The annual Annual General Meeting for year 2009 took place on 8th May.

In attendance was our board of Directors', shareholders' and the hospital's management team.

This was the chairman's report for 2008

Dear Shareholders,

The year 2008 started with great challenges following the disputed elections and the resultant violence and poor economic growth. It was therefore extremely difficult to achieve good results. In spite of this difficult beginning, we managed to achieve satisfactory results.

Performance for the year

During the year under review, revenue increased from Kshs 105 million to Kshs 141 million. However expenses rose from Kshs 104 million to Kshs 141 million. The major area of cost growth is administrative expenses which increased by Kshs 39 million to Kshs 69 million. Staff costs also grew significantly from Kshs 19 million to Kshs 26 million, an increase of 31 %. The other major growth is provision for bad debts which is increased from Ksh.4.9 million to 8 million, a growth of 65%.

Profit before taxation declined from Kshs 690,068 to Kshs 215,022.

Investment in equipment

During the period, we purchased a number of key equipment. This include a new ultrasound machine purchased at a cost of Kshs 3.1 million, a new haematology analyser acquired at Kshs 1.1 million and a dental unit acquired at Kshs 850,000. These investments are expected to improve the quality of service we provide and make a contribution to turnover, cash flow, profitability and scope of service.

Investment in ICT

We have continued to invest heavily in ICT in the belief that future competitive advantage will depend on the degree of investment in technology across all key functions. During the year, our outpatient services became largely paperless. We also developed the capacity to provide fixed price packages for which there is demand in the market. Our system is now smart card compliant in anticipation of the medical insurance industry’s migration from photo card to smart card identification systems.

We refurbished and re-launched our website and improved our communication capabilities through email and SMS. We are now in the process of computerizing our human resource management in order to achieve better control of this important resource and reduce administrative workload.

In October 2008, the Kenya Institute of Management awarded us the inaugural Kenya Business Awards (KABA) in recognition of our innovative use of ICT.

Revaluation of Land and Buildings

Our land and buildings were revalued by Lloyd Masika. The new values have substantially boosted our fixed assets whose value increased from Kshs 27 million to Kshs 80 million.

Development of Metro Villas Estate

You will recall that two years ago, we sold 2 acres of land to 34 shareholders. I am pleased to inform you that we have finally commenced construction of the estate as a gated community with a controlled living environment. The construction is being financed by the members, a Kshs 140 million bank loan from Savings & Loan and a Loan Stock which is open to every shareholder to subscribe to.

The estate will improve security, increase exposure of the company to the public, provide new clientele and provide accommodation to doctors thus giving them quick access to patients especially at night.

The board has signed a sale agreement with each house buyer. The sale agreement passes all the construction risks and benefits to the house owner. Your company assets are therefore safe from any claims arising from the estate project.

Loan Stock Issue

The board requires Kshs 150 million to finance construction of the Metro Villas Estate and has for this reason approached Savings & Loan for a construction loan. In addition, the board has decided to offer any shareholder with surplus funds, an opportunity to invest money in the company by way of a Loan Stock. The Loan stock is a safe, secure and high yield investment. I encourage every shareholder to invest depending on personal ability.    

Dividends

Due to the heavy cash demands occasioned by the construction, acquisition of equipment and the growing need to finance working capital, the board has resolved not to pay a dividend.

Future prospects

The company is progressing well. Despite the very difficult macro economic environment brought about by the global financial crises, the board is cautiously optimistic that 2009 will be a better year than 2008. The greatest risk to long term growth is the limited infrastructure. The company is implementing a number of developments to ensure that capacity grows in tandem with demand for services. The developments, which will be implemented over the next five years, include purchase and replacement of equipment and construction of new buildings to accommodate extra beds, diagnostic facilities, and private doctors. The existing buildings will also be renovated and upgraded. In addition, the company will also invest in information technology and management systems in order to maximize productivity.

Appreciation

Once again, I wish to thank all our clients for choosing us as their preferred healthcare provider, our shareholders and suppliers for continuing to believe in us and our staff for dedication and commitment to quality healthcare delivery.

 

Robin M. Mogere

Chairman