IHH Annual Report 2018

TREND IMPACT TO GROUP OUR RESPONSE LINK TO STRATEGY Technological Disruption Global consulting firms have identified technological disruptions as one of the impending, if not current, issues that the healthcare industry will face. With the exponential growth of technology, innovators and non-traditional healthcare players around the world have begun to enter the industry for a piece of the pie. For the Group, any failure to keep up with the changes will put us behind the curve. Taking an active approach, we established the Innovation Office at Parkway Pantai in 2016 to bring new technologies and business models to the organisation, whether by partnership or investment. We embrace the innovation culture and encourage new ideas throughout all levels of the Company. This was manifested in the successful launch of Parkway Pantai’s inaugural Innovation Challenge where over 150 entries were submitted by teams from across all our markets. Winning ideas included an automated self-service X-Ray kiosk and a tech- equipped “smart” ambulance. Organic growth Inorganic growth Enhance service offerings Geopolitical Tensions Escalating geopolitical tensions have taken a toll on global investment portfolios, with some markets facing uncertainties. The unstable political climate in the Middle East, especially in Turkey, has seen the US imposing sanctions and tariffs, severely affecting the Turkish Lira. For IHH Healthcare, this currency volatility is impacting Acibadem, which operates in Turkey. While Acibadem’s expanding operations have shown promising results, financial performance has been impacted by foreign exchange translation losses upon consolidation at the Group. IHH Healthcare is committed to managing geopolitical risks by applying defenses to our strategies. One of the immediate ways is to defer all expansion capital expenditure for Acibadem. The Group is also closely monitoring developments involving the Turkish Lira, and we have established clear plans to reduce Acibadem’s foreign debt to manage its exposure to currency volatility. Moreover, diversification of our businesses and geographies in the Group reduces our reliance on a single market. This allows cyclical dips in one market to be offset by gains in another. Our strong portfolio of cash-generative assets and ready cashflow in developed markets such as Singapore and Malaysia is well poised to support the growth of the emerging markets of Turkey, India and Greater China. Invest in people Leverage innovation Increased Competition We operate in an increasingly competitive marketplace and a fragmented healthcare industry where new entrants can impact the demand for our services. Competition from established healthcare providers aside, we have been increasingly facing pressure from disruptive digital healthcare startups that have entered the market. We have enhanced our capabilities and capacities to undertake more complex medical cases. In addition, we are taking advantage by tapping our wide pool of talent to develop high-value-added service and product offerings to boost our competitive strength in the marketplace. For instance, we have introduced synergistic patient programs in some of our home markets, with a key focus on improving collaboration between our experts across our hospital networks. Invest in people Leverage innovation 37 Strategic Report