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CLINIC HOLDINGS LIMITED
NETWORK HEALTHCARE HOLDINGS LIMITED
SETTLEMENT ANNOUNCEMENT
1. Introduction
On 15 December 2000 the settlement of the litigation proceedings between
Netcare, Clinics and Barney Hurwitz et al was announced. Reference was also
made in the announcement to the remaining unresolved claims by Netcare against
Clinics.
2. Settlement Agreement
The Boards of Directors of Netcare and Clinics are now pleased to announce that
agreement ("the settlement") has been reached on the award to Netcare as
settlement of its claims arising from the sale by Netcare of various hospital
assets ("the Netcare assets") to Clinics in 1997 ("the original sale"). The
settlement provides for the issue by Clinics of an additional 61,1 million
Clinic's ordinary shares to Netcare with effect from 1 April 2001.
The purchase price originally attributed to the Netcare assets was R862,3
million which was settled by the issue to Netcare of 183,5 million Clinics
shares at R4,70 per share. The additional 61,1 million Clinics shares to be
awarded in terms of the settlement will result in the purchase price of R862,3
million attributed to the Netcare assets being settled by the issue to Netcare
of 244,6 million Clinics shares at an average price of R3,53 per share.
As a consequence of Netcare and Clinics having similar Boards of Directors, the
final quantification of the claims was subject to independent review by the
independent firm of auditors, BDO Spencer Steward (JHB) Inc ("BDO"). BDO has
confirmed that the terms of the settlement agreement are fair and reasonable to
Clinics and its minority shareholders.
3. Financial Effects
The financial effects of the issue of additional Clinics shares to Netcare are
set out in the following tables and are based on their respective audited
financial statements for the year to 30 September 2000. In compiling the
table, the financial effects of the specific repurchase of 55 million Netcare
shares by a wholly owned subsidiary of Clinics ("the specific repurchase"),
referred to in the announcement dated 12 March 2001, are included for
completeness.
3.1 Financial Effects on Netcare
Audited Pro-forma Pro-forma % Change
after the after the relating to
specific settlement the
repurchase settlement
Headline earnings per
Netcare share (cents) 20,2 20,7 20,9 1,1
Attributable earnings per
Netcare share (cents) 19,4 19,9 20,2 1,1
Net tangible asset value per
Netcare share (cents) 102,8 102,3 103,5 1,2
Assumptions
Based on Netcare's increased share of the earnings and equity of Clinics
pursuant to the settlement.
3.2 Effects of the settlement on Clinics
Earnings per Clinics share - Accounting for the attributable earnings of the
Netcare shares acquired pursuant to the specific repurchase
Audited Pro-forma Pro-forma % Change
after the after the relating to
specific settlement the
repurchase settlement
Headline earnings per
Clinics share (cents) 38,2 38,9 35,9 (7,7)
Attributable earnings per
Clinics share (cents) 37,1 37,8 34,9 (7,7)
Earnings per Clinics share - Disregarding the attributable earnings of the
Netcare shares acquired pursuant to the specific repurchase
Audited Pro-forma Pro-forma % Change
after the after the relating to
specific settlement the
repurchase settlement
Headline earnings per
Clinics share (cents 38,2 37,4 34,5 (7,7)
Attributable earnings per
Clinics share (cents) 37,1 36,2 33,4 (7,7)
Net Asset Value per Clinics share
Audited Pro-forma Pro-forma % Change
after the after the relating to
specific settlement the
repurchase settlement
Net tangible asset value per
Clinics share (cents) 205,9 205,1 189,2 (7,7)
Assumptions
Number of Clinics shares (million) Weighted average In issue
Audited 728,4 729,2
After claim 789,6 790,4
Sandton 3 April 2001
Advisers to Clinics and Clinics minorities Attorneys Sponsor
B D O Spencer Stewart H R Levin Merrill Lynch
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