LENMED AIR 2019.pdf

Debt management As mentioned previously, during the financial year under review, Lenmed obtained a R1.6 billion composite facility from Rand Merchant Bank to allow it to continue its expansion projects. Interest-bearing borrowings (excluding shareholder loans) increased marginally from R1 262.5 million to R1 288.5 million. Lenmed’s net interest-bearing debt to equity ratio (excluding loans from minorities) has decreased from 60.6% to 54.9%. The interest ratio coverage decreased in line with increased interest payable to 2.7 times (2018: 3.5 times), with cash flow from operations to net interest expense dropping from 3.8 times to 3.2 times. The Rand Merchant Bank facility is at a lower rate and, combined with lower capital expenditure levels, should result in improved ratios in 2020. The Group, despite significant borrowings, believes it can repay the current debt comfortably. Risk management The Group adequately met covenant hurdles at the end of the financial year and the current forecasts indicate that the covenants will also be adequately met in the next financial year, as well as in following years. However, the Group has prudently requested and obtained an overdraft facility of R100 million. Compelling acquisitions will be treated on a case-by-case basis, within acceptable borrowing levels. However, the focus for the next 18 months will be to reduce debt levels to ensure that the Group remains prudently geared. Dollar receipts from patients in Mozambique are currently sufficient to meet the Rand Merchant Bank (RMB) loan obligations for that territory. Mr Vaughan Firman Chief Financial Officer 41 LENMED ANNUAL INTEGRATED REPORT 2019