Annual Financial Report
Updated : 15:01
Mediclinic International plc
(Incorporated in England and Wales)
Company Number: 08338604
LSE Share Code: MDC
JSE Share Code: MEI
NSX Share Code: MEP
ISIN: GB00B8HX8Z88
LEI: 2138002S5BSBIZTD5I60
("Mediclinic", the "Company", or the "Group")
21 June 2019
POSTING OF ANNUAL REPORT AND FINANCIAL STATEMENTS,
NOTICE OF ANNUAL GENERAL MEETING AND PROXY FORM
Mediclinic announces that its Annual Report and Financial Statements in respect of the financial year ended 31 March 2019 ("2019 Annual Report") is being posted to shareholders today, together with the Notice of Annual General Meeting and the Form of Proxy in relation to the Company's annual general meeting to be held on Wednesday, 24 July 2019 at Rosewood London Hotel, 252 High Holborn, London, WC1V 7EN at 15:00 (BST).
In accordance with Listing Rule 9.6.1, the above documents are being submitted to the National Storage Mechanism and will shortly be available to the public for inspection at www.morningstar.co.uk/uk/NSM.
The documents are also being made available on the Company's website at www.mediclinic.com during the course of today.
In accordance with DTR 6.3.5 of the FCA's Disclosure Guidance and Transparency Rules, additional information is set out in the appendices to this announcement. The information in the appendices is extracted from the 2019 Annual Report and should be read in conjunction with the Company's preliminary results announcement issued on 23 May 2019 (RNS number 0970P). Together, these constitute the information required by DTR 6.3.5 to be communicated in full unedited text through a Regulatory Information Service. This material is not a substitute for reading the full 2019 Annual Report.
About Mediclinic International plc
Mediclinic is an international private healthcare services group, established in South Africa in 1983, with divisions in Switzerland, Southern Africa (South Africa and Namibia) and the United Arab Emirates.
The Group's core purpose is to enhance the quality of life.
Mediclinic is focused on providing specialist-orientated, multi-disciplinary services across the continuum of care in such a way that the Group will be regarded as the most respected and trusted provider of healthcare services by patients, medical practitioners, funders and regulators of healthcare in each of its markets.
Mediclinic comprises 77 hospitals, five sub-acute hospitals, 12 day case clinics and 21 outpatient clinics. Hirslanden operates 18 hospitals, two day case clinics and three outpatient clinics in Switzerland with more than 1 900 inpatient beds; Mediclinic Southern Africa operates 52 hospitals, five sub-acute hospitals and 12 day case clinics with more than 8 500 inpatient beds; and Mediclinic Middle East operates seven hospitals, two day case clinics and 21 outpatient clinics with more than 900 inpatient beds in the United Arab Emirates.
The Company's primary listing is on the London Stock Exchange ("LSE") in the United Kingdom, with secondary listings on the JSE Ltd in South Africa and the Namibian Stock Exchange in Namibia.
Mediclinic also holds a 29.9% interest in Spire Healthcare Group plc, a leading private healthcare group based in the United Kingdom and listed on the LSE.
For further information, please contact:
Company Secretary, Link Company Matters Limited
Jayne Meacham / Caroline Emmet
+44 (0)20 7954 9569
Investor Relations, Mediclinic International plc
James Arnold, Head of Investor Relations
+44 (0)20 3786 8181
Media queries
FTI Consulting
Brett Pollard/Debbie Scott - UK
+44 (0)20 3727 1000
Sherryn Schooling - South Africa
+27 (0)21 487 9000
Registered address: 6th Floor, 65 Gresham Street, London, EC2V 7NQ, United Kingdom
Website: www.mediclinic.com
Joint corporate brokers: Morgan Stanley & Co International plc and UBS Investment Bank
JSE sponsor: Rand Merchant Bank (A division of FirstRand Bank Limited)
NSX sponsor: Simonis Storm Securities (Pty) Ltd
APPENDIX A: PRINCIPAL RISKS AND UNCERTAINTIES
The Group's principal risks and uncertainties are detailed below, as extracted from pages 55-59 of the 2019 Annual Report. For further information, please refer to the 2019 Annual Report.
KEY
REFERENCE | CATEGORY | BUSINESS PROCESSES |
A | Strategic and business environment risk | · Strategy formulation and implementation · Strategic investment and strategic projects |
B | Financial and reporting risks | · Revenue cycle · Procure-to-pay cycle · Financial management and control · Treasury · Health information (including coding) |
C | Operational risks | · Infrastructure · Marketing and corporate communication · Operations |
D | Information technology risks | · ICT and related projects |
E | Regulatory compliance risks | · Legal and secretarial · Governance, risk and compliance · Environmental management |
F | Clinical risks | · Clinical · Nursing · Pharmacy · Coding |
G | People risks | · ICT · Human resources |
Increased | Risk exposure increased due to change in business environment, increased investments, increased dependency of operations on information technology, information sensitivity and cost involved.
| |
Reduced | Proactive and continuous monitoring, favourable results of negotiations, effective treasury and risk management processes resulted in lowering of risk exposure.
| |
No change | Risk exposure has not changed significantly as the operating and regulatory environment has remained mostly the same and enhanced risk mitigation measures have kept the risk at same level.
|
PRINCIPAL RISK | MOVEMENT IN 2019 | DESCRIPTION OF RISK | MITIGATION OF RISK |
Regulatory and compliance risks
E | Increased
The increasing risk relates to the continued healthcare reform and the introduction of new regulations.
| These risks relate to adverse changes in legislation and regulations impacting on the Group or the failure to comply with legislation and regulations which may result in losses, fines, penalties or damage to reputation.
The risks include healthcare reform by regulators aimed at reducing the cost of healthcare, broadening the access to quality healthcare and increasing the monitoring of quality standards by regulators.
| · Proactive engagement with stakeholders · Health policy units created to conduct research and to provide strategic input into reform processes · Active industry participation across all divisions · Company secretarial, legal and compliance functions support operational management, monitor regulatory developments and, where necessary, obtain expert legal advice for the effective implementation of compliance initiatives · Compliance risks identified and assessed as part of compliance management processes |
Information systems security and cyber risk
D
| Increased
The increased risk relates to the continued external threats arising from cyberattacks and breaches. | Information systems security risk and cyber risk relate to the unauthorised access to information systems through external or internal attack or unauthorised breach resulting in the unavailability of systems, failure of data integrity and data confidentiality breaches. | · Comprehensive information systems identity access management, change and physical access controls · Regular security reviews · Disaster recovery planning · Group information security and data privacy policies · Group ICT Security Committee |
Business investment and acquisition risks
A, B | Reduced
The investment and governance process were strengthened during the year. | These risks relate to increased financial exposure relating to major strategic business investments and acquisitions. The risk includes the sensitivity of the assumptions made when capital is allocated and the effective implementation of major investment decisions. | · Strategic planning processes · Due diligence processes · Investment mandates · Board oversight · Post-acquisition management processes |
Business project risks
A, D | New | The Group plans to adapt to the evolving regulatory, industry and market environment.
These risks refer to issues or occurrences that may potentially interfere with successful completion of projects, including timeliness, cost and quality. | · Effective project governance practices, methodologies and reporting · Experienced project management teams · Proactive monitoring and oversight |
Economic and business environment risks
A | No change
Economic growth in the Middle East and Southern Africa remained low, resulting in increased risk exposure. | These risks relate to the downturn in the general economic and business environments impacting on the affordability of healthcare for funders and self-paying patients.
The business environment risks include the potential negative impact on tariffs and fees resulting from the shift of the relative positioning away from healthcare service providers toward funders. | · Systems to monitor developments and trends in the economic and business environments and early warning indicators · Proactive monitoring and negotiation by the Group's Funder Relations departments · Focus on quality and continuum of care to reinforce the Group's market position |
Competition risks
A | Increased
Healthcare providers market continued to grow. | These risks relate to the uncertainty created by the existence of competitors or the emergence of new competitors with their own strategies.
The risk includes the outmigration of care, partly driven by further technological developments, and the development of alternative care models. | · Proactive monitoring · Strategic planning processes · Quality and value of care processes |
Clinical risks
F | No change
Clinical processes across all operating divisions remained a key focus area for the Group. Risk exposure remained at a comparable level to the previous year. | These risks relate to all clinical risks associated with the provision of clinical care resulting in undesirable clinical outcomes.
Clinical risks at the Group's facilities are managed daily. High-priority clinical risk areas include patient safety culture, adverse obstetric outcomes, medication errors, surgical and procedural adverse events and multidrug resistant organisms. Such risks may also result in damage to Mediclinic's reputation and impact on brand equity. Brand equity refers to the commercial value derived from the consumer perception of the Group's brand names rather than the services provided under those brand names. | · Refer to the Clinical Services Report for a detailed analysis of the strategies to manage and monitor clinical risks · A Group-wide clinical risk register implemented per division · Accreditation processes · Clinical governance processes · Monitoring of clinical performance indicators · Focus on quality management processes · Stakeholder engagement and disclosure strategies · Clinical audits |
Disruptive innovation and digitalisation risks
D | New | Disruptive innovation and digitalisation risks include the disintermediation and erosion of the Mediclinic business model due to the impact of technological development. It refers to the extent and speed that new technologies (and combinations thereof) change and transform industries and to what extent an organisation is able to exploit these opportunities and also being able to respond and innovate, while managing associated risks. | · Strategic planning processes · Proactive monitoring · Systems to monitor developments and trends in the economic and business environments and early warning indicators |
Availability, recruitment and retention of skilled resources and medical practitioners
G | No change
Vacancies and turnover ratios in respect of skilled resources and medical practitioners are expected to remain at similar levels to the prior year. | The availability and support of admitting medical practitioners, whether independent or employed, are critical to the Group's services.
There is a shortage of skilled labour, particularly a shortage of qualified and experienced nursing staff in Southern Africa. | · Systems to monitor satisfaction, movement and profiles of medical practitioners · Details on the relationship with medical practitioners provided in the Sustainable Development Report · The employment, recruitment and retention strategies explained in the Sustainable Development Report · Extensive training and skills development programme and foreign recruitment programme, explained in the Sustainable Development Report |
Availability and cost of capital risks (Including financing and liquidity risks)
B | No change
Interest rates are expected to remain at comparable levels during 2019. Long-term financing arrangements are in place. | These risks relate to the cost, terms and availability of capital to finance strategic expansion opportunities and/or the refinancing or restructuring of existing debt affected by prevailing capital market conditions. | · Long-term planning of capital requirements and cash-flow forecasting · Scrutiny of cash-generating capacity within the Group · Proactive and long-term agreements with banks and other funders relating to funding facilities · Systems to monitor compliance with requirements of debt covenants · Further details on capital risk management and the Group's borrowings contained in the annual financial statements |
Operational and credit risks
B, C | No change
The operational and credit risks did not change significantly and remained stable. | Operational risk refers to diverse types of operational events with a potential for financial loss, operational interruptions or reputational damage.
Credit risk is the risk of loss due to a funder's inability to pay the outstanding balance owing, default by banks and/or other deposit-taking institutions, or the inability to recover outstanding amounts due from patients. | · Preservation of a sound internal financial control environment · Effective operational risk management processes · Effective monitoring and oversight of operations · Regulated minimum solvency requirements for funders. · Monitoring of approved funders · Treasury policy |
Quality and stability of operational services risks
C | No change
The quality and operational services risks did not change significantly and remained stable. | These risks refer to the quality of service and the stability of the operations. It includes:
· incidents of poor service or where operational management fail to respond effectively to complaints; · operational interruptions which refer to any disruption of the facility and may include the threat of disrupted electricity or water supply; and · fire and allied perils causing damage or business interruption. | · Patient satisfaction surveys (both internal and external) · Complaints monitoring · Training programmes and supervision of service levels · Emergency backup electricity generation · Emergency and disaster planning · Extensive fire-fighting and detection systems, including comprehensive maintenance processes · Comprehensive insurance to deal with financial impact of potential disasters |
APPENDIX B: STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Statement of Directors' Responsibilities below is extracted from page 179 of the 2019 Annual Report. This statement relates solely to the 2019 Annual Report and is not connected to the information presented in this announcement or the preliminary results announcement released on 23 May 2019.
The Directors are responsible for preparing the Annual Report, including the financial statements, in accordance with applicable legislation and regulation.
The Act requires the Directors to prepare financial statements for each financial year. The Directors prepared the Group and Company financial statements in accordance with IFRS, as adopted by the EU. The Directors should only approve the financial statements if they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group and Company for the reporting period. In preparing the financial statements, the Directors are required to:
· select suitable accounting policies and apply these consistently;
· state whether applicable IFRS, as adopted by the EU, have been followed for the Group and Company financial statements respectively, subject to any material departures disclosed and explained in the financial statements;
· make judgments and accounting estimates that are reasonable and prudent; and
· prepare the financial statements on the going-concern basis, unless it is inappropriate to presume that the Group and Company will continue in business.
The Directors are responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps to prevent and detect fraud and other irregularities.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's and Company's transactions and disclose with reasonable accuracy, at any time, the financial position of the Group and Company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Act and, in respect of the Group's consolidated financial statements, Article 4 of the International Accounting Standards Regulation.
The Directors are responsible for the maintenance and integrity of the financial and associated corporate information published on the Company's website at www.mediclinic.com. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
DIRECTORS' CONFIRMATIONS
The Directors consider that this Annual Report, which contains the annual financial statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the position, performance, business model and strategy of the Group and Company.
Each of the Directors, whose names and functions are listed on page 104 of the Annual Report, confirm that to the best of their knowledge:
· the Group and Company financial statements, which were prepared in accordance with IFRS, as adopted by the EU, give a true and fair view of the assets, liabilities, financial position, cash flows and results of the Group and the Company; and
· the Directors' Report on page 130 includes a fair review of the development and performance of the business and the position of the Group and the Company, together with a description of the principal risks and uncertainties that they face.
DISCLOSURE OF INFORMATION TO EXTERNAL AUDITOR
In the case of each Director in office on the approval date of the Directors' Report, they confirm that:
· in so far as the Directors are aware, there is no relevant audit information of which the Group and Company auditor is unaware; and
· they have taken all reasonable steps as a Director to ascertain any relevant audit information and to establish that the Group and Company's auditor is aware of that information.
APPENDIX C: RELATED PARTY TRANSACTIONS
The following description of related party transactions involving the Company and is subsidiaries during the financial year ended 31 March 2019 is extracted from page 269 of the 2019 Annual Report.
35. | RELATED PARTY TRANSACTIONS
Remgro Limited owns, through various subsidiaries (Remgro Healthcare (Pty) Ltd, Remgro Health Ltd and Remgro Jersey GBP Ltd) 44.56% (2018: 44.56%) of the Company's issued share capital.
|
The following transactions were carried out with related parties: |
2019 £'m | 2018 £'m | ||
i) | Transactions with shareholders | ||
Remgro Management Services Limited (subsidiary of Remgro Ltd) | |||
Managerial and administration fees | 0.3 | 0.3 | |
Internal audit services | 0.2 | 0.2 | |
V & R Management Services AG (subsidiary of Remgro Ltd) | |||
Administration fees* | - | - | |
ii) | Key management compensation | ||
Key management includes the directors (executive and non-executive) and members of the executive committee. | |||
Salaries and other short-term benefits | |||
Short-term benefits | 6 | 6 | |
Post-employment benefits* | - | - | |
Share-based payment | - | 1 | |
iii) | Transactions with associates | ||
Zentrallabor Zürich | |||
Fees earned | (2) | (2) | |
Purchases | 9 | 8 | |
Spire Healthcare Group plc | |||
Non-executive director fee* | - | - | |
Wits University Donald Gordon Medical Centre (Pty) Ltd | |||
Fees paid
* Amount is less than £0.1m. | 2 | 2 |
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