TIDMAMEI
RNS Number : 1449L
African Medical Investments PLC
31 August 2012
African Medical Investments plc / Index: AIM / Epic: AMEI /
Sector: Healthcare
31 August 2012
African Medical Investments plc ('African Medical' or 'the
Group')
Final Results
African Medical Investments plc, the AIM listed company
operating in the African healthcare sector, announces its results
for the year ended 29 February 2012. The Annual Report and Accounts
for the year ended 29 February 2012 is available on the Company's
website at www.amiplc.com and copies will be posted to shareholders
today.
Highlights
-- Continued progress consolidating existing specialist hospital
facilities in Maputo, Dar es Salaam, and Harare
-- Increased revenues by 124% to US$12.1 million and reduced
loss before tax to US$15,021,000 (2011: US$18,843,000)
-- Successful sale of AMI Aviation Services (Pty) Ltd for US$1.3 million
-- Continuing financial support of Harbinger Capital Partners
Master Fund I, Ltd, who subscribed for US$1,825,000 of further loan
notes post year end
-- Expansion strategy in place in Tete, Mozambique and Lusaka,
Zambia to capitalise on growing demand for quality healthcare in
Africa
Business Review
AMI has continued to affirm its position in the African
healthcare market by providing international standard healthcare
through its private hospitals in Africa. AMI's current healthcare
portfolio includes the 35 bed AMI Hospital Maputo, Mozambique, the
30 bed AMI Hospital Dar es Salaam, Tanzania, and the 18 bed AMI
Hospital Harare, Zimbabwe. During this past year, the Group has
consolidated its existing operations and the Board is confident the
Group is now well positioned to capitalise on the growing demand
for quality healthcare, particularly from the emerging middle
class, foreign business investors, governments and health insurers
in Africa.
Africa hosts some of the world's fastest growing economies,
primarily led by resource development, and this has further
increased the requirement for private healthcare on the continent.
This economic backdrop offers a company such as AMI a significant
opportunity, and the Board is cognisant that the Group must engage
with insurance companies and multi-nationals to more efficiently
provide healthcare. This objective has been wholly adopted in AMI's
healthcare proposition and will remain a central component of the
Company's growth strategy.
Notwithstanding this, the Group's near-term focus remains on the
consolidation and security of its existing assets, improving
revenue generation and maximising future potential. The
restructuring of the assets and removing ineffective legacy
operations has dominated the agenda during the period, however the
Board is confident that this process is now nearing completion and
beginning to bear fruit for the Group. An on-going challenge for
the Group is the reclaiming of control at its Harare facility
following the forcible and illegal occupation by former management.
Legal proceedings are currently underway and the Board remains
confident in the validity of its legal position.
In line with the restructuring process initiated last year, our
achievements have culminated in revenue more than doubling from
US$5.4 to US$12.1 million, gross profits turning positive and
operating overheads increasing by less than 10%. Net cash used in
operating activities decreased by 40% to $6.638 million and was
funded by the subscription for shares by Dr. Peter Botha, the Chief
Executive, further subscription for Loan Notes by Harbinger Capital
Partners Master Fund I, Ltd and utilisation of cash available at
the beginning of the year. Despite the improvements in turnover and
operating results, occupancy rates and case mix have not yet
reached levels adequate to generate cash from operating
activities.
As part of the restructuring process, the Board has focussed on
improving occupancy rates and optimising resources across the
current portfolio by ensuring that the numbers of doctors and
available services appropriately reflect demand, whilst non-core
assets and operating units have been suitably divested or
outsourced. In addition, progress has been made in improving the
financial performance of the Group's portfolio through case mix
optimisation.
Through successful operational and financial consolidation, AMI
has started to improve the efficiency and the results of each unit
whilst identifying opportunities for growth. The Board is confident
of growth in the Group's product offering and market reach. The
expansion of the portfolio remains a longer term goal for the Group
and the Board are working actively to target new markets through
investment in the existing facilities, possible joint venture
opportunities and the construction of new hospitals and
services.
Taking each of the Group's hospitals in turn: AMI Hospital
Maputo is firmly established as a centre of excellence for
disciplines such as paediatrics, gynaecology, surgery,
orthopaedics, neurosurgery, internal medicine, haemodialysis and
dentistry. The hospital boasts 35 beds, a delivery room,
haemodialysis unit, 24-hour emergency centre, X-ray department, CT
scan centre, 4D ultrasound, three intensive care unit ('ICU') beds,
two neonatal ICU beds and two theatres. Support services
underpinning the aforementioned clinical services include nursing
services, physiotherapy, radiology, a pharmacy and a laboratory.
The facility is well equipped to deal with the growing demand for
high quality medical care that is consistently being relied upon by
local residents, businesses, embassies, tourists, and the expanding
health insurance sector where AMI Maputo has forged a strong
network of affiliates.
During the period, and in accordance with the Group's strategy
to consolidate existing resources, AMI Hospital Maputo has focussed
on improving its case mix, in particular, increasing theatre usage
by ensuring that the appropriate balance of doctors and the
availability of specialist treatment reflect patient demand. The
Board is confident that the improved case mix, staff and resources
now in place will better enable the Group to maximise the potential
of the hospital and capitalise on the growing insurance-led demand
for quality healthcare.
AMI Hospital Dar es Salaam continues to perform encouragingly,
providing 24 hour out-patient emergency department with a fully
equipped procedure room, casualty, state of the art major and minor
operating theatres, ICU and high dependency unit services, two
fully equipped delivery rooms, a radiology department with CT
scanner, digital X-ray and 3D ultrasound, dialysis centre,
occupational health services and facilities and an on-site
laboratory, pharmacy and physiotherapy services. It is this wealth
of services that continues to attract referrals from medical
providers within the community, and major local medical insurance
companies providing a key source of business for the hospital. The
Dar es Salaam team will continue to build upon this local rapport
to maintain long term working relationships.
Enhanced governance procedures have been implemented during this
past period at Dar es Salaam. In keeping with the efforts to
maximise financial efficiency, the hospital's current resources
have been refined and now more suitably match patient demand, thus
helping to reduce overheads and increase profits. The Board is
confident that further cost savings can be made in the current
financial year.
The Group's third facility, the 18 bed AMI Hospital Harare,
provides a range of services, including a 24-hour accident and
emergency department, a 4-bed high dependency unit, theatres for
minor and major operating procedures, a 14 bed medical and surgical
ward, GP services, an in-patient pharmacy and a fully equipped
ambulance for patient transfers.
Legal proceedings are currently taking place in the High Court
and Supreme Court of Zimbabwe to restore AMI's occupancy and
control of the Harare facility to African Medical following the
forcible occupation of the hospital by the former management
company led by the previous chief executive, Dr. Vivek Solanki. The
Board is confident in its legal position and that African Medical
will be reinstated to the facility.
In June 2012, African Medical agreed the sale of its wholly
owned subsidiary, AMI Aviation Services (Pty) Ltd, for US$1.3
million. The disposal is in accordance with the Board's strategy of
consolidating the Group's portfolio of specialist private hospitals
and improving its financial performance. The proceeds have been
reinvested in the business, supporting the ongoing working capital
requirements of the specialist hospitals, where growth
opportunities have now been identified.
The Group remains in a period of transition, but the Board is
confident that case mix optimisation and finalisation of its cost
reduction programme will position the Group to significantly
improve its financial results. Working capital and cash
requirements will continue to depend on the timeframe and outcome
of the Harare legal proceedings and the impact of the Group's
turnaround strategy. The Group plans to continue to roll-out
additional healthcare services and maintain its position as a
leading provider of high quality healthcare in Africa.
The expansion strategy is already in effect in Tete, northern
Mozambique, where AMI is working with a major resource company to
establish a medical clinic, including the establishment of a
polyclinic, and ultimately a fully-fledged hospital, in this
growing mining community. In addition, the Group is in advanced
negotiations to secure a hospital management contract in Lusaka,
Zambia, and is participating in exploratory discussions with
potential partners in other jurisdictions. The Board looks forward
to updating shareholders in the near future regarding these
developments.
Results and dividend
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