TOGETHER
WE CARE
2021 ANNUAL REPORT
MEDICLINIC’S CORE
PURPOSE IS TO ENHANCE
THE QUALITY OF LIFE
Mediclinic’s performance this year reflects
the Group’s unwavering support of and
collaboration with governments and
authorities in tackling the pandemic.
STRATEGIC REPORT
Introduction
Performance
1
Financial review
2
Report profile
3
4 Chair’s Review
8 At a glance
Investment case
10
12 COVID-19 overview
18 Together we care
Strategy and performance
24 Group Chief Executive Officer’s Report
30 Market overview and opportunities
32 Strategy overview
38 Continuum of care
Business delivery and resource
management
40 Business model
42 Value added statement
44 Stakeholder engagement
48 Section 172 statement
51 Sustainable development overview
67 Non-financial information statement
Operations and risk
68 Clinical services overview
84 Group Chief Financial Officer’s Report
95 Five-year summary
96 Risk management report
GOVERNANCE AND
REMUNERATION REPORT
106 Chair’s Introduction
107 Board of Directors
114 Group Executive Committee
116 Corporate Governance Statement
141 Directors’ Report
142 Audit and Risk Committee Report
154 Clinical Performance and Sustainability
Committee Report
158 Nomination Committee Report
164 Remuneration Committee Report
182 Statement of directors’ responsibilities
FINANCIAL STATEMENTS
184 Independent Auditor’s Report
196 Group annual financial statements
289 Company annual financial statements
ADDITIONAL INFORMATION
296 Shareholder information
299 Company information
300 Forward-looking statements
301 Glossary of terms
PERFORMANCE
Inpatient admissions
600 000+
Outpatients treated
2.4m+
COVID-19 patients treated
40 000+
Number of clinical indicators
measured
150
Ongoing investment
£126m
New COVID-19-related
services launched
7
The Group’s
commitment to making
a positive contribution
to each of its stakeholders
cuts to the heart of
healthcare – improving
health and wellbeing
in the long term forms
an integral part of the
business.
1
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC REVENUE (£’M)
2 749
2 876
2 932
3 083
2 995
ADJUSTED EBITDA (£’M)
501
515
493
541
426
REPORTED OPERATING PROFIT/(LOSS) (£’M)
362
-288
-184
81
209
ADJUSTED OPERATING PROFIT/(LOSS)
(£’M)
360
370
330
327
221
REPORTED EARNINGS/(LOSS) (£’M)
229
-492
-151
-320
68
ADJUSTED EPS3 (PENCE)
29.8
30.0
26.9
24.0
13.7
OPERATING CASH FLOW (£’M)
492
466
451
330
589
17
18
19
20
21
17
18
19
20
21
17
18
19
20
21
17
18
19
20
21
17
18
19
20
21
17
18
19
20
21
17
18
19
20
21
FINANCIAL
REVIEW1
REVENUE (3%)
Sudden onset of COVID-19-related lockdown
measures and non-urgent elective procedure
restrictions in April 2020 significantly impacted
first-half performance; revenue up 1% in the
second half as Group adapted to subsequent
waves of the pandemic
REPORTED EARNINGS £68M
Reflecting impact of the pandemic on Group
revenue and largely fixed employee cost base
ADJUSTED EARNINGS
PER SHARE (43%)
Reflecting Group operating results in addition
to ongoing investment associated with
long-term growth and expansion across
the continuum of care
ADJUSTED EBITDA2 (21%)
Profitability significantly impacted by sudden
decline in revenue in first half of the year;
also reflects escalation in usage and pricing
of personal protective equipment (‘PPE’)
and staffing requirements due to isolation
and quarantine regulations; adjusted EBITDA
down 12% in second half as Group adapted to
subsequent waves of the pandemic
CASH FROM OPERATIONS (44%)
Reflecting Group operating results in addition
to cash conversion of 77%; ongoing financial
resilience demonstrated by strong liquidity
position with cash and available facilities
of £679m and net debt reducing to £2 159m
DIVIDEND REMAINS SUSPENDED
at the end of FY21 as part of broad range of
proactive measures to conserve liquidity during
the pandemic
Notes
1 The Group uses adjusted income statement reporting as
non-IFRS measures in evaluating performance. Refer to the
Five-year summary on page 95 for more information and
the ‘Financial review’ section of the Group Chief Financial
Officer’s Report on page 85 for an explanation and for a
reconciliation to the equivalent IFRS measures.
2 Earnings before income, tax, depreciation and amortisation.
3 Earnings per share.
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MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT
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PROFILE
ABOUT THE COMPANY
Mediclinic International plc (‘Mediclinic’ or the ‘Company’)
has a primary listing on the London Stock Exchange (‘LSE’)
in the United Kingdom (‘UK’), with secondary listings on
the JSE in South Africa and the Namibian Stock Exchange
(‘NSX’) in Namibia. The Group’s registered office is in
London, UK.
ABOUT THIS REPORT
Mediclinic published this annual report with financial
statements (‘Annual Report’) in respect of the financial
year ended 31 March 2021 (the ‘reporting period’ or ‘year
under review’ or ‘period under review’ or ‘FY21’).
In addition, Mediclinic also produces an accompanying
suite of reports in respect of both the 2020 calendar year
and FY21, which is available on the Group’s website from
the date of the distribution of this Annual Report and the
Company’s notice of annual general meeting (‘AGM’) by
no later than 18 June 2021.
2021 Clinical Services Report
2021 Sustainable Development Report
2021 Notice of Annual General Meeting
SCOPE, BOUNDARY AND REPORTING CYCLE
This Annual Report presents the financial results, the
environmental, social and governance (‘ESG’) performance,
the clinical performance, and the financial performance
of Mediclinic for the reporting period and reports on the
operations of the Company’s subsidiaries in Switzerland,
South Africa and Namibia, and the United Arab Emirates
(‘UAE’) (collectively, the ‘Group’). It also compares results
with those of the prior financial year (‘FY20’) and indicates
focus areas for the financial year/s ahead (‘FY22’, ‘FY23’).
REPORTING PRINCIPLES
This Annual Report contains information that is deemed
useful and relevant to stakeholders, with due regard to
their expectations through continuous engagement or
information that the board of directors of Mediclinic
(the ‘Board’ or ‘Board of Directors’) believes may
influence stakeholders’ perception or decision-making.
The information aims to provide stakeholders with an
understanding of the Group’s financial, economic, social
and environmental impacts to enable them to evaluate
the ability of Mediclinic to create and sustain value.
This Annual Report was prepared in accordance with
the International Financial Reporting Standards (‘IFRS’),
the listing rules issued by the Financial Conduct Authority
(‘FCA’) (‘Listing Rules’), the listings requirements of
the JSE (‘Listings Requirements’), the UK Corporate
Governance Code published by the Financial Reporting
Council (‘FRC’) in July 2018 (the ‘Code’) and the UK
Companies Act 2006 (the ‘Act’) (including the Companies,
Partnerships and Group [Accounts and Non-Financial
Reporting] Regulations 2016 aimed at improving the
transparency of companies regarding non-financial and
diversity information), where relevant. The Company
complied with all the provisions of the Code, other than
the exceptions explained in the Corporate Governance
Statement on page 116.
The Company’s reporting on sustainable development
included in this report (supplemented by the 2021
Sustainable Development Report which is available at
annualreport.mediclinic.com) was done in accordance with
the Global Reporting Initiative Sustainability Reporting
Standards 2016 (‘GRI Standards’) and the non-financial
reporting regulations referred to above.
EXTERNAL AUDIT AND ASSURANCE
The Company’s and Group’s annual financial statements
were audited by the Group’s independent external auditor,
PricewaterhouseCoopers LLP (the ‘external auditor’ or
‘PwC’), in accordance with International Standards of
Auditing (UK) (‘ISA’).
The Group follows various other voluntary external
accreditation, certification and assurance initiatives,
complementing the Group’s combined assurance model,
as reported on in the 2021 Clinical Services Report and
2021 Sustainable Development Report, available at
annualreport.mediclinic.com. The Group believes that this
adds to the transparency and reliability of information
reported to its stakeholders.
GLOSSARY OF TERMS
Capitalised terms used in this report are defined in the
Glossary of terms on page 301.
APPROVAL OF ANNUAL REPORT AND FINANCIAL
STATEMENTS
The Board approved this report, including the Strategic
Report and Governance and Remuneration Report
(including the Corporate Governance Statement,
Directors’ Report and committee reports and
Remuneration Report contained herein), on 25 May 2021.
Dame Inga Beale
Non-executive Chair
25 May 2021
3
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
CHAIR’S REVIEW
ADAPTING TO TODAY,
BUILDING FOR
TOMORROW
We have been and continue to
be centre stage, what we do
during this time will define us
for decades to come.
Dame Inga Beale
Chair
Q&A
Q. WHAT SHOULD BE THE ORGANISATION’S
FOCUS FOR THE IMMEDIATE FUTURE?
We are going to have a strong focus on the continuum of
care and innovation, as well as a more capital-light asset
model so we can enable the client’s journey in a physical
or a virtual form.
Q. HOW DO YOU CONNECT WITH THE GROUP’S
PURPOSE?
I was drawn to Mediclinic because of its meaningful and
authentic purpose: to enhance the quality of life. And in the
past year that has been thrown into focus for everybody
around the world. Healthcare will continue to be in high
demand and the opportunities are really plentiful.
Q. THE BOARD BOASTS SKILLS AND EXPERIENCE
FROM VARIED INDUSTRIES. HOW DOES THIS BENEFIT
MEDICLINIC?
I am really proud of our diverse Board membership. We
are well equipped because we have such a wealth of
backgrounds and experiences – and that means diverse
viewpoints. There is a lot of research showing that the
most diverse teams create the most innovative solutions.
View a condensed
video interview at
annualreport.mediclinic.com
or scan the QR code.
It has been almost a year since Dr Edwin Hertzog,
founder of Mediclinic, retired and I had the honour of
succeeding him as Chair. In his farewell keynote to
management, he shared leadership lessons acquired
over the Company’s 37-year history. The following
words have remained top of mind since: ‘Change is
a constant … Keep your eyes and ears open and act
like cats on a hot tin roof. Always be alert. Always be
awake.’ If ever this sentiment has struck true, it is now.
Mediclinic has faced regulatory and industry disruptions
in the past, but COVID-19 presents arguably the biggest
challenge since our inception in 1983.
PURPOSE AND CULTURE
In the past year, COVID-19 tested our resilience as an
organisation operating at the heart of the fight against
the virus. While the pandemic has created some
uncertainty for businesses, regardless of the sector,
it also confirmed the fortitude of our employees, the
belief in our purpose and the dedication to the values
that guide our behaviour every day and help us to build
a business of the future.
I am inspired by the abundant accounts of the
extraordinary care, compassion, commitment and
strength of our employees, who not only support
our clients and their families, but also one another in
these difficult times. While the unknowns persisted
throughout the year, the Company’s purpose has
remained constant and has guided our more than
33 000 employees to overcome moments that, at
times, seemed insurmountable.
Tragically, there have been lives lost – some Mediclinic
employees and affiliated doctors and allied health
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MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT I
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professionals – and on behalf of the Board, I extend our
deepest sympathies to everyone who experienced loss.
SUSTAINABLE DEVELOPMENT
Mediclinic is recognised as a leader in sustainability in the
healthcare services sector. For three consecutive years,
we have maintained the top MSCI ESG triple A rating and
continue to be a constituent of the FTSE4Good UK Index.
I am particularly proud that the Group has been ranked
the top global healthcare provider and service company
in the REFINITIV Diversity and Inclusion Index.
This year, we added detailed action plans to our ESG
goals. Our environmental goal of becoming a net-zero
carbon company with zero waste to landfill by 2030 is,
arguably, one of the most ambitious. I look forward to
the progress reports on these essential deliverables which
will contribute to a better future for all our stakeholders.
Our commitment to making a positive contribution to
each of our stakeholders cuts to the heart of healthcare
– improving health and wellbeing in the long term
forms an integral part of our business. By growing our
contributions in this, and by becoming a more diverse
and inclusive business that provides greater support to
communities, governments and authorities, we equip
the organisation for a sustainable future and position it
as the first choice for patients, employees and business
partners.
It is well known that I am a strong supporter of diversity
and inclusion. Outside of my role as Chair, I frequently
lead female leadership webinars and participate in
initiatives that promote new ways of thinking. I was
privileged to participate in the organisation’s 2020/2021
Great Leadership Conversation Series where themes of
organisational importance were discussed by a group
of female leaders, and I am heartened to see the way
we are welcoming diverse perspectives. The ever-
increasing rate of change in business requires agility
and adaptability, and these skills are, in my experience,
more inherent to diverse teams, which produce an array
of unique perspectives and solutions. During the past
12 months, the Board and Group Executive Committee
actively monitored progress with regard to gender
diversity at senior management level across the Group.
Subsequently, we refined our corresponding diversity
target to at least 40% female and at least 40% male
representation at senior management and executive level
throughout the organisation.
For more insights into Mediclinic’s
approach to sustainable development,
view a short message by Dr Felicity
Harvey, Chair of the Clinical Performance
and Sustainability Committee, at
annualreport.mediclinic.com.
BOARD EXPERTISE
I was initially drawn to Mediclinic because of its purpose
but I have also found healthcare an exciting sector. It is
growing, and will continue to do so. The opportunities
are plentiful and varied as we move along the continuum
of care and join up prevention, care, recovery and
enhancement.
During my time as Chair Designate, I was privileged
to spend time with Dr Hertzog. From entrepreneur to
helmsman of an internationally successful healthcare
5
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
CHAIR’S REVIEW CONTINUED
services provider, Dr Hertzog truly had an inspirational
career journey. During his tenure as Chair and while
Mediclinic’s geographical footprint expanded, its focus
on putting Patients First never faltered – and neither
will it in future. It is clear he led by example, always
demonstrating compassion, humility and humanity.
On behalf of the Board, I thank him for his unparalleled
contribution and wish him a long and fulfilling retirement.
I have gained valuable insight into the business during
these pivotal times and we remain committed to building
an organisation that is the partner of choice that people
trust for all their healthcare needs.
My fellow Board members have diverse backgrounds,
skills and experience, and together we are equipped
with a wealth of different perspectives to support
management in delivering on Mediclinic’s strategic,
operational, social and financial objectives. Our clinical
experts at Board level, aided by the Group’s strict
governance frameworks and structures, not only steward
superior clinical outcomes and exceptional client
experience, but they also support Dr René Toua, Group
Chief Clinical Officer, who leads a coordinated cross-
divisional clinical response to the pandemic.
To read more about Board appointments and
composition, see my introduction to the Governance
and Remuneration Report on page 106.
Both COVID-19 and the implementation of our Group
strategic goals have impacted the way we evaluate risk
appetite and mitigation. Risk and audit are addressed as
two separate topics during Audit and Risk Committee
meetings to ensure that time is dedicated to each. The
Board plays an integral part in risk management and,
informed by my career in insurance, I have encouraged
all Board members to think more broadly about both
external and internal risks, as well as to pursue a more
holistic risk radar rather than a ranking approach.
OUR STRATEGIC PRIORITIES
Continuing with Mediclinic’s tradition of forthcoming
and transparent disclosure, virtual meetings have
allowed me to engage with 14 of the Group’s
largest shareholders this year. This was followed
Mediclinic Medforum, South Africa
6
We must continue to
demonstrate our ability
to adapt and be agile.
by a perception study in the final quarter of FY21,
incorporating feedback from 76 investors and analysts.
The results have confirmed the many areas in which we
excel, such as clinical excellence, patient experience and
trust, but also raised four matters that require renewed
effort: strategic delivery, capital allocation, leverage and
financial returns. While these matters are not new to the
Board and management, the study vindicates the efforts
being made to address them. I would like to thank all
the study participants – these insights are valuable and
will help inform the Board when making future strategic
decisions.
Healthcare is a highly regulated industry and we must
continue to demonstrate our ability to adapt and be agile,
accelerating the speed at which we execute our strategy
in order to deliver improved returns. The executive team
have shifted their attention to rapid execution, with the
key focus areas being growth across the continuum
of care, innovation and digital transformation. Metrics
are being developed to measure progress and support
execution. Under Dr Ronnie van der Merwe’s leadership,
the executive team have made significant progress in
developing the value of being a Group. This is crucial if
we are to benefit from the scale and knowledge uniquely
nurtured within the organisation as we pursue our various
multi-year strategic goals.
Execution of the Mediclinic Group Strategy will also
require a disciplined approach to how we invest in our
assets. Traditionally the Group has made significant
investments in its global infrastructure. This has created
a valuable real-estate asset base presenting a unique
position from which to expand across the continuum of
care. The trajectory of investment across the Group is
pivoting towards innovation and digital transformation,
and offering a seamless client journey in physical and
virtual care. The Board supports this approach and
continues to encourage the Group Executive Committee
to consider the long-term financial benefits of developing
as an industry leader and innovator.
As part of the broader capital allocation process, the
Board has thoroughly reviewed the Group’s capital
allocation process, including its debt structure, and we
remain comfortable with the level of debt, the maturity
profiles and the Group’s ability to service interest
costs. The Group’s responsible approach to leverage
is further supported by the extensive asset portfolio
which is used as security for the majority of our debt.
Shareholders should be reassured by the Group’s recent
debt repayment of over £66m of debt, uninhibited by
COVID-19, reducing net debt at 31 March 2021 to £2 159m,
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT despite the significant impact and disruption COVID-19
has had on our patient activity over the period under
review. The Board is encouraged that, in addition to
funding future capital projects, Mediclinic currently
expects to make around £250m of debt repayments
between FY22 and FY24, funded from the cash-flow
generation and available facilities across the business.
Finally, the Board also recognises the need for the Group
to deliver improved returns on invested capital. Through
pursuing the priorities listed here, we are confident of
consistent and ongoing improvement, and we will ensure
that the necessary oversight and focus are given to
achieving this. I welcome the inclusion this year of return
on invested capital (‘ROIC’) as a measure in the Group’s
long-term incentive plan (‘LTIP’), demonstrating its
importance in the pursuit of creating long-term value
for our shareholders.
PERFORMANCE
Swift and decisive internal action at the start of the
pandemic enabled the Group to deliver a robust financial
performance and ensured the liquidity of the Group
remains strong. The most significant impact to the
Group’s revenue and profitability was during April 2020
when governments introduced strict lockdown measures
and suspended non-urgent elective surgical procedures.
Thereafter, as we prepared for subsequent waves of
the pandemic, we were afforded greater operational
and clinical flexibility that allowed us to dynamically
manage the services we could offer to both COVID-19
and non-COVID-19 patients, drawing on our experience
from the first wave. During this period of significant
uncertainty, our employees showed and continue to
show exceptional courage and dedication as they
adapted on an almost daily basis to the rapidly changing
environment.
Mediclinic has always pursued long-term investments
that support the success of the Group. Despite
the pandemic, we continued to diligently invest in
opportunities critical to the execution of the Mediclinic
Group Strategy, especially as we concentrate our
healthcare innovation and digital transformation efforts
to deliver future growth and improved returns.
The Board took the difficult decision to suspend the
dividend at the end of FY20. This was part of a broad
range of proactive measures taken to conserve liquidity.
We are very aware of the importance of dividends to
many of our shareholders. However, at such an uncertain
time with reduced visibility on the duration or the full
impact of the crisis, we believe it remains prudent to
prioritise liquidity preservation measures. The Board,
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therefore, has decided not to propose a final dividend
and will keep the position on future dividend payments
under regular review.
LONG-TERM ROLE AND RESPONSIBILITY
The important role and responsibility of large corporates
in modern society had been widely recognised before
the pandemic and must be emphasised even more as we
navigate the second year of the pandemic and beyond.
Each business today plays a vital role in supporting
livelihoods – both of its employees and the national
economies in which it operates. The Board and the
executive team have a responsibility to safeguard the
future of our organisation and to provide value to each
stakeholder.
Healthcare is unique in that, during this time, it has been
the sector around which national responses have been
designed. We have been and continue to be centre stage,
what we do during this time will define us for decades
to come. Hence the strength of the executive team with
Ronnie at the helm, the Mediclinic Group Strategy, our
organisational culture and governance structures give
me confidence in our ability to recover fully in the future
and deliver long-term sustainable value.
Dame Inga Beale
Non-executive Chair
25 May 2021
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AT A GLANCE
AT A GLANCE
A UNIQUELY
INTEGRATED
INTERNATIONAL
HEALTHCARE PARTNER
UK
Switzerland
Mediclinic is a diversified international private healthcare
services group1, established in South Africa in 1983, with
divisions in Switzerland, Southern Africa (South Africa
and Namibia) and the UAE.
SWITZERLAND
Hirslanden, the leading private healthcare provider in
Switzerland, is recognised for clinical excellence and
outstanding patient experience
www.hirslanden.ch
SOUTH AFRICA AND NAMIBIA
Mediclinic Southern Africa is one of the three major
private healthcare providers in the region with a
relentless focus on offering value to all its partners
and clients
www.mediclinic.co.za
THE UAE
Mediclinic Middle East has established a trusted brand
and strong reputation in this developing region by
offering clinical care of internationally recognised
standards
www.mediclinic.ae
THE UK
Mediclinic has a 29.9% stake in Spire Healthcare PLC
(‘Spire’)
www.spirehealthcare.com
Read more on Spire in the Group Chief Executive Officer’s Report on page 28
and the Group Chief Financial Officer’s Report on page 86.
74
hospitals2
18
5
subacute hospitals3
18
day case clinics5
outpatient clinics6
454
theatres
33 136
permanent and
fixed-term employees
The UAE
South Africa
and Namibia
2
mental health
facilities4
11 449
beds
Notes
1 In addition to three operating divisions, the Group also has two non-operating segments – the UK and Corporate.
2 Provides patient treatment with specialised medical and nursing staff, and medical equipment.
3 Provides comprehensive goal-orientated inpatient care designed for a patient who has had an acute illness, injury or exacerbation of a disease process.
4 Provides specialised treatment of serious mental disorders.
5 Provides elective procedures, surgical procedures and planned medical procedures, but admits and discharges patients on the same day.
6 Provides consultations (by general practitioner, specialist or allied healthcare professional) with no theatre facilities.
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MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT Mediclinic Southern Africa: £734m
Contribution to revenue (£’m)
Corporate: £2m
Hirslanden: £1 478m
Mediclinic Middle East: £781m
Total
£426m
Total
£2 995m
Contribution to adjusted
EBITDA (£’m)
49+
51+
48+
Contribution to adjusted
earnings (£’m)
Mediclinic Southern Africa: £26m
Mediclinic Middle East: £102m
Total
£101m
Hirslanden: £225m
Corporate: £(7)m
Hirslanden: £57m
Mediclinic Southern Africa: £106m
Mediclinic Middle East: £35m
Corporate: £(7)m
Spire: £(10)m
BETTER WAYS TO CARE
Mediclinic is focused on providing specialist-orientated,
multidisciplinary services across the continuum of care in
such a way that the Group will be regarded as the most
respected and trusted provider of healthcare services
by clients, medical practitioners, healthcare insurers and
regulators of healthcare in each of its markets.
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Read more about the continuum of care on page 38.
Speciality split
70+
Day surgery
cases
6%
Outpatient
cases
24%
Inpatient
cases
70%
Speciality1
Cardiology/Cardiothoracic surgery
General medicine2
General surgery
Internal medicine
Laboratory
Obstetrics and gynaecology
Oncology
Orthopaedics
Paediatrics
Radiology
Total
Inpatient
cases
Day
surgery
cases
Outpatient
cases
8%
2%
19%
16%
1%
6%
1%
13%
3%
1%
70%
0%
0%
1%
2%
0%
1%
1%
1%
0%
0%
6%
0%
5%
1%
5%
4%
1%
1%
1%
1%
5%
24%
Notes
1 Based on FY21 healthcare revenue.
2 Includes services rendered by general practitioners and allied health professionals.
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+
26
+
1
+
N
25
+
24
+
N
22
+
30
+
N
6
+
24
+
J
INVESTMENT CASE
MEDICLINIC’S VISION
To be the partner of choice that people trust for all their healthcare needs
Following a clear strategic roadmap to accomplishing its vision, Mediclinic is constantly evolving and
expanding its integrated healthcare system to offer clients easy access to convenient high-quality
healthcare in the most appropriate setting at the most appropriate cost. By approaching this with
disciplined capital allocation, it also delivers superior and sustainable value to shareholders.
1
2
3
PARTNER OF CHOICE
TRUST
CLIENT CENTRED
• As a recognised employer
• Established leading market positions
and partner of choice, attracts
and retains best talent and
independent medical practitioners
across all disciplines
• Collaborates with governments
and authorities to offer healthcare
services and participates
in initiatives to strengthen
relationships across public
and private healthcare sectors
• Innovates with healthcare insurers
and industry partners to deliver
products and services which meet
the changing needs of clients
6
Hirslanden awarded six contracts
with Swiss cantons for repetitive
COVID-19 testing by April 2021
2 300+
& 3 594
Partners with more than 2 300
medical practitioners in Switzerland
and 3 5941 in South Africa
with over 35 years’ experience
• One of the largest private healthcare
providers and physician networks
across the Europe, Middle East and
Africa (‘EMEA’) region
• Balanced portfolio across developed
(Switzerland and the UK) and
emerging markets (Southern Africa,
the UAE and Saudi Arabia)
• Committed to sustainable
development with clear ESG goals
to conserve, connect and comply
5
Hirslanden hospitals in
top 27 for Switzerland according
to Newsweek’s ‘World’s Best
Hospitals 2021’
Mediclinic Middle East awarded
Superbrand status by the UAE
Superbrands Council in 2020
• Internationally recognised clinical
expertise and a relentless focus
on improving patient safety and
clinical outcomes
• Focus on providing cost-efficient,
quality care and outstanding client
experiences
• Digitalisation competencies
dedicated to transforming services
and modalities to offer seamless
client journeys across physical and
virtual care
5
Press Ganey® measures patient
experience across five care lines –
inpatient, day surgery, outpatient,
emergency centre (‘EC’) and
virtual care
20
Partners with more than 20 private
and public organisations to meet
clients’ healthcare needs across
the continuum of care
Note
1 Includes general practitioners who admit directly to Mediclinic facilities. The year-on-year increase (2020: 2 250+) directly relates to the pandemic which
catalysed closer collaboration with specialists across wider and more diverse geographies. While not all of these specialists will continue to admit on a regular
basis, the availability of high-quality expertise is of paramount importance to ensure access to care for all patients during these times.
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OPPORTUNITIES
FOR GROWTH
STRONG FINANCIAL
PROFILE
HIGH BARRIERS
TO ENTRY
• Market share growth propelled
• Robust cash generation
• Leverages international expertise
by leading market positions and
diverse services
• Focused expansion into new
services across the continuum
of care through investment in
innovation, digital transformation
and technology
• Disciplined approach to grow into
new geographies by leveraging
the Group’s core competencies
Precision medicine service at
Hirslanden and Mediclinic Middle
East launching in FY22
Renal care and oncology service
partnerships established at
Mediclinic Southern Africa
• Drives enhanced returns through
increased asset turnover and
value-oriented capital allocation
• Responsible approach to leverage
by proactively managing cost and
maturity of debt largely secured
against significant property
portfolio
• Group benefits realised to deliver
cost saving and operating
efficiencies
£679m
cash and available facilities
at year-end
CHF145m
Swiss bond successfully refinanced
with lower coupon rate
to effectively manage large
multidisciplinary facilities, Centres
of Excellence (‘CoEs’) and
specialised services
• Extensive and well-invested asset
portfolio providing operational
flexibility including expansion
across the continuum of care
• Hub-and-spoke healthcare models
supported by widespread physical
and virtual client referral channels
• Detailed knowledge of complex
and diverse reimbursement models
underpinned by data science
management
86%
The Group owns 64 of its
74 hospitals (‘hubs’)
46
mental health facilities, subacute
hospitals and day case and
outpatient clinics (‘spokes’) across
the Group and its partners
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COVID-19
OVERVIEW
MEDICLINIC’S RESPONSE
The Group continues to fulfil an essential role in combatting the pandemic.
As an international healthcare services provider, Mediclinic prioritises
the safety of its employees and patients; the continuity of its operations;
and its support of and collaboration with the relevant health authorities.
COVID-19 IN NUMBERS
£32m
COVID-19-related spend
40 000+
COVID-19 patients treated in hospital
60+
international professional societies
and epidemiology experts consulted
105m
examination gloves sourced in 2020,
35 million more than in an average year
1.3m
masks/month used during COVID-19 waves,
up from 360 000 masks/month pre-pandemic
2 900%
increase in use of isolation gowns during
pandemic’s peak compared with normal operations
10+
new internal engagement channels across the
Group to support continuous communication
48%
increase in absenteeism hours1, mainly due to
COVID-19 quarantine periods and illness
EMPLOYEES VACCINATED AT 31 MARCH 20212
±35%
at Hirslanden
±29%
±85%
at Mediclinic Southern Africa
at Mediclinic Middle East
Notes
1 Percentage calculated for the 2020 calendar year.
2 Percentage applicable to eligible employees.
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The system that prepares, protects and mobilises Mediclinic during the COVID-19 pandemic
WHO
WHAT
Multidisciplinary taskforces
DIVISIONAL
LEVEL
Hospital and operational response
planning and management
Clinical taskforce led by the
Group Chief Clinical Officer
GROUP
LEVEL
Strategic direction and response
and outcome monitoring
Clinical Performance and
Sustainability Committee and the
Board, which has four directors with
healthcare and clinical experience
BOARD
LEVEL
Through regular reporting and
consultation, these bodies provide
invaluable guidance to the Group
Chief Clinical Officer in tailoring and
adapting Mediclinic’s response
Multidisciplinary and
specialist taskforces
Central coordination of task teams
and clinical governance
CONTINUOUS EXTERNAL STAKEHOLDER CONSULTATION
CLIENTS
24/7 call centres, online risk assessment tools, awareness campaigns
GOVERNMENTS AND AUTHORITIES
Supporting with testing, treatment and vaccination strategies
HEALTHCARE INSURERS
INVESTORS
MEDIA
MEDICAL PRACTITIONERS
Communication via live broadcasts, virtual meetings and online
treatment collaborations
PROFESSIONAL SOCIETIES
SUPPLIERS
ACTIONS
• Redeploying suitable
employees to support
operations
• Acquiring additional
ventilators and other
intensive care unit
(‘ICU’) equipment and
related consumable
products
• Expanding ICU capacity
where possible
• Establishing additional
laboratory facilities
• Proactively procuring
critical PPE and
medication
• Researching and
sourcing alternative
mechanisms to provide
oxygenation
NEW SERVICES AND
INFRASTRUCTURE
• Virtual care advancement
• Polymerase chain
reaction (‘PCR’) testing
units and additional
laboratory facilities
• Repetitive testing online
platform
• Home delivery and
drive-through pharmacy
services
• Remote patient
monitoring
• Alternative interim
facilities which admit
asymptomatic and
low-acuity cases
• Vaccination centre
establishment and
management
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
COVID-19 OVERVIEW CONTINUED
TIMELINE
2020
Restrictions on elective procedures1
Switzerland
Southern Africa
The UAE
26 FEB
First COVID-19 case admitted at Hirslanden
11 MAR
• World Health Organization (‘WHO’) declares
COVID-19 outbreak a pandemic
• First COVID-19 case admitted at Mediclinic
Southern Africa
26 MAR
PCR testing service launched at
Mediclinic Middle East
5 APR
Hirslanden: admissions peak in first wave
14 MAY
Mediclinic Middle East: admissions peak
in first wave
22 JUL
Mediclinic Southern Africa:
admissions peak in first wave
24 NOV
Hirslanden: admissions peak in second wave
18 DEC
New 501.V2 variant announced in South Africa
9 JAN
First COVID-19 case admitted at
Mediclinic Middle East
28 FEB
Daily Group clinical taskforce meetings commence
12 MAR
Online risk assessment tool launched
at Mediclinic Southern Africa
1 APR
First telemedicine consultation
at Mediclinic Middle East
23 APR
Hospital access control screening app
introduced at Mediclinic Southern Africa
1 JUN
• Telemedicine solution launched at Mediclinic
Southern Africa to support affiliated doctors
• Mediclinic Middle East concludes agreement with
national airlines to test passengers before flights
15 AUG
First Mediclinic Middle East employee
vaccinated as part of a clinical trial
7 DEC
Vaccination roll-out commences in the UAE
23 DEC
First Hirslanden employee vaccinated
2021
13 JAN
Hirslanden contracted to operate its first
vaccination centre
17 FEB
Vaccination roll-out commences in South Africa
25 MAR
Repetitive testing platform, Together
we test, launched at Hirslanden
12 JAN
• Vaccination roll-out in Switzerland commences
• Mediclinic Southern Africa: admissions peak
in second wave
12 FEB
Mediclinic Middle East: admissions peak
in second wave
20 FEB
First Mediclinic Southern Africa
employee vaccinated
Note
1 Restrictions were both self-imposed and government mandated
to preserve capacity. In some divisions, restrictions were
applicable to certain regions or facilities only.
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SAFETY FIRST
The Group’s international perspective remains a key
differentiating factor for Mediclinic. Led by the centrally
coordinated Clinical Services function, the Group
responded efficiently and effectively to the pandemic
and expanded upon established infection prevention
and control (‘IPC’) programmes by leveraging Group
insight and best practices.
• IPC and communicable disease emergency
preparedness programmes govern admission,
containment, triage and treatment of suspected
or confirmed COVID-19 cases
• New visitation and access control guidelines
• Thermal screening at the point of entry
• Increased availability of hand sanitisers
• Mandatory use of masks for patients and visitors
• Mandatory COVID-19 testing prior to admission for
elective procedures
• Mandatory COVID-19 testing upon admission for all
non-elective admissions
• Social distancing enforced in waiting areas
• Restrictions on the number of persons using the
elevators
• Revised PPE-use protocols in high-risk areas and
procedures
• Increased frequency of facility disinfection
• New clinical guidelines for care process flow of
COVID-19 patients from EC to ward, ICU, high
dependency and palliative care or discharge
• Periodic employee COVID-19 testing as per
regulatory guidelines
• Suspected and confirmed COVID-19 case
management as per national treatment guidelines
• Employee vaccination programmes
Multidisciplinary taskforces at Group and divisional level
enable Mediclinic to constantly re-evaluate its ongoing
response to the pandemic, allowing it to optimise treatment
pathways for patients in order that demand for critical and
intensive care beds can be managed appropriately.
The Group invested in a number of initiatives to support
employees, affiliated doctors and communities during this
time, including establishing 24/7 client call centres and
crisis control centres.
The Group’s centrally coordinated procurement teams with
global sourcing capabilities have played a pivotal role in
ensuring uninterrupted delivery of critical care during the
pandemic. Across three continents, the teams’ proactive
measures ensured the continued supply of critical PPE,
medication, consumables and ICU equipment.
EMPLOYEE PROTECTION, EDUCATION
AND WELLBEING
• Work-from-home arrangements for qualifying employees
• COVID-19 and PPE-use training and PPE supply for
workplace use
• Screening and self-isolation of employees
• Vulnerable frontline employees redeployed to
lower-risk units
• Paid leave for sick and quarantined1 employees
• E-learning and distance learning methods implemented
for continuous medical training and education
• Mental and physical wellbeing support for employees
and affiliated doctors
• Regular communication with employees and affiliated
doctors
Refer to ‘The people who set Mediclinic apart’ case study
on page 18 for more information on how employees were
supported during the reporting period.
The Group invested in a number
of initiatives to support
employees, affiliated doctors
and communities during this
time, including establishing
24/7 client call centres and
crisis control centres.
Note
1 Refer to page 57 of the 2021 Sustainable Development Report for more information.
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COVID-19 OVERVIEW CONTINUED
CONTINUITY OF CARE
The Group’s approach to providing elective procedures
and outpatient treatments has remained fluid, while its
delivery of critical and urgent care has not wavered.
Hospitals have adapted their services to reflect any local
restrictions, the changing demands on individual and
regional facilities, and the availability of clinical personnel.
As the peaks of COVID-19 recede, more normal operating
practices have resumed, demonstrating the strong
underlying demand for Mediclinic’s specialist healthcare
services. Patient activity is returning steadily, supported
by the Group’s ability to implement and accommodate
protocols to ensure services are offered safely and
conveniently.
ADMISSIONS IN FY20 AND FY21
Group admissions
70 000
60 000
50 000
40 000
COVID-19 admissions
10 000
8 000
6 000
4 000
2 000
0
Apr 19
Jun 19
Aug 19
Oct 19
Dec 19
Feb 20
Apr 20
Jun 20
Aug 20
Oct 20
Dec 20
Feb 21
Apr 21
May 19
Jul 19
Sep 19
Nov 19
Jan 20
Mar 20
May 20
Jul 20
Sep 20
Nov 20
Jan 21
Mar 21
Group admissions Admissions (excluding COVID-19) COVID-19 admissions
PARAMOUNT PARTNERSHIPS
Collaborating with public and private stakeholders,
including governments and authorities, has been vital in
helping to address the effects of the pandemic. Across
the world, major advances have been made in the
development, manufacture and distribution of COVID-19
vaccines. Mediclinic is working with health authorities to
support government-led vaccination roll-out plans and
prioritisation schedules. It is encouraging to witness that
across the world, governments are prioritising healthcare
workers in the vaccination roll-outs. Mediclinic supports
this approach and is facilitating the process, ensuring
eligible colleagues receive a vaccine, thereby protecting
their wellbeing and, as a result, the quality of care
Mediclinic patients receive.
In Switzerland, Hirslanden has opened four vaccination
centres and partnered with six cantons to manage
repetitive testing on its digital platform, Together
we test. Mediclinic Southern Africa is supporting the
vaccine roll-out strategy of the National Department
of Health and is part of the private sector initiative to
assist the government where required, including the
management of vaccine centres at its facilities. The
government-led vaccination programme in the UAE is
well underway and all Mediclinic Middle East facilities
are supporting the roll-out.
Refer to the Group Chief Financial Officer’s Report from
page 84 for more information on the Group’s performance.
16
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCSTRATEGIC REPORT TOGETHER WE CARE CASE STUDY
THE PEOPLE
WHO SET
MEDICLINIC
APART
YEAR OF THE NURSE
The Group’s nurses are more than just caregivers.
Every day, they motivate, innovate and lead. They have
the ability to mend the body, heal the heart and calm
the mind, giving of themselves to care and to comfort.
In 2020, in commemoration of the 200th anniversary
of Florence Nightingale’s birth, the world celebrated
the Year of the Nurse. Within the Group it was an
opportunity to put a spotlight on the calling and pay
tribute to the unstinting efforts of nurses across the
three divisions.
It was also a year of extraordinary adversity that
highlighted the linchpin role nurses play in the provision
of quality care. When pandemic surges threatened to
overwhelm healthcare services around the globe, they
remained steadfast in their dedication.
Worldwide there has been profound appreciation for
the courage and compassion of healthcare workers.
Mediclinic Group Chief Executive Officer (‘CEO’)
Dr Ronnie van der Merwe articulated this in a message
to employees on the International Day of the Nurse:
‘For your unwavering daily commitment to venture forth
and help the vulnerable, we salute and thank you.’
18
18
14 000+
nurses across the Group
10 800+
employees surveyed about
COVID-19’s impact on their
working life
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT EMPLOYEE WELLBEING
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At Mediclinic, employee welfare is about optimising
the overall health of the workforce, not just reducing
the number of injuries. This takes into account the
physical workplace, task organisation and company
culture, extending beyond health into happiness and job
satisfaction. To this end the Group runs wellness drives,
employee engagement surveys, vaccination programmes
and education campaigns as a matter of course.
The pandemic posed a significant risk to the health
and safety of the Mediclinic workforce. Stringent IPC
measures were put in place well before the Group
admitted its first COVID-19 patient. A survey conducted
in June 2020 showed that employees felt positive about
the plans, policies and safety protocols implemented to
counter the virus.
As important as employees’ physical safety was their
psychological resilience. To provide supplementary
emotional support, each of the divisions moved rapidly
to roll out a range of initiatives. Hirslanden supplied
employees with a Corona Care Kit that included access
to an independent 24-hour support line, opportunities
for personal coaching and care services offered by the
Corporate Office. Online self-help modules focused on
resilience, stress management and relaxation.
Mediclinic Southern Africa launched a mobile app
and employee web portal of self-care information and
resources, with additional aid in the form of telephone
counselling and support sessions. The division
empowered leaders to rally their teams through weekly
audiocasts and emails that focused on leading through
a crisis, as well as a wellbeing guide and leader toolkit.
At Mediclinic Middle East, the employee assistance
programme was enhanced with onsite mental health
support and the division paid for accommodation when
employees needed to isolate from friends and family.
In meeting the challenges of the past year, the Group
has demonstrated that its employees are its most valued
asset.
In addition to the annual Your Voice employee
engagement survey, a COVID-19 employee survey was
administered in Southern Africa and the UAE at the peak
of the pandemic to gain insight into employee needs.
Refer to pages 44–47 and 54–57 of the 2021 Sustainable Development Report to learn more about employee
engagement, wellness and safety.
The COVID-19 pandemic is a
marathon, not a sprint. Our aim
is to provide our employees
with relevant occupational
health and wellbeing support
until the pandemic has been
overcome – as well as beyond.
Mr Magnus Oetiker, Group Chief Strategy
and Human Resources Officer
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TOGETHER WE CARE CONTINUED
CASE STUDY
DATA
SCIENCE
AND
COVID-19
INSIGHTS INFORM PANDEMIC PREPAREDNESS
The Group’s Data Science and Information Management
function played a central role in Mediclinic’s response
to the pandemic by providing foresight for resource
planning to ensure facilities were adequately prepared.
‘Our data scientists developed forecasting models
specifically calibrated for the Group’s hospitals to predict
the number of ventilators required for each at any given
point in time. We also developed models for stock
such as medicine, PPE and oxygen,’ says Mr Jannie van
Schalkwyk, Group General Manager for the function.
Data engineers and visualisation experts worked
together to create interactive dashboards presenting
statistics such as the number of COVID-19 cases
admitted, occupancy levels and clinical outcomes.
The entire process was automated and reports updated
overnight so decision-makers could view the latest
information on how the virus was impacting the Group’s
facilities when they started work in the morning.
In gathering and analysing data, Mediclinic benefited
from its presence in different geographies, with the
divisions dealing with surges at different times. ‘Sharing
knowledge assisted us considerably in developing better
data solutions and risk models to measure and predict
the impact of the virus.’
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IMPROVING OUTCOMES
IMPROVING OUTCOMES
Besides the forecasting and insights,
which were crucial for planning during
the pandemic, data analytics also directed
the clinical response. ‘We quickly learned
that 80% of COVID-19 deaths occur in
people over 65 years, which informed
how those patients were managed,’
Mr Van Schalkwyk says. Data analytics
further revealed that COVID-19 consumed
resources differently from the traditional
mix of treatments – for example, treating
the virus led to a significant increase in the
use of oxygen and PPE. Addressing these
resource requirements timeously enabled
Mediclinic to provide better care when it
mattered most.
Q&A
MR JANNIE VAN SCHALKWYK
Q. YOU ARE A STATISTICIAN
DEALING WITH IMPERSONAL
DATA. HOW DO YOU CONNECT
WITH YOUR JOB ON AN
EMOTIONAL LEVEL?
People might think of data science
as a back-office function where
introverts work with algorithms.
But I see the real-life impact.
When we work with clinical data,
we think of how we can use it to
drive better outcomes. Maybe
we’re not at the point-of-care of
looking after patients, but we are
improving lives with the insights
we generate. What could be more
rewarding?
We are living in a
precarious time and
I believe data science
is going to become
instrumental in shedding
light on the uncertainties
and what to do to create
a better world.
Mr Jannie van Schalkwyk, Group
General Manager: Data Science and
Information Management
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
TOGETHER WE CARE CONTINUED
CASE STUDY
FUTURE-
READY
BY DESIGN
INNOVATIVE SOLUTIONS BUILT AROUND THE CLIENT
The healthcare landscape is changing rapidly: technology
is enabling the digitisation of medical records, accurate
health tracking through wearables, individual genomic
insights, and rapid analysis and prediction through artificial
intelligence (‘AI’) and machine learning.
With today’s consumers wanting easy access to
personalised care, Mediclinic is developing its vision for
a patient portal which will integrate all of a client’s health
information, from clinical records and live smartwatch
measurements to their unique genetic profile, to allow for
a consolidated view.
‘We are moving towards a paradigm in which care is
completely tailored to the individual,’ explains Dr Tyson
Welzel, Group Chief Innovation Officer. ‘This personal care
will not only concentrate on the biological whole but also
the personal preferences of individual clients.’
Supporting the portal will be a virtual command centre,
powered by AI, where all the data streams come together
to be assessed by experts in every discipline for truly
integrated care. The benefits are myriad, from increased
quality care to reducing costs due to the elimination of
duplication, to giving clients more control over their own
healthcare journey.
22
The future of medicine
is highly personalised,
pre-emptive and directed,
creating opportunities to
help clients improve
wellbeing, augment
physical and psychological
health, prevent illness and
increase longevity.
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT DIGITAL TRANSFORMATION
A key enabler of Mediclinic’s services and client
engagement is digital transformation, which focuses
on enhancing existing processes in areas as diverse as
clinical care and procurement. ‘Digital collaboration
tools and robotic process automation allow us to take
away routine and repetitive tasks and focus on work that
amplifies benefits for the client,’ says Dr Julian Fleming,
Group General Manager: Digital Transformation.
While both digital transformation and innovation result
in a ‘product’, the real value lies in the radical change
in how Mediclinic achieves its growth and unlocks
new revenue opportunities. Technology enables value-
added solutions without the high barriers traditionally
associated with healthcare such as the required capital,
infrastructure and geographical proximity to a client.
It creates opportunities that extend Mediclinic’s reach
outside of its traditional operating areas and offers
enhanced value to both clients and shareholders. ‘Our
purpose is to enhance the quality of life. Through digital
technology we can do that for many more people while
maintaining the quality and expertise many have come
to expect from Mediclinic,’ says Dr Fleming.
FORWARD FOCUSED
Although the pandemic sidelined non-core clinical
activities by tying up resources, it accelerated
acceptance of digital solutions. In addition to
telemedicine applications in all divisions, the Group
has run a number of large and encouraging pilots during
the year for a Mediclinic app, which will create a digital
front door to Mediclinic’s services.
By April 2021, six Swiss cantons had partnered with
Hirslanden to manage their repetitive testing strategies
through Hirslanden’s digital platform, Together we test.
During the year, Mediclinic Southern Africa automated
access control to its facilities through a WhatsApp
bot and launched a mobile application that facilitated
patient pre-admission by providing a COVID-19
assessment, allowing doctors and administrative staff
to identify patients at risk prior to admission. In the
UAE, Mediclinic Middle East partnered with the Abu
Dhabi Department of Health to offer family physician-led
primary healthcare, using remote interventions to lessen
the need for in-person healthcare visits and also reduce
possible exposure to COVID-19.
In the year ahead, Mediclinic will continue to roll out
precision medicine and pursue intelligently applied
automation to enhance productivity. Despite strongly
leaning on technology, real patients remain at the centre
of it all. The Company is building people into the ‘digital-
by-design’ approach and asking clients how they want
care to be delivered, so they can move seamlessly from
virtual to physical engagements and back again.
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Q&A
DR TYSON WELZEL
Q. WHAT DOES YOUR ROLE, WHICH IS
NEW, INDICATE ABOUT MEDICLINIC’S
AMBITIONS?
Although clinical possibilities are increasing
on a daily basis, there is a worldwide scarcity
of healthcare workers. At the same time
funders are attempting to drive down cost.
The consumer, who is used to new ways
of interacting online, is looking to do the
same with their healthcare provider. The
appointment signals not simply Mediclinic’s
acknowledgement of these megatrends,
but an active drive to remain more than
competitive in such a landscape.
DR JULIAN FLEMING
Q. WHAT INSPIRES YOU TO PURSUE
DIGITAL SOLUTIONS TO HEALTHCARE
CHALLENGES?
I am passionate about access to healthcare.
Digital helps us transcend issues such as
geographical location and ability to pay
for health insurance because we can offer
lower-cost care via a smartphone. We have
so many opportunities to extend Mediclinic’s
reach outside our traditional geographies
and still offer value to both our clients and
our shareholders.
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
GROUP CHIEF EXECUTIVE OFFICER’S REPORT
MAPPING A BETTER
FUTURE WITH RESILIENCE
AND INGENUITY
For many countries, businesses and people, the
past year has undoubtedly been one of the most
challenging in living memory. It has been no different
for Mediclinic, but in facing the pandemic we have
been able to do what we do exceptionally well –
work together to provide care to clients who are at
their most vulnerable and demonstrate our ability to
identify and seize opportunities to adapt, improve and
innovate.
Despite the past year demanding much of the
healthcare industry, Mediclinic and our employees,
we have remained resilient throughout. Since treating
our first COVID-19 patient in January 2020, our
incredible doctors and nurses have not faltered in
caring for more than 40 000 affected inpatients.
Our critical care and emergency services continued
undisturbed. Throughout, the health and wellbeing of
our employees and our clients remained our highest
priority.
Despite the pandemic and the intermittent restrictions
placed on elective procedures to prioritise healthcare
resources during critical periods, I am proud of how
quickly and proactively we established new services
and supporting infrastructure, supplementing our
existing business. While some of these are short-term
initiatives that provide benefits in the near term only,
others will form the foundation for future growth.
OPERATING PERFORMANCE
The Group delivered a robust operating performance,
despite revenue and profitability being significantly
impacted in April 2020 by the implementation of
COVID-19-related lockdown measures, the suspension
of non-urgent elective surgical procedures and
increased costs associated with managing the
pandemic. From May 2020 onwards, government
restrictions were moderated, enabling us to safely
reintroduce our diverse service offering, while also
caring for COVID-19 patients.
Performance in the second half of the year was
impacted by the more severe second wave of the
pandemic. However, due to the less restrictive
measures introduced by governments and regulatory
authorities, greater operational flexibility and the
lessons learned during the first wave, the financial
impact on the Group was less significant than during
the first half, delivering a sequentially improved
second-half performance.
Dr Ronnie van der Merwe
Group Chief Executive Officer
Q&A
Q. HOW DID YOU MOTIVATE THE ORGANISATION TO
REMAIN RESILIENT AND OVERCOME CONSTRAINTS?
The most important was to create good and transparent
communication. We regularly reminded our people
of our purpose and tried to create a sense of pride in
the contribution we were making. We also addressed
employees’ fears and uncertainties through a series of
personal messages from my office.
Q. YOUR ONE WORD FOR 2021 IS ‘OPPORTUNITY’.
WHAT IN YOUR OPINION WILL BE MEDICLINIC’S
BIGGEST ACHIEVEMENT IN THE YEAR TO COME?
Our Group Strategy, formulated prior to the pandemic,
redefines our business completely and opens up new
opportunities. Getting involved in more care settings
this year would be an achievement, as well as making
use of all the opportunities that large-scale digitalisation
may bring.
Q. WHAT HAS THE PANDEMIC TAUGHT YOU?
The crisis brought out the best in our employees.
Their unwavering positivity and energy were remarkable.
Both our workforce and our organisation became very
adaptable during this period.
View a condensed
video interview at
annualreport.mediclinic.com
or scan the QR code.
24
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT Group revenue in FY21 was down 3% at £2 995m
(FY20: £3 083m), adjusted EBITDA was down 21% at
£426m (FY20: £541m) and the adjusted EBITDA margin
was 14.2% (FY20: 17.5%). Both adjusted earnings and
adjusted EPS were down 43% at £101m (FY20: £177m)
and 13.7 pence (FY20: 24.0 pence), respectively.
Cash and available facilities increased during the year
to £679m (FY20: £518m), net debt reduced to £2 159m
at year-end (FY20: £2 325m) and FY21 cash conversion
was 77% (FY20: 109%).
Refer to the Group Chief Financial Officer’s Report from
page 84 for more information on our FY21 performance.
STRATEGY EXECUTION
Since my appointment as Group CEO three years ago,
the Group has made significant strides in bolstering the
value we offer collectively. Our international footprint,
shared expertise and diversified service offering provide
numerous opportunities to deliver value and growth as
a Group.
We continue to see tangible benefits from this approach.
Our Group bargaining power and coordination enable
significant cost savings on a wide range of procured
items – from low-cost high-volume consumables to
low-volume cutting-edge capital equipment – and on
contracting information communications technology
(‘ICT’) services and software. The latter being of growing
importance to our digital transformation and innovation
initiatives.
£2 995m
Group revenue FY21
£679m
Cash and available facilities
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There are few international healthcare providers that
offer services across the continuum of care in such
diverse doctor models and insurance environments as
Mediclinic. Through a shift towards centrally leading
overlapping areas of expertise, we are collating the best
practices from each of our divisions across the clinical,
procurement, finance, ICT, data science, digital, and
business development disciplines.
Not only does this enable continuous improvement, but
it also equips us with a world-class toolkit to successfully
expand into new geographies and services across the
continuum of care should opportunities arise.
This year, with such rapid developments in healthcare
and client behaviour, we have further refined our
Mediclinic Group Strategy to ensure that it continuously
provides the best foundation from which to address
the challenges of our industry and strengthen our
2525
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
GROUP CHIEF EXECUTIVE OFFICER’S REPORT CONTINUED
competitive advantage. While disruptions due to the
pandemic have complicated progress in some areas, they
have simultaneously illuminated further opportunities
in others. I am more confident than ever that our goals
are aligned with future healthcare needs and long-term
trends.
Refer to the Strategy overview on page 32 for more
information on our strategic goals.
In summary, I would like to highlight three key areas on
strategy delivery:
Transforming our services and client engagement
through innovation and digitalisation
The pandemic has highlighted and accelerated the
global demand for accessible, convenient, quality care.
In response, we have prioritised the execution of our
innovation and digital transformation initiatives. To help
facilitate this, we welcomed Dr Tyson Welzel to the Group
Executive Committee as Group Chief Innovation Officer
in October 2020. Under his leadership, centrally led
Innovation and Digital Transformation functions are being
established to pursue more opportunities in this rapidly
growing segment.
During the pandemic, lockdowns necessitated deploying
certain virtual care initiatives quickly to provide remote
access to the Group’s clinical experts and existing
services. These overarching solutions will, in the longer
term, form the foundation of a seamless service
experience across both the virtual and physical care
settings. Core to this is establishing a digital healthcare
platform across the divisions. A client-facing application
being piloted for a pregnancy and baby care pathway
was launched at Hirslanden in April 2021. Mediclinic
Southern Africa is due to launch its application in
September 2021, piloting a new dialysis service, with
Mediclinic Middle East set to implement remote patient
monitoring in the same month.
We anticipate that our exciting precision medicine
service at Hirslanden and Mediclinic Middle East,
utilising established divisional laboratory facilities, will
soon deliver new revenue streams. Led by specialist
geneticists, the service will enable disease treatment and
prevention tailored according to genetic, environmental
and lifestyle variables of individual clients.
We anticipate that our exciting
precision medicine service at
Hirslanden and Mediclinic
Middle East will soon deliver
new revenue streams.
26
Recent robotic process automation projects focused
on administrative processes have yielded significant
improvements in speed and accuracy. Further trials
and Group-wide roll-out are planned for the year ahead
and a Group Hyper Automation Centre of Expertise is
expected to be operational by June 2021. But our digital
transformation focus extends beyond efficiencies to
gaining competencies across the entire organisation to
grow our client engagement and offer enhanced value in
meeting their healthcare needs.
Becoming an integrated healthcare provider across
the continuum of care
In meeting the evolving and modern needs of our clients,
we are positioned ideally to use our existing facilities and
trusted clinical expertise as a foundation for expansion.
In support of regional care models, we continued to
invest in our day case clinics, which now total 18. Here
less complex cases can be treated more efficiently
at high volume in a lower-cost setting without
compromising on the quality of care our clients have
come to expect at our existing acute care hospitals.
These investments are generating good returns due to
increased demand and volume growth. At the same time,
we can increase our focus on delivering more complex
and specialised medical and surgical care in the resulting
capacity at acute care facilities.
Through its cooperation agreement with Medbase (the
leading Swiss specialist in family healthcare and part of
the Migros Group), Hirslanden has concluded the sale
of its three outpatient clinics. The two partners have
also established a radiology joint venture, which will be
managed by Hirslanden. In addition, Helsana Insurance
recently announced an innovative continuum of care
insurance product, in collaboration with Hirslanden and
Medbase, which offers supplementary insured clients
access to high-quality, integrated care at Hirslanden and
Medbase facilities. In South Africa, Mediclinic Southern
Africa’s investment in the Intercare Group affords it a
similar partnership, and in the UAE, Mediclinic Middle
East owns an established network of 18 outpatient clinics.
Demand for care in specialised fields, such as mental
health, rehabilitation, oncology and dialysis, remains
high. In March 2021, Mediclinic Southern Africa
announced a partnership with Icon Oncology to deliver
seamless one-stop oncology services at a new flagship
treatment facility based at Mediclinic Constantiaberg in
Cape Town. In February 2021, the Southern Africa division
opened its first renal facility at Mediclinic Bloemfontein
in partnership with BGM Renal Care, with a further
four centres planned for FY22. Co-locating these services
at existing facilities will ensure a comprehensive vertically
integrated approach to renal care in the acute and
chronic environment. In April 2021, Mediclinic Middle East
and the Dubai Health Authority entered into a public-
private partnership (‘PPP’) which will see Mediclinic
operate the Dubai Health Authority’s Al Barsha Dialysis
Centre from mid-May to provide patients with the highest
quality specialised patient-centred care.
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT I
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Hirslanden Klinik Aarau, Switzerland
Our clinical processes
are designed to
protect the safety
of our clients and
our employees,
and to improve the
effectiveness of care.
As our services expand, our extensive experience in these
specialised fields can be replicated in existing and new
markets. Soon, we will also be able to incorporate our
virtual care offering to provide our clients with access to
physical and virtual services focused on prevention, care,
recovery and enhancement.
Improving our value proposition significantly
Our clinical processes are designed to protect the safety
of our clients and our employees, and to improve the
effectiveness of care. To further enhance these processes,
we have started the implementation of a single electronic
safety event reporting system in every facility across the
Group.
Determining appropriate care plans for complex clinical
cases directly impacts outcomes and affordability. At
Mediclinic, these complex care decisions are made by
panels of experts, i.e. indication boards. During the
year, we added oncology, complex visceral and cardiac
surgery, and bariatric surgery to the disciplines they
cover.
We have also improved our feedback channels by
expanding the Press Ganey® patient experience survey
tool to cover all care settings, including virtual care.
A classification system for underlying concerns in
patient complaints was also implemented to identify
further improvement areas.
By establishing CoEs, PPPs, university affiliations and
student medical training programmes, we are not only
investing in our current knowledge base, but also in the
future healthcare workforce.
This year, Hirslanden added a further two PPPs to the
two announced last year. In the UAE, the Surgical Review
Corporation accredited the Metabolic and Bariatric
Surgery CoE at Mediclinic Airport Road Hospital in Abu
Dhabi. In May 2021, as part of a multi-year upgrade
and expansion project, this same flagship tertiary care
hospital commenced with the phased opening of a
comprehensive cancer centre (‘CCC’), the second to
be established by the division in collaboration with
Hirslanden oncology specialists. The newly built wing of
the hospital also began delivering additional specialist
inpatient and outpatient services in May 2021 and will
be further complemented by the upgrade of the existing
hospital by the end of FY22. The first CCC, situated
at Mediclinic City Hospital (North Wing), was recently
awarded the Dubai Healthcare City Excellence Innovation
Award.
To read more about our clinical services, see page 68
for an overview.
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The Group is well positioned
to deliver our services as
restrictions ease and patient
demand increases.
SPIRE
In the UK, Spire partnered with the National Health
Service (‘NHS’) to play a considerable part in the
broader national response to the pandemic. The group
maintained solid levels of liquidity throughout the year
by closely managing capital investment outflows and
through its participation in the agreement with the NHS.
As a shareholder and fellow healthcare provider,
Mediclinic supported the Board and senior management
in their vital work. Initially on standby for overflow of
patients, Spire rapidly shifted from a business offering
elective care during regular working hours to a 24-hour
operation. All the while, Spire simultaneously maintained
a long-term view to enable a seamless transition to
resuming private work when it was practical to do so.
OUTLOOK
The Group is well positioned to deliver our services
as restrictions ease and patient demand increases,
benefiting from the postponement of non-urgent patient
treatment. Encouraging momentum in non-COVID-19
patient activity was building towards the end of the
period as we transitioned out of the second wave of
the pandemic. This is expected to deliver revenue and
EBITDA growth across all three divisions in FY22.
Given the Group’s focus on operational and cost
efficiencies, we do not anticipate long-term structural
impediments to returning EBITDA margins at Hirslanden
and Mediclinic Southern Africa to pre-pandemic levels.
At Mediclinic Middle East, we expect margins to continue
gradually increasing as we grow our presence across
the region, supported by recent expansion and upgrade
projects in Dubai and Abu Dhabi.
A TEAM-ORIENTATED APPROACH
Our perseverance would not be possible without our
employees, nurses, affiliated doctors and allied health
professionals. Across our geographies and guided by
our Company purpose, they have proven their strength,
competence and compassion. They are Mediclinic and
they are the reason we are able to provide excellent care,
together.
An invaluable contributor to our accomplishments
this year has been the steadfast support of the Board,
especially our new Chair, Dame Inga Beale. I am also
proud of the Group’s Executive Committee members,
who have successfully balanced an increase in daily
demands with a focus on our long-term goals and on
motivating employees to remain positive and productive
in extraordinary circumstances.
During this year, I’ve often reflected on my years working
in theatre at night as a practising anaesthesiologist. It
is inspiring how each healthcare worker, regardless of
diverse background or experience, shares the same
professional and personal concerns and desires, and an
undeniable dedication to caring for clients, no matter
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MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT New expansion at Mediclinic Airport Road Hospital, the UAE
how difficult the circumstances may be. I can vouch
that these frontline employees, together with all the
healthcare workers across the world, deserve our
unqualified respect and gratitude for their conviction and
resilience. We fully endorse the vaccination programmes
which have commenced worldwide and are supporting
the health authorities and communities we serve such
that the vaccines can be delivered in haste.
We have learned many lessons in the past 12 months,
through our unwavering commitment to patients
during this trying time, and we have applied these as
a collective to benefit the entire Group. I believe we
will strengthen this foundation in the year to come and
make good progress on the execution of our Mediclinic
Group Strategy. We look to FY22 with hope and
eagerness to pursue the opportunities it is sure to bring.
Dr Ronnie van der Merwe
Group Chief Executive Officer
25 May 2021
While disruptions due
to the pandemic have
complicated progress in
some areas, they have
simultaneously illuminated
further opportunities in
others. I am more confident
than ever that our goals
are aligned with future
healthcare needs and
long-term trends.
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
MARKET OVERVIEW
AND OPPORTUNITIES
ALWAYS IN DEMAND
MEDICLINIC’S MARKETS
Although COVID-19 has had a
fundamental impact on many
industries and economies
across the globe, the demand
for healthcare services has
not wavered. Over the past
few years, the healthcare
industry has encountered
unprecedented change due
to rapid development in
the global landscape, most
notably driven by ageing
populations, a growing
burden of lifestyle diseases,
advances in new medical
technology, virtual care
and emerging healthcare
consumerism. These provide
opportunities for growth.
1.4bn
people aged 60 and older
by 2030.1
9.7 years
In 2019, global life expectancy
at birth was 73.4 years.
Healthy life expectancy at
birth, however, was 63.7.
This means that on average
9.7 years of life were spent in
poor health.2
42%
of consumers in the United
States of America (‘US’) said
they used tools to measure
fitness and track health
improvement goals in 2020,
up 25% from 2013.3
25.2% 4
compound annual growth
rate projected for global
telemedicine market size
from USD61.40bn in 2019 to
USD560bn by 2027.
USD7.8trn 5
global spending on health
in 2017, or about 10% of
gross domestic product
(‘GDP’) and USD1 080 per
capita.
LIFELONG PARTNERSHIP
Clients’ needs are changing
– healthcare encounters are
no longer isolated incidents.
Clients now seek a partner
who can accompany them
through life and champion
their wellness through
advice and support so
they can manage their
own health – regardless
of time or place. Due to
the rapid advancement of
technology and services,
their expectations extend
beyond treatment and
recovery to prevention
and enhancement.
AFFORDABILITY
The healthcare regulatory
environment is an evolving
one as governments,
regulators, healthcare
insurers and patients focus
on ensuring care remains
affordable in light of ever-
increasing demand. One
of the ways this is pursued
is through outmigration
of care, an approach that
aims to reduce the cost of
certain low-acuity services
and procedures by offering
these in different care
settings. In addition, there is
an ongoing drive for greater
transparency and data
sharing so clinical outcomes
can be monitored and
benchmarked consistently.
30
SWITZERLAND
8.7m6
stable population
12.2% 7
of GDP spent on healthcare
2021 8
expected recovery of GDP to
pre-pandemic levels
SOUTH AFRICA AND NAMIBIA
9.0m10
stable population of privately insured
members
2024 11
expected recovery of GDP to
pre-pandemic levels
THE UAE
9.8m13
growing population
88%14
expatriate population as a
percentage of total population
2022 15
expected recovery of GDP to
pre-pandemic levels
Government investing in diversification
strategies and stimulus packages to reduce
dependency on hydrocarbons and continue
attracting expatriates to the region
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT
MEDICLINIC’S MARKETS
HEALTHCARE
74% 9
of bed capacity provided by public
cantonal hospitals, the largest
providers of healthcare
• Mature, high-quality healthcare
system
• Mandatory health insurance
with the option to purchase
supplementary cover
OPPORTUNITIES FOR
HIRSLANDEN
• Expand across the continuum
of care: day case clinics, genetics,
radiology, family medicine,
virtual care
• Leverage collaboration with
Medbase to expand referral
networks and create new
insurance products
• Forge additional PPPs
HEALTHCARE
36% 12
average insurance solvency ratio
(25% required in South Africa)
• Mature acute hospital sector
• Network formations common
practice
OPPORTUNITIES FOR
MEDICLINIC SOUTHERN AFRICA
• Expand across the continuum
of care: primary care, day case
clinics, dialysis, mental health,
oncology, radiology
• Develop delivery models
and insurance products for
private-pay-and-employed-but-
uninsured market
HEALTHCARE
• Mandatory health insurance
• Significant degree of variability in
the types of healthcare services
offered, the breadth and depth
of clinical expertise, business
and operating practices, patient
experience and clinical outcomes
OPPORTUNITIES FOR
MEDICLINIC MIDDLE EAST
• Expand across the continuum of
care: oncology, genetics, remote
patient monitoring, long-term
care, palliative care, virtual care,
diagnostics
• Expand into neighbouring
countries
• Introduce new clinical
specialities, technologies and
high-acuity care to the region
• Leverage strong international
brand and reputation
Refer to the Strategy overview on
page 32 and Continuum of care
on page 38 for more information
on progress during the year.
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THE RESPONSE
The Group has placed great
focus on leveraging its expertise
and leading market positions
to partner and collaborate
with other public and private
healthcare providers. This
approach helps entrench
Mediclinic into the healthcare
delivery systems of the nations
in which it operates, making the
Group even more relevant over
the long term.
Mediclinic is further adapting to
address the changing landscape
in which convenient access to
the most appropriate care in
the most appropriate setting at
the most appropriate cost has
become critical to success. By
evolving across the continuum
of care, offering services
that prevent, care, recover,
and enhance, the Group is
deliberately positioning itself
for a sustainable future.
Although the divisions operate
in unique legal, regulatory and
economic environments, they
share and strive towards the
same Group strategic goals.
Sources
1 ‘Decade of healthy ageing 2020–2030’,
WHO
2 ‘Life expectancy and healthy life expectancy’,
WHO
3 ‘Are consumers already living the future of
health?’, Deloitte Insights
4 Telehealth Market Research Report, Fortune
Business Insights
5 ‘Global Spending on Health: A World in
Transition 2019’, WHO
6 ‘Switzerland population’, Worldometer
7 ‘Health expenditure in relation to GDP’,
OECD iLibrary
8 ‘Economic forecasts 2021/2022’,
Schweizerische Eidgenossenschaft
9 ‘Privatkliniken Schweiz 2020’
10 Council for Medical Schemes 2019/2020
Annual Report, page 156
11 ‘The Rand Outlook’, RMB, January 2021
12 Council for Medical Schemes 2019/2020
Annual Report, page 16
13 ‘Total population of the UAE’, The World Bank
14 ‘Population of the UAE’, Edarabia
15 ‘UAE economy to grow 2.5% in 2021 after
shrinking 5.8% last year’, Reuters
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STRATEGY OVERVIEW
A REFINED
STRATEGIC APPROACH
During the year, the Group further refined its strategic intent to emphasise and prioritise the goals that will shape
the Group’s future state and ensure that in every geography it is able to attract returning clients who trust Mediclinic
to enhance their quality of life across the physical and virtual continuum of care.
Refer to the Business model on page 40 for more information.
The following FY21 strategic goals and transformation drivers have been repositioned for the year ahead.
GOAL: TO STRENGTHEN THE GROUP’S
POSITION AS THE EMPLOYER OF CHOICE
GOAL: TO ACHIEVE SUPERIOR
LONG-TERM FINANCIAL RETURNS
TRANSFORMATION DRIVER:
SUSTAINABLE DEVELOPMENT
Progress during FY21:
• Further entrenched Diversity and
Inclusion Strategy and Group
purpose, vision and values
• Launched digital campus and
commenced with integration of
pockets of digital learning
management elements in the Group
future learning management system
• Successfully implemented integrated
digital recruitment and recruitment
marketing module in Switzerland
and Southern Africa
• Implemented standardised reporting
and introduced an advanced
analytics human resources (‘HR’)
dashboard with statistics and
interactive data visualisation.
• Conducted annual Group-wide
Gallup® employee engagement
survey with participation rate of 77%
• Established several measures to
support and safeguard employees
during the pandemic
Reason for repositioning:
While an enabling factor to current and
future success, being the employer of
choice is not a determinator of the
future state. Talent, however, remains
of the utmost importance and
positioning the Group as an employer
of choice will remain a key focus area.
Many of the FY21 employer of choice
sub-goals have been incorporated into
the social aspect of the Group
Sustainable Development Strategy.
Progress during FY21:
• Established Group Sustainable
Development Forum to execute
Group Sustainable Development
Strategy
• Communicated Group Sustainable
Development Strategy internally
and externally
• Reviewed and established
corporate social investment
(‘CSI’) approaches across
the Group
• Launched Group anti-bribery
and corruption campaign to
improve awareness and remarket
the ethics lines
COVIDEVELOPMENT
The implementation of the
ISO 14001:2015 environmental
management system at Hirslanden
and Mediclinic Middle East was
postponed to FY22.
Reason for repositioning:
Due to healthcare’s impact
on the environment and the
impact of climate change on the
business, the environmental
objectives have been elevated and
incorporated into a Group
strategic goal.
All the objectives of the
transformation driver are
represented in the goals of
the Group Sustainable
Development Strategy.
Progress during FY21:
• Maintained returns-
oriented decision-making
at divisional, Group and
Board level
• Embarked on Finance
transformation process
with an aligned strategy
for the function and
initiatives aimed at, inter
alia, an aligned operating
model, finance technology
and process improvement
• Progressed with the
implementation of
a standard technology
solution for indirect
procurement based on
an aligned blueprint
across the Group
Reason for repositioning:
While of key importance,
achieving superior long-term
financial returns is regarded
as an outcome to successful
strategy execution and
capital allocation, and not a
goal in and of itself. As such,
it has been repositioned to
form part of the short term
incentive (‘STI’) and LTIP
performance metrics.
The sub-goal related to
standardised and optimised
product portfolios and
e-procurement has been
incorporated into the social
aspect of the Group
Sustainable Development
Strategy.
Refer to the Sustainable development overview on page 51 and the 2021 Sustainable Development Report for more information.
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MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT GOALS AND PROGRESS
TO BECOME AN
INTEGRATED HEALTHCARE
PROVIDER ACROSS THE
CONTINUUM OF CARE
TO GROW IN
EXISTING MARKETS
AND EXPAND INTO
NEW MARKETS
1
TO IMPROVE THE
GROUP’S VALUE
PROPOSITION
SIGNIFICANTLY
6
5
2
3
2026
STRATEGIC
GOALS
4
TO EVOLVE AS
A DATA-DRIVEN
ORGANISATION
TO TRANSFORM
THE GROUP’S
SERVICES AND
CLIENT
ENGAGEMENT
THROUGH
INNOVATION AND
DIGITALISATION
TO MINIMISE
THE GROUP’S
ENVIRONMENTAL
IMPACT
PRINCIPAL AND EMERGING RISKS (AS DESCRIBED
IN THE RISK MANAGEMENT REPORT ON PAGE 96)
1. Pandemics and infectious diseases
8. Business projects
2. Disruptive innovation and digitalisation
9. Patient safety and clinical quality
3. Economic and business environment
10. Availability and cost of capital
4. Regulatory and compliance
11. Financial and credit risk
5. Information systems security and cyberattacks
12. Quality of service and operational stability
6. Competition
7. Workforce risks
13. Business investments and acquisitions
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STRATEGY OVERVIEW CONTINUED
TO BECOME AN INTEGRATED
HEALTHCARE PROVIDER ACROSS
THE CONTINUUM OF CARE
1
LINK TO PRINCIPAL
AND EMERGING RISKS
1, 2, 3, 4, 5, 6, 8, 9, 10, 13
• Develop further service offerings based on
the divisional business plans in the prevention,
care, recovery and enhanced spaces
• Align the reimbursement models in each division
with the respective continuum of care offering
PROGRESS DURING FY21:
The goal has been embedded throughout the
organisation, with the development areas clearly
defined per division.
FOCUS AREAS FOR FY22:
• Finalise divisional business plans and funding
strategies
• Incorporate elements and partner with businesses
to expand the Mediclinic network
• Develop key performance indicators (‘KPIs’) and
measure progress against these
TO IMPROVE THE GROUP’S VALUE
PROPOSITION SIGNIFICANTLY
LINK TO PRINCIPAL
AND EMERGING RISKS
1, 3, 4, 6, 7, 8, 9, 12
2
• Aim for zero preventable harm to clients
• Reduce the ‘cost of us’
• Partner with patients to create true patient
centricity
• Develop patient care journeys which enable
an integrated care delivery system and
value-based healthcare
PROGRESS DURING FY21:
• Expanded disciplines covered by indication boards
to include oncology, complex visceral and cardiac
surgery, and bariatric surgery
• Standardised and shortened Press Ganey® patient
experience survey, and expanded it to all care
settings
• Implemented standardised taxonomy for complaints
received via the survey tool
• Progressed well with the implementation of
standardised event reporting software, completing
successful pilots in two divisions, and the
establishment of doctor-specific KPIs
COVIDEVELOPMENT
• Postponed the standardisation of obstetric care
to FY22
FOCUS AREAS FOR FY22:
• Quantify and reduce variation in clinical care
outcomes and complications of care
• Further expand patient-reported outcome measures
• Establish patient advocacy groups
• Measure client experience in integrated care
solutions and virtual healthcare
• Standardise obstetric care
• Develop and implement an integrated care
framework
• Pilot client-facing application for pregnancy and
baby care pathway at Hirslanden and Mediclinic
Southern Africa
GOAL CHANGE/S: ‘Develop patient care journeys which enable an integrated care delivery system and
value-based healthcare’ has been introduced as a new sub-goal and further progress will be reported on
in the 2022 Annual Report.
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MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT TO TRANSFORM THE GROUP’S SERVICES
AND CLIENT ENGAGEMENT THROUGH
INNOVATION AND DIGITALISATION
LINK TO PRINCIPAL
AND EMERGING RISKS
1, 2, 5, 6, 8, 10, 13
3
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• Establish a radical innovation capability for the Group
• Optimise through automation as part of digital
• Establish a comprehensive virtual care offering
• Optimise the use of people, technology and data
transformation
• Drive Group-wide departmental digital transformation
through healthcare informatics to improve the safety,
quality and cost of patient care
PROGRESS DURING FY21:
• Launched alternative care settings and treatment
modalities, e.g. telemedicine and home care
• Facilitated critical care collaborative forum for
specialist intensivists from all three divisions
between April and August
• Electronic health record (‘EHR’), patient data
management system and radiology information
system rolled out to AndreasKlinik Cham Zug and
Klinik Stephanshorn as part of Hirslanden’s HIT2020,
a larger back-office centralisation project
• CareConnect health information exchange (‘HIE’)
project progressed well at Mediclinic Southern Africa
• Concluded roll-out of EHR at Mediclinic Airport
Road Hospital, the Al Ain clinics, Mediclinic Al
Jowhara Hospital and Mediclinic Al Ain Hospital
at Mediclinic Middle East
• Mediclinic Middle East integrated its EHR
successfully with HIEs in both Dubai and Abu Dhabi
FOCUS AREAS FOR FY22:
• Develop innovation pipeline across the Group
assisted by innovation management software
• Expand precision medicine offering
• Establish foundation to enable execution of Group
Innovation Strategy
• Embed automation across several business functions
• Support the digital transformation of the broader
Legal department
• Prioritise digital transformation efforts in the Group
• Evaluate client engagement platform functionality
across the Group
• Integration of pre-diagnostic symptom checker in
digital client offering
• Extend virtual ICU pilot
• Develop a virtual home care strategy for the Group
• Establish a roadmap for virtual command centres
• Standardise and define adoption of client
relationship management systems
GOAL CHANGE/S: Innovation occurs on a continuum, starting at the core, moving through areas peripheral to
the core and ending with radical innovation. Digital transformation is one of the means to achieve some of the
innovation peripheral to the core. Mediclinic created a new portfolio of innovation and appointed a Chief Group
Innovation Officer to oversee both functions. As such, the innovation transformation driver and the digitalisation
sub-goals have been aligned to create a new strategic goal.
New sub-goals have been introduced and further progress will be reported on in the 2022 Annual Report.
35
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
STRATEGY OVERVIEW CONTINUED
TO EVOLVE AS A DATA-DRIVEN
ORGANISATION
4
LINK TO PRINCIPAL
AND EMERGING RISKS
5
• Build a robust, modern and secure enterprise data
• Implement data-driven innovation using advanced
lake that curates all data assets
analytics, AI and machine learning
• Manage data as a strategic company asset
• Develop a company culture of using data every day
• Develop a strategy and implementation plan for
AI and machine learning solutions for the Group
for fact-based decision-making
PROGRESS DURING FY21:
• Implemented cohorts of analytical champions (citizen
data scientists) across the organisation
• Established core Data Science and Information
Management functions at all divisions
• Implemented Tableau as standard for data visualisation
• Automated data collection for various clinical
indicators
FOCUS AREAS FOR FY22:
• Establish foundation for a true enterprise data
lake and develop a roadmap to migrate data
and analytical solutions and workload to cloud
infrastructure
• Move data curation into the business as a core
competency and improve data literacy across
the Group
• Developed various dashboards to measure operational
performance and report and manage COVID-19
outcomes
• Use AI to guide and automate a variety of critical
decisions, virtual care processes and operational
actions
GOAL CHANGE/S: The word ‘analytics’ has been replaced with ‘data’ to emphasise data curation as a core competency.
TO MINIMISE THE GROUP’S
ENVIRONMENTAL IMPACT
5
LINK TO PRINCIPAL
AND EMERGING RISKS
4, 12
• Become carbon neutral by 2030
• Have zero waste to landfill by 2030
PROGRESS DURING FY21:
Although this is a new goal, progress was made
against the two sub-goals.
• Implemented standardised methodologies to
capture and assure all carbon emission data
• Implemented data management system to capture
and manage all environmental data across the Group
• Developed and implemented a Group Waste
Management Policy
FOCUS AREAS FOR FY22:
• Conclude renewable energy purchase agreements
at five Mediclinic Southern Africa facilities for
8GWh/year for implementation in FY22
• Photovoltaic (‘PV’) installations at 10 Mediclinic
Southern Africa facilities, generating 4.9GWh/year
• CHF4m, ZAR40m and AED8m budgeted for green
initiatives in FY22 at Hirslanden, Mediclinic Southern
Africa and Mediclinic Middle East, respectively
• Conclude on annual targets and roadmaps to
achieve carbon neutrality and have zero waste to
landfill by 2030
• In collaboration with the Procurement department,
review top suppliers’ environmental practices and
discuss plans to reduce packaging waste
• Implement ISO 14001:2015 Environmental
Management System at three Hirslanden and five
Mediclinic Middle East hospitals
GOAL CHANGE/S: This is a new goal which stems from the sustainable development transformation driver.
36
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT TO GROW IN EXISTING MARKETS AND
EXPAND INTO NEW MARKETS
LINK TO PRINCIPAL RISKS
LINK TO PRINCIPAL
1, 2, 5, 6, 8, 10, 13
AND EMERGING RISKS
3, 4, 6, 8, 10, 11, 13
6
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• Grow in existing markets based on the continuum
• Expand into new markets
of care goal
PROGRESS DURING FY21:
•
Refer to the Continuum of care on page 38 for
more information on expansion in existing markets
• Proactively searched for and investigated growth
opportunities
FOCUS AREAS FOR FY22:
• Expand PPPs
• Expand outpatient radiology and laboratory services
across Switzerland
• Progress Hirslanden’s defined growth strategy for
• Completed market analyses of identified priority
day case clinics
areas, including country and site visits
• Launch precision medicine at Hirslanden and
Mediclinic Middle East
• Expand acute hospital capacity and grow day case
clinic footprint selectively in Southern Africa
• Embed and grow mental health capabilities at
Mediclinic Southern Africa
• Embed renal dialysis service, and establish new
chronic clinics at Medicinic Southern Africa
• Launch home care, long-term care and mental
health at Mediclinic Middle East
• Complete acquisition of Bourn Hall International
MENA
• Open new wing at Mediclinic Airport Road Hospital
• Manage Al Murjan hospital project in Kingdom of
Saudi Arabia
• Proactively build a pipeline of opportunities for
future growth in priority markets
• Continue disciplined capital allocation to incremental
international expansion
• Consider ad hoc opportunities for growth outside of
priority markets
GOAL CHANGE/S: The sub-goal ‘Attract, retain and engage doctors’ was closed as it was decided that divisions
will take individual responsibility for this area going forward aided by strategies developed collaboratively between
divisions.
A new sub-goal has been introduced and further progress will be reported on in the 2022 Annual Report.
37
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
CONTINUUM OF CARE
PATIENT FIRST
AT EVERY STEP
PREVENT, CARE, RECOVER AND ENHANCE
For close on four decades, Mediclinic has grown its
expertise across geographies. The Group has earned
a reputation of being a respected and trusted provider
of healthcare services in each of its markets. It has put
its Patients First.
Innovation both inside and outside healthcare is
increasingly influencing the way clients perceive the
quality of care, as well as how and where it should
be offered. Expansion across the continuum of care
widens the Group’s service focus, improves accessibility,
delivers integrated care solutions and creates the
opportunity to form a lasting relationship with clients.
It also allows the Group to deliver services in the most
appropriate care setting at an optimal cost.
By embracing new healthcare provision channels
and industry partners, Mediclinic progressed with
its expansion during the year under review through
acquisitions, partnerships, collaborations and its own
direct investments. It also strengthened existing services
through technology and innovation to support other
corporates and improve services offered to clients.
I carefully considered the nature of the
relationship between Mediclinic and
those who make use of our services
within an evolving healthcare landscape.
A patient is a person receiving medical
care; a client is a person who receives
advice. The latter implies a level of trust
and a long-term relationship that extends
beyond mere treatment. We want our
patients to interact with Mediclinic
beyond the conventional treatment
process, rather as a client who turns
to us to enhance their quality of life.
Dr Ronnie van der Merwe
Group Chief Executive Officer
PREVENT
CARE
• Public health awareness
campaigns in all three
geographies
• Hirslanden expanded Medbase
partnership by establishing a
radiology joint venture
• Hirslanden expanded services through two
new PPPs
• More than
200 approved
research studies across
the Group
• Pilots launched for
single electronic safety
event reporting system
in every facility across
the Group
• Prepared for launch
of genetics service
Mediclinic Precise
at Hirslanden and
Mediclinic Middle East
• Six vaccination centres
managed by Hirslanden
• Vaccine centres
launched across the
UAE by Mediclinic
Middle East
• More than 10 COVID-19 test centres
operated by Hirslanden
• Mediclinic Southern Africa partnered
with independent oncology experts
to host affiliated treatment centres,
and with BGM Renal Care to establish
renal service units
• Home delivery service for prescription
medication and drive-through
pharmacies at Mediclinic Middle East
• Day case clinics opened at Mediclinic
Bloemfontein and Mediclinic Cape Gate
in South Africa and at Operationszentrum
St. Gallen in Switzerland
• Surgical Review Corporation accredited
Metabolic and Bariatric Surgery CoE
at Mediclinic Airport Road Hospital in
Abu Dhabi
• Mediclinic Middle East launched
• CCC opened at Mediclinic Airport Road
PCR drive-through testing stations
throughout the UAE
Hospital in the UAE
• Mediclinic Middle East partnered with
Mohammed Bin Rashid University of
Medicine and Health Sciences and Al Jalila
Children’s Specialty Hospital to complete
Dubai’s first transplant surgeries using
kidneys from living donors at Mediclinic
City Hospital
38
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT
THE MEDICLINIC CONTINUUM OF CARE
P R EVENT
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PATIENTS
CARE
ENHAN C E
CARE
RECOVER
ENHANCE
DIGITAL & CLIENT ENGAGEMENT
• Mediclinic Middle East partnered
• Prepared for launch of genetics
• Virtual care in all three
with Abu Dhabi Department
of Health to enrol patients
into remote chronic disease
management programme
• Mediclinic Middle East piloted
remote patient monitoring
service Mediclinic Precise
at Hirslanden and Mediclinic
Middle East
geographies
• Improved feedback channels by
expanding Press Ganey® patient
experience survey tool to cover
all care settings
• Hirslanden introduced digital
platform for repetitive testing,
Together we test
• Hospital access control and pre-
admissions apps introduced at
Mediclinic Southern Africa
• Mediclinic Middle East’s EHR
integrated successfully with
HIE in Abu Dhabi and Dubai
• Mediclinic Middle East partnered
with Abu Dhabi Department
of Health to enrol patients
into remote chronic disease
management programme
• Mediclinic Middle East piloted
remote patient monitoring
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
39
BUSINESS MODEL
HOW MEDICLINIC IS POSITIONED
INTERNATIONAL FOOTPRINT
Mediclinic is a diversified
international private healthcare
group which provides a wide
range of services across the
continuum of care. This breadth
and exposure to various regulatory
and economic environments and
client demographics provide it with
a strong understanding and clear
visibility of how care trends are
evolving across the world.
5
countries
APPROPRIATE CARE
Mediclinic is investing in the
resources, skills and capabilities
needed to market, design, build,
operate and maintain a seamless
service offering across the physical
and virtual continuum of care.
This will provide Mediclinic clients
with exceptional services and
solutions, and in turn enable the
Group to prosper.
115+
healthcare facilities
GROUP VALUE
Established in South Africa in
1983 as a provider of acute care
in hospitals, the Group has grown
significantly since inception to now
boast leading competencies in
specialised medicine, day surgery,
outpatient care, diagnostics, client
experience, facility management,
procurement, finance and
acquisitions, with evolving
innovation and virtual care
capabilities.
35+
years in healthcare
SUSTAINABLE FUTURE
A strong commitment to
sustainability and responsible
business benefits the environment
and communities in which the
Group operates.
2030
target year for carbon
neutrality and zero
waste to landfill
EXPERTISE
Mediclinic recruits more than
3 000 diverse employees each
year across more than 415 different
roles. Guided by the organisational
values of being client centred,
trusting and respectful, patient
safety focused, performance driven
and team orientated, they impact
lives every day.
33 100+
employees across 125 nationalities
FINANCE
Mediclinic has a robust financial
profile, supported by an
extensive property portfolio,
long-standing relationship with
lenders and relatively long-dated
debt maturities. The Group
has a responsible approach to
leverage and a disciplined capital
allocation process.
41
lending banks
40
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT
HOW MEDICLINIC IS POSITIONED
TO CREATE VALUE EVERY
DAY FOR STAKEHOLDERS
PARTNER
TO CARE
• Clients
• Communities
• Employees
and potential
applicants
• Medical
practitioners
PARTNER
TO CREATE
• Governments
and authorities
• Healthcare
insurers
• Industry partners
• Investors
• Suppliers
PARTNER
TO IMPROVE
• Industry
associations
• Media
• Professional
societies
12
stakeholder groups
THE MEDICLINIC CONTINUUM OF CARE
P R EVENT
R E COVER
PATIENTS
CARE
ENHAN C E
Refer to Stakeholder engagement on page 44 for more
information on the value created during the year for
material stakeholders.
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P
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BY PROVIDING
COST-EFFICIENT,
QUALITY CARE
AND OUTSTANDING
CLIENT EXPERIENCES
600 000+
inpatient admissions
2.4m+
outpatients treated
150
clinical indicators measured and
reported on across the Group
85
Press Ganey® inpatient
experience survey score
(out of 100)
91
Press Ganey® day surgery
experience survey score
(out of 100)
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
41
VALUE ADDED
STATEMENT
The Value added statement depicts the economic benefit created by the Group and how that is distributed among
the various stakeholders, comprising employees, shareholders, banks, government, creditors and the economic value
retained in the business.
VALUE CREATED
Revenue
Cost of materials and services
Finance income
Share of net profit of equity-accounted investments
DISTRIBUTION OF VALUE
To employee benefit and contractor costs
Tax and other state and local authority levies (excluding VAT)
To suppliers of capital:
Non-controlling interests
Finance cost on borrowed funds
Distributions to shareholders
VALUE RETAINED
To maintain and replace assets
Income retained for future growth
FIGURE 1: VALUE CONTRIBUTION BREAKDOWN (%)
21
20
Employees
Maintaining and replacing assets
Future growth
Finance cost
Tax
Shareholders
Non-controlling interests
4242
FY21
£’m
%
FY20
£’m
%
2 995
(1 199)
4
(10)
3 083
(1 143)
9
2
1 790
100.0
1 951
100.0
1 448
39
11
76
-
81.0
2.2
0.6
4.2
-
1 446
71
18
87
59
74.2
3.6
0.9
4.5
3.0
1 574
88.0
1 681
86.2
115
101
216
6.4
5.6
12.0
152
118
270
7.8
6.0
13.8
FY21
%
81.0
6.4
5.6
4.2
2.2
-
0.6
FY20
%
74.2
7.8
6.0
4.5
3.6
3.0
0.9
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
STAKEHOLDER ENGAGEMENT
CONSERVE,
CONNECT,
COMPLY
Mediclinic’s ESG goals transcend the natural environment to include
interactions with stakeholders, protection of human rights, and a
commitment to doing the right thing, even when no one is watching.
In this, the Group has prioritised the following material issues:
• MINIMISING ENVIRONMENTAL IMPACT
• BUILDING STAKEHOLDER TRUST
• BEING AN ETHICAL AND RESPONSIBLE
CORPORATE CITIZEN
STAKEHOLDERS
KEY ISSUES
CLIENTS
• Patient experience
• CSI
• Human rights
• Data privacy
• Ethics, anti-bribery and
anti-corruption
• Healthcare infrastructure
EMPLOYEES AND
POTENTIAL APPLICANTS
• Employee recruitment
and retention
• Employee engagement
• Diversity and inclusion
• Employee wellness and safety
• CSI
• Information assets
• Ethics, anti-bribery and
anti-corruption
• Healthcare infrastructure
GOVERNMENTS AND AUTHORITIES
• Carbon emissions
• Water resources
• Waste and hazardous
waste management
• Affordable, accessible,
quality healthcare
• Diversity and inclusion
• Future workforce
• CSI
• Data privacy
• Ethics, anti-bribery and
anti-corruption
44
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT All stakeholders are important to Mediclinic, and engagement is
prioritised and improved upon each year. The Group has identified
the following priority stakeholder groups: clients, communities,
employees and potential applicants, governments and authorities,
healthcare insurers, industry associations, industry partners,
investors, media, medical practitioners, professional societies
and suppliers. Below, more information is provided on the most
material stakeholders during the year.
Refer to the 2021 Sustainable
Development Report for
more information on the
Group’s material issues and a
comprehensive overview of
stakeholder engagement.
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KEY ISSUES
HOW MEDICLINIC ENGAGES
OUTCOME
VALUE CREATED
At facility level, Mediclinic engages with
its clients through systematic patient
rounds and employees dedicated to
client experience and care. Press
Ganey® patient experience index
surveys and 24-hour helplines provide
further engagement opportunities.
Health-related information is shared
online through social media and
websites, in printed magazines and
brochures, and in person at corporate
events and health awareness days.
Employees are engaged through a
wide range of electronic and in-person
channels, including the annual Gallup®
employee engagement survey, focus
groups, performance reviews, leadership
video conferences, internal campaigns
and employee wellness programmes.
The Group Press Ganey® participation
rate declined slightly and the number of
inpatient admissions reduced by 21% due
to the pandemic.
88%
of inpatients surveyed
recommend Mediclinic
facilities
£1.5bn
paid in salaries
The pandemic’s impact on employee
engagement and experience was far-reaching,
including a decline in participation in the
annual Your Voice employee engagement
survey compared with the previous year. This
contributed to a slight decline in the number
of engaged employees. However, the results
acknowledged the invaluable contribution
of colleagues in these extremely challenging
circumstances by strongly supporting the
statement, ‘My co-workers are committed
to doing quality work’. The Group used the
opportunity to gain greater insight into
employee needs and ways to support their
resilience and wellbeing.
Mediclinic participates in regular
meetings, conferences and seminars,
with senior leaders on government
boards. It also participates in national
health training and education, and
PPPs to enable healthcare, training
and research.
Throughout the pandemic, the Group has
been regarded as a trusted healthcare
provider and partner to government.
Several initiatives and collaborations
occurred across all three geographies to
support government in their COVID-19
response plans, including treatment, testing
and vaccinations.
£39m
paid in tax
45
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
STAKEHOLDER ENGAGEMENT CONTINUED
STAKEHOLDERS
KEY ISSUES
INVESTORS
MEDICAL PRACTITIONERS
SUPPLIERS
• Climate change
• Carbon emissions
• Water resources
• Energy efficiency
• Biodiversity
• Waste and hazardous waste
management
• An effective environmental
management system
• Patient experience
• Employee recruitment
and retention
• Employee engagement
• Diversity and inclusion
• Employee wellness and safety
• Supply chain management
• CSI
• Human rights
• Information assets
• Data privacy
• Ethics, anti-bribery and
anti-corruption
• Healthcare infrastructure
• Patient experience
• Employee recruitment
and retention
• Employee engagement
• Diversity and inclusion
• Employee wellness and safety
• Supply chain management
• Information assets
• Data privacy
• Ethics, anti-bribery and
anti-corruption
• Healthcare infrastructure
• Climate change
• Carbon emissions
• Water resources
• Energy efficiency
• Biodiversity
• Waste and hazardous waste
management
• An effective environmental
management system
• Patient experience
• Human rights
• Ethics, anti-bribery and
anti-corruption
• Healthcare infrastructure
SECTION 172 DIRECTORS’ DUTIES
The Board collectively, together with its directors individually, is committed to acting in a way that promotes the
success of the business to the benefit of all stakeholders.
The Section 172 statement on page 48 highlights key
actions in this regard. More information on how the directors’ duties are discharged and the oversight of these duties
is included in the Corporate Governance Statement on page 116.
46
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT
KEY ISSUES
HOW MEDICLINIC ENGAGES
OUTCOME
Mediclinic met with more than 135 unique
financial institutions during the year,
and the Chair of the Board held one-
on-one meetings with 14 of the Group’s
top international and South African
shareholders to gain insight into their views.
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VALUE CREATED
3.0%
FY21
ROIC
Seeking to drive
improved returns
through strategic
delivery
This year, virtual care solutions were
implemented to allow medical practitioners
to consult with patients who were reluctant
to visit physical facilities. The Group
also hosted five virtual ICU collaborative
meetings during the year to enable and
encourage knowledge sharing across
geographies.
Up to
221
medical practitioners
across three
geographies
participated in Group
ICU collaborative
meetings
The Group’s financial results are
disclosed regularly through stock
exchange announcements and investors
are invited to participate at the AGM.
Investor Relations regularly engages with
investors through meetings, roadshows,
conferences and site visits, as well as
sell-side analyst and salesforce meetings.
Operational, financial, strategic and
ESG-related news is shared via the
corporate website.
Affiliated medical practitioners
participate in hospital clinical committees
and boards. Engagement is enhanced
through regular meetings, continuous
professional education and network
events, electronic communication,
broadcasts and dedicated medical
practitioner portals at Hirslanden and
Mediclinic Southern Africa. At Mediclinic
Middle East, medical practitioners are
employed by the division and are invited
to attend biannual engagement events
and an annual research day.
Supplier meetings and reviews occur
regularly. They often present product
demonstrations, evaluations and training,
and are in attendance at trade fairs.
Key manufacturing facilities are visited
regularly to verify compliance with the
Company’s Modern Slavery and Human
Trafficking Statement.
Based on the global demand and volume
shortages, procurement had to extend
beyond normal sourcing channels.
Joint purchasing enabled a rapid
response to sourcing, while the global
Group volumes provided additional
leverage to secure stock.
£1.2bn
annual procurement
spend
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
SECTION 172 STATEMENT
STATEMENT OF DIRECTORS’
PERFORMANCE OF THEIR
STATUTORY DUTIES
IN ACCORDANCE WITH SECTION 172(1)
OF THE COMPANIES ACT 2006
Under Section 172 of the Act (‘Section 172’), the
directors of the Company have a duty to act in a manner
which they consider, in good faith, would be most likely
to promote the success of Mediclinic to the benefit of
its shareholders as a whole, having regard for other key
stakeholders and relevant matters.
This duty is consistent with, and supportive of,
Mediclinic’s purpose and organisational culture which
promote behaviour that is client centred, trusting and
respectful, patient safety focused, performance driven
and team orientated.
The stakeholder engagement processes adopted by
Mediclinic allow the Board to understand what matters
the most to different stakeholders. They also enable it
to carefully consider all the competing priorities and
adopt the course of action that is most likely to lead
to the long-term success of the Group and support
the Board’s determination to maintain Mediclinic’s
reputation for high standards of business conduct.
This statement illustrates how the directors had
regard to the matters set out in Section 172(1)(a) to (f)
in the fulfilment of their duties during FY21. Further
information on this can be found throughout this Annual
Report, particularly in the sections referenced alongside.
The case study, ‘The people who set Mediclinic apart’,
looks at how the Group has supported employees
over the past year. See page 18 for more.
METHODS USED BY THE DIRECTORS TO FULFIL THEIR
DUTY UNDER SECTION 172
• The Board papers for each meeting include a
reminder of directors’ Section 172 duties and the
Group’s key stakeholders. In addition, each paper
supporting a discussion and request for a decision
from the Board and its committees includes a table
setting out the Section 172 factors and corresponding
considerations. The Chair of the Board and committee
chairs ensure that the ensuing discussions are
properly informed by all relevant Section 172 matters.
• The Board assesses and approves the Group’s
purpose, values and strategy; ensures the strategy is
aligned with the Group’s culture; and sets the ‘tone
from the top’ by promoting those values and culture.
• The Board regularly monitors progress on the
implementation of the Group’s strategy and
associated business plan and conducts an annual
review of both to ensure they remain appropriate.
• The Clinical Performance and Sustainability
Committee oversees the Group’s clinical performance
and sustainable development matters on behalf of
the Board and reports to the Board on its activities
and key outcomes. The committee’s activities include
a biannual review of stakeholder engagement.
• Directors engage directly with key stakeholders
where appropriate and report any feedback to the
Board as a whole. The Chair, Group CEO, Group Chief
Financial Officer (‘CFO’), Senior Independent Director
(‘SID’) and chairs of the Board’s committees welcome
engagement with shareholders.
• The Board conducts a biannual review of workforce
engagement, led by the designated non-executive
director responsible for workforce engagement.
• The Board considers the potential consequences of
its decisions in the short, medium and long term and
ensures that the Group’s risk management processes
identify any associated risks to the business and its
stakeholders, and that mitigation plans are established
to appropriately address these.
• The Board receives assurance through internal and
external audits; employee, patient, doctor and investor
surveys; and reports from brokers and other advisers.
48
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SECTION 172 IN ACTION DURING FY21
PREPAREDNESS AND RESPONSE TO COVID-19
The Group’s preparedness and operational, clinical and financial response to the pandemic was a top priority for
the Board and the Clinical Performance and Sustainability Committee. The Company provided the Board with daily
dashboards and detailed reports for meetings discussing its COVID-19 response.
TABLE 1: SECTION 172 CONSIDERATIONS
CLIENTS
WORKFORCE
GOVERNMENTS AND
AUTHORITIES, AND
COMMUNITIES
INVESTORS AND LONG-
TERM SUSTAINABILITY
OF THE COMPANY
• The simultaneous
delivery of healthcare
to both COVID-19 cases
and non-COVID-19
cases, as permitted
by the authorities
• The continuous sharing
of clinical knowledge
and practices across
the divisions to improve
clinical outcomes
• Protection from the
physical and mental
impact of COVID-19, in
particular for frontline
and other patient-facing
employees
• Recognition and
acknowledgement
of their efforts and
dedication, in discussions
on remuneration and
internal and external
communications
• Support for the wider
communities in which
the Group operates
by collaborating
with relevant health
authorities throughout
the pandemic
• Donations by the
directors and the
divisional CEOs of 30%
of their fees or salaries
for three months (1 April
to 30 June 2020) to
charitable causes related
to the pandemic
Short- and longer-term
measures taken to
protect the sustainability
of the business, such as
temporarily suspending
the dividend to preserve
the Group’s liquidity with
due regard for the impact
thereof on shareholders
Outcomes and actions
The Group delivered a robust operating performance during the year, demonstrating
ongoing operational, clinical and financial resilience while continuing to navigate
the challenges posed by the pandemic. It delivered a solid second-half financial
performance despite more severe second waves of the pandemic and is well
positioned to deliver growth in FY22.
UPDATED GROUP STRATEGY AND SUSTAINABLE DEVELOPMENT STRATEGY
During the year under review, updates to the following were presented to the Board for consideration and approval:
• The Mediclinic Group Strategy (including the strategic goals) and associated five-year financial plan
• The Group Sustainable Development Strategy
TABLE 2: SECTION 172 CONSIDERATIONS
LONG-TERM SUCCESS OF
THE COMPANY
The impact on the shape
of the business and the
basis for long-term value
creation, considering that
some of the initiatives
would deliver their full
potential after completion
of the five-year financial
plan
Outcomes and actions
INVESTORS
WORKFORCE
The financial impact,
including disciplined
capital allocation and
the gradual improvement
in the Group’s ROIC, as
indicated by investors to
be key considerations
The impact of
implementation on
management and
employees who were
already under strain
dealing with the effects
of the pandemic on the
current business
ENVIRONMENT AND
COMMUNITIES
The resultant
improvements in the
Group’s long-term
resilience, the reduction
of its impact on the
environment and the wider
direct and indirect benefits
on the communities served
by the Group
The Board approved the updates together with the corresponding goals, key
milestones and plans for regularly monitoring progress on implementation and impact.
49
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
SECTION 172 STATEMENT CONTINUED
UPGRADE AND EXPANSION OF TWO SWISS HOSPITALS
The Board considered the request to approve the upgrade and expansion of the following two Hirslanden hospitals
in Switzerland:
• Klinik St. Anna
• Hirslanden Klinik Aarau
TABLE 3: SECTION 172 CONSIDERATIONS
LONG-TERM SUCCESS OF
THE COMPANY
CLIENTS AND
WORKFORCE
The needs, strategy
and potential for the
two facilities and the
alternative solutions
and their relative merits
The impact of the work
on clients, employees and
doctors, together with the
corresponding mitigating
measures and the longer-
term benefits
INVESTORS
COMMUNITIES
The sources of funding,
competitive advantages
and projected financial
returns, which compared
favourably with
Hirslanden’s weighted
average cost of capital
of 5.0%
The benefits to
communities from
broadening and
strengthening quality
healthcare services
and making these
available to a larger
number of clients
Outcomes and actions
The Board approved both proposals, allowing work on the projects to proceed as
planned. The Investment Committee will review actual vs. budgeted spend within
one year of commissioning, and operating vs. projected operating performance
within three years of commissioning, as part of its normal remit.
Refer to the following sections of this Annual Report for more information:
• the Chair’s Review on page 4;
• the COVID-19 overview on page 12;
• the ‘The people who set Mediclinic apart’ case study on page 18;
• the ‘Data science and COVID-19’ case study on page 20;
• the Business model on page 40;
• Stakeholder engagement on page 44;
•
‘Employee engagement’ and ‘Preventing bribery and corruption’ in the Sustainable development overview on page 63
and page 66, respectively;
• the Risk management report on page 96;
•
‘Stakeholder interests and Board engagement’, ‘Workforce engagement’ and ‘Investor engagement’ in the Corporate
Governance Statement on pages 127–133; and
• the Clinical Performance and Sustainability Committee Report on page 154.
Hirslanden Klinik Aarau, Switzerland
50
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT SUSTAINABLE
DEVELOPMENT
OVERVIEW
INTRODUCTION
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Mediclinic dedicates resources – whether physical, social or natural – towards achieving its purpose. The Group is
eschewing a culture of consumption in favour of a culture of conservation and connection. These goals transcend the
natural environment to include interactions with each other, protection of human rights, and a commitment to doing
the right thing, even when no one is watching.
51
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
SUSTAINABLE DEVELOPMENT OVERVIEW CONTINUED
MEDICLINIC’S SUSTAINABLE DEVELOPMENT MISSION STATEMENT
‘We are committed to ensuring that every day we improve sustainability by managing our resources responsibly
and efficiently to the benefit of our stakeholders and the environment.’
CONTENT
About Mediclinic
ESG governance structure
Interview with Dr Felicity Harvey, Chair of
the Clinical Performance and Sustainability
Committee
Interview with Mr Gert Hattingh, Group Chief
Governance Officer
Highlights
Mediclinic’s approach
ESG in the Group’s DNA
Materiality assessment
Material issue 1: Minimising
environmental impact
Material issue 2: Building
stakeholder trust
ESG index
Stakeholders
Overview
Carbon neutrality
Energy usage
Climate change
Biodiversity
Waste
Environmental management systems
Water usage
Overview
Client value proposition
Employer of choice
Employee engagement
Diversity and inclusion
Wellness and safety
Supply chain
Future workforce
CSI
Human rights
Material issue 3: Being an ethical
and responsible corporate
citizen
Overview
Ethics
Governance
Healthcare infrastructure
Information assets
Independent assurance
52
2021
SUSTAINABLE
DEVELOPMENT
REPORT
SUSTAINABLE
DEVELOPMENT
OVERVIEW
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abbreviated
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORTThis Sustainable development overview is a condensed version of the Group’s 2021 Sustainable Development Report, available at annualreport.mediclinic.com. It covers the most important sustainable development activities across the Group with specific reference to its material issues, initiatives and outcomes for the 2020 calendar year, unless stated otherwise. SAFEGUARDING
THE FUTURE
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When we are clear about why
sustainability is important, it
enables us to impact what our
contacts do. One organisation
can actually have a huge
multiplier effect.
Dr Felicity Harvey reflects on the Group’s
efforts to create a better world.
View a condensed
video interview at
annualreport.mediclinic.com
or scan the QR code.
HIGHLIGHTS
GROUP
Q&A
Q. WHAT INSPIRES YOU TO WORK ON
SUSTAINABILITY?
Sustainable development is about improving
our place in the world. From a public health
perspective, which I have been involved in for
many years, it is also about improving people’s
lives. Sustainable development and why I went
into healthcare are so intertwined that I naturally
gravitate towards it.
Q. WHAT DIFFERENCE CAN A SINGLE BUSINESS
SUCH AS MEDICLINIC MAKE?
We may think of ourselves as a single organisation,
but the reality is we touch thousands of people.
That is because of our stakeholders, who include
not only the people we treat and who work for
us, but also the companies that partner with us,
the governments in whose countries we work,
and the regulators with whom we work. When we
are clear about why sustainability is important, it
enables us to spread the message widely and to
impact what our contacts do. One organisation
can actually have a huge multiplier effect.
Refer to page 5 of the 2021 Sustainable
Development Report for the full interview.
Ranked as the foremost healthcare
provider according to MSCI ESG
rating with a top AAA score for
3rd consecutive year
Obtained ISS ESG Prime status
Ranked 32nd globally on
REFINITIV Diversity and
Inclusion Index, the top
ranking Healthcare Providers
and Services company
Constituent of FTSE4Good,
an index that recognises
companies for strong ESG
practices
Signatory of the CDP UK
(originally the Carbon Disclosure
Project), which supports
companies to measure and
disclose their environmental
impact
53
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
SUSTAINABLE DEVELOPMENT OVERVIEW CONTINUED
MATERIALITY ASSESSMENT
FIGURE 1
MATERIALITY
ASSESSMENT
MATRIX
Material issue 1
M I N I M I S I NG ENVIRONMENTAL IM
P
A
C
T
E CITIZE N
C
a
r
b
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e
m
i
s
s
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m
a
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n
g
Information assets
Ethics, anti-bribery
and anti-corruption
e
C
O
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P
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V
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diversity
W a ste a n d h a z a r d
a n a g e
m
Bio
w
r o n m e n t a l
a ste m
i v e e n v i
t e m
s y s
A n e ff e c t
m a n a g e m e n t
VALUE
Patient experience
AT
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Employee recruitment
and retention
C T
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e 2
BUILDI N G S T A K E H O L D E
i a l i s
u
s
M a t e r
STAKEHOLDERS
Refer to Stakeholder engagement on page 44, the Section 172 statement on page 48, the ‘Stakeholder interests
and Board engagement’ section of the Corporate Governance Statement on page 127 and the 2021 Sustainable
Development Report for information on stakeholder engagement.
54
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORTThe Clinical Performance and Sustainability Committee annually reviews the Group’s material sustainability issues. This is done to ensure that management initiatives are directed at the sustainable development matters that are most significant to the business, and which directly affect the Group’s ability to create long-term value for its key stakeholders.
E CITIZE N
AT
R
O
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L
B
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3
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E
N
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B
Material issue 1
T
S
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R T
e 2
BUILDI N G S T A K E H O L D E
i a l i s
u
s
M a t e r
CONSERVE
MATERIAL ISSUE 1: MINIMISING ENVIRONMENTAL IMPACT
IMPORTANCE
The Group’s main environmental impacts are the consumption of resources (energy and water) and the disposal of
healthcare risk waste and general waste. Mediclinic is committed to achieving carbon-neutral status and zero waste
to landfill by 2030.
During the reporting period, there were no incidents of material non-compliance with any environmental legislation,
regulations, accepted standards or codes applicable to the Group, with no significant fines imposed.
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RISKS TO THE BUSINESS
• Business interruptions
• Increased operational costs
• Reputational damage
• Impact of carbon tax and climate
change legislation
• Fines and penalties
RISK MITIGATION
• Minimising environmental impact
incorporated in Mediclinic Group
Strategy
• Risk management process and
systems of internal control
embedded within the Group
• Annual review of policies:
Enterprise-wide Risk
Management (‘ERM’) Policy,
Sustainable Development Policy,
Environmental Policy, Group
Waste Management Policy
TCFD STATEMENT OF INTENT
The Listing Rules require
premium-listed commercial
companies to disclose in their
annual report whether they
have reported on how climate
change affects their business
in a manner consistent with
the recommendations of the
Task Force on Climate-related
Financial Disclosures (‘TCFD’),
and to provide an explanation
and other information if
they are unable to do so. In
addition, the UK Government
intends to introduce
mandatory climate-related
disclosures to supplement
the requirements under the
Listing Rules.
Mediclinic supports this
approach, yet these
requirements only become
applicable to Mediclinic in
FY22 and FY23, respectively.
2020 IN NUMBERS1
Total Scope 1 & 2 CO2 emissions in
tonnes (t)
Total water usage in megalitres (ML)
Group
226 048t
2019:
239 960t
Group
1 648ML
2019:
1 705ML
Hirslanden
5 374t
2019:
5 795t
Hirslanden
367ML
2019:
368ML
Mediclinic
Southern
Africa
Mediclinic
Middle
East
173 136t
2019:
178 417t
47 248t
2019:
55 748t
Mediclinic
Southern
Africa
1 029ML
2019:
1 093ML
Mediclinic
Middle
East
252ML
2019:
244ML
Total energy consumption in
gigajoule (GJ)
Waste recycled in tonnes (t)3
Group2
1 188 023GJ
Group
1 914t
2019:
1 968t
Hirslanden
260 807GJ
Hirslanden
595t
2019:
494t
Mediclinic
Southern
Africa
Mediclinic
Middle
East
652 818GJ
271 656GJ
Mediclinic
Southern
Africa
Mediclinic
Middle
East
1 070t
2019:
1 223t
249t
2019:
251t
Notes
1 The divisions only implemented standardised methodologies and calculations for reporting on
environmental data in 2020, aligning with the 2021 CDP Report. Refer to the 2021 Sustainable
Development Report for comparison purposes. Mediclinic has no operations in the UK and only
reports on the data of its operating divisions. Data for Medical Innovations and Group Services,
which are situated in Southern Africa, is included in Group totals and excluded from Mediclinic
Southern Africa data.
2 Total energy consumption includes that of Mediclinic Group Services and Medical Innovations,
but these entities have been removed from the Mediclinic Southern Africa boundary from
2021 CDP Report and will be reported under Mediclinic International going forward. No comparative
data available.
3 Recycling decreased overall as a result of the COVID-19 pandemic; recycling initiatives in certain
areas were paused by the service providers. Waste recycled excludes organic waste recovered.
55
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
SUSTAINABLE DEVELOPMENT OVERVIEW CONTINUED
BECOMING CARBON NEUTRAL BY 2030
CARBON EMISSIONS
Mediclinic’s commitment to carbon-neutral status is
supported by a sound strategy. Emission-reduction
activities yield benefits such as cost savings, secured
energy supply and a healthy planet for future
generations. Rising electricity costs are an incentive to
reduce consumption by investing in energy-efficient
equipment and renewable energy sources.
With the assistance of external consultants, the divisions
measure their carbon footprint using the Greenhouse Gas
Protocol. These measures include, in varying degrees:
• Direct emissions (Scope 1 emissions) from Mediclinic-
owned or -controlled equipment (stationary fuels); air-
conditioning and refrigeration gas refills; anaesthetic
and other gas consumption; emergency response
vehicles; and fleet and pool vehicles (mobile fuels).
• Indirect emissions from the consumption of purchased
electricity (Scope 2 emissions).
• Indirect emissions in the supply chain (Scope 3
emissions), and from Mediclinic’s business travel
activities; employee commuting; upstream and
downstream third-party distribution; the consumption
of office paper; electricity transmission; and
distribution losses and waste.
• Non-Kyoto Protocol greenhouse gas emissions such
as from Freon, which is used in air-conditioning and
refrigerant equipment. Data of these emissions was
converted into a carbon dioxide equivalent (‘CO2e’)
using recognised calculation methods, emission
factors and stating assumptions made, where
relevant.
TABLE 1: TOTAL CARBON EMISSIONS
Hirslanden
Mediclinic Southern Africa
Mediclinic Middle East
Scope 1 (tonnes)
Scope 2 (tonnes)
Scope 3 (tonnes)
Non-Kyoto Protocol
emissions (tonnes)
Total Scope 1 & 2 CO₂e
(tonnes)
Total Scope 1 & 2 CO₂e/
bed day (kg)
Total Scope 1 & 2 CO₂e/
full-time employee
Total Scope 1 & 2 CO₂e/m2
4 780
(2019: 5 232)
5952
(2019: 562)
143
(2019: 219)
n/a
5 374
(2019: 5 795)
10.00
(2019: 10.00)
0.72
(2019: 0.78)
0.02
(2019: 0.02)
22 0831
(2019: 21 047)
151 0533
(2019: 157 370)
39 576
(2019: 44 589)
3 1805
(2019: 1 233)
173 136
(2019: 178 417)
101.00
(2019: 89.00)
10.96
(2019: 11.25)
0.19
(2019: 0.21)
3 869
(2019: 2 959)
43 379
(2019: 52 789)
14 5594
(2019: 14 170)
2 635
(2019: 2 056)
47 248
(2019: 55 748)
233.51
(2019: 327.62)
6.97
(2019: 9.76)
0.18
(2019: 0.21)
Notes
1 Increase in Scope 1 emissions mainly due to increased diesel consumption as a result of load shedding, as well as the impact of updated emission factors
on the emissions from anaesthetic gases.
2 Emissions from purchased electricity in Switzerland increased mainly as a result of Salem-Spital switching from natural gas to district heating.
3 Renewable energy generated onsite has been reclassified to Scope 2 purchased renewable electricity for nine of Mediclinic’s 12 facilities where PV
systems are installed. The PV systems installed at these facilities are owned by Kigeni, which sells the electricity to Mediclinic, thus even though it is
generated onsite it should be categorised as purchased renewable electricity.
4 Increase in Scope 3 emissions mainly due to the increase of the Defra emission factor, more than three-fold, for commercial and industrial waste. Third-
party emissions from waste collections increased almost 10-fold in 2020, likely due in part to increased waste disposal and more frequent collections
during the pandemic. An additional service provider was also reported for the first time in 2020.
5 Emissions increased primarily due to a large quantity of R22 purchased for future use.
The carbon emissions per division for the last four
calendar years are reported in the 2021 Sustainable
Development Report as summarised on pages 72–73.
56
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT
ENERGY USAGE
Electricity is the main contributor to the Group’s carbon footprint. Healthcare facilities require significant energy
as medical equipment and air filtration and conditioning units at many hospitals run on a 24/7 basis. All divisions
are taking steps to reduce their electricity consumption intensity through the adoption of the ISO 14001:2015
environmental management system. This will lead to improved operational efficiency of technical installations;
the introduction of various new energy-efficient and renewable technologies; and changes in employee behaviour
regarding energy use.
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TABLE 2: DIRECT AND INDIRECT ENERGY CONSUMPTION (GJ)
Hirslanden
Mediclinic Southern Africa
Mediclinic Middle East1
Direct energy purchased
Direct energy produced
Indirect energy consumed
Energy
consumption
Total
Per bed
day
86 932
(2019: 105 670)
1 584
(2019: n/a)
172 290
(2019: 163 650)
260 807
(2019: 269 320)
0.46
(2019: 0.46)
103 132
(2019: 125 684)
1 4372
(2019: 11 240)
548 249
(2019: 544 742)
652 818
(2019: 681 667)
0.38
(2019: 0.34)
34 398
(2019: 17 679)
n/a
237 258
(2019: 249 310)
271 656
(2019: 266 989)
1.59
(2019: 1.75)
Notes
1 The intensity measures of energy consumption per bed day of Mediclinic Middle East are not comparable with Hirslanden and Mediclinic Southern Africa
as this division has more outpatient clinics (i.e. no beds) than hospitals and the extreme weather conditions in the UAE negatively impact energy and
water consumption.
2 Renewable energy generated onsite has been reclassified to Scope 2 purchased renewable electricity for nine of Mediclinic’s 12 facilities where PV systems
are installed – this was reported under renewable energy produced in the previous year. The PV systems installed at these facilities are owned by Kigeni,
which sells the electricity to Mediclinic, thus even though it is generated onsite it should be categorised as purchased renewable electricity (indirect
energy consumed).
DIVISIONAL INFORMATION
HIRSLANDEN
MEDICLINIC SOUTHERN AFRICA
MEDICLINIC MIDDLE EAST
• Renewable energy through
PV systems
• Solar panels for water heating
• Supervisory control and data
acquisition systems to monitor
electricity consumption
• Energy-efficient practices
• LED light fittings and
movement sensors
• Regular servicing of air
conditioners
• Solar panels for new buildings
• Shading devices to minimise
direct heating
• Sustainable materials used
wherever possible
• Electricity purchased mainly
from European hydroelectricity1
for all but one hospital, as well
as the Corporate Office
• 16 of 17 hospitals registered as
CO₂-reduced businesses and
monitored annually by EnAW
• Replacement of ventilation,
heating and cooling systems
with energy-efficient ones and
adjustment of operating times
• LED light fittings
• Renewal of ICT infrastructure
• Use of energy-efficient
systems and equipment in all
departments
Note
1 Hirslanden’s market-based hydroelectricity emissions are assumed to be zero, with a Certificate of Origin to support such assumption.
57
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
SUSTAINABLE DEVELOPMENT OVERVIEW CONTINUED
MINIMISING THE IMPACT OF CLIMATE CHANGE ON
THE BUSINESS
Mitigating health risks related to climate change links
strongly with the Company’s purpose. Yet its operations
directly and indirectly contribute to climate change
through the release of greenhouse gases during the
delivery of care and procurement of products essential
to its service.
Mediclinic acknowledges that climate change poses
a material risk to its operations, the environment
and society, and that appropriate action is required
to reduce its impact. In addition, responsible use
of resources can be a source of strategic advantage
for the Group, allowing it to manage and contain its
operating costs and ensure ongoing access to water
and energy supplies.
PROTECTING BIODIVERSITY
Mediclinic’s philosophy has always been to minimise
its impact on the natural environment. The Group
Sustainable Development Strategy has a sub-goal
of driving environmental sustainability by way of
an effective environmental management system.
An environmental impact assessment is performed
for each new building project, the outcome of which
determines whether a more comprehensive assessment
is required legally. This comprehensive and continuous
process enables the Group to manage its biodiversity
impact accurately. No new building projects in the
financial year required an environmental impact
assessment and none of the divisions’ owned, leased
and managed facilities are in, or adjacent to, protected
areas or areas of high biodiversity value outside of
protected areas.
HAVING ZERO WASTE TO LANDFILL BY 2030
A Group Waste Management Policy was developed
for roll-out during 2021, which encapsulates the
objective to:
• Refuse – avoiding generating waste at the source,
including at supplier level
• Reuse – repurposing waste materials for own or
third-party use
• Reduce/recycle – managing the plastic waste
management cycle
• Recover – recovering energy from waste materialsover
Stringent protocols are followed to ensure that waste
management within the Group complies with all
legislation, regulations and municipal bylaws. The Group
regards the handling of waste in an environmentally
sound, legal and safe manner as its ethical, moral and
professional duty. During the reporting period, there
were no incidents at the Group’s facilities or offices
leading to significant spills.
TABLE 3: WASTE MANAGEMENT
Switzerland
Southern Africa
Total waste (tonnes)2
Organic waste processed/
reutilised (tonnes)
Recycled waste (tonnes)3
Total waste diverted from
landfill (tonnes)
Waste recycled as a
percentage of total waste
1 371
424
(2019: 430)
595
(2019: 417)
1 019
(2019: 847)
43.4%
7 892
290
(2019: 162)
1 070
(2019: 1 224)
1 360
(2019: 1 386)
13.6%
The UAE1
5 006
n/a
249
(2019: 251)
249
(2019: 251)
5.0%
Notes
1 Food waste is not processed or reused. Healthcare risk waste is disposed of after treatment and hazardous chemical waste is shipped to Germany
for incineration.
2 No comparative data available.
3 Recycled waste in Southern Africa decreased due to recycling activities being paused by waste management companies as a result of COVID-19.
Mediclinic acknowledges that climate change poses a material risk
to its operations, the environment and society, and that appropriate
action is required to reduce its impact.
58
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REGIONAL INFORMATION
SWITZERLAND
SOUTHERN AFRICA
THE UAE
• Healthcare risk waste
• Waste management tenders to
• Healthcare risk waste handled
by professional providers
• Contracts for collection of
recyclables such as paper,
cardboard, plastics and cans
• Waste recycling initiatives in
Abu Dhabi and Dubai hospitals
transported by licensed
companies and incinerated at
waste stations
• Recycling of paper, cardboard,
glass, PET bottles
• Weight and waste type
monitored and archived by
hospital, transport provider
and incinerator
• Food waste processed in biogas
facility
assist in achieving ‘zero waste to
landfill’ by incorporating waste
management requirements into
the waste management processes
in development
• Corporate Office discontinued
purchases of plastic water bottles,
plastic straws and polystyrene food
containers
• 19 hospitals discontinued the use of
plastic straws
• Eight hospitals discontinued the use
of polystyrene packaging in their
kitchens and coffee shops
• Healthcare risk waste transported
and treated by licensed service
providers by means of autoclave
or electro-thermal deactivation
technology
• Anatomical waste treated by
incineration
• Recycling of paper, plastic,
cardboard, glass, metal, Tetrapak,
fluorescent lights, food waste,
e-waste, printer cartridges and
batteries
• Suppliers encouraged to reuse
packaging and transporting
containers
• Redundant furniture and information
technology (‘IT’) equipment donated
• Cooking oil recovered for biodiesel
ENVIRONMENTAL MANAGEMENT SYSTEMS
Mediclinic is committed to ensuring that its
environmental management systems and practices
are aligned with international best practices to
safeguard its reputation and provide assurance
regarding the environmental quality, safety and
reliability of its processes and services.
For FY22, implementation of the ISO 14001:2015
Environmental Management System is planned
TABLE 4: WATER USAGE FROM WATER UTILITIES (KL)
at three hospitals at Hirslanden and five at Mediclinic
Middle East.
USING AND REUSING WATER RESOURCES SUSTAINABLY
For healthcare facilities, good quality fresh water is
essential for maintaining hygiene, quality patient care
and IPC. Initiatives across the Group support sustainable
water usage. The Group benefits from the expertise
gained across its divisions as they address water-use
challenges unique to each geography.
kL
kL/bed day
Hirslanden
Mediclinic Southern Africa
Mediclinic Middle East
366 648
(2019: 367 898)
0.65
(2019: 0.63)
1 029 058
(2019: 1 093 002)
0.60
(2019: 0.55)
252 042
(2019: 244 185)
1.361
(2019: 1.52)
Note
1 Bed days for Mediclinic Middle East include only hospitals and two day clinics (Deira and Dubai Mall) and thus the kL/bed day sold has been calculated
by subtracting 8% of total kL (contribution of clinics without bed days).
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CONNECT
MATERIAL ISSUE 2: BUILDING STAKEHOLDER TRUST
IMPORTANCE
Mediclinic employees, affiliated doctors, suppliers
and industry partners form the foundation from
which the Group is able to offer its services to clients
and communities. In this, the Group is dedicated to
partnering with all its stakeholders. As the partner,
the Group is positioned to have long-term relationships
that extend beyond isolated interactions and trusted to
deliver measurable, quality outcomes and transparent
reporting.
RISKS TO THE BUSINESS
• Poor employee engagement and wellness
• Inability to recruit healthcare practitioners to meet
business demand
• Ageing nursing workforce with decreasing entrants
to profession
• Poor clinical outcomes and services
• Medical malpractice liability
• Reputational damage
• Inability to continue business due to inadequate
supplies
2020 IN NUMBERS
RISK MITIGATION
• Group Sustainable Development Strategy with social
objectives
• Implementation of Mediclinic Diversity and Inclusion
Strategy
• Effective execution of employee engagement
action plans
• Extensive training and skills development programmes
• Establishment of Global Leadership Development
Framework
• Continued implementation of a Group learning
architecture to build competence aligned to Group
strategy
• CSI initiatives monitored by senior management with
feedback to Clinical Performance and Sustainability
Committee
• Establishment of the Group purchasing organisation
to secure products at reduced prices
• Five-year Group procurement vision to optimise end-
to-end supply chain performance
Female representation in senior and
middle management roles
Gallup® employee engagement
grand mean score (out of five)
Total absenteeism rate1
Group
35.6%
2019:
34.6%
Group
Hirslanden
20.6%
2019:
22.3%
Mediclinic
Southern
Africa
Mediclinic
Middle
East
Mediclinic
Group
Services
38.2%
2019:
38.5%
37.4%
2019:
36.1%
24.3%
2019:
17.1%
Hirslanden
Mediclinic
Southern
Africa
Mediclinic
Middle
East
Mediclinic
Group
Services
3.98
2019:
3.99
3.99
2019:
4.00
3.93
2019:
3.97
4.09
2019:
4.00
4.20
2019:
4.21
Group2
Switzerland
Southern
Africa
The UAE
3.9%
5.3%
2019:
4.4%
4.7%
2019:
2.5%
1.2%
2019:
0.8%
Notes
1 Actual days lost expressed as a percentage of total days scheduled to be worked by the workforce during the reporting period.
2 New data point with no prior year comparative data.
3 Excludes contributions made by Mediclinic Group Services.
Mediclinic employees, affiliated doctors, suppliers and industry
partners form the foundation from which the Group is able to offer
its services to clients and communities.
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Press Ganey® inpatient experience
index grand mean score (out of 100)
New suppliers2
Contribution to CSI3
Group
Hirslanden
Mediclinic
Southern
Africa
Mediclinic
Middle
East
84.4
2019:
83.9
88.4
2019:
88.3
82.7
2019:
82.7
84.9
2019:
86.0
Group
Hirslanden
Mediclinic
Southern
Africa
Mediclinic
Middle
East
3 230
1 600
1 300
330
Hirslanden
Mediclinic
Southern
Africa
Mediclinic
Middle
East
CHF1.8m
2019:
CHF2.1m
ZAR29.8m
2019:
ZAR26.7m
AED1.9m
2019:
AED2.3m
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IMPORTANCE
Three critical areas define the value equation in
healthcare – clinical outcomes, client experience and
cost per event.
At the heart of Mediclinic lies its Patients First
philosophy, supported by the organisational values of
being client centred; trusting and respectful; and patient
safety focused.
Mediclinic’s value proposition is a key factor in pursuit
of its purpose and realisation of its vision. It directly
addresses a key industry challenge: the affordability
of healthcare. In this regard Mediclinic sees itself very
much as part of the solution.
The Group’s unique approach to the value equation
is reported on in the 2021 Clinical Services Report.
COST
Various Group initiatives focus on managing the
affordability of healthcare, including fair and transparent
tariff negotiations, need-based expansion, healthcare
reform, and efficient and cost-effective operations. The
latter is achieved through streamlining and centralising
its procurement processes (refer to page 64, and
page 57 in the 2021 Sustainable Development Report
for more information).
EMPLOYEE
OVERVIEW
FIGURE 2: TOTAL WORKFORCE
PER GEOGRAPHY1
32 399
33 090
33 141
Group
20
19
18
Hirslanden
20
19
18
10 442
10 307
10 643
Mediclinic Southern Africa2
20
19
18
15 804
16 063
15 280
Mediclinic Middle East3
20
6 152
19
18
6 719
7 071
Mediclinic Group Services4
20
19
0
0
Notes
1 Total workforce refers to permanent and fixed-term employees at 31 December 2020.
2 Pre-2020 totals for Mediclinic Southern Africa include Mediclinic Group Services. Increase in Mediclinic Southern Africa workforce from 2018 to 2019
largely attributable to the opening of new day case clinics. Decline in Mediclinic Southern Africa workforce from 2019 to 2020 largely attributable to
right-sizing initiatives which were achieved through natural attrition and voluntary separation packages, and the exclusion of Mediclinic Group Services
from the data pool.
18
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3 Increase in Mediclinic Middle East workforce from 2018 to 2020 largely attributable to overall business growth.
4 New data point with no prior year comparative data. Mediclinic International plc’s one employee based in the UK included in 2020 data, pre-2020
reported only under Group total.
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FULL-TIME
EMPLOYEES 30 470
2 671
TEMPORARY
EMPLOYEES
125
nationalities
±£114m
monthly payroll
31+
Geographical
distribution
of all full-time
employees
Switzerland: 31%
South Africa &
Namibia: 48%
The UAE: 21%
Employees involved in client care
(as a % of full-time employees)
Switzerland
South Africa and Namibia1
The UAE
60%
61%
60%
Employees in managerial roles
(as a % of full-time employees)
Hirslanden
15%
Mediclinic Southern Africa
14%
Mediclinic Middle East
7%
Mediclinic Group Services
77%
Average
tenure across
the Group
< 5 years: 45%
5–14 years: 42%
> 15 years: 13%
45+
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Note
1 Excludes Mediclinic Group Services as the shared services division
does not have employees based at the operations.
RECRUITMENT
As an international healthcare services provider,
Mediclinic competes for talent in a very competitive
employer market. Its recruitment approach is reviewed
regularly to ensure it anticipates the industry challenges
and changes, as well as mitigates the global shortage of
healthcare professionals, specifically specialist nurses
and clinicians. In support thereof, Mediclinic proactively
monitors global and regional industry and recruitment
trends.
EMPLOYEE VALUE PROPOSITION AND RECRUITMENT
MARKETING
The annual Your Voice employee engagement survey
is administered in partnership with the global analytics
and advisory leader, Gallup®. Every year the results are
scrutinised for universal themes that affect employee
engagement and retention.
LOCAL HIRING AND GLOBAL SOURCING
The Group is committed to providing employment and
development opportunities to citizens in each of the
countries in which it operates. Employment of foreign
nationals is considered where no suitable local candidates
can be found. International sourcing becomes a viable
option only once all alternatives have been exhausted.
RETENTION
Retention strategies are aimed at understanding patterns
that exceed healthy turnover benchmarks. An important
tool for insight is conducting exit interviews in a safe,
non-threatening manner.
The Group harnesses two of the most impactful ways
to optimise retention: providing opportunities for a
diverse workforce to thrive and creating an inclusive
environment. Every year, employees are invited to share
their perception of the workplace through the Your Voice
survey (refer to page 63), which provides the opportunity
to proactively assess employees’ sense of belonging,
whether they feel valued and whether they feel
empowered to do their best every day. These results are
analysed and trends are explored through focus groups
to understand perceptions and ultimately optimise
engagement and retention.
REMUNERATION, BENEFITS AND REWARDS
The Group remunerates employees in a manner that
supports its purpose, vision, culture and strategic goals,
while attracting, retaining and motivating scarce skills.
In this, fair, reasonable and market-related remuneration
practices are maintained.
In line with the organisational value of high-performance
behaviour, employees are rewarded for achieving
strategic objectives which comprise financial and
operational objectives, including measures of clinical
performance. Eligible employees receive STIs and senior
management receive a combination of short- and long-
term incentives.
Various additional benefits are offered to employees
throughout the Group with regional differences due
to local market practices and regulatory compliance.
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Employees are kept informed on benefit matters on a
continuous basis via various interactive media platforms.
cascading of goals to each and every business unit and
ultimately each employee.
EMPLOYEE ENGAGEMENT
Research by Gallup® has shown that highly engaged
employees contribute to better financial results, improved
clinical outcomes and increased patient safety. Creating
a consistently positive employee experience is also key
to Mediclinic’s aim of becoming an employer of choice
and requires continuous engagement across the Group.
Mediclinic encourages and enables engagement across
employee levels and divisions via various methods,
including:
• the annual Your Voice employee engagement survey
and resultant action plans;
• training and performance management;
• access to various supporting resources such as
interactive call centres;
• occupational health clinics and programmes; and
• ethics lines.
Refer to the Corporate Governance Statement
on page 116 for more information on how the Board
engages with the workforce.
TRAINING AND DEVELOPMENT
The capability of Mediclinic is highly dependent on the
skill-set of the sum total of its employees. Each team
member’s growth is valued and the Group is dedicated
to providing accessible learning opportunities that can
optimally enable employee performance and support
career growth.
Leaders are empowered through a variety of academic
interventions, exposure to divisional and Group projects,
stretch assignments, inclusion in leadership dialogues
about important organisational and industry matters,
mentoring and coaching, online learning resources, etc.
In 2021, the Group will focus on management
development to ensure line managers are equipped
with the necessary skills to be inclusive leaders who
create an environment where employees can thrive
and do their best every day.
During 2020, good strides were made in adopting a
Group learning management system that will ultimately
be the single point of reference for all learners. The
transfer of interventions from legacy systems will
continue in the coming year with a blended learning
approach utilised to ensure relevance to the business
priorities and successful learning outcomes.
PERFORMANCE MANAGEMENT
Performance management is a critical talent process
where line managers and employees align expectations
and goals to ensure the focused and deliberate
contribution of each employee to the team, and
ultimately, the divisional and Group goals.
During the past 12 months, the annual strategic planning
cycle has been refined. This enables an earlier start to
the process and therefore provides more room for the
Continuous performance conversations are encouraged
across the Group, with formal annual/six-monthly
performance tracking conversations between managers
and employees. Managers are held accountable for Your
Voice employee engagement action planning. The most
recent Your Voice results validated this approach by
reporting an increase in employee perception that their
achievements are recognised through the process of
continuous conversation. Management empowerment
will remain a focus area for 2021 to optimise their ability
to utilise these conversations for identifying training
needs and facilitating effective career development
discussions.
SUCCESSION PLANNING
The annual talent review process for key divisional and
Group roles encompasses talent across the organisation
and is standardised across Mediclinic with definitions
and supporting tools consistently applied. This supports
progress monitoring of bench strength, as well as risk
monitoring to timeously identify insufficient pipelines
for priority roles.
Active Group and divisional collaboration ensures
alignment and direct insight into divisional development
opportunities that can support the growth of successors.
Even though the 2020 focus areas to enhance all core
pipelines carry over to 2021, special emphasis will be
placed on the Clinical, ICT and HR pipelines, taking
account of the Group’s focus on diversity and inclusion.
The Group’s enterprise succession management system
enables all role players to monitor, influence and report
on progress through accurate and integrated records
of all succession and development-related actions.
It is a dynamic tool that, despite the large number of
employees reviewed and supported, offers flexible
views on talent pools and the readiness of successors
for key roles.
LABOUR RELATIONS
All policies and procedures are in accordance with
applicable local labour legislation and are evaluated
regularly to ensure they remain as such. Policies which
deal with employee matters (i.e. misconduct, incapacity,
and disciplinary and grievance procedures) are shared
during onboarding of new employees and are made
available to all employees via internal channels.
Policy and guidelines govern action during workplace
disruption (i.e. industrial action) to minimise the impact
on healthcare services. Union representation is rare and
in most cases an elected workplace forum regularly
meets with facility management to ensure sound labour
relations.
DIVERSITY AND INCLUSION
Mediclinic strives to be truly diverse across all levels of
the organisation. Strong endorsement by the Board and
executive management, and the allocation of financial
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resources support the effective implementation of the
long-term Diversity and Inclusion Strategy, which will
deliver key organisational benefits. The transformation
journey is further bolstered by the Group Talent Centre
of Expertise, which manages diversity and inclusion
initiatives across the entire organisation.
Refer to the Nomination Committee Report on page 158
and to the Corporate Governance Statement from page 121
for more detail and information on representation at Board
and executive level, as well as a gender analysis for Group
employees.
While the Group has uniform gender and generational
focus areas across all geographies, they are
supplemented by division-specific diversity priorities.
Specific targets include:
• racial representation targets that are aligned with
broad-based black economic empowerment
(‘B-BBEE’) Employment Equity targets per
occupational level at Mediclinic Southern Africa and
Mediclinic Group Services; and
• an Emiratisation target of 3% Emirati representation by
March 2022 and 8% by 2025 at Mediclinic Middle East.
Various initiatives across all talent practices have been
identified to support the achievement of these targets.
Refer to the 2021 Sustainable Development Report
for the summarised employment equity report and
comprehensive information on diversity and inclusion.
WELLNESS AND SAFETY
To build a culture of wellness, Mediclinic takes a holistic
approach which includes physical, social, emotional,
occupational, environmental and financial support,
by offering a variety of onsite and offsite services and
activities across the Group. Health and safety policies
and procedures govern the health, safety and cleanliness
of all Mediclinic facilities.
OPTIMISED SUPPLY CHAIN
The Group procurement five-year vision, approved in
2019, is built on four pillars:
• Standardised procurement processes and master data
management through the establishment of Group
Procurement Support Services
• E-procurement solution to cover all spend across
the Group
• Management and analytics for all spend in the Group
• An organisational structure to support the ongoing
functioning of Group Procurement
Mediclinic’s Supply Chain Risk Management Policy and
Code of Business Conduct and Ethics (‘Ethics Code’),
which are available on the Group’s website, confirm that
suppliers who, inter alia, support the Group’s vision and
brand are eligible and that the Company relies on suppliers
to deliver products and services of the highest quality.
Mediclinic refrains from doing business with third parties
who do not conduct their business in an environmentally
64
responsible manner and influences its suppliers and
service providers to limit their overall impact on the
environment.
FUTURE WORKFORCE
In light of the continued global shortage of healthcare
employees and to secure the future of healthcare,
Mediclinic actively invests in the workforce of tomorrow.
Across the divisions there are training opportunities for
healthcare students and support of applicable studies.
CORPORATE SOCIAL INVESTMENT
The Group contributes to the wellbeing of the
communities within which it operates by investing in
continuing initiatives that address socio-economic
problems or risks. CSI activities are structured around
the improvement of healthcare through training
and education, sponsorships, donations, employee
volunteerism, PPP and joint ventures.
Given the diverse landscapes (both physical and
regulatory) in which the Group operates, CSI focus areas
are determined by each division to adequately address
the needs of their specific geographies.
HUMAN RIGHTS
The Group is committed to conducting its business in a
manner that respects and promotes the human rights
and dignity of people. This commitment is entrenched in
the Group’s Ethics Code, which is further supported by
the Group’s commitment to:
• avoiding and not contributing to any indirect adverse
human rights impacts linked to the Group’s operations
or services by its suppliers or other business relations;
• respecting patients’ rights, including but not limited to
privacy, confidentiality, dignity, no discrimination, full
information on health status and treatment, a second
opinion, access to medical records, self-determination
and participation, refusal of treatment and the right to
complain;
• valuing diversity and equal opportunities for all in the
workplace; and
• not tolerating any form of unfair discrimination, such as
relating to access to employment, career development,
training or working conditions based on gender,
age, religion, nationality, race/ethnic origin, language,
HIV/Aids status, family status, disability, etc.
During the year, no material incidents of discrimination,
violations involving rights of indigenous peoples and/or
human rights reviews or impact assessments were
observed or reported throughout the Group.
MODERN SLAVERY AND HUMAN TRAFFICKING
The Mediclinic Modern Slavery and Human Trafficking
Statement, which is available on the Group’s website,
sets out the steps Mediclinic has taken to prevent any
form of these abuses, including any direct form of forced
labour or child labour in its business, or indirectly through
its supply chain.
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• Independent ethics lines available
to management, the Board and
relevant Board committees
due to legal and regulatory non-
compliance or changes in the
regulatory environment
MATERIAL ISSUE 3:
BEING AN ETHICAL AND RESPONSIBLE CORPORATE CITIZEN
IMPORTANCE
RISKS TO THE BUSINESS
Mediclinic is committed to
• Fines and possible prosecution
conducting business with
• Reputational damage
transparency, honesty and integrity,
• Inability to continue business
and applying sound governance
and compliance principles across
the Group. An array of policies,
processes and standards supports
the Group’s compliance programmes
and provides a framework for
business conduct and ethics. This
supports an environment in which
the organisational values of the
Group are embraced and lived
daily, encouraging a culture of
transparency and ethics. It
is respectively shared and adopted
by all relevant employees and,
where necessary, training is
provided.
• Financial damage caused by poor
governance, unethical practices
and inadequate risk management
• Cyber incidents
• Data privacy breaches
• Poor facility conditionsonditions
RISK MITIGATION
• Group Sustainable Development
• Visible ethical leadership
• Regular fraud and ethics feedback
Strategy with governance
objectives
• Facility audits
upgrades
controls
of risk management process
• Annual review of policies
• Information security controls
• Data privacy awareness
campaigns and structured
e-learning
to all employees and external
parties
Management and Compliance
and Internal Audit functions
• Implementation of key financial
• Established Group Risk
• Planned facility maintenance and
• Compliance risks assessed as part
2020 IN NUMBERS
Calls to ethics lines1
Group
Switzerland
Southern Africa
The UAE
Investment in capital projects and new equipment2
148
2019:
154
16
2019:
27
Group
Hirslanden
£72m
2020:
£108m
CHF43m
2020:
CHF51m
115
2019:
118
Mediclinic
Southern Africa
ZAR400m
2020:
ZAR582m
17
2019:
9
Mediclinic
Middle East
AED88m
2020:
AED174m
Investment in equipment replacement
and property upgrades2
Expenditure on repair and maintenance2
Group
Hirslanden
£54m
2020:
£84m
CHF38m
2020:
CHF43m
Group
Hirslanden
£61m
2020:
£68m
CHF50m
2020:
CHF48m
Mediclinic
Southern Africa
ZAR302m
2020:
ZAR730m
Mediclinic
Southern Africa
ZAR257m
2020:
ZAR286m
Mediclinic
Middle East
AED36m
2020:
AED46m
Mediclinic
Middle East3
AED37m
2020:
AED35m
Notes
1 Six high-priority cases were reported to the Group’s ethics lines during the calendar year, investigated and closed.
2 As capital expenditure is audited annually by the external auditor, PwC, the amounts disclosed are per financial year.
3 The FY20 expenditure on repair and maintenance has been re-presented to be consistent with the expense-by-nature income statement presentation.
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transformation, new equipment to
expand and refurbish its facilities,
replacement of existing equipment,
and the repair and maintenance of
existing property and equipment.
PROTECTING INFORMATION
ASSETS
The Group’s technology and
information assets as well as the
users thereof are protected by
an effective information- and
cybersecurity (‘InfoSec’) programme.
With operations spanning multiple
geographical areas, it requires an
international data network and Group
approach to manage threats.
The Group InfoSec Committee, which
consists of dedicated divisional
Information Security Officers,
governs InfoSec across the divisions
according to information security
best practices, sourced from several
internationally acclaimed InfoSec
institutions.
‘Information systems security
and cyberattacks’ and ‘Disruptive
innovation and digitalisation’ are
identified as principal risks in the
Company’s risk register.
Refer to the Risk management report
on page 96 for more information.
DATA PRIVACY
The Group fulfils its commitment to
protecting the personal data of its
stakeholders through an extensive
Group-wide data privacy project.
The project aligns and ensures
compliance with all relevant data
protection legislation, as applicable
in the various countries of operation,
including the European Union’s
General Data Protection Regulation
(‘GDPR’), widely regarded as the
gold standard for data protection.
The Group Privacy and Data
Protection Policy ensures alignment
to the GDPR.
INDEPENDENT ASSURANCE
The process of independent
assurance and external accreditation
ensures that international standards
are adhered to in all aspects of
hospital operations.
Refer to page 68 of the
2021 Sustainable Development
Report for more information.
PREVENTING BRIBERY AND
CORRUPTION
Mediclinic’s position as a trusted
diversified healthcare services
provider is underpinned by its
commitment to ethical standards.
The Group’s Ethics Code, which is
available on the Company website,
guides honourable business
conduct. A Group-wide compliance
monitoring programme exists to
reinforce the Group’s commitment
to regulatory compliance and to
monitor the level of compliance
across all jurisdictions.
Independent ethics lines exist to
enable whistleblowers to report
concerns in a confidential or
anonymous manner. Over the
years, the majority of calls have
been of a grievance nature. Only in
exceptional cases has information
led to the discovery of unethical,
corrupt or fraudulent behaviour.
As part of the Group Sustainable
Development Strategy, a targeted
drive to raise awareness of anti-
bribery, corruption and ethical
behaviour was developed during
2020, with roll-out in 2021. Content
was customised in English, French,
German and Arabic, according to
the language preferences of the
operating geography. The Group’s
ethics line efficiencies were also
reviewed by considering their
visibility; awareness of availability,
confidentiality and whistleblower
protection; and response at
hospitals and corporate offices.
These campaigns will continue to be
implemented on an annual basis and
66
include onboarding materials to all
new recruits and suppliers.
Refer to the Risk management
report on page 96 and the Audit
and Risk Committee Report on
page 142 for more information on
the Group’s management of these
matters.
A summary of the Group’s approach
to clinical ethical issues is set out
in the Clinical services overview on
page 83.
During the period under review,
there were no incidents of material
non-compliance with the Ethics
Code, Anti-bribery Policy or any
legislation, regulations, accepted
standards or codes applicable to the
Group concerning antitrust matters
or matters relating to corruption
and bribery, with no significant fines
being paid in this regard.
SUSTAINING EFFECTIVE AND
TRANSPARENT GOVERNANCE
Refer to page 65 of the
2021 Sustainable Development
Report for information on
compliance with consumer
protection laws and governance
of advertising. The Group Tax
Strategy is published in the
‘Risk management’ section
of the Company’s website at
www.mediclinic.com.
MAINTAINING HIGH-QUALITY
HEALTHCARE INFRASTRUCTURE
To ensure a safe and user-friendly
environment for both patients
and employees, the Group
continuously invests in capital
projects, innovation and digital
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The table below sets out where stakeholders can find information in the Strategic Report that relates to non-financial
matters detailed under Section 414CB of the Act. Further details on all these matters can be found in the
2021 Sustainable Development Report, available at annualreport.mediclinic.com, as well as policy documents,
available at www.mediclinic.com.
NON-FINANCIAL MATTER
RELEVANT POLICIES
AND STATEMENTS
Anti-corruption and
anti-bribery
• Anti-bribery Policy1
• ERM Policy
• Fraud Risk Management Policy1
• Group Privacy and Data
Protection Policy
• Regulatory Compliance Policy
• Ethics Code
Business model
n/a
Employees
Environmental matters
• Board Diversity Policy
• Ethics Code
• Employee relations policies
• Group Diversity and Inclusion
Strategy
• Health and safety policies and
procedures
• Group Environmental Policy
• Group Sustainable
Development Policy
Non-financial KPIs
n/a
READ MORE IN THIS REPORT
• Strategy overview
• Sustainable development
overview (Material issue 3: Being
an ethical and responsible
corporate citizen)
• Business model
• Strategy overview
• Chair’s Review
• Group Chief Executive Officer’s
Report
• Strategy overview
• Business model
• Sustainable development
overview (Material issue 2:
Building stakeholder trust)
• Strategy overview
• Sustainable development
overview (Material issue 1:
Minimising environmental impact)
• Sustainable development
overview
• Clinical services overview
Principal risks
ERM Policy
Risk management report
Respect for human rights
Social matters
• Ethics Code
• Group Diversity and Inclusion
Strategy
• Modern Slavery and Human
Trafficking Statement
Sustainable development overview
(Material issue 2: Building
stakeholder trust)
• Ethics Code
• Group Supply Chain Risk
Management Policy
• Group purpose
• Values
• Chair’s Review
• Strategy overview
• Business model
• Sustainable development
overview
Note
1 These policies include anti-corruption matters.
PAGE
REFERENCE
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CLINICAL
SERVICES
OVERVIEW
INTRODUCTION
Mediclinic puts patients at the heart of its operations to deliver high-quality healthcare services consistently.
It upholds the highest standards of clinical governance and ethical behaviour across its divisions; invests significant
time and resources in recruiting and retaining skilled employees; and makes considerable investment into its facilities
and equipment.
This Clinical services overview is a condensed version of the Group’s 2021 Clinical Services Report, available at
annualreport.mediclinic.com. It covers the most important clinical performance characteristics across the Group with
specific reference to its initiatives and clinical outcomes for the 2020 calendar year, unless stated otherwise.
CONTENT
COVID-19 overview (refer to page 12 of this Annual Report)
Interview with Dr René Toua
Highlights
Mediclinic’s healthcare landscape
Value equation index
Patient experience
Clinical performance
International benchmarking
Never events
Adverse events
Hand hygiene
Healthcare-associated infections
Device-associated infections
Surgical site infections
Antimicrobial stewardship
Mortality – adult
Mortality – neonatal
Clinical
outcomes
Readmission, re-operation and extended stay
Partnerships
Assurance
Clinical ethics summary
2021 CLINICAL
SERVICES REPORT
CLINICAL SERVICES
OVERVIEW
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abbreviated
In addition to the information presented above, the 2021 Clinical Services Report provides information on
achievements, events, initiatives, patient feedback and case studies.
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COMMITTED
TO CLIENTS
Dr René Toua, Group
Chief Clinical Officer,
shares learnings from
the past year.
Dr René Toua
Group Chief Clinical Officer
Q. IN 2020, HEALTHCARE
PROVIDERS HAD TO CONTEND
WITH MONUMENTAL CHALLENGES.
WHAT IS THE VALUE OF HAVING
A CLEAR PURPOSE?
When confronted with a crisis, our
clear purpose is the true north that
guides us. It gives us hope, makes us
more resilient and reminds us to put
clients first. Our single-minded focus
on enhancing the quality of life for
clients is what helped us navigate
the challenges.
Q. HOW DID THE GROUP’S
CROSS-COUNTRY INSIGHT AND
EXPERTISE BENEFIT MEDICLINIC
OVER THE PAST YEAR?
We were fortunate that the
pandemic reached the divisions
at different times, enabling us to
learn from experience and global
experts, share the burden of work
and capitalise on coordinating
procurement processes for the
Group. Working together in this
way underlined that when we share
our lessons, we lessen our share
of the load.
Our single-minded
focus on enhancing
the quality of life for
clients is what helped
us navigate the
challenges.
Q. WHAT DID YOU LEARN IN
EMERGENCY MEDICINE THAT
STOOD YOU IN GOOD STEAD FOR
HANDLING THE PANDEMIC?
Uncertainty, high stakes, making
decisions with imperfect information
and teamwork are critical elements
to emergency medicine. They
are equally true for the current
healthcare crisis. As such my
experience has prepared me well.
Refer to page 9 of the 2021
Clinical Services Report for the
full interview.
View a condensed
video interview at
annualreport.mediclinic.com
or scan the QR code.
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CLINICAL SERVICES OVERVIEW CONTINUED
HIGHLIGHTS
Geneva Innovation Prize 2020
COVIDEVELOPMENT
Clinique La Colline and Clinique des
Grangettes, as part of Association des
Cliniques Privées de Genève, Genève-Cliniques
(the Association of Private Hospitals of
Geneva), together with the University Hospital
of Geneva, were awarded the prize to highlight
their remarkable collaboration during the
COVID-19 pandemic.
Conference goes online
COVIDEVELOPMENT
When pandemic restrictions scuppered plans
to host large-scale gatherings in person,
Hirslanden transformed its annual conference
into an innovative online forum, a first for
the business. The third Hirslanden Doctors’
Summit, attended by around 200 doctors, was
broadcast live on 20 November 2020.
New screening tool for COVID-19
COVIDEVELOPMENT
Just one day after the WHO declared a
global pandemic on 11 March 2020, Mediclinic
Southern Africa launched its online assessment
tool to help the public determine whether
they needed to be tested. This was soon
expanded to cover questions evaluating risk
for hospitalisation. With a clinical team of
registered nurses and paramedics on call to
provide expert advice, the service disseminated
vital knowledge and eased the strain on
overburdened state resources.
Milestones for robotic surgery
Dr Gawie Bruwer, urologist at Mediclinic Durbanville
in South Africa, carried out his 500th radical
prostatectomy using the da Vinci surgical system.
After introducing the da Vinci surgical system
in June 2020, Mediclinic City Hospital in Dubai
reached its goal number of robotic surgery cases
five months ahead of expectations. It also achieved
a number of firsts, with several major procedures
that had never been done robotically in the UAE or
the Middle East region, including minimally invasive
surgery for large ventral hernias.
Pioneering transplant programme
In November 2020, Dubai’s first transplant surgeries
using kidneys from living donors took place thanks
to a partnership between Mediclinic City Hospital,
Mohammed Bin Rashid University of Medicine and
Health Sciences and Al Jalila Children’s Specialty
Hospital. The joint collaboration, which also covers
surgeries with deceased donor kidneys, has brought
transplants to the fore in the UAE.
Excellence in cancer care
The CCC at Mediclinic City Hospital was awarded
the 2020 Healthcare Innovation Award from Dubai
Healthcare City Authority. In 2020, part of the CCC’s
sector-leading activities included a symposium
to present the latest oncological breakthroughs.
Dr Shaheenah Dawood, Mediclinic consultant
oncologist with a special interest in breast cancer,
was recognised as Top Emirati Contributor at the
healthcare awards
200
Klinik Hirslanden among
Newsweek’s 200 Best Hospitals
in the World for 2021.
90%
increase in research applications
approved for Mediclinic Southern
Africa in 2020.
100
robotic surgeries at Mediclinic City
Hospital since introducing da Vinci
surgical system in June 2020.
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MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT Mediclinic City Hospital in Dubai reached
its goal number of robotic surgery cases
five months ahead of expectations.
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CLINICAL SERVICES OVERVIEW CONTINUED
SWITZERLAND
HIRSLANDEN
FACILITIES
17
hospitals
Including:
7 secondary
care community
hospitals
7 tertiary
care city
hospitals
4
day case
clinics
10 600+ full-time employees | 60% involved in direct patient care
HEALTHCARE SERVICES
DIAGNOSTICS
ROUTINE ELECTIVE PROCEDURES
SPECIALISED TREATMENTS
EMERGENCY CARE
ADVANCED TECHNOLOGY
RESEARCH AND TRAINING
COVID-19 VACCINATION CENTRES
COVIDEVELOPMENT
COVID-19 ONLINE REPETITIVE TESTING
COVIDEVELOPMENT
WORLD-CLASS CARE
QUALITY ASSURANCE
• 6 certified breast cancer
• ISO 9001:2015 certification for all participating
centres
facilities
• CCC at Klinik Hirslanden
• Prostate cancer centre
at Klinik Hirslanden
• Certified stroke centre
at Klinik Hirslanden
• 4 cardiac centres
• CAR-T therapy at Klinik
Hirslanden
• 9 hospitals offer robotic
surgery (da Vinci surgical
system at 3)
• CyberKnife at Klinik
• German Cancer Society certification –
Klinik Hirslanden Cancer Centre
• Joint Accreditation Committee ISCT-Europe
& EBMT accreditation – Klinik Hirslanden
• Swiss Cancer League certification – Six breast
cancer centres
• Swiss Cancer League and Swiss Society for
Senology certification – Bern Biel Cancer Centre
• Swiss Federation of Clinical Neuro-Societies
certification – Klinik Hirslanden Stroke Centre
Care settings
Inpatient 81%
Day cases 4%
Outpatient1 15%
Hirslanden
Note
1 As part of a significant cooperation agreement, Hirslanden sold its three outpatient clinics to its strategic partner Medbase during the year.
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G E R M A N Y
F R A N C E
3
1
Zurich
17
16
2
3
2
12
4
5
Bern
6
4
7
15
10
1
11
S W I T Z E R L A N D
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A U S T R I A
14
13
Geneva
9
8
I TA LY
Hospitals
Canton of Aarau
1 Hirslanden Klinik Aarau1
Canton of Appenzell Ausserrhoden
2 Klinik Am Rosenberg
Canton of Basel
3 Klinik Birshof
Canton of Bern
4 Klinik Beau-Site
5 Klinik Linde1
6 Klinik Permanence
7 Salem-Spital1
Canton of Geneva
Canton of Lucerne
10 Klinik St. Anna1
11 St. Anna in Meggen
Canton of St. Gallen
12 Klinik Stephanshorn1
Canton of Vaud
13 Clinique Bois-Cerf
14 Clinique Cecil1
Canton of Zug
15 AndreasKlinik Cham Zug1
Canton of Zurich
16 Klinik Hirslanden1
8 Clinique des Grangettes1
17 Klinik Im Park1
9 Clinique La Colline
Day case clinics
Canton of Lucerne
1 St. Anna im Bahnhof
Canton of Zurich
2 Operationszentrum Bellaria
3 OPERA Zumikon
Canton of St. Gallen
4 OPERA St. Gallen
Note
1 Hospital with obstetrics department.
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CLINICAL SERVICES OVERVIEW CONTINUED
SOUTH AFRICA & NAMIBIA
MEDICLINIC SOUTHERN AFRICA
FACILITIES1
50
hospitals
5
subacute
hospitals
2
mental
health
facilities
12
day case
clinics
42
emergency
transport bases
and 19 industrial
site bases in
South Africa
15 200+ full-time employees | 61% involved in direct patient care
HEALTHCARE SERVICES
ROUTINE ELECTIVE PROCEDURES
SPECIALISED TREATMENTS
EMERGENCY CARE
TRANSPLANT MEDICINE
ADVANCED TECHNOLOGY
RESEARCH AND TRAINING
QUALITY ASSURANCE
37 hospitals participate in
COHSASA2 accreditation
programme3
WORLD-CLASS CARE
• Solid Organ Transplant Centre at Wits
Donald Gordon Medical Centre in
partnership with Wits University
• Haematology and Bone Marrow Transplant
Centre at Mediclinic Constantiaberg
• 46 ECs
• Arthroplasty network
• 9 cardiac centres
• 2 electrophysiology centres
• Robotic surgery at Mediclinic Durbanville
(da Vinci surgical system)
• 36 neonatal ICUs for high-risk infants,
30 of which form part of the Vermont
Oxford Network
Care settings
Inpatient 90%
Day cases 8%
Outpatient 2%
Notes
1 Includes Intercare facilities.
2 Council for Health Service Accreditation of Southern Africa (‘COHSASA’).
3 The accreditation programme was paused during COVID-19 with COHSASA granting an extended grace period for reaccreditation.
Reaccreditation has now restarted.
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26
N A M I B I A
Windhoek
28
27
8
32
Pretoria
12
9
6
10
2
7
3
1 2
1
4
11
13 3
4
15
Johannesburg
33
5
14
19
21
Pretoria
Johannesburg
31
3
5 12
2
29 30
5
1
Bloemfontein
S O U T H A F R I C A
22
20 8
25 9
24
23
16 10
18
17
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43
45
Cape
Town
1
37
7
42
34
4
6
35
36
44
49
47
11
48
40
50
Cape Town
41
38
39
2
46
Hospitals
Free State
Limpopo
1 Mediclinic Bloemfontein
19 Mediclinic Lephalale
Western Cape
34 Mediclinic Cape Gate
35 Mediclinic Cape Town
2 Mediclinic Hoogland
20 Mediclinic Limpopo
36 Mediclinic Constantiaberg
4 Intercare Subacute Hospital
Tyger Valley
5 Welkom Medical Centre
Subacute Hospital
3 Mediclinic Welkom
21 Mediclinic Thabazimbi
Gauteng
22 Mediclinic Tzaneen
4 Intercare Medfem Hospital
Mpumalanga
5 Mediclinic Emfuleni
6 Mediclinic Heart Hospital
7 Mediclinic Kloof
23 Mediclinic Ermelo
24 Mediclinic Highveld
25 Mediclinic Nelspruit
8 Mediclinic Legae
Namibia
9 Mediclinic Medforum
26 Mediclinic Otjiwarongo
10 Mediclinic Midstream
27 Mediclinic Swakopmund
11 Mediclinic Morningside
28 Mediclinic Windhoek
12 Mediclinic Muelmed
13 Mediclinic Sandton
14 Mediclinic Vereeniging
15 Wits Donald Gordon
Medical Centre1
Northern Cape
29 Mediclinic Gariep (part
of Mediclinic Kimberley)
30 Mediclinic Kimberley
31 Mediclinic Upington
37 Mediclinic Durbanville
Mental health facilities
38 Mediclinic Geneva
39 Mediclinic George
1 Denmar Specialist
Psychiatric Hospital
40 Mediclinic Hermanus
2 Mediclinic Neuro Clinic
41 Mediclinic Klein Karoo
42 Mediclinic Louis Leipoldt
43 Mediclinic Milnerton
44 Mediclinic Paarl
45 Mediclinic Panorama
Day case clinics
1 Intercare Day Hospital
Century City
2 Intercare Day Hospital
Hazeldean
46 Mediclinic Plettenberg Bay
3 Intercare Day Hospital Irene
47 Mediclinic Stellenbosch
48 Mediclinic Vergelegen
49 Mediclinic Winelands
Orthopaedic Hospital
50 Mediclinic Worcester
KwaZulu-Natal
North West
Subacute hospitals
16 Mediclinic Newcastle
32 Mediclinic Brits
17 Mediclinic Pietermaritzburg
33 Mediclinic Potchefstroom
1 Intercare Subacute Hospital
Hazeldean
18 Mediclinic Victoria
2 Intercare Subacute
Hospital Irene
3 Intercare Subacute
Hospital Sandton
Note
1 Associated company being equity accounted (Mediclinic Southern Africa holds 49.9%).
4 Intercare Day
Hospital Sandton
5 Mediclinic Bloemfontein
Day Clinic
6 Mediclinic Cape Gate Day Clinic
7 Mediclinic Durbanville
Day Clinic
8 Mediclinic Limpopo Day Clinic
9 Mediclinic Nelspruit Day Clinic
10 Mediclinic Newcastle
Day Clinic
11 Mediclinic Stellenbosch
Day Clinic
12 Welkom Medical Centre
Day Clinic
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CLINICAL SERVICES OVERVIEW CONTINUED
THE UAE
MEDICLINIC MIDDLE EAST
FACILITIES
7
hospitals
2
day case
clinics
18
outpatient
clinics
7 000+ full-time employees | 60% involved in direct patient care
HEALTHCARE SERVICES
OUTPATIENT CARE
REMOTE CARE
COVIDEVELOPMENT
TELEMEDICINE
COVIDEVELOPMENT
DIAGNOSTICS
ROUTINE ELECTIVE PROCEDURES
SPECIALISED TREATMENTS
EMERGENCY CARE
ADVANCED TECHNOLOGY
RESEARCH AND TRAINING
WORLD-CLASS CARE
QUALITY ASSURANCE
• CCC in the North Wing adjacent to
Mediclinic City Hospital
• 5 cardiology units
• 2 cardiac centres
• Robotic surgery at Mediclinic City Hospital
(da Vinci surgical system)
• Stroke centre at Mediclinic City Hospital
• 7 neonatal ICUs for high-risk infants,
all of which form part of the Vermont
Oxford Network
• College of American Pathologists
accreditation – Mediclinic City
Hospital laboratory
• European Association for the
Study of Obesity’s Collaborating
Centres for Obesity Management
accreditation – specialised unit at
Mediclinic Parkview Hospital
• ISO 15189:2009 certification for
all laboratories
• Joint Commission International
accreditation for all facilities
• Joint Commission International
accreditation – diabetes clinical
programme at Mediclinic Welcare
Hospital
• Surgical Review Corporation
Centre of Excellence accreditation
– specialised bariatric unit at
Mediclinic Airport Road Hospital
Care settings
Inpatient 26%
Day cases 12%
Outpatient 62%
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5
5
7
15
Dubai
6
10
13
17
6
14
2
8
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Dubai
Abu Dhabi
9
11
1
44
16
3
3
2
7
18
2
Al Ain
1
U N I T E D A R A B
E M I R AT E S
12
S A U D I A R A B I A
Hospitals
Outpatient clinics
1 Mediclinic Airport Road Hospital
1 ENEC
11 Mediclinic Khalifa City
2 Mediclinic Al Ain Hospital
2 Mediclinic Al Bawadi
12 Mediclinic Madinat Zayed
3 Mediclinic Al Jowhara Hospital
3 Mediclinic Al Madar
13 Mediclinic Meadows
4 Mediclinic Al Noor Hospital
4 Mediclinic Al Mamora
14 Mediclinic Me‘aisem
5 Mediclinic City Hospital
5 Mediclinic Al Qusais
15 Mediclinic Mirdif
6 Mediclinic Parkview Hospital
6 Mediclinic Al Sufouh
16 Mediclinic Mussafah
7 Mediclinic Welcare Hospital
7 Mediclinic Al Yahar
17 Mediclinic Springs
8 Mediclinic Arabian Ranches
18 Mediclinic Zakher
Day case clinics
1 Mediclinic Deira
2 Mediclinic Dubai Mall
9 Mediclinic Baniyas
10 Mediclinic Ibn Battuta
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CLINICAL SERVICES OVERVIEW CONTINUED
BETTER WAYS
TO CONNECT
PATIENT EXPERIENCE
Client experience refers to a wide spectrum of experiences that clients have when interacting with Mediclinic.
These may be related to care or administration (i.e. settling accounts, scheduling appointments). Patient
experience is a subsection of client experience and relates to the experience of a patient in any Mediclinic care
setting across the continuum of care.
PRESS GANEY®
Mediclinic benchmarks and publicly reports on patient experience at a divisional level through Press Ganey®,
an internationally recognised leading provider of patient experience measurement for healthcare organisations.
Patients are surveyed after discharge and this valuable feedback helps Mediclinic better understand patients’ needs
and adapt care services accordingly (Table 1).
The patient experience survey collects feedback on
the following categories:
• Admissions process
• Condition of room
• Meals
• Nurses
• Physicians
• Tests and treatments
• Experience of visitors
• Personal issues (i.e. privacy, safety, hygiene, respect)
• Discharge process
• Overall experience
In 2020, various new surveys were introduced to expand the range of patient experience insights. In addition to
surveys for the EC and ambulatory surgery, Mediclinic now also garners feedback from paediatric patients with a
special version of the inpatient survey. Moreover, the inpatient survey has been enhanced with additional questions
for patients admitted via the hospital’s EC, and Mediclinic Middle East has incorporated a special survey for virtual
care patients.
TABLE 1: PRESS GANEY® INPATIENT RESULTS FOR THE 2020 CALENDAR YEAR
Participating since
February 2017
October 2014
October 2014
Hirslanden
Mediclinic
Southern Africa
Mediclinic
Middle East
Total participating facilities
17
50
7
Total surveys collected
Likelihood of recommending
the hospital/clinic
18 072
(2019: 12 191)
91.8%
(2019: 92.1%)
42 540
(2019: 52 958)
85.0%
(2019: 85.0%)
2 262
(2019: 2 939)
87.0%
(2019: 88.6%)
Mediclinic now also garners feedback from
paediatric patients with a special version of
the inpatient survey.
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MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT BETTER WAYS
TO UNLOCK
VALUE
Across the divisions, initiatives
seek to improve the quality of care,
provide innovative services and
reduce costs for clients.
HIRSLANDEN
• Revolutionary app-based
programme at Hirslanden Klinik
Aarau to help cancer patients
regain quality of life
• PPP with Spitäler Schaffhausen
to create the Centre for Urology
Zurich at Klinik Hirslanden
• Cooperation between Klinik Im
Park and See-Spital Foundation
to broaden offer of medical care
• Integrated geriatric care provided
to municipal nursing home by
Hirslanden Klinik Aarau
MEDICLINIC SOUTHERN AFRICA
• Increased uptake of Care Expert,
an integrated model for hip and
knee replacements, among doctors
and patients
• Affiliated oncology treatment
centres at several hospitals
MEDICLINIC MIDDLE EAST
• Partnership with travel companies
to offer PCR test with flight
check-in
• Agreement with Al Murjan,
Saudi Arabian business group,
to establish 200-bed private
hospital in Jeddah
• Progress on precision medicine
offering, with kit validation,
analyser training and report testing
BETTER WAYS
TO CARE
Clinical governance lays the foundation for the structures and
processes that ensure the best possible outcomes for patients.
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CLINICAL OUTCOMES
FIGURE 1:
MEDICLINIC
CLINICAL
MANAGEMENT
MODEL
SUPERIOR
CLINICAL
PERFORMANCE
VALUE-BASED
CARE
CLINICAL
COST EFFICIENCY
CLINICAL
EFFECTIVENESS
PATIENT SAFETY
(including IPC)
CLINICAL GOVERNANCE
CLINICAL INDICATORS
More than 150 clinical indicators
are measured monthly in line with
a standardised set of definitions
and classifications. Many of these
outcome indicators are self-
reported and others are derived
from administrative data. These
indicators are monitored for trends
and used to identify opportunities
for improvement. The hospitals
closely monitor their results and
compare themselves with other
hospitals in the same division.
Clinical indicator improvements
during the year include the roll-out
of an adult mortality risk adjustment
model for Mediclinic Middle East;
the refinement of existing indicator
definitions; and the expansion of
categories.
STATISTICAL SIGNIFICANCE
Statistical significance is determined
to identify areas of improvement that
create knowledge leveraging and
sharing opportunities to the benefit
of all divisions. By also identifying
areas of concern, it allows the Group
to determine key focus areas for
future initiatives.
Where variation in the current year’s
data is found to be statistically
significant compared with prior
reporting periods, the applicable data
in the graph is marked with an orange
dot and an explanation is provided,
if available. In these instances it
is unlikely that the changes in the
numbers are due to chance.
For more information on statistical
significance and how it is calculated,
refer to the 2021 Clinical Services
Report.
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CLINICAL SERVICES OVERVIEW CONTINUED
NEVER EVENTS
Across the divisions, the WHO surgical safety checklist is followed
to decrease errors and adverse events, and increase teamwork and
communication during surgery.
The implementation of the safe surgical checklist remains a key focus
area. Mediclinic reports only on a subset of surgical and procedural never
events at present, focusing on: the correct identification of patients,
procedures and sites, and the prevention of retained foreign objects.
FIGURE 2: NEVER EVENTS1
Rate per 1 000 patient days
(Number of events in brackets)
Hirslanden
20
19
18
0.002 (1)
0.002 (1)
0.006 (3)
Mediclinic Southern Africa
20
19
18
0.012 (20)
0.014 (27)
0.009 (17)
Mediclinic Middle East
20
19
18
0.007 (1)
0.029 (5)
0.022 (3)
Note
1 The never event rate is reported to the third decimal to negate the obscuring effect of rounding.
An open culture where teams are comfortable
discussing patient safety incidents and
concerns is fostered through the inclusive
completion of systems analysis of serious
adverse events in hospitals.
CLINICAL OUTCOMES
PATIENT SAFETY
Achieving patient safety requires a
collective commitment to building
a patient safety culture. This means
that each employee focuses on
reporting and learning from near
misses and adverse events that
may cause patient harm. An open
culture where teams are comfortable
discussing patient safety incidents
and concerns is fostered through
the inclusive completion of systems
analysis of serious adverse events in
hospitals. These processes lead to an
informed culture because teams learn
from the adverse events to mitigate
future incidents. Fundamental to this
is the ‘just culture’ (Frankl framework)
wherein employees involved in
adverse events are treated fairly.
COVIDEVELOPMENT
HIRSLANDEN
The clinical outcomes of the division
remained stable during the year,
although occupancy rates in the
first half of 2020 were lower than
comparable prior periods as elective
patients could not be admitted due
to the pandemic.
MEDICLINIC SOUTHERN AFRICA
Most patient safety indicators saw
a year-on-year decrease, especially
serious adverse events, despite
the challenges experienced. Some
indicators such as medication
errors may have been affected by
a decrease in reporting, which was
negatively impacted by COVID-19
surges.
MEDICLINIC MIDDLE EAST
Most of the clinical indicators that
were negatively impacted by the
COVID-19 pandemic during the first
wave improved significantly after the
peak in May/June. A centralised ICU
strategy, which was initiated during
the first wave of the pandemic,
proved to be very effective, and
daily huddles to coordinate and
standardise care were reinitiated
as COVID-19 admissions started
to increase again towards the end
of the year.
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MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT
ADVERSE EVENTS
An important aspect of improving the
quality and safety of patient care is
preventing adverse events that could
harm patients, including hospital-
associated pressure ulcers, falls and
medication errors.
HIRSLANDEN
COVIDEVELOPMENT
Due to operational pressures caused
by the pandemic, data collection for
adverse events was interrupted for
three months during the year.
FIGURE 3: ADVERSE EVENTS
Rate per 1 000 patient days
Statistically significant
Hospital-associated pressure ulcers
0.86
0.78
0.95
20
19
18
Falls
20
19
18
Medication errors
20
19
18
0.95
1.17
1.41
1.95
2.26
2.46
The 10.26% increase in the hospital-associated
pressure ulcer rate from 0.78 in 2019 to
0.86 in 2020 is not statistically significant.
The fall rate decreased by 13.72% from
2.26 in 2019 to 1.95 in 2020, a statistically
significant change. The decrease directly
relates to the incorrect use of electronic
reporting forms at two hospitals. Steps
are being taken to ensure correct capturing
in future.
Hirslanden commenced reporting on
medication errors in 2018. The 18.80%
decrease in the medication error rate from
1.17 in 2019 to 0.95 in 2020 is statistically
significant. Analysis of the fluctuation is
difficult as the current reporting system
is restrictive with limited classification
and system factor analysis abilities.
A multidisciplinary taskforce has been
established to review medication
management and develop a medication
safety plan.
MEDICLINIC
SOUTHERN AFRICA
FIGURE 4: ADVERSE EVENTS
Rate per 1 000 patient days
Statistically significant
Hospital-associated pressure ulcers
20
19
18
0.30
0.23
0.23
Falls
20
19
18
1.11
1.08
1.03
Medication errors
20
19
18
0.73
0.98
1.19
The rate of hospital-associated
pressure ulcers increased by
30.43% from 0.23 in 2019 to 0.30
in 2020. The fall rate increased by
2.78% from 1.08 in 2019 to 1.11 in
2020. Neither of these increases is
statistically significant.
Medication errors per 1 000
patient days reduced by 25.51%
from 0.98 in 2019 to 0.73 in 2020,
a statistically significant decrease.
The rate could be influenced
by a lower reporting rate and
does not necessarily reflect an
improvement in medication safety.
The involvement of pharmacists
in incorrect medication error
reporting has resulted in
additional reporting mechanisms
for potential medication errors.
Near-miss medication errors
related to prescription and
dispensing are recorded to show
where pharmacists intervene
with regard to appropriate
prescription of antibiotics and
other medication, and where
dispensing errors are corrected
before medication is given to
the patient. Pharmacists are also
well placed to identify certain
administration errors which may
not have been identified by the
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nursing employees in the
wards. This reporting is
supplementary to the hospital
event management system
and is quantitative and
dependent on time availability of
pharmacists. The data collection
to date has been used to guide
hospitals to identify specific
areas for quality improvement
and prevention of medication
errors, and to provide a
measurement tool to track
progress.
COVIDEVELOPMENT
The number of reported
pharmacy interventions
decreased by 40% in 2020,
especially in July, August and
December, approximately in line
with the peaks of the pandemic.
Pharmacists could not review
as many prescriptions as they
usually do, due to fewer patients
admitted, a temporary
termination of team rounds,
restriction of movement in the
hospitals and reallocation of
clinical and ward pharmacists
to assist with dispensing. This
resulted in a decrease in the
reporting of interventions and
early identification of medication
errors.
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
CLINICAL SERVICES OVERVIEW CONTINUED
MEDICLINIC MIDDLE EAST
FIGURE 5: ADVERSE EVENTS
Rate per 1 000 patient days
Statistically significant
Hospital-associated pressure ulcers
20
19
18
Falls
20
19
18
0.32
0.23
0.18
0.46
0.52
0.42
Medication errors
20
19
18
2.94
3.55
9.13
COVIDEVELOPMENT
The increase in the hospital-associated pressure ulcer rate by 39.13%
from 0.23 in 2019 to 0.32 in 2020 is not statistically significant and
was mainly due to COVID-19. All patients are risk assessed for pressure
injuries and appropriate preventive measures are implemented.
The 11.54% decrease in the fall rate from 0.52 in 2019 to 0.46 in 2020 is
not statistically significant. Fall awareness and prevention remain focus
areas for Mediclinic Middle East. A multidisciplinary taskforce was
established to review the fall framework and current fall prevention
policies, and to investigate new technologies to identify concerning
trends and opportunities for improvements.
The medication error rate increased by 210.54% from 2.94 in 2019 to
9.13 in 2020, a statistically significant change. There is a continued focus
on medication management. Both outpatient and inpatient medication
errors are reported and are classified as prescription, dispensing
and administration errors. Focused medication audits and physician
education and training are ongoing in all facilities. The majority of
prescription errors during the period were reported at Mediclinic
Parkview Hospital. A thorough multidisciplinary review revealed that
many of the errors related to lack of adherence to EHR processes.
These issues were effectively addressed, and the inpatient medication
error rate decreased steadily for the rest of the year. Medication
management policies and double-checking of medication before
dispensing are continuously reinforced.
COVIDEVELOPMENT
The pandemic also contributed to the increase in the no-harm inpatient
medication error rate, which peaked at the height of the first COVID-19
wave. Many pharmacists were infected during the first wave and the
increased workload and lack of proper documentation were identified
as possible contributing factors.
82
FACILITY
FOCUS
Thanks to ongoing development
projects, Mediclinic is positioned
to provide in-demand care.
DAY CASE CLINIC
WHERE: ST. GALLEN,
SWITZERLAND
The new OPERA St. Gallen, which
opened on 1 July 2020, is the
Group’s fourth clinic in Switzerland
to offer outpatient procedures.
By implementing streamlined
processes and leveraging medical
advances, these facilities can
offer same-day surgeries without
compromising on quality. The day
case clinic offers two operating
theatres, 12 beds and various waiting
and recovery rooms. Patients with
additional insurance can take
advantage of private rooms.
DAY CASE CLINIC
WHERE: CAPE TOWN,
SOUTH AFRICA
Welcoming patients since
1 September 2020, the Mediclinic
Cape Gate Day Clinic consists of
two fully equipped theatres with
specialised personnel that offer day
surgery in the areas of dermatology,
orthopaedics and ophthalmology,
to name a few. The novel design
uses cubicles to provide patients
with private recovery areas, enhance
the workflow and improve access
for nurses.
HOSPITAL EXPANSION
WHERE: ABU DHABI, THE UAE
Featuring over 100 beds and
providing for a range of specialities,
the extension to Mediclinic Airport
Road Hospital sees the facility
more than double in size. The
new construction, completed in
2020 and due to open in 2021,
accommodates several outpatient
clinics. The expansion positions
the facility as Abu Dhabi’s leading
tertiary care private hospital and is
part of a wider renovation project
that has included equipment
upgrades and refurbishment.
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT CLINICAL ETHICS SUMMARY
ISSUE
MEDICLINIC’S RESPONSE
Advanced care planning, end-of-life
and terminal care
Clinical governance structures to report, audit and address in line with
local regulations and legislation
Assisted reproductive technology and
in vitro fertilisation
• Centres governed by local regulatory and legal framework
• Compliance monitored by licensing authorities
Competence and scope of practice
Clinical governance structures to monitor and address concerns
Doctor cover, availability and response
• On-call rosters at ECs
• Reporting system for non-compliant independent doctors, HR process
Doctor qualifications and performance,
and illegal practice
for employed doctors
• Formal process verifies registration, qualifications and credentials
• Feedback from peers solicited
• Established prevention policies and investigations of, inter alia,
deteriorating clinical quality indicators and complaints
Drug trials and medical research
• Aligned with the Declaration of Helsinki and local legislation
• Approval by independent, accredited ethics committee and recorded
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Employee and patient protection
on a registry
• No unofficial drug testing allowed
• Clinical research approval committee and policies
• Occupational health specialists at each hospital
• Healthcare employees screened for pulmonary tuberculosis, and
screened and vaccinated against Hepatitis B if necessary
• HIV/Aids diagnosis and support offered to affected employees in
accordance with local regulations
• In case of Methicillin-resistant Staphylococcus aureus, healthcare
employees screened and decolonised if necessary
• Annual flu vaccine, other vaccines when indicated
• Radiation exposure monitored centrally by Hirslanden
Ethical behaviour and billing,
and falsification of diagnosis
and documentation
• Regular documentation and clinical coding audits at hospital level
• HR policies for misconduct and criminal behaviour
• Ethics lines for reporting
Euthanasia
Neither practised nor condoned
Forced female circumcision
Informed consent required for any medical or surgical intervention
Genetics
Inappropriate care
Organ trade
Pharmacy
• Testing and counselling according to local regulations and legislation
• Data privacy principles and rules apply to results
Managed by indication boards at Hirslanden, cost per event at Mediclinic
Southern Africa and Mediclinic Middle East
Organ donation and receipt process carefully documented and in line
with applicable legislation
Policies, procedures and audits to comply with legislation, ethical
and operational requirements
Remuneration, kickbacks
Perverse incentives prohibited
Reporting and disclosure of adverse events
• Formal adverse event reporting system at hospital level
• Recorded events discussed at clinical hospital committees
Technology (including robotics)
• Equipment must be CE1-certified and approved by the local regulator
Termination of pregnancy
and/or certified by the Food and Drug Administration of the United States
of America
• Used for approved indication as dictated by guidelines
• Clinical safety proven before new technology implemented
• Strict control measures to ensure legal compliance
• Freedom of choice for employees regarding participation
Note
1 CE certification mark indicates conformity with health, safety and environmental protection standards for products sold within, manufactured in or
designed to be sold in the European Economic Area.
83
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
GROUP CHIEF FINANCIAL OFFICER’S REPORT
ON FIRM FOOTING TO
OVERCOME THE HEALTH CRISIS
Mr Jurgens Myburgh
Group Chief Financial Officer
Q&A
Q. HOW WILL THE GROUP’S CAPITAL INVESTMENT
PLANS SUPPORT STRATEGY DELIVERY?
We have developed a balanced approach to capital
allocation. In this, we prioritise facility maintenance
for safe ongoing operations. While we pursue
opportunities within our existing business, we will also
implement our strategy, including growth across the
continuum of care, innovation, digital transformation
and regional expansion through bolt-on investments.
Q: IS THE GROUP TARGETING LEVERAGE
REDUCTION AND REINSTATEMENT OF THE
DIVIDEND?
Over many years we’ve built a high-quality asset
portfolio. Apart from the operational flexibility this
affords us, it means we can pursue our strategy of
responsible leverage. As the uncertainty brought
about by the pandemic and restrictions associated
with covenant waivers dissipates, it is our intention to
reinstate a dividend by this time next year.
Q: COULD YOU DESCRIBE THE PATH TO IMPROVED
RETURNS?
We seek to increase returns by driving improved
operating performance and growing market share
through the execution of our strategy. Disciplined
expansion in existing and new markets will generate
returns greater than our weighted average cost
of capital.
View a condensed
video interview at
annualreport.mediclinic.com
or scan the QR code.
84
The Group prioritised the
preservation of its liquidity
position from the onset
of the pandemic while
optimising its operational
response.
FINANCIAL SUMMARY
• FY21 revenue down 3% to £2 995m;
down 1% in constant currency;
significantly impacted in April 2020
by COVID-19-related lockdown measures
and non-urgent elective procedure
restrictions
• FY21 adjusted EBITDA down 21% at
£426m; down 20% in constant currency;
reflecting revenue impact, largely fixed
employee cost base and escalation in
PPE costs and staffing requirements due
to isolation and quarantine regulations
• As restrictions eased elective
procedures recovered driving 2H21
year-on-year revenue growth of 1%;
EBITDA down 12% in 2H21 as the Group
adapted to the pandemic
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT I
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Klinik Stephanshorn, Switzerland
• Adjusted operating profit down 32%
at £221m; reported operating profit up
214% to £209m
• Reported earnings of £68m (FY20: loss
of £320m)
• Adjusted EPS down 43% at 13.7 pence
• Cash conversion 77% of adjusted EBITDA
(FY20: 109%) improved in 2H21 compared
with 42% at 1H21
• FY21 capital investment down 34%
to £126m due to COVID-19-related
operational constraints and priority to
maintain liquidity
• Cash and available facilities increased
to £679m at 31 March 2021, compared
with £661m at 30 September 2020
• Net incurred debt reduced to £1 483m
at year-end (FY20: £1 622m)
• Compliant with all waived and effective
debt covenants at year-end
• Dividend remains suspended as part of
the Group’s broad response to maintaining
its liquidity position (FY20: 3.20 pence)
GROUP RESULTS
ADJUSTED RESULTS
The Group uses adjusted income statement reporting
as non-IFRS measures in evaluating performance and
as a method to provide clear and consistent reporting.
Performance in the first half of the year was significantly
impacted in April 2020 by COVID-19-related lockdown
measures and non-urgent elective procedure restrictions.
In April 2020, Group revenue was down 33% and
adjusted EBITDA was down around £60m compared
with the prior period. From May 2020 onwards, the
moderation of restrictions resulted in a strong rebound
in operating performance in Switzerland and the UAE.
Southern Africa experienced a more gradual recovery
during the second quarter of the financial year as it
exited the first wave.
Despite a subsequent and more severe wave of the
pandemic in the second half of the financial year,
the Group delivered an improved financial performance
supported by less restrictive lockdown measures, greater
operational flexibility and counter-seasonal demand in
Southern Africa and the UAE during December 2020.
Having reached the peak of the second wave early
in the fourth quarter, the Group entered a transition
period during which COVID-19 patient volumes began
to decline, allowing more normal operating practices
to resume gradually. Similar to the trend in the first half
of the year, this resulted in a strong rebound in non-
COVID-19 patient activity towards the end of the period.
The Group’s revenue was down 3% at £2 995m
(FY20: £3 083m) and down 1% in constant currency
terms for the year. Stronger demand in the second
half of the year delivered revenue growth of 1%.
85
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
GROUP CHIEF FINANCIAL OFFICER’S REPORT CONTINUED
Adjusted EBITDA was down 21% at £426m (FY20:
£541m) and down 20% in constant currency terms. This
was a result of the revenue decline exacerbated by the
largely fixed employee cost base, an escalation in PPE
usage, consumables pricing and staffing requirements
due to isolation and quarantine regulations. Across the
Group, incremental COVID-19-related expenses totalled
around £32m. The Group’s adjusted EBITDA margin was
14.2% (FY20: 17.5%). Driven by stronger demand, the
EBITDA margin improved sequentially in the second half
of the year to 16.1%, with adjusted EBITDA down 12% in
2H21 compared with the prior year period.
Adjusted depreciation and amortisation was down 5% to
£207m (FY20: £217m) reflecting lower capital investment
during the period due to COVID-19-related operational
constraints and liquidity preservation measures.
Adjusted operating profit was down 32% at £221m
(FY20: £327m) which resulted in a lower ROIC of 3.0%
compared with 4.4% in FY20.
Adjusted net finance cost was down 8% at £72m
(FY20: £78m), mainly due to the reduction of base
rates in South Africa and the UAE as well as translation
differences caused by the depreciation of the rand,
which is also the highest interest rate environment.
The adjusted tax charge of £27m (FY20: tax charge of
£56m) and adjusted effective tax rate for the period
of 19.3% (FY20: 22.3%) reflect the higher contribution
of non-taxable income from Mediclinic Middle East. This
was partly offset with an increase in the effective tax
rate due to the recognition of non-deductible equity-
accounted losses from the investment in Spire, as well
as the non-recognition of deferred tax assets on current
year tax losses at Hirslanden.
Adjusted non-controlling interests were down 41% to
£11m (FY20: £18m), mainly due to lower contributions
from Mediclinic Southern Africa hospitals with larger
outside shareholdings. Adjusted share of net profit of
equity-accounted investments was down from a profit
of £2m in FY20 to a loss of £10m in FY21, reflecting
the net loss reported by Spire for the 12 months ended
31 December 2020.
Both adjusted earnings and adjusted EPS were
down 43% at £101m (FY20: £177m) and 13.7 pence
(FY20: 24.0 pence), respectively.
At the end of FY20, the Board took the prudent and
appropriate decision to suspend the dividend as part
of the Group’s response to maintain its liquidity position
through the pandemic and maximise its support in
combatting COVID-19. The Board recognises the
importance of its dividend to shareholders and will
keep this position under review in light of the continued
uncertainties posed by the pandemic.
In arriving at adjusted operating profit, reported
operating profit was adjusted for the following
exceptional items:
• accelerated depreciation of £10m relating to the
86
dismantling of two hospital wings as part of an
expansion project at Hirslanden’s Klinik St. Anna;
• impairment charges of £4m relating to Mediclinic
Southern Africa; and
• insurance proceeds of £2m received for the loss
of equipment at Mediclinic Southern Africa.
Prior period operating profit was adjusted for the
following exceptional items:
• recognition of an impairment charge of £481m
to Mediclinic Middle East goodwill;
• recognition of an impairment charge of £33m
to Hirslanden fixed assets;
• impairment reversal of £4m relating to Hirslanden
properties;
• impairment charges of £2m relating to Mediclinic
Southern Africa; and
• fair value adjustments on derivative contracts of £1m.
As previously reported, for the 12 months ended
31 December 2020, Spire reflected a goodwill impairment
charge of £200m which gave rise to a reported loss of
£234m. Since the Group had already impaired its equity
investment in Spire, previously recognised impairment
losses in the amount of £60m were reversed. In this
context, earnings were further adjusted for the following
exceptional items:
• Mediclinic’s share of the equity-accounted impairment
loss from Spire of £60m;
• reversal of previously recorded impairment losses
against the carrying value of the equity investment in
Spire of £60m; and
• remeasurement of the redemption liability related to
Clinique des Grangettes of £23m.
The prior period reported loss was adjusted for the
following exceptional items:
• remeasurement of the redemption liability related to
Clinique des Grangettes of £5m;
• recognition of an impairment charge on the equity
investment in Spire of £10m; and
• the reduction of Swiss property deferred tax liabilities
of £29m resulting from corporate tax reforms in
Switzerland.
REPORTED RESULTS
Reported revenue was down 3% to £2 995m
(FY20: £3 083m) and EBITDA was down 21% to £428m
(FY20: £541m), down 1% and down 20%, respectively,
in constant currency terms.
Depreciation and amortisation remained flat at £217m
(FY20: £217m). Operating profit increased to £209m
(FY20: loss of £184m).
Net finance cost increased by 14% to £95m
(FY20: £83m).
The Group’s effective tax rate for the period was 24.4%
(FY20: [8.6]%). The prior period effective tax rate was
impacted by exceptional non-deductible goodwill
impairment charges, the impairment of the equity
investment and a reduction in deferred tax liabilities that
resulted from corporate tax reforms in Switzerland.
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT The reported earnings show a profit of £68m (FY20: loss
of £320m). The EPS was 9.2 pence (FY20: loss per share
of 43.4 pence).
CASH CONVERSION
Cash flow conversion of 77% (FY20: 109%) improved
during the second half of the year (1H21: 42%).
The first half was primarily impacted by lower receivables
collections at Mediclinic Middle East compared with earlier
in the period, exacerbated by the strong counter-seasonal
performance in the second quarter period, increased
debtors balances at Hirslanden and a normalisation in
Hirslanden’s trade payables balance post the initial peak’s
stringent liquidity preservation measures.
The second-half improvement was driven by Hirslanden
and Mediclinic Middle East, despite both divisions’ strong
performances at the end of the period, which curtailed the
overall recovery, and strong collections continuing in April
2021 at Mediclinic Middle East. The Group continues to
target 90–100% cash conversion.
LIQUIDITY
Cash and available facilities remained strong in the
second half, increasing to £679m at 31 March 2021,
compared with £661m at 30 September 2020 and
£518m at 31 March 2020.
The Group prioritised the preservation of its liquidity
position from the onset of the pandemic while optimising
its operational response. Restrictions on operations caused
by the pandemic, in addition to decisions to postpone
certain projects, reduced year-on-year capex across all
three divisions.
Cash and available facilities
remained strong in the
second half, increasing to
£679m at 31 March 2021,
compared with £661m at
30 September 2020 and
£518m at 31 March 2020.
FOREIGN EXCHANGE RATES
Although the Group reports its results in sterling, the
divisional profits are generated in Swiss franc, South
African rand and UAE dirham. During the reporting period,
the average and closing exchange rates were as follows:
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Average rates
Swiss franc
South African rand
UAE dirham
Year-end rates
Swiss franc
South African rand
UAE dirham
2021
2020
1.21
21.30
4.80
1.30
20.37
5.07
1.25
18.76
4.67
1.20
22.08
4.56
Movements in exchange rates affected the reported
earnings and reported balances in the statement of
financial position. The resulting currency translation
difference, which is the amount by which the Group’s
interest in the equity of the divisions decreased
because of spot rate movements, amounted to
£235m (FY20: increase of £175m) and was debited
(FY20: credited) to the statement of comprehensive
income. The main reason for the decrease was the
weakening of the year-end Swiss franc and UAE dirham
rates against sterling.
Foreign exchange rate sensitivity:
• The impact of a 10% change in the £/CHF exchange
rate for a sustained period of one year is that adjusted
profit for the period would increase/decrease by £4m
(FY20: increase/decrease by £7m) due to exposure
to the £/CHF exchange rate.
• The impact of a 10% change in the £/ZAR exchange
rate for a sustained period of one year is that adjusted
profit for the period would increase/decrease by £3m
(FY20: increase/decrease by £9m) due to exposure
to the £/ZAR exchange rate.
• The impact of a 10% change in the £/AED exchange
rate for a sustained period of one year is that adjusted
profit for the period would increase/decrease by £4m
(FY20: increase/decrease by £4m) due to exposure
to the £/AED exchange rate.
87
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
GROUP CHIEF FINANCIAL OFFICER’S REPORT CONTINUED
DIVISIONAL RESULTS
Year ended 31 March
Revenue
Hirslanden
Mediclinic Southern Africa
Mediclinic Middle East
Corporate
Adjusted EBITDA
Hirslanden
Mediclinic Southern Africa
Mediclinic Middle East
Corporate
Adjusted EBITDA %
Group
Hirslanden2
Group currency (millions)
2021
2020
£2 995
£3 083
£1 478
£1 438
%
(3)%
3%
(19)%
6%
£907
£737
£1
100%
£541
£245
£188
£110
(21)%
(8)%
(44)%
(8)%
£(2)
250%
£734
£781
£2
£426
£225
£106
£102
£(7)
14.2%
15.1%
17.5%
17.0%
Mediclinic Southern Africa
14.2%
20.8%
Mediclinic Middle East
13.1%
15.1%
Adjusted operating profit
Hirslanden
Mediclinic Southern Africa
Mediclinic Middle East
Corporate
Adjusted operating profit %
Group
Hirslanden
Mediclinic Southern Africa
Mediclinic Middle East
(32)%
(10)%
(53)%
(11)%
100%
£221
£107
£71
£51
£(8)
7.4%
7.1%
9.5%
6.6%
£327
£119
£151
£57
–
10.6%
8.2%
16.7%
7.9%
Divisional currency (millions)1
2021
2020
%
1 784
15 573
3 760
n/a
1 804
(1)%
17 031
(9)%
3 445
9%
n/a
272
306
(11)%
2 209
3 536
(38)%
492
n/a
(6)%
521
n/a
15.1%
14.2%
13.1%
128
1 477
248
n/a
7.1%
9.5%
6.6%
17.0%
20.8%
15.1%
149
(14)%
2 838
(48)%
(9)%
273
n/a
8.2%
16.7%
7.9%
Notes
1 Divisional currency for Hirslanden is shown in Swiss franc (CHF), Mediclinic Southern Africa in South African rand (ZAR) and Mediclinic Middle East in
UAE dirham (AED).
2 The EBITDA margin includes government grants of £10m (CHF13m) (FY20: nil) disclosed as ‘Other income’.
The Group uses adjusted income statement reporting as non-IFRS measures in evaluating performance and to provide
consistent and comparable reporting.
88
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT HIRSLANDEN
Switzerland introduced COVID-19 lockdown measures on
16 March 2020, which included the suspension of elective
procedures for all hospitals. Lockdown measures were
relaxed on 27 April 2020 and the resumption of elective
procedures saw a strong recovery in inpatient admissions
in May and June 2020. A similar trend was witnessed
as the division passed through the second wave of the
pandemic during the fourth quarter of the financial year.
Hirslanden has engaged extensively with the cantonal
authorities throughout the pandemic, and been involved
in their COVID-19 response planning, testing and
vaccination roll-outs.
capex of CHF43m (FY20: CHF51m). In line with the
expected improvements in operating cash flows,
the Group currently plans to proportionately increase
the annual capex investment at Hirslanden while
continuing to generate appropriate free cash to equity
holders (including the annual debt repayments). FY22
forecast expansion capex of around CHF55m includes
the first of seven years of investment in the projects at
Klinik St. Anna and Hirslanden Klinik Aarau to strengthen
the competitive position of these key hospitals. FY22
maintenance capex is forecast at around CHF70m.
Medium-term maintenance capex is expected to be
around 4–5% of revenue.
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FY21 revenue decreased by 1% to CHF1 784m
(FY20: CHF1 804m), broadly recovering from the
significant impact experienced in April 2020. Inpatient
revenue was flat at CHF1 329m (FY20: CHF1 331m) and
inpatient admissions decreased by 0.1%. In the second
half of the year, revenue was flat and inpatient admissions
were up 0.8%.
The general insurance mix increased to 51.0%
(FY20: 49.2%), largely due to Hirslanden supporting
the public health system during peaks of the pandemic.
Despite the shift in insurance mix, inpatient revenue per
case declined by only 0.1% due to a COVID-19-related
increase in the case mix index. Average occupancy was
flat at 61.1% (FY20: 61.1%).
Outpatient and day case revenue, which contributed some
20% (FY20: 21%) to total revenue in the period, was down
3%, mainly due to the sale of three outpatient clinics to
Medbase as part of the broader cooperation agreement.
An increase in supply costs and additional staffing
requirements during the pandemic further impacted
adjusted EBITDA which declined 11% to CHF272m
(FY20: CHF306m) with an adjusted EBITDA margin of
15.1% (FY20: 17.0%). COVID-19-related expenses were
around CHF10m. In line with the revenue performance,
Hirslanden delivered a strong sequential improvement in
adjusted EBITDA margin from 13.7% in 1H21 (1H20: 16.2%)
to 16.7% in 2H21 (2H20: 17.7%).
Adjusted depreciation and amortisation decreased by
9% to CHF143m (FY20: CHF157m) due to lower capital
investment during the year and impairments in the
prior year period. Adjusted operating profit decreased
by 14% to CHF128m (FY20: CHF149m).
Adjusted net finance cost was flat at CHF58m
(FY20: CHF58m).
Adjusted earnings decreased by 19% to CHF47m
(FY20: CHF57m).
MEDICLINIC SOUTHERN AFRICA
South Africa implemented lockdown measures on
27 March 2020 to help contain the spread of the
pandemic. In line with this decision, Mediclinic Southern
Africa suspended elective procedures and closed
standalone day case clinics. With the initial peak of
the pandemic being passed in early August 2020,
non-COVID-19 surgical case volumes subsequently
improved, driven by a return in demand for elective
procedures. The peak of the second COVID-19 wave in
January 2021 gave rise to a counter-seasonal performance
in December 2020, when larger patient numbers than
normal were experienced as we approached the second
peak. Non-COVID-19 admissions again improved in
March 2021 as more normal operating practices resumed.
Mediclinic Southern Africa’s revenue was down 9%
to ZAR15 573m (FY20: ZAR17 031m), reflecting the
significant impact experienced in April 2020. Paid patient
days (‘PPDs’) decreased by 15.3% and the occupancy
rate was down at 56.3% (FY20: 67.9%). Despite a gradual
recovery from May 2020 onwards, 1H21 revenue and PPDs
declined 19% and 25.0%, respectively. Adapting to the
pandemic, performance in the second half of the year
was much improved with revenue up 2% and PPDs down
5.2%. Average revenue per bed day increased by 8.2%
reflecting the increase in acuity. The average length of
stay was up 16.6% reflecting the longer than average stay
for COVID-19 patients and a disproportionate decline in
day case admissions.
The effects of supply costs and additional staffing
requirements during the pandemic further impacted
adjusted EBITDA, which declined 38% to ZAR2 209m
(FY20: ZAR3 536m) with the adjusted EBITDA margin at
14.2% (FY20: 20.8%). In line with the revenue performance,
Mediclinic Southern Africa delivered a strong sequential
improvement in adjusted EBITDA margin from 8.2% in
1H21 (1H20: 20.8%) to 19.0% in 2H21 (2H20: 20.7%).
COVID-19-related expenses were around ZAR323m.
The division converted 66% (FY20: 116%) of adjusted
EBITDA into cash generated from operations, with an
improvement in the second half of the year (1H21: 44%).
Total capex spent during the year decreased by 14%
to CHF81m (FY20: CHF94m) comprising maintenance
capex of CHF38m (FY20: CHF43m) and expansion
Depreciation and amortisation increased by 9% to
ZAR763m (FY20: ZAR698m), mainly due to increased
spend on hospital infrastructure upgrades and medical
equipment in the prior period in line with the division’s
current upgrade and maintenance cycle. Adjusted
operating profit decreased by 48% to ZAR1 477m
(FY20: ZAR2 838m).
89
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GROUP CHIEF FINANCIAL OFFICER’S REPORT CONTINUED
Net finance cost increased by 1% to ZAR561m
(FY20: ZAR554m) due to lower finance income given
lower cash on deposit and lower interest rates, with
around half the division’s interest rate exposure hedged.
Adjusted earnings decreased by 61% to ZAR519m
(FY20: ZAR1 335m).
The division converted 111% (FY20: 104%) of adjusted
EBITDA into cash generated from operations.
Total capex spent during the year decreased by 47% to
ZAR702m (FY20: ZAR1 312m) comprising maintenance
capex of ZAR302m (FY20: ZAR730m) and expansion
capex of ZAR400m (FY20: ZAR582m). Key projects
included the new Mediclinic Bloemfontein and Mediclinic
Cape Gate day case clinics and the expansion at
Mediclinic Brits and Mediclinic Legae hospitals. FY22
expansion capex is forecast to be around ZAR520m
including expansion projects at Mediclinic Cape Town
and Mediclinic Midstream hospitals and Mediclinic
Vergelegen and Mediclinic Winelands day case clinics,
in addition to further investment in IT infrastructure
projects to support future growth initiatives. FY22
maintenance capex is forecast at around ZAR610m.
Medium-term maintenance capex is expected to average
around 3% of revenue.
MEDICLINIC MIDDLE EAST
Dubai and Abu Dhabi gradually implemented national
lockdowns and curfews from March 2020 due to the
pandemic. In Dubai, elective procedures were suspended
and reintroduced only in May 2020. In Abu Dhabi such
restrictions were not implemented, although inpatient
admissions and outpatient cases were significantly
impacted as a result of lockdown measures. With the
lifting of restrictions from May 2020, volumes rebounded.
In August 2020, counter-seasonal holiday trends caused
a significant increase in volumes compared with the prior
year period. During the second wave of the pandemic,
a further restriction on elective surgery was imposed in
Dubai from 21 January to 21 March 2021. Throughout the
pandemic, outpatient cases were interrupted, improving
towards the end of the period.
While the pandemic materially impacted non-COVID-19
activity levels, Mediclinic Middle East launched
virtual care and pharmacy home delivery services
so patients could be diagnosed and supplied with
prescription medication without the need for
face-to-face consultations. In addition, the division
is involved in various projects supporting the health
authorities including the establishment of two new
laboratories for COVID-19 testing and administering
vaccinations.
Mediclinic Middle East’s revenue increased 9% to AED3 760m
(FY20: AED3 445m), which includes around AED485m in
COVID-19-related revenues. Inpatient admissions and day
cases were down 2.1% and outpatient cases down 9.3%.
The impact on volumes was less significant in the second
half of the year, with inpatient admissions and day cases
down 1.1% and outpatient cases down 4.7% compared
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with 2H20. The volume impact was partly offset by an
increase in the average revenue per inpatient and day
case admission and outpatient cases up 17.3% and 15.1%,
respectively, reflecting an increase in acuity directly and
indirectly due to COVID-19.
The diagnostic-related grouping reimbursement model
for inpatient procedures was implemented in Dubai
on 1 September 2020. Initial results indicate that, as
previously guided, the change is expected to be revenue
neutral for Mediclinic.
Adjusted EBITDA decreased 6% to AED492m
(FY20: AED521m) due to the sustained impact of
COVID-19 on outpatient volumes in particular, lower
contribution margin of COVID-19-related and new
revenues exacerbated by COVID-19-related expenses
that totalled around AED28m. The adjusted EBITDA
margin of 13.1% (FY20: 15.1%) improved from 12.7% in
1H21 (1H20: 12.6%) to 13.5% in 2H21 (17.3%). The second
half also included start-up costs associated with the
commissioning of the Mediclinic Airport Road Hospital
expansion and the new CCC.
Adjusted depreciation and amortisation was flat at
AED248m (FY20: AED249m). Adjusted operating profit
decreased by 9% to AED248m (FY20: AED273m).
Net finance cost decreased by 15% to AED78m
(FY20: AED91m), mainly due to a decrease in the base
rate. One third of the borrowings are hedged.
Adjusted earnings decreased by 6% to AED170m
(FY20: AED181m).
The division converted 73% (FY20: 98%) of adjusted
EBITDA into cash generated from operations, due to
slow collections, exacerbated by the strong revenue
performance in March 2021. Significant collections
received in early April 2021 that were expected before
year-end would have resulted in the division achieving
its target of 90–100% cash conversion.
Total capex spent during the year decreased by 49% to
AED124m (FY20: AED220m) comprising maintenance
capex of AED36m (FY20: AED46m) and expansion
capex of AED88m (FY20: AED174m). Key projects
included the Mediclinic Airport Road Hospital expansion
and CCC, ongoing EHR roll-out and investment in new
robotics equipment. FY22 expansion capex is forecast
to be the final year of major investment as the division
positions for sustainable long-term growth. FY22 forecast
expansion capex of around AED230m includes delayed
capex investment at Mediclinic Airport Road Hospital
and the EHR roll-out, in addition to key projects involving
precision medicine, sports medicine, remote patient
monitoring, IT infrastructure investment, critical care unit
upgrades at Mediclinic Al Ain Hospital and the installation
of smart lifts at the Mediclinic Al Noor Hospital. FY22
maintenance capex is forecast at around AED85m.
Medium-term maintenance capex is expected to be
around 2–3% of revenue with expansion capex from FY23
onwards at half the level in FY21.
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT FY22 GUIDANCE
Given the strong underlying demand for Mediclinic’s broad
range of services, the Group expects to deliver growth
in revenue and EBITDA across all three divisions in FY22.
With the ongoing pandemic, varied pace of vaccine
rollouts and our planning assumption of potential third
waves causing continuing uncertainty on the shape of
the recovery, Mediclinic remains cautious as to the full
impact of COVID-19 on near-term operating performance.
In Switzerland, given the potential impact of a third
wave on admissions, insurance mix and operating costs,
Hirslanden expects to deliver modest revenue growth
and a stable year-on-year EBITDA margin. In Southern
Africa, with the ongoing impact of the pandemic on
admissions and operating costs, Mediclinic Southern
Africa currently expects revenue to recover to
around FY20 levels and a year-on-year improvement
in EBITDA margin approaching the 2H21 outturn.
Mediclinic Middle East is expected to deliver mid-single
digit revenue growth supported by recent expansion
and upgrade projects and an improved EBITDA margin,
approaching FY20 levels.
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FINANCIAL POSITION
PROPERTY, EQUIPMENT AND VEHICLES,
AND INTANGIBLE ASSETS
Property, equipment and vehicles decreased to
£4 052m at 31 March 2021 (FY20: £4 358m), mainly due
to the weakening of the year-end Swiss franc and UAE
dirham rates against sterling. The depreciation charge
of £196m was partly offset by ongoing investment to
expand the asset base in support of growth across the
continuum of care and to enhance patient experience
and clinical quality.
In response to the crisis and the initial uncertainty it
created, the Group delayed, postponed or reduced
certain capital projects as part of a broad range of
initiatives to preserve liquidity. Total capital expenditure
for the period was £126m (FY20: £192m), the majority of
which was invested during the second half of the year.
Maintenance and expansion capex amounted to £54m
(FY20: £84m) and £72m (FY20 £108m), respectively.
Mediclinic is one of the largest private healthcare
providers across Europe, Middle East and Africa, with
unique clinical expertise and scale. Aligned with the
Group’s strategic goals and balanced approach to
capital allocation, Mediclinic will seek to execute on
opportunities to grow within its existing business across
the continuum of care, invest in various innovation
and digital transformation initiatives and pursue
opportunities for regional expansion through bolt-on
investments at the appropriate time.
Intangible assets decreased to £1 061m at 31 March 2021
(FY20: £1 171m), mainly due to the impact of the
weakening year-end UAE dirham rate against sterling
on the Mediclinic Middle East goodwill.
INVESTMENT IN ASSOCIATES
SPIRE
Mediclinic holds a 29.9% investment in Spire which is equity
accounted. Spire reported its full-year financial results for
the period ended 31 December 2020 on 4 March 2021.
For the 12 months ended 31 December 2020,
Spire reported a loss after taxation of £234m
(31 December 2019: profit of £7m), which included a
goodwill impairment charge of £200m. The equity-
accounted portion of this impairment amounts to £60m.
Following Spire’s goodwill impairment charge, the Group’s
interest in the net asset value of Spire was higher than its
carrying value of the equity investment at 30 September
2020. As a result an impairment reversal equal to the
Group’s share of the goodwill impairment of £60m was
recognised and reported in the Group’s interim financial
statements. Excluding the equity-accounted goodwill
impairment charge, Mediclinic’s equity-accounted loss
amounted to £10m (2020: income of £2m).
In response to the crisis and the initial uncertainty it created, the
Group delayed, postponed or reduced certain capital projects as
part of a broad range of initiatives to preserve liquidity.
91
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
GROUP CHIEF FINANCIAL OFFICER’S REPORT CONTINUED
NET DEBT
Borrowings
Lease liabilities
Less: cash and cash equivalents
Net debt
Total equity
Debt-to-equity capital ratio
2021
£’m
1 777
676
(294)
2 159
2 967
72.8%
2020
£’m
1 951
703
(329)
2 325
3 003
77.4%
Net debt reduced to £2 159m at year-end (FY20: £2 325m),
after an optional CHF50m debt repayment at Hirslanden in
November 2020 and an AED120m scheduled repayment at
Mediclinic Middle East. The leverage ratio of 5.1x at year-end
(FY20: 4.3x), which reflects the impact of the pandemic on
the Group’s profitability, remained stable in the second half
of the year (1H21: 5.2x).
The Group maintains a strategy of responsible leverage,
largely using its extensive asset base to secure cost-efficient
borrowings. While property ownership drives operational
and financial benefits, the approach is not fixed, reflecting
the business needs of the Group as it expands across the
continuum of care, which includes less asset-intensive
investments and partnerships.
Debt is ring-fenced within each division, with no cross
guarantees or cross defaults. Borrowings are denominated
in the same currency as the divisions’ underlying revenue
and therefore not exposed to foreign exchange rate risk. In
February 2021, Hirslanden successfully refinanced a CHF145m
bond, reducing the coupon rate from 1.63% to 1.25%.
The debt-to-equity ratio improved to 72.8% at year-end
(FY20: 77.4%).
In FY22, debt repayments are expected at Hirslanden
and Mediclinic Middle East of CHF50m and AED249m,
respectively. Mediclinic Middle East currently expects to
continue repaying debt it incurred during the multiyear
expansion period which supports the division’s future
growth aspirations.
COVENANTS
The Group had headroom over all covenants, waived or
effective, at year-end.
At the start of the pandemic, the Group obtained
covenant tests waivers, mostly for leverage ratios, where
the forecast financial impact from the disruption caused
by COVID-19 on the operations may have resulted in
covenants being exceeded before coming back into
compliance as revenues normalised. For Mediclinic
Middle East and Mediclinic Southern Africa, the first
of such waived covenant compliance tests will be
performed at the end of June 2021 and September 2021,
respectively. Hirslanden has prudently engaged with its
lending banks to further extend the leverage covenant
test waiver by 12 months, with the first test now to be
performed at the end of September 2022.
The following table illustrates the headroom to the covenant tests:
Status
Headroom
variable
FY21
Headroom1
1H21
Headroom1
FY20
Headroom1
Compliant
Hirslanden
Leverage ratio
Waived2
EBITDA
Economic capital ratio
Effective
Equity
Loan to value ratio
Effective Property value
Mediclinic Southern Africa
Leverage ratio
Waived2
EBITDA
Net interest cover ratio
Waived2
EBITDA
Mediclinic Middle East
Leverage ratio
Waived2
EBITDA
Debt service coverage ratio
Effective
Cash flow
5%
30%
17%
6%
18%
48%
21%
9%
30%
14%
(4)%
18%
37%
41%
17%
27%
17%
37%
47%
41%
80%
n/a
Yes
Yes
n/a
n/a
n/a
Yes
Minimum net worth
Effective
Minimum monthly receivables
Effective
n/a
n/a
> AED700m > AED630m > AED750m Yes
> AED240m3 > AED190m3 > AED195m3
Yes
Notes
1 Headroom is calculated with reference to the indicated headroom variable, keeping other inputs constant.
2 Waived covenant compliance tests are to be performed at the end of June 2021 for Mediclinic Middle East, at the end of September 2021 for Mediclinic
Southern Africa and at the end of September 2022 for Hirslanden.
3 Average of last three months.
92
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT The Group’s financial performance for the year ended
31 March 2021 across all three divisions was well ahead
of the COVID-19-adjusted base case scenarios modelled
at the beginning of the pandemic in March 2020.
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SWISS PENSION BENEFIT OBLIGATION
Hirslanden provides defined contribution pension plans
in terms of Swiss legislation to employees, the assets of
which are held in separate trustee-administered funds.
These plans are funded by payments from employees
and Hirslanden, taking into account the recommendations
of independent qualified actuaries. Because of the strict
definition of defined contribution plans in IAS 19, these
plans are classified as defined benefit plans, since the
funds are obliged to take some investment and longevity
risk in terms of Swiss law. The IAS 19 net pension asset
was valued by the actuaries at the end of the year and
amounted to £83m (FY20: liability of £71m), consisting
of a net pension asset of £110m relating to one of the
plans and a net pension liability of £27m relating to four
of the plans. The net pension asset is included under
‘Retirement benefit assets’ in the Group’s statement of
financial position, whereas the net pension liabilities are
included under ’Retirement benefit obligations’. The
increase that resulted in a net pension asset was largely
due to an increase in the plan assets. In constant currency,
the pension liability increased by £48m whereas the plan
assets increased by £208m.
DERIVATIVE FINANCIAL INSTRUMENTS
Through the acquisition of Clinique des Grangettes,
the Group entered into a put/call agreement over the
remaining 40% interest of Clinique des Grangettes and
Clinique La Colline. At the end of the year, the value of
the redemption liability related to the written put option
amounted to £115m (FY20: £101m) after adjusting the
liability for changes in the estimated performance. The
remeasurement of the redemption liability recognised
within finance cost was £23m (FY20: £5m).
GOING CONCERN
The severity, duration and full impact of the COVID-19
pandemic and its economic aftermath on the Group’s
businesses remain uncertain. Despite the global vaccine
roll-outs and the robust operating performance for
the year ended 31 March 2021, there remains a degree
of risk and uncertainty as to the Group’s financial
performance for at least the next 12–18-month period
to 30 September 2022.
The Group’s financial performance for the year ended
31 March 2021 across all three divisions was well ahead
of the COVID-19-adjusted base case scenarios modelled
at the beginning of the pandemic in March 2020. As
evidenced in the year under review, the key impact to
revenue and profitability during the pandemic was the
national lockdown measures and restrictions imposed
on non-urgent elective procedures. Notwithstanding the
continued uncertainty due to the ongoing pandemic, it is
considered reasonably unlikely that the severe restrictions
previously imposed on non-urgent elective procedures
will be reintroduced given the advance in COVID-19
operating protocols since March 2020.
For the purposes of assessing liquidity specifically and
going concern broadly at 31 March 2021, the Group
modelled a combination of severe but plausible downside
scenarios on a month-by-month basis and also applied
appropriate mitigation actions which would be within the
Group’s control. These scenarios had specific reference to:
• reduction in volumes due to the ongoing effects of the
COVID-19 pandemic or a deterioration in the business
environment;
• reduction in tariffs due caused by possible regulatory
changes; and
• working capital and capital expenditure requirements.
Due to the mostly fixed employee cost base across
the business, lower revenue due to either a reduction
in tariffs or volumes has the most pronounced impact
on EBITDA. Compared with the business plan, the
combined adverse effect of reduction of tariffs and
volumes after mitigation modelled amounts to a decline
of 24% of EBITDA over the 18-month period to
30 September 2022, which is more severe than the
decline in adjusted Group EBITDA of 21% during FY21.
In the worst affected month, the Group EBITDA is
affected by approximately 35% in the downside case
when compared with the base case. In the downside
case, the Group EBITDA includes an adverse impact
of at least 12% per month compared with base case.
Depending on the circumstances, further mitigating
actions would be available to the Group that have not
been modelled. These include:
• further reductions in capital expenditure, e.g. ceasing
ongoing projects;
• reductions in staff and other operating costs;
• a freeze on recruitment;
• a restriction on salary increases;
• rental relief from landlords; and
• utilising surplus cash at a corporate level.
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
GROUP CHIEF FINANCIAL OFFICER’S REPORT CONTINUED
Based on the assumptions applied and the effect of
mitigating actions set out above, most within the control
of the Group, the analyses demonstrate that the divisions
will continue to be able to meet their obligations for the
periods modelled.
Debt is ring-fenced within each division, with no
cross guarantees or cross defaults. Borrowings are
denominated in the same currency as the divisions’
underlying revenue and therefore not exposed to foreign
exchange rate risk. The nearest term material maturity is
a bank loan of ZAR2 575m and redeemable preference
shares of ZAR1 800m that are due in September 2022.
Mediclinic Southern Africa is proactively engaging
with the banks on either an extension of the facility as
provided for in the original loan agreement or a refinance
of the entire facility. Mediclinic Southern Africa’s leverage
ratio is at a level where refinancing should be possible
considering the current market conditions.
In addition to successfully refinancing its CHF145m bond
on more favourable terms, Hirslanden has prudently
engaged with its lending banks to further extend a
covenant test waiver by 12 months, with the first tests
now to be performed at the end of September 2022.
By the time of the reinstated test, all covenants will have
sufficient headroom based on the range of modelled
scenarios.
Due to the proactive response to maintain the
Group’s liquidity position, cash and available facilities
have remained strong at £679m at year-end,
compared to £518m at 31 March 2020 and £661m
at 30 September 2020.
While recognising that there remains significant risk to
the Group’s financial performance for at least the next
12 months, the directors have a reasonable expectation
that the Group will be able to continue in operation
and meet its liabilities as they fall due for a period of at
least 12 months from the date of approving the financial
statements.
Mr Jurgens Myburgh
Group Chief Financial Officer
25 May 2021
94
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT FIVE-YEAR
SUMMARY
The Five-year summary is presented in sterling, rounded to the nearest million.
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INCOME STATEMENTS
Revenue
Adjusted EBITDA
Operating (loss)/profit
Adjusted operating profit
Reported (loss)/earnings
Adjusted earnings
PER SHARE STATISTICS
Basic (loss)/earnings basis
Diluted (loss)/earnings basis
Basic adjusted earnings basis
Diluted adjusted earnings basis
Dividends declared per share
STATEMENTS OF FINANCIAL POSITION
ASSETS
Non-current assets
Current assets
Total assets
EQUITY
Owners of the parent
Non-controlling interests
Total equity
LIABILITIES
Non-current liabilities
Current liabilities
Total liabilities
Total equity and liabilities
STATEMENTS OF CASH FLOWS
Operating cash flow (£'m)
Adjusted EBITDA cash conversion (%)
IFRS 16
FY21
£’m
2 995
426
209
221
68
101
FY21
pence
9.2
9.2
13.7
13.7
–
FY21
£’m
5 440
1 232
6 672
2 849
118
2 967
3 021
684
3 705
6 672
FY21
330
77%
Pre-IFRS 16
FY20
£’m
3 083
541
(184)
327
(320)
177
FY20
pence
(43.4)
(43.4)
24.0
24.0
3.20
FY20
£’m
5 741
1 213
6 954
2 890
113
3 003
3 182
769
3 951
FY19
£’m
2 932
493
81
330
(151)
198
FY19
pence
(20.5)
(20.5)
26.9
26.9
7.9
FY19
£’m
5 335
1 091
6 426
3 151
115
3 266
2 576
584
3 160
6 954
6 426
FY20
589
109%
FY19
451
91%
FY18
£’m
2 876
515
(288)
370
(492)
221
FY18
pence
(66.7)
(66.7)
30.0
30.0
7.9
FY18
£’m
5 382
961
6 343
3 286
87
3 373
2 445
525
2 970
6 343
FY18
466
90%
FY17
£’m
2 749
501
362
360
229
220
FY17
pence
31.0
31.0
29.8
29.8
7.9
FY17
£’m
6 353
1 069
7 422
4 086
78
4 164
2 668
590
3 258
7 422
FY17
492
98%
95
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
RISK
MANAGEMENT
REPORT
INTRODUCTION
The Group’s ERM policy follows the International Committee of Sponsoring Organizations of the Treadway
Commission’s Internal Control – Integrated Framework and is reviewed annually. The policy defines the risk
management objectives, methodology, risk appetite, risk identification, assessment and treatment processes,
and the responsibilities of the various risk management role players in the Group.
Through risk management, an integrated and effective framework is established which seeks to identify, assess and
manage important and emerging risks which could impact on the Group’s ability to achieve strategic, financial and
operational goals, and regulatory compliance. The risk management process is fully integrated into the strategic planning
Refer to the Strategy overview on pages 32–37.
process and supports the achievement of the Mediclinic Group Strategy.
Goal 1
Goal 2
To become an integrated healthcare provider
across the continuum of care
To improve our value proposition
significantly
Goal 3
To transform our services and client
engagement through innovation and
digitalisation
Goal 5
To minimise our environmental impact
Goal 4
To evolve as a data-driven organisation
Goal 6
To grow in existing markets and expand into
new markets
Risks are classified according to their degree of controllability and relevance to the Group’s strategy.
Risk management processes are tailored to the relevant risk type:
• Strategic risks – Mediclinic considers it appropriate
to assume some risk in achieving its strategy and
generating appropriate returns for shareholders.
Strategic risks are different from preventable risks
in that they are not inherently undesirable. The risk
management system is designed to reduce the
likelihood that the assumed risks materialise and
to improve Mediclinic’s ability to manage or contain
the risk events, should they occur.
• External risks/Threats – Certain risks arise from events
or circumstances external to the business’s influence
or control, e.g. natural disasters, geopolitical tensions,
or macroeconomic changes. Management’s response
focuses on identifying the sources of such risks and
seeking to mitigate their impact on the business.
• Internal preventable risks – These risks arise from
within the Group and are controllable. They are
managed through active prevention by monitoring
operational processes and guiding behaviours and
decisions towards desired norms.
96
The Board is ultimately accountable for the Group’s risk
management processes and internal control system,
and for determining the Group’s risk appetite. It
receives regular updates on the current and emerging
risks facing the business, and considers the impact
these risks may have on key stakeholders and the
achievement of the Group’s strategic goals.
The Audit and Risk Committee supports the Board in the
management of risk and is responsible for reviewing the
effectiveness of the risk management and internal control
Refer to the Audit and Risk
processes during the year.
Committee Report on page 142. The Board is further
supported by the Clinical Performance and Sustainability
Committee, which provides governance and oversight
over clinical performance and related risks and control
effectiveness.
Refer to the Clinical Performance and
Sustainability Committee Report on page 154.
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT PRINCIPAL RISKS AND UNCERTAINTIES
Principal risks are risks that can materially affect Mediclinic’s business model, performance, prospects, solvency, liquidity
or reputation. These are determined through a strategic risk review process where top risks are identified and assessed
by divisional Executive Committees and the Group Executive Committee (with input from non-executive directors).
Risk assessments at
functional, project and
operational level
Divisional Executive
Committee risk
assessments
Group Executive
Committee risk
assessment
Principal risks
Mediclinic’s risk landscape is reviewed regularly by the Group Executive Committee and the Board. Political, economic,
social, technological, environmental and legal developments which may impact the Group’s operations and business
model viability in the short, medium or long term are reviewed to identify emerging and transition risks (i.e. climate
policy or technological shifts).
The FY21 review confirmed that the principal risks remain valid and no new principal risks were identified. Pandemics
and infectious diseases remain at the top of the principal risk list. COVID-19 poses an ongoing risk to the Group and
affects other principal risks. The Group’s operational activities may be affected by further waves and mutations of the
COVID-19 virus possibly leading to suspension and postponement of elective procedures and, consequently, an impact
on financial performance.
emergency preparedness and response to the pandemic, and the impact thus far.
Refer to the COVID-19 overview on pages 12–16 for more information on the Group’s
THE HEAT MAP SHOWS THE
PRINCIPAL RISKS OF THE GROUP
Higher
d
o
o
h
i
l
e
k
i
L
Strategic risks
2. Disruptive innovation and
digitalisation
8. Business projects
13. Business investments and
acquisitions
External risks/Threats
1. Pandemics and infectious diseases
3. Economic and business environment
4. Regulatory and compliance
5. Information systems security
and cyberattacks
6. Competition
10. Availability and cost of capital
Internal preventable risks
7. Workforce risks
9. Patient safety and clinical quality
11. Financial and credit risk
12. Quality of service and operational
stability
1
2
9
8
6
7
5
3
4
13 11
12
10
Lower
Impact
Higher
97
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCSTRATEGIC REPORT
RISK MANAGEMENT REPORT CONTINUED
1. PANDEMICS AND INFECTIOUS DISEASES
TYPE OF RISK
External risk/Threat
OWNER
Group Chief Clinical Officer
RISK APPETITE
Low
RISK RATING
Critical
PRINCIPAL RISK
A pandemic occurs when
an infectious disease
rapidly infects many people
and spreads to multiple
countries and continents.
These risks refer to the
Group’s ability to respond
effectively to the potential
adverse clinical, operational
and business effects caused
by a pandemic or infectious
disease.
KEY STAKEHOLDERS
• Clients
• Employees
• Governments and
authorities
• Investors
• Medical practitioners
• Professional societies
CONSIDERED IN
VIABILITY ASSESSMENT
Yes, modelled adverse
impact on volumes caused
by COVID-19 pandemic.
KEY MITIGATION
• Hospital and business
incident response
planning
• Central coordination of
task teams and clinical
governance
• Monitoring
• Financial scenario
planning
• Communication strategy
TREND
FY21 FY20
The risk relating to the
COVID-19 pandemic
remains at an elevated
level.
LINK TO STRATEGY
Goal 1
Goal 2
Goal 3
2. DISRUPTIVE INNOVATION AND DIGITALISATION
OWNER
Group Chief Innovation
Officer
KEY STAKEHOLDERS
• Clients
• Employees
• Industry partners
• Investors
• Medical practitioners
CONSIDERED IN
VIABILITY ASSESSMENT
No
RISK APPETITE
Moderate to significant
RISK RATING
Critical
KEY MITIGATION
• Dedicated Innovation
TREND
FY21 FY20
function which includes
digital transformation
• Strategic planning
processes
• Proactive monitoring
• Continuum of care
The increased risk relates
to increased demand from
clients and stakeholders
for adoption of virtual
solutions and innovation.
strategy
LINK TO STRATEGY
Goal 1
Goal 3
TYPE OF RISK
Strategic
PRINCIPAL RISK
Disruptive innovation
and digitalisation
risks incorporate the
disintermediation and
erosion of the Mediclinic
business model due to the
impact of technological
development. It refers to
the extent and speed at
which new technologies
(and combinations thereof)
change and transform
industries, and to what
extent an organisation can
exploit these opportunities
by being responsive and
innovative, while managing
associated risks.
98
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT 3. ECONOMIC AND BUSINESS ENVIRONMENT
TYPE OF RISK
External risk/Threat
OWNER
Group CFO
RISK APPETITE
Moderate to significant
RISK RATING
High
PRINCIPAL RISK
These risks relate to the
downturn in the general
economic and business
environments impacting the
affordability of healthcare
for funders and self-paying
patients.
The business environment
risks include the effect of
market dynamics on tariffs
and fees.
KEY STAKEHOLDERS
• Clients
• Governments and
authorities
• Healthcare insurers
• Investors
CONSIDERED IN
VIABILITY ASSESSMENT
Yes, modelled volume
reduction and downturn in
the macroeconomic and
business environment.
KEY MITIGATION
• Monitor developments
and trends in the
economic and business
environments and early
warning indicators
• Proactive monitoring
and negotiation by the
Group’s Funder Relations
functions
• Focus on quality and
continuum of care to
reinforce the Group’s
market position
TREND
FY21 FY20
The global economic
environment and outlook
remain weak.
LINK TO STRATEGY
Goal 1
Goal 2
Goal 6
4. REGULATORY AND COMPLIANCE
TYPE OF RISK
External risk/Threat
OWNER
Group Chief Governance
Officer and divisional CEOs
RISK APPETITE
Low
RISK RATING
High
PRINCIPAL RISK
These risks relate to adverse
changes in legislation and
regulations impacting on
the Group, or where failure
to comply with legislation
and regulations may result
in losses, fines, penalties or
damage to reputation. The
Group is also exposed to
an increasing compliance
monitoring cost.
The risks include healthcare
reform by regulators aimed
at reducing the cost of
healthcare, broadening the
access to quality healthcare
and increasing quality
standards monitoring by
regulators.
The Group monitors
the emerging risks from
climate change in line with
regulatory changes and
disclosure requirements.
The actions the Group
is taking to mitigate the
impact of climate change,
and minimise its impact
on the environment, are
described on page 58.
KEY STAKEHOLDERS
• Governments and
KEY MITIGATION
• Proactive engagement
TREND
FY21 FY20
authorities
• Industry partners
• Investors
• Medical practitioners
CONSIDERED IN
VIABILITY ASSESSMENT
Yes, modelled reductions
in tariffs and volumes.
The risk remains stable for
the period under review.
It relates to the continued
healthcare reform and
the introduction of new
legislation or regulations
LINK TO STRATEGY
Goal 1
Goal 2
Goal 5
Goal 6
with stakeholders
• Health policy units
created to conduct
research and provide
strategic input into
reform processes
• Active industry
participation across all
divisions
• Company Secretarial,
Legal and Compliance
functions 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
• Group’s Sustainable
Development Strategy
addresses environmental
risks (refer to page 55)
99
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCSTRATEGIC REPORT
RISK MANAGEMENT REPORT CONTINUED
5. INFORMATION SYSTEMS SECURITY AND CYBERATTACKS
TYPE OF RISK
External risk/Threat
OWNER
Group Chief Information
Officer
RISK APPETITE
Low
RISK RATING
High
PRINCIPAL RISK
Information systems
security and cyberattack
risks relate to the
unauthorised access
to information systems
through external or internal
attack or unauthorised
breaches resulting in the
unavailability of systems,
failure of data integrity and
loss of confidential data.
KEY STAKEHOLDERS
• Clients
KEY MITIGATION
• Comprehensive
TREND
FY21 FY20
• Employees and potential
applicants
• Governments and
authorities
• Investors
CONSIDERED IN
VIABILITY ASSESSMENT
No
information systems
identity access
management, change
and physical access
controls
• Regular security reviews
• Disaster recovery
planning
• Group information
security and data privacy
policies
• Group ICT Security
Committee
The risk relates to the
continued external threat
from cyberattacks and
breaches, which has
remained at similar levels
to the prior reporting
period.
LINK TO STRATEGY
Goal 1
Goal 3
Goal 4
6. COMPETITION
TYPE OF RISK
External risk/Threat
PRINCIPAL RISK
This risk relates to the
uncertainty created by
existing and/or emerging
competitors with alternative
business models.
The risk includes the
outmigration of care
(partly driven by
further technological
developments) and the
development of alternative
care models.
OWNER
Group CEO and divisional
CEOs
KEY STAKEHOLDERS
• Clients
• Employees
• Healthcare insurers
• Industry partners
• Investors
• Medical practitioners
CONSIDERED IN
VIABILITY ASSESSMENT
Yes, modelled reductions in
volumes as well as tariffs.
RISK APPETITE
Moderate
RISK RATING
Medium
KEY MITIGATION
• Proactive monitoring
• Strategic planning
processes
• Quality and value of care
processes
TREND
FY21 FY20
Providers in the healthcare
market remain competitive
with a slightly improved
risk exposure for the
Group.
LINK TO STRATEGY
Goal 1
Goal 2
Goal 3
Goal 6
100
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT 7. WORKFORCE RISKS
TYPE OF RISK
Internal preventable risk
PRINCIPAL RISK
There is a shortage of
skilled labour, particularly of
qualified and experienced
nursing employees in
Southern Africa.
The availability and support
of admitting medical
practitioners, whether
independent or employed,
are critical to the Group’s
services.
The risk includes the
potential negative effect
of COVID-19 on frontline
healthcare workers, who
are working under immense
and unprecedented
pressure for extended
periods and putting their
physical, mental and social
wellbeing at risk.
OWNER
Group Chief Strategy and
Human Resources Officer
and divisional CEOs
RISK APPETITE
Low
RISK RATING
Medium
KEY STAKEHOLDERS
• Employees and potential
KEY MITIGATION
• Systems to monitor
TREND
FY21 FY20
applicants
• Investors
• Medical practitioners
CONSIDERED IN
VIABILITY ASSESSMENT
Yes, modelled shortage of
qualified and experienced
healthcare employees.
Vacancies and turnover
ratios in respect of skilled
resources and medical
practitioners are expected
to remain at similar levels
to the prior reporting
period.
LINK TO STRATEGY
Goal 2
satisfaction, movement
and profiles of medical
practitioners
• Details on the
relationship and
engagement with
medical practitioners
provided in the
2021 Sustainable
Development Report
• Employment,
recruitment and
retention strategies
explained in the
2021 Sustainable
Development Report
• Extensive training and
skills development
programme and
international recruitment
programme explained in
the 2021 Sustainable
Development Report
• The wellbeing of all
employees is actively
monitored and managed
through well-established
support structures. Refer
to the ‘The people who
set Mediclinic apart’ case
study on page 18 and the
2021 Sustainable
Development Report for
more information
101
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCSTRATEGIC REPORT RISK MANAGEMENT REPORT CONTINUED
8. BUSINESS PROJECTS
TYPE OF RISK
Strategic
PRINCIPAL RISK
The Group is adapting to
the evolving operational
and regulatory environment
and healthcare market.
These risks refer to issues
or occurrences that could
interfere with successful
completion of projects,
including timelines, cost and
quality.
OWNER
Group CEO, divisional
CEOs and Group Chief
Information Officer
KEY STAKEHOLDERS
• Clients
• Medical practitioners
• Industry partners
• Investors
• Suppliers
• Employees
CONSIDERED IN
VIABILITY ASSESSMENT
Yes, modelled failure to
deliver sustainable cost
savings.
RISK APPETITE
Moderate
RISK RATING
Medium
KEY MITIGATION
• Effective project
governance practices,
methodologies and
reporting
• Experienced project
management teams
• Proactive monitoring
and oversight
TREND
FY21 FY20
These risks remain stable
for the year under review.
LINK TO STRATEGY
Goal 1
Goal 2
Goal 3
Goal 6
9. PATIENT SAFETY AND CLINICAL QUALITY
TYPE OF RISK
Internal preventable risk
OWNER
Group Chief Clinical Officer
RISK APPETITE
Low
RISK RATING
Medium
PRINCIPAL RISK
These risks relate to all
clinical risks associated with
the provision of clinical care
resulting in undesirable
clinical outcomes.
Clinical risks are managed
daily at all facilities. High-
priority clinical risk areas
include patient safety culture,
adverse obstetric outcomes,
medication errors, surgical
and procedural adverse
events and multidrug-
resistant organisms.
Such risks may also result
in damage to Mediclinic’s
reputation and impact on
brand equity1.
KEY STAKEHOLDERS
• Clients
KEY MITIGATION
• Refer to the 2021
TREND
FY21 FY20
• Employees and potential
applicants
• Healthcare insurers
• Industry partners
• Medical practitioners
CONSIDERED IN
VIABILITY ASSESSMENT
Yes, modelled reductions in
volumes as well as tariffs.
Clinical processes across
all divisions remained a key
focus area for the Group.
Risk exposure remained at
a comparable level to the
prior reporting period.
LINK TO STRATEGY
Goal 1
Goal 2
Clinical Services Report
for a detailed analysis of
the strategies to manage
and monitor clinical risks
• A Group-wide
clinical risk register
implemented per
division
• Accreditation processes
• Clinical governance
processes
• Monitoring of clinical
performance indicators
• Focus on quality
management processes
• Stakeholder
engagement and
disclosure strategies
• Clinical audits
Note
1 Brand equity refers to the commercial value derived from the consumer perception of the Group’s brand names rather than the services provided under
those brand names.
102
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT
10. AVAILABILITY AND COST OF CAPITAL
TYPE OF RISK
External risk/Threat
OWNER
Group CFO
RISK APPETITE
Moderate
RISK RATING
Medium
PRINCIPAL RISK
The Group requires capital
to finance strategic
expansion opportunities
and/or refinance or
restructure existing debt
– the cost, terms and
availability of which
depend on prevailing
market conditions.
KEY STAKEHOLDERS
• Investors
KEY MITIGATION
• Long-term planning of
TREND
FY21 FY20
• Banks
CONSIDERED IN
VIABILITY ASSESSMENT
Yes, modelled increased
cost of capital as well as
working capital
deterioration.
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
• Systems to monitor
compliance with
requirements of debt
covenants
• Refer to note 17 of the
Group annual financial
statements for further
details on capital risk
management and the
Group’s borrowings
Interest rates are expected
to remain at comparable
levels during 2021.
Long-term financing
arrangements are in place.
The Group’s leverage
across the divisions
is at levels where the
refinancing at current
market conditions should
be possible.
LINK TO STRATEGY
Goal 1
Goal 3
Goal 6
11. FINANCIAL AND CREDIT RISK
TYPE OF RISK
External risk/Threat
OWNER
Group CFO
RISK APPETITE
Low
RISK RATING
Medium
KEY STAKEHOLDERS
• Healthcare insurers
• Investors
CONSIDERED IN
VIABILITY ASSESSMENT
Yes, modelled working
capital deterioration.
TREND
FY21 FY20
The credit risks did not
change significantly and
remained stable.
LINK TO STRATEGY
n/a
KEY MITIGATION
• Preservation of a sound
internal financial control
environment
• Effective operational risk
management processes
• Effective monitoring and
oversight of operations
• Regulated minimum
solvency requirements
for funders
• Monitoring of approved
funders
• Group Treasury Policy
PRINCIPAL RISK
Credit risks relate to possible
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.
Credit risk with respect to
trade receivables consists
mainly of medical schemes
and insurance companies,
which are required to
maintain minimum reserve
levels. In Switzerland and
the UAE, a large part of
trade receivables is owed
by cantonal or government-
funded programmes, which
support healthcare providers
with early release of payments
due during COVID-19 business
disruptions.
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
103
STRATEGIC REPORT
RISK MANAGEMENT REPORT CONTINUED
12. QUALITY OF SERVICE AND OPERATIONAL STABILITY
OWNER
Group Chief Clinical Officer
and divisional Chief
Operating Officers
KEY STAKEHOLDERS
• Clients
• Employees
• Investors
• Medical practitioners
CONSIDERED IN
VIABILITY ASSESSMENT
Not specifically. However,
volume reductions have
been modelled.
RISK APPETITE
Low
RISK RATING
Medium
TREND
FY21 FY20
These risks did not change
significantly and remained
stable.
LINK TO STRATEGY
Goal 2
Goal 5
KEY MITIGATION
• Patient satisfaction
surveys (both internal
and external)
• Complaints monitoring
• Training programmes
and supervision of
service levels
• Emergency backup
electricity generation
• Emergency and disaster
planning
• Extensive fire-fighting
and detection systems,
including comprehensive
maintenance processes
• Comprehensive
insurance cover for
financial impact of
potential disasters
TYPE OF RISK
Internal preventable risk
PRINCIPAL RISK
Operational risks refer to
diverse types of operational
events with a potential for
financial loss, operational
interruptions or reputational
damage.
These risks refer to the
quality of service and the
stability of the operations,
including:
• incidents of poor service
or where operational
management fails to
respond effectively to
complaints;
• operational interruptions,
which refer to any
disruption of the facility
and may include the threat
of disrupted electricity or
water supply; and
• fire and allied perils causing
damage or business
interruption.
VIABILITY ASSESSMENT
ASSESSMENT OF PROSPECTS
The directors have assessed the
prospects of the Group by reference
to its current financial position, its
recent performance, investment case,
strategy, annual financial planning
and risk assessment. The Group’s
strategy, which informs the annual
financial planning process, considers
factors such as technological, social,
and environmental changes.
ASSESSMENT PERIOD
The directors have determined the
five years to March 2026 to be an
appropriate period over which to
provide its viability statement as it is
consistent with the annual planning
104
period which largely reflects the
benefit of investments made in the
present period.
ASSESSMENT OF VIABILITY
The business plan reflects the
Group’s strategy, associated risks,
and the directors’ best estimate of
its prospects. Fundamental to the
assessment of the Group’s prospects
is the long-term business model
of quality service delivery and
revenue growth under acceptable
risk tolerance. The annual financial
planning process includes a detailed
bottom-up approach per division
for the budget year (performed
by each clinic and hospital) and
an extension of the key assumptions
to the forecast period. The budgets
and five-year plans, including the
Group strategic goals, are iteratively
reviewed and finally approved by
the divisional Executive Committees,
the Group Executive Committee and
the Board.
The five-year period extends beyond
the maturities of a material portion
of the Group’s borrowings in each
division. The Group expects to be able
to refinance existing borrowings on
broadly similar terms and conditions
before the existing facilities expire.
Refer to page 219 for the maturity
profile of the Group’s borrowings.
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT
13. BUSINESS INVESTMENTS AND ACQUISITIONS
TYPE OF RISK
Strategic
OWNER
Group CFO
RISK APPETITE
Moderate
RISK RATING
Medium
KEY STAKEHOLDERS
• Governments and
authorities
• Industry partners
• Investors
CONSIDERED IN
VIABILITY ASSESSMENT
No
PRINCIPAL RISK
These risks relate to
increased financial exposure
due to major strategic
business investments and
acquisitions.
They include the sensitivity
of the assumptions
made when capital is
allocated and the effective
implementation of major
investment decisions.
Key:
KEY MITIGATION
• Strategic planning
processes
• Due diligence processes
• Investment mandates
• Board oversight
• Post-acquisition
TREND
FY21 FY20
The investment and
governance processes
remained unchanged for
the period under review
management processes
LINK TO STRATEGY
Goal 1
Goal 3
Goal 6
Risk exposure has increased due to change in business environment; increased investments; increased dependency of operations
on information technology; information sensitivity; and associated cost.
Proactive and continuous monitoring; favourable results of negotiations; effective treasury; and risk management processes have
resulted in lowering of risk exposure.
Risk exposure has remained largely unchanged as the operating and regulatory environments have remained stable, and
enhanced risk mitigation measures have kept the risk at the same level.
The assessment included stress
tests of various severe but plausible
scenarios. The impact of each
scenario and certain scenarios in
combination were modelled and
assessed on EBITDA or profit after
tax as appropriate, net debt and debt
covenant tests over the five-year
forecast period.
The principal risks and related key
assumptions underlying each of
the divisions’ business plans were
stress tested. Due to the mostly
fixed employee cost base across the
business, lower revenue due to either
a reduction in tariffs or volumes has
the most pronounced impact on
EBITDA. Compared with the business
plan, the combined adverse effect
of reduction of tariffs and volumes
after mitigation amounts to a decline
of approximately 15% to 20% per
year to EBITDA over the five-year
assessment period.
Refer to page 204 for a further
analysis of the going concern
assertion which has been adopted in
preparing the financial statements.
VIABILITY STATEMENT
The assessment described above
showed that the business, in its
geographically diverse portfolio, would
be able to withstand any individual
and certain combinations of the severe
but plausible scenarios, ceteris paribus,
by taking management action with
the following key mitigating steps:
reducing discretionary investment,
initiating cost management initiatives,
using drawdown of overdraft facilities,
and improving net working capital
days.
Considering the Group’s prospects
and principal risks and uncertainties,
the directors confirm that the Group
will be able to continue in operation
and meet its liabilities as they fall
due, in the ordinary course of
business, over the five-year period
of their detailed assessment, ending
31 March 2026.
105
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCSTRATEGIC REPORT
GOVERNANCE AND
REMUNERATION
REPORT
CHAIR’S INTRODUCTION
I am delighted to present the Governance and
Remuneration Report, my first as Chair of Mediclinic.
Dr Edwin Hertzog supported and guided me during my
transition from Chair Designate to Chair in July 2020,
and I would like to thank him and everyone involved
in my detailed induction programme, which was held
remotely except for interaction with the Hirslanden team
in Switzerland.
The Corporate Governance Statement that follows will
enable you to gain an understanding of the governance
responsibilities and focus of the Board throughout the
past year. The Board and executive team are committed
to maintaining strict principles of corporate governance
and the highest standards of integrity and ethics, which
are embedded in the Group’s purpose, vision and
organisational culture. These aspects are actively managed
by the Group’s leadership, closely monitored by the
Board and embedded across all levels of its operations, as
evidenced in the Strategic Report and this section of the
Annual Report.
The year under review was undoubtedly a challenging
one for us all, given the significant uncertainty brought
about by the COVID-19 pandemic. A key area of focus
for the Board has been overseeing Mediclinic’s response
to the pandemic across the countries and communities
in which it operates, while maintaining sound systems of
risk management and internal control, and monitoring
the wellbeing of employees, particularly those in frontline
positions. We will continue to monitor the evolving nature
of the pandemic and its significance for Mediclinic until it
no longer has a material impact on the Group.
We have reviewed the composition of the Board and
senior management to ensure it continues to be diverse
in terms of the background, skills and experience required
to support the strategic and operational direction of
the business. We were delighted to welcome Mr Steve
Weiner to the Board in July 2020 and, in 2021, emphasis
has been placed on identifying two independent non-
executive directors to succeed Messrs Alan Grieve and
Trevor Petersen. Further details on this process and
the outcome are set out in the Nomination Committee
Report on page 160.
Following this year’s Board evaluation, undertaken by
Lintstock Ltd, we agreed an action plan to address
the findings, which is well underway. More details can
be found in the section on ‘Evaluation of the Board,
Committees and Chair’ in the Corporate Governance
Statement on page 134.
Due to the restrictions effected by the UK Government’s
response to COVID-19, we were unable to hold our
2020 AGM with investors attending in person as originally
planned. Following my appointment as Chair, however,
I was able to engage extensively with investors by
106
other means. Details thereof are set out in the ‘Investor
engagement’ section of the Corporate Governance
Statement on page 132.
Although we would prefer to welcome investors in person
to our 2021 AGM, we are unable to predict with certainty
what, if any, restrictions on public meetings or travel will be
in effect on the AGM date. The health and wellbeing of our
investors and employees are of paramount importance to
the Board. Due to the expected ongoing travel restrictions
in the UK and abroad, and the fact that some directors
are based outside of the UK, the entire Board will not be
present. We have thus agreed to scale back our AGM again
this year by hosting a purely functional meeting, limited
principally to putting the resolutions to investors and
calling the poll. Investors and corporate representatives are
strongly encouraged to not attend in person or appoint any
proxy to attend other than the chair of the meeting.
However, we understand that the event is an opportunity for
investors to ask the Board questions related to the business
of the Company, and we welcome such questions. To ensure
that all investors have the opportunity to engage with the
Board before submitting their proxy votes, we will host a live
online investor engagement event on Monday, 19 July 2021
at 14:00 BST. I look forward to introducing myself to you at
this event and, together with the Group CEO, Group CFO
and the chairs of the Audit and Risk, Clinical Performance
and Sustainability, Nomination and Remuneration
committees, responding to your questions. Investors can
also submit questions in writing in advance of the event.
Further details are set out in the 2021 Notice of AGM, which
is available at annualreport.mediclinic.com.
During the year we scrutinised the Group’s strategy,
principal risks, risk appetite, and workforce engagement
mechanisms and outputs. Further details of our corporate
governance framework and activities for the year are
included in this Annual Report, as well as in the 2021 Clinical
Services Report and the 2021 Sustainable Development
Report available at annualreport.mediclinic.com.
I am immensely grateful for the support the Board and I
have received from the workforce and wider stakeholders
during this uniquely testing year and remain confident that
the Board, supported by an effective executive team and
governance structure, is well placed to ensure the delivery
of the Mediclinic Group Strategy.
Dame Inga Beale
Non-executive Chair
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT BOARD OF
DIRECTORS
The biographies of the
directors and their committee
membership at 25 May 2021
(the ‘Last Practicable Date’)
are set out in this section.
COMMITTEE KEY
Member of Audit and
A
Risk Committee
Member of Clinical
C
Performance and
Sustainability Committee
Member of Investment
I
Committee
Member of Nomination
N
Committee
Member of Remuneration
R
Committee
Chair of committee
SKILLS AND
EXPERIENCE KEY
Capital markets, investor
management
Financial, accounting
and/or risk management
Healthcare
IT, cybersecurity
Medical/clinical/similarly
complex business
Marketing and customer
focus
Sustainability
Talent and culture
management, HR
DAME INGA BEALE
I N R
NON-EXECUTIVE CHAIR
NATIONALITY: BRITISH
APPOINTED: CHAIR DESIGNATE MARCH 2020,
CHAIR JULY 2020
CONTRIBUTION TO THE COMPANY AND REASONS
FOR RE-ELECTION
Dame Inga has close to 40 years of business management
and leadership experience in global financial services,
insurance and risk management in particular, and
contributes a wealth of other skills and experience to
the Board. As CEO of Lloyd’s of London, the insurance
and reinsurance market, she initiated large-scale digital
and cultural transformation programmes and led the
business’s expansion into Dubai, China and India. She also
played a critical role in advancing diversity and inclusion
initiatives across Lloyd’s and the international insurance
sector. Her background provides a valuable balance to
the Board and brings a different perspective to the Board’s
debates.
CAREER EXPERIENCE
From 2014 to 2018 she served as the first female CEO
of Lloyd’s of London. Previously she held various senior
leadership positions across the insurance sector, both in
Switzerland and internationally, including at Converium,
Zurich Insurance Group, Canopius and GE Insurance
Solutions.
KEY EXTERNAL APPOINTMENTS
Independent non-executive director of Crawford &
Company and London First. She serves on the London
Mayor’s Business Advisory Board and is Patron of Insuring
Women’s Futures. She has recently been appointed to the
supervisory board of NN Group N.V.
QUALIFICATIONS
Associate of the Chartered Insurance Institute since 1987,
appointed Dame Commander of the Order of the British
Empire in 2017 for services to the UK economy.
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BOARD OF DIRECTORS CONTINUED
DR RONNIE VAN DER MERWE
MR JURGENS MYBURGH
IC
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GROUP CHIEF EXECUTIVE OFFICER
NATIONALITY: SOUTH AFRICAN
APPOINTED: JUNE 2018
GROUP CHIEF FINANCIAL OFFICER
NATIONALITY: SOUTH AFRICAN
APPOINTED: AUGUST 2016
CONTRIBUTION TO THE COMPANY AND REASONS
FOR RE-ELECTION
Mr Myburgh is a qualified chartered accountant with
broad financial and accounting experience obtained
during his career of over 20 years. Since joining the
Group, he has emphasised the importance of capital
management and allocation informed by cost of capital
across the Group and driven a structured approach
to growth.
CAREER EXPERIENCE
After qualifying as a chartered accountant with KPMG
in 2000, he joined The Standard Bank of South Africa
Ltd in 2001 and was appointed as Head of Mergers and
Acquisitions in 2009. Subsequently, he served as CFO at
Datatec Ltd, an international ICT Group, before joining
Mediclinic as Group CFO in August 2016.
KEY EXTERNAL APPOINTMENTS
None.
QUALIFICATIONS
BComm Hons in Accounting (University of
Johannesburg), registered with the South African
Institute of Chartered Accountants (‘SAICA’).
CONTRIBUTION TO THE COMPANY AND REASONS
FOR RE-ELECTION
Dr Van der Merwe has a strong track record of
leadership and management within a large private
sector healthcare organisation, including strategy,
organisational development, clinical performance,
adoption of technology and managing quality. He also
has extensive knowledge of Mediclinic’s operations.
As a qualified anaesthesiologist in private practice,
Dr Van der Merwe gained extensive experience
in trauma and elective anaesthesia, intensive care
management, and the management of acute and
chronic pain. During his involvement in the medical
insurance industry, he gained expertise in healthcare
data management, analytics, managed healthcare
principles and reimbursement models. He established
the Clinical Services, Clinical Information, Advanced
Analytics, Health Information Management and central
Procurement functions at Mediclinic, contributing to
the growth and strategic positioning of the Group.
CAREER EXPERIENCE
He joined the Company in 1999 and as Chief Clinical
Officer took responsibility for various aspects of the
business prior to his appointment as executive director
and Group CEO of Mediclinic. He was an executive
director of Mediclinic International Ltd from 2010, up
to the reverse takeover of Al Noor Hospitals Group plc.
He was appointed as an executive director and Group
CEO of Mediclinic, with effect from 1 June 2018, and
also serves as a non-executive director of Spire since
24 May 2018 under the terms of the shareholder
agreement between Spire and Mediclinic.
KEY EXTERNAL APPOINTMENTS
Non-executive director of Spire.
QUALIFICATIONS
MBChB (Stellenbosch University), DA (SA) (College of
Anaesthetists of South Africa), FCA (SA) (Fellowship of
the College of Anaesthetists of South Africa), Advanced
Management Program (Harvard Business School).
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MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT MR ALAN GRIEVE
A I N
DR MUHADDITHA AL HASHIMI
C
SENIOR INDEPENDENT DIRECTOR
NATIONALITY: BRITISH AND SWISS
APPOINTED: INDEPENDENT NON-EXECUTIVE DIRECTOR
FEBRUARY 2016, SID JULY 2019
INDEPENDENT NON-EXECUTIVE DIRECTOR
NATIONALITY: EMIRATI
APPOINTED: NOVEMBER 2017
CONTRIBUTION TO THE COMPANY AND REASONS
FOR RE-ELECTION
Working as an executive and non-executive director
across a wide range of business areas, Mr Grieve
has gained comprehensive experience in finance,
accounting and risk management; he also has
extensive knowledge of the healthcare sector.
This equips him with a strong basis for assessing
and, where appropriate, challenging the financial
and risk management framework.
CONTRIBUTION TO THE COMPANY AND REASONS
FOR RE-ELECTION
Dr Al Hashimi has extensive knowledge and experience
of the healthcare sector and provides substantial
strategic and tactical expertise in operations, fiscal
management and negotiating strategic transactions.
She contributes valuable insights, especially into the
Middle East operations of the Company, and has an
excellent understanding of the broader geopolitical
landscape.
CAREER EXPERIENCE
He began his career in accountancy at the respective
auditing firms now known as PwC and EY. He worked
for Richemont, the Swiss luxury goods group, as
Company Secretary from 1998 to 2004 and as
Director of Corporate Affairs from 2004 to 2014. He
served as an independent non-executive director of
Mediclinic International Ltd from 2012 and as a director
of Mediclinic Switzerland AG (now Hirslanden AG)
between 2008 and 2012. He served as CFO of Reinet
Investments Manager SA and Reinet Fund Manager SA
from 2008 to 2011 and was the CEO from 2012 until he
retired in 2014.
CAREER EXPERIENCE
Dr Al Hashimi has over 20 years’ experience in the
healthcare and higher education industry in the
UAE. She is currently the Chair of the Sharjah Private
Education Authority. Previous roles include serving as
CEO of Dubai Healthcare City; CEO of the Mohammed
Bin Rashid Al Maktoum Academic Medical Center;
Deputy CEO of Tatweer; Member of Dubai Holdings;
Executive Dean of the Faculty of Health Sciences,
Higher Colleges of Technology (‘HCT’); Acting Deputy
Vice Chancellor of Academic Affairs at HCT; and a
Director of Education of the Harvard Medical School
Dubai Center.
KEY EXTERNAL APPOINTMENTS
Non-executive director Reinet Investments Manager SA
and Reinet Fund Manager SA.
QUALIFICATIONS
BA Hons Business Administration (Heriot-Watt
University), member of the Institute of Chartered
Accountants of Scotland.
KEY EXTERNAL APPOINTMENTS
Member of the University of Sharjah board of trustees,
member of the Audit and Compliance Committee and
the Academic Committee of the University of Sharjah,
and a trustee of the UAE Nursing and Midwifery Council
and the UAE Genetic Diseases Association.
QUALIFICATIONS
BS in Medical Technology (University of Minnesota),
MSc in Clinical Laboratory Services (University of
Minnesota), Doctor of Public Health (University of
Texas).
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT BOARD OF DIRECTORS CONTINUED
MR JANNIE DURAND
DR FELICITY HARVEY CBE
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NON-EXECUTIVE DIRECTOR
NATIONALITY: SOUTH AFRICAN
APPOINTED: FEBRUARY 20161
INDEPENDENT NON-EXECUTIVE DIRECTOR
NATIONALITY: BRITISH
APPOINTED: OCTOBER 2017
CONTRIBUTION TO THE COMPANY AND REASONS
FOR RE-ELECTION
Mr Durand has extensive knowledge and over
20 years’ experience in the investment industry
bringing substantial strategic and tactical expertise.
He contributes valuable insights to the Board’s
discussions by drawing on his skills and experience
of the investment and capital markets, finance and
accounting, risk management, development and
implementation of strategy, as well as investor relations.
CONTRIBUTION TO THE COMPANY AND REASONS
FOR RE-ELECTION
Dr Harvey’s clinical and public health background
provides valuable balance to the Board and brings an
important perspective to the Board’s discussions and to
the Clinical Performance and Sustainability Committee,
particularly as developments in technology continue to
accelerate. She also plays a crucial role in supporting
management in the development and implementation
of the Company’s sustainability strategy.
CAREER EXPERIENCE
He served as non-executive director of Mediclinic
International Ltd from 2012 up until the combination of
the businesses of the Company (then Al Noor Hospitals
Group plc) and Mediclinic International Ltd in 2016. He
joined the Rembrandt Group in 1996 and in 2012 was
appointed as the CEO of Remgro, which holds a 44.56%
interest in the Company, serving as its representative on
the Board.
KEY EXTERNAL APPOINTMENTS
Non-executive chair for the following listed companies
within the Remgro group: Distell Group Holdings Ltd,
RCL Foods Ltd and Rand Merchant Investment
Holdings Ltd.
QUALIFICATIONS
BAcc Hons in Accountancy (Stellenbosch University),
MPhil in Management Studies (Oxford University),
registered with SAICA.
Note
1 Mr Uys, the Head of Strategic Investment at Remgro, was appointed as
the alternate director to Mr Durand in April 2016. Prior to joining Remgro,
he was a founding member and ultimately became the CEO of the
Vodacom Group. He holds an MEng in Electronic Engineering (Stellenbosch
University) and an Executive MBA (Stellenbosch University).
110
CAREER EXPERIENCE
Throughout her career, Dr Harvey has gained an in-
depth knowledge of the health sector, mainly through
her work in the medical field. She is a clinician by
background and was previously Director General for
Public and International Health at the UK Department
of Health; Director of the UK Prime Minister’s Delivery
Unit; Head of the Medicines, Pharmacy and Industry
Group at the Department of Health; Director of Prison
Health at Her Majesty’s Prison Service; Head of Quality
Management at NHS Executive; and Private Secretary
to the Chief Medical Officer.
KEY EXTERNAL APPOINTMENTS
Non-executive director of Guy’s and St Thomas’ NHS
Foundation Trust, London; non-executive director of
Halcyon TopCo Ltd; visiting professor at the Institute
of Global Health Innovation, Imperial College London;
Chair of the WHO Independent Oversight and Advisory
Committee for Health Emergencies.
QUALIFICATIONS
MBBS (St Bartholomew’s Medical College, University
of London), PgDip in Clinical Microbiology (The Royal
London Hospital College, University of London),
MBA (Henley Management College). She was appointed
Commander of the Order of the British Empire in 2008,
and is an Honorary Fellow of the Royal College of
Physicians and a Fellow of the Faculty of Public Health, as
well as a member of Chapter Zero, the UK Chapter of the
World Economic Forum’s Climate Governance Initiative.
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT MR DANIE MEINTJES
DR ANJA OSWALD
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NON-EXECUTIVE DIRECTOR
NATIONALITY: SOUTH AFRICAN
APPOINTED: NON-EXECUTIVE DIRECTOR AUGUST 2018,
NON-EXECUTIVE DIRECTOR FOR WORKFORCE
ENGAGEMENT APRIL 2019
INDEPENDENT NON-EXECUTIVE DIRECTOR
NATIONALITY: SWISS
APPOINTED: JULY 2018
CONTRIBUTION TO THE COMPANY AND REASONS
CONTRIBUTION TO THE COMPANY AND REASONS
FOR RE-ELECTION
As the former Group CEO and prior to that, as
divisional Human Resources Executive, Mr Meintjes led
Mediclinic’s efforts to engage with, and invest in, the
Company’s workforce. With his career background and
in-depth knowledge of the Company, he is uniquely
positioned to effectively oversee the Company’s
employee engagement processes and evaluate the
effectiveness and progress in this regard. He brings
significant operational, strategic and risk management
experience to the Board as well as extensive knowledge
of the healthcare sector.
CAREER EXPERIENCE
He served as CEO of Mediclinic from 2010 up to his
retirement on 1 June 2018. He was appointed as an
executive director and Group CEO of the Company
on 15 February 2016. Mr Meintjes served in various
management positions in the Remgro group before
joining Mediclinic in 1985 as the Hospital Manager
of Mediclinic Sandton. He became a member of
Mediclinic’s Executive Committee in 1995 and a director
in 1996. In 2006 he was seconded to serve as a senior
executive of the Group’s operations in Dubai and
appointed as the CEO of Mediclinic Middle East in 2007.
He served as a non-executive director of Spire from
2015, a position from which he retired on 24 May 2018.
KEY EXTERNAL APPOINTMENTS
Non-executive director of Capitec Bank Holdings Ltd
and Capitec Bank Ltd.
QUALIFICATIONS
BPL Hons in Industrial Psychology (University of the
Free State), Advanced Management Program (Harvard
Business School).
FOR RE-ELECTION
Dr Oswald supports the Board with her knowledge
and experience in digital transformation and digital
ecosystems as well as with her tremendous network
in different fields. In addition, with her unique insights
into day-to-day operations in the broader political and
regulatory context of private healthcare in Switzerland
and her experience as a medical specialist, general
manager and board member of various companies and
start-up companies, she brings a wealth of knowledge
and practical experience.
CAREER EXPERIENCE
She was previously Deputy Medical Officer in
the Department of Health, Head of Medical and
Pharmaceutical Services, as well as a member of various
cantonal, regional and national committees in Swiss
health administration authorities and worked closely
with political opinion leaders. She was also CEO of a
healthcare start-up company and worked for several
years as a medical specialist in various hospitals.
KEY EXTERNAL APPOINTMENTS
CEO of Klinik Sonnenhalde AG, member of the boards
of Integrierte Psychiatrie Winterthur, Zippsafe AG, a
spin-off of ETH in the industry field that produces smart
locker solutions, and Past-President of the Association
of Private Hospitals in Basel.
QUALIFICATIONS
MD-PhD (University of Basel), specialising in
Orthopaedic Surgery and Traumatology, as well as
in Sports Medicine, Executive MBA (University of
Rochester-Bern). She holds a certificate in General
Management (University of Bern) as well as a certificate
of the Swiss Board School (International Center for
Corporate Governance of the University of St. Gallen).
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT BOARD OF DIRECTORS CONTINUED
MR TREVOR PETERSEN
MR TOM SINGER
A R
A R
INDEPENDENT NON-EXECUTIVE DIRECTOR
NATIONALITY: SOUTH AFRICAN
APPOINTED: FEBRUARY 2016
INDEPENDENT NON-EXECUTIVE DIRECTOR
NATIONALITY: BRITISH
APPOINTED: JULY 2019
CONTRIBUTION TO THE COMPANY AND REASONS
CONTRIBUTION TO THE COMPANY AND REASONS
FOR RE-ELECTION
Mr Petersen brings significant experience, in-depth
knowledge and corporate history of Mediclinic and
the healthcare sector, having served as a director from
2012 and through the successful merger of Mediclinic
International and Al Noor Hospitals Group plc in
February 2016. Through his career in accountancy
and audit, Mr Petersen has valuable experience,
which informs his role on the Mediclinic Board and its
committees.
FOR RE-ELECTION
Mr Singer’s skills and experience, gained through his
long and successful career in finance across a broad
range of UK and international branded consumer
businesses, including in the healthcare sector,
provide important input. He also brings a thorough
understanding of the UK-listed company environment.
His career and background make him ideally suited
to succeed Mr Grieve as chair of the Audit and Risk
Committee.
CAREER EXPERIENCE
Previously a lecturer at the University of Cape Town,
he took up a partnership in the merged firm of
PricewaterhouseCoopers Inc in 1996. He served as a
partner of the national firm from 1997 to 2009 and
as the partner-in-charge of Cape Town and Chair of
the Western Cape region. He has served professional
membership associations such as the SAICA and was
elected the Chair of its national body in 2006 and 2007.
KEY EXTERNAL APPOINTMENTS
Lead independent non-executive director of Media24
(Pty) Ltd.
QUALIFICATIONS
BComm Hons in Financial Management (University of
Cape Town), registered with SAICA.
CAREER EXPERIENCE
Previously served as CFO of InterContinental Hotels
Group PLC, a leading international hotel group, and
British United Provident Association (‘BUPA’), a
provider of health insurance, care homes for the elderly
and other health-related services including private
hospitals. Earlier in his career, Mr Singer was CFO and
Chief Operating Officer of William Hill PLC and Finance
Director of Moss Bros PLC, having started his career in
professional services and spending a total of 12 years at
Price Waterhouse and McKinsey.
KEY EXTERNAL APPOINTMENTS
Non-executive director of Halfords Group plc and DP
Eurasia NV, an operator of pizza restaurants in Turkey
and Russia.
QUALIFICATIONS
BSc Hons Finance and Accounting (University of
Bristol), qualified chartered accountant, Advanced
Management Programme (INSEAD).
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INDEPENDENT NON-EXECUTIVE DIRECTOR
NATIONALITY: AMERICAN
APPOINTED: JULY 2020
CONTRIBUTION TO THE COMPANY AND REASONS
FOR ELECTION
Mr Weiner brings significant healthcare and
international consumer goods experience in executive
and non-executive finance and business transformation
leadership roles in large, complex organisations in
developed and developing markets.
CAREER EXPERIENCE
He spent most of his career in finance with the
international consumer goods group Unilever,
most recently as Group Controller responsible for
performance management, accounting, reporting and
control. He was a member of Unilever’s Global Finance
Leadership Team, working closely with the group’s
board and Audit Committee. As non-executive director
of Guy’s and St Thomas’ NHS Foundation Trust, one of
the largest NHS Foundation Trusts in the UK, he chaired
the Audit Committee from 2014 to 2018.
KEY EXTERNAL APPOINTMENTS
Non-executive director of Guy’s and St Thomas’ NHS
Foundation Trust and of King’s College Hospital NHS
Foundation Trust.
QUALIFICATIONS
Masters in Finance (Columbia University), BSc in
Management (Rutgers University).
Mediclinic Milnerton
113
GOVERNANCE AND REMUNERATION REPORT2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
GROUP EXECUTIVE
COMMITTEE
The Group CEO is supported by an experienced and capable executive management team, with extensive
industry experience and organisational knowledge. The success of Mediclinic is testament to the strong
management team and its ability to execute on the Mediclinic Group Strategy.
The biographies of the Group CEO and Group CFO are provided on page 108 of this Annual Report.
MR GERT HATTINGH
DR DIRK LE ROUX
MR MAGNUS OETIKER
GROUP CHIEF GOVERNANCE
OFFICER
NATIONALITY: SOUTH AFRICAN
GROUP CHIEF INFORMATION
OFFICER
NATIONALITY: SOUTH AFRICAN
GROUP CHIEF STRATEGY AND
HUMAN RESOURCES OFFICER
NATIONALITY: SWISS
Mr Hattingh joined Mediclinic in
1991 as Group Accountant. He
served in various management
positions across the Group and was
appointed as Company Secretary
in 2000 and Group Services
Executive in 2011. Subsequent to
the acquisition of Al Noor Hospitals
Group plc in February 2016, he
holds the position of Group Chief
Governance Officer.
QUALIFICATIONS: BAcc Hons
(Stellenbosch University), Advanced
Management Program (Harvard
Business School), registered with
the SAICA.
Dr Le Roux joined Mediclinic in
August 2014 as the Group ICT
Executive and was appointed
to his current position of Group
Chief Information Officer on
11 August 2014. Prior to joining
Mediclinic, he served in various
managerial roles, including as
Managing Director of ThinkWorx
Consulting, Chief Information Officer
at Media24 (Pty) Ltd, General
Manager of IT Strategy and Risk
at Absa Bank Ltd and Head of IT at
the Development Bank of Southern
Africa.
QUALIFICATIONS: DComm in
Informatics (University of Pretoria),
MBA cum laude (North-West
University), PgDip in Data Metrics
(Unisa), BEng in Civil Engineering
(University of Pretoria).
Mr Oetiker worked for Hirslanden
in various management positions
from 2000 to 2016. He served on
this division’s Executive Committee
from 2008 in various roles, while
also taking responsibility for HR
management, funder relations
and strategy. During his last two
years at Hirslanden, he acted as
Chief Strategy Officer. In 2016, he
joined a family-owned company
in Switzerland with interests in
healthcare, real estate and catering
as CEO. In February 2018, he was
appointed Group Chief Strategy and
Human Resources Officer.
QUALIFICATIONS: BSc in Business
Administration (Zurich University of
Applied Sciences), Executive MBA
(University of Zurich).
114114
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT DR RENÉ TOUA
GROUP CHIEF CLINICAL OFFICER
NATIONALITY: SOUTH AFRICAN
DR TYSON WELZEL
DR DANIEL LIEDTKE
GROUP CHIEF INNOVATION OFFICER
NATIONALITY: GERMAN AND
SOUTH AFRICAN
CHIEF EXECUTIVE OFFICER:
HIRSLANDEN
NATIONALITY: SWISS
Before joining the Group, Dr Welzel
fulfilled clinical and academic roles
acquiring extensive experience in
private and public healthcare. He is also
a founder of the CoE in Emergency
Medicine in Bern. In 2016, he joined
Mediclinic, taking responsibility
for clinical governance and health
technology assessments, before being
appointed as Group General Manager:
Innovation in 2019. He subsequently
joined the Group Executive Committee
in October 2020 as Group Chief
Innovation Officer.
QUALIFICATIONS: MBChB (University
of Cape Town), European Masters
in Disaster Medicine (University
of Eastern Piedmont), MMedSc in
Clinical Epidemiology (Stellenbosch
University), Masters in International
Management (McGill University).
Dr Liedtke joined the Hirslanden
Klinik St. Anna in Lucerne in
2001. He held various clinical and
managerial positions at Hirslanden
prior to his appointments as
Hospital Manager of Klinik
Hirslanden in 2008 and as
Chief Operating Officer of the
Hirslanden Group in 2015. In 2019,
he was appointed as CEO.
QUALIFICATIONS: Doctor of
Business Administration (Charles
Sturt University), Master of Health
Administration (FHS St. Gallen),
DO in Osteopathic Medicine (Swiss
Conference of Cantonal Health
Directors), BSc in Physiotherapy
(Swiss Confederation), Certificate
in Car Electronics (Federal
certificate).
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Dr Toua is a medical practitioner
with extensive experience in private
and public healthcare. She started
her career in primary healthcare,
established a geriatric private
primary care practice and worked
in emergency medicine, including
at an academic trauma unit, for
several years. She joined Mediclinic
in 2006 and held the positions of
Regional Clinical Manager, and
Clinical Data and Information
Manager for Mediclinic Southern
Africa. Subsequently, she served
as the Group General Manager:
Clinical Performance. She sits on
the Executive Committee and is vice
Chair of the board of trustees for
Remedi, the in-house medical aid
scheme. She was appointed Group
Chief Clinical Officer with effect
from 1 July 2018.
QUALIFICATIONS: MBChB
(Stellenbosch University), MPhil
in Emergency Medicine (Patient
Safety and Clinical Decision Making)
(University of Cape Town), PgCert
in Project Management (University
of Stellenbosch Business School).
MR KOERT PRETORIUS
MR DAVID HADLEY
CHIEF EXECUTIVE OFFICER:
MEDICLINIC SOUTHERN AFRICA
NATIONALITY: SOUTH AFRICAN
CHIEF EXECUTIVE OFFICER:
MEDICLINIC MIDDLE EAST
NATIONALITY: BRITISH
Mr Pretorius joined Mediclinic in
1998 as the Regional Manager for
the central region of Mediclinic’s
operations in Southern Africa and
in 2003 took on the role of Chief
Operating Officer of the Mediclinic
Group. He was appointed CEO of
Mediclinic Southern Africa in 2008
and served as an executive director
of Mediclinic International Ltd from
2006, up to the acquisition of Al Noor
Hospitals Group plc.
QUALIFICATIONS: BCompt in
Accounting Science (University of
the Free State), Master of Business
Leadership (Unisa).
Mr Hadley joined Mediclinic in 1993
and filled various administrative
roles in HR, finance, operations
and hospital management before
being seconded to Dubai in
2007 to oversee the opening of
Mediclinic City Hospital. He was
appointed as CEO of Mediclinic
Middle East in 2009 and has
served on the Group Executive
Committee since 2011.
QUALIFICATIONS: BComm
(Unisa), MBA cum laude
(University of Liverpool).
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT
CORPORATE
GOVERNANCE
STATEMENT
INTRODUCTION
The Board is accountable to the Company’s
shareholders for ensuring the sound management
and long-term success of the Group. This can only
be achieved if the Board is supported by appropriate
governance processes to ensure that the Group is
managed responsibly and with integrity, fairness,
transparency and accountability. This Corporate
Governance Statement (the ‘Statement’) describes
the key elements of Mediclinic’s corporate governance
framework.
COMPLIANCE WITH THE UK CORPORATE
GOVERNANCE CODE AND LISTING RULES
This Statement, together with the various Board
committee reports and relevant sections of the
Strategic Report included in this Annual Report,
describes the Board’s application of and compliance
with the Code published by the FRC (www.frc.org.uk).
During FY21 and up to the Last Practicable Date, the
Company complied with all the provisions of the Code,
with the following exceptions:
• Provision 9 (regarding the independence of the chair
on appointment)
The Company’s former Chair, Dr Hertzog, was not
considered independent given his involvement in
various executive roles at Mediclinic International Ltd
since 1983 until his appointment as non-executive
Chair in 1992. Given his in-depth industry knowledge
and experience, the Board considered it in the best
interests of the Company that he served as Chair until
his retirement upon the conclusion of the Company’s
2020 AGM. He was succeeded by Dame Inga Beale,
who was deemed independent by the Board upon her
appointment as Chair on 22 July 2020.
• Provision 17 (regarding the nomination committee
leading the process for board appointments and
making recommendations to the board)
The Nomination Committee recommends
appointments to the Board ( refer to page 158
for more). However, in accordance with the
Company’s relationship agreement with its
principal shareholder, Remgro (the ‘Relationship
Agreement’), further details of which are provided
on page 139, Remgro is entitled to appoint up
to a maximum of three directors to the Board.
Mr Jannie Durand was appointed by Remgro
on 15 February 2016 and represents Remgro
on the Board. His appointment was therefore
not led by the Nomination Committee. No new
Board appointments were made in terms of the
Relationship Agreement during the year under
review.
Furthermore, the process for the appointment of
the new Chair was not managed by the Nomination
Committee, but by an independent panel of the
Board, which excluded Dr Hertzog and any director
with a possible conflict of interest.
• Provision 3 (regarding regular engagement by
the chair with major shareholders)
Until Dame Inga’s appointment, engagement
with major shareholders was conducted primarily
through the Group CEO, Group CFO and Head of
Investor Relations, who provided regular feedback
to the Board. A proactive and comprehensive
engagement schedule with major shareholders
was planned to introduce the Chair and to garner
their views on governance, performance against
strategy and the Group’s response to COVID-19.
Due to COVID-19-related travel restrictions, these
meetings occurred via video conference. Dame Inga
intends to have regular engagement with investors
going forward, in person, once it becomes practical
to do so.
Refer to the ‘Investor engagement’
section on page 132 of this Statement for more
information.
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MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT Mediclinic Midstream, South Africa
• Provision 36 (regarding post-employment
shareholding requirements)
The previous Remuneration Policy, approved by
shareholders in July 2017 and applicable until
22 July 2020, did not include a formal policy for post-
employment shareholding requirements. However,
the requirement was introduced in the current
Remuneration Policy, approved by shareholders on
22 July 2020, to ensure compliance with this provision.
Refer to the summary of the Remuneration Policy
on page 167 of the Remuneration Committee Report.
• Provision 40 and 41 (regarding engagement with
investors and the workforce)
The Remuneration Committee has engaged with
investors on the Company’s Remuneration Policy and
outcome. However, as explained on page 171 of the
Remuneration Committee Report, the Committee
has not directly engaged with the workforce on
remuneration matters.
In addition to complying with all other applicable
corporate governance requirements in the UK in
accordance with the Company’s primary listing
on the LSE, the Board is also satisfied that the
Company meets all the relevant requirements of
the JSE Listings Requirements and the NSX Listings
Requirements arising from its secondary listings
on the JSE in South Africa and the NSX in Namibia,
respectively.
The Board is accountable to the
Company’s shareholders for
ensuring the sound management
and long-term success of the
Group. This can only be achieved
if the Board is supported by
appropriate governance processes
to ensure that the Group is
managed responsibly.
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT CORPORATE GOVERNANCE STATEMENT CONTINUED
FIGURE 1: CORPORATE GOVERNANCE FRAMEWORK
BOARD
COMPANY
SECRETARY
GROUP CEO
AND CFO
CHAIR
SENIOR
INDEPENDENT
DIRECTOR
NON-
EXECUTIVE
DIRECTORS
EXECUTIVE
DIRECTORS
COMMITTEES
AUDIT AND RISK COMMITTEE
CLINICAL PERFORMANCE AND
SUSTAINABILITY COMMITTEE
INVESTMENT COMMITTEE
NOMINATION COMMITTEE
REMUNERATION COMMITTEE
GROUP EXECUTIVE COMMITTEE
BOARD
STRUCTURE
AND ROLES
The Board has adopted a robust
corporate governance framework
to assist it in exercising its
responsibilities. It has full and
effective control of the Company
and approves all material decisions.
BOARD COMMITTEES
In order to operate efficiently
and provide the appropriate level
of attention and consideration
to relevant matters, the Board
has delegated authority to five
committees to carry out certain
tasks on its behalf, while reserving
the authority to approve certain
key matters, as documented in
the Group’s authority levels and
reserved matters. The latter is
reviewed annually by the Board.
The terms of reference of each
Board committee are available
on the Company’s website at
www.mediclinic.com. Reports on
the role, composition and activities
of these committees are included
after this Statement.
DIVISION OF RESPONSIBILITIES
A Board Charter sets out the key
responsibilities of the Chair, SID,
non-executive directors, executive
directors, the Group CEO and
the Company Secretary, and
outlines the roles of the various
Board committees, as summarised
in Figure 1. The segregation of
the roles of the Chair and the
Group CEO enhances the Board’s
independent oversight of executive
management and ensures that no
one individual on the Board has
unfettered powers or authority.
118
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT CHAIR
KEY RESPONSIBILITIES
• Leads the Board
• Ensures the effective performance of the
Board in directing the Group
• Works closely with the Group CEO to ensure
the implementation of Board-approved
actions
• Ensures effective communication with
shareholders and that the Board has a clear
understanding of shareholders’ views
GROUP CEO
KEY RESPONSIBILITIES
• Leads and oversees the Group Executive
Committee
NON-EXECUTIVE DIRECTORS
KEY RESPONSIBILITIES
• Support the development of the strategic
direction of the Group
• Scrutinise and hold to account the performance
of management and individual executive
directors
• Offer specialist advice and provide constructive
challenge, drawing on their skills, experience
and judgement
• Satisfy themselves on the integrity of the
Group’s financial reporting and on the
effectiveness of its internal control and risk
management systems
• Approve the appointment or removal of
directors
• Keep abreast of the views of shareholders
• Leads the preparation and review of the
and other stakeholders
Mediclinic Group Strategy
• Manages the business of the Group under
the framework of delegated authorities from
the Board
• Progresses, develops and oversees the
implementation of Board-approved actions
and the strategic direction of the Group and
its commercial objectives
• Ensures the Group’s purpose, vision,
organisational culture (including the values)
and corporate governance framework are
embedded across the organisation and
reflected in employee behaviour
SENIOR INDEPENDENT DIRECTOR
KEY RESPONSIBILITIES
• Provides a sounding board for the Chair
• Serves as an intermediary for other directors
and shareholders
• Leads the annual appraisal of the Chair’s
performance and the independence of non-
executive directors
• Leads the search for a new Chair, when
necessary
COMPANY SECRETARY
Link Company Matters Limited
KEY RESPONSIBILITIES
• Acts as Secretary to the Board, Board
committees and the Management Disclosure
Committee, attending all meetings
• Provides advice and guidance to the Board
collectively, and directors individually,
with regard to their duties, responsibilities
and powers, and on matters of corporate
governance
• Ensures the effective administration of
proceedings and matters related to the Board,
the Company and its shareholders
• Acts as point of contact for shareholders on
corporate governance matters
INVESTMENT COMMITTEE
KEY RESPONSIBILITIES
• Provides strategic input and direction on capital
allocation and growth opportunities in new
geographies
• Reviews and approves or makes
recommendations to the Board regarding
proposed investments and capital expenditures,
depending on authority levels
• Review and makes recommendations to the
Board regarding debt funding, as well as
refinancing of existing debt facilities
• Monitors performance of approved investments
Details of the membership and key responsibilities
of the Audit and Risk Committee, Clinical
Performance and Sustainability Committee,
Nomination Committee and Remuneration
Committee are set out in the separate reports for
these committees on pages 142, 154, 158 and 164,
respectively.
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT CORPORATE GOVERNANCE STATEMENT CONTINUED
MEETING ATTENDANCE
The names of the directors who served during FY21 are set out in Table 1 below, together with their attendance
of Board and Investment Committee meetings held. Attendance of other committee meetings is set out in the
respective committee reports.
Each director’s attendance of Board and committee meetings is considered part of the formal annual review of
their performance. When a director is unable to attend a Board or committee meeting, they communicate their
comments and observations on the matters to be considered in advance of the meeting via the Chair, the SID or the
relevant Board committee’s chair for raising, as appropriate, during the meeting. Despite the challenges posed by
COVID-19, directors’ external appointments had no or extremely limited impact on their attendance of Board and
committee meetings.
TABLE 1: BOARD AND INVESTMENT COMMITTEE MEETING ATTENDANCE
NAME1
DESIGNATION
DATE OF
APPOINTMENT
TO BOARD
NUMBER OF
BOARD
MEETINGS
ATTENDED2
DATE OF
APPOINTMENT
TO INVESTMENT
COMMITTEE
NUMBER OF
INVESTMENT
COMMITTEE
MEETINGS
ATTENDED3
Dame Inga Beale
Non-executive Chair
26/03/2020
Dr Edwin Hertzog1
Non-executive Chair
(retired)
Dr Ronnie van der
Merwe
Group Chief Executive
Officer
Mr Jurgens Myburgh
Mr Alan Grieve
Group Chief Financial
Officer
Senior Independent
Director
Dr Muhadditha Al
Hashimi
Independent
Non-executive Director
15/02/2016
01/06/2018
01/08/2016
15/02/2016
01/11/2017
Mr Jannie Durand
Non-executive Director
15/02/2016
Dr Felicity Harvey
Independent
Non-executive Director
03/10/2017
Mr Danie Meintjes4
Non-executive Director
15/02/2016
Dr Anja Oswald5
Mr Trevor Petersen
Mr Tom Singer
Mr Steve Weiner6
Independent
Non-executive Director
Independent
Non-executive Director
Independent
Non-executive Director
Independent
Non-executive Director
25/07/2018
15/02/2016
24/07/2019
22/07/2020
7/7
2/2
7/7
7/7
7/7
7/7
7/7
7/7
7/7
6/7
7/7
7/7
5/5
01/09/2020
19/02/2016
25/07/2018
01/08/2016
19/02/2016
-
2/2
1/1
2/2
2/2
2/2
19/02/2016
2/2
-
19/02/2016
1/2
-
-
-
-
Notes
1 Apart from Dr Edwin Hertzog, who retired from the Board and its committees upon the conclusion of the Company’s 2020 AGM, the composition of the
Board and the Investment Committee is shown at 31 March 2021. Refer to the Nomination Committee Report on page 158 for details of changes to the Board
anticipated during FY22.
2 The attendance reflects the number of scheduled Board meetings held during FY21. Between the Company’s financial year-end and the Last Practicable Date,
the Board held one scheduled and one ad hoc meeting, which were attended by all directors or at least the requisite quorum.
3 The attendance reflects the number of scheduled meetings of the Investment Committee held during FY21. The Investment Committee held five additional
ad hoc meetings during the reporting period to address urgent matters, which were either attended by all members of the Investment Committee or at least
the quorum required under its terms of reference. The Investment Committee held one meeting between the Company’s financial year-end and the Last
Practicable Date.
4 Mr Danie Meintjes was unable to attend one scheduled meeting of the Investment Committee due to an unexpected, urgent and unavoidable commitment,
but provided his input beforehand to the chair of the committee.
5 Dr Anja Oswald was unable to attend one Board meeting due to unexpected personal reasons, but provided her input beforehand to the Chair of the Board.
6 Mr Steve Weiner was appointed to the Board on 22 July 2020 and attended all subsequent scheduled Board meetings.
120
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT BOARD COMPOSITION AND DIVERSITY
The delivery of the Company’s long-term strategy
depends on attracting and retaining the right skills
across the Group, starting with the Board, as well
as the executive management team and their direct
reports.
At the date of this Annual Report, the Board comprised
the independent Chair, two executive directors, seven
independent non-executive directors and two non-
executive directors. The Company complies with the
Code recommendation that at least half the Board,
excluding the Chair, should be independent.
Further details on the assessment of the independence
of non-executive directors are set out on page 138.
Further details on forthcoming changes to the
composition of the Board are set out in the Nomination
Committee Report on page 159.
Mr Durand is not considered to be independent owing
to his role as Remgro’s representative on the Board
and Mr Meintjes does not meet the criteria to be
considered an independent non-executive director due
to his former position as Group CEO of the Company
until 2018. The Board considered his proposed re-
election as a non-executive director and, after careful
deliberation, concluded that his re-election would be in
the best interest of the Group and all its stakeholders,
taking into account the overall composition of the
Board and his knowledge and experience of the
industry and the business gained over 30 years in
different capacities across the organisation.
The Board seeks to construct an effective, robust, well-
balanced and complementary Board, the capability
of which is appropriate to the nature, complexity and
strategic demands of the business. The Board and the
Nomination Committee actively consider the structure,
size and composition of the Board and its committees
when contemplating new appointments and succession
planning for the year ahead, as described on page 159
of the Nomination Committee Report. A range of
diversity factors are taken into account in determining
the optimal composition of the Board and its committees,
together with the need to balance their composition
and refresh this progressively over time.
The Company’s non-executive directors come
from a wide range of industries, backgrounds
and geographical locations and have appropriate
experience of organisations with international reach.
The skills and expertise of the Board have been
extended and reinforced through the appointment
of Mr Weiner during the year under review.
The Nomination Committee continues to consider
and develop succession plans for the Board and its
committees. Accordingly, when considering Board
appointments and internal promotions at senior level,
the Company will continue to take account of relevant
voluntary guidelines in fulfilling their role regarding
diversity, while seeking to ensure that each post is
offered strictly on merit to the best available candidate.
Refer to the Nomination Committee Report on page 158
for more information on Board diversity, the Board
Diversity Policy, the diversity of the Group Executive
Committee and the Executive Committees of each
division (including a breakdown of race for Southern
Africa, in line with local requirements), and changes to
the Board anticipated during FY22.
FIGURE 2: BOARD COMPOSITION AND DIVERSITY1
Independence2 (%)
64%
18%
18%
Independent non-executive directors
Non-executive directors
Executive directors
Gender
Ethnicity3 (%)
Female: 33%
Male: 67%
Diverse ethnicity: 17%
White: 83%
Tenure4 (%)
Non-executive directors10+
< 1 year: 10%
> 1 year and ≤ 3 years: 30%
> 3 years and ≤ 6 years: 20%
> 6 years: 40%
Notes
1 The composition of the Board
is shown at the Last Practicable
Date.
2 Excludes the Chair of the Board.
3 Diverse ethnicity refers to
individuals with evident heritage
from African, Asian, Middle
Eastern and South American
regions, or from another ethnic
group, as defined by the Parker
Report.
4 Tenure is calculated at
31 March 2021, from the date
of first appointment as a director
of Mediclinic International plc or
its predecessor companies.
121
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT30
+
20
+
40
+
N
N
CORPORATE GOVERNANCE STATEMENT CONTINUED
Relevant industry experience (number of directors)
Country of residence (number of directors)
11
6
3
5
12
4
5
2
1
4
Healthcare
Medical/clinical/similarly complex businesses
Marketing and customer focused
IT, cybersecurity
Stakeholder management1
Sustainability
South Africa
Switzerland
UAE
UK
Note
1 Refer to Stakeholder engagement on page 44 for more information on the Group’s stakeholders.
PRINCIPAL BOARD RESPONSIBILITIES AND ACTIVITIES
KEY RESPONSIBILITIES
• Entrepreneurial oversight
• Evolving corporate strategy and purpose
• Progress monitoring of strategic goal execution
• Encoding of Group purpose in operational policies and practices
• Agreeing the nature and extent of the principal risks
• Establishing and overseeing a prudent and effective risk management and internal control framework
• Engaging with shareholders and other stakeholders
The Board’s annual agenda plan is designed to ensure that sufficient time is allocated to address all necessary matters.
Agendas are adjusted throughout the year to prioritise relevant issues and ensure focused consideration of strategic
priorities. Sufficient time is provided for the Chair to meet privately with the non-executive directors to discuss any
concerns. The agendas were restructured during the course of FY21 to prioritise matters for decision and discussion.
TABLE 2: BOARD’S FY21 FOCUS AREAS
Key:
STRATEGIC GOALS
PRINCIPAL RISKS AND UNCERTAINTIES
As described in the Strategy
overview on page 32.
As described in the Risk management
report on page 96.
To become an integrated healthcare provider
across the continuum of care
1 Strategic risks
To improve the Group’s value proposition
significantly
To transform the Group’s services and client
engagement through innovation and
digitalisation
To evolve as a data-driven organisation
2 External risks/Threats
3 Internal preventable risks
SUSTAINABLE DEVELOPMENT MATERIAL ISSUES
1 Minimising environmental impacts
2 Building stakeholder trust
To minimise the Group’s environmental impact
3 Being an ethical and responsible corporate citizen
To grow in existing markets and expand into
new markets
122
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT BOARD’S FOCUS AREAS
STRATEGIC GOALS
PURPOSE, STRATEGY AND CULTURE
Oversaw and approved evolution of the Group
corporate strategy, purpose, vision and values,
associated strategic goals and five-year business
plan, with due consideration for evolving market
conditions and impact of COVID-19 on the
Group’s business model and operations.
Monitored progress on the execution of the
strategy by way of in-depth presentations by
Group Executive Committee every six months
and reporting at each Board meeting by
Group CEO
Ensured purpose, culture and values are
embedded in operational policies and practices;
monitored culture to ensure it is appropriate
and aligned with strategy, purpose and values,
based on management reports on matters
such as internal audits, compliance, ethics and
fraud, doctor and patient satisfaction, clinical
performance, and employee statistics and
engagement surveys
PRINCIPAL RISKS
AND
UNCERTAINTIES
SUSTAINABLE
DEVELOPMENT
MATERIAL ISSUES
1, 2, 3
1, 2, 3
3
2, 3
Refer to the Strategy overview on page 32 and section on ‘Stakeholders’ in this table.
Considered requests for approval of material
investments, such as the expansion of
Hirslanden Klinik St. Anna and Hirslanden
Klinik Aarau
CLINICAL PERFORMANCE
Discussed regular reports from the Group Chief
Clinical Officer and Clinical Performance and
Sustainability Committee on each division’s
response to COVID-19, clinical performance,
Ward-to-Board accountability and divisional
clinical sub-goals
Refer to the Clinical services overview on page 68.
OPERATIONAL PERFORMANCE
Discussed regular reports from the Group CEO
on the operating performance of the Group
and the impact of COVID-19 pandemic, as
well as annual deep dives presented by the
divisional CEOs
Discussed initiatives to address decline in
volumes due to national lockdowns, tariff
pressure and outmigration of care, and to drive
greater cost efficiencies
Refer to the Group Chief Executive Officer’s Report on page 24.
1, 2, 3
1, 2, 3
1, 2, 3
2, 3
2, 3
1, 2, 3
2, 3
2, 3
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT CORPORATE GOVERNANCE STATEMENT CONTINUED
BOARD’S FOCUS AREAS
STRATEGIC GOALS
PRINCIPAL RISKS
AND
UNCERTAINTIES
SUSTAINABLE
DEVELOPMENT
MATERIAL ISSUES
FINANCIAL PERFORMANCE, CORPORATE REPORTING, TAX STRATEGY AND DIVIDENDS
Discussed regular reports from the Group CFO
on Group and divisional forecasts and actual
financial performance relative to FY21 budget
Reviewed and approved half-year, Q3 and
full-year trading updates via a Board committee,
half-year financial report, annual report and
corresponding results announcement and
investor presentations
Reviewed and approved the Group and divisional
FY22 budget and updated five-year plan,
incorporating the anticipated short- and
medium-term impact of COVID-19
Considered and approved decisions to suspend
the FY20/FY21 final dividend and FY21 interim
dividend
2, 3
2, 3
n/a
3
2, 3
1, 2, 3
n/a
3
n/a
Refer to the Group Chief Financial Officer’s Report on page 84.
RISK MANAGEMENT AND INTERNAL CONTROLS
Reviewed and approved an updated risk appetite
statement and considered biannual reports from
the Group General Manager: Risk Services on the
Group’s risk management framework, internal
control system and statutory and regulatory
compliance
Conducted a robust assessment of emerging
and principal risks and uncertainties as well as
mitigating actions and reviewed the assessment
of going concern and long-term viability
Conducted robust assessment of effectiveness of
risk management processes and material internal
controls and confirmed their continued efficacy
despite changes in the operating environment
due to COVID-19
1, 2, 3
1, 2, 3
1, 2, 3
1, 2, 3
2, 3
3
Refer to the Risk management report on page 96 and the Audit and Risk Committee Report on page 142.
124
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT BOARD’S FOCUS AREAS
STRATEGIC GOALS
PRINCIPAL RISKS
AND
UNCERTAINTIES
SUSTAINABLE
DEVELOPMENT
MATERIAL ISSUES
ICT AND DIGITAL TRANSFORMATION
Considered regular reports from the Group
Chief Information Officer on ICT infrastructure,
strategy, risks and their potential impact,
existing controls and mitigants, and proposed
enhancements
Closely monitored the implementation of major
IT projects and received reports from the newly
appointed Group Chief Innovation Officer on
the adoption of new technology and digital
transformation
Refer to the Audit and Risk Committee Report on page 142.
LEADERSHIP
Considered feedback from Nomination
Committee on succession planning and diversity
in respect of the Board, its committees and
senior management
Considered progress against Hampton-Alexander
Review targets for Board and senior leadership
and their direct reports, and compliance with
Parker Report’s ethnic diversity targets
Considered and approved recommendations
of Nomination Committee for appointments to
the roles of SID; chair of the Investment, Audit
and Risk, and Remuneration committees; and
non-executive directors
Reviewed outcomes and agreed and
implemented actions arising from the
evaluation of the Board and its committees
1, 2, 3
1, 2, 3
3
3
1, 2, 3
1, 2, 3
1, 2, 3
1, 2, 3
1, 2, 3
1, 2, 3
1, 2, 3
1, 2, 3
Refer to the Nomination Committee Report on page 158 and the section on ‘Evaluation of the Board, committees and
Chair’ on page 134.
STAKEHOLDERS
Received and discussed biannual reports from
the designated non-executive director for
workforce engagement, outlining the outcomes
from the annual employee engagement survey
and feedback and insight from all Group levels,
supplemented by feedback from management;
discussed updates on workforce wellbeing
during COVID-19
The Company’s purpose, values and culture
underpin all decisions taken by the Board but
were particularly evident in discussions and
decisions regarding COVID-19 and its impact on
the workforce.
3
2
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT CORPORATE GOVERNANCE STATEMENT CONTINUED
BOARD’S FOCUS AREAS
STRATEGIC GOALS
STAKEHOLDERS (CONTINUED)
Reviewed the Group’s key stakeholders and
approved the addition of professional societies;
reviewed the methods of engagement (including
with the workforce) and concluded they were
effective
PRINCIPAL RISKS
AND
UNCERTAINTIES
SUSTAINABLE
DEVELOPMENT
MATERIAL ISSUES
2, 3
1, 2, 3
Considered regular reports on investor views
1, 2
1, 2, 3
Ensured effective follow-up regarding investors’
matters reflected in 2020 AGM voting and took
feedback into consideration when responding
n/a
2
3
Refer to Stakeholder engagement on page 44, the Sustainable development overview on page 51, the ‘Stakeholder
interests and Board engagement’ section of this Statement on page 127 and the Section 172 statement on page 48.
SUSTAINABLE DEVELOPMENT
Discussed and approved Group Sustainable
Development Strategy and ESG goals
Monitored B-BBEE initiatives undertaken in
South Africa
1, 2, 3
1, 2, 3
2
2
Refer to the Sustainable development overview on page 51 and the Clinical Performance and Sustainability Committee
Report on page 154.
n/a
2, 3
1, 2, 3
n/a
n/a
3
CORPORATE GOVERNANCE
Reviewed and approved Group policies and
procedures, including:
- the Board Charter and committees’ terms
of reference;
- authority levels and matters reserved for
the Board;
- business conduct and ethics;
- anti-bribery;
- sustainable development;
- Board diversity;
- treasury management; and
- tax strategy
Reviewed and approved directors’ proposed
external appointments (including expected time
commitments) and ensured conflicts of interest,
including those arising from significant
shareholdings, were clearly identified and
managed, as set out on page 138
126
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT STAKEHOLDER INTERESTS
AND BOARD ENGAGEMENT
The Group has identified the following priority stakeholder groups: clients, communities, employees and potential
applicants, governments and authorities, healthcare insurers, industry associations, industry partners, investors,
media, medical practitioners, professional societies and suppliers.
Below, more information is provided on the Group’s most material stakeholders for the year under review, how
the Board gains an understanding of their key areas of interest or concern, and how these have been taken into
consideration in the Board’s discussions and decision-making.
The Board has reviewed the Group’s mechanisms for engagement with its key stakeholders and is satisfied that they
are effective.
Refer to Stakeholder engagement on page 44 for more information.
TABLE 3: BOARD ENGAGEMENT
STAKEHOLDER
IMPORTANCE
Clients
The wellbeing of clients and
building long-term relationships
with them form the cornerstone of
the business and the Group’s ability
to pursue its purpose
WHAT MATTERS TO THEM
• Easy access to safe, quality and
cost-effective healthcare by
means of world-class facilities
and technology
• Appropriate care settings
• Treatment information
• The right to make decisions on
their care
• Client experience
• Personal data and patient rights
BOARD ENGAGEMENT/
CONSIDERATION DURING DISCUSSIONS/
DECISION-MAKING
• Reviews clinical performance indicators
• Introduced and monitors reports on
Ward-to-Board accountability
• Reviews Press Ganey® patient experience
index and implementation of resulting
action plans
• Considers ethics reports
• Reviews information security and data
privacy arrangements
• Considers impact of decisions and
dividends on facilities, services and
investments
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT CORPORATE GOVERNANCE STATEMENT CONTINUED
BOARD ENGAGEMENT/
CONSIDERATION DURING DISCUSSIONS/
DECISION-MAKING
• Reviews regular reports from designated
non-executive director for workforce
engagement and monitors implementation
of resultant action plans
• Workforce reports include:
− employee retention and turnover
− annual Gallup® employee engagement
survey results
− Group Diversity and Inclusion Strategy
progress
− training and performance management
progress
− absenteeism
− internal communication channels
• Monitors remuneration arrangements
• Communicates with employees through
electronic communication and video
broadcasts
BOARD ENGAGEMENT/
CONSIDERATION DURING DISCUSSIONS/
DECISION-MAKING
• Encourages a constructive dialogue with
the Group’s regulators
• Monitors clinical, regulatory and legal
compliance through regular management
reports
STAKEHOLDER
IMPORTANCE
Employees and potential
applicants
The exceptional talent and
dedication of employees, whose
behaviour is guided by the
organisational values, enable
sustained success
WHAT MATTERS TO THEM
• Recognition
• Flexible work arrangements
• Competitive remuneration
• An ethical, safe, fair and healthy
working environment
• Access to training and
development opportunities
STAKEHOLDER
IMPORTANCE
Governments and
authorities
Having a business model founded
on compliance with applicable
legislation and regulations within
Mediclinic’s geographies safeguards
the Company’s ability to offer
services and operate facilities
WHAT MATTERS TO THEM
• Healthcare legislation and
regulation compliance
• Initiatives and collaboration on
issues such as skills shortages
and the cost of private healthcare
• Universal access to affordable,
quality healthcare
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MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT STAKEHOLDER
IMPORTANCE
Investors
As the owners and providers of
equity and debt capital to the
Group, investors can rightly expect
that their needs be understood
and addressed
WHAT MATTERS TO THEM
• Profitable growth
• Financial sustainability and
performance (including coping
with COVID-19)
• Diverse opportunities for
long-term value creation
• The Group’s strategic and ESG
goals (including response to
climate change)
• Regulatory environment
• Operational drivers of each
division
• Remuneration Policy
STAKEHOLDER
IMPORTANCE
Medical practitioners
For the success of the business, it is
vital Mediclinic attracts and retains
medical practitioners since affiliated
doctors refer their patients to or
treat their patients in the Group’s
facilities
WHAT MATTERS TO THEM
• Facilities and equipment
• Nursing care
• Patient safety
• Client experience
• Involvement in strategic clinical
issues
• Implementation of EHRs
• Opportunities for continued
professional development
• Adaptability in the face of an
evolving healthcare industry
BOARD ENGAGEMENT/
CONSIDERATION DURING DISCUSSIONS/
DECISION-MAKING
• Considers investors’ views and feedback,
including detailed feedback obtained
through investor perception studies
• Seeks to increase the amount and quality
of engagement with investors to ensure
a clear understanding of their views
• Consults major investors regarding focus
areas and key developments, and takes
feedback into account as appropriate
• Reviewed and approved a Group
Sustainable Development Strategy
and will monitor its implementation
• Considers impact of decisions regarding
facilities, services, investments and
dividends on financial performance and
shareholder returns
BOARD ENGAGEMENT/
CONSIDERATION DURING DISCUSSIONS/
DECISION-MAKING
• Reviews doctor satisfaction surveys and
resultant action plans
• Provides support and oversight through
the Ward-to-Board accountability
framework and promotes the sharing
of good practices across the Group
• Supports introduction of appropriate
new technology and monitors the
implementation of major projects
• Considers impact of decisions regarding
facilities, services, investments and
dividends on doctors
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT CORPORATE GOVERNANCE STATEMENT CONTINUED
STAKEHOLDER
IMPORTANCE
Suppliers
Mediclinic believes in building
long-term relationships of mutual
trust and respect with suitable
suppliers to ensure a sustainable
and uninterrupted supply chain and
ethically sourced products
WHAT MATTERS TO THEM
• Fair and transparent negotiations
• Timeous payment
BOARD ENGAGEMENT/
CONSIDERATION DURING DISCUSSIONS/
DECISION-MAKING
• Reviews and approves the Company’s
arrangements to prevent modern slavery
• Reviews and approves payment practices
and performance reporting in the UK
• Supports introduction of appropriate
new technology and monitors the
implementation of major projects
• Regularly considers fraud and ethics
reports (including whistleblowing)
For more information, refer to:
• COVID-19 overview on page 12;
• Business model on page 40;
• Stakeholder engagement on page 44;
• Section 172 statement on page 48;
• ‘Employee engagement’ and ‘Preventing bribery and corruption’ in the Sustainable development overview on
pages 63 and 66, respectively;
• the ‘Workforce engagement’ section of this Statement below;
• the ‘Investor engagement’ section of this Statement on page 132; and
• the 2021 Sustainable Development Report, available at annualreport.mediclinic.com.
WORKFORCE ENGAGEMENT
Employee wellbeing has been of the utmost importance
to the Group’s COVID-19 response and engagement
agenda, and at the forefront of every decision made by
the Board. Listening and responding to employee needs
through effective communication and sound relations
are important components in being regarded as the
employer of choice among existing and prospective
employees, and vital to maintaining an engaged
and loyal workforce that will help deliver the Group’s
strategic goals.
Workforce engagement is conducted through various
methods, including leadership video conferences,
periodic employee surveys, performance reviews,
employee magazines and employee wellness and
recognition programmes. Further details of the
Group’s workforce engagement are included in the
2021 Sustainable Development Report, available at
annualreport.mediclinic.com.
Mr Meintjes is the designated non-executive director
responsible for engagement with the Group’s workforce.
As the former Group CEO and with his prior experience
as divisional Human Resources Executive, he was closely
involved with the Company’s approach to engaging
with, investing in and rewarding the Group’s employees.
Given his knowledge and experience gained over
30 years in different capacities at Mediclinic, the Board
considers him well positioned to oversee engagement
efforts and relay the voice of the workforce.
Mr Meintjes’ responsibilities in this regard include:
• reviewing and assessing the existing workforce
engagement programmes;
• understanding and interpreting the views of the
workforce;
• providing feedback to the Board on the impact
and effectiveness of the Group’s various workforce
engagement initiatives, including but not limited to,
the Gallup® employee engagement survey results
and HR-related matters reported on the ethics lines;
• conveying feedback from the Group’s workforce (as
consolidated via multiple channels) to the Board and
shareholders;
• providing feedback to the workforce through existing
(or if appropriate, new) communication channels on
how their input was communicated to and considered
by the Board; and
• reporting to the Board on workforce engagement
twice annually.
Mr Meintjes works closely with the Group Chief
Strategy and Human Resources Officer and his team
in accordance with a work plan designed to support
Mr Meintjes in the fulfilment of this role. The Board
received a number of dashboards and detailed
reports throughout FY21, which enabled the Board
to assess and monitor the culture of each division
and themes arising from the employee engagement
programmes. The reports continued to evolve during
the year in response to questions and observations by
management and the Board.
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MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT
Mediclinic City Hospital, the UAE
The main areas of concern emerging from workforce
engagement discussed by the Board during FY21 were:
• difficulty managing stress at work and Mediclinic’s
support in this; and
• maintaining personal wellbeing during COVID-19 for
all employees, but especially among frontline workers.
A physically and mentally healthy workforce is
fundamental to the delivery of the Mediclinic Group
Strategy. The negative impact of COVID-19 has
magnified the workforce-related risks for the Group, as
discussed in the Risk management report on page 96.
The Board reviewed the existing and planned workforce
engagement channels, with due consideration for
recommendations by the designated non-executive
director, and was satisfied that these provide an
effective means of collecting feedback from and
providing feedback to the Group-wide workforce.
The Board noted and was satisfied with the additional
measures implemented to ensure employee safety
during COVID-19. In addition, continued team
engagement was encouraged to ensure team support
and cohesion. Team engagement results and themes
stemming from the diversity and inclusion section of
the annual Gallup® employee engagement survey
were explored in these meetings to ensure progress
on engagement and diversity and inclusion goals.
The survey indicated workforce concerns around:
• the theme of empowerment, with specific reference
to the encouragement of individual growth and career
development opportunities for all; and
• diversity and inclusion, with a particular focus on
gender, ethnicity and age.
Feedback on the themes of ‘I belong’ and ‘I am valued’
showed good improvement during the FY21 survey.
The distribution of the Group’s employees per division
is included in the Sustainable development overview
on page 61, with only one employee (Head of Investor
Relations) based in the UK.
Refer to ‘Preparedness and response to COVID-19’ in
the Section 172 statement on page 49 for further detail,
and the Chair’s Review on page 4 and the Nomination
Committee Report on page 158 for diversity and
inclusion-related actions.
DIVERSITY AND INCLUSION
The Group values diversity and provides equal
opportunities in its workplace. It does not tolerate any
form of discrimination, such as access to employment,
career development, training or working conditions
based on gender, religion, nationality, race, language,
HIV/Aids status, sexual orientation or other form of
differentiation. During FY21, the Board reviewed the
Group Diversity and Inclusion Policy approved in 2020,
which sets out the Group’s strategy and goals for
establishing and maintaining a diverse and inclusive
workforce, and actively monitored its implementation.
Adequate procedures are in place for applicants with
disabilities to receive training to perform safely and
effectively; there are also development opportunities to
ensure they reach their full potential. Where an individual
becomes disabled during the course of employment,
Mediclinic will seek to provide, wherever possible,
continued employment on normal terms and conditions.
Adjustments will be made to the environment and duties
or suitable new roles within the Company will be secured,
with additional training where necessary.
Refer to the Nomination Committee Report on page 158
and the 2021 Sustainable Development Report available
at annualreport.mediclinic.com for more information.
131
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT CORPORATE GOVERNANCE STATEMENT CONTINUED
INVESTOR ENGAGEMENT
The Chair, Group CEO, Group CFO, SID and Head
of Investor Relations are responsible for investor
relations, including effective, regular and transparent
communication on matters such as operational and
financial performance, regulatory changes, governance
and strategy. In addition, they are responsible for
ensuring that the Board has a clear understanding
of investors’ views on these matters. The Board
committee chairs are available to engage with
investors on significant matters related to their areas
of responsibility. The Chair has ensured that the Board
as a whole has a clear understanding of the views of
the investors and the Board believes that appropriate
and proportionate mechanisms exist to acquire a good
understanding of major investors’ key areas of concern
and support.
Management is supported by and in constant dialogue
with the Company’s corporate brokers. The Management
Disclosure Committee assists the Board to ensure the
timely and accurate disclosure of all information required
by law and regulatory authorities, including those arising
from its listing on the LSE and JSE.
The Company seeks to maintain a forum for open
discussion on key market and Company-specific matters
and values investors’ opinions and the time they make
available to engage with the Company.
During the year, Mediclinic sought feedback on the
Group’s FY21 LTIP performance measures and award
levels and the FY21 STI performance measures. The
Chair of the Remuneration Committee engaged with
a number of major investors and institutional investor
representative bodies on these matters.
Annual Remuneration Report on pages 172–176 for more
information.
Refer to the
As a result of the UK Government’s measures relating to
public gatherings in response to COVID-19, the Group
could not hold its 2020 AGM with investors attending
in person. In the interest of transparent engagement,
the Board invited questions to be submitted prior to the
meeting and committed to providing responses. While
no questions were received from retail investors, the
Group engaged with institutional investors to address
matters raised.
Typical investor
relations
programme
Regular face-to-face
engagement
with capital markets,
including:
• investor meetings
• attendance at investor
conferences
• roadshows
• presentations
• site visits
• ad hoc events with
investors, sell-side
analysts and sales teams
During the period:
Virtual interactions
Material published on Mediclinic’s website
Management and Investor Relations participated in
18 roadshows, investor conferences and ad hoc
capital market events
Chair held one-on-one meetings with 14 major
international and South African investors
Meetings with more than 135 unique
financial institutions
Investors are invited to provide feedback directly to management and Investor
Relations. The Board also receives regular formal feedback through quarterly reports
prepared by QuantiFire, a third-party service provider that collects opinions and
confidence measures from investors.
As planned, the Group conducted an investor and analyst perception study following
the previous one completed in FY19. A report on the findings was presented to the
Board in March 2021.
Investor perception
study results
76
participating investors
and sell-side analysts
132
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT The following strengths, weaknesses, opportunities and threats were identified by participants:
STRENGTHS
WEAKNESSES
• Quality of care and clinical outcomes
• Geographical footprint and diversification
• Strong management
• Brand loyalty
• Operational expertise
• Well-invested asset base
• High level of balance sheet debt
• Historic capital allocation – overpayment for
acquisitions
• Swiss business (related to points above)
• Emphasis on quality of care reduces margins
• Geographical footprint
• Exposure to regulatory change
• Slow to innovate
OPPORTUNITIES
THREATS
• Growth and expansion in the Middle East/the UAE
• Broaden range of healthcare services
• Demographic change driving increased demand
• Operational improvements
• Digitalisation
• Better capital allocation
• Deleveraging
• COVID-19 recovery – pent-up demand
• Increased or changing regulations
• Pressure to provide low-cost healthcare
• Pressure on tariffs from healthcare insurers
• Shift from inpatient to outpatient procedures
and care
• Increased competition and market disruptors
• Limited growth opportunities in South Africa
Shareholders can access details of the Group’s results and other news releases through the LSE’s Regulatory News
Service and the JSE Stock Exchange News Service. In addition, the Group publishes the announcements on the
‘Investor relations’ section of its website at investor.mediclinic.com. Shareholders and other interested parties can
subscribe to email news updates by registering via the website.
FIGURE 3: STYLE OF FUND
MANAGER BREAKDOWN (%)
Corporate 45%
GARP 12%
Value 9%
Quant 3%45+
Retail 6%
Index 3%
Other 3%
Hybrid 6%
Growth 5%
Value and growth 8%
FIGURE 4: GEOGRAPHICAL
HOLDINGS (%)
70+
Africa 70%
Remgro 45%
Rest of Africa 25%
UK 19%
North America 8%
Nordics and Asia 2%
Western Europe 1%
ENGAGEMENT WITH SHAREHOLDERS
FOLLOWING THE 2020 AGM
At the Company’s 2020 AGM, the resolution to
authorise the directors to allot ordinary shares
(Resolution 18) received 79.65% support from
shareholders. In accordance with the Code, the
Company sought to engage with key shareholders
after the AGM to ensure it fully understood the reasons
behind the result and published an update on the
Group’s website on 22 January 2021.
The Board notes that the voting outcome reflects the
differing market practice between the UK and South
Africa, where shareholders in the latter jurisdiction
usually approve more restricted levels of authority
to issue shares and prefer to vote on the proposed
allotments of shares on a case-by-case basis.
Most South African shareholders acknowledge
that they operate under policies that do not permit
support of the standard UK-level of authority to allot
ordinary shares, although a number do understand the
Company’s position. As Mediclinic is a UK premium-
listed company, the Board considers it appropriate
to seek authorities in line with the UK’s Investment
Association’s Share Capital Management Guidelines
to: (a) allow the Company to respond to market
developments; and (b) enable allotments to take place
to finance business opportunities as they arise. The
views of all shareholders are important to Mediclinic
and the Board will continue to engage with South
African shareholders on this topic; however, as the
voting outcome reflects the difficulty in balancing
the expectations of different markets, it is possible
this outcome will continue.
133
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT19
+
8
+
2
+
1
N
12
+
9
+
8
+
6
+
6
+
5
+
3
+
3
+
3
N
CORPORATE GOVERNANCE STATEMENT CONTINUED
EVALUATION OF THE BOARD,
COMMITTEES AND CHAIR
The Company is committed to evaluating the performance and effectiveness of the Board as a whole, its
committees, the Chair and the directors, and acting upon the feedback received. The Board regards the evaluation
process as an important way to monitor progress.
FY20 EVALUATION
TABLE 4: PROGRESS ON FY20 BOARD EVALUATION KEY ACTIONS
KEY ACTIONS
STATUS
Increase opportunities for non-executive directors’
involvement in Group strategy development, in
particular the strategic sub-goals for digital
transformation and innovation.
Increase opportunities for discussion of potential and
emerging risks by the Board.
Identify and introduce new methods for the Board to
access external expertise and insights into digital
business transformation and other pertinent matters.
Refer to the ‘Principal Board responsibilities and
activities’ section of this Statement on page 122.
The Board received specific briefings from external and
internal experts, including on the macroeconomic
backdrop for each division and particular emerging risks.
The Board also held a detailed discussion and approved
the revised risk appetite statement.
Refer to the the ‘Principal Board responsibilities and
activities’ section of this Statement on page 122.
Maintain focus on continuous improvement in the
quality of information provided to the Board.
Refer to the ‘Principal Board responsibilities and
activities’ section of this Statement on page 122.
FY21 EVALUATION
Under the Code, companies are recommended to
conduct an externally facilitated board and committee
evaluation every three years. Since the last one was
conducted in FY18, the Company was due to have
such an evaluation this financial year. The Committee,
however, in the light of both the fact that the period
in question was the Chair’s first year at the helm of
the Board and the ongoing uncertainty caused by
COVID-19, agreed that a full externally facilitated
Board evaluation be delayed until FY22. Instead, the
FY21 evaluation was conducted as a questionnaire-only
self-evaluation facilitated by the independent evaluator
Lintstock Ltd, to strengthen the evidence and rigour
of the exercise. Lintstock Ltd conducted the externally
facilitated Board evaluation in FY18, but has no other
connection with the Company or any individual director.
The evaluation focused on the Board and its
committees’ composition, knowledge and behaviours,
processes and support, work undertaken during FY21
and priorities for change in FY22. For the Board, the
questionnaire also focused on:
• the flow of information to the Board during the pandemic
and priorities to best position the Company for recovery;
The anonymity of responses was guaranteed throughout
the process in order to promote candid feedback.
KEY ACTIONS
The results of the evaluation of the Board committees
were considered by the relevant committee prior to
their presentation and discussion at the Board meeting
held in February 2021, together with the results for the
evaluation of the Board itself and key actions identified
for subsequent follow-up during the year.
Refer to the committees’ reports for details of the actions
from their evaluations and to page 163 of the Nomination
Committee Report for information on the impact of the
Board evaluation on Board composition.
Summary of actions agreed upon for the Board
for FY22:
• Increase visibility on succession planning at Board level.
• Increase opportunities for reporting on Group and
divisional competitors to the Board.
• Continue to identify and introduce new methods for
the Board to access external expertise and insights
into digital business transformation and other
pertinent matters.
• Increase opportunities for discussion on the
• the Board’s oversight of strategy, risk management,
Company’s risk appetite at Board level.
employees and other stakeholders;
• succession planning;
• and the effectiveness of its committees.
• Maintain focus on continuous improvement in the
quality of information provided to the Board by way
of management information dashboards.
134
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT ACCOUNTABILITY
RISK MANAGEMENT AND INTERNAL CONTROLS
RELATING TO FINANCIAL REPORTING
The Group has a comprehensive risk management
and internal control system designed to identify and
appropriately mitigate the emerging and principal
risks faced by the business and ensure the accuracy
and reliability of the Group’s financial reporting, while
facilitating the delivery and sustainability of the Group’s
strategic goals.
• an annual IT general control assessment conducted
by the external auditor on the business applications
on which the financial close process relies;
• assurance on key processes and IT audits as part of
the internal audit coverage; and
• review of the disclosures by the Group, the Board and
the Audit and Risk Committee within the annual,
half-year and other price-sensitive reports, as relevant,
to ensure compliance.
Key features of the Group’s internal financial control
system include:
• clearly defined delegations of authority and lines of
accountability;
• policies and procedures governing financial resource
management, financial reporting, key projects and
ICT security;
• annual self-assessments of the effectiveness of
controls by the relevant management teams;
The Board is responsible for reviewing and confirming the
effectiveness of the Group’s risk management and material
internal controls, including those relating to the financial
reporting process. Although the responsibility for evaluating
the Group’s risk management procedures, assessing
the effectiveness of internal controls and monitoring
reporting integrity has been delegated to the Audit and
Risk Committee, the Board maintains a strong and regular
oversight of the outcome of the committee’s work.
FIGURE 5: GROUP RISK MANAGEMENT GOVERNANCE STRUCTURE
R
E
S
P
O
N
S
I
B
I
L
I
T
Y
F
O
R
R
O
F
Y
T
I
L
I
B
A
T
N
U
O
C
C
A
Board
Responsible for corporate governance, strategy, risk
management and financial performance
Audit and Risk
Committee
Responsible for review and approval of adequacy
and effectiveness of risk management and internal
controls
Group Executive
Committee
Supports Group CEO in managing business
activities
Divisions
Responsible for identification, assessment and
management of divisional risks
An overview of the Group’s overall approach to risk
management can be found in the Risk management
report on page 96. Refer to page 148 for more
information on the role of the Audit and Risk Committee
in relation to risk management and internal controls.
all directors and employees in order to promote and
enforce ethical business practices and standards across
the Group. The Ethics Code is available to all employees
and communicated to new employees as part of
onboarding.
ETHICS AND COMPLIANCE
Conducting business in an honest, fair and legal manner
is one of Mediclinic’s fundamental guiding principles
and is actively endorsed by the Board and management,
ensuring that the highest ethical standards are
maintained in all dealings with stakeholders. The Group’s
commitment to ethical standards is supported by the
Group’s values and is set out in the Company’s Ethics
Code, which is available under the ‘Governance’ section
of the Company’s website at www.mediclinic.com.
The Ethics Code provides a framework of the standards
of business conduct and ethics that are required of
An eight-week awareness campaign to remarket the
Company’s ethics lines was rolled out in the final
quarter of the financial year in each division, including
orientation material for new employees. The Board
receives regular updates on fraud and ethics matters
(including instances of whistleblowing) and the Audit
and Risk Committee reviews and reports to the Board
on the effectiveness of the ethics lines annually.
Compliance with relevant legislation, regulations and
accepted standards/codes is integral to the Group’s risk
management process and is monitored in accordance
with the Group’s Regulatory Compliance Policy.
135
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT
CORPORATE GOVERNANCE STATEMENT CONTINUED
SLAVERY AND HUMAN TRAFFICKING
The Board has considered and approved the Company’s
Modern Slavery and Human Trafficking Statement
for the year under review, as required in terms of the
Modern Slavery Act 2015. The updated statement
reflects the steps taken by the Group to enhance its
internal processes and due diligence of suppliers to
prevent slavery and human trafficking and demonstrate
its commitment to this objective.
The statement is available on the Company’s website at
www.mediclinic.com.
FRAUD AND CORRUPTION
The Group adopts zero tolerance to unethical business
conduct, in particular fraud and corruption, which
is addressed in the Ethics Code and the Group’s
Anti-bribery Policy.
Refer to the Audit and Risk Committee Report on
page 142 for more information.
COMPETITION LEGISLATION
The Group supports and adheres to the relevant
competition and antitrust legislation applicable in the
various countries in which it operates. The legislation
is complex and the Group has issued guidelines, which
are reviewed and updated at least annually, to its
employees on compliance with competition legislation
within their jurisdiction.
In terms of the Namibian Competition Act, No. 2
of 2003, Mediclinic Southern Africa’s pharmacies
in Namibia are part of an investigation into the
determination of pharmacy prices at all retail
pharmacies in the country. The division received
comprehensive legal advice from competition experts.
No legal action for anti-competitive, antitrust or similar
conduct was instituted against the Group during the
year under review.
ICT GOVERNANCE
Mediclinic has an extensive ICT environment that acts
as an enabler of business strategies and operations.
The core business information systems cover clinical
processes, revenue cycle management and patient
administration. The SAP enterprise resource planning
back-office systems support, inter alia, the Finance,
Accounting, HR and Procurement functions. An
enterprise data warehouse enables advanced analytics
and supports decision-making by providing, sourcing
and enriching the required data-sets. An extensive
office automation environment enables both on-premise
and remote working, as well as collaboration and
communication within and across divisions, while an
international network enables data flows, interoperability
and communication across the entire Group.
ICT governance is done in the context of the Group’s
overall governance, in general, and of the Group’s risk
management structures and processes, specifically.
The Group’s risk management system is used to capture
and track all ICT risks, audit findings, mitigating actions
and responsibilities.
136
Central to ICT governance is the Group’s ICT
Management Committee (‘ICT Manco’) and its ICT
architecture and information security subcommittees.
The ICT Manco is a subcommittee of the Group
Executive Committee and membership consists of
the Group Chief Information Officer, divisional Chief
Information Officers and the Head of HR Systems.
This committee focuses on delivering the Group ICT
strategy through collaboration, standardisation and
synergies, including:
• enabling the digitalisation of Mediclinic’s business
model and services;
• modernisation of ICT service and solution delivery
and provisioning;
• ensuring a high-performing and cost-efficient
ICT function;
• establishing ICT reference architectures and
standards;
• setting information security-related policies
and standards;
• developing and reviewing ICT risk profiles; and
• providing assurance regarding information and
cybersecurity as well as access control, change
management and disaster recovery.
The ICT Manco is supported by the Group’s Information
Security Committee. The proceedings of this committee
are informed by information security best practices
sourced from NIST, ISACA, CoBIT 5, ITIL, ISO 27001
and the South African King IV™ Report on Corporate
Governance.
To ensure business continuity, Mediclinic employs a
wide range of technological capabilities to safeguard its
ICT installation, users and connections to external ICT
systems.
Information security and data protection policies and
controls are in place throughout the Group regulating,
inter alia, the processing, use and protection of own,
personal and third-party information. This is further
entrenched through continuous user training, security
awareness programmes and certification courses in
information security. The flow of personal data across
country borders is managed in accordance with
country-specific legislation.
There were no material information security incidents
during the year under review. Although the Group
was not a victim of a cyberattack during the past
year, there was a security incident in Hirslanden that
affected administrative data in its non-patient IT
network. This was rapidly resolved, with no impact
to patient safety or clinical services and only very
minor disruption to a limited number of administrative
functions. Based on investigations, there is no
evidence that any data, including patient data, was
accessed and all files impacted by the incident were
fully restored.
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT DIRECTORS
Refer to page 107 for the directors’ biographies.
APPOINTMENT, REMOVAL AND TENURE
The rules relating to the appointment and removal
of directors are set out in the Company’s Articles of
Association, as adopted on 22 July 2020 (the ‘Articles’).
Non-executive directors are appointed for a term of
three years, subject to earlier termination, including
provision for early termination by either the Company
or the non-executive director on three months’ notice.
All non-executive directors serve on the basis of letters
of appointment, which are available for inspection at the
Company’s registered office and at the AGM. The letters
of appointment set out the time commitment expected
of non-executive directors who, on appointment,
undertake that they will have sufficient time to meet
their responsibilities.
INDUCTION AND TRAINING
The Chair, with the support of the Company Secretary,
is responsible for the induction of new directors and
ongoing development of all directors.
Upon appointment, all directors are provided with
training in respect of their legal, regulatory and
governance responsibilities and obligations in
accordance with the UK regulatory regime. The
induction includes meetings with the Group Executive
Committee and other senior management to orientate
and familiarise the new directors with the healthcare
industry as well as Mediclinic’s business, strategy and
goals, and key risks; and, pending the lifting of local
lockdown restrictions, operational site visits.
Mr Weiner was appointed during the year under
review and has completed a comprehensive Board
induction programme tailored to his individual needs
and requirements.
The training needs of the directors are periodically
discussed at Board meetings and briefings are arranged
on issues relating to corporate governance and other
areas of importance.
The Board is kept informed of legal, regulatory and
governance matters. Additional training is available on
request, where appropriate, so that directors can update
their skills and knowledge as applicable.
INDEPENDENT PROFESSIONAL ADVICE
All directors may seek independent professional advice
in connection with their roles as directors. All directors
have access to the advice and services of the Company
Secretary at the expense of the Company.
ELECTION/RE-ELECTION
In accordance with the Company’s Articles, a director
appointed by the Board must stand for election at
the first AGM subsequent to such appointment and
other directors must stand for re-election annually.
Accordingly, Mr Weiner (appointed on 22 July 2020)
will stand for election at the Company’s 2021 AGM.
All other directors will stand for re-election.
Taking into account the result of the Board evaluation
carried out during the year under review and
recommendations from the Nomination Committee,
the Board considers that all the current directors
continue to be effective; are committed to their roles;
and have sufficient time available to perform their
duties. The Board therefore recommends the re-election
of all directors and the election of Mr Weiner.
Remgro, through wholly owned subsidiaries, holds
44.56% of the issued ordinary shares of the Company
and is therefore regarded as a controlling shareholder
of the Company for the purposes of the Listing Rules.
These require that independent non-executive directors
of a company with a controlling shareholder must be
elected by a majority of votes cast by independent
shareholders, in addition to a majority of votes cast
by all shareholders in such company. The resolutions
proposed at the AGM for the election of the independent
non-executive directors of the Company will therefore
be taken on a poll and the votes cast by independent
shareholders and all shareholders will be calculated
separately. Such resolutions will be passed only if
a majority of votes cast by independent shareholders
are in favour thereof, in addition to a majority of votes
cast by all shareholders being in favour thereof.
POWERS OF DIRECTORS
The general powers of the directors are contained within
relevant UK legislation and the Company’s Articles.
The directors are entitled to exercise all powers of
the Company, subject to any limitations imposed by
the Articles or applicable legislation.
INDEMNIFICATION OF DIRECTORS
The Company has entered into a deed of indemnity
with each director who served during the reporting
period under identical terms. These qualifying
third-party indemnity provisions (as defined in the
Act) were in force for the benefit of all directors who
held office during FY21 and up to the approval of the
Annual Report. The deeds indemnify the directors in
accordance with the applicable laws of England against
liability incurred as a director or employee of the Group.
In addition, the Company has provided directors and
officers with indemnity insurance and insurance in
connection with their duties and responsibilities.
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT
CORPORATE GOVERNANCE STATEMENT CONTINUED
DIRECTORS’ EXTERNAL APPOINTMENTS AND
CONFLICTS OF INTEREST
Prior to their appointment and thereafter annually,
directors are required to complete a detailed
questionnaire to identify any direct or indirect interest
that conflicts or may possibly conflict with the
Company’s interests (a ‘conflict of interest’) and
any direct or indirect interest in a proposed or
existing transaction or arrangement entered into
by the Company.
Directors are required to obtain approval from the
Board prior to accepting new appointments. The Board
has well-established procedures to identify and manage
conflicts of interest, including those that may result
from Remgro’s shareholding in the Company, and thus
ensure that the overall independence of the Board is
not compromised or overridden by the influence of a
third party.
In addition, directors are reminded at each Board
meeting of their duty to declare any new conflicts of
interest, interests in proposed transactions, changes to
previous declarations and any new actual or potential
conflicts of interest or interests in transactions that
could arise from new external roles that directors
are proposing to take up. Any conflicts of interest or
interests in proposed transactions identified by these
processes are considered by the directors who have
no interest in the relevant matter and, if appropriate,
authorised in accordance with the Act and the Articles
and their duties as directors, with conditions attached
where prudent to do so.
ASSESSMENT OF THE INDEPENDENCE OF
NON-EXECUTIVE DIRECTORS
The Board annually reviews any potential conflicts
of interest and identified conflicts are, if appropriate,
authorised. The Committee and the Board are
satisfied that the commitments of the Chair and other
non-executive directors do not conflict with their duties
and commitments as directors of the Company.
The independence of the non-executive directors
was reviewed, with Mr Grieve (the SID) reviewing the
independence of the other non-executive directors and
Mr Grieve’s independence being reviewed by the Chair
of the Board. This review was undertaken with reference
to factors that could affect a director’s independence
as set out in the Code and by considering the conduct,
independence of thought and judgement exhibited
by the independent directors during Board and
committee meetings. While two non-executive
directors, Messrs Durand and Meintjes, are considered to
be non-independent due to the nature of their existing
or prior relationship with the Company, the Board is
satisfied that the other non-executive directors are
independent and free from any relationship that could
affect their judgement and continue to demonstrate
their independence by how they conduct themselves in
Board meetings, including how they exercise judgement
and independent thinking.
COMPENSATION FOR LOSS OF OFFICE
There are no agreements in place with any director or
employee that provide for compensation for loss of
office or employment resulting from a takeover, except
that provisions of the Company’s share plans may cause
options and awards granted under such plans to vest on
a takeover.
Refer to the Remuneration Committee Report on
page 164 for more information on the committee’s
responsibilities, directors’ service contracts and letters
of appointment, directors’ remuneration, and directors’
shareholding and share interests in the issued shares of
the Company.
138
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT OTHER DISCLOSURES
ARTICLES OF ASSOCIATION
The Company’s Articles may be amended by way of
a special resolution of the shareholders. At the AGM
of the Company held on 22 July 2020, shareholders
approved the adoption of new Articles by way of a special
resolution. The Articles are available in the ‘Governance’
section of the Company’s website at www.mediclinic.com.
SIGNIFICANT AGREEMENTS
The following agreements are considered significant
in terms of their potential impact on the business of
the Group as a whole and could alter or terminate on
the change of control of the Company:
• The Relationship Agreement with Remgro was
entered into on 14 October 2015 with an effective date
of 15 February 2016. This agreement does not include
a change of control provision but does terminate if:
(i) the Company’s ordinary shares cease to be listed
and admitted to trading on the LSE’s main market
for listed securities; or
(ii) Remgro, taken together, ceases to hold a
minimum interest of 10% in the Company.
• The following facilities and finance agreements are
regarded as significant and contain change of control
provisions:
-
Swiss senior secured borrowings with three
committed extensions exercised, expiring in
September 2026 and bearing interest at Swiss
franc London Interbank Offered Rate (‘LIBOR’)
plus a margin of 1.25% up to a maximum of Swiss
franc LIBOR plus a margin of 1.65% depending on
the loan-to-value:
• CHF1.5bn amortising senior secured term loan
facility;
• CHF0.25bn senior secured capex facility; and
• CHF0.1bn senior secured revolving facility.
With reference to the facility agreement, there
will be a change in the calculation of the variable
interest rate from LIBOR to Swiss average rate
overnight (‘SARON’).
South African senior secured borrowings totalling
ZAR6.2bn, bearing interest at Johannesburg
Interbank Average Rate (‘JIBAR’) plus a margin
of 1.71% to 1.81% until September 2021, thereafter
1.49% to 1.59%, expiring in September 2022 and
2023 with uncommitted extension options.
South African unsecured preference share funding
totalling ZAR1.8bn, bearing interest at 72% of
JIBAR plus a margin of 1.77% until September 2021,
thereafter 1.65%, expiring in September 2022 with
uncommitted extension options.
-
-
- UAE amortising senior secured borrowings of
USD250m bearing interest at US dollar LIBOR
plus a margin of 1.85%, with the last payment in
July 2023.
PRINCIPAL SHAREHOLDER AND RELATIONSHIP
AGREEMENT
Remgro held 44.56% of the issued ordinary share capital
of the Company, at the Last Practicable Date.
Under the Relationship Agreement between the Company
and Remgro, Remgro undertakes to comply with the
following independence provisions, as required under the
Listing Rules:
• Transactions and arrangements between the Company
and Remgro (and/or its associates) are, and will be, at
arm’s length and on normal commercial terms.
• Neither Remgro nor any of its associates will take any
action that would have the effect of preventing the
Company from complying with its obligations under the
Listing Rules.
• Neither Remgro nor any of its associates will propose,
or procure the proposal of, a shareholder resolution that
is intended or appears to be intended to circumvent the
proper application of the Listing Rules.
The Company complied with the above independence
provisions and, insofar as it is aware, Remgro complied
with the independence provisions and the procurement
obligation set out in the Relationship Agreement from
the effective date of the agreement. In accordance with
the terms of the Relationship Agreement, for every 10%
of the issued ordinary share capital of the Company (or an
interest which carries 10% or more of the aggregate voting
rights in the Company from time to time) held, Remgro
is entitled to appoint one director to the Board, up to
a maximum of three directors, provided that the right
to appoint a third director is subject to the requirement
that the Board will, following such appointment, comprise
a majority of independent non-executive directors.
If Remgro’s shareholding reduces to below 10% of the
Company’s share capital (or 10% of the aggregate voting
rights in the Company), the rights and obligations of
Remgro in terms of the Relationship Agreement shall
terminate. The ordinary shares owned by Remgro rank
pari passu with the other ordinary shares in all respects.
RELATED-PARTY TRANSACTIONS
Details of all related-party transactions are contained
in note 35 to the Group annual financial statements on
page 274.
POLITICAL DONATIONS
Political donations are generally prohibited in terms of
the Company’s Ethics Code and Anti-bribery Policy,
unless pre-approved by the Executive Committee of the
division and reported to the Group Executive Committee.
It is not the policy of the Company to make political
donations as contemplated in the Act and, during the
year under review, the Group made no such payments.
However, as a result of broad definitions used in the Act,
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT CORPORATE GOVERNANCE STATEMENT CONTINUED
normal business activities of the Company, which might
not be considered political donations or expenditure in
the usual sense, may possibly be construed as political
expenditure or as a donation to a political party or other
political organisation and fall within the restrictions of
the Act. This could include sponsorships, subscriptions,
payment of expenses, paid leave for employees fulfilling
public duties and support for bodies representing the
business community in policy review or reform. The
Board has therefore resolved to propose a resolution
for shareholder consideration at the AGM, as in previous
years and in line with best practice, to authorise
the Company to make political payments up to an
aggregate amount of £100 000.
As is customary in Switzerland, Hirslanden maintains a
proper and constructive dialogue with political decision-
makers and stakeholders to represent the division’s
perspective and support informed decision-making
that contributes to improving patient outcomes and the
long-term sustainability of the business. Under the Swiss
political system, citizens are active in political bodies
at federal, cantonal and municipal levels in addition
to their regular occupations. Parliamentarians are not
professional politicians in this system and the parties
do not receive state support. Therefore, in line with
common and official practice in Switzerland, Hirslanden
assists in supporting the country’s political system
by making third-party contributions to a number of
political parties, institutions and associations involved
in campaigns which are of interest to the business.
The allowance for payments of this kind during FY21
was reduced to CHF3 000, but no such payments were
effected during the reporting period. Payments of this
kind made by Hirslanden in FY20 totalled CHF63 225.
Annual fluctuations in spend are mostly due to the
timing of national and cantonal renewal elections.
These contributions are not considered political payments
as contemplated in Part 14 of the Act, as they are not
made to the political parties within the scope of the Act.
GOING CONCERN STATUS
The Group annual financial statements, as set out
on pages 196–288 and approved by the Board on
25 May 2021, were prepared on a going concern basis.
The directors considered the Company’s financial
position; availability of funding; the principal risks
and uncertainties; and the viability assessment, and
accordingly considered it appropriate to adopt the
going concern basis of accounting in preparing the
financial statements, further details of which are
included in the Group Chief Financial Officer’s Report
on page 84, the Risk management report on page 96
and the Audit and Risk Committee Report on page 142.
EVENTS AFTER THE REPORTING PERIOD
On 10 May 2021, a fire broke out at Klinik Hirslanden
and caused significant damage to one of the building
wings. Since the EC, ICU and operating theatres were not
damaged by the fire, the hospital remains operational.
Although the amount of damage caused by the fire has
not been determined, insurance cover for the damage to
the property, equipment and supplies is in place, including
cover for the losses incurred due to business interruption.
The directors are not aware of any other matter or
circumstance arising between the end of the financial
year and Last Practicable Date that would significantly
affect the operations of the Group or the results of its
operations.
OVERSEAS BRANCHES
The Company, having secondary listings on the JSE
in South Africa and the NSX in Namibia, has established
an overseas branch in South Africa.
REQUIREMENTS OF THE LISTING RULES
Information required to be disclosed in terms of Listing Rule 9.8.4R, as applicable, is referenced below:
DETAIL
LOCATION IN ANNUAL REPORT
Confirmations regarding entering into a relationship agreement
with a controlling shareholder and compliance with independence
provisions
Refer to the ‘Principal shareholder and
relationship agreement’ section on page 139
Agreements with a controlling shareholder
Provision of services by a controlling shareholder
Interest capitalised
There are no other disclosures to be made under LR 9.8.4.
None other than the relationship agreement
referred to on page 139
None other than the services provided by
Remgro described in note 35 to the Group
annual financial statements on page 274
Notes 6 and 26 to the Group annual
financial statements on pages 223 and
264, respectively
140
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT DIRECTORS’ REPORT
This Statement incorporates by reference the Audit and Risk Committee Report, the Clinical Performance and
Sustainability Committee Report, the Nomination Committee Report and the Remuneration Committee Report.
The information set out in this Statement, together with the following disclosures included in this Annual Report and
incorporated by reference, constitutes the Directors’ Report of the Company for FY21, as contemplated in the Act:
Strategic Report
Sets out those matters required to be disclosed in the Directors’
Report which are considered to be of strategic importance
LOCATION IN
ANNUAL REPORT
Pages 1–105
- Strategy and future developments
Strategy overview on page 32
- Research and development
- Greenhouse gas emissions
Stakeholder engagement by the Board
Statement of directors’ responsibilities
Financial risk management objectives and policies
Shareholder information
For and on behalf of the Board.
Dame Inga Beale
Non-executive Chair
25 May 2021
Clinical research activities
referred to on page 83, with
further detail available in the
2021 Clinical Services Report
available at annualreport.
mediclinic.com
Sustainable development
overview on page 51, with
further detail available
in the 2021 Sustainable
Development Report available
at annualreport.mediclinic.com
‘Stakeholder interests and
Board engagement’ section of
this Statement on page 127
Page 182
Notes to the Group annual
financial statements on
pages 203–276
Pages 296–298
141
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT AUDIT AND RISK
COMMITTEE
REPORT
This is my final report as Chair of the Audit and Risk
Committee (the ‘Committee’), as I will be stepping down
from the Committee on 13 September 2021 and retire
from the Board on 14 February 2022, as described in
the Nomination Committee Report. I will be succeeded
as Committee Chair by Mr Tom Singer, who joined the
Committee upon his appointment to the Board in 2019.
I would like to thank the members of the Committee, the
management team, and the external and internal auditors
for their hard work and support during my tenure, but
especially during this past year, when we have all had
to continue to work under the challenges imposed by
the COVID-19 pandemic. This report provides details of
the activities of the Committee during FY21 and up to
the Last Practicable Date, to provide an insight into how
the Committee discharged its responsibilities. I trust you
will find this report to be informative and that you take
assurance from the work we have undertaken.
Mr Alan Grieve
Chair of the Audit and Risk Committee
The role of the Committee is to assist with the Board’s oversight
responsibilities in relation to the Group’s financial and narrative
reporting, internal control system and risk management processes.
TABLE 1: COMMITTEE COMPOSITION AND MEETING ATTENDANCE
NAME1
DESIGNATION
DATE OF APPOINTMENT
TO COMMITTEE
NUMBER OF SCHEDULED
MEETINGS ATTENDED2
Mr Alan Grieve
(Committee Chair)
Senior Independent
Director
15/02/2016 (as member)
24/07/2019 (as Chair)
Mr Trevor Petersen
Mr Tom Singer
Mr Steve Weiner3
Independent
Non-executive Director
Independent
Non-executive Director
Independent
Non-executive Director
15/02/2016
24/07/2019
22/07/2020
4/4
4/4
4/4
2/34
Notes
1 The composition of the Committee is shown at 31 March 2021. As discussed in the Nomination Committee Report, Messrs Grieve and Petersen will step
down from the Committee in September 2021 and the Board is in the process of identifying and appointing two independent non-executive directors,
which will ensure that the Committee continues to meet the membership criteria under the Code throughout FY22.
2 The attendance reflects the number of scheduled meetings held during the financial year.
3 Mr Steve Weiner was appointed as a member of the Committee upon his appointment to the Board on 22 July 2020.
4 Mr Weiner was unable to attend one Committee meeting due to a conflicting commitment. Messrs Weiner and Grieve liaised in advance regarding
the key matters under consideration.
142
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT
FIGURE 1: COMMITTEE MEMBERS’ SKILLS
AND EXPERIENCE
3
2
4
Chartered accountant
Former CFO or Group Controller of a UK-listed company
Competence relevant to the healthcare sector
The Committee normally holds four meetings
during the financial year, with one of these meetings
dedicated primarily to an extensive review of risk-
related matters. Two additional ad hoc meetings
were held during FY21 mainly to discuss an insurance
proposal, treasury management-related matters and
the results of the Committee’s evaluation. One ad
hoc meeting and one scheduled meeting were held
between the Company’s financial year-end and the
Last Practicable Date, to approve this Annual Report
and accounts and related matters. These meetings
were attended by all members of the Committee at
the time or at least the minimum quorum required
under the Committee’s terms of reference.
The Group CEO, Group CFO, the Group Chief
Governance Officer and the Company Secretary attend
all meetings. Representatives from the external auditor
are also invited to attend all meetings. Other attendees
from time to time include the Board Chair, Mr Pieter
Uys (alternate to Mr Jannie Durand), the Group Chief
Information Officer and the Group General Managers
for finance, risk services and internal audit, as well as
other relevant management members, as required.
Each scheduled meeting is held in advance of a
Board meeting, allowing the Committee’s Chair to
report to the Board on the key matters discussed.
The Committee meets privately without management
present after scheduled meetings, as necessary. Private
meetings are held at least once a year with the external
auditor, the Group General Manager: Internal Audit and
senior management, respectively, to allow any issues of
concern to be raised by, or with, each party.
The Chair of the Committee meets separately with the
Group CFO, Group General Manager: Internal Audit and
Mediclinic Cape Gate Day Clinic, South Africa
the external auditor during the financial year to ensure
that the work of the Committee is focused on key and
emerging issues.
ROLE AND KEY AREAS OF ACTIVITY
The role of the Committee is to assist with the Board’s
oversight responsibilities in relation to the Group’s
financial and narrative reporting, internal control
system and risk management processes, Internal Audit
function and the relationship with the external auditor,
as well as ethical conduct, governance and compliance.
The following sections of this report describe the key
activities of the Committee in each of these areas. The
Committee’s terms of reference, which comply with the
FCA’s Disclosure and Transparency Rules and the Code
and are reviewed annually by the Committee and the
Board, are available on the ‘Governance’ section of the
Company’s website at www.mediclinic.com.
During the period under review, the Committee
discussed the possibility of allocating its responsibilities
to separate, standalone risk and audit committees.
Following discussion, the Committee decided against
such separation but took a number of measures
during the course of the year in order to strengthen
oversight, as described in the ‘Effectiveness of the risk
management processes and internal control system’
section on page 148.
The Committee also discussed the UK Government’s
white paper on ‘Restoring trust in audit and corporate
governance’, in terms of its impact on the role of the
Committee, the Finance function and the Group’s risk
management and internal control system and assurance
processes, including the mandate and resourcing of the
Internal Audit function and the current external audit
arrangements.
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT AUDIT AND RISK COMMITTEE REPORT CONTINUED
CLINICAL SERVICES OVERVIEW
FINANCIAL REPORTING
The Committee ensures the integrity of the Group’s
financial and narrative reporting, including its full-year
and half-year reports, and financial statements and
announcements regarding the Company’s financial
performance. The Committee does so by scrutinising
and challenging the views of management and the
external auditor, as relevant. The principal areas of
focus during the reporting period and up to the Last
Practicable Date were:
• The financial performance of the Group’s divisions,
Spire and the Group as a whole, and the key drivers
of that performance in the context of the impact of
the ongoing pandemic, the budget agreed for the
year, guidance provided to investors and market
expectations, and consideration of the requirement
to provide further updates to the market.
• The significant accounting policies and practices
adopted by the Group, their impact on the Group’s
financial statements and the corresponding
presentation and disclosures included in the Group’s
periodic financial reports.
• Key accounting items and areas of significant
judgement, material assumptions and estimates
(as detailed in the section on ‘Significant financial
reporting matters’), and the sensitivity of outcomes
to reasonably possible adverse or favourable changes
in key assumptions.
• An assessment of the Company’s going concern
status and long-term viability, including the Group’s
capital maintenance strategy, actual liquidity position
and covenant compliance, to ensure that sufficient
resources remained available to meet the Company’s
needs. This included the recommendation to the
Board to suspend the FY21 final and interim dividend,
in order to preserve the Company’s liquidity.
• Group tax matters, tax risks and assurances received
from the Company’s tax advisors as part of the
year-end financial close process, together with
progress on country-by-country tax reporting and
transfer pricing documentation. The Committee also
reviewed and recommended the Group Tax Strategy
to the Board for approval. The strategy is published
in the ‘Risk management’ section of the Company’s
website at www.mediclinic.com.
• Key elements raised in the auditor’s feedback
and formal reports, in particular the going
concern assessment and the goodwill impairment
assessments, as set out in the external auditor’s
report on pages 184–195. This includes testing of the
auditor’s overall conclusions, to ensure the delivery of
a high-quality audit.
• The clarity of disclosures and the processes followed
to ensure the integrity of the information provided
in the Group’s periodic financial reports, including
adjusted performance measures, and an evaluation
that they present a fair, balanced and understandable
assessment of the Group’s position and prospects.
• The Committee’s annual review of the competence
of the Group-wide Finance function.
• Management’s proposed incremental approach to
providing internal and independent external assurance
on the Group’s ESG reporting, in response to the growing
expectations and forthcoming requirements in this area.
• Compliance with relevant accounting standards and
statutory, regulatory and good practice reporting
requirements, including the recommendations
published by the FRC during the financial year.
The Committee also discussed with management
and the external auditor the impact of COVID-19 on
the accounting and auditing timetable for the FY20
and FY21 annual reports and financial statements and
the FY21 half-year results, and ensured appropriate
steps were taken to safeguard the quality of the
Group’s reporting and of the external audit. While the
publication of the FY20 full-year results was delayed by
approximately two weeks, the Group and the external
auditor had adapted sufficiently to the new processes
necessitated by the pandemic, and the publication of
the FY21 half-year and full-year results proceeded as
originally planned.
SIGNIFICANT FINANCIAL REPORTING MATTERS
The significant financial reporting matters and principal
areas of judgement considered by the Committee in
relation to the 2021 half-year and full-year financial
statements, including matters communicated by the
external auditor to the Committee, are set out below.
The Committee discussed with management and the
external auditor their separate reports on each matter,
focusing in particular on key assumptions and sensitivity
analyses and areas where there had been differences of
opinion, to satisfy itself that the conclusions drawn were
reasonable and supportable based on the information
available at the time, and that the corresponding
disclosures in the Group’s reports were appropriate.
In addition to the information presented above, the 2021 Clinical Services Report provides information on
achievements, events, initiatives, patient feedback and case studies..
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MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT TABLE 2: SIGNIFICANT ISSUES CONSIDERED IN RELATION TO THE FINANCIAL STATEMENTS
ISSUE
WORK UNDERTAKEN BY THE COMMITTEE AND OUTCOMES
Goodwill and
non-financial
assets
(CGU level)
impairment
reviews
(see notes 6
and 7 to the
Group annual
financial
statements)
The key issues considered were:
• the impairment assessment and test of the Mediclinic Middle East and Hirslanden goodwill; and
• whether any indication existed that non-financial assets at an individual cash-generating unit
(‘CGU’) level at the divisions may be impaired.
The Group’s annual financial planning process concludes with individual business plans per division
that are approved by the Board. The business plans take account of macroeconomic conditions,
industry-specific trends and operational details. The business plans incorporated changes in
the markets in which the divisions operate. The Committee reviewed the key assumptions to the
impairment tests performed, including free cash flows (from the business plans described above),
long-term growth rates and discount rates. Long-term growth rates for periods not covered by
the forecast periods were challenged to ensure they were appropriate in the countries relevant
to the divisions.
The Committee noted the judgements and assumptions applied in business plans, and was
satisfied that management had developed its forecasts based on the best available evidence at this
time, including in relation to the likely evolution and potential impact of COVID-19. Based on its
challenge of the key assumptions and associated sensitivities, the Committee concurred with the
impairment booked against the carrying value of some CGUs within Mediclinic Southern Africa.
The Committee discussed the external auditor’s feedback and considered its conclusion regarding
the impairment assessments.
The Committee also considered the sensitivities to changes in assumptions and the related
disclosures required by IAS 36 Impairment of Assets and IAS 1 Presentation of Financial
Statements. Considering all the above, management responses and the external auditor’s views,
the Committee was satisfied that the assumptions used were reasonable and, together with related
disclosures, were appropriately presented.
Going
concern
The key issues considered were:
• the going concern status of the Group for a period of at least 12 months from the date of this
(see note 2.1
to the Group
annual
financial
statements)
report; and
• the impact of the COVID-19 pandemic on the liquidity of the business.
As part of the year-end process, management performed a monthly liquidity analysis per division
extending to September 2022 that included a base and downside case scenario per division.
The Committee evaluated the key assumptions used in preparing these scenarios, including risk
scenarios and expected impact of further COVID-19 waves on the business. The Committee
considered the downside case scenarios and evaluated whether management’s downside case
constituted a severe but plausible scenario. On mitigating actions, the Committee confirmed that
only such actions within the control of management were included and that further mitigating
actions were considered that might be available to the Group if downside risk factors prove worse
than currently expected. A key factor considered was the impact of COVID-19 on the 18-month
period ending 30 September 2022.
The Committee concluded that the Group, at a divisional level and supplemented with cash at
the centre, has sufficient liquidity in both the base case and the downside case scenarios and that
liquidity was sufficiently disclosed in the financial statements.
The Committee considered the compliance with covenant ratios related to borrowings in each of
the divisions and noted that there is sufficient headroom in the covenant calculations.
After evaluating management’s assessment and the auditor’s report on the going concern
assumption, the Committee recommended to the Board to approve the going concern assumption
for the Group’s financial statements, together with related disclosures.
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT AUDIT AND RISK COMMITTEE REPORT CONTINUED
TABLE 2: SIGNIFICANT ISSUES CONSIDERED IN RELATION TO THE FINANCIAL STATEMENTS CONTINUED
ISSUE
WORK UNDERTAKEN BY THE COMMITTEE AND OUTCOMES
Viability
assessment
The key issue considered was:
• the Group’s long-term viability assessment.
(see the Risk
management
report in this
Annual
Report)
The Committee reviewed the viability assessment and sought support from management for the
scenarios selected and the key underlying assumptions. The Committee also examined the stress
testing undertaken by management based on severe but plausible scenarios identified for each of
the divisions as capable of impairing the viability of the Group. It considered the external auditor’s
views on the methodology and assumptions adopted by management and the outcome of the
external auditor’s conclusions.
Having considered the principal risks, the Committee has a reasonable expectation that the Group
will be able to continue in operation and meet its liabilities as they fall due over the five-year period
of the detailed assessment, ending on 31 March 2026.
The key issues considered were:
• the impairment assessment of the equity investment in Spire at half year; and
• the carrying value of the equity investment in Spire at year-end.
At half year the Committee reviewed the key assumptions used in the impairment assessment.
At year-end the Committee considered whether there was objective evidence that the equity
investment in Spire significantly improved.
Based on Spire’s earnings and earnings forecast the Committee concluded that there has not been
a significant improvement to support a reversal of the previously recognised impairment charges.
Carrying
value of
equity
investment
in Spire
(see note 8 to
the Group
annual
financial
statements)
Swiss pension
fund
The key issue considered was:
• the carrying value of the Swiss pension fund.
(see note 19
to the Group
annual
financial
statements)
The Committee reviewed the main assumptions underlying the valuation of the pension
obligations, as determined by the external actuaries. These assumptions, such as discount rates,
mortality and inflation rate, were discussed with management and the external auditor in the light
of prevailing economic indicators in Switzerland. The Committee also received a comprehensive
presentation from the actuarial consultants to the Swiss pension fund on key figures, obligations
and trends around Swiss pension funds.
Following its review and the above discussion, the Committee was satisfied with the value of the
Swiss pension fund and the associated disclosures.
Recoverability
of Mediclinic
Middle East
receivables
The key issue considered was:
• recoverability of Mediclinic Middle East trade receivables and if sufficient impairment for credit
losses have been recognised.
The Committee obtained an understanding of the year-on-year increase in the outstanding
receivable balances and evaluated the provision for expected credit losses and disallowances.
The Committee concluded that the Mediclinic Middle East receivables are adequately provided for
and took note of the collections after year-end, and also noted that cash conversion improved
compared with the half year.
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MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT TABLE 2: SIGNIFICANT ISSUES CONSIDERED IN RELATION TO THE FINANCIAL STATEMENTS CONTINUED
ISSUE
WORK UNDERTAKEN BY THE COMMITTEE AND OUTCOMES
Classification
and
presentation
of exceptional
items
The key issue considered was:
• the Group’s use of non-IFRS measures and the judgement applied to determine whether the
items were exceptional.
The Committee reviewed the exceptional items for FY21, amounting to £33m after taking related
tax and deferred tax into account (£35m before tax) of which £23m related to the remeasurement
of redemption liability (written put option). Details of the exceptional items are set out in the
Group Chief Financial Officer’s Report on page 84.
Particular consideration was given to the types of income and expenses adjusted by
management in arriving at the Group’s adjusted earnings measure. The Committee received
confirmation from management and the external auditor that the exceptional items and adjusted
measures had been evaluated, classified and presented in line with the Group’s policy and
guidance from the FRC, and that management’s application of the Group’s policy was consistent
with previous accounting periods. It also examined whether the disclosures within the Group
Chief Financial Officer’s Report and the half-year and preliminary results announcements
provided sufficient detail to understand the nature of these items.
Following its review and the discussion with management and the external auditor, the
Committee was satisfied that:
• the amounts classified as exceptional items were reasonable and the related disclosure of
these items in the Group Chief Financial Officer’s Report and results announcements was
appropriate;
• all adjusted measures were appropriately labelled and reconciled to the equivalent statutory
measures and the related disclosures were clear and transparent; and
• there was consistent application in determining the exceptional items.
Income
statement
reclassification
The Group changed the presentation of its operating expenses on the face of the income
statement from an analysis-by-function to an analysis-by-nature and restated comparatives.
The Committee considered and evaluated the proposed cost categories and the rationale for the
change and satisfied itself that the new approach better reflects the nature of how the business
is managed and provides more relevant information.
FAIR, BALANCED AND UNDERSTANDABLE
REPORTING AND THE USE OF ADJUSTED MEASURES
Throughout the year under review, the Committee,
on behalf of the Board, reviewed the Group’s external
financial reports and other announcements relating to
its financial performance to ensure that these presented
a fair, balanced and understandable assessment of the
Company’s position and prospects.
The following measures were adopted to ensure that
this Annual Report meets that requirement:
• Factual content was verified by management.
• Members of senior management undertook a
comprehensive review of the document to consider
messaging and balance.
• The Committee reviewed a full draft of the document,
together with a summary of management’s approach
to the preparation of the narrative sections and the
annual financial statements.
• The Committee considered whether there was
consistency between the key messages in this Annual
Report and the Group’s position, performance and
strategy, and between the narrative sections and the
Group annual financial statements.
• It also considered whether all key events reported to
the Board and its committees during the year, both
positive and negative, were adequately reflected,
together with reporting by the external auditor of
any material inconsistencies.
• The Committee reviewed the use of adjusted
measures by the Group as described in the Group
Chief Financial Officer’s Report.
• A comprehensive review of the entire Annual Report
was carried out by the directors.
• Feedback from the Committee and other directors
on areas that would benefit from further clarity was
incorporated into this Annual Report ahead of final
approval.
The Committee also considered whether the Annual
Report included sufficient and appropriate disclosures of
the impact of COVID-19 on the Group during FY21 and
from the financial year-end to the Last Practicable Date.
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Based on all the above, the Committee advised the
Board that, in its opinion, this Annual Report, taken
as a whole, was fair, balanced, understandable and
representative of the year under review, and that it
provided the information necessary for stakeholders
to assess the Group’s position, performance, business
model and strategy.
EFFECTIVENESS OF RISK MANAGEMENT PROCESSES
AND INTERNAL CONTROL SYSTEM
Details of the Group’s principal risks and uncertainties and
risk management processes, and of the key features of the
Group’s internal control system are set out on pages 97–105
and page 135 of this Annual Report, respectively. The
Board retains overall responsibility for determining the risk
appetite of the Group; overseeing the risk management
processes and internal controls implemented throughout
the Group; reviewing their effectiveness; and reporting
on the outcome of their review in the annual report.
The Board has delegated responsibility for monitoring
and reviewing the effectiveness of the Group’s risk
management processes and internal controls to the
Committee. This section describes the Committee’s work
in this area and the assurance processes in place.
The Committee considers the effectiveness of the Group’s
risk management and internal control system during
its discussions at every meeting. It also receives regular
reports from management on particular issues requested
by the Committee, or identified from the Company’s risk
management, internal audit or compliance processes
or reports on fraud and ethical matters (including any
instances of whistleblowing). These are supplemented by
feedback on the internal control environment provided
by the external auditor as part of their half-year review
and in their formal report on the full-year audit. In
addition, where appropriate, the Group seeks assurance
from external experts. Recommendations arising from
the above processes are communicated to the relevant
business areas by the Risk Management or Internal Audit
functions, as appropriate, and the Committee receives
regular progress reports on implementation and further
requirements identified. Once a year, the Committee
conducts a formal review of the effectiveness of the
Group’s risk management and internal control system.
As previously mentioned, the Committee decided against
recommending to the Board the separation of its audit
and risk-related activities to a separate, standalone risk
committee. Instead, it decided to allocate more time
to focused discussions on risk matters. As a result,
the following matters were explored in-depth this year:
• a comprehensive review of the Group’s risk appetite
and updated risk appetite statement, with a particular
focus on the risks associated with strategic goals and
their management and governance processes;
• strengthening of procedures to scan for and identify
emerging risks;
• further enhancements to risk reporting to the
Committee and the Board; and
• strengthening of Board-level risk oversight by allocating
148
responsibility for the top risks affecting the Group’s
strategy to the Board or a relevant committee.
The Committee made suggestions to improve the
proposed process to ensure these risks continued to
be considered in the Board and committees’ regular
discussions, as well as in more detailed reviews
presented by internal or external experts, and to
ensure that the output of these discussions fed into
the Committee and the annual review of the Group’s
principal risks conducted by the Committee on behalf
of the Board.
Other key focus areas of the Committee in relation to the
Group’s risk management and internal control system and
their effectiveness during the reporting period and from
the financial year-end to the Last Practicable Date are set
out below.
• Annual policy reviews, including the Committee’s terms
of reference, risk management and compliance policies.
• Relevant statutory, regulatory and good practice
developments.
• The Group’s ERM Policy, framework and processes,
including risk tools incorporated across the Group.
• The evolution of emerging and principal risks for the
Group as a whole and other topical risks and associated
mitigants. One of the key risks identified by the
Committee for detailed consideration was the highly
elevated risk of stress adversely affecting Mediclinic’s
employees, as a result of dealing with the effects of
the COVID-19 pandemic coupled with change in the
organisation at the strategic level.
• The Group’s key insurance arrangements and policies
as well as the pension fund arrangements at Hirslanden
and a high-level risk assessment from the division’s
perspective, including the latest scheme valuation for
the Hirslanden Pension Plan at 31 December 2020, good
funding position, current coverage ratio, and levers
available in the event that the fund fell into deficit.
• Ensuring that the Group maintained an effective risk
management and control environment despite the
challenges and limitations imposed by COVID-19,
such as working from home and extended restrictions
on national and international travel.
• Following the downgrading of South Africa’s financial
institutions’ credit ratings in December 2020, reviewing
and approving amendments to the Group Treasury
Policy subject to the introduction of enhanced controls,
monitoring and reporting requirements for the
management of cash held in Southern Africa by Group
entities.
• Regular reports from the Internal Audit function
identifying any particular aspects of the Group’s internal
controls that required enhancement and corresponding
action plans and follow-up reports.
• The Internal Audit function’s annual report on the
effectiveness of the Group’s internal controls, presented
to the Committee at its May meeting, and the control
findings set out in the external auditor’s reports.
• Feedback from management on fraud and ethical
matters (including whistleblowing), litigation and
regulatory compliance.
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT • Progress against the ERM, internal audit and
compliance plans for FY21, which were completed
as planned despite the ongoing challenges posed
by COVID-19, and approving the corresponding plans
for FY22.
• Further enhancement of the integrated reporting
received on financial, operational, clinical and
compliance risk management processes, systems of
internal control and sources of internal and external
assurances.
At the request of the Board, the Committee carried out
an assessment of the Group’s emerging and principal risks
before the Last Practicable Date. This included a review
of the Group’s ERM Policy, framework and processes,
the Group’s risk appetite statement, any changes in the
emerging and principal risks facing the Group, and action
plans designed to mitigate these risks in line with the
Group’s risk appetite. The principal risks and uncertainties
facing the Group, the procedures in place to identify
emerging risks and how these risks are being managed or
mitigated, as reviewed by the Committee and approved
by the Board, are described on pages 97–105 of this
Annual Report.
At its May 2020 and May 2021 meetings, the Committee
also reviewed the effectiveness of the Group’s internal
control system, including all material financial, operational,
regulatory compliance and (subject to the agreed
separation of responsibilities agreed with the Clinical
Performance and Sustainability Committee) clinical
controls, in accordance with the FRC Guidance on Risk
Management, Internal Control and related Financial
and Business Reporting. The Committee considered
reports from the Risk Management, Internal Audit and
Compliance functions, which reflected the outcomes
of various peer reviews, control self-assessments, the
delivery of the ERM plan and the internal audit plan and
status of any corrective actions taken by management in
response to their findings.
In addition to these internal assurances, the Committee
took into account the findings from the external auditor’s
evaluation of the internal control environment performed
during the full-year audit and other external assurances
commissioned, as well as its own observations throughout
the year under review. Following due consideration, the
Committee concluded that the Group continued to have
an effective risk management and control environment
despite the challenges posed by COVID-19. No significant
failings or weaknesses were identified and processes
were in place to ensure that the necessary actions were
taken to build and strengthen any areas for improvement
identified by the review. The Board considered the
Committee’s findings in relation to the effectiveness of
the Group’s systems of risk management and internal
control, and was satisfied that throughout the year under
review and up to the Last Practicable Date, the Group risk
management and internal control environment continued
to be effective.
INTERNAL AUDIT
The Internal Audit function is a key element of the Group’s
internal control environment. Strong reliance is placed
on the Group’s Combined Assurance Model, which uses
control self-assessment techniques to assure on key risk
areas. It is responsible for undertaking risk-based internal
audits across the Group and examining the internal
controls and management of risks relating to the financial,
operational and clinical performance, IT and compliance
activities of the Group. Recommendations from internal
audits are communicated to the relevant business areas
and progress on their implementation is tracked by the
Internal Audit function. The function’s responsibilities also
include providing independent appraisal and assurance
to the Committee of the effectiveness of the Group’s risk
management processes and internal control system.
The Internal Audit function reports functionally to the
Committee and administratively to the Group Chief
Governance Officer. It works closely with the Group Risk
Management function and engages with the external
auditor at least on a quarterly basis, or more frequently
if required, to improve the levels of assurance delivered
to the Board on key risk areas. The Group continued
to supplement its in-house Internal Audit capacity by
contracting in specialist services as required to ensure
the optimisation of resources.
The key topics relating to internal audit considered by
the Committee during the reporting period and from
the financial year-end to the Last Practicable Date are
set out below.
• Progress on the completion of the internal audit plan
for FY21, including reports on internal audits, key
findings, management action plans and progress on
their implementation despite the challenges posed by
COVID-19. These audits included the internal audit of
key hospital-related processes, major transformational
projects, IT-related projects, ad hoc and process
audits. The clinical audits have oversight by the Clinical
Performance and Sustainability Committee, but the
Committee is updated on the key clinical audit findings.
• Annual assessment of the effectiveness of the Group’s
internal controls (as described earlier in this report).
• Scrutiny of the internal audit plan for the following
financial year, including the methodology and
deliverables. The plan is set on a three-year rolling basis,
with the focus areas being determined and updated
annually. The Internal Audit function will continue to
adopt a risk-based approach to audits for FY22 and
intends to focus on the audit of key hospital processes,
clinical audits, IT audits, process-based audits and
selected sustainability and governance audits.
• Annual assessment of the development, resourcing
and effectiveness of the Internal Audit function.
The Committee conducted this review at its May 2020
and May 2021 meetings, taking into account reports
received from and discussions with the Group General
Manager: Internal Audit, a robust discussion of the
self-assessment of the function presented to the
Committee, and feedback provided by management
and the external auditor in separate private meetings
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with the Committee. The Committee continues
to be satisfied with the effectiveness, resourcing,
independence and standing of the Internal Audit
function in terms of delivering its current mandate, and
noted that consideration was being given to assessing
and preparing for the outcome of the UK Government’s
consultation on strengthening directors’ responsibility
and accountability for the effectiveness of internal
control and risk management procedures.
• Review of the Internal Audit function’s mandate.
• Private meeting with the Group General Manager:
Internal Audit, without management.
EXTERNAL AUDIT
The Committee, on behalf of the Board, is responsible
for overseeing the relationship with the external auditor,
including ensuring the quality and robustness of the
external audit. PwC was appointed as the Company’s
external auditor in February 2016, as approved by the
Company’s shareholders in December 2015. The lead
audit engagement partner, Mr Neil Grimes, was appointed
in June 2020 for FY21. The external auditor is invited to all
Committee meetings and receives copies of all relevant
papers and meeting minutes.
The key topics considered by the Committee during the
reporting period and between the financial year-end and
the Last Practicable Date in relation to the external audit
are set out below.
• The matters set out in the external auditor’s
pre-year-end report on accounting, auditing and
control matters, the year-end audit report and the
external auditor’s review of the half-year results, as
discussed earlier in this report.
• Progress of the external audit against the audit plan
and any impediments posed by the pandemic.
• The quality and effectiveness of the external audit and
the external auditor’s independence and objectivity.
• The reappointment of the external auditor, taking into
account feedback received during a private meeting
with management and a private meeting of Committee
members.
• The external audit plan for FY21 and proposed fees.
• The non-audit services expenditure incurred in respect
of FY21.
• The non-audit services authorised thresholds for FY22.
• The policy on the external auditor’s independence and
for approval of non-audit services.
• Private meetings with the external auditor, without the
presence of management.
QUALITY, EFFECTIVENESS AND INDEPENDENCE
OF THE EXTERNAL AUDIT
The Committee plays a key role in seeking to ensure that
the Group receives a high-quality and effective statutory
audit. It does so by overseeing the relationship with
the external auditor and through open discussions with
management and the external auditor during Committee
meetings and with each group privately, after meetings.
Through these discussions, members of the Committee
ensure they have a clear understanding of any
150
contentious issues, challenge management on their
judgements and the quality of disclosures, and scrutinise
the external auditor’s analysis and work.
EVALUATION OF THE EXTERNAL AUDITOR
In order to form a view on the quality of the audit
and the effectiveness of the process, the Committee
considered its own observations and interactions with
the auditor, as well as feedback from management and
others who had regular contact with the external auditor
in the course of its activities. As the FY21 external audit
neared finalisation, this group of persons was asked to
evaluate the performance of the external auditor, with
a strong focus on its independence and objectivity. The
evaluation was performed by way of a questionnaire,
which focused on four key performance areas: (1) the
robustness of the audit process; (2) the quality of delivery;
(3) the quality of reporting; and (4) the quality of people
and service. The feedback on the FY21 external audit
drawn from the questionnaire and from the separate
meetings with the external auditor and management was
discussed by the Committee at the meeting held in May
2021. Matters discussed included: the smooth transition
to the new lead audit partner; areas of discussion
between the external auditor, management and the
Committee; the external auditor’s robust but constructive
challenge to management’s assertions and areas of
significant judgement; and the overall thoroughness of
their work.
A key aspect considered by the Committee was evidence
of the external auditor’s professional scepticism and
challenge in its reports as well as during Committee
discussions, particularly on issues such as: the
impairment assessments of the Mediclinic Middle East
and Hirslanden goodwill; the impairment assessment
of the equity investment in Spire at the half year; the
carrying value of the equity investment in Spire at year-
end; the recoverability of receivables at Mediclinic Middle
East, and adequacy of provisions for credit losses and
disallowances; and the going concern assessment.
The Committee also took note of the FRC’s Audit
Quality Practice Aid for Audit Committees published in
December 2019 and the Audit Quality Inspection report
for PwC published by the FRC’s Audit Quality Review
team in July 2020. Any opportunities for improvement in
the quality of the external audit and the effectiveness of
the process were discussed with the lead audit partner
and his team. Following this review, the Committee was
satisfied that PwC had carried out its duties in a diligent,
professional and effective manner and recommended
to the Board that a resolution to reappoint PwC as
the Company’s auditor be proposed to shareholders at
the 2021 AGM.
EXTERNAL AUDITOR’S INDEPENDENCE
The Committee is also responsible for annually assessing
the independence and objectivity of the external auditor
and adopts a two-fold approach to do so. Firstly, the
Committee considers the information and assurances
provided by the external auditor under the FRC’s Revised
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT Ethical Standard for Auditors. Secondly, the Committee
developed and monitors the Non-audit Services
Policy and associated fees, designed to safeguard the
independence of the external auditor.
In their external audit report for FY21, PwC confirmed
that there were no significant facts and matters that may
reasonably be thought to bear on its independence or
on the objectivity of the lead partner and the audit team.
The quality review partner, who reviews the judgements
of the audit team, rotates every seven years and the lead
partner and key audit partners at each division rotate
every five years. The quality review partner was appointed
for the FY20 audit and is therefore not due for rotation
until after FY26. The lead partner for the FY21 external
audit, Mr Grimes, was appointed with effect from
June 2020 and is therefore not due for rotation until
June 2025. The key audit partners for Hirslanden,
Mediclinic Southern Africa and Mediclinic Middle East
were appointed in FY19, FY18 and FY21, respectively,
with rotation due after FY24, FY23 and FY26. The
Committee also considered the Group’s usage of PwC
for the provision of non-audit services and the updated
Non-audit Services Policy referred to below. Based
on the above confirmations and arrangements, the
feedback from management and Committee members’
own observations of the external auditor’s conduct
and judgement, the Committee was satisfied that
PwC continues to be independent and free from any
conflicting interest with the Group.
NON-AUDIT SERVICES AND FEES
The Committee believes that it may be appropriate in
certain, limited circumstances for the Company to engage
its external auditor to provide non-audit services. The
provision of such services is strictly governed by the
Group’s Non-audit Services Policy which helps to ensure
that the external auditor’s independence and objectivity
are not impaired or perceived to be impaired. The
policy incorporates the additional restrictions on
non-audit services introduced by the FRC’s Revised
Ethical Standard 2019 and was last reviewed and
approved by the Committee in March 2021.
At the beginning of each financial year, the Committee
determines the pre-approved monetary thresholds for
each category of non-audit services that may be provided
by the external auditor. The nature of the non-audit
services, the individual fee levels for each category and
the aggregate fee relative to the external audit fee are
taken into account in determining these thresholds. Any
individual assignment with a fee exceeding £50 000
requires the Committee’s prior approval.
The fees paid to PwC in respect of non-audit services
amounted to approximately £0.7m or 29% of the
statutory audit fees. Approximately £0.4m of the non-
audit service fees were in respect of reviews conducted
in relation to the financial statements for the six months
ended 30 September 2020. Therefore, excluding the
half-year reviews, non-audit service fees as a percentage
of statutory audit fees amounted to 7%.
Refer to note 24 to the Group annual financial
statements on page 263 for more information on
the fees paid for audit and non-audit services during
the year under review. In addition, an amount of
approximately £0.2m or 7% of the statutory audit fees
was paid for Swiss billing code audits. These audits are
required by Swiss law to ensure that the codes used for
the bills issued by Hirslanden on invoices for inpatient
hospital services are entered in accordance with the
Swiss diagnostic-related grouping tariffs. The Committee
allowed this non-audit service since it is cost effective
for the Group and represents a relatively small part of
the statutory audit fee.
REAPPOINTMENT
As described above, the Committee concluded that the
services provided by the external auditor were of a high
quality; that the external audit process in respect of FY21
was effective; and that the auditor remains objective and
independent. Accordingly, the Committee recommended
to the Board that the reappointment of PwC as the
Company’s external auditor be proposed to shareholders
at the Company’s 2021 AGM.
The Committee complied with the provisions of the
Statutory Audit Services for Large Companies Market
Investigation (Mandatory Use of Competitive Tender
Processes and Audit Committee Responsibilities)
Order 2014. In terms of the UK Competition and Market
Authority (‘CMA’) rules, the Company is required to
ensure that the external auditor’s contract is put out to
tender at least every 10 years, with the proviso that no
single firm may serve as the Company’s external auditor
for a period exceeding 20 years. The planning for this
retendering has already commenced, with the intention
for the tender process to be completed during the 2022
calendar year and the Board making the corresponding
recommendation to shareholders at the Company’s 2023
AGM, allowing the external auditor selected as a result of
that process to conduct the audit for the financial year
commencing 1 April 2023, 10 years after the Company’s
initial listing.
GOVERNANCE, COMPLIANCE AND ETHICAL CONDUCT
The Group is focused on conducting its business in
an honest, fair and ethical manner – a principle actively
endorsed by the Board and management. The Committee
oversees the Group’s processes for handling breaches
of the Group’s Ethics Code and Anti-bribery Policy.
The key topics considered by the Committee during the
year under review in relation to governance, compliance
and ethical conduct (which have all been mentioned
previously in this Committee Report, in the context of
the Committee’s other responsibilities) are set out below.
• Potential division of the Committee into separate,
stand-alone audit and risk committees.
• Annual review of the Committee’s terms of reference
and all material internal controls, risk management
and compliance policies and procedures.
• Relevant statutory, regulatory and good practice
developments.
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• Group Tax Strategy and key tax considerations across
the Group.
• Management’s reports on regulatory compliance across
the Group.
• Management’s report on fraud and ethical matters
(including any instances of whistleblowing).
• Management’s report on any litigation cases.
The Committee is responsible for ensuring Group-wide
compliance with relevant legislation and regulations.
The Group operates a standardised risk-based
compliance monitoring programme that tracks the
Group’s compliance with key legislation across all
the jurisdictions in which it operates. The Committee
received regular updates on the status of regulatory
compliance across the Group; examined the implications
of forthcoming legislation and management’s plans to
address the new requirements; and monitored progress
on their implementation.
During the year under review, at the Board’s request,
the Committee also received regular feedback from the
Group General Manager: Risk Services on all material
cases and incidents reported on the ethics lines, or by
other means, including any instances of whistleblowing,
and how these were managed. The Committee satisfied
itself that the arrangements in place for addressing these
matters were appropriate, proportionate and effective,
and provided regular reports to the Board on any major
issues and developments. Refer to the Sustainable
development overview on page 65 for further details
on the ethics lines.
Refer to the Sustainable development overview on
page 66 for further details on business conduct, ethics,
and anti-corruption and anti-bribery matters. Details of
the Clinical Performance and Sustainability Committee
are provided on page 154.
COMMITTEE EVALUATION
The Committee reviewed its performance as part of the
annual evaluation of the Board and its committees, which
is described on page 134 of the Corporate Governance
Statement. The external auditor and other regular
attendees were invited to participate in the evaluation of
the Audit and Risk Committee. The Committee members
reviewed and discussed the outcomes of the evaluation
and certain actions were agreed for implementation,
designed to further develop or mature some of the
Group’s risk management and reporting. The results were
reported to the Board at the March 2021 meeting. The
Committee will implement plans to progress the agreed
actions, monitor the resultant outcomes and incorporate
these into the next performance evaluation.
PROGRESS ON KEY FY21 PRIORITIES
Continuing to build and strengthen the Group’s
risk management framework and reporting, and
increase the time allocated to the Committee’s
discussion of emerging risks
Refer to the ‘Role and key areas of activity’ and
‘Effectiveness of risk management processes and internal
control system’ sections of this report on pages 143 and 148
and to the ‘Risk management and internal controls’ section of
the Corporate Governance Statement on page 135
Continuing to monitor the development of the
in-house Internal Audit function and the audit
processes introduced during the reporting period
Refer to the ‘Internal Audit’ section of this report
on page 149
Managing the Group’s corporate reporting on ESG
matters
Refer to the ‘Financial reporting’ section of this report
on page 144
Monitoring the ongoing impact of COVID-19 on the
Group’s liquidity, covenant compliance and financial
reporting
Refer to the ‘Financial reporting’ section of this report
on page 144
FY22 PRIORITIES
The Committee will, among other matters, focus on:
• monitoring and reviewing the operation of new
procedures established under the strengthened risk
management framework;
• the quality of reporting on climate-related and other
ESG matters;
• reviewing and preparing to address the relevant
reforms that emerge from the UK Government’s
white paper on restoring trust in audit and corporate
governance;
• continuing to monitor the impact of COVID-19 on
accounting, audit, risk management and internal control
matters; and
152
• introducing further regular expert training on
developments in accounting, audit and reporting
matters.
Approved and signed on behalf of the Committee.
Mr Alan Grieve
Chair of the Audit and Risk Committee
25 May 2021
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT G
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Mediclinic Gariep,
South Africa
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
CLINICAL PERFORMANCE
AND SUSTAINABILITY
COMMITTEE REPORT
The main focus of the
Committee during FY21
was overseeing and
supporting the Group’s
clinical preparedness
for, and response to,
the pandemic.
Dr Felicity Harvey
Chair of the Clinical Performance and
Sustainability Committee
As Chair of the Clinical Performance and Sustainability Committee (the ‘Committee’), it is my pleasure to report on its
activities for FY21, including key focus areas, together with the priorities for FY22.
COMMITTEE COMPOSITION AND MEETING ATTENDANCE
TABLE 1: COMMITTEE COMPOSITION AND MEETING ATTENDANCE
NAME1
DESIGNATION
DATE OF APPOINTMENT
TO COMMITTEE
NUMBER OF SCHEDULED
MEETINGS ATTENDED2
Dr Felicity Harvey
(Committee Chair)
Independent
Non-executive Director
Dr Muhadditha
Al Hashimi
Dr Anja Oswald3
Dr Ronnie van der Merwe
Mr Steve Weiner4
Independent
Non-executive Director
Independent
Non-executive Director
Group Chief Executive
Officer
Independent
Non-executive Director
03/10/2017
01/04/2018
01/03/2021
25/07/2018
22/07/2020
5/5
5/5
0/1
5/5
4/4
Notes
1 The composition of the Committee is shown at 31 March 2021.
2 The attendance reflects the number of scheduled meetings held during the financial year. Details of additional meetings are set out alongside.
3 Dr Oswald was appointed as a member of the Committee with effect from 1 March 2021 to provide additional clinical and healthcare expertise,
as identified during the review of the Committee’s effectiveness. She was unable to attend one subsequent meeting of the Committee due to
an engagement arranged prior to her appointment to the Committee.
4 Mr Weiner was appointed as a member of the Committee upon his appointment to the Board on 22 July 2020.
154
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT FIGURE 1: COMMITTEE MEMBERS’ SKILLS
AND EXPERIENCE
5
4
2
4
2
Healthcare sector
Medical/clinical/similarly complex businesses
HR/talent management/culture management
Other stakeholder management1
Sustainability
Note
1 Refer to Stakeholder engagement on page 44 for more information
on the Group’s stakeholders.
The Committee held five meetings during the year
under review, one of which was dedicated to facilitating
discussions on clinical performance and the sustainable
development strategy for the Group and each division.
In addition, one meeting was held between the
Company’s financial year-end and the Last Practicable
Date which was attended by all members at the time,
except for Dr Anja Oswald. Each scheduled meeting
is held in advance of Board meetings, allowing the
Committee’s Chair to report to the Board on the key
matters discussed.
Under the Ward-to-Board accountability framework,
the Group and divisional Chief Clinical Officers and the
Group General Manager: Clinical Performance are invited
to attend all meetings, as is the Group Chief Governance
Officer, who is responsible for the Group’s sustainable
development management. The divisional CEOs and
other relevant members of management are invited to
attend meetings as required.
ROLE AND KEY AREAS OF ACTIVITY
The role of the Committee is to assist the Board in:
• promoting a culture of excellence in patient safety, quality
of care and patient experience by, among other things,
monitoring the clinical performance of the Group; and
• ensuring that the Group is and remains a good and
responsible corporate citizen by monitoring the
sustainable development performance of the Group.
The Committee is governed by formal terms of reference,
which are reviewed at least annually by the Committee
and the Board. The terms of reference are available in
the ‘Governance’ section of the Company’s website at
www.mediclinic.com.
The key focus areas of the Committee during the year
under review and resultant outcomes are set out below.
CLINICAL PERFORMANCE
COVID-19
The main focus of the Committee during FY21 was
overseeing and supporting the Group’s clinical
preparedness for, and response to, the pandemic,
including the impact on frontline workers and on
administrative and corporate functions; predictions
of a second and third wave; coordination between
divisions; and executive oversight at Group level.
FIGURE 2: COMMITTEE COMPOSITION
Independent non-executive
directors 80%
Executive directors 20%80+
GOVERNANCE
The Committee continued to oversee and support the
progress of the Ward-to-Board accountability framework
across all three divisions. This accountability framework
is integral to the Group’s Patients First approach and
the corresponding patient safety and clinical quality
goals. It is designed to align the interests of clients and
care providers, and strengthen a culture of performance
reporting and accountability. It also ensures effective
information flows up and down the organisation and
facilitates Group-wide alignment and collaboration.
The framework has now been implemented across
all three divisions, including Clinical Performance
Committees (‘CPCs’) at each division, and is being
replicated appropriately at hospital level. The divisional
committees, where possible, include local independent
clinical experts to provide a different perspective and
avoid ‘group think’. The Ward-to-Board accountability
framework drives clinical quality and efficiency, thereby
providing re-assurance and creating value for the
Company and its stakeholders. Evidence of this is
emerging at Hirslanden, where the framework has been
introduced and is being embedded. At Mediclinic
Southern Africa and Mediclinic Middle East, the
framework has been embedded for more than a year
and has continued to enhance the transparency,
understanding and management of adverse events
across both these divisions.
The hospital-level CPCs are led by and consist of
experienced and reputable medical practitioners, as
well as hospital management. These committees
identify clinical performance areas for potential
improvement and then devise and implement action
plans to bring about the necessary improvements.
CLINICAL MANAGEMENT MODEL
The Group’s clinical management model is based on
a clinical performance framework consisting of four
components: patient safety, clinical effectiveness, clinical
cost efficiency and value-based care.
The Patient Safety Company (‘TPSC’) software is being
implemented across all three divisions, providing an
integrated clinical event management system and
uniform reporting across the Group. At Mediclinic
Middle East, a pilot project of TPSC implementation
was successfully completed.
Refer to the COVID-19 overview on page 12 for more
information on the Group’s response to the pandemic.
Refer to the 2021 Clinical Services Report for more
information on the project.
155
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT20
+
N
CLINICAL PERFORMANCE AND SUSTAINABILITY COMMITTEE REPORT CONTINUED
CLINICAL SERVICES OVERVIEW
The composite performance indicator dashboard
implemented in FY19 allowed the Committee to scrutinise
in greater detail the clinical performance of the Group’s
three divisions. Further areas for refinement were
identified, such as:
• expanding and standardising indicators and indices
across the continuum of care; and
• adopting more standardised key performance
indicators for specialities, definitions and
interpretations across all three divisions, while still
meeting local reporting needs to address regulatory
requirements or particular focus areas.
The Committee monitors progress in this regard. These
changes are enhancing the ability of management and
the Committee to consider the clinical performance
of each division on a consistent basis and identify
opportunities for cross-learning and collaboration.
CLINICAL RISK MANAGEMENT, CONTROLS
AND PROCESSES
During the year, the Committee deepened its oversight of
clinical risk management, controls and procedures through
enhanced reporting from management and clinical audits
conducted by the Internal Audit function. Despite disruptions
caused by COVID-19, there was clinical audit coverage across
all three divisions. Follow-up audits were conducted at
Mediclinic Southern Africa and Mediclinic Middle East, and
four clinical audits were conducted at Hirslanden.
The clinical audits found compliance with most controls
for high-risk clinical areas. For non-compliance, corrective
actions were formulated and implemented, some
immediately and others over a longer period, and
monitored by the divisional CPC, to ensure completion.
• Evaluated the schedule of key stakeholders and
recommended the addition of professional societies
to the Board.
• Reviewed progress on the development of an integrated
care delivery system.
• Monitored the implementation of virtual care projects.
• Reviewed and approved the annual Clinical
services overview in this Annual Report and
the 2021 Clinical Services Report available at
annualreport.mediclinic.com.
SUSTAINABLE DEVELOPMENT
The Committee, among other matters:
• Monitored the implementation of the Group Sustainable
Development Strategy, approved by the Board in FY20,
which consolidated the Group’s various ESG initiatives
and implements a structured, consistent and systematic
approach. The Committee received feedback from
the respective departments on the implementation
of objectives on a biannual basis, with sub-goals
and objectives reviewed annually. New objectives
and revised timelines were recommended to the Board
for approval. More information on the Group Sustainable
Development Strategy is available under ‘Sustainable
development’ in the ‘Governance’ section of the
Company’s website.
• Reviewed and approved proposed policy changes to
ensure alignment to the Group Sustainable Development
Strategy, including the Group Sustainable Development
Policy, the Group Environmental Policy and the Ethics
Code, all available on the Company’s website at
www.mediclinic.com.
• Monitored the sustainable development performance
of the Group, especially:
- engagement with key stakeholders and key outcomes
OTHER FOCUS AREAS
• Evaluated compliance with the Group’s patient safety
from such engagement (including patient and
employee engagement surveys);
approach, which informed the patient safety workshop
attended by the Board in September 2020; quality
clinical care standards, policies and procedures; and
regulations and accreditation standards at divisional
level.
• Reviewed progress on the implementation of the
patient safety framework.
• Continued to review the work of the Patient Safety
Committee to standardise and enhance collaboration
across the Group, assist in reinforcing the Group’s
strengths, and identify and prioritise focus areas.
• Reviewed progress on integrating client experience
and clinical care, improving client experience and
expanding the measurement of patient experience
to all care settings.
• Reviewed progress on the implementation of EHRs
across all three divisions.
- labour relations and working conditions;
- employee training and skills development;
- health and public safety;
- B-BBEE in South Africa;
- the Company’s Modern Slavery and Human
Trafficking Statement as required in terms of the
Modern Slavery Act 2015, available on the Company’s
website;
- environmental impact management;
- fraud and ethics;
- compliance, including the governance of
advertising and compliance with consumer
protection legislation; and
- CSI.
• Monitored the results of the Company’s participation in
various sustainability indices and assessments, notably
the Company’s inclusion in the FTSE4Good Index.
• Monitored the implementation of a clinical adverse
• Confirmed the key sustainability priorities as
event and clinical risk management solution suitable
for the Group to further strengthen patient safety
procedures.
In addition to the information presented above, the 2021 Clinical Services Report provides information on
• Reviewed clinical effectiveness and cost efficiencies.
achievements, events, initiatives, patient feedback and case studies..
• Reviewed the outcomes and follow-up actions arising
recommended by management and reported on
page 54 and in the 2021 Sustainable Development
Report available at annualreport.mediclinic.com.
• Reviewed and approved the annual Sustainable
development overview included in this Annual Report
and the 2021 Sustainable Development Report.
from patient and doctor satisfaction surveys.
156
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT As referred to below, certain South African subsidiaries
of the Company are required to appoint a social and ethics
committee in terms of the South African Companies Act,
No. 71 of 2008, as amended (‘SA Companies Act’), unless
such companies are subsidiaries of another company that
has a social and ethics committee which performs the
functions required by this regulation on its behalf. The
Committee therefore performs the statutory functions
required of a social and ethics committee in terms of the
SA Companies Act.
COMPLIANCE
The Committee discussed management’s report on
compliance universe aspects within the Group, as
allocated to the Committee and set out in their terms
of reference. The discussion included evaluating relevant
risk and control self-assessments and concluded that
no matters of material non-compliance were identified.
Where non-compliance was identified, corrective actions
were formulated, and implementation will be monitored.
ASSURANCE
The Committee considered the need to maintain the
current external and internal assurance measures of
the Group’s non-financial reporting as applied for FY21,
particularly in relation to its sustainable development
performance. The Committee is satisfied that the current
level of combined assurance provides the necessary
independent assurance over the quality and reliability
of the information presented in relation to the Group’s
clinical performance and sustainable development. The
Committee will continue to monitor whether additional
forms of assurance are required in future.
COMMITTEE EVALUATION
The Committee reviewed its performance as part of the
annual evaluation of the Board and its committees, which
is described on page 134 of the Corporate Governance
Statement. Subsequently, the Committee provided
management with guidance on the matters set out below,
to further strengthen its oversight:
• the adoption of a regular quarterly reporting cycle
for clinical performance data instead of following the
Committee meeting cycle, to facilitate comparisons;
• further improvements to external orientation on clinical
performance; and
• enhancing the monitoring of sustainable development
by engaging the Committee in more strategic sessions.
Cognisant of the above, the Committee and the Board
concluded that the Committee operated effectively during
the year under review and that its current members have
the necessary skills and experience.
ANNUAL GENERAL MEETING
In terms of the SA Companies Act, a social and ethics
committee must, through one of its members, report to the
shareholders at a company’s AGM on the matters within
its mandate. As the Committee performs the role of such a
committee in terms of the SA Companies Act, it will fulfil this
function by referring shareholders at the Company’s 2021
AGM to this report, which should be read in conjunction
with the 2021 Sustainable Development Report available
at annualreport.mediclinic.com. Any specific questions for
the Committee may be sent to the Company Secretary
prior to the AGM.
PROGRESS ON KEY PRIORITIES FOR THE
COMMITTEE FOR FY20
PRIORITIES
STATUS
Continued implementation
and improved functioning
of the Ward-to-Board
accountability framework
across the divisions
Review of the clinical
performance indicators and
identification of trends
Implementation of advanced
technology for improved
clinical information and
performance
Refer to the
‘Governance’ section of
this Committee Report.
Refer to the ‘Clinical
management model’
section of this
Committee Report.
Refer to the ‘Other
focus areas’ section of
this Committee Report.
Continued monitoring of
the Company’s sustainable
development
Refer to the ‘Sustainable
development’ section of
this Committee Report.
FY22 PRIORITIES
The Committee will, among other matters, focus on:
• continuing to improve the comparability of reporting
within and across all three divisions;
• continuing to provide appropriate patient safety
training to senior management and the Board,
together with other relevant training on health
measures and global trends;
• monitoring progress on the implementation of
the Group’s clinical goals;
• monitoring progress on the implementation of
a software solution for the management of clinical
adverse events;
• monitoring progress on the implementation of EHRs
at Hirslanden, Mediclinic Southern Africa and Mediclinic
Middle East;
• monitoring progress on the clinical internal audits;
• monitoring the Group’s response to the COVID-19
pandemic; and
• monitoring progress on the implementation of the
Group’s Sustainable Development Strategy.
Signed on behalf of the Committee.
Dr Felicity Harvey
Chair of the Clinical Performance and Sustainability
Committee
25 May 2021
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT NOMINATION
COMMITTEE
REPORT
The Board believes that
maintaining an appropriate
balance of skills, knowledge,
experience, race, gender
and other characteristics is
imperative for the effective
operation of the Board.
Dame Inga Beale
Chair of the Nomination Committee
As Chair of the Nomination Committee (‘the Committee’), it is my pleasure to report on its activities for FY21,
together with the priorities for FY22.
COMMITTEE COMPOSITION AND MEETING ATTENDANCE
The current Committee composition meets the requirements of the Code, with the majority of members being
independent non-executive directors. The Chair of the Board is the Chair of the Committee but does not chair
the meeting when Board Chair succession is discussed.
TABLE 1: COMMITTEE COMPOSITION AND MEETING ATTENDANCE
NAME1
DESIGNATION
DATE OF APPOINTMENT
TO COMMITTEE
NUMBER OF SCHEDULED
MEETINGS ATTENDED2
Dame Inga Beale
(Committee Chair)
Mr Alan Grieve
Non-executive Chair3
26/03/2020
Senior Independent
Director
15/02/2016
Mr Jannie Durand
Non-executive Director
15/02/2016
Dr Felicity Harvey
Dr Anja Oswald
Independent Non-
executive Director
Independent Non-
executive Director
25/07/2018
25/07/2018
2/2
2/2
2/2
2/2
2/2
Notes
1 The composition of the Committee is shown at 31 March 2021. Dr Edwin Hertzog retired from the Board on 22 July 2020.
2 The attendance reflects the number of scheduled meetings held during the financial year. Details of additional meetings are set out below.
3 Dame Inga was deemed to be independent upon appointment.
The Committee normally holds two scheduled meetings
during a financial year. During FY21, the Committee
held three additional ad hoc meetings to consider
non-executive directors’ succession and recruitment,
and Mr Weiner’s appointment as non-executive director.
The Committee held five ad hoc meetings during
FY21 and two ad hoc meetings between the Company’s
financial year-end and the Last Practicable Date
to discuss further plans for non-executive director
succession and the progress of these plans, discussed
alongside. These meetings were attended by all
members of the Committee at the time, or at least
the minimum quorum required under the Committee’s
terms of reference.
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MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT
Other attendees of the Committee meetings, regularly
and upon invitation, include the Group CEO, the Group
Chief Strategy and Human Resources Officer and the
Group General Manager: Talent Management.
ROLE AND KEY AREAS OF ACTIVITY
The role of the Committee is to assist the Board in:
• reviewing succession planning within the Board, the
Group Executive Committee and their direct reports;
• reviewing the structure, size and composition,
including diversity and independence, of the Board
and its committees;
• identifying potential candidates to be appointed as
directors or members of Board committees, as the
need arises;
• establishing and overseeing the process for the annual
evaluation of the Board, its committees, the Chair and
individual directors; and
• establishing the Board Diversity Policy and reviewing
diversity progress within the Board, the Group
Executive Committee and their direct reports.
The Committee is governed by formal terms of
reference, which are reviewed at least annually by the
Committee and the Board. The terms of reference are
available in the ‘Governance’ section of the Company’s
website at www.mediclinic.com.
BOARD AND OTHER SUCCESSION PLANNING
During the year under review, Dame Inga progressed
from Chair Designate to Chair of the Board upon the
conclusion of the 2020 AGM and Dr Edwin Hertzog’s
retirement. Simultaneously, Dame Inga was also
appointed Chair of the Nomination Committee.
A key activity for the Committee during the reporting
period was leading the search for an independent
non-executive director to succeed Mr Seamus Keating,
who stepped down from the Board on 31 March 2020.
The Committee considered the existing skills, experience
and composition of the Board, including gender and
ethnic diversity, as well as the requirement for skills
and knowledge of the Board and its committees for
the future strategic needs of the business, and compiled
a role specification. The Committee considered the
nominations received from Board members and the
qualifying candidates that the independent external
search party, MWM Consulting Limited, had identified
in a previous recruitment process. Through this,
the Committee was able to identify four potential
candidates for its shortlist, which included sufficient
diverse and high-calibre individuals without the need
to incur the expense of appointing an external search
party. Taking the aforementioned into consideration,
as well as the importance of the candidate’s background
in UK-listed companies and financial and risk awareness,
the Committee recommended the appointment
of Mr Steve Weiner to the Board. It highlighted his
background, which fulfilled the role specification, and,
additionally, his understanding of healthcare based on
his experience as a non-executive director at two
large, complex NHS trusts. The Board subsequently
approved Mr Weiner’s appointment as an independent
non-executive director of the Company, and his
appointment as a member of the Audit and Risk
Committee and Clinical Performance and Sustainability
Committee with effect from 22 July 2020. He was also
appointed as a member of the Remuneration Committee
with effect from 11 November 2020.
The Committee also initiated the process to fill the
vacancy that will be created by Mr Grieve’s resignation
as the SID. At the ninth anniversary of his appointment
on 13 September 2021, he may no longer be seen to
meet the independence criteria set out in the Code.
An internal selection process in which members of
the Board were invited to apply for the role of the SID
followed. The key attributes of each applicant, including
the skills, experience, knowledge and responsibilities
of the applicants, were considered against the
specification for the role, which reflected the criteria
as set out in the Code and the relevant guidance.
Subsequently, Dr Felicity Harvey, Chair and member of
the Clinical Performance and Sustainability Committee
since October 2017, was selected to succeed Mr Grieve
as SID effective from 13 September 2021.
Similarly, the Committee initiated the process to identify
chair successors for the Audit and Risk Committee and
Remuneration Committee to succeed Messrs Grieve
and Petersen, respectively, from September 2021,
the ninth anniversary of their initial appointments as
directors of Mediclinic International Limited. Mr Tom
Singer will succeed Mr Grieve as Chair of the Audit
and Risk Committee effective from 13 September
2021 and Mr Weiner will succeed Mr Petersen as
Remuneration Committee Chair effective from the same
date. The Committee notes that, upon appointment,
Mr Weiner will not meet the Code requirement for
remuneration committee chairs to have served on a
remuneration committee for at least 12 months prior
to their appointment. However, the Committee has
every confidence that Mr Weiner has the appropriate
skills and experience to carry out the role. He has also
attended five Remuneration Committee meetings since
being appointed as a member of the committee and
is therefore familiar with its discussions and workings.
In addition, his appointment to the Audit and Risk and
Clinical Performance and Sustainability committees
upon joining the Board gives him excellent insights in
terms of setting appropriate financial and non-financial
performance measures and targets for the STI and LTIP
schemes. In the interests of continuity and an effective
handover, the Committee has recommended to the
Board that Messrs Grieve and Petersen remain on
the Board, albeit in a non-independent capacity, from
12 September 2021 until the expiry of their second
three-year term on 14 February 2022. The Board,
excluding the Chair, will continue to comprise a majority
of independent directors throughout FY22.
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT NOMINATION COMMITEE REPORT CONTINUED
In addition, the Committee sought to identify candidates
to succeed Messrs Grieve and Petersen as independent
non-executive directors to ensure the Board continues
to comply with the Code requirements on independence
throughout FY22. The Committee compiled a list of
objective criteria for the roles following an assessment
of the existing skills, experience and composition of
the Board; the effect of these resignations; the Code’s
requirements for these positions; the current and
future needs of the business; and the benefits of a
diverse Board. Odgers Berndtson Limited, an external
search agency, was appointed to conduct an extensive
search for suitably qualified individuals. The firm has no
connection with the Company or any of the individual
directors other than the provision of search services
for this role. As at the date of the report, the Committee
was in the process of actively recruiting new
non-executive directors. Further announcements will
follow at the conclusion of the recruitment process.
The Committee continued to conduct its detailed annual
review of the succession plans for the Board, the Group
Executive Committee and members of the divisional
Executive Committees, taking into account the Board
Diversity Policy, the outcome of the annual Board
evaluation, non-executive directors’ length of service
and a detailed skills matrix of the Board.
with effect from 1 March 2021. In this, the Committee
recognised her background, skills and experience in
healthcare and the need for additional clinical expertise
on the Clinical Performance and Sustainability Committee
highlighted by that committee’s own evaluation.
Following Dame Inga’s appointment as independent
non-executive director and member of the Nomination
Committee on 26 March 2020, and her subsequent
appointment as Chair of the Board upon the conclusion
of the 2020 AGM, she was appointed as a member
of the Remuneration Committee with effect from
1 June 2020. This appointment is compliant with the
2018 Corporate Governance Code, as Dame Inga was
independent upon her appointment as non-executive
director and Chair Designate.
DIVERSITY
The Committee reviewed the Board Diversity Policy,
which applies to the Board and the Group Executive
Committee, and received feedback from the divisions
regarding progress against their diversity and inclusion
goals during FY21 and plans for continued improvement
going forward. The Committee also received feedback
from the FY21 diversity and inclusion culture survey and
were informed of the actions taken to address Group
and divisional themes highlighted by the results.
The method facilitating workforce engagement
was reviewed by the Committee, whereafter it was
recommended to the Board that it had fulfilled
the Board’s obligations for FY21, thus meeting the
requirements of the Code. The Committee further
deemed that the method remains appropriate for the
Company and recommended it continues to be adopted
going forward. The method was, however, enhanced
through the inclusion of Mr Danie Meintjes, the appointed
non-executive director for workforce engagement, in
executive feedback sessions on Your Voice employee
engagement survey results and biannual meetings with
each divisional Chief Human Resources Officer to assess
their progress and challenges.
BOARD AND COMMITTEE COMPOSITION
During the reporting period, the Committee conducted
its annual review of the structure, size, diversity and
composition of the Board and its committees. As part
of this process, it considered a detailed skills matrix for
the Board, updated by each director to confirm their
skills ahead of the discussion, and the outcome of the
Board evaluation. The areas reviewed included the Board
members’ experience, independence, diversity, tenure,
geographical knowledge, ESG experience, sustainability
skills and knowledge of the Company as a whole.
In addition to Mr Weiner’s appointment, as discussed
under ‘Board and other succession planning’, Dr Anja
Oswald was appointed to the Clinical Performance and
Sustainability Committee and therefore stepped down
as a member of the Remuneration Committee, both
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MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT
DIVERSITY POLICY
The Board supports the principle of boardroom diversity
in general and takes boardroom skills diversity seriously.
It believes that the Board will benefit from different
skills; geographical, educational and professional
backgrounds; industry experience; age; race; gender;
social and ethnic backgrounds; cognitive and personal
strengths; and other characteristics; and considers these
matters regularly at Board and Committee meetings.
These factors are considered in determining the
optimum composition of the Board and, when possible,
balanced appropriately. When recruiting new directors,
consideration will also be given to ensuring that the size
of the Board does not grow unnecessarily and that all
appointments are made on justifiable merit. In fulfilling
its role in terms of diversity, the Committee will continue
to consider relevant prescribed guidelines, market best
practice and the performance of peer companies.
The Board believes that maintaining an appropriate
balance of skills, knowledge, experience, race, gender
and other characteristics is imperative for the effective
operation of the Board, as well as the successful delivery
of the strategy and long-term success of the Company.
The Board Diversity Policy has four objectives to
support the Board’s commitment to diversity. These
objectives also support the delivery of the Group’s
strategic priorities by drawing on a wide pool of
talent, introducing a broader range of perspectives
and insights, reducing the risk of ‘group think’, and
supporting an inclusive culture across the Group.
TABLE 2: PROGRESS AGAINST OBJECTIVES
OBJECTIVE
PROGRESS
During the year, the Board agreed to the appointment of Mr Weiner as independent
non-executive director. He complements the current Board composition, not just
in terms of background, but also in his breadth of skills, knowledge and experience,
as described in the aforementioned process of his recruitment.
The Group CEO and divisional CEOs annually share their diversity goals and report
on progress to the Committee. The divisions continue to focus on increasing diversity
below Board level by encouraging and strengthening the talent pipeline within each
division through short- and long-term succession planning. Activities during the year
included strategies and interventions to encourage engagement of women in senior
management; campaigning to increase awareness of diversity and inclusion; improving
the B-BBEE standing of Mediclinic Southern Africa and its subsidiary companies;
and promoting Emiratisation at Mediclinic Middle East. The Committee also took into
account the increased focus on ethnic diversity as sparked by the ongoing activities
of the Black Lives Matter movement worldwide.
Where the Company has been unable to promote candidates to new positions from
within, it has identified the desired criteria for external candidates. Both these activities
have been embedded to support the Executive Committees, with general diversity
featuring as one of the key priorities.
The Board and the executive management remain committed to achieving diversity
and will continue to recommend appointments based on merit, skills, experience,
independence and knowledge required by the Board, the executive management
and the Company.
The Committee reviewed the Board Diversity Policy and was satisfied that the
objectives remained relevant. The Committee remains committed to progressing
the objectives for FY22.
A framework for the Group Diversity and Inclusion Strategy was approved during
FY20 to help develop a diverse pipeline of talent to executive management positions.
Progress against these objectives is reviewed at least annually by the Committee, which
reports on it to the Board.
The Committee reviewed the composition of the Board and its committees, specifically
the balance of skills, experience, independence, knowledge and diversity. The Committee
reviewed the progress made in each division and reported it to the Board. Each division’s
talent pipeline strategy was reviewed in detail, including their diversity focus, progress
during the year and plans for continued improvement during FY22.
In line with the Parker Report’s recommendation to have at least one director of colour
by 2024, the Board had two directors of colour (as defined in the Parker Report)
throughout the year and at the date of this report. Mr Petersen’s resignation from
the Board will impact this balance, a fact the Committee will ensure is considered in
the recruitment process for Messrs Petersen and Grieve’s replacements.
The Committee is pleased to report that, at the date of this Annual Report, the Board
had 33% female representation, in line with the 2020 target recommended by the
Hampton-Alexander Review. This proportion may change throughout the coming year
as new non-executive directors are appointed.
The Group’s workforce has 75% female representation overall. As referenced in the
2021 Sustainable Development Report, a target has been set of at least 40% female
and at least 40% male representation at middle management and more senior levels
of the organisation.
Mr Weiner was identified from a diverse list of candidates, each of whom was assessed
on merit, against an agreed set of criteria and the capabilities required for that
particular appointment, while taking into account the benefits of a diverse Board.
The Committee reviewed each of the candidates’ significant commitments, other
directorships, skills, experience, knowledge, gender, race, geographical location,
and other diversity considerations.
The Board will remain
committed to achieving
a diverse Board and
executive management
including aspects
such as age, gender,
ethnicity, education
and professional
background.
The Committee will
annually consider and
make recommendations,
if applicable, to the
Board on its diversity
objectives.
In reviewing the
composition of the
Board and executive
management, the
Committee will consider
diversity, in addition to
considering the balance
of skills, experience,
independence and
knowledge.
In identifying suitable
candidates for
appointment to the
Board, the Committee
will assess candidates
on merit against
objective criteria and
with due regard to the
benefits of a diverse
Board.
161
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT NOMINATION COMMITEE REPORT CONTINUED
ORGANISATIONAL DIVERSITY
Details of race, gender and age representation on the Group’s governance bodies, including the Board, the Group
Executive Committee, the divisional Executive Committees and senior managers, can be found below.
TABLE 3: RACE, GENDER AND AGE REPRESENTATION ON GOVERNANCE BODIES
RACE (ONLY IN RESPECT
OF SOUTHERN AFRICA)
GENDER
AGE (YEARS)
AT 31/03/2021
BLACK2
WHITE
MALE
FEMALE
30–50
> 50
NO.
%
NO.
%
NO.
%
NO.
%
NO.
%
NO.
%
2 Board members of
diverse ethnicity (17%)3
n/a
n/a
8
9
67%
90%
7
100%
3
27%2
8
73%
9
82%
4
1
–
2
33%
10%
–
18%
1
5
4
2
8%
50%
57%
18%
11
5
3
9
92%
50%
43%
82%
n/a
9
90%
1
10%
6
60%
4
40%
TOTAL
MEMBERS1
12
10
7
11
10
Mediclinic
Board
Group
Executive
Committee
Hirslanden
Executive
Committee
Mediclinic
Southern
Africa
Executive
Committee
Mediclinic
Middle East
Executive
Committee
TABLE 4: RACE, GENDER AND AGE REPRESENTATION OF DIRECT REPORTS TO GOVERNANCE BODIES
RACE (ONLY IN RESPECT
OF SOUTHERN AFRICA)
GENDER
AGE (YEARS)
AT 31/03/2021
BLACK2
WHITE
MALE
FEMALE
30–50
> 50
NO.
%
NO.
%
NO.
%
NO.
%
NO.
%
NO.
%
n/a
n/a
19
66%
10
34%
18
62%
11
38%
41
60%
27
40%
44
65%
24
35%
TOTAL NO
OF DIRECT
REPORTS1
29
68
61
16
26%2
45
74%
24
39%
37
61%
26
43%
35
57%
77
n/a
51
66%
26
34%
61
79%
16
21%
Group
Executive
Committee
Hirslanden
Executive
Committee
Mediclinic
Southern
Africa
Executive
Committee
Mediclinic
Middle East
Executive
Committee
Notes
1 Total membership shown at 31 March 2021.
2 In the South African context, the term ‘black people’ is a generic term which means African, Coloureds and Indians who: (a) are citizens of the Republic of
South Africa by birth or descent; or (b) became citizens by naturalisation before 27 April 1994 or on or after 27 April 1994 and who would have been entitled
to acquire citizenship by naturalisation prior to that date.
3 Diverse ethnicity refers to individuals with evident heritage from African, Asian, Middle Eastern and South American regions, or from another diverse ethnic
group, as defined by the Parker Report.
162
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT
FIGURE 1: GENDER REPRESENTATION – GROUP EMPLOYEES AND SENIOR MANAGERS1
Group employees (%)
Senior managers (%)
74%
26%
22%
78%
Female 22 601
Male 7 779
Female 31
Male 110
Note
1 Senior managers are employees who are responsible for planning, directing or controlling the activities of the Group or a strategically significant part
of the Group and direct undertakings included in the Group consolidation (excluding the executive directors of the Company).
COMMITTEE EVALUATION
The Committee reviewed its performance as part of
the annual evaluation of the Board and its committees,
which is described on page 134 of the Corporate
Governance Statement. No significant issues requiring
improvement were identified and the Committee and
the Board concluded that the Committee operated
effectively during the year under review.
EVALUATION OF THE COMPOSITION, STRUCTURE
AND FUNCTIONING OF THE BOARD
When considering the election or re-election of
directors or appointment of new directors, the
Committee considers the outcome of the Board
evaluation process, as well as other factors such as the
individual director’s knowledge, skills and experience;
the independent judgement they add to Board
deliberations; and other commitments. Responses
regarding the composition of the Board were also
taken into account in the selection criteria for new
appointments to the Board and its committees.
The terms and conditions of appointment of the
non-executive directors, which include their expected
time commitment, are available for inspection at the
Company’s registered office and at the 2021 AGM.
FY22 PRIORITIES
The Committee will, among other matters, focus on:
• continuing the development of succession plans
and the talent pipeline towards key Group and
divisional roles;
• continuing the review of the composition of the Board
and its committees in respect of skills, diversity, tenure
and commitments; and
• continuing the implementation of the Group Diversity
and Inclusion Strategy.
Signed on behalf of the Committee.
Dame Inga Beale
Chair of the Nomination Committee
25 May 2021
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT REMUNERATION
COMMITTEE
REPORT
Mr Trevor D Petersen
Chair of the Remuneration Committee
25 May 2021
even greater demand on the Group’s healthcare facilities
and employees, Mediclinic adapted well through agility
and resilience, implementing lessons learned from the
first wave, to deliver a solid second-half performance
with revenue growth of 1%.
Refer to the COVID-19 overview on page 12, the
Group Chief Executive Officer’s Report on page 24 and
the Group Chief Financial Officer’s Report on page 84
for more detailed information.
IMPACT OF COVID-19 ON REMUNERATION
As set out on page 196 of the 2020 Annual Report, the
Committee postponed certain decisions in relation to
executive remuneration given the significant uncertainty
at the time and the Group’s priority being to maintain its
liquidity position and maximise its operational support to
relevant health authorities and governments in tackling
the pandemic. An update on such decisions is provided
below.
• FY20 STI outcome: Following careful review of all
relevant factors, the Committee approved the final
outcome of the FY20 STI award in November 2020
and applied its discretion to reduce the formulaic
outcome by 60% (from 42% of maximum to 17% of
maximum). The Committee considered this to be
a fair outcome taking into account Group performance
in FY20, bonus outcomes for the wider employee
group (where bonuses to facility-based employees
were paid in full based on the formulaic outcome) and
the investor experience. In line with the Remuneration
Policy, 50% of the STI outcome was deferred into
shares for two years.
• FY21 salary increases: After thorough review, the
Committee approved the previously planned salary
increases of 5.5% for the executive directors in line
with the average salary increases granted to Mediclinic
Southern Africa and Mediclinic Group Services
employees, effective from 1 October 2020, excluding
back-pay for the period April–September 2020.
• FY21 LTIP awards: It was intended for the FY21
LTIP awards to be based on adjusted EPS, relative
total shareholder return (‘TSR’), ROIC and client
experience (10% of award). However, given the global
LETTER FROM THE CHAIR
On behalf of the Remuneration Committee
(the ‘Committee’), it is my pleasure to present the
Directors’ Remuneration Report for FY21. I would
like to thank Dr Anja Oswald, who stepped down from
the Committee effective on 1 March 2021, for the counsel
that she provided as a member of the Committee since
July 2018, and formally welcome Dame Inga Beale and
Mr Steve Weiner who joined the Committee during the
financial year. This will be my last report, as I will be
stepping down from the Committee with effect from
13 September 2021 and handing over to my successor
as Chair, Mr Weiner.
The report comprises the following sections:
• This letter, which provides an overview of the key
decisions made on remuneration during FY21
(refer to pages 164–166)
• A summary of the Directors’ Remuneration
Policy approved by investors at the 2020 AGM
(97.31% vote in favour) and how it will be implemented
in FY22 (refer to pages 167–169)
• The annual Remuneration Report, which describes
how the Remuneration Policy was applied during
FY21 (refer to pages 172–181)
FY21 PERFORMANCE CONTEXT
The Group delivered a robust operating performance
during the year, demonstrating ongoing operational
and financial resilience.
Mediclinic has been unwavering in its support of
relevant health authorities throughout the pandemic
while continuing to execute on its strategy, accelerating
its innovation and digital transformation initiatives
and launching numerous new partnerships and
collaborations. These, alongside its focus on expanding
its integrated services across the continuum of care,
support long-term sustainable growth across the Group.
Financial performance in the first half of the year was
significantly impacted in April 2020 by the sudden
onset of COVID-19-related lockdown measures and
non-urgent elective procedure restrictions. Despite
the more severe second wave of the pandemic placing
164
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT Mediclinic has been unwavering
in its support of relevant health
authorities throughout the
pandemic while continuing to
execute on its strategy,
accelerating its innovation and
digital transformation initiatives.
uncertainty caused by COVID-19, the Committee
deferred a decision on award levels and the underlying
performance targets. Following consultation with
investors, the LTIP awards were granted in December
2020. In line with the RNS announcement published
on 15 December 2020, details of award levels and the
underlying performance targets for these awards are
provided on page 175.
In addition to the above, all directors and divisional CEOs
voluntarily donated 30% of their fees and salaries for three
months (1 April to 30 June 2020) to charitable causes
related to the pandemic. All other Group and divisional
Executive Committee members made similar donations
to related charities in their respective countries.
PERFORMANCE OUTCOMES IN FY21
As set out on page 195 of the 2020 Annual Report, it was
intended for the FY21 STI to be based on Group adjusted
earnings before interest and taxes (‘EBIT’) performance
and subject to adjustments based on performance
against financial and non-financial subset indicators
for each of the three divisions.
COVID-19 has had a significant impact on clinical quality
and client experience assessments. While the business
continues to take each of these areas seriously given
their importance to long-term sustainable performance,
it has not been possible to measure performance on
a robust and consistent basis for FY21. Therefore, the
Committee determined that it was not appropriate
to set formal targets for the subset indicators for
FY21. Rather, the Committee agreed that the FY21
outcome would be determined initially by adjusted EBIT
performance (i.e. on a formulaic basis, in line with the
approach taken in previous years), with the outcomes
then reviewed based on overall business performance,
including underlying financial performance, clinical
quality and client experience (with input from the
Clinical Performance and Sustainability Committee), and
employee engagement. The Committee would then use
its judgement to consider performance and determine
whether it was appropriate to make any downward
adjustments to the formulaic STI outcome.
As set out in more detail on page 174, the Group
achieved EBIT of £239.0m for FY21, which was ahead
of the stretch EBIT target of £230.4m. This resulted
in a formulaic STI of 100% of the maximum. Following
consideration of the formulaic outcome, the Committee
reviewed clinical quality, client experience and employee
engagement performance in considering whether it
would be appropriate to make any adjustment. Key
highlights for the year are listed below.
• Effectively managing the impact of COVID-19 across
all divisions, with the Group working collaboratively
as an integrated team, by ensuring that expertise and
experience were shared across the Group when little
was known about COVID-19. This allowed divisions
that experienced later waves to learn from others and
improve patient outcomes.
• Establishing proactive measures to protect patients,
employees, affiliated doctors and allied health
professionals to ensure the sustainability of the
business.
• Managing resources proactively, ranging from
equipment, availability of beds, logistics, medication
and oxygen, to ensure no division ran out of supplies
or required equipment. The scale on which products
were purchased also ensured fair prices in a competitive
environment with rapid escalation of prices.
• Rapidly responding to rising caseloads as a result of
COVID-19 across Hirslanden and Mediclinic Middle
East, and in particular Mediclinic Southern Africa.
Not only did the Group support national responses
to the pandemic, during this period the relationships
with local governments and authorities, regulators
and independent doctors were strengthened.
• Establishing innovative measures to allow patients
to stay in touch with loved ones at a time when
face-to-face visits were not possible.
• Maintaining employee engagement levels across the
Group in line with 2019 scores at 3.98.
Reflecting on the above, the Committee felt that the
formulaic outcome was an appropriate reflection of
overall performance, and the performance and leadership
by the executives of the business through COVID-19. The
above said, the Committee was acutely aware that the
165
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT REMUNERATION COMMITTEE REPORT CONTINUED
dividend remains suspended as part of the Group's broad
response to maintaining its liquidity position, and as such,
the Committee determined that it would be appropriate
for the release of any STI to be conditional on the Group’s
dividend being reinstated. The cash proportion of the
bonus (50%) will therefore be deferred until such time
and 50% of the bonus award will continue to be deferred
into shares, with the awards subject to the usual vesting
period and the Group dividend being reinstated.
LTIP awards granted in June 2018 will lapse based
on adjusted EPS and relative TSR performance over
the three-year performance period.
for further details.
Refer to page 175
IMPLEMENTATION IN FY22
Mr Jurgens Myburgh will receive a 3.6% base
compensation increase effective 1 April 2021, in line
with the average increase awarded to the wider South
African workforce.
The Committee has been mindful that Dr Ronnie van
der Merwe’s base compensation has been positioned at
the lower end of the market compared with peers since
his appointment as Group CEO in June 2018. Therefore,
after careful consideration of Dr Van der Merwe’s
performance since his appointment as Group CEO,
including strategically positioning the Group for the
future through team alignment and development,
driving increased efficiencies and patient quality across
all three divisions, as well as his exceptional leadership
and commitment during the COVID-19 pandemic, the
Committee agreed a base compensation increase of 7.1%.
Both Mr Myburgh and Dr Van der Merwe’s increases were
calculated based on a constant currency exchange rate
of £1: ZAR21.38 to eliminate the effect of a fluctuating
exchange rate.
While the Committee recognises that such salary
increases are not common in the current climate, the
Committee felt it was important to reflect the calibre of
the individual in the role. Even once the increase has been
implemented, Dr Van der Merwe’s total compensation
opportunity will continue to be positioned between
lower quartile and median of equivalent size FTSE 250
companies.
FY22 STI awards will continue to be based on Group
adjusted EBIT performance, with the financial and
non-financial subset indicators reinstated for each of the
three divisions.
Refer to page 167 for further details.
It is intended that an FY22 LTIP award will be granted to
Dr Van der Merwe and Mr Myburgh, respectively, in line
with the normal maximum levels under the Remuneration
Policy. The Committee will consider the Company’s share
price at the time of grant when finalising the quantum
of awards. It will use its discretion to amend the vesting
166
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT
outcome where it considers that it is not representative of
business performance. This includes consideration of any
potential ‘windfall gains’ at the point of vesting.
page 168 for further details of the awards basis.
Refer to
REMUNERATION POLICY REVIEW
During FY22, and under the leadership of the new
Committee Chair, the Committee intends to undertake
a comprehensive review of the Remuneration Policy and
incentive framework for executive directors and senior
management across the Group to ensure that it:
• continues to support the Group’s key remuneration
principles;
• appropriately incentivises the executive directors and
senior management to deliver on the Group strategic
goals and create long-term shareholder value; and
• continues to adhere to good corporate governance.
While conscious of the external environment, the review
will consider in detail whether the Group’s current
remuneration offering is market competitive and
supports delivery of the Group’s strategic priorities
and future growth.
Following the review, the Committee intends to consult
with major investors on any recommended changes with
the view to putting a revised Remuneration Policy for
executive directors to a binding shareholder vote at the
2022 AGM.
I trust the information presented in this report enables
stakeholders to understand how the Directors’
Remuneration Policy was implemented over the reporting
period, how it will be implemented in the coming financial
year and the rationale behind the Committee’s decision-
making. The Committee remains committed to open and
transparent dialogue with investors and welcomes any
feedback or comments.
The Committee believes that the Remuneration Policy
operated as intended during FY21 and it considers that
the remuneration received by executive directors was
appropriate in terms of Group and personal performance,
the significant role played by the Group in national efforts
to tackle the pandemic and the experience of investors
and employees. The Committee remains committed
to open and transparent dialogue with investors and
welcomes any feedback or comments.
Mr Trevor D Petersen
Chair of the Remuneration Committee
25 May 2021
SUMMARY OF REMUNERATION POLICY
The following section provides a summary of the Directors’ Remuneration Policy approved by investors at the AGM
held on 22 July 2020. The full policy can be found under the ‘Governance’ section of the Company’s website at
www.mediclinic.com. There are no proposals to amend the policy at the 2021 AGM.
The Remuneration Policy supports the execution of the Company's long-term strategy in a way that is consistent
with its culture and values (through appropriate performance metrics used for the purpose of the STI and LTIP);
appropriately aligns executives' remuneration with the interests of investors (through the use of appropriate
stretching performance targets for incentive awards and settlement of deferred shares and LTIP awards through
shares); and complies with the Code.
TABLE 1: EXECUTIVE DIRECTOR REMUNERATION POLICY OVERVIEW AND FY22 IMPLEMENTATION
ELEMENT
OF PAY
PURPOSE AND
LINK TO STRATEGY
TERMS
Base
compensation
• To attract, retain
and motivate
talented
individuals who
are critical to the
Group’s success
Annual STI
• To encourage and
reward delivery
of the Group’s
annual financial
and operational
goals
• To encourage
share ownership
and align with
investors'
interests
Comprising of
a Board fee
denominated in
£ (reflecting the
Board’s UK status)
and a base salary
denominated in
ZAR (reflecting the
location where the
executive directors
reside).
Maximum
opportunity
(% of base
compensation)
Performance
conditions
Deferral
GROUP CEO
GROUP CFO
£544 6771
£390 3151
Base salaries are reviewed annually with
any increases normally taking effect on
1 April of each year. Salaries are appropriately
benchmarked and reflect the role, job size and
responsibility as well as the performance and
effectiveness of the individual.
150%
133%
Bonus determined by Group adjusted EBIT, with
the outturn reduced based on performance against
financial and strategic subset indicators of the three
divisions.
Targets are not published in advance as they are
deemed commercially sensitive; however, details will
be provided in the following year’s Remuneration
Committee Report.
The Committee has the discretion to override
formulaic outturns (upward or downward)
considering overall Company, business line and
individual performance.
50% compulsory deferral for two years, subject
to employment conditions only and settled in
Company shares.
Note
1 Annualised remuneration payable in South African rand translated into sterling at a rate of £1: ZAR21.30 at 31 March 2021. Note that the change to the base
compensation figures disclosed above from last year resulted from fluctuations in the sterling: rand exchange rate during the year.
167
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT REMUNERATION COMMITTEE REPORT CONTINUED
ELEMENT
OF PAY
PURPOSE
AND LINK TO
STRATEGY
LTIP
• To balance
performance
pay between
achieving
financial and
strategic
performance
goals and
delivering
sustainable
outperformance
• To encourage
share ownership
and align with
investors’
interests
• To help recruit
and retain high-
performing
executive
directors
• To provide
employees
with long-
term savings
via pension
provisions
• To provide
a market-
competitive
level of benefits
to ensure
executive
directors’
wellbeing
• Alignment
of executive
directors’
interests
with those of
investors
Pension/
retirement
benefits
Benefits
Share
ownership
guidelines
Post-
cessation
shareholding
requirement
TERMS
GROUP CEO
GROUP CFO
Maximum
opportunity
(% of base
compensation)
Performance
conditions
200%
150%
MEASURE
WEIGHTING THRESHOLD
Adjusted
EPS growth
40%
(25%)
28p
Relative TSR1 25%
Median
ROIC2
Client
satisfaction
25%
10%
5.0%
82.85%
TARGET
(62.5%)
MAX.
(100%)
35p
42p
Straight
line
Upper
quartile
5.5%
6.25%
85.85%
88.85%
The Committee will retain the discretion to override formulaic
outturns (upward or downward) considering overall Company,
business line and individual performance.
Performance/
deferral period
Performance is measured over three years, following which
awards are subject to a two-year holding period, subject to
employment conditions only. Awards settled in Company shares.
Contribution
(% of salary)
9.0% of salary, excluding Board fee, in line with the pension
contribution levels provided across Mediclinic Southern Africa
and Mediclinic Group Services.
Private medical insurance, life insurance of between 5–7 times
annual base salary, as personally selected.
Requirement
as a % of base
compensation
225%
200%
Executive directors are required to hold Company shares for two years post-
cessation at a level equal to the lower of the actual shareholding on departure
or the shareholding requirement immediately prior to departure.
Full post-cessation shareholding requirement to be held for 12 months following
cessation, reducing to 50% of this level for a further 12 months.
Notes
1 Measured against the FTSE 250, excluding financial services and extraction companies.
2 ROIC is net operating profit less adjusted tax expressed as a percentage of average invested capital.
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MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT
TABLE 2: NON-EXECUTIVE DIRECTORS’ FEES IN FY21
BASE FEES
Chair of the Board
Base Board fee
COMMITTEE CHAIR/SENIOR INDEPENDENT DIRECTOR FEES
Audit and Risk Committee
Clinical Performance and Sustainability Committee
Investment Committee
Nomination Committee
Remuneration Committee
Senior Independent Director
COMMITTEE MEMBER FEES
Audit and Risk Committee
Clinical Performance and Sustainability Committee
Investment Committee
Nomination Committee
Remuneration Committee
FEE FROM
1 APRIL 2020
FEE FROM
1 APRIL 2021
INCREASE
£280 000
£280 000
£63 000
£63 000
£16 000
£10 000
£10 000
£10 000
£16 000
£25 000
£16 000
£12 000
£10 000
n/a2
£16 000
£11 0003
£10 000
£10 000
£7 000
£7 000
£7 000
£8 000
£7 000
£7 000
£10 000
£10 000
0%
0%
0%
20%1
0%
n/a
0%
(40%)3
0%
14%1
0%
0%
0%
Notes
1 To better reflect the relative time commitment required for the Clinical Performance and Sustainability Committee, increases have been made to the fees
for both the Committee Chair and its members.
2 The Nomination Committee is currently chaired by the Board Chair who receives an all-inclusive fee. Should this change, the fee will be £11 000.
3 The revised fee for the SID will apply from the date on which a new SID is appointed.
SERVICE AGREEMENTS AND LETTERS OF APPOINTMENT
Executive directors’ service contracts do not have a fixed expiry date. However, they are terminable either by
the Company or by the executive director providing six months’ notice.
TABLE 3: EXECUTIVE DIRECTORS’ SERVICE CONTRACT COMMENCEMENT DATES
EXECUTIVE DIRECTOR
Mr Jurgens Myburgh
Dr Ronnie van der Merwe
COMMENCEMENT DATE OF SERVICE AGREEMENT
1 August 2016
1 June 2018 (joined Mediclinic on 1 July 1999)
Non-executive directors have letters of appointment setting out the terms under which they provide their services to
the Company. The dates of their original appointment and expiry of their current three-year term are shown below.
TABLE 4: NON-EXECUTIVE DIRECTORS’ APPOINTMENT DATE AND EXPIRY OF CURRENT TERM
NON-EXECUTIVE DIRECTOR
DATE OF APPOINTMENT
EXPIRY OF CURRENT TERM
Dame Inga Beale
Mr Alan Grieve
26 March 2020
15 February 2016
Dr Muhadditha Al Hashimi
1 November 2017
Mr Jannie Durand
Dr Felicity Harvey
Mr Danie Meintjes
Dr Anja Oswald
Mr Trevor Petersen
Mr Tom Singer
Mr Steve Weiner
15 February 2016
3 October 2017
15 February 2016
25 July 2018
15 February 2016
24 July 2019
22 July 2020
25 March 2023
14 February 2022
30 October 2023
14 February 2022
2 October 2023
31 July 2024
31 July 2021
14 February 2022
23 July 2022
21 July 2023
169
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT REMUNERATION COMMITTEE REPORT CONTINUED
ADHERENCE TO THE 2018 CORPORATE GOVERNANCE CODE PRINCIPLES
The following design principles from the Code were considered by the Committee when developing
the Remuneration Policy.
Clarity
• The Committee welcomes open and frequent dialogue with investors on the approach
to remuneration.
• The Committee looks to provide clear disclosure of how the Remuneration Policy has been
implemented in the year and how it intends to implement it in the year ahead.
• Incentive arrangements (which are cascaded throughout the Group as appropriate) are based
on clearly defined financial and non-financial metrics that are aligned with the Mediclinic
Group Strategy.
Simplicity
• A market-standard annual bonus and LTIP structure is followed. The structure is simple and
well understood by both investors and participants.
• The remuneration approach taken for executive directors is cascaded down the organisation
as appropriate.
Risk
• The Committee considers that the structure of incentive arrangements does not encourage
inappropriate risk-taking.
• Under the STI and LTIP, discretion may be applied where formulaic outturns are not
considered reflective of overall performance.
• Share settlement of incentive awards, bonus deferral, the LTIP holding period and
shareholding requirements, including post-cessation shareholding, provide a clear link
to the ongoing performance of the business and the experience of investors.
• Malus and clawback provisions apply to both the STI and LTIP.
Predictability
• The Remuneration Policy contains details of threshold and maximum opportunity levels
under the STI and LTIP, with actual outcomes dependent on performance achieved against
predetermined measures and target ranges.
Proportionality
• The Committee’s ability to apply discretion ensures appropriate outcomes in the context
Alignment to
culture
of long-term performance.
• Incentive time horizons provide strong alignment between executive directors’ remuneration
outcomes and long-term Company performance.
• Performance measures and target ranges under the STI and LTIP are aligned to the Mediclinic
Group Strategy.
• Reward arrangements are designed to reward delivery of the Mediclinic Group Strategy which
is focused on enhancing the quality of life. This is achieved through having incentive awards
(both in the short- and long-term) based not only on financial metrics but also non-financial
metrics linked to areas such as clinical performance and client satisfaction. Adherence to
the Company philosophy of always putting Patients First will ultimately lead to the delivery
of strong financial performance and long-term shareholder value creation.
• All employees are entitled to participate in the pension scheme. The pension level for the
executive directors is set at the rate provided to the South African workforce.
• Strong individual, business line and Company performance are incentivised and recognised
in the wider employee population through STI schemes and, for the most senior employees,
the LTIP.
170
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT INVESTOR VOTING AND ENGAGEMENT
The Directors’ Remuneration Report for FY20 and the Directors’ Remuneration Policy were approved by investors at
the Company’s 2020 AGM with 99.19% and 97.31% of votes cast in their favour, respectively.
TABLE 5: SHAREHOLDER VOTING ON REMUNERATION MATTERS
FOR
%
AGAINST
%
WITHHELD
TOTAL
SHARES
VOTED
% OF ISSUED
SHARES
VOTED
FY20 Directors’
Remuneration Report
644 127 734 99.19
5 283 387
0.81
2 384 045
649 411 121
88.09
Remuneration Policy
633 886 281 97.31
17 494 687 2.69
414 198
651 380 968
88.35
The Committee considers the AGM to be an opportunity
to engage with investors, giving investors the
opportunity to provide feedback on the way in which
the Remuneration Policy operates and the way in which
it has been implemented. In addition, the Committee will
seek to engage directly with major investors and their
representative bodies regarding any material changes
to the Remuneration Policy or its implementation.
The Committee consulted with major investors during
FY20 on the changes to the Remuneration Policy
and details of how their feedback was considered
when updating the Remuneration Policy are set out
on page 194 of the 2020 Annual Report.
During FY21, the Committee also consulted with major
investors on the FY21 STI performance metrics and
FY21 LTIP quantum and performance metrics/targets.
On both occasions, the Committee was grateful for the
time and constructive feedback that investors provided.
CONSIDERATION OF EMPLOYEE PAY AND CONDITIONS
Pay and employment conditions are considered when
setting remuneration for executive directors.
Given the size and scale of the Group’s operations,
which include multiple jurisdictions, the Committee
currently does not formally consult with employees
in respect of the design of the Remuneration Policy
and its implementation. However, the Committee
receives information on workforce pay and employment
conditions as part of the annual Committee calendar and
oversees the operation of share plans across the Group.
While not specifically consulted on executive
remuneration, feedback from employees is gathered
through a wide range of electronic and in-person
channels, including the annual Gallup® employee
engagement survey, focus groups, performance reviews,
leadership video conferences, internal campaigns
and employee wellness programmes. In FY21, the
Board received and discussed biannual reports from
the designated non-executive director for workforce
engagement, outlining the outcomes from the annual
employee engagement survey and feedback and insight
from all levels within the Group, supplemented by
feedback from management; and discussed updates on
workforce wellbeing during COVID-19.
When determining executive director remuneration
arrangements, including base compensation increases,
the Committee takes account of appropriate information
on the approach to such issues within the wider workforce,
to permit informed comparison of relevant metrics.
The structure of the executive directors’ pay policy on
the annual STI is generally in line with the policy for
remuneration of management within the Group.
Similarly, the structure of the executive directors’ pay policy
on the LTIP is in line with the current policy for remuneration
of key senior management within the Group, with awards
for all participants subject to the achievement of the same
performance conditions over a three-year period.
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT REMUNERATION COMMITTEE REPORT CONTINUED
ANNUAL REMUNERATION REPORT1
Note
1 Throughout the Annual Remuneration Report, South African rand remuneration was translated into sterling at a rate of £1: ZAR21.30 at 31 March 2021
and £1: ZAR18.76 at 31 March 2020.
DIRECTORS’ REMUNERATION
This section sets out the single figure tables showing the remuneration for the executive and non-executive directors
for FY21 and FY20. Further information on these figures is set out in the subsequent sections.
TABLE 6: SINGLE TOTAL FIGURES OF DIRECTORS’ REMUNERATION (AUDITED)
EXECUTIVE DIRECTORS
Dr Ronnie van
der Merwe
Mr Jurgens
Myburgh
FY21
FY20
FY21
FY20
SALARY
& FEES
£’0001
497
543
369
401
NON-EXECUTIVE CHAIR5
Dame Inga Beale
Dr Edwin Hertzog
NON-EXECUTIVE DIRECTORS
Dr Muhadditha Al Hashimi
Mr Jannie Durand6
Mr Alan Grieve
Dr Felicity Harvey
Mr Danie Meintjes
Dr Anja Oswald
Mr Trevor Petersen
Mr Tom Singer7
Mr Steve Weiner8
FIXED PAY
VARIABLE PAY
BENEFITS
£’000
PENSION
£’000
SUBTOTAL
£’000
STI
£’0002
LTI
£’000
SUBTOTAL
£’000
TOTAL
£’0003
7
15
6
11
39
43
27
30
543
601
402
442
742
138
488
91
0
0
0
0
FIXED PAY
742
138
488
91
1 285
739
890
533
FEES £’000
BENEFITS4 £’000
TOTAL £’000
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
219
1
87
281
70
70
79
77
118
106
80
80
70
70
80
80
89
96
83
54
60
0
0
2
6
1
3
3
6
0
1
0
0
2
6
2
4
3
7
0
0
0
219
1
89
287
71
73
82
83
118
107
80
80
72
76
82
84
92
103
83
54
60
Notes
1 All directors voluntarily committed to donating 30% of their salaries and fees for three months (1 April to 30 June 2020) to charitable causes related to the
pandemic. The figures reported in Table 6 are before the voluntary donations.
2 As noted on page 164, the Committee approved an FY20 STI outcome equal to 17% of the maximum opportunity in November 2020. The FY20 STI and total
remuneration figures have therefore been restated.
3 The formulaic outcome of the STI was 100% of the maximum, however, the Committee determined that the cash proportion of the bonus (50%) will be
deferred until the dividend has been reinstated and 50% of the bonus award will continue to be deferred into shares, with the awards subject to the usual
two-year vesting period and the Group dividend being reinstated.
4 Benefits to non-executive directors comprise reimbursement of reasonable travel, accommodation and subsistence expenses plus the associated tax. No such
benefits were paid in FY21 as all Board and committee meetings took place via video conferencing due to COVID-19-related travel restrictions.
5 Dame Inga was appointed as non-executive director and Chair Designate of the Company on 26 March 2020, and succeeded Dr Hertzog upon his retirement
as non-executive director and Chair on 22 July 2020.
6 Mr Durand’s fees are paid to Remgro and include services rendered by Mr Durand or his alternate, Mr Pieter Uys.
7 Mr Singer was appointed as non-executive director of the Company on 24 July 2019.
8 Mr Weiner was appointed as non-executive director of the Company on 22 July 2020.
172
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT BASE COMPENSATION (AUDITED)
Base salaries and Board fees are reviewed annually in March, with any changes ordinarily effective from 1 April.
However, as noted on page 164, a decision on FY21 salary increases for executive directors was delayed until
October 2020. Following careful review, the Committee approved the previously planned annual salary increases
of 5.5% for the executive directors, albeit effective from 1 October 2020 (with no back payment the annualised
increase for the full year was 2.25%). The 5.5% increase was in line with the average increase for the South African
workforce which was introduced from 1 April 2020 for all non-managerial positions.
TABLE 7: BASE COMPENSATION FOR FY21
EXECUTIVE DIRECTOR
Dr Ronnie van der Merwe
Mr Jurgens Myburgh
BOARD FEE
(£’000)
63
63
BASE
SALARY
(ZAR’000)
9 248
6 510
TOTAL BASE
COMPENSATION
(£’000)
497
369
Mr Myburgh received a 3.6% salary increase effective
1 April 2021, in line with the average increase awarded
to the wider South African workforce.
As set out in the letter from the Committee Chair, the
Committee has been mindful that Dr Van der Merwe’s
base compensation has been positioned at the lower
end of the market compared with peers since his
appointment as Group CEO in June 2018. Therefore,
after careful consideration of Dr Van der Merwe’s
performance since his appointment as Group CEO,
including strategically positioning the Group for the
future through team alignment and development,
driving increased efficiencies and patient quality
across all three divisions, as well as his exceptional
leadership and commitment during the COVID-19
pandemic, the Committee agreed a base compensation
increase of 7.1%.
BENEFITS AND PENSION (AUDITED)
The benefits that form part of Dr Van der Merwe and
Mr Myburgh’s remuneration include private medical
insurance, life insurance and reimbursements for
reasonable business-related expenses (e.g. travel,
accommodation subsistence, including where
appropriate any associated taxes).
The executive directors participated in the Mediclinic
Southern Africa defined contribution fund and received
a company pension contribution equal to 9.0% of base
salary, not including Board fee, in line with the rate
allocated to all Mediclinic Southern Africa and Mediclinic
Group Services employees. No element of any executive
director’s remuneration other than base salary is
pensionable.
Non-executive directors were reimbursed for
reasonable business-related expenses (e.g. travel,
accommodation and subsistence) and, in some
instances, the associated tax was borne by the
Company. They receive no pension contribution
or other benefits and are not granted awards under
the short-term or long-term reward schemes.
PRIOR YEAR AWARDS (AUDITED)
FY20 STI AWARDS
Following careful review of all relevant factors,
the Committee approved the final outcome of the
FY20 STI award in November 2020 and applied its
discretion to reduce the formulaic outcome by 60%
(from 42% of maximum to 17% of maximum). The
Committee considered this to be a fair outcome
taking into account Group performance in FY20,
bonus outcomes for the wider employee group (where
bonuses to facility-based employees were paid in full
based on the formulaic outcome) and the investors'
experience.
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT REMUNERATION COMMITTEE REPORT CONTINUED
TABLE 8: FY20 STI AWARDS
EXECUTIVE DIRECTOR
ACTUAL BONUS (£)1
ACTUAL BONUS AS
A % OF ANNUAL BASE
COMPENSATION
Dr Ronnie van der Merwe
Mr Jurgens Myburgh
138 412
90 842
25.5%
22.7%
MAXIMUM BONUS
OPPORTUNITY AS A
% OF ANNUAL BASE
COMPENSATION
150%
133%
Note
1 Figures converted to sterling at a rate of £1: ZAR18.76 at 31 March 2020.
In line with the Remuneration Policy, 50% of the STI outcome was deferred into shares for two years subject to
continued employment only.
EXECUTIVE DIRECTOR
DATE OF GRANT
NATURE OF
AWARD
NUMBER OF
SHARES1
FACE VALUE
£’000
Dr Ronnie van der Merwe
Mr Jurgens Myburgh
20/11/2020
Share Awards
20 391
13 383
63
42
Note
1 Number of shares granted was based on the five-day average middle market quotation prior to grant of an LSE share (£3.11) and converted from sterling to
ZAR63.66 using the Spot exchange rate on 19 November 2020 (£1: ZAR20.45).
FY21 STI AWARDS
As set out in the letter from the Committee Chair, given
the significant impact on clinical quality and client
experience assessments, the FY21 STI was based on
Group adjusted EBIT performance targets only. Following
consideration of the formulaic outcome, the Committee
reviewed clinical quality, client experience and employee
engagement performance in considering whether it would
be appropriate to make any adjustment. Key highlights for
the year are listed below.
• Effectively managing the impact of COVID-19 across
all divisions, with the Group working collaboratively
as an integrated team, by ensuring that expertise and
experience were shared across the Group when little
was known about COVID-19. This allowed divisions
that experienced later waves to learn from others and
improve patient outcomes.
• Establishing proactive measures to protect patients,
employees, affiliated doctors and allied health
professionals to ensure the sustainability of the business.
• Managing resources proactively, ranging from
equipment, availability of beds, logistics, medication
and oxygen, to ensure no division ran out of supplies
or required equipment. The scale on which products
were purchased also ensured fair prices in a competitive
environment with rapid escalation of prices.
• Rapidly responding to rising caseloads as a result of
COVID-19 across Hirslanden and Mediclinic Middle
East, and in particular Mediclinic Southern Africa. Not
only did the Group support national responses to the
pandemic, during this period the relationships with
local governments and authorities, regulators and
independent doctors were strengthened.
• Establishing innovative measures to allow patients
to stay in touch with loved ones at a time when
face-to-face visits were not possible.
• Maintaining employee engagement levels across the
Group in line with 2019 scores at 3.98.
Reflecting on the above, the Committee felt that the
formulaic outcome was an appropriate reflection of overall
performance, and the performance and leadership by
the executives of the business through COVID-19. The
above said, the Committee was acutely aware that the
dividend remains suspended as part of the Group's broad
response to maintaining its liquidity position, and as such,
the Committee determined that it would be appropriate
for the release of any STI to be conditional on the Group’s
dividend being reinstated. The cash proportion of the
bonus (50%) will therefore be deferred until such time and
50% of the bonus award will continue to be deferred into
shares, with the awards subject to the usual vesting period
and the Group dividend being reinstated.
FIGURE 1: SUMMARY OF THE PERFORMANCE CONDITIONS AND ACHIEVEMENT AGAINST TARGETS
The achieved Group adjusted EBIT for the purposes of the executive directors’ STI comprises Group adjusted EBIT
excluding the impact of STI bonus accruals for eligible participants (£27.8m) and subject to add backs of certain
exceptional income and charges (£3.6m).
Group achieved adjusted EBIT
Stretch adjusted EBIT
Threshold adjusted EBIT
174
239m
230m
194m
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT TABLE 9: FY21 STI AWARDS
EXECUTIVE DIRECTOR
ACTUAL BONUS (£)
ACTUAL BONUS AS A
% OF ANNUAL BASE
COMPENSATION
Dr Ronnie van der Merwe
Mr Jurgens Myburgh
741 596
487 821
150%
133%
MAXIMUM BONUS
OPPORTUNITY AS A
% OF ANNUAL BASE
COMPENSATION
150%
133%
The STI bonus payable for the FY21 will be settled in shares, with 50% of the award deferred for a period of two years.
Deferred shares will be subject to continued employment. This deferral is not subject to any further conditions.
LTIP AWARDS VESTED TO EXECUTIVE DIRECTORS (AUDITED)
In June 2018, an LTIP award equal to 200% and 150% of base compensation was granted to Dr Van der Merwe and
Mr Myburgh, respectively. An LTIP award was also granted to Mr Meintjes in respect of his prior role as Group CEO.
The awards were based on adjusted EPS performance and relative TSR performance versus the FTSE 100 over the
three financial years to 31 March 2021.
No LTIP awards are due to vest in view of the actual performance compared with the threshold targets.
TABLE 10: LTIP PERFORMANCE TARGETS AND ACTUAL PERFORMANCE
PERFORMANCE
CONDITION
WEIGHTING
THRESHOLD
TARGET
(25% VESTING)
MAXIMUM
TARGET
(100% VESTING)
ACTUAL
PERFORMANCE
VESTING
(% OF
MAXIMUM)
Adjusted EPS
growth
TSR ranked
relative to
constituents of
the FTSE 100
Index
60%
40%
5% per annum
compounded
12% per annum
compounded
(23.0%)
Median of peers
(50th percentile)
Upper quartile
of peers
(75th percentile)
(46.6%)
0%
0%
LTIP AWARDS GRANTED TO EXECUTIVE DIRECTORS
(AUDITED)
As set out on pages 164–165, the FY21 LTIP awards were
deferred due to the global uncertainty caused by
the pandemic. Following consultation with investors,
the LTIP awards were granted in December 2020.
An FY21 LTIP award equal to 200% and 150% of base
compensation was granted to Dr Van der Merwe and
Mr Myburgh, respectively. The Committee considered
it appropriate to grant awards in line with the normal
maximum levels under the Remuneration Policy taking
into account:
• Share price performance: since the grant of the FY20
LTIP (19 June 2019) (and noting the impact of the
pandemic) the share price has remained broadly flat.
• The level of stretch included in the performance targets.
The Committee is mindful of share price performance
in recent years and external guidance on ‘windfall
gains’. It will use its discretion to amend the vesting
outcome where it considers that it is not representative
of business performance. This includes consideration
of any potential ‘windfall gains’ at the point of vesting,
taking into account:
• underlying financial performance over the vesting
period;
• share price performance over the vesting period on
an absolute basis and compared with the market; and
• any significant events prior to grant (e.g. the COVID-19
pandemic) and during the vesting period that may
have impacted the Company’s share price or the
market as a whole.
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT REMUNERATION COMMITTEE REPORT CONTINUED
The adjusted EPS and ROIC targets have been set taking into account both internal and external forecasts. Despite
the uncertainty, the Committee believes that the targets are appropriately balanced in terms of being:
• stretching so that they proportionately reward performance; and
• motivational and incentivising to the executive team.
TABLE 11: FY21 LTIP AWARDS GRANTED TO EXECUTIVE DIRECTORS
EXECUTIVE
DIRECTOR
DATE OF
GRANT
NATURE
OF
AWARD
NUMBER
OF
SHARES1
FACE
VALUE
£’000
FACE VALUE
AS A % OF
ANNUAL BASE
COMPENSATION2
END OF
PERFOR-
MANCE
PERIOD
PERFORMANCE
CONDITIONS
Dr Ronnie
van der
Merwe
Mr Jurgens
Myburgh
14/12/2020
Conditional
Share
Awards
390 661
1 074
200%
216 411
595
150%
31/03/2023
See Table 12
below
Notes
1 Number of shares granted based on the five-day average middle market quotation prior to grant of an LSE share (£2.75) and translated into sterling at
a rate of £1: ZAR20.02 on 13 December 2020.
2 Annual base salary translated into sterling at a rate of £1: ZAR20.02 on 13 December 2020.
TABLE 12: FY21 LTIP PERFORMANCE CONDITIONS
PERFORMANCE CONDITION
WEIGHTING
THRESHOLD
TARGET
(25% VESTING)
TARGET
(62.5% VESTING)
MAXIMUM TARGET
(100% VESTING)
Adjusted EPS for FY23 (measured on
a constant currency basis)
TSR ranked relative to constituents
of the FTSE 250 excluding financial
services and extraction companies
(measured over three financial years)
ROIC for FY23
Client experience index
40%
25 pence
29 pence
33 pence
25%
25%
10%
Median of peers
(50th percentile)
(62.5th percentile)
Upper quartile
of peers
(75th percentile)
4.5%
5.0%
6.0%
Measured independently by Press Ganey® based on the
consolidated score of the three divisions' achievement
over the performance period. Awards measured based on
performance in each year in the performance period and,
as such, details on the performance targets and outcome
will be included in the year of vesting.
The awards are subject to clawback and malus
provisions.
Awards are denominated in shares with vesting
dependent on the achievement of performance
conditions over a three-year period. Awards are
subject to a two-year deferral period after vesting,
thus only settled at the end of a five-year period from
the grant date.
PAYMENTS TO PAST DIRECTORS AND PAYMENTS FOR
LOSS OF OFFICE (AUDITED)
No payments that have not been reported previously or
in this report were made to past directors, and no loss of
office payments were made during FY21.
DIRECTORS’ SHAREHOLDING AND SHARE INTERESTS
(AUDITED)
Executive directors are required to build and maintain
a minimum shareholding in Mediclinic linked to their
base compensation. Shares are valued for these
purposes at the year-end price, which was £2.86 per
share at 31 March 2021.
176
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT TABLE 13: DIRECTORS’ SHAREHOLDINGS AND SHARE INTERESTS
SHARE-
HOLDING
GUIDELINES
AS A % OF
ANNUAL
BASE
COMPEN-
SATION
SHARES
HELD AT
31 MARCH
2020
SHARES
HELD AT
31 MARCH
2021
% OF
ANNUAL
BASE
COMPEN-
SATION
OUTSTANDING
UNVESTED LTIP
AWARDS WITH
PERFORMANCE
CONDITIONS1
DEFERRED
STI
SHARES1
SHARE-
HOLDING
REQUIREMENT
MET
225%
51 630
51 630
29.7%
764 098
20 391
200%
83 000
90 500
70.2%
422 867
13 383
Progress being
made
Progress being
made
EXECUTIVE
DIRECTOR
Dr Ronnie
van der
Merwe
Mr Jurgens
Myburgh
Note
1 Awards granted prior to the introduction of the revised policy will be settled in cash and therefore are not taken into consideration as part of determining
whether shareholding requirements have been met.
Dr Van der Merwe and Mr Myburgh will use 50% of the net of tax value of any cash-settled share awards paid to
them under the LTIP, deferred bonus plan or other awards, to purchase shares in the Company until they meet their
shareholding guideline.
TABLE 14: NON-EXECUTIVE DIRECTORS’ SHAREHOLDINGS
NON-EXECUTIVE DIRECTOR
AT 31 MARCH 2020
AT 31 MARCH 20211
Dame Inga Beale
Dr Edwin Hertzog1
Mr Alan Grieve
Dr Muhadditha Al Hashimi
Mr Jannie Durand
Dr Felicity Harvey
Mr Danie Meintjes
Dr Anja Oswald
Mr Trevor Petersen
Mr Tom Singer
Mr Pieter Uys1
Mr Steve Weiner
–
394 276
7 500
–
–
–
–
394 276
7 500
–
–
–
142 063
123 900
–
–
–
417
n/a
–
–
–
417
–
Notes
1 Or, if earlier, the date of retirement as a non-executive director of the Company.
2 Mr Uys is the alternate to Mr Durand.
There were no changes in the directors’ shareholdings
between the financial year-end and the Last Practicable
Date. The Company’s Register of Directors’ Interests,
which is open for inspection at the Company’s registered
office during business hours, contains full details of the
directors’ shareholdings and share allocations.
SHARE DILUTION LIMITS
The Company is committed to protecting investors’
interests and ensuring that the dilution of shares
remains within a reasonable limit. In line with guidelines
by the Investment Association, the Company limits
equity-based awards under its employee share plans
to 10% of the Company’s issued share capital over
a 10-year calendar period and equity-based awards
under executive share plans to 5% of issued share
capital over the same period.
CHANGE IN REMUNERATION LEVELS
Table 15 shows the percentage change in remuneration
from FY20 to FY21 for each of the directors compared
with that for an average employee. Given that both the
executive directors as well as the majority of the non-
executive directors, with comparable values alongside,
reside in South Africa, the Southern Africa workforce has
been used as a comparator group (currently there is only
one employee employed by Mediclinic International plc,
based in the UK).
177
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT REMUNERATION COMMITTEE REPORT CONTINUED
TABLE 15: COMPARATIVE PERCENTAGE CHANGE IN REMUNERATION: EXECUTIVE DIRECTORS AND EMPLOYEES
SALARY AND FEES
FY20 to FY21
BENEFITS
EXECUTIVE DIRECTORS
Dr Ronnie van der Merwe1
Mr Jurgens Myburgh1
NON-EXECUTIVE CHAIR
Dame Inga Beale4
NON-EXECUTIVE DIRECTORS
Mr Alan Grieve5
Dr Muhadditha Al Hashimi
Mr Jannie Durand6
Dr Felicity Harvey
Mr Danie Meintjes
Dr Anja Oswald
Mr Trevor Petersen
Mr Tom Singer7
Mr Steve Weiner8
AVERAGE EMPLOYEE
2.4%
2.3%
n/a
11.3%
0.0%
2.3%
0.0%
0.0%
(0.3%)
(7.1%)
0.0%
n/a
5.5%
(49.2%)2
(41.7%)2
n/a
(61.3%)
(69.7%)
(52.7%)
0.0%
(64.9%)
(47.2%)
(55.1%)
0.0%
n/a
3.9%
STI
508.4%3
509.8%3
–
–
–
–
–
–
–
–
–
–
118%
Notes
1 Percentage change between the executive directors' base compensation, benefits and STI between FY20 and FY21 paid in South African rand.
2 Benefits include private medical insurance, life insurance and reimbursements for reasonable business-related expenses. Company contributions to
pension equal to 9.0% of base salary, not including Board fee, and increased by 2.8% for Dr Van der Merwe and 2.7% for Mr Myburgh.
3 The formulaic outcome of the STI was 100% of the maximum, however, the Committee determined that the cash proportion of the bonus (50%) will be
deferred until the dividend has been reinstated and 50% of the bonus award will continue to be deferred into shares, with the awards subject to the usual
two-year vesting period and the Group dividend being reinstated.
4 Dame Inga was appointed as non-executive director and Chair Designate of the Company on 26 March 2020, and succeeded Dr Hertzog as Chair on
22 July 2020.
5 Mr Grieve assumed the role of SID and Chair of the Audit and Risk Committee following the retirement of Mr Desmond Smith at the Company’s 2019
AGM on 24 July 2019.
6 Mr Durand was appointed Chair of the Investment Committee with effect 1 September 2020.
7 Mr Singer was appointed as a non-executive director of the Company on 24 July 2019 and as a member of the Remuneration Committee on
13 November 2019. As such, figures have been annualised.
8 Mr Weiner was appointed as non-executive director of the Company on 22 July 2020.
CEO PAY RATIO
While the Company has fewer than 250 UK-based employees and therefore is not required to disclose a ratio,
the Committee felt that it was appropriate to voluntarily disclose the CEO-to-all-employee-pay ratio, given the
Company’s commitment to high standards of transparency and good governance.
TABLE 16: FY21 CEO PAY RATIO
CEO
25TH PERCENTILE
50TH PERCENTILE
75TH PERCENTILE
Ratio
Total pay and benefits
Salary
£1 283 532
£497 157
111:1
£11 611
£8 912
57:1
£22 553
£16 664
21:1
£61 716
£56 603
The Company chose to adopt Option A methodology in calculating the ratio on the basis that it is a robust approach
and is preferred by investors and proxy voting agencies.
The Group CEO’s single figure of remuneration for FY21 was used for the calculation ratio as detailed on page 172.
All employees' pay (excluding the Group CEO, non-executive directors, interns and students) was annualised as from
1 April 2020 and translated into sterling at a rate of £1: ZAR21.30, AED4.80 and CHF1.21 at 31 March 2021.
The Committee anticipates that there is likely to be changes in the ratio in future years and disclosures as the Group
CEO’s total remuneration has a greater portion of pay delivered as variable remuneration, which is consistent with
the Company’s remuneration principles.
178
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT PERFORMANCE AND PAY PERFORMANCE
Figure 2 shows the value at 31 March 2021 of £100 invested in the Company upon inception on 21 June 2013,
compared with the value of £100 invested in the FTSE 100 Index and FTSE 250 Index on the same date.
The intervening points are the financial year-ends prior to the date of the combination with Al Noor Hospitals
Group plc on 15 February 2016 and the financial year-ends since.
The FTSE 100 and FTSE 250 were used as comparators as the Company has been a member of each of these
indices during the relevant period.
FIGURE 2: MEDICLINIC TOTAL SHAREHOLDER RETURN COMPARED WITH FTSE 100 AND FTSE 250
250
200
150
100
50
0
1
J
u
n
e
2
0
1
3
1
D
e
c
2
0
1
3
1
J
u
n
e
2
0
1
4
1
D
e
c
2
0
1
4
1
J
u
n
e
2
0
1
5
1
D
e
c
2
0
1
5
1
J
u
n
e
2
0
1
6
1
D
e
c
2
0
1
6
1
J
u
n
e
2
0
1
7
1
D
e
c
2
0
1
7
1
J
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n
e
2
0
1
8
1
D
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2
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8
1
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9
1
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2
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1
9
1
J
u
n
e
2
0
2
0
1
D
e
c
2
0
2
0
Mediclinic
FTSE 100
FTSE 250
TABLE 17: TOTAL GROUP CEO REMUNERATION SINCE INCEPTION
YEAR ENDED 31 DECEMBER
YEAR ENDED 31 MARCH
2012 2013 2014
2014
2015
2017
2018
1 Jan–
15 Feb
2016
15
Feb–
31 Mar
2016
1 Apr–
31 May
20181
1 Jun
2018–
31 Mar
20192
2020
2021
GROUP CEO Dr Kassem Alom Mr Ronald Lavater
Mr Danie Meintjes1
Dr Ronnie van der Merwe2
326
361
290
170
702
2 165
79
1 029
1 126
138
600
739
1 285
n/a
n/a
n/a
11.8% 20.0%
n/a
79.7% 55.9% 61.4% 16.5% 16.5% 17.0%3
100.0%4
n/a
n/a
n/a
100.0%
n/a
n/a
n/a
50.0% 50.0%
n/a
n/a
50.0% 100.0%4
n/a
n/a
n/a
65.4% 69.9%
n/a
0.0%
0.0%
0.0% 0.0% 0.0%
0.0%
0.0%
Total
remuneration
£’000
STI outturn
(% of
maximum)
Deferred STI
portion
LTIP vesting
(% of
maximum)
Notes
1 Mr Meintjes retired as Group CEO on 31 May 2018.
2 Dr Van der Merwe was appointed as Group CEO on 1 June 2018.
3 As noted on page 173, the Committee approved an FY20 STI outcome equal to 17% of the maximum opportunity in November 2020. The FY20 STI and
total remuneration figures have therefore been restated.
4 As noted on page 174, the release of the FY21 STI is conditional on the Group dividend being reinstated.
Consistent with the calculation methodology for the single figure for total remuneration, the total remuneration
figure includes the total STI award based on that year’s performance and the LTIP award based on the three-year
performance period ending in the relevant year.
179
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT
REMUNERATION COMMITTEE REPORT CONTINUED
RELATIVE IMPORTANCE OF SPEND ON PAY
TABLE 18: COMPARISONS SPEND ON EMPLOYEE COSTS
Employee costs1
Dividends paid
FY21
£’m
1 381
–
FY20
£’m
1 367
59
CHANGE
%
1%
(100)%
Note
1 FY20 employee costs re-presented to be consistent with the expense by nature income statement presentation.
COMMITTEE COMPOSITION AND MEETING ATTENDANCE
None of the Committee members are involved with the Company at an operational level, nor do they have any
personal financial interest in the matters considered at meetings. The Committee recommends the compensation
of the Chair of the Board, but the Chair of the Board, in consultation with the executive directors, determines the
non-executive directors’ fees.
TABLE 19: COMMITTEE COMPOSITION AND MEETING ATTENDANCE
NAME1
DESIGNATION
Mr Trevor Petersen
(Committee Chair)
Independent
Non-executive Director
Dame Inga Beale3
Non-executive Chair
Mr Tom Singer
Mr Steve Weiner4
Independent
Non-executive Director
Independent
Non-executive Director
DATE OF APPOINTMENT
TO COMMITTEE
NUMBER OF SCHEDULED
MEETINGS ATTENDED2
15/02/2016
01/06/2020
13/11/2019
11/11/2020
4/4
3/3
4/4
2/2
Notes
1 The composition of the Committee is shown at 31 March 2021. Dr Oswald stepped down from the Committee on 1 March 2021.
2 The attendance reflects the number of scheduled meetings held during the financial year.
3 Dame Inga was appointed as a member of the Committee on 1 June 2020 and attended all Committee meetings that took place after the date of her
appointment. She was deemed independent upon appointment.
4 Mr Weiner was appointed as a member of the Committee on 11 November 2020 and attended all Committee meetings that took place after the date
of his appointment.
Four additional ad hoc meetings were held during the
financial year to deal with urgent matters. One scheduled
meeting was held between the Company’s financial
year-end and the Last Practicable Date. All these
meetings were attended by all members of the
Committee at the time or at least the minimum quorum
required under the Committee’s terms of reference.
As noted in the Nomination Committee Report on page 159,
Mr Petersen intends to step down from the Committee
on 13 September 2021 and will be replaced by
Mr Weiner as Chair. Mr Meintjes, Mr Durand and/or his
alternate Mr Uys, attend meetings by invitation but are
not voting members. Other attendees, also by invitation
only, include the Group CEO, the Group Chief Strategy
and Human Resources Officer, the Group Executive:
Reward and representatives from Deloitte LLP, all of
whom provide significant support to the Committee.
None of the aforementioned attend as a right, nor do they
attend when their own remuneration is under discussion.
ROLE AND KEY AREAS OF ACTIVITY
The role of the Committee is to assist the Board in:
• determining the Group’s remuneration strategy and
policy, having regard for the alignment of incentives
and rewards with the Group’s culture;
• reviewing remuneration and related policies for
the workforce across the Group, taking these into
180
account when setting the Remuneration Policy;
• establishing the operation of appropriate parameters
for the Group’s performance-related pay schemes; and
• determining the total remuneration package for
the Chair of the Board and each element of the total
individual remuneration package for each executive
director, other members of the Group Executive
Committee and certain other executives (including the
Group Company Secretary) and ensuring these support
and are linked to the Mediclinic Group Strategy and
promote its long-term sustainable success.
The Committee is governed by formal terms of reference,
which are reviewed at least annually by the Committee
and the Board. The terms of reference are available in
the ‘Governance’ section of the Company’s website at
www.mediclinic.com.
The Committee Chair presents a summary of material
matters to the Board and meeting minutes are circulated
to all directors. The Committee reports to investors
annually by way of this report and the Chair attends the
AGM to address any questions that arise.
Including routine monitoring and approval activities,
the material issues discussed by the Committee during
the year under review and between the financial year-
end and the Last Practicable Date are summarised
alongside.
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT TABLE 20: MATERIAL ISSUES DISCUSSED BY THE COMMITTEE
AREA
Awards
Remuneration levels
Regulatory and
governance review
DISCUSSIONS
• Considered and approved the STI payment for FY20.
• Considered and approved the quantum, performance metrics and targets for the
FY21 STI and LTIP awards.
• Considered and approved FY21 salary increases for executive directors and the Group
Executive Committee, with a decision being delayed until October given the impact of
COVID-19.
• Considered and approved FY22 salary increases for executive directors and the
Group Executive Committee.
• Reviewed and approved overall FY22 salary increases of all employee groups of each
division.
• Reviewed and approved the FY22 fee of the Chair of the Board.
• Reviewed regulatory and corporate governance developments, and reviewed
and recommended to the Board for approval the ensuing changes to its terms of
reference.
• Reviewed and confirmed the independence and objectivity of its remuneration
consultant, Deloitte LLP.
EXTERNAL ADVISOR TO THE COMMITTEE
During the year under review, the Committee and the Company retained an independent external advisor to assist
with various aspects of the Company’s remuneration as set out in Table 21 below.
TABLE 21: EXTERNAL ADVISOR TO THE COMMITTEE
ADVISOR
APPOINTED/
SELECTED BY
SERVICES
PROVIDED
Appointed by
the Committee
following a robust
selection process
and reviewed
annually
by the Committee
• General advice
on remuneration
matters
• Advice on UK
market practice
and UK investor
perspectives
Deloitte LLP
Founding member
of the Remuneration
Consultants Group
and adheres to the
Voluntary Code
of Conduct in
relation to executive
remuneration
consulting in the UK
FEES PAID BY THE
COMPANY FOR
THESE SERVICES
PROVIDED IN THE
REPORTING PERIOD
OTHER SERVICES
PROVIDED TO
THE COMPANY IN
THE REPORTING
PERIOD
£102 850 based on
time charges for work
completed
Tax advisory services
Share plan valuation
The Remuneration Committee reviewed the
independence and objectivity of Deloitte LLP, taking
into consideration its experience and management’s
feedback, together with the assurances provided by
Deloitte LLP that it has effective internal processes to
ensure it is able to provide remuneration consultancy
services that meet these two critical requirements.
Following this review, the Remuneration Committee is
satisfied that Deloitte LLP has maintained independence
and objectivity and has no conflicts of interest with the
Company that may impact on such.
This Committee Report has been prepared on behalf
of the Board by the Committee, in accordance with the
Code, the Listing Rules, the Act, and Schedule 8
of the Large and Medium-sized Companies and
Groups (Accounts and Reports) Regulations 2008
(as amended).
Signed on behalf of the Committee.
Mr Trevor D Petersen
Chair of the Remuneration Committee
25 May 2021
181
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCGOVERNANCE AND REMUNERATION REPORT STATEMENT OF
DIRECTORS’
RESPONSIBILITIES
IN RESPECT OF THE FINANCIAL STATEMENTS
The directors are responsible for preparing the annual
report and the financial statements in accordance with
applicable legislation and regulations.
Legislation in the UK governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
The Act requires the directors to prepare financial
statements for each financial year. Under the Act, the
directors have prepared the Group annual financial
statements and the Company annual financial statements
in accordance with IFRS as adopted by the EU. Under
the Act, the directors must not approve the financial
statements unless they are satisfied that these 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 then apply them
consistently;
• state whether applicable IFRS as adopted by the EU
have been followed for the Group annual financial
statements and for the Company annual financial
statements, 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 also 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 keeping adequate
accounting records that are sufficient to show and explain
the Group 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 Remuneration
Committee Report comply with the Act and the Group
financial statements with Article 4 of the IAS Regulation.
The directors are responsible for the maintenance and
integrity of the Company’s website.
182
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT
DIRECTORS’ CONFIRMATIONS
The directors consider that this Annual Report, and
accounts, taken as a whole, is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the Group and Company’s
position and performance, business model and strategy.
Each of the directors, whose names and functions are
listed from page 107 of this Annual Report, confirm that, to
the best of their knowledge:
• the Company annual financial statements, which have
been prepared in accordance with IFRS as adopted by
the EU, give a true and fair view of the assets, liabilities,
financial position and loss of the Company;
• the Group annual financial statements, which have been
prepared in accordance with IFRS as adopted by the EU,
give a true and fair view of the assets, liabilities, financial
position and loss of the Group; and
• the Directors’ Report includes a fair review of the
development and performance of the business and
the position of the Group and Company, together with
a description of the principal risks and uncertainties
that these entities face.
In the case of each director in office at the date the
Directors’ Report is approved:
• so far as the director is aware, there is no relevant audit
information of which the Group and Company’s auditors
are unaware; and
• they have taken all the steps that they ought to have
taken as a director in order to make themselves aware of
any relevant audit information and to establish that the
Group and Company’s auditors are aware of that
information.
Dr Ronnie van der Merwe
Group Chief Executive Officer Group Chief Financial Officer
25 May 2021
Mr Jurgens Myburgh
25 May 2021
FINANCIAL
STATEMENTS
CONTENTS
184
Independent auditors’ report
GROUP ANNUAL FINANCIAL STATEMENTS
196
198
199
200
202
203
Consolidated statement of financial position
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the Group annual financial statements
COMPANY ANNUAL FINANCIAL STATEMENTS
289
290
291
292
Company statement of financial position
Company statement of changes in equity
Company statement of cash flows
Notes to the Company annual financial statements
GENERAL INFORMATION
These financial statements are consolidated financial statements for Mediclinic International plc (the ‘Company’
or ‘Mediclinic’) and its subsidiaries, associates and joint ventures (collectively, the ‘Group’). A list of subsidiaries,
associates and joint ventures is included from page 277.
Mediclinic is a public limited company, listed on the London Stock Exchange (‘LSE’) and incorporated and
domiciled in England and Wales. The Company has secondary listings on the JSE and the Namibian Stock
Exchange (‘NSX’). A wholly owned subsidiary, Hirslanden AG, issued bonds listed on the SIX Swiss Exchange.
REGISTERED ADDRESS:
6th Floor
65 Gresham Street
London
EC2V 7NQ
United Kingdom
The core purpose of the Group is to enhance the quality of life.
The financial statements were authorised for issue by the directors on 25 May 2021. No authority was given
to anyone to amend the financial statements after the issue date.
Press releases, financial reports and other information are available on the Company’s website at
www.mediclinic.com.
183
I
I
F
N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLC
INDEPENDENT AUDITORS’
REPORT TO THE MEMBERS
OF MEDICLINIC
INTERNATIONAL PLC
REPORT ON THE AUDIT OF THE
FINANCIAL STATEMENTS
OPINION
In our opinion, Mediclinic International plc’s Group
annual financial statements and Company annual
financial statements (the “financial statements”):
• give a true and fair view of the state of the Group’s
and of the Company’s affairs as at 31 March 2021 and
of the Group’s profit and the Group’s and Company’s
cash flows for the year then ended;
• have been properly prepared in accordance with
international accounting standards in conformity with
the requirements of the Companies Act 2006; and
• have been prepared in accordance with the
requirements of the Companies Act 2006.
We have audited the financial statements, included
within the Annual Report, which comprise: the
Consolidated and Company statements of financial
position as at 31 March 2021; the Consolidated
income statement, the Consolidated statement of
comprehensive income, the Consolidated and Company
statements of changes in equity and the Consolidated
and Company statements of cash flows for the year
then ended; and the notes to the financial statements,
which include a description of the significant
accounting policies.
Our opinion is consistent with our reporting to the
Audit and Risk Committee.
SEPARATE OPINION IN RELATION TO INTERNATIONAL
FINANCIAL REPORTING STANDARDS ADOPTED
PURSUANT TO REGULATION (EC) NO 1606/2002 AS
IT APPLIES IN THE EUROPEAN UNION
As explained in note 2 to the financial statements, the
Group, in addition to applying international accounting
standards in conformity with the requirements of the
Companies Act 2006, has also applied international
financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the
European Union.
In our opinion, the Group financial statements
have been properly prepared in accordance with
international financial reporting standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies
in the European Union.
BASIS FOR OPINION
We conducted our audit in accordance with
International Standards on Auditing (UK) (‘ISAs (UK)’)
and applicable law. Our responsibilities under ISAs (UK)
are further described in the Auditors’ responsibilities
for the audit of the financial statements section of our
report. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis
for our opinion.
INDEPENDENCE
We remained independent of the Group in accordance
with the ethical requirements that are relevant to our
audit of the financial statements in the UK, which
includes the FRC’s Ethical Standard, as applicable to
listed public interest entities, and we have fulfilled our
other ethical responsibilities in accordance with these
requirements.
To the best of our knowledge and belief, we declare
that non-audit services prohibited by the FRC’s Ethical
Standard were not provided.
Other than those disclosed in Note 24, we have
provided no non-audit services to the Company or its
controlled undertakings in the period under audit.
184
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT OUR AUDIT APPROACH
OVERVIEW
AUDIT SCOPE
• Our Group audit included full scope audits at three reporting components. We performed centralised audit
procedures on the equity accounted results of Spire Healthcare Group plc (‘Spire’) based on its audited financial
statements at 31 December 2020. We have also audited selected financial statement line items of the Company
to support the Group audit.
• Taken together, the reporting components, where we conducted audit procedures, together with central work
performed at the Group level, accounted for 95% of consolidated revenue, 88% of consolidated profit before tax
and 90% of consolidated adjusted profit before tax.
KEY AUDIT MATTERS
• Going concern assessment in response to economic uncertainties from COVID-19 (Group)
• Impairment of goodwill and other non-financial assets (Group)
• Impact of COVID-19 (Group and Company)
• Impairment assessment of the Company’s investment in subsidiaries (Company)
MATERIALITY
• Overall Group materiality: £10.8 million (2020: £12.4 million) based on approximately 5% of the three-year average
of adjusted profit before tax (2020: 5% of adjusted profit before tax).
• Overall Company materiality: £33.0 million (2020: £35.0 million) based on approximately 1% of total assets.
• Performance materiality: £8.1 million (Group) and £24.7 million (Company).
THE SCOPE OF OUR AUDIT
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
financial statements.
KEY AUDIT MATTERS
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the
audit of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect
on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement
team. These matters, and any comments we make on the results of our procedures thereon, were addressed in
the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Impairment of the Group’s associate investment in Spire, and adoption of IFRS 16 Leases, which were key audit
matters last year, are no longer included. For Spire, the assessed risk related to valuation of the investment in
Spire has reduced at year-end following the assessment of indicators of impairment, including reference to Spire’s
quoted market value at the Balance Sheet date. In relation to the adoption of IFRS 16 Leases, this was applicable
to the previous year’s audit and there were no new complexities identified with ongoing accounting in this area for
the current year’s audit. Otherwise, the key audit matters below are consistent with last year.
185
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS INDEPENDENT AUDITORS’ REPORT CONTINUED
KEY AUDIT MATTER
1. GOING CONCERN ASSESSMENT IN RESPONSE TO ECONOMIC UNCERTAINTIES FROM
COVID-19 (GROUP) (refer to Group Chief Financial Officer’s Report, Audit and Risk
Committee Report and note 2.1 in the consolidated financial statements)
The COVID-19 pandemic has had a significant impact on the global economy and on
the markets in which the Group operates. The severity and duration of the impact of the
COVID-19 pandemic and its economic aftermath on all businesses, including Mediclinic,
remains uncertain.
National lockdowns were implemented during March 2020 in each country in which
the Group operates, imposing restrictions on the Group’s ability to perform elective
surgery and outpatient activities. These restrictions have negatively impacted the
results of the Group for the financial year ended 31 March 2021 and are expected
to continue to directly impact the Group for at least the next financial year with the
potential for longer-term indirect impacts from global recessionary factors and higher
unemployment.
In order to conclude whether it is appropriate for the financial statements to be
prepared on a going concern basis, management performed a detailed analysis of the
expected impact of COVID-19 on the Group’s revenue, profit and cash flows including an
assessment of the extent of possible cost mitigation. Management prepared a base case
budget and strategic plan covering the next five financial years which encompass a best
estimate of this impact, including a forecast of monthly liquidity for the next 18 months
to September 2022. Management separately considered a number of potential downside
scenarios, preparing a severe but plausible downside case which models a reduction
in tariffs due to possible regulatory changes and a reduction in volumes due to the
deterioration in the business environment or steps taken by governments to contain the
spread of COVID-19. In doing so, management made estimates and applied assumptions
that are critical to the outcome of the Group’s going concern assessment. These forecasts
were prepared in conjunction with an assessment of the Group’s liquidity and covenant
compliance for the period through to 30 September 2022.
All of the Group’s borrowings are held separately within each of the operating divisions,
with no cross guarantees or cross default clauses, and the related covenant tests
are determined by reference to financial performance measures at each division.
Management prepared covenant compliance calculations based on its approved
forecasts (covering both its base case and downside case scenarios) for those
covenants that remain in place for the period extending to 30 September 2022.
Where management’s projections indicated a potential covenant breach, management
agreed waivers at each division for those specific covenants at risk of breach.
We focused on this area given the importance of the going concern judgement in the
context of the basis of preparation of the financial statements and recognising the high
degree of judgement inherent in management’s forecasts, which is heightened by the
current uncertainty that exists about trading prospects as a result of the COVID-19
pandemic.
HOW OUR AUDIT
ADDRESSED THE
KEY AUDIT MATTER
We evaluated management’s going concern assessment and we performed testing
procedures at each division and for the Group as a whole. Refer to the ‘Conclusions relating
to going concern’ section within this report for the procedures that we performed to address
the key audit matter and our conclusions.
186
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT KEY AUDIT MATTER
2. IMPAIRMENT OF GOODWILL AND OTHER NON-FINANCIAL ASSETS (GROUP)
(refer to Audit and Risk Committee Report and notes 2, 4, 6 and 7 in the consolidated
financial statements)
The Group has £1 061 million (2020: £1 171 million) of intangible assets. This balance
consists mainly of goodwill relating to the Mediclinic Middle East operations amounting
to £834 million (2020: £928 million) and goodwill of £100 million (2020: £97 million)
relating to Switzerland. The Group also has property, equipment and vehicles of
£4 052 million (2020: £4 358 million).
The Group is required to perform annual impairment tests on goodwill. Goodwill is
generally assessed for impairment at the operating division level on the basis that the
commercial rationale for the transactions giving rise to goodwill is to realise synergies
across the entire operating division and not just within the acquired business. The two
exceptions are the acquisition of Les Grangettes completed in 2018 where goodwill
is assessed for impairment at the CGU level given the existence of a significant non-
controlling interest, and to discrete acquisitions in Southern Africa in which case the
goodwill is allocated to that CGU. Other assets subject to impairment assessment at the
CGU level primarily comprise land and buildings.
In the current year, an impairment loss of £4 million was recorded to partially impair
goodwill and property and equipment within seven Southern Africa CGUs.
We focused on the impairment assessments of goodwill, intangible assets, property,
equipment and vehicles and other non-financial assets. These impairment reviews carried
out by the Group contain a number of significant judgements, including the level at
which goodwill is monitored for impairment and the determination of CGUs within each
operating division, and estimates, including future cash flow projections, growth rates
and discount rates. There is greater risk and uncertainty in the forecast cash flows at
31 March 2021 as a consequence of the COVID-19 pandemic and its expected impact
on the Group’s future operations. Changes in these assumptions might lead to a change
in the recoverable values of the related assets and therefore to any impairment losses
recognised.
We used our valuation experts to assist us in our assessment of management’s impairment
calculations and we tested the reasonableness of key assumptions, including cash flow
forecasts and the selection of growth rates and discount rates. We challenged management
to substantiate its assumptions, including comparing relevant assumptions to industry
benchmarks and economic forecasts. We substantively tested the integrity of supporting
calculations and we corroborated certain information with third party sources.
We agreed the underlying cash flows to approved forecasts and we assessed growth rates
and discount rates by comparison to third party information, the Group’s cost of capital
and relevant risk factors. Future cash flow assumptions were evaluated in the context
of current trading performance against budget and forecasts, impacts of COVID-19,
considering the historical accuracy of budgeting and forecasting and understanding
the reasons for the growth profiles used. We validated the carrying amounts of the net
assets subject to impairment testing to the underlying accounting records, making sure that
there was appropriate consistency between the assets and liabilities that were included
in management’s assessment and the related cash flows.
In addition, we performed independent sensitivity analyses to ascertain the impact of
reasonably possible changes to key assumptions on the available headroom or the level
of impairment required.
We evaluated management’s judgement regarding the levels at which goodwill arising from
the Swiss and Middle East acquisitions are monitored for impairment review purposes.
187
HOW OUR AUDIT
ADDRESSED THE
KEY AUDIT MATTER
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS INDEPENDENT AUDITORS’ REPORT CONTINUED
HOW OUR AUDIT
ADDRESSED THE
KEY AUDIT MATTER
CONTINUED
Where impairments were identified by management relating to the Southern African
operations based on fair value less costs of disposal, we tested the calculation of the
impairment charge and we ensured that the value-in-use would not give rise to a higher
recoverable amount. We tested management’s estimate of disposal costs for each division
and we evaluated management’s assessment whether market participant adjustments were
required to be made to the valuations.
We assessed the appropriateness of management’s disclosures about sensitivities in
note 6 and 7 of the consolidated financial statements in relation to the Swiss and Middle
East operations.
Based on the procedures performed, we noted no material issues arising from our work.
KEY AUDIT MATTER
3. IMPACT OF COVID-19 (GROUP AND COMPANY) (refer to Audit and Risk Committee
Report)
The COVID-19 pandemic is having a significant impact on the Group’s operations.
Management has undertaken an assessment of the impact of COVID-19 on the Group
and Company financial statements at 31 March 2021, focusing on the potential impact
on the Group’s and Company’s significant accounting estimates. The areas where the
impact has been most significant are as follows:
• The Group’s going concern assessment;
• Impairment of goodwill and other non-financial assets;
• Impairment of the Company’s investments in subsidiaries; and
• The related disclosures in the Annual Report.
We focused on the impact of COVID-19 on the preparation of the Group and Company
financial statements as its impact is significant and widespread, both in terms of the
impact on a range of the Group’s and Company’s accounting estimates, including but
not limited to going concern and impairment, and in terms of related disclosures in the
Annual Report.
In addition, management’s way of working, including the operation of controls, has
been impacted by COVID-19 as a result of a large number of employees working
remotely and using technology enabled working practices.
Our own ways of working have also changed which has meant virtual review meetings
and electronic review processes (instead of in-person visits and hard copy reviews)
being performed using virtual technology tools.
We considered the financial reporting and audit implications of the COVID-19 pandemic
on our audit risk assessment.
We issued audit instructions to component auditors, requesting further procedures to
be performed to ensure the completeness of our audit risk assessment and planned
audit response at each division.
We assessed our ability to execute the audit when operating under the restrictions of
national lockdowns and related international travel restrictions.
We implemented alternative communication and review protocols with management
and with component auditors.
We performed procedures to assess any control implications arising from the change
in management’s ways of working. Based on the work performed at the Group level and
by the component teams we did not identify any evidence of a material deterioration in
the control environment.
We reviewed management’s disclosures in relation to the impact of COVID-19 in
the Annual Report, considering whether the disclosures were consistent with the
Company’s scenario planning and with trading experience in April 2021.
HOW OUR AUDIT
ADDRESSED THE
KEY AUDIT MATTER
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MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT
HOW OUR AUDIT
ADDRESSED THE
KEY AUDIT MATTER
CONTINUED
We evaluated management’s accounting estimates in light of COVID-19 and we have
reported separate key audit matters in the following areas:
• The assessment of going concern of the Group;
• The impairment assessment of goodwill and non-financial assets; and
• The impairment assessment of the Company’s investments in subsidiaries.
All of our oversight procedures were undertaken remotely using video conferencing
and remote audit workpaper reviews to satisfy ourselves as to the sufficiency of audit
work performed at the components.
Based on the procedures performed, we noted no material issues from our work.
KEY AUDIT MATTER
4. IMPAIRMENT ASSESSMENT OF THE COMPANY’S INVESTMENT IN SUBSIDIARIES
(COMPANY) (refer to Audit and Risk Committee Report and notes 2 and 3 in the
Company financial statements)
HOW OUR AUDIT
ADDRESSED THE
KEY AUDIT MATTER
Investments in subsidiaries are accounted for at cost less impairment in the
Company statement of financial position. At 31 March 2021, the Company held
investments in subsidiaries with a carrying value of £3 311 million.
In the current financial year, impairment indicators were identified in connection with
the Company’s investment in the Southern Africa operations due to the impact of the
deterioration in the macroeconomic environment and an impairment test was therefore
performed by management for this investment held. Management’s analysis resulted in
no impairment charges.
The impairment assessment performed by management was considered a key audit
matter given the size of the underlying investment carrying values and recognising the
significance of the impairment charges that had been recorded in prior financial years.
The assessment requires the application of management judgement, particularly in
determining whether any impairment indicators have arisen that trigger the need for an
impairment test and assessing whether the carrying value of an asset can be supported
by its recoverable amount, which is determined by reference to the key valuation
assumptions for each investment.
We independently evaluated management’s assessment whether any indicators of
impairment existed by comparing the Company’s carrying value of investments in
subsidiaries to the Group’s market capitalisation at 31 March 2021 and to the valuations
implied by other models, including valuation models prepared for impairment testing
purposes at divisions which were subject to audit procedures as part of our Group
audit.
The key assumptions used in the impairment models were consistent with those used
for impairment testing as described in the key audit matter “Impairment of goodwill
and other non-financial assets (Group)”.
We evaluated management’s sensitivity analyses to ascertain the impact of reasonably
possible changes to key assumptions on the level of impairment required. We
separately evaluated the difference between the investment carrying values and the
Group’s market capitalisation.
We considered the appropriateness of the related disclosures in the Company financial
statements.
Based on the procedures performed, we noted no material issues arising from our work.
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS INDEPENDENT AUDITORS’ REPORT CONTINUED
HOW WE TAILORED THE AUDIT SCOPE
We tailored the scope of our audit to ensure that we
performed enough work to be able to give an opinion
on the financial statements as a whole, taking into
account the structure of the Group and the Company,
the accounting processes and controls, and the industry
in which they operate.
The Group financial statements involve a consolidation
of 15 reporting units, certain of which are sub-
consolidations of the operations in each of the Group’s
key markets. The sub-consolidations were deemed to
be components for our audit and comprise the Group’s
three main divisions: Southern Africa, Switzerland and
the Middle East. These components required an audit
of their complete financial information due to their size.
In establishing the overall approach to the Group audit,
we determined the type of work that needed to be
performed at the reporting units by us, as the Group
audit team, or by component auditors from other
PwC network firms. Where the work was performed
by component auditors, we determined the level of
involvement we needed to have in the audit work at
those components to be able to conclude whether
sufficient appropriate audit evidence had been obtained
as a basis for our opinion on the Group financial
statements as a whole. An overview of the impact
of COVID-19 on our planned audit approach and our
response in terms of our involvement in the work of
component auditors is included in our report as a key
audit matter.
We instructed, supervised and reviewed the audit work
of each of our component audit teams in South Africa,
Switzerland and the Middle East, which included
audit work paper reviews, participation in key audit
discussions with local management and participation
in audit clearance meetings at each component. We
also maintained regular dialogue with our component
audit teams at each key reporting unit.
Further specific audit procedures over the Group
consolidation, selected financial statement line items
reported by the Company and over the Group’s
associate interest in Spire, and procedures over the
Annual Report and audit of the financial statement
disclosures were directly led by the Group audit team.
Taken together, the component audit work, together
with work performed at the Group level, accounted
for 95% of consolidated revenue, 88% of consolidated
profit before tax and 90% of consolidated adjusted
profit before tax calculated on an absolute basis.
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MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT
MATERIALITY
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and
in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements – Group
Financial statements – Company
Overall materiality
£10.8 million
(2020: £12.4 million).
£33.0 million
(2020: £35.0 million).
How we determined it
Rationale for benchmark
applied
Approximately 5% of three-year
average of adjusted profit before
tax (2020: 5% of adjusted profit
before tax)
We believe that adjusted profit
before tax is a primary measure
used by shareholders in assessing
the performance of the Group. The
Group’s profit before tax has been
adjusted for insurance proceeds,
accelerated depreciation and
amortisation, fair value adjustments
on derivative contracts, impairment
of properties and goodwill and
remeasurement loss of put option
liability. The adjusted profit before
tax measure removes the impact
of significant items which do not
recur from year to year or which
otherwise significantly affect the
underlying trend of performance
from continuing operations.
Adjusted profitability measures
are metrics against which the
performance of the Group is
most commonly assessed by
management and reported to
shareholders. We believe that using
a three-year average adjusted profit
before tax is a more appropriate
measure as it smooths the impact of
fluctuation of the Group’s results as
a result of the COVID-19 pandemic.
Approximately 1% of total assets
(2020: 1% of total assets)
Mediclinic International plc is the
ultimate parent company which
holds the Group’s investments.
Therefore, the entity is not
in itself profit oriented. The
strength of the Balance Sheet
is the key measure of financial
health that is important to
shareholders, since the primary
concern for the Company is
the payment of dividends.
Using a benchmark of total
assets is therefore considered
appropriate. For 2021 and 2020,
selected financial statement
line items related to cash and
equity of the Company are
included in the scope of the
Group audit and were audited
to a lower capped materiality of
£9.7 million (2020: £11.1 million).
However, we determined that
the Company did not require a
full scope audit of its complete
financial information for the
purposes of the Group audit.
For each reporting component in the scope of our
Group audit, we allocated a materiality that is less than
our overall Group materiality. The range of materiality
allocated across components was between £6.0 million
and £9.0 million. Certain components were audited to
a local statutory audit materiality that was also less
than our overall Group materiality.
We use performance materiality to reduce to
an appropriately low level the probability that
the aggregate of uncorrected and undetected
misstatements exceeds overall materiality. Specifically,
we use performance materiality in determining the
scope of our audit and the nature and extent of our
testing of account balances, classes of transactions
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS INDEPENDENT AUDITORS’ REPORT CONTINUED
and disclosures, for example in determining sample
sizes. Our performance materiality was 75% of overall
materiality, amounting to £8.1 million for the Group
financial statements and £24.7 million for the Company
financial statements.
In determining the performance materiality, we
considered a number of factors – the history of
misstatements, risk assessment and aggregation risk
and the effectiveness of controls – and concluded that
an amount at the upper end of our normal range was
appropriate.
We agreed with the Audit and Risk Committee that
we would report to them misstatements identified
during our audit above £1 million (Group audit)
(2020: £1 million) and £1 million (Company audit)
(2020: £1 million) as well as misstatements below
those amounts that, in our view, warranted reporting
for qualitative reasons.
CONCLUSIONS RELATING
TO GOING CONCERN
The going concern assessment in response to economic
uncertainties from COVID-19 was identified as a key
audit matter for the reasons set out in the ‘Key audit
matters’ section. Our evaluation of the directors’
assessment of the Group’s and the Company’s ability
to continue to adopt the going concern basis of
accounting included:
• Assessing both the base case budgets and strategic
financial plan prepared by management and the
severe but plausible downside case which was used
to sensitise the base case model.
• In relation to the budget and strategic financial plan,
we agreed the key inputs including revenue, EBITDA
and net debt to budgets and strategic plans approved
by the Directors. We evaluated the historical accuracy
of the budgeting and forecasting process to assess the
reliability of the Group’s budgets and strategic plans.
In addition, we tested the integrity of management’s
monthly liquidity analysis at each division.
• We evaluated the key assumptions in the forecasts
and considered whether these assumptions appeared
reasonable, for example by comparing forecast sales
to trends during the 2021 financial year. We assessed
whether management’s downside case was severe
but plausible. In respect of COVID-19, we evaluated
the extent and duration of the expected impact on
the Group’s operations assumed in the base case
and downside case by comparison to the Group’s
experience during the first and second waves of
the pandemic.
• With regard to mitigation of anticipated revenue
declines under the severe but plausible downside
scenarios, we evaluated the extent to which cost
or cash flow savings included in the forecasts were
based on controllable activities, confirming that only
measures directly controllable by the Group had been
modelled. We separately evaluated the existence of
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MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT
further cost or cash flow measures which had not been
modelled but which management could action to the
extent that downside risk factors prove more negative
than currently anticipated.
• With regard to the Leverage ratio covenant waiver
agreed in April 2021 at Hirslanden, we obtained
and confirmed the terms of the covenant waiver
agreement.
• We recalculated management’s forecast
covenant compliance calculations through to
30 September 2022 and confirmed that the calculation
methodologies are consistent with the terms of the
underlying covenant waiver agreements or facility
agreements to the extent that covenants were not
waived. In relation to covenant compliance, we
undertook independent sensitivity analysis to consider
the extent to which headroom exists to absorb any
further downside risk related to the severity and
duration of the COVID-19 pandemic.
• We evaluated management’s analysis of liquidity
headroom to satisfy ourselves that there is sufficient
liquidity anticipated over the period of assessment and
we again undertook independent sensitivity analysis
to consider the extent to which headroom exists to
absorb any further downside risk.
• We assessed the COVID-19 and related going concern
disclosures provided in the Annual Report to determine
whether these disclosures are consistent with the
analysis which we evaluated and with the testing which
we performed. We found that the disclosures provided
an explanation of the directors’ assessment that was
consistent with the evidence we obtained.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the Group’s and the Company’s
ability to continue as a going concern for a period of at
least twelve months from when the financial statements
are authorised for issue.
In auditing the financial statements, we have concluded
that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements
is appropriate.
However, because not all future events or conditions can
be predicted, this conclusion is not a guarantee as to the
Group’s and the Company’s ability to continue as a going
concern.
In relation to the directors’ reporting on how they have
applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to
the directors’ statement in the financial statements about
whether the directors considered it appropriate to adopt
the going concern basis of accounting.
Our responsibilities and the responsibilities of the
directors with respect to going concern are described in
the relevant sections of this report.
REPORTING ON OTHER INFORMATION
The other information comprises all of the information in the Annual Report other than the financial statements and
our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial
statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to
the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material
inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a
material misstatement of the financial statements or a material misstatement of the other information. If, based on
the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Strategic report and Directors’ Report, we also considered whether the disclosures required by
the UK Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain
opinions and matters as described below.
STRATEGIC REPORT AND DIRECTORS’ REPORT
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report
and Directors’ Report in respect of the financial statements for the year ended 31 March 2021 is consistent with the
financial statements and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the Group and Company and their environment obtained in the
course of the audit, we did not identify any material misstatements in the Strategic report and Directors’ Report
in respect of the financial statements.
DIRECTORS’ REMUNERATION
In our opinion, the part of the Remuneration Committee Report to be audited has been properly prepared in
accordance with the Companies Act 2006.
CORPORATE GOVERNANCE STATEMENT
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability
and that part of the corporate governance statement relating to the Company’s compliance with the provisions
of the UK Corporate Governance Code specified for our review. Our additional responsibilities with respect to the
corporate governance statement as other information are described in the Reporting on other information section
of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
corporate governance statement is materially consistent with the financial statements and our knowledge obtained
during the audit, and we have nothing material to add or draw attention to in relation to:
• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify
emerging risks and an explanation of how these are being managed or mitigated;
• The directors’ statement in the financial statements about whether they considered it appropriate to adopt the
going concern basis of accounting in preparing them, and their identification of any material uncertainties to
the Group’s and Company’s ability to continue to do so over a period of at least twelve months from the date of
approval of the financial statements;
• The directors’ explanation as to their assessment of the Group’s and Company’s prospects, the period this
assessment covers and why the period is appropriate; and
• The directors’ statement as to whether they have a reasonable expectation that the Company will be able to
continue in operation and meet its liabilities as they fall due over the period of its assessment, including any
related disclosures drawing attention to any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the Group was substantially less in
scope than an audit and only consisted of making inquiries and considering the directors’ process supporting their
statement; checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance
Code; and considering whether the statement is consistent with the financial statements and our knowledge and
understanding of the Group and Company and their environment obtained in the course of the audit.
193
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS INDEPENDENT AUDITORS’ REPORT CONTINUED
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following
elements of the corporate governance statement is materially consistent with the financial statements and our
knowledge obtained during the audit:
• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and
understandable, and provides the information necessary for the members to assess the Group’s and Company’s
position, performance, business model and strategy;
• The section of the Annual Report that describes the review of effectiveness of risk management and internal
control systems; and
• The section of the Annual Report describing the work of the Audit and Risk Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the
Company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code
specified under the Listing Rules for review by the auditors.
RESPONSIBILITIES FOR THE FINANCIAL
STATEMENTS AND THE AUDIT
RESPONSIBILITIES OF THE DIRECTORS FOR THE FINANCIAL STATEMENTS
As explained more fully in the Statement of Directors’ Responsibilities in respect of the financial statements,
the directors are responsible for the preparation of the financial statements in accordance with the applicable
framework and for being satisfied that they give a true and fair view. The directors are also responsible for such
internal control as they determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or the Company or to
cease operations, or have no realistic alternative but to do so.
AUDITORS’ RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in
line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance
with laws and regulations related to healthcare regulations in the Group’s markets, and to UK and international tax
regulations, and we considered the extent to which non-compliance might have a material effect on the financial
statements. We also considered those laws and regulations that have a direct impact on the financial statements
such as the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent
manipulation of the financial statements (including the risk of override of controls), and determined that the principal
risks were related to posting inappropriate journal entries to increase revenue or reduce expenditure, accounting
for large or unusual transactions outside the normal course of business and management bias in key accounting
estimates. The Group engagement team shared this risk assessment with the component auditors so that they could
include appropriate audit procedures in response to such risks in their work. Audit procedures performed by the
Group engagement team and/or component auditors included:
• Enquires with management, internal audit and the Audit and Risk Committee including consideration of known or
suspected instances of non-compliance with laws and regulation and fraud;
• Review of internal audit reports;
• Inspection of reporting from the Group’s whistleblowing helpline and, if applicable, the results of management’s
further investigations;
• Challenging assumptions and judgements made by management in relation to the Group’s and Company’s
accounting estimates;
• Identifying and testing journal entries based on our risk assessment; and
• Review of related work performed by component auditors, including the responses to risks related to
management override of controls and to fraud in revenue recognition.
194
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT There are inherent limitations in the audit procedures described above. We are less likely to become aware of
instances of non-compliance with laws and regulations that are not closely related to events and transactions
reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher
than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example,
forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using
data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than
testing complete populations. We will often seek to target particular items for testing based on their size or risk
characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population
from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website
at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
USE OF THIS REPORT
This report, including the opinions, has been prepared for and only for the Company’s members as a body in
accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving
these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report
is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
OTHER REQUIRED REPORTING
COMPANIES ACT 2006 EXCEPTION REPORTING
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Company, or returns adequate for our audit have not
been received from branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• the Company financial statements and the part of the Remuneration Committee Report to be audited are not
in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
APPOINTMENT
Following the recommendation of the Audit and Risk Committee, we were appointed by the members on
18 March 2016 to audit the financial statements for the year ended 31 March 2016 and subsequent financial periods.
The period of total uninterrupted engagement is six years, covering the years ended 31 March 2016 to 31 March 2021.
Neil Grimes (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
25 May 2021
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS
GROUP ANNUAL
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 MARCH 2021
Notes
6
7
8
19
9
10
11
12
9
21
30.8
33
13
13
14
16
2021
£’m
5 440
4 052
1 061
171
110
12
34
1 232
109
826
2
1
–
294
–
6 672
74
690
4 523
(2 438)
2 849
118
2 967
2020
£’m
5 741
4 358
1 171
181
–
9
22
1 213
104
766
2
2
2
329
8
6 954
74
690
4 327
(2 201)
2 890
113
3 003
ASSETS
Non-current assets
Property, equipment and vehicles
Intangible assets
Equity-accounted investments
Retirement benefit asset
Other investments and loans
Deferred income tax assets
Current assets
Inventories
Trade and other receivables
Other investments and loans
Current income tax assets
Derivative financial instruments
Cash and cash equivalents
Assets classified as held-for-sale
Total assets
EQUITY
Capital and reserves
Share capital
Share premium reserve
Retained earnings
Other reserves
Attributable to equity holders of the Company
Non-controlling interests
Total equity
196
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONTINUED
AT 31 MARCH 2021
LIABILITIES
Non-current liabilities
Borrowings
Lease liabilities
Deferred income tax liabilities
Retirement benefit obligations
Provisions
Derivative financial instruments
Cash-settled share-based payment liabilities
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Provisions
Retirement benefit obligations
Derivative financial instruments
Current income tax liabilities
Liabilities classified as held-for-sale
Total liabilities
Total equity and liabilities
Notes
17
18
10
19
20
21
15
22
17
18
20
19
21
33
2021
£’m
3 021
1 686
621
425
127
37
124
1
684
498
91
55
19
14
2
5
–
2020
£’m
3 182
1 787
654
427
168
36
109
1
769
515
164
49
17
14
2
4
4
3 705
6 672
3 951
6 954
These financial statements and the accompanying notes as set out on pages 196–288 were approved for issue by the
Board of Directors on 25 May 2021 and were signed on its behalf by:
Dr Ronnie van der Merwe
Group Chief Executive Officer
Mr Jurgens Myburgh
Group Chief Financial Officer
Mediclinic International plc (Company no 08338604)
The notes on pages 203–288 form an integral part of these financial statements.
197
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2021
Revenue
Other income
Employee benefit and contractor costs
Consumables and supplies
Care-related costs
Infrastructure-related costs
Service costs
Provision for expected credit losses
Depreciation and amortisation
Impairment of property, equipment and vehicles
Impairment of intangible assets
Other gains and losses
Operating profit/(loss)
Finance income
Finance cost
Share of net (loss)/profit of equity-accounted investments
Reversal of impairment/(impairment) of equity-accounted
investment
Profit/(loss) before tax
Income tax expense
Profit/(loss) for the period
Attributable to:
Equity holders of the Company
Non-controlling interests
Profit/(loss) per ordinary share attributable to the equity holders
of the Company – pence
Basic
Diluted
Note
1 Refer to note 2.1.
Notes
23
24
24
24
24
24
6 & 24
7 & 24
25
24
26
8
8
27
16
28
28
2021
£’m
2 995
13
(1 448)
(Re-presented)1
2020
£’m
3 083
–
(1 446)
(719)
(145)
(110)
(147)
(11)
(217)
(3)
(1)
2
209
4
(99)
(70)
60
104
(25)
79
68
11
79
9.2
9.2
(691)
(136)
(113)
(147)
(9)
(217)
(30)
(482)
4
(184)
9
(92)
2
(10)
(275)
(24)
(299)
(320)
21
(299)
(43.4)
(43.4)
The notes on pages 203–288 form an integral part of these financial statements.
198
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2021
Profit/(loss) for the year
Other comprehensive (loss)/income
Items that may be reclassified to the income statement
Currency translation differences
Realised fair value hedge adjustments transferred to income
statement
Fair value adjustment – cash flow hedges
Items that may not be reclassified to the income statement
Remeasurements of retirement benefit obligations
Effect of changes in income tax rates
Other comprehensive (loss)/income, net of tax
Total comprehensive loss for the year
Attributable to:
Equity holders of the Company
Non-controlling interests
Notes
29
29
29
29
29
29
16
2021
£’m
79
(235)
(235)
2
(2)
127
127
–
(108)
(29)
(45)
16
(29)
2020
£’m
(299)
169
175
–
(6)
(21)
(17)
(4)
148
(151)
(161)
10
(151)
The notes on pages 203–288 form an integral part of these financial statements.
199
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2021
Balance at 31 March 2019
IFRS 16 transition adjustment
Restated at 1 April 2019
(Loss)/profit for the year
Other comprehensive income/(loss) for the year
Total comprehensive income/(loss) for the year
Transactions with non-controlling shareholders
Dividends paid
Balance at 31 March 2020
Profit for the year
Other comprehensive (loss)/income for the year
Total comprehensive (loss)/income for the year
Equity-settled share-based payment1
Transactions with non-controlling shareholders
Dividends paid
Balance at 31 March 2021
Note
1 Less than £0.5m for the year under review.
Share
capital
(note 13)
£’m
Capital
redemption
reserve
(note 14)
£’m
74
–
74
–
–
–
–
–
74
–
–
–
–
–
–
6
–
6
–
–
–
–
–
6
–
–
–
–
–
–
Share
premium
reserve
(note 13)
£’m
690
–
690
–
–
–
–
–
690
(3 014)
815
(8)
4 327
–
–
–
–
–
–
74
6
690
(3 014)
578
(8)
4 523
2 849
Reverse
acquisition
reserve
(note 14)
£’m
(3 014)
Foreign
currency
translation
reserve
(note 14)
£’m
628
Hedging
reserve
(note 14)
£’m
(2)
(3 014)
628
(2)
4 732
187
187
(6)
(6)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(237)
(237)
Retained
earnings
£’m
4 769
(37)
(320)
(22)
(342)
(4)
(59)
68
124
192
–
4
–
–
–
–
–
–
–
–
–
–
–
Attributable
to equity
holders of the
Company
£’m
Non-
controlling
interests
(note 16)
Total equity
£’m
3 151
(37)
3 114
(320)
159
(161)
(4)
(59)
2 890
68
(113)
(45)
–
4
–
£’m
115
–
115
21
(11)
10
3
(15)
113
11
5
16
–
(3)
(8)
118
3 266
(37)
3 229
(299)
148
(151)
(1)
(74)
3 003
79
(108)
(29)
–
1
(8)
2 967
The notes on pages 203–288 form an integral part of these financial statements.
200
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT Attributable
to equity
holders of the
Company
£’m
Non-
controlling
interests
(note 16)
£’m
Total equity
£’m
Capital
redemption
reserve
(note 14)
£’m
Share
capital
(note 13)
£’m
74
74
Share
premium
reserve
(note 13)
£’m
690
690
–
–
–
–
–
–
–
–
–
–
–
–
6
–
6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 31 March 2019
IFRS 16 transition adjustment
Restated at 1 April 2019
(Loss)/profit for the year
Other comprehensive income/(loss) for the year
Total comprehensive income/(loss) for the year
Transactions with non-controlling shareholders
Dividends paid
Balance at 31 March 2020
Profit for the year
Other comprehensive (loss)/income for the year
Total comprehensive (loss)/income for the year
Equity-settled share-based payment1
Transactions with non-controlling shareholders
Dividends paid
Balance at 31 March 2021
Note
1 Less than £0.5m for the year under review.
The notes on pages 203–288 form an integral part of these financial statements.
Reverse
acquisition
reserve
(note 14)
£’m
(3 014)
–
(3 014)
–
–
–
–
–
Foreign
currency
translation
reserve
(note 14)
£’m
Hedging
reserve
(note 14)
£’m
628
–
628
–
187
187
–
–
(2)
–
(2)
–
(6)
(6)
–
–
Retained
earnings
£’m
4 769
(37)
4 732
(320)
(22)
(342)
(4)
(59)
74
6
690
(3 014)
815
(8)
4 327
–
–
–
–
–
–
–
(237)
(237)
–
–
–
–
–
–
–
–
–
68
124
192
–
4
–
3 151
(37)
3 114
(320)
159
(161)
(4)
(59)
2 890
68
(113)
(45)
–
4
–
74
6
690
(3 014)
578
(8)
4 523
2 849
115
–
115
21
(11)
10
3
(15)
113
11
5
16
–
(3)
(8)
118
3 266
(37)
3 229
(299)
148
(151)
(1)
(74)
3 003
79
(108)
(29)
–
1
(8)
2 967
201
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS 2021
2020
£’m
Inflow/(outflow)
£’m
Inflow/(outflow)
330
4
(70)
(29)
235
(137)
(56)
(80)
(2)
4
(1)
–
1
(4)
1
–
98
(130)
(8)
–
1
115
(196)
(3)
(39)
(32)
329
(3)
294
589
9
(83)
(59)
456
(182)
(81)
(102)
(12)
9
(1)
5
–
(2)
–
2
274
(207)
(15)
(59)
(1)
15
(101)
(1)
(45)
67
265
(3)
329
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2021
CASH FLOW FROM OPERATING ACTIVITIES
Cash generated from operations
Interest received
Interest paid
Tax paid
Net cash generated from operating activities
CASH FLOW FROM INVESTMENT ACTIVITIES
Investment to maintain operations
Investment to expand operations
Acquisition of subsidiaries
Disposal of subsidiaries
Acquisition of investment in associate
Dividends received from equity-accounted investment
Proceeds from other investments and loans
Increase in other investments and loans
Proceeds from insurance claim
Proceeds on disposal of property, equipment and vehicles
Net cash generated before financing activities
CASH FLOW FROM FINANCING ACTIVITIES
Distributions to non-controlling interests
Distributions to shareholders
Transaction with non-controlling interest
Proceeds from borrowings
Repayment of borrowings
Refinancing transaction costs
Repayment of lease liabilities
Net increase in cash and cash equivalents
Opening balance of cash and cash equivalents
Exchange rate fluctuations on foreign cash
Notes
30.1
30.2
30.3
30.4
30.5
31
32
8
16
30.6
16
30.7
30.7
30.7
30.7
Closing balance of cash and cash equivalents
30.8
The notes on pages 203–288 form an integral part of these financial statements.
202
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT NOTES TO THE GROUP ANNUAL
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
1. DESCRIPTION OF BUSINESS
Mediclinic is an international healthcare services group with divisions in Switzerland, Southern Africa
(South Africa and Namibia) and the United Arab Emirates (‘UAE’), and with an equity investment in the United
Kingdom (‘UK’). Its core purpose is to enhance the quality of life.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these consolidated financial statements are set out
below. These policies have been consistently applied to all the periods presented, unless otherwise stated.
2.1. Basis of preparation
The consolidated financial statements have been prepared in accordance with international accounting standards
in conformity with the requirements of the Companies Act 2006 ('IFRS') and the applicable legal requirements of
the Companies Act 2006. In addition to complying with international accounting standards in conformity with the
requirements of the Companies Act 2006, the consolidated financial statements also comply with international
financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European
Union. There are no differences for the Group in applying IFRS as issued by the IASB and IFRS. The financial
statements are prepared on the historical cost convention, except for the following items, which are carried at fair
value or valued using another measurement basis:
• Derivative financial assets and liabilities, equity instruments measured at fair value through profit or loss (‘FVPL’)
and equity instruments measured at fair value through other comprehensive income (‘FVOCI’) are measured at
fair value;
• Retirement benefit obligations calculated in terms of the projected unit credit method and corresponding plan
assets are measured at fair value; and
• Liabilities for cash-settled share-based payments are measured at fair value.
The preparation of the financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Group’s
accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions
and estimates are significant to the consolidated financial statements, are disclosed in note 4.
Functional and presentation currency
The consolidated financial statements and financial information are presented in sterling (the presentation
currency), rounded to the nearest million. The functional currencies of the majority of the Group's entities, and
the currencies of the primary economic environments in which they operate, are the Swiss franc, South African
rand and UAE dirham. The UAE dirham is pegged against the United States (‘US’) dollar at a rate of 3.6725 per
US dollar.
Exchange rates
The Group uses the average of exchange rates prevailing during the year to translate the results and cash flows of
foreign subsidiaries, the joint venture and associated undertakings into sterling and year-end rates to translate the
net assets of those undertakings. The following exchange rates were applicable for the year:
Average rates
Swiss franc
South African rand
UAE dirham
Year-end rates
Swiss franc
South African rand
UAE dirham
2021
2020
1.21
21.30
4.80
1.30
20.37
5.07
1.25
18.76
4.67
1.20
22.08
4.56
203
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
2.1. Basis of preparation (continued)
Going concern
The severity, duration and full impact of the COVID-19 pandemic and its economic aftermath on the Group’s
businesses remain uncertain. Despite the global vaccine roll-outs and the robust operating performance for
the year ended 31 March 2021, there remains a degree of risk and uncertainty as to the Group’s financial
performance for at least the next 12–18-month period to 30 September 2022.
The Group’s financial performance for the year ended 31 March 2021 across all three divisions was well ahead
of the COVID-19-adjusted base case scenarios modelled at the beginning of the pandemic in March 2020.
As evidenced in the year under review, the key impact to revenue and profitability during the pandemic was
the national lockdown measures and restrictions imposed on non-urgent elective procedures. Notwithstanding
the continued uncertainty due to the ongoing pandemic, it is considered reasonably unlikely that the severe
restrictions previously imposed on non-urgent elective procedures will be reintroduced given the advance in
COVID-19 operating protocols since March 2020.
For the purposes of assessing liquidity specifically and going concern broadly at 31 March 2021, the Group
modelled a combination of severe but plausible downside scenarios on a month-by-month basis and also
applied appropriate mitigation actions which would be within the Group’s control. These scenarios had specific
reference to:
• reduction in volumes due to the ongoing effects of the COVID-19 pandemic or a deterioration in the business
environment;
• reduction in tariffs due caused by possible regulatory changes; and
• working capital and capital expenditure requirements.
Due to the mostly fixed employee cost base across the business, lower revenue due to either a reduction in
tariffs or volumes has the most pronounced impact on EBITDA. Compared with the business plan, the combined
adverse effect of reduction of tariffs and volumes after mitigation modelled amounts to a decline of 24% of
EBITDA over the 18-month period to 30 September 2022, which is more severe than the decline in adjusted
Group EBITDA of 21% during FY21. In the worst affected month, the Group EBITDA is affected by approximately
35% in the downside case when compared with the base case. In the downside case, the Group EBITDA includes
an adverse impact of at least 12% per month compared with base case.
Depending on the circumstances, further mitigating actions would be available to the Group that have not been
modelled. These include:
• further reductions in capital expenditure, e.g. ceasing ongoing projects;
• reductions in staff and other operating costs;
• a freeze on recruitment;
• a restriction on salary increases;
• rental relief from landlords; and
• utilising surplus cash at a corporate level.
Based on the assumptions applied and the effect of mitigating actions set out above, most within the control
of the Group, the analyses demonstrate that the divisions will continue to be able to meet their obligations for
the periods modelled.
Debt is ring-fenced within each division, with no cross guarantees or cross defaults. Borrowings are denominated
in the same currency as the divisions’ underlying revenue and therefore not exposed to foreign exchange rate
risk. The nearest term material maturity is a bank loan of ZAR2 575m and redeemable preference shares of
ZAR1 800m that are due in September 2022. Mediclinic Southern Africa is proactively engaging with the banks
on either an extension of the facility as provided for in the original loan agreement or a refinance of the entire
facility. Mediclinic Southern Africa’s leverage ratio is at a level where refinancing should be possible considering
the current market conditions.
In addition to successfully refinancing its CHF145m bond on more favourable terms, Hirslanden has prudently
engaged with its lending banks to further extend a covenant test waiver by 12 months, with the first tests now to
be performed at the end of September 2022. By the time of the reinstated test, all covenants will have sufficient
headroom based on the range of modelled scenarios.
Due to the proactive response to maintain the Group’s liquidity position, cash and available facilities have remained
strong at £679m at year-end, compared to £518m at 31 March 2020 and £661m at 30 September 2020.
204
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
2.1. Basis of preparation (continued)
Going concern (continued)
While recognising that there remains significant risk to the Group’s financial performance for at least the next
12 months, the directors have a reasonable expectation that the Group will be able to continue in operation and
meet its liabilities as they fall due for a period of at least 12 months from the date of approving the financial
statements.
Income statement reclassification
During the period under review, the Group changed the presentation of its operating expenses in the
Consolidated Income Statement from an analysis by function to an analysis by nature. Comparatives have
been changed to conform to the new presentation. The rationale for the change is to align the presentation
of expenses with that of the internal management reports and to provide a more robust disaggregation of
the Group’s activities that better reflects the nature of the business. The Group believes that the change in
presentation of expenses results in more relevant information for the users and enhanced disclosure on the face
of the income statement. The prior period expenses of £3 271m for the year ended 31 March 2020 previously
classified as ‘Cost of sales’ (£1 960m) and ‘Administration and other operating expenses’ (£1 311m) have been
reclassified by nature of expense as set out in the table below.
Category
Employee benefit and contractor costs
Consumables and supplies
Care-related costs
Infrastructure-related costs
Service costs
Provision for expected credit losses
Depreciation and amortisation
2.2. Consolidation and equity accounting
a) Basis of consolidation
Description
Includes employee benefit expenses for all staff, contractor costs
and other employee-related costs.
Includes the cost of all inventories, including obsolete stock, which
have been expensed during the year.
Includes costs closely linked to providing a service or care to
patients and enhancing patient experience, and includes catering,
laundry, cleaning, security services and other patient-related costs.
Includes repairs and maintenance, rates and taxes, utilities, rent
expensed in terms of IFRS 16 and other infrastructure-related costs.
Includes all other administrative and operating expenses and
non-specific service costs rendered, including, but not limited to,
consulting, marketing, travel and audits.
Consists of the movement in the allowance for expected credit
losses recognised in terms of IFRS 9.
Includes depreciation on property, equipment and vehicles and
right-of-use assets, as well as amortisation of intangible assets.
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls
an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power over the entity.
The results of subsidiaries are included in the consolidated financial statements from the effective date of
acquisition until control is relinquished.
Adjustments to the financial statements of subsidiaries are made when necessary to bring their accounting
policies in line with those of the Group.
All intra-company transactions, balances, income and expenses are eliminated in full on consolidation.
Non-controlling interests in the net assets of consolidated subsidiaries are identified and recognised separately
from the Group’s interest therein, and are recognised within equity. Losses of subsidiaries attributable to
non-controlling interests are allocated to the non-controlling interest even if this results in a debit balance
being recognised.
205
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
2.2. Consolidation and equity accounting (continued)
b) Business combinations
The Group accounts for business combinations using the acquisition method of accounting. The cost of the
business combination is measured as the aggregate of the fair values of assets obtained and liabilities incurred
or assumed. Costs directly attributable to the business combination are expensed as incurred, except the costs
to issue debt or incur borrowings, which are amortised as part of the effective interest, and costs to issue equity,
which are included in equity.
The acquiree's identifiable assets, liabilities and contingent liabilities that meet the recognition conditions of
IFRS 3 Business Combinations are recognised at their fair values at acquisition date, except for non-current
assets (or disposal companies) that are classified as held-for-sale in accordance with IFRS 5 Non-current Assets
Held-for- sale and Discontinued Operations, which are recognised at fair value less costs to sell.
Contingent liabilities are only included in the identifiable assets and liabilities of the acquiree where there is
a present obligation at acquisition date.
On acquisition, the Group assesses the classification of the acquiree's assets and liabilities and reclassifies them
where the classification is inappropriate for Group purposes. This excludes lease agreements and insurance
contracts, whose classification remains as per their inception date.
Non-controlling interests arising from a business combination, which are present ownership interests and
entitle their holders to a proportionate share of the entity's net assets in the event of liquidation, are measured
either at the present ownership interests' proportionate share in the recognised amounts of the acquiree's
identifiable net assets or at fair value. The treatment is not an accounting policy choice but is selected for each
individual business combination and disclosed in the note for business combinations. All other components of
non-controlling interests are measured at their acquisition date fair values, unless another measurement basis
is required by IFRS.
In cases where the Group held a non-controlling shareholding in the acquiree prior to obtaining control, that
interest is measured to fair value at acquisition date. The measurement to fair value is included in profit or loss
for the year. Amounts arising from interests in the acquiree prior to the acquisition date that have previously
been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be
appropriate if that interest were disposed of.
Goodwill is determined as the consideration paid, plus the fair value of any shareholding held prior to obtaining
control, plus non-controlling interest, less the fair value of the identifiable assets and liabilities of the acquiree. If
the total of consideration transferred, non-controlling interest recognised and previously held interest measured
is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the
income statement.
Goodwill is not amortised but is tested on an annual basis for impairment or more frequently if events or changes
in circumstances indicate a potential impairment. If goodwill is assessed to be impaired, that impairment is not
subsequently reversed.
Goodwill arising on acquisition of foreign entities is considered an asset of the foreign entity. In such cases,
the goodwill is translated to the functional currency of the Company at the end of each reporting period with
the adjustment recognised in equity through other comprehensive income.
c)
Investments in associates and joint ventures
Associates are all entities over which the Group has significant influence but not control, generally accompanying
a shareholding of between 20% and 50% of the voting rights. Investments in joint arrangements are classified as
either joint operations or joint ventures depending on the contractual rights and obligations of each investor. The
Group has assessed the nature of its joint arrangements and determined them to be joint ventures. Investments in
associates and joint ventures are accounted for using the equity method of accounting.
206
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
2.2. Consolidation and equity accounting (continued)
c)
Investments in associates and joint ventures (continued)
Under the equity method, the equity-accounted investments are initially recognised at cost and adjusted
thereafter to recognise the Group’s share of the post-acquisition profits or losses and movements in other
comprehensive income. Dividends received or receivable from equity-accounted investments are recognised as
a reduction in the carrying amount of the investment. The Group’s investments in associates and joint ventures
include goodwill identified on acquisition. When the Group’s share of losses in an associate or joint venture equals
or exceeds its interests in the investment (which includes any long-term interests that, in substance, form part
of the Group’s net investment), the Group does not recognise further losses, unless it has incurred obligations or
made payments on behalf of the entity.
Unrealised gains on transactions between the Group and its equity-accounted investments are eliminated to
the extent of the Group’s interest in these investments. Unrealised losses are eliminated unless the transaction
provides evidence of an impairment of the asset transferred. Accounting policies of the equity-accounted
investments have been changed where necessary to ensure consistency with the policies adopted by the Group.
If the ownership interest in an equity-accounted investment is reduced but significant influence or joint control
is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is
reclassified to profit or loss where appropriate. The Group’s share of post-acquisition profit or loss is recognised in
the income statement, and its share of post-acquisition movements in other comprehensive income is recognised
in other comprehensive income with a corresponding adjustment to the carrying amount of the investment.
The Group determines at each reporting date whether there is any objective evidence that the equity-accounted
investment is impaired. If this is the case, the Group calculates the amount of impairment as the difference
between the recoverable amount of the investment and its carrying value and recognises the amount adjacent
to share of profit or loss of the investment in the income statement.
2.3. Segment reporting
Consistent with internal reporting, the Group's segments are identified as the three geographical operating
segments in Switzerland, Southern Africa and the Middle East. The UK and Corporate segments are additional
non-operating segments. The chief operating decision-maker, who is responsible for allocating resources and
assessing performance of the segments, has been identified as the Group Executive Committee, which makes
strategic decisions. The Group Executive Committee comprises the executive directors and senior management
as disclosed in the Annual Report on pages 108 and 114–115.
Intersegment transactions are eliminated and shown separately in the Segmental report. Refer to note 5.
2.4. Property, equipment and vehicles
Land and buildings comprise mainly hospitals and offices. All property, equipment and vehicles are shown at cost
less accumulated depreciation and impairment, except for land, which is shown at cost less impairment. Cost
includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs to enhance an
asset are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it
is probable that future economic benefits associated with the item will flow to the Group and the cost of the item
can be measured reliably. All other repairs and maintenance costs are charged to the income statement during
the financial period in which they are incurred.
Land and capital expenditure in progress is not depreciated. Depreciation on the other assets is calculated using
the straight-line method to allocate the cost less its residual value over its estimated useful life as follows:
• Buildings:
• Equipment:
• Furniture and vehicles:
10–100 years
3–10 years
3–8 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of
financial position date.
When commissioned, capital expenditure in progress is transferred to the relevant category of property and
equipment and depreciated in accordance with the Group's policies.
Refer to note 2.6 for impairment of property, equipment and vehicles.
An asset is derecognised on disposal or when no future economic benefits are expected from its use. Profit or
loss on disposals is determined by comparing fair value of proceeds with carrying amounts. These are included
in the income statement.
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NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
2.5. Intangible assets
a) Goodwill
Goodwill is determined as the consideration paid, plus the fair value of any shareholding held prior to obtaining
control, plus non-controlling interest, less the fair value of the identifiable assets and liabilities of the acquiree.
Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill on acquisition of associates
and joint ventures is included in investments in associates and joint ventures. Goodwill is tested annually for
impairment or more frequently if events or changes in circumstances indicate a potential impairment. Goodwill
is carried at cost less accumulated impairment. Impairments on goodwill are not reversed. Gains and losses on
the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units (‘CGUs’) for the purpose of impairment testing. The allocation
is made to those CGUs or groups of CGUs that are expected to benefit from business combinations in which
goodwill arose. Management monitors goodwill for impairment at a CGU level, except for the Mediclinic Middle
East goodwill, which is monitored at an operating segment level. Any impairment losses that are recognised
are allocated first to reduce the carrying amount of any goodwill allocated to the CGU and then to reduce the
carrying amount of other assets in the CGU where the carrying amount is greater than the recoverable amount.
b) Trade names
Trade names have been recognised by the Group as part of a business combination. No value is placed
on internally developed trade names. Trade names are capitalised at the cost to the Group and amortised
on a straight-line basis over their estimated useful lives of 2–25 years. Trade names are carried at cost less
accumulated amortisation and accumulated impairment. Expenditure to maintain trade names is accounted
for against income as incurred.
c) Computer software
Acquired computer software licences, configuration and implementation costs are capitalised on the basis
of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their
estimated useful lives (2–10 years) using the straight-line method.
Costs associated with maintaining computer software are expensed as incurred.
2.6. Impairment of non-financial assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment
and whenever events or changes in circumstances indicate a potential impairment. Assets that are subject to
amortisation or depreciation are tested for impairment whenever events or changes in circumstances indicate
a potential impairment. An impairment loss is recognised for the amount by which the asset’s carrying value
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair-value-less-costs-to-sell
and value-in-use. The recoverable amount is calculated by estimating future cash benefits that will result from
each asset and discounting those cash benefits at an appropriate discount rate. For the purposes of assessing
impairment for non-financial assets other than goodwill, assets are grouped at the lowest levels for which there
are separately identifiable and independent cash flows – CGUs. Non-financial assets other than goodwill that
suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
2.7. Financial assets
The Group classifies its financial assets in the following measurement categories:
• Financial assets measured subsequently at fair value (either through FVOCI or FVPL)
• Financial assets measured at amortised cost
The classification depends on the business model for managing the financial assets and the contractual term of
the cash flows. Management determines the classification of its investment at initial recognition.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive
income. For investments in debt instruments, this will depend on the business model in which the investment
is held. For investments in equity instruments, this will depend on whether the Group has made an irrevocable
election at the time of initial recognition to account for the equity investment at FVOCI.
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not
at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial
asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
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2.7. Financial assets (continued)
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired
or have been transferred and the Group has transferred substantially all risks and rewards of ownership.
Equity instruments and instruments managed on a portfolio basis
The Group subsequently measures all equity investments and instruments managed on a portfolio basis at fair
value. Changes in the fair value of financial assets at FVPL are recognised in other gains and losses in the income
statement.
Where management has elected to present fair value gains and losses on these investments in other
comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit and loss.
Upon derecognition of these investments, any balance within the FVOCI reserve is reclassified to retained
earnings. Dividends from such investments are recognised in profit or loss as other gains and losses when the
Group's right to receive payments is established.
Impairment losses on these investments measured at FVOCI or FVPL are not reported separately from other
changes in fair value.
Instruments managed on a portfolio basis (other than equity instruments) consist of highly liquid investments
in money market funds that do not meet the maturity criteria of IAS 7 Statement of Cash Flows and therefore
cannot be classified as cash and cash equivalents.
Debt instruments
Subsequent measurement of debt instruments depends on the Group's business model for managing the asset
and the cash flow characteristics of the asset.
There are two measurement categories into which the Group classifies its debt instruments:
• Amortised cost: Assets that are held for collection of contractual cash flows representing solely payments of
principal and interest are measured at amortised cost. Interest income from these financial assets is included in
finance income using the effective interest rate method. Trade receivables and loans receivable are classified as
debt instruments measured at amortised cost.
• FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss
is recognised in profit or loss and presented in the income statement as part of other gains and losses in the
period in which it arises. Interest income from these financial assets is included in finance income.
Debt instruments are included in current assets, except for maturities greater than 12 months after the reporting
date, which are classified as non-current assets.
Impairment
The Group recognises an allowance for expected credit losses for all debt instruments not held at FVPL. Expected
credit losses are based on the difference between the contractual cash flows due in accordance with the contract
and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective
interest rate.
Expected credit losses are recognised in two stages. For credit exposures for which there has not been a
significant increase in credit risk since initial recognition, expected credit losses are provided for credit losses that
result from default events that are possible within the next 12 months. For those credit exposures for which there
has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses
expected over the remaining life of the exposure, irrespective of the timing of the default.
For trade receivables only, the Group applies the simplified approach permitted by IFRS 9, which requires lifetime
expected credit losses to be recognised from initial recognition of the receivables. The Group has established a
provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific
to the debtors and the economic environment. Trade receivables have been grouped based on shared credit risk
characteristics, such as the counterparty (insurer or individual, etc.) or geographical region, and the days past
due. The expected loss rates are based on the payment profiles of debtors and the corresponding historical credit
losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking
information on macroeconomic factors affecting the ability of the customers to settle the receivables.
For debt instruments at FVOCI and debt instruments at amortised cost, the Group applies the low credit risk
simplification. At every reporting date, the Group evaluates whether the debt instrument is considered to have
low credit risk using all reasonable and supportable information that is available without undue cost or effort. In
addition, the Group considers that there has been a significant increase in credit risk when contractual payments
are more than 30 days past due.
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NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
2.7. Financial assets (continued)
Impairment (continued)
The Group considers a financial asset in default when contractual payments are 90 days past due. However, in
certain cases, the Group may also consider a financial asset to be in default when internal or external information
indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into
account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable
expectation of recovering the contractual cash flows.
2.8. Offsetting of financial assets and liabilities
Financial assets and liabilities are offset and the net amount reported in the statement of financial position when
there is a legally enforceable right to offset the recognised amounts; the legal enforceable right is not contingent
on a future event and is enforceable in the normal course of business even in the event of default, bankruptcy
or insolvency; and there is an intention to settle on a net basis or realise the asset and settle the liability
simultaneously.
2.9. Inventories
Inventories are measured at the lower of cost, determined on the weighted average method, or net realisable
value. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable
selling expenses.
2.10. Cash and cash equivalents
Cash and cash equivalents consist of balances with banks and cash-on-hand and are classified as debt
instruments measured at amortised cost. Bank overdrafts are classified as financial liabilities at amortised cost
and are disclosed as part of borrowings in current liabilities in the statement of financial position.
2.11. Derivative financial instruments and hedging activities
Derivative financial instruments comprise interest rate swaps, put/call agreements and forward contracts.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
subsequently measured at fair value. The method of recognising the resulting gain or loss depends on whether
the derivative is designated as a hedging instrument and, if so, the nature of the item being hedged. Hedges
of a particular risk associated with a recognised liability or a highly probable forecast transaction are designated
as cash flow hedges. The Group uses interest rate swaps as cash flow hedges.
At inception of a hedge relationship, the Group formally designates and documents the hedge relationship to
which it applies hedge accounting and the risk management objective and strategy for undertaking the hedge.
The documentation includes the identification of the hedging instrument; the hedged item; the nature of the risk
being hedged; and how the Group will assess whether the hedging relationship meets the hedge effectiveness
requirements. A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness
requirements:
• There is an economic relationship between the hedged item and the hedging instrument.
• The effect of credit risk does not dominate the value changes that result from that economic relationship.
• The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item
that the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to
hedge that quantity of hedged item.
Hedges that meet all the qualifying criteria for hedge accounting are accounted for, as described below under
Cash flow hedges.
The fair values of various derivative instruments used for hedging purposes are disclosed in note 21. The hedging
reserve in shareholders’ equity is shown in note 14. On the statement of financial position, hedging derivatives are
not classified based on whether the amount is expected to be recovered or settled within, or after, 12 months. The
full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity
of the hedge relationship is more than 12 months; it is classified as a current asset or liability when the remaining
maturity of the hedge relationship is less than 12 months.
Cash flow hedges
The effective portion of changes in the fair value of derivatives that is designated and qualifies as a cash flow
hedge is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is
recognised immediately in the income statement.
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2.11. Derivative financial instruments and hedging activities (continued)
Cash flow hedges (continued)
Amounts accumulated in other comprehensive income are reclassified to the income statement in the periods
when the hedged item affects profit or loss (for example, when the interest expense on hedged variable rate
borrowings is recognised in profit or loss).
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when
the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no
longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to
the income statement.
Non-hedging derivatives
Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative
instrument that does not qualify for hedge accounting are recognised at fair value through profit or loss.
Written put option (redemption liability)
The amount that may become payable under a written put option on exercise is initially recognised at the present
value of the redemption amount with a corresponding charge directly to equity.
The liability is subsequently adjusted for changes in the estimated performance and increased through finance
charges up to the redemption amount that is payable at the date at which the option first becomes exercisable.
In the event that the option expires unexercised, the liability is derecognised with a corresponding adjustment
to equity.
2.12. Non-current assets held-for-sale
Non-current assets and disposal groups are classified as held-for-sale if their carrying amount will be recovered
through a sale transaction rather than through continuing use. This condition is regarded as met only when the
sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition.
Management must be committed to the sale, which should be expected to qualify for recognition as a completed
sale within one year from the date of classification.
Non-current assets (and disposal groups) classified as held-for-sale are measured at the lower of carrying amount
and fair value less costs to sell.
A non-current asset is not depreciated (or amortised) while it is classified as held-for-sale, or while it is part of
a disposal group classified as such.
2.13. Share capital
Ordinary shares are classified as equity. Shares in the Company held by wholly owned Group companies are
classified as treasury shares and are held at cost.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction
from the proceeds, net of tax.
2.14. Treasury shares
Treasury shares are deducted from equity until the shares are cancelled, reissued or disposed. No gains or losses
are recognised in profit or loss on the purchase, sale, issue or cancellation of treasury shares. All consideration
paid or received for treasury shares is recognised directly in equity.
2.15. Trade and other payables
Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest rate method. Accounts payable are classified as current liabilities if payment is due
within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented
as non-current liabilities.
2.16. Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently
stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
value is recognised in the income statement over the period of the borrowings using the effective interest rate
method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after the reporting date.
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
2.16. Borrowings (continued)
Borrowing costs are expensed when incurred, except for borrowing costs directly attributable to the construction
or acquisition of qualifying assets. Borrowing cost directly attributable to the construction or acquisition of
qualifying assets is added to the cost of those assets, until such time as the assets are substantially ready for
their intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready
for its intended use.
2.17. Provisions
Provisions are recognised when the Group has a present legal or constructive obligation, as a result of past
events, and it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation, and a reliable estimate of the amount of the obligation can be made.
Provisions are determined by discounting the expected future cash flows using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the liability.
Provision for malpractice claims is made at the year-end for the estimated cost of claims incurred but not settled
at the end of each reporting period, including the cost of claims incurred but not yet reported to the Group. The
estimated cost of claims includes expenses to be incurred in settling claims. The Group takes all reasonable steps
to ensure that it has appropriate information regarding its claims exposures. The Group does not discount its
liabilities for unpaid claims. Liabilities for unpaid claims are estimated using the input of assessments for individual
cases reported to the Group and statistical analysis for the claims incurred but not reported.
2.18. Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement,
except to the extent that it relates to items recognised in other comprehensive income or directly in equity.
In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax legislation enacted or substantively enacted
at the reporting date in the countries where the Group and its subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable
tax regulation is subject to interpretation. It establishes provisions, where appropriate, on the basis of amounts
expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However,
deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax
is determined using tax rates (and legislation) that have been enacted or substantially enacted by the reporting
date, and are expected to apply when the related deferred income tax asset is realised or the deferred income tax
liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be
available against which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates,
except for deferred income tax liabilities where the timing of the reversal of the temporary difference is controlled
by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets against current tax liabilities, and when the deferred income tax assets and liabilities relate to income taxes
levied by the same taxation authority on either the same taxable entity or different taxable entities where there is
an intention to settle the balances on a net basis.
2.19. Employee benefits
a) Retirement benefit costs
The Group provides defined benefit and defined contribution plans for the benefit of employees, the assets of
which are held in separate trustee-administered funds. These plans are funded by payments from the employees
and the Group, taking into account recommendations of independent qualified actuaries.
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2.19. Employee benefits (continued)
a) Retirement benefit costs (continued)
Defined contribution plans
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate
entity. Each member’s fund value is directly linked to the contributions and the related investment returns.
The Group has no legal or constructive obligations to make further contributions if the fund does not hold
sufficient assets to pay all employees the benefits relating to employee service in the current and prior period/(s).
The contributions are recognised as employee benefit expenses when they are due.
Defined benefit plans
This plan defines an amount of pension benefit an employee will receive on retirement, dependent on one or
more factors such as age, years of service and compensation. The liability recognised in the statement of financial
position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the
end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually
by independent actuaries using the projected unit credit method. The present value of the defined benefit
obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality
corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to
maturity approximating to the terms of the related pension obligation.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged
or credited to equity in other comprehensive income in the period in which they arise. Past service costs are
recognised immediately in the income statement. A net pension asset is recorded only to the extent that it does
not exceed the present value of any economic benefit available in the form of reductions in future contributions
to the plan, and any unrecognised actuarial losses and past service costs. The annual pension costs of the Group’s
benefit plans are charged to the income statement.
Incurred interest costs/income on the defined benefit obligations are recognised as wages and salaries.
b) Post-retirement medical benefits
Some Group companies provide for post-retirement medical contributions in relation to current and retired
employees. The expected costs of these benefits are accounted for by using the projected unit credit method.
Under this method, the expected costs of these benefits are accumulated over the service lives of the employees.
Valuation of these obligations is carried out by independent qualified actuaries. All actuarial gains and losses are
charged or credited to other comprehensive income in the period in which they arise.
c) Cash-settled share-based compensation
The Group operates cash-settled share-based compensation plans. The Group recognises the value of the
services received (expense), and the liabilities to pay for those services, as the employees render service.
The liabilities are measured, initially, and at each reporting date until settled, at the fair value appropriate to the
scheme, taking into account the terms and conditions on which the rights were granted, and the extent to which
the employees have rendered service to date, excluding the impact of any non-market-related vesting conditions.
Non-market-related vesting conditions are included in the assumptions regarding the number of units expected
to vest. These assumptions are revised at the end of each reporting period. All changes to the fair value of the
liability are recognised in the income statement.
d) Equity-settled share-based compensation
The Group operates an equity-settled, share-based compensation plan, under which the entity receives services
from employees as consideration for equity instruments (options) of the Company. The fair value of the employee
services received in exchange for the grant of the options is recognised as an expense. The total amount to be
expensed is determined by reference to the fair value of the options granted:
• including any market performance conditions;
• excluding the impact of any service and non-market performance vesting conditions; and
• including the impact of any non-vesting conditions.
At the end of each reporting period, the Group revises its estimates of the number of options that are expected
to vest based on the non-market vesting conditions and service conditions. It recognises the impact of the
revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.
e) Profit sharing and bonus plans
The Group recognises a liability and an expense where a contractual obligation exists for short-term incentives.
The amounts payable to employees in respect of the short-term incentive schemes are determined based on
annual business performance targets.
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2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
2.20. Revenue recognition
Revenues are measured at the transaction price which is the amount of consideration that the Group expects
to be entitled to in exchange for the services provided.
A performance obligation is a promise to transfer distinct goods and services to a customer. Hospital services
provided to patients are regarded as a bundle of services which comprise accommodation, meals, theatre
time, use of equipment, pharmacy stock and nursing services. This is considered to be a single performance
obligation as the medical procedures cannot be performed without one of the above elements.
Revenue is recorded during the period in which the hospital service is provided and is based on the amounts
due from patients and/or medical funding entities. Fees are calculated and billed based on various tariff
agreements with funders.
Discounts comprise retrospective volume discounts granted to certain funders on attainment of certain levels
of patient visits and constitute variable consideration under IFRS 15. These are accrued over the course of the
arrangement based on estimates of the level of business expected and are adjusted against revenue at the
end of the arrangement to reflect actual volumes. Refer to note 23 for the accounting policies regarding these
discounts specifically for Mediclinic Southern Africa and Mediclinic Middle East.
In the Middle East, the normal business process associated with transactions with insurers includes an amount
of claims disallowed (disallowance provision) which is not paid by the insurer. These disallowed claims could
be for various technical or medical reasons. Disallowance write-offs on rejected claims is a general practice by
the insurers in the Middle East. Accordingly, Mediclinic Middle East expects an amount of consideration that is
less than what was originally invoiced. These write-offs constitute variable consideration under IFRS 15. Variable
consideration is recognised as revenue to the extent that it is highly probable that a reversal of revenue will not
occur.
The Group does not expect to have any contracts where the period between the transfer of the promised
service to the patient and the payment by the patient exceeds one year. Consequently, the Group does not
adjust any of the transaction prices for time value of money.
Refer to note 23 for specific revenue recognition accounting policies relating to different geographical locations.
Other income
Other income is recognised on the following basis:
• Interest income for credit-impaired financial assets is measured by applying the effective interest rate method
to amortised cost. For all other financial assets, the interest income is measured by applying the effective
interest rate method to the gross carrying amount.
• Rental income is recognised on a straight-line basis over the term of the lease and presented as part of
revenue.
• Government grants that compensate the Group for loss of revenue are recognised in profit or loss when they
become receivable and are presented as other income. Refer to note 24 for additional information regarding
government grants.
2.21. Consumables and supplies
Consumables and supplies consist of the cost of inventories, including obsolete stock, which have been
expensed during the year.
Rebates received from suppliers are recognised when all the conditions agreed with the suppliers are met, the
amount of cost of supplies can be measured reliably and it is probable that the economic benefits associated
with the transaction will flow to the entity.
2.22. Leases
The Group leases various buildings, equipment, vehicles and other assets. Lease terms are negotiated on an
individual basis and contain a wide range of different terms and conditions. The lease agreements do not
impose any covenants other than the security interests in the leased assets that are held by the lessor.
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset
is available for use by the Group. Assets and liabilities arising from a lease are initially measured on a present
value basis. Lease liabilities include the net present value of the following lease payments:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• the exercise price of a purchase option if the Group is reasonably certain to exercise that option;
• payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option; and
• lease payments to be made under reasonably certain extension options.
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2.22. Leases (continued)
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used,
being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset
of similar value to the right-of-use asset in a similar economic environment with similar terms, security and
conditions.
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which
are not included in the lease liability until they take effect. When adjustments to lease payments based on an
index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss
over the lease period to produce a constant periodic rate of interest on the remaining balance of the liability for
each period.
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date less any lease incentives;
• any initial direct costs; and
• restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on
a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset’s useful life.
Payments associated with short-term leases and all leases of low-value assets are recognised on a straight-line
basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.
Low-value assets comprise small items of medical and other equipment. Low-value assets contribute an
insignificant portion of the Group’s rental payments expensed in terms of IFRS 16.
To determine the incremental borrowing rate, the Group uses recent third-party financing received by the lessee
as a starting point and adjusts the rate to reflect changes in financing conditions since the third-party financing
was received. The Group also makes adjustments to the rate relating to the specific lease based on the term,
country, currency and security.
Some property leases contain variable payment terms that are linked to revenue generated from a hospital.
Variable lease payments that depend on revenue are recognised in profit or loss in the period in which the
condition that triggers those payments occur.
Extension and termination options are included in a number of leases across the Group. The majority of the
extension and termination options held are exercisable only by the Group and not by the respective lessor.
In determining the lease term, all facts and circumstances that create an economic incentive to exercise an
extension option, or not to exercise a termination option, are considered.
COVID-19-related rent concessions
The Group has applied COVID-19-Related Rent Concessions – Amendment to IFRS 16. The Group applies the
practical expedient allowing it not to assess whether eligible rent concessions that are a direct consequence
of the COVID-19 pandemic are lease modifications. The Group applies the practical expedient consistently to
contracts with similar characteristics and in similar circumstances. For rent concessions in leases to which the
Group chooses not to apply the practical expedient, or that do not qualify for the practical expedient, the Group
assesses whether there is a lease modification. Rent concessions are included in other gains and losses.
2.23. Dividend distribution
Final dividends are recorded in the Group’s financial statements in the period in which they are approved by the
Company’s shareholders. Interim dividends are recorded and paid in the period in which they are approved by
the directors.
215
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS CONTINUED
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
2.24. Foreign currency transactions
Transactions and balances
Foreign currency transactions are translated into the respective Group entities’ functional currencies at
exchange rates prevailing at the date of the transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation of monetary assets and liabilities denominated in
foreign currencies at year-end exchange rates are recognised in the income statement (except when recognised
in other comprehensive income as part of qualifying cash flow hedges).
Non-monetary assets and liabilities denominated in foreign currencies that are measured at historical cost are
translated using the exchange rate at the transaction date, and those measured at fair value are translated at the
exchange rate at the date that the fair value was determined. Exchange rate differences on non-monetary items
are accounted for based on the classification of the underlying items.
Translation differences on non-monetary financial assets measured at FVOCI are included in other
comprehensive income. Foreign exchange gains and losses are presented in the income statement in other gains
and losses.
Group entities
The results and financial position of all foreign operations that have a functional currency different from the
Group’s presentation currency are translated into the presentation currency as follows:
• Assets and liabilities are translated at the closing rate at the reporting date;
• Income and expenses for each income statement are translated at average exchange rates during the year; and
• All resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of the net investment in foreign operations
are taken directly to other comprehensive income. Goodwill and fair value adjustments arising on the acquisition
of foreign operations are treated as assets and liabilities of the foreign operation and translated at closing rates
at the reporting date.
2.25. Standards, interpretations and amendments
Published standards, amendments and interpretations effective for the 31 March 2021 financial period:
The following published standards, amendments and interpretations are mandatory for the accounting period
beginning on or after 1 April 2020 and have been adopted:
• IFRS 3 Definition of a Business amendments (1 January 2020)
• IFRS 7, IFRS 9 and IAS 39 Interest Rate Benchmark Reform Phase 1 (1 January 2020)
• IAS 1 and IAS 8 Definition of Material amendments (1 January 2020)
The Group has also elected to adopt the following amendments early:
• IFRS 16 Leases - COVID-19-related Rent Concessions (1 June 2020)
The implementation of these standards and amendments had no material financial impact on the reported
results or financial position of the Group.
Published standards, amendments and interpretations not yet effective and not early adopted:
The following new accounting standards, interpretations and amendments will have no material impact on the
financial statements:
• IFRS 7, IFRS 9 and IAS 39 Interest Rate Benchmark Reform Phase 2 (1 January 2021)
• IFRS 4 Insurance Contracts (1 January 2021)
• IFRS 17 Insurance Contracts (1 January 2023)
• IAS 16 Property, Plant and Equipment: Proceeds before Intended Use amendments (1 January 2022)
• IAS 37 Onerous Contracts – Cost of Fulfilling a Contract amendments (1 January 2022)
• Annual improvements 2018–2020 cycle – Amendments and clarifications to existing IFRS standards
(1 January 2022)
• IAS 1 Classification of Liabilities as Current or Non-current amendments (1 January 2023)
216
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT
3. FINANCIAL RISK MANAGEMENT
3.1. Financial risk factors
Normal business activities expose the Group to a variety of financial risks: market risk (including currency
risk, interest rate risk and other price risk), credit risk and liquidity risk. The Group’s overall risk management
programme seeks to minimise the effect of potential adverse events on the Group’s financial performance.
a) Market risk
i) Currency risk
Investments in foreign operations
The Group has investments in foreign operations whose net assets are exposed to foreign currency translation risk.
Changes in the sterling/Swiss franc, sterling/South African rand and sterling/UAE dirham exchange rates over a
period of time result in increased/decreased earnings. Other than the Group's earnings and payment of dividends,
which are presented and declared in sterling and thus exposed to currency risk, the Group is not significantly
exposed to currency risk since the divisions predominantly operate and are funded in their local currency.
In the case of corporate offshore transactions and/or cross-border business combinations, generally forward
cover contracts are considered or taken out to minimise foreign currency risk.
The impact of a 10% change in the sterling/Swiss franc, sterling/South African rand and sterling/UAE dirham
exchange rates for a sustained period of one year is:
• profit for the period would increase/decrease by £1m (2020: increase/decrease by £5m) due to exposure to
the sterling/Swiss franc exchange rate;
• profit for the period would increase/decrease by £3m (2020: increase/decrease by £9m) due to exposure to
the sterling/South African rand exchange rate;
• profit for the period would increase/decrease by £4m (2020: increase/decrease by £4m1) due to exposure to
the sterling/UAE dirham exchange rate;
• foreign currency translation reserve would increase/decrease by £162m (2020: increase/decrease by £143m)
due to exposure to the sterling/Swiss franc exchange rate;
• foreign currency translation reserve would increase/decrease by £13m (2020: increase/decrease by £14m) due
to exposure to the sterling/South African rand exchange rate; and
• foreign currency translation reserve would increase/decrease by £114m (2020: increase/decrease by £113m) due
to exposure to the sterling/UAE dirham exchange rate.
ii) Interest rate risk
The Group’s interest rate risk arises from long-term borrowings as well as short-term deposits. Borrowings
and short-term deposits issued at variable rates expose the Group to cash flow interest rate risk. Interest rate
derivatives and assets issued at fixed interest rates expose the Group to fair value interest rate risk. Group policy
is to maintain an appropriate mix between fixed and floating rate borrowings and placings.
The Group’s interest rate risk arises from bank borrowings at variable interest rates. The Group manages its
interest rate risk by using floating-to-fixed interest rate swaps. Such interest rate swaps have the economic effect
of converting borrowings from floating rates to fixed rates. Under the interest rate swaps, the Group agrees with
other parties to exchange, at specified intervals, the difference between fixed contract rates and floating-rate
interest amounts calculated by reference to the agreed notional amounts. The interest rate hedges entered into
match key contractual terms of the borrowings to enable an economic relationship between hedged item and
hedging instrument. At year-end, a portion of the South African borrowings and Middle East borrowings were
hedged and the Swiss borrowings were unhedged (refer to note 17). The unhedged borrowings are evaluated
on a regular basis.
With the interest rate swap agreements the Group entered into to mitigate interest rate risk, the Group did not
consider there to be a significant concentration of interest rate risk.
Financial instruments issued at fixed rates expose the Group to fair value interest rate risk. The Group’s exposure
to fair value interest rate risk is not considered to be significant due to the short-term nature of the investments.
Note
1 Profit for the period excludes the Mediclinic Middle East goodwill impairment charge.
217
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS CONTINUED
3. FINANCIAL RISK MANAGEMENT CONTINUED
3.1. Financial risk factors (continued)
a) Market risk (continued)
ii) Interest rate risk (continued)
Interest rate sensitivity
The sensitivity analyses below were determined based on the exposure to interest rates of net debt at the
reporting date and the stipulated change taking place at the beginning of the financial year, and held constant
throughout the reporting period in the case of instruments that have floating rates. The sensitivity of interest
rates can be summarised as follows:
• Switzerland: At 31 March 2021, the 3M Swiss LIBOR was -0.75% (2020: -0.62%). Interest rates would have to
increase by 75 basis points to have an impact on profit for the period with all other variables held constant. An
increase in the interest rate of 25 basis points would have no impact on profit for the period (2020: no impact).
• Southern Africa: Profit for the period would decrease/increase by £0.7m (2020: decrease/increase by £0.9m)
if the interest rates had been 100 basis points higher/lower in Southern Africa with all other variables held
constant; and
• Middle East: Profit for the period would decrease/increase by £0.4m (2020: decrease/increase by £0.5m) if the
interest rates had been 50 basis points higher/lower in the Middle East with all other variables held constant.
b) Credit risk
Financial assets that potentially subject the Group to concentrations of credit risk consist principally of cash,
short-term deposits, trade and other receivables, derivative financial contracts, and reinsurance used to manage
insurance risk. The Group's cash equivalents and short-term deposits are placed with reputable financial
institutions with a high credit rating. Trade receivables are represented net of the allowance for expected credit
losses. Credit risk with respect to trade receivables is limited due to the large number of customers comprising
the Group's customer base, which consists mainly of medical schemes and insurance companies. The financial
condition of these customers in relation to their credit standing is evaluated on an ongoing basis. Medical
schemes and insurance companies are required to maintain minimum reserve levels. The policy for patients that
do not have a medical scheme or an insurance company paying for the Group's service is to require a preliminary
payment instead. The Group does not have any significant exposure to any individual customer or counterparty
and expected credit losses were assessed at the end of the year.
The Group is exposed to credit-related losses in the event of non-performance by counterparties to hedging
instruments. The counterparties to these contracts are major financial institutions. The Group monitors its
positions and limits the extent to which it enters into contracts with any one party.
The gross carrying amounts of financial assets (before credit loss allowances) included in the statement of financial
position represent the Group's maximum exposure to credit risk in relation to these assets. At 31 March 2020 and
31 March 2021, the Group did not consider there to be a significant concentration of credit risk.
c) Liquidity risk
The liquidity risk related to the impact of the COVID-19 pandemic has been considered in the directors’ evaluation
of the going concern assumption. See section 2.1.
The Group manages liquidity risk by monitoring cash flow forecasts to ensure that it has sufficient cash to meet
operational needs, while maintaining sufficient headroom on its undrawn borrowing facilities at all times so that
the Group does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities.
The Group's unused banking and overdraft facilities
2021
£’m
385
2020
£’m
189
218
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT 3. FINANCIAL RISK MANAGEMENT CONTINUED
3.1. Financial risk factors (continued)
c) Liquidity risk (continued)
The following table details the Group’s remaining contractual maturity for its financial liabilities. The table
has been prepared based on the undiscounted cash flows of financial liabilities based on the required date
of repayment. The table includes both interest and principal cash flows. The analysis of derivative financial
instruments has been prepared based on undiscounted net cash inflows/(outflows) that settle on a net basis.
Financial liabilities
31 March 2021
Borrowings
Lease liabilities
Derivative financial instruments
Trade payables
Other payables and accrued expenses
31 March 2020
Borrowings
Lease liabilities
Derivative financial instruments
Trade payables
Other payables and accrued expenses
Carrying
value
£’m
Contractual
cash flows
£’m
1–12
months
£’m
1–5 years
£’m
1 777
676
126
235
206
1 951
703
111
260
204
2 550
886
130
235
206
2 822
954
107
260
204
147
59
8
235
206
219
61
3
260
204
1 549
217
122
–
–
1 596
231
104
–
–
Beyond
5 years
£’m
854
610
–
–
–
1 007
662
–
–
–
d)
Insurance risk
The risk that an insured event occurs and the amount of the resulting claim is uncertain. The risks covered by
the Group’s insurance policies include property damage and business interruption, malpractice claims, directors’
and officers’ liability, commercial crime and cyber risk. The Group manages insurance risk by outsourcing claims
handling to service providers who review the claims on a regular basis and by pursuing early settlement of claims
to reduce its exposure to unpredictable developments.
3.2. Capital management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern
while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital
structure of the Group consists of debt, which includes the borrowings disclosed in note 17; cash and cash
equivalents and equity attributable to equity holders of the parent, comprising issued capital, retained earnings
and other reserves; and non-controlling interest as disclosed in notes 13, 14 and 16, respectively. The Group’s Audit
and Risk Committee reviews the going concern status and capital structure of the Group biannually. The Group
balances its overall capital structure through the payment of dividends and new share issues, as well as the issue
of new debt or the redemption of existing debt. Although a dividend suspension is in place, the Group’s dividend
policy is to target a payout ratio of 25–35% of adjusted earnings. The Board may revise the policy at its discretion.
The debt-to-capital ratios as at 31 March 2021 and 31 March 2020 were as follows:
Borrowings
Lease liabilities
Less: cash and cash equivalents
Net debt
Total equity
Debt-to-equity capital ratio
2021
£’m
1 777
676
(294)
2 159
2 967
72.8%
2020
£’m
1 951
703
(329)
2 325
3 003
77.4%
219
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS CONTINUED
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom
equal the actual results. Management also needs to exercise judgement in applying the Group’s accounting
policies.
This note provides an overview of the areas that involved a higher degree of judgement or complexity, and
of items which are more likely to be materially adjusted due to estimates and assumptions turning out to
be incorrect. Detailed information about each of these estimates and judgements is included in the notes as
listed below.
Critical accounting judgements
• Level at which management monitors goodwill for impairment testing (refer to note 7)
• Deferred tax on unremitted earnings (refer to note 10)
• Determination of CGUs for impairment testing (refer to note 6)
• Determination of lease term (refer to note 18)
Key estimates
• Impairment of non-current assets excluding goodwill (refer to note 6)
• Impairment of goodwill (refer to note 7)
• Impairment of equity-accounted investments (refer to note 8)
• Retirement benefits (refer to note 19)
• Remeasurement of redemption liability (written put option) (refer to note 21)
220
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT 5. SEGMENTAL REPORT
The reportable operating segments are identified as follows: Switzerland, Southern Africa and Middle East and
additional segments are shown for the United Kingdom and Corporate.
Reportable operating segments
Other
Switzerland
£’m
Southern
Africa
£’m
Middle East
£’m
United
Kingdom
£’m
1 478
734
781
Year ended 31 March 2021
Revenue
EBITDA
EBITDA before management fee
Group Services fees included
in EBITDA1
Other gains and losses
Total
£’m
2 995
428
428
–
2
225
231
(6)
–
108
114
(6)
1
Depreciation and amortisation
(217)
(128)
(36)
Impairment of property,
equipment and vehicles
Impairment of intangible assets
Operating profit/(loss)
Loss from associate
Reversal of impairment of
associate
Finance income
Finance cost (excluding
intersegment loan interest)
Total finance cost
Elimination of intersegment
loan interest1
Taxation
Segment result
At 31 March 2021
Investments in associates
Investments in joint ventures
Capital expenditure for
the year2
(3)
(1)
209
(70)
60
4
(99)
(99)
–
(25)
79
167
4
126
–
–
97
–
–
–
(54)
(72)
18
(11)
32
3
–
67
(3)
(1)
69
–
–
3
(29)
(29)
–
(14)
29
2
4
33
Corporate
£’m
2
(7)
(22)
15
–
(1)
–
–
(8)
–
–
1
–
18
(18)
–
(7)
–
–
–
–
–
–
–
–
–
–
–
–
(70)
60
–
–
–
–
–
(10)
157
–
–
102
105
(3)
1
(52)
–
–
51
–
–
–
(16)
(16)
–
–
35
5
–
26
Total segment assets
6 672
3 972
740
1 701
157
102
Total segment liabilities
(excluding intersegment loan)
Total liabilities from
reportable segment
Elimination of
intersegment loan
3 705
2 470
602
624
4 635
3 400
602
624
(930)
(930)
–
–
–
–
–
9
9
–
Notes
1 Intersegment transactions’ pricing is determined on an arm’s length basis.
2 Relates to additions to non-current assets other than financial instruments, deferred tax assets and net defined benefit assets.
221
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS CONTINUED
5. SEGMENTAL REPORT CONTINUED
Reportable operating segments
Other
Middle East
£’m
United
Kingdom
£’m
Corporate
£’m
Switzerland
£’m
1 438
245
Southern
Africa
£’m
907
188
251
194
113
Year ended 31 March 2020
Revenue
EBITDA
EBITDA before
management fee
Group Services fees included
in EBITDA1
Other gains and losses
Total
£’m
3 083
541
541
–
4
Depreciation and amortisation
(217)
(126)
737
110
(3)
1
(53)
–
–
(481)
(423)
–
–
1
(20)
(20)
–
–
5
–
47
1 838
–
–
–
–
–
–
–
–
–
–
2
(10)
–
–
–
–
–
168
–
–
(442)
(8)
1
(2)
(17)
15
3
(1)
–
–
–
–
–
–
–
–
17
(17)
(1)
(1)
–
–
1
(6)
–
4
4
(34)
(482)
(184)
2
(10)
9
(92)
(92)
–
(24)
(299)
177
4
192
6 954
(33)
–
90
–
–
–
(35)
(52)
17
13
68
2
–
75
4 192
(6)
–
(37)
–
(1)
(1)
149
–
–
8
(37)
(37)
–
(36)
84
2
4
69
680
3 951
2 701
564
683
4 942
3 692
564
683
(991)
(991)
–
–
169
75
–
–
–
3
3
–
Reversal of impairment of
property
Impairment of property,
equipment and vehicles
Impairment of intangible assets
Operating profit/(loss)
Income from associate
Impairment of associate
Finance income
Finance cost (excluding
intersegment loan interest)
Total finance cost
Elimination of intersegment
loan interest1
Taxation
Segment result
At 31 March 2020
Investments in associates
Investments in joint ventures
Capital expenditure for
the year2
Total segment assets
Total segment liabilities
(excluding intersegment loan)
Total liabilities from
reportable segment
Elimination of
intersegment loan
Notes
1 Intersegment transactions’ pricing is determined on an arm’s length basis.
2 Relates to additions to non-current assets other than financial instruments, deferred tax assets and net defined benefit assets.
222
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT 5. SEGMENTAL REPORT CONTINUED
The total non-current assets, excluding financial instruments and
deferred tax assets, per geographical location are:
Switzerland
Southern Africa
Middle East
United Kingdom
ENTITY-WIDE DISCLOSURES
Revenue
From UK
From foreign countries
Revenues from external customers are primarily from hospital services
6. PROPERTY, EQUIPMENT AND VEHICLES
Land – cost
Buildings
Cost
Accumulated depreciation and impairment
Land and buildings
Capital expenditure in progress
Right-of-use assets
Cost
Accumulated depreciation
Equipment
Cost
Accumulated depreciation
Furniture and vehicles
Cost
Accumulated depreciation and impairment
2021
£’m
2020
£’m
3 330
518
1 389
157
3 499
484
1 559
168
–
–
2 995
3 083
2021
£’m
886
2 181
2 845
(664)
2020
£’m
959
2 336
2 997
(661)
3 067
3 295
85
625
739
(114)
237
931
(694)
38
213
(175)
81
675
739
(64)
264
961
(697)
43
216
(173)
4 052
4 358
223
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS CONTINUED
6. PROPERTY, EQUIPMENT AND VEHICLES CONTINUED
Capital
expenditure
in progress
£’m
Right-of-use
assets
£’m
Equipment
£’m
Furniture
and
vehicles
£’m
–
641
52
(5)
(46)
–
–
–
(1)
–
–
(3)
–
37
675
59
(1)
(49)
(12)
–
–
–
8
299
(1)
57
–
(82)
–
7
3
–
47
–
16
–
(18)
–
1
–
–
(19)
(2)
–
–
–
–
264
35
–
–
–
–
(1)
43
8
–
(72)
(15)
7
9
–
–
–
1
1
–
–
–
–
Total
£’m
3 524
640
221
(6)
(197)
8
–
–
(10)
(34)
4
(7)
3
212
4 358
164
(1)
(196)
–
–
(3)
1
8
(279)
(55)
625
(6)
237
38
4 052
2021
£’m
105
46
59
2020
£’m
169
76
93
Net book value at 1 April 2019
IFRS 16 transition adjustment
Additions
Disposals
Depreciation
Business combinations
Transfer between asset classes
Prior year capital expenditure
completed
Disposal of subsidiaries
Impairment
Reversal of impairment
Transfer to assets held for sale
Borrowing cost capitalised
Exchange differences
Land and
buildings
£’m
3 088
–
34
(1)
(51)
8
17
41
(9)
(13)
4
(4)
–
181
Net book value at 31 March 2020
3 295
Additions
Disposals
Depreciation
Transfer between asset classes
Prior year capital expenditure
completed
Impairment
Borrowing cost capitalised
Lease remeasurements
Exchange differences
13
–
(60)
4
34
(3)
1
–
(217)
Net book value at 31 March 2021
3 067
90
–
62
–
–
–
(25)
(44)
–
–
–
–
3
(5)
81
49
–
–
–
(44)
–
–
–
(1)
85
Total additions (excluding additions on right-of-use assets)
To maintain operations
To expand operations
224
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT 6. PROPERTY, EQUIPMENT AND VEHICLES CONTINUED
The right-of-use assets were recognised during the prior year with the adoption of IFRS 16 Leases. Refer to note 18
for further information on leases.
Property, equipment and vehicles with a book value of £2 696m (2020: £2 869m) are encumbered as security for
borrowings (see note 17).
The impact of climate change on the assets’ useful lives was considered at year-end and no significant impacts
were identified.
Critical accounting estimates and judgements
Property, equipment and vehicles are considered for impairment if impairment indicators are identified at an
individual CGU level. A CGU is the smallest identifiable group of assets that generates cash inflows that are largely
independent of the cash inflows from other assets or groups of assets. The Group defines CGUs as combined
inter-dependent hospitals and/or clinics or as individual hospitals depending on the geographical location or the
degree of integration.
The impairment assessment is performed at CGU level and any impairment charge that arises would be allocated
to the CGU’s goodwill first, followed by other assets (such as property, equipment and vehicles, and other
intangible assets).
Impairment assessment
Due to the significant impact the COVID-19 pandemic had on the Southern Africa segment, its CGUs were assessed
for impairment at 31 March 2021. The recoverable amounts of the CGUs tested for impairment were based on
fair-value-less-cost-to-sell calculations. The determination of fair-value-less-cost-to-sell calculations uses level 3
valuation techniques. In determining the fair-value-less-cost-to-sell for the CGUs, the cash flows were discounted
at a rate of 12.7%. Beyond five years a growth rate of 4.5% was used. The recoverable amount of three CGUs
(£5m in total) was determined to be lower than their individual carrying values and as a result an impairment
charge of £3m (2020: £nil) was recognised in the income statement relating to property, equipment and vehicles.
The recoverable amount of 43 CGUs was higher than their carrying values and had sufficient headroom. After
recognition of the impairment charges, the carrying amounts of the CGUs are not sensitive to reasonably possible
changes in the discount rate and the terminal growth rate.
No impairment indicators were identified for the Swiss and Middle East CGUs at 31 March 2021. In the prior year,
the carrying value of one Swiss CGU was determined to be higher than its recoverable amount and as a result an
impairment charge of £33m was recognised in the income statement relating to property, equipment and vehicles.
Some CGUs within Hirslanden remain sensitive to reasonably possible changes in key assumptions in the fair-value-
less-cost-to-sell calculations. As a result, any increase in the discount rate or decreases in the short-term cash
flow projections or long-term growth rates could give rise to further material impairment charges in future periods.
In determining the fair-value-less-cost-to-sell for the CGUs, the cash flows were discounted at rates between
4.9% and 5.2% (2020: 4.8% and 5.1%). An increase in the discount rate of 0.7% would lead to an impairment charge
of approximately £19m and a decrease of 7% in the cash flow projections would result in an impairment charge of
approximately £1m. A decrease of the terminal year growth rate to 0% would not result in impairment.
Any impairment determined at a CGU level under IAS 36 will include an assessment of the recoverable amount of
Hirslanden’s owned properties, which are subject to a third-party valuation at least annually. This valuation applies
a consistent methodology across key assumptions to determine the rental charges based on appropriate and
market-related metrics, which are discounted using a market-related discount rate to determine the value of the
properties. Therefore, there is a risk that this valuation could materially change in future periods.
Reversal of impairment
During the year ending 31 March 2020, Klinik Belair was sold and a reversal of previously recognised impairment
charges in respect of properties of £4m was recognised.
Change in accounting estimate
During the year, an expansion project, which will include the construction of new hospital wings at a hospital in
Hirslanden, was approved. The existing hospital wings will be dismantled at the end of the financial year ending
31 March 2023 and will be replaced by a new construction as part of the expansion project. As a result, the estimated
useful life of the existing hospital wings has been reduced and the depreciation of these assets’ carrying value
accelerated. For the year ended 31 March 2021, the accelerated depreciation included in the depreciation charge
amounts to £10m. The accelerated depreciation in FY2022 and FY2023 will amount to £19m each year.
225
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS CONTINUED
7.
INTANGIBLE ASSETS
Goodwill
Cost
Accumulated impairment
Trade names
Cost
Accumulated amortisation and impairment
Computer software
Cost
Accumulated amortisation
2021
£’m
946
1 689
(743)
45
424
(379)
70
162
(92)
1 061
Net book value at 1 April 2019
IFRS 16 transition adjustment
Additions
Amortisation
Business combinations
Impairment
Exchange differences
Net book value at 31 March 2020
Additions
Amortisation
Business combinations
Impairment
Exchange differences
Net book value at 31 March 2021
Goodwill
£’m
1 450
–
–
–
4
(482)
75
1 047
–
–
3
(1)
(103)
946
Trade
names
£’m
53
–
–
Computer
software
£’m
60
–
23
(4)
(16)
–
–
5
54
–
(4)
–
–
(5)
45
–
–
3
70
21
(17)
–
–
(4)
70
Leases1
£’m
23
(23)
–
–
–
–
–
–
–
–
–
–
–
–
2020
£’m
1 047
1 862
(815)
54
420
(366)
70
150
(80)
1 171
Total
£’m
1 586
(23)
23
(20)
4
(482)
83
1 171
21
(21)
3
(1)
(112)
1 061
Note
1 Relates to favourable lease contracts on buildings. The leases are characterised by fixed annual rent with no annual rent escalations for majority of
the contract. This was reclassified on 1 April 2019 on adoption of IFRS 16 to right-of-use assets within property, equipment and vehicles.
226
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT 7.
INTANGIBLE ASSETS CONTINUED
Total additions
To maintain operations
To expand operations
2021
£’m
21
8
13
2020
£’m
23
8
15
Critical accounting estimates and judgements
The Group tests annually whether goodwill, resulting from acquisitions, has suffered any impairment. The
recoverable amounts of CGUs have been determined based on fair-value-less-cost-to-sell calculations. These
calculations require the use of estimates in respect of cash flow projections and long-term growth and discount
rates, and assume a stable regulatory environment. Regulatory environments are subject to uncertainties that can
have an impact on goodwill and the intangible assets’ carrying value.
IFRS requires the impairment assessment to be performed at the level at which goodwill and trade names are
monitored for impairment by management, provided that this level cannot be bigger than an operating segment.
Management assesses goodwill at a CGU level, except for the Mediclinic Middle East goodwill, which is monitored
at an operating segment level. This means that for the Mediclinic Middle East division, recoverability of goodwill
is assessed by reference to the aggregated cash flows of the legacy Middle East and Al Noor businesses.
The Mediclinic Middle East goodwill originated mainly from the Al Noor business combination with a portion
originating from other UAE business combinations. The initial commercial rationale for the acquisition of Al Noor
included expected synergies from integrating the legacy Al Noor business with the legacy Mediclinic Middle East
business that would be realised across the combined Middle East division. In accordance with IFRS, goodwill shall
be allocated to all CGUs, or groups of CGUs, that are expected to benefit from the expected synergies.
Impairment testing of significant goodwill balances
The Group tests goodwill for impairment on an annual basis or more frequently if there are indications that these
assets may be impaired. The annual impairment assessment is performed at year-end when the annual financial
planning process is finalised. The Group’s impairment assessment compares the carrying value of the group of
CGUs with its recoverable amount.
The recoverable amount of a group of CGUs is determined by its fair-value-less-cost-to-sell, regarded as the
more appropriate reflection of the value of the business, which is derived from discounted cash flow calculations.
The key inputs to its calculations are described below.
Forecasts
As part of the annual financial planning process, the Group’s divisions are required to submit budgets for the next
financial year and forecasts for the following four years, which are approved by the Board. Future earnings in
the fair-value-less-cost-to-sell calculation are based on these budgets and forecasts that are calculated on a per
hospital basis and consider both internal and external market information. These budgets and forecasts represent
management’s best view of future revenues and cash flows and encompass a best estimate of the short- and
long-term impact of the COVID-19 pandemic. The cash flow forecast includes the purchase of environmentally
friendly equipment.
Growth rates
Growth rates are determined from budgeted and forecast revenue. Terminal year growth rates are country
specific and determined based on the forecast market growth rates, and considering long-term medical inflation.
The regulatory environment and impact on tariffs are considered. Growth rates have been benchmarked against
external data for the relevant markets.
Discount rates
The weighted average cost of capital (‘WACC’) was determined by considering the respective debt and equity
costs and ratios. The discount rate is based on the risk-free rate for government bonds adjusted for a risk
premium to reflect the increased risk of investing in equities. Discount rates are lower for the divisions which
operate in more mature markets with low inflation and higher for those operating in markets with a higher
inflation. Discount rates reflect the time value and the risks associated with the segmental or divisional cash flows.
The assumptions used in the calculation of the discount rate are benchmarked to externally available data.
227
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS CONTINUED
7.
INTANGIBLE ASSETS CONTINUED
Impairment testing of Mediclinic Middle East goodwill
The Mediclinic Middle East goodwill with a carrying amount of £834m (2020: £928m) originated mainly
from the Al Noor business combination, with a portion originating from other UAE business combinations.
Key assumptions used for the fair-value-less-cost-to-sell calculations for the annual impairment testing were
as follows:
• Discount rates – The discount rate applied to cash flow projections is 8.7% (2020: 8.8%).
• Growth rates – The terminal growth rate beyond five years is 3.0% (2020: 3.0%).
• Forecasts – Represents management’s best view of future revenues and cash flows over a five-year period
and is comparable with the forecast used in the prior year.
The recoverable amount was determined to be higher than the carrying value and consequently no impairment
was recognised against goodwill during the year under review. In the prior year, an impairment of £481m was
recognised against goodwill.
Sensitivity analysis
An increase in the discount rate by 0.6% combined with a decrease in the terminal growth rate by 0.5% would
reduce the headroom to £nil. A decrease in forecast cash flows by 9% would also reduce headroom to £nil.
These changes are not considered reasonably possible to occur within the next 12 months. However, as the key
assumptions have the potential to vary over time, these are therefore highlighted as a key accounting estimate.
Impairment testing of Hirslanden goodwill and trade names
Hirslanden goodwill with a carrying amount of £100m that originated from the business combination of
Hirslanden OPERA Zumikon AG in the current year and Clinique des Grangettes in previous years has been tested
for impairment.
The recoverable amount has been determined based on fair-value-less-cost-to-sell discounted cash flow
calculations.
• Discount rates – The discount rate applied to cash flow projections was 5.1% (2020: 5.0%).
• Growth rates – The terminal growth rate beyond five years was 1.6% (2020: 1.6%).
• Forecasts – Represents management’s best view of future revenues and cash flows over a five-year period
and is comparable with the forecast used in the prior year.
Sensitivity analysis
An increase in the discount rate by 2.7% (2020: 1.2%) combined with a decrease in the terminal growth rate by
1.6% (2020: 1.2%) would reduce the headroom to £nil.
These changes are not considered reasonably possible to occur within the next 12 months.
Impairment testing of Southern Africa goodwill
Southern Africa goodwill with a carrying amount of £14m has been tested for impairment. The recoverable
amount has been determined based on fair-value-less-cost-to-sell discounted cash flow calculations by
applying a discount rate of 12.7% and a terminal year growth rate beyond five years of 4.5%. As a result, the
carrying amount of the goodwill of five CGUs was determined to be higher than its recoverable amount and
an impairment of £1m was recognised against goodwill.
228
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT 8. EQUITY-ACCOUNTED INVESTMENTS
Investment in associates
Investment in joint venture
8.1. Investment in associates
Listed investment
Unlisted investments
Reconciliation of carrying value at the beginning and end of the year
Opening balance
Additional investment in unlisted associate
Share of net profit of associated companies
Reversal of impairment/(impairment) of listed associate
Dividends received from associated companies
Exchange differences
Set out below are details of the associate which is material to the Group:
2021
£’m
167
4
171
2021
£’m
157
10
167
177
1
(70)
60
–
(1)
167
2020
£’m
177
4
181
2020
£’m
168
9
177
189
1
2
(10)
(5)
–
177
Spire Healthcare Group plc (‘Spire’)
Country of
incorporation and
place of business
United
Kingdom
% ownership
29.9%
Spire is listed on the LSE. It does not issue publicly available quarterly financial information at a detailed level and has
a December year-end. The investment in associate was equity accounted for the 12 months to 31 December 2020
(2020: 31 December 2019). No significant events occurred between 1 January 2021 and the reporting date.
229
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS CONTINUED
8. EQUITY-ACCOUNTED INVESTMENTS CONTINUED
8.1. Investment in associates (continued)
Summarised financial information in respect of the Group’s material associate is set out below:
Summarised statement of financial position
Non-current assets
Current assets
Total assets
Non-current liabilities
Current liabilities
Net assets
At 31 Dec
2020
£’m
At 31 Dec
2019
£’m
1 992
250
2 242
(1 295)
(254)
693
2 233
205
2 438
(1 301)
(198)
939
Mediclinic's effective interest
29.9%
29.9%
Mediclinic's effective interest in net assets after impairments
Market value of listed investment at 31 March
Summarised statement of comprehensive income
Revenue
Profit from continuing operations
Other comprehensive income
Total comprehensive income
Dividends received from associate
157
201
920
(237)
(1)
(238)
–
168
94
981
7
(2)
5
5
Refer to note 38 for further details of investments in associates.
Critical accounting estimates and judgements
The Group assesses whether equity-accounted investments have suffered any impairment when indicators of
impairment are identified, in this case the significant and prolonged decline in the market value of the investment
below its carrying value.
Spire’s loss for the period under review included a goodwill impairment charge of £200m. The equity-accounted
portion of this impairment amounts to £60m. Accumulated impairment charges recognised by the Group in prior
periods amount to £283m. Following Spire’s goodwill impairment charge, the Group’s interest in the net asset
value of Spire was higher than its carrying value of the equity investment at 30 September 2020. As a result an
impairment reversal equal to the Group’s share of the goodwill impairment of £60m was recognised and reported
in the Group’s interim financial statements.
At 31 March 2021, the market value of the investment in Spire was £201m, which was higher than the carrying
value of £157m. The Group considers the assessment of impairment reversal in the context of the financial
performance of Spire, volatility of the share price during the period and the ongoing impact of the COVID-19
pandemic, among other factors. No further impairment reversal has been recorded.
The following key assumptions which were used in the calculation in the prior year:
• Discount rates – a discount rate of 6.9% was applied to cash flow projections.
• Growth rates – a terminal growth rate of 2.0% was applied in the calculation.
230
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT 8. EQUITY-ACCOUNTED INVESTMENTS CONTINUED
8.2. Investment in joint venture
Reconciliation of carrying value at the beginning and end of the year
Opening balance
2021
£’m
4
4
2020
£’m
4
4
The Group has a 49.9% interest in Wits University Donald Gordon Medical Centre (Pty) Ltd. The unlisted
joint venture is accounted for by using its financial information for the 12 months ended 31 December 2020
(2020: 31 December 2019) since it has a different year-end.
Details of the joint venture appear in note 38.
9. OTHER INVESTMENTS AND LOANS
Debt instruments at amortised cost
Equity instruments at FVPL (unlisted shares)
Equity instruments at FVPL (listed shares)
Equity instruments at FVOCI (unlisted shares)
Investments in money market funds
Non-current
Current
Total other investments and loans
Other investments and loans are held in the following currencies:
Swiss franc
South African rand
UAE dirham
US dollar
2021
£’m
2020
£’m
9
–
1
2
2
14
12
2
14
5
5
2
2
14
9
2
–
–
–
11
9
2
11
3
6
2
–
11
Debt instruments at amortised cost
Debt instruments at amortised cost include loans receivable from doctors and other parties. For details on loans
to related parties, refer to note 35.
Loans receivable inherently expose the company to credit risk, being the risk that the company will incur financial
loss if counterparties fail to make payments as they fall due.
Loans receivable are subject to the impairment provisions of IFRS 9 Financial Instruments, which require a loss
allowance to be recognised for all exposures to credit risk. The loss allowance for loans receivable is calculated
based on 12-month expected losses if the credit risk has not increased significantly since initial recognition. In
cases where the credit risk has increased significantly since initial recognition, the loss allowance is calculated
based on lifetime expected credit losses. The loss allowance is updated to either 12-month or lifetime expected
credit losses at each reporting date based on changes in the credit risk since initial recognition. If a loan is
considered to have a low credit risk at the reporting date, then it is assumed that the credit risk has not increased
significantly since initial recognition. On the other hand, if a loan is in arrears more than 90 days, then it is
assumed that there has been a significant increase in credit risk since initial recognition.
No credit losses were recognised on the loans receivable (2020: nil).
231
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS CONTINUED
10. DEFERRED TAX
The movement on the deferred tax account is as follows:
Opening balance
Income statement credit for the year
Exchange differences
Change in accounting policy
Disposal of subsidiaries
Business combinations
Charged to other comprehensive income
Balance at year-end
Deferred income tax assets
Deferred income tax liabilities
2021
£’m
405
(6)
(34)
–
–
–
26
391
(34)
425
391
2020
£’m
401
(30)
35
(2)
(1)
1
1
405
(22)
427
405
The deferred tax relating to current assets and current liabilities contains temporary differences that are likely to
be realised in the next 12 months. The deferred tax balance comprises temporary differences arising in separate
legal entities. Offsetting has been applied on a legal entity basis. The table below shows the deferred tax
balances and movements in the various categories before offsetting was applied:
Tangible
assets
£’m
Intangible
assets
£’m
Current
assets
£’m
Provisions
and other
£’m
Financial
assets
£'m
397
(18)
1
(1)
28
407
407
3
–
(29)
381
17
(5)
–
–
1
13
13
–
–
(1)
12
5
2
–
–
–
7
7
1
–
–
8
21
(4)
–
–
2
19
19
–
–
(2)
17
–
–
–
–
–
–
–
1
20
(1)
20
Total
£’m
440
(25)
1
(1)
31
446
(19)
427
446
5
20
(33)
438
(13)
425
Deferred tax liabilities
At 1 April 2019
(Credited)/charged to the
income statement
Business combinations
Disposal of subsidiaries
Exchange differences
At 31 March 2020
Set-off of deferred tax liabilities
pursuant to set-off provisions
Net deferred tax liabilities
at year-end
At 1 April 2020
Charged to the income statement
Charged to other comprehensive
income
Exchange differences
At 31 March 2021
Set-off of deferred tax liabilities
pursuant to set-off provisions
Net deferred tax liabilities
at year-end
232
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT 10. DEFERRED TAX CONTINUED
Current
liabilities
£’m
Provisions
and other
£’m
Long-term
liabilities
£’m
Derivatives
£’m
Leases
£’m
Tangible
assets
£'m
Tax losses
carried
forward
£’m
Total
£’m
Deferred tax assets
At 1 April 2019
(2)
Charged/(credited) to
the income statement
Charged/(credited) to
other comprehensive
income
Change in accounting
policy
Exchange differences
–
–
–
–
(6)
(3)
–
–
2
(22)
(2)
3
–
1
–
(1)
(2)
–
–
At 31 March 2020
(2)
(7)
(20)
(3)
–
–
–
(2)
–
(2)
Set-off of deferred tax
assets pursuant to
set-off provisions
Net deferred tax
assets at year-end
At 1 April 2020
(2)
Credited to the
income statement
Charged to other
comprehensive income
Exchange differences
–
–
–
(7)
(2)
–
(1)
(20)
(3)
(2)
(1)
6
–
–
–
1
–
–
(1)
(3)
At 31 March 2021
(2)
(10)
(15)
(2)
Set-off of deferred
tax assets pursuant
to set-off provisions
Net deferred tax
assets at year-end
–
–
–
–
–
–
–
(3)
–
–
(9)
(39)
1
–
–
1
(7)
(7)
(5)
–
–
(5)
1
(2)
4
(41)
19
(22)
(41)
(11)
6
(1)
(3)
(12)
(47)
13
(34)
233
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS CONTINUED
10. DEFERRED TAX CONTINUED
At 31 March 2021, the Group had unutilised tax losses of approximately £172m (2020: £121m) potentially available
for offset against future profits. A deferred tax asset of £12m (2020: £7m) has been recognised in respect of
tax losses based on profitability from approved budgets and business plans. No deferred tax asset has been
recognised in respect of the remaining losses due to the unpredictability and availability of future profit streams
in the relevant jurisdictions. The majority of the unrecognised losses relate to the Mediclinic International plc in
the United Kingdom, which have no expiry, and the remainder relate to Switzerland, which expire after seven
years. Their utilisation is dependent on the profitability of the related entities. The financial projections used in
assessing the future profitability are consistent with those used in assessing the carrying value of goodwill as set
out in note 7. The rate of utilisation of these losses will depend on the incidence and timing of profits within each
entity which consequently affect their recognition as deferred tax assets.
Unused tax losses not recognised as deferred tax assets for the Group are as follows:
UNUSED TAX LOSSES NOT RECOGNISED AS DEFERRED TAX ASSETS
Expiry in 1 year
Expiry in 2 years
Expiry in 3–7 years
No expiry
2021
£’m
4
–
52
54
110
2020
£’m
1
2
35
51
89
Critical accounting estimates and judgements
Deferred tax on unremitted earnings
The Group recognised a deferred tax liability of £1m (2020: £1m) in respect of temporary differences relating to
unremitted earnings. This liability relates to non-resident shareholder tax of the Group’s Namibian subsidiaries
and the amount is included in the ‘Provisions and other’ category of deferred tax liabilities. No deferred tax
liability has been recognised for the other foreign subsidiaries and equity-accounted investments of the Group
where the Group is able to control the timing of any distributions and it is not probable that any distributions
will be made in the foreseeable future. Similarly, tax is not provided where it is expected at the reporting date
that such distributions will not give rise to a tax liability. The gross timing difference in this regard amounts
to £1 293m (2020: £1 294m). There are no significant expected income tax consequences of earnings being
distributed from Switzerland and the UAE, as there is no dividend withholding tax applicable to earnings being
distributed from these operations, neither should there be any tax liability on the receipt of these dividends.
Although South African distributions to the UK are typically subject to dividend withholding taxes, distributions
from South Africa are not expected to have income tax consequences in the foreseeable future as the operations
in South Africa have a significant contributed tax capital balance from which may be paid dividends free from
withholding tax. In line with the South African Reserve Bank requirement, it is intended that dividends to the
South African resident shareholders on the South African share register will be paid from the dividend access
scheme. Refer to note 13 for details on the dividend access scheme.
11.
INVENTORIES
Inventories consist of:
Pharmaceutical products
Consumables
Finished goods and work in progress
2021
£’m
97
11
1
109
2020
£’m
94
10
–
104
The cost of inventories recognised as an expense and included in consumables and supplies amounted to £719m
(2020: £691m1). Write-downs of inventories to net realisable value amounted to £6m (2020: £3m). These were
recognised as an expense during the year and included in consumables and supplies in the income statement.
Note
1 Refer to note 2.1.
234
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT 12. TRADE AND OTHER RECEIVABLES
Financial instruments
Trade receivables
Loss allowance
Other receivables
Non-financial instruments
Prepayments and deposits
Other receivables
(Re-
presented)1
2020
£’m
687
(19)
668
54
722
40
4
44
2021
£’m
740
(22)
718
56
774
47
5
52
Total trade and other receivables
826
766
Note
1 Swiss unbilled services (£106m), previously presented as other receivables, have been reclassified to trade receivables due to its similar
characteristics.
Trade and other receivables are categorised as debt instruments at amortised cost. The carrying amounts of the
Group’s trade and other receivables are denominated in the following currencies:
Swiss franc
South African rand
UAE dirham
US dollar
2021
£’m
489
81
255
1
826
2020
£’m
472
77
217
–
766
235
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS Total
£’m
740
(22)
718
Total
£’m
687
(19)
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS CONTINUED
12. TRADE AND OTHER RECEIVABLES CONTINUED
The Group applies the simplified approach for providing for expected credit losses prescribed by IFRS 9, which
permits the use of lifetime expected loss provision for all trade receivables. The loss allowance is determined as
follows:
2021
Gross carrying amount
Loss allowance
Net carrying amount
Current
£’m
436
(2)
434
1–30 days
past due1
£’m
31–60 days
past due
£’m
61–90 days
past due
£’m
55
–
55
41
(1)
40
27
(1)
26
More than
90 days
past due
£’m
181
(18)
163
Expected loss rate
0.36%
0.95%
1.82%
4.34%
9.93%
2020
Gross carrying amount
Loss allowance
Net carrying amount
Current
£’m
1–30 days
past due1
£’m
31–60 days
past due1
£’m
61–90 days
past due
£’m
417
(1)
416
55
–
55
35
–
35
23
(1)
22
More than
90 days
past due
£’m
157
(17)
140
668
Expected loss rate
0.32%
0.00%
0.00%
4.35%
10.83%
Note
1 Loss allowance is less than £0.5m.
Movement in the loss allowance
Opening balance
Loss allowance
Amounts written off as uncollectable
Unused amounts reversed
Balance at year-end
2021
£’m
19
12
(8)
(1)
22
2020
£’m
18
9
(7)
(1)
19
A loss allowance is recognised for all receivables, in accordance with IFRS 9 Financial Instruments, and is
monitored at the end of each reporting period. In addition to the loss allowance, receivables are written off when
there is no reasonable expectation of recovery, for example, when a debtor has been placed under liquidation.
Receivables that have been written off are not subject to enforcement activities.
Other receivables are considered to have low credit risk, and the loss allowance provision recognised during the
period was therefore limited to 12 months’ expected credit losses. Other receivables are considered to have low
credit risk where they have a low risk of default and the issuer has a strong capacity to meet its contractual cash
flow obligations in the near term. The expected credit losses for other receivables are insignificant.
Management considers the credit quality of the trade receivables that have not been credit impaired to be high
in light of the nature of these trade receivables as described in note 3.1(b).
Trade receivables to the value of £295m (2020: £254m) have been ceded as security for banking facilities.
236
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT 13. SHARE CAPITAL
Issued share capital
Share capital
Share premium
Ordinary shares
Number of shares in issue and fully paid
Nominal value
2021
£’m
74
690
764
2020
£’m
74
690
764
2021
£’m
2020
£’m
737 243 810
737 243 810
10p
10p
Treasury shares
During the prior year, the remaining 32 330 treasury shares held by Mpilo Trust were disposed of. The Group does
not have any treasury shares at 31 March 2021 (31 March 2020: nil).
Dividend Access Scheme ('DAS')
A wholly owned subsidiary of the Company, Mediclinic International (RF) (Pty) Ltd, formed a Dividend Access
Trust to comply with a South African Reserve Bank requirement that dividends from a South African source due
to South African shareholders on the South African share register must be paid locally to avoid an outflow of
funds from South Africa.
The beneficiaries of the trust are the South African shareholders of the Company who hold their shares via the
South African share register on the relevant record date in respect of each distribution paid through the DAS.
The Dividend Access Trust does not participate in any profits.
When a dividend is declared by the Company, the Dividend Access Trust would receive a dividend from Mediclinic
International (RF) (Pty) Ltd, which in turn is paid over to the Company’s transfer secretaries in South Africa, who
arrange for the payment of the relevant amount to the South African shareholders (the beneficiaries of the trust)
through the usual dividend payment procedures, as if this was a dividend received from Mediclinic International
plc. To the extent that dividends due to South African shareholders are not ultimately funded from Mediclinic
International (RF) (Pty) Ltd, they receive those dividends as normal dividends from Mediclinic International
plc. The South African shareholders' entitlement to receive dividends declared by Mediclinic International plc is
reduced by any amounts they receive via the trust.
237
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS CONTINUED
14. OTHER RESERVES
Other reserves comprise:
Foreign currency translation reserve
Hedging reserve
Reverse acquisition reserve1
Capital redemption reserve2
Movements in other reserves
Foreign currency translation reserve
Opening balance
Currency translation differences
Hedging reserve
Opening balance
Realised fair value hedge adjustments transferred to income statement
Fair value adjustments of cash flow hedges, net of tax
2021
£’m
578
(8)
2020
£’m
815
(8)
(3 014)
(3 014)
6
6
(2 438)
(2 201)
578
815
(237)
(8)
(8)
2
(2)
815
628
187
(8)
(2)
–
(6)
Reverse acquisition
During February 2016, Mediclinic completed the combination between Al Noor and Mediclinic International Ltd.
The combination was classified as a reverse acquisition.
Notes
1 The reverse acquisition reserve represents the net of the following adjustments resulting from the Al Noor reverse acquisition:
• adjustment of the capital structure (share capital and share premium) of the Group to that of the legal parent;
• adjustment to account for the premium on shares issued to the Mediclinic International Ltd shareholders; and
• the share value component of the total consideration.
2 The UK Companies Act 2006 provides that where shares of a company are repurchased and funded by a new issue of shares, the amount by which
the company’s issued share capital is diminished on cancellation of the shares is transferred to a capital redemption reserve to maintain capital.
The reduction of the company’s share capital shall be treated as if the capital redemption reserve was paid-up capital of the company.
238
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT 15. SHARE-BASED PAYMENTS
Long-term incentive plan (‘LTIP’) awards
Under the LTIP, conditional phantom shares are awarded to selected senior management (including executive
directors). The LTIP awards share-based payment arrangement that will be settled in cash is accounted for as
a cash-settled share-based payment transaction in terms of IFRS 2 and the LTIP awards that will be settled in
shares will be accounted for as an equity-settled share-based payment transaction.
Cash-settled share-based payment liability
Equity-settled share-based payment reserve1
Total share-based payment reserves and liabilities
Expenses arising from equity-settled share-based payment transactions1
Expenses arising from cash-settled share-based payment transactions1
Total expense (refer to note 24)
Note
1 Less than £0.5m for the year under review.
2021
£’m
2020
£’m
1
–
1
–
–
–
1
–
1
–
1
1
Cash-settled share-based payment arrangements
The vesting of these shares is subject to continued employment, and is conditional upon achievement of
performance targets, measured over a three-year period. The performance conditions for the year under review
constitute a combination of absolute total shareholder return (‘TSR’) (40% weighting of the 2018 and 2019 LTIP
awards; 25% weighting of the 2020 LTIP awards), earnings per share (‘EPS’) (60% weighting of the 2018 and 2019
LTIP awards; 40% weighting of the 2020 LTIP awards), return on invested capital (‘ROIC’) (25% weighting of the
2020 LTIP awards) and patient experience index (10% weighting of the 2020 LTIP awards).
Opening balance
Share-based payment expense1
Closing balance
Note
1 Less than £0.5m for the year under review.
2021
£’m
1
–
1
2020
£’m
–
1
1
A reconciliation of the movement in the LTIP award units is detailed below:
Opening balance
Granted
Vested
Lapsed
Closing balance
Average price (pence)
286
300
2021
Number of units
3 877 820
1 852 340
–
(622 067)
5 108 093
2020
Number of units
2 047 733
2 109 925
(8 259)
(271 579)
3 877 820
239
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS CONTINUED
15. SHARE-BASED PAYMENTS CONTINUED
Cash-settled share-based payment arrangements (continued)
Valuation assumptions relating to the outstanding units:
Grant date
Vesting date
Outstanding units
Closing share price
Risk-free interest rate
Expected dividend yield
Volatility
2020 LTIP
allocation
2019 LTIP
allocation
2018 LTIP
allocation1
13 December 2020
19 June 2019
15 June 2018
13 December 2023
1 June 2022/2024
15 June 2021/2023
1 852 340
2 088 813
1 166 940
286
0.02%
0.00%
37.00%
286
0.19%
0.00%
41.80%
286
0.18%
0.00%
42.30%
Note
1 The performance period for the 2018 Awards has elapsed with the Company being below the performance targets. None of the awards will vest.
Certain awards were also granted to management that were subject only to service conditions. These awards
were granted on 1 September 2016 and vested on various dates between 1 September 2016 and 14 June 2019.
The total number of these awards granted was 16 115. Of these awards, the remaining 8 259 vested in 2020.
Equity-settled share-based payment arrangements
The vesting of these shares is subject to continued employment and is conditional upon achievement of four
performance targets, measured over a three-year period. The performance conditions for the year under review
constitute a combination of TSR (25% weighting), adjusted EPS (40% weighting), ROIC (25% weighting) and the
Group’s consolidated patient experience index score (10% weighting).
The shares vest in December 2023.
The share-based payment expense relating to equity-settled share-based payment arrangements was less than
£0.5m during the year (2020: £nil).
Opening balance
Granted
Closing balance
Average price
(pence)
270
2021
Number of
units
–
607 072
607 072
2020
Number of
units
–
–
–
Valuation assumptions relating to the outstanding units:
Grant date
Vesting date
Outstanding units
Share price of Mediclinic International plc share on grant date
(denominated in sterling)
Risk-free interest rate
Expected dividend yield
Volatility
2020 LTIP
allocation
13 December 2020
13 December 2023
607 072
270
(0.13)%
0%
43.80%
240
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT 16. NON-CONTROLLING INTERESTS
Opening balance
Transactions with non-controlling shareholders
Dividends to non-controlling shareholders
Share of total comprehensive income
Share of profit
Currency translation differences
Share of other comprehensive income
Non-controlling interest
2021
£’m
113
(3)
(8)
16
11
2
3
118
2020
£’m
115
3
(15)
10
21
(12)
1
113
Details of the ownership interest held by material non-controlling interests (‘NCI’) are as follows:
Curamed Holdings (Pty) Ltd (group)
Grangettes Group
Mediclinic Limpopo Trust
Country of business
South Africa
Switzerland
South Africa
2021
26.6%
40.0%
50.0%
2020
30.2%
40.0%
50.0%
Summarised financial information in respect of the Group’s subsidiaries that have material NCIs is set out below.
The summarised financial information below represents amounts before inter-group eliminations.
31 March 2021
Summarised balance sheet
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Accumulated NCI in statement of financial position
Summarised statement of comprehensive income
Revenue
Profit for the year
Other comprehensive income
Total comprehensive income
Profit allocated to NCI
Dividends paid to NCI
Summarised cash flows
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents
Mediclinic
Limpopo Trust
£'m
Curamed Holdings
(Pty) Ltd (group)
£'m
Grangettes
Group
£'m
11
29
–
(4)
36
18
21
6
–
6
3
2
7
(1)
(4)
2
51
38
(4)
(10)
75
19
57
9
–
9
1
1
5
(3)
(2)
–
337
78
(185)
(51)
179
36
160
15
8
23
6
5
23
(5)
(34)
(16)
241
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS CONTINUED
16. NON-CONTROLLING INTERESTS CONTINUED
31 March 2020
Summarised balance sheet
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Accumulated NCI in statement of financial position
Summarised statement of comprehensive income
Revenue
Profit for the year
Other comprehensive income
Total comprehensive income
Profit allocated to NCI
Dividends paid to NCI
Summarised cash flows
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents
Mediclinic
Limpopo Trust
£'m
Curamed Holdings
(Pty) Ltd (group)
£'m
Grangettes
Group
£'m
10
24
–
(3)
31
16
25
9
–
9
4
2
10
(1)
(5)
4
43
33
(3)
(10)
63
19
69
13
–
13
3
2
18
(5)
(8)
5
354
72
(208)
(38)
180
34
142
19
1
20
8
7
25
(3)
(27)
(5)
Transactions with non-controlling interests
During the period under review, the Group entered into various transactions where it acquired additional interests
in non-controlling interests and disposed of non-controlling interests without losing control. The effect on the
equity attributable to the owners during the year is summarised as follows:
Carrying amount of non-controlling interests acquired/(disposed of)
Consideration received from/(paid to) non-controlling interests
Increase in equity attributable to owners of the Company
2021
£’m
3
1
4
2020
£’m
3
(1)
2
242
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT 17. BORROWINGS
Bank loans
Preference shares
Listed bonds
Non-current borrowings
Current borrowings
Total borrowings
Secured bank
loan one1
Secured bank
loan two2
Secured bank
loan three2
Listed bonds
Swiss operations
(denominated in Swiss franc)
This loan bears interest at variable rates
linked to the 3M LIBOR plus 1.25%. With
reference to the Facility agreement,
there will be a change in the calculation
of the variable interest rate from LIBOR
to SARON. CHF50m is redeemable
annually on 30 September with the final
outstanding balance redeemable on
30 September 2026. The repayment on
30 September 2020 was suspended, but
management decided to make a voluntary
repayment in November 2020. The non-
current portion includes capitalised
financing costs of £13m (2020: £13m).
These loans were acquired as part of the
Linde acquisition and bear interest at a
fixed rate of 1.12%. CHF0.5m is repayable on
30 June and 31 December every year. The
remaining balances are repayable during
May 2023.
This fixed interest mortgage loan was
acquired as part of the Linde acquisition
and bears interest at 0.90% compounded
quarterly. The loan is repayable by
December 2023.
The listed bonds consist of CHF90m
at 2.00% and CHF145m at 1.25% Swiss
franc bonds. The bonds are repayable on
25 February 2025 and 25 February 2026,
respectively. In February 2021, one of the
existing bonds was repaid (CHF145m at
1.63%) and a new bond of CHF145m at
1.25% was issued.
Balance carried forward
2021
£’m
1 507
89
181
1 777
1 686
91
1 777
2020
£’m
1 673
82
196
1 951
1 787
164
1 951
2021
£’m
Non-current
2021
£’m
Current
2020
£’m
Non-current
2020
£’m
Current
986
38
1 156
–
13
1
15
8
–
8
1
–
181
1 188
–
39
75
1 254
121
122
Notes
1 The loan is secured by mortgage notes on Swiss properties and buildings to the value of £2 382m (2020: £2 580m) and Swiss bank accounts
with a book value of £81m (2020: £149m).
2 These loans are secured by mortgage notes on the properties and buildings of the Linde Group.
243
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS CONTINUED
17. BORROWINGS CONTINUED
Secured bank
loan one1
Secured bank
loan two1
Other secured
bank loans2
Preference
shares1
Bank overdraft
Secured bank
loan one3
Balance carried forward
Southern African operations
(denominated in South African rand)
The loan bears interest at the 3M JIBAR
variable rate plus a margin of 1.71%
(2020: 1.49%) compounded quarterly and
is repayable on 26 September 2022. £20m
(2020: £18m) of the loan has been hedged.
The loan bears interest at the 3M JIBAR
variable rate plus a margin of 1.81%
(2020: 1.59%) compounded quarterly
and is repayable on 26 September 2023.
£175m (2020: £162m) of the loan has been
hedged.
These loans bear interest at variable rates
linked to the prime overdraft rate and are
repayable in periods ranging between one
and 12 years.
Dividends are payable monthly at a rate of
72% of 3M JIBAR plus a margin of 1.77%
(2020: 1.65%). The outstanding balance will
be redeemed on 26 September 2022.
Middle East operations
(denominated in US dollar)
The loan bears interest at variable
rates linked to the 3M LIBOR and a
margin of 1.85% with five-year amortising
terms, expiring in August 2023.
£51m (2020: £65m) of the loan has
been hedged.
2021
£’m
Non-current
2021
£’m
Current
2020
£’m
Non-current
1 188
39
1 254
2020
£’m
Current
122
126
1
116
1
176
3
89
–
1
1
–
–
162
3
82
–
1
1
–
13
104
1 686
49
91
170
1 787
26
164
Notes
1 Property and equipment with a book value of £296m (2020: £271m) are encumbered as security for these loans. Cash and cash equivalents
of £5m (2020: £1m) and trade receivables of £53m (2020: £51m) have also been ceded as security for these borrowings.
2 Property, equipment and vehicles with a book value of £18m (2020: £18m) are encumbered as security for these loans. Net trade receivables
of £1m (2020: £1m) have also been ceded as security for these loans.
3 Shares of investments in Emirates Healthcare Holdings Ltd and Emirates Healthcare Ltd are encumbered as security for these loans as well as
an account pledge on receivable collection accounts.
244
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT 18. LEASES
Amounts recognised in the statement of financial position
The statement of financial position shows the following amounts relating to leases:
Right-of-use assets
Buildings
Equipment
Right-of-use assets per geographical market
Switzerland
Southern Africa
The United Arab Emirates
Lease liabilities
Switzerland
Southern Africa
The United Arab Emirates
Of which are:
- Non-current lease liabilities
- Current lease liabilities
2021
£’m
621
4
625
390
27
208
625
2021
£’m
408
38
230
676
621
55
676
2020
£’m
672
3
675
414
29
232
675
2020
£’m
416
38
249
703
654
49
703
245
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS CONTINUED
18. LEASES CONTINUED
Amounts recognised in the income statement
The income statement shows the following amounts relating to leases:
Depreciation charge of right-of-use assets
Buildings
Equipment
Interest expense (included in finance cost)
Expense relating to short-term leases and leases of low-value assets
COVID-19-related rent concessions
2021
£’m
2020
£’m
48
1
49
20
8
(1)
45
1
46
21
12
–
The total cash outflow for leases, excluding short-term leases and leases of low-value assets, was £56m
(2020: £63m).
The Group negotiated rent concessions with its landlords at a number of buildings in the Middle East as a result
of the severe impact of the COVID-19 pandemic during the year. The Group applied the practical expedient for
COVID-19-related rent concessions consistently to eligible rent concessions. The amount recognised in profit or
loss of £1m (2020: £nil) reflects changes in lease payments arising from rent concessions to which the Group has
applied the practical expedient for COVID-19-related rent concessions.
Critical accounting estimates and judgements
In determining the lease term, management considers all facts and circumstances that create an economic
incentive to exercise an extension option. Extension options are only included in the lease term if the lease is
reasonably certain to be extended.
For leases of hospitals, the Group considers their past practice in exercising renewal options and the cost of
business disruption required to replace the leased asset. Most extension options in respect of hospitals have not
been included in the lease liability due to the long duration of existing lease contracts and the low probability of
exercising renewal options based on the contractual renewal terms.
The lease term is reassessed if an option is actually exercised (or not exercised) or the Group becomes obliged
to exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant event or
a significant change in circumstances occurs, which affects this assessment, and which is within the control of
the lessee.
246
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT 19. RETIREMENT BENEFIT OBLIGATIONS
Statement of financial position obligations for:
Swiss pension benefit asset
Swiss pension benefit obligation
South African post-retirement medical benefit obligation
UAE end-of-service benefit obligation
Total retirement benefit obligations
Short-term portion of retirement benefit obligations
Non-current retirement benefit obligations
Total retirement benefit assets
Short-term portion of retirement benefit assets
Non-current retirement benefit assets
Total amount charged to the income statement:
Swiss pension benefit obligation
South African post-retirement medical benefit obligation
UAE end-of-service benefit obligation
Total amount charged/(credited) to the other comprehensive income:
Swiss pension benefit obligation
South African post-retirement medical benefit obligation
UAE end-of-service benefit obligation
2021
£’m
(110)
27
37
77
141
141
(14)
127
(110)
–
(110)
38
5
11
54
(152)
2
(3)
(153)
2020
£’m
–
71
28
83
182
182
(14)
168
–
–
–
40
6
10
56
12
(8)
13
17
Critical accounting estimates and judgements
The cost of defined benefit pension plans, post-retirement medical benefit liability obligations and the UAE
end-of-service obligations is determined using actuarial valuations. The actuarial valuation involves making
assumptions about discount rates, expected rates of return on assets, future salary increases, mortality rates and
future pension increases. Due to the long-term nature of these plans, such estimates are subject to significant
uncertainty and can have a material impact on the valuations. Details of the key assumptions for each relevant
obligation, together with the sensitivities of the carrying value of the obligations, are disclosed.
The sensitivity analyses presented in each section overleaf are based on a change in an assumption while holding
all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions
may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial
assumptions, the same method (present value of the defined benefit obligation calculated with the projected
unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit
obligation recognised within the statement of financial position.
247
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS CONTINUED
19. RETIREMENT BENEFIT OBLIGATIONS CONTINUED
a) Swiss pension benefit obligation
The Group's Swiss defined benefit pension plans are as follows:
• Pensionskasse Hirslanden
• Vorsorgestiftung VSAO (Association for Swiss Assistant and Senior Doctors)
• Hirslanden Clinique La Colline SA
• Hirslanden Klinik Linde AG
• Clinique des Grangettes SA
• Hirslanden OPERA Zumikon AG
Swiss pension benefit obligation
Statement of financial position
Amounts recognised in the statement of financial position are as follows:
Present value of funded obligations
Fair value of plan assets
Net pension liability
Presented as:
Net pension asset
Net pension liability
The movement in the defined benefit obligation over the year is as follows:
Opening balance
Current service cost
Interest cost
Employee contributions
Benefits paid
Business combinations
Actuarial (gain)/loss
Exchange differences
Balance at year-end
The movement of the fair value of plan assets over the year is as follows:
Opening balance
Employer contributions
Plan participants' contributions
Benefits paid from fund
Business combinations
Interest income on plan assets
Return on plan assets greater than discount rate
Administration costs
Exchange differences
Balance at year-end
2021
£’m
2020
£’m
1 261
(1 344)
(83)
(110)
27
(83)
1 321
37
6
39
(46)
2
10
(108)
1 261
1 250
43
39
(46)
1
6
162
(1)
(110)
1 344
1 321
(1 250)
71
–
71
71
1 216
39
6
37
(58)
–
(22)
103
1 321
1 164
40
37
(58)
–
6
(35)
(1)
97
1 250
248
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT 19. RETIREMENT BENEFIT OBLIGATIONS CONTINUED
a) Swiss pension benefit obligation (continued)
Swiss pension benefit obligation (continued)
Statement of financial position (continued)
Net pension liability reconciliation
Opening net liability
Expenses recognised in the income statement
Contributions paid by employer
Business combinations
Exchange differences
Actuarial (gain)/loss
Closing net (asset)/liability
Statement of other comprehensive income
Amounts recognised in other comprehensive income are as follows:
Actuarial loss – experience
Actuarial gain/(loss) due to demographic assumption changes
Actuarial gain/(loss) due to financial assumption changes
Return on plan assets greater than discount rate
Total other comprehensive income
Income statement
Amounts recognised in the income statement are as follows:
Current service cost
Interest on liability
Interest on plan assets
Administration cost
Actual return on plan assets
Principal actuarial assumptions on statement of financial position
Discount rate
Future salary increases
Future pension increases
Inflation rate
Number of plan members
Active members
Pensioners
2021
£’m
2020
£’m
71
38
(43)
1
2
(152)
(83)
(25)
67
(52)
162
152
37
6
(6)
1
38
168
0.20%
1.50%
0.00%
1.00%
10 075
1 171
11 246
52
40
(40)
–
7
12
71
(6)
23
5
(34)
(12)
39
6
(6)
1
40
(28)
0.45%
1.50%
0.00%
1.00%
9 710
1 063
10 773
249
2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS CONTINUED
19. RETIREMENT BENEFIT OBLIGATIONS CONTINUED
a) Swiss pension benefit obligation (continued)
Asset allocation
Quoted investments
Fixed income investments
Equity investments
Real estate
Other
Non-quoted investments
Fixed income investments
Equity investments
Real estate
Other
2021
£’m
2021
%
2020
£’m
2020
%
437
418
20
109
984
28
1
237
94
32.5%
31.1%
1.5%
8.1%
73.2%
2.1%
0.1%
17.6%
7.0%
430
34.4%
315
25.2%
21
118
1.7%
9.4%
884
70.7%
30
–
2.4%
0.0%
249
19.9%
87
7.0%
360
26.8%
366
29.3%
1 344
100.0%
1 250 100.0%
Risk exposure
Through its defined benefit pension plans, the Group is exposed to a number of risks, the most significant of
which are detailed below:
Asset volatility: The plan liabilities are calculated using a discount rate set with reference to corporate bond yields;
if plan assets underperform this yield, this will create a deficit.
Changes in bond yields: A decrease in corporate bond yields will increase plan liabilities, although this will be
partially offset by an increase in the value of the plans’ bond holdings.
Inflation risks: The pension obligations are linked to salary and pension inflation, and higher inflation will lead
to higher liabilities. The majority of the plan’s assets are either unaffected by (fixed interest bonds) or loosely
correlated with (equities) inflation, meaning that an increase in inflation will also increase the deficit.
Life expectancy: The majority of the plans’ obligations are to provide benefits for the life of the member, so
increases in life expectancy will result in an increase in the plans’ liabilities.
250
MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT 19. RETIREMENT BENEFIT OBLIGATIONS CONTINUED
a) Swiss pension benefit obligation (continued)
Assumptions and sensitivity analysis
Impact on defined benefit obligation
Base assumption
Discount rate
Salary growth rate
Pension growth rate
0.20%
1.50%
0.00%
Change in
assumption
Increase in
obligation
Decrease in
obligation
0.25%
0.50%
0.25%
2.9%
0.7%
2.0%
2.8%
0.7%
0.0%
Base assumption
BVG 2020
with CMI
improvements
Change in
assumption
1 year in
expected
lifetime
of plan
participants
Increase by
1 year in
assumption
Decrease by
1 year in
assumption
2.0%
2.0%
Life expectancy (mortality)
The Group accounts for actuarially determined future pension benefits and provides for the expected liability in
the statement of financial position. The assumptions used to calculate the expected liability are based on actuarial
advice. The discount rate is based on market yields obtained on high-quality corporate bonds that have durations
consistent with the term of the obligation.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the
previous year.
Expected employer contributions to be paid to the pension plans for the year ended 31 March 2022 amount to
£36m and it is anticipated that these contributions will remain at a similar level in the foreseeable future, subject
to change in financial conditions.
The weighted average duration of the defined benefit obligation is 11.5 years (2020: 13.5 years). The maturity
profile of the defined benefit obligation is as follows:
At 31 March 2021
Defined benefit obligation
At 31 March 2020
Defined benefit obligation
5 years
£’m
Total
£'m
119
325
848
1 292
93
277
1 040
1 410
Additional information on Swiss defined benefit pension plans
Pensionskasse Hirslanden
For employees of Hirslanden Group in Switzerland, the Pensionskasse Hirslanden (‘PH’) Fund provides
post-employment, death-in-service and disability benefits in accordance with the Federal Law on Occupational
Old-age, Survivor's and Disability Insurance (German: BVG). The PH Fund is a foundation and an entity legally
separate from Hirslanden. The PH Fund’s governing body is composed of an equal number of employer and
employee representatives. This governing body determines the level of benefits and the investment strategy for
the plan assets based on asset-liability analyses performed periodically. The basis for these asset-liability analyses
are the statutory pension obligations as these largely determine the cash flows of the PH Fund. In addition, the
investment of the plan assets is based on regulations developed by the governing body in accordance with
the legal investment guidelines (BVV2). The Investment Committee of the governing body is responsible for
their implementation. The governing body has mandated the investment activity to Complementa Investment
Controlling AG, as the global custodian.
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS CONTINUED
19. RETIREMENT BENEFIT OBLIGATIONS CONTINUED
a) Swiss pension benefit obligation (continued)
Additional information on Swiss defined benefit pension plans (continued)
Pensionskasse Hirslanden (continued)
The investment strategy complies with the legal guidelines and is relatively conservative. Alternative investments
and unhedged foreign currency positions are rare.
The benefits of the pension plan are substantially higher than the legal minimum. They are determined by the
employer’s and employees’ contributions and interest granted on the plan members’ accumulated savings;
the interest rate is determined annually by the governing body in accordance with the legal framework (defined
contribution, as defined by the occupational pension law). The employees’ and the employer's contributions are
determined based on the insured salary and range from 1.25–15% of the insured salary depending on the age of
the beneficiary.
The pension law requires adjusting pension annuities for inflation depending on the financial condition of the
pension fund. Although the pension plan is fully funded at present in accordance with the pension law, the
financial situation of the PH Fund will not allow for inflation adjustments.
VSAO
For employed physicians of Hirslanden Group in Switzerland, the VSAO Pension Fund provides post-employment,
death-in-service and disability benefits in accordance with the Federal Law on Occupational Old-age, Survivor's
and Disability Insurance (German: BVG). The VSAO Fund is a foundation and an entity legally separate
from Hirslanden. The fund’s governing body is composed of an equal number of employer and employee
representatives. The investment of the plan assets is in accordance with the legal investment guidelines (BVV2).
The benefits of the pension plan are substantially higher than the legal minimum. They are determined by the
employer’s and employees’ contributions and interest granted on the plan members’ accumulated savings; the
interest rate is determined by the governing body in accordance with the legal framework (defined contribution,
as defined by the occupational pension law).
The employee’s and the employer’s contributions are 14% of the insured salary.
Other pension plans
Other pension plans exist for the latest acquired subsidiaries (Hirslanden Clinique La Colline SA, Hirslanden Klinik
Linde AG, Clinique des Grangettes and Hirslanden OPERA Zumikon AG) which are not yet integrated into PH, the
main pension plan of the Group. These pension funds are legally separate from Hirslanden Group. The investment
of the plan assets is in accordance with the legal investment guidelines (BVV2).
The employee’s and the employer’s contributions are determined based on the insured salary and range from
1.78–15% of the insured salary depending on the age of the beneficiary.
General information on all pension plans
If an employee leaves Hirslanden Group or the pension plan respectively before reaching retirement age, the
law provides for the transfer of the vested benefits to the new pension plan. These vested benefits comprise
the employee’s and the employer’s contributions plus interest, the money originally brought in to the pension
plan by the beneficiary. Upon reaching retirement age, the plan participant may decide whether to withdraw the
benefits in the form of an annuity or (partly) as a lump-sum payment. The pension law requires adjusting pension
annuities for inflation depending on the financial condition of the pension fund.
The pension law in Switzerland envisages that benefits provided by a pension fund are fully financed through the
annual contributions defined by the regulations. If insufficient investment returns or actuarial losses lead to a plan
deficit as defined by the pension law, the governing body is legally obliged to take actions to close the funding
gap within a period of 5–7 years. Besides adjustments to the level of benefits, such actions could also include
additional contributions from respective Group companies and the beneficiaries. The current financial situation
of the PH Fund does not require such restructuring actions. None of the Group companies benefit from any plan
surpluses.
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MEDICLINIC INTERNATIONAL PLC 2021 ANNUAL REPORT 19. RETIREMENT BENEFIT OBLIGATIONS CONTINUED
b) South African post-retirement medical benefit obligation
The Group's Southern African operations have a post-retirement medical benefit obligation for employees who
joined before 1 July 2012. The Southern African operations subsidise the contributions payable to the group
medical aid in respect of certain eligible retired employees. The subsidy obligations are unfunded and the benefit
payment obligations are met as they fall due.
The Group accounts for actuarially determined future medical benefits and provides for the expected liability in
the statement of financial position. The assumptions used to calculate the expected liability are based on actuarial
advice. The discount rate is based on market yields obtained on high-quality corporate bonds which have
durations consistent with the term of the obligation. It has been assumed that medical inflation will take place
at a rate of 2.9% in excess of consumer price inflation.
In the last valuation on 31 March 2021, an 11.40% (2020: 10.40%) medical inflation rate and a 13.70% (2020: 13.40%)
discount rate were assumed. The average retirement age was set at 63 years (2020: 63 years).
The assumed rates of mortality are as follows:
• During employment: SA 85/90 tables of mortality
• Post-employment: PA(90) tables
South African post-retirement medical benefit obligation
Amounts recognised in the statement of financial position are as follows:
Opening balance
Amounts recognised in the income statement
Current service cost
Interest cost
Benefits paid
Actuarial loss/(gain) recognised in other comprehensive income
Exchange differences
Present value of unfunded obligations
2021
£’m
28
5
1
4
(1)
2
3
37
2020
£’m
37
6
2
4
(1)
(8)
(6)
28
Risk exposure
Through its defined benefit post-retirement medical benefit obligation, the Group is exposed to a number of risks,
the most significant of which are detailed below:
Changes in bond yields: A decrease in corporate bond yields will increase medical benefit obligations.
Inflation risks: The medical benefit obligations are linked to medical inflation, and higher inflation will lead to
higher liabilities.
Assumptions and sensitivity analysis
Impact on defined benefit obligation
Base assumption
Discount rate
Medical inflation rate
13.70%
11.40%
Change in
assumption
0.50%
1.00%
Increase in
obligation
Decrease in
obligation
6.0%
15.0%
7.0%
12.0%
The expected post-employment medical benefits payable for the year ended 31 March 2022 amount to £1m.
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2021 ANNUAL REPORT MEDICLINIC INTERNATIONAL PLCFINANCIAL STATEMENTS NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS CONTINUED
19. RETIREMENT BENEFIT OBLIGATIONS CONTINUED
b) South African post-retirement medical benefit obligation (continued)
Assumptions and sensitivity analysis (continued)
The weighted average duration of the defined benefit obligation is 15 years (2020: 15 years). The maturity profile
of the defined benefit obligation is as follows:
At 31 March 2021
Defined benefit obligation
At 31 March 2020
Defined benefit obligation