Final Results

NMC Health Plc

London, 7 March 2018: NMC Health plc ("NMC", the "Company" or the "Group"), the leading United Arab Emirates private healthcare operator with international services across 13 countries, announces its results for the full year ended 31 December 2017 ("FY 2017").

Financial summary and highlights

Notes:

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

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

· Adjusted Earnings per share equals Diluted adjusted earnings per share as shown in Note 16

· EBITDA equals Profit from operations before depreciation, amortization, transaction cost and impairment as shown in the Consolidated Income statement.

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

FY2017 Financial Highlights

· Group reported revenues increased by 31.3% to US$1,603.4m.

o Organic growth accounted for 15.6% YoY increase in revenues

· Healthcare division revenue increased by 41.1% to US$1,161.6m1.

o Healthcare EBITDA margin stood at 31%, up 130 bps YoY

· Distribution division revenue grew by 12.7% to US$486.8m2

o Distribution EBITDA margin declined slightly to 10.6%

· Reported EBITDA increased by 43.6% to US$353.4m.

· Reported EBITDA margin expanded by 180bps to 22.0%.

· Net profit increased by 38.2% to US$209.2m.

· Net profit margin increased by 60bps to 13.0%.

· Adjusted net profit increased by 43.2% to US$236.6m.

· Earnings per share (EPS) amounted to US$0.910 (FY 2016: US$0.711)

· Adjusted earnings per share amounted to US$1.036 (FY 2016: US$0.781)

· Proposed dividend pay-out ratio is maintained at 20% of profit after tax, amounting to GBP3 13 pence per share

FY2017 Business Highlights - A year on year (YOY) comparison

· Healthcare division's patients increased by 33.5% to 5.8.m.

· Revenue per patient from healthcare services increased by 7.6% to reach US$189.8

· Hospital bed occupancy rates reached 71.6%, a decrease of 270bps.

· Operational beds increased from 679 beds to 1365 beds, 101% increase

· Doctors' employed reached 1437, an increase of 37.9%

· Distribution division increased its product portfolio by 17.5% to 108,900 stock keeping units (SKUs)

· Sales and marketing personnel at the Distribution division grew 6.6% to 820

1 Before intra-group elimination

2 Before intra-group elimination

3 British Pound

Mr Prasanth Manghat, Chief Executive Officer, commented:

2017 proved to be a year of tremendous achievements for NMC, enhancing further the successful track record already achieved by the Group in previous years. Qualification for the FTSE 100 index, consolidation of previous organic and inorganic expansions, extension of our geographic footprint and strengthening and deepening of the management structure all marked a very active year for NMC. In short, we see 2017 as setting the stage for many more years of growth for the Company and we begin 2018 with confidence.

Outlook

NMC has moved from success to success over the past many years and I see no reason why this should change in the foreseeable future, despite an otherwise challenging environment. Sustained ramp up of utilization at facilities we opened in recent years, integration of acquired assets and continued discipline in organic and inorganic expansions should all translate into a very promising 2018 and beyond. The most important assets to keep a track of in this regard are: NMC Royal, Brightpoint and Chronic Care for ramp-up of operations, Al Zahra Hospital and CosmeSurge from an integration standpoint and the GCC in general and KSA in particular for additional acquisitions as we continue to see the benefit from acquiring assets and optimising their capabilities within the NMC network/model.

The Company continues to benefit from ready access to debt financing and a supportive shareholder base that we will not take for granted. While we continue to apply strict criteria to our expansion opportunities this backdrop gives us confidence in addressing any future funding requirements to support our ambitious growth plans.

A copy of this report will be available on the Company's Investor Relations website which can be accessed from www.nmchealth.com.

Contacts

Investors

NMC Health

Cautionary statement

These Preliminary Results have been prepared solely to provide additional information to shareholders to assess the Group's performance in relation to its operations and growth potential. These Preliminary Results should not be relied upon by any other party or for any other reason. Any forward looking statements made in this document are done so by the directors in good faith based on the information available to them up to the time of their approval of this report. However, such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

The listing rules of the UK Listing Authority (LR 9.7A.1) require that preliminary statements of annual results must be agreed with the listed company's auditor prior to publication. In addition, the Listing Rules require such statements to give details of the nature of any likely modifications that may be contained in the auditor's report to be included with the Annual Report and whether any audit report has been issued on the statutory accounts. NMC Health plc confirms that it has agreed with Ernst & Young LLP for the preliminary announcement to be notified to RNS. The financial information presented in this preliminary announcement was authorised for issue by the Board of Directors on 6 March 2018. The auditor's report on those financial statements was unqualified and did not contain a statement under section 498 of the Companies Act 2006. The audited financial statements will be delivered to the Registrar of Companies and a copy will also be available on the Company's website (www.nmchealth.com) in due course. The financial information contained in this document does not constitute statutory accounts as defined in section 435 of the Companies Act 2006.

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

Statement of Directors' Responsibilities

Responsibility statement of the directors on the Annual Report & Accounts

The Group's Annual Report & Accounts for the year ended 31 December 2017 includes the following responsibility statement.

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

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

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

On behalf of the Board

Simon Watkins

Group Company Secretary

6 March 2018

About NMC Health

NMC the leading United Arab Emirates private healthcare operator with an international network of hospitals. The Group currently operates or manages over 125 assets across 13 countries. NMC is also ranked as one of the top 3 in-vitro fertilisation ("IVF") operators globally. The Group is also a leading provider of long-term medical care in the UAE through its subsidiary ProVita. Pursing an aggressive international expansion program from 2016, the company now has over 35% of its licensed bed capacity in the Kingdom of Saudi Arabia (KSA), where the company has introduced long-term and multi-specialty care services. The enlarged Group received over 5.7m patients in 2017. The Group is also a leading UAE supplier of products and consumables across several key market segments, with the major contribution coming from healthcare related products. The Group reported revenues of US$1.6 billion for the year ended 31 December 2017.

In April 2012 NMC was listed on the Premium Segment of the London Stock Exchange. NMC is a constituent of the FTSE 100 Index.

Business and Financial Review

FY 2017 continued to build on the achievements of FY 2016, with NMC further consolidating its position as the leading healthcare provider in the UAE and expanding its footprint in KSA. The Group also extended its geographic reach into Oman, where it currently accounts for 20% of the private sector bed capacity in the country.

OPERATIONAL OVERVIEW

Consolidated revenues of the Group recorded 31% YoY growth in 2017 to reach US$1.6bn. The Healthcare division continues to be the primary driver of top line growth, posting 41% YoY growth in 2017 vs. 13% for the Distribution division. The faster growth continues to translate into increasing revenue contribution from the healthcare business, with its share rising from 52% in 2014 to 72% in 2017.

Consolidated EBITDA reached US$353m (+44% YoY), with the Healthcare Division accounting for 87% of the Group EBITDA and Distribution division accounting for the remaining 13%. Higher margins associated with the healthcare business also continue to elevate overall Group margins, with consolidated EBITDA margin reaching 22% in 2017, up 180 bps YoY.

With the Healthcare division remaining the primary focus of NMC's organic and inorganic expansion plans going forward, the trend of increasing contribution from this segment to the Group's revenues and profitability is expected to continue for the foreseeable future. Consequently, the Group EBITDA margin is anticipated to rise further in the coming years. Moreover, in terms of the individual businesses, the sustainable EBITDA margin for the Healthcare division stands around 30% versus 9-10% for Distribution.

HEALTHCARE DIVISION

Building on the good momentum of previous years, the Healthcare division continued its trend of strong growth in 2017, with revenues posting 41% YoY growth to reach US$1.2bn. Healthcare services accounted for US$1.1bn out of the total, with pharmacies and Operations & Management contributing US$59m and US$8m, respectively. Sustained margin improvement again translated into more rapid expansion at the EBITDA level, which stood at US$355m (+ 47% YoY). EBITDA margin for the year stood at 31%, up 130 bps YoY.

A total of 5.8m patients visited NMC's facilities in 2017, up 33% YoY. The sharp rise was driven through a combination of continued ramp-up at facilities opened by the Group in recent years, particularly NMC Royal Hospital, and inorganic additions, particularly that of Al Zahra Hospital, during the year.

Average revenue per patient increased 8% YoY to US$189.8. Improving this metric remains an important focus area for NMC and average revenue per patient has risen 88% from US$100.7 at the time of our IPO in 2012. Introduction of higher value healthcare services, such as long-term care and IVF, combined with a concerted move towards undersupplied, more sophisticated medical procedures, is expected to sustain this trend of improving revenue per patient. For 2017 in particular, increasing contribution from NMC Royal Hospital and addition of Al Zahra Hospital to the portfolio supported improvement in average revenue per patient.

Key healthcare verticals

Performance overview by vertical

Multi-Specialty

Benefiting from rapid ramp-up of utilization at facilities opened in recent years (particularly at NMC Royal Hospital and DIP Hospital) and addition of Al Zahra Hospital (NMC's largest acquisition to date), the multi-specialty vertical recorded 50% YoY growth in revenues to US$834m for 2017.

The number of patients within the multi-specialty vertical increased 35% to 5.5m in 2017. Meanwhile, average revenue per patient for the year stood at US$139.4 (+15% YoY). As indicated earlier, healthy ramp-up at NMC Royal Hospital and addition of Al Zahra Hospital to the portfolio have been key catalysts for the increase in number of patients, as well as improvement in average revenue per patient.

The number of licenced beds within the vertical increased from 655 in 2016 to 1,168 in 2017, with acquisition of Al Zahra Hospital, assets in Oman and two new hospitals in KSA, accounting for an addition of 398 beds to the portfolio. Additionally, 115 new beds were added in existing facilities, reflecting continued optimization of even the more mature hospitals within NMC's network.

NMC Royal Hospital remains the cornerstone of the multi-specialty vertical, with the number of operational beds reaching 200 by end 2017. The remaining 116 licensed beds in the facility are expected to become operational by 2019.

In terms of inorganic expansion, 2017 witnessed the inclusion of Al Zahra Hospital to NMC's network. Acquisition of the hospital also completed the Group's hub-and-spoke model in Sharjah, making it the most dominant operator in the Emirate. The year also witnessed expansion of NMC's geographic footprint into Oman through the acquisition of Atlas Healthcare's facilities. The 102 beds in Oman translate into a 20% private sector market share for NMC in the country, positioning it well to benefit from the roll-out of mandatory healthcare insurance planned by the government from 2018. Last, but not least, the Group further strengthened its foothold in KSA by acquiring one multi-specialty facility each across the cities of Ha'il and Najran.

Maternity & Fertility

The maternity & fertility vertical posted US$205m revenues in in 2017, translating into 17% YoY growth. The business benefitted from continued ramp-up of operations at Brightpoint Hospital, with utilization reaching 77% in 2017 (65% in 2016).

The fertility business also maintained its pace of strong YoY growth, marked by a combination of growing performance of the IVF network and an organic expansion with new Fakih IVF clinics added in Al Ain and Oman. NMC is steadily moving to build on its position as the second largest IVF player in the world and is focusing on expanding its footprint in the GCC, as well as other geographies in the coming months. One of the most important developments in this regard is the recent acquisition of Al Salam Medical Group, which will allow NMC to establish its first IVF clinic in Riyadh.

Long-term & Home care

The long-term & home care vertical recorded revenues of US$114m in 2017, up 36%. The increase was driven by improved occupancy at existing facilities and addition of new capacity, particularly through the conversion of As Salama hospital in KSA from Multi-specialty to a long-term care facility.

Additionally, 16 long-term care beds were added in Al Zahra Hospital, continuing the trend of cross-pollination across assets that commenced with the introduction of 26 long-term care beds in NMC Royal during 2016.

Occupancy rate for the long-term & home care vertical stood at 86% in 2017 vs. 90% in 2016. Meanwhile, revenue per patient for the vertical stood at US$20,063 in 2017, compared to US$39,854 in the previous year.

Operations & Management

NMC renewed its focus on the Operations & Management vertical in 2017, with a key aim of growing the business strongly going forward. The existing contract for Khalifa Hospital in Umm Al Quwain was renewed for another 5-year period and several new contracts were signed. Two in particular were announced during the year, namely Emirates Healthcare Group's assets and a UAE government hospital in Yemen.

Revenues from the O&M vertical stood at US$8m in 2017 (+33% YoY), with substantial further growth anticipated in 2018.

Distribution

The Distribution business recorded 13% revenue growth in 2017 to reach US$487m. The growth was supported by the recent changes implemented by Dubai Government making insurance mandatory. EBITDA margin for the division declined slightly to 10.6%, translating into 2017 EBITDA of US$52m.

NMC further solidified its position as one of UAE's largest distribution companies, increasing the number of its SKUs to 108,900 (+17.5% YoY), with 46% of the products sold under exclusive agency contracts. The supporting infrastructure for the Distribution business also continued to increase, with total warehouse storage area increasing to 725,000 sq. ft. (+11%) and vehicle fleet rising to 232 (+1%).

The UAE government has implemented 5% Value Added Tax (VAT), effective from 1 January 2018. While most of NMC's business will not be affected by this tax (the majority of healthcare services are zero-rated and most pharmaceutical products are either exempt or zero-rated), parts of the Distribution business will be subject to VAT. However, the tax burden is expected to be transferred to the end consumer. Additionally, input tax incurred by NMC is refundable and can be adjusted against VAT on the Distribution division.

Financial review

The Group reported solid results in FY 2017 and is in a sound financial position overall.

The Group's reported revenue grew by 31.3% to US$1.6bn (FY2016: US$1.2bn) of which 15.6% was achieved organically with the remaining 15.8% growth resulting from the transformation strategy of the group through acquisitions. Group EBITDA increased by 43.6% to US$353.4m (FY2016: US$246.1m). Group EBITDA margin increased by 180 basis points to 22% mainly as a result of realising some of the acquisition related synergies within the Group and the improvement of margin in existing entities (including the new facilities). Group net profit increased by 38.2% to US$209.2m (FY2016: US$151.4m) and Group basic earnings per share grew by 28.0% to US$0.910 (FY2016: US$0.711).

Overall, our growth in revenue and improved profitability are attributed to both an improvement in performance of our existing hospitals and medical facilities and the acquisitions made within the Middle East, Europe and South America over the last 2 years.

Healthcare division

Revenue in the Healthcare division continued to achieve improved performance from US$823.3m in FY2016 to US$1,162m in FY2017, a level of growth of 41.1% of which 16.4% was achieved organically with the remaining 24.7% coming from acquired assets.

EBITDA improved to US$355.4m in FY2017 (2016: US$241.1m), a level of growth of 47.4%. EBITDA margins were 30.6% (FY2016: 29.3%).

The entities which were acquired earlier in the year, in particular Al Zahra Hospital though yet to be fully integrated within the Group performed above expectation in terms of revenues, EBITDA and cash flows.

The other entities acquired as part of the Group's Growth Strategy to build an integrated multi-vertical and multi-brand healthcare network across several geographies such as As Salama Hospital, Bin Said Clinics, and Atlas Healthcare Clinics performed in line with our expectations. Overall, our acquisitions have contributed a positive impact on the group revenue, EBITDA and cash flow.

Distribution division

Within the Distribution division, revenues increased to US$486.8m in FY2017 (FY2016: US$431.9m), a growth rate of 12.7%. EBITDA increased to US$51.5m in FY2017 (FY2016: US$47.1m), a growth rate of 9.4%.

The growth in revenue is attributed to the expansion of and consolidation within our distribution network. Further, the introduction of mandatory insurance in Dubai in 2016 continues to have a favourable impact on the Pharma portfolio.

Our focus on identifying efficiencies within our operations contributed to an improvement in our margins.

Capital Expenditure

Total capital additions of US$63.5m (FY2016: US$66.9m) were made during the year, in line with our expectations. Of the total capital expenditure spend during the period, US$31.4m (FY2016: US$38.9m) related to new capital projects and US$32.1m (FY2016: US$28.0m) related to further capital investment in our existing facilities.

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

Acquisitions:

During the year, we completed and announced a number of transactions, some of which had a material impact on our results and reflect our focused expansion strategy. Total consideration paid for all the acquisitions was US$641.0m.

Intangible assets increased to US$1,156.9m from US$652.9m mainly because of the goodwill recognised in respect of the Al Zahra acquisition.

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

Cash

Cash and cash equivalents decreased from US$433.4m to US$206.5 m.

The Group converted 78.5% (2016: 71.7%) of underlying EBITDA into cash generated from operations. Net cash inflow from operating activities for the 2017 financial year was US$277.5m, compared with US176.4m for the comparative period in 2016.

Net debt and funding

Net debt increased during the year from US$431.3m to US$1,011.4m, in line with management's expectations. Net debt-to-EBITDA ratio at the end of 2017 stood at 2.9x, remaining at a very comfortable level relative to the Group's cash flow generation capacity.

The increase in net debt is largely attributed to the acquisitions made during the year. The overall movement is explained as follows:

Working Capital

The Group's two divisions, Healthcare and Distribution, have different funding requirements. As in the previous years, the Group continues to fund its working capital requirements for its Healthcare division from operational cash flow, and we do not expect this position to change in the 2018 financial year.

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

Funding

The Group's largest acquisition during FY2017, the acquisition of Al Zahra Hospital was largely financed via borrowings, but also utilising the proceeds of a share placing raising US$322m in December 2016.

During the year, the Group entered two new syndicated facilities amounting to US$825m (Facility A) and US$250m (Facility B) respectively. Facility A is repayable over 60 months with an initial grace period of 12 months. Facility B is repayable over 84 months with a grace period of 12 months.

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

The total debt of the Group, excluding accounts payable and accruals, was US$1,399.0m as at 31 December 2017 compared to US$1,049.1m as at 31 December 2016.

Finance costs and income

Total finance costs for FY2017 were US$63.8m compared to US$41.7m in FY2016. This was mainly on account of the higher facility amount availed to refinance the existing debts as well as to finance the acquisitions.

As part of the Group's capital expenditure programme, borrowing costs of Nil (FY2016: US$0.3m) have been capitalised during the year. The rate used to determine the amount of borrowing costs eligible for capitalisation was1.9% for (FY2016, which is the effective rate of the borrowings used to finance the capital expenditure).

Dividend

The Board is proposing to continue with its policy of annual dividend payments of between 20% and 30% of profit after tax, outlined in the Company's IPO prospectus in 2012. The Board is therefore recommending that a final dividend of 13 pence per share be paid in cash in respect of the year ended 31 December 2017 (FY2016: 10.6 pence per share).

Subject to approval of the shareholders at the company's annual general meeting on 28 June 2018, the dividend timetable is as follows:

Ex-dividend date - 14 June 2018

Record date - 15 June 2018

Payment date - 10 July 2018

NMC Health plc

Consolidated financial statements

Year ended 31 December 2017

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2017

NMC Health plc

CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME

For the year ended 31 December 2017

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

The attached notes 1 to 41 form part of the consolidated financial statements.

NMC Health plc

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2017

NMC Health plc

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2017

The attached notes 1 to 41 form part of the consolidated financial statements.

NMC Health plc

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2017

The attached notes 1 to 41 form part of the consolidated financial statements.

NMC Health plc

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2017

NMC Health plc

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2017

The attached notes 1 to 41 form part of the consolidated financial statements.

NMC Health plc

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

At 31 December 2017

1 CORPORATE INFORMATION

NMC Health plc (the "Company" or "Parent'') is a Company which was incorporated in England and Wales on 20 July 2011. The Company is a public limited company operating in the United Arab Emirates ("UAE"), Oman, Saudi Arabia, Spain, Colombia, Italy, Denmark and Brazil. The address of the registered office of the Company is Level 1, Devonshire House, One Mayfair Place, London, W1J 8AJ. The registered number of the Company is 7712220. The Company's immediate and ultimate controlling party is a group of three individuals (H.E. Saeed Mohamed Butti Mohamed Al Qebaisi (H.E. Saeed Bin Butti), Dr BR Shetty and Mr Khalifa Butti Omair Yousif Ahmad Al Muhairi (Mr. Khalifa Bin Butti) who are all shareholders and of whom two are directors of the Company and who together have the ability to control the Company.

The Parent and its subsidiaries (collectively the "Group") are engaged in providing professional medical services, home care services, long term care services and the provision of all types of research and medical services in the field of gynaecology, obstetrics and human reproduction, and the rendering of business management services to companies in the health care and hospital sector. The Group is also engaged in wholesale of pharmaceutical goods, medical equipment, cosmetics, food, IT products and services.

The consolidated financial statements of the Group for the year ended 31 December 2017 were authorised for issue by the board of directors on 6 March 2018 and the consolidated statement of financial position was signed on the Board's behalf by Mr Prasanth Manghat and Mr Prashanth Shenoy.

2.1 BASIS OF PREPARATION

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union as they apply to the financial statements of the Group for the year ended 31 December 2017 and applied in accordance with the Companies Act 2006.

The consolidated financial statements are prepared under the historical cost convention, except for derivative financial instruments and contingent consideration payable which have been measured at fair value. The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all periods, presented.

Functional and reporting currency

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

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

Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Review in the Annual Report. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Financial Review in the Annual Report.

The Group has two diverse operating divisions, Healthcare and Distribution, both of which operate in a growing market.

The directors have undertaken an assessment of the future prospects of the Group and the wider risks that the Group is exposed to. In its assessment of whether the Group should adopt the going concern basis in preparing its financial statements, the directors have considered the adequacy of financial resources in order to manage its business risks successfully, together with other areas of potential risk such as regulatory, insurance and legal risks.

The Group has considerable financial resources including banking arrangements through a spread of local and international banking groups and utilizes short and medium term working capital facilities to optimise business funding. Debt covenants are reviewed by the Board each month. The Board believes

that the level of cash in the Group, the spread of bankers and debt facilities mitigates the financing risks that the Group faces from both its expansion through acquisitions and in relation to working capital requirements.

The Group delivered a strong performance in 2017. Both the Healthcare and Distribution divisions have continued their positive growth in revenue during 2017. Net profit and earnings before interest tax depreciation and amortization (EBITDA) of both healthcare and distribution divisions have increased in 2017. EBITDA margin of Distribution is almost the same as last year whereas for Healthcare it increased slightly which is due to opening of new facilities during the year. The directors have reviewed the business plan for 2018 and the five-year cash flow, together with growth forecasts for the healthcare sector in the UAE. The directors consider the Group's future forecasts to be reasonable.

The directors have not identified any other matters that may impact the viability of the Group in the medium term and therefore they continue to adopt the going concern basis in preparing the consolidated financial statements.

2.2 BASIS OF CONSOLIDATION

The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 December 2017. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

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

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

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

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

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

· Rights arising from other contractual arrangements

· The Group's voting rights and potential voting rights

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

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

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

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

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

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

The Group acquired an additional 10% interest in the voting shares of Americare LLC, The American Surgecenter Pharmacy LLC and the American Surgecenter LLC increasing its ownership interest to 100% for cash consideration of US$2,615,000. The Group recorded a loss of US$1,279,000 on this in retained earnings