This article is from the Australian Property Journal archive
RAMSAY Health Care has revealed a $125 million write-down across six of its UK hospitals following a review of its assets and a company restructure, while weaker than anticipated Australian operations has prompted a downgrade of operating earnings for the 2018 financial year.
The ASX-listed group said the sites identified during the review as requiring “onerous lease provisioning and/or fixed asset impairment” included Berkshire Independent, Ashtead, Mount Stuart, Croydon, Renacres and Clifton Park hospitals, Berkshire Independent and Ashtead accounted for £60 million net of tax of the provision, of the circa £75 million total.
Ramsay managing director, Craig McNally said that notwithstanding the positive tariff adjustment in the UK, which came into effect in April 2018, NHS demand management strategies are having a significant negative impact on volumes despite the significant and increasing number of people in the UK awaiting treatment.
“While the funding boost for the NHS announced this week by the UK Prime Minister is a positive step, we do not anticipate immediate benefits for us and expect operating conditions in the UK to remain challenging in the medium term,” he said.
There is no impairment on the goodwill of the UK business, and are non-cash in nature. The charge will be excluded from Ramsay’s core NPAT for the 2018 financial year not effect its final dividend for FY18.
However, Ramsay said it has also experienced weaker growth rates in procedural work and inpatient admissions in its Australian operations in recent months, as well as delays in the rollout of the Ramsay Pharmacy franchise network.
“Having just received disappointing May results, and with no material improvement anticipated for June, Ramsay advises that its FY18 Core EPS growth is now expected to be approximately 7% compared to the guidance of 8% to 10% previously provided in conjunction with the release of its results for the six months ended 31 December 2017,” McNally said.
“In the meantime, we continue to focus on operational efficiency improvements in our UK business, which have included a restructure in recent months, as well as focusing our efforts on building our non-NHS business.
“Ramsay expects operating conditions in both the UK and Australia to remain challenging.
“In addition to the recent slowdown in the UK, we are also facing more challenging market conditions in Australia with lower growth in procedural work and inpatient admissions, which has adversely impacted case mix in our Australian hospitals. Given the current climate around private health insurance and affordability, we expect this trend will continue into FY19,”
McNally said the group would continue investing upgrading facilities, and to invest strategically in brownfield expansions.
Australian Property Journal
