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NMC Final FY 2016 Results

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By LSE RNS

RNS Number : 8055Y

NMC Health Plc

08 March 2017

NMC Health Plc

FINANCIAL REPORT: Full year ended 31 December 2016

London, 8 March 2017: NMC Health Plc (LSE:NMC) ('NMC'), the leading integrated private healthcare provider operating across the United Arab Emirates ('UAE') and one of the top global providers of fertility treatments through its Spanish subsidiary Clinica Eugin, announces its results for the full year ended 31 December 2016.

Financial summary and highlights

US$m (unless stated)	FY 2016	FY 2015	Growth %

Group
Revenue	1,220.8	880.9	38.6%
EBITDA	246.1	150.3	63.7%
EBITDA margin	20.2%	17.1%	309bps
Net Profit to Parent	132.7	82.2	61.4%
Net Profit	151.4	85.8	76.5%
Net Profit margin	12.4%	9.7%	267bps
Earnings per share (US$)-Basic	0.711	0.443	60.6%
Adjusted Net Profit	165.2	97.5	69.4%
Adjusted Earnings Per Share(US$)	0.785	0.506	55.2%

Divisional performances
Healthcare revenue	823.3	517.1	59.2%
Healthcare EBITDA	241.1	137.0	76.0%
Healthcare EBITDA margin	29.3%	26.5%	280bps
Healthcare net profit	192.9	108.0	78.6%
Healthcare occupancy	74.3%	73.5%	80bps

Distribution revenue	431.9	393.4	9.8%
Distribution EBITDA	47.1	43.5	8.3%
Distribution EBITDA margin	10.9%	11.1%	-15bps
Distribution net profit	43.6	40.7	7.0%

Notes:

· Net Profit equals profit after tax as shown in the Consolidated Income statement

· Adjusted Net profit equals adjusted profit as shown in Note 16

· EBITDA equals Profit from operations before depreciation, amortization and one off items as shown in the Consolidated Income statement.

· Healthcare and distribution numbers are before considering intra - group eliminations

FY2016 Financial Highlights

· Group reported revenues increased by 38.6% to US$1,220.8m.

· Healthcare division revenue increased by 59.2% to US$823.3m[1].

· Distribution division revenue grew by 9.8% to US$431.9m[2]

· Reported EBITDA increased by 63.7% to US$246.1m.

· Reported EBITDA margin expanded by 309bps to 20.2%.

· Net profit increased by 76.5% to US$151.4m.

· Net profit margin increased by 267bps to 12.4%.

· Adjusted net profit increased by 69.4% to US$165.2m.

· Earnings per share (EPS) amounted to US$0.711 (FY 2015: US$0.443)

· Adjusted earnings per share amounted to US$0.785 (FY 2015: US$0.506)

· Proposed dividend pay-out ratio is maintained at 20% of profit after tax, amounting to GBP[3] 10.6 pence per share

FY2016 Business Highlights - A year on year (YOY) comparison

· Healthcare division's patients increased by 34.5% to 4.3m.

· Revenue per patient from healthcare services increased by 28.3% to reach US$176.3.

· Hospital bed occupancy rates reached 74.3%, an improvement of 80bps.

· Operational beds increased from 537 beds to 679 beds, 26.4% increase

· Doctors' employed reached 1042, an increase of 27.5%

· Distribution division increased its product portfolio by 9.3% to 97,600 stock keeping units (SKUs)

· Sales and marketing personnel at the Distribution division grew 11.0% to 769

1 Before intra-group elimination

2 Before intra-group elimination

3 British Pound

Dr B.R. Shetty, Chief Executive Officer & Executive Vice-Chairman of NMC, commented:

NMC Health delivered record growth in 2016 as we began to reap the long-term rewards of several years of progress on the two stages of our growth strategy. In recent years NMC has expanded its asset and brand portfolio organically and inorganically into additional healthcare services segments, extended our presence across the continuum of care, entered into higher growth and margin specialties with very favourable regional supply/demand dynamics, and selectively entered new geographies to position the Group at the intersection of multiple growth channels to the ultimate benefit of all our stakeholders.

Outlook

I would like to thank my fellow members of the Board of Directors, the senior management team and our shareholders for their continued support and dedication throughout the year. Most importantly, I would like to thank the employees of NMC - both old and new - for their tireless efforts to provide the United Arab Emirates' and the region's growing population with increased local access to quality healthcare services and products, as we have done so for the last four decades.

Our transformation from a small pharmacy and clinic into an internationally recognised private healthcare services provider would not have been possible without the unparalleled support of the UAE government and its residents, and I extend my sincerest thanks to you for your encouragement.

We expect another good year for the UAE economy in 2017 supported by further GDP growth of around 2.3% despite lower oil prices, based on forecasts by leading rating agencies. For the local healthcare sector, one of the key drivers of growth will be the increase in the patient volumes with expected completion of mandatory healthcare insurance in the Emirate of Dubai by Q1 2017. For NMC in particular, we expect continued strong performance from our enlarged network, its growing specialisms and the further introduction of higher value added services especially through our single specialty verticals.

Analyst and investor conference call

A conference call and webcast for analysts and investors will take place today, Wednesday 08 March 2017 at 14:00 GMT/ 18:00 UAE / 09:00 EST.

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 Health
Prasanth Manghat, Deputy Chief Executive Officer	+971 50 522 5648
Suresh Krishnamoorthy, Chief Financial Officer	+971 50 591 5365
Roy Cherry, Head of Strategy and Investor Relations	+971 50 667 0184

Media
FTI Consulting, London
Matthew Cole	+44 (0)20 3727 1101

FTI Consulting, Gulf
Shane Dolan	+971 (0)4 437 2100

Cautionary statement

These Preliminary 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 Preliminary 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.

The listing rules of the UK Listing Authority (LR 9.7A.1) require that preliminary statements of annual results must be agreed with the listed company's auditor prior to publication. In addition the Listing Rules require such statements to give details of the nature of any likely modifications that may be contained in the auditor's report to be included with the Annual Report and whether any audit report has been issued on the statutory accounts. NMC Health plc confirms that it has agreed this preliminary announcement of annual results with Ernst & Young LLP. The financial information presented in this preliminary announcement was authorised for issue by the Board of Directors on 7 March 2017. The auditor's report on those financial statements was unqualified and did not contain a statement under section 498 of the Companies Act 2006. The audited financial statements will be delivered to the Registrar of Companies and a copy will also be available on the Company's website (www.nmchealth.com) in due course. The financial information contained in this document does not constitute statutory accounts as defined in section 435 of the Companies Act 2006.

This constitutes regulated information for the purposes of the Disclosure and Transparency Rules.

Statement of Directors' Responsibilities

Responsibility statement of the directors on the Annual Report & Accounts

The Group's Annual Report & Accounts for the year ended 31 December 2016 includes the following responsibility statement.

Each of the directors confirms that, to the best of their knowledge:

The financial statements, prepared in accordance with the International Financial Reporting Standards as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

The Strategic Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties they face.

On behalf of the Board

Simon Watkins

Group Company Secretary

07 March 2017

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. NMC currently operates or manages four strategic verticals within its healthcare division. In addition, the Group is also a leading UAE supplier of products and consumables across several key market segments, through its distribution division, with the major contribution coming from healthcare related products. 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$1220.8m 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.

Business and Financial Review

Business overview

OPERATIONAL REVIEW

The Group reported consolidated revenues of US$1.2bn in FY2016 (+38.6% YoY) with approximately 65.6% (FY2015: 56.8%) coming from its healthcare division and 34.4% (FY2015: 43.2%) from the distribution division.

The Group has increased the revenue contribution from the higher margin healthcare business from 49.5% in 2014 to 65.6% in 2016, by outpacing the growth in the distribution division - through organic and inorganic investments in recent years.

Consequently, the healthcare division accounted for 83.7% (FY2015: 75.9%) of Group EBITDA with the balance of 16.3% (FY2015: 24.1%) coming from the distribution division.

While the organic investments have an initial suppressing impact on margins, due to the gradual ramp-up towards breakeven and eventually profitability - this impact has been more than offset through our subsequent initiation of the capabilities stage of our strategy, a stage that has been focused on inorganic expansion prioritising clinical specialisations with higher value added per patient services that complement NMC's integrated offering and enjoy even more favourable regional market dynamics.

As a result, the consolidated group EBITDA reached US$246.1m (+63.7% YoY), resulting in an EBITDA margin of 20.2% an increase of 309bps compared to FY 2015. Since the initiation of the capabilities stage in our strategy in early 2015, consolidated group EBITDA margins have increased by 425bps or 27% (15.9% in 2014 to 20.2% in 2016).

The trend of comparable healthcare division growth and increasing contribution is expected to continue, supported by:

1. existing healthcare assets continuing to outpace the growth in distribution,

2. rising and more profitable contribution from the three major organic hospital additions made post IPO and most specifically from NMC Royal, the largest and most recent organic hospital addition

3. increased healthcare spend in Dubai market underpinned by the recent roll-out of mandatory medical insurance, which is already having positive impact on our assets within the emirate

4. Consolidation in 2017 of the 140 bed As Salama Hospital in Al Khobar, Saudi Arabia - acquired in 2016

5. Commencement of long-term care operations in 2017 within the recently established 120 bed Jeddah facility in Saudi Arabia. This facility has total potential building capacity of 220 beds

6. Al Zahra Hospital Sharjah acquisition announced in December 2016 and expected to be completed by Q1, 2017

7. Fakih IVF acquisition, which was completed in February 2016 and thus consolidated for 11 out of 12 months in 2016. Will be consolidated for the full year 2017

HEALTHCARE DIVISION

The healthcare division reported revenues of US$823.2m in FY2016 (+59.2% YoY), including US$761.5m from healthcare services, US$55.5m from hospital pharmacies and US$6.3m from the operation and management of third-party healthcare assets.

A total of 4.32m patients visited NMC's healthcare network in FY 2016, an increase of 34.5% compared to FY 2015. This was mainly driven by organic growth grounded in the enlargement of our network during the capacity focused stage of the Group strategy, which saw the addition of three new hospitals between 2014 and 2015.

Average revenue per patient from healthcare services in FY 2016 was US$176.3, 28.3% growth over FY 2015; as we continued to see growing contribution from the capabilities focused strategy stage in NMC's expansion, which was initiated in 2015, this manifested itself through the consolidation of higher complexity and ultimately higher value per patient units including Provita, Fakih IVF and Clinica Eugin. In addition, this growth was supported by the increasing top-line contribution from Brightpoint and NMC Royal Khalifa City. Both these relatively new hospitals, achieved above average revenue per patient compared to NMC's pre-IPO network as a consequence of their;

1. unique market positioning

2. patient mix and extended service mix

3. enhanced clinical capabilities

This combined growth in patients, service mix and revenue per patient increased group asset utilisation and operational gearing. As a result, healthcare division margin increased by 220bps to 29.3% in 2016 - despite lower in-hospital pharmacy margins during the period.

Key healthcare verticals

Performance overview by vertical

Detail	Multispecialty	Maternity & Fertility	Longterm & Home care	Total
Revenue (USD '000)	542,306	187,030	87,675	817,011
Growth, YoY	27%	263%	182%	59.8%
Revenue/patient	121	691	8,579	176.3
Growth, YoY	6%	-12%	94%	28.3%
Capacity
Licensed beds	655	100	120	875
Operational beds	459	100	120	679
Growth, YoY	32%	0%	33%	26.4%
Spare capacity (beds %)	30%	0%	0%	22.4%
Patients	4,038,905	270,861	10,220	4,319,986
Growth, YoY	29%	313%	45%	34.5%
Bed Occupancy	72%	65%	90%	74.3%

Source: NMC Health

*Revenue per patient excludes pharmacy revenues

MULTI-SPECIALTY

NMC completed its hub-and-spoke network opening of the 250 licensed beds super specialty and quaternary care NMC Royal Hospital. This facility launched its inpatient services in March 2016 and has performed ahead of expectations.

The addition of NMC Royal Hospital further expands our portfolio, bringing the total number of hospitals within this vertical to six across the UAE - which will rise to seven following acquisition of Al Zahra Hospital, which is expected to be completed in the first quarter of 2017. This platform is complemented by a network of medical centres and day surgeries to increase operational reach and the addressable market through cross-referrals. NMC also has a network of 15 pharmacies.

This enhanced multi-specialty healthcare delivery network of assets across the UAE has elevated NMC's capacity, geographical presence, service quality and offering complexity to further increase NMC's future growth prospects.

The multi-specialty vertical's combined revenue was US$542.3m (+26.6% YoY), backed by strong performance at all major hospitals and to a lesser extent the full consolidation of Dr Sunny's network of medical centres.

The total number of patients reached 4.04m (+28.7% YoY). While growth was good across the portfolio and also has impact due to full consolidation of Dr. Sunny's network of medical centres.

Revenue per patient was US$120.5 (+5.5% YoY), excluding pharmacies, despite the dilutive impact from the comparatively low revenue per patient at Dr. Sunny. The main reason the vertical was able to offset this impact was NMC Royal Hospital - which with recent commencement of inpatient operations, now has one of the highest revenue per patient indicators amongst NMC's assets.

MATERNITY & FERTILITY

The opening of Brightpoint Royal Women's Hospital combined with the subsequent acquisitions of Clinica Eugin and Fakih IVF confirms the Maternity & Fertility vertical's global market position, as one of the leading and premium international providers of fertility treatment services based on:

· Scale of its global business, cycle capacity and global egg-bank

· Focused strategic initiative towards raising capabilities and access to care in high growth and under-supplied markets

· Segment leading treatment capabilities and success rates

· Diversity and complexity of service offering across the fertility treatment spectrum

· Established presence and referral centres across regulatory geographies to facilitate one-stop approach for patients

The most recent acquisition of Fakih IVF which completed in January 2016 has proved to be highly synergistic, with significant opportunity for cross-referral of patients and transfer of best practices and technologies within NMC's Maternity & Fertility vertical. Patients have access to an integrated continuum of care with complementary capabilities and coordinated, seamless service offerings including local IVF treatments of the highest international standards at Fakih IVF, international referral to Clinica Eugin and its wider fertility service offering as permitted by its operational and regulatory environment, and hospitals, led by Brightpoint, for antenatal, delivery and postnatal services.

NMC's maternity and fertility focused healthcare assets within the healthcare division, reported revenues at US$187.0m in 2016 (+263% YoY), as Brightpoint Royal Women's Hospital recorded strong growth and Fakih IVF was consolidated from February 2016.

Brightpoint Royal Women's Hospital which started its initial outpatient operations in July 2014, commenced inpatient services in May 2015 with 60 beds out of the total licensed bed capacity of 100. As of 2016 the hospital is utilising the full 100 bed capacity. Patient growth was record high at 313%, mainly driven from the strong outpatient growth at Brightpoint.

This exceptional growth in patient visits, from what used to be a very low base due to the start-up nature of Brightpoint's operations, led to a dilution in the vertical's revenue per patient from US$785 to US$691 (-12% YoY).

LONG-TERM & HOME CARE

NMC is firmly established as the leading provider of long-term and in-home healthcare services in the UAE.

In 2015 NMC acquired ProVita and Americare. Provita is the the UAE's leading provider of long-term medical care. Americare operates a community-based physician practice providing medical care in the comfort of the patient's home for a variety of conditions and across all ages. Meeting the under-serviced demand for long-term care facilities, ProVita fills a gap between the short-term care offered by NMC's existing facilities and the in-home services offered by Americare, furthering NMC's strategy of being an integrated healthcare provider with Centres of Excellence across specialities.

During 2016 Provita completed and launched operations starting in March 2016 at the 30 bed expansion in Abu Dhabi, which took the total capacity up to 120 beds (+33% YoY). Subsequently, Provita commenced operations of 26 beds within NMC Royal Super Specialty Hospital dedicated to acute care.

In August 2016, NMC announced the acquisition of the 140 bed As Salama Hospital in Khobar and the investment of a newly established 120 bed asset in Jeddah - both with a focus on the Saudi Arabian long-term care market. NMC expects to consolidate these entities starting from March 2017.

While Saudi Arabia has one of the most advanced regional healthcare markets, the local long-term care segment has a very limited number of specialist operators relative to the size of the population, presenting a sizeable opportunity.

By providing specialised long-term care, NMC can help to absorb capacity from the more expensive and comparatively lower quality of life ICU beds currently occupied by long-term acute and sub-acute care patients within NMC and other local/international private sector and government hospitals. This integrated solution across the continuum of care allows for a seamless patient experience with higher quality of life for the patients and their families combined with synergies and enhanced efficiencies for NMC and payors. Given the limited availability of long term care facilities in the region, we expect NMC's care solutions to provide an effective alternative to sending patients abroad for treatment.

NMC's long-term and home care focused healthcare assets within the healthcare division, reported combined revenues of US$87.7m in 2016 (+182% YoY), as Provita was consolidated for the full year.

OPERATION & MANAGEMENT

NMC Health continued to operate and manage the 205-bed Sheikh Khalifa General Hospital in Umm al-Quwain on behalf of the UAE Ministry of Presidential Affairs since Q4 2012.

NMC has a five year contract to operate this hospital in return for an annual management fee based on qualitative metrics. This is the first such contract to manage a large Government healthcare facility awarded by a Government Department to a local UAE business, demonstrating confidence in NMC's significant healthcare experience and capabilities.

The total revenue contribution from this contract reached US$6.3m in 2016, with year on year growth of 5%.

DISTRIBUTION DIVISION

Over the past 40 years, NMC has developed one of the largest product portfolios in the UAE with around 97,600 SKUs, and is the exclusive wholesaler of mainly globally established and branded healthcare products and equipment.

NMC's distribution division operates across the entire UAE through a network of five warehouses and three sales and marketing offices strategically located in the major cities and a fleet of 230 vehicles ensuring timely distribution.

Reported revenues for this division reached US$431.9m in 2016 (+9.8% YoY) with an EBITDA of US$47m - resulting in an EBITDA margin of 10.9%. The EBITDA margin was slightly lower this year, -15bps YoY, compared to the exceptionally high margins of 2015.

The FMCG segment (+14% year on year) remained the largest contributor to the distribution division followed by Pharmaceuticals at 34%.

Recent distribution agreements added to our portfolio include:

1. MENA DMCC

2. Hector Beverages Private Limited

Financial review

FY 2016 was a remarkable year for NMC Health Plc. with the Group embarking on acquisitions in the key verticals within the healthcare space, both within Middle East, Europe and South America.

The Group delivered a robust performance in 2016 both at the overall and at the divisional level primarily due to strong inpatient and outpatient performance at our existing and the acquired hospitals and medical centres including the new ones commissioned during the previous years.

The acquired assets over the fertility and mother care space and long term care segments delivered performance in line with expectation.

Group reported revenue grew by 38.6% to US$1.2b (FY2015: US$880.9m) of which 18.5% was achieved organically with the remaining 20.1% growth resulting from the transformation strategy of the group through acquisition, and Group EBITDA increased by 63.7% to US$246.1m (FY2015: US$150.3m). Group EBITDA margin increased by 309 basis points to 20.2% with the additions of new entities and improvement of margin in existing entities including the new facilities. Group net profit increased by 76.5% to US$151.4 million (FY2015: US$85.8m), Group Basic earnings per share grew by 60.6% to US$0.711p (FY2015: US$0.443). Cash generated from operations increased by 109.8% to US$176.4m on account of inclusion of cash flows from acquired entities. This reflected a conversion of EBITDA into operating cash flow of 71.7%. Return on Average Equity increased to 27.3% (FY2015: 18.3%).

Healthcare division

Revenue in the Healthcare division continued to witness improved performance from US$517.1m in FY2015 to US$823.3m in FY2016, a growth of 59.2% of which 25.1% was achieved organically with the remaining 34.1% of growth coming from acquired assets.

EBITDA improved to US$241.1m in FY2016 (2015: US$137.0m), a growth of 76.0%. EBITDA margins were at 29.3% (FY2015: 26.5%).

Newly commissioned facilities, NMC Royal Hospital, Brightpoint Royal Women's Hospital, NMC General Hospital LLC, Dubai Investment Park and NMC Day Surgery Centre LLC performed above expectation in terms of revenues, EBITDA and cash flows.

During the year, the Group acquired Fakih IVF as part of its new Growth Strategy to grow an integrated multi-vertical and multi-brand healthcare network across several geographies. This contributed a positive impact on the group revenue, EBITDA and cash flow.

Distribution division

Within the Distribution division, revenues increased to US$431.9m in FY2016 (FY2015: US$393.4), a growth of 9.8%. EBITDA increased to US$47.1m in FY2016 (FY2015: US$43.5m), a growth of 8.3%.

Addition of agencies, customer tie-ups and cost efficient operations contributed to better performance in terms of revenue and margins. The introduction of mandatory insurance in Dubai had a favourable impact on the Pharma portfolio.

Capital Expenditure

The Group has increased its investment in new capacity during the course of the year, as well as continuing to upgrade and maintain its existing infrastructure. Total net capital additions of US$66.9m (FY2015: US$82.2m) were made during the year. This encompassed the Group's capital projects of US$38.9m. The Group also incurred US$28.0m on furniture, equipment and leasehold improvements required across the existing operations.

The Group has assessed all significant capital expenditure projects including NMC Royal Hospital for indicators of impairment and have concluded that the projects have sufficient headroom and that none of the assets are impaired

Acquisitions:

During the year, we completed and announced a number of transactions, some of which had a material impact on our results during the period. These transactions reflect our focused expansion strategy and total consideration paid for all the acquisitions was US$236.3m.

For detailed discussion on the acquired assets, please refer to the Business Combinations note (note 5) of the financial statements.

Cash

Net cash inflow from operating activities for the 2016 financial year was US$176.4m, compared with US$84.1m for the comparative period in 2015. This was mainly on account of inclusion of cash flows from acquired entities.

Including funds held on deposit, cash as at 31 December 2016 amounted to US$617.8m compared to US$177.4m at the end of FY2015. As expected, the Group had a net debt position of US$431.3m at 31 December 2016 compared with US$552.9m at 31 December 2015.

Net debt and funding

Net debt decreased during the period from US$552.9 m to US$431.3m. The decrease in net debt is primarily a result of Group's free cash generation in the period of $176.4m, proceeds from the issue of new equity shares of US$314.9m partially offset by the financing for acquisitions of $236.3m, investment in tangible and intangible assets of US$58.4m and dividend including finance cost payment of US$54.0m.

The movement in cash and the level of capital expenditure have had a significant effect on the movement in net debt during the 2016 financial year. A summary of the principal drivers is shown as follows:

	$m
Net Debt at 31 December 2015	552.9
Free cash flow	(176.3)
Investment capital expenditure	58.4
Proceeds from share issue	(314.9)
Acquisitions (Note 5)	236.3
Contingent consideration paid for acquisition (Note 36)	9.5
Dividend paid (Note 26)	21.6
Finance cost paid	32.4
Other Items	11.4
Net debt as at 31 December 2016	431.3

Working Capital

Working capital for our two operating business divisions is funded differently due to the nature of their business models. The Group is able to fund its working capital requirements for its Healthcare division from operational cash flow, and we do not expect this position to change in the 2017 financial year.

In relation to our Distribution division, the working capital requirement is dependent on a number of factors including the timing of receipt of debtors and the timing of payment of creditors as well as inventory flow during the year and the timing of re-imbursement of promotional expenses agreed with our Principals in relation to the sale and marketing of their products. The Distribution division requires external working capital facilities throughout the year, the level of which is dependent on business seasonality. These working capital facilities are arranged through a number of banking providers and in general terms the level of working capital required is between 20%-30% of the Group's total debt facilities.

Funding

Currently, the Group has a 5 year syndicated loan facility of US$825m, with a third party (borrower), which was structured in two tranches: 1) US$350m of term debt, this was utilised to refinance the existing higher cost debt; and 2) US$475m delayed drawdown acquisition facility to support NMC's capabilities focused strategy in making accretive acquisitions.

The total debt of the Group, excluding accounts payable and accruals, was US$1049.1m as at 31 December 2016 compared to US$730.1m as at 31 December 2015.

Financing of New Acquisition (Al Zahra Hospital)

The Group has arranged new loan facilities of US$1.4b. The consideration payable to Seller (GMPC) of approximately US$560 million and associated fees relating to the Acquisition, along with the repayment of the Group's current debt facilities, will be funded from a combination of the New Loan Facilities and proceeds from new shares placement. The New Loan Facilities comprise: the Facility A Agreement, consisting of a US$825 million loan with five year maturity, used for refinancing existing syndicated facilities; Facility B Agreement, totalling US$300 million, to provide cash consideration for the Acquisition; and Facility C Agreement not relevant now as group has already gone for share placement on 14^th December 2016.

Issue of shares

During 2016, the Group issued 18,571,428 Shares (the Placing Shares) in an equity placing (representing up to 9.99 per cent of the Company's Ordinary Share Capital), at a price of 1,375 pence per share, raising gross proceeds of US$322.3m. The net proceeds of the placement US$314.9m after reducing the associated expenses of US$7.4m, was recognised as Equity.

Finance costs and income

Total finance costs for FY2016 were US$41.6m compared to US$23.8m in FY2015. This was mainly on account of the higher facility amount availed to refinance the existing debts as well as to finance the acquisitions.

As part of the Group's capital expenditure programme, borrowing costs of US$0.3m (FY2015: US$1.7m) have been capitalised during the year. The rate used to determine the amount of borrowing costs eligible for capitalisation was 1.9% (FY2015: 2.1%) which is the effective rate of the borrowings used to finance the capital expenditure.

Dividend

The Board is proposing to continue with its policy of annual dividend payments of between 20% and 30% of profit after tax, outlined in the Company's IPO prospectus in 2012. The Board is therefore recommending that a final dividend of 10.6 pence per share be paid in cash in respect of the year ended 31 December 2016 (FY2015: 6.2 pence per share).

Subject to approval of the shareholders at the company's annual general meeting on 23 May 2017, the dividend timetable is as follows:

Ex-dividend date - 11 May 2017

Record date - 12 May 2017

Payment date - 2 June 2017

NMC Health plc

Consolidated financial statements

Year ended 31 December 2016

NMC Health plc

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2016

		2016	2015
	Notes	US$'000	US$'000

Revenue	7	1,220,835	880,870
Direct costs	8	(753,325)	(575,926)
		-----------------------	-----------------------
GROSS PROFIT		467,510	304,944

General and administrative expenses	8	(267,895)	(191,247)
Other income	9	46,466	36,649
		-----------------------	-----------------------

PROFIT FROM OPERATIONS BEFORE DEPRECIATION,
AMORTIZATION AND TRANSACTION COSTS		246,081	150,346

Transaction costs in respect of business combinations	5	(4,603)	(4,131)
Depreciation	17	(45,010)	(29,851)
Amortisation	18	(10,989)	(5,475)
Impairment of property and equipment	17	(1,376)	-
		-----------------------	-----------------------
PROFIT FROM OPERATIONS		184,103	110,889

Finance costs	10	(41,684)	(23,845)
Finance income	11	9,157	925
Unamortised finance fees written off		-	(2,612)
		-----------------------	-----------------------
PROFIT FOR THE YEAR BEFORE TAX	12	151,576	85,357
Tax	15	(174)	403
		-----------------------	-----------------------
PROFIT FOR THE YEAR		151,402	85,760
		==========	==========
Profit for the year attributable to:
Equity holders of the Parent		132,689	82,215
Non-controlling interests		18,713	3,545
		-----------------------	-----------------------
Profit for the year		151,402	85,760
		==========	==========
Earnings per share for profit attributable to the equity holders of the Parent:

Basic EPS (US$)	16	0.711	0.443
Diluted EPS (US$)	16	0.707	0.442

		==========	==========

NMC Health plc

CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME

For the year ended 31 December 2016

		2016	2015
	Notes	US$'000	US$'000


PROFIT FOR THE YEAR		151,402	85,760

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		(4,050)	(5,342)

Other comprehensive income not to be reclassified to income statement in subsequent periods (net of tax)
Re-measurement (loss) / gains on defined benefit plans	28	(147)	260
		-----------------------	-----------------------
Other comprehensive income for the year (net of tax)		(4,197)	(5,082)
		-----------------------	-----------------------
TOTAL COMPREHENSIVE INCOME FOR THE YEAR		147,205	80,678
		==========	==========
Total comprehensive income attributable to :
Equity holders of the Parent		129,030	77,859
Non-controlling interests		18,175	2,819
		-----------------------	-----------------------
Total comprehensive income		147,205	80,678
		==========	==========

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

The attached notes 1 to 40 form part of the consolidated financial statements.

NMC Health plc

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2016

		2016	2015
	Notes	US$'000	US$'000
ASSETS
Non-current assets
Property and equipment	17	459,338	433,524
Intangible assets	18	652,983	413,059
Investment in Joint Venture	39	834	-
Deferred tax assets	15	2,135	1,316
Loan receivable	19	9,129	1,725
Advances paid for acquisitions	5	1,614	-
Other non-current assets	5	43,053	-
		--------------------------	-----------------------
		1,169,086	849,624
		--------------------------	-----------------------
Current assets
Inventories	20	144,387	134,788
Accounts receivable and prepayments	21	374,457	282,475
Loan receivable	19	5,387	2,670
Amounts due from related parties	31	3,628	4,116
Income tax receivable		2,208	2,810
Bank deposits	22	137,900	58,886
Bank balances and cash	22	479,940	118,511
		-------------------------	--------------------
		1,147,907	604,256
		-------------------------	-----------------------
TOTAL ASSETS		2,316,993	1,453,880
		==========	==========
EQUITY AND LIABILITIES
Equity
Share capital	23	31,910	29,566
Share premium	23	491,778	179,152
Group restructuring reserve	24	(10,001)	(10,001)
Foreign currency translation reserve		(8,128)	(4,616)
Option redemption reserves	37	(35,027)	(24,496)
Retained earnings	25	436,337	318,092
		-----------------------	-----------------------
Equity attributable to equity holders of the Parent		906,869	487,697

Non-controlling interests		42,002	11,968
		-----------------------	-----------------------
Total equity		948,871	499,665
		-----------------------	-----------------------
Non-current liabilities
Term loans	27	594,780	483,725
Employees' end of service benefits	28	26,648	19,284
Other payables	30	40,792	14,024
Option redemption payable	37	37,500	25,084
Deferred tax liabilities	15	8,245	9,761
		-----------------------	-----------------------
		707,965	551,878
		-----------------------	-----------------------
Current liabilities
Accounts payable and accruals	29	158,812	123,511
Other payables	30	26,827	11,150
Amounts due to related parties	31	14,876	17,419
Bank overdrafts and other short term borrowings	22	219,851	154,962
Term loans	27	234,519	91,621
Employees' end of service benefits	28	3,560	3,206
Income tax payable		1,712	468
		-----------------------	-----------------------
		660,157	402,337
		-----------------------	-----------------------
Total liabilities		1,368,122	954,215
		-----------------------	-----------------------
TOTAL EQUITY AND LIABILITIES		2,316,993	1,453,880
		==========	==========

The consolidated financial statements were authorised for issue by the board of directors on ___________ and were signed

on its behalf by

Dr B. R. Shetty	Mr. Suresh Krishnamoorthy
Executive Vice Chairman & Chief Executive Officer	Chief Financial Officer

The attached notes 1 to 40 form part of the consolidated financial statements.

NMC Health plc

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2016

	Attributable to the equity holders of the Parent
	Share capital	Share premium	Group restructuring reserve	Retained earnings	Foreign currency translation reserve
	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000

Balance as at 1 January 2016	29,566	179,152	(10,001)	318,092	(4,616)
Profit for the period	-	-	-	132,689	-
Other comprehensive income	-	-	-	(147)	(3,512)
	-----------------------	---------------------	-----------------------	---------------------	-----------------------
Total comprehensive income for the period				132,542	(3,512)

Dividend (note 26)	-	-	-	(16,350)	-
Option redemption reserve (note 37)	-	-	-	-	-
Issue of shares - new (note 23)	2,344	319,970	-	-	-
Shares issue costs (note 23)	-	(7,344)	-	-	-
Acquisition of non-controlling interest (note 2.2)	-	-	-	(587)	-
Settlement of put option (note 37)	-	-	-	-	-
Acquisition of subsidiaries (note 5 )	-	-	-	-	-
Share based payments (note 32)	-	-	-	2,640	-
	-----------------------	---------------------	-----------------------	-----------------------	------------------------
Balance as at 31 December 2016	31,910	491,778	(10,001)	436,337	(8,128)

	==========	========	==========	==========	=========

Balance as at 1 January 2015	29,566	179,152	(10,001)	250,306	-
Profit for the period	-	-	-	82,215	-
Other comprehensive income	-	-	-	260	(4,616)
	-----------------------	---------------------	-----------------------	---------------------	-----------------------
Total comprehensive income for the period	-	-	-	82,475	(4,616)

Dividend (note 26)	-	-	-	(15,866)	-
Option redemption reserve	-	-	-	-	-
Acquisition of subsidiaries	-	-	-	-	-
Share based payments (note 32)	-	-	-	1,177	-
	-----------------------	---------------------	-----------------------	-----------------------	------------------------
Balance as at 31 December 2015	29,566	179,152	(10,001)	318,092	(4,616)
	==========	========	==========	==========	=========

	Attributable to the equity holders of the Parent
	Option redemption reserves	Total	Non- controlling interest	Total
	US$ '000	US$ '000	US$ '000	US$ '000

Balance as at 1 January 2016	(24,496)	487,697	11,968	499,665
Profit for the period	-	132,689	18,713	151,402
Other comprehensive income	-	(3,659)	(538)	(4,197)
	-----------------------	---------------------	-----------------------	-----------------------
Total comprehensive income for the period	-	129,030	18,175	147,205

Dividend (note 26)	-	(16,350)	(5,300)	(21,650)
Option redemption reserve (note 37)	(12,801)	(12,801)	-	(12,801)
Issue of shares - new (note 23)	-	322,314	-	322,314
Shares issue costs (note 23)	-	(7,344)	-	(7,344)
Acquisition of non-controlling interest (note 2.2)	-	(587)	(1,365)	(1,952)
Settlement of put option (note 37)	2,270	2,270	-	2,270
Acquisition of subsidiaries (note 5 )	-	-	18,524	18,524
Share based payments (note 32)	-	2,640	-	2,640
	-----------------------	---------------------------	-------------------------	---------------------
Balance as at 31 December 2016	(35,027)	906,869	42,002	948,871

	==========	==========	=========	=========

Balance as at 1 January 2015	-	449,023	4,004	453,027
Profit for the period	-	82,215	3,545	85,760
Other comprehensive income	-	(4,356)	(726)	(5,082)
	-----------------------	---------------------	-----------------------	-----------------------
Total comprehensive income for the period	-	77,859	2,819	80,678

Dividend (note 26)	-	(15,866)	-	(15,866)
Option redemption reserve	(24,496)	(24,496)	-	(24,496)
Acquisition of subsidiaries	-	-	5,145	5,145
Share based payments (note 32)	-	1,177	-	1,177
	-----------------------	---------------------------	-------------------------	---------------------
Balance as at 31 December 2015	(24,496)	487,697	11,968	499,665
	==========	==========	=========	=========

The attached notes 1 to 40 form part of the consolidated financial statements.

NMC Health plc

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2016

		2016	2015
	Notes	US$'000	US$'000
OPERATING ACTIVITIES
Profit for the year before tax		151,576	85,357
Adjustments for:
Depreciation	17	45,010	29,851
Employees' end of service benefits	28	7,246	4,869
Amortisation of intangible assets	18	10,989	5,475
Finance income	11	(9,157)	(925)
Finance costs	10	41,684	23,845
Loss on disposal of property and equipment		31	185
Foreign exchange loss/ (gain)		358	(536)
Non cash other income		626	(418)
Unamortised finance fees written off	8	-	2,612
Impairment of property and equipment	17	1,376	-
Share based payments expense	32	2,640	1,177
		-----------------------	-----------------------
		252,379	151,492
Working capital changes:
Inventories		(8,630)	(19,139)
Accounts receivable and prepayments		(78,638)	(59,969)
Amounts due from related parties		487	3,869
Accounts payable and accruals		15,524	1,292
Amounts due to related parties		(2,539)	9,039
		-----------------------	-----------------------
Net cash from operations		178,583	86,584
Employees' end of service benefits paid	28	(1,546)	(1,133)
Income tax paid		(666)	(1,367)
		-----------------------	-----------------------
Net cash from operating activities		176,371	84,084
		-----------------------	-----------------------
INVESTING ACTIVITIES
Purchase of property and equipment		(59,571)	(79,281)
Purchase of intangible assets	18	(473)	(561)
Proceeds from disposal of property and equipment		1,574	85
Acquisition of subsidiaries, net of cash acquired	5	(236,328)	(375,505)
Investment in Joint venture		(928)	-
Bank deposits maturing in over 3 months		26,764	27,115
Restricted cash		(84,473)	6,498
Finance income received		6,529	1,533
Advances paid for acquisitions	5	(1,614)	-
Loan receivable	19	(10,505)	(4,395)
Other non-current assets		(1,768)	-
Contingent consideration paid for acquisition	36	(9,567)	-
		-----------------------	-----------------------
Net cash used in investing activities		(370,360)	(424,511)
		-----------------------	-----------------------
FINANCING ACTIVITIES
New term loans and draw-downs	27	631,548	822,698
Repayment of term loans	27	(378,660)	(472,796)
Transaction cost of term loan		-	(10,789)
Receipts of short term borrowings		351,089	407,849
Repayment of short term borrowings		(319,556)	(422,629)
Dividend paid to shareholders	26	(16,350)	(15,866)
Dividend paid to non controlling interest	26	(5,300)	-
Finance costs paid		(32,421)	(20,335)
Acquisition of non-controlling interest		(1,952)	-
Proceed from new share issue - net		314,970	-
		-----------------------	-----------------------
Net cash from financing activities		543,368	288,132
		-----------------------	-----------------------
INCREASE / (DECREASE) IN CASH AND CASH
EQUIVALENTS		349,379	(52,295)

Cash and cash equivalents at 1 January		84,024	136,319
		----------------------	----------------------
CASH AND CASH EQUIVALENTS AT 31 DECEMBER	22	433,403	84,024
		========	========

The attached notes 1 to 40 form part of the consolidated financial statements.

NMC Health plc

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

At 31 December 2016

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 company operating in the United Arab Emirates ("UAE"), Spain, Colombia, Italy and Denmark and Brazil. 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 one is a director 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, home care services, long term care 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 consolidated financial statements of the Group for the year ended 31 December 2016 were authorised for issue by the board of directors on 7 March 2017 and the consolidated statement of financial position was signed on the Board's behalf by Dr BR Shetty and Mr Suresh Krishnamoorthy.

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union as they apply to the financial statements of the Group for the year ended 31 December 2016 and applied in accordance with the Companies Act 2006.

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. The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all periods, presented.

Functional and reporting currency

The functional currency of the Company and its subsidiaries in the UAE is the UAE Dirham and the functional currency of the subsidiaries operating outside UAE is the currency of those respective countries. The reporting currency of the Group is United States of America Dollar (US$) as this is a more globally recognized currency. The UAE Dirham is pegged against the US Dollar at a rate of 3.673 per US Dollar.

All values are rounded to the nearest thousand dollars ($000) except when otherwise indicated.

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 Strategic Review in the Annual Report. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Financial Review in the Annual Report.

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 in 2016. Both the Healthcare and Distribution divisions have continued their positive growth in revenue during 2016. Net profit and EBITDA of both healthcare and distribution divisions have increased in 2016. EBITDA margin of Distribution is almost the same as last year whereas for Healthcare it increased slightly which is due to opening of new facilities during the year. The directors have reviewed the business plan for 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 consolidated financial statements.

2.2 BASIS OF CONSOLIDATION

The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 December 2016. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

· Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee)

· Exposure, or rights, to variable returns from its involvement with the investee

· The ability to use its power over the investee to affect its returns

Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

· The contractual arrangement with the other vote holders of the investee

· Rights arising from other contractual arrangements

· The Group's voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity while any resultant gain or loss is

recognised in profit or loss. Any investment retained is recognised at fair value.

The consolidated financial statements include the financial statements of the Company and its subsidiaries listed below:

					Percentage of holdings
			Country of		31 December	31 December
			incorporation		2016	2015
Direct subsidiaries:
	NMC Holding Co LLC		UAE		100%	100%
	NMC Health Holdco Limited		UK		100%	100%

Indirect subsidiaries:
	NMC Healthcare LLC		UAE		100%	100%
	New Pharmacy Company Limited		UAE		100%	99%
	New Medical Centre LLC-Dubai		UAE		100%	99%
	NMC Specialty Hospital LLC-Abu Dhabi		UAE		100%	99%
	NMC Specialty Hospital LLC- Dubai		UAE		100%	99%
	New Medical Centre Trading LLC-Abu Dhabi		UAE		100%	99%
	NMC Trading LLC-Dubai		UAE		100%	99%
	Bait Al Shifaa Pharmacy LLC-Dubai		UAE		100%	99%
	New Medical Centre LLC-Sharjah		UAE		100%	99%
	New Medical Centre Specialty Hospital LLC-Al Ain		UAE		100%	99%
	Reliance Information Technology LLC		UAE		100%	99%
	BR Medical Suites FZ LLC		UAE		100%	100%
	Bright Point Royal Womens Hospital LLC		UAE		100%	99%
	NMC Day Surgery Centre LLC		UAE		100%	99%
	NMC Hospital LLC (DIP Hospital)		UAE		100%	99%
	Medifertil, S.A		Columbia		61.90%	60.50%
	Centro de infertilidad y Reproduccion
	Humana SLU (CIRH)		Spain		88.40%	86.40%
	Centro de Medicina della Riproduzione (Biogenesi)		Italy		53.00%	51.80%
	EUVITRO, S.L.U		Spain		88.40%	86.40%
	Copenhagen Fertility Center Holding Aps (DK)		Denmark		79.60%	-
	Huntington Centro de Medicina Reproductive, S/A (BR)		Brazil		53%	-
	ProVita International Medical Center LLC		UAE		100%	100%
	Lifewise Home Healthcare LLC		UAE		100%	-
	NMC Royal Hospital LLC		UAE		100%	99%
	The American Surgecenter Pharmacy LLC		UAE		90%	90%
	The American Surgecenter LLC		UAE		90%	90%
	Americare LLC		UAE		90%	90%
	Trans Arabia Drug Store LLC		UAE		75%	75%
	Sunny Specialty Medical Centre LLC.		UAE		100%	100%
	Sunny Medical Centre LLC.		UAE		100%	100%
	New Sunny Medical Centre LLC		UAE		100%	100%
	Sunny Al Buhairah Medical Centre LLC		UAE		100%	100%
		Sunny Al Nadha Medical Centre LLC	UAE	100%		100%
		Sunny Dental Care LLC.	UAE	100%		100%
		Grand Hamad Pharmacy LLC	UAE	100%		100%
		Hamad Pharmacy LLC	UAE	100%		100%
		Sharjah Pharmacy L.L.C	UAE	100%		100%
		*Sunny Sharqan Medical Centre L.L.C.	UAE	100%		-
		*NMC Royal Medical Centre L.L.C.	UAE	100%		-
		*NMC Healthcare L.L.C.	Oman	100%		-
		*Fulfil Trading L.L.C.	UAE	100%		-
		Nadia Medical Centre L.L.C.	UAE	100%		-
		Cooper Dermatology and Dentistry Clinic	UAE	100%		-
		Cooper Health Clinic	UAE	100%		-
		Fakih IVF Fertility Centre LLC	UAE	51%		-
		Fakih IVF LLC	UAE	51%		-
		Beiersdorf Cosmetics Trading LLC- Abu Dhabi branch.	UAE	100%		99%
		New Marketing & Trading Co.LLC	UAE	100%		99%
		Beiersdorf Cosmetics Trading LLC- Al Ain branch	UAE	100%		99%
		New Marketing & Trading Co -LLC-Al Ain branch.	UAE	100%		99%
		New Medical Centre Trading LLC.-branch 2	UAE	100%		99%
		New Medical Centre Trading LLC-branch 3	UAE	100%		99%
		Beiersdorf Cosmetics Trading LLC- branch	UAE	100%		99%
		National Marketing & Trading Co. LLC	UAE	100%		99%
		New Marketing & Trading Company LLC-branch	UAE	100%		99%
		NMC Trading LLC-branch	UAE	100%		99%
		Beiersdorf Cosmetics Trading Co. LLC	UAE	100%		99%
		National Marketing & Trading Co. LLC - Dubai branch	UAE	100%		99%
		New Marketing & Trading Co. LLC- Dubai branch	UAE	100%		99%
		New Medical Centre Trading (Store) LLC	UAE	100%		99%
		New Medical Centre Veterinary Medicine
		& Equipment Trading Co LLC	UAE	100%		99%
		NMC Trading LLC branch	UAE	100%		99%
		NMC Trading LLC -Fujairah branch	UAE	100%		99%
		NMC Trading RAK- branch LLC	UAE	100%		99%
		New Medical Centre	UAE	100%		100%
		New Medical Centre L.L.C. -branch (Al-Ain,Al wadi)	UAE	100%		100%
		NMC Pharmacy	UAE	100%		100%
		NMC Pharmacy-Branch	UAE	100%		100%
		*PVHC KSA	KSA	100%		-
		*TVM KSA Acquisition 2 Ltd.	Cyprus	100%		-
		*NMC Royal Medical Centre LLC-Branch	UAE	100%		-
		*Muscat Central Healthcare L.L.C.	Oman	100%		-
		*NMC Healthcare India Pvt. Ltd.	India	100%		-
		*NMC International Trading L.L.C.	UAE	100%		-
		*Cooper Health Clinic-Branch	UAE	100%		-
		*New Reproductive Care Ltd.	Cayman	51%		-

*These entities are established by NMC during the current year and accordingly are not disclosed as acquired entities in note 5.

During the current period, the Group acquired 1% beneficial interest in certain subsidiaries, as listed below, for a consideration of US$419,000. These subsidiaries are registered in the UAE. The Group previously had 99% shareholding in these entities. The Group recorded a gain of US$536,000 on this in retained earnings

NMC Specialty Hospital LLC- Abu Dhabi

NMC Specialty Hospital LLC- Dubai

New Medical Centre Specialty Hospital LLC-Al Ain

New Pharmacy Company Limited

Bait Al Shifaa Pharmacy LLC-Dubai

Reliance Information Technology LLC

New Medical Centre Hospital LLC- Dubai

New Medical Centre LLC-Sharjah

NMC Day Surgery Centre LLC

NMC Hospital LLC (DIP Hospital)

Bright point Hospital LLC

New Medical Centre Trading LLC-Abu Dhabi

NMC Trading LLC-Dubai

In addition, the Group acquired an additional 2.0% interest in Luarmia SL ("Luarmia"), increasing its ownership interest to 88.4%. Cash consideration of US$1,533,000 was paid to the non-controlling shareholders. The Group recorded a loss of US$1,123,000 on this in retained earnings.

2.3 SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

The key assumptions concerning the future, key sources of estimation uncertainty and critical judgements at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

Significant estimates

Impairment of inventories

Inventories are held at the lower of cost and net realisable value. When inventories become old or obsolete, an estimate is made of their net realisable value. For individually significant amounts this estimation is performed on an individual basis. Amounts which are not individually significant, but which are old or obsolete, are assessed collectively and a provision applied according to the inventory type and the Group's policy for inventory provisioning. The gross carrying amount of inventories at 31 December 2016 was US$145,565,000 (2015: US$136,176,000) and the provision for old and obsolete items at 31 December 2016 was US$1,178,000 (2015: US$1,388,000) (note 20).

Impairment of accounts receivable

An estimate of the collectible amount of trade accounts receivable is made when collection of the full amount is no longer probable. For individually significant amounts, this estimation is performed on an individual basis. Amounts which are not individually significant, but which are past due or claims which can potentially be rejected, are assessed collectively and a provision applied according to the length of time past due, based on historical recovery rates.

A majority of the receivables that are past due but not impaired pertains to Group's operations in UAE, these receivables 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.

Gross trade accounts receivable at 31 December 2016 were US$326,480,000 (2015: US$255,038,000) and the provision for doubtful debts at 31 December 2016 was US$12,129,000 (2015: US$13,022,000) (note 21). Any difference between the amounts actually collected in future periods and the amounts expected will be recognised in the consolidated income statement.

Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit (CGU) exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm's length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the asset's performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill recognised by the Group. The key assumptions used to determine the recoverable amount for the different CGUs are disclosed and further explained in note 18.

In addition, the Group has work in progress in respect of Hospital Information System (HIS) and ERP amounting to US$4,345,000 (2015:US$3,991,000). This amount is included in capital work in progress in property and equipment and in software in intangible assets (note 17 and note 18). As required by IAS 36 an impairment test is performed and no impairment was identified.

Valuation of intangibles assets

The Group measures its intangible assets acquired in a business combination as follows:

Brand	Relief from royalty
Database and software	Replacement cost
Patient relationships	Multi period excess earning method
Non-compete agreements	Income approach-with or without method
Rental and private contracts	Multi period excess earning method

Estimating the fair value of the brand requires determination of the most appropriate valuation method. This estimate also requires determination of the most appropriate inputs to the valuation method including the base revenue, expected life of the intangible assets, selecting an arm's length royalty rate, discount rate and making assumptions about them. Similarly, estimating the replacement cost of the database requires an estimate of the number of cycles that are recorded in the database along with the best estimate of the hours dedicated by the staff (such as doctors, nurses, biologists, and other specialist technicians) to collect the data, the useful life of the database, discount rate and an estimate of tax saving.

Estimating the fair value of patient relationships and the non-compete agreements requires an estimate of the expected revenue over an appropriate period of time, a churn rate to account for the reduction in the number of patients over the years, discount rate, rate of inflation and the useful life and the risk inherent in ownership of the asset or security interest being valued.

Useful economic lives of property and equipment and depreciation method

Depreciation is calculated on all property and equipment other than land and capital work in progress, at the following rates calculated to write off the cost of each asset on a straight line basis over its expected useful life. Management has re-assessed the useful economic lives of all asset categories with effect from 1 January 2016, following a review of the useful economic lives of the Group's assets and market research conducted on depreciation rates and methods in the industry:

	Rate applied	Rate applied
	from	up to
	1 January	31 December
	2016	2015

Hospital building	2%-6%	6%
Buildings	6%	6%
Leasehold improvements	5.88% - 20%	10% - 20%
Motor vehicles	20%	20%
Furniture, fixtures and fittings	12.5% - 20%	12.5% - 20%
Medical equipment	10% - 25%	10% - 25%

The impact of the re-assessment of useful economic lives and depreciation method is an increase in reported profit of US$2,562,000 in the current year.

Useful economic lives of intangible assets and amortisation method

The useful lives of intangible assets are assessed as either finite or indefinite. Intangibles assets are amortised on straight line basis over their useful life. The following useful lives have been determined for acquired intangible assets:

Brands - 5-20 years

Software - 5 years

Database -15 years

Patient relationships - 7 years

Non-compete agreement - 3-4 years

Rental contracts - 7 years

Private contracts - 3 years

Contingent consideration on acquisitions

Contingent consideration, resulting from business combinations, is valued at fair value at the acquisition date as part of the business combination. When the contingent consideration meets the definition of a financial liability, it is subsequently re-measured to fair value at each reporting date. The change in the fair value at each reporting date is recorded in the consolidated income statement. The determination of the fair value is based on discounted cash flows. The key assumptions taken into consideration in determining the fair value are the probability of meeting relevant performance targets, securing certain agreements, completing certain acquisitions and the discount factor (note 5).

Valuation of put option

The accounting for put options requires significant management judgment and is driven by the specific contract terms. Put options were issued as part of the Luarmia SL, CFC and HCMR acquisitions. On the basis of the contract terms and interpretation of relevant accounting standards and guidance, the judgment is that the Group does not have present ownership of the non-controlling interest (NCI) on account of Luarmia SL, CFC and HCMR as at the date of acquisition. This judgment leads to the next stage of the accounting decisions required. The Group has concluded that IFRS 10 takes precedence over IAS 32, and the permitted policy choice is that there should be full recognition of NCI using the proportionate method.

The financial liability that is payable under put option is measured at fair value at each reporting date. The key assumptions taken into consideration in determining the fair value are the probability of meeting relevant reproductive cycles, EBITDA and net debt targets (note 37).

Significant judgements

Business combinations and goodwill

Management judgement is applied in determining whether the acquisition represents an acquisition of an asset or a business combination. This involves assessing whether or not the entities and the assets acquired constitute the carrying on of a business, i.e., whether there are inputs and processes applied to those inputs that have the ability to create outputs. When a business combination occurs, the fair values of the identifiable assets and liabilities assumed, including intangible assets, are recognised. The determination of the fair values of acquired assets and liabilities is based, to a considerable extent, on management's judgement. If the purchase consideration exceeds the fair value of the net assets acquired, then the difference is recognised as goodwill. If the purchase price consideration is lower than the fair value of the assets acquired then a gain is recognised in the consolidated income statement. Allocation of the purchase price between finite lived assets and indefinite lived assets such as goodwill affects the results of the Group as finite lived intangible assets are amortised, whereas indefinite lived intangible assets, including goodwill, are not amortised. The key judgements in respect of the contingent consideration recognised as part of a business combination relate to the performance of the business, the discount rates used and the contractual arrangements of ownership.

Functional currency

The UAE Dirham is determined to be the functional currency of the Company.

Judgement has been used to determine the functional currency of the Company that most appropriately represents the economic effects of the Company's transactions, events and conditions. The primary economic environment influencing the Company's income (dividends) is the UAE and the effect of the Companies local environment is limited to expenses incurred within the UK. The ability of the Company to meet its obligations and pay dividends to its shareholders is dependent on the economy of, and the operation of its subsidiaries in, the UAE.

Assets held in the name of the previous shareholder

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. As at 31 December 2016 certain land with a carrying amount of US$4,144,000 (2015: US$4,144,000) are held in the name of a previous shareholder for the beneficial interest of the Group. As the beneficial interest of such land and buildings resides with the Group, these assets are recorded within land and buildings in the Group consolidated financial statements. The directors take into account this local legal registration requirement, the Group's entitlement to the beneficial interest arising from these assets, as well as other general business factors, when considering whether such assets are impaired (note 17).

Leases for buildings and land

Generally our hospitals, day patient medical centres and hospital projects under development are located on land and in buildings which are leased. As at 31 December 2016, the majority of the lease periods range from five to twenty seven years apart from the leases for New Medical Centre Hospital LLC-Dubai ('Dubai General Hospital) and the warehouse facilities, which had leases which are renewable on an annual basis with a total value of US$801,000 (2015: US$778,000) included within property, and equipment as at 31 December 2016 (note 17). If any such leases are terminated or expire and are not renewed, the Group could lose the investment, including the hospital buildings and the warehouses on the leased sites which could have a material adverse effect on our business, financial condition and results of operations. The directors have considered the following facts in determining the likelihood that these leases will be renewed:

Whilst some leases can be for long term durations, it is not unusual and can often be common practice throughout all of the emirates in the United Arab Emirates for landlords to lease land and buildings to companies on annually renewable leases of one year terms and for these

· leases to be renewed automatically. Throughout the Group's over 43 year history it has never had a lease cancelled or not renewed, and the Group enjoys a high degree of respect in the region and believes that it maintains strong relationships with the landlords.

· Both the Dubai General Hospital and the warehouse facilities have been occupied by the Group on annually renewable leases, for a period of more than 16 years and each year these leases have been automatically renewed.

· The warehouse facilities have been built by the Group on land leased from government bodies in the Emirates of Dubai and Abu Dhabi on the back of the policies of these governments to attract investment in warehousing in the United Arab Emirates.

Lease for NMC Royal Hospital LLC

NMC Royal Hospital LLC is constructed from land leased from Municipality of Abu Dhabi. Remaining period of lease as of 31 December 2016 is 24 years expiring in 2040. Management has determined the useful life of NMC Royal Hospital LLC building 50 years. Carrying amount of NMC Royal Hospital LLC building included in property and equipment as of 31 December 2016 is US$122,463,000. Management believe that lease will be renewed for the full useful life of the building. The directors have considered the facts that throughout the Group's 43 year history it has never had a lease cancelled or not renewed, and the Group enjoys a high degree of respect in the region and believes that it maintains strong relationships with the lessor in determining the likelihood that lease will be renewed.

2.4 CHANGES IN ACCOUNTING POLICIES

New and amended standards and interpretations:

The Group applied for the first time certain standards and amendments which are effective for annual periods beginning on or after 1 January 2016.

The new standards, amendments to IFRS, which are effective as of 1 January 2016 are listed below, have no impact on the Group.

· IFRS 14 Regulatory Deferral Accounts

· Amendments to IFRS 11 Joint Arrangements: Accounting for Acquisition of Interests

· Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortization.

· Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants

· Amendments to IAS 27: Equity Method in Separate Financial Statements

· Annual Improvements 2012-2014 Cycle

o IFRS 5 Non-current Assets Held for Sale and Discontinued Operations

o IFRS 7 Financial Instruments: Disclosures

i. Servicing contracts

ii. Applicability of the amendments to IFRS 7 to condensed interim financial statements

o IAS 19 Employee Benefits

o IAS 34 Interim Financial Reporting

o Amendments to IAS 1 Disclosure Initiative

o Amendments to IFRS 10, IFRS 12 and IAS 28 Investment Entities: Applying the Consolidation Exception

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, less discounts and rebates and taking into account contractually defined terms of payment and excluding taxes or duties.

Revenue streams include clinic service revenues, sale of goods - Pharmacy, sale of goods -Distribution, Healthcare management fees and revenue sharing arrangement with doctors. The Group assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent. The Group determines it is acting as principal when it has exposure to the significant risks and rewards associated with the transaction and measures revenue as the gross amount received or receivable. When the Group does not retain the significant risks and rewards, it deems that it is acting as an agent and measures revenue as the amount received or receivable in return for its performance under the contract and excludes any amounts collected on behalf of a third party.

Clinic, homecare and long term care service revenues:

Clinic, homecare and long term care service revenues represent the revenue which NMC generates from the provision of either inpatient or outpatient medical services, homecare services or long term care services. The group primarily receives these revenues from patients' private /medical insurance schemes. Revenues are recognised when, and to the extent that, performance of a medical service occurs, and is measured at the fair value of the consideration received or receivable. NMC has determined that it is acting as Principal in these arrangements as it has the responsibility for providing the medical services to the patient, it sets the prices for services which are provided, it bears the credit risk and it bears the risk of providing the medical service.

Gynaecology, obstetrics and human reproduction:

Revenue in respect of the different types of gynaecology, obstetrics and human reproduction services is recognized as follows:

· Donor IVF and Own IVF sales (In Vitro Fecundation):

Revenue in respect of gynaecology, obstetrics and human reproduction is mainly from In Vitro Fertilization (IVF) treatment.

Revenue from IVF treatment is recognized based on the stage of the treatment. The treatment is divided into three stages. Each stage takes about 20 days. 24%-25% of revenue is booked in the first stage (at the beginning of the treatment), 50%-65% of revenue is booked in the middle stage (at patient's egg extraction in the case of the use of the patient's own egg or in the case of the use of a donor egg at the fertilization date) and 11%-25% of revenue is booked at the final stage (embryo implantation). These percentages are based on an internal study of the costs incurred in the different streams performed in prior years.

· Cryo transfer sales:

Total cost of the treatment is split in two phases in terms of revenue recognition. 25% is recorded when the doctor agrees with the patient to initialize the treatment and 75% at the embryo implantation. The time between both phases is about 2-3 weeks.

· Intrauterine insemination

Revenue is recognized in full at the insemination date.

Sale of Goods - Pharmacy:

The sales of goods from pharmacy relates to the sale of pharmaceutical and other products from hospitals and pharmacies. Whilst the Group does not establish the prices for the pharmaceutical products sold as both the purchase and selling prices for all pharmaceutical products are fixed by the Ministry of Health, UAE. NMC has determined that it is acting as Principal in respect of these sales as it provides the goods for sale, it bears the inventory risk, and it bears the credit risk from customers. Revenue from the sale of goods - Pharmacy is therefore recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Significant risk for retail goods is passed to the buyer at the point of sale.

Sale of Goods - Distribution:

Where the Group bears the inventory risk and the customer credit risk and has the ability to set the prices for the products sold then the Group has determined that it is acting as Principal. Revenue from the sale of goods is therefore recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Significant risk for retail goods is passed to the buyer for wholesale goods at the time of delivery.

For agency relationships, the revenue earned is measured as the Group's share of the revenue, as specified in the contract. Any amounts collected on behalf of the third party are excluded from revenue and are recorded as a payable. There are currently no material agency relationships.

Healthcare Management fees:

Management fees represent fees earned for managing a hospital. Management fees are recognised when the services under the contract are performed, and the service level criteria have been met, and are measured at the fair value of the consideration received or receivable, in line with the terms of the management contract.

Revenue sharing arrangements with doctors:

The Group enters into contracts with doctors whereby these doctors are employed to perform certain procedures or run outpatient services using the facilities. In return the doctors obtain a share of the revenues that are generated from these facilities. Each contractual arrangement with individual doctors is assessed against specific criteria to determine whether the Group is acting as principal or agent in the arrangement with these doctors.

Other income

Other income comprises revenue from suppliers for the reimbursement of advertising and promotion costs incurred by the Group. Revenue is recognised following formal acceptance of the Group's reimbursement claims by suppliers and is measured at the confirmed amount receivable.

Interest income

For all financial instruments measured at amortised cost, interest income or expense is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in finance income in the consolidated income statement.

Rebates from Suppliers

The Distribution business receives rebates in the ordinary course of business from a number of its suppliers of pharmaceutical products, in accordance with contractual arrangements in place with specific suppliers. Rebates are accounted for once approval has been received from the supplier following the negotiations which have taken place with them. Rebates receivable are accounted for as a deduction from the cost of purchasing pharmaceutical goods, once the rebate has been approved by the supplier on the basis under IAS 18 that the probability of inflow is not sufficiently certain and the amounts cannot be reliably measured until that point. When rebates have been agreed in advance, for example when it has been agreed that a certain rebate will be applied to the purchase of specific goods for a set period of time rather than just to a specific one off purchase, then the rebate is recognised as a reduction in the purchase price as soon as the goods are purchased. When rebates are offered based upon the volume purchased and it is probable that the rebate will be earned and the amount can be estimated reliably, then the discount is recognised as a reduction in the purchase price when the goods are purchased and the assessment is reviewed on an ongoing basis. Rebates receivable are accounted for on a net basis, being set off against the trade payables to which they relate, as they are a reduction in the amount we owe to our suppliers in respect of pharmaceutical products purchased

Current income tax

Current income tax assets and liabilities arising from overseas operations for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities in the respective overseas jurisdictions. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Group operates and generates taxable income.

Current income tax relating to items recognised directly in equity is recognised in equity and not in the consolidated income statement. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

· When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;

· In respect of taxable temporary differences associated with investments in subsidiaries, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:

· When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;

· In respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, are recognised subsequently if new information about facts and circumstances change. The adjustment is either treated as a reduction in goodwill (as long as it does not exceed goodwill) if it was incurred during the measurement period or recognised in profit or loss.

Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition-related costs are expensed as incurred and disclosed separately in the consolidated income statement.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of IAS 39 Financial Instruments: Recognition and Measurement, is measured at fair value with the changes in fair value recognised in the consolidated income statement.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained.

Restructuring reserve

The group restructuring reserve arises on consolidation under the pooling of interest method used for the group restructuring which took place on 1 April 2012. This represents the difference between the share capital of NMC Healthcare LLC, the previous parent company of the Group, and the carrying amount of the investment in that company at the date of the restructure. This reserve is non-distributable.

Deferred consideration

Deferred consideration arises when settlement of all or any part of the cost of a business combination is deferred. It is stated at fair value at the date of acquisition, which is determined by discounting the amount due to present value at that date. Interest is imputed on the fair value of non-interest bearing deferred consideration at the discount rate and expensed within finance costs. At each balance sheet date deferred consideration comprises the remaining deferred consideration valued at acquisition plus unwinding of interest imputed on such amounts from acquisition to the balance sheet date.

Property and equipment

Property and equipment are stated at cost less accumulated depreciation and any impairment in value.

Hospital building	2%-6%
Buildings	6%
Leasehold improvements	5.88% - 20%
Motor vehicles	20%
Furniture, fixtures and fittings	12.5% - 20%
Medical equipment	10% - 25%

The carrying amounts of property and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount, being the higher of their fair value less cost to sell and their value in use.

Capital work in progress is stated at cost and is not depreciated. Lease costs in respect of capital work in progress are capitalised within capital work in progress during the period up until it is commissioned. When commissioned, capital work in progress is transferred to the appropriate property and equipment asset category and depreciated in accordance with the Group's policies. The carrying amounts of capital work in progress are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount.

Expenditure incurred to replace a component of an item of property and equipment that is accounted for separately is capitalised and the carrying amount of the component that is replaced is written off. Other subsequent expenditure is capitalised only when it increases future economic benefits of the related item of property and equipment. All other expenditure is recognised in the consolidated statement of comprehensive income as the expense is incurred.

Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in consolidated statement of comprehensive income in the period in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite. The following useful lives have been determined for acquired intangible assets:

Brands - 5-20 years

Software - 5 years

Database -15 years

Patient relationships - 7 years

Non-compete agreement - 3-4 years

Rental contracts - 7 years

Private contracts - 3 years

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the consolidated income statement in the expense category that is consistent with the function of the intangible assets.

Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the consolidated income statement when the asset is derecognised.

Borrowing costs

Borrowing costs that are directly attributable to the acquisition or construction of an asset are capitalised as part of the cost of the asset until the asset is commissioned for use. Borrowing costs in respect of completed assets or not attributable to assets are expensed in the period in which they are incurred.

Pre-operating expenses

Pre-operating expenses are the expenses incurred prior to start of operations of a new business unit. These are recognised in the consolidated income statement in the year in which they occur.

Inventories

Inventories are valued at the lower of cost and net realisable value after making due allowance for any obsolete or slow moving items. Costs are those expenses incurred in bringing each product to its present location and condition and are determined on a weighted average basis. Net realisable value is based on estimated selling price less any further costs expected to be incurred to disposal.

Accounts receivable

Accounts receivable are stated at original invoice amount less a provision for any uncollectible amounts. Accounts receivable with no stated interest rates are measured at invoiced amounts when the effect of discounting is immaterial. An estimate of doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when there is no possibility of recovery.

Loans receivables

Loans receivables are initially recognised at fair value. After initial measurement, such financial assets are subsequently measured at amortised cost using effective interest rate (EIR) method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the statement of profit or loss. The losses arising from impairment are recognised in the statement of profit or loss.

Cash and cash equivalents

For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash in hand, bank balances and short term deposits with an original maturity of three months or less, net of outstanding bank overdrafts.

Equity

The Group has issued ordinary shares that are classified as equity. The difference between the issue price and the par value of ordinary share capital is allocated to share premium. The transaction costs incurred for the share issue are accounted for as a deduction from share premium, net of any related income tax benefit, to the extent they are incremental costs directly attributable to the share issue that would otherwise have been avoided.

Accounts payable and accruals

Liabilities are recognised for amounts to be paid in the future for goods and services received whether billed by the supplier or not. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Accounts payable are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Provisions

Provisions are recognised when the Group has an obligation (legal or constructive) arising from a past event, and the costs to settle the obligation are both probable and able to be reliably measured. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and risks specific to the obligation. Increases in provisions due to the passage of time are recognised in the consolidated income statement within 'Finance costs'.

Put option-Non controlling interest

In circumstances where the Group has determined that they do not have the present ownership interest in the shares subject to a put option, the Group has concluded that IFRS 10 takes precedence over IAS 32 and accordingly a non-controlling interest (NCI) is fully recognised at the date of acquisition, The Group recognises the full NCI using the proportionate share of net assets method. The financial liability that may become payable under a put option in respect of the NCI is recognised at fair value within liabilities, with the liability being treated as an immediate reduction to equity attributable to the parent (other reserves). The financial liability is subsequently re-measured to fair value at each reporting date and the change in the fair value at each reporting date is recorded in the consolidated income statement.

Term loans

Term loans are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, term loans are subsequently measured at amortised cost using the effective interest method. Interest on term loans is charged as an expense as it accrues, with unpaid amounts included in "accounts payable and accruals".

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the consolidated income statement.

Employees' end of service benefits

The Group operates an un-funded post-employment benefit plan (employees' end of service benefits) for its expatriate employees in the UAE, in accordance with the labour laws of the UAE. The entitlement to these benefits is based upon the employees' final salary and length of service, subject to the completion of a minimum service period. Payment for employees' end of service benefits is made when an employee leaves, resigns or completes his service.

The cost of providing benefits under the post-employment benefit plan is determined using the projected unit credit method. Re-measurements, comprising of actuarial gains and losses, are recognized immediately in the statement of financial position with a corresponding debit or credit to retained earnings through other comprehensive income in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.

Interest is calculated by applying the discount rate to the defined benefit liability. The rate used to discount the end of service benefit obligation is determined by reference to market yields at the balance sheet date on high quality corporate bonds. The current and non-current portions of the provision relating to employees' end of service benefits are separately disclosed in the consolidated statement of financial position.

The Group recognises the following changes in the employees' end of service benefits under 'direct costs' and 'general and administrative expenses' in the consolidated statement of comprehensive income:

● Service costs comprising current service costs

● Interest expense

With respect to its UAE national employees, the Group makes contributions to the relevant UAE Government pension scheme calculated as a percentage of the employees' salaries. The obligations under these schemes are limited to these contributions, which are expensed when due.

Share based payments

Equity-settled share-based payments to employees (including executive directors) are measured at the fair value of the equity instruments at the grant date. The fair value excludes the effect of non-market-based vesting conditions. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 32.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest. At each reporting date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in the consolidated statement of other comprehensive income such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves / other payables.

No expense is recognised for awards that do not ultimately vest, except for equity-settled transactions for which vesting are conditional upon a market or non-vesting condition. These are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share (see note 16).

Foreign currencies

Transactions in foreign currencies are recorded in UAE Dirhams at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date. All differences are taken to the consolidated income

statement.

Translation of foreign operations

On consolidation, the assets and liabilities of foreign operations are translated into US Dollars at the rate of exchange prevailing at the reporting date and their income statements are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions). All resulting currency translation differences are recognised as a separate component of equity.

The Group's principal geographical segment is the United Arab Emirates. The UAE Dirham is pegged against the US Dollar so a single rate of 3.673 per US Dollar is used to translate those assets and liabilities and balances in the consolidated income statement.

When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the consolidated income statement as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

Derivative financial instruments

The Group uses derivative financial instruments such as forward exchange contracts, put options and contingent consideration. Such derivative financial instruments are initially recognised at fair value on the date on which a contract is entered into and are subsequently remeasured at fair value. Derivatives with positive market values (unrealised gains) are recognised as assets and derivatives with negative market values (unrealised losses) are recognised as liabilities in the consolidated statement of financial position.

Any gains or losses arising from changes in fair value on derivatives during the year are taken directly to profit or loss.

Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

· In the principal market for the asset or liability, or

· In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible to by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

· Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities

· Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

· Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

Impairment of financial assets

An assessment is made at each consolidated statement of financial position date to determine whether there is objective evidence that a specific financial asset may be impaired. If such evidence exists, any impairment loss is recognised in the consolidated income statement. Impairment is determined as the difference between carrying value and the present value of future cash flows discounted at the current market rate of return for a similar financial asset.

Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date, whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement. Operating leases are recognised as an operating expense in the consolidated income statement on a straight line basis. Lease incentives are recorded as a reduction of rental expense over the lease term, on a straight-line basis.

Joint venture

A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture.

Joint ventures are accounted for using the equity method (equity accounted investees) and are initially recognized at cost. The Group's investment includes goodwill identified on acquisition, net of any accumulated impairment losses. The consolidated financial statements include the Group's share of the total comprehensive income and equity movements of equity accounted investees, from the date that joint control commences until the date that joint control ceases. When the Group's share of losses exceeds its interest in an equity accounted investee, the Group's carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of an investee.

4 ACCOUNTING STANDARDS AND INTERPRETATIONS ISSUED BUT NOT EFFECTIVE

The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group's financial statements are listed below. The Group intends to adopt these standards, if applicable, when they become effective.

IFRS 15 Revenue from Contracts with Customers

IFRS 15 was issued in May 2014 and establishes a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

The new revenue standard will supersede all current revenue recognition requirements under IFRS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after 1 January 2018. Early adoption is permitted. The Group plans to adopt the new standard on the required effective date using the Modified retrospective method. During 2016, the Group performed a preliminary assessment of IFRS 15, which is subject to changes arising from a more detailed ongoing analysis. Furthermore, the Group is considering the clarifications issued by the IASB in April 2016 and will monitor any further developments.

The Group is a leading Healthcare service provider in UAE, Europe and South America and also a leading supplier of products and consumables across several key market segments in UAE, through its distribution division.

i) Sale of goods

In distribution business, the Group doesn't expect to have any impact on the Group's profit or loss on adoption of IFRS 15, as the Group recognizes the revenue at a point in time when control of the asset is transferred to the customer, generally on delivery of the goods. Sale of goods has only one performance obligation.

In Healthcare business, the Group is considering the following in order to assess the potential impact of IFRS 15, if any:

ii) Various health packages:

All Healthcare packages except some gynecology packages referred below have very short length of service. Services are rendered within 1 to 7 days and therefore revenues recognized at a point in time services are rendered. Management is therefore not expecting IFRS 15 implementation to have an impact on the revenue recognized during a period.

Two healthcare gynecology packages i) Basic antenatal and ii) IVF business consist of several stages or cycles and hence services are rendered over a longer period of time which varies from 1 month to 9 month. Management is currently assessing the contractual conditions and its implication regarding the period when performance obligation is met. Revenue from basic antenatal and IVF business in 2016 was less than 3% of healthcare revenue.

The Group continues to assess individual contracts to determine the final impact, if any of appropriate systems, internal controls, policies and procedures necessary to collect and disclose the required information

iii) Presentation and disclosure requirements

IFRS 15 provides presentation and disclosure requirements, which are more detailed than under current IFRS. The presentation requirements represent a significant change from current practice and significantly increases the volume of disclosures required in Group's financial statements.

IFRS 16 Leases

IFRS 16 was issued in January 2016, and specifies how an IFRS reporter will recognise, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16's approach to lessor accounting substantially unchanged from its predecessor, IAS 17.

IFRS 16 applies to annual reporting periods beginning on or after 1 January 2019. The Group is currently assessing the impact of IFRS 16 and plans to adopt the new standard on the required effective date.

In addition, the standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group's financial statements that are not expected to have any material impact on the Group are as follows:

· IFRS 9 Financial Instruments

· Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

· IAS 7 Disclosure Initiative - Amendments to IAS 7

· IAS 12 Recognition of Deferred Tax Assets for Unrealised Losses- Amendments to IAS 12

· IFRS 2 Classification and Measurement of Share-based Payment Transactions - Amendments to IFRS 2

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	Fakih IVF	CFC	HCMR	Nadia	Cooper	Lifewise	Total
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Assets
Intangible assets	25,324	-	149	-	1	-	25,474
Property and equipment	4,309	99	2,404	316	343	14	7,485
Inventories	613	-	356	-	-	-	969
Accounts receivable	8,579	811	2,553	1,102	181	38	13,264
Other receivables	41,436	101	109	101	591	8	42,346
Deferred tax asset	-	48	-	-	-	-	48
Cash and bank balances	3,395	163	346	134	835	-	4,873
	83,656	1,222	5,917	1,653	1,951	60	94,459

Liabilities
Borrowings	-	-	855	-	-	-	855
Accounts payable	4,788	340	2,032	297	1,137	38	8,632
Other payable	43,001	-	760	23	103	17	43,904
Tax payable	-	113	136	-	-	-	249
	47,789	453	3,783	320	1,240	55	53,640

Total identified net assets at fair value	35,867	769	2,134	1,333	711	5	40,819
Non -controlling interest	(17,575)	(77)	(872)	-	-	-	(18,524)
Goodwill arising on acquisition	186,616	14,404	8,574	13,787	10,258	267	233,906
Purchase consideration	204,908	15,096	9,836	15,120	10,969	272	256,201

Purchase consideration:
Payable in cash	190,446	13,582	9,836	12,251	9,502	272	235,889
Contingent consideration	8,128	1,514	-	-	-	-	9,642
Deferred consideration	7,051	-	-	2,869	1,467	-	11,387
Fair value measurement	(717)	-	-	-	-	-	(717)
Total consideration	204,908	15,096	9,836	15,120	10,969	272	256,201

Analysis of cash flows on acquisitions is as follows:

Particulars	Fakih IVF	CFC	HCMR	Nadia	Cooper	Lifewise	Total
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Cash paid	(190,446)	(13,582)	(9,836)	(12,251)	(9,502)	(272)	(235,889)
Deferred consideration paid	(3,410)	-	-	(435)	(1,467)	-	(5,312)
Net cash acquired with the subsidiaries	3,395	163	346	134	835	-	4,873
Transaction costs	-	(744)	(259)	(106)	(136)	(14)	(1,259)
Net cash flow on acquisition	(190,461)	(14,163)	(9,749)	(12,658)	(10,270)	(286)	(237,587)

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

	2016 US$ '000	2015 US$ '000
Transaction costs for Fakih IVF	-	750
Transaction costs for the acquired entities	1,259	3,304
Transaction costs for acquisitions in progress	3,344	77
	-----------------------	-----------------------
	4,603	4,131
	=========	=========

The fair value assessment of identifiable net assets is final except for CFC and HCMR.

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

Other financial information with respect to acquired entities is as follows:

Particulars	Fakih IVF	CFC	HCMR	Nadia	Cooper	Lifewise	Total
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Revenue from the date of acquisition	65,171	3,133	6,058	7,211	3,441	38	85,052
Profit after tax from the date of acquisition	35,293	1,284	376	3,036	430	(87)	40,332
Revenue from 1 January to 31 December 2016 (unaudited)	70,600	5,589	15,575	7,211	4,268	174	103,417
Profit after tax from 1 January to 31 December 2016 (unaudited)	38,101	1,506	794	3,036	626	(125)	43,938
Trade receivables gross value as of acquisition date	8,579	951	2,657	1,102	181	38	13,508
Trade receivables fair value as of acquisition date	8,579	811	2,553	1,102	181	38	13,264

Acquisition of Fakih IVF

On 24 November 2015, the Group agreed, subject to regulatory approval and legal formalities, to acquire a 51% controlling stake in the voting shares of Fakih IVF, an unlisted group registered in Cayman Islands and operationally headquartered in Abu Dhabi, UAE, which is the Middle East's leader in the provision of IVF and fertility services. All controlling rights (i.e. voting, appointment and removal of directors, dividend rights) vest with NMC. These rights cannot be relinquished.

The Group acquired the control of Fakih IVF on 8 February 2016, date on which regulatory approvals and legal formalities were completed. The consolidated financial statements include the results of Fakih IVF for 11 month period from the acquisition date.

The goodwill recognised is attributable to the expected synergies and other benefits from combining the assets and activities of Fakih IVF with those of the Group. Goodwill is allocated to the healthcare segment. None of the recognised goodwill is expected to be deductible for income tax purposes as there is no corporation tax in the UAE. Synergistic benefits will arise in the following ways:

· Fakih is recognized as a leading Middle East market leader for IVF treatment. NMC plan to set up an IVF clinic in Bright Point Hospital and NMC Royal, Abu Dhabi will benefit directly from set-up, training and efficiency cost savings as a result of utilising Fakih-IVF processes and procedures.

· NMC patients in UAE can be referred to Fakih clinics in UAE for IVF related treatments.

· The successful and swift launch of IVF clinics in the UAE under the NMC umbrella, and using proven Fakih technologies, is expected to attract additional patients from within the UAE and the wider GCC area. There are only a small number of IVF clinics in the UAE at present. This is a key growth area in the healthcare sector where NMC can use its substantial brand strength, together with Fakih own specialised brand, to attract new customers that may previously have chosen alternative clinic.

At the date of the acquisition, the fair value assessment of identifiable net assets included brands amounting to US$25,214,000. No deferred tax liability has been recognised as there is no corporation tax in UAE.

Deferred consideration is payable in three unequal instalments in a period of two years with last instalment due in 2017.

Purchase consideration includes contingent consideration of US$8,128,000. The full value of the contingent consideration is US$9,030,000 and the present value as at 31 December 2016 is US$8,128,000. The contingent consideration relates to amounts payable in the event that licenses to operate in certain other GCC countries are obtained. As of 31 December 2016, contingent consideration remains payable and is included in other payables. Contingent consideration is expected to be payable by end of 2017.

The Group has incurred a contractual obligation to deliver cash or another financial asset by issuing the Post-dated cheques (those were issued by a company prior to our acquisition and not connected to the unit acquired) and have met the definition of financial liability, present value of such Post-dated cheques of US $38,029,000 was recorded as liability as of acquisition date. Further, the Group has a contractual right to be compensated from the Seller by way of cash or other financial asset in case it suffers any loss on account of those Post-dated cheques as the Group is indemnified by the Seller for any loss that may arise on account of encashment of such issued Post-dated cheques before their replacement. Accordingly, a contra financial asset has been recorded of the above same amount as of acquisition date.

As of 31 December 2016, present value of Post-dated cheques issued and corresponding receivable is US$36,929,000 and have been recorded under non-current other payables (note 30) and other non-current financial assets.

Acquisition of Copenhagen Fertility Center ("CFC")`

On 10 June 2016, the Group acquired 90% of the voting shares of CFC, an unlisted company based in Denmark and specialising in research and medical services in the fields of gynaecology, obstetrics and human reproduction. The consolidated financial statements include the results of CFC for 7 month period from the acquisition date.

The Group entered into separate shareholder agreement dated 10 June 2016 with the sellers relating to a put option on the minority 10% shareholdings that remains with the previous owner's post-acquisition. The Group does not have 'present ownership' of this 10% minority shareholding due to the terms of the option agreements and will continue to account for the acquisition of CFC on the basis of 90% equity stake, with full recognition of the 10% non-controlling interest. The put options are exercisable from the fifth anniversary of the shareholder agreement. On exercise of the put options, cash will be paid. The value of the put option is calculated based on the EBITDA multiple. A redemption liability for the value of the options at the acquisition date has been created amounting to US$1,585,000 (being the present value of the redemption liability at the acquisition date), with an equal amount being treated as a reduction in equity. As at 31 December 2016, the present value of the redemption liability is US$1,541,000 (Note 37).

The Group acquired CFC to enable Clinica Eugin to reinforce its presence in Europe and strengthen its brand and positioning at the forefront of its market. All controlling rights (i.e. voting, appointment and removal of directors, dividend rights) vest with NMC. These rights cannot be relinquished.

Goodwill represents future business potential and profit growth of CFC and it comprises all intangibles that cannot be individually recognised such as the assembled workforce, customer service, future client relationships and presence in the geographical market. Goodwill is allocated to the healthcare segment. None of the recognised goodwill is expected to be deductible for income tax purposes.

Acquisition of Huntington Centro de Medicina Reproductiva S/A ("HCMR")

On 12 September 2016, the Group acquired 60% of the voting shares of HCMR, an unlisted company based in Sao Paulo, Brazil and specialising in research and medical services in the fields of gynaecology, obstetrics and human reproduction. The consolidated financial statements include the results of HCMR for 4 month period from the acquisition date.

The Group entered into separate shareholder agreement dated 12 September 2016 with the sellers relating to put option on the minority 40% shareholdings that remains with the previous owners post-acquisition. The Group does not have 'present ownership' of this 40% minority shareholding due to the terms of the option agreements and will continue to account for the acquisition of HCMR on the basis of 60% equity stake, with full recognition of the 40% non-controlling interest. The put options are exercisable at any time between the lock up period and 36 months thereafter (Liquidity period). Lock Up period is 3 years. On exercise of the put options, cash will be paid. The value of the put option is calculated based on the EBITDA multiple. A redemption liability for the value of the options at the acquisition date has been created amounting to US$11,216,000 (being the present value of the redemption liability at the acquisition date), with an equal amount being treated as a reduction in equity. As at 31 December 2016, the present value of the redemption liability is US$10,707,000 (Note 37).

The Group acquired HCMR to enable Clinica Eugin to reinforce its presence in South America and strengthen its brand and positioning at the forefront of its market. All controlling rights (i.e. voting, appointment and removal of directors, dividend rights) vest with NMC. These rights cannot be relinquished.

Goodwill represents future business potential and profit growth of HCMR and it comprises all intangibles that cannot be individually recognised such as the assembled workforce, customer service, future client relationships and presence in the geographical market. Goodwill is allocated to the healthcare segment. None of the recognised goodwill is expected to be deductible for income tax purposes.

Purchase price allocation is not yet finalized. Goodwill has been recognized based on currently available information and is subject to further adjustments as and if new information comes to managements awareness.

Acquisition of Nadia Medical Centre LLC ("Nadia")

The Group acquired 100% of Nadia because this acquisition extends gynaecology and paediatric service offerings to complement NMC's growing IVF/women's health franchise including Fakih, Clinica Eugin and Bright Point Royal. This medical centre is expected to contribute to the patient cross-referral capabilities of NMC's nation-wide and multi-specialty hub-and-spoke healthcare services network. All controlling rights (i.e. voting, appointment and removal of directors, dividend rights) vest with NMC. These rights cannot be relinquished.

The Group acquired the control of Nadia on 7 January 2016, date on which regulatory approvals and legal formalities were completed. The consolidated financial statements include the results of Nadia for 12 month period from the acquisition date.

The goodwill recognised is attributable to the expected synergies and other benefits from combining the assets and activities of Nadia with those of the Group. Goodwill is allocated to the healthcare segment. None of the recognised goodwill is expected to be deductible for income tax purposes as there is no corporation tax in the UAE. Synergistic benefits will arise in the following ways:

· The ability to cross refer patients from Nadia to the nearby NMC Specialty Hospital and Bright Point Royal in Abu Dhabi.

· Nadia can utilise In Patient and Out Patient facilities at Bright point and NMC Royal for deliveries and other procedures.

· Synergies will arise from Nadia focus on gynaecology and paediatrics and NMC's growth in IVF & women health segments.

Deferred consideration is payable in three unequal instalments in a period of three years with last instalment due in 2018.

Acquisition of Cooper Health Clinic and Cooper Dermatology & Dental Clinic ("Cooper")

On 30 December 2015, the Group agreed to acquire 100% of the business of Cooper because this business extends the specialisation in the provision of obstetrics, gynaecology, paediatric and dental services in Dubai region. All controlling rights (i.e. voting, appointment and removal of directors, dividend rights) vest with NMC. These rights cannot be relinquished.

The Group acquired the control of Cooper on 8 March 2016, date on which regulatory approvals and legal formalities were completed. The consolidated financial statements include the results of Cooper for 10 month period from the acquisition date.

The goodwill recognised is attributable to the expected synergies and other benefits from combining the assets and activities of Cooper with those of the Group. Goodwill is allocated to the healthcare segment. None of the recognised goodwill is expected to be deductible for income tax purposes as there is no corporation tax in the UAE. Synergistic benefits will arise in the following ways:

· The acquisition of Cooper extends the healthcare segment's market position within Dubai and the UAE as a whole.

· The ability to cross refer patients from Cooper to the nearby NMC Specialty Hospital in

Dubai

Full and final deferred consideration payable was paid in August 2016.

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

Particulars	Luarmia SL	CIRH	Biogenesi	TADS	Americare	Dr Sunny	ProVita	Total
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Assets
Intangible assets	35,657	378	7,373	-	2,623	6,847	21,935	74,813
Property and equipment	1,932	73	645	30	1,158	1,219	8,635	13,692
Deferred tax asset	842	-	1	-	-	-	-	843
Inventories	3,521	-	-	362	85	810	662	5,440
Accounts receivable	678	174	-	851	2,724	5,372	9,881	19,680
Other receivables	3,821	41	-	172	350	2,880	2,386	9,650
Cash and bank balances	9,610	1,976	9	2,001	1,199	3,828	9,825	28,448
	56,061	2,642	8,028	3,416	8,139	20,956	53,324	152,566

Liabilities
Current tax	-	35	-	-	-	-	-	35
Borrowings	25,006	-	-	-	39	1,566	54	26,665
Deferred tax	8,804	92	2,058	-	-	-	-	10,954
Accounts payable	2,887	382	2	922	1,016	3,865	3,066	12,140
Other payable	5,100	1,691	111	1,126	1,884	1,942	1,869	13,723
	41,797	2,200	2,171	2,048	2,939	7,373	4,989	63,517

Total identified net assets at fair value	14,264	442	5,857	1,368	5,200	13,583	48,335	89,049
Non-controlling interest	(1,940)	-	(2,343)	(342)	(520)	-	-	(5,145)
Goodwill arising on acquisition	117,059	13,622	8,329	4,879	26,763	53,838	120,582	345,072
Purchase consideration	129,383	14,064	11,843	5,905	31,443	67,421	168,917	428,976

Purchase consideration:
Payable in cash	127,107	11,393	5,522	5,905	31,443	57,973	160,592	399,935
Contingent consideration	2,276	2,671	6,321	-	-	9,448	8,325	29,041
Total consideration	129,383	14,064	11,843	5,905	31,443	67,421	168,917	428,976

Purchase price allocation for Centro de Infertilidad y Reproduccion Humana SLU (CIRH), Centro de Medicina della Riproduzione (Biogenesi), Trans Arabia Drug Store LLC (TADS), Dr Sunny Healthcare (Dr. Sunny), ProVita International Medical Centre LLC (ProVita) were provisional as of 31 December 2015 and has been completed during the year. Purchase price allocation of all of these acquisitions remain same except for Dr. Sunny for which fair value of contingent consideration has been updated by an amount of US$2,126,000 and accordingly purchase consideration and goodwill are reduced by same amount. On the grounds of materiality considerations the adjustment have been recorded in the current period.

Analysis of cash flows for acquisitions done in previous year disclosed in 2015 consolidated financial statements was as follows:

Particulars	Luarmia SL	CIRH	Biogenesi	TADS	Americare	Dr Sunny	ProVita	Total
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Cash paid	(127,107)	(11,393)	(5,522)	(5,905)	(31,443)	(57,973)	(160,592)	(399,935)
Contingent consideration paid	(2,276)	-	-	-	-	(1,742)	-	(4,018)
Net cash acquired with the subsidiaries	9,610	1,976	9	2,001	1,199	3,828	9,825	28,448
Transaction costs	(1,745)	(87)	(96)	(81)	(313)	(374)	(608)	(3,304)
Net cash flow on acquisition	(121,518)	(9,504)	(5,609)	(3,985)	(30,557)	(56,261)	(151,375)	(378,809)

Other financial information with respect to entities acquired in previous year disclosed in 2015 consolidated financial statements was as follows:

Particulars	Luarmia SL	CIRH	Biogenesi	TADS	Americare	Dr Sunny	ProVita	Total
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Revenue from the date of acquisition	29,668	6,645	2,858	5,243	11,435	12,158	19,701	87,708
Profit after tax from the date of acquisition	6,708	1,660	819	2,485	2,126	1,192	5,033	20,023
Revenue from 1 January to 31 December 2015	36,063	8,804	5,990	5,841	16,601	36,357	54,007	163,663
Profit after tax from 1 January to 31 December 2015	6,010	2,631	2,312	2,656	3,143	2,588	9,298	28,638
Trade receivable s gross value as of acquisition date	858	174	-	851	2,724	6,510	12,451	23,568
Trade receivables fair value as of acquisition date	678	174	-	851	2,724	5,372	9,881	19,680

Advances paid for acquisitions

As of the reporting date, certain acquisitions are in progress for which the Group has paid an advance of US$1,614,000 (2015: US$ nil)

6 MATERIAL PARTLY-OWNED SUBSIDARIES

The financial information in respect of subsidiaries that have material non-controlling interests is provided below:

Proportion of equity interest held by NMC:

	Percentage of holdings
	Country of In corporation	31 December 2016	31 December 2015
Indirect subsidiaries:
Luarmia SL	Spain	88.4%*	86.4%*
Americare LLC	UAE	90%	90%
Fakih	UAE	51%	-

*Shareholding disclosed is for Luarmia SL only. Within Luarmia SL there are certain other subsidiaries. The financial information provided below is for Luarmia SL and its subsidiaries.

Accumulated balances of material non-controlling interest:

	2016	2015
	US$'000	US$'000

Luarmia SL	5,836	4,298
Americare LLC	1,062	704
Fakih IVF LLC	34,160	-

Profit allocated to material non-controlling interest:

	2016	2015
	US$'000	US$'000

Luarmia SL	1,251	15
Americare LLC	357	184
Fakih IVF LLC	16,586	-

The summarised financial information of these subsidiaries is provided below. This information is stated before inter-company eliminations.

Summarised statement of profit or loss for 2016:	Luarmia	Fakih	Americare
Summarised statement of profit or loss for 2016:	US$'000	US$'000	US$'000
Revenue	66,078	65,171	17,044
Direct cost	(23,597)	(19,469)	(10,377)
Administrative and other expenses	(26,812)	(8,831)	(2,281)
Depreciation and amortisation	(6,000)	(3,022)	(813)
Profit before tax	9,669	33,849	3,573
Income tax	(174)	-	-
Profit for the year	9,495	33,849	3,573
Other comprehensive loss	(3,955)	-	-
Total comprehensive income	5,540	33,849	3,573
Attributable to non-controlling interests	1,251	16,586	357

Summarised statement of profit or loss for 2015:	Luarmia	Americare
Summarised statement of profit or loss for 2015:	US$'000	US$'000
Revenue	39,020	11,435
Direct cost	(16,205)	(6,485)
Administrative and other expenses	(14,116)	(2,538)
Depreciation and amortisation	(3,823)	(570)
Profit before tax	4,876	1,842
Income tax	403	-
Profit for the year	5,279	1,842
Other comprehensive loss	(5,342)	-
Total comprehensive (loss) income	(63)	1,842
Attributable to non-controlling interests	15	184

Summarised statement of financial position as at 31 December 2016	Luarmia	Fakih	Americare
	US$'000	US$'000	US$'000
Inventories and cash and bank balance (current)	17,449	13,861	363
Account receivable and prepayment (current)	8,934	31,615	9,298
Property, plant and equipment and other non-current assets (non-current)	135,570	68,454	3,236
Accounts payable and accruals (current)	(17,682)	(5,113)	(1,843)
Interest-bearing loans (current)	(10,704)	-	-
Interest-bearing loans and deferred tax liabilities (non- current)	(36,592)	-	-
Other payable (non- current)	(20,450)	(39,102)	(437)
Total Equity	76,525	69,715	10,617
Attributable to:
Equity holders of parent	70,689	35,555	9,555
Non-controlling interest	5,836	34,160	1,062

Summarised statement of financial position as at 31 December 2015	Luarmia	Americare
	US$'000	US$'000
Inventories & cash and bank balance (current)	17,831	1,180
Accounts receivable and prepayments (current)	5,163	4,194
Property and equipment and other non-current assets (non-current)	108,265	3,333
Accounts payable and accruals (current)	(9,026)	(1,350)
Interest-bearing loans (current)	(9,708)	-
Interest-bearing loans and deferred tax liabilities (non- current)	(35,524)	-
Other payable (non- current)	(12,801)	(313)
Total Equity	64,200	7,044
Attributable to:
Equity holders of parent	59,902	6,339
Non-controlling interest	4,298	705

Summarised cash flow information for period ended 31 December 2016	Luarmia	Fakih	Americare
	US$'000	US$'000	US$'000
Operating	15,593	15,003	(98)
Investing	(26,607)	(4,914)	(716)
Financing	10,398	-	-
Net Increase/(decrease) in cash and cash equivalents	(616)	10,089	(814)

Summarised cash flow information for period ended 31 December 2015	Luarmia	Americare
	US$'000	US$'000
Operating	5,324	1,611
Investing	(18,440)	(121)
Financing	16,312	(1,595)
Net Increase/(decrease) in cash and cash equivalents	3,196	(105)

7 SEGMENT INFORMATION

For management purposes, the Group is organised into business units based on their products and services and has two reportable segments as follows:

· The healthcare segment is engaged in providing professional medical services, comprising diagnostic services, in and outpatient clinics, provision of all types of research and medical services in the field of gynaecology, obstetrics and human reproduction and retailing of pharmaceutical goods. It also includes the provision of management services in respect of a hospital.

· The distribution & services segment is engaged in wholesale trading of pharmaceutical goods, medical equipment, cosmetics and food.

No operating segments have been aggregated to form the above reportable operating segments.

The new acquired companies, Fakih IVF, Copenhagen Fertility Center, Huntington Centro de Medicina Reproductive, Nadia Medical Centre, Cooper Health and Lifewise Home Healthcare LLC comes under the healthcare segment.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on EBITDA and profit or loss. These are measured consistently with EBITDA and profit or loss excluding finance income and group administrative expenses, unallocated depreciation and unallocated other income, in the consolidated financial statements.

Finance costs and finance income relating to UAE subsidiaries are not allocated to individual segments as they are managed on a group basis. In addition Group overheads are also not allocated to individual segments as these are managed on a Group basis.

Transfer prices between operating segments are on an arm's length basis in a manner similar to transactions with third parties.

The following tables present revenue and profit and certain asset and liability information regarding the Group's business segments for the years ended 31 December 2016 and 2015.

	Healthcare	Distribution and services	Total segments	Adjustments and eliminations	Consolidated
	US$'000	US$'000	US$'000	US$'000	US$'000
Year ended 31 December 2016
Revenue
External customers	816,314	404,521	1,220,835	-	1,220,835
Inter segment	7,001	27,406	34,407	(34,407)	-
	-----------------------	-----------------------	-----------------------	-----------------------	-----------------------
Total	823,315	431,927	1,255,242	(34,407)	1,220,835
	==========	==========	==========	==========	==========
(Expenses) / Income
Depreciation and
Amortization	(43,320)	(3,248)	(46,568)	(9,431)	(55,999)

Finance costs	(5,834)	(9)	(5,843)	(35,841)	(41,684)

Segment EBITDA	241,115	47,113	288,228	(42,147)	246,081
	==========	==========	==========	==========	==========
Segment profit	192,932	43,565	236,497	(85,095)	151,402
	==========	==========	==========	==========	==========
Segment assets	1,454,767	265,194	1,719,961	597,032	2,316,993
	==========	==========	==========	==========	==========
Segment liabilities	256,613	72,405	329,018	1,039,104	1,368,122
	==========	==========	==========	==========	==========
Other disclosures
Capital expenditure	61,483	4,171	65,654	1,751	67,405
	==========	==========	==========	==========	==========

Year ended 31 December 2015
Revenue
External customers	511,029	369,841	880,870	-	880,870
Inter segment	6,087	23,575	29,662	(29,662)	-
	-----------------------	-----------------------	-----------------------	-----------------------	-----------------------
Total	517,116	393,416	910,532	(29,662)	880,870
	==========	==========	==========	==========	==========
(Expenses) / Income
Depreciation and
amortization	(27,887)	(2,705)	(30,592)	(4,734)	(35,326)

Finance costs	(1,154)	(4)	(1,158)	(22,687)	(23,845)

Segment EBITDA	136,976	43,498	180,474	(30,128)	150,346
	==========	==========	==========	==========	==========
Segment profit	108,037	40,708	148,745	(62,985)	85,760
	==========	==========	==========	==========	==========
Segment assets	1,029,305	257,484	1,286,789	167,091	1,453,880
	==========	==========	==========	==========	==========
Segment liabilities	160,677	65,748	226,425	727,790	954,215
	==========	==========	==========	==========	==========
Other disclosures
Capital expenditure	78,271	2,085	80,356	1,907	82,263
	==========	==========	==========	==========	==========

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 overdraft and other short term borrowings and certain other assets and liabilities are 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

	2016	2015
	US$'000	US$'000

Segment EBITDA	288,228	180,474
Unallocated group administrative expenses	(42,202)	(31,153)
Unallocated other income	55	1,025
Unallocated finance income	9,157	925
Unallocated unamortised finance fees written off	-	(2,612)
Finance costs	(41,684)	(23,845)
Depreciation	(45,010)	(29,851)
Amortisation	(10,989)	(5,475)
Impairment of assets	(1,376)	-
Transaction costs related to business combination	(4,603)	(4,131)
Tax	(174)	403
	-----------------------	-----------------------
Group Profit	151,402	85,760
	=========	=========

Reconciliation of Segment profit to Group profit

	2016	2015
	US$'000	US$'000

Segment profit	236,497	148,745
Unallocated finance income	6,699	1,043
Unallocated finance costs	(35,841)	(22,687)
Unallocated group administrative expenses	(42,202)	(31,153)
Unallocated unamortised finance fees written off	-	(2,612)
Unallocated depreciation	(1,034)	(624)
Unallocated other income	55	1,025
Unallocated amortisation cost	(8,398)	(4,110)
Unallocated impairment of property and equipment	(1,030)	-
Unallocated transaction cost	(3,344)	(3,867)
	-----------------------	-----------------------
Group Profit	151,402	85,760
	=========	=========

Reconciliation of Group assets

	2016	2015
	US$'000	US$'000

Segment assets	1,719,961	1,286,789
Unallocated property and equipment	10,710	10,290
Unallocated inventory	22	22
Unallocated accounts receivable and prepayments	8,656	8,913
Unallocated bank balances and cash	436,949	86,321
Unallocated bank deposits	137,869	58,858
Unallocated intangible assets	2,826	2,687
	-----------------------	-----------------------
Group assets	2,316,993	1,453,880
	=========	=========

Reconciliation of Group liabilities
	2016	2015
	US$'000	US$'000

Segment liabilities	329,018	226,425
Unallocated term loans	782,624	539,875
Unallocated employees' end of service benefits	2,608	1,854
Unallocated accounts payable and accruals	8,281	5,837
Unallocated bank overdraft and other short term borrowings	219,851	154,962
Unallocated amounts due to related parties	488	178
Unallocated option redemption liability	25,252	25,084
	-----------------------	-----------------------
Group liabilities	1,368,122	954,215
	=========	=========

Other information

The following table provides information relating to Group's major customers who contribute more than 10% towards the Group's revenues:

	Healthcare	Distribution and services	Total
	US$'000	US$'000	US$'000
Year ended 31 December 2016
Customer 1	324,285	-	324,285
	-----------------------	-----------------------	-----------------------
	324,285	-	324,285
	==========	==========	==========
Year ended 31 December 2015
Customer 1	154,772	-	154,772
Customer 2	47,083	-	47,083
	-----------------------	-----------------------	-----------------------
	201,855	-	201,855
	==========	==========	==========

Geographical information

	2016 US$'000	2015 US$'000
Revenue from external customers
United Arab Emirates	1,154,757	841,851
Spain	55,361	34,994
Others	10,717	4,025
	-----------------------	-----------------------
Total revenue as per consolidated income statement	1,220,835	880,870
	==========	==========

Non-current assets
United Arab Emirates	974,522	671,956
Spain	193,706	176,824
Others	859	844
	-----------------------	-----------------------
Total non-current assets	1,169,087	849,624
	==========	==========

Deferred tax assets
United Arab Emirates	-	-
Spain	2,122	1,302
Others	13	14
	-----------------------	-----------------------
Total Deferred tax assets	2,135	1,316
	==========	==========

Analysis of revenue by category:
	2016	2015
	US$'000	US$'000

Revenue from services:
Healthcare - clinic	720,051	410,408
Healthcare - management fees	10,135	7,280
	-----------------------	-----------------------
	730,186	417,688
Sale of goods:	-----------------------	-----------------------
Distribution	404,521	369,841
Healthcare	86,128	93,341
	-----------------------	-----------------------
	490,649	463,182
	-----------------------	-----------------------
Total	1,220,835	880,870
	=========	=========

8 EXPENSES BY NATURE

	2016	2015
	US$'000	US$'000

Cost of inventories recognised as an expense	457,276	389,702
Salary expenses	371,075	239,139
Rent expenses	65,549	44,859
Sales promotion expenses	50,695	43,882
Repair and maintenance expenses	13,408	9,891
Electricity expenses	6,652	4,927
Legal & licence fees	8,134	3,561
Motor vehicle expenses	3,773	3,292
Insurance expenses	8,338	2,688
Printing and stationery	3,169	2,560
Communication expenses	3,724	2,393
IT expenses	1,656	1,193
Others	27,771	19,086
	-----------------------	-----------------------
	1,021,220	767,173
	=========	=========
Allocated to :
Direct costs	753,325	575,926
General and administrative expenses	267,895	191,247
	-----------------------	-----------------------
	1,021,220	767,173
	=========	=========

The classifications of the remaining expenses by nature recognised in the consolidated income statement are:

	2016	2015
	US$'000	US$'000

Transaction costs in respect of business combinations	4,603	4,131
Depreciation	45,010	29,851
Amortisation	10,989	5,475
Finance costs	41,684	23,845
Impairment of property and equipment	1,376	-
Unamortised finance fees written off	-	2,612
	-----------------------	----------------------
	103,662	65,914
	=========	=========

9 OTHER INCOME

Other income includes US$43,644,000 (2015: US$35,256,000) relating to reimbursement of advertisement and promotional expenses incurred by the Group. Revenue is recognised following the formal acceptance of the Group's reimbursement claims by suppliers and is measured at the confirmed amount receivable.

10 FINANCE COSTS

	2016	2015
	US$'000	US$'000

Bank interest	31,648	18,106
Bank charges	3,594	2,489
Financial instruments fair value adjustments	4,282	1,793
Amortisation and re-measurement of
option redemption liability (note 37)	2,160	1,457
	----------------------	----------------------
	41,684	23,845
	=========	=========

11 FINANCE INCOME

	2016	2015
	US$'000	US$'000

Bank and other interest income	1,418	925
Financial instruments fair value adjustments	7,739	-
	-----------------------	-----------------------
	9,157	925
	==========	==========

12 PROFIT FOR THE YEAR BEFORE TAX

The profit for the year before tax is stated after charging:

	2016	2015
	US$'000	US$'000

Cost of inventories recognised as an expense	457,276	389,702
	==========	==========
Cost of inventories written off and provided (note 20)	1,869	1,678
	==========	==========
Minimum lease payments recognised as operating lease expense	65,549	44,859
	==========	==========
Depreciation (note 17)	45,010	29,851
	==========	==========
Amortisation (note 18)	10,989	5,475
	==========	==========
Net Impairment of accounts receivable (note 21)	2,957	1,740
	==========	==========
Employees' end of service benefits (note 28)	7,246	4,869
	==========	==========
Net foreign exchange loss / (gain)	490	(593)
	==========	==========
Loss on disposal of property and equipment	31	185
	==========	==========
Share based payments expense (note 32)	2,640	1,177
	==========	==========

13 AUDITOR'S REMUNERATION

The Group paid the following amounts to its auditor and its associates in respect of the audit of the financial statements and for other services provided to the Group.

	2016	2015
	US$'000	US$'000
Fees payable to the Company's auditor for the audit of the Company's annual accounts	984	1,300
Fees payable to the Company's auditor and its associates for other services:
- the audit of the company's subsidiaries pursuant to legislation	727	453
- audit related assurance services	198	233
- other assurance services	11	-
- Tax compliances services	-	12
- Tax advisory services	-	-
- non audit services	1,960	115
	-----------------------	-----------------------
	3,880	2,113
	==========	==========

Included in the fees payable to the Company's auditor for the audit of the Company's annual accounts is US$ nil (2015: US$12,000) which was under-accrued in respect of the prior year audit of the Company's annual accounts.

The fees paid to the auditor includes US$61,000 (2015: US$115,000) in respect of out of pocket expenses. There were no benefits in kind provided to the auditor or its associates in either 2016 or 2015.

Non-audit services relate to a Class 1 transaction (significant acquisition) combined with an equity placement and are non-recurring in nature. This includes Reporting Accountants Report on the Historical financial information of the acquired company as well as working capital and Pro-forma financial information report, issuing of Comfort and Consent Letters and the Bring down Public Report.

14 STAFF COSTS AND DIRECTORS' EMOLUMENTS

(a) Staff costs

	2016	2015
	US$'000	US$'000

Wages and salaries	334,976	217,439
Employees' end of service benefits (note 28)	7,246	4,869
Share based payments expense (note 32)	2,640	1,177
Others	26,213	15,654
	--------------------	--------------------
	371,075	239,139
	========	========

Staff costs include amounts paid to directors, disclosed in part (b) below. The average number of monthly employees during the year was made up as follows:

	2016	2015

Healthcare	7,392	5,495
Distribution & services	3,166	2,456
Administration	263	230
	-----------------------	-----------------------
	10,821	8,181
	==========	==========

(b) Directors' remuneration

	2016	2015
	US$'000	US$'000

Directors' remuneration	7,166	4,623
	==========	==========

Some of the executive directors are entitled to end of service benefits and to participate in share option plans as disclosed in note 32. Further information in respect of this compensation paid to directors is disclosed in the Directors' Remuneration Report.

15 TAX

The Group operates in the United Arab Emirates and Spain and certain other countries. As there is no corporation tax in the United Arab Emirates, no taxes are recognised or payable on the operations in the UAE. There is no taxable income in the UK accordingly there is no tax liability arising in the UK. The unused tax losses amount to US$25,549,000 as at 31 December 2016 (2015: US$13,049,000).

With respect to Group operations in Europe and South America the tax disclosures are as follows:

Consolidated income statement	2016 US$'000	2015 US$'000
Current income tax:
Charge for the year	2,305	753
Adjustment in respect of charge for the year	(5)	(163)
	-----------------------	-----------------------
	2,300	590

Deferred tax:

Charge on profit origination and reversal of temporary differences	(2,126)	(993)
in the current year
	-----------------------	-----------------------
Income tax charge/(credit) reported in the income statement	174	(403)
	==========	==========

No tax is included in other comprehensive income (2015: US$NIL) Given that there is no tax payable in respect of operations in the UAE and no UK corporation tax payable, the Group has used the Spanish tax rate for the purpose of the preparation of the tax reconciliation presented below as all the taxable profits have been generated by Luarmia S.L. group of companies. The corporation tax rate in Spain is 25% (2015: 28%)

Reconciliation of tax expense and the accounting profit multiplied by the Spanish domestic tax rate of 25% (2015: 28%) is represented below:

	2016 US$'000	2015 US$'000
Group accounting profit before tax from continuing operations for the year	151,575	85,357
Less: Accounting profit before tax from continuing operations (not subject to tax)	139,594	78,558
	-----------------------	-----------------------
Accounting profit before tax from continuing operations (subject to tax)	11,981	6,799
	==========	==========

Tax at the rate of 25% (2015: 28%)	2,995	1,904
Non-taxable dividend income	(1,774)	(1,032)
Tax saved on amortization of intangibles	(1,198)	(480)
Adjustment in respect of prior period income tax	(5)	(163)
Different tax rates on overseas earnings	233	16
Expenses not deductible for tax purposes and other permanent differences	72	-
Deductible expenses for tax purpose:
R&D and IT	(382)	(609)
Accelerated depreciation	-	(39)
Other deductible expenses	233	-
	-----------------------	-----------------------
Income tax charged/ (credit) reported in the income statement	174	(403)
	==========	==========

The effective tax rate of the Group is 0.11% (2015: -0.47%).

Deferred tax assets and liabilities comprise of:

Deferred tax assets:	2016 US$'000	2015 US$'000
Tax credit for R&D expenses	1,126	1,235
Limit on tax deductibility of depreciation and amortisation	1,009	81
	-----------------------	-----------------------
Total deferred tax assets	2,135	1,316
	==========	==========

Deferred tax liabilities:	2016 US$'000	2015 US$'000

Depreciation and amortization	8,245	9,761
	-----------------------	-----------------------
Total deferred tax liabilities	8,245	9,761
	==========	==========

Reconciliation of deferred tax liabilities, net	2016 US$'000	2015 US$'000

As of 1 January	8,445	-

Tax charge/(credit) for the year	(2,127)	(993)
Foreign exchange adjustments	(208)	(673)
Acquired with business during the year	-	10,111
	-----------------------	-----------------------
As at 31 December	6,110		8,445
	==========	==========

Deferred tax assets are recognised to the extent that it is probable as supported by forecasts that future taxable profits will be available against which the temporary differences can be utilised.

16 EARNINGS PER SHARE (EPS)

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

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 year 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:

	2016	2015

Profit attributable to equity holders of the Parent (US$'000)	132,689	82,215
	==========	==========

Weighted average number of ordinary shares in issue ('000) for basic EPS	186,627	185,714
Effect of dilution from share based payments ('000)	922	484
	-----------------------	-----------------------
Weighted average number of ordinary shares ('000) for diluted
EPS	187,549	186,198
	==========	==========

Basic earnings per share (US$)	0.711	0.443

Diluted earnings per share (US$)	0.707	0.442

The table below reflects the income and share data used in the adjusted earnings per share computations. All one off expense and amortisation of acquired intangible assets, have been adjusted from the profit attributable to the equity holders of the parent to arrive at the adjusted earnings per share:

	2016 US$'000	2015 US$'000
Profit attributable to equity holders of the Parent	132,689	82,215
Unamortised finance fees written off	-	2,612
Transaction costs in respect of business combination	4,603	4,131
Amortisation of acquired intangible assets (net of tax)	7,819	4,995
Impairment of property and equipment	1,376	-
	-----------------------	-----------------------
Adjusted profit attributable to equity holders of the Parent	146,487	93,953
	==========	==========

Weighted average number of ordinary shares ('000)	187,549	186,198

Diluted adjusted earnings per share (US$)	0.781	0.505

Adjusted profit for the year of the Group is calculated as follows:

	2016	2015
	US$'000	US$'000

Profit for the year	151,402	85,760
Unamortised finance fees written off	-	2,612
Transaction costs in respect of business combination	4,603	4,131
Amortisation of acquired intangible assets (net of tax)	7,819	4,995
Impairment of property and equipment	1,376	-
	-----------------------	-----------------------
Adjusted profit	165,200	97,498
	==========	==========

17 PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

	2016	2015
	US$'000	US$'000

Property and equipment	459,338	433,524
	-----------------------	-----------------------
	459,338	433,524
	==========	==========

	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
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)
Impairments	-	-	-	-	-	-	(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	=======	=======	=======	========	======	=========	=======	======

	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
At 1 January 2015
Cost:	19,206	12,343	26,300	51,859	7,421	143,488	213,758	474,375
Additions	-	-	-	2,317	1,564	14,088	63,733	81,702
Relating to acquisition of subsidiaries	-	-	-	2,268	571	7,222	3,631	13,692
Disposals	-	-	-	-	(234)	(2,231)	(33)	(2,498)
Transfer from CWIP	-	-	-	101,444	-	17,893	(119,337)	-
Exchange difference	-	-	-	-	-	(118)	(8)	(126)
	-----------------------	-----------------------	-----------------------	-----------------------	-----------------------	-----------------------	-----------------------	-----------------------
At 31 December 2015	19,206	12,343	26,300	157,888	9,322	180,342	161,744	567,145
	-----------------------	-----------------------	-----------------------	-----------------------	-----------------------	-----------------------	-----------------------	-----------------------
Depreciation:
At 1 January 2015	-	8,114	5,920	13,730	5,185	73,069	-	106,018
Charge for the year	-	310	1419	13,054	800	14,268	-	29,851
Exchange difference	-	-	-	-	-	(20)	-	(20)
Disposals	-	-	-	-	(206)	(2,022)	-	(2,228)
	-----------------------	-----------------------	-----------------------	-----------------------	-----------------------	-----------------------	-----------------------	-----------------------
At 31 December 2015	-	8,424	7,339	26,784	5,779	85,295	-	133,621
	-----------------------	-----------------------	-----------------------	-----------------------	-----------------------	-----------------------	-----------------------	-----------------------
Net carrying amount:	19,206	3,919	18,961	131,104	3,543	95,047	161,744	433,524
At 31 December 2015	=======	=======	=======	========	======	=========	=======	======

As part of the Group's capital expenditure programme, borrowing costs of US$357,000 (2015: US$1,691,000) have been capitalised during the year. The rate used to determine the amount of borrowing costs eligible for capitalisation was 1.9% (2015: 2.1%) which is the effective rate of the borrowings used to finance the capital expenditure. Companies in the UAE are not subject to taxation and as such there is no tax relief in respect of capitalised interest.

Total capital expenditure during the year ended 31 December 2016 was US$66,932,000 (2015: US$81,702,000). Of the total capital expenditure spend during the year, US$38,949,000 (2015: US$63,733,000) related to new capital projects and US$27,983,000 (2015: US$17,969,000) 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 (note 2.3). As at 31 December 2016 US$801,000 (2015: US$778,000) of the amounts included in property and equipment related to assets with annually renewable leases.

In accordance with the 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. land with a carrying amount of US$4,144,000 (31 December 2015: US$4,144,000) are held in the name of a previous shareholder for the beneficial interest of the Group. As the beneficial interest of such land and buildings resides with the Group, these assets are recorded within land and buildings in the Group's consolidated financial statements. The directors take into account this local legal registration requirement, the Group's entitlement to the beneficial interest arising from these assets, as well as other general business factors, when considering whether such assets are impaired.

18 INTANGIBLE ASSETS

	Software	Brands	Patient relationship and Database	Goodwill	Others	Total
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
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
PPA Adjustment Dr. Sunny (note 5)	-	-	-	(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	5,865	58,511	15,331	567,338	5,938	652,983

	Software	Brands	Patient relationship and Database	Goodwill	Others	Total
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
31 December 2015
Cost: At 1 January 2015	3,220	-	-	1,016	-	4,236
Additions	548	-	-	-	13	561
Relating to acquisition of subsidiaries	3,217	40,914	20,098	345,072	10,584	419,885
Exchange difference	(144)	(785)	(460)	(4,668)	(122)	(6,179)

At 31 December 2015	6,841	40,129	19,638	341,420	10,475	418,503


Amortisation:
At 1 January 2015	-	-	-	-	-	-
Charge for the year	1,099	1,588	1,270	-	1,518	5,475
Exchange difference	(21)	-	-	-	(10)	(31)

At 31 December 2015	1,078	1,588	1,270	-	1,508	5,444

Net carrying amount:
At 31 December 2015	5,763	38,541	18,368	341,420	8,967	413,059

Others include intellectual property, rental contracts, private contracts and non-compete arrangements.

Goodwill

Additions to goodwill in the year relate to goodwill measured in respect of the acquisitions of Fakih IVF, Copenhagen Fertility Center Holding, Huntington Centro de Medicina Reproductive, Nadia Medical Centre, Cooper Health and Lifewise Home Healthcare LLC.

Goodwill is not amortised, but is reviewed annually for assessment of impairment in accordance with IAS 36. The Group performed its annual goodwill impairment test in December 2016 and 2015. Goodwill acquired through business combinations is allocated to the following operating segments representing a group of cash generating units (CGUs), which are also operating and reportable segments, for impairment testing:

--Healthcare

--Distribution and services

The healthcare CGU has goodwill allocated to it of US$562,459,000 at the year-end (2015: US$336,541,000). The distribution and services CGU has goodwill allocated to it of US$4,879,000 at the year-end (2015: US$4,879,000).

The recoverable amounts for both CGUs are based on value in use, which has been calculated using cash flow projections from financial budgets approved by senior management covering a five year period. Cash flows beyond the five year period are extrapolated using a 3% growth rate (2015: 3.0%) which is significantly lower than the current annual growth rate of both CGUs. The pre-tax discount rate applied to the cash flows of both CGUs is 8.45% (2015: 7.7%), which is based on the Group's weighted average cost of capital (WACC) and takes into account such measures as risk free rates of return, the Group's debt/equity ratio, cost of debt and local risk premiums specific to the CGUs. As a result of the analysis, there is headroom in both CGUs and no impairment has been identified. Reasonable sensitivities have been applied to each CGU's cash flows and the discount rates used, and in all cases the value in use continues to exceed the carrying amount of CGU goodwill.

The key assumptions on which management has based its cash flow projections for the five year period covered by the most recent forecasts are those related to growth in available beds, patient numbers for the healthcare segment and revenue from the distribution of products for the distribution and services segment. The assumptions made reflect past experience and are based on management's best estimate and judgment.

Other acquired intangible assets

Assets in this class are amortised over their estimated useful lives on a straight line basis. All amortisation charges for the year have been charged against operating profits.

Other than goodwill, the Group does not hold any intangible assets with an indefinite life

Included in software are HIS and ERP projects amounting to US$3,349,000 (2015: US$2,995,000) which are work-in-progress as of year-end. Management is currently in the process of estimating the useful economic life of the HIS and ERP projects. Amortization of the software will commence once it is implemented and goes live.

19 LOAN RECEIVABLE

	2016	2015
	US$'000	US$'000

Loan receivable	14,516	4,395
	-----------------------	-----------------------
	14,516	4,395
	==========	==========

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

Current	5,387	2,670
Non-current	9,129	1,725
	-----------------------	-----------------------
	14,516	4,395
	==========	==========

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 $8,848,000 with the repayment of the first trance US $2,720,000 on 10 November 2016, second trance US $2,720,000 on 10 November 2017 and the remaining final trance payment by 10 November 2018.

During the year ended 31 December 2016, the loan agreement was amended in respect of first trance repayment date and total loan facility amount. First trance loan repayment date was revised as 10 April 2017 and the loan facility ceiling was increased to US $18,513,000.

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 31 December 2016 was US $14,516,000 (full value US$14,900,000).

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.

20 INVENTORIES

	2016	2015
	US$'000	US$'000

Pharmaceuticals and cosmetics	75,657	65,166
Scientific equipment	13,404	14,093
Consumer products	42,568	40,766
Food	7,087	9,118
Egg bank	2,656	2,622
Consumables	855	783
Opticals	309	315
Goods in transit	1,636	2,087
Other	1,393	1,226
	-----------------------	-----------------------
	145,565	136,176
Less: provision for slow moving and obsolete inventories	(1,178)	(1,388)
	-----------------------	-----------------------
	144,387	134,788
	==========	==========

The amount of write down of inventories recognised as an expense for the year ended 31 December 2016 is US$1,869,000 (2015: US$1,678,000). This is recognised in direct costs.

Trust receipts issued by banks amounting to US$81,671,000 (2015: US$21,370,000) are secured against the inventories.

21 ACCOUNTS RECEIVABLE AND PREPAYMENTS

	2016	2015
	US$'000	US$'000

Accounts receivable	314,351	242,016
Receivable from suppliers for promotional expenses	13,164	10,690
Other receivables	27,179	12x`,225
Prepayments	19,763	17,544
	----------------------	----------------------
	374,457	282,475
	==========	==========

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$12,129,000 (2015: US$13,022,000). Movements in the provision for doubtful debts are as follows:

	2016	2015
	US$'000	US$'000

At 1 January	13,022	8,996
Written off	(4,377)	(1,595)
Written back (note 12)	(1,843)	(1,295)
Charge for the year (note 12)	4,800	3,035
Addition from business combinations	549	3,888
Exchange difference	(22)	(7)
	-----------------------	-----------------------
At 31 December	12,129	13,022
	=========	=========

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

31 December 2016
Accounts receivable	314,351	210,592	70,940	19,070	8,944	4,805

31 December 2015
Accounts receivable	242,016	168,747	49,460	12,466	7,016	4,327

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 31 December 2016 accounts receivables of US$12,129,000 (2015: US$13,022,000) were impaired and fully provided for.

Credit risk is managed through the Group's established policy, procedures and controls relating to credit risk management (note 33). 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$314,351,000 (2015: US$242,016,000) amount of US$159,922,000 is receivables from five customers (2015: US$108,936,000 is receivables from 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, a significant amount of trade accounts receivable are neither past due nor impaired.

Amounts due from related parties amounting to US$3,628,000 (31 December 2015: US$4,116,000) as disclosed on the face of the consolidated statement of financial position are trading in nature and arise in the normal course of business.

Included in other receivables is an amount of US$7,679,000 (2015: US$ nil) receivable from entities owned by a non-controlling interest

22 CASH AND CASH EQUIVALENTS

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

	2016	2015
	US$'000	US$'000

Bank deposits	137,900	58,886
Bank balances and cash	479,940	118,511
Bank overdrafts and other short term borrowings	(219,851)	(154,962)
	-----------------------	-----------------------
	397,989	22,435
Adjustments for:
Short term borrowings	160,628	129,095
Bank deposits maturing in over 3 months	(28,329)	(55,094)
Restricted cash	(96,885)	(12,412)
	-----------------------	-----------------------
Cash and cash equivalents	433,403	84,024
	=========	=========

Bank deposits of US$137,900,000 (2015: US$58,886,000) are with commercial banks in the United Arab Emirates and Spain. These are mainly denominated in the UAE Dirhams and Euro and earn interest at the respective deposit rates. These deposits have original maturity between 1 to 12 months (2015: 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 the shareholders (H.E. Saeed Bin Butti, Dr BR Shetty and Mr Khalifa Bin Butti ) and carry interest at EIBOR plus margin rates ranging from 1% to 4% (2015: 1% to 4%) per annum.

At 31 December 2016, the Group had US$59,715,000 (2015: US$42,356,000) of undrawn bank overdraft facilities, which are renewable annually.

Restricted cash mainly represents funds held by a bank in respect of upcoming loan repayment and payment for acquisitions.

23 SHARE CAPITAL

31 December 2016
	Number of shares	Ordinary shares	Share premium	Total
	(thousands)	US$'000	US$'000	US$'000

Issued and fully paid
(nominal value 10 pence sterling each)	204,285	31,910	491,778	523,688
	==========	==========	==========	==========

31 December 2015:
	Number of shares	Ordinary shares	Share premium	Total
	(thousands)	US$'000	US$'000	US$'000

Issued and fully paid
(nominal value 10 pence sterling each)	185,714	29,566	179,152	208,718
	==========	==========	==========	==========

Issued share capital and share premium movement

	Number	Ordinary	Share
	of shares	shares	premium	Total
	(thousands)	US$ '000	US$ '000	US$ '000

At 1 January 2016	185,714	29,566	179,152	208,718
Issue of new shares - IPO	18,571	2,344	319,970	322,314
Share issue costs	-	-	(7,344)	(7,344)

At 31 December 2016	204,285	31,910	491,778	523,688

On 14 December 2016, NMC Health plc had public offering on the London Stock Exchange and raised US$322,314,000, of which US$170,000,000 (9,732,847 shares) was subscribed collectively by Dr. B R Shetty, H.E Saeed Bin Butti and Khalifa Bin Butti and Infinite Investment LLC. Infinite Investment LLC is an associate of H.E Saeed Bin Butti and Khalifa Bin Butti.

24 GROUP RESTRUCTURING RESERVE

The group restructuring reserve arises on consolidation under the pooling of interests method used for group restructuring, which took place on 28 March 2012 when the Company became the holding company of NMC Healthcare LLC through its wholly owned subsidiaries, NMC Holding LLC and NMC Health Holdco Limited. Under this method, the group is treated as a continuation of the NMC Healthcare LLC group. The difference between the share capital of NMC Healthcare LLC (US$27,226,000) and the carrying amount of the investment in that company (US$37,227,000), which equates to the net assets of NMC Healthcare LLC at the date of reorganisation (28 March 2012), amounting to US$10,001,000(debit), is recorded on consolidation as a group restructuring reserve. This reserve is non-distributable.

25 RETAINED EARNINGS

As at 31 December 2016, retained earnings of US$18,009,000 (2015: US$17,590,000) are not distributable. This relates to a UAE Companies Law requirement to set aside 10% of annual profit of all UAE subsidiaries until their respective reserves equal 50% of their paid up share capital. The subsidiaries discontinue such annual transfers once this requirement has been met.

26 DIVIDEND

In the AGM on 3 June 2016 the shareholders approved a dividend of 6.2 pence per share, amounting to GBP 11,514,000 (US$16,350,000) to be paid to shareholders on the Company's share register on 20 May 2016. The dividend amount was paid to the shareholders on 14 June 2016 (30 June 2015: a dividend of GBP 10,028,000 equivalent to US$15,866,000 was approved on 16 June 2015 and paid on 18 June 2015). No interim dividend was declared during the year. Subject to shareholder' approval at the Annual General Meeting on 23 May 2017, a final dividend of 10.6 pence per share, GBP21,753,000 (US$26,538,000) will be paid to shareholders on the Company's share register on 12 May 2017.

An amount of US$5,300,000 (2015: US$ nil) is paid as dividend to non-controlling interests during the year ended 31 December 2016.

27 TERM LOANS

	2016	2015
	US$'000	US$'000

Current portion	234,519	91,621
Non-current portion	594,780	483,725
	---------------------	---------------------
	829,299	575,346
	=========	=========
Amounts are repayable as follows:

Within 1 year	234,519	91,621
Between 1 - 2 years	243,115	98,355
Between 2 - 5 years	351,665	385,370
	---------------------	---------------------
	829,299	575,346
	=========	=========

During the year ended 31 December 2015, the Group agreed a syndicated loan facility, of US$825,000,000 (US$350,000,000 of term debt and US$475,000,000 of delayed drawdown acquisition facility). The loan facility is repayable over 60 monthly instalments with a grace period of twelve months. The applicable interest rate is dependent upon the respective leverages. Based upon the leverage at the time of initial drawdown, the initial margin was 100bps/70bps over 1month LIBOR/EIBOR per annum.

During the year ended 31 December 2016, the Group drew down term loans of US$631,548,000 (2015: US$822,698,000) and repaid term loans of US$378,660,000 (2015: US$472,796,000).

The Group has utilised an amount of US$350,000,000 (2015: US$350,000,000) against the syndicated loan facility as well as US$463,527,000 (2015: US$163,679,000) of the delayed drawdown acquisition finance as of 31 December 2016.

This syndicated loan is guaranteed by corporate guarantees provided by NMC Health plc and operating subsidiaries of the Group. The syndicated loan is secured against a collateral package which includes assignment of some insurance company receivables and their proceeds by the Group and a pledge over certain bank accounts within the Group and pledge of shares of the entities acquired using the proceeds of the loan.

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

28 EMPLOYEES' END OF SERVICE BENEFITS

Movements in the provision recognised in the consolidated statement of financial position are as follows:

	2016	2015
	US$'000	US$'000

Balance at 1 January	22,490	14,934
Charge for the year	7,246	4,869
Actuarial loss/(gain )	147	(260)
Transfer from related party	4	-
Employees' end of service benefits paid	(1,546)	(1,133)
Addition from business combinations	1,867	4,080
	-----------------------	-----------------------
Balance at 31 December	30,208	22,490
	==========	==========

Current	3,560	3,206
Non-current	26,648	19,284
	-----------------------	-----------------------
Balance at 31 December	30,208	22,490
	==========	==========

Charge for the year comprise of the following:

Current service cost	6,525	4,234
Interest cost	721	635
	----------------	----------------
Balance at 31 December	7,246	4,869
	=======	=======

In accordance with the provisions of IAS 19 - 'Employee Benefits', management has carried out an exercise to assess the present value of its obligation at 31 December 2016 and 2015, using the projected unit credit method, in respect of employees' end of service benefits payable under the UAE Labour Law.

During the current year, the Group has recognised an actuarial loss of US$147,000 (31 December 2015: gain of US$260,000) in other comprehensive income. Management has assumed an average length of service of 5 years (2015: 5 years) and increment/promotion costs of 1.5% (2015: 2.25%). The expected liability at the date of employees' leaving service has been discounted to its net present value using a discount rate of 2.5% (2015: 3.25%). Management also performed a sensitivity analysis for changes in discount rate and increment costs; the results of this analysis showed that none of the factors had any material impact on the actuarial valuation.

29 ACCOUNTS PAYABLE AND ACCRUALS

	2016	2015
	US$'000	US$'000


Trade accounts payable	108,202	87,029
Accrued interest	2,691	1,014
Accrued expenses	7,362	7,536
Others	40,557	27,932
	-----------------------	-----------------------
	158,812	123,511
	=========	=========

Trade and other payables are non-interest bearing and are normally settled on 50-60 day terms.

30 OTHER PAYABLES

	2016		2015
	US$'000		US$'000
Contingent consideration payable for acquisitions (note 36)	24,139	25,016
Deferred consideration payable for acquisitions	6,551	-
Other payable (note 5)	36,929	158
	-----------------------	-----------------------
	67,619	25,174
	==========	==========

Classification of other payables into current and non-current is as follows:

Current	26,827	11,150
Non-current	40,792	14,024
	-----------------------	-----------------------
	67,619	25,174
	==========	==========

31 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 one is a director 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 consolidated income statement are as follows:

	2016	2015
	US$'000	US$'000

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

Sales	14	699
Purchases	59,370	54,252
Rent charged	451	440
Other income	1,435	1,195

Entities where a shareholder of NMC is a key member of management personnel of such entity

Management fees received from such entity by NMC	6,303	6,003
Sales	296	438

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

	2016	2015
	US$'000	US$'000
Entities significantly influenced by a shareholder who is a key management personnel in NMC

Amounts due from related parties	-	328
Amounts due to related parties	14,876	17,419

Entities where a shareholder of NMC is a key member of management personnel of the entity
management personnel of such entity
Amounts due from related parties	3,628	3,788

Outstanding balances with related parties at 31 December 2016 and 31 December 2015 were unsecured, payable on 50-60 days term and carried interest at 0% (31 December 2015: 0%) per annum. Settlement occurs in cash. As at 31 December 2016 US$1,576,000 of the amounts due from related parties were past due but not impaired (31 December 2015: US$1,778,000).

The Group has incurred expenses and recharged back an amount of US$2,097,000 (31 December 2015: US$1,854,000) made on behalf of a related party where a shareholder who has significant influence over the Group is a key management personnel of that entity.

Out of total term loans outstanding as of 31 December 2016, term loans of US$51,561,000 (2015: US$28,372,000) 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 in UAE 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.

During the current period, the Group acquired 1% beneficial interest in certain subsidiaries, as listed in note 2.2, for a consideration of US$419,000. These subsidiaries are registered in the UAE. The Group previously had 99% shareholding in these entities. The Group recorded a gain of US$536,000 on this in retained earnings.

Compensation of key management personnel

	2016	2015
	US$'000	US$'000

Short term benefits	10,236	6,469
Employees' end of service benefits	16	16
	-----------------------	-----------------------
	10,252	6,485
	==========	==========

The key management personnel include all the Non-Executive Directors, the two (31 December 2015: two) Executive Directors and four (31 December 2015: four) senior management personnel.

During the year additional shares of 451,868 (2015: 345,649) were granted to Executive Directors and other senior management in the form of share options.

One individual (31 December 2015: 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 year ended 31 December 2016 amounts to US$1,303,000 (2015: US$786,000).

32 SHARE BASED PAYMENTS

The Group currently operates two share option schemes:

Long term incentive plan (LTIP)

Options awarded under the LTIP are made annually to Executive Directors and other senior management. The exercise prices are nil. Options have a life of ten years and a vesting period of three years. The LTIP is subject to performance conditions which can be found in the Directors' Remuneration Report in the Annual Report.

Short term incentive plan (STIP)

Options awarded under the STIP are made annually to Executive Directors and other senior management. The exercise prices are nil. Options have a life of ten years and a vesting period of three years.

Fair values are determined using the Black-Scholes model. Expected volatility has been based on

historical volatility over the period since the Company's shares have been publically traded.

Administrative expenses include a charge of US$2,640,000 (2015: US$1,177,000) in respect of the cost of providing share options. The cost is calculated by estimating the fair value of the option at grant date and spreading that amount over the vesting period after adjusting for an expectation of non-vesting.

For options granted in the years ended 31 December 2015 and 2016, the fair value per option granted and the assumptions used in the calculation are as follows:

	2016	2015
	STIP	STIP

Share price at grant date	£9.675	£5.200
Fair value at measurement date	£9.520	£5.060
Exercise price	£nil	£nil
Expected volatility	40%	40%
Expected option life	3 years	3 years
Expected dividend yield	0.54%	0.91%
Risk free interest rate	1.05%	0.98%

	2016	2015	2015
	LTIP	LTIP 1	LTIP 2

Share price at grant date	£9.675	£5.200	£7.650
Fair value at measurement date	£9.520	£5.060	£7.377
Exercise price	£nil	£nil	£nil
Expected volatility	40%	40%	40%
Expected option life	3 years	3 years	3 years
Expected dividend yield	0.54%	0.91%	1.21%
Risk free interest rate	1.05%	0.98%	1.05%

LTIP represent long term incentive plans issued in March 2016.

The options existing at the year-end were as follows:

		2016		2015
	Number of shares	Exercise price	Period when exercisable	Number of shares

Long term incentive plan (LTIP)
October 2014	160,778	£nil	29/10/17 to 28/10/24	160,778

Short term incentive plan (STIP)
October 2014	55,527	£nil	29/10/17 to 28/10/24	55,527

Long term incentive plan (LTIP)
February 2015	221,539	£nil	25/02/18 to 24/02/25	221,539

Short term incentive plan (STIP)
February 2015	74,801	£nil	25/02/18 to 24/02/25	74,801

Long term incentive plan (LTIP)
September 2015	49,309	£nil	09/09/18 to 08/09/25	49,309

Long term incentive plan (LTIP)
March 2016	383,717	£nil	15/03/19 to 14/03/26	-

Short term incentive plan (STIP)
March 2016	68,151	£nil	15/03/19 to 14/03/26	-
	-----------------------			-----------------------
Total options subsisting on existing ordinary shares	1,013,822			561,954
	-----------------------			-----------------------
Percentage of issued share capital	0.5%			0.3%
	==========			==========

Movement of share options during the year is as follows:

	2016	2015

At 1 January	561,954	216,305

Granted during the year	451,868	345,649
	-----------------------	-----------------------
Outstanding at 31 December	1,013,822	561,954
	==========	==========

No options expired, were exercised or forfeited during the year (2015: nil).

33 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group's principal financial liabilities comprise loans and borrowings, contingent consideration on acquisition of subsidiaries, put option redemption liability and trade and other payables. In addition to these financial liabilities the Group has forward exchange contract as of 31 December 2016. The main purpose of these financial liabilities is to finance the Group's operations. The Group has accounts and other receivables, and cash and short-term deposits that arise directly from its operations.

The Group is exposed to interest rate risk, credit risk, liquidity risk and foreign currency risk. These risks and the Group's financial risk management objectives and policies are consistent with last year. The Group's exposure to foreign currency risk includes risk on the Group's net investment in foreign subsidiaries in Spain and certain other countries.

The Group's senior management oversees the management of these risks. The Board of Directors reviews and agrees policies for managing each of these risks which are summarised below.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group is exposed to interest rate risk on its interest bearing assets and liabilities (bank deposits, bank overdrafts and other short term borrowings and term loans). Management is of the opinion that the Group's exposure to interest rate risk is limited.

The following table demonstrates the sensitivity of the consolidated income statement to reasonably possible changes in interest rates, with all other variables held constant. The sensitivity of the consolidated income statement is the effect of the assumed changes in interest rates on the Group's profit for the year based on the floating rate financial assets and financial liabilities as of the respective year end.


Increase/ (decrease) in basis points	Effect on profit at 31 December 2016	Effect on profit at 31 December 2015
	US$'000	US$'000

100	(9,112)	(6,714)
(100)	9,112	6,714

Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group limits its credit risk with respect to customers due to the nature of the customers that it has dealings with. Within the Healthcare business in the UAE, the majority of the Group's customers are insurance companies. The largest insurance company in UAE is fully backed by Sovereign wealth funding from Abu Dhabi. All other insurance companies in the UAE are required to be listed on a stock exchange and therefore are governed by the regulations of their respective markets. The Group limits its credit risk with respect to healthcare customers in markets other than UAE by requesting certain percentage of advance payments from customers and obtaining final payments before completion of treatment. Within the distribution business the Group deals primarily with large reputable multinational retail companies. The Group further seeks to limit its credit risk by setting credit limits for individual customers and monitoring outstanding receivables.

The Group limits its credit risk with regard to bank deposits by only dealing with reputable banks. The external credit ratings for the banks at which the bank deposits and cash at bank are held are as follows:

	2016	2015
	US$'000	US$'000

AA-/A-1/Aa3	11,903	18,038
A+/A1	5,494	722
A/A2	219,787	19,426
A+/A-1	4,273	419
A3/A-	5,865	4,352
AA+	-	4
AAA/A-1+	6,164	-
A2/P-1	140	-
A3/P-2	19	-
B1	1,629	1,145
BB	4,196	2,496
BB+	562	812
Baa3	163,491	109,728
BBB	1,938	2,609
BBB-	42,172	7,941
BBB+/Baa1/Baa1/P-2	120,627	5,769
Without external credit rating	28,633	2,895
	-----------------------	-----------------------
Total bank deposit and cash at bank	616,893	176,356
	=========	=========

With respect to credit risk arising from cash and cash equivalents, the Group's exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.

Liquidity risk

The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of banking facilities. The Group limits its liquidity risk by raising funds from its operations and ensuring bank facilities are available. Trade payables are normally settled within 50-60 days of the date of purchase.

The table below summarises the maturities of the Group's undiscounted financial liabilities, based on contractual payment dates and current market interest rates.

	On demand	Less than 3 months	3 to 12 months	1 to 5 years	Total
	US$'000	US$'000	US$'000	US$'000	US$'000

At 31 December 2016
Trade accounts payable	-	108,202	-	-	108,202
Amounts due to related parties	-	14,876	-	-	14,876
Other payables	-	-	28,391	81,592	109,983
Option redemption payable	-	-	-	42,605	42,605
Terms loans	-	79,560	174,085	615,769	869,414
Bank overdrafts and other short term borrowings	60,154	107,170	56,957	-	224,281
Financial guarantees	11,764	-	-	-	11,764
	-----------------------	-----------------------	-----------------------	-----------------------	-----------------------
Total	71,918	309,808	259,433	739,966	1,381,125
	==========	==========	==========	==========	==========
	On demand	Less than 3 months	3 to 12 months	1 to 5 years	Total
	US$'000	US$'000	US$'000	US$'000	US$'000

At 31 December 2015
Trade accounts payable	-	87,029	-	-	87,029
Amounts due to related parties	-	17,419	-	-	17,419
Other payables	-	32,932	4,194	18,321	55,447
Option redemption payable	-	-	-	30,163	30,163
Terms loans	-	46,612	54,889	506,722	608,223
Bank overdrafts and other short term borrowings	26,325	58,350	74,189	-	158,864
Financial guarantees	9,069	-	-	-	9,069
	-----------------------	-----------------------	-----------------------	-----------------------	-----------------------
Total	35,394	242,342	133,272	555,206	966,214
	==========	==========	==========	==========	==========

The Group also has future capital commitments for the completion of ongoing capital projects of US$9,048,000 (2015: US$30,230,000) (note 35). These are to be financed from the fixed deposits held by the Group.

During the time of acquisition of Al Zahra Hospital in order to pay the consideration and as a back stop of existing US$ 825,000,000 long term debt facility, the Group has finalised a new loan facility with JP Morgan Chase Bank and Standard Chartered Bank as mandated lead arrangers for US$1,400,000,000 in the month of December 2016. Of this an amount of US$ 325,000,000 has been cancelled after raising equity on 14 December 2016. The balance facility of US$ 1,075,000,000 remains unutilized as of 31 December 2016. From this an amount of US$825,000,000 will be utilized to replace existing long term debt facility and remaining, if needed, will be utilized to fund the Al Zahra Hospital acquisition.

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Foreign currency risk comprises of transaction risk, statement of financial position risk and the Group's net investment in foreign subsidiaries. Transaction risk relates to the Group's cash flow being adversely affected by a change in the exchange rates of foreign currencies against the UAE Dirham. Statement of financial position risk relates to the risk of the Group's monetary assets and liabilities in foreign currencies acquiring a lower or higher value, when translated into UAE Dirhams, as a result of currency movements.

The Group is exposed to currency risk on its trade accounts payable, put option redemption payable and certain other payables denominated in foreign currencies, mainly in Euros and Saudi Riyal. As the US Dollar is pegged to the UAE Dirham, balances in US Dollars are not considered to represent significant currency risk.

The table below indicates the impact of Group's foreign currency monetary liabilities and assets at 31 December, on its profit before tax.

	2016	2015
	US$'000	US$'000

+5%	(2,113)	(1,690)
-5%	2,113	1,690

The Group is exposed to foreign currency risk on net investment in foreign subsidiaries. During the year ended 31 December 2016 the Group has recorded a foreign currency exchange loss of US$4,050,000 (2015: US$5,342,000) on the translation of foreign subsidiaries in other comprehensive income.

Capital management

The primary objective of the Group's capital management is to ensure that it maintains healthy capital ratios in order to support its business and maximise shareholders' value.

The Group manages its capital structure and makes adjustments to it in light of changes in business conditions. Capital comprises share capital, share premium, reserves and retained earnings and is measured at US$906,869,000 as at 31 December 2016 (2015: US$487,697,000). In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Certain banking facilities may also impose covenant requirements on the Group with respect to capital management.

The Group monitors capital using a gearing ratio, which is net debt divided by capital plus net debt. The Group includes within net debt, interest bearing loans and borrowings, accounts payable and accruals and other payables less bank deposits and bank balances and cash.

	2016	2015
	US$'000	US$'000


Interest bearing loans and borrowings	1,049,150	730,308
Accounts payable and accruals	158,812	123,511
Other payable	67,619	25,174
Option redemption payable	37,500	25,084
Less: bank deposits, bank balances and cash	(617,840)	(177,397)
	-----------------------	-----------------------
Net debt	695,241	726,680

Capital	906,869	487,697
	-----------------------	-----------------------

Capital and net debt	1,602,110	1,214,377
	==========	==========
Gearing ratio	43%	60%

34 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 31 December 2016 of US$11,764,000 (2015: US$9,069,000).

35 COMMITMENTS

Capital commitments

The Group had future capital commitments of US$9,048,000 at 31 December 2016 (2015: US$30,230,000) principally relating to the completion of ongoing capital projects.

Other commitments	2016	2015
	US$'000	US$'000

Future minimum rentals payable under non-cancellable operating leases

Within one year	11,354	12,846
After one year but not more than five years	53,896	53,943
More than five years	74,080	84,407
	---------------------	-----------------------
Total	139,330	151,196
	==========	=========

36 FINANCIAL INSTRUMENTS CARRIED AT FAIR VALUE

Forward exchange contract

The Group holds a forward exchange contract to manage foreign exchange exposure. The forward contract has a principal value of US$15,000,000 and is denominated in Qatari Riyal. This contract has not been designated as a cash flow hedge and the increase in the fair value during 2016 of US$1,249,000 (2015: decrease in fair value of US$1,200,000 has been included in finance costs and the corresponding receivable is included in the 'others' category within other receivable (note 21). This is a level 2 derivative financial instrument.

Contingent consideration

Contingent consideration relates to acquisitions done in current and prior year. Movements in contingent consideration payable are as follows:

	2016	2015
	US$'000	US$'000

Balance at 1 January	25,016	-
Contingent consideration recognised at acquisition (note 5)	9,642	29,041
Fair value measurement	1,549	49
Purchase price allocation adjustment (note 5)	(2,126)	-
Exchange gain	(375)	(56)
Payments made	(9,567)	(4,018)
	-----------------------	-----------------------
Balance at 31 December	24,139	25,016
	==========	==========

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$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 31 December 2016 comprises of following:

	2016	2015
	US$'000	US$'000

CIRH	2,912	2,768
Biogenesi	4,741	6,578
Dr Sunny Healthcare	3,644	7,345
ProVita	3,298	8,325
Fakih	8,128	-
CFC	1,416	-
	-----------------------	-----------------------
	24,139	25,016
	==========	==========

CIRH

Contingent consideration is payable subject to attainment of revenue or reproductive cycle targets. Management believes that these targets will be met. Full value of contingent consideration payable is US$3,156,000 (2015: US$3,255,000) and its present value is US$2,912,000 (2015: US$2,768,000). This is due for payment in 2017. Significant unobservable input used is discount rate (9.2%). A 1% increase in discount rate would result in decrease in fair value of the contingent consideration by US$24,000 and a 1% decrease in discount rate would result in increase in fair value by US$49,000.

Biogenesi

Contingent consideration is payable subject to attainment of profit before tax target. Significant unobservable inputs used are profit before tax and discount rate (10.7%). Full value of contingent consideration payable is US$5,260,000 (2015: US$7,700,000) and its present value is US$4,741,000 (2015: US$6,578,000). Contingent consideration amounting to US$2,212,000 on achieving 2016 EBITDA target has been paid during the year. Outstanding contingent consideration is payable in the period from 2017 to 2019. A 1% increase in discount rate would result in decrease in fair value of the contingent consideration by US$42,000 and a 1% decrease in discount rate would result in increase in fair value by US$43,000. 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. Contingent consideration amounting to US$2,328,000 on achieving 2015 EBITDA has been paid during the year.

ProVita

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. One of the licenses has been obtained and an amount of US$5,027,000 has been paid. Full value of contingent consideration payable is US$3,500,000 (2015: US$8,500,000) and its present value is US$3,298,000 (2015: US$8,325,000).

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 (Note 5). Full value of contingent consideration payable is US$9,031,000 (2015: US$nil) and its present value is US$8,128,000 (2015: US$nil).

CFC

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.

37 OPTION REDEMPTION PAYABLE

Option redemption payable comprise of the following:

	2016	2015
	US$'000	US$'000

Luarmia	25,252	25,084
CFC and HCMR	12,248	-
	-----------------------	-----------------------
	37,500	25,084
	==========	==========

Movement in option redemption payable is as follows:

	2016	2015
	US$'000	US$'000

Balance at 1 January	25,084	-
Addition	12,801	24,496
Amortisation and re-measurement adjustment (note 10)	2,160	1,457
Exchange gain	(275)	(869)
Settlement of put option	(2,270)	-
	-----------------------	-----------------------
Balance at 31 December	37,500	25,084
	=========	==========

Luarmia

As part of acquisition of Luarmia SL ("Luarmia") in 2015, the Group entered into separate co-investment / shareholder agreements dated 23 February 2015 with the sellers relating to put & call options on the minority 13.6% shareholdings that remains with the previous owners post-acquisition. The Group does not have 'present ownership' of this 11.6% (2015: 13.6%) minority shareholding due to the terms of the option agreements and continue to account for the acquisition of Luarmia on the basis of an 88.4% (2015: 86.4%) equity stake, with full recognition of the 11.6% (2015: 13.6%) non-controlling interest. The put options are exercisable between 1 & 30 June 2018, 1 & 30 June 2019 and 1 & 30 June 2020 (three exercisable windows). On exercise of the put options, cash will be paid. The value of the put option is calculated based on the multiple of purchase price and further multiples are measured on the number of reproductive cycles specified in the agreement. A redemption liability for the value of the options at the acquisition date was created amounting to US$24,496,000 (being the present value of the redemption liability at the acquisition date), with an equal amount being treated as a reduction in equity. As at 31 December 2016, the present value of the redemption liability is US$25,252,000 (2015: US$25,084,000).

On 28 November 2016, the Group acquired an additional 2.0% interest in the voting shares of Luarmia, increasing its ownership interest to 88.4% for cash consideration of US$1,533,000. As the ownership interest increased by 2%, the Group derecognizes the financial liability of US$2,270,400 in relation to such 2% put option and recognizes an offsetting credit in the same component of equity recorded on initial recognition (i.e. put option redemption reserve).

The key assumption in estimating the expected amount is the multiple of purchase price and reproductive cycle's projections. The financial liability is sensitive to changes in these assumptions for example a 10% increase in reproductive cycles will result in an increase in the financial liability with US$3,268,830 (2015: US$28,290,000), while a 10% decrease would result in a decrease in the financial liability with US$3,101,800 (2015: US$22,039,000).

CFC and HCMR

During the year, Luarmia SL entered into put option agreements with the minority shareholders of Brazil and Denmark entities. A redemption liability for the value of the options at the acquisition date was created amounting to US$11,216,000 and US$1,585,000 (being the present value of the redemption liability at the acquisition date), with an equal amount being treated as a reduction in equity. As at 31 December 2016, the present value of the redemption liability is US$10,707,000 and US$1,541,000 respectively.

The put option of HCMR is exercisable any time starting from the third anniversary and 36 months thereafter. The earliest date of exercise is September 2019. The key assumption in estimating the liability amount is the forecasted EBITDA of the year 2018 and 2019 and projected net debt of 2019. The financial liability is sensitive to changes in the forecasted EBITDA and Net Debt. For example a 10% simultaneous increase in EBITDA and Net debt will result in an increase in the financial liability with US$876,000 while a 10% decrease would result in a decrease in the financial liability with US$876,000.

The put option for CFC is exercisable from the fifth anniversary of the date of the agreement. With respect to this, the earliest month of exercise is June 2021. The key assumption in estimating the liability amount is the forecasted EBITDA of the entity for 2020. The financial liability is sensitive to changes in the forecasted EBITDA. For example a 10% increase in EBITDA will result in an increase in the financial liability with US$154,000, while a 10% decrease would result in a decrease in the financial liability with US$154,000 .

38 FAIR VALUES OF FINANCIAL INSTRUMENTS

The fair values of the Group's financial instruments are not materially different from their carrying values at the statement of financial position date.

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

Financial assets and liabilities carried at fair value are disclosed in note 36.

During the years ended 31 December 2016 and 31 December 2015, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into or out of Level 3 fair value measurements.

39 INVESTMENT IN JOINT VENTURE

The Group has a 45.83% interest in Egyptian International Company ("EIC"), a joint venture involved in the field of providing extensive expertise services Healthcare and hospital management. The Group's interest in EIC amounting US$834,000 is accounted for using the equity method in the consolidated financial statements. EIC has not started its operations and accordingly, no share of profit or loss is recognised in consolidated statement of comprehensive income

40 SUBSEQUENT EVENTS

Acquisition of As Salama Hospital LLC ("ASH")

On 28 August 2016, the Group agreed to acquire a 70% controlling stake in the voting shares of As Salama Hospital LLC ("ASH"), an unlisted private general hospital which exists to serve the healthcare needs of all people in Al-Khobar, Kingdom of Saudi Arabia and surrounding areas by providing acute and long-term care. ASH accomplishes this through dedicated, competent staff providing accessible patient-focused care, guided by a commitment to continuous improvement. ASH is a leader in Long Term Care service provider (Over Long Term Care, it also provides its patients with other comprehensive healthcare services due to lack of healthcare facilities in the vicinity) in Al Khobar, Eastern province of Saudi Arabia. ASH is the fifth largest hospital in the Eastern province of Saudi Arabia and account for 10% of market share, with occupancy rate stands at 84.8% in 2015. Regulatory approvals and legal formalities completed on 02 January 2017, meaning that control has passed to the Group and full consolidation of results will commence from that date.

The agreed purchase consideration for the business was US$28m. There is no deferred and contingent consideration payable.

The fair value assessment of identifiable net assets at the acquisition date remains in progress and therefore the fair value of the identifiable net assets is preliminary. The Group has a 1 year timeframe from the date of acquisition to finalise the measurement of the net assets acquired. The net assets identified to date are those existing at the acquisition date, those forming part of the acquisition, and those that meet the recognition criteria for assets and liabilities. No acquisition date contingent liabilities requiring full recognition have been noted as yet.

Provisional goodwill has been calculated being the difference between the fair value of the consideration paid and payable, and the fair value of the net assets acquired. For convenience, the closest available balance sheet date has been used for the purposes of measuring net assets acquired. This date is 31 December 2016, with full consolidation commencing on 1 January 2017.

Details of the provisional goodwill calculated as of 31 December 2016 are as follows		Fair value recognised on acquisition
Assets		US$'000
Property, plant and equipment		3,433
Inventories		1,446
Accounts receivable		12,242
Other receivables		800
Cash and bank balances		1,298
		-----------------------
		19,219
Liabilities		-----------------------
Borrowings		1,334
Accounts payable		4.929
Other payables		4,030
		-----------------------
		10,293
		-----------------------
Total identifiable net assets at fair value		8,926

		US$'000
Non-controlling interests		(2,678)
Goodwill arising on acquisition		21,767
		---------------------
Purchase consideration transferred		28,015
		=========

The acquisition of ASH has resulted in a provisional goodwill of US$21.8m The Group has elected to measure the non-controlling interests in the acquiree using the proportionate method, resulting in an NCI on acquisition of US$2.7m (being 30% of the identifiable net assets at fair value).

The transaction costs of US$142,000 have been expensed and are included under transaction costs in respect of business combinations in the consolidated income statement.

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, subject to the completion of all the conditions precedent referred in SPA. Al Zahra is one of the largest private hospitals in the UAE, operating 137 active inpatient beds, serving approximately 400,000 outpatients and 23,000 inpatient bed days per year. This asset would be difficult to replicate and considerably expands NMC's capacity in the region. It complements NMC's existing network of seven out-patient medical centers in Sharjah, the third most populous emirate in the UAE, and further strengthens its position as the largest private healthcare provider in the UAE and GCC region.

NMC acquired control of Al Zahra on 13 February 2017, the date on which all the conditions precedent were met, meaning that control has passed to the Group and full consolidation of results will commence from that date. 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 total purchase consideration was US$560.9m including the Real Estate (Land and Building) amounting to US$100m. Total consideration for the transaction has been done under consideration of the acquired business and the Real Estate. There is no deferred and contingent consideration payable.

The fair value assessment of identifiable net assets at the acquisition date remains in progress and therefore the fair value of the identifiable net assets is preliminary. Based on the preliminary fair value exercise, provisional Brand of US$3.5m has been identified. The Group has a 1 year timeframe from the date of acquisition to finalise the measurement of the net assets acquired. The net assets identified to date are those existing at the acquisition date, those forming part of the acquisition, and those that meet the recognition criteria for assets and liabilities. No acquisition date contingent liabilities requiring full recognition have been noted as yet.

Provisional goodwill has been calculated being the difference between the fair value of the consideration paid and payable, and the fair value of the net assets acquired.

Details of the provisional goodwill calculated as of 31 January 2017, are as follows		Fair value recognised on acquisition

Assets		US$'000
Intangible assets		3,539
Property, plant and equipment		115,027
Inventories		6,668
Accounts receivable		42,129
Other receivables		1,017
Cash and bank balances		6,095
		---------------------
		174,475
Liabilities		---------------------
Accounts payable		22,750
Other payables		5,826
		---------------------
		28,576
		---------------------
Total identifiable net assets at fair value		145,899
Goodwill arising on acquisition		414,950
		---------------------
Purchase consideration transferred		560,849
		=========

The acquisition of Al Zahra has resulted in a provisional goodwill of US$415.0m. No other fair value adjustments relating to other assets or liabilities have been noted. Their fair values have provisionally been assessed as equalling their book values at the acquisition date.

Goodwill represents the future business potential and profit growth of the Al Zahra. 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 Al Zahra & NMC will obtain

The transaction costs of US$3,173,000 have been expensed and are included under transaction costs in respect of business combinations in the consolidated income statement.

Strategic risks and uncertainties

In the table of strategic risks below, the Board have set out the Group's strategic risks and the mitigating actions and controls taken against those risks. It should be noted that the order that these risks are expressed in the table does not reflect an order of magnitude as regards their potential impact on the Group. The Board Oversight of the System of Internal Control and Risk section in the Annual Report also sets out additional details of the governance framework and controls in place within the Group's businesses to monitor and control risk.

There have been no material changes made to the Group's strategic risk register in 2016. However, the Board has made a number of minor changes to the list of principal risks in the last 12 months, particularly having regard to the challenges faced by the Group in the execution of its strategic growth plan and integration of acquired businesses into the Group, in particular given the acquisitive nature of the Group and its entry into new markets.

Risk Class

Description and Potential Impact

Current Mitigations

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 multi-brand 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 know-how 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

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

This information is provided by RNS

The company news service from the London Stock Exchange

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2.2 BASIS OF CONSOLIDATION

Revenue recognition

Interest income

Rebates from Suppliers

Property and equipment

Medical equipment

10% - 25%

Intangible assets

Borrowing costs

Pre-operating expenses

Pre-operating expenses are the expenses incurred prior to start of operations of a new business unit. These are recognised in the consolidated income statement in the year in which they occur.

Inventories

Accounts receivable

Cash and cash equivalents

Equity

Accounts payable and accruals

Term loans

Foreign currencies

Translation of foreign operations

Impairment of financial assets

10 FINANCE COSTS

11 FINANCE INCOME

12 PROFIT FOR THE YEAR BEFORE TAX

13 AUDITOR'S REMUNERATION

14 STAFF COSTS AND DIRECTORS' EMOLUMENTS

15 TAX

19 LOAN RECEIVABLE

20 INVENTORIES

33 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Interest rate risk

Credit risk

Foreign currency risk

Capital management

The primary objective of the Group's capital management is to ensure that it maintains healthy capital ratios in order to support its business and maximise shareholders' value.

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