Managing Director's Report
Dr Lim Cheok Peng
Group President &
Chief Executive Officer
Parkway Holdings Limited
The year 2007 was one of sterling operational and financial performance for ParkwayHealth:
- The Group's total revenue rose 29% to S$869.7 million (proforma) in FY2007;
- Net profit, excluding exceptional items, was S$90.3 million;
- Contributions from all divisions also grew;
- Revenue for the Singapore Hospitals rose by 30% to S$463 million over prior year;
- International Hospitals turned in S$172.6 million (proforma) in revenue while
- Healthcare Services division brought in S$229.4 million (proforma).
In what was a record for ParkwayHealth, the Group reported a 35% rise in net profit (before exceptional items) which translates to a growth of 31% in earnings per share (EPS). We also achieved strong EBITDAR1 growth across all divisions. EBITDAR for Singapore Hospitals climbed 11% to S$114.7 million. EBITDAR for International Hospitals was up 32% to S$28.1 million (proforma) while Healthcare Services division rose 78% to S$49.6 million (proforma).
On 23 August 2007, the Group disposed of its interest in hospitals and medical units in East Shore Hospital, Gleneagles Hospital and Mount Elizabeth Hospital, into Parkway Life REIT.
The disposal gave rise to an exceptional gain of S$221 million which we utilized to reward shareholders with a special cash dividend of S$85.1 million. Our non-executive staff was also recognized when a special bonus of S$7.7 million was paid out to them at the year end.
Importantly, for our shareholders, Parkway's Board of Directors declared a final tax-exempt one-tier dividend of 4.51 cents per share, equivalent to 5.50 cents per share less 18.0% tax. This would bring the total dividends to an equivalent amount of 24.45 cents less 18.0% tax or 10% above last year's gross dividend payment.
The Group's overall quality, service, finance and growth goals were set out in the Enterprise Strategy Map and measured through the corporate balance scorecard.
Early in 2007, we undertook a review of employee compensation to retain top talent and engaged employees. To consolidate the Group's focus to provide the finest quality in health care, the Singapore operations was re-organised to reflect a matrix structure comprising multi-disciplinary, cross-functional teams. As part of the corporate re-branding exercise, we launched aggressive service excellence activities to reiterate the values we have adopted to achieve the highest levels of quality care and service.
Similarly our medical specialties and services were grouped into Eight Clinical Programmes which will offer patients a seamless, integrated, and comprehensive care across the Singapore hospitals. The effort to establish the highest level of quality care has been recognised by the Joint Commission International (JCI), which all three Singapore hospitals have received full accreditation.
In addition, our quality management team commenced tracking clinical performance measures to ensure we are benchmarked against the best in the world.
Overall, our International Hospitals delivered strong revenue with good patient numbers to match. There are now 15 hospitals under ParkwayHealth's stable and we have been able to realize efficiencies and synergies that produce results.
Since the Pantai Group of hospitals came under our management, operations have been streamlined. EBITDAR margins have turned in positive results. The Pantai Medical Centre in Kuala Lumpur, Hospital Pantai Ayer Keroh and Hospital Pantai Batu Pahat have all started building capacity.
Likewise, our International Operations team will be equally involved in the development of a 600-bed greenfield, multi-specialty hospital in Mumbai, India. Indeed, we are looking forward to exciting times ahead.
Growing our operations across Asia will hinge on a strong base in Singapore. While the Singapore facilities are upgraded and renovated over the next few years, this is not sufficient to meet the government's aim of one million medical tourists by 2012. The number of patients admitted to our Singapore Hospitals grew 1.9% over last year. As you may be aware, our Singapore Hospitals are already operating at capacity, which is why we need to build new hospitals.
The growth strategy therefore pivots on whether Parkway can acquire more land in Singapore where this precious resource remains very limited. Winning the new hospital site at Novena will allow us to meet higher demand for capacity and entrench ParkwayHealth's position as leading private healthcare provider in Singapore.
This is the culmination of a whole year of preparation that galvanizes the people of ParkwayHealth to meticulously plan for and build a "Hospital of the Future". Our Singapore Operations team will be fully engaged in the planning and construction of ParkwayHealth's new hospital which we expect to be operational by July 2011.
This new Hospital of the Future will incorporate patient-focus features that reflect our core values to treat those we serve and each other with compassion, dignity and respect.
ParkwayHealth is well positioned for future growth considering the strong fundamentals of Singapore's private healthcare environment and our pipeline of other expansion projects.
I would like to thank the ParkwayHealth management team and all employees for their hard work and commitment during the year.We would also like to express our appreciation to our executives who retired during the year for their vast contribution and energy without which Parkway certainly would not have grown in reputation internationally as we have.
We also extend a warm welcome to the many new health care executives, accredited doctors, nurses and staff whom we have recruited and are training to meet our operational needs of the future.
My management and I are particularly happy to thank our doctors and nurses for their unwavering dedication, excellent patient care and integrity, which will place ParkwayHealth as a leading health care brand for Singapore and across Asia.
1EBITDAR: Earnings before interest, tax depreciation, amortisation and rental. Following thelaunch of the Parkway Life REIT IPO in August 2007, the Q3 2007 results will commence reporting EBITDAR (ie. excludes REIT rental).
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