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Netcare - Expansion Of Netcare"s International Activities Network Healthcare Holdings Limited Incorporated in the Republic of South Africa (Registration number 1996/008242/06) ("Netcare") JSE Share Code: NTC ISIN number: ZAE000011953 EXPANSION OF NETCARE"S INTERNATIONAL ACTIVITIES Introduction Netcare is pleased to announce that its International Division, through Netcare Healthcare (UK) Limited (Netcare UK), has concluded a Memorandum of Understanding with Fidelidade Mundial, S.A. (FMSA), a leading insurance institution in Portugal, for the joint expansion and development of FMSA"s private healthcare subsidiary, Hospitais Privados de Portugal S.G.P.S. (HPP). FMSA enjoys approximately 22% of the Portuguese healthcare insurance market covering 350 000 lives. FMSA is owned by Caixa Geral de Depsitos Group (CGD), a Portuguese Government owned enterprise which is the largest financial institution in Portugal, having assets in excess of Euro66 billion. Research into the selection of a strategic partner for the HPP project commenced during June 2003 and Netcare was selected from amongst numerous international healthcare providers who satisfied the qualifying criteria prescribed by HPP. HPP has subsidiaries operating in Northern, Central and Southern Portugal. The HPP Group currently operates five hospitals with 299 beds, located in Lisbon, Porto and the Algarve, with another two hospitals presently being planned for construction. The hospital businesses are complemented by ancillary healthcare services providing primary care, radiology and pathology. Netcare Healthcare UK Netcare has previously reported on its successful progress as contractor and preferred bidder for selected National Health Service (NHS) provider contracts in the United Kingdom, having a potential aggregate value of R1,4 billion over five years. Having regard to these compelling developments, an operational infrastructure has now been established in the UK and Group Chief Operating Officer, Dr Richard Friedland, has temporarily relocated to the UK to manage and expand the Group"s international operations, which will include, for the time being, those activities both in the UK and Portugal. Rationale Following on from Netcare UK"s success with the NHS, the Group has seen significant interest in public/private partnerships ("PPP") by several Governments in Europe. As a result thereof, Netcare"s International Division has embarked on a deliberate strategy to secure partnerships with several strategic healthcare enterprises to tender for PPP"s. Given the similarities in strategy indicated by the ultimate shareholder in HPP, CGD, it is the intention of the parties that Netcare UK will, subject to confirmation of the transaction by the South African Reserve Bank, invest and become a strategic shareholder in HPP in order to partner CGD in initially expanding the Group and tendering for PPP projects throughout Portugal. It is further contemplated that the transaction will include Netcare UK entering into a service level agreement for the provision of selected value adding products and services for the HPP Group. This investment presents a formidable opportunity for Netcare UK due, inter alia, to the following key factors: - HPP"s key competitive advantages are the support provided by its shareholders" financial and insured markets and also the track record of creating and supplying a distinguished quality service. - The impressive management expertise and local knowledge within the HPP group and its shareholders. - The Portuguese Government"s progressive and practical PPP plan to launch 10 projects over a 3 year period (2 new and 8 replacement facilities). These projects are anticipated to have an infrastructural value in excess of Euro750m, with the aggregate for clinical services amounting to almost Euro4.5bn over a 10 year period. - CGD has indicated its intention to jointly invest with Netcare in expanding into selected European markets as well as other Portuguese speaking regions. Financial effects The financial effects of Netcare"s relationship with HPP are, at this stage, not significant on a pro-forma basis. However, the successful implementation of Netcare"s service level commitments, as well as the potential returns on Netcare"s investment in HPP and its expanded operations should impact positively on the Netcare Group in future. Further announcements regarding the status and progress of Netcare UK will be published from time to time. Sandton 4 March 2004 Netcare Sponsor Merrill Lynch South Africa (Pty) Limited Date: 04/03/2004 01:15:03 PM Supplied by www.sharenet.co.za Produced by the JSE SENS Department
