Company Announcements

Half-year Report

Source: RNS
RNS Number : 7138O
NMC Health Plc
23 August 2017
 

NMC Health plc

 

HALF-YEARLY FINANCIAL REPORT: Six months ended 30 June 2017

 

London, 23 August 2017: NMC Health plc (LSE:NMC) ('NMC'), the leading integrated private healthcare network operator in the GCC region including United Arab Emirates and one of the leading global providers of fertility treatments through its European, South American and Middle Eastern subsidiaries, today announces its interim results for the six months ended 30 June 2017.

 

·     Reported revenues increased by 34.0% year-on-year (compared to H1, 2016) to reach US$775.2m in H1, 2017 (US$ 578.3m in H1, 2016).

·     EBITDA reached US$170.7m (+47.3% YoY), resulting in a Group EBITDA margin of 22.0% (+200bps YoY); Healthcare business verticals contributed 86.9% of Group EBITDA in the period, up from 84.7% in H1, 2016.

·     Adjusted Net profits attributable to shareholders increased to US$105.7m (+56.0% YoY).

·     Basic EPS reported at US$ 0.429 (H1, 2016: 0.336); Diluted EPS at US$0.426 (H1, 2016: US$0. 334); Adjusted EPS at US$0.514 (H1, 2016: US$0.363).

·     New Management Structure announced to ensure a solid management foundation for further strategic growth

 

Business review

NMC Health produced strong performance in H1, 2017 with good progress seen across all parts of the Group. Our newly opened facilities continue to ramp-up well and the Group's acquired businesses are benefitting from both improved performance and the commencement of planned integration projects. 

 

Our long-term growth strategy, predicated on capacity and then capability focussed growth, continues to accelerate our expansion into more complex medical, and thus higher value added, specialty healthcare segments. The subsequent establishment of new strategic multi-brand verticals is enabling us to unlock synergies within the enlarged group, delivering significantly improved growth for the Group despite the continuing more moderate macro environment in our primary market of the UAE.

 

Over the past 12 months, NMC has focussed on continuing its strategic growth through geographic diversification, organic expansion and the commencement of projects to both release synergies from acquisitions as well as create revenue enhancements from operating initiatives between our various Group businesses. Our increasingly diversified and enhanced Group healthcare asset and brand portfolio is providing the Group with increased competitive advantages across our five specialised strategic verticals in what is an increasingly competitive market and, together with a more optimised asset utilisation, is leading to a higher growth, margin and return profile.

 

Al Zahra Hospital in Sharjah has performed well and in line with our expectations during the first five months of the Group's ownership. Initial integration projects have been completed smoothly. Our other acquired facilities in Sharjah, Dr Sunny clinics, also performed well and the Group believes it is now well placed to benefit from the anticipated future roll-out of mandatory insurance in the Sharjah market.

 

In neighbouring Dubai, our assets continue to benefit from market growth resulting from the introduction of mandatory health insurance. In Abu Dhabi, the ramp-up of our largest facility, NMC Royal Hospital in Khalifa City, continues to exceed expectations and the removal of Thiqa co-payment requirements by the Health Authority of Abu Dhabi in April 2017 is expected to positively impact in particular this facility, Al Zahra Hospital and Fakih IVF in H2, 2017 and beyond.

 

The Group's initial move into new geographies in the GCC is proceeding well with good performance experienced in our new assets in both Oman and Saudi Arabia, both of which are trading in-line with management expectations.

 

During H1, 2017, total patient visits to Group assets were 2.88m, an increase of 36.2% YoY. Revenue per patient in multi-specialty increased by 15.3% to reach US$ 134.4 and overall revenue per patient increased 8.2% YoY to US$ 183.5. This growth resulted from continuing focus on higher value procedures and specialties, increasing volumes and contribution in NMC Royal Hospital as well as good revenue per patient contributions from our newly acquired facilities.

 

In our operations and Management vertical, our contract to manage the Sheikh Khalifa General Hospital in Umm al Quwain was extended for a further 5 year term. Additionally, we have signed a number of new contracts and the Group will now be managing multiple private and public sector healthcare facilities across varied geographies.  

 

Our Distribution division has continued its good growth trend of recent years with revenue growth of 14.7% YoY, driven principally through the acquisition of new brands and products across its portfolio during the period. Whilst we believe that the Distribution business is well placed to return continued solid performance, consolidated Group margins continue to benefit from the strategic aim of relative dilution of the Distribution vertical with Healthcare division businesses contributing 70.5% of Group revenues compared to 65.5% in H1, 2016 and 48% at the time of IPO in 2012.  

 

As a result, Group EBITDA reached US$170.7m (+47.3% YoY) with a Group EBITDA margin of 22.0% (+200bps YoY) and we expect full-year EBITDA to be towards the top end of the current guidance range of US$335m to US$350m. The healthcare division margins increased by 60bps YoY to reach 30.2% during the period.  Meanwhile, margins of the distribution division improved to 10.8%.

 

Table: Summary of Reported Income Statement

Detail

H1 2017

H1 2016 Reported

YoY Growth

Revenue

US$775.2m

US$578.3m

34.0%

EBITDA

US$170.7m

US$115.9m

47.3%

Margin

22.0%

20.0%

200bps

One-off expenses

US$18.0m

US$5.4m

234.3%

Net profit

US$97.8m

US$70.5m

38.8%

Adjusted Net profit

US$115.8m

US$75.9m

52.7%

EPS

US$0.429

US$0.336

27.7%

Adjusted EPS

US$0.514

US$0.363

41.6%

―         Adjusted net profit and EPS numbers exclude non-recurring and one-off expenses. This refers to incurred business combination costs, amortisation of acquired intangibles and unamortised finance fees.

 

Net debt increased to US$ 1,049.9m in line with management expectations. Cash and short term bank deposits amounted to US$ 294.9m (2016: 617.8m) with a total debt balance at US$ 1,344.8m (2016: 1,049.1m).

 

Table: Summary Divisional performance

Divisional performances

H1 2017

H1 2016

YoY Growth

Healthcare revenue

US$ 561.1m

US$389.8m

43.9%

Healthcare EBITDA

US$ 169.3m

US$115.3m

46.8%

Healthcare EBITDA margin

30.2%

29.6%

                  60bps

Healthcare Net Profit

US$ 138.3m

US$92.4m

49.7%

Total patients

2.88m

2.11m

36.2%

Revenue per patient

US$183.5

US$169.7

8.2%

Healthcare occupancy

69.1%

70.5%

-140bps

Distribution revenue

US$ 235.3m

US$205.1m

14.7%

Distribution EBITDA

US$ 25.5m

US$20.9m

22.1%

Distribution EBITDA margin

10.8%

10.2%

                  60bps

Distribution Net Profit

US$ 23.7m

US$19.4m

21.9%

 

Note: This table shows individual Divisional performance and will not reconcile to Group financial information above which is consolidated after eliminating intra-group trading

 

Healthcare division

Total Revenues across our four Healthcare business verticals reached US$ 561.1m (up by US$171.3m or 43.9% YoY). Revenue growth was achieved across the Group's assets with good performance delivered within the acquired assets, strong ramp up of our newly opened facilities as well as continued revenue growth across our three more mature specialty Hospitals.

 

Multi-specialty vertical

The multi-specialty vertical's exceptional growth in H1, 2017 resulted from the continued push towards developing and optimising NMC's service offering, focus on increased asset utilisation, continuing benefits from the roll-out of mandatory healthcare insurance in Dubai and the contribution from our newly acquired assets.  Total patient visits increased to 2.73m (+38.4% YoY) with a revenue per patient of US$134.4.  As at 30 June 2017, the licensed bed capacity increased to 912 beds (+257 beds YOY) out of which 769 beds (+336 beds YOY) were operational. Excluding the Omani assets, the overall occupancy was stable at 68.5%, in line with the level seen last year.  Omani bed capacity added during the year has skewed the overall occupancy rate to 62.1%.

 

Our newly acquired Al Zahra Hospital in Sharjah was consolidated from February 2017 and contributed revenue of US$52m during the H1, 2017, in line with management's expectations. The facility now has an upgraded fully fledged emergency department and in July 2017 bed capacity was increased from 137 to 154 active inpatient beds with the addition of a new Long Term Acute Care unit operating with specialist knowledge provided by our ProVita business. Al Zahra Hospital is now the second largest hospital in the NMC group on a bed capacity basis.

 

Our largest facility, NMC Royal Hospital, Khalifa City, which commenced full service operations in March 2016, continues to ramp up ahead of expectations contributing US$55m of revenue in H1, 2017.

 

In Dubai, both our Dubai Specialty Hospital and DIP General Hospital performed well, with BR Medical Suites, providing high end treatments and surgeries, achieving excellent growth well above management expectations.

 

Maternity & fertility vertical

The maternity & fertility vertical delivered good YoY growth across all its assets. Clinica Eugin reported very strong growth compared to the first half of 2016, with good performance from the existing assets and contribution from our new IVF assets in Denmark and Brazil.

 

Fakih IVF has performed well in the period and is expected to benefit from H2, 2017 onwards as a result of the removal of restrictions in April 2017 on IVF treatment for Thiqa patients in Abu Dhabi as well as an increase in patient numbers and cycles achieved following improved success rates arising from the sharing of clinical knowledge between our two IVF businesses. In addition, the enhanced cross-utilisation of assets continues with the roll out of Fakih clinics into other NMC Healthcare facilities.

 

Brightpoint Royal Women's Hospital continues to ramp up well and is proving to be a location of choice for expectant mother's in the local market.

 

Revenues for the Maternity and Fertility vertical reached US$ 104.1m (+20.7% YoY), with total patient visits of 142k (+4.8% YoY) and revenue per patient of US$ 733.1. The licensed & operational bed capacity remained at 100 with an occupancy rate of 64.5% (+3.9% YoY).

 

Long-term & home care vertical

There continues to be a shortage of Long-term acute care provision across the GCC generally, and ProVita is showing very strong growth across its UAE business and also in our first Saudi Arabian operation, our newly acquired As Salama Hospital, which contributed US$11.8m of revenue in its first six months of operations.  ProVita Abu Dhabi operations continue to perform well, with revenue growth helped by a higher than anticipated level of ventilated patients being cared for in ProVita's new unit within NMC Royal Hospital.  

 

Revenues reached US$ 57.4m with licensed bed capacity increased to 260 beds, of which all 260 beds were operational with an occupancy rate of 90%.

 

Operation & management vertical

NMC continues to operate and manage the 205 bed Sheikh Khalifa General Hospital in Umm Al Quwain on behalf of the UAE ministry of presidential affairs, with the management contract recently extended for a further five years beyond the initial term of the contract which commenced in 2012. The total revenue contribution from this contract reached US$3.30m in H1, 2017 (+5% YoY).

 

Management anticipate additional focus in this business vertical to gain management contracts where NMC can bring its significant operational and clinical expertise to manage third party facilities.

 

Distribution division

Distribution division revenues grew by 14.7% YoY to reach US$ 235.3m. The distribution division's growth was supported by new product introductions and increased sales effort with stock keeping units (SKU's) near to105,600.

 

The healthcare segment (pharmaceuticals and laboratory equipment) was the leading contributor (43.7%). The fast moving consumer goods segment (FMCG) occupied the second position, in terms of total contribution to divisional revenues, at 37.7%.

 

During the period sales staff expanded to 1,174 staff (PY 1,163). We also added 19 (+8% YoY) new distribution vehicles compared to the same period last year, for a total of 258.

 

Integration initiatives

Alongside an aggressive strategic growth plan, management recognise the need for a smooth integration plan to ensure good utilisation of all Group assets and maximise operational efficiency. Our acquisition program has introduced an increasing pool of employee talent into the Group giving management and staff better career enhancement opportunities across NMC's businesses and enabling the Group to restructure the organisation at various levels and improve overall management expertise and experience across our business verticals.

 

The Group is taking a partnering approach to integration recognising the existing value and successful nature of each acquired business as well as the benefits that can be achieved to capitalise on scale synergies across the Group. Our approach to integration is to proceed with initial selective coordination on key activities and then to undertake a phased and appropriate approach to other operational synergy and revenue enhancement initiatives. This, we believe, is an appropriate and balanced approach creating the most effective value accretion and optimised business structure in the longer term.

 

To date, cost synergy programs have focussed on procurement and management integration. Of more significance in 2016 and H1, 2017 have been a number of revenue enhancement projects which have resulted in increasing patient cross referrals and various business partnerships between group entities resulting in increased revenue in parts of the Group.

 

More details will be provided in relation to our integration activities as part of the Group's 2017 full year results.  

 

Management structure update

Following the decision by Dr B. R. Shetty to step down from his Executive position of CEO and Executive Vice Chairman with the Group in March 2017, and the Board changes announced by the Company in June 2017, the Company is now pleased to confirm details of an updated management structure for the Group.

 

Dr B. R. Shetty took up the role of Joint Non-Executive Chairman in March 2017 and continues in this role providing advice in relation to the strategic development of the Group whilst also focussing on development of his other business interests. Mr Khalifa Bin Butti re-joined the Board in June 2017 as Executive Vice-Chairman, and alongside his role as a Director of the Company, has a particular focus in assisting the Board and management through his significant strategic connections and partnerships in the Middle East.

 

In addition to the above board changes, the revised Management structure for the Group reporting to Mr Prasanth Manghat, Chief Executive Officer, is as follows:

 

Ø Chief Financial Officer

Prashanth Shenoy is promoted to the position of CFO with effect from 1 September 2017. Prashanth joined the Group in 2016 and has been Deputy CFO and an integral member of the Group's M&A and projects team. He has played an instrumental role in NMC's acquisition of Al Zahra Hospital, fund raising and equity placing and closely involved with NMC's strategic entry into the Saudi Arabian market. Prashanth has 16 years of experience, predominantly in pharmaceutical and healthcare businesses, with significant international exposure.

 

Suresh Krishnamoorthy is stepping down from his position as CFO for personal family reasons and will be taking sabbatical leave from the Group. When he returns following this period of leave, Suresh will take up a new Group role focussing on strategic financial initiatives.

 

Ø Chief Investment Officer

Hani Buttikhi was appointed an Executive Director of the Company on 28 June 2017 in the role of Chief Investment Officer. In addition to assisting the CEO in relation to Group Strategy, Mr Buttikhi takes responsibility for the M&A, Corporate Development and Investor Relations functions which previously reported to the Deputy CEO. Asjad Yahya, who is managing our Investor Relations activity, will report to Mr Buttikhi.

 

Ø Chief Operations Officer, Healthcare

Michael Davis is COO, Healthcare with responsibility for all Healthcare operations of the Group. Michael previously reported to the Deputy CEO as CEO of ProVita, joining the Group as part of the acquisition of that business in August 2015. Michael has over 30 years of experience within large acute and post-acute listed hospital businesses in the US and has been living and working in the UAE since 2013.

 

Both the existing positions of Group Medical Director and Chief Operating Officer, Distribution, will continue to report to the CEO. Roy Cherry, who was previously responsible for Investor Relations and certain other investment functions, remains on extended leave to continue recovery from his illness.

 

In addition to the above, three new positions for growth have been created reporting directly to the CEO:

 

Ø Director of Employee Engagement

The retention of our excellent staff has always been a high priority for NMC Healthcare. Given the significant growth of the Group in recent years, this new position focussing on Group-wide employee initiatives has been created to ensure that the enlarged Group continues to be well placed to retain highly motivated and trained staff across its various corporate and operating businesses.

 

Ø Head of IVF

The IVF business vertical has become a material business for the Group and together the Fakih IVF and Clinica Eugin businesses are one of the largest providers of IVF treatments in the World. Given the scale and distinct nature of this business vertical, a new position of Head of IVF has been created taking day to day corporate responsibility for management of these businesses.

 

Ø Head of Saudi Arabian Operations

Following the commencement of operations in Saudi Arabia announced in December 2016, this new role has been created to take specific responsibility for managing the Group's day to day activities in Saudi Arabia. Saudi Arabia is a significant and strategically important market in the Middle East, and is seen as a key future market for growth for the Group.

 

Mr Prasanth Manghat, Chief Executive Officer, commented:

 

"H1, 2017 has seen strong performance from our acquired businesses, newly opened facilities as well as continuing growth in our more mature facilities. Our acquisitions in Sharjah are performing well and we are very pleased with initial performance from our new Saudi Arabian and Oman operations, as we start to diversify operations from our primary UAE market into the GCC and beyond.  

 

NMC's focus in recent years has been to deliver a capacity and capability growth strategy which has enabled us to achieve improved margins and diversify revenue channels setting a solid platform for long term sustained growth. We have also started phased integration initiatives aimed at extracting synergies from Group operations, maximising asset utilisation and achieving revenue enhancements between complementary Group businesses. We are very pleased with the progress of these initiatives which, together with our ongoing strategic plan to further grow and diversify operations both organically and through acquisition, gives us confidence for the future.

 

The new management structure has been developed following our significant growth over the last two years and is designed to ensure a solid management foundation for our future strategic growth. I wish all my management colleagues very best wishes in their new roles. I would like to thank Suresh Krishnamoorthy for his significant contribution to the Group over the last 17 years and we look forward to his return to the Group in his new role. We also send our best wishes Roy Cherry for a quick and full recovery following his recent illness.

 

Such sustained periods of significant change and growth can be difficult for our employees. Our continuing performance improvement during this period has been achieved through the efforts and dedication of all of our management and staff and I would personally like to thank all of them for their continuing hard work and commitment in maintaining our high-quality service and patient care."

 

Principal risks and uncertainties

 

The Board considers the risks and uncertainties associated with its business, with the risks connected with the Group's expansion program being some of the key risks faced by the Group.

 

The detailed list of the principal risks and uncertainties faced by the Group, and the mitigation of those risks, are listed on pages 10 to 12.

 

Summary and outlook

 

The overall macro-economic outlook in the principal countries in which we operate remains stable. The ongoing insurance reform in Dubai continues to increase medical insurance penetration rates and expand the UAE healthcare market size. The increased focus of healthcare privatisation initiatives in our new markets of Saudi Arabia and Oman are also encouraging.

 

The management team will continue to assess potentially attractive and accretive opportunities for further business expansion and diversification.

 

The Board view the outlook for the remainder of FY 2017, and FY 2018, with confidence.

 

Analyst and investor meeting

 

A conference call and webcast for analysts and investors will take place today, Wednesday 23 August 2017, at 14.00 BST.

 

A copy of this report will be available on the Company's Investor Relations website which can be accessed from www.nmchealth.com.

 

Contacts

 

Investors

 

NMC

 

Prasanth Manghat, Deputy Chief Executive Officer

+971 50 522 5648

Suresh Krishnamoorthy, Chief Financial Officer

+971 50 591 5365

Asjad Yahya, Investor Relations

+971 56 219 0975

 

 

Media

 

FTI Consulting, London

 

Matthew Cole

 

+44 (0)20 3727 1101

 

 

 

FTI Consulting, Gulf

 

Shane Dolan

 

+971 (0)4 437 2100

 

 

Cautionary statement

These Interim Results have been prepared solely to provide additional information to shareholders to assess the Group's performance in relation to its operations and growth potential. These Interim Results should not be relied upon by any other party or for any other reason. Any forward looking statements made in this document are done so by the directors in good faith based on the information available to them up to the time of their approval of this report. However, such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

 

About NMC

NMC Health plc group is the leading private sector healthcare operator in the United Arab Emirates, with a nation-wide network of hospitals and operations in the country since 1975. The Group currently operates or manages eight hospitals, two day-care patient centres, nine medical centres and fifteen pharmacies. In addition, the Group owns and operates Clinica Eugin in Barcelona, Spain - one of the leading fertility treatment centres globally. NMC also owns a 51% shareholding in Fakih IVF Group, the Middle East market leader for in-vitro fertilisation ('IVF') services. Moreover, NMC also owns and operates Americare Group, the leading home care provider in the UAE as well as ProVita, the pioneering provider of long-term medical care, also in the UAE. The enlarged company received almost 4.3m patients in 2016. The group is also a leading UAE supplier of products and consumables across several key market segments, with the major contribution coming from healthcare related products. NMC Health plc group reported revenues of US$1,220.8m in 2016.

 

In April 2012 NMC Health plc was listed on the Premium Segment of the London Stock Exchange. NMC Health plc is a constituent of the FTSE 250 Index.

 

Financial review

During the first half of the 2017 financial year, the Group continued to demonstrate strong growth at both the Group and divisional level. Group revenues increased by 34 % to US$775.2m (H1, 2016: US$578.3m). Group EBITDA improved by 47.3% to US$170.7m (H1, 2016: US$115.9m).

 

Revenue in the Healthcare division for the first half of 2017 increased by 43.9% to US$561.1m (H1, 2016: US$389.8m). Healthcare division EBITDA was US$169.3m for the first half of the year, which represented growth of 46.8% compared to same period last year (H1, 2016: US$115.3m). EBITDA margins were at 30.2%, which is a 60bps growth over the comparative period in 2017 (29.6% for H1, 2016) due to improved margins and value added services offered in the assets acquired.

 

Revenue in the Distribution division grew by 14.7% to US$235.3m (H1, 2016: US$205.1m) compared to the same period last year. Distribution division EBITDA was US$25.5m (H1, 2016: US$20.9m), with an EBITDA margin of 10.8% (H1, 2016: 10.2%).

 

Adjusted Earnings per share were US$ 0.514 (H1, 2016 US$ 0.363) during the period. Adjusted Earnings per share is calculated on a like for like basis for both periods using the number of shares in issue as at 30 June and after adjusting net income for non-operating one-off expenses. Non-operating one-off expenses consisted of unamortised finance fees in respect of the previous syndication loan, transaction costs in respect of business combinations and intangible amortisations in respect of business combinations.

 

Basic Earnings per share reported at US$ 0.429 for H1, 2017, increased from US$ 0.336 in H1, 2016.

 

Dividends

 

The Board remains committed to its previously stated policy to target a dividend pay-out ratio of 20-30% of profit after tax. The Board believes that this is a progressive dividend policy, whilst maintaining an appropriate level of dividend cover. The dividend policy not only reflects the strong cash flow characteristics of the Group, but also allows the retention of cash to fund the ongoing operating requirements and continued investment which the Company has highlighted for its long-term growth.

 

A dividend of 10.6 pence per share was approved and paid as a final dividend for the full year for 31 December 2016. The Board has determined that an interim dividend will not be declared but that any dividend for the 2017 financial year will be paid fully as a final dividend.

 

Capital expenditure

 

Total capital expenditure in the six months ended 30 June 2017 was US$22.9m (H1, 2016: US$ 40.2m), in line with our expectations.

 

Of the total capital expenditure spend during the period, US$ 10.0m (June 2016: US$27.3m) related to new capital projects and US$12.9m (June 2016: US$12.9m) related to further capital investment in our existing facilities.

 

In addition, the Group acquired Real Estate properties worth US$100.0m from Gulf Medical Projects Co. PSC during the period. The Real Estate property consists of Land and three buildings being used by Al Zahra Hospital in Sharjah. The Group engaged a third party to value the purchased Real Estate properties. Based on this report, the land is valued at US$13.5m and the buildings at US$86.5m having a useful life of 40 years. The group paid a real estate transfer fee of US$2.0m during the legal tittle transfer process and the same was capitalized on a pro rata basis.

 

The Group continues to have sufficient cash or debt facilities to progress its current capital projects programme.

 

Cash

 

The level of cash in the Group as at 30 June 2017 was in line with management expectations. During the period the number of average receivable days increased slightly from 94 days at 31 December 2016 to 101 days at 30 June 2017.

 

Debt

 

Net debt increased to US$ 1,049.9m. Cash and short term bank deposits amounted to US$ 294.9m (2016: 617.8m) with a total debt balance at US$ 1,344.8m (2016: 1,049.1m). This is in line with management expectations.

 

During the period, the Group entered two new syndicated facilities amounting to US$ 825m (Facility A) and US$ 250m (Facility B) respectively. Facility A was used to repay the balance of an existing syndicated loan, previously entered into in March 2015, of US$ 706 Million with the remaining amount available for general corporate purposes. Facility A is repayable over 60 months with an initial grace period of 12 months. Facility B is for acquisition purposes and is repayable over 84 months with a grace period of 12 months.

 

In addition to the above facilities, term loans also include other short term revolving loans which get drawn down and repaid over the period.

 

Going concern

The directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly the directors continue to adopt the going concern basis in preparing the condensed financial statements.

 

Statement of directors' responsibilities

The Interim report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Interim Report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority. The Disclosure and Transparency Rules ("DTR") require that the accounting policies and presentation applied to the half-yearly figures must be consistent with those applied in the latest published annual accounts, except where the accounting policies and presentation are to be changed in the subsequent annual accounts, in which case the new accounting policies and presentation should be followed, and the changes and the reasons for the changes should be disclosed in the Interim Report, unless the United Kingdom Financial Conduct Authority agrees otherwise.

 

The directors confirm that this condensed set of financial statements has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting' as adopted by the European Union, and that to the best of their knowledge, the Business and Finance Reviews contained herein includes a fair review of:

 

·     The important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements as required by DTR 4.2.7R;

·     The principal risks and uncertainties for the remaining six months of the year as required by DTR 4.2.7R; and

·     Related party transactions that have taken place in the first six months of the current financial year that have materially affected the financial position or performance of the Group during the first six months of the current financial year as required by DTR 4.2.8R.

 

For and on behalf of the Board of Directors:

 

 

Suresh Krishnamoorthy

Chief Financial Officer

22 August 2017

 

Principal risks and uncertainties

 

Group Management maintains and reviews a Strategic Risk Register, which is the basis for the list of principal risks and uncertainties, on an on-going basis with the Board retaining oversight over the Register and the risk management process. These risks and uncertainties, the potential effect of them on the Group and the mitigation of them is analysed in the following table.

 

It should be noted that the order that these risks and uncertainties are expressed in the table do not reflect an order of magnitude as regards their potential impact on the Group

 

 Risks and uncertainties

Potential impact

Mitigation

 

Investment

 

Bad decisions in relation to either acquisition or organic growth investments or an inability to

appropriately execute integration or new facility ramp-up plans may result in:

• Lower Return on Investment (ROI);

• Lower revenue than expected;

• Decreased margins and market share;

• Potential for impairment of assets;

• Potential difficulty in raising future finance

·      Board oversight in approving and monitoring strategic projects.

·      Project management controls.

·      Detailed market and business appraisal processes.

·      Focus on integration pathway to improve Group revenue generation from intra-group business referrals and multibrand facility sharing.

·      Strategy to acquire international know-how through acquisition plan.

·      Re-alignment of existing assets within the Group's hub and spoke model (e.g. existing specialty hospitals feeding the regional NMC Royal Hospital, Khalifa City).

 

Competition

Increased competition due to high private and public investments in the UAE healthcare sector and associated investments coming from new entrants or existing player partnerships would lead to market share loss and potential reduction in access to future growth in UAE healthcare spend.

·      Integrated Hub-Spoke model.

·      Growing healthcare network.

·      Partnership with Government hospitals.

·      The development of international partnerships and use of increased knowhow gained through strategic growth plan.

·      Diversification of patient base.

·      Variety in service offerings.

Financial

Failing to innovate and effectively deliver new services. Inexperience of operating in new markets/offerings leads to missed opportunity or poor service delivery.

·      Frequent monitoring of both fixed and variable cost.

·      Synergy tracking and reporting.

·      Acquiring the skills associated with the M&A transactions.

Financial

Potential adverse effect NMC's margin as a result of unexpected regulatory or cultural changes affecting the provision of healthcare, the basis of the healthcare insurance structure or increases in medical inflation and pricing pressure and bargaining from key insurance providers in the Group's key markets, would result in less profitability.

·      Diversification of the revenue streams.

·      Increased collaboration between different group assets and businesses.

·      Frequent monitoring of both fixed and variable cost.

·      Good relationships with insurance providers.

·      Strategy to increase patient volumes and focus on clinical specialisms.

·      M&A Strategy in new markets.

 

Macro-economic

Potential instability in revenue impairing cash flow and working capital health as a result of global and regional demographic, macro-economic and geopolitical factors.

·      UAE is a stable and booming market to operate in.

·      Diverse business and revenue streams.

·      Long Term debt facilities and unutilized working capital limits.

·      Strong banking and supplier relationships.

 

Financial

Failure to maximize the opportunity of

acquisitions though successful integration strategies or through ineffective management structure or operating model may results in:

• Increased market and regulatory/ legal obligations;

• Increased culture resistance and complexity in shifting the governance model from enterprise to corporate structure;

• Increased operational exposure due to the complexity of integrating higher number of spokes to centralized hub of excellence;

• Increased investment risk due to weak due diligence and other mitigates.

·      Proper due diligence.

·      Post-acquisition integration plan.

·      Rigorous analysis of value of the acquisition.

·      Focus on the corporate cultures involved.

·      Executive committee reporting and targets.

·      Synergy tracking and reporting.

·      Acquiring the skills associated with the M&A transactions.

 

Technology

A Data Security (e.g. VIP patient records) breach due to either intentional malicious cyber-attack

or unintentional data or system loss resulting in reputational damage, operational disruption or regulatory breach.

·      ISO 27001 certified framework for IT policies and controls.

·      Strict measures towards clients' data and records.

·      Investment in new Hospital Information System and ERP financial system approved by the Board and implementation in progress.

 

Compliance & Regulation

Failure to comply with multi regulatory and standards bodies' requirements could result in financial fines, inability to renew licenses, as well as NMC reputation damage.

·      Quality & Standards Department monitors regulatory changes.

·      Partnership with government.

·      Good relationships with regulators and accrediting organizations.

·      Continuous focus on delivering high levels of service.

 

 

Clinical Quality, Product & Service

Failure to comply with internationally recognized clinical care and quality standards, clinical negligence, the misdiagnosis of medical conditions or pharmaceuticals and the supply of unfit products across both divisions could result in regulatory sanction, licence removal, significant reputational damage, loss of patient and customer confidence and potential criminal proceedings.

·      Doctors subject to rigorous licensing procedures which operate in the UAE.

·      Healthcare division is a regulated business and five of the Group's principal hospitals have achieved, or are in the process of achieving, international quality standards accreditation.

·      Many aspects of the operation of the Distribution division, including the sale of

pharmaceuticals, is regulated in the UAE.

·      Board oversight and integrated governance structure.

·      Medical malpractice insurance to cover any awards of financial damages.

·      Continuous training and development programs.

 

Human Capital

Failure to retain/acquire key professionals or inability to acquire sufficient Medical staff could potentially lead to inability to deliver required healthcare services and execute growth strategy.

·      Partnership with education institutes.

·      Effective sourcing strategies & recruitment campaigns.

·      Ongoing review of senior management resources and succession plans in place for key positions.

·      Competitive salary packages, growth and good working conditions act as a good retention tool.

·      Clear career path for staff and continuous training and development programs.

 

 

 

Independent review report to NMC Health plc

 

 

Introduction

 

We have been engaged by the Company to review the condensed set of consolidated financial statements in the half-yearly financial report for the six months ended 30 June 2017 which comprises the condensed consolidated income statement, the condensed consolidated statement of other comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated statement of changes in equity, the condensed consolidated statement of cash flows and related notes 1 to 21. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.

 

Directors' Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

As disclosed in note 2, the annual consolidated financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

 

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

 

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

 

Ernst & Young LLP

London

 

Date: 22 August 2017

 

 

NMC Health plc

CONDENSED CONSOLIDATED INCOME STATEMENT

For the six months ended 30 June 2017

 

 

 

Unaudited

 

Notes

Period ended

30 June

2017

US$ '000

Period ended

30 June

2016

US$ '000

Revenue

6

775,153

578,340

Direct costs

 

(470,282)

(358,971)

 

 

-----------------------

-----------------------

GROSS PROFIT

 

304,871

219,369

General and administrative expenses

 

(160,841)

(126,815)

Other income

 

26,621

23,297

 

 

-----------------------

-----------------------

PROFIT FROM OPERATIONS BEFORE DEPRECIATION, AMORTISATION AND TRANSACTION COSTS

 

170,651

115,851

Transaction costs in respect of business combinations

5

(4,458)

(242)

Depreciation

9

(28,051)

 

(20,908)

Amortisation

10

(7,252)

(5,434)

 

 

-----------------------

-----------------------

PROFIT FROM OPERATIONS

 

130,890

89,267

Finance costs

 

(27,872)

(19,877)

Finance income

 

3,082

1,783

Unamortised finance fees written off

 

(6,794)

-

 

 

-----------------------

-----------------------

PROFIT FOR THE PEROD BEFORE TAX

 

99,306

71,173

Tax

7

(1,499)

(693)

 

 

-----------------------

-----------------------

PROFIT FOR THE PERIOD

 

97,807

70,480

 

 

==========

==========

Profit  for the period  attributable  to:

 

 

 

  Equity holders of the Parent

 

87,729

62,375

  Non-controlling interests

 

10,078

8,105

 

 

-----------------------

-----------------------

PROFIT FOR THE PERIOD

 

97,807

70,480

 

 

==========

==========

Earnings per share for profit attributable to the

 

 

 

equity holders of the Parent:

 

 

 

Basic  EPS  (US$)

8

0.429

0.336

Diluted EPS (US$)

8

0.426

0.334

 

One off items includes unamortised finance fees written off (US$ 6.8m) , transaction costs in respect of business combinations (US$4.5m), and amortisation of acquired intangibles (US$6.8m).

 

The attached notes 1 to 21 form part of the condensed consolidated financial statements

 

NMC Health plc

CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME

For the six months ended 30 June 2017

 

 

 

 

 

Unaudited

 

Notes

Period ended

30 June

2017

US$ '000

Period ended

30 June

2016

US$ '000

 

 

 

 

Profit  for the period

 

97,807

70,480

 

 

 

 

Other comprehensive income

 

 

 

Other comprehensive income to be reclassified to income statement in subsequent periods (net of tax)

 

 

 

Exchange difference on translation of foreign operations

 

9,586

1,936

 

 

 

 

Other comprehensive income not to be reclassified to income statement in subsequent periods (net of tax)

 

 

 

Re-measurement gains on defined benefit plans

 

1,011

322

 

 

-----------------------

-----------------------

Other comprehensive income for the period (net of tax)

 

10,597

2,258

 

 

-----------------------

-----------------------

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

 

108,404

72,738

 

 

==========

==========

 

 

 

 

Total comprehensive income attributable to :

 

 

 

  Equity holders of the Parent

 

97,211

64,370

  Non-controlling interests

 

11,193

8,368

 

 

-----------------------

-----------------------

Total comprehensive income

 

108,404

72,738

 

 

==========

==========

 

These results relate to continuing operations of the Group. There are no discontinued operations in the current and prior period.

 

The attached notes 1 to 21 form part of the condensed consolidated financial statements

 

NMC Health plc

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2017

 

 

 

Unaudited

Audited

 

 

30 June

31 December

 

 

2017

2016

 

Notes

US$'000

US$'000

ASSETS

 

 

 

 

Non-current assets

 

 

 

Property and equipment

9

585,340

459,338

Intangible assets

10

1,133,149

652,983

Investment in Joint Venture

 

2,020

834

Deferred tax assets

7

3,238

2,135

Loan receivable

11

9,881

9,129

Advances  paid for acquisitions

 

1,645

1,614

Other non-current assets

 

41,972

43,053

 

 

-------------------------

-----------------------

 

 

1,777,245

1,169,086

 

 

-------------------------

-----------------------

Current assets

 

 

 

Inventories

12

157,548

144,387

Accounts receivable and prepayments

13

497,324

374,457

Loan receivable

11

5,381

5,387

Amounts due from related parties

 

-

3,628

Income tax receivable

 

910

2,208

Bank deposits

14

74,015

137,900

Bank balances and cash

14

220,924

479,940

 

 

------------------------

--------------------

 

 

956,102

1,147,907

 

 

------------------------

-----------------------

TOTAL ASSETS

 

2,733,347

2,316,993

 

 

==========

==========

EQUITY AND LIABILITIES

 

 

 

Equity

 

 

 

Share capital

 

31,910

31,910

Share premium

 

491,778

491,778

Group restructuring reserve

 

(10,001)

(10,001)

Foreign currency translation reserve

 

343

(8,128)

Option redemption reserves

 

(35,027)

(35,027)

Retained earnings

15

501,287

436,337

 

 

-----------------------

-----------------------

Equity attributable to equity holders of the Parent

 

980,290

906,869

 

 

 

 

Non-controlling interests

 

46,913

42,002

 

 

-------------------------

-----------------------

Total equity

 

1,027,203

948,871

 

 

-------------------------

-----------------------

Non-current liabilities

 

 

 

Term loans

16

1,006,159

594,780

Employees' end of service benefits

 

36,141

26,648

Other payables

 

37,957

40,792

Option redemption payable

 

13,704

37,500

Deferred tax liabilities

7

9,579

8,245

 

 

-------------------------

-----------------------

 

 

1,103,540

707,965

 

 

-------------------------

-----------------------

 

 

NMC Health plc

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2017

 

 

 

Unaudited

Audited

 

 

30 June

31 December

 

 

2017

2016

 

Notes

US$'000

US$'000

Current liabilities

 

 

 

Accounts payable and accruals

 

188,867

158,812

Other payables

 

26,059

26,827

Option redemption payable

 

26,018

-

Amounts due to related parties

18

14,721

14,876

Bank overdrafts and other short term borrowings

 

233,847

219,851

Term loans

16

104,765

234,519

Employees' end of service benefits

 

5,987

3,560

Income tax payable

 

2,340

1,712

 

 

-----------------------

-----------------------

 

 

602,604

660,157

 

 

-------------------------

-----------------------

Total liabilities

 

1,706,144

1,368,122

 

 

-------------------------

-----------------------

TOTAL EQUITY AND LIABILITIES

 

2,733,347

2,316,993

 

 

==========

==========

 

The condensed consolidated financial statements were authorised for issue by the board of directors on 22 August 2017 and were

signed on its behalf by

 

 

Mr Prasanth Manghat

Mr Suresh Krishnamoorthy

Chief Executive Officer

Chief Financial Officer

 

 

The attached notes 1 to 21 form part of the condensed consolidated financial statements

 

 

NMC Health plc

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2017

 

 

 

   Attributable to the equity holders of the Parent

 

Share  capital

Share  premium

Group restructuring reserve

Retained earnings

US$ '000

US$ '000

US$ '000

US$ '000

 

 

 

 

 

Balance as at 1 January 2017

31,910

491,778

(10,001)

436,337

Profit for the period

-

-

-

87,729

Other comprehensive income

-

-

-

1,011

 

-----------------------

---------------------

-----------------------

---------------------

Total comprehensive income for the period

 

 

 

88,740

Dividend (Note 17)

-

-

-

(27,779)

Deferred tax adjustment

-

-

-

310

Adjustment to prior year business

-

-

-

-

  combinations (Note 5)

-

-

-

-

Acquisition of subsidiaries (Note 5)

-

-

-

-

Share based payments

-

-

-

3,679

 

-----------------------

---------------------

-----------------------

---------------------------

Balance as at 30 June 2017 (unaudited)

31,910

491,778

(10,001)

501,287

 

 

 

 

 

 

==========

========

==========

==========

 

 

 

 

 

Balance as at 1 January 2016

29,566

179,152

(10,001)

318,092

Profit for the period

-

-

-

62,375

Other comprehensive income

-

-

-

322

 

-----------------------

---------------------

-----------------------

---------------------

Total comprehensive income for the period

 

 

 

62,697

Dividend (Note 17)

-

-

-

(16,350)

Acquisition of non-controlling interest

-

-

-

536

Acquisition of subsidiaries

-

-

-

-

Share based payments

-

-

-

1,204

 

-----------------------

---------------------

-----------------------

---------------------------

Balance as at 30 June 2016 (unaudited)

29,566

179,152

(10,001)

366,179

 

 

 

 

 

 

==========

========

==========

==========

 

 

   Attributable to the equity holders of the Parent

 

 

 

Foreign currency translation reserve

Option redemption reserves

Total

Non- controlling interest

Total

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

 

 

 

 

 

 

Balance as at 1 January 2017

(8,128)

(35,027)

906,869

42,002

948,871

Profit for the period

-

-

87,729

10,078

97,807

Other comprehensive income

8,471

-

9,482

1,115

10,597

 

-----------------------

-----------------------

---------------------

-----------------------

-----------------------

Total comprehensive income for the period

8,471

-

97,211

11,193

108,404

Dividend (Note 17)

-

-

(27,779)

(14,379)

(42,158)

Deferred tax adjustment

-

-

310

134

444

Adjustment to prior year business

-

-

-

-

-

  combinations (Note 5)

-

-

-

1,631

1,631

Acquisition of subsidiaries (Note 5)

-

-

-

6,332

6,332

Share based payments

-

-

3,679

-

3,679

 

------------------------

-----------------------

---------------------------

-------------------------

---------------------

Balance as at 30 June 2017 (unaudited)

343

(35,027)

980,290

46,913

1,027,203

 

 

 

 

 

 

 

=========

==========

==========

=========

=========

 

 

 

 

 

 

Balance as at 1 January 2016

(4,616)

(24,496)

487,697

11,968

499,665

Profit for the period

-

-

62,375

8,105

70,480

Other comprehensive income

1,673

-

1,995

263

2,258

 

-----------------------

-----------------------

---------------------

-----------------------

-----------------------

Total comprehensive income for the period

1,673

-

64,370

8,368

72,738

Dividend (Note 17)

-

-

(16,350)

(5,047)

(21,397)

Acquisition of non-controlling interest

-

-

536

(955)

(419)

Acquisition of subsidiaries

-

-

-

17,575

17,575

Share based payments

-

-

1,204

-

1,204

 

------------------------

-----------------------

---------------------------

-------------------------

---------------------

Balance as at 30 June 2016 (unaudited)

(2,943)

(24,496)

537,457

31,909

569,366

 

 

 

 

 

 

 

=========

==========

==========

=========

=========

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NMC Health plc

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2017

 

 

 

 

Unaudited

 

 

Period ended

30 June

2016

 

Notes

US$ '000

US$ '000

OPERATING ACTIVITIES

 

 

 

Profit for the period  before tax

 

99,306

71,173

Adjustments for:

 

 

 

  Depreciation

9

28,051

20,908

  Employees' end of service benefits

 

4,714

3,341

  Amortisation of Intangible assets

10

7,252

5,434

  Finance income

 

(3,082)

(1,783)

  Finance costs

 

27,872

19,877

  Loss on disposal of property and equipment

 

185

45

  Foreign exchange loss

 

-

698

  Unamortised finance fees written off

 

6,794

-

  Other non-cash income

 

-

197

  Share based payments expense

 

3,679

1,204

 

 

------------

------------

 

 

174,771

121,094

Working capital changes:

 

 

 

  Inventories

 

(4,770)

8,036

  Accounts receivable and prepayments

 

(62,086)

(57,631)

  Amounts due from related parties

 

4,445

294

  Accounts payable and accruals

 

(14,470)

13,016

  Amounts due to related parties

 

(161)

(6,066)

 

 

------------

------------

Net cash from operations

 

97,729

78,743

Employees' end of service benefits paid

 

(1,772)

(594)

Income tax (paid) / receipt

 

(1,100)

1,663

 

 

------------

------------

Net cash from operating activities

 

94,857

79,812

 

 

------------

------------

INVESTING ACTIVITIES

 

 

 

Purchase of property and equipment

 

(22,914)

(36,599)

Purchase of intangible assets

10

(463)

(434)

Proceeds from disposal of property and equipment

 

32

1,100

Acquisition of subsidiaries, net of cash acquired

5

(609,187)

(221,554)

Acquisition of non-controlling interest

 

-

(296)

Purchase consideration paid in advance

 

(1,645)

-

Investment in Joint venture

 

(1,218)

-

Bank deposits maturing in over 3 months

 

(39,954)

532

Restricted cash

 

83,301

(47,296)

Finance income received

 

535

2

Loan receivables

11

(1,185)

(8,641)

Other non-current assets

 

(1,659)

(1,348)

Contingent and deferred consideration paid for acquisition

5 & 21

(6,521)

(11,477)

 

 

------------

------------

Net cash used in investing activities

 

(600,878)

(326,011)

 

 

------------

------------

 

 

NMC Health plc

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS continued

For the six months ended 30 June 2017

 

 

 

 

Unaudited

 

 

Period ended

30 June

2016

 

Notes

US$ '000

US$ '000

 

 

 

 

FINANCING ACTIVITIES

 

 

 

New term loans and draw-downs

16

454,437

356,972

Repayments of term loans

16

(170,546)

(139,228)

Transaction cost of term loan

 

(15,685)

-

Receipts of short term borrowings

 

169,929

157,724

Repayment of short term borrowings

 

(175,676)

(130,216)

Dividend paid to shareholders

 

(27,779)

(16,350)

Dividend paid to non- controlling interest

 

(7,215)

(5,047)

Other payable

 

1,200

-

Finance costs paid

 

(21,942)

(14,860)

 

 

------------

------------

Net cash from  financing activities

 

206,723

208,995

 

 

------------

------------

 

 

 

 

NET DECREASE IN CASH AND CASH EQUIVALENTS

 

 

 

EQUIVALENTS

 

(299,298)

(37,204)

 

 

 

 

 

 

 

Cash and cash equivalents at 1 January

 

433,403

84,024

 

 

------------

------------

CASH AND CASH EQUIVALENTS AT 30 JUNE ECEMBER

 

14

134,105

46,820

 

 

=======

=======

         

 

The attached notes 1 to 21 form part of the condensed consolidated financial statements.

 

 

NMC Health plc

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

At 30 June 2017

 

 

1          CORPORATE INFORMATION

 

NMC Health plc (the "Company" or "Parent'') is a company which was incorporated in England and Wales on 20 July 2011. The Company is a public limited liability company operating in the Middle East, Europe and South America . The Group is primarily based in United Arab Emirates ("UAE"). The address of the registered office of the Company is Level 1, Devonshire House, One Mayfair Place, London, W1J 8AJ. The registered number of the Company is 7712220. The Company's immediate and ultimate controlling party is a group of three individuals (H.E. Saeed Mohamed Butti Mohamed Al Qebaisi (H.E. Saeed Bin Butti), Dr BR Shetty and Mr Khalifa Butti Omair Yousif Ahmad Al Muhairi (Mr. Khalifa Bin Butti) who are all shareholders and of whom two are directors of the Company and who together have the ability to control the Company.

 

The Parent and its subsidiaries (collectively the "Group") are engaged in providing professional medical services and the provision of all types of research and medical services in the field of gynaecology, obstetrics and human reproduction, and the rendering of business management services to companies in the health care and hospital sector. The Group is also engaged in wholesale of pharmaceutical goods, medical equipment, cosmetics, food, IT products and services.

 

The condensed consolidated financial statements of the Group for the six months ended 30 June 2017 were authorised for issue by the Board of Directors on 22 August 2017.

 

The condensed consolidated financial statements do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006.

 

Statutory financial statements for the year ended 31 December 2016 were published and were delivered to Companies House. Those financial statements were approved by the Board of Directors on 7 March 2017. The report of the auditor on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006.

 

The condensed consolidated financial statements have been reviewed, not audited.

 

2              BASIS OF PREPARATION

 

The condensed consolidated financial statements for the six months ended 30 June 2017 have been prepared in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority and with IAS 34, 'Interim financial reporting' as adopted by the European Union.

 

The condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read together with the consolidated financial statements of NMC Health plc as of 31 December 2016 which were prepared in accordance with IFRS (as adopted in the European Union).

 

The consolidated financial statements are prepared under the historical cost convention, except for derivative financial instruments and contingent consideration payable which have been measured at fair value.

 

Accounting policies

 

The principal accounting policies adopted in the preparation of these condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2016, except for the  adoption of new standards and interpretations effective as of 1 January 2017. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

 

The new standards, amendments to IFRS, which are effective as of 1 January 2017 are listed below, have no impact on the Group.

 

·      Amendments to IAS 7 Statement of Cash Flows: Disclosure Initiative

 

·      Amendments to IAS 12 Income Taxes: Recognition of Deferred Tax Assets for Unrecognised Losses

 

·      Annual Improvements 2014-2016 Cycle

 

Amendments to IFRS 12 Disclosure of Interests in Other Entities: Clarification of the scope of disclosure requirements in IFRS 12

 

The new standards and amendments, effective as of 1 January 2017, have no impact on the Group.

 

As presented in our 2016 Annual report, the Group plans to adopt IFRS 15 on the required effective date using the Modified retrospective method. The Group has performed a preliminary impact assessment which is subject to changes arising from a more detailed ongoing analysis, however management does not expect a significant impact from the application of the standard.

 

Going concern

 

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Business Review on page 1 to 7. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Financial Review on pages 8 and 9.

 

The Group has two diverse operating divisions, Healthcare and Distribution, both of which operate in a growing market.

 

The directors have undertaken an assessment of the future prospects of the Group and the wider risks that the Group is exposed to. In its assessment of whether the Group should adopt the going concern basis in preparing its financial statements, the directors have considered the adequacy of financial resources in order to manage its business risks successfully, together with other areas of potential risk such as regulatory, insurance and legal risks.

 

The Group has considerable financial resources including banking arrangements through a spread of local and international banking groups and utilizes short and medium term working capital facilities to optimise business funding. Debt covenants are reviewed by the Board each month. The Board believes that the level of cash in the Group, the spread of bankers and debt facilities mitigates the financing risks that the Group faces from both its expansion through acquisitions and in relation to working capital requirements.

 

The Group delivered a strong performance during the first half of 2017. Both the Healthcare and Distribution divisions have continued their positive growth in revenue during the first half of 2017. Net profit and EBITDA of both healthcare and distribution divisions have increased during first half in 2017. EBITDA margin of Healthcare is increased whereas EBITDA margin of Distribution remained comparable to last year.  The directors have reviewed the business plan for the year end 2017 and the five year cash flow, together with growth forecasts for the healthcare sector in the UAE. The directors consider the Group's future forecasts to be reasonable.

 

The directors have not identified any other matters that may impact the viability of the Group in the medium term and therefore they continue to adopt the going concern basis in preparing the condensed consolidated financial statements

 

The directors expect that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the interim condensed consolidated financial statements.

 

Significant accounting judgements and estimates 

 

The preparation of the condensed consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

 

In preparing these condensed consolidated financial statements, the significant judgements and estimates made by management in applying the Group's accounting policies and the key sources of estimation and uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2016.

 

3              FINANCIAL RISK MANAGEMENT

 

The primary risk arising from the Group's financial instruments are interest rate risk, foreign currency risk, credit risk and liquidity risk. These risks and the Group's financial risk management objectives and policies are consistent with that disclosed in the consolidated financial statements as at and for the year ended 31 December 2016.

 

4              SEASONALITY OF OPERATIONS

 

The Group does not have any operations of a seasonal or cyclical nature.

 

5              BUSINESS COMBINATIONS

 

The fair value of the identifiable assets and liabilities of entities acquired as at the date of acquisition are as follows:

 

Particulars

Al Zahra

Others

Total

 

US$'000

US$'000

US$'000

Assets

 

 

 

Intangible assets

3,999

12,463

16,462

Property and equipment

124,196

6,288

130,484

Inventories

6,668

1,723

8,391

Accounts receivable

44,143

14,472

58,615

Other receivables

2,204

814

3,018

Cash and bank balances

6,095

1,584

7,679

 

187,305

37,344

224,649

 

 

 

 

Liabilities

 

 

 

Borrowings

-

1,333

1,333

Accounts payable

26,077

5,201

31,278

Other payable

11,990

5,115

17,105

Tax payable

-

321

321

 

38,067

11,970

50,037

 

 

 

 

Total identified net assets at fair value

149,238

25,374

174,612

Non -controlling interest

-

(6,332)

(6,332)

Goodwill arising on acquisition

413,613

39,297

452,910

Purchase consideration

562,851

58,339

621,190

 

 

 

 

Purchase consideration:

 

 

 

Payable in cash

562,851

54,015

616,866

Deferred consideration

-

3,527

3,527

Advance paid in 2016

 

797

797

Total consideration

562,851

58,339

621,190

 

Until last year, each acquisition was shown separately. From current period, smaller acquisitions have been clubbed together as "others". This is done to make disclosure concise.

 

The fair value assessment of identifiable net assets at the acquisition date remains in progress

and therefore the fair values of the identifiable net assets are provisional.

 

Analysis of cash flows on acquisitions is as follows:

 

Particulars

Al Zahra

Others

Total

 

US$'000

US$'000

US$'000

Cash paid

(562,851)

(54,015)

(616,866)

Net cash acquired with the subsidiaries

6,095

1,584

7,679

Transaction costs

(4,458)

-

(4,458)

Net cash flow on acquisition

(561,214)

(52,431)

(613,645)

 

The transaction costs reported in the condensed consolidated income statement comprise of the following:

 

 

Unaudited

 

6 months ended 30 June

2017

US$ '000

6 months ended 30 June

2016

US$ '000

Transaction costs for the acquired entities

 

4,458

242

 

-----------------------

-----------------------

 

4,458

242

 

=========

=========

 

The non-controlling interest in all acquired entities is measured at the proportionate share of net assets of subsidiaries.

 

Acquisition of Al Zahra Hospital ("Al Zahra")

 

On 14 December 2016, the Group agreed to acquire a 100% controlling stake in the voting shares of Al Zahra, UAE providing both in-patient and outpatient service to the highest standards, supported by state of art facilities. Al Zahra is one of the largest full service multi-speciality hospitals in the UAE in Sharjah and Northern Emirates. The hospital has 137 active in-patients beds and a capacity of 154 beds (expandable to at least 200 beds), treating approximately 400,000 outpatients and 23,000 in-patients bed days per year. It has strong relationships with a number of major insurance providers in Sharjah with approximately 85% of outpatients referred through the insurance channel.

 

NMC acquired control of Al Zahra on 13 February 2017, date on which all conditions precedent were completed, meaning that control has passed to the Group. For convenience, the closest available balance sheet date has been used for the purposes of measuring net assets acquired. This date is 31 January 2017, with full consolidation commencing on 1 February 2017.  We are not aware of any material transactions in the period between 01 February 2017 and 13 February 2017. The consolidated financial statements include the results of Al Zahra for 5 months period.

 

Included in property and equipment are land and building of US$100 million acquired as part of Al Zahra acquisition.

 

At the date of acquisition, the fair value of identifiable intangible assets included brand amounting to US$3,539,000 and software amounting to US$460,000.

 

Goodwill represents the future business potential and profit growth of the acquired business.  It comprises all of the intangibles that cannot be individually recognised such as the assembled workforce, the customer service, future client relationships, the presence in geographic markets, the synergies that acquired entities & NMC will obtain.

 

Between 1 February 2017 to 30 June 2017 turnover of US$ 51,564,000 arising from Al Zahra was included in Groups turnover. If the business had been acquired at the beginning of the year, the estimated Groups turnover for the half year ending 30 June 2017 would have been US$ 61,580,000 higher. The business has been integrated to the Groups existing activities and is not practical to identify the impact on the Groups profit in the period.

 

At the date of the acquisition the fair value of the trade receivables was US$ 44,143,000. The gross amount of trade receivables is US$ 51,637,000.

 

Other Acquisitions

 

In the Kingdom of Saudi Arabia, the Group agreed to acquire a 70% controlling stake in the voting shares of As Salama Hospital LLC ("ASH") on 28 August 2016, an unlisted private general hospital which exists to serve the healthcare needs of all people in Al-Khobar by providing acute and long-term care. ASH is the fifth largest hospital in the Eastern province of Saudi Arabia and account for 10% of market share. Regulatory approvals and legal formalities were completed on 02 January 2017, meaning that control has passed to the Group. For convenience, the closest available balance sheet date i.e. 01 January 2017 has been used for the purposes of measuring net assets acquired.

 

In the Sultanate of Oman, the Group acquired a general hospital and a private clinic.

 

The Group agreed to acquire the Healthcare Business and assets of Atlas Healthcare on 05 December 2016. Atlas Healthcare is one of the leading providers of comprehensive healthcare services in Al Ruwi and Al Ghoubra a suburb of Muscat, the capital city of the Sultanate of Oman. Regulatory approvals and legal formalities Completed on 13 February 2017, meaning that control has passed to the Group. For convenience, the closest available balance sheet date i.e. 01 February 2017 has been used for the purposes of measuring net assets acquired.

 

The Group also agreed to acquire the Healthcare Business and assets of Bin Said, a private clinic on 04 October 2016 in Muscat. Regulatory approvals and legal formalities Completed on 01 January 2017, meaning that control has passed to the Group.

 

At the date of acquisition, the fair value of identifiable intangible assets included brand amounting to US$5,043,000, private contracts amounting to US$7,355,000 and software amounting to US$65,000 for ASH.

 

Goodwill represents the future business potential and profit growth of the acquired business.  It comprises all of the intangibles that cannot be individually recognised such as the assembled workforce, the customer service, future client relationships, the presence in geographic markets, the synergies that acquired entities & NMC will obtain.

 

We have also completed several other minor acquisitions that continued to expand our service offerings in healthcare which have been clubbed under others. The contribution to revenue and attributable profit from these acquisitions are immaterial. If these acquisitions have occurred at the beginning of the year, their contribution to the revenue and attributable profit would also have been immaterial. The same applies for gross amount and fair value of receivables.

 

The fair value of the identifiable assets and liabilities of entities acquired in previous year at the dates of acquisition were as follows:

 

Particulars

Fakih IVF

Others

Total

 

US$'000

US$'000

US$'000

Assets

 

 

 

Intangible assets

25,324

150

25,474

Property and equipment

4,309

3,176

7,485

Inventories

613

356

969

Accounts receivable

8,579

4,685

13,264

Other receivables

41,436

910

42,346

Deferred tax asset

-

48

48

Cash and bank balances

3,395

1,478

4,873

 

83,656

10,803

94,459

 

 

 

 

Liabilities

                     

                          

 

Borrowings

-

855

855

Accounts payable

4,788

3,844

8,632

Other payable

43,001

903

43,904

Tax payable

-

249

249

 

47,789

5,851

53,640

 

 

 

 

Total identified net assets at fair value

35,867

4,952

40,819

Non -controlling interest

(17,575)

(949)

(18,524)

Goodwill arising on acquisition

186,616

47,290

233,906

Purchase consideration

204,908

51,293

256,201

 

 

 

 

Purchase consideration:

 

 

 

Payable in cash

190,446

45,443

235,889

Contingent consideration

8,128

1,514

9,642

Deferred consideration

7,051

4,336

11,387

Fair value measurement

(717)

-

(717)

Total consideration

204,908

51,293

256,201

 

Under others acquisitions:

Purchase price allocation for Copenhagen Fertility Centre ("CFC") and Huntington Centro De Medina Reproductiva S/A ("HCMR") were provisional as of 31 December 2016 and have been completed during the year. Purchase price allocation of CFC remain same, however updated for HCMR. For HCMR Brand amounting to US$ 3,824,000 and private contracts amounting to US$ 1,818,000 have been recognised. Corresponding credit has been recognised in goodwill of US$ 2,376,000 deferred tax liability of US$ 1,359,000, NCI of US$ 1,631,000 and exchange gain of US$ 276,000. On the ground of materiality purchase price adjustment have been recognised in current period.

 

Analysis of cash flows for acquisitions done in previous year disclosed in 2016 consolidated financial statements was as follows:

 

Particulars

Fakih IVF

Others

Total

 

US$'000

US$'000

US$'000

Cash paid

(190,446)

(45,443)

(235,889)

Deferred consideration paid

(3,410)

(1,902)

(5,312)

Net cash acquired with the subsidiaries

3,395

1,478

4,873

Transaction costs

-

(1,259)

(1,259)

Net cash flow on acquisition

(190,461)

(47,126)

(237,587)

 

During the period deferred consideration amounting to US$ 4,356,000 in respect of Fakih IVF and Nadia has been paid.

 

Other financial information with respect to entities acquired in previous year disclosed in 2016 consolidated financial statements was as follows:

 

Particulars

Fakih IVF

Others

Total

 

US$'000

US$'000

US$'000

Revenue from the date of acquisition

65,171

19,881

85,052

Profit after tax from the date of acquisition

35,293

5,039

40,332

Revenue from 1 January to 31 December 2016 (unaudited)

70,600

32,817

103,417

Profit after tax from 1 January to 31 December 2016 (unaudited)

38,101

5,837

43,938

Trade receivables gross value as of acquisition date

8,579

4,929

13,508

Trade receivables fair value as of acquisition date

8,579

4,685

13,264

 

6              SEGMENT INFORMATION

 

The following tables present revenue and profit information regarding the Group's operating segments for the six months ended 30 June 2017 and 2016, respectively.

 

There is no difference from the last annual report in the basis of segmentation or the basis of measurement of segment profit or loss. The newly acquired companies/businesses Al Zahra, ASH, Atlas, and Bin Said come under the healthcare segment.

 

 

 

 

Healthcare

Distribution

and

services 

Total segments

Adjustments and eliminations

Consolidated

 

 

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

 

Six months ended

30 June 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

External customers

554,380

220,773

775,153

-

775,153

 

Inter segment

 

6,693

14,563

21,256

(21,256)

-

 

-----------------------

-----------------------

-----------------------

-----------------------

-----------------------

Total

561,073

235,336

796,409

(21,256)

775,153

 

-----------------------

-----------------------

-----------------------

-----------------------

-----------------------

Results

 

 

 

 

 

Depreciation and amortisation

(27,554)

(1,870)

(29,424)

(5,879)

(35,303)

Finance costs

(4,342)

(4)

(4,346)

(23,526)

(27,872)

 

 

 

 

 

 

Segment EBITDA

169,301

25,528

194,829

(24,178)

170,651

Segment profit

138,349

23,653

162,002

(64,195)

97,807

 

 

 

 

 

 

             

 

Six months ended

30 June 2016

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

External customers

386,424

191,916

578,340

-

578,340

Inter segment

3,333

13,158

16,491

(16,491)

-

 

-----------------------

-----------------------

-----------------------

-----------------------

-----------------------

Total

389,757

205,074

594,831

(16,491)

578,340

 

-----------------------

-----------------------

-----------------------

-----------------------

-----------------------

Results

 

 

 

 

 

Depreciation and amortisation

(20,197)

(1,522)

(21,719)

(4,623)

(26,342)

Finance costs

(2,814)

(2)

(2,816)

(17,061)

(19,877)

 

 

 

 

 

 

Segment EBITDA

115,311

20,903

136,214

(20,363)

115,851

Segment profit

92,447

19,379

111,826

(41,346)

70,480

 

 

 

 

 

 

 

The following table presents segment assets and segment liabilities of the Group's operating segments as at 30 June 2017 and 31 December 2016.

 

 

Healthcare

Distribution

and

services 

Total segments

Adjustments and eliminations

Consolidated

 

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

               

 

Segment assets

 

30 June 2017 (unaudited)

 

2,084,157

290,858

2,375,015

358,332

2,733,347

 

==========

==========

==========

==========

==========

At 31 December 2016

 

 

1,454,767

265,194

1,719,961

597,032

2,316,993

(audited)

==========

==========

==========

==========

==========

 

Segment liabilities

 

30 June 2017 (unaudited)

292,087

79,794

371,881

1,334,263

1,706,144

 

==========

==========

==========

==========

==========

At 31 December 2016

256,613

72,405

329,018

1,039,104

1,368,122

(audited)

==========

==========

==========

==========

==========

 

 

Healthcare

Distribution

and

services

Total segments

Adjustments and eliminations

Consolidated

 

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

Other disclosures

Capital expenditure

 

30 June 2017 (unaudited)

19,791

2,772

22,563

814

23,377

 

==========

==========

==========

==========

==========

At 31 December 2016

61,483

4,171

65,654

1,751

67,405

(audited)

==========

==========

==========

==========

==========

 

Inter-segment revenues are eliminated upon consolidation and reflected in the 'adjustments and eliminations' column. All other adjustments and eliminations are part of detailed reconciliations presented further below.

 

Adjustments and eliminations

Finance income and group overheads are not allocated to individual segments as they are managed on a group basis.

 

Term loans, bank overdrafts and other short term borrowings and certain other assets and liabilities are substantially not allocated to segments as they are also managed on a group basis.

 

Capital expenditure consists of additions to property and equipment and intangible assets.

 

Reconciliation of Segment EBITDA to Group profit

 

 

Unaudited

 

6 months ended 30 June

2017

US$ '000

6 months ended 30 June

2016

US$ '000

Segment EBITDA

194,829

136,214

  Unallocated group administrative expenses

(24,779)

(20,175)

  Unallocated other income

601

(188)

  Unallocated finance income

3,082

1,783

  Unallocated unamortised finance fees written off

(6,794)

-

  Finance costs

(27,872)

(19,877)

  Depreciation

(28,051)

(20,908)

  Amortisation

(7,252)

(5,434)

  Transaction cost related to business combination

(4,458)

(242)

  Tax

(1,499)

(693)

 

-----------------------

-----------------------

Group profit

97,807

70,480

 

==========

==========

 

Reconciliation of Segment profit to Group profit

 

 

Unaudited

 

6 months ended 30 June

2017

US$ '000

6 months ended 30 June

2016

US$ '000

 

 

 

Segment profit

162,002

111,826

  Unallocated finance income

640

701

  Unallocated unamortised finance fees written off

(6,794)

-

  Unallocated finance costs

(23,526)

(17,061)

  Unallocated group administrative expenses

(24,779)

(20,175)

  Unallocated depreciation

(901)

(481)

  Unallocated other income

601

(188)

  Unallocated amortisation costs

(4,978)

(4,142)

  Unallocated Transaction cost related to business combination

(4,458)

-

 

-----------------------

-----------------------

Group profit

 

97,807

70,480

 

==========

==========

 

Geographical information

 

 

Unaudited

 

6 months ended 30 June

2017

US$ '000

6 months ended 30 June

2016

US$ '000

Revenue from external customers

 

 

  United Arab Emirates

734,491

550,463

  Spain

22,221

22,726

  Others

18,441

5,151

 

-----------------------

-----------------------

Total revenue as per  condensed consolidated  income statement

775,153

578,340

 

==========

==========

 

7              TAX

 

The Group is primarily based in UAE. As there is no corporation tax in the UAE, no taxes are recognised or payable on the operations in the UAE. There is no taxable income in the UK and accordingly there is no tax liability arising in the UK.

 

With respect to operations in Spain and certain other countries, the tax disclosures are as follows:

 

Consolidated income statement

 

Current income tax:

 

Unaudited

 

Period ended

30 June

2017

US$ '000

Period ended

30 June

2016

US$ '000

Charge for the period

2,624

1,680

 

 

 

Credit relating to origination and reversal of temporary differences

-

(117)

 

-----------------------

-----------------------

 

2,624

1,563

Deferred tax:

 

 

Credit relating to origination and reversal of temporary differences in the current period

(1,125)

(870)

 

-----------------------

-----------------------

Income tax reported in the condensed consolidated income statement

1,499

693

 

==========

==========

 

No Tax is included in other comprehensive income (six months ended 30 June 2016: NIL).

 

Deferred tax assets and liabilities comprise of:

 

Deferred tax assets:

 

 

Unaudited

30 June

2017

US$ '000

Audited

31 December

2016

US$ '000

 

 

 

Tax credit for R&D expenses

1,520

1,126

Limit on tax deductibility of depreciation and amortisation

1,718

1,009

 

-----------------------

-----------------------

Total deferred tax assets

3,238

2,135

 

==========

==========

 

Deferred tax liabilities:

 

 

Unaudited

30 June

2017

US$ '000

Audited

31 December

2016

US$ '000

Depreciation and amortisation

 

9,579

8,245

 

-----------------------

-----------------------

Total deferred tax liabilities

9,579

8,245

 

==========

==========

 

8              EARNINGS PER SHARE (EPS)

 

Basic EPS amounts are calculated by dividing net profit for the period attributable to ordinary equity holders of the Parent Company by the weighted average number of ordinary shares outstanding during the period.

 

Diluted EPS amounts are calculated by dividing the profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

 

The following reflects the income and share data used in the basic and diluted earnings per share computations:

 

 

Unaudited

 

6 months ended 30 June

2017

US$ '000

6 months ended 30 June

2016

US$ '000

Profit attributable to equity holders of the Parent (US$ '000)

87,729

62,375

 

-----------------------

-----------------------

Weighted average number of ordinary shares in issue ('000) for basic EPS

204,285

185,714

 

 

 

Effect of dilution from share based payments ('000)

1,543

830

 

-----------------------

-----------------------

Weighted average number of  ordinary shares ('000) for diluted

 

 

EPS

205,828

186,544

 

-----------------------

-----------------------

Basic earnings per share (US$)

0.429

0.336

 

 

 

Diluted earnings per share (US$)

0.426

0.334

 

The table below reflects the income and share data used in the adjusted earnings per share computations. All one off expenses and amortization of intangible arises on business combination, net of tax have been adjusted from the profit attributable to the equity holders of the parent to arrive at the adjusted earnings per share: 

 

 

Unaudited

 

6 months ended 30 June

2017

US$ '000

6 months ended 30 June

2016

US$ '000

Profit attributable to equity holders of the Parent (US$ '000)

87,729

62,375

 

 

 

Unamortised finance fees written off (US$ '000)

6,794

-

 

 

 

Transaction costs in respect of business combination (US$ '000)

4,458

242

 

 

 

Amortisation of acquired intangible assets (net of tax) (US$ '000)

6,753

5,143

 

-----------------------

-----------------------

 

 

 

Adjusted profit attributable to equity holders of the Parent (US$'000)

105,734

67,760

 

-----------------------

-----------------------

 

 

 

Weighted average number of ordinary shares in use ('000) for diluted EPS

205,828

186,544

 

 

 

Diluted adjusted earnings per share (US$)

0.514

0.363

 

 

 

 

Adjusted profit for the period of the group is calculated as follows:

 

 

Unaudited

 

6 months ended 30 June

2017

US$ '000

6 months ended 30 June

2016

US$ '000

Profit  for the period

97,807

70,480

Unamortised finance fees written off

6,794

-

Transaction costs in respect of business combination

4,458

242

Amortisation of acquired intangible assets (net of tax)

6,753

5,143

 

-----------------------

-----------------------

Adjusted profit

115,812

75,865

 

==========

==========

 

9              PROPERTY AND EQUIPMENT

 

 

Freehold land

Hospital building

Buildings

Leasehold improve-ments

Motor vehicles

Furniture, fixtures  fittings and medical equipment

Capital work in progress

Total

 

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

30 June 2017

 

 

 

 

 

 

 

 

Cost:

 

 

 

 

 

 

 

 

At  1 January 2017

19,206

137,321

26,991

172,612

11,108

246,113

22,981

636,332

Additions

-

 

145

 

162

 

1,752

1,011

9,795

10,049

22,914

Relating to acquisition of subsidiaries

13,746

88,337

-

3,151

41

24,042

1,167

130,484

 Transfer from  CWIP

-

-

-

671

-

2,284

(2,955)

-

 Exchange difference

-

168

-

-

-

1,096

-

1,264

 Disposals

-

(183)

-

(21)

(185)

(332)

-

(721)

 

--------------------

----------------------

----------------------

--------------------

--------------------

-----------------------

-----------------------

----------------------

  At 30 June 2017

32,952

225,788

27,153

178,165

11,975

282,998

31,242

790,273

 

--------------------

----------------------

----------------------

--------------------

--------------------

-----------------------

-----------------------

----------------------

Depreciation:

 

 

 

 

 

 

 

 

  At  1 January 2017

-

10,511

8,793

44,093

6,755

106,842

-

176,994

  Charge for the year

-

1,938

733

9,347

738

15,295

-

28,051

  Exchange difference

-

(14)

-

-

-

406

-

392

  Disposals

-

(37)

-

(8)

(165)

(294)

-

(504)

 

--------------------

---------------------

----------------------

--------------------

--------------------

-----------------------

-----------------------

-----------------------

  At 30 June 2017

-

12,398

9,526

53,432

7,328

122,249

-

204,933

 

--------------------

---------------------

----------------------

--------------------

--------------------

-----------------------

-----------------------

-----------------------

Net carrying amount:

32,952

213,390

17,627

124,733

4,647

160,749

31,242

585,340

  At 30 June 2017

=======

=======

=======

========

======

=========

=======

======

31 December 2016

 

 

 

 

 

 

 

 

Cost:

 

 

 

 

 

 

 

 

At  1 January 2016

19,206

12,343

26,300

157,888

9,322

180,342

161,744

567,145

Additions

-

970

-

4,072

1,751

21,190

38,949

66,932

Relating to acquisition of subsidiaries

-

-

-

2,228

35

5,222

 

7,485

Disposals

-

-

-

(498)

 (370)

(2,239)

 

(3,107)

 Transfer from  CWIP

-

124,046

691

9,000

370

41,915

(176,022)

-

 Reclassification

-

-

-

(78)

-

78

 

-

 Transfer to Intangible

-

-

-

-

-

-

(318)

(318)

 Impairment of assets

-

-

-

-

-

-

(1,376)

(1,376)

 Exchange difference

-

(38)

-

-

-

(395)

4

(429)

 

--------------------

----------------------

----------------------

--------------------

--------------------

-----------------------

-----------------------

----------------------

  At 31 December 2016

19,206

137,321

26,991

172,612

11,108

246,113

22,981

636,332

 

--------------------

---------------------

----------------------

--------------------

--------------------

-----------------------

-----------------------

----------------------

Depreciation:

 

 

 

 

 

 

 

 

  At  1 January 2016

-

8,424

7,339

26,784

5,779

85,295

-

133,621

  Charge for the year

-

2,032

1,454

17,429

1,345

22,750

-

45,010

  Reclassification

-

-

-

(40)

-

40

 

-

  Exchange difference

-

55

-

-

-

(190)

-

(135)

  Relating to disposals

-

-

-

(80)

(369)

(1,053)

-

 (1,502)

 

--------------------

---------------------

----------------------

--------------------

--------------------

-----------------------

-----------------------

----------------------

  At 31 December 2016

-

10,511

8,793

44,093

6,755

106,842

-

176,994

 

--------------------

---------------------

----------------------

--------------------

--------------------

-----------------------

-----------------------

----------------------

Net carrying amount:

19,206

126,810

18,198

128,519

4,353

139,271

22,981

459,338

  At 31 December 2016

=======

=======

=======

========

======

=========

=======

======

                           

 

As part of the Group's capital expenditure programme, borrowing costs of US$ NIL (six months ended 30 June 2016: US$ 237,000) have been capitalised during the period. The rate used to determine the amount of borrowing costs eligible for capitalisation was 3.29%  (30 June 2016: 1.90%) which is the effective rate of the borrowings used to finance the capital expenditure. Companies in UAE are not subject to taxation and as such there is no tax relief in respect of capitalised interest.

 

Total capital expenditure in the six months ended 30 June 2017 was US$ 22,914,000 (six months ended 30 June 2016: US$ 40,168,000). Of the total capital expenditure spend during this period, US$ 10,049,000 (six months ended 30 June 2016: US$ 27,297,000) related to new capital projects and US$ 12,865,000 (six months ended 30 June 2016: US$ 12,871,000) related to further capital investment in our existing facilities.

 

Generally hospital and distribution operations are carried out on land and buildings which are leased from Government authorities or certain private parties. The majority of the lease periods range from five to twenty seven years apart from New Medical Centre Hospital LLC-Dubai ("Dubai General Hospital") and the warehouse facilities which have leases renewable on an annual basis. As at 30 June 2017 US$ 692,000 (31 December 2016 US$ 801,000) of the amounts included in property and equipment related to assets with annually renewable leases.

 

In accordance with local laws, except in some specific locations in the UAE, the registered title of land and buildings must be held in the name of a UAE national. As a result, land and buildings of the Group are legally registered in the name of shareholders or previous shareholders of the Group. The land with a carrying amount of US$ 4,144,000 (31 December 2016: US$ 4,144,000) is held in the name of a previous shareholder for the beneficial interest of the Group. As the beneficial interest of such land resides with the Group, this asset is recorded within freehold land in the Group consolidated financial statements. The directors takes into account this local legal registration requirement, the Group's entitlement to the beneficial interest arising from this asset, as well as other general business factors, when considering whether such asset is impaired.

 

10           INTANGIBLE ASSETS

 

Software

Brands

Patient

relationship

and

Database

Goodwill

Others

Total

 

 

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

 

30 June 2017

 

 

 

 

 

 

 

 

Cost:

At 1 January 2017

7,723

64,713

19,282

567,338

10,169

669,225

 

Additions

458

-

-

-

5

463

 

Relating to acquisition of subsidiaries

525

8,582

7,355

452,910

-

469,372

 

Adjustment to prior year business combinations (Note 5)

-

3,824

-

(2,376)

1,818

3,266

 

Disposal

(8)

-

-

-

-

(8)

 

Exchange difference

291

1,467

792

11,884

719

15,153

 

 

 

 

 

 

 

 

 

At 30 June 2017

8,989

78,586

27,429

1,029,756

12,711

1,157,471

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortisation:

 

 

 

 

 

 

 

At 1 January 2017

1,858

6,202

3,951

-

4,231

16,242

 

Charge for the year

440

3,717

1,741

-

1,354

7,252

 

Exchange difference

83

133

-

-

612

828

 

 

 

 

 

 

 

 

 

At 30 June 2017

2,381

10,052

5,692

-

6,197

24,322

 

 

 

 

 

 

 

 

 

Net carrying amount:

 

 

 

 

 

 

 

At 30 June 2017 (unaudited)

6,608

68,534

21,737

1,029,756

6,514

1,133,149

 

 

 

 

 

 

 

 

 

31 December 2016

 

 

 

 

 

 

 

 

Cost:

At 1 January 2016

6,841

40,129

19,638

341,420

10,475

418,503

 

Additions

473

-

-

-

-

473

 

Relating to acquisition of subsidiaries

258

25,214

-

233,906

2

259,380

 

Transfer from tangible

318

-

-

-

-

318

 

Fair value adjustment

-

-

-

(2,126)

-

(2,126)

 

Exchange difference

(167)

(630)

(356)

(5,862)

(308)

(7,323)

 

 

 

 

 

 

 

 

 

At 31 December 2016

7,723

64,713

19,282

567,338

10,169

669,225

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortisation:

 

 

 

 

 

 

 

At 1 January 2016

1,078

1,588

1,270

-

1,508

5,444

 

Charge for the year

819

4,614

2,681

-

2,875

10,989

 

Exchange difference

(39)

-

-

-

(152)

(191)

 

 

 

 

 

 

 

 

 

At 31 December 2016

1,858

6,202

3,951

-

4,231

16,242

 

 

 

 

 

 

 

 

 

Net carrying amount:

 

 

 

 

 

 

 

At 31 December 2016 (audited)

5,865

58,511

15,331

567,338

5,938

652,983

 

 

 

 

 

 

 

 

 

                       

 

Additions to goodwill in the period relate to provisional goodwill measured in respect of the acquisitions of Al Zahra, ASH, Atlas and Bin Said.

 

Included in software are an HIS and ERP Projects which are amounting to US$ 3,665,000 (31 December 2016: US$ 3,349,000) represents work-in-progress as of period/year end. Management is currently in the process of estimating the useful economic life of the software and is still determining the amortisation method to be applied.  Amortisation of the software will commence once it is implemented and goes live.

 

11           LOAN RECEIVABLE

 

 

Unaudited

30 June

2017

US$ '000

Audited

31 December

2016

US$ '000

 

 

 

Loan receivable

 

15,262

14,516

 

-----------------------

-----------------------

 

15,262

14,516

 

==========

==========

 

Classification of loan receivable into current and non-current is as follows:

 

Current

5,381

5,387

Non-current

 

9,881

9,129

 

-----------------------

-----------------------

 

15,262

14,516

 

==========

==========

 

In 2015, the Group entered into a loan arrangement, with a third party (Borrower), to finance certain payables in connection with a hospital facility, for an aggregate amount not to exceeding US$18,513,000 with the repayment of the first tranche US$2,720,000 on 10 September 2017, second tranche US$2,720,000 on 10 November 2017 and the remaining final tranche payment by 10 November 2018. 

 

During the period, an additional amount of US$ 1,185,000 (30 June 2016: US$ 8,641,000) is paid.

 

The Group believes that the amount is fully recoverable. Loan is secured by obtaining personal guarantees of shareholders of borrower. The fair value of the loan receivable as on 30 June 2017 was US $15,262,000 (full value US$15,910,000).

 

The loan is interest -free, however, any unpaid loan receivable as of due date shall bear commission at the rate of 15% per annum starting from due date till date of payment.

 

12           INVENTORIES

 

During the six months ended 30 June 2017, the Group wrote down US$ 740,000 of obsolete and damaged inventories (six months ended 30 June 2016: US$ 782,000). This expense is included in direct costs within the condensed consolidated income statement. The provision for old and obsolete inventories as of 30 June 2017 was US$ 1,258,000(31 December 2016: US$ 1,178,000).

 

Trust receipts issued by banks amounting to US$ 34,914,000 (31 December 2016: US$ 81,671,000) are secured against the inventories.

 

13           ACCOUNTS RECEIVABLE AND PREPAYMENTS

 

 

Unaudited

30 June

2017

US$ '000

Audited

31 December

2016

US$ '000

Accounts receivable

 

429,411

314,351

Receivable from suppliers for promotional expenses

13,997

13,164

Other receivables

 

36,553

27,179

Prepayments

 

17,363

19,763

 

----------------------

----------------------

 

497,324

374,457

 

 

==========

==========

 

Receivables from suppliers relate to advertising and promotional expenses incurred by the Group.

 

Accounts receivable are stated net of provision for doubtful debts of US$20,484,000 (31 December 2016: US$12,129,000). During the six months ended 30 June 2017, the Group has provided an additional provision of US$3,365,000 (six months ended 30 June 2016: US$1,919,000), added US$ 8,777,000 (six months ended 30 June 2016: 505,000) on account of business combinations, released a provision of US$ 2,292,000  (six months ended 30 June 2016: US$ 1,297,000) due to collection and written off a provision of US$ 1,495,000 (six months ended 30 June 2016: US$1,357,000) due to bad debts.

 

The ageing of unimpaired accounts receivable is as follows:

 

 

 

 

Past due but not impaired

 

Total

Neither past due nor impaired

< 90 days

91-180 days

181-365 days

>365 days

 

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

 

 

 

 

 

 

 

30 June 2017

 

 

 

 

 

 

  Accounts receivable

429,411

270,501

95,289

34,569

23,181

5,871

 

 

 

 

 

 

 

31 December 2016

 

 

 

 

 

 

  Accounts receivable

314,351

210,592

70,940

19,070

8,944

4,805

 

Unimpaired receivables are expected, on the basis of past experience, to be fully recoverable. It is not the practice of Group to obtain collateral over receivables and they are therefore unsecured. As at 30 June 2017 trade receivables of US$ 20,484,000 (31 December 2016: US$ 12,129,000) were impaired and fully provided for.

 

Credit risk is managed through the Group's established policy, procedures and control relating to credit risk management. A majority of the receivables that are past due but not impaired are from insurance companies and government-linked entities in the United Arab Emirates which are inherently slow payers due to their long invoice verification and approval of payment procedures. Payments continue to be received from these customers and accordingly the risk of non-recoverability is considered to be low.

 

Of the net trade receivables balance of US$ 429,411,000 (31 December 2016: US$314,351,000) an amount of US$ 205,103,000 (31 December 2016: US$ 159,922,000) is against five customers.

 

The Group's terms require receivables to be repaid within 90-120 days depending on the type of customer, which is in line with local practice in the UAE. Due to the long credit period offered to customers, significant amounts of accounts receivable are neither past due nor impaired.

 

Amounts due from related parties amounting to US$ NIL (31 December 2016: US$3,628,000) as disclosed on the face of the condensed consolidated statement of financial position are trading in nature and arise in the normal course of business.

 

14           CASH AND CASH EQUIVALENTS

 

Cash and cash equivalents included in the consolidated statement of cash flows comprise of the following:

 

 

 

Unaudited

 

30 June

2017

US$ '000

30 June

2016

US$ '000

 

 

 

Bank deposits

74,015

96,422

Bank balances and cash

220,924

108,346

Bank overdrafts and other short term borrowings

(233,847)

(200,281)

 

-----------------------

-----------------------

 

61,092

4,487

Adjustments for:

 

 

  Short term borrowings

154,880

156,603

  Bank deposits maturing in over 3 months

(68,283)

(54,562)

  Restricted cash

(13,584)

(59,708)

 

-----------------------

-----------------------

Cash and cash equivalents

134,105

46,820

 

==========

==========

 

Bank deposits of US$ 74,015,000 (30 June 2016: US$ 96,422,000) are with commercial banks in the United Arab Emirates. These are mainly denominated in UAE Dirhams and earn interest at the respective deposit rates. These deposits have original maturity between 1 to 10 months (30 June 2016: 3 to 12 months).

 

Short term borrowings include trust receipts and invoice discounting facilities which mature between 90 and 180 days. Trust receipts are short term borrowings to finance imports.  The bank overdrafts and short term borrowings are secured by assets of the Group up to the amount of the respective borrowings and personal guarantees of few of the major shareholders of the parent company and carry interest at EIBOR plus margin rates ranging from 1% to 4%. (30 June 2016: 1% to 4%).

 

Restricted cash mainly represents funds held by a bank in respect of upcoming loan repayment instalments.

 

15           RETAINED EARNINGS

 

As at 30 June 2017, retained earnings of US$ 18,009,000 (31 December 2016: US$18,009,000) are not distributable. This relates to a UAE Companies Law requirement to set aside 10% of annual profit of all UAE subsidiaries. The subsidiaries may resolve to discontinue such annual transfers when their respective reserves equals 50% of their paid up share capital.

 

16           TERM LOANS

 

 

Unaudited

30 June

2017

US$ '000

Audited

31 December

2016

US$ '000

Current portion

104,765

234,519

Non-current portion

1,006,159

594,780

 

 ---------------------

 ---------------------

 

1,110,924

829,299

 

=========

=========

Amounts are repayable as follows:

 

 

Within 1 year

 

 

Between 1 - 2 years

104,765

234,519

Between 2 - 5 years

188,370

243,115

 

817,789

351,665

 

 ---------------------

 ---------------------

 

1,110,924

829,299

 

=========

=========

 

During the period, the Group entered two syndicated facilities amounting to US$ 825 million (Facility A) and US$ 250 million (Facility B). Facility A is used to settle an existing syndicated loan of US$ 706 Million and remaining amount is for general corporate purposes.   Facility B is for acquisition purposes. New facilities are repayable over 60 and 84 monthly instalments respectively with a grace period of twelve months. New facilities are guaranteed by corporate guarantees from NMC Health plc and operating subsidiaries of the Group. These loans are secured against a collateral package which includes assignment of some insurance company receivables and a pledge over certain bank accounts within the Group and shares of the entities acquired using the proceeds of the loan. In addition to the above facilities, term loans also include other short term revolving loans which get drawn down and repaid over the period.The Group has charged an amount of US$ 6,794,000 to the consolidated income statement with respect to unamortised transaction costs of existing debts which have been settled using proceeds of new syndicate loan (Facility A).

 

17           DIVIDEND

 

In the AGM on 23 May 2017 the shareholders approved a dividend of 10.6 pence per share, amounting to GBP 21,753,000 (US$ 27,779,000) to be paid to shareholders on the Company's share register on 12 May 2017. The dividend amount was paid to the shareholders on 1 June 2017 (30 June 2016: a dividend of GBP 11,514,000 equivalent to US$ 16,350,000 was approved on 3 June 2016 and paid on 14 June 2016).

 

18           RELATED PARTY TRANSACTIONS

 

These represent transactions with related parties, including major shareholders and senior management of the Group, and entities controlled, jointly controlled or significantly influenced by such parties, or where such parties are members of the key management personnel of the entities. Pricing policies and terms of all transactions are approved by the management of the Group.

 

The Company's immediate and ultimate controlling party is a group of three individuals (H.E. Saeed Bin Butti, Dr BR Shetty and Mr Khalifa Bin Butti) who are all shareholders and of whom two are directors of the Company and who together have the ability to control the Company. As the immediate and ultimate controlling party is a group of individuals, it does not produce consolidated financial statements.

 

Relationship agreement

 

The Controlling Shareholders and the Company have entered into a relationship agreement, the principal purpose of which is to ensure that the Company is capable of carrying out its business independently of the Controlling Shareholders and that transactions and relationships with the Controlling Shareholders are at arm's length and on a normal commercial basis.

 

In accordance with the terms of the relationship agreement, the Controlling Shareholders have a collective right to appoint a number of Directors to the Board depending upon the level of their respective shareholdings. This entitlement reduces or is removed as the collective shareholdings reduce. The relationship agreement includes provisions to ensure that the Board remains independent.

 

Transactions with related parties included in the condensed consolidated income statement are as follows:

 

 

Unaudited

 

6 months ended

30 June

2017

US$ '000

6 months ended

30 June

2016

US$ '000

Entities significantly influenced by a shareholder who is a key management personnel in NMC

 

 

 

 

 

  Sales

34

7

  Purchases

34,915

28,732

  Rent charged

193

248

  Other Income

782

685

 

 

 

       

 

Amounts due to related parties disclosed in the consolidated statement of financial position are as follows:

 

 

Unaudited

30 June

2017

US$ '000

Audited

31 December

2016

US$ '000

Entities significantly influenced by a shareholder who is a key management personnel in NMC

 

 

 

 

 

 

 

  Amounts due to related parties

14,721

14,876

 

 

 

       

 

Outstanding balances with related parties at 30 June 2017 and 31 December 2016 were unsecured, payable on 50-60 days term and carried interest at 0% (31 December 2016: 0%) per annum. Settlement occurs in cash. As at 30 June 2017: US$ NIL of the amounts due from related parties were past due but not impaired (31 December 2016: US$ 1,576,000).

 

Out of total term loans outstanding as of 30 June 2017, term loans of US$ 45,147,000 (31 December 2016: US$ 51,561,000) are secured by joint and several personal guarantees of the Shareholders (HE Saeed Bin Butti, Dr BR Shetty and Mr Khalifa Bin Butti).

 

Pharmacy licenses, under which the Group sells its products, are granted to the shareholders or directors of the Company, who are UAE nationals. No payments are made in respect of these licenses to shareholders or directors.

 

Compensation of key management personnel

 

 

Unaudited

 

6 months ended

30 June

2017

US$ '000

6 months ended

30 June

2016

US$ '000

Short term benefits

 

8,404

5,631

 

Employees' end of service benefits

 

8

8

 

 

-----------------------

-----------------------

 

 

8,412

5,639

 

 

==========

==========

 

 

The key management personnel include all the Non-Executive Directors, the four (30 June 2016: two) Executive Directors and four (30 June 2016: four) senior management personnel.

 

During the period an additional shares of 712,758 (Six month ended 30 June 2016: 451,868) was granted to Executive Directors and other senior management in the form of share options.

 

One individual (30 June 2016: one) who is a related party of one of the shareholders is employed by the Group. The total compensation for employment received by that related party in the six months ended 30 June 2017 amounts to US$ 1,195,000 (six months ended 30 June 2016: US$738,000).

 

19           CONTINGENT LIABILITIES

 

The Group had contingent liabilities in respect of bank and other guarantees and other matters arising in the ordinary course of business from which it is anticipated that no material liabilities will arise at 30 June 2017: US$ 12,706,000 (31 December 2016: US$11,764,000).

 

20           COMMITMENTS

 

Capital commitments

The Group has future capital commitments at 30 June 2017 of US$ 9,083,000 (31 December 2016: US$9,048,000) principally relating to the completion of on-going capital projects at period/year end.

 

Other commitments

 

 

 

Unaudited

30 June

2017

US$ '000

Audited

31 December

2016

US$ '000

Future minimum rentals payable under non-cancellable operating leases

 

 

  Within one year

12,385

11,354

  After one year but not more than five years

57,029

53,896

  More than five years

62,856

74,080

 

---------------------

---------------------

 

132,270

139,330

 

==========

==========

 

21           FINANCIAL INSTRUMENTS CARRIED AT FAIR VALUE

 

Contingent consideration

Contingent consideration relates to acquisitions done in current and prior years. Movement in contingent consideration payable is as follows:

 

 

Unaudited

30 June

2017

US$ '000

Audited

31 December

2016

US$ '000

Balance at 1 January

24,139

25,016

Contingent consideration recognised at acquisition (note 5)

-

9,642

Fair value measurement 

(279)

1,549

Purchase price allocation adjustment

-

(2,126)

Exchange loss/ (gain)

642

(375)

Payments made

(2,165)

(9,567)

 

-----------------------

-----------------------

 

22,337

24,139

 

==========

==========

 

In accordance with the fair value hierarchy under IFRS 13, contingent consideration is classified as a level 3 derivative financial instrument. The fair value of outstanding contingent consideration as at the reporting date is US$22,337,000 (31 December 2016: US$24,139,000) The valuation technique used for measurement of contingent consideration is the weighted average probability method and then applying discounting.

 

Contingent consideration payable as of 30 June 2017 comprises of following:

 

 

Unaudited

30 June

2017

US$ '000

Audited

31 December

2016

US$ '000

 

 

 

CIRH

3,427

2,912

Biogenesi

3,073

4,741

Dr Sunny Healthcare

3,644

3,644

ProVita

3,298

3,298

Fakih 

8,128

8,128

CFC

767

1,416

 

-----------------------

-----------------------

 

22,337

24,139

 

==========

==========

 

CIRH

Contingent consideration is payable subject to attainment of revenue targets. Significant unobservable

Inputs used are revenue targets and discount rate (9.2%). Contingent consideration amounting to US$3,427,000 on achieving 2016 EBITDA target has been paid fully in July 2017.           

 

Biogenesi

Contingent consideration is payable subject to attainment of profit before tax targets. Significant unobservable inputs used are profit before tax and discount rate (10.7%). Contingent consideration amounting to US$2,165,000 on achieving 2016 EBITDA target has been paid during the period ended 30 June 2017. A 1% increase in discount rate would result in decrease in fair value of the contingent consideration by US$27,600 and a 1% decrease in discount rate would result in increase in fair value by US$28,200. Management believe profit before tax targets for FY 2017 - FY 2019 will be met and accordingly not considered sensitive to fair value measurement.

 

Dr Sunny Healthcare

The contingent consideration relates to amounts payable on achieving 2016 EBITDA target amount. Target EBITDA has been achieved and accordingly this contingent consideration becomes payable.

 

Provita

The contingent consideration relates to amounts payable in the event that licenses to operate in Qatar will be obtained. Management believes that it is highly probable that these licenses will be obtained.

 

Fakih

The contingent consideration relates to amounts payable in the event that licenses to operate in certain other GCC countries are obtained. Management believes that it is highly probable that these licenses will be obtained.

 

CFC

The contingent consideration relates to amounts payable on achieving 2016 EBITDA target amount.  2016 EBITDA target was not achieved and therefore only 50% of the contingent consideration becomes payable.

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR PTMRTMBJTBMR