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Dear investors and shareholders,
This release is to update you on the developments year-to-date including those related to Covid-19 and provide you with guidance for the accounting year 2020.
Lokman Hekim's Covid-19 statement.
Lokman Hekim is taking all necessary steps to meet the challenge of Covid-19 virus with utmost care and diligence. Our procedures in handling Covid-19 are in full coordination with Turkish Ministry of Health and in line with preventative measures and guidance provided by the World Health Organization.
I would like to stress here that our staff is working very hard and around the clock to help our patients and meet their demands in these difficult times. We have strict infection control rules and preventative procedures in place across our network. Our hospitals and clinics are well-equipped and prepared to manage and mitigate Covid-19 risks. Furthermore, our protocols ensure the health and safety of our staff dealing with patients. We are ready to meet the challenge and help our infected patients recover.
While the extent of Covid-19's impact on global economy remains uncertain, we see signs that the business activities around the globe will suffer for at least couple of months. We recognize and appreciate the determination and timely efforts by the Turkish Ministry of Health, which has so far helped contain the spread of virus.
It is our view that the impact of Covid-19 in Turkey will be kept at a minimum, thanks to the early preventative measures implemented by the Ministry. We also see the economic stimulus package introduced by our President will help boost overall activities. We will continue helping Ministry of Health to contain the virus and mitigate any health risks associated.
2020 accounting year guidance.
2019 summary . Our 2019 performance both in terms of growth and margns were fully in line with our published guidance as we have already shared with you. We have also communicated to you about our projects and investments to upgrade Lokman Hekim network.
So far in 2020. There are two important developments to highlight so far this year. First, we have completed all the compliance work and leased Ankara Hospital, our flagship, to Lokman Hekim University as planned. Second, the government has approved and announced its updated pricing schedule, which was long overdue.
Revenue guidance . We expect our revenues to grow circa 20% in 2020 driven by
(1) the pricing-advantageous and margn-accretive use of Ankara Hospital as Lokman Hekim Medical School's research hospital,
(2) Updated pricing schedule from 2020, the SUT.
(3) improved capacity usage in the rest of our network, and
Rest of the P&L . We expect moderation in inflation this year to reduce the cost of sales and boost gross margns. We further expect moderation in financing charges to continue. This is due to two factors: (1) the decline in cost of funding as we refinance part of our obligations at lower interest rates, and (2) restructuring our overall debt by lengthening its tenure. The impact of all these on net margn should be positive.
Dividend policy. Our dividend policy, which dates to 2011, the year Lokman Hekim became public, is unchanged. We expect to distribute TL4.8 million in dividends this year pending an AGM approval on 29 March 2020.
Investments. We expect investments in Etlik hospitals to finalize in 2020 as planned and shared with you in our 2019 comments. Capacity expansion investments at Akay Hospital has commenced and will continue throughout 2020.
2020 guidance summary. We remain upbeat about the prospects despite the uncertainty related to Covid-19. With the contribution of Ankara Hospital leased to Lokman Hekim University included, we expect to generate TL404-TL420 million in revenues, consistent with at least 20% year -on-year growth. We expect EBITDA to grow approximately 40%; our margn guidance ranges between 14% and 16%. We expect leverage measured as net debt to EBITDA to drop to below 2x mark.
Mustafa Sarioglu, M.D.
Chairman and CEO
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