IHH Annual Report 2018

HOME MARKET – TURKEY What we do COMPLEMENTARY ANCILLARY SERVICES SECONDARY & TERTIARY CARE PRIMARY CARE QUATERNARY CARE and the expansion of Acibadem Maslak Hospital completed in October 2018. The Group also saw strong growth in foreign patients in 2018 as key initiatives were undertaken to drive medical tourism for the Turkish operations. Revenue per inpatient admission increased 24.4% to RM7,721. Acibadem continues to enhance it service offering through the introduction of new service lines and value propositions across its network of hospitals in Turkey, Bulgaria, Macedonia and the Netherlands. Acibadem has recently installed the MRI-LINAC, a smart radiotherapy method with advanced hardware, providing important benefits to both the patient and the doctor. Acibadem has become the third center with an MRI-LINAC device in Europe and the ninth facility throughout the world. Acibadem also introduced the “Alzheimer’s and Aging Center” at Acibadem Eskisehir Hospital on 1 May 2018 to provide modern healthcare services for Alzheimer’s patients. In Macedonia, Acibadem Sistina Hospital opened the first private Pediatric Hematology and Oncology Center of Macedonia. The new center will provide opportunities for more medical services offered in pediatric branches. On 30 November 2018, the Group completed a transaction that simplified Acibadem’s shareholding structure and increased its stake in Acibadem from 60% to approximately 90%. The transaction allows IHH to further consolidate its control in the Turkish operations. IHH is working to repay Acibadem’s existing non-Lira loans of US$250 million equivalent to reduce its foreign debt obligations and deleverage its balance sheet. The Group has clear plans that will put Acibadem in a stronger position to manage volatility in the Turkish Lira. Outlook The Turkish operations expects patient volumes to grow with the continued demand, increased affordability of private healthcare and more foreign patients travelling to Turkey to seek medical treatments. Acibadem Altunizade Hospital will also continue to contribute to Acibadem’s revenue as patient volumes grow and more complex cases are undertaken. Acibadem Maslak Hospital’s capacity has recently been expanded and more beds were added. The new expanded facility commenced operations in early October, making it the largest private hospital in Turkey. In view of the inflationary environment and the depreciating Turkish Lira against the US dollar and Euro, we expect a rising cost of purchases, resulting in higher pricing of drugs, consumables and medical equipment. However, the Group expects to mitigate these effects through tight cost controls, improvement in case mix and growth in foreign patient revenue. 1. TOBB Healthcare Providers Industry Council, Turkey Healthcare Landscape, December 2017. KEY FACTS RM3.7 billion Revenue RM617.3 million EBITDA Acibadem Holding (“Acibadem”) is one of Turkey’s leading private healthcare providers, operating more than 4,000 beds across 22 hospitals and 15 medical clinics across Turkey, Macedonia, Bulgaria and the Netherlands. It is known for high quality diagnostic services and clinical treatment offerings for Turkish and international patients, equipped with state-of-the-art medical technologies, including smart radiotherapy, robotic surgery, intraoperative radiotherapy and digital tomosynthesis mammography. Acibadem is a brand that resonates well with clinical excellence in Central and Eastern Europe and is a familiar medical hub for foreign patients in the region. Performance Highlights Despite a challenging year in Turkey, Acibadem revenue came in at RM3.7 billion compared to RM3.9 billion in 2017. EBITDA remained flat at RM617.3 million. Excluding the translation effects from the depreciating Turkish Lira, revenue increased 32% while its EBITDA increased 38% over the corresponding period last year. Inpatient admissions grew 7.4% to 229,433 from the successful ramp-up of Acibadem Altunizade Hospital opened in March 2017 49 Performance Review