Unaudited interim group results: Mediclinic International plc

Posted on 10 November 2016

Unaudited interim group results of Mediclinic International PLC and its subsidiaries for the six months ended 30 September 2016 and declaration of cash dividend.

Incorporated in England and Wales • Company Number: 08338604 • LSE Share Code: MDC • JSE Share Code: MEI • NSX Share Code: MEP • ISIN: GB00B8HX8Z88 • South African Income Tax Number: 9950122714 (“Mediclinic”, the “Company” or the “Group”)

Group financial and operating highlights

• 27% increase in group revenue of which 16% was contributed by Al Noor
• Strong performance in Switzerland with revenue up 5% and underlying EBITDA up 7%
• Good organic growth in Southern Africa supported by infrastructure investment
• Middle East business impacted by new insurance co-payment requirement, doctor vacancies and delayed facility openings
• Integration of Al Noor on track to deliver AED75m of annualised synergies
• Underlying EBITDA up 11% to £220m
• Operating profit up 10% to £169m
• Underlying earnings per share decreased by 26% to 12.8 pence, largely impacted by the shares issued to acquire and adverse operating performance
• Cash flow conversion 95% of underlying EBITDA
• Interim dividend per ordinary share up to 3.20 pence
• Continued investments to improve patient experience and clinical quality of Al Noor

Danie Meintjes, CEO of Mediclinic today, commented:
‘We have seen good progress across the Group in the first half of the year. Switzerland in particular had strong revenue and underlying EBITDA growth driven by an increase in total patient activity. In the Middle East, we have had a productive first half of the year successfully opening the City Hospital North Wing in Dubai and business integration is progressing well, expected to deliver AED75m of annualised synergies. In Abu Dhabi, the recent introduction of Thiqa co-payment has further impacted our near term expectations for Thiqa revenues. We continue to believe in the long-term growth opportunity the Middle East presents to the Group.

‘Whilst the industry trends of growing competition and regulatory changes remain challenging across all our platforms, we are highly focused on investing in and delivering high quality patient-centric clinical care. With this focus and our leading positions in core markets, Mediclinic is well-positioned to deliver sustainable long-term growth.’

Outlook

The Group’s main strategic focus remains to ensure high-quality care and optimal patient experience. To this end, Mediclinic continues to invest in its people, patient facilities and the technology within the facilities.

The Group’s growing international scale also enables it to unlock further value through promoting collaboration and best practice between its operating platforms and to leverage the benefits of scale through synergies and cost-efficiencies. The Group is well-positioned to deliver long-term value to its shareholders with a well-balanced portfolio of global operations, a leading position across all four attractive healthcare markets and a platform for future growth.

Mediclinic continues to see a strong demand for quality private healthcare services across its three operating platforms and in the UK, notwithstanding the ongoing challenges in the global and regional economies and the regulatory changes that continue to impact healthcare and its affordability.

At Hirslanden, given high occupancy levels, the Group anticipates modest growth and stable margins for the full year 2016/17.

In Mediclinic Southern Africa, the Group expects continued growth, notwithstanding macro-economic challenges and increasing competition anticipated in the year ahead. In line with the Group’s key strategic initiatives, it will continue to make additional investment in the operations to drive competitive advantage.

In the Middle East, revenue growth (excluding the further impact of Thiqa volumes referenced below) is expected to be at the bottom end of expectations due to the continued weak macro-economic environment, the alignment of business and operational practices and a further delay to the opening of Al Jowhara, which is now open. In addition, the Abu Dhabi business continues to be impacted by the new Thiqa co-payment regulation. This has further impacted Thiqa volumes in the second quarter.

Assuming these current volumes persist, we expect an additional impact to full year revenues of around AED150m leading to an overall decline versus 2015/16 pro-forma Middle East revenues. Notwithstanding good progress on the integration synergies the impact from the lower revenues is expected to result in underlying EBITDA margins around the bottom end of previous expectations.

Dividend policy and dividend declaration

The Group’s dividend policy is to target a pay-out ratio of between 25% and 30% of underlying earnings. The Board may revise the policy at its discretion.

The Board declared an interim dividend from retained earnings of 3.20 pence per ordinary share for the six months ended 30 September 2016. Shareholders on the South African register will be paid the ZAR cash equivalent of 53.31200 cents (45.31520 cents net of dividend withholding tax) per share.

A dividend withholding tax of 15% will be applicable to all shareholders on the South African register who are not exempt therefrom. The ZAR cash equivalent has been calculated using the following exchange rate: £1: ZAR16.66, being the 5 day average ZAR/GBP exchange rate on Friday, 4 November 2016 at 3:00pm GMT Bloomberg.

The interim dividend will be paid on Monday, 12 December 2016 to all ordinary shareholders who are on the register of members at the close of business on the record date of Friday, 25 November 2016.

The salient dates for the dividend will be as follows:
Dividend announcement date: Thursday, 10 November 2016
Last date to trade cum dividend (SA register): Tuesday, 22 November 2016
First date of trading ex-dividend (SA register): Wednesday, 23 November 2016
First date of trading ex-dividend (UK register): Thursday, 24 November 2016
Record date: Friday, 25 November 2016
Payment date: Monday, 12 December 2016

Share certificates may not be dematerialised or rematerialised within Strate from Wednesday, 23 November 2016 to Friday, 25 November 2016, both dates inclusive. No transfers between the UK and SA registers may take place from Thursday, 10 November 2016 to Friday, 25 November 2016, both days inclusive.

Further information

The contents of this short-form announcement are the responsibility of the Board of Directors of the Company. This announcement represents a summary of the information contained in the unabridged interim results announcement, published on 10 November 2016 on the LSE’s Regulatory News Service (“RNS”) and the JSE’s Stock Exchange News Service (“SENS”) and on Mediclinic’s website at www.mediclinic.com.

Any investment decisions by investors and/or shareholders should be based on the unabridged announcement as referred to above.

The unabridged announcement is also available for inspection at the registered office of the Company and the offices of the Company’s sponsor at no charge, during normal business hours.

By order of the Board.

Danie Meintjes
Chief Executive Officer

Jurgens Myburgh
Chief Financial Officer
10 November 2016

DIRECTORS: Dr E de la H Hertzog (Chairman) (South African), DP Meintjes (Chief Executive Officer) (South African), PJ Myburgh (Chief Financial Officer)
(South African), JJ Durand (ne) (South African), JA Grieve (ind ne) (British), SD Keating (ind ne) (Irish), Prof Dr RE Leu (ind ne) (Swiss), N Mandela (ind ne)
(South African), TD Petersen (ind ne) (South African), DK Smith (ind ne) (South African), IP Tyler (snr ind) (British), PJ Uys (alternate to JJ Durand) (South African)

COMPANY SECRETARY: Capita Company Secretarial Services Limited (V Dalby)

REGISTERED ADDRESS: Mediclinic International plc, 40 Dukes Place, London, EC3A 7NH, United Kingdom • Tel +44 20 7954 9600 • Fax +44 20 7954 9886
Ethics line: 0800 005 316 (South Africa only) or +27 12 543 5332 (if dialling from outside South Africa)

REGISTRAR/TRANSFER SECRETARIES:
United Kingdom: Capita Asset Services • The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU
Tel 0871 664 0300 (UK only) or +44 20 8639 3399 (if dialling from outside the UK)
South Africa: Computershare Investor Services (Pty) Ltd • 70 Marshall Street, Johannesburg, 2001 • PO Box 61051, Marshalltown, 2107
Tel +27 11 370 5000 • Fax +27 11 688 7716
Namibia: Transfer Secretaries (Pty) Ltd • 4 Robert Mugabe Avenue, Windhoek • PO Box 2401, Windhoek • Tel +264 61 227 647 • Fax +264 61 248 531

CORPORATE BROKER: Morgan Stanley & Co International plc
JSE SPONSOR (SOUTH AFRICA): Rand Merchant Bank (a division of FirstRand Bank Limited)
NSX SPONSOR (NAMIBIA): Simonis Storm Securities (Pty) Ltd