Strategic Report: Performance highlights

GROUP FINANCIAL RESULTS

OPERATIONAL HIGHLIGHTS

Strong financial position

The strong financial position of the Group supported the overall performance of the three divisions in 2018. In Switzerland, Hirslanden was faced with a number of regulatory changes that came into effect during the year and the division will need to continue adapting to the evolving outpatient environment whilst delivering cost savings and operational efficiencies. The division recognised an impairment charge on intangible assets and properties of £644m. The Southern Africa division, once again, produced steady revenue growth and managed its cost base despite pressure on patient volumes in the current environment. The Middle East division reached an inflection point this year with a strong second half performance delivering marginal improvement in revenue and adjusted EBITDA margin for the year. Spire’s reported profit after tax was impacted by exceptional items that lowered the contribution from the investment in associate for the year. Further, Mediclinic recognised an impairment on the investment in associate of £109m. At a Group level, the reported earnings loss was £492m, impacted by the impairments and other exceptional items.

Succeeding with the turnaround of the Abu Dhabi business

The operational changes that were implemented in the Abu Dhabi business during the prior year, to align with Mediclinic’s established Dubai business, have laid the foundation for future success. The Middle East division is now entering a growth phase underpinned by continued strong performance in the Dubai business, ongoing improvement in the Abu Dhabi business and the opening of several new facilities over the coming years.

Patients First strategic objective

Our patients are at the core of Mediclinic. The Group’s strategic focus specifically requires that it consistently delivers high-quality healthcare and optimal patient experience across the operating divisions in Switzerland, Southern Africa and the Middle East. To this end, Mediclinic continued to invest in its people, clinical facilities and technology. We made continued progress this year in the key areas of clinical performance, patient experience and staff engagement.

Benefits of being a global healthcare service group

As one of the largest independent pan-EMEA1 healthcare services groups, Mediclinic is well positioned to deliver long-term value to its shareholders. The Group’s growing international scale enables it to unlock further value through promoting collaboration and best practice across various fields including clinical and patient care, extracting operational synergies and delivering cost efficiencies through global procurement.

Evolving regulatory environment

The demand for healthcare services is unquestionably growing around the globe. The challenge for the industry, however, is to ensure those services remain affordable resulting in changing care delivery models and greater regulatory oversight. We place considerable emphasis on the investment we make in our clinical performance and the facilities that we operate to deliver our patients the care that we believe will improve the quality of their lives. However, we must manage the delivery of these services in an efficient, cost-effective way to ensure sustainability.

1 Europe, Middle East and Africa

Key Performance Indicators

Notes
1 The Group uses adjusted income statement reporting as non-IFRS measures in evaluating performance and as a method to provide shareholders with clear and consistent reporting. See the reconciliations between the statutory and the non-IFRS measures in the Financial Review.
2 Earnings refer to (loss)/profit attributable to equity holders.
3 The total dividend per share for the year ended 31 March 2018 in pounds sterling comprises the final dividend of 4.70 pence per share (2017: 4.70 pence) and the interim dividend of 3.20 pence per share, paid in December 2017 (2017: 3.20 pence).

Group results are subject to movements in foreign currency exchange rates. Refer to the Financial Review for exchange rates used to convert the operating divisions’ results to pounds sterling.