The Company generates revenue through providing medical imaging equipment to state hospitals and various medical centres.
The Company generates revenue through providing medical imaging equipment to state hospitals and various medical centres that it contracts for, following a tender process. Such contracts are issued for a period of approximately two years. It has six valid contracts with six state hospitals in Istanbul, Ankara, Balikesir and Ordu.
The Company services six leading state hospitals in Turkey by providing medical imaging equipment and it is awarded these contracts following a tendering process, the duration of which is approximately two years. Once these contracts expire, it is highly expected that the Company will be the winner of the next round of the tender due to the highest technology and exceptional service quality it provides. All imaging equipment is financed by three year leasing terms. Other than the existing six hospitals, negotiations to win more hospital contracts are continuing. Once the Metropolitan Hospitals Project that the Government is pushing for has realised, then the hospital that will be built in Ankara will have a budget of $50m for imaging services.
The 2013 and 2014 forecasts (see document attached) are based on the assumption that the Metropolitan Hospitals Project will be realized. An imaging budget of $50m will occur for each hospital featured in the Metropolitan Hospitals Project. Apart from the Metropolitan Hospitals Project aforementioned above, for each hospital that the Company will add to its client list, its profitability will increase by 20%. Negotiations for these new contracts are ongoing.
Since the expected lifespan of the equipment at hand is approximately 10 years, the Company has no CapEx requirements. If however, a new hospital is added to its client list, then the purchase of new equipment will be assessed according to that hospital’s budget. The second hand value of the equipment currently stands at $3,500m. The leasing liability will be completed in 12 months’ time.
The current owner of the 60% stake wants out as he needs cash injection for another energy project that he has been involved.
An NDA is to be signed by the potential buyer.