Annual Financial Report

RNS Number : 2038S

Mediclinic International plc

22 June 2018

 

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")

22 June 2018

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 2018 ("2018 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, 25 July 2018 at The Lincoln Centre, 18 Lincoln's Inn Fields, London WC2A 3ED at 15:00 (BST).

In accordance with Listing Rule 9.6.1, the above documents are being submitted to the UK Listing Authority via 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 are extracted from the 2018 Annual Report and should be read in conjunction with the Company's preliminary results announcement issued on 24 May 2018 (RNS number 0970P). This material is not a substitute for reading the full 2018 Annual Report.

About Mediclinic International plc

Mediclinic is an international private healthcare services group with operating divisions in Switzerland, Southern Africa (South Africa and Namibia) 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, an LSE-listed and UK-based private healthcare group.

Mediclinic comprises 75 hospitals and 28 clinics. Hirslanden operates 17 private acute care facilities and 4 clinics in Switzerland with more than 1 800 inpatient beds; Mediclinic Southern Africa operates 49 hospitals and 2 day clinics throughout South Africa and 3 hospitals in Namibia with more than 8 100 inpatient beds in total; and Mediclinic Middle East operates 6 hospitals and 22 clinics with more than 700 inpatient beds in the United Arab Emirates.

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

For further information, please contact:

Company Secretary, Link Company Matters Limited

Jayne Meacham / Caroline Emmet

[phone]

Investor Relations, Mediclinic International plc

James Arnold, Head of Investor Relations

[e-mail]

[phone]

Media queries

FTI Consulting

Brett Pollard/Debbie Scott - UK

[phone]

Sherryn Schooling - South Africa

[phone]

Registered address: 6^th 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 44 to 48 of the 2018 Annual Report. For further information, please refer to the 2018 Annual Report. 

PRINCIPAL RISK	MOVEMENT IN 2018	DESCRIPTION OF RISK		MITIGATION OF RISK
Economic and business environment risk 1	Increased Economic growth in Switzerland and in South Africa continued to be weak, resulting in increased risk exposure.	The risk relates to 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
Business investment and acquisition risks 1, 2	Reduced The investments and governance processes were strengthened during the year.	This is the risk of increased financial exposure relating to major strategic business investments and acquisitions.		•   •   •   • •	Strategic planning processes Due diligence processes Investment mandates Board oversight Post-acquisition management processes
Competition 1	No change Healthcare providers market continued to grow through normal channels of acquisitions, expansions, new facilities etc. There were no major changes to impact risk exposure.	The risk relates 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
Availability and cost of capital (including financing and liquidity risk) 2	Increased Interest rates are expected to rise in the year ahead, which may lead to an increase in the cost of capital.	These risks involve the cost, terms and availability of capital to finance strategic expansion opportunities and/or the refinancing or restructuring of existing debt which has been 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 Monitoring compliance with requirements of debt covenants Further details on capital risk management and the Group's borrowings are contained in the annual financial statements
Operational and credit risks 2, 3	Reduced The risk exposure was reduced following the successful integration of the Al Noor business.	Operational risk refers to diverse types of operational events with the 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 Extensive combined assurance processes Monitoring operations through key performance indicators ("KPIs") Continuous enhancement of operational efficiency and cost reduction Regulated minimum solvency requirements for funders Monitoring approved funders Treasury policy Executive and board level oversight
Quality and stability of operational services risk 3	No change The operational services risk did not change significantly and remained stable throughout the year.	The risk refers to the quality of service and the stability of the operations. It includes but is not limited to:		•   •   • •   •   • •   •   •	Patient satisfaction surveys (internal and external) Complaints monitoring Training programmes Supervising 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
		•   •   •	incidents of poor service or incidents where operational management fails to respond effectively to complaints; operational interruptions which refers to any disruption of the facility and may include the threat of disrupted power or water supply; and fire and allied perils causing damage or business interruption.
Information Systems security and availability risk 4	Increased The increased risk relates to the continued external threats arising from cyberattack.	Information systems security risk (including cyber risk) relates to unauthorised access to information systems, failure of data integrity and confidentiality. Availability risk relates to instances where systems are not available for use by its intended users. Project delivery risk, closely associated with information systems risk, refers to issues or occurrences that could potentially interfere with completion of projects, including scope, timeliness and appropriateness of delivery.		•   •   •   •   •   •	Comprehensive information systems logical access, change and physical access controls Disaster recovery planning System design and architecture Group ICT Security Committee Experienced project management teams Proactive monitoring and oversight
Regulatory and compliance risk 5	Increased The increased risk relates to the introduction of new regulations which includes TARMED (Tariff System for Outpatient Medical Services) in Switzerland and the EU General Data Protection Regulation ("GDPR").	The risk involves adverse changes in laws and regulations impacting the Group or 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 the 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 into reform processes Active industry participation across all divisions Company Secretarial and/or 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 compliance management processes Visible ethical leadership Monitoring and investigation of incidents reported on the ethics line Executive and Board level oversight
Clinical risks 6	No change Clinical processes across operating divisions continued to be a key focus area for the Group. Risk exposure remained at a comparable level to the previous year.	Clinical risks are associated with the provision of clinical care and may result in undesirable quality of care or clinical outcomes. The risks include a pandemic and disease outbreak. A pandemic is an epidemic of infectious disease that spreads 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, which is the value of the Group's 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 registers per operating division Accreditation processes Clinical governance processes Monitoring clinical performance indicators Comprehensive processes for infection control and prevention Marketing and communication strategies Quality management processes Stakeholder engagement and disclosure strategies
Risk of availability, recruitment and retention of skilled resources and medical practitioners 7	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 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 The employment, recruitment and retention strategies are explained in the Sustainable Development Report The extensive training and skills development programme, and the foreign recruitment programme are further explained in the Sustainable Development Report.

KEY

REFERENCE	CATEGORY	BUSINESS PROCESSES		STRATEGIC PRIORITIES
1	Strategic and business environment	•   •	Strategy formulation and implementation Strategic investments and strategic projects	•   •	Delivering business value Continuing to expand as a successful international healthcare group
2	Financial and reporting risks	• • •   • •	Revenue cycle Procure to pay cycle Financial management and control Treasury Health information (including coding)
3	Operational risks	• •   •	Infrastructure Marketing and corporate communication Operations
4	Information technology risks	•   •	Information and communications technology ("ICT") ICT projects
5	Regulatory compliance risks	• •   •	Legal and secretarial Governance, risk and compliance Environmental management	•   •	Ensuring good corporate governance Acting as a responsible corporate citizen
6	Clinical risks	• • • •	Clinical Nursing Pharmacy Coding	•   •	Delivering superior value to its patients Delivering integrated healthcare in collaboration with doctors and allied healthcare professional communities
	People risks	• •	Human resources Compensation and benefits cycle	•   •   •	Being an employer of choice Having constructive relationships with all stakeholders Being a valued member of the community
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.

 

APPENDIX B: STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Statement of Directors' Responsibilities below is extracted from page 160 of the 2018 Annual Report. This statement relates solely to the 2018 Annual Report and is not connected to the information presented in this announcement or the preliminary results announcement released on 24 May 2018.

The Directors are responsible for preparing the Annual Report, including the financial statements, in accordance with applicable law and regulation.

The UK Companies Act requires the Directors to prepare financial statements for each financial year. The Directors prepared the Group and Company financial statements in accordance with International Financial Reporting Standards ("IFRS"), as adopted by the European Union. 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 them consistently;
•	state whether applicable IFRS have been followed, subject to any material departures disclosed and explained in the financial statements;
•	make judgements 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 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 UK Companies Act and, in respect of the Group's consolidated financial statements, Article 4 of the IAS Regulation.

The Directors are responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

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 United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Directors consider that the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group and Company's performance, business model and strategy.

Each of the Directors, whose names and functions are listed on pages 86 to 89 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 European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and
•	the Strategic Report 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 it faces.

DISCLOSURE OF INFORMATION TO AUDITORS

Each of the directors confirms that:

•	to the best of their knowledge and belief, there is no relevant audit information of which the Company's auditors are unaware; and
•	they have taken all reasonable steps to ascertain any relevant audit information and to establish that the Company's auditors are 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 2018 is extracted from page 241 of the 2018 Annual Report.

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

		2018 £'m	2017 £'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	1
iii)	Transactions with associates
	Zentrallabor Zürich
	Fees earned	(2)	(1)
	Purchases	8	10
	Spire Healthcare Group plc
	Non-executive director fee*	-	-
	Wits University Donald Gordon Medical Centre (Pty) Ltd
	Fees paid * Amount is less than £0.5m.	2	2

 

END

 

 

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