LENMED AIR 2019.pdf

Figures in R’000 Carrying value at beginning of year Additions Disposals Depreciation FCTR Adjustment 2018 Carrying value at end of year 9. Property, plant and equipment continued 2018 Buildings - (restated) 1 798 016 142 346 - (6 470) (30 318) 1 903 574 Land - (restated) 160 446 61 832 - - (7 467) 214 811 Plant and equipment 275 327 94 962 (764) (36 062) (4 549) 328 932 Motor vehicles 724 2 049 (37) (353) (4) 2 379 Furniture and fittings 35 373 12 990 - (3 068) (1 772) 43 523 Leasehold improvement 5 033 - – (1 593) – 3 440 Office equipment 5 384 572 – (1 223) – 4 733 IT equipment 20 608 9 868 (4 763) (4 731) (166) 20 816 2 300 911 324 619 (5 564) (53 500) (44 276) 2 522 208 Certain assets are encumbered as security for liabilities of the Group (refer to note 20). A register of land and buildings is available for inspection at the registered office of the company by its shareholders. No borrowing costs have been capitalised in the current year (2018: R21.481 million). Figures in R’000 Cost Accumulated amortisation Carrying value 10. Goodwill 2019 Carrying amount at end of the year 312 888 – 312 888 2018 Carrying amount at end of the year 312 888 – 312 888 Goodwill relates to the excess of the purchase price consideration over the fair value of the assets and liabilities of Lenmed Health Laverna (Pty) Ltd, Lenmed Health Shifa (Pty) Ltd, Lenmed Health Kathu Private Hospital (Pty) Ltd and Lenmed Ethekwini Hospital and Heart Centre (Pty) Ltd on acquisition as a subsidiary and is detailed below: Group Figures in R’000 2019 Restated 2018 Lenmed Health Laverna (Pty) Ltd 5 125 5 125 Lenmed Health Shifa (Pty) Ltd 17 282 17 282 Lenmed Health Kathu Private Hospital (Pty) Ltd 10 378 10 378 Lenmed Ethekwini Hospital and Heart Centre (Pty) Ltd 280 103 280 103 312 888 312 888 An annual impairment test is conducted on goodwill. Management determines the recoverable amounts of cash generating units as being the higher of net selling price or value in use. In the absence of an active market, value in use is used to determine the recoverable amount. A traditional method of discounting management’s best estimate of future cash flows attributable to the cash generating unit has been applied to determine the value in use. A growth rate has been applied to the cash flow streams to take into account the effect of inflation. Management has based it’s cash flow projections covering a 10 year period. Assumptions used in the calculation of the discount rate are as follows: + R186 rate was yielding 8.71% as at 28 February 2019 (2018: 8.31%). + A market risk premium of 6% (2018: 5.6%) given the unlisted nature of the Group. Growth for 2019 is forecast to be 8% (2018: 8%). + Beta of 0.8 is appropriate based on the defensive nature of the Group. The net present value of these forecasts support the value of goodwill indicated above. Management has based their assumptions on past experience and external sources of information. Notes to the consolidated annual financial statements continued CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 106