IHH Healthcare : Q1 2024 Quarterly Report

IHH HEALTHCARE BERHAD

(Incorporated in Malaysia)

INTERIM FINANCIAL REPORT

31 MARCH 2024

IHH HEALTHCARE BERHAD

Registration No. 201001018208

(Incorporated in Malaysia)

UNAUDITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE FIRST QUARTER AND FINANCIAL PERIOD ENDED 31 MARCH 2024

		1st quarter ended
	Note	31 Mar 2024	31 Mar 2023	Variance
		RM'000	RM'000	%
Revenue	1	5,955,460	5,142,406	16%
Other operating income	2	102,853	1,104,441	-91%
Inventories and consumables		(1,192,624)	(1,043,322)	-14%
Purchased and contracted services		(471,078)	(464,166)	-1%
Staff costs	3	(2,272,778)	(1,905,809)	-19%
Depreciation and impairment of property, plant and equipment	4	(294,146)	(266,021)	-11%
Depreciation of right-of-use ("ROU") assets	4	(106,614)	(92,253)	-16%
Amortisation of intangible assets	4	(13,206)	(11,141)	-19%
Operating lease expenses		(30,885)	(27,507)	-12%
Other operating expenses		(721,204)	(669,860)	-8%
Finance income	5	78,731	39,588	99%
Finance costs	5	(257,438)	(185,221)	-39%
Net monetary gain arising from hyperinflationary economy		146,096	164,758	-11%
Share of profits of associates (net of tax)		6,753	6,113	10%
Share of profits of joint ventures (net of tax)		692	502	38%
Profit before tax		930,612	1,792,508	-48%
Income tax expense	6	(5,211)	(240,544)	98%
Profit for the period		925,401	1,551,964	-40%
Other comprehensive income, net of tax
Items that are or may be reclassified subsequently
to profit or loss
Foreign currency translation differences from
foreign operations	7	173,930	50,059	NM
Realisation of FCTR1 upon disposal of subsidiaries		-	10,726	-100%
Hyperinflationary adjustments		426,116	538,135	-21%
Hedge of net investments in foreign operations	7	8,273	322,076	-97%
Cash flow hedge		(15,925)	(9,774)	-63%
Costs of hedging		(936)	(430)	-118%
		591,458	910,792	-35%

Items that will not be reclassified subsequently to profit or loss

Remeasurement of defined benefit liabilities

Total other comprehensive income for the period, net of tax Total comprehensive income for the period

Profit attributable to:

(11,408)	(1,073)	NM
580,050	909,719	-36%
1,505,451	2,461,683	-39%

Owners of the Company	767,972	1,390,519	-45%
Non-controlling interests	157,429	161,445	-2%
Profit for the period	925,401	1,551,964	-40%
Total comprehensive income attributable to:
Owners of the Company	1,312,272	2,239,610	-41%
Non-controlling interests	193,179	222,073	-13%
Total comprehensive income for the period	1,505,451	2,461,683	-39%
Earnings per share (sen)
Basic	8.72	15.79	-45%
Diluted	8.72	15.79	-45%

NM: Not meaningful Note:

1: Foreign currency translation reserve

1

IHH HEALTHCARE BERHAD

Registration No. 201001018208

(Incorporated in Malaysia)

UNAUDITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE FIRST QUARTER AND FINANCIAL PERIOD ENDED 31 MARCH 2024

SUPPLEMENTARY INFORMATION

			1st quarter ended
	Note		31 Mar 2024 31 Mar 2023	Variance
Profit attributable to owners of the Company,			RM'000	RM'000	%
excluding EIvi		402,846	329,866	22%
Add/(Less): Exceptional items ("EI")
Gain on disposal of subsidiariesi	2	-	981,417
Gain on disposal of assetii		2,614	-
Exchange difference on net borrowings,
net of changes in fair value of financial derivativesiii	5	(46,217)	7,148
Deferred tax creditsiv	6	293,359	-
Net monetary gain arising from hyperinflationary economyv		146,096	164,758
			395,852	1,153,323
Less: Tax effects on EI		11,554	(1,644)
Less: Non-controlling interests' share of EI		(42,280)	(91,026)
			365,126	1,060,653
Profit attributable to owners of the Company					-45%
		767,972	1,390,519
Earnings per share, excluding EIvi (sen)		4.57	3.75	22%
Basic
Diluted		4.57	3.75	22%

Note:

"Acibadem Holdings" as referred to throughout this financial report includes the wholly-owned Integrated Healthcare Turkey Yatirimlari Limited Group, which owns approximately 90% interest in Acıbadem Sağlık Yatırımları Holding A.Ş. Group.

1. Gain on disposal of IMU Health Sdn Bhd and its subsidiaries (collectively, "IMU Health") of RM862.0 million and Gleneagles Chengdu Hospital Company Limited ("Gleneagles Chengdu Hospital") of RM116.5 million.
2. Gain on disposal of Fortis Malar Hospital.
3. Exchange differences arising from foreign currency denominated borrowings, lease liabilities, payables, cash and receivables, recognised by Acibadem Holdings.
   It is netted off with the fair value changes of the financial derivatives which was entered to hedge a portion of Acibadem Holdings' foreign currency denominated borrowings.
4. Deferred tax credits arising from the revaluation of certain assets in the tax financials of the Group's entities in Turkiye, as allowed by the Turkiye government.
5. Net increase in purchasing power from the net monetary position of the Group's operations in Turkiye, upon the application of MFRS 129, Financial Reporting in Hyperinflationary Economies.
6. Net of tax and minority interests.

The unaudited Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the 2023 Audited Financial Statements and the accompanying explanatory notes attached to this financial report.

2

IHH HEALTHCARE BERHAD

Registration No. 201001018208

(Incorporated in Malaysia)

EXPLANATORY NOTES TO THE STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

The Group's reported results, across the periods, was impacted by the relative movements of Ringgit Malaysia ("RM") against the exchange rates of the countries that the Group operates in. The RM weakened against Singapore Dollars ("SGD") and strengthened against Turkish Lira ("TL") in the current period as compared to the corresponding period last year.

The Group's reported results, across the periods, was also impacted by the relative movements of inflation rates in Turkiye, upon the application of MFRS 129, Financial Reporting in Hyperinflationary Economies ("MFRS 129") to the Group's entities in Turkiye. Refer to Section A4 for details.

In addition to variances arising from the above-mentioned effects of the relative movement in exchange rates and inflation rates in Turkiye, the following notes explain the major fluctuations in the statement of profit or loss and other comprehensive income for the quarter ended 31 March 2024.

Refer to Section B1 for performance review of the Group's major operating segments.

1. Q1 2024 revenues were higher as compared to Q1 2023 driven by a sustained demand for quality healthcare services, a case-mix of more acute patients and price adjustments to counter inflation. Ozel Kent Saglik Hizmetleri ve Malzemeleri Sanayi Ticaret A.S. ("Kent"), which was acquired on 14 February 2023, and Bedrock Healthcare Sdn. Bhd. ("Bedrock"), which was acquired on 29 February 2024, also contributed to the increase.
2. Q1 2024 other operating income decreased from a high base in Q1 2023 whereby gains on disposal of IMU Health and Gleneagles Chengdu Hospital of RM862.0 million and RM116.5 million was recognised respectively.
3. Q1 2024 staff costs increased as the Group expands its capacity to cater for higher demand for its services and annual increments.
4. Q1 2024 depreciation, amortisation and impairment expense increased when the property, plant and equipment, right-of-use assets and intangible assets of the Group's subsidiaries in Turkiye increased with higher inflation rates in Turkiye during the period.
5. Acibadem Holdings recognised exchange differences arising from the translation of its unhedged foreign currency denominated borrowings, lease liabilities, payables, cash and receivables as finance income or finance cost. Acibadem Holdings manages its foreign exchange exposures by entering into cross currency swaps ("CCS") and foreign exchange forward contracts. The Group recognised a net loss of RM46.2 million in Q1 2024 as compared to a net gain of RM7.1 million in Q1 2023.
   Excluding the above, Q1 2024 net finance costs increased mainly due to higher prevailing interest rates in 2024 and decrease in capitalisation of borrowing cost for Parkway Shanghai Hospital upon completion of construction in February 2023.
6. Refer to Section B5 for details on income tax expenses.
7. The Group's foreign currency translation differences from foreign operations arise mainly from the translation of the net assets of its Singapore, India and Europe operations.
   Parkway Life Real Estate Investment Trust ("PLife REIT") hedges its interest in the net assets of its Japanese operations. The effective portion of the hedge was recognised as a hedge of net investments in the statement of other comprehensive income, which offsets the foreign currency translation differences from the translation of the net assets of its Japanese operations.

Note:

Key exchange rates used to translate the YTD results of overseas subsidiaries into RM:

		31 Mar 2024	31 Mar 2023
1	SGD	3.5241	3.2906
1	TL	0.1471	0.2323

3

IHH HEALTHCARE BERHAD

Registration No. 201001018208

(Incorporated in Malaysia)

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2024

		31 Mar 2024	31 Dec 2023
	Note	RM'000	RM'000
Assets
Property, plant and equipment		13,966,997	13,413,941
Right-of-use assets		7,239,761	7,119,066
Investment properties		4,022,870	4,105,768
Goodwill on consolidation	1	14,624,010	14,295,951
Other intangible assets		3,057,667	2,963,011
Interests in associates		147,507	139,761
Interests in joint ventures		18,485	6,813
Other financial assets		233,741	233,393
Trade and other receivables	2	269,703	128,840
Tax recoverables		459,473	422,193
Derivative assets		156,745	138,018
Deferred tax assets		565,268	512,495
Total non-current assets		44,762,227	43,479,250
Development properties		79,635	79,579
Inventories		666,156	639,837
Trade and other receivables	2	3,300,730	3,084,027
Tax recoverables		24,538	31,244
Other financial assets		257,140	286,008
Derivative assets		134,808	212,898
Cash and cash equivalents		2,212,821	2,379,123
		6,675,828	6,712,716
Assets classified as held for sale		196	194
Total current assets		6,676,024	6,712,910
Total assets		51,438,251	50,192,160

4

IHH HEALTHCARE BERHAD

Registration No. 201001018208

(Incorporated in Malaysia)

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2024

		31 Mar 2024	31 Dec 2023
Equity	Note	RM'000	RM'000
Share capital		19,691,636	19,691,630
Other reserves		1,915,363	1,573,882
Retained earnings		8,181,466	7,840,027
Total equity attributable to owners of the Company		29,788,465	29,105,539
Non-controlling interests		3,234,609	3,253,111
Total equity		33,023,074	32,358,650
Liabilities
Loans and borrowings		6,749,150	6,650,567
Lease liabilities		1,399,247	1,412,669
Employee benefits		190,728	182,950
Trade and other payables		506,514	454,222
Derivative liabilities		6,488	12,936
Deferred tax liabilities		1,607,773	1,663,349
Total non-current liabilities		10,459,900	10,376,693
Bank overdrafts		37,171	77,885
Loans and borrowings		1,631,537	1,660,820
Lease liabilities		260,599	247,822
Employee benefits		156,486	158,354
Trade and other payables	3	5,459,353	4,951,735
Derivative liabilities		2,623	7,159
Tax payable		407,508	353,042
Total current liabilities		7,955,277	7,456,817
Total liabilities		18,415,177	17,833,510
Total equity and liabilities		51,438,251	50,192,160
Net assets per share attributable to owners of the Company1 (RM)		3.38	3.30

1: Based on 8,807.0 million and 8,807.0 million shares issued as at 31 March 2024 and 31 December 2023 respectively.

The unaudited Consolidated Statement of Financial Position should be read in conjunction with the 2024 Audited Financial Statements and the accompanying explanatory notes attached to this financial report.

5

IHH HEALTHCARE BERHAD

Registration No. 201001018208

(Incorporated in Malaysia)

EXPLANATORY NOTES TO THE STATEMENT OF FINANCIAL POSITION

The Group's reported financial position as at 31 March 2024 was impacted by the movements in RM against the exchange rates of the countries that the Group operates in. The RM weakened against SGD and strengthened against TL for the period ended 31 March 2024.

The Group's reported financial position as at 31 March 2024 was also impacted by the movements of the price index in Turkiye, upon the application of MFRS 129 to the Group's entities in Turkiye. Inflation rates in Turkiye increased for the period ended 31 March 2024. Refer to Section A4 for details.

In addition to variances arising from the above-mentioned effects of the movement in exchange rates and inflation rates in Turkiye, the following notes explain the major fluctuations in the statement of financial position as at 31 March 2024.

1. Goodwill increased mainly due to acquisition of Bedrock on 29 February 2024 which resulted in goodwill on acquisition of RM142.0 million, translational effects from a strengthened SGD against RM during the period and from MFRS 129 effects.
2. Trade and other receivables increased mainly due to higher revenue and advance given in relation to hospital renovations.
3. Current trade and other payables increased mainly due to dividends declared by the Company and not paid out as at 31 March 2024. The dividends was paid on 26 April 2024.

Note:

Key closing exchange rates used to translate the financial position of overseas subsidiaries into RM:

		31 Mar 2024	31 Dec 2023
1	SGD	3.5112	3.4990
1	TL	0.1471	0.1568

6

IHH HEALTHCARE BERHAD

Registration No. 201001018208

(Incorporated in Malaysia)

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL PERIOD ENDED 31 MARCH 2024

At 1 January 2024

Foreign currency translation differences from foreign operations

Hyperinflationary adjustments

Hedge of net investments in foreign operations Cash flow hedge

Costs of hedging

Remeasurement of defined benefit liabilities Total other comprehensive income for the period Profit for the period

Total comprehensive income for the period

Contributions by and distributions to owners Share-basedpayment transactions

Transfer to share capital for share options exercised Cancellation of vested share options

Dividends to owners of the Company Dividends to non-controlling interests Remeasurement of liabilities on put options

granted to non-controlling interests Transfer per statutory requirements

Changes in ownership interests in subsidiaries

Total transactions with owners

At 31 March 2024

<-------------------------------------------	Attributable to owners of the Company	--------------------------------------------------------		>
<-------------------------------------------------------		Non-distributable	------------------------------------------------------		>	Distributable
								Foreign
	Share				Cost of			currency			Non-
Share	option	Revaluation	Fair value	Hedge	hedging	Capital	Legal	translation	Retained		controlling	Total
capital	reserve	reserve	reserve	reserve	reserve	reserve	reserve	reserve	earnings	Total	interests	equity
RM'000	RM'000	RM'000	RM'000	RM'000	RM'000	RM'000	RM'000	RM'000	RM'000	RM'000	RM'000	RM'000
19,691,630	25,065	83,434	47,395	(54,974)	51	(4,040,148)	46,926	5,466,133	7,840,027	29,105,539	3,253,111	32,358,650
-	-	-	-	-	-	-	-	172,313	-	172,313	1,617	173,930
-	-	-	-	(5,271)	-	(10,479)	2,059	341,850	67,751	395,910	30,206	426,116
-	-	-	-	-	-	-	-	2,939	-	2,939	5,334	8,273
-	-	-	-	(16,352)	-	-	-	-	-	(16,352)	427	(15,925)
-	-	-	-	-	(333)	-	-	-	-	(333)	(603)	(936)
-	-	-	-	-	-	-	-	-	(10,177)	(10,177)	(1,231)	(11,408)
-	-	-	-	(21,623)	(333)	(10,479)	2,059	517,102	57,574	544,300	35,750	580,050
-	-	-	-	-	-	-	-	-	767,972	767,972	157,429	925,401
-	-	-	-	(21,623)	(333)	(10,479)	2,059	517,102	825,546	1,312,272	193,179	1,505,451
-	1,422	-	-	-	-	-	-	-	-	1,422	-	1,422
6	-	-	-	-	-	-	-	-	-	6	-	6
-	(332)	-	-	-	-	-	-	-	332	-	-	-
-	-	-	-	-	-	-	-	-	(484,385)	(484,385)	-	(484,385)
-	-	-	-	-	-	-	-	-	-	-	(108,716)	(108,716)
-	-	-	-	-	-	(117,285)	-	(13,696)	-	(130,981)	(103,103)	(234,084)
-	-	-	-	-	-	-	54	-	(54)	-	-	-
6	1,090	-	-	-	-	(117,285)	54	(13,696)	(484,107)	(613,938)	(211,819)	(825,757)
-	-	-	-	-	-	(15,408)	-	-	-	(15,408)	138	(15,270)
6	1,090	-	-	-	-	(132,693)	54	(13,696)	(484,107)	(629,346)	(211,681)	(841,027)
19,691,636	26,155	83,434	47,395	(76,597)	(282)	(4,183,320)	49,039	5,969,539	8,181,466	29,788,465	3,234,609	33,023,074

7

IHH HEALTHCARE BERHAD

Registration No. 201001018208

(Incorporated in Malaysia)

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL PERIOD ENDED 31 MARCH 2024

<-------------------------------------------

Attributable to owners of the Company --------------------------------------------------------

>

<-------------------------------------------------------

Non-distributable------------------------------------------------------

>

Distributable

Foreign

Share

Cost of

currency

Non-

Share

option

Revaluation

Fair value

Hedge

hedging

Capital

Legal

translation

Retained

controlling

Total

capital

reserve

reserve

reserve

reserve

reserve

reserve

reserve

reserve

earnings

Total

interests

equity

RM'000

RM'000

RM'000

RM'000

RM'000

RM'000

RM'000

RM'000

RM'000

RM'000

RM'000

RM'000

RM'000

At 1 January 2023

Foreign currency translation differences from foreign operations

Realisation of FCTR upon disposal of subsidiaries Hyperinflationary adjustments

Hedge of net investments in foreign operations Cash flow hedge

Costs of hedging

Remeasurement of defined benefit liabilities Total other comprehensive income for the period Profit for the period

Total comprehensive income for the period

Contributions by and distributions to owners Share-basedpayment transactions

Transfer to share capital for share options exercised Cancellation of vested share options

Dividends to owners of the Company

Dividends to non-controlling interests Remeasurement of liabilities on put options

granted to non-controlling interests Transfer per statutory requirements

Changes in ownership interests in subsidiaries

Total transactions with owners

Disposal of subsidiaries

At 31 March 2023

19,684,881	22,783	83,434	-	8,274	791	(3,998,823)	36,380	3,689,021	6,665,236	26,191,977	2,967,080	29,159,057
-	-	-	-	-	-	-	-	223,272	-	223,272	(173,213)	50,059
-	-	-	-	-	-	-	-	10,726	-	10,726	-	10,726
-	-	-	-	-	-	(9,933)	1,902	508,847	3,716	504,532	33,603	538,135
-	-	-	-	-	-	-	-	114,466	-	114,466	207,610	322,076
-	-	-	-	(3,474)	-	-	-	-	-	(3,474)	(6,300)	(9,774)
-	-	-	-	-	(153)	-	-	-	-	(153)	(277)	(430)
-	-	-	-	-	-	-	-	-	(278)	(278)	(795)	(1,073)
-	-	-	-	(3,474)	(153)	(9,933)	1,902	857,311	3,438	849,091	60,628	909,719
-	-	-	-	-	-	-	-	-	1,390,519	1,390,519	161,445	1,551,964
-	-	-	-	(3,474)	(153)	(9,933)	1,902	857,311	1,393,957	2,239,610	222,073	2,461,683
-	2,217	-	-	-	-	-	-	-	-	2,217	-	2,217
6,749	(1,260)	-	-	-	-	-	-	-	-	5,489	-	5,489
-	(1,389)	-	-	-	-	-	-	-	1,389	-	-	-
-	-	-	-	-	-	-	-	-	(616,489)	(616,489)	-	(616,489)
-	-	-	-	-	-	-	-	-	-	-	(101,396)	(101,396)
-	-	-	-	-	-	(3,370)	-	-	-	(3,370)	(2,415)	(5,785)
-	-	-	-	-	-	-	28	-	(28)	-	-	-
6,749	(432)	-	-	-	-	(3,370)	28	-	(615,128)	(612,153)	(103,811)	(715,964)
-	-	-	-	(3)	-	1,506	-	1	-	1,504	275	1,779
6,749	(432)	-	-	(3)	-	(1,864)	28	1	(615,128)	(610,649)	(103,536)	(714,185)
-	-	-	-	-	-	(21,574)	-	-	19,051	(2,523)	54,895	52,372
19,691,630	22,351	83,434	-	4,797	638	(4,032,194)	38,310	4,546,333	7,463,116	27,818,415	3,140,512	30,958,927

The unaudited Consolidated Statement of Changes in Equity should be read in conjunction with the 2024 Audited Financial Statements and the accompanying explanatory notes attached to this financial report.

8

IHH HEALTHCARE BERHAD

Registration No. 201001018208

(Incorporated in Malaysia)

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE FINANCIAL PERIOD ENDED 31 MARCH 2024

	Financial period ended
	31 Mar 2024	31 Mar 2023
Cash flows from operating activities	RM'000	RM'000
Profit before tax	930,612	1,792,508
Adjustments for:
Dividend income	(112)	-
Finance income	(78,731)	(39,588)
Finance costs	257,438	185,221
Depreciation and impairment of property, plant and equipment	294,146	266,021
Depreciation of ROU assets	106,614	92,253
Amortisation of intangible assets	13,206	11,141
Impairment loss made:
- Trade and other receivables	15,249	34,070
Write-off:
- Property, plant and equipment	230	95
- Trade and other receivables	10,922	1,125
- Inventories	846	1,459
Gain on disposal of property, plant and equipment	(968)	(3,486)
Gain on disposal of subsidiaries	-	(981,417)
Gain on disposal of asset	(2,614)	-
Change in fair value of investment properties	(144)	792
Share of profits of associates (net of tax)	(6,753)	(6,113)
Share of profits of joint ventures (net of tax)	(692)	(502)
Equity-settledshare-based payment	1,422	2,217
Net monetary gain arising from hyperinflationary economy	(146,096)	(164,758)

Operating profit before changes in working capital	1,394,575	1,191,038
Changes in working capital:
Development properties	(56)	286
Inventories	(59,652)	(81,895)
Trade and other receivables	(451,875)	(286,026)
Trade and other payables	68,419	(47,973)

Cash generated from operations		951,411	775,430
Tax paid	(120,075)	(114,445)
Net cash from operating activities	831,336	660,985
Cash flows from investing activities
Interest received	38,785	25,948
Acquisition of a subsidiary/business, net of cash and cash equivalents acquired	(208,976)	(254,014)
Purchase of other financial assets	(13,642)	(34,536)
Net (placement)/withdrawal of fixed deposits with tenor of more than 3 months	(90,787)	117,469
Purchase of property, plant and equipment	(638,354)	(256,080)
Cost capitalised and purchase of investment properties	(5,080)	(16,680)
Development and purchase of intangible assets	(29,577)	(6,475)
Net cash inflow from disposal of subsidiaries	-	1,175,176
Proceeds from disposal of other financial assets	135,388	25,670
Proceeds from disposal of property, plant and equipment	23,193	25,693
Proceeds from disposal of asset	67,694	-
Dividends received from associates and joint ventures	329	13,580
Net cash (used in)/from investing activities	(721,027)	815,751

9