Raffles Medical Group reports 1.3% rise in FY2016 net profit as costs increase

SINGAPORE-LISTED Raffles Medical Group on Monday posted only slightly higher earnings for the full year in 2016, as growth in revenue was dragged down by higher expenses.

Net profit for FY2016 edged up 1.3 per cent year on year to S$70.2 million, weighed down by higher consumption of inventories and consumables as sales of medical supplies and services grew.

Growth in revenue was also offset by higher staff costs due to the recruitment of more doctors, specialists, nurses and ancillary staff to cater to the expansion of the existing business operations, the new medical centre in Raffles Holland V, as well as new subsidiaries acquired in Q4 2015.

The group said that on a comparable basis, excluding the results of the newly acquired International SOS (MC Holdings) Pte Ltd and its subsidiaries, operating profit would have grown by 4.4 per cent instead of 1.7 per cent.

Revenue came in at S$473.6 million, up 15.4 per cent. Revenue from healthcare services grew 30.8 per cent and hospital services went up 6.3 per cent. The growth was driven by higher patient load from the expanding Raffles Medical clinic network, more specialist consultants, as well as full-year contributions from MCH.

Excluding revenue contribution from MCH, the group's revenue would have grown by 7.5 per cent.

Earnings per share stood at 4.04 Singapore cents, down from 4.05 a year ago following the share split last year.

The group has a healthy cash position of S$111.9 million as at end December 2016, while cashflow from operating activities was S$78.9 million.

"The strong operating cashflows will enable the group to support its investments in MCH, Raffles Hospital Shanghai and Raffles Hospital extension. These investments, which included capital expenditure for business expansion, amounted to S$45.6 million in 2015," it said.

A final dividend of 1.5 Singapore cents per share amounting to about S$26.2 million has been declared, similar to the year-ago period if the share split is factored in. Including interim dividend of 0.5 Singapore cent per share paid in August 2016, the total dividend for the FY2016 will be two Singapore cents per share.

In its outlook, the healthcare provider said: "The slower economic growth in Singapore and the region may have a dampening effect on health care demand in general . . . The completion of Raffles Hospital extension planned later this year as well as the group's expansion to other regional markets in cities where there is strong demand for reliable quality health care will enable the group to enjoy greater synergies brought about by the expanded reach of our outpatient and inpatient services."