African Medical Investments PLC Final Results -13-

      adjustment                 -                    -                    -                 32                  -            -            32 
     Charge for 
      the 
      year                      93                  267                    -                136                714          348         1,558 
     Disposal                    -                    -                    -                  -                (1)            -           (1) 
     Exchange 
      differences                -                    3                    -                  6               (45)           70            34 
     28 February 
      2011                      93                  462                    -                174              1,083          508         2,320 
                    --------------  -------------------  -------------------  -----------------  -----------------  -----------  ------------ 
 
     Net book 
     value 
                    --------------  -------------------  -------------------  -----------------  -----------------  -----------  ------------ 
     28 February 
      2011                  11,138                  212                2,351              2,600              3,756        1,284        21,341 
                    ==============  ===================  ===================  =================  =================  ===========  ============ 
 
 

Property, plant and equipment is depreciated from the completion and opening of the respective clinic.

Medical equipment comprises clinical equipment, furniture and fittings and medical vehicles. Other assets comprise other vehicles, office furniture and equipment.

A depreciation charge of US$872,105 has been included in operating expenses in the income statement for the current period (2011: US$573,000).

A depreciation charge of US$752,576 has been included in cost of sales in the income statement for the current period (2011: US$984,000).

At 29 February 2012, the Group had no contractual commitments for the acquisition of property, plant and equipment (2010: US$Nil).

The acquisition cost of the aircraft was undervalued in a prior year. The acquisition adjustment of US$295,000 provided in the year ended 28 February 2011 arose through the understatement of amounts payable to previous shareholders of the acquired company for the asset acquisition.

20. Inventories

 
                                             2012        2011 
                                            $'000       $'000 
                                       ----------  ---------- 
 
     Pharmaceuticals and consumables          642         296 
                                       ==========  ========== 
 

The cost of inventory recognised as an expense and included in cost of sales amounted to US$1,549,000 (2011: US$658,522).

21. Financial assets

 
 
                                                2012           2011 
                                               $'000          $'000 
                                        ------------   ------------ 
     Current assets 
     Trade receivables                         1,009            542 
     Other receivables (see note 23)             293            628 
     Cash at bank                                195          4,681 
                                        ------------   ------------ 
     Total financial assets                    1,497          5,851 
                                        ============   ============ 
 
 

The directors consider that the carrying amount of other financial assets approximates their fair value.

Impairment losses related to loans and receivables have been disclosed in note 6 to the financial statements.

22. Financial asset investment

 
                                           2012        2011 
                                          $'000       $'000 
                                    -----------  ---------- 
 
     At 1 March                               -         196 
     Impairment during the period             -       (196) 
     At 29/28 February                        -           - 
                                    ===========  ========== 
 

The financial asset investment comprised the options to acquire the business and assets of the JIA Clinic and the Harare Trauma Centre. These options have a nil value at the balance sheet date given the events detailed in note 5.

23. Trade and other receivables

 
                                        2012        2011 
                                       $'000       $'000 
                                ------------  ---------- 
 
     Trade receivables                 2,038         674 
     Impairment (see note 25)        (1,029)       (132) 
                                ------------  ---------- 
     Net trade receivables             1,009         542 
     Other receivables                   293         628 
                                ------------ 
                                       1,302       1,170 
                                ============  ========== 
 

Trade receivables comprise amounts receivable from the sales of medical services.

The trade receivables that were due at 29 February 2012, but not impaired, were all due within one month of the year end (2011: within one month).

The Group's credit terms are payment of invoices within 30 days of invoicing. The level of exposure of individual receivables is reviewed and appropriate credit limits imposed. No collateral is held in relation to these amounts and these amounts as well as other receivables and cash represent the Group's maximum credit risk.

24. Financial liabilities

Trade and other payables

 
                                          2012        2011 
                                         $'000       $'000 
                                    ----------  ---------- 
 
     Trade payables                      1,310       1,431 
     Other payables                      2,424       2,051 
     Accruals and deferred income        1,307         510 
     Bank overdraft                        283           - 
                                    ---------- 
                                         5,324       3,992 
                                    ==========  ========== 
 

Trade payables comprise amounts outstanding for trade purchases and ongoing costs.

Other payables include amounts payable to related parties and local payroll tax liabilities (see note 32).

Accruals include amounts due and payable for audit fees, travel costs and directors remuneration at the balance sheet date.

Bank overdraft represents the overdraft facility held at the AMI Maputo hospital.

The directors consider that the carrying amount of financial liabilities approximates their fair value. The average credit period taken for trade purchases is 72 days (2011: 37 days).

Interest bearing loans

 
                                                2012        2011 
                                               $'000       $'000 
                                          ----------  ---------- 
     Full liability owed to convertible 
      loan note holders 
     Nominal value of loan notes in            5,037           - 
      issue at the beginning of the 
      year 
     Additional notes issued in the 
      year                                       700       5,000 
     Interest charged at 10%                     538          37 
                                          ----------  ---------- 
     Total liability                           6,275       5,037 
                                          ==========  ========== 
 
     Represented by: 
     Fair value of convertible loan 
      notes                                    4,693       4,013 
     Equity component                          1,004         987 
     Accumulated interest to date                578          37 
                                          ----------  ---------- 
     Total liability                           6,275       5,037 
                                          ==========  ========== 
 
     Fair value of convertible loan 
      notes 
     1 March                                   4,050           - 
     Nominal value of convertible 
      loan note issued in year                   700       5,000 
     Equity component                           (17)       (987) 
     Interest charged                            538          37 
                                          ----------  ---------- 
     29/28 February                            5,271       4,050 
                                          ==========  ========== 
 

On 2 February 2011 convertible loan notes to the value of $5,000,000 were issued to Harbinger Capital Partners Master Fund Limited which bear interest at 10% per annum. The convertible loan note instrument under which these convertible loan notes were issued constitutes a compound financial instrument. The instrument has been fair valued using a discount rate of 15% being the director's best estimate of a fair rate of interest for a straight loan excluding any equity elements. The adjusted redemption share price of these convertible loan notes is 2p per share. An extension of this agreement was finalised on 16 August 2011 with the issue further convertible loan notes to the value of $700,000 under the same agreement. The other reserve in equity at the balance sheet date of US$1,006,946 (2011: US$987,000) represents the equity element of the convertible loan note. For further notes on funding received after year end please refer to the note 33, Events after the reporting period.