| |
Overall risk management programme
The Group’s overall financial risk management programme focuses, inter alia, on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the Group’s financial performance. The Group does not apply formal
hedge accounting but uses derivative financial instruments to hedge interest and foreign currency risk exposures.
Financial risk management is carried out by a central treasury department (treasury) under policies approved by the
investment committee. Treasury identifies, evaluates and economically hedges financial risks in close cooperation with
the Group’s operating units. The Group has written principles for overall financial risk management, as well as written
policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial
instruments and non-derivative financial instruments, and investment of excess liquidity.
Capital risk management
The Group’s objective when managing capital is to safeguard the Group’s ability to continue as a going concern in order
to provide returns for shareholders and benefits for other stakeholders and to provide for sufficient capital expansion. The
capital structure of the Group consists of debt, which includes the borrowings disclosed in note 21, cash and cash
equivalents disclosed in note 15 and equity as disclosed in the statement of financial position. Preference shares are
included in borrowings. The Group uses the net debt to normalised EBITDA ratio to measure the funding requirements in
the form of debt or equity.
The ratio is calculated as net debt divided by normalised EBITDA. Net debt is calculated as total interest-bearing
borrowings (including current interest-bearing and non-current interest-bearing borrowings as shown in the statement of
financial position) plus guarantees (if applicable) less net cash and cash equivalents. Normalised EBITDA is defined, in the
debt agreements, as earnings before interest, tax, depreciation and amortisation, adjusted for non-recurring items and
including the EBITDA of new acquisitions for that part of the year when it was not owned by the Group.
In order to maintain or adjust the capital structure, the Group may adjust the amount of distributions paid to
shareholders, return capital to shareholders, issue new shares or sell assets to manage the debt level.
There have been no changes to what the Group manages as capital, the strategy for capital maintenance or externally
imposed capital requirements from the previous year. Although the implementation of IFRS 16 Leases has an immaterial
impact on the covenants, the Group has had initial discussions with the lenders to potentially adjust the calculations.
| |
2018
R’m |
|
| Total interest cover ratio (times) |
5.63 |
|
5.71 |
|
| Net debt to normalised EBITDA ratio (times) |
1.96 |
|
2.73 |
|
| The Group has externally imposed debt covenants in place as part of the terms of the
current debt structures. |
|
|
|
|
| The covenants imposed arising from preference shares, syndicated and
bilateral term loans are as follows: |
|
|
|
|
| A minimum of total interest cover ratio (times) |
4.00 |
|
4.00 |
|
| A maximum of net debt to normalised EBITDA ratio (times) |
3.50 |
|
3.50 |
|
|
|
|
|
|
Financial risk
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, fair value
interest rate risk and cash flow interest rate risk), credit risk, liquidity risk and fair value risk.
Market risk
Foreign exchange risk
| |
Risk exposure |
|
The Group interacts with international suppliers and is exposed to foreign exchange risk
arising from various currency exposures. The foreign currency transactions are mainly
denominated in:
- Pound sterling;
- European euro; and
- US dollar.
The Group’s presentation currency is the South African rand, but as it operates
internationally with investments in foreign operations, it is exposed to a number of
currencies, of which the exposure to the Botswana pula (BWP), pound sterling (GBP),
US dollar (USD), European euro (EUR), Swiss franc (CHF) and Polish zloty (PLN) are the
most significant.
|
| |
How the risk arises |
|
Foreign exchange risk arises when future commercial transactions or recognised assets
or liabilities are denominated in a currency that is not the entity’s functional currency and
from net investments in foreign operations. These transactions include certain intercompany
loans which expose the Group to foreign exchange risk. |
| |
Objectives, policies and processes for managing
the risk and methods
used to measure risk |
|
The Group has set up a policy to require Group companies to manage their foreign
exchange risk against their functional currency. The Group’s treasury risk management
principle is to hedge material cash flows where the local cash flow impact is in excess of
5 million (2018: 5 million) functional currency denomination. The Group companies are
required to economically hedge their foreign exchange risk exposure in consultation with
treasury. To manage their foreign exchange risk arising from future commercial
transactions and recognised assets and liabilities, entities in the Group use forward
contracts and options, transacted with commercial banks on an all-inclusive price in the
companies’ functional currency.
Currency exposure arising from the net assets of the Group’s foreign operations is
managed primarily through borrowings denominated in the relevant foreign currencies,
as and when it is required. At 30 September 2019, foreign denominated borrowings to
the equivalent of R7 800 million existed (2018: R8 161 million).
The Group reviews its foreign currency exposure, including commitments, on an ongoing
basis.
|
| |
Concentration of risk |
|
The Group has investments in foreign operations in Botswana, the United Kingdom, Italy,
Spain, Switzerland, northern Europe, Ireland and Poland. The net assets of the
Botswana, United Kingdom, Italy, Spain, Switzerland, northern Europe, Ireland and
Polish investments are exposed to foreign currency translation risk as the companies are
subsidiaries of the Group. |
Foreign currency exposure at statement of financial position date:
| |
Rand millions |
|
| |
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
BWP |
GBP |
EUR |
CHF |
PLN |
|
| Non-current assets |
196 |
16 027 |
1 405 |
750 |
2 002 |
|
205 |
14 999 |
1 574 |
683 |
2 151 |
|
| Current assets |
410 |
1 006 |
1 081 |
17 |
411 |
|
318 |
1 062 |
844 |
226 |
314 |
|
| Current liabilities |
(59) |
(1 783) |
(1 338) |
(89) |
(268) |
|
(42) |
(1 624) |
(1 208) |
(35) |
(355) |
|
| Non-current liabilities |
(154) |
(4 233) |
(3 017) |
– |
(672) |
|
(148) |
(3 372) |
(3 455) |
– |
(1 252) |
|
| Exposure on external balances |
393 |
11 017 |
(1 869) |
678 |
1 473 |
|
333 |
11 065 |
(2 245) |
874 |
858 |
|
| Net exposure on balances between Group companies |
(3) |
1 829 |
(2 579) |
869 |
(119) |
|
(3) |
1 922 |
(2 637) |
826 |
(111) |
|
| Total net exposure |
390 |
12 846 |
(4 448) |
1 547 |
1 354 |
|
330 |
12 987 |
(4 882) |
1 700 |
747 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Foreign currency in millions |
|
| |
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
BWP |
GBP |
EUR |
CHF |
PLN |
|
| Non-current assets |
142 |
858 |
85 |
49 |
528 |
|
155 |
813 |
96 |
47 |
562 |
|
| Current assets |
297 |
54 |
65 |
1 |
108 |
|
241 |
58 |
51 |
16 |
82 |
|
| Current liabilities |
(43) |
(95) |
(81) |
(6) |
(71) |
|
(32) |
(88) |
(73) |
(2) |
(93) |
|
| Non-current liabilities |
(112) |
(227) |
(182) |
– |
(177) |
|
(112) |
(183) |
(210) |
– |
(327) |
|
| Exposure on external balances |
284 |
590 |
(113) |
44 |
388 |
|
252 |
600 |
(136) |
61 |
224 |
|
| Net exposure on balances between Group companies |
(2) |
98 |
(155) |
57 |
(31) |
|
(2) |
104 |
(160) |
57 |
(29) |
|
| Total net exposure |
282 |
688 |
(268) |
101 |
357 |
|
250 |
704 |
(296) |
118 |
195 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sensitivities analysis
The table below analyses the impact on the Group’s foreign currency translation reserve (FCTR). The analysis is based on
the assumption that the South African rand had strengthened/weakened by 10% against the GBP with all other variables
held constant. The other foreign currencies do not have a significant impact on the FCTR sensitivity.
| |
| Impact on movement in FCTR in other comprehensive income |
|
|
| Rand strengthened |
(1 090) |
|
| Rand weakened |
1 090 |
|
|
|
|
The tables below analyse the impact on the Group’s revenue, operating profit and post-tax profit. The analysis is based
on the assumption that the South African rand had strengthened/weakened by 10% against the foreign currency with all
other variables held constant. The CHF has an insignificant impact on the Group’s revenue, operating profit and post-tax
profit and therefore its impact is included under the EUR.
| |
Rand strengthened |
|
Rand weakened |
|
|
|
|
|
|
|
|
|
|
| |
2018
R’m |
|
2018
R’m |
|
| Impact on revenue |
|
|
|
|
|
|
|
|
| BWP |
(60) |
|
(49) |
|
60 |
|
49 |
|
| GBP |
(271) |
|
(242) |
|
271 |
|
242 |
|
| EUR |
(286) |
|
(251) |
|
286 |
|
251 |
|
| USD |
(27) |
|
n/a |
|
27 |
|
n/a |
|
| PLN |
(136) |
|
(128) |
|
136 |
|
128 |
|
| Impact on operating profit |
|
|
|
|
|
|
|
|
| BWP |
(16) |
|
(15) |
|
16 |
|
15 |
|
| GBP (loss position) |
5 |
|
5 |
|
(5) |
|
(5) |
|
| EUR |
(46) |
|
(36) |
|
46 |
|
36 |
|
| USD (loss position) |
12 |
|
n/a |
|
(12) |
|
n/a |
|
| PLN |
(1) |
|
– |
|
1 |
|
– |
|
| Impact on post-tax profit |
|
|
|
|
|
|
|
|
| BWP |
(11) |
|
(12) |
|
11 |
|
12 |
|
| GBP (loss position) |
12 |
|
19 |
|
(12) |
|
(19) |
|
| EUR |
(26) |
|
(13) |
|
26 |
|
13 |
|
| USD (loss position) |
10 |
|
n/a |
|
(10) |
|
n/a |
|
| PLN (loss position) |
21 |
|
5 |
|
(21) |
|
(5) |
|
| INR¹ |
n/a |
|
(11) |
|
n/a |
|
11 |
|
|
|
|
|
|
|
|
|
|
| Exchange rates used for conversion of foreign denominated items |
|
|
|
|
|
|
|
|
| Assets and liabilities |
|
|
|
|
|
|
|
|
| BWP |
|
|
|
|
1.38 |
|
1.32 |
|
| GBP |
|
|
|
|
18.68 |
|
18.46 |
|
| EUR |
|
|
|
|
16.59 |
|
16.45 |
|
| USD |
|
|
|
|
15.18 |
|
n/a |
|
| CHF |
|
|
|
|
15.27 |
|
14.44 |
|
| PLN |
|
|
|
|
3.79 |
|
3.83 |
|
| Income/expense items |
|
|
|
|
|
|
|
|
| BWP |
|
|
|
|
1.35 |
|
1.30 |
|
| GBP |
|
|
|
|
18.34 |
|
17.60 |
|
| EUR |
|
|
|
|
16.22 |
|
15.37 |
|
| USD |
|
|
|
|
14.42 |
|
n/a |
|
| PLN |
|
|
|
|
3.77 |
|
3.66 |
|
| INR1 |
|
|
|
|
n/a |
|
0.19 |
|
|
|
|
|
|
|
|
|
|
1 Disposed of its Indian equity investment (Max) – refer note 26.
Interest rate risk
| |
Risk exposure |
|
Borrowings issued at variable rates expose the Group to cash flow interest rate risk.
Borrowings issued at fixed rates economically expose the Group to fair value interest
rate risk. Refer note 21. |
| |
How the risk arises |
|
The Group’s interest rate risk primarily arises from a mix of short and long-term
borrowings. The Group’s income and operating cash flows are substantially independent
of changes in market interest rates. Refer to note 15. |
| |
Objectives, policies and processes for managing
the risk and methods
used to measure risk |
|
The Group manages its interest rate exposure in total and mainly borrows or invests
as far as possible at Group level, unless it is more appropriate to do so at subsidiary
level. Based on the various scenarios, the Group manages its cash flow interest rate risk
by using interest rate collars, caps and swaps. Such interest rate hedges have the
economic effect of capping the exposure to floating rates to a maximum rate. Generally,
the Group raises long-term borrowings at floating rates and then hedges floating rates
to a known maximum exposure. Under the interest rate collars, caps and swaps, the
Group agrees with other parties to exchange, at specified intervals (primarily quarterly),
the difference between the hedge and the floating rate interest amounts calculated by
reference to the agreed notional amounts. Swaps are entered into to fix interest rates
from floating rates. |
| |
Concentration of risk |
|
Group policy is to hedge a maximum of 80% of its borrowings and to hedge a quantum
of borrowings to ensure the profit or loss impact of a 1% movement in interest rates
on unhedged borrowings is less than 2.0% of the previous 12-month Group normalised
EBITDA. At 30 September 2019, 42% of the Group debt was hedged (2018: 33%).
Refer to note 23 for the current interest rate hedges in place. |
The Group analyses its interest rate exposure on a dynamic basis. Various scenarios are simulated taking into
consideration refinancing, renewal of existing positions, alternative financing and hedging. Based on these scenarios, the
Group calculates the impact on profit or loss of a defined interest rate shift. For each simulation, the same interest rate
shift is used for all currencies. The scenarios are run only for liabilities that represent the major interest-bearing positions.
| |
2018
R’m |
|
| Impact on post-tax profit |
|
|
|
|
| 1% increase |
(81) |
|
(64) |
|
| 1% decrease |
123 |
|
95 |
|
|
|
|
|
|
The simulation is done on a quarterly basis to verify that the maximum loss potential is within the Group’s limits.
The Group’s debt is partially hedged by interest rate swap contracts. The interest rate swap contracts hedge
R5.3 billion (2018: R4.7 billion) of the variable interest rate outstanding balance of Group debt of R11 289 million
(2018: R12 690 million).
Liquidity risk
| |
Risk exposure |
|
Those financial liabilities of the Group with contractual cash flows and maturity dates are
exposed to liquidity risk. |
| |
How the risk arises |
|
Liquidity risk arises should the Group not be able to meet its obligations as they become
due. |
| |
Objectives, policies and
processes for managing
the risk and methods
used to measure risk |
|
Prudent liquidity risk management implies maintaining sufficient cash and marketable
securities, the availability of funding through an adequate amount of committed credit
facilities and the ability to close out market positions. The Group’s liquidity risk is
mitigated by the availability of funds to cover future commitments. The Group manages
liquidity risk through an ongoing review of future commitments and credit facilities. Due
to the dynamic nature of the underlying businesses, treasury maintains flexibility in
funding by maintaining availability under committed credit lines.
The Group has sufficient available bank facilities that can be utilised to service short-term
commitments. Refer note 21.
Cash flow forecasts are prepared and utilised borrowing facilities are monitored on a
daily basis. Longer-term cash flow forecasts are updated quarterly. |
| |
Concerntration of risk |
|
The table below analyses the Group’s financial liabilities into relevant maturity groupings,
based on the remaining period at the statement of financial position date to the
contractual maturity date. The amounts disclosed in the table are the contractual
undiscounted cash flows. Refer note 29 for operating lease commitments. |
| |
Southern Africa |
|
Alliance Medical |
|
Poland |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
2018
R’m |
|
2018
R’m |
|
2018
R’m |
|
| Interest-bearing borrowings |
|
5 398 |
|
9 811 |
|
|
7 998 |
|
7 364 |
|
|
1 339 |
|
1 425 |
|
| Less than one year |
|
1 752 |
|
2 563 |
|
|
1 469 |
|
1 267 |
|
|
73 |
|
78 |
|
| Between one and five years |
|
3 227 |
|
6 786 |
|
|
6 505 |
|
6 090 |
|
|
1 266 |
|
1 347 |
|
| Over five years |
|
419 |
|
462 |
|
|
24 |
|
7 |
|
|
– |
|
– |
|
| Trade and other payables |
|
1 800 |
|
1 753 |
|
|
1 882 |
|
1 608 |
|
|
118 |
|
122 |
|
| Less than one year |
|
1 800 |
|
1 753 |
|
|
1 794 |
|
1 519 |
|
|
116 |
|
122 |
|
| Between one and five years |
|
– |
|
– |
|
|
88 |
|
89 |
|
|
2 |
|
– |
|
| Contingent consideration liabilities |
|
– |
|
4 |
|
|
1 225 |
|
1 179 |
|
|
33 |
|
67 |
|
| Less than one year |
|
– |
|
4 |
|
|
4 |
|
– |
|
|
33 |
|
67 |
|
| Between one and five years |
|
– |
|
– |
|
|
4 |
|
44 |
|
|
– |
|
– |
|
| Over five years |
|
– |
|
– |
|
|
1 217 |
|
1 135 |
|
|
– |
|
– |
|
| Derivative financial instruments |
|
13 |
|
6 |
|
|
17 |
|
– |
|
|
– |
|
– |
|
| Less than one year |
|
3 |
|
– |
|
|
– |
|
– |
|
|
– |
|
– |
|
| Between one and five years |
|
10 |
|
6 |
|
|
17 |
|
– |
|
|
– |
|
– |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
7 211 |
|
11 574 |
|
|
11 122 |
|
10 151 |
|
|
1 490 |
|
1 614 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The table below analyses the Group’s derivative financial instruments which will be settled on a gross basis into relevant
maturity groupings based on the remaining period at the statement of financial position date to the contractual maturity
date. The amounts disclosed in the table are the contractual undiscounted cash flows.
| |
Outflow |
|
Inflow |
|
|
|
|
|
|
|
|
|
|
| |
2018
R’m |
|
2018
R’m |
|
| Trading derivatives (foreign exchange
contracts and interest rate swap contracts) |
|
|
|
|
|
|
|
|
| Less than one year |
(3) |
|
– |
|
– |
|
87 |
|
| Between one and five years |
(27) |
|
(6) |
|
– |
|
13 |
|
| Total |
(30) |
|
(6) |
|
– |
|
100 |
|
|
|
|
|
|
|
|
|
|
Credit risk
| |
Risk exposure |
|
Credit risk arises mainly from cash and cash equivalents, trade and other receivables
and other assets.
Trade receivables comprise a widespread customer base. |
| |
How the risk arises |
|
Credit risk is the risk of financial loss due to counterparties to financial instruments not
meeting their contractual obligations. |
| |
Objectives, policies and
processes for managing
the risk and methods
used to measure risk |
|
Credit risk is managed using Group policies within the territories it arises.
The Group deposits the surplus cash with major banks with high-quality credit standing
and maintains an appropriate spread of cash deposits between various financial
institutions to limit the exposure to any one counterparty. For banks and financial
institutions, only independently rated parties with a minimum Moody’s rating “Baa+” for
South African banks are accepted. For both Alliance Medical and Poland, counterparty
risk is managed through the active monitoring and management of counterparties with
which Alliance Medical and Poland transact.
The Group evaluates credit risk relating to customers on an ongoing basis. If customers
are independently rated, these ratings are used. If there is no independent rating, risk
control assesses the credit quality of the customer, taking into account its financial
position, past experience and other factors. Individual risk limits are set for patients
without medical aid insurance. Services to customers without medical aid insurance are
settled in cash or using major credit cards on discharge date as far as possible. Credit
guarantee insurance is not purchased.
In certain Alliance Medical territories, use is made of invoice factoring facilities which are
on a non-recourse basis, further reducing the credit risk from individual customers. |
| |
Concerntration of risk |
|
The maximum exposures to credit risk at the reporting date are cash and cash
equivalents as well as the carrying value of each class of trade and other receivables and
other assets. The Group does not hold any collateral as security. The Group is exposed
to a number of guarantees for the overdraft facilities of Group companies. Refer to note
29 for additional details. |
| |
Maximum exposure to credit risk by class of financial instrument |
|
Financial assets exposed to credit risk at year-end were as follows:
|
|
|
|
|
| |
2018
R’m |
|
| Trade and other receivables |
3 747 |
|
3 636 |
|
| Cash and cash equivalents |
1 544 |
|
1 494 |
|
| Other assets |
87 |
|
177 |
|
|
| |
Credit quality analysis of
financial assets that are
neither past due nor
impaired (applied before
1 October 2018) |
|
The credit quality of trade and other receivables that are neither past due nor impaired
can be assessed by reference to historical information about counterparty default rates.
No material historical default rates exist that require additional impairments.
The Group does not expect any significant loss from non-performance by counterparties
on credit granted that has not been provided for.
Amounts owing by associates and joint ventures are interest-bearing at rates negotiated
on an annual basis (2019: 10.00% and 2018: 10.00%) and are repayable on terms
agreed by the associate and/or joint venture company’s directors. The credit quality of
these loans is determined based on past default rates taking into account expected
changes in the economic environment. No such defaults existed in the past. |
The cash and cash equivalents carrying amount is denominated in the following currencies:
| |
2018
R’m |
|
| South African rand |
546 |
|
273 |
|
| Botswana pula |
180 |
|
133 |
|
| Pound sterling |
288 |
|
395 |
|
| European euro |
430 |
|
537 |
|
| Polish zloty |
90 |
|
145 |
|
| United States dollar |
8 |
|
8 |
|
| Swiss franc |
2 |
|
3 |
|
| Balance at 30 September |
1 544 |
|
1 494 |
|
| Overdraft facilities within the Group are secured by means of cross sureties by Group companies. |
|
|
|
|
| The credit quality of cash at bank and short-term money market instruments is: |
|
|
|
|
| Southern Africa1 |
544 |
|
272 |
|
| Botswana2 |
180 |
|
133 |
|
| Alliance Medical3 |
730 |
|
944 |
|
| Poland4 |
86 |
|
142 |
|
| Cash on hand |
4 |
|
3 |
|
| |
1 544 |
|
1 494 |
|
|
|
|
|
|
1 The counterparties have a South African Moody’s rating of Baa3 (2018: Baa3).
2 The counterparties have a Botswana Standard & Poor rating of A- (2018: A-).
3 The counterparties have a minimum Fitch credit rating of BBB- (2018: BB-).
4 The counterparties have a minimum Polish Fitch rating of B (2018: B).
Trade and other receivables
An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses
(ECLs). The provision rates are based on days past due for groupings of various customer segments with similar loss
patterns (mainly by customer type).
The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable
information that is available at the reporting date about past events, current conditions and forecasts of future economic
conditions. Generally, trade receivables are written off when the Group has exhausted all options regarding the debt.
Refer Annexure A – significant accounting policies (section 1.11 financial instruments).
The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed
in this note. The Group does not hold collateral as security.
Set out below is the information about the credit risk exposure on the Group’s trade receivables using a provision matrix:
| |
| Private patients |
310 |
118 |
49 |
108 |
196 |
781 |
|
| Medical aids |
1 101 |
141 |
97 |
66 |
127 |
1 532 |
|
| Government and public healthcare facilities |
482 |
92 |
59 |
66 |
320 |
1 019 |
|
| Trade receivables |
1 893 |
351 |
205 |
240 |
643 |
3 332 |
|
| Expected credit loss (R’m) |
1 |
1 |
1 |
2 |
215 |
220 |
|
| Weighted average expected credit loss rate (%) |
0.1% |
0.3% |
0.5% |
0.8% |
33.4% |
|
|
The ageing of amounts past due but not impaired is as follows relating to the year ended 30 September 2018:
| |
1 373 |
|
| Southern Africa |
823 |
|
| Alliance Medical |
491 |
|
| Poland |
59 |
|
|
|
|
Trade and other receivables at 30 September 2018
| |
31 – 60
days
R’m |
61 – 90
days
R’m |
91 – 180
days
R’m |
181 – 360
days
R’m |
More than
a year
R’m |
Total
R’m |
|
| Southern Africa |
|
|
|
|
|
|
|
| Private clients |
– |
– |
40 |
26 |
2 |
68 |
|
| Medical aids |
– |
63 |
130 |
146 |
71 |
410 |
|
| Government |
51 |
28 |
52 |
50 |
158 |
339 |
|
| Foreign patients |
1 |
– |
2 |
1 |
2 |
6 |
|
| |
52 |
91 |
224 |
223 |
233 |
823 |
|
| Alliance Medical |
|
|
|
|
|
|
|
| Debtors1 |
310 |
33 |
65 |
39 |
44 |
491 |
|
| |
310 |
33 |
65 |
39 |
44 |
491 |
|
| Poland |
|
|
|
|
|
|
|
| Private clients |
2 |
1 |
1 |
1 |
4 |
9 |
|
| Government (National Health Fund in Poland) |
4 |
1 |
– |
– |
24 |
29 |
|
| Other |
7 |
– |
– |
7 |
7 |
21 |
|
| |
13 |
2 |
1 |
8 |
35 |
59 |
|
| 1 |
Due to the nature of Alliance Medical’s business the key customers are, or are funded by, government-funded public bodies such as
NHS trusts in the UK or ASL bodies in Italy, and therefore the nature of these organisations further reduces the susceptibility to credit
risk. In certain territories, use is made of invoice factoring facilities which are on a non-recourse basis, further reducing the credit risk
from individual customers. As such any further detailed analysis of the credit risk of the financial assets by category was not
considered meaningful in prior years. |
Fair value
The derivative assets and liabilities used for hedging, as presented in the statement of financial position, are the financial
assets and liabilities that are measured at fair value.
The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active and
for unlisted securities, the Group establishes fair value by using valuation techniques. These include the use of recent
arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis
and option pricing models, making maximum use of market inputs and relying as little as possible on entity-specific
inputs.
The Group’s financial instruments held at fair value, are measured subsequent to their initial recognition and are grouped
into levels 1 to 3 based on the extent to which the fair values are observable. All of the resulting fair value estimates for
the derivatives used for hedging are included in level 2. The contingent considerations are included in level 3. The fair
value of interest rate swaps is calculated as the mark-to-market valuation, which represents the mid-market value of the
instrument as determined by the financial institution at 30 September 2019.
The fair value of forward exchange contracts is determined using forward exchange rates at the statement of financial
position date, with the resulting value discounted back to the present value, as determined by the financial institution at
30 September 2019.
There were no transfers between levels 1, 2 and 3 during the year.
|