RE: What could NMC do29 Feb 2020 09:41
true - but atleast some of it would have been held as direct collateral and was sold (as we're told) for "enforcement of security"... so that $335m cannot be the full current balance that NMC is liable for, even if they go unpaid... it must be some measure lower than this (but true, probably not zero).
In terms of margin comparisons:
EBITDA margin comparison given with the competitors is again misleading and not comparable. As per our
Group strategy history (which was based on first Capacity, then Capability and later geographic expansion).
Unlike any other competitors, NMC has additional service capabilities which results in high margins
healthcare services. This is why NMC is differentiated from other competitors who are primarily
multispecialty focused businesses. NMC benefits in terms of margins from other specialized verticals like
IVF, long term care and O & M verticals which are high margin businesses.
FY 2014 EBITDA margins of our competitors i.e. Mediclinic and Al Noor hospitals were at 22% and 19%
respectively and NMC EBITDA Margin in FY 2014 stood at c. 16%. The NMC group started to add
capabilities from acquisitions starting from FY 2015 wherein high margin businesses like Long term care &
Homecare, IVF, Cosmetic business and Operations & Management contracts were added. This was
complemented with geographical expansions and utilization of the new facilities which were opened in FY
2014 and FY 2015 which helped group to sustain higher margins over the years.
I found this interesting too, they had kind of already told us they use supply chain and receivables financing...
Suppliers’ use of supply chain financing
The Group has never given an impression to investors or other stakeholders that our suppliers have not
used, or are not using, supply chain financing. These facilities remain commercial matters for these
suppliers and only have recourse to them. NMC has been publicly clear on that position for several years
and the Group accounts for its obligations to such suppliers as trade payables.
The Group is not assuming any recourse on any such supply finance facilities. NMC has simply provided
an undertaking in the form of a guarantee to settle the accepted trade payables against each invoice.
Accordingly, the supply chain finance programs that Muddy Waters claims could be “not on the balance
sheet at all” are accounted for as trade payables on the balance sheet, which is the correct classification
under IFRS.
Under these types of supply chain finance programs, suppliers accept discounted payments for their
invoices in return for receiving immediate payment from the financer, who then collects the full amount of
the invoice from the purchaser (NMC in this case) at the original invoice payment date. Clearly, for the
purchaser (NMC) these payments relate to trade payables, with no actual borrowing by NMC from the
financer to pay suppliers early or providing direct credit support for the suppl
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