Private hospital group Medi-Clinic maintained its consistent growth pattern in the six months ended 30 September 2009, with a 15% increase in headline earnings and a solid performance in its South African and international operations.
Medi-Clinic operates private hospitals in South Africa, Namibia, Switzerland and the United Arab Emirates.
Group revenue increased 12% to R8 363m (2008: R7 496m) and EBITDA was up 12% to R1 739m (2008: R1 555m).
Headline earnings rose by 15% to R331m (2008: R287m) and headline earnings per ordinary share increased by 15% to 59.0 cents (2008: 51.2 cents).
“The results are particularly gratifying,” says Dr Edwin Hertzog, Medi-Clinic Chairman, “especially in light of a global recession, economic turmoil and the timing of the Easter holiday period which resulted in fewer business days in the Swiss and South Africa operations during the reporting period.”
Medi-Clinic Southern Africa increased revenue by 13% to R3 802 million (2008: R3 357 million). EBITDA was 14% higher at R813 million (2008: R715 million).
The Hirslanden operations in Switzerland increased revenue by 5% (4% at constant foreign exchange rates) to R4 037 million (CHF540 million) (2008: R3 827 million (CHF517 million)).
Emirates Healthcare increased revenue by 68% (62% at constant foreign exchange rates to R524 million (AED237 million) (2008: R312 million (AED147 million)).
The interim dividend per ordinary share increased by 6.5% to 23.0 cents (2008: 21.6 cents).
“We informed our shareholders in the 2009 Annual Report that we will in future target a dividend cover of three times based on Group headline earnings.” Dr Hertzog says, adding that “The fact that the increase in the dividend per share is lower than the increase in basic headline earnings per share is a first step in achieving that goal.”
“The Group’s debt decreased from R24 590 million at 31 March 2009 to R21 755 million, mainly because of the strengthening of the Rand against the Swiss Franc during the reporting period,” says Gerhard Swiegers, Group Chief Financial Officer. “Operating profit margins were maintained across all three growth platforms. We are particularly pleased that The City Hospital in Dubai reached break-even at EBITDA level during September 2009, earlier than expected,” says Louis Alberts, Group Chief Executive.
Significant resources continue to be invested across the three operating platforms. In Switzerland a neurology centre and a vascular centre will be established at Klinik Hirslanden with effect from April 2010 and June 2010 respectively. Projects for the increase of capacity at Klinik Aarau (28 inpatient beds), Klinik Im Park (2 ICU beds, 4 intermediate care beds and an operating theatre) and Klinik St. Anna (7 new private rooms) have been approved. Klinik Beau-Site in Berne will be expanded by 23 beds to 116 beds with 19 beds to be commissioned in 2011 and the balance in 2012. In South Africa the number of beds is expected to increase from 6 859 to 7 028 during the next six months. The commissioning of the new 140 bed Cape Gate Medi-Clinic in the Western Cape is expected as planned in February 2010. Extensive upgrade projects are in progress at Panorama Medi-Clinic, Constantiaberg Medi-Clinic and Hermanus Medi-Clinic. Other significant projects that are planned to commence towards the end of the calendar year are the addition of 74 beds at Nelspruit Medi-Clinic, 30 beds at Limpopo Medi-Clinic and 28 beds at Tzaneen Medi-Clinic. In Dubai, a project is in progress to upgrade the Welcare Hospital and to increase the total beds in the hospital from 120 to 130.
“A key focus for us going forward is to continue to extract value from the synergies between the three operating platforms,” Alberts says. “We commenced with the establishment of an integrated international platform for best practices across borders, consolidating our collective intellectual capital.”
In terms of the South African legislative environment, Dr Hertzog confirms that Medi-Clinic supports the Government’s policy objectives to increase access to quality healthcare for all citizens. “Regulatory issues are part and parcel of the healthcare environment. The Group, particularly in Switzerland and Southern Africa, is constantly monitoring the regulatory environment with a view to play a proactive role in decision-making or to adjust to a potential new environment,” he added.
“The Group has so far weathered the global recession quite well. Barring unforeseen circumstances, the Group continues to be optimistic about its operational prospects for next year. We see ourselves as long-term players in the global healthcare market, focused on our core business of acute care specialist orientated hospital services,” Dr Hertzog concludes.