Income 98 Consolidated Statement of Financial Position 99 Consolidated Statement of Changes in Equity 101 Consolidated Statement of Cash Flows 103 Notes to the Consolidated Financial Statements 158 Statement of Financial Position 159 Statement of Changes in Equity Countries Facilities 160 Statement of Cash Flows 161 Notes to the Financial 19 189+ Statements Other Information 2017: 13 2017: 129 own and managed facilities 174 Shareholder information (51 owned facilities and 78 managed) NMC Health plc Annual Report and Accounts 2018 1 WorldReginfo - 8ec90900-1eef-4328-a6bc-197d0a7f1415 Overview Joint Chairmen’s 2018 letter to Shareholders Continuing our strategic growth journey The past year has been one of solid progress Dear Shareholder, as we continue to execute our strategy of growth 2018 saw Group Revenue increase to and integration of the businesses now making up US$2.1bn in 2018, up 28.3% from 2017. Consolidated EBITDA increased by 37.9% the wider NMC Group. to US$487.4m over the same period. These financial results are an impressive testament to the achievements of our management and staff in 2018. Integration and Efficiencies As we reported last year, 2017 was an important year of consolidation, and management have in 2018 built on the success of its integration program in 2017. In pursuing these projects, management have sought to ensure that the Group operates through its geographic clusters and business verticals as efficiently as possible. The management structure has been enhanced, providing additional experience and bandwidth. From a financial perspective, good organic growth was achieved not only in EBITDA but also in EBITDA margin in 2018. Our published guidance indicates that this trend continues into 2019. Strategy In December 2017, the Company reiterated and updated its growth strategy. During 2018, the Company: • Acquired the remaining minority interest in Fakih IVF that it didn’t previously own; • Acquired 70% of CosmeSurge, a growing cosmetic surgery business; • Opened a number of new IVF clinics, and acquired Boston IVF, to widen the reach of the growing IVF business; • Opened and acquired hospital facilities in the Kingdom of Saudi Arabia; and • Acquired Aspen Healthcare in the UK. These acquisitions and new openings have been accretive for shareholders in the shorter term. In addition, we also announced recently that the creation of a Joint Venture with Hassana Investment Company in the Kingdom of Saudi Arabia had been finalised. 2 NMC Health plc Annual Report and Accounts 2018 WorldReginfo - 8ec90900-1eef-4328-a6bc-197d0a7f1415 Group Strategic Financial Other Overview Report Governance Statements Information “We also announced recently that the creation of a Joint Venture with Hassana Investment Company in the Kingdom of Saudi Arabia had been finalised.” Long-Term Financial Stability years. The Board and management The Board adopted a Modern Slavery During 2018 and early 2019, the have likewise focused more attention Policy in 2018 and has published its management team have also on these matters. first Modern Slavery Statement. This been focussed on ensuring that the Statement reviews our internal policies Company’s debt is structured efficiently. The Board believes that the Company and procedures and Modern Slavery has a good governance structure risks within both our own businesses In April 2018 the Company issued a $450m providing assurance to all shareholders and those of our supplier base. Convertible Bond converting existing debt of the Company. into a more structured seven-year bond. In line with many other companies we In November 2018, the Company issued During 2018 the Board restructured its see all aspects of ESG and stakeholder a $400m Sukuk financing arrangement. Committees, which had been in place for engagement as a journey and we will The Sukuk is the first US$ denominated three years, to ensure that they provide continue to update shareholders on Sukuk by a healthcare provider globally a fresh focus on Committee business. progress in this area each year. as well as the first international capital The Board has a wide cultural and ethnic markets issuance from the healthcare mix as well as a wide range of skills and Board and Employees sector in the MENA region. operational experience from different Dr Nandini Tandon decided recently to parts of the world. Shareholders can step down from the Board to focus on her These financing transactions lengthened therefore take continued re-assurance other business interests. The Board has the average term of our net debt and that different viewpoints are well thanked Nandini for her contribution as provide the Group with the long-term represented during Board discussions. a Director over the last 4½ years and wish stability required for a phased her well for the future. The search for a expansion strategy. The Board for the first time, undertook an new independent non-executive Director externally facilitated board evaluation in is in progress. Dividend 2018. The evaluation concluded that “the As a result of our growth, good Board is operating effectively and healthily”. The Board is very appreciative of performance and continuing financial A summary of the findings of the board the hard work of all our management stability, your Board intends to retain its evaluation is set out on page 46. team and staff in delivering quality dividend payment policy of distributing services for our patients and returns a dividend of approximately 20% of profit The Company has always considered for our shareholders. The continued after tax. Therefore, the Board plans both the interests of its primary commitment and support they have to submit a resolution to shareholders stakeholders and those of the external shown during this continuing period at the 2019 Annual General Meeting communities within which it operates. of transformational change and growth authorising payment of a cash dividend With the integration and transformation is testament to their strong work ethic. of 18.1 pence per share, an increase of 39% of the Group well on track, management compared to the 2017 dividend payment. and the Board have been able to focus Outlook more fully on the transparency of our Despite challenging economic conditions Management Environmental, Social and Governance being experienced in some global financial The increasing size of the Group has (ESG) activities and the reporting of markets, we remain positive in the led Prasanth Manghat to continue the these activities to shareholders. markets in which we operate. The ongoing expansion of his management team drive to increase private healthcare in both the Corporate Centre and within In 2018 the Company published its first ESG participation in a number of our primary Group businesses.