Investment reviews


Contribution to headline earnings 30 June 2023
R million
30 June 2022
R million
Mediclinic 1 691 1 267

Mediclinic’s business consists of the provision of comprehensive, high-quality hospital services on a cost effective basis in Southern Africa, the United Arab Emirates, Switzerland and the United Kingdom.

Corporate information

Equity valuation at 30 June 2023: £3 972 million
Chief Executive Officer: R van der Merwe
Remgro nominated directors: J J Durand, P J Uys, A Elias, S Crouse (alternate)

Sustainability measures

CSI/Training spend: R112 million
Number of employees: 36 496
BBBEE status: Level 4
Environmental aspect: Scope 1 and 2 emissions of 205 281 tonnes CO2e
Year ended
31 March 2023
£ million %
Revenue 3 618 11.9
Operating profit 78 (72.1)
Adjusted earnings 192 15.0

Mediclinic Group Limited (Mediclinic)

Mediclinic has a March year-end and the results for the 12 months to 31 March 2023 have been equity accounted at 44.6% 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 691 million (2022: R1 267 million), representing an increase of 33.5%. Included in Mediclinic’s contribution is an additional provision for transaction costs incurred before 30 June 2023 amounting to R539 million, relating to the acquisition by Manta Bidco Limited (Bidco), a newly formed company that is jointly owned by Remgro and MSC Mediterranean Shipping Company SA, of the entire issued ordinary share capital of Mediclinic, other than the Mediclinic shares Remgro already owned (the Acquisition). Bidco and Mediclinic provided for transaction costs of R247 million and R292 million, respectively, which is in addition to the R78 million that has already been accounted for in Mediclinic’s results for the year ended 31 March 2023. As a result of the Acquisition, Remgro’s indirect interest in Mediclinic increased from 44.6% to 50.0% (or by 5.4%) on 6 June 2023, the date on which the Mediclinic shareholders received their offer price. For the 2024 financial year, Remgro will account for Mediclinic’s results for the year ending 31 March 2024 at 44.6% for the first two months and at 50.0% for the following 10 months.

Mediclinic uses adjusted income statement reporting as non-IFRS measures in evaluating performance and as a method to provide clear and consistent reporting.

Mediclinic experienced a difficult first half, and notwithstanding the continued macroeconomic pressures, delivered an improved second half performance. Mediclinic’s revenue was up 12% at £3 618 million (2022: £3 233 million) and up 4% in constant currency terms, driven by an 11.2% growth in inpatient admissions and a 16.2% growth in day case admissions, partly offset by lower average revenue per case due to mix changes, exacerbated by the post-Covid-19 environment, and below-inflation tariff increases.

Adjusted EBITDA was up 9% at £570 million (2022: £522 million) and up 1% in constant currency terms. The adjusted EBITDA margin was 15.8% (2022:16.1%), reflecting softer revenue performance, increased employee costs due to general nurse shortages in Switzerland and pronounced seasonality and additional headcount related to capacity expansion in the Middle East.

Switzerland’s revenue increased by 1% to CHF1 900 million (2022: CHF1 885 million), driven by inpatient revenue growth of 2% and outpatient and day case revenue growth of 3%, offset by reducing revenues from Covid-19-related testing and vaccination activities. Admission growth was impacted by a general shortage of nursing employees, leading to capacity constraints in certain parts of the division. The constrained revenue growth, combined with the elevated spend on temporary and overtime employee costs due to general nurse shortages, resulted in a 6% decrease in adjusted EBITDA to CHF280 million (2022: CHF297 million). The adjusted EBITDA margin was 14.7% (2022: 15.6%).

Southern Africa’s revenue increased by 6% to R19 506 million (2022: R18 416 million), reflecting strong client activity. Paid patient days increased by 7%; however, average revenue per bed day was down 1.1%, reflecting an expected change in mix following prior periods with more pronounced Covid-19 cases. The average length of stay was down 7.3% reflecting the decrease in longer stay Covid-19 patients and a significant increase in day case admissions. Adjusted EBITDA increased by 10% to R3 775 million (2022: R3 430 million), driven by revenue performance and responsible cost management, delivering an improved adjusted EBITDA margin of 19.4% (2022: 18.6%).

The Middle East revenue increased by 8% to AED4 459 million (2022: AED4 111 million), recovering from the pronounced seasonality in the first half following the lifting of Covid-19 travel restrictions. Inpatient admissions and day cases were up 17% and outpatient cases were up 14%. However, this was offset by a decrease in the average revenue per inpatient and day case admission by 9% and in average revenue per outpatient case by 4%, reflecting mix changes in the post-Covid-19 environment. Pharmacy revenue increased by 15% and contributed approximately 20% of total revenues for the division. Adjusted EBITDA increased by 4% to AED641 million (2022: AED614 million), reflecting additional headcount, due to the investment for growth in new and existing facilities, which, combined with the growth in pharmacy revenue, resulted in a marginal decrease in adjusted EBITDA margin to 14.4% (2022: 14.9%).

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