5. OPERATING AND FINANCIAL REVIEW
RAMSAY HEALTH CARE LIMITED
• Ramsay’s FY22 result will be impacted by the effectiveness of
the ongoing global response to the COVID pandemic, including
the success of vaccination programs in each region in reducing
the number and severity of COVID cases. Vaccination rates
will dictate the extent to which each region can operate on an
unrestricted capacity basis and will influence patient and doctor
comfort levels in returning to a hospital environment for both
surgical and non-surgical services.
• Surgical backlogs and latent demand for non-surgical services
are expected to continue to drive volumes as countries emerge
from lock-downs. Ramsay expects to assist with relieving
pressure on public waiting lists. The pace at which backlogs
are addressed will be dependent, to an extent, on governments
providing health systems with additional funding.
• In Australia, the 1HFY22 results will be impacted by reduced
activity levels flowing from the lock-downs in NSW, Queensland
and Victoria. The EBIT impact of lock-downs in July in Australia
was approximately $13m (inclusive of higher costs associated
• Due to the introduction of surgical restrictions on 23rd August
2021 at seven of Ramsay's hospitals in Greater Sydney, the total
EBIT impact in FY22 is forecast to be significantly more material
and will depend on the duration of the restrictions. By way of
reference, the estimated EBIT impact of an approximately 90
day restriction on elective surgeries in Victoria in 2020 was
$70m. Ramsay's business in NSW is approximately twice the
size of Victoria.
• In the absence of further lock-downs, earnings are expected
to improve as peak COVID costs decline and further business
efficiencies are identified. While margins are expected to
improve through a return to a pre-COVID case mix over time
and peak COVID costs abating, the results will continue to be
impacted by higher usage and elevated costs of PPE and other
ongoing costs associated with social distancing and screening
(refer Divisional Results for further information on the Outlook
for Asia Pacific).
• In the UK, the business is focused on the significant opportunity
associated with the backlog of privately insured and self-funded
patients in the UK and increasing its market share of these
segments over time through further investment in clinical
excellence to attract doctors and patients.
• Ramsay UK signed a new National Increasing Capacity
Framework Agreement with the NHS for an initial term of two
years, plus a two-year extension. The business will continue
to support the NHS priorities flowing from the impacts of the
pandemic and will work with the NHS to assist with addressing
the backlog in elective procedures and treatments and waiting
• Activity in July and August has been impacted by snap 10-day
isolation orders notified by the UK Government's COVID tracing
app. This has resulted in employees, doctors and patients being
forced to isolate at short notice, driving the cancellation of
surgeries. As the rules stipulating isolation upon receipt of an
app notification are rolled back, the recovery in admissions is
expected to continue.
• The UK business will have the full year benefit of capacity
in three new facilities completed in the last twelve months.
The business will continue to look for opportunities to expand
the hospital footprint with new greenfield sites (refer Divisional
Results for further detail on the outlook for the UK).
• The French Government has extended the revenue guarantee
decree issued in April 2021 for the period 1 January - 30 June
2021 to 31 December, providing support and certainty to
Ramsay Santé. The businesses in the Nordics are expected
to continue to perform strongly ex-lockdowns, as countries in
the region emerge from COVID and the backlog in demand for
health care services is addressed (Refer Divisional Results for
further detail on the outlook for the Europe).
• COVID case numbers in France and the Nordic region
increased in July and August, driving higher hospitalisations;
both businesses will be impacted by any further lock-downs.
• Ramsay will continue to invest in the business and optimise its
facilities and footprint to strengthen its competitive advantage
and leverage the scale of the business. Total Group capital
expenditure for FY22 is expected to be in the range of
$900m-1.1bn. The increase in capital expenditure is primarily
being driven by an increase in brownfield capital expenditure in
Australia, combined with growth capital expenditure in Europe
and the UK and an increase in digital investment in the UK.
• Capital expenditure is expected to remain at elevated levels in
FY23-FY25 in light of the significant development pipeline in
the Australian business.
• Ramsay’s strong balance sheet and cashflow position the
business well to deliver on its long-term strategy and the
business will remain disciplined in its approach to investment.
• As part of its commitment to sustainability, Ramsay has
commenced aligning its reporting with the Taskforce for
Climate related Financial Disclosures (TCFD) recommendations
• Investment in the Ramsay Cares sustainability strategy will be
focused on the mental health and wellbeing of employees,
setting the foundations to reduce the Company's energy
intensity and emissions and an emphasis on responsible
sourcing within medical supply chains.
16 Annual Report 2021