Integrated report 2020

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How we created value for our stakeholders

FINANCIAL CAPITAL

FINANCIAL CAPITAL

INPUTS
  • Equity of R18 278 million (2019: R17 491 million)
  • Net debt of R14 116 million (2019: R11 318 million)

Strategic focus areas

OUTCOMES
  • R38 million profit after tax (2019: R2 871 million)
  • R4 098 million normalised EBITDA pre-IFRS 16 (2019: R5 727 million)
  • Net debt: normalised EBITDA ratio of 2.96 times (2019: 1.96 times)
  • 23.0% decline in cash generated from operations
  • Zero cents per share (cps) dividends paid (2019: 93 cps)
  • Interest cover ratio of 5.8 times (2019: 5.6 times)
  • Normalised earnings per share (EPS) of 61.0 cps (2019: 116.4 cps)
  • Normalised EPS excluding amortisation of 94.0 cps (2019: 148.1 cps)
  • Headline EPS of 48.7 cps (2019: 88.7 cps)
  • Capex as percentage of revenue of 7.7% (2019: 8.0%)
  • Free cash flow before transaction costs of R1 790 million (2019: R2 342 million)
ACTIONS TO ENHANCE OUTCOMES
  • Adapting long-term strategic objectives in response to the economic environment post-COVID-19
  • Implementing cash preservation levers
  • Cost control
  • Delaying capex spend without compromising the business
  • Deferring executive and management bonuses
  • Suspension of dividends
  • Financial covenant amendments
  • Refinancing and increased committed facilities with banks

MANUFACTURED CAPITAL

MANUFACTURED CAPITAL

INPUTS
  • R1 205 million (2019: R1 166 million) invested in maintenance capex
  • R759 million (2019: R894 million) in growth capex

Southern Africa

  • 49 acute hospitals, seven acute rehabilitation and nine mental health facilities
  • 363 Life Employee Health Solutions clinics (2018: 391)
  • 9 151 registered beds (2019: 9 136)
  • 304 hospital theatres (2019: 302)
  • Five oncology units (2019: five)
  • 375 renal dialysis units (2019: 329)

Alliance Medical

  • 213 diagnostic imaging units (2019: 206)
  • 52 molecular imaging units (2019: 48)
  • Ten radiopharmacy locations (2019: nine)

Scanmed

  • 42 medical facilities
  • 582 beds and
  • 13 cardiac units

Strategic focus areas

OUTCOMES
  • 58.4% weighted occupancy rate (2019: 69.7%)
  • Improved hospital efficiencies
  • Technological superiority recognised by patients and markets, supporting brand strength and differentiation internationally
  • Easing burden on public healthcare facilities during the COVID-19 pandemic
  • Simplifying healthcare access for patients Improved clinical safety
  • Improved clinical safety
ACTIONS TO ENHANCE OUTCOMES
  • Providing world-class facilities and equipment to allow for quality and cost-effective care
  • Diversifying the business across lines and territories
  • Completing vital upgrades to our equipment
  • Repurposing mobile units to better serve our patients

INTELLECTUAL CAPITAL

INTELLECTUAL CAPITAL

INPUTS
  • Alternative reimbursement pricing models
  • International experience in serving governments
  • Diverse footprint in southern Africa and internationally
  • World-class hospital operator, delivering world-leading clinical quality
  • Strength in operating models reflected in best-in-class margins
  • Depth and resilience in management teams reflected through the efficacy displayed when dealing with the concurrent of COVID-19, the cyber-attack and leadership changes
  • Vertically integrated international diagnostic and radiopharmacy business
  • Formulaic and standardised procurement processes
  • An in-house nursing dashboard in southern Africa
  • LMI has a pipeline of novel imaging agents that address major unmet clinical needs in neurological, oncological and cardiovascular diseases, with FDA approved Neuraceq™ (florbetaben F18), having the second-largest market share in US that would expand significantly if an Alzheimer's therapeutic disease-modifying drug is approved

Strategic focus areas

OUTCOMES
  • Developing new service offerings and creating new business opportunities
  • Improved clinical excellence and efficiencies
  • Quality standards are maintained and improved by our quality and safety Board sub-committee and through clinical governance
  • Leveraging IT and technology to drive standardisation, and to reduce administrative costs and economies of scale
  • Best practice and knowledge-sharing collaboration among territories
ACTIONS TO ENHANCE OUTCOMES
  • Entrenching our digital strategy throughout the business
  • Focusing on governance evolution and maturity
  • Driving compliance with established processes and systems at the point of care
  • Integrating Group initiatives as we move towards a standardised reporting and core enterprise resource planning (ERP) system
  • Providing a digital ecosystem by introducing digital solutions
  • Engaging with SA government leveraging off local and international expertise in the offering of services to the public sector
  • Focus on further integration within our acute and non-acute offering to drive value based care and building towards an integrated healthcare model
  • Continue to lead in delivering improved patient-centric experience

HUMAN CAPITAL

HUMAN CAPITAL

INPUTS
  • An experienced leadership team, with a newly appointed Group Chief Executive
  • 19 969 employees across the Group, comprising nurses, radiologists, pharmacists and other skilled employees (2019: 20 436)
  • R224 million invested in training in southern Africa (2019: R201 million)
  • R5.8 million raised for the Employee Assistance Fund to support employees during the pandemic
  • Fair and transparent remuneration practices
  • Substantive and meaningful improvement in diversity and inclusion at all levels

Strategic focus areas


OUTCOMES
  • R9 534 million (2019: R8 860 million) paid to employees in salaries and benefits
  • 3 095 employee COVID-19 infections, with 19 employees tragically passing away
  • 802 nurses were enrolled for training (2019: 1 005)
  • 1 587 learnerships provided in southern Africa (2019: 1 083) and 27 apprentices on programme in the UK (2019: 32)
  • Improved employee engagement
  • Addressed skills shortages
  • Fulfilled and healthy employees
  • Increased employee loyalty
  • Gratuity bonuses amounting to a total of R45 million paid to employees for their efforts during the COVID-19 pandemic
ACTIONS TO ENHANCE OUTCOMES
  • Optimising utilisation and nursing efficiency
  • Implementing initiatives to sustain labour resources
  • Modernising human resource systems
  • Recruiting and developing talent by enhancing our employee value proposition (EVP) and cultivating an engaged workforce
  • Partnering with business leaders to implement effective human resource (HR) strategies
  • Partnering with leading training institutions to continually upskill our leadership teams

SOCIAL AND RELATIONSHIP CAPITAL

INPUTS
  • Life Healthcare, Alliance Medical and Scanmed brands and reputation
  • Relationships with 3 630 healthcare professionals (in southern Africa, where work is on an associative basis) (2019: 3 800)
  • Relationships with healthcare funders, including preferred network agreements
  • Investing R65 million in community upliftment, health and education projects (2019: R106 million)
  • Partnering with government to deliver access to high-quality care
  • Contracts and agreements with suppliers
  • Relationships with shareholders, investors and financiers
  • Good working relationships with organised labour

Strategic focus areas

OUTCOMES
  • Developed and enriched partnerships
  • Doctor shareholding
  • Level 4 broad-based black economic empowerment (B-BBEE) rating
  • 50% of preferential procurement spent on level 1 to 3 vendors (2019: 38%)
  • Increased patient experience scores
  • Excellent relationships with healthcare professionals, creating a pipeline of future specialists
ACTIONS TO ENHANCE OUTCOMES
  • Cultivating long-term relationships with stakeholders
  • Increasing preferred network deals with designated service providers (DSPs)
  • Ongoing engagement with governments
  • Monitoring relationships with suppliers
  • Driving transformation and diversity initiatives across the business
  • Cultivating and nurturing good working relationships with organised labour unions in southern Africa
  • Collaboration with international radiopharmaceutical manufacturers to expand Neuraceq's current manufacturing network

NATURAL CAPITAL

NATURAL CAPITAL

INPUTS
  • Invested R8 million in renewable energy sources in southern Africa
  • Consumed 997 867 kℓ water in our healthcare facilities (2019: 913 090 kℓ) in southern Africa
  • Used 155 600 509 kWh electricity (2019: 151 177 164 kWh) in southern Africa
  • Installed solar photovoltaic (PV) panels at four facilities, bringing the total to 12 facilities (2019: 7) in southern Africa

Strategic focus areas

OUTCOMES
  • Improved monitoring of water use
  • Reduced carbon emissions beyond our target
  • Solar harvesting reduced electricity reliance on national grid
  • Healthcare risk waste increased to 2.01 (2019: 1.93 kg/PPD)
ACTIONS TO ENHANCE OUTCOMES
  • Installing solar capacity at four additional facilities in southern Africa
  • Monitoring energy reduction projects
  • Exploring opportunities to reduce water consumption
  • Upgrading the measuring system for water and electricity consumption to improve accuracy of reporting

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