ANNUAL REPORT 2023 Touching Transforming
At IHH, we are deeply committed to fostering sustainable growth with foresight and dynamism, all while holding onto our aspiration to Care. For Good. With the trust and confidence bestowed upon us by all stakeholders, we persistently strive to challenge the existing healthcare norms and put our patients' needs first to build lasting relationships. This is how we embody our heartfelt purpose of ‘Touching Lives, Transforming Care’.
Group Overview 2 A Purpose-Led Approach 4 Navigating This Report 5 Investment Case 6 Clinical Excellence 10 IHH at a Glance 12 Financial Highlights 14 Operational and Sustainability Highlights 16 Corporate Milestones 2023 18 Awards and Accreditations Strategic Report 22 Chairman’s Statement 26 Group CEO’s Message 30 Business Strategy 32 Business Model 34 Impact of Value Creation 36 Operations Review 36 Malaysia 37 Singapore 38 Türkiye and Europe 39 India 40 Greater China 41 Parkway Life REIT 41 Laboratories 42 Financial Review 44 Market Outlook 48 Stakeholder Engagement 52 Our Material Matters 55 Risk Management 56 Principal Risks Sustainability 61 Sustainability Opening Statement 62 Sustainability Approach 64 Sustainability Highlights 65 Sustainability Goals 66 Sustainability Snapshots 68 Sustainability Governance Governance 71 Board of Directors 78 Group Management 84 Corporate Governance Overview Statement 101 Nomination and Remuneration Committee Report 106 Audit Committee Report 109 Risk Management Committee Report 111 Statement on Risk Management and Internal Control 119 Investor Relations Report Other Information 122 Additional Compliance Information 124 Directors’ Responsibility Statement Financial Statements 126 Directors’ Report 132 Statement by Directors 133 Statutory Declaration 134 Independent Auditors’ Report 137 Statements of Financial Position 139 Statements of Profit or Loss and Other Comprehensive Income 140 Statements of Changes in Equity 146 Statements of Cash Flows 148 Notes to the Financial Statements Additional Corporate Information 249 Analysis of Shareholdings 251 List of Top 30 Largest Shareholders 253 List of Top 10 Properties 255 Notice of Fourteenth Annual General Meeting Form of Proxy Annual Report 2023 1 Content
A Purpose-Led Approach Patients First We put patients’ needs first Integrity We do the right thing Empathy We listen with our hearts Teamwork We are better together Excellence We champion continuous improvement and innovation Values By touching lives and transforming care, we aspire to uplift the healthcare experience of patients and local communities all over the world. Our strongly rooted values not only define our actions as a group, but also guide our strategy, decision-making, and policies, fostering a culture of excellence and patientcentric service at IHH. Our Purpose Our Commitment Group Overview To our patients and their loved ones We will put our patients’ needs first and go the extra mile to provide quality and exemplary care. To our people We will build a caring and inspiring environment for our people to succeed and shape the future with us. To our partners We will work together with respect and honesty for mutual benefit. To our shareholders We will build long term sustainable growth and shareholder value. To our communities We will do good beyond our healthcare services. To our planet We will make choices that protect the environment and preserve it for future generations. IHH Healthcare Berhad 2
ACE Framework In December 2023, we unveiled the new ACE framework with refined strategic priorities. The framework serves as our beacon for sustainable growth and value creation for our stakeholders. Our Strategic Priorities Align to Propel Profitable Growth All IHH operations will be aligned with our aspiration to Care. For Good. and co-create a sustainable healthcare system while delivering profitable growth. Challenge to Transform We are challenging ourselves to transform and future-proof the organisation by initiating projects to enhance process efficiencies across the Group and in our markets. Empower to Excel We will adopt a localised approach, empowering all our markets and their operations and functions to chart and drive their growth trajectories. These are done in alignment with national healthcare agendas and our continued commitment to create quality care and outcomes for patients. Grow Organically IHH remains steadfast in expanding bed capacities, driving patient volume growth to increase occupancy and upgrading facilities and equipment to enhance revenue intensity. Expand Across Healthcare Continuum We will grow our ambulatory care offerings and improve primary care clinic penetration in selected markets, in line with national healthcare agendas. Capture Inorganic Opportunities We continually explore and evaluate earnings-accretive assets in existing and new markets to capture new opportunities. Develop New Growth Engines We are expanding vertically into the laboratory and diagnostic business, alongside targeted investments in innovative healthcare solutions and seamless digital services to complement our existing offerings. Turnaround Underperforming Assets We endeavor to maximise the potential of our underperforming assets. Annual Report 2023 3
Navigating This Report Our Reporting Suite IHH Annual Report for the financial year ended 31 December 2023 is supplemented by our standalone Sustainability Report 2023. Our reporting suite can be accessed online. Reporting Suite Annual Report 2023 Sustainability Report 2023 Disclosure • Chairman’s Statement • Group CEO’s Message • Operations Review • Financial Review • Corporate Governance Overview Statement • Audit Committee Report • Statement on Risk Management and Internal Control • Directors’ Report • Independent Auditors’ Report • Financial Statements • Global Reporting Initiative (GRI) • Sustainable Development Goals Disclosure (SDGD) Reporting Frameworks • Main Market Listing Requirements of Bursa Malaysia Securities Berhad (MMLR) • Malaysian Code on Corporate Governance 2021 • Companies Act 2016 (CA 2016) • Malaysian Financial Reporting Standards (MFRS) • International Financial Reporting Standards (IFRS) • Main Market Listing Requirements of Bursa Malaysia Securities Berhad (MMLR) • SGX Listing Rule 711 (A) and (B) • Global Reporting Initiatives Universal Standards 2021 Please scan the QR code to refer to our Sustainability Report. Navigation Icons Refer to this guide while traversing the report. Five Strategic Priorities ACE Framework Empower to Excel Capture Inorganic Opportunities Stakeholder Engagement Senior Management Doctors, Nurses and Employees Investors and Shareholders Patients Accreditation Bodies Regulators Intermediaries Suppliers and Service Providers Local Communities Principal Risks Group Overview Cybersecurity and Data Privacy Foreign Exchange Pandemic Climate Change Geopolitical Develop new growth engines Expand across healthcare continuum Grow Organically Align to propel profitable growth Challenge to Transform Turnaround underperforming assets IHH Healthcare Berhad 4
As one of the world’s largest healthcare networks, with over 80 hospitals in 10 countries across Asia and Europe, IHH Healthcare offers our patients a full spectrum of integrated healthcare services around our portfolio of trusted healthcare brands. Our excellent reputation over time is underscored by these competitive advantages. Seven Prestigious and Trusted Hospital Brands Deep Operating Capabilities At the Forefront of Change Commitment to Sustainability Our distinguished brands – Acibadem, Mount Elizabeth, Prince Court, Gleneagles, Fortis, Pantai, and Parkway – are amongst the most reputable globally. We are proud of our leading brands that represent healthcare excellence and are united under one purpose: to touch lives and transform care. Global Scale and Influence With our extensive network, we have been able to provide healthcare that is accessible, efficient and of high value. We prioritise the optimal balance of value and quality to ensure patients receive exceptional care at all our hospitals in all markets. From cutting-edge medical technologies to personalised patient care, our brands set the gold standard in healthcare excellence. As a nod to our operational excellence and digital transformation, our healthcare group is frequently recognised for our awardwinning innovations in the healthcare industry. Innovation is at the heart of value creation. We form strategic partnerships to stay abreast of the latest technologies to improve patient care and operational capabilities. One such innovation is the use of Artificial Intelligence (AI) for accurate bill estimation, where IHH was one of the first healthcare groups in the world to roll out, which provides patients peace of mind. We are dedicated to driving sustainable growth while keeping to our core aspiration to Care. For Good. Every touchpoint with our patients, people, public and planet is an opportunity for us to make a positive impact. Embodying Care at Every Touchpoint Our success is not just in the numbers; it’s in the lives touched and the communities impacted. While IHH boasts a distinguished stable of brands, global scale and clinical excellence, what truly sets us apart is our aspiration to Care. For Good. Annual Report 2023 5 Investment Case
Clinical Excellence Group Overview IHH Healthcare has embarked on a journey to improve clinical outcomes and enhance patient experience. Our wide-ranging initiatives include the introduction of clinical quality indicators, investing in new medical technologies, conducting service training and much more. Our efforts are aimed at ensuring patients feel cared for and costs are transparent at every touchpoint. 2. Providing continuous training for healthcare workers We actively promote and facilitate knowledge sharing across and within our markets. By drawing from each other’s successes and experiences, we can enhance efficiency, effectiveness, and performance of the entire organisation. The IHH Quality Summit is an annual event that marks our quality journey and accomplishments, while also honouring individuals who devote themselves to delivering exceptional care. At our eighth Quality Summit held in 2023, delegates across the IHH network, academics and industry experts gathered to explore the theme of ‘Future of Care’. At the event, we also introduced the Operational Excellence Symposium aimed at developing a ground-up culture of continuous improvement in advancing healthcare management. Separately in 2023, IHH Healthcare hosted four medical symposiums in India, Türkiye and Singapore to unite professionals across IHH, fostering collaboration across business units and driving collective growth and innovation. The symposiums, covering topics including organ transplants, oncology, reproductive medicine and robotics-assisted surgery, were a platform for sharing medical best practices and key advances, introducing attendees to capabilities across IHH and building a community to facilitate knowledge exchange and patient referrals. 3. Investing in new medical technologies and clinical offerings Mount Elizabeth Novena Hospital, a renowned private hospital in Singapore, opened its new Proton Therapy Centre in May 2023. The state-of-the-art facility is the first of its kind among private hospitals in Southeast Asia. It is also IHH Healthcare’s most substantial single investment in medical technology. Proton therapy painlessly and precisely targets tumours in sensitive areas like the head or the neck while minimising damage and radiation exposure to surrounding healthy tissues and organs. In other markets, we have also expanded our breadth and depth of medical services through the establishment of new treatment centres and introduction of advanced technologies such as artificial intelligence (AI) to improve disease diagnostics. 4. Adhering to a robust clinical governance framework IHH Healthcare’s commitment to excellent clinical and patient care is reflected in our adherence to a robust clinical governance framework. Through stringent quality standards, continuous monitoring, and evidencebased practices, we foster a culture of accountability, transparency, and continuous improvement, ultimately benefiting patients and stakeholders alike. Through this steadfast commitment, we uphold IHH’s reputation as a leader in the healthcare industry. 1. Tracking and measuring clinical performance and outcomes using clinical quality indicators Since the implementation of our Value-Driven Outcomes (VDO) strategy in Q4 2020, we have doubled our number of VDO procedures from four to eight, hence providing significantly more patients with high-quality and cost-efficient healthcare services. We started at a baseline of 113 clinical quality indicators (CQIs) in 2022 – our goal is to double this number by 2025. With growing CQIs, we can comprehensively and accurately track and monitor clinical performance and outcomes. An increase in CQIs usually co-relate with a lower outcome percentage, but IHH is striving to achieve a 90% target by 2025. This commitment to excellence is at the core of our mission. IHH Healthcare Berhad 6
Transformative Treatments 2023 IHH Healthcare Singapore • CAR T-cell therapy: Groundbreaking immunotherapy that reprogrammes a patient’s immune cells to recognise and attack cancer cells. It offers hope to patients with certain types of leukemia and lymphoma that have been resistant to other treatments. • da Vinci Robotic Surgical System: Surgical system that allows surgeons to perform minimally invasive procedures with greater precision and control. Patients benefit from smaller incisions, reduced pain, shorter hospital stays, and faster recovery. This reflects IHH’s expertise in minimally invasive surgery and its ability to offer superior outcomes for patients, available at Gleneagles Hospital Singapore. Acibadem (Türkiye) • In-Vitro Fertilisation (IVF): Some 2,200 embryos were transferred in 2023 with the rate of 59.5% positive pregnancies and 42.4% live births. This showcases our expertise in reproductive medicine and the ability to attract a diverse patient population seeking fertility solutions. Fortis (India) • Magnetic Resonance Linear Accelerator (MR LINAC): Combines MRI scan with radiation therapy, allowing for real-time visualisation of tumors during treatment. Patients benefit from more precise radiation delivery and fewer side effects, available at Fortis Memorial Research Institute Gurgaon (FMRI). • Gamma Knife: Non-invasive form of radiosurgery that delivers highly focused radiation to tumors in the brain. Patients benefit from precise tumor targeting and minimal damage to surrounding healthy tissue, available at FMRI. IHH Healthcare Malaysia • Actinium treatment: Targeted therapy for prostate cancer that delivers radiation directly to cancer cells while sparing surrounding tissues. Patients benefit from more effective treatment with fewer side effects. This is only offered at IHH hospitals in Malaysia. • CORI robotic system: Technology to assist surgeons during joint replacement surgeries, offering greater precision and accuracy. Patients benefit from smaller incisions, reduced pain, faster recovery, and improved long-term outcomes. Annual Report 2023 7
Group Overview Clinical Excellence IHH Healthcare Malaysia • Digital PET CT and FAPI PET & CT scan: IHH Malaysia is the first in Southeast Asia to offer FAPI PET/CT, which uses a new type of radioisotope. The advanced imaging techniques are used to detect and stage various types of cancers and patients benefit from more accurate tumor detection and treatment planning. • Mona Lisa for prostate biopsy: Cutting-edge device used for prostate biopsy, providing more accurate and less invasive tissue sampling. Patients experience reduced discomfort, fewer complications, and faster recovery, ideal for patients seeking a less invasive approach to prostate care. Fortis (India) • MRIs for imaging services: Commissioned at three Fortis hospitals (Anandapur, Kolkata; BG Road, Bengaluru; and Manesar, Gurugram). • Cath labs to enhance cardiac care: Commissioned and under delivery at seven Fortis hospitals (Fortis Escorts Heart Institute; Greater Noida; Anandapur, Kolkata; Nagarbhavi, Bengalaru; Cunningham Road, Bengaluru; BG Road, Bengaluru; and Hiranandani Hospital, Vashi). IHH Healthcare Singapore • Photon Counting CT: Revolutionary imaging technology that offers higher resolution and lower radiation doses compared to traditional CT scans. Patients benefit from more detailed images and reduced radiation exposure, available at Mount Elizabeth Hospital. Gleneagles Hospitals (India) • MRI upgrade for Neurology Programme: Implemented at Gleneagles BGS Hospital, Kengeri, Bengaluru. • Mammography system with 3D Tomosynthesis: Advanced imaging technology used for breast cancer screening that captures multiple images of the breast from different angles, creating a three-dimensional view. This allows doctors to examine breast tissue layer by layer, making it easier to detect small abnormalities that may be hidden in a standard mammogram, available at Gleneagles HealthCity, Chennai. • Advanced cath labs: Intravascular ultrasound (IVUS) imaging is now available at Gleneagles Hospital, Lakdi-Ka-Pul, Hyderabad. Additionally, at Parel, Mumbai, Gleneagles’ bi-plane cath lab allows for more advanced imaging. Innovative Diagnostics 2023 IHH Healthcare Berhad 8
IHH Healthcare Singapore • Genomic Centre: Advanced genetic testing and analysis to personalise patient care and treatment plans. Patients benefit from tailored treatment approaches based on their unique genetic makeup, available at Mount Elizabeth Novena Hospital. • New ambulatory care facility: Centrally located at Woodleigh, Parkway MediCentre provides convenient and comprehensive outpatient care to the community. IHH Healthcare Malaysia • MyHealth360: A digital patient-centric mobile platform that streamlines patients’ healthcare journey so they can take charge of their health and well-being on one single app. Gleneagles Hong Kong • Oncology symposium: Jointly organised by IHH Healthcare and Hong Kong University’s medical faculty departments to promote clinical collaboration, leveraging cuttingedge medical capabilities to advance cancer care and treatment options. Expanding Access and Quality 2023 Annual Report 2023 9
IHH at a Glance As at 31 March 2024 Group Overview With a network of 57 hospitals throughout the region, including Malaysia, Singapore, India and Greater China, Parkway Pantai is one of Asia’s largest integrated private healthcare groups. Acibadem Holdings is Türkiye’s leading private healthcare provider, offering integrated healthcare services across 24 hospitals in Türkiye, North Macedonia, Bulgaria, the Netherlands and Serbia. The Acibadem brand is renowned for its clinical excellence in Europe and North Africa. 100% 31.17% 100% 35.56% 90% 100% IHH Healthcare Berhad 10
Prince Court, a distinguished hospital for Malaysians, expatriates and medical tourism patients, is recognised for its outstanding achievements and breakthroughs in medicine. Prince Court Medical Centre Setting the healthcare benchmarks in Türkiye and the region, this visionary brand combines the top experts and latest technology with the contemporary sophistication of a five-star hotel, offering generous personal space and attention to detail. Acibadem Mount Elizabeth The two hospitals in Singapore are among the world’s top destinations for medical treatment, known for top experts, excellent clinical outcomes and exceptional personalised service. Fortis Healthcare is a leading integrated healthcare service provider in India. The healthcare verticals of Fortis primarily comprise hospitals, diagnostics and day care specialty facilities. Fortis Healthcare Located in our key Asian markets, this world-class private hospital brand is known for its international standing and stature, delivering superior clinical outcomes in extensive modern facilities. Gleneagles Born in Singapore, Parkway is one of Asia’s leading brands in private healthcare, offering the full spectrum of integrated healthcare services in clinics and hospitals and a wide range of ancillary services. Brands include Parkway Hospitals, Parkway Shenton, Parkway Laboratories and Parkway Radiology. Parkway Pantai Conveniently located across Malaysia, Pantai proudly serves families and communities with quality healthcare, always delivered with friendly, familiar smiles. Our Portfolio of Excellence in Healthcare We are proud of our leading brands in our various markets, each underpinned by an outstanding reputation for clinical outcomes and quality care. Annual Report 2023 11
1,279.2 1,380.7 FY19 FY20 FY21 FY22 FY23 1,594.8 715.3 920.7 50,192.2 FY19 FY20 FY21 FY22 FY23 48,467.5 45,510.3 44,534.3 45,053.3 5,573.0 5,033.3 4,912.8* Singapore 3,886.5 4,289.8 FY19 FY20 FY21 FY22 FY23 Singapore FY19 FY20 FY21 FY22 FY23 1,626.7 1,693.0 1,359.5 1,475.1 1,483.9* 3,683.6 2,727.2 3,073.7* Malaysia 2,187.1 2,331.1 FY19 FY20 FY21 FY22 FY23 Malaysia FY19 FY20 FY21 FY22 FY23 937.3 760.1 555.9 675.2 846.8* 14.53 FY19 FY20 FY21 FY22 FY23 15.09 17.15 7.13 9.49 India FY19 FY20 FY21 FY22 FY23 600.4 664.5 200.5 360.0 492.3* 3,554.5 3,728.8 3,175.1* India 2,655.8 3,320.9 FY19 FY20 FY21 FY22 FY23 5,945.1 4,347.2 Türkiye and Europe 3,462.2 3,764.7 4,455.3* FY19 FY20 FY21 FY22 FY23 Türkiye and Europe FY19 FY20 FY21 FY22 FY23 1,198.9 796.1 853.5 1,058.2* 1,249.2 Financial Highlights Group Overview Revenue by Strategic Business Units (RM million) EBITDA by Strategic Business Units (RM million) Profit After Tax and Minority Interest (PATMI) excluding exceptional items (RM million) Basic Earnings per Share excluding exceptional items (sen) Total Assets (RM million) * Restated FY2022 due to Labs being a separate business segment. In the charts above, prior to FY2022, Labs was classified as part of the Singapore, Malaysia, India, and Türkiye and Europe Hospital and Healthcare business segment. The above charts are not drawn to scale. See pages 42 to 43 on Financial Review for more information. IHH Healthcare Berhad 12
Notes The above financial summary may not be comparable across the periods presented due to the changes in the Group structure. For changes in the accounting policies, adoption of new and/or revised accounting standards, as well as changes in presentation of financial statements for the current financial year, only the comparative figures for the previous year are restated to conform with the requirements arising from the said changes or adoption. Comparative figures for the previous year are restated, where applicable, upon the completion of the Purchase Price Allocation on the Group’s acquisitions of subsidiaries as required under MFRS 3, Business Combinations. 1. Labs comprise the Group’s diagnostic laboratory business. In the table above, prior to FY2022, Labs was classified as part of the Singapore, Malaysia, India, and Türkiye and Europe Hospital and Healthcare business segment. 2. Others comprise mainly corporate offices as well as other investment holding entities. 3. Arises from the application of MFRS 129, Financial Reporting in Hyperinflationary Economies for component entities whose functional currency is the Turkish Lira. 4. Being earnings before interest, tax, depreciation, amortisation, exchange differences, share of results of associates and joint ventures and other non-operational items. 5. Being net assets attributable to ordinary shareholders (excluding non-controlling interests). 6. Being net assets attributable to ordinary shareholders (excluding non-controlling interests) less goodwill and intangible assets. 7. Being PATMI for the year over average of equity attributable to owners of the Company as at year-end and beginning of the year. 8. Debt includes loans and borrowings as well as lease liabilities and bank overdrafts. FY2019 FY2020 FY2021 FY2022 FY2023 A. Income Statement (RM Million) Revenue by Strategic Business Units Singapore 4,289.8 3,886.5 5,033.3 4,912.8 5,573.0 Malaysia 2,331.1 2,187.1 2,727.2 3,073.7 3,683.6 India 3,320.9 2,655.8 3,728.8 3,175.1 3,554.5 Greater China 604.6 662.4 876.9 998.4 1,306.8 Türkiye and Europe 3,764.7 3,462.2 4,347.2 4,455.3 5,945.1 Southeast Asia 190.8 138.4 – – – Hospital and Healthcare 14,501.9 12,992.4 16,713.4 16,615.3 20,063.0 IMU Health 259.0 248.7 257.6 260.8 53.9 Labs total revenue – – – 1,662.0 1,664.9 Less: Labs inter-segment revenue – – – (602.6) (685.4) Labs1 – – – 1,059.4 979.5 Others2 12.1 8.5 7.6 5.0 5.7 14,773.0 13,249.6 16,978.6 17,940.5 21,102.1 PLife REIT total revenue 347.9 367.0 370.7 376.2 407.8 PLife REIT inter-segment revenue (208.4) (212.0) (217.5) (226.7) (254.7) PLife REIT 139.5 155.0 153.2 149.5 153.1 14,912.5 13,404.6 17,131.8 18,090.0 21,255.2 Hyperinflationary adjustment3 – – – (101.3) (320.4) Total 14,912.5 13,404.6 17,131.8 17,988.7 20,934.8 EBITDA4 by Strategic Business Units Singapore 1,475.1 1,359.5 1,693.0 1,483.9 1,626.7 Malaysia 675.2 555.9 760.1 846.8 937.3 India 360.0 200.5 664.5 492.3 600.4 Greater China (175.5) (146.5) (69.6) (60.3) 74.5 Türkiye and Europe 853.5 796.1 1,198.9 1,058.2 1,249.2 Southeast Asia 69.1 45.6 (0.3) (0.3) (1.8) Hospital and Healthcare 3,257.4 2,811.1 4,246.6 3,820.6 4,486.3 IMU Health 87.2 75.7 86.7 84.8 13.0 Labs1 – – – 369.3 345.4 Others2 (112.0) (107.4) (185.6) (170.7) (120.6) Eliminations – – – 9.2 (0.1) 3,232.6 2,779.4 4,147.7 4,113.2 4,724.0 PLife REIT 294.4 308.9 349.9 278.4 325.8 Eliminations (209.3) (212.0) (218.2) (234.3) (263.6) 3,317.7 2,876.3 4,279.4 4,157.3 4,786.2 Hyperinflationary adjustment3 – – – (106.2) (142.2) Total 3,317.7 2,876.3 4,279.4 4,051.1 4,644.0 Profit After Tax and Minority Interest (“PATMI”) Including Exceptional Items 551.5 288.9 1,862.5 1,548.4 2,951.9 Excluding Exceptional Items 920.7 715.3 1,594.8 1,380.7 1,279.2 B. Financial Position (RM Million) Total Assets 45,053.3 44,534.3 45,510.3 48,467.5 50,192.2 Net Borrowings 6,385.0 7,441.0 5,856.0 7,170.4 7,670.6 Equity attributable to Owners of the Company 22,339.5 21,739.8 22,424.9 26,192.0 29,105.5 C. Financial Ratios Basic Earnings per Share (sen) Including Exceptional Items 5.28 2.27 20.20 17.00 33.52 Excluding Exceptional Items 9.49 7.13 17.15 15.09 14.53 Net Assets5 per Share (RM) 2.55 2.48 2.55 2.97 3.30 Net Tangible Assets6 per Share (RM) 0.88 0.87 0.94 1.16 1.35 Return on Equity7 (%) Including Exceptional Items 2.5% 1.3% 8.4% 6.5% 10.7% Excluding Exceptional Items 4.2% 3.2% 7.2% 5.8% 4.6% Return on Total Assets (%) Including Exceptional Items 1.2% 0.6% 4.1% 3.2% 5.9% Excluding Exceptional Items 2.0% 1.6% 3.5% 2.8% 2.5% Net Debt Equity Ratio8 (times) 0.23 0.28 0.21 0.25 0.24 Annual Report 2023 13
Operational and Sustainability Highlights Group Overview FY2019 FY2020 FY2021 FY2022 FY2023 Malaysia No. of hospitals at end of year 15 16 16 16 16 No. of licensed beds1 at end of year 2,537 2,908 2,961 3,000 2,951 No. of operational beds1 at end of year 2,372 2,696 2,676 2,731 2,822 Inpatient admissions2 218,051 158,944 151,944 205,459 241,123 Average length of stay3 (days) 2.7 2.9 3.1 3.0 3.0 Occupancy rate4 70% 49% 48% 63% 72% Average revenue per inpatient admission (in RM) 7,054 8,428 10,346 9,587 9,925 Singapore No. of hospitals at end of year 4 4 4 4 4 No. of licensed beds1 at end of year 998 998 1,039 1,017 1,017 No. of operational beds1 at end of year 960 991 989 907 793 Inpatient admissions2 78,541 64,071 64,227 61,951 61,197 Average length of stay3 (days) 2.9 3.1 3.0 3.1 3.0 Occupancy rate4 65% 55% 54% 56% 61% Average revenue per inpatient admission (in RM5) 37,543 39,484 41,854 52,769 59,529 India No. of hospitals at end of year 29 31 31 31 29 No. of licensed beds1 at end of year 5,887 6,154 6,011 5,952 5,888 No. of operational beds1 at end of year 4,770 5,004 4,756 4,880 4,991 Inpatient admissions2 363,126 270,581 320,543 298,437 299,506 Average length of stay3 (days) 3.3 3.7 3.8 4.0 4.2 Occupancy rate4 69% 54% 66% 69% 70% Average revenue per inpatient admission (in RM5) 6,190 7,004 8,064 9,300 10,596 Türkiye and Europe No. of hospitals at end of year 21 21 22 24 24 No. of licensed and operational beds6 at end of year 4,157 4,189 4,202 4,780 5,196 No. of overnight beds6 at end of year 2,863 2,893 2,997 3,211 3,450 Inpatient admissions2 221,493 186,662 219,582 234,831 249,829 Average length of stay3 (days) 3.5 3.8 3.8 3.5 3.4 Occupancy rate4 75% 67% 77% 74% 70% Average revenue per inpatient admission (in RM5) 1,947 6,424 6,180 7,736 10,703 Notes The above information comprise operational data relating to hospitals owned by subsidiaries in the Group’s home markets only. It does not include data relating to hospitals owned by joint ventures and associates of the Group, and does not include hospitals that are managed for third parties. Hospitals in Türkiye and Europe do not compile certain operational data, including number of operational beds, the average length of stay and occupancy rate, on the same basis as the rest of the regions and therefore, these numbers may not be comparable. For changes in classification/definitions for the current financial year, only the comparative figures for the previous year are restated to conform with the current classification/definitions. 1. Licensed beds are approved number of beds by the Ministry of Health that the hospital regularly maintains and staffs. Operational beds is an internal measure which includes licensed beds utilised for patients. 2. Represents the total number of overnight inpatients admitted. 3. Represents the average number of days an overnight inpatient stays. 4. Represents the percentage of hospital operational/ overnight beds occupied by inpatients. Occupancy rate may be lower due to new hospitals that are in the ramp up stage. 5. Prior years’ average revenue per inpatient admission had been translated using the exchange rates as at 31 December 2023, so as to be comparable across periods. 6. Under Turkish Law, “licensed beds” refer to the approved number of beds used for observation and treatment of at least 24 hours, including intensive care, premature and infant unit beds, beds in the burn care units and as indicated in the hospital operation licenses. In addition to licensed beds, “operational beds” include beds used for treatments of less than 24 hours such as chemotherapy, radiotherapy and sedation or other beds such as incubators, labour beds, beds for examination, minor treatments and relaxation, from which Acibadem derives revenue and does not require licensing. “Overnight beds” comprise beds used for observation and treatment of at least 24 hours. IHH Healthcare Berhad 14
Our Planet Commitment to Net-Zero by 2050 The Public Close to 1.3m lives touched5 Our People 70,000+ talented and dedicated employees Our Patients 7.4m patients have access to their medical records online 1 Fortis Healthcare and Gleneagles Hospitals (India). 2 Includes 5 hospitals managed for third parties. 3 Europe includes North Macedonia, Bulgaria, Netherlands and Serbia. 4 Overnight beds comprise beds used for observation and treatment of at least 24 hours. 5 Number of lives touched includes cumulative number of patients utilising IHH Healthcare services targeted at reducing antimicrobial use and disease burden, and number of beneficiaries reached through our corporate responsibility programmes. Türkiye and Europe3 24 hospitals 3,450 overnight beds4 249,829 inpatient admissions RM10,703 average revenue per inpatient admission Malaysia 16 hospitals 2,822 operational beds 241,123 inpatient admissions RM9,925 average revenue per inpatient admission Singapore 4 hospitals 793 operational beds 61,197 inpatient admissions RM59,529 average revenue per inpatient admission India1 34 hospitals2 5,545 operational beds2 299,506 inpatient admissions RM10,596 average revenue per inpatient admission Annual Report 2023 15
• Mount Elizabeth Hospital wall breaking ceremony to mark the commencement of extensive refurbishment works to upgrade and refresh its ageing facility into a modern, state-of-the-art medical institution over the next three years in Singapore. • IMU divestment completed. • IHH Malaysia (IHH MY) forms its Antimicrobial Stewardship (AMS) Committee as a sub-function of the IHH MY Clinical Governance & Advisory Committee. The AMS Committee will provide guidance to IHH MY hospitals on a systematic approach to tackle antibiotic resistance, identified as one of the largest public health risks. • Mount Elizabeth Novena Hospital opens its state-of-the-art Proton Therapy Centre, becoming the first private hospital in Southeast Asia to provide access to one of the most advanced forms of precision cancer treatments available. • Parkway MediCentre Woodleigh, IHH Singapore’s first ambulatory care unit, officially opens. • Acibadem acquires Kent Health Group in Izmir, the third largest city in Türkiye, as part of its growth strategy. • Gleneagles Hospital in Mumbai performed a bilateral total arm transplant, the first of its kind in Asia. • Pantai Hospital Batu Pahat is the first hospital and commercial building in Batu Pahat Malaysia to feature solar panels in its structure. This marks a significant milestone by becoming the first hospital in IHH Malaysia to complete the installation of a solar panel system. • Fortis Healthcare acquires 350-bed hospital in Manesar, Gurugram. • Parkway Shenton opens new clinic in the central business district, marking its 50th anniversary in primary care in Singapore. Jan Feb Mar May Apr Photo: Acıbadem Kent Hospital Photo: Proton Therapy machine IHH Healthcare Berhad 16 Corporate Milestones 2023 Group Overview
• Mount Elizabeth Novena Hospital in Singapore launches Centre for Genomic Health, offering comprehensive genetic testing services. • Fortis Healthcare announces the divestment of Fortis Malar Hospital, Chennai. • The Haematology and Stem Cell Transplant Centre opens at The Heeren, located close to Mount Elizabeth Hospital. • IHH Singapore inks two-year Corporate Responsibility Memorandum of Understanding (MOU) with Para Athletics (Singapore) to enhance the healthcare experience of local para-athletes. • Parkway Shanghai Hospital begins offering advanced refractory cancer care in partnership with Sharehereon Health. • Fortis Healthcare announces the divestment of its Vadapalani, Chennai Hospital Business Operations (Arcot Road). • Pantai Premier Pathology rebrands itself as Premier Integrated Labs in Malaysia. • IHH Healthcare entered into a share purchase agreement to acquire Timberland Medical Centre, a prominent and respected 82-bed private medical centre in Kuching, Sarawak with strong brand recognition across Borneo. • IHH increases majority stake in India’s Gleneagles Global Hospitals, in line with growth strategy in India. • Gleneagles Healthcare Wong Chuk Hang clinic opens its doors to meet the healthcare needs in the Southern District and the wider community. • IHH Malaysia launches Mobile Clinic through Twin Towers Medical Centre to enhance healthcare access for the industrial workforce. Jun • Gleneagles Hospital Penang celebrates 50th Anniversary of care and clinical excellence. Aug Sept Nov Oct Photo: Partnership between Parkway Shanghai Hospital and Sharehereon Health Photo: Premier Integrated Labs rebranding ceremony Photo: Timberland Medical Centre Annual Report 2023 17
Awards and Accreditations Group Overview IHH Healthcare Time – World’s Best Companies 2023 • Ranked 726 among 750 best companies globally Forbes – World’s Best Employers 2023 • Ranked 250 among 700 best employers globally IR Magazine Awards South East Asia 2023 • Best ESG reporting (large cap) HRM Asia Readers’ Choice Award 2023 • Global Leadership of Business Enterprise (I.GLOBE) programme The Edge Singapore’s Billion Dollar Club 2023 • Growth in Profit After Tax (PAT) over three years – Healthcare Services, Pharmaceuticals, Biotechnology and Medical Research sector Adam Smith Awards Asia 2023 • Highly Commended Winner of the Best Treasury Transformation Project Asiamoney Asia’s Outstanding Companies Poll 2023 • Most Outstanding Company in Singapore – Healthcare Sector Institutional Investor’s 2023 – Asia Pacific (Ex-Japan) Executive Team Rankings • Most Honored Companies – Rest of Asia • Healthcare, Pharma & Biotech (for FY2022 performance): – O verall: #3 in ‘Best CEO’, ‘Best CFO’, ‘Best Investor Relations’, ‘Best IR Team’, ‘Company Board of Directors’, ‘Overall ESG’ – Buy-Side: #2 in ‘Best CEO’, ‘Best CFO’, ‘Best Investor Relations’, ‘Best IR Team’, ‘Company Board of Directors’, ‘Overall ESG’, and #3 in ‘Best IR Professionals’ Malaysia Global Health Asia-Pacific Awards 2023 IHH Healthcare Malaysia • Hospital Group of the Year Gleneagles Hospital Penang • Medical Tourism Hospital of the Year Gleneagles Hospital Kuala Lumpur • Hospital of the Year in Malaysia • Customer Care Service Provider of the Year • Endocrinology Service Provider of the Year • Gastroenterology Service Provider of the Year • ICU Service Provider of the Year • Neurology Service Provider of the Year • Prostate Care Service Provider of the Year Pantai Hospital Kuala Lumpur • Cancer Centre of the Year • Comprehensive Hand & Microsurgery Service Provider of the Year • Heart & Vascular Service Provider of the Year • Respiratory Medicine Service Provider of the Year • Robotic Rehabilitation Service Provider of the Year Pantai Integrated Rehab • Integrated Rehabilitation and Physiotherapy Centre of the Year Prince Court Medical Centre • Orthopaedic Service Provider of the Year World Stroke Organisation (WSO) Angels Diamond Award 2023 • Pantai Hospital Ipoh Healthcare Asia Awards 2023 Prince Court Medical Centre • Medical Tourism Hospital of the Year and Clinical Service Initiative of the Year Gleneagles Hospital Kuala Lumpur • Service Innovation of the Year ESG Business Awards 2023 Gleneagles Hospital Kuala Lumpur • Community Health Outreach Programme Award (Malaysia) Malaysia Healthcare Icon Leadership Award • Gleneagles Hospital Johor Singapore Healthcare Asia Medtech Awards 2023 • IHH Healthcare Singapore – Health App of the Year WSHAsia Awards 2023 • IHH Healthcare Singapore – Industry Excellence Award Healthcare Asia Awards 2023 • Mount Elizabeth Novena Hospital – Customer Service Initiative of the Year and the Clinical Service Initiative of the Year Newsweek - World’s Best Specialised Hospitals and World’s Best Smart Hospitals • Gleneagles Hospital and Mount Elizabeth Hospital Türkiye & Europe Acibadem Healthcare Group Capital Magazine – The Most Admired Companies of the Business World Survey • Ranked first in the Hospital sector Services Exporters’ Association (HIB) • Champion for Healthcare Services Tech Brands Türkiye • Ranked first in Healthcare sector Brandverse Awards Türkiye 2023 • Gold award in “Healthcare Institutions” category 2023 Awards IHH Healthcare Berhad 18
India WSO Angels Diamond Award 2023 • Fortis Hospital, Noida • Fortis Escorts Hospital, Faridabad Regional & State Organ and Tissue Transplant Organization (ROTTO-SOTTO) Award • Fortis Hospital, Kalyan – Best NonTransplant Organ Retrieval Centre AHPI 2023 Award • Fortis Hospital, Noida – Excellence in Nursing Practices Outlook Health 2023 – Best hospital rankings in India • Global Hospitals, Parel, Mumbai (rebranded to Gleneagles Hospital) • Gleneagles Global Health City, Perumbakkam-Sholinganallur, Chennai (rebranded to Gleneagles HealthCity) Greater China Operations Gleneagles Hong Kong Hospital Family Top Brand 2023 • Obstetrics and Gynecology Services Office of the Privacy Commissioner for Personal Data, Hong Kong • Outstanding Gold Award of the Privacy-Friendly Awards 2023 Dutch Chamber of Commerce, Hong Kong • Sustainable Innovation Award – Silver 2023 Accreditations Joint Commission International (JCI) Malaysia Pantai Hospital Kuala Lumpur Gleneagles Hospital Kuala Lumpur Gleneagles Hospital Penang Singapore Gleneagles Hospital Mount Elizabeth Hospital Mount Elizabeth Novena Hospital Parkway East Hospital Türkiye Acibadem Adana Hospital Acibadem Altunizade Hospital Acibadem Maslak Hospital Acibadem Atakent Hospital Acibadem City Clinic UMBAL Clinical Hospital Acibadem Sistina Brunei Gleneagles JPMC National Accreditation Board for Hospitals and Healthcare Providers (NABH) India Gleneagles BGS Hospital, Kengeri Bengaluru Gleneagles Healthcity, Chennai Gleneagles Hospital, Mumbai Fortis Hospital Cunnigham Road, Bengaluru Fortis Hospital Vasant Kunj, New Delhi Fortis La Femme, Greater Kailash II, New Delhi Malaysian Society for Quality Health (MSQH) Malaysia Pantai Hospital Cheras Pantai Hospital Penang Pantai Hospital Kuala Lumpur Pantai Hospital Ampang Pantai Hospital Ipoh Pantai Hospital Batu Pahat Pantai Hospital Manjung Pantai Hospital Sungai Petani Pantai Hospital Ayer Keroh Pantai Hospital Klang Pantai Hospital Laguna Merbok Gleneagles Hospital Kuala Lumpur Gleneagles Hospital Penang Gleneagles Hospital Johor Gleneagles Hospital Kota Kinabalu Prince Court Medical Centre Annual Report 2023 19
Building trust among our stakeholders is a critical foundation of our strategy. In doing greater good by our patients, our people, the public and our planet, we build strong and sustainable growth. Strategic Report 22 Chairman’s Statement 26 Group CEO’s Message 30 Business Strategy 32 Business Model 34 Impact of Value Creation 36 Operations Review 36 Malaysia 37 Singapore 38 Türkiye and Europe 39 India 40 Greater China 41 Parkway Life REIT 41 Laboratories 42 Financial Review 44 Market Outlook 48 Stakeholder Engagement 52 Our Material Matters 55 Risk Management 56 Principal Risks Care. For good. 20 IHH Healthcare Berhad
Annual Report 2023 21
As a leading healthcare provider, IHH Healthcare is committed to delivering sustainable value to all stakeholders, including our patients, our people, the public and our planet. We will continue to do right by the unwavering trust that has been placed in us over the years. Tan Sri Mohd Azlan Hashim Non-Executive Chairman Chairman’s Statement Strategic Report IHH Healthcare Berhad 22
Dear Stakeholders, IHH Healthcare has once again maintained its resilience and shown robust performance in 2023. We have achieved commendable growth as a Group, even amid persistent challenges including rising inflation and shortage of nursing talents in the sector. The hurdles in our path have translated into opportunities for our people to adapt, pivot and rise to the occasion. As we look at the year in retrospect, IHH has not wavered from its commitment to positively impact our people, patients, the public and our planet, and strived to live up to the trust that all our stakeholders have placed in us. The accolades we have been given in 2023 further affirm that we are moving in the right direction, serving our stakeholder groups with distinction and integrity at every step. In clinical excellence, we were regaled with over 20 awards at the GlobalHealth Asia-Pacific Healthcare and Hospital Awards, with IHH Malaysia named Healthcare Group of the Year in Asia-Pacific. In human resources, Forbes included IHH as one of the ‘World Best Employers 2023’, a recognition we hold close to heart. IHH witnessed several milestones this year, including the 50th anniversary celebrations of both Pantai Hospital Kuala Lumpur and Pantai Hospital Penang. Both hospitals have grown to become healthcare icons in their respective regions. Parkway Shenton in Singapore also celebrated its Golden Anniversary with the opening of its 54th clinic and a series of community events. Delivering Value for Our Patients In 2023, we expanded our reach and services in all areas of our business. The opening of new hospitals and achievement of breakthroughs, thanks to medical advancements, and technological innovations have raised not just clinical excellence, but also allowed us to deliver greater value for our patients. In Singapore, we opened Parkway MediCentre Woodleigh, our new ambulatory care facility that provides convenient and comprehensive outpatient care to the community in the northeastern region of Singapore. In India, we inaugurated the new Fortis Cancer Institute outpatient department block to provide complete and holistic cancer care. In Malaysia, Twin Towers Medical Centre launched its first mobile clinic to bring occupational health and safety services closer to industrial workers. These are but a handful of examples of IHH’s efforts to make high-quality healthcare more accessible and convenient for communities. Delivering Value for Our People The value that we have created for our patients would not have been possible without the dedication and hard work from all levels of IHH staff, both clinical and non-clinical. Suffice to say, the shortage of healthcare talent has been a perennial challenge for medical institutions worldwide, with brain drain that reached new levels at the height of the COVID-19 pandemic. Like our counterparts, IHH recognises that taking on a job in healthcare is a higher calling that tests our professionals’ physical, mental and emotional capacities. This is why we are firm believers in fair remuneration and take every opportunity to give our people due recognition for their dedication. In the past year, 907 employees in Malaysia and Singapore within our global network received IHH’s Long Service and Golden Years Service Awards, serving as a true testament to our organisation as a place where individuals can flourish, thrive, and consider a second home. The total well-being of our staff is our topmost priority, and we have several support measures to safeguard everyone’s physical and mental health. IHH also offers ample opportunities for employees to upskill and develop fulfilling careers. One of our latest initiatives include the launch of a Johor Bahru-Singapore shuttle service by IHH Singapore for the convenience of our Malaysian employees at Mount Elizabeth Hospital, Mount Elizabeth Novena Hospital, Gleneagles Hospital and Parkway East Hospital. The easy commute has allowed our nurses and staff more rest and quality time with their loved ones at home. The total well-being of our staff is our topmost priority, and we have several support measures to safeguard everyone’s physical and mental health. IHH also offers ample opportunities for employees to upskill and develop fulfilling careers. Annual Report 2023 23
While the wider landscape continues to pose business uncertainties, IHH will be meeting challenges ahead with prudence and cautious optimism as one IHH Group, while continuing our march to Care. For Good. Chairman’s Statement In addition, we have introduced a new mental wellness app among employees of IHH, marking a milestone in our journey to foster a healthier workplace for all, given the rigorous demands of the industry. As our initiatives to support our employees’ well-being continue to gain traction, we will retain and further refine these best practices in the years ahead. Just as our patients have put their faith in us, we will continue to be a pillar of trust for our people. Delivering Value for the Public and Our Planet In February 2024, we reaffirmed our commitment by renewing the Memorandum of Understanding (MOU) with the Ministry of Health Malaysia, to fully sponsor radiotherapy and radiosurgery to another 500 cancer patients, building upon the impactful initiative that commenced in 2022. We had completed treatment for 500 cancer patients using these state-of-the-art technologies in the previous iteration of the MOU with the Health Ministry. Our dedication to healthcare extends beyond our patients to the community we serve. With a proactive approach, we aim to cultivate a healthier society, which in turn will contribute to a reduced environmental impact within the healthcare sector. To do so, we will enhance our Antimicrobial Stewardship Programme to equip all our hospitals to implement interventions for preventing antimicrobial resistance, in sync with international and local guidelines. We stay aligned with our target to cap carbon emissions by 2025 based on our pre-laid goals and to achieve Net-Zero by 2050. In September 2022, IHH set time-bound, measurable targets, to achieve this. This year, we built upon that foundation by intensifying our efforts to reduce emissions. We have started to define and derive baseline Scope 3 emissions across our value chain this year, and have launched decarbonisation initiatives including reducing energy consumption and switching to renewable energy. In 2022, we set an interim target to reduce single-use virgin plastic by 90% in non-clinical areas in IHH Malaysia and IHH Singapore by 2023. IHH Singapore has achieved this target. IHH Malaysia ended 2023 with a commendable 79% reduction and has since achieved the target. In sustainability initiatives, IHH is fully aligned with the United Nations Sustainable Development Goals. We are working towards climate-related disclosures meeting the standards of the globally recognised standards of the Task Force on Climate-related Financial Disclosures (TCFD). IHH Healthcare Berhad 24 Strategic Report
In addition to having a panel of leaders that have proven their mettle in clinical expertise and management, IHH has a comprehensive set of policies and systems to ensure the highest level of governance in board diversity, anti-corruption and data privacy and protection. Our strict policies foster trust and positively influence the value that IHH delivers to stakeholders year after year. Delivering Results In recognition of the steadfast confidence our shareholders have placed in IHH, the Board of Directors declared a final cash dividend of 5.5 sen per share to be paid on 26 April 2024, bringing total ordinary dividend for FY2023 to 9.0 sen per share (previously paid interim cash dividend of 3.5 sen per share on 27 October 2023). The total dividend declared for FY2023 amounts to 18.6 sen per share, including a special dividend of 9.6 sen per share paid in end June 2023 from the divestment of International Medical University (IMU). Furthermore, the Group enhanced its dividend policy in February 2024, whereby not less than 30% of the Group’s profit after tax and minority interests, excluding exceptional items, shall be distributed to shareholders. These dividends signify not only our financial strength but also our commitment to delivering consistent returns to our valued shareholders. Looking Ahead There is much to be excited about in 2024 and beyond. The use of technology in healthcare – from telemedicine and artificial intelligence to augmented and virtual reality – will continue to proliferate across patient care and medical training. Personalised medicine and preventive healthcare, along with increased discernment among consumers will positively move the needle towards better population well-being in the long run. While the wider landscape continues to pose business uncertainties, IHH will be meeting challenges ahead with prudence and cautious optimism as one IHH Group, while continuing our march to Care. For Good. We have built a leading presence in our core markets of Malaysia, Singapore, Türkiye and India. While we continue to deepen our reach in these core countries, we will evaluate opportunities in new high-growth markets to bring IHH’s value-driven clinical services to even more individuals around the world. We sincerely appreciate your ongoing support and trust in IHH. Tan Sri Mohd Azlan Hashim Non-Executive Chairman Sustainability is an ongoing journey that is in equal parts complex, urgent and purposeful. IHH remains open to new and better ways to enhance our sustainability efforts, and we hope to inspire change by being a trailblazer in the healthcare sector. Delivering Value Through Our Governance We are delighted to announce the appointment of IHH Healthcare’s new Group Chief Executive Officer Dr Prem Kumar Nair, who officially stepped into the role on 1 October 2023. He is a familiar face to us all, having helmed IHH Singapore in the last three and a half years. Dr Nair is a highly regarded industry veteran, having had a wealth of experience in clinical work, healthcare administration and management, and education. I look forward to working closely with him, the IHH management team, and all our stakeholders to continue IHH’s sustainable growth, astute innovativeness, and all-round excellence. At this juncture, I would also like to express my gratitude to IHH’s Transition Committee for their work prior to Dr Nair’s appointment and seeing to the smooth changeover. Additionally, we have appointed a new Group Chief Financial Officer, Mr Dilip Kadambi, as of 5 April 2024. He will play a pivotal role in providing financial leadership for IHH and its operations, ensuring a path of continued success and growth for the organisation. In board movements, we welcome Mr Yoichiro Endo, who will assume the role of Non-Independent, Non-Executive Director taking over from Mr Takeshi Akutsu, as of 1 April 2024. Annual Report 2023 25
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