Investment reviews

Mediclinic International Limited (Mediclinic)

Mediclinic has a March year-end and therefore its results for the twelve months to 31 March 2014 have been equity accounted in Remgro’s results for the year under review.

Mediclinic’s contribution to Remgro’s headline earnings for the year under review amounted to R1 489 million (2013: headline loss of R491 million). This increase resulted mainly from once-off charges relating to the refinancing of its Swiss and South African debt accounted for during the comparative year, of which Remgro’s share of these once-off items amounted to R1 312 million. Excluding these once-off costs, Mediclinic’s contribution would have increased by 81% from R821 million, reflecting a solid operating performance as well as the positive impact of a weaker rand and the leveraging effect of the group’s improved capital structure.

A higher past service cost credit of R192 million (2013: R27 million) on its retirement benefit obligations also contributed, albeit to a lesser extent, to the increase in headline earnings.

Mediclinic’s turnover for its year ended 31 March 2014 increased by 25% to R30 495 million (2013: R24 436 million), with strong performances from all three operating platforms.

Mediclinic Southern Africa’s revenue increased by 11% to R11 205 million (2013: R10 059 million) for the year under review, mainly due to a 5.9% increase in bed-days sold and a 5.4% increase in the average income per bed-day. Operating income before interest, taxation, de­preciation and amortisation (EBITDA) increased by 11% to R2 453 million (2013: R2 163 million) and the Southern African operations contributed R984 million (2013: R901 million) to the normalised attributable income of Mediclinic.

Mediclinic has an interest of 100% in Hirslanden, the holding company of the largest private hospital group in Switzerland. Hirslanden’s revenue for the year under review increased by 33% to R15 874 million (2013: R11 892 million) and normalised EBITDA, which excludes the effect of a positive adjustment to past service costs of the Hirslanden pension fund and a pre-acquisition Swiss tariff provision charge, was 28% higher at R3 297 million (2013: R2 584 million). The weakening in the average rand/Swiss franc exchange rate for the year positively impacted the financial numbers above, with revenue and normalised EBITDA increasing by 8% and 5% respectively at constant foreign exchange rates.

Mediclinic Middle East owns and operates the Welcare Hospital and the City Hospital in Dubai. Revenue from the Middle East platform increased by 37% to R3 416 million (2013: R2 485 million) for the year under review, while EBITDA increased by 52% to R752 million (2013: R495 million).

The weakening in the average rand/UAE dirhams exchange rate for the year positively impacted the financial numbers above, with revenue and EBITDA increasing by 15% and 27% respectively at constant foreign exchange rates. This growth was achieved due to a good performance from all business units, as inpatient hospital admissions, hospital outpatient consultations and visits to the emergency units increased by 4% each. Clinic outpatient consultations increased by 8%.

The group remains uniquely positioned across three diverse international operating platforms and continues to invest for growth across these platforms, with Hirslanden’s acquisition of Klinik La Colline in Geneva and Swissana Clinic in Lucerne being announced subsequent to the end of its financial year.