This was due to gains from exceptional items recognised in Q3 FY2021 such as an increase in deferred tax assets of RM248.2 million, coupled with the effect of MFRS 129-related adjustments and foreign exchange losses in Q3 FY2022.
Excluding the effects of the Malaysian financial reporting standard (MFRS) 129, net profit decreased 39% to RM338.1 million, the company said in a statement today.
MFRS 129 (Financial reporting in hyperinflationary economies) sets out the framework for restating financial statements in hyperinflationary economies in a consistent and comparable basis, the company explained.
MFRS 129 comes into play given IHH’s business operations in Turkey, where cumulative inflation rates over a three-year period exceeded 100% as at April 2022.
Its quarterly revenue rose 3.38% to RM4.6 billion from RM4.44 billion previously amid strong recovery from core non-Covid-19 revenues as both local and foreign patients returned to seek treatment at its hospitals.
IHH MD and CEO Kelvin Loh noted that its headline profits decreased by 54% due to a high base in Q3 2021 that saw a recognition of higher deferred tax assets of RM248.2 million.
This was coupled with higher depreciation and amortisation due to MFRS 129-related adjustments and foreign exchange losses in Q3 2022, he added.
“However, our core operating performance improved. Like-for-like, net operating income for Q3 2022 improved 6% to RM374.2 million and revenue was up 4% as we pivoted well out of the pandemic.”
He expects inpatient volumes and bed occupancy to grow as we enter a post-Covid world. “The group’s long-term growth trajectory remains positive, underpinned by favourable healthcare megatrends and our robust financial position,” added Loh.
IHH acknowledged the healthcare industry continues to face near-term macroeconomic headwinds, adding that most costs are expected to increase with global rising inflation.
“The group will maintain a tight rein on costs and leverage synergies from its international network to achieve cost savings,” the company said.
In China, it expects continued challenges with its operations and investments on the mainland and will review its portfolio to minimise ongoing losses.
The group signed an equity transfer agreement with Perennial Health to divest its effective 49% stake in Gleneagles Chengdu Hospital on Nov 24 this year. The sale is in line with IHH’s strategy to review its asset portfolio in China to minimise losses.
IHH said it will continue to seek opportunities to acquire strategic assets, focusing on improving its returns on equity, improving group-wide synergies and operational efficiencies, and building distinct platforms where it sees strong growth potential, such as its laboratory businesses.
Its share price fell five sen to close at RM5.95 today, giving it a market capitalisation of RM52.4 billion.