Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 1
Alliance Medical Group Limited
Annual Report &
Financial Statements
For the year ended 30 September 2020
Company number 08601376
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 2
Registered Number: 08601376
DIRECTORS
P P Van Der Westhuizen
M D Chapman
H A D Marsh
INDEPENDENT AUDITORS
Deloitte LLP
Four Brindley Place
Birmingham
B1 2HZ
United Kingdom
BANKERS
NatWest Bank plc
1 Town Hall Building
Banbury
Oxon
OX16 8JS
REGISTERED OFFICE
Iceni Centre
Warwick Technology Park
Warwick
CV34 6DA
United Kingdom
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Annual Report & Financial Statements 2020 Page 3
STRATEGIC REPORT
PRINCIPAL ACTIVITIES
The principal activities of Alliance Medical Group Limited and its subsidiaries (the “Group”) during the year were
the provision of diagnostic imaging services, molecular imaging services and patient services to public health
services and independent organisations across Europe, and the manufacture and distribution of
radiopharmaceuticals.
The Group operates a portfolio of mobile and fixed location scanners, with most revenue generated using
Magnetic Resonance Imaging (“MRI”) and Positron Emission Tomography/Computed Tomography (“PET/CT”)
technology.
The Company acts as a holding company.
REVIEW OF THE BUSINESS
The Group is positioned as Europe’s leading independent provider of medical imaging services, operating
principally in the UK, Germany, Ireland, Italy, The Netherlands and Spain. The key performance indicators
during the year were:
Year ended
30 Sep 2020
Year ended
30 Sep 2019
Turnover
£319.9m
£319.0m
EBITA
1
£25.6m
£36.0m
EBITDA
2
£61.8m
£64.8m
As can be seen from the above, turnover has remained consistent with the prior year despite adverse impact
from the Covid pandemic. Reduction in volumes of scans were felt around the group particularly when strict
restrictions were imposed by local government, mainly impacting the months of March to July 2020. Following
this, volumes have since recovered and are back to approximately 100% of pre-Covid levels in all regions. New
opportunities which became available as a result of the pandemic helped recover lost revenue. Increased costs
were incurred, which negatively impacted EBITDA and EBITA, also as a result of Covid, these mainly related
to PPE costs for staff and reduction in efficiency in operating the units due to additional Covid prevention
measures.
As a result of the above and as can be seen from the Income statement on page 18, cost of sales excluding
depreciation have increased to £194.9m (30 September 2019 £184.4m) and overheads have reduced to
£58.2m (30 September 2019 £65.2m).
IFRS 16 has also been adopted for the first time which has impacted the depreciation number by approximately
£5.5m in the year to 30 September 2020, depreciation in total increasing to £36.2m (30 September 2019
£28.8m).
The strategy of the Group is to add value to healthcare customers through providing practical solutions at the
critical point of clinical decision-making, by helping to plan, develop and deliver clinical pathways that deliver
the best possible patient outcomes. This strategy is delivered through the provision of diagnostic imaging
services, molecular imaging services and patient services, thereby contributing to the effectiveness and
efficiency of healthcare delivery, whilst providing acceptable returns for shareholders.
The Group is also expanding its footprint in the development, manufacture and distribution of
radiopharmaceuticals through the prior acquisition of the Piramal Imaging SA group. This acquisition, together
with the acquisition of Eckert & Ziegler’s cyclotron division during prior periods and the Group’s existing UK-
based radiopharmaceutical business, supports the Group strategy of contributing to the effectiveness and
efficiency of healthcare delivery by enhancing and developing the use of diagnostic imaging services.
A dividend of £nil (2019: £nil) was paid during the period to shareholders.
1
EBITA represents earnings before interest, tax, amortisation of acquired intangibles, profit/(loss) on disposal of property, plant and
equipment, share of profits of joint ventures and exceptional items.
2
EBITDA represents earnings before interest, tax, depreciation, amortisation of acquired intangibles, profit/(loss) on disposal of property,
plant and equipment, share of profits of joint ventures and exceptional items.
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STRATEGIC REPORT
REVIEW OF THE BUSINESS (continued)
The group does not consider there to be any other key performance indicators, including non-financial key
performance indicators, relevant to the business.
ACQUISITIONS DURING THE PERIOD
During the year the following business was acquired and the transaction has been treated as an acquisition
under IFRS 3 “Business Combinations” (note 5):
a) Alliance Medical S.R.L acquired Priamar S.R.L, consisting of one legal entity.
Total cash consideration transferred for the acquisition during the period was £0.6m and it contributed £0.8m
to revenue and a loss of £0.1m to EBITDA in the post-acquisition period.
SECTION 172(1) STATEMENT
In performing their duties under section 172, the directors of Alliance Medical Group Limited have had regard
to the matters set out in section 172(1) as follows:
The directors’ approach
The Group operates on a decentralised basis, with the Board having established an organisational structure
with clear reporting procedures, lines of responsibility and delegated authority. The Board is ultimately
accountable to the Company’s shareholders for setting the Company’s strategy and for overseeing its
financial and operational performance in line with the parent company’s strategic objectives. Implementation
of the Company’s strategic objectives, as determined and overseen by the Board, is delegated to the local
senior management teams within each region, who are also responsible for the day to day operational
management of their businesses.
The Board cultivates strong relationships with key stakeholders so that it is well placed and sufficiently
informed to take their considerations into account when making decisions where appropriate in order to
discharge their legal obligations and to pursue the Company’s strategic objectives. Our purpose is to create
long-term value for stakeholders and in order to do this, we need to understand our stakeholders and what
matters to them.
Maintaining our licence to operate
In executing our strategy, Directors must act in accordance with a set of general duties detailed in section 172
of the Companies Act 2006. These general duties include a duty to promote the success of the Company, and
specifically to act in a way that the Director considers, in good faith, would be most likely to promote the
success of the Company for the benefit of its shareholders as a whole and, in doing so, having regard
(amongst other matters) to:
Board oversight and Decision making
The board meets on a regular basis to review performance, including:
- Clinical governance and quality measures
- Human resource implications
- Operational delivery
- Financial performance
- Progress towards strategic objectives
Key decisions are taken in these meetings, being those which are material or of strategic importance to the
Group. These decisions are made in line with a Delegation of Authority as set by the Board of the ultimate
parent company, Life Healthcare Group Holdings Limited (“Life Healthcare”). For decisions that do fall outside
the Delegation of Authority, a recommendation is made by the Board to the appropriate sub-committee of Life
Healthcare Group for further consideration.
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STRATEGIC REPORT (continued)
Examples of key decisions taken during the year include:
Approval of 2021 budget
The board approved the final budget for the 12 months to September 2021, in September 2020, subject to the
final approval of the Life Healthcare Group Board. The budget was based on business plans and targets for
each main area of the Group, including any investments needed to fulfil these.
Capital investment in additional CT scanners
During the year the Company acquired additional CT scanners, in order to support various public healthcare
providers’ response to COVID-19, including within Nightingale Hospitals in England.
Key Stakeholders
As a healthcare provider, we have a large number of stakeholders, including patients, employees, regulators
and commissioners, customers and suppliers.
Having regard to the need to foster the Company’s business relationships with patients
Our patients are central to everything we do. The board receives regular updates on quality and compliance
metrics so that the quality of services provided can be closely monitored. Patient feedback, both positive and
negative, is essential for the development of our service and to ensure we are providing the best possible
care for patients.
Having regard to the interests of the Company’s employees
The Company employs clinical staff and administrative teams to support them and enable their focus on
patient care.
The Company engages with employees through a number of channels, including the Employee Forum,
operational team briefings, regular communications from the UK MD and updates through the intranet.
The Directors monitor the results of regular staff surveys, so that the board is able to discuss human
resourcing matters with the interests of the employees at the centre. Engaging with our employees enables us
to create an inclusive culture and a positive working environment.
Having regard to the need to foster the Company’s business relationships with Regulators & Commissioners
As a provider of healthcare services, it is essential our services are provided in line with local regulator &
commissioners needs. The Board will consider the requirements of regulators & commissioners when making
decision on resource allocations.
With respect to long term decisions
All major decisions are reviewed and validated by the directors at regular board meetings with all key
decisions supported by detailed briefings identifying main issues, main recommendations, and alternatives
considered and the likely long term impact on the company in respect of value creation, its environmental and
community effect and any implications for key stakeholders.
With respect to high standards of business conduct
We acknowledge the responsibility we have to our local community in which we operate and given our global
presence, our duty to act on an international scale. The vast majority of our workforce is drawn from local
residence generating wealth in the areas we operate as well as bolstering employment opportunities.
Having regard to the need to act fairly as between members of the company
The ultimate parent undertaking is Life Healthcare Group Holdings Limited, incorporated in South Africa. The
board at South Africa level are represented within Life UK Holdco Ltd and its subsidiaries as mutual directors
sit on both boards. As a result the directors are fully aligned with its shareholders.
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STRATEGIC REPORT (continued)
Having regard to the need to foster the Company’s business relationships with Customers
A close working relationship with our customers, who are predominantly public healthcare providers, helps us
to better understand their needs. Our teams use their significant experience in providing high quality
healthcare services to constantly refine what we do to provide continuous improvement in our service offering.
Having regard to the need to foster the Company’s business relationships with Suppliers
The company has good relationships with its key suppliers and often works in partnership with them to deliver
innovative solutions to better benefit other stakeholders.
Having regard to the need to foster the Company’s business impacts on the environment
The Company recognises the serious threat posed by climate change and the urgent need for meaningful
action. As part of their improvement plans, our businesses seek to reduce their GHG emissions over time
through more efficient use of electricity, fuel and heat, and by increasing the proportion of renewable energy
where commercially viable.
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STRATEGIC REPORT (continued)
MANAGEMENT OF THE PRINCIPAL RISKS AND UNCERTAINTIES FACING THE GROUP
The Directors recognise the importance of good risk management to the success of the Group. The risk
management strategy is based on a clearly defined Group strategy, supported by strong management which is
capable of implementing and adapting the strategy to reflect changing market dynamics and customer needs.
The principal risks and uncertainties facing the Group, the potential impact and mitigation are summarised
below.
Risk Category
Potential Impact
Mitigation
Operational risk
Adverse patient
outcomes
The Group is focused on implementing new systems,
providing high quality training, increasing recruitment and
providing high quality reporting.
Financial risk
Failure to meet growth
targets
Annual budget reviewed by the Directors, with actual
performance against the budget reported monthly;
Clear delegated authority for major capex and material
contracts with Director review and approval;
Centralisation of purchasing scanners and ensuring
appropriate insurance cover.
Competitive risk
Loss of contracts during
competitive retender
Ensuring clinical standards and performance criteria on
existing contracts are maintained;
Strengthening the financial status of the Group;
Broad spread of customers to minimise the impact of
losing an individual customer.
Legislative risk
Increased compliance
costs
Monitoring potential changes to legislation;
Actively engaging with decision makers to drive change;
Regular audits undertaken of compliance with legislation.
Reputational risk
Loss of existing or
future business
Certain categories of scans are double-reported and
emphasis is placed on quality and medical oversight;
Press comments are monitored and responded to as
appropriate.
Pricing risk
Reduced profitability
Entering medium to long term contracts;
Broad customer base to minimise the impact of a single
customer making changes.
Liquidity risk
Withdrawal of funding
Applying cash collection targets throughout the Group;
Utilising debt factoring facilities;
Regular cash flow forecasting, with action taken if needed
to re-time flows.
Credit risk
Increased bad debt
expense
Diversification of credit risk across several European
countries, and regions within those countries;
Broad customer base covering both public and private
sector;
Deferred payment terms offered only to those customers
which demonstrate an appropriate payment history and
satisfy credit-worthiness procedures.
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STRATEGIC REPORT (continued)
MANAGEMENT OF THE PRINCIPAL RISKS AND UNCERTAINTIES FACING THE GROUP (continued)
Risk Category
Mitigation
Exchange rate
risk
Hedging via a portion of the ultimate Group’s borrowings
being denominated in Euros.
Recruitment risk
Development of undergraduate placement scheme,
graduate recruitment programme and other international
recruitment channels.
Commercial
viability risk
Consideration of which radiopharmaceutical compounds to
develop in the context of potential market size, the
probability of success and the costs to develop;
Regular reviews of decisions to progress taking into
account any further developments;
Partnering with pharmaceutical companies to develop
compounds for use in their own clinical trials.
Supply chain risk
Rolling maintenance programme for cyclotrons;
Reciprocal back up arrangements in place with other
suppliers;
Setup of new cyclotron sites where commercially viable,
e.g. Dinnington site setup in 2020.
Brexit risk
Trying to use varied resourcing strategies, including
increased focus on university partnerships and
apprenticeship to increase availability of qualified
radiographers;
Also hiring from outside of EU.
FUTURE DEVELOPMENTS
The Directors are satisfied with the performance of the Group and do not believe the nature or strategy of the
business will change in the foreseeable future.
Approved by the Board of Directors on 23 December 2020 and signed on its behalf by:
H A D Marsh
Director
Iceni Centre, Warwick Technology Park, Warwick, CV34 6DA, United Kingdom
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REPORT OF THE DIRECTORS
The Directors present their report together with the audited consolidated financial statements for the year ended
30 September 2020.
RESULTS AND DIVIDENDS
For the year to 30 September 2020 EBITA was £25.6m (30 September 2019: £36.0m) and EBITDA was £61.8m
(30 September 2019: £64.8m). The profit for the year after interest, tax, depreciation, amortisation and
exceptional items was £2.9m (30 September 2019: profit of £6.7m).
During the year a dividend of £nil was paid to shareholders (30 September 2019: £nil). Since year end no
dividends have been proposed.
FUTURE DEVELOPMENTS
The Directors do not believe that the nature or strategy of the business will change in the foreseeable future.
DIRECTORS
The current Directors who served in the period and up to the date of signing were as follows:
P P Van Der Westhuizen
M D Chapman
H A D Marsh
The Directors held no shares in the Company at 30 September 2020 (2019: nil).
DIRECTORS’ AND OFFICERS’ LIABILITY INSURANCE
During the year and at the date of approval of the financial statements there were insurance cover for Directors’
and Officersliability as permitted under section 232 (2) of the Companies Act 2006. These are third party
indemnity policy and it’s a Global policy arranged by the company’s Ultimate Parent and controlling party, Life
Healthcare Group Holdings Limited.
RESEARCH AND DEVELOPMENT
Within Life Molecular Imaging, we have a Pipeline of novel imaging agents that address major unmet clinical
needs in neurological, oncological and cardio vascular diseases. These products are at various stages of
development, including some within active clinical trials.
EMPLOYEE INVOLVEMENT
The Group employed an average of 2,125 people across Europe in the period (2019: 2,026). The Group
attaches considerable importance to the involvement of its employees and has continued to keep them informed
on matters affecting them as employees and on the various factors affecting the performance of the Group.
Employees are consulted on issues directly affecting them wherever practicable, and senior managers and
employee representatives from all areas of the business meet to discuss issues. In some areas of the business,
employee surveys are undertaken, using an independent third party, and the results are shared with employees
and are used to drive changes as required, and also outline the impact economic and financial factors on the
company’s performance. Some senior management are also involved in a share scheme to further encourage
their involvement in the company’s success.
EQUALITY
The Group is committed to ensuring that recruitment practices promote equality of opportunity in line with the
2010 Equality Act in the UK and relevant legislation in other regions in which the Group operates. The Group
treats all applicants fairly regardless of their sex, sexual orientation, marital status, race, colour, nationality,
ethnic or nation origin, religion, age, disability and union membership status. The Group ensures that no
requirement or condition is imposed without justification, which could disadvantage an individual on any of the
above grounds.
The Group continues to be supportive of the employment of disabled persons. Applications for employment
from disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned.
In the event an existing member of staff becomes disabled, it is the Group’s policy to provide continued
employment wherever practicable in the same or alternative positions and appropriate training is arranged. It
is the policy of the Group that the training, career development and promotion of disabled employees should,
as far as possible, be identical to that of other employees.
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REPORT OF THE DIRECTORS (continued)
USE OF FINANCIAL INSTRUMENTS
Financial instruments are used by the directors to hedge against the financial risks the company faces, details
of these risks and how they have been mitigated are further explained in the strategic report on pages 6 and 7.
POLICY AND PRACTICE ON PAYMENT OF CREDITORS
It is the Group’s policy to confirm the terms of payment with suppliers when agreeing the terms of the
transaction. Payments are contingent on the supplier providing goods or services to the required standard and
purchasing is sometimes co-ordinated between Group undertakings.
BRANCHES
Alliance Medical Limited, a subsidiary of Alliance Medical Group has a branch in Italy, Alliance Medical Limited
Sede secondaria MB, the results of which are included in these financial statements.
GOING CONCERN
The Group performs regular assessments on the going concern status of the Group. These assessments take
into consideration:
current solvency of the Group;
current liquidity position;
available committed and uncommitted bank facilities;
cash commitments for the next 12 months;
bank covenants; and
debt maturities.
As part of the assessments the board of directors has reviewed the Group budgets, forecasts, available cash
resources and unutilised facilities as well as the debt maturity profile. The forecasts for the Group have been
prepared, covering its future performance, capital and liquidity for a period of 12 months from the date of
approval of these consolidated financial statements including performing sensitivity analyses. The expected
future cash flows were adjusted to reflect the best estimate of the short and longer-term impact of the COVID-
19 pandemic (the pandemic).
To ensure the Group has sufficient cash reserves, in addition to securing bank facilities at Life UK Holdco level,
postponing central bonus payments and deferring capex projects, management has implemented a number of
mitigating actions which include cost and cash preservation levers across the Group’s operations.
The external debt used to provide funding for the group sits outside of this consolidation at Alliance Medical
Group level (the external debt is recorded in Life UK Holdco Limited) and include covenants that must be met
at various measurement points as defined in the contract for these facilities. These covenants are measured
based on the results of the wider group- this being the group headed by Life Healthcare Group Holdings Limited.
Life Healthcare Group Holdings Limited is the ultimate parent undertaking and controlling party of Alliance
Medical Group limited. The wider group successfully refinanced this external debt during March 2020 and
extended the Debt’s maturities. This wider Group is in a strong financial position with net debt to normalised
EBITDA as at 30 September 2020 at 2.96 times (2019: 1.96 times). Given the significant uncertainty caused by
the pandemic, the wider Group pre-emptively negotiated amended bank covenants for the period up to 31
March 2021 and continue to monitor prospective compliance with such covenants. In addition, banking facilities
have been increased and the wider Group’s committed undrawn bank facilities as at 30 September 2020 are
R6.3 billion.
The Group’s assessments and sensitivity analysis show that the Group has sufficient accessible capital and
liquidity to continue to meet its obligations as they fall due and as a result it is appropriate to prepare these
consolidated financial statements on a going concern basis.
POLITICAL AND CHARITABLE DONATIONS
The Group made £nil (2019: £nil) charitable donations and £nil (2019: £nil) political donations during the period.
FINANCIAL RISK MANAGEMENT
For measures taken by the Directors to alleviate the financial risks borne by the group, please see the further
detail in the strategic report on pages 7 to 8.
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REPORT OF THE DIRECTORS (continued)
ENERGY AND CARBON REPORTING
The Group recognises the serious threat posed by climate change and the urgent need for meaningful action.
As part of their improvement plans, our businesses seek to reduce their GHG emissions over time through
more efficient use of electricity, fuel and heat, and by increasing the proportion of renewable energy where
commercially viable.
Alliance Medical submitted its four-yearly ESOS2 Energy Consumption Report in December 2019. The report
provides greater visibility of our energy use across all our supply channels. Alliance Medical is also required
to submit a report in terms of government’s streamlined energy and carbon reporting (SECR) framework for
the first time this year, providing commentary on the practical changes undertaken to improve energy
consumption and, consequently, our environmental footprint. We are also busy transforming our car fleet
scheme to introduce electric vehicles.
Alliance Medical is particularly exposed to radioactive waste due to the nature of its business. We manage
this carefully, along with the control and disposal of general, infectious and hazardous medical waste. We
comply with international waste disposal guidelines and local in-country requirements throughout this
process.
Engagement with suppliers, customers and others
For further detail on the business relationships of the group, please refer to the Section 172 statement in the
strategic report shown on pages 4 to 6.
POST BALANCE SHEET EVENTS
The Covid pandemic is considered to remain a significant event after the balance sheet date, even though it
has also impacted the period in these financial statements. The impact of Covid is still being felt across the
globe within the healthcare industry, including the countries that Alliance Medical Group operate in. Following
the balance sheet date, a number of European Countries, including the UK, has entered second national lock
down. The effects of Covid are still felt around the business, however volumes are almost back to 100% of
pre-Covid levels and systems and protocols put in place during wave 1 of the pandemic now mean that the
business can continue to operate at a more effective level during the ongoing Covid impacts. This is as well
as opportunities taken as a result of the pandemic, have meant that the directors do not believe that the
effects of Covid post the balance sheet date lead to a material impact in the numbers presented and
therefore no adjustments are required.
As well as the above there are ongoing discussions between the UK and the EU in relation to a trade deal
following the UKs exit from the EU effective from 1 January 2021. Currently there are no details regarding the
likelihood or the contents of such a deal. As a result it cannot be estimated what impacts Brexit will have on the
Company and therefore no changes have been made to these financial statements.
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REPORT OF THE DIRECTORS (continued)
AUDITORS
Each of the persons who is a director at the date of approval of this report confirms that:
so far as the director is aware, there is no relevant audit information of which the Company's auditors are
unaware; and
the director has taken all the steps that he/she ought to have taken as a director in order to make
himself/herself aware of any relevant audit information and to establish that the company's auditors are
aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of s418 of the
Companies Act 2006.
Deloitte LLP have expressed their willingness to continue in office as auditors and appropriate arrangements
have been put in place for them to be deemed reappointed as auditors in the absence of an Annual General
Meeting.
Approved by the Board of Directors on 23 December 2020 and signed on its behalf by:
H A D Marsh
Director
Iceni Centre
Warwick Technology Park
Warwick
CV34 6DA
United Kingdom
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REPORT OF THE DIRECTORS (continued)
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the Annual Report and the financial statements in accordance with
applicable law and regulation.
Company law requires the directors to prepare financial statements for each financial year. Under that law the
directors have prepared the group financial statements in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union and the parent company, company financial statements
have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law), including FRS 101 “Reduced Disclosure Framework.
Under company law the directors must not approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that
period. In preparing the parent company financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgments and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material
departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the company will continue in business.
In preparing the group financial statements, International Accounting Standard 1 requires that directors:
properly select and apply accounting policies;
present information, including accounting policies, in a manner that provides relevant, reliable,
comparable and understandable information;
provide additional disclosures when compliance with the specific requirements in IFRSs are
insufficient to enable users to understand the impact of particular transactions, other events and
conditions on the entity’s financial position and financial performance; and
make an assessment of the company’s ability to continue as a going concern.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the company’s transactions and disclose with reasonable accuracy at any time the financial position of the
company and enable them to ensure that the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
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INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF ALLIANCE MEDICAL GROUP LIMITED
Report on the audit of the financial statements
Opinion
In our opinion:
the financial statements of Alliance Medical Group Limited (the ‘parent company’) and its subsidiaries
(the ‘group’) give a true and fair view of the state of the group’s and of the parent company’s affairs as
at 30 September 2020 and of the group’s profit for the year then ended;
the group financial statements have been properly prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union;
the parent company financial statements have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice, including Financial Reporting Standard 101
“Reduced Disclosure Framework”; and
the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
We have audited the financial statements which comprise:
the consolidated income statement;
the consolidated statement of comprehensive income;
the consolidated and parent company balance sheets;
the consolidated and parent company statements of changes in equity;
the consolidated cash flow statement;
the related notes to the consolidated financial statements 1 to 30; and
the related notes to the parent company financial statements 1 to 13
The financial reporting framework that has been applied in the preparation of the group financial statements is
applicable law and IFRSs as adopted by the European Union. The financial reporting framework that has
been applied in the preparation of the parent company financial statements is applicable law and United
Kingdom Accounting Standards, including Financial Reporting Standard 101 “Reduced Disclosure
Framework” (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the auditor's
responsibilities for the audit of the financial statements section of our report.
We are independent of the group and the parent company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK, including the Financial Reporting Council’s (the
‘FRC’s’) Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
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INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ALLIANCE MEDICAL GROUP LIMITED
(continued)
Conclusions relating to going concern
We are required by ISAs (UK) to report in respect of the following matters where:
the directors’ use of the going concern basis of accounting in preparation of the financial statements
is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that
may cast significant doubt about the group’s or the parent company’s ability to continue to adopt the
going concern basis of accounting for a period of at least twelve months from the date when the
financial statements are authorised for issue.
We have nothing to report in respect of these matters.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion
on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material misstatement of the other information. If,
based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in respect of these matters.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent
company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors either intend to liquidate the group or the
parent company or to cease operations, or have no realistic alternative but to do so.
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Annual Report & Financial Statements 2020 Page 16
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ALLIANCE MEDICAL GROUP LIMITED
(continued)
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s
website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Report on other legal and regulatory requirements
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
the information given in the strategic report and the directors’ report for the financial year for which
the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding of the group and of the parent company and their
environment obtained in the course of the audit, we have not identified any material misstatements in the
strategic report or the directors’ report.
Matters on which we are required to report by exception
Under the Companies Act 2006 we are required to report in respect of the following matters if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our
audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and
returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
We have nothing to report in respect of these matters.
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Annual Report & Financial Statements 2020 Page 17
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ALLIANCE MEDICAL GROUP LIMITED
(continued)
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
company and the company’s members as a body, for our audit work, for this report, or for the opinions we
have formed.
Peter Gallimore FCA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Birmingham, United Kingdom
December 2020
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23
Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 18
CONSOLIDATED INCOME STATEMENT
For the year ended 30 September 2020
Note
For the year to
30 September
2020
£m
For the year to
30 September
2019
£m
Revenue
4
319.9
319.0
Cost of sales
(231.1)
(213.2)
Gross profit
88.8
105.8
Administrative expenses
(68.2)
(74.7)
Exceptional items
6
(0.7)
(1.8)
Profit /(loss) before interest & taxation
7
19.9
29.3
Finance costs
9
(14.9)
(16.8)
Share of profit of joint ventures
13
0.5
0.6
Profit/(loss) before taxation
5.5
13.1
Taxation
10
(2.6)
(6.4)
Profit/(loss) for the year
2.9
6.7
Profit/(loss) for the year attributable to:
The equity shareholders of the Company
2.9
6.7
Non-controlling interests
-
-
Profit for the year
2.9
6.7
The notes on pages 23 to 69 are an integral part of these consolidated financial statements.
The Group’s activities all derive from continuing operations. There is no material difference between the profit
on ordinary activities before taxation and the profit for the financial periods stated above and their historical
cost equivalents.
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Annual Report & Financial Statements 2020 Page 19
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 September 2020
Year to
30 September
2020
Year to
30 September
2019
£m
£m
Items that will not be reclassified subsequently to profit or
loss:
Remeasurement of net defined benefit liability
0.2
(0.3)
Items that may be reclassified subsequently to profit or loss:
Foreign exchange differences on translation of foreign operations
0.3
(0.4)
Other comprehensive income/(expense) for the year, net of
income tax
0.5
(0.7)
Profit in the year
2.9
6.7
Total comprehensive income in the year
3.4
6.0
Attributable to:
Owners of the parent
3.4
6.1
Non-controlling interests
-
(0.1)
Total comprehensive income in the year
3.4
6.0
The notes on pages 23 to 69 are an integral part of these consolidated financial statements.
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 20
CONSOLIDATED BALANCE SHEET Company registration number 08601376
As at 30 September 2020
At 30 Sep 2020
At 30 Sep 2019
Note
£m
£m
ASSETS
Non-current assets
Property, plant and equipment
11
242.5
201.1
Goodwill
12
99.9
97.7
Other intangible assets
12
37.7
38.7
Investment in joint ventures
13
3.1
2.8
Other investments
14
0.9
0.6
Deferred tax assets
22
6.1
7.2
390.2
348.1
Current assets
Inventories
15
2.9
1.9
Trade and other receivables
16
61.4
67.4
Current income tax receivable
0.7
-
Cash and cash equivalents
17
63.9
37.6
128.9
106.9
TOTAL ASSETS
519.1
455.0
LIABILITIES
Non-current liabilities
Trade and other payables
18
(32.3)
(27.4)
Borrowings
19
(324.1)
(257.1)
Deferred tax liabilities
22
(1.8)
(2.1)
Retirement benefit obligations
23
(7.4)
(7.0)
Provisions
24
(4.3)
(4.6)
(369.9)
(298.2)
Current liabilities
Trade and other payables
18
(106.1)
(111.4)
Borrowings
19
(20.8)
(37.4)
Current income tax payable
(1.4)
(1.3)
Provisions
24
(11.6)
(0.9)
(139.9)
(151.0)
TOTAL LIABILITIES
(509.8)
(449.2)
NET ASSETS
9.3
5.8
EQUITY
Share capital
25
-
-
Share premium account
127.4
127.4
Translation reserve
0.7
0.3
Other reserves
(126.6)
(126.6)
Retained earnings
7.8
4.7
Equity attributable to shareholders of the Company
9.3
5.8
Non-controlling interests
-
-
TOTAL EQUITY
9.3
5.8
The notes on pages 23 to 69 form an integral part of these financial statements.
The financial statements on pages 18 to 69 were approved by the Board of Directors on 23 December 2020
and were signed on its behalf by:
H A D Marsh
Director
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 21
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2020
Share
capital
£m
Share
premium
account
£m
Translation
reserve
£m
Other
reserves
£m
Retained
earnings
£m
Equity
share-
holders
£m
Non-
controlling
interests
£m
Total
equity
£m
At 1 October 2018
-
127.4
0.6
(126.6)
(1.7)
(0.3)
0.1
(0.2)
Profit for the year
-
-
-
-
6.7
6.7
-
6.7
Actuarial valuation of
pensions
-
-
-
-
(0.3)
(0.3)
-
(0.3)
Foreign exchange loss in
the year
-
-
(0.3)
-
-
(0.3)
(0.1)
(0.4)
Total Comprehensive
income
-
-
(0.3)
-
6.4
6.1
(0.1)
6.0
At 30 September 2019
-
127.4
0.3
(126.6)
4.7
5.8
-
5.8
Profit for the year
-
-
-
-
2.9
2.9
-
2.9
Actuarial valuation of
pensions
-
-
-
-
0.2
0.2
-
0.2
Foreign exchange gain in
the year
-
-
0.4
-
-
0.4
-
0.4
Total Comprehensive
income
-
-
0.4
-
3.1
3.5
-
3.5
At 30 September 2020
-
127.4
0.7
(126.6)
7.8
9.3
-
9.3
The notes on pages 23 to 69 form an integral part of these financial statements.
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Annual Report & Financial Statements 2020 Page 22
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 September 2020
Year to
30 Sep 2020
Year to 30
Sep 2019
Note
£m
£m
Cash generated from operations
27
78.0
64.9
Interest paid
(11.6)
(11.1)
Income tax paid
(2.1)
(8.7)
Net cash generated from operating activities
64.3
45.1
Cash flows from investing activities
Net cash paid for acquisitions
(0.8)
(9.4)
Purchase of property, plant and equipment
(42.3)
(46.0)
Purchase of intangible assets
(3.5)
(6.0)
Proceeds from sale of property, plant and equipment
0.8
0.9
Net cash used in investing activities
(45.8)
(60.5)
Cash flows from financing activities
Repayment of borrowings
(17.6)
(5.2)
Drawdown of borrowings
32.4
14.5
Repayment of finance leases
(14.9)
(14.1)
Drawdown of finance leases
12.6
11.5
Repayment of principal lease obligations
(5.2)
-
Net cash generated from financing activities
7.3
6.7
Net increase/(decrease) in cash and cash equivalents
25.8
(8.7)
Cash and cash equivalents at the beginning of the period
37.6
46.4
Exchange differences
0.5
(0.1)
Cash and cash equivalents at end of period
17
63.9
37.6
Net cash and cash equivalents comprises:
Cash at bank
63.9
37.6
The notes on pages 23 to 69 form an integral part of these financial statements.
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 23
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
1. GENERAL
The Company is a private company, limited by shares and is incorporated in the United Kingdom under
Companies Act 2006 and registered in England. The address of the Registered Office and principal place of
business is shown on page 2.
The principal activities of the Group are the provision of diagnostic imaging services, molecular imaging services
and patient services to public health services and independent organisations across Europe, and the
manufacture and distribution of radiopharmaceuticals.
2. ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these consolidated financial statements are set
out below.
Basis of preparation
These financial statements have been prepared in accordance with IFRS as adopted by the European Union
(“adopted IFRS”), and with those parts of the Companies Act 2006 applicable to companies reporting under
adopted IFRS. The Company has elected to prepare its Company financial statements in accordance with
applicable accounting standards in the United Kingdom and Companies Act 2006; these are presented on
pages 18 to 69.
These financial statements have been prepared on a going concern basis, under the historical cost convention
except where the measurement of balances at fair value is required. The financial statements have been
prepared in Pounds Sterling, which is the same as the functional currency of the Company, and all values are
rounded to the nearest one hundred thousand (£0.1m) except where otherwise stated. The following accounting
policies are those that the Group considers to be its principal accounting policies in respect of the consolidated
results.
Going Concern
The Group performs regular assessments on the going concern status of the Group. These assessments take
into consideration:
current solvency of the Group;
current liquidity position;
available committed and uncommitted bank facilities;
cash commitments for the next 12 months;
bank covenants; and
debt maturities.
As part of the assessments the board of directors has reviewed the Group budgets, forecasts, available cash
resources and unutilised facilities as well as the debt maturity profile. The forecasts for the Group have been
prepared, covering its future performance, capital and liquidity for a period of 12 months from the date of
approval of these consolidated financial statements including performing sensitivity analyses. The expected
future cash flows were adjusted to reflect the best estimate of the short and longer-term impact of the COVID-
19 pandemic (the pandemic).
To ensure the Group has sufficient cash reserves, in addition to securing bank facilities at Life UK Holdco level,
postponing central bonus payments and deferring capex projects, management has implemented a number of
mitigating actions which include cost and cash preservation levers across the Group’s operations.
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 24
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
2. ACCOUNTING POLICIES (continued)
The external debt used to provide funding for the group sits outside of this consolidation at Alliance Medical
Group level (the external debt is recorded in Life UK Holdco Limited) and include covenants that must be met
at various measurement points as defined in the contract for these facilities. These covenants are measured
based on the results of the wider group- this being the group headed by Life Healthcare Group Holdings Limited.
Life Healthcare Group Holdings Limited is the ultimate parent undertaking and controlling party of Alliance
Medical Group limited. The wider group successfully refinanced this external debt during March 2020 and
extended the Debt’s maturities. This wider Group is in a strong financial position with net debt to normalised
EBITDA as at 30 September 2020 at 2.96 times (2019: 1.96 times). Given the significant uncertainty caused by
the pandemic, the wider Group pre-emptively negotiated amended bank covenants for the period up to 31
March 2021 and continue to monitor prospective compliance with such covenants. In addition, banking facilities
have been increased and the wider Group’s committed undrawn bank facilities as at 30 September 2020 are
R6.3 billion.
The Group’s assessments and sensitivity analysis show that the Group has sufficient accessible capital and
liquidity to continue to meet its obligations as they fall due and as a result it is appropriate to prepare these
consolidated financial statements on a going concern basis.
Standards and interpretations effective in the current period
In the current financial year, the Group has adopted the following new and revised Standards, Amendments
and Interpretations. Their adoption has not had a significant impact on the comparative amounts reported in
these Financial Statements but IFRS 16 has had a significant impact on the current year:
IFRS 16: Leases (effective from 01 October 2019)
The Group adopted IFRS 16 “Leases” on 1 October 2019 using the modified retrospective approach, resulting
in no adjustments to the prior year comparatives. IFRS 16 superseded the previous lease guidance, including
IAS 17: “Leases” and related interpretations. IFRS 16 requires all leases, except where exemptions are
applied, to be recognised on the Balance Sheet as a lease liability with a corresponding right-of-use asset
presented within property, plant and equipment. As a result of the transition to IFRS 16, the Group recognised
right-of-use assets of £40.7 million and lease liabilities of £40.7 million at the date of transition.
As part of the initial application of IFRS 16, the Group has applied the following exemptions available: IFRS
16 guidance has not been applied to leases with a lease term which ends within 12 months of the date of
initial application or to leases of low value assets. Payments relating to these leases are recognised as an
expense in the Income Statement over the lease term and no right-of-use asset or lease liability is
recognised. The group has also chosen to apply the practical expedient in paragraph C3 of IFRS 16.
The lease liabilities were measured at the present value of the remaining lease payments discounted at the
incremental borrowing rate as at 1 October 2019. On transition, the right-of-use assets were measured at an
amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments. When
calculating the lease liabilities all elements of the lease were considered, including variable lease payments,
extension options and residual value guarantees, these were reviewed on a lease by lease basis.
The variable lease payments relate to four specific building rental contracts in Italy, and are specific
agreements with the building owners. The annual amounts payable vary as the lease goes on, however this is
pre-agreed and there are no ongoing variables which can affect the cost of the lease. As a result, the changes
in the lease cost has already been considered when completing the IFRS 16 valuation and so there are no
anticipated potential variances because of these. There is not deemed to be a material impact on the
calculation because of these leases.
There are also Italian building rentals with options to extend the lease period, the standard lease period for
these leases is 6 years, but with an option to extend for another 6 years. Due to the nature of the leases
(buildings) when carrying out the IFRS 16 valuations it has been assumed these will be extended as they are
most likely to be.
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 25
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
2. ACCOUNTING POLICIES (continued)
In order to calculate the incremental borrowing rate, reference interest rates were derived from current finance
leases or external borrowing rates. Interest rates were obtained for all key currencies and were subsequently
adjusted to reflect the country risk premium and a leasing risk premium. The leasing risk premium derived
was adjusted to reflect whether the lease was deemed to be secured or unsecured. The Group applied a
single discount rate to a portfolio of leases with similar characteristics, in line with the practical expedient
available under IFRS 16. For leases that were classified as finance leases under IAS 17, the carrying amount
of the right-of-use asset and the corresponding lease liability at 1 October 2019 was determined to be the
carrying amount of the lease asset and lease liability under IAS 17 immediately before that date. Where it
has been applicable and relevant to do so, the same incremental borrowing rate has been applied to a similar
group of assets. The weighted average borrowing rate applied to the leases during the year was 3.35%.
The following explains the difference between operating lease commitments disclosed, applying IAS 17, at 30
September 2019 and the lease liability recognised on adoption of IFRS 16 at 1 October 2019.
£m
Total minimum lease payments reported at 30 September 2019 under IAS 17
25.7
Change in assessment of lease term under IFRS 16
22.9
Leases outside the scope of IFRS 16
(0.2)
Impact of discounting lease liability under IFRS 16
(7.7)
Lease liability recognised on transition to IFRS 16 at 1 October 2019
40.7
New Standards, Amendments and Interpretations in issue but not yet effective
At the date of authorisation of these financial statements, the Group has not applied the following new and
revised IFRS Standards that have been issued but are not yet effective:
IFRS 17
Insurance Contracts
IFRS 10 and IAS 28
(amendments)
Sale or Contribution of Assets between an Investor and its Associate
or Joint Venture
Amendments to IAS 1
Classification of Liabilities as Current or Non-current
Amendments to IFRS 3
Reference to the Conceptual Framework
Amendments to IAS 16
Property, Plant and EquipmentProceeds before Intended Use
Amendments to IAS 37
Onerous Contracts Cost of Fulfilling a Contract
Annual Improvements to IFRS
Standards 2018-2020 Cycle
Amendments to IFRS 1 First-time Adoption of International Financial
Reporting Standards, IFRS 9 Financial Instruments, IFRS 16
Leases, and IAS 41 Agriculture
The directors do not expect that the adoption of the Standards listed above will have a material impact on the
financial statements of the Group in future periods.
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 26
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
2. ACCOUNTING POLICIES (continued)
Basis of consolidation
The consolidated financial statements of the Group have been prepared under the principles of acquisition
accounting.
Subsidiaries are entities over which the Group has control. Control is achieved when the Group is exposed to,
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. Subsidiaries are fully consolidated from the date that control commences
until the date that control ceases.
Inter-company transactions, balances and unrealised gains and losses on transactions between Group
companies are eliminated in full on consolidation.
Non-controlling interests in the net assets of consolidated subsidiaries are presented separately from the
Group’s equity therein. Non-controlling interests in the net assets consist of the amount of those interests at the
date of the original business combination and the non-controlling parties’ share of changes in equity since the
date of combination. Losses applicable to the non-controlling parties in excess of the non-controlling parties’
interest in the subsidiary’s equity are allocated against the interests of the Group except to the extent that the
non-controlling parties have a binding obligation and are able to make an additional investment to cover the
losses.
The Group applies IFRS 11 to all joint arrangements. Under IFRS 11 investments in joint arrangements are
classified as either joint operations or joint ventures. The Group’s investments in its joint ventures are accounted
for using the equity method. Under the equity method, joint ventures are initially recognised at cost and the
carrying amount of the investment is subsequently adjusted to recognise changes in the Group’s share of net
assets of the joint venture since the acquisition date. Goodwill relating to the joint ventures is included in the
carrying amount of the investment and is neither amortised nor individually tested for impairment. The
consolidated income statement reflects the Group’s share of the results of operations of the joint ventures. After
application of the equity method, the Group determines whether it is necessary to recognise an impairment loss
on its investment in its joint ventures. At each reporting date, the Group determines whether there is objective
evidence that the investment in the joint ventures is impaired. If there is such evidence, the Group calculates
the amount of impairment as the difference between the recoverable amount of the investment in the joint
ventures and its carrying value, and then recognises the loss as share of profit of joint ventures’ in the
consolidated income statement.
Business combinations
Acquisitions of subsidiaries are accounted for using the purchase method. The cost of the acquisition is
measured as the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or
assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs
directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the
acquisition date.
Where part or all of the consideration is deferred or contingent on uncertain future events, the cost of acquisition
initially recorded is a reasonable estimate of the fair value of amounts expected to be payable in the future,
discounted to present value. The cost of acquisition is adjusted when revised estimates are made, with
corresponding adjustments made to the income statement.
When the accounting for a business combination can only be determined provisionally, provisional values are
used. These provisional values are adjusted within 12 months of the acquisition date and once the initial
accounting has been completed by adjusting the fair values of the identifiable net assets acquired and the
goodwill arising on consolidation.
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 27
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
2. ACCOUNTING POLICIES (continued)
Goodwill
Goodwill arising on consolidation represents the excess of the cost of the business combination over the
Group’s interest in the fair value of the identifiable assets, liabilities and contingent liabilities of a subsidiary at
the date of acquisition. If the fair value of the net assets acquired is in excess of the aggregate consideration
transferred, the gain is recognised as profit.
The financial statements of subsidiaries used in the preparation of the consolidated financial statements are
prepared based on consistent accounting policies with the Group. The costs of integrating and reorganising
acquired businesses are charged to the post-acquisition income statement.
Goodwill is subsequently carried at cost less any accumulated impairment losses. For the purpose of
impairment testing, goodwill is allocated to each of the Group’s cash generating units expected to benefit from
the synergies of the combination. Cash generating units to which goodwill has been allocated are tested for
impairment annually or more frequently if there is an indication of potential impairment. If the recoverable
amount of the cash generating unit is less than the carrying amount of the unit, the impairment loss is allocated
first to reduce the carrying amount of goodwill allocated to the unit and then to other assets of the unit pro-rata
on the basis of the carrying amount of each asset in the unit. Any impairment loss recognised for goodwill is
not reversed in a subsequent year.
On disposal of a subsidiary, the attributable goodwill is included in the determination of the profit or loss on
disposal.
Intangible assets
Intangible assets that are acquired by the Group are stated at cost, which is, if acquired as part of a business
combination, the fair value of the intangible asset on the date of acquisition, or, in the case of individually
purchased intangible assets, the amount paid, less accumulated amortisation and impairment losses.
Amortisation is charged to the income statement on a straight line basis over the estimated useful lives as
follows:
Contractual and non contractual customer relationships 1 to 10 years
Brand name 4 years
Purchased technology licences 3 to 7 years
Product development costs Over the life of the relevant patent period, once
revenue starts to be generated
Amortisation periods are reviewed annually and adjusted if appropriate.
Internally generated intangible assets are recognised in the balance sheet as assets only in respect of product
development costs. For all other categories internally generated intangible assets are not recognised as assets
in the balance sheet and therefore expenditure in generating these is charged to the income statement as
incurred.
Costs incurred in the development of products that are assessed to be viable and likely to generate profitable
revenue streams are capitalised to the extent that they are directly attributable to the product and capitalisation
does not result in the carrying value being above the recoverable amount from the product.
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 28
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
2. ACCOUNTING POLICIES (continued)
Property, plant and equipment
Property, plant and equipment held for use in the business is stated in the balance sheet at book value, being
cost less accumulated depreciation and accumulated impairment losses.
Depreciation is charged so as to write off the cost over the estimated useful lives, using the straight line method
as follows:
Land Not depreciated
Freehold property 50 years
Leasehold property and improvements Period of the lease, or the length of the contract to
which the property relates, if shorter
Scanning equipment 5 to 10 years, or the length of the contract to which
the equipment relates
Motor vehicles 3 to 4 years
Other plant and equipment 3 to 25 years
Assets held under finance leases are depreciated over the shorter of their expected useful lives or the lease
term. When there is reasonable certainty that the ownership of the leased asset will be obtained by the lessee
at the end of the lease term the assets held under finance leases will be depreciated over their useful economic
lives.
Assets under construction are transferred to their respective asset class and commence depreciation on the
date commercial operation commences.
Residual values, remaining useful lives and depreciation methods are reviewed annually and adjusted if
appropriate.
Impairment of property, plant and equipment and intangible assets
At each balance sheet date, the Group reviews the carrying amounts of its property, plant and equipment and
intangible assets, other than goodwill and other assets which are not amortised, to determine whether there is
any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of any impairment loss. Where it is not possible
to estimate the recoverable amount of an individual asset, because the asset does not generate cash inflows
that are largely independent, the Group estimates the recoverable amount of the cash generating unit to which
the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets
are also allocated to individual cash generating units.
The recoverable amount is the higher of fair value less costs to sell, and value in use. In assessing value in
use, the estimated future cash flows, which are not adjusted for risk, are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific
to the asset.
If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount,
the carrying amount of the asset (or cash generating unit) is reduced to its recoverable amount and an
impairment loss is recognised immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is
increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying
amount does not exceed the carrying amount that would have been determined had no impairment loss been
recognised for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognised
immediately.
Goodwill and other intangible assets which are not amortised are reviewed annually for impairment losses.
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 29
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
2. ACCOUNTING POLICIES (continued)
Inventories
Inventories are valued at the lower of cost and net realisable value on a first-in, first-out basis. Cost comprises
goods held for resale, direct materials and, where applicable, direct labour costs and those overheads that have
been incurred in bringing the inventories to their present location and condition. Net realisable value represents
the estimated selling price less all estimated costs of completion and associated selling costs. Where
necessary, an appropriate allowance is made for obsolete, slow-moving and defective inventories.
Financial instruments
The Group classifies financial instruments, or their component parts, on initial recognition as financial assets,
financial liabilities or equity instruments according to the substance of the contractual arrangements entered
into.
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting
all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct
issue costs.
All financial instruments are initially recognised at fair value. After initial recognition, loans and receivables,
including short-term receivables, and financial liabilities, including trade payables, are carried at amortised cost,
as reduced by appropriate allowances for estimated irrecoverable amounts. Derivative financial instruments
are carried at fair value.
For trade and other receivables and contract assets, the simplified approach permitted under IFRS 9 is
applied. The simplified approach requires that at the point of initial recognition the expected credit loss across
the life of the receivable must be recognised. As these balances do not contain a significant financing
element, the simplified approach relating to expected lifetime losses is applicable under IFRS 9. The Group
determines the expected credit losses on these items by using a provision matrix, estimated based on
historical credit loss experience based on the past due status of the debtors, adjusted as appropriate to reflect
current conditions and estimates of future economic conditions. Accordingly, the credit risk profile of these
assets is presented based on their past due status in terms of the provision matrix.
Cash and cash equivalents are also subject to impairment requirements.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and other short-term highly liquid deposits with
an original maturity at acquisition of three months or less. Cash held on deposit with an original maturity at
acquisition of more than three months but less than twelve months is disclosed as current asset investments.
For the purposes of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents
as defined above, net of bank overdrafts that are repayable on demand that are an integral part of the Group’s
cash management.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently
stated at amortised cost with any difference between the proceeds (net of transaction costs) and the redemption
value being recognised in the income statement over the expected life of the borrowings using the effective
interest method. Finance costs, which are the difference between the net proceeds and the total amount of
payments made in respect of the instruments, are spread on a straight line basis over the expected life of the
debt.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made
of the amount of the obligation. The amount recognised as a provision is the best estimate, at the end of the
reporting period, of the consideration required to settle the present obligation, taking into account the risks and
uncertainties surrounding the obligation.
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 30
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
2. ACCOUNTING POLICIES (continued)
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable during the period, and
represents amounts receivable for goods and services provided in the normal course of business, net of
discounts, VAT and other sales related taxes.
The Group recognises revenue when the amount of revenue can be reliably measured, and performance
obligations within the contract with the customer have been met. Due to the nature of the business and contracts
with customers in almost all cases it is clear and undeniable when the performance obligations have been met,
for example, it is when a patient has physically been scanned. Once a patient is scanned, depending on the
type of patient an invoice will be generated immediately, or picked up as part of a monthly invoice. Once the
invoice is raised, the debt becomes payable. Returns and refunds are not material to the business due to the
service provided, once a scan is complete the service has been fulfilled and there are very few cases of disputes
by customers.
The principal activities of the Group are the provision of diagnostic imaging services, molecular imaging services
and patient services and the development, manufacture and distribution of radiopharmaceuticals. Revenue is
recognised principally on a ‘per scan’ basis or a ‘day rate’ basis for imaging services, depending upon the terms
of the contract, once the scanning service is complete. For the radiopharmaceutical businesses revenue is
recognised principally on a ‘per dose’ of ‘per delivery’ basis for manufacturing activities and on reaching
contractual milestones or as a royalty percentage of sales of products for development activities. The Group
does not participate in activities which need to be accounted for under long-term contract accounting rules.
Leases
Where a lease arrangement is identified, a liability to the lessor is included in the Balance Sheet as a lease
obligation calculated at the present value of minimum lease payments. A corresponding right-of-use asset is
recorded in property, plant and equipment. Lease payments are apportioned between finance costs and
reduction of the lease liability so as to reflect the interest on the remaining balance of the liability.
Finance charges are recorded in the Income Statement within finance costs. Right-of-use assets are
depreciated over the shorter of the estimated useful life of the asset and the lease term.
Leases with a term of 12 months or less and leases for low value are not recorded on the Balance Sheet and
lease payments are recognised as an expense in the Income Statement on a straight-line basis over the
lease term.
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 31
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
2. ACCOUNTING POLICIES (continued)
Foreign currencies
The Group’s activities expose it to the financial risks of changes in foreign currency exchange rates. The Group
uses net investment in overseas subsidiaries to manage these exposures. The individual financial statements
for each Group company are recorded in the currency of the primary economic environment in which they
operate (the functional currency). For the purpose of the consolidated financial statements, the results and
financial position of each Group company are expressed in Pounds Sterling, which is the functional currency of
the Company and the presentational currency for the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the
company’s functional currency are recorded at rates prevailing at the dates of the transactions. At each balance
sheet date, monetary assets and liabilities that are denominated in currencies other than the functional currency
are retranslated at the rates prevailing on the balance sheet date. Non-monetary items that are measured in
terms of historical cost in a non-functional currency are not retranslated. Exchange differences arising on the
settlement of monetary items, and on the retranslation of monetary items, are included in the income statement
for the period.
For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign
operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items
are translated at the average exchange rates for the period. Exchange differences arising, if any, are classified
as equity and transferred to the Group’s translation reserve. On disposal of an operation, any translation
differences to the point of disposal are recognised as income or expense.
The exchange rate for the principal foreign currencies in use by the Group were as follows:
Year ended
30 September 2020
Year ended
30 September 2019
Year end rate
Average rate in
the year
Year end rate
Average rate in
the year
Euro
1.098
1.138
1.126
1.130
Polish Zloty
4.972
5.004
4.927
4.862
US Dollar
1.287
1.283
1.230
1.271
Swiss Franc
1.186
1.225
1.223
1.266
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 32
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
2. ACCOUNTING POLICIES (continued)
Retirement benefit costs
Group companies operate various pension schemes. The schemes are generally funded through payments to
insurance companies or trustee-administered funds. The Group has a number of defined contribution plans
and participates in the Italian Trattamento di Fine Rapporto (“TFR”) scheme which has the characteristics of
both defined benefit and defined contribution schemes. A defined contribution plan is a pension plan under
which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive
obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the
benefits relating to employee service in current and prior years. A defined benefit plan is a pension plan that is
not a defined contribution plan.
The Group participates in a number of defined contribution pension schemes in the countries in which it
operates, the assets of which are held separately from those of the Group and are invested with insurance
companies and external fund managers. The Group has no further obligations once the contributions have
been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid
contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments
is available.
Under the rules of the Trattamento di Fine Rapporto (“TFR”) scheme, Italian employees are entitled to a
payment when they cease to be employed by the company. It is an unfunded liability held on the balance sheet
and is not a pension scheme. In 2007, the TFR system was reformed, and under the new law, employees are
given the ability to choose where the TFR compensation is invested. If the employee does not specify, the
compensation is directed to the National Social Security Institute or pension funds. Under IFRS the TFR had
the characteristics of a defined benefit scheme for payments made up to the reform in 2007 and accordingly
these payments are accounted as such. Contributions under the reformed TFR system are accounted for as a
defined contribution plan.
Taxation
The tax expense represents the sum of the tax currently payable and the deferred tax charge.
The tax currently payable is based on taxable profit for the period on a business by business basis. Taxable
profit differs from profit before tax as reported in the income statement because it excludes items of income or
expense that are taxable or deductible in other years and it further excludes items that are never taxable or
deductible. The Group’s liability for current tax is calculated using tax rates that have enacted or substantively
enacted at the balance sheet date in the countries where taxable profit is generated.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of
the assets and liabilities in the financial statements and the corresponding tax bases used in the computation
of taxable profit, and is accounted for using the liability method on an undiscounted basis. Deferred tax liabilities
are recognised for all temporary differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible temporary differences can be utilised.
Deferred tax is calculated at the tax rates that have been enacted or substantively enacted by the balance sheet
date. Deferred tax is included in the income statement, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also recognised directly in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied by the same tax authority and the
Group intends to settle its current tax assets and liabilities on a net basis.
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 33
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
2. ACCOUNTING POLICIES (continued)
IFRS non-GAAP measure
The Directors consider EBITA and EBITDA to be key performance indicators (“KPI) of the business as defined
in the Strategic Report.
EBITA approximates to the underlying earnings from operations, being profit from operations before
amortisation of acquired intangibles, profit/(loss) on disposal of property, plant and equipment, and exceptional
items.
Depreciation and amortisation are the main non-cash expenses of the business, so EBITDA approximates to
cash flow from operations, before adjustment for movements in working capital and capital expenditure.
Exceptional items
Where certain expense or revenue items recorded in a year are significant by their size or incidence, these are
disclosed as exceptional within a separate line of the income statement. Examples of items classified as
“exceptional include:
Refinancing costs;
Reorganisation and restructuring costs; and
Other items not in the normal course of day-to-day business.
Decommissioning costs
The Group records a provision for the decommissioning costs of cyclotrons used in the production of
radiopharmacy products. Decommissioning costs are provided at the present value of expected costs to settle
the obligation using estimated cash flows and are recognised as a provision. The cash flows are discounted at
a current pre-tax rate. The unwinding of the discount is expensed as incurred and recognised in the consolidated
income statement. The estimated future costs of decommissioning will be reviewed annually and adjusted as
appropriate. Changes in the estimated future costs or in the discount rate applied will be added to or deducted
from the provision.
Segment reporting
Details of revenue generated by destination is included in note 4 where the destination country contributes more
than £0.5m to the Group’s revenue.
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 34
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
The preparation of the consolidated financial statements requires the use of critical accounting estimates and
requires management to exercise judgements in the process of applying the Group’s accounting policies.
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions regarding the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. A description of the accounting estimates and judgements
that were critical to preparing specific financial statement items, as well as the processes employed to do so,
are set out below and further information about these areas of judgement is contained within the accounting
policies note (note 2).
Key source of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance
sheet 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.
Contingent consideration
The Alliance Medical Group acquired Life Molecular Imaging group (formerly known as Piramal Imaging) in
2018, consisting of 4 legal entities. As part of this acquisition, a large proportion of the consideration was
contingent with a relatively small amount paid at the time of acquisition.
The contingent consideration will become payable when the acquired business is generating a positive cash
contribution, measured on a cumulative basis from the date of acquisition. The contingent consideration is a
50% share of pre-tax cash generated for a period of 10 years post acquisition or a maximum payable of
US$200m. The amount included is the anticipated payment, based on long term forecasts, discounted to
present value.
There are a number of factors which will impact the value of the contingent consideration and the directors have
had to use their knowledge of the business along with certain judgements and estimates in order to value this
consideration.
Forecasts have been completed to identify when the business is likely to become profitable, as well as the level
of the profits, the profitability of this business also depends on the products created being given market
authorisation and passing medical trials.
Critical judgements in applying the Company’s accounting policies
The following are the critical judgements, apart from those involving estimations (which are dealt with separately
above), that the directors have made in the process of applying the Company’s accounting policies and that
have the most significant effect on the amounts recognised in the financial statements.
Impairment of goodwill and other intangible assets
Judgement is required to consider whether any impairments of goodwill or other intangible assets exist, and
whether the useful economic lives of existing intangible assets and those acquired in the year remain
appropriate. This judgement is exercised by considering any factors which have arisen during the year, or are
likely to arise in the future, which may affect the valuations, including technological changes, changes in the
customer base and market conditions.
The key assets included within intangibles are associated with Life Molecular Imaging Group. These are assets
which are being researched and developed by the business in the hope that they will go through medical trials
and used in the mainstream healthcare industry. These assets have a value in intangibles of £25.0m as at 30
September 2020 (£23.5m at 30 September 2019).
In order to support these asset values forecasts are prepared for each product being developed. These
forecasts show the level of development costs expected, along with the period in which it is hoped medical trials
will be started, as well as finished and then the likelihood the products will be able to be sold to the market. The
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 35
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
(continued)
Going concern
The Group performs regular assessments on the going concern status of the Group. These assessments take
into consideration:
current solvency of the Group;
current liquidity position;
available committed and uncommitted bank facilities;
cash commitments for the next 12 months;
bank covenants; and
debt maturities.
As part of the assessments the board of directors has reviewed the Group budgets, forecasts, available cash
resources and unutilised facilities as well as the debt maturity profile. The forecasts for the Group have been
prepared, covering its future performance, capital and liquidity for a period of 12 months from the date of
approval of these consolidated financial statements including performing sensitivity analyses. The expected
future cash flows were adjusted to reflect the best estimate of the short and longer-term impact of the COVID-
19 pandemic (the pandemic).
To ensure the Group has sufficient cash reserves, in addition to securing bank facilities at Life UK Holdco level,
postponing central bonus payments and deferring capex projects, management has implemented a number of
mitigating actions which include cost and cash preservation levers across the Group’s operations.
The external debt used to provide funding for the group sits outside of this consolidation at Alliance Medical
Group level (the external debt is recorded in Life UK Holdco Limited) and include covenants that must be met
at various measurement points as defined in the contract for these facilities. These covenants are measured
based on the results of the wider group- this being the group headed by Life Healthcare Group Holdings Limited.
Life Healthcare Group Holdings Limited is the ultimate parent undertaking and controlling party of Alliance
Medical Group limited. The wider group successfully refinanced this external debt during March 2020 and
extended the Debt’s maturities. This wider Group is in a strong financial position with net debt to normalised
EBITDA as at 30 September 2020 at 2.96 times (2019: 1.96 times). Given the significant uncertainty caused by
the pandemic, the wider Group pre-emptively negotiated amended bank covenants for the period up to 31
March 2021 and continue to monitor prospective compliance with such covenants. In addition, banking facilities
have been increased and the wider Group’s committed undrawn bank facilities as at 30 September 2020 are
R6.3 billion.
The Group’s assessments and sensitivity analysis show that the Group has sufficient accessible capital and
liquidity to continue to meet its obligations as they fall due and as a result it is appropriate to prepare these
consolidated financial statements on a going concern basis.
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 36
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
4. SEGMENTAL INFORMATION
Revenue by destination is analysed as:
Year to
30 Sep 2020
Year to
30 Sep 2019
£m
£m
United Kingdom
160.6
162.2
Italy
88.4
97.7
Spain
7.0
7.3
Germany
6.2
0.5
Netherlands
1.8
1.7
Republic of Ireland
27.8
25.0
Austria
5.3
0.2
Finland
-
0.7
Lithuania
-
0.7
Norway
2.0
1.7
Poland
1.3
1.8
Switzerland
4.1
7.6
USA
11.7
9.3
Belgium
1.3
1.4
Latvia
0.9
-
Other countries
1.5
1.2
319.9
319.0
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 37
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
5. BUSINESS COMBINATIONS
Acquisitions in Italy
On 31 December 2019, Alliance Medical Srl acquired 100% control of Priamar Srl, a company who carries out
medical diagnostic imaging services. This acquisition was carried out to further enhance the Groups position
within the Italian market. This transaction has been treated as an acquisition under IFRS 3 “Business
Combinations”. The fair values of the identifiable assets and liabilities at the date of acquisition were:
Priamar Srl
£m
Intangible assets
-
Non current assets
0.2
Current assets
0.3
Current liabilities
(0.6)
Non current liabilities
-
Total identifiable net liabilities at fair value
(0.1)
Goodwill arising on acquisition
0.7
Cash consideration transferred
0.6
The fair values of the identifiable assets and liabilities were determined using a variety of valuation techniques
including the market approach and replacement cost approach. The goodwill arising from this acquisition is
attributable to economies of scale expected from combining the operations of the group.
The acquisition contributed revenue of £0.8m and net loss of £0.1m from acquisition to 30 September 2020.
For the 12 month period to 30 September 2020, the business generated revenue of £1.2m and a net loss of
£0.1m.
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
6. EXCEPTIONAL ITEMS
Year to
30 Sep 2020
Year to
30 Sep 2019
£m
£m
Administrative expenses
Legal and settlement costs and other sundry items
-
0.5
Merger and acquisition costs
0.7
1.3
0.7
1.8
There were no Legal and settlement costs and other sundry items for the year to 30 September 2020, the costs
in the year to 30 September 2019 were in relation to onerous contracts.
Merger and acquisition costs of £0.7m (2019: £1.3m) were incurred during the year to 30 September 2020.
These costs relate to professional fees incurred as part of reviewing the Group strategy, which includes
assessing potential acquisitions. Of the £0.7m incurred in the year to 30 September 2020, £0.2m relates to
acquisitions which were completed during the year and £0.5m relates to potential acquisitions in the future.
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 39
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
7. PROFIT BEFORE INTEREST & TAXATION
This is stated after charging:
Year to
30 Sep 2020
Year to
31 Sep 2019
£m
£m
Auditors remuneration:
Fees payable for the audit of the parent Company and
consolidated financial statements
0.4
0.2
Fees payable for the audit of subsidiaries
0.5
0.5
Taxation for compliance services
-
0.1
Other taxation Advisory services
0.2
-
Depreciation:
Owned assets
23.9
22.4
Assets held under finance leases
6.8
6.4
Right of use assets under IFRS 16
5.5
-
Amortisation of intangible assets
5.0
5.0
Operating lease rentals:
Land and buildings
0.1
6.8
Other
0.1
0.6
(Profit)/Loss on disposal of property, plant and
equipment
0.2
(0.1)
Amortised cost adjustments:
Contingent consideration discounting
3.2
2.4
Amortisation of intangible assets is included in administrative expenses in the income statement.
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
8. EMPLOYEES AND DIRECTORS
a) Directors emoluments
Year to
30 Sep 2020
Year to
30 Sep 2019
£m
£m
Emoluments
0.8
1.0
Amount receivable under long term incentive
schemes
0.5
0.3
1.3
1.3
Emoluments include £nil (2019: £nil) in respect of payments made for executive directors becoming non-
executive.
Amount receivable under long term incentive schemes are in respect of qualifying services and relate to two
(2019: two) of the directors.
Contributions made on behalf of one (2019: one) of the directors to money purchase pension schemes totalled
£11k in the year (2019: £6k), of this amount £1k was outstanding at year end (2019: £nil).
The amounts in respect of the highest paid Director are as follows:
Year to
30 Sep 2020
Year to
30 Sep 2019
£m
£m
Emoluments
0.4
0.2
Amount receivable under long term incentive
schemes
0.4
0.2
0.8
0.4
Emoluments include £nil (2019: £nil) in respect of payments made for executive directors becoming non-
executive.
Contributions made on behalf of the directors to money purchase pension schemes totalled £11k in the year
(2019: £6k), of this amount £1k was outstanding at year end (2019: £nil).
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
8. EMPLOYEES AND DIRECTORS
b) Staff costs
Year to
30 Sep 2020
Year to
30 Sep 2019
£m
£m
Wages and salaries
73.7
70.6
Social security costs
11.6
11.1
Amount receivable under long term incentive
schemes
2.3
1.4
Other pension costs (see note 23)
3.0
3.0
Other benefits
1.4
0.9
92.0
87.0
The average monthly number of employees, including Directors and part time employees was:
Year to
30 Sep 2020
Year to
30 Sep 2019
Number
Number
Sales
34
40
Administrative
596
575
Technical/operations
1,495
1,411
2,125
2,026
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
9. FINANCE COSTS
Year to
30 Sep 2020
Year to
30 Sep 2019
£m
£m
Bank loans
0.2
0.2
Other interest
1.7
2.9
Interest on loans from parent company
8.5
8.7
Exchange rate difference on intercompany financing
(3.7)
(0.5)
Finance charges in respect of finance leases
1.6
1.9
Finance charges in respect of IFRS 16 leases
1.3
-
Interest cost of defined benefit schemes
0.1
0.1
Discounting of contingent consideration
3.2
2.4
12.9
15.7
Amortisation of loan issue costs (note 19)
2.0
1.1
14.9
16.8
The intercompany loans are between subsidiaries which have different functional currencies. The exchange
rate differences relate to the retranslation of intercompany balances in the underlying subsidiary’s books.
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
10. TAXATION
a) Tax charge
The tax charge in the income statement represents:
Year to
30 Sep 2020
Year to
30 Sep 2019
£m
£m
Current tax:
UK tax
-
-
Overseas tax
1.9
5.3
Total current tax
1.9
5.3
Deferred tax:
Origination and reversal of temporary differences
0.4
3.2
Adjustments in respect of prior years
0.3
-
Deferred tax asset recognised
-
(2.1)
Total deferred tax
0.7
1.1
Total tax charge/(credit) in the income statement
2.6
6.4
During the prior period, it was deemed appropriate to recognise capital allowances that are expected to be
recovered in the foreseeable future, on the basis that some had been utilised, this resulted in a credit to
deferred tax of £2.1m. Some of these assets have been utilised in the current year.
b) Reconciliation of the total tax charge
The tax charge in the income statement in the year differs from the charge which would result from the standard
rate of corporation tax in the UK of 19% (2019: 19%). The differences are reconciled below:
Year to
30 Sep 2020
Year to
30 Sep 2019
£m
£m
Profit/(loss) before tax
5.5
13.1
Profit before tax at the standard rate of corporation
tax of 19% (2019: 19%)
1.0
2.5
Expenses not deductible for tax purposes
2.5
2.7
Depreciation for the period less than capital
allowances
0.5
2.0
Other timing differences
(0.5)
0.1
Tax losses not recognised in deferred tax
(0.5)
-
Prior year adjustment
(1.0)
0.6
Effect of overseas tax rate
0.7
2.4
Income not taxable
(0.4)
(1.5)
Group relief received
(0.7)
(0.1)
Loss of disposal of fixed assets
-
-
Other movements
(0.1)
(0.2)
Deferred tax recognised/(unrecognised)
1.1
(2.1)
Tax charge/(credit) in the income statement
2.6
6.4
The Company is registered in England and Wales and domiciled in the United Kingdom for tax purposes.
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
10. TAXATION (continued)
c) Factors affecting current and future tax charges
In the Spring Budget 2020, the Government announced that from 1 April 2020 the corporation tax rate would
remain at 19% (rather than reducing to 17%, as previously enacted). This new law was substantively enacted
on 17 March 2020. As the proposal to keep the rate at 19% was substantively enacted prior to the balance
sheet date, its effects are included in these financial statements.
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
11. PROPERTY, PLANT AND EQUIPMENT
Freehold land
and buildings
and leasehold
improvements
£m
Scanning units
and equipment
£m
Other
plant and
equipment
£m
Motor vehicles
£m
Assets under
construction
£m
Total
£m
Cost
At 30 September 2018
83.4
161.7
16.1
7.8
16.1
285.1
Additions
3.2
14.1
1.6
0.5
32.9
52.3
Additions as part of a
business acquisition
-
2.2
-
-
-
2.2
Reclassification
7.3
17.8
0.8
-
(25.9)
-
Disposals
(1.0)
(2.0)
(0.9)
(2.5)
-
(6.4)
Exchange differences
(0.1)
(0.3)
0.1
-
-
(0.3)
At 30 September 2019
92.8
193.5
17.7
5.8
23.1
332.9
Additions
2.0
11.1
1.4
1.7
20.6
36.8
Reclassification
5.2
15.1
2.8
-
(23.1)
-
Recognition of right of use
assets
40.0
-
0.5
0.2
40.7
Disposals
(1.0)
(5.8)
(0.4)
(1.3)
-
(8.5)
Exchange differences
1.0
1.9
-
-
0.1
3.0
At 30 September 2020
140.0
215.8
22.0
6.4
20.7
404.9
Accumulated
depreciation
At 30 September 2018
22.5
72.3
9.0
4.8
-
108.6
Provided during the year
6.6
18.9
3.2
0.1
-
28.8
Disposals
(1.0)
(1.7)
(0.9)
(1.8)
-
(5.4)
Exchange differences
0.1
0.1
(0.4)
-
-
(0.2)
At 30 September 2019
28.2
89.6
10.9
3.1
-
131.8
Provided during the period
11.9
20.6
2.9
0.8
-
36.2
Disposals
(0.8)
(5.6)
(0.2)
(0.8)
-
(7.4)
Exchange differences
0.5
1.4
(0.1)
-
-
1.8
At 30 September 2020
39.8
106.0
13.5
3.1
-
162.4
Net book value
At 30 September 2020
100.2
109.8
8.5
3.3
20.7
242.5
At 30 September 2019
64.6
103.9
6.8
2.7
23.1
201.1
Assets held under
finance leases
Net book value at 30
September 2020
5.8
41.4
-
3.1
-
50.3
Net book value at 30
September 2019
6.5
45.4
-
0.3
-
52.2
The above categories include the following net book values at 30 September 2020 in relation to right of use
assets:
Freehold land and buildings and leasehold improvements £40.6m
Scanning units and equipment £41.4m
Other plant and equipment £0.3m
Motor vehicles £3.1m
Assets under construction £nil
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
12. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
£m
Customer
base
£m
Brands
£m
Purchased
technology
licences
£m
Product
development
costs
£m
Other
intangible
assets total
£m
Total
£m
Cost
At 30 September 2018
90.5
38.8
10.5
8.8
19.6
77.7
168.2
Additions
-
-
-
1.1
4.9
6.0
6.0
Additions as part of a
business acquisition
7.3
3.9
0.9
-
-
4.8
12.1
Exchange differences
(0.1)
(0.1)
-
(0.1)
0.3
0.1
-
At 30 September 2019
97.7
42.6
11.4
9.8
24.8
88.6
186.3
Additions
-
-
-
1.4
1.6
3.0
3.0
Additions as part of a
business acquisition
0.7
-
-
-
-
-
0.7
Exchange differences
1.5
0.5
-
0.1
0.8
1.4
2.9
At 30 September 2020
99.9
43.1
11.4
11.3
27.2
93.0
192.9
Accumulated
amortisation
At 30 September 2018
-
29.2
10.5
4.9
0.1
44.7
44.7
Amortisation provided
during the year
-
2.6
-
1.4
1.0
5.0
5.0
Exchange differences
-
-
-
-
0.2
0.2
0.2
At 30 September 2019
-
31.8
10.5
6.3
1.3
49.9
49.9
Amortisation provided
during the period
-
2.2
0.1
1.7
0.9
4.9
4.9
Exchange differences
-
0.4
-
0.1
-
0.5
0.5
At 30 September 2020
-
34.4
10.6
8.1
2.2
55.3
55.3
Net book value
At 30 September 2020
99.9
8.7
0.8
3.2
25.0
37.7
137.6
At 30 September 2019
97.7
10.8
0.9
3.5
23.5
38.7
136.4
There are no intangible assets, other than goodwill, with indefinite useful lives. Amortisation of product
development costs commences once revenue starts to be generated and is spread over the relevant patent
period.
Goodwill and other intangible assets acquired as part of a business combination are allocated, at acquisition,
to the cash generating units (CGU) that are expected to benefit from that business combination.
Customer base includes two material individual assets following acquisitions in the UK and Italy businesses,
these are being amortised in line with the accounting policy in note 3 of these financial statements. The
remaining useful life of the assets within this category range from 3 years to 9 years.
Brands includes an asset following an acquisition in the UK. The Group have not changed the branding of the
acquired business and are continuing to use the company’s original name, this asset is the value of the brand
of the acquired business, this is being amortised in line with the accounting policy in note 3 of these financial
statements. The remaining useful life of the assets within this category is 9 years.
Development costs include the costs associated with the development of the Neuraceq product within the Life
Molecular imaging business, this is being amortised in line with the accounting policy in note 3 of these financial
statements. The remaining useful life of the assets within this category is 9 years.
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
12. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)
The CGU used to determine the recoverable amount are the geographical regions in which the businesses are
located and managed, or the business itself where there is an intention to maintain separation from existing
businesses.
At 30 Sep 2020
At 30 Sep 2019
£m
£m
Cash generating units:
UK
37.6
37.6
Italy
44.3
42.5
Northern Europe
6.3
6.2
Piramal Imaging acquisition
8.6
8.4
Ireland
2.6
2.5
Spain
0.5
0.5
Total goodwill
99.9
97.7
Annual test for impairment of goodwill
The Group tests for impairment annually, or more frequently if there is an indication of potential impairment, in
accordance with the accounting policy stated in note 2. Goodwill and other intangible assets have been tested
for impairment by comparing their carrying value with the higher of fair value less costs to sell and value in use.
The recoverable amount of the CGU is determined based on a value in use calculation which uses cash flow
projections over an initial five year period based on budgets and assumed short-term growth rates which take
into account region, market and modality.
The assumed long-term growth rate used to determine the cash flows beyond the initial five year period is 2.0%
(2019: 1.5%) on a weighted average basis. This is with the exception of Life Molecular Imaging which has been
treated separately. The growth for this CGU has been taken from the long term forecast of the business that
was used on acquisition in order to calculate the intangibles, due to the nature of the business growth outside
the initial 5 years is expected to be significantly higher than 1.5% when it is hoped certain products being
developed will be ready for the market.
The value assigned to the Spain cash generating unit above is deemed insignificant when compared with the
Groups total carrying value of goodwill.
The pre-tax and post-tax discounts rates used for each CGU are listed below.
CGU
Pre-tax discount
rate 2020
Post-tax discount
rate 2020
Pre-tax discount
rate 2019
Post-tax discount
rate 2019
United Kingdom
7.58%
6.14%
7.64%
6.19%
Italy
9.97%
7.18%
8.24%
5.77%
Northern Europe
7.00%
5.60%
5.90%
4.64%
Life Molecular Imaging *
14.37%
11.00%
15.00%
11.48%
Ireland
7.09%
6.20%
6.99%
6.12%
Spain
9.53%
7.15%
7.84%
5.88%
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
12. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)
The key assumptions used in the cash flow projections are as follows:
Replacement capital expenditure trends towards depreciation over the forecast period;
Terminal values have been calculated using long-term growth rates;
Future performance of acquired businesses is in line with the business cases for investment.
At 30 September 2020, it was concluded that no impairment of goodwill and other intangible assets was required
(2019: £nil).
Any reasonably possible change in the key assumptions noted above would not result in further impairment to
the carrying amount of the goodwill and other intangible assets.
A number of sensitivity analyses has been carried out to assess the impact on the impairment calculations,
including, if there was a 0.5% decrease in the terminal growth rate for the Group, and increase in capex spend
of £5m and an increase in the WACC rate to the highest range (from the medium). These workings have
confirmed that there would still be no requirement for a goodwill impairment.
Due to the size and nature of the Life Molecular Imaging intangible, a separate sensitivity analysis was done
on this intangible asset also. An increase in the WACC rate by 1% and a reduction in the PET adoption rate of
Neuraceq by 10% was calculated and even with these sensitivities, there were still headroom and no impairment
of the asset value was necessary.
13. JOINT VENTURES
As at 30 September 2020 and 30 September 2019 the Group had interests in the following joint ventures:
Name
Form of
business
structure
Place of
incorporation
and operation
Share
class held
Proportion of
nominal value
of issued
capital held
Principal activity
Barringtons MRI
Limited
Incorporated
Ireland
Ordinary
50%
Diagnostic centre
20/20 Imaging
Limited
Incorporated
Ireland
Ordinary
33%
Diagnostic centre
The proportion of voting power held is the same as the proportion of issued capital held by the Group.
The registered offices of the joint ventures are as follows:
Barringtons MRI Limited - Bon Secours Hospital at Barringtons, Georges Quay, Limerick, V94 HE2T
20/20 Imaging Limited - 82 North Main Street, Bandon, Co. Cork, P72 T971
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
13. JOINT VENTURES (continued)
The summarised financial information in respect of the Group’s interests in the joint ventures, which is based
on IFRS and accounted for using equity method, is set out below:
Year to
30 Sep 2020
Year to
30 Sep 2019
£m
£m
Revenue
4.8
6.1
Cost of sales
(1.9)
(2.2)
Administrative expenses
(3.0)
(2.7)
Profit for the period
(0.1)
1.2
Group’s share of profit for the period
0.5
0.6
At 30 Sep 2020
At 30 Sep 19
£m
£m
Non-current assets
0.8
1.0
Cash
3.3
2.7
Current assets
0.7
1.1
Current liabilities
(0.7)
(0.8)
Equity
4.1
4.0
Carrying amount of the investments
3.1
2.8
14. OTHER INVESTMENTS
At 30 Sep 2020
At 30 Sep 2019
£m
£m
Other investments
0.9
0.6
Alliance Medical Limited invested £0.8m (£0.3m of which was in this financial year) in preference shares in
ARTMS Products Inc, a Canadian based organisation. Alliance Medical Italia srl acquired Villa Serena for £0.1m
as part of the acquisition of the Albaro Group of companies.
15. INVENTORY
At 30 Sep 2020
At 30 Sep 2019
£m
£m
Current assets:
Raw materials and consumables
2.9
1.9
Inventory expensed to the profit and loss account in the year to 30 September 2020 was £10,410,000 (2019:
£8,727,000).
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Annual Report & Financial Statements 2020 Page 50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
16. TRADE AND OTHER RECEIVABLES
At 30 Sep 2020
At 30 Sep 2019
£m
£m
Current assets:
Trade receivables
49.0
54.1
Allowance for doubtful debts
(10.0)
(9.1)
39.0
45.0
Other receivables
18.5
19.0
Prepayments and accrued income
3.9
3.4
61.4
67.4
Trade receivables are non-interest bearing and generally have a 30 to 90 day term.
Due to their short maturities, the fair value of trade and other receivables approximates to their book value.
There is no significant concentration of credit risk with respect to trade receivables, as the Group has a large
number of customers that are internationally dispersed. Policies are also in place to ensure the provision of
goods and services are only made to customers with an appropriate credit history and credit limits are
periodically reviewed. Amounts recoverable from customers are reviewed on an ongoing basis and appropriate
provision is made for bad and doubtful debts. Provision requirements are determined by reference to ageing
of invoices, credit history and other available information. Provision has been made for bad and doubtful debts
due to potential pricing adjustments with no significant defaults from customers in the year due to strong long
term relationships with customers. Due to the nature of our business our key customers are, or are funded by,
Government funded public bodies such as NHS trusts in the UK or ASL bodies in Italy, and therefore the nature
of these organisations further reduces our susceptibility to credit risk. In certain territories, use is made of
invoice factoring facilities which are on a non-recourse basis, further reducing the credit risk from individual
customers. As such any further detailed analysis of the credit risk of our financial assets category is not
considered meaningful.
The Group has a broad base of customers with no concentration of credit quality within trade receivables at 30
September 2020 or 30 September 2019. The maximum exposure to credit risk is the carrying amount.
Year to
30 Sep 2020
Year to
30 Sep 2019
£m
£m
Movement in allowance for doubtful debts:
Brought forward
9.1
8.8
Doubtful debts (credit)/charge recognised in the period
1.4
0.9
Movements in respect of business acquisitions
-
-
Utilised during the year
(0.6)
(0.6)
Exchange differences
0.1
-
At end of period
10.0
9.1
At 30 September 2020, trade receivables of £28.8m were past due but not impaired (2019: £28.5m). The ageing
analysis of these trade receivables is as follows:
At 30 Sep 2020
At 30 Sep 2019
£m
£m
Up to three months past due
22.7
17.5
Three to six months past due
2.5
4.7
Over six months past due
3.6
6.3
28.8
28.5
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
16. TRADE AND OTHER RECEIVABLES (continued)
Following the adoption of IFRS 9 additional work was carried out on the trade receivables to calculate the
Expected Credit Loss (ECL) of each customer category. The below balances are as at 30 September 2020.
Customer category
Current
30-60
days
61-90
days
91-180
days
180-360
days
>1 year
Total
Spanish Government
Gross trade receivables
1,261
566
484
388
383
-
3,082
ECL (%)
10.6%
0%
0%
0%
0%
0%
0%
Loss allowance
134
-
-
-
-
-
134
Irish public health
Gross trade receivables
895
358
79
103
39
107
1,581
ECL (%)
7.7%
0%
0%
0%
0%
0%
4.36%
Loss allowance
69
-
-
-
-
-
69
UK NHS
Gross trade receivables
3,757
4,403
934
541
175
536
10,346
ECL (%)
11.4%
0%
0%
0%
0.6%
88.3%
8.7%
Loss allowance
429
-
-
-
1
473
903
Italian public health
Gross trade receivables
4,346
372
23
(138)
25
3,132
7,760
ECL (%)
5.8%
0%
0%
13.0%
60.0%
90.3%
40.1%
Loss allowance
252
-
-
18
15
2,829
3,114
Private organisations
Gross trade receivables
11,519
2,742
817
1,305
1,014
6,895
24,292
ECL (%)
7.6%
0.6%
1.1%
9.0%
14.8%
57.8%
21.2%
Loss allowance
877
16
9
117
150
3,983
5,152
Private individuals
Gross trade receivables
212
58
814
19
72
779
1,954
ECL (%)
25.4%
1.7%
4.4%
21.0%
23.6%
78.8%
37.1%
Loss allowance
54
1
36
4
17
614
726
Total
Gross trade receivables
21,990
8,499
3,151
2,218
1,708
11,449
49,015
ECL (%)
8.3%
0.2%
1.4%
6.3%
10.7%
69.0%
20.6%
Loss allowance
1,815
17
45
139
183
7,899
10,098
Reference has been made to past default experiences using historical information at least two years old and
management’s assessment of credit worthiness over these receivables to calculate the above ECLs.
Following a review this year there has not been deemed to be a material movement from the calculations
made last year.
There has been no material change to the loss allowance calculations from the previous period, the change
that has occurred is based on changes in the gross amount of trade receivables from the prior period as well
as the historical data being used to calculate the expected credit loss being update by 12 months to provide a
more up to date calculation.
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Annual Report & Financial Statements 2020 Page 52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
17. CASH AND CASH EQUIVALENTS
At 30 Sep 2020
At 30 Sep 2019
£m
£m
Current assets:
Cash at bank and in hand
63.9
37.6
The fair value of cash and cash equivalents approximates to their book values. Cash at bank earns interest at
floating rates based on daily bank deposit rates.
Included in the above cash is restricted cash of £1.2m (30 September 2019: £1.2m) in relation to a contract in
Italy.
Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions. The Group
controls credit risk from a treasury perspective by only depositing funds with authorised counter-parties with a
credit rating of at least ‘B’, and by ensuring that such positions are monitored regularly. Credit risk on cash and
short term deposits is limited because the counter-parties are banks with appropriate credit ratings assigned by
international credit rating agencies and is managed through holding funds with a range of international banks
and financial institutions. We therefore have limited concentration of credit risk in any one bank or territory. As
such any further detailed analysis of the credit risk of our financial assets by category is not considered
meaningful.
At 30 September 2020, cash of £1.2m (2019: £1.1m), included in the above balance, was pledged as collateral
for bank guarantees.
18. TRADE AND OTHER PAYABLES
At 30 Sep 2020
At 30 Sep 2019
£m
£m
Current liabilities:
Trade payables
32.1
35.9
Other taxes and social security
2.2
2.4
Accrued charges
59.6
65.4
Amounts owed to parent undertaking
6.9
6.9
Other payables
5.3
0.8
106.1
111.4
Non-current liabilities:
Deferred and contingent consideration
29.0
27.1
Accrued charges
1.6
-
Long Term Incentive Plan
1.7
0.3
32.3
27.4
Total
138.4
138.7
Amounts owed to parent undertaking above represent amounts owed to Life UK Healthcare Limited, the
parent company. These value are unpaid interest amounts due for payment within the next 12 months.
Interest is not to be charged on top of the interest.
Contingent consideration includes a discounting adjustment of £3.2m (2019: £2.4m) with amounts being paid
of £0.4m and FX adjustments of £0.9m representing the other movements.
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Annual Report & Financial Statements 2020 Page 53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
19. BORROWINGS
At 30 September 2020
At 30 September 2019
Current
liabilities
£m
Non-
current
liabilities
£m
Total
£m
Current
liabilities
£m
Non-
current
liabilities
£m
Total
£m
Secured debt net of
issue costs
3.0
-
3.0
13.0
-
13.0
Other borrowings
0.2
0.7
0.9
0.2
0.6
0.8
Finance leases
12.1
21.0
33.1
14.0
21.3
35.3
Lease liabilities
5.5
30.0
35.5
Amounts owed to
parent undertakings
10.5
261.9
272.4
10.2
235.2
245.4
Total borrowings
31.3
313.6
344.9
37.4
257.1
294.5
The maturity profile of borrowings is analysed as follows:
At 30 September 2020
Secured
debt
£m
Other bank
borrowings
£m
Finance
leases
£m
Lease
liabilities
£m
Amounts
owed to
parent
undertakings
£m
Total
£m
Due within one year or on demand
3.0
0.2
12.1
5.5
-
20.8
Due between one and two years
-
0.4
9.0
4.5
-
13.9
Due between two and five years
-
0.3
11.2
7.8
238.5
257.8
Due after five years
-
-
0.8
17.7
33.9
52.4
Carrying value at 30 September 2020
3.0
0.9
33.1
35.5
272.4
344.9
At 30 September 2019
Secured
debt
£m
Other bank
borrowings
£m
Finance
leases
£m
Lease
liabilities
£m
Amounts
owed to
parent
undertakings
£m
Total
£m
Due within one year or on demand
13.1
0.2
14.0
-
10.2
37.5
Due between one and two years
-
0.2
9.6
-
-
9.8
Due between two and five years
-
0.4
11.7
-
204.2
216.3
Due after five years
-
-
-
-
32.9
32.9
13.1
0.8
35.3
-
247.3
296.5
Unamortised issue costs
(0.1)
-
-
-
(1.9)
(2.0)
Carrying value at 30 September 2019
13.0
0.8
35.3
-
245.4
294.5
As part of secured debt, there is a revolving credit facility of £5m, of which £0m was drawn in Sterling and £0m
was drawn in Euros at 30 September 2020 (2019: £1.7m and £3.2m). Interest on the revolving credit facility
was payable at a rate of LIBOR or Euribor, for loans denominated in Sterling and Euros respectively, plus a
margin of 3.75%.
Also included in secured debt are two invoice factoring facilities, these were drawn to the value of £3.0m (2019:
£8.2m), these facilities are secured against the sales invoices that the facility has agreed to lend upon.
Other bank borrowings are at floating rates of interest.
There were £6.6m of undrawn finance lease facilities available at 30 September 2020 (2019: £2.5m). The
finance leases are secured against the assets to which they relate and bear fixed interest rates which range
from 1.7% to 4.75%.
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 54
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
19. BORROWINGS (continued)
Amounts owed to parent undertakings at 30 September 2020 of £230.4m (2019: £204.2m) are subject to
interest at a rate of LIBOR plus a margin of 2.85%. These amounts are repayable as agreed between the
parties in writing which is anticipated to be not before December 2022. Amounts of £33.7m (2019: £32.9m) are
subject to interest at Euribor plus a margin of 2.85%. These amounts are repayable as agreed between the
parties in writing but not before 20 November 2025. Amounts of £10.5m (2019: £10.2m) are subject to interest
at a rate of LIBOR plus a margin of 2.20% and a repayable on demand as currently there is no written
agreement, hence the balance being shows as current.
Borrowings are analysed by currency as follows:
At 30 September 2020
At 30 September 2019
Sterling
£m
Euros
£m
US Dollars
£m
Total
£m
Sterling
£m
Euros
£m
US Dollars
£m
Total
£m
Secured debt
1.9
1.1
-
3.0
7.2
5.8
-
13.0
Other borrowings
-
0.6
0.3
0.9
-
0.8
-
0.8
Finance leases
30.9
2.2
-
33.1
32.2
3.1
-
35.3
IFRS 16 leases
9.0
26.5
-
35.5
-
-
-
-
Amounts owed to
parent undertakings
238.7
33.7
-
272.4
212.5
32.9
-
245.4
280.5
64.1
0.3
344.9
251.9
42.6
-
294.5
20. FINANCIAL COMMITMENTS
Operating lease commitments
The Group’s total future minimum lease payments under non-cancellable operating leases are as follows:
At 30 Sep 2020
At 30 Sep 2019
£m
£m
Due within one year
0.1
5.5
Between two and five years
0.1
14.6
After five years
-
5.6
0.2
25.7
The reduction from last year is as a result of the implementation of IFRS 16 from 1 October 2019. As a result
of this change in standard the majority of the leases have now been treated as right of use assets with a lease
creditor also accounted for at inception. The figure remaining in the above are outside the scope of IFRS 16
due to them being “exempt” as either low value or short term leases.
Capital commitments
As at 30 September 2020, the Group had placed contracts with a total value of £8.3m (2019: £6.7m) for
expenditure on property, plant and equipment, which is not provided in the financial statements.
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Alliance Medical Group Limited
Annual Report & Financial Statements 2020 Page 55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2020
21. FINANCIAL INSTRUMENTS
Fair value hierarchy
IFRS 7 Financial Instruments: Disclosure”requires fair value measurements to be undertaken using a fair
value hierarchy that reflects the significance of the inputs used in the measurements, according to the following
levels:
Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
Level 3 Inputs for the asset or liability that are not based on observable market data (that is,
unobservable inputs).
All the Group’s financial instrument fair value measurements have been categorised as Level 2 in the current
period with the exception of the contingent consideration in relation to the Life Molecular Imaging acquisition in
2018, further details on this can be seen below.
There were no transfers between levels during the current period.
Life Molecular Imaging contingent consideration
The inputs utilised in the valuation of continent consideration for the Life Molecular Imaging business
(acquired in 2018) can be categorised as level 3 within the fair value hierarchy, meaning inputs are not based
on observable market data.
The contingent consideration payable is based on a discounted cash flow model, and includes items such as
timing of FDA approval and development phases and market adoption rate, neither of which are based on
observable market data and are the director’s best estimate based on experience and utilisation of third party
data and research undert