Annual Financial Report

RNS Number : 0149J

Mediclinic International plc

23 June 2017

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")

23 June 2017

POSTING OF ANNUAL REPORT AND FINANCIAL STATEMENTS, NOTICE OF ANNUAL GENERAL MEETING AND PROXY FORM

Mediclinic's Annual Report and Financial Statements in respect of the financial year ended 31 March 2017 ("2017 Annual Report") is being posted to shareholders during the course of today, together with the Notice of Annual General Meeting and Form of Proxy in relation to the Company's annual general meeting to be held on Tuesday, 25 July 2017 at the Rosewood London Hotel, 252 High Holborn, London, WC1V 7EN at 15:00 (BST).

In accordance with Listing Rule 9.6.1, the above documents will be submitted to the UK Listing Authority via a National Storage Mechanism and will shortly be available to the public for inspection at www.morningstar.co.uk/NSM.

The documents will also be made available on the Company's website at www.mediclinic.com during the course of today.

The Company released its preliminary results on 24 May 2017 (RNS No. 0335G), and this announcement should be read in conjunction with that announcement. The financial information contained in the preliminary results announcement does not constitute the Company's statutory accounts for the years ended 31 March 2016 and 2017, but is derived from those accounts. Statutory accounts for year ended 31 March 2017 will be delivered to the Registrar of Companies in due course. The Company's auditors have reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (ii) did not contain a statement under Section 498(2) or (3) of the Companies Act 2006. The text of the auditors' report can be found in the Company's 2017 Annual Report.

About Mediclinic International plc

Mediclinic is an international private healthcare group with operating platforms in Southern Africa (South Africa and Namibia), Switzerland and the United Arab Emirates. Its core purpose is to enhance the quality of life of patients by providing acute care, specialist-orientated, multi-disciplinary healthcare services. Mediclinic also holds a 29.9% interest in Spire Healthcare Group plc, a LSE listed and UK-based private healthcare group.

Mediclinic comprises 74 hospitals and 37 clinics. Mediclinic Southern Africa operates 49 hospitals and 2 day clinics throughout South Africa and 3 hospitals in Namibia with more than 8 000 inpatient beds in total; Hirslanden operates 16 private acute care facilities and 4 clinics in Switzerland with more than 1 600 inpatient beds; and Mediclinic Middle East operates 6 hospitals and 31 clinics with more than 700 inpatient beds in the United Arab Emirates.

During February 2016, the combination of the Company (previously named Al Noor Hospitals Group plc), with operations mainly in Abu Dhabi in the United Arab Emirates, and Mediclinic International Limited was completed. Mediclinic International Limited was a South African based international private healthcare group founded in 1983 and listed on the JSE, the South African stock exchange, since 1986, with operations in South Africa, Namibia, Switzerland and the United Arab Emirates (mainly in Dubai). The combination resulted in the renaming of the enlarged group to Mediclinic International plc.

Mediclinic has a primary listing on the Main Market of the LSE, with secondary listings on the JSE in South Africa and the NSX in Namibia.

For further information, please contact:

Capita Company Secretarial Services Limited

Victoria Dalby

+44 (0)207 954 9600

Investor Relations, Mediclinic International plc

James Arnold, Head of Investor Relations

ir@mediclinic.com

+44 (0)20 3786 8181

Media queries

FTI Consulting

Brett Pollard/Debbie Scott (UK)

+44 (0)20 3727 1000

Frank Ford (South Africa)

+27 (0)21 487 9000

Registered address: 1st Floor, 40 Dukes Place, London, EC3A 7NH, United Kingdom

Website: www.mediclinic.com

Corporate broker: Morgan Stanley & Co International plc

JSE sponsor: RAND MERCHANT BANK (A division of FirstRand Bank Limited)

NSX sponsor: Simonis Storm Securities (Pty) Ltd

APPENDICES

The following appendices should be read in conjunction with, and not as a substitute for, reading the full 2017 Annual Report. Take note that page references and definitions in the text below are as in the 2017 Annual Report.

APPENDIX A: PRINCIPAL RISKS

The Company's principal risks are detailed below. For further information on the risks for the financial year ended 31 March 2017, please refer to the 2017 Annual Report.

PRINCIPAL RISK	DESCRIPTION OF RISK	MITIGATION OF RISK
Regulatory and Compliance risk	Adverse changes in laws and regulations impacting the Group or the failure to comply with laws and regulations which may result in losses, fines, prosecution or damage to reputation. The risk includes ethical and governance risks that refer to unexpected negative consequences of unethical actions or the failure of the control and oversight mechanisms which were designed and implemented to uphold the ethical standards and controls of the organisation.	· Proactive engagement strategies with stakeholders · Health policy units created to conduct research and provide strategic input for reform processes · Active industry participation across all platforms · Company secretarial and legal departments 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 departmental risk registers · Compliance management · Visible ethical leadership · Monitoring and investigation of incidents reported on the ethics line · Board-level oversight
Competition	The risk relating 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
Business investment and acquisition risks	The increased financial exposure relating to major strategic business investments and acquisitions. During the prior financial year, Mediclinic made strategic investments in Spire Healthcare, and acquired the Al Noor Hospitals Group.	· Strategic planning processes · Due diligence processes · Investment mandates · Board oversight · Post-acquisition management processes
Economic and business environment	The downturn in the general economic and business environment, including all those factors that affect a company's operations, customers, competitors, stakeholders, suppliers and industry trends. The business environment risk includes the power of funders and the potential negative impact on tariffs and fees resulting from the shift of the relative negotiating power towards funders, away from healthcare service providers.	· Systems to monitor developments in the economic and business environment of trends and early warning indicators · Proactive monitoring and negotiation by Group's funder relations departments · Focus on quality and continuum of care to reinforce the Company's position
Operational and credit risks	Operational risk refers to various types of operational events with a potential for financial loss. 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 the patient.	· Preservation of a sound internal financial control environment · Effective risk management processes · Extensive combined assurance processes · Monitoring operations through KPIs · Continuous enhancement of operational efficiency and cost reduction · Regulated minimum solvency requirements for funders · Monitoring approved funders · Treasury policy · Board-level oversight
Availability and cost of capital (Including financing and liquidity risk)	The cost, terms and availability of capital to finance strategic expansion opportunities and/or the refinancing or restructuring of existing debt which was affected by prevailing capital market conditions. The impact of negative interest rates currently prevalent in Switzerland.	· 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 · Monitoring compliance with requirements of debt covenants · Further details on capital risk management and the Group's borrowings are contained in the consolidated financial statements on page 164
Clinical risks	All clinical risks associated with the provision of clinical care resulting in undesirable clinical care or clinical outcomes. The risks include a pandemic and disease outbreak. A pandemic is an epidemic of infectious disease that is spreading through human populations across a large region. Disease outbreak involves highly infectious diseases with a high mortality rate. Such risks may also result in damage to the Mediclinic brand equity. Brand equity refers to the value of the Group's brand names.	· Refer to the Clinical Services Overview from page 37 and the Clinical Services Report available on the Company's website at www.mediclinic.com for a detailed analysis of the strategies to manage and monitor clinical risks · A Group-wide clinical risk register implemented per platform · Accreditation processes · Clinical governance processes · Monitoring clinical performance indicators · Implementation of comprehensive processes for infection control and prevention · Marketing and communication strategies · Focus on quality management processes · Stakeholder engagement and disclosure strategies
Information systems security and availability risk	Information systems security risk (including cyber risk) relates to the unauthorised access to information systems, failure of data integrity and confidentiality. Availability risk relates to the instances where systems are not available for use by its intended users. A risk which closely associated with information systems risk is project delivery. Project delivery risk refers to issues or occurrences that may potentially interfere with successful completion of projects, including its scope, timeliness and appropriateness of delivery.	· Comprehensive IT logical access, change and physical access controls · Disaster recovery planning · System design and architecture · Group ICT security committee · Experienced project management team · Proactive monitoring and oversight · Reallocation of tasks and resources
Quality and stability of operational services	The risk refers to the quality of service and the stability of the operations. It includes but is not limited to: · incidents of poor service or incidents where operational management fail to respond effectively to complaints; · operational interruptions which are any disruption of the facility and including the threat of disrupted power or water supply; and · fire and allied perils causing damage or business interruption.	· Patient satisfaction surveys (both internal and external) · Complaints monitoring · Training programmes · Supervision of service levels · Emergency backup power generation · Emergency planning · Plans to deal with disasters · Extensive fire-fighting and detection systems, including comprehensive maintenance processes · Comprehensive insurance to deal with financial impact of potential disasters
Availability, recruitment and retention of skilled resources and medical practitioners	The availability and support of admitting doctors, whether independent or employed, are critical to the services the Group provides. There is a shortage of skilled labour, particularly a shortage of qualified and experienced nursing staff in Southern Africa.	· Monitoring doctor satisfaction, movement and doctors' profiles · Details on the relationship with doctors are provided in the Sustainable Development Report available on the Company's website at www.mediclinic.com · The employment recruitment and retention strategies are explained in the Sustainable Development Highlights on page 60 and in more detail in the Sustainable Development Report available on the Company's website at www.mediclinic.com · Extensive training and skills development programme, and foreign recruitment program, further explained in the Sustainable Development Highlights on page 61 and in more detail in the Sustainable Development Report available on the Company's website at www.mediclinic.com

PRINCIPAL RISK

DESCRIPTION OF RISK

MITIGATION OF RISK

Regulatory and Compliance risk

Adverse changes in laws and regulations impacting the Group or the failure to comply with laws and regulations which may result in losses, fines, prosecution or damage to reputation.

The risk includes ethical and governance risks that refer to unexpected negative consequences of unethical actions or the failure of the control and oversight mechanisms which were designed and implemented to uphold the ethical standards and controls of the organisation.

· Proactive engagement strategies with stakeholders

· Health policy units created to conduct research and provide strategic input for reform processes

· Active industry participation across all platforms

· Company secretarial and legal departments 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 departmental risk registers

· Compliance management

· Visible ethical leadership

· Monitoring and investigation of incidents reported on the ethics line

· Board-level oversight

Competition

The risk relating 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

Business investment and acquisition risks

The increased financial exposure relating to major strategic business investments and acquisitions.

During the prior financial year, Mediclinic made strategic investments in Spire Healthcare, and acquired the Al Noor Hospitals Group.

· Strategic planning processes

· Due diligence processes

· Investment mandates

· Board oversight

· Post-acquisition management processes

Economic and business environment

The downturn in the general economic and business environment, including all those factors that affect a company's operations, customers, competitors, stakeholders, suppliers and industry trends.

The business environment risk includes the power of funders and the potential negative impact on tariffs and fees resulting from the shift of the relative negotiating power towards funders, away from healthcare service providers.

· Systems to monitor developments in the economic and business environment of trends and early warning indicators

· Proactive monitoring and negotiation by Group's funder relations departments

· Focus on quality and continuum of care to reinforce the Company's position

Operational and credit risks

Operational risk refers to various types of operational events with a potential for financial loss.

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 the patient.

· Preservation of a sound internal financial control environment

· Effective risk management processes

· Extensive combined assurance processes

· Monitoring operations through KPIs

· Continuous enhancement of operational efficiency and cost reduction

· Regulated minimum solvency requirements for funders

· Monitoring approved funders

· Treasury policy

· Board-level oversight

Availability and cost of capital

(Including financing and liquidity risk)

The cost, terms and availability of capital to finance strategic expansion opportunities and/or the refinancing or restructuring of existing debt which was affected by prevailing capital market conditions.

The impact of negative interest rates currently prevalent in Switzerland.

· 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

· Monitoring compliance with requirements of debt covenants

· Further details on capital risk management and the Group's borrowings are contained in the consolidated financial statements on page 164

Clinical risks

All clinical risks associated with the provision of clinical care resulting in undesirable clinical care or clinical outcomes.

The risks include a pandemic and disease outbreak. A pandemic is an epidemic of infectious disease that is spreading through human populations across a large region. Disease outbreak involves highly infectious diseases with a high mortality rate.

Such risks may also result in damage to the Mediclinic brand equity. Brand equity refers to the value of the Group's brand names.

· Refer to the Clinical Services Overview from page 37 and the Clinical Services Report available on the Company's website at www.mediclinic.com for a detailed analysis of the strategies to manage and monitor clinical risks

· A Group-wide clinical risk register implemented per platform

· Accreditation processes

· Clinical governance processes

· Monitoring clinical performance indicators

· Implementation of comprehensive processes for infection control and prevention

· Marketing and communication strategies

· Focus on quality management processes

· Stakeholder engagement and disclosure strategies

Information systems security and availability risk

Information systems security risk (including cyber risk) relates to the unauthorised access to information systems, failure of data integrity and confidentiality. Availability risk relates to the instances where systems are not available for use by its intended users.

A risk which closely associated with information systems risk is project delivery. Project delivery risk refers to issues or occurrences that may potentially interfere with successful completion of projects, including its scope, timeliness and appropriateness of delivery.

· Comprehensive IT logical access, change and physical access controls

· Disaster recovery planning

· System design and architecture

· Group ICT security committee

· Experienced project management team

· Proactive monitoring and oversight

· Reallocation of tasks and resources

Quality and stability of operational services

The risk refers to the quality of service and the stability of the operations. It includes but is not limited to:

· incidents of poor service or incidents where operational management fail to respond effectively to complaints;

· operational interruptions which are any disruption of the facility and including the threat of disrupted power or water supply; and

· fire and allied perils causing damage or business interruption.

· Patient satisfaction surveys (both internal and external)

· Complaints monitoring

· Training programmes

· Supervision of service levels

· Emergency backup power generation

· Emergency planning

· Plans to deal with disasters

· Extensive fire-fighting and detection systems, including comprehensive maintenance processes

· Comprehensive insurance to deal with financial impact of potential disasters

Availability, recruitment and retention of skilled resources and medical practitioners

The availability and support of admitting doctors, whether independent or employed, are critical to the services the Group provides.

There is a shortage of skilled labour, particularly a shortage of qualified and experienced nursing staff in Southern Africa.

· Monitoring doctor satisfaction, movement and doctors' profiles

· Details on the relationship with doctors are provided in the Sustainable Development Report available on the Company's website at www.mediclinic.com

· The employment recruitment and retention strategies are explained in the Sustainable Development Highlights on page 60 and in more detail in the Sustainable Development Report available on the Company's website at www.mediclinic.com

· Extensive training and skills development programme, and foreign recruitment program, further explained in the Sustainable Development Highlights on page 61 and in more detail in the Sustainable Development Report available on the Company's website at www.mediclinic.com

APPENDIX B: RELATED-PARTY TRANSACTIONS

The following description of related-party transactions involving the Company and its subsidiaries during the financial year ended 31 March 2017 is extracted from page [xx] of the 2017 Annual Report and is repeated in this announcement solely for the purpose of complying with DTR 6.3.5:

		GROUP
		2017 GBP'm	2016 GBP'm
34.	RELATED-PARTY TRANSACTIONS Remgro Limited owns, through various subsidiaries (Remgro Healthcare (Pty) Limited, Remgro Health Limited and Remgro Jersey GBP Limited) 44.56% (2016: 44.56%) of the Company's issued share capital.
	The following transactions were carried out with related third parties:

i)	Transactions with shareholders
	Share subscription - Remgro Group and its subsidiaries	-	600
	In addition to the share subscription (February 2016), Remgro also participated in the Right Offer (August 2015)

	Remgro Management Services Limited (subsidiary of Remgro Limited)
	- Managerial and administration fees	0.30	0.20
	- Internal audit services	0.20	0.10
	- Management fee relating to the acquisition of equity investment (Spire Healthcare Group plc)	-	2
	- Underwriting fees in respect of the rights offer	-	4

	V & R Management Services AG (subsidiary of Remgro Limited)
	- Administration fees*	-	-

	Acquisition of equity investment (Spire Healthcare Group plc)
	- During the prior period, Mediclinic International (RF) (Pty) Ltd (previously Mediclinic International Ltd) and Remgro Limited jointly negotiated the terms of the transaction to acquire an equity investment in Spire Healthcare Group plc with the seller. Refer to note 30 for additional information.

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	7	4
	- Short-term benefits	6	4
	- Post-employment benefits*	-	-
	- Share-based payment	1	-

iii)	Transactions with associates
	Zentrallabor Zürich (ZLZ)
	- Fees earned	(1)	(1)
	- Purchases	10	7

	Spire Healthcare Group plc
	- Non-executive director fee* *amount is less than £0.5m.	-	-

This information is provided by RNS

The company news service from the London Stock Exchange

END

ACSSELSUDFWSELM

Companies

Mediclinic International (MDC)

Friday, 10th January 2025

COMPANIES COVERED:

SBRY CKN APH

Alliance Pharma jumps as takeover news announced and Clarkson advances on modest profit upgrade but Sainsbury continues slide as costs rise and non-food sales slow.

Full Archive

UK 100

Latest directors dealings

2 days ago FRP Advisory Group
2 days ago Marks Electrical Group
2 days ago CLS Holdings
2 days ago QinetiQ Group
2 days ago Spectris

All directors dealings today