LENMED AIR 2019.pdf

“In an environment when simply maintaining last year’s performance is praiseworthy, I feel proud of just how well our Lenmed people performed under such trying economic circumstances.” Overview Despite the challenges, we increased Group revenue by 15% (R2.22 billion to R2.55 billion), which included R423.6 million (2018: R360.6 million) from operating activities, which demonstrates our improved cash management. We also raised earnings before interest, taxation, depreciation and amortisation (EBITDA) by 13.4% to R446.5 million. When reviewing this performance, the word ‘resilience’ comes to mind. Irrespective of which hospital or facility, Lenmed people continue caring for our patients and building on the Lenmed reputation. I look forward to seeing what can be achieved when the economic and social cycle turns upward. Resilience is good — especially when integrated with a keen sense of social responsibility. While Lenmed’s operations should rightly create value for the Group’s shareholders, at the same time our hospitals are key assets to communities that lack resources and, in many instances, are struggling to maintain the services they have. In my opinion, South Africa has already entered a period of fundamental restructuring. At Lenmed we once again look forward to being a community driver of nation building, as we did when we established our first hospital in Lenasia in the turbulent 1980s. Risks and opportunities Lenmed’s most significant risks this year are linked to political and economic events, in Southern Africa and globally. South Africa in particular has stumbled from crisis to crisis in recent years and its economy is presently too inefficient to generate the jobs and consumerwealththat cangrowprivatehealthcare. Local communities are restless, while Eskom’s ongoing power supply issues could hinder economic and social development for years to come. These political and economic risks impact directly on the degree of interest investors show in healthcare projects, although we aim for those projects which target sustainable value rather than quick returns. On the regulatory side, South Africa’s Department of Health (DoH) has been working proactively with the private healthcare sector regarding public private partnerships for doctor training and treating non-insured patients in private hospitals. A healthcare market inquiry for independent healthcare providers should be completed by the end of 2019. Mozambique appears to be emerging from its own economic setbacks, although in early 2019 the devastating cyclones I dai and Kenneth took many lives and caused widespread destruction. The World Bank has estimated that the damage will cost approximately US$2 billion to repair. We hope that this tragic act of nature can accelerate an economic revival of the nation. Botswana remains one of Africa’s most consistent economies and continues growing healthily. Our Bokamoso Private Hospital in Gaborone is delivering solid results and working energetically to reduce its debtors book. Our strategy of steady and conservative expansion has positioned Lenmed as a strong competitor when private healthcare in South Africa inevitably consolidates, particularly as the three largest hospital groups are restrained from obtaining licences in certain areas. While our roots are built in a traditional Indian township, we have not been complacent and have worked to maintain and improve our B-BBEE rating. In this regard, we have had our B-BBEE rating re-evaluated under the revised codes and are pleased to announce that Lenmed is a Level 4 contributor in accordance with the Department of Trade and Industry’s B-BBEE Codes of Good Practice. Private healthcare presently engages just 18% of South Africa’s population. We are hopeful that millions more are able to access quality private healthcare, given an improved economic trajectory and a pragmatic outcome of NHI-related deliberations. Technological change — risk and opportunity As withmost industries, healthcare is heavily impacted by sweeping technological changes that are transforming how people and organisations communicate, collaborate, work and play. Lenmed is already 18 months into a comprehensive digitisation journey with SAP as our lead IT partner. Although still three years from full implementation and optimisation, the SAP platform is already delivering major operational, data analysis and cost saving benefits. Our systemic approach to digitisation enables Lenmed to compete with larger healthcare groups on the basis of patient, medical professional and Medical Aid Funder (MAF) experiences. Cyber hacking for data and personal information has become a worldwide threat and Lenmed has been pro-active in appointing cybercrime specialists to implement best practice digital security measures, supported by regular updating and testing. A step change in strategy The Board and executive continued steering the Group in line with our development strategy of recent years, based on steady LENMED ANNUAL INTEGRATED REPORT 2019 03