Chairman & Managing Director's Review
Dear Fellow Shareholder,
Despite ongoing disruption from the COVID-19 (COVID) pandemic,
Ramsay reported a solid result in FY21. The strength of the
underlying business, together with an expanded pipeline of
growth opportunities, provides us with confidence for the medium
to long term.
Over the past 12 months, Ramsay employees and clinicians have
worked hard to support the public health campaign against COVID. In
Europe, Ramsay Santé has played a critical role assisting the French
Government by treating more than 11,000 COVID patients since
the start of the pandemic. Across the Nordic region, our employees
have stepped up to treat COVID patients, provide polymerase chain
reaction (PCR) testing in our primary health care facilities and, more
recently, to help roll-out the vaccination program.
In the UK, Ramsay has been the leading provider of independent
hospital services to the National Health Services (NHS) through both
the provision of hospital capacity and treating non-COVID priority
cases. Ramsay UK has looked after more than 650,000 NHS patients,
hosted more than 20 NHS services from its facilities and provided
16,000 plus cancer treatments for NHS patients.
Our joint venture in Asia, Ramsay Sime Darby, has been assisting with
escalating COVID case numbers in Indonesia and Malaysia since the
start of 2021, providing testing and vaccination services and treating
both public and private COVID patients.
In Australia, Ramsay employees have been deployed in public
hospitals and aged care facilities impacted by the pandemic
and Ramsay hospitals in New South Wales have been treating
non-COVID patients to help ease pressure on the public system. In
recent months, more than 400 Ramsay people have volunteered for
community health roles such as working at public vaccination hubs.
On behalf of the Board and senior management, we would like to
thank our team around the world for living the values of The Ramsay
Way, embodying Paul Ramsay's vision of ‘people caring for people’
by delivering the best of care to people often facing the worst of
circumstances. We would also like to extend our condolences to
the families of team members who have passed away from COVID
and those who have lost loved ones to this disease over the past
We are pleased to announce that, despite the COVID disruption,
Ramsay reported a 58.1% increase in statutory net profit to $449.0m
for the 12-month period to 30th June 2021 (FY21). The solid growth
in earnings reflects strong growth in surgical admissions across our
regions when lock-down restrictions were not in place. The results
continued to be impacted by surgical operating restrictions, as well
as the flow-on impact of social distancing and lock-downs on demand
for non-surgical services. Earnings included revenue and cost
support from governments in Europe and the UK for the use of our
facilities and services. The result also includes the impact of higher
costs associated with operating in a COVID environment and the
margin impact of both a drop in non-surgical admissions and a higher
proportion of lower acuity surgical services in the catch-up volume.
Our strong balance sheet and cashflow has been maintained with
leverage at the wholly owned funding group level, on a proforma
basis, declining to 0.7 times, driving lower financing costs over the
year. We have a significant pipeline of growth opportunities and
continue to explore strategic investment options to build scale or
move into new and adjacent health care services, while remaining
focused on maintaining our financial discipline as we look to improve
returns across the business.
The Board determined a fully franked final dividend of 103 cents per
share, taking the full year dividend to 151.5 cents per share, a material
increase on the COVID impacted FY20 result and flat on the pre
COVID FY19 full year dividend. The higher-than-normal payout ratio
of 79% reflects the Board's confidence in the strength of the business
and in recognition of those shareholders who have supported the
Company through the pandemic.
The Asia Pacific region reported an 18.9% increase in EBIT to
$636.0m earned on an increase in total segment revenue and other
income of 7.3% to $5,464.1m. The Australian result was impacted by
surgical restrictions and general disruption from a four-month lock-down
in Victoria in the first half of the fiscal year and multiple snap
state lock-downs in the second half of the fiscal year. The combined
cost of the business interruption is estimated at $83m. Despite the
lock-downs, admissions growth was positive against both FY20 and
FY19, reflecting double digit growth in surgical admissions and more
subdued growth in non-surgical admissions.
We continued to invest in a strong pipeline of brownfield and
greenfield developments, with total capital expenditure of $260.0m
over the course of the year. Brownfield projects completed during
the year delivered 25 new net beds, one new operating theatre and
seven renal chairs.
Our joint venture in Asia, Ramsay Sime Darby was impacted by a
significant rise in COVID cases in the second half of the year, which
resulted in surgical restrictions as medical systems struggled to deal
with the rise in hospitalisations. The business was supported during
the period by conducting extensive PCR testing in Malaysia and
Indonesia and assisting with the vaccine roll-out.
Our UK business reported an 83.4% increase in EBIT to $92.8m
on a 21.3% decrease in revenue from patients and other revenue
to $606.5m. The business was also heavily impacted by COVID
outbreaks. The business operated under revised agreements with
the NHS for most of the year, which provided Ramsay UK with
net cost recovery for the services provided to the NHS, as well as
accommodating the return of some capacity for private patient
activity and routine NHS elective surgery activity. As stay-at-home
restrictions were eased in the fourth quarter of the fiscal
year, both private health insurance and self-funded admissions
came back strongly. In April, we moved back to operating under
normal arrangements with the NHS, however public sector volume
recovered more slowly than the private sector.
The business continued to invest in building out its footprint, with two
new facilities opened in the 12-month period and another new facility
opening recently. The business has also increased its investment
in capabilities and clinical excellence, as it seeks to attract a higher
share of private sector patients and doctors.
4 Annual Report 2021