Detailed Corporate Financial Analysis Report: IHH Healthcare Berhad

This report presents a comprehensive corporate financial analysis of IHH Healthcare Berhad, a Malaysian healthcare company. The analysis covers five years of financial data, including income statements, statements of financial position, and cash flow statements. It employs horizontal and vertical analysis to identify trends and patterns. Financial ratios, including liquidity, gearing, activity, and profitability ratios, are calculated and evaluated. Furthermore, DuPont analysis, Altman Z-score, and market ratios are used to assess the company's financial health and investment potential. The report incorporates insights from the Chairman's and Managing Director's reports to provide a holistic view of the company's performance and future prospects, ultimately aiming to inform investors about the risks and rewards associated with investing in IHH Healthcare Berhad.

Running Head: CORPORATE FINANCIAL ANALYSIS
CORPORATE FINANCIAL ANALYSIS
Name of the Student
Name of the University
Author Note

1CORPORATE FINANCIAL ANALYSIS
Executive Summary
The main purpose of this report is to prepare a corporate financial analysis report of
IHH Healthcare Company for helping the investors in company’s stock. The paper is
supported by analysing the company’s annual report for five years. It is found that, in terms
of financial position the company has generated enough revenue from the past five years.
But, investing in the company’s stock will be quiet riskier for the shareholders. This is
because the profitability position of the company is quiet less in terms of return on equity as
compared to the previous five years.

2CORPORATE FINANCIAL ANALYSIS
Table of Contents
Introduction................................................................................................................................1
Background of the Company.....................................................................................................1
Corporate Financial Analysis.....................................................................................................1
Income Statement...................................................................................................................3
Statement of Financial Position.............................................................................................3
Cash Flow Statement..............................................................................................................6
Horizontal Analysis................................................................................................................7
Vertical Analysis..................................................................................................................11
Financial Ratio Analysis......................................................................................................12
DuPont analysis....................................................................................................................15
Altman z-score.....................................................................................................................16
Market Ratios.......................................................................................................................17
Chairman Report..................................................................................................................18
Managing Directors Report..................................................................................................19
Conclusion................................................................................................................................19
References................................................................................................................................20

3CORPORATE FINANCIAL ANALYSIS
Introduction
This paper will be discussing on the strengths and weakness of the company’s
financial statement. The corporate financial report will be communicating the financial health
position of IHH Healthcare Company. The financial analysis will be done on the basis of
horizontal and vertical analysis of the company’s financial statement. This report will help
the investors to analyse the valuation of the company in terms its financial ratio position and
position of market ratios. The main objective of this report is to prepare a corporate financial
analysis report of IHH Healthcare Berhad for the investors.
Background of the Company
IHH Healthcare Berhad is a healthcare sector of Malaysia that is focused on providing
a top most healthcare services to the people. The group is traded in Kuala Lumpur city of
Malaysia. The group is traded in Bursa Malaysia stock exchange of Malaysia. It is the largest
private healthcare group of Asia. Dato Mohammed Azlan bin Hshim is the current chairman
of the company. The group comprises of some of the top leading brands like Mount
Elizabeth, Pantai, Gleneagles, Acibadem and ParkwayHealth. The company was established
with an acquisition of Pantai Group in the FY 2010.
Corporate Financial Analysis
Financial Statements
The financial Statement of IHH Healthcare Berhad comprises of Income Statement,
Financial Position Statement and cash flow statement. The financial Statement is prepared for
the year ended FY 2018, FY 2017, FY 2016, FY 2015 and FY 2014. The financial statement
is prepared as per the Malaysian financial Reporting Standards (Bakar & Rosbi, 2017). This
standard is according to the International financial reporting standards of the company’s act
2016 in Malaysia. This financial Statement gives a true value of the group’s financial position

4CORPORATE FINANCIAL ANALYSIS
in the respective years. The company directors are responsible for the preparation of the
financial statements and control the internal environment of the group in order to prevent
form any type of fraud and error in the financial statements (IHH Healthcare Berhad . 2020). .
The auditors’ are responsible for preparing the financial statement and make sure the
financial figures are free from any type of material misstatements. The above financial
Statement is prepared according to the requirements mentioned in the company’s act 2016.
Advantages-
 Financial Statement analysis will help the investors to decide on valuing the
company’s stock and decides whether to invest in it or not.
 The regulators can ensure that, the company is following a good practices and help
the government to analyse the tax owned by the company from its business.
Limitations-
 It is difficult to compare the financial position of the company.
 Sufficient data is not present in the notes to account of the annual report, hence, it has
been difficult to compare and can cause confusion.
 The financial ratios calculated was only supported from historical analysis. It cannot
be used for future investigation.

5CORPORATE FINANCIAL ANALYSIS
Income Statement
The company Revenue is generated from Health care services, education services,
management fees, revenue from contracts with their customers, income from rents and
income from dividends (Siew, Fai & Hoe, 2016). The revenue from contracts with customers
is generated by various reportable segments like Singapore, Malaysia, India, Northern Asia,
Europe, Middle East and North Africa. Revenue from health care services were related to
contracts with their patients. The health care services is recorded in the form of credit terms
and there is no obligation of refunds for the health care services that is provided. Revenue
from management fees is generated from various consultancy services.
Statement of Financial Position

6CORPORATE FINANCIAL ANALYSIS

7CORPORATE FINANCIAL ANALYSIS
The trade and other receivables includes both the current & non-current receivables.
Non-current receivables includes; interest receivables, deposits and prepayments and current
receivables included trade receivables includes; amounts received from associates, joint
ventures, short-term deposits, prepayments and interest receivables. Cash & cash equivalents
comprises if cash at bank balances, fixed deposits having a tenor period of less than three
months, bank overdrafts, collateral received, cash from cash flow statements. Other assets of
the company include; tax recoverable, derivative assets, deferred tax assets, development
properties and amount that is due form subsidiaries. Loans and borrowings also comprises of
short-term & long-terms borrowings (Khalif, Bakar & Gegov, 2019). The non-current
borrowings includes all the long-term bank borrowings, loans generated from corporates,
lease liabilities, unsecured CCD (compulsory convertible debentures), loans generated from
non-controlling interests. The current borrowings included short-term bank borrowings, loans
from corporates and finance lease liabilities (Remali et al., 2017). The loans from non-
controlling interests comprises of HKD- denominated loans for the purchase of shares of
GHK Hospital Limited and construction of a hospital in Hong Kong city. Employee benefits
also comprises of current & non-current benefits. The non-current benefits includes;
retirement benefits, deferred bonus scheme and provision for unconsumed leave and the
current benefits includes; employment termination benefit, contribution plan, short-term
provision for unconsumed scheme, deferred bonus scheme and PTM long-term incentive
plan. The liabilities section of balance sheet also include; trade & other payables which
comprises of non-current payables like accruals, CCPS liabilities and deposits & current trade
payables includes; interest payables, short-term accruals, guarantee provision, rental advance
billings and contract liabilities (IHH Healthcare Berhad . 2020). Other liabilities of the
company includes; derivative liabilities, tax payables and amount due from subsidiaries. The
company equity comprises of share capital, retained earnings and stockholder’s equity. The

8CORPORATE FINANCIAL ANALYSIS
share capital includes ordinary shares issues & paid. The dividend holders receive the
dividends periodically. Other reserves include; share option reserve, fair value reserves,
revaluation reserves, hedge reserves, capital reserves and legal reserves (Fahami et al., 2019).
Cash Flow Statement
The cash flow of the company is generated from operating activities, investing
activities and financial activities. The profit from operating activities were generated from the
operations of accounts receivables, changes in the company’s working capital, gain from
property, plant & equipment, gain from subsidiaries, gain from sale of financial investments
and gain from return on foreign exchange subsidiaries (Teo, Khong & Pek, 2019). The cash
generated from operating activity is taxable and net cash is generated by deducting the
taxable rate from the actual cash generated from the operations. Cash of the company also
flows from investing activities. This includes; purchase of investment properties, purchase of
market funds, acquisitions of subsidiaries, purchase of intangible assets, dividends that is

9CORPORATE FINANCIAL ANALYSIS
received from marketable funds, dividends that is received from joint ventures and Dividends
that is received from associates and repayments from their subsidiaries (Wan, 2017). The
cash generated from financing activities includes; the proceeds generated from exercise of
share options, from loans and borrowings, from the issue of fixed rate medium term notes,
payment of perpetual securities distribution, proceeds from dilution of interest in subsidiaries,
issues of shares from non-controlling interest from pledged deposits and acquisition of non-
controlling interests (Rubadharishini, 2017). The cash flow statements also included cash &
cash equivalents which includes the cash at bank and cash in the form of fixed deposits
having a tenor period of less than three months.
Horizontal Analysis
This is an important technique to understand how the company is doing financially.
This is used to evaluating trends in the historical data and compare each and every items in
the financial statements (Zhang et al., 2019). This is used to forecast the future. The
accounting period for doing the horizontal analysis is for five years per annually. The method
for comparing the horizontal analysis is from percentage comparison (Al-Juniad et al., 2018).
FY 2014 is taken as the base year for calculating the percentage change of the financial
figures.

10CORPORATE FINANCIAL ANALYSIS
 Total current assets in the FY 2015 has been increased by 24.32% in the FY 2015 as
compared to the FY 2014. There is a decrease by 1.11% in the financial year 2016 as
compared to the previous year. There is a rapid increase in the current assets in the FY
2017 by 77.41%. The company has adequately managed the current assets in the FY
2017. As compared to FY 2017, the current assets has been increased by 29% in the
FY 2018.

11CORPORATE FINANCIAL ANALYSIS
 Total non-current assets of the company has increased by 23.94% in FY 2015 as
compared to the FY 2014. It has been increased by 5.65% in the FY 2016, as
compared to the previous years and decreased by 5.5% in FY 2017 as compared to the
previous year 2016 (Malachowski et al., 2019). But, in the FY 2018, there was a good
increase of 12% as compared to the previous accounting year.
 It can be seen that, the total assets in FY 2015 has been increased by 23.94% as
compared to the year 2014. It has been increased by 4.76% in the FY 2016 with
respect to the FY 2015, increased by 4.71% in the FY 2017 as compared to the FY
2016 and increased by 16% in the FY 2018 (Zhao et al., 2017).
 The total current liabilities was more in 2015 as compared to the FY 2014 and has
been increased by 37.27%, increased by 12.53% in the FY 2016 as compared to FY
2015, increased by 11.07% in the FY 2017 as compared to the FY 2016 and increased
by 36% in the FY 2018 as compare to the FY 2017.
 The total non-current liabilities was also more in the FY 2015, it has been increased to
61.49% in the FY 2015 as compare to the FY 2014 (IHH Healthcare Berhad . 2020). .
It has been increased by 20.29 in FY 2016 as compared to FY 2015, but decreased by
6.99% in the FY 2017 as compared to the previous year 2016. In 2018, the non-
current liabilities has been increased by 24% as compared to the previous year 2017.
 It can be seen that, the total liabilities was more in 2015 and has been increased by
53.70% as compared to the previous year 2014. It was slightly increased by 18.06% in
the FY 2016 as compared to 2015, decreased by 6.99% in the FY 2017 as compared
to FY 2016 and increased by 28% in the FY 2018 as compare to the previous year
2017.
 The total equity was increased by 13.72% in FY 2015 as compared to the previous
year 2014, decreased by 1.42% in FY 2016 as compare to FY 2015, increased by