Netcare - Effect Of Circular 7/2005 Relating To Operating Leases On The

Netcare - Effect Of Circular 7/2005 Relating To Operating Leases On The         
          Financial Results Of Netcare                                          
Network Healthcare Holdings Limited                                             
(Co. Reg. No. 1996/008242/06)                                                   
Code: NTC                                                                       
ISIN number: ZAE000011953                                                       
("Netcare")                                                                     
EFFECT OF CIRCULAR 7/2005 RELATING TO OPERATING LEASES ON THE FINANCIAL RESULTS 
OF NETCARE                                                                      
In accordance with Circular 7/2005 released by the South African Institute of   
Chartered Accountants ("SAICA"), the method by which South African companies    
should account for operating leases with fixed escalation clauses has been      
clarified, necessitating adjustments to the financial statements of those       
companies affected.                                                             
Payments made under operating leases are recognised in the income statement on a
straight-line basis over the term of the lease. Past practice, whereby operating
lease payments were expensed on a payments basis, was based on an interpretation
of IAS 17(AC 105) - Leases, that was generally accepted in the South African    
community. The move towards full compliance with International Financial        
Reporting Standards ("IFRS") has led to the view that the entity is obliged to  
adopt the straight-line basis of accounting for all lease payments. The         
adjustment has been made as required by the International Accounting Standards  
Board ("IASB") with the necessary restatement of comparative figures. The       
effects of the restatement on the financial statements are summarised below:    
                                        R"000                                   
Effect on Retained Earnings                                                     
30 September 2003                       (141,461)                               
Effect on 2004 EBITDA                   (11,467)                                
Effect on 2005 EBITDA                   (6,565)                                 
EBITDA is defined as Earnings before Interest, Tax, Depreciation and            
Amortisation.                                                                   
Netcare has assessed the impact of the change in interpretation and, in light of
the fact that it owns the vast majority of its hospitals and other medical      
facilities, it advises that the impact is not material on a year on year basis. 
JOEL WOLPERT                                                                    
Group Company Secretary                                                         
Tel No:   (011) 301-0213                                                        
Fax No:   (011) 301-0481                                                        
E-mail:   joel.wolpert@netcare.co.za                                            
Sponsor                                                                         
Merrill Lynch South Africa                                                      
Date: 06/10/2005 01:49:25 PM Supplied by www.sharenet.co.za                     
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