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NTC - Network Healthcare Holdings Limited - Audited group results for the year
ended 30 September 2007
Network Healthcare Holdings Limited
(Registration number: 1996/008242/06)
(Incorporated in the Republic of South Africa)
(JSE share code: NTC) (ISIN code: ZAE000011953)
("Netcare", "the Company" or "the Group")
Audited group results for the year ended 30 September 2007
Group financial highlights
*27% increase in adjusted headline earnings per share
*20% increase in final reductions of capital per share
*15% increase in South African revenue
*14% increase in South African operating profit
Group business highlights
*Strong organic growth in South Africa
*Commissioned two new hospitals in South Africa
*Acquired the remaining interest in Community Hospital Group
*3 700 nurses and paramedics trained
*Successful integration of General Healthcare Group
Group balance sheet at 30 September
Note 2007 2006*
Rm Rm
ASSETS
Non-current assets
Property, plant and equipment 26 683 27 246
Goodwill 16 091 16 745
Intangible assets 289 271
Associated companies, investments and loans 4 298 255
Financial asset - Derivative financial 1 453 834
instruments
Deferred taxation 514 396
Total non-current assets 45 328 45 747
Current assets
Investments and loans 4 56 51
Inventories 600 571
Accounts receivable 2 875 2 706
Cash and cash equivalents 1 361 1 463
4 892 4 791
Assets held for sale 5 319
Total current assets 5 211 4 791
Total assets 50 539 50 538
EQUITY AND LIABILITIES
Capital and reserves
Ordinary share capital and premium 1 819 1 497
Treasury shares (5 555) (5 555)
Other reserves 2 035 1 357
Retained earnings 5 833 4 938
Ordinary shareholders` equity 4 132 2 237
Preference share capital and premium 644 644
Minority interest 3 806 3 355
Total shareholders` equity 8 582 6 236
Non-current liabilities
Long-term debt 28 944 29 224
Financial liability - Derivative financial 1 156 2 152
instruments
Post-retirement benefit obligations 115 294
Deferred lease liability 63 64
Deferred taxation 6 073 6 399
Total non-current liabilities 36 351 38 133
Current liabilities
Accounts payable 2 570 2 624
Short-term debt 2 086 2 953
Taxation payable 410 138
Bank overdrafts 461 454
5 527 6 169
Liabilities in disposal group held for sale 5 79
Total current liabilities 5 606 6 169
Total equity and liabilities 50 539 50 538
*Restated (refer to note 2)
Group income statement for the year ended 30 September
Note 2007 2006 %
Rm Rm change
Continuing operations
Revenue 18 607 11 152 66,8
Cost of sales (10 856) (6 376)
Gross profit 7 751 4 776
Other income 204 349
Administrative and other expenses (4 965) (3 547)
Operating profit 6 2 990 1 578 89,5
Financial income 7 328 563
Financial expenses 8 (2 463) (1 490)
Attributable earnings of associates 32 28
Profit before taxation 887 679 30,6
Taxation 9 99 (229)
Profit for the year from continuing 986 450 119,1
operations
Discontinued operation
Profit for the year from discontinued 5 109 87 25,3
operation
Profit for the year 1 095 537 103,9
Attributable to:
Ordinary shareholders 927 729
Preference shareholders 30 12
Profit attributable to shareholders 957 741
Minority interest 138 (204)
1 095 537
Earnings per share (cents)
Basic 75,4 50,3 49,9
Continuing operations 66,5 44,3 50,1
Discontinued operation 8,9 6,0 48,3
Diluted* 71,7 49,6 44,6
Continuing operations 63,3 43,7 44,9
Discontinued operation 8,4 5,9 42,4
Capital distributions per share 31,0 27,0 14,8
(cents)
*Restated (refer to note 2)
Group cash flow statementfor the year ended 30 September
2007 2006
Rm Rm
Cash flows from operating activities
Cash received from customers 18 869 11 433
Cash paid to suppliers and employees (14 (9 304)
895)
Cash generated from operating activities 3 974 2 129
Interest paid (2 355) (838)
Continuing operations (2 348) (838)
Discontinued operation (7)
Taxation paid (286) (234)
Continuing operations (269) (234)
Discontinued operation (17)
Preference dividends paid (30) (12)
Reductions of capital paid (347) (391)
Net cash from operating activities 956 654
Continuing operations 882 654
Discontinued operation 74
Cash flows from investing activities
Purchase of property, plant and equipment (1 389) (1 014)
Proceeds on disposal of property, plant and equipment 40 50
Settlement of post-retirement benefit obligation (151)
Additions to intangible assets (103) (111)
(Increase)/decrease in investments and loans (52) 171
Proceeds from disposal of investments and 1 9
subsidiaries
Interest received 158 151
Dividends received 1 1
Acquisition of subsidiaries and businesses, net of (169) (16 393)
cash acquired
Share buy-backs (682)
Net cash from investing activities (1 664) (17 818)
Continuing operations (1 632) (17 818)
Discontinued operation (32)
Cash flows from financing activities
Proceeds from issue of ordinary shares 669 1 678
Proceeds from issue of preference shares 644
Repurchase of shares (134)
Long-term liabilities raised 262 25 021
Short-term liabilities repaid (317) (7 936)
Net cash from financing activities 614 19 273
Continuing operations 617 19 273
Discontinued operation (3)
Translation effects on cash and cash equivalents of 39 (1 393)
foreign entities
(Decrease)/increase in cash and cash equivalents (55) 716
Cash and cash equivalents at beginning of the year 1 009 293
Cash in disposal group held for sale (54)
Cash and cash equivalents at end of year 900 1 009
Statement of recognised income and expense
for the year ended 30 September
2007 2006
Rm Rm
Effect of translation of foreign entities (93) 1 427
Fair value (losses)/gains on investments (24) 5
Effect of cash flow hedge accounting 600 (299)
Net investment hedges - fair value losses for the (98)
year
Actuarial gains/(losses) taken directly to equity 1 (12)
Movement in contingency reserve 6 2
Disposal of shares in subsidiary (36)
Fair value deficit on disposal of shares (7)
Negative goodwill derecognised 820
Other reserve movements 1
Net income recognised directly in equity 447 1 846
Profit for the year 1 095 537
Total recognised income for the year 1 542 2 383
Attributable to:
Ordinary shareholders 1 062 (909)
Preference shareholders 30 12
Minority interest 450 3 280
1 542 2 383
Headline earnings for the year ended 30 September
Note 2007 2006* %
Rm Rm change
Reconciliation of headline
earnings
Profit for the year from 986 450
continuing operations
Less:
Preference shareholders (30) (12)
Minority interest (138) 204
Earnings used in the calculation 818 642 27,4
of basic earnings per share from
continuing operations
Adjusted for:
Impairment of goodwill 16 2
Impairment of intangible assets 40
Impairment of investments 1 21
Impairment of land and buildings 14
Reversal of impairment of land and (11)
buildings
Profit on disposal of property, (1) (4)
plant and equipment
Profit on disposal of (1) (120)
subsidiaries/investments
Minority share of headline (16)
adjusting items
Headline earnings from continuing 846 555 52,4
operations
Headline earnings from 109 87
discontinued operation
Headline earnings 955 642 48,8
Headline earnings per share (cents)
Basic 77,6 44,3 75,2
Continuing operations 68,8 38,3 79,6
Discontinued operation 8,8 6,0 46,7
Diluted 73,8 43,7 68,9
Continuing operations 65,4 37,8 73,0
Discontinued operation 8,4 5,9 42,4
*Restated (refer to note 2)
Notes for the year ended 30 September
1. Basis of preparation and accounting policies
The condensed financial statements have been extracted from the
Group financial statements which have been prepared in accordance
with International Financial Reporting Standards, the Listing
Requirements of the JSE Limited and the South African Companies
Act, 1973, as amended.
The accounting policies have been applied consistently with those
of the prior year, except for the following accounting standards,
interpretations and amendments to published accounting standards
which were adopted prior to their effective dates:
*IAS 23 Revision of International Accounting Standard 23
Borrowing costs
*IFRIC Interpretation 10 Interim Financial Reporting and
Impairment
*IFRIC Interpretation 11 Group and Treasury Share Transactions
*IFRIC Interpretation 12 Service Concession Arrangements
*IFRIC Interpretation 14 IAS 19 - The Limit on a Defined Benefit
Asset, Minimum Funding Requirements and their Interaction
2. Restatement of comparative information
2.1 Business
combinations
In accordance with IFRS 3 Business Combinations, adjustments
to the provisional accounting for business combinations have
been made. This has resulted in adjustments to the 30
September 2006 balance sheet as follows:
As Adjustments As restated
previously Rm Rm
reported
Rm
Balance sheet
Goodwill 16 907 (162) 16 745
Deferred 196 200 396
taxation -
asset
Accounts 2 707 (1) 2 706
receivable
Accounts (2 587) (37) (2 624)
payable
The above restatements had no effect on profit or equity.
2.2 Earnings per share
Headline earnings and the diluted weighted average number of
shares at 30 September 2006 have been restated. The effect
thereof is detailed below.
Headline earnings
Headline earnings has been restated as a result of Circular
8/2007 issued on 31 July 2007 by the South African Institute
of Chartered Accountants. Long-term debt reorganisation costs
were excluded from headline earnings in the comparative year.
These costs are not adjusting re-measurements as identified
in Circular 8/2007 and are now included in headline earnings.
Diluted weighted average number of shares
The diluted weighted average number of shares has been
restated to include the effect of the fair value of services
to be received in the future from participants in the Netcare
Share Incentive Scheme and the HPFL trusts.
The effect of the restatements are as follows:
2006
Headline earnings Rm
As previously reported 814
Effect of restatement (172)
As restated 642
Diluted weighted average m
number of shares
As previously reported 1 510
Effect of restatement (41)
As restated 1 469
Headline cents
earnings per
share - Basic
As previously reported 56,2
Effect of restatement (11,9)
As restated 44,3
Headline earnings per cents
share - Diluted
As previously reported 53,9
Effect of restatement (10,2)
As restated 43,7
Earnings per cents
share - Diluted
As previously reported 48,3
Effect of restatement 1,3
As restated 49,6
3. Reclassification of comparative information
The following reclassifications to the 30 September 2006 income
statement have been made:
Financial income
Fair value adjustments on investments, profit on disposal of
subsidiaries and investments previously included in financial
income have been reclassified to other income. These
reclassifications amounted to R136 million.
Financial expenses
Impairment of goodwill and investments previously included in
financial expenses have been reclassified to administrative and
other expenses. These reclassifications amounted to R23 million.
2007 2006
Rm Rm
4. Associated companies, investments and
loans
Non-current
Associated companies 282 242
Other loans 16 13
298 255
Current
Held-for-trading 5
investments
Loans 56 46
56 51
354 306
Directors` valuation of 466 423
associated companies
5. Disposal group and assets held for sale
Assets held for sale
Assets in disposal group - Ampath 275
Holdings Trust
Land and buildings held for sale 44
319
Liabilities in disposal group held for (79)
sale
240
5.1 Discontinued operation -
Ampath Holdings Trust
The Ampath Holdings Trust
has been classified as a
disposal group held for
sale. Results from the
discontinued operation
are as follows:
Revenue 507 465
Other income 2
Administrative (380) (363)
and other
expenses
Operating profit 127 104
Financial (7) (11)
expenses
Profit before taxation 120 93
Taxation (11) (6)
Profit for the year 109 87
The assets and
liabilities of the Ampath
Holdings Trust disposal
group are as follows:
Property, plant and 54
equipment
Goodwill 72
Investments and loans 5
Inventories 8
Accounts receivable 76
Taxation receivable 6
Cash and cash equivalents 54
Long-term debt (6)
Post-retirement benefit (10)
obligation
Accounts payable (57)
Short-term debt (6)
The cash flows
are as follows:
Cash flows from operating 74
activities
Cash flows from investing (32)
activities
Cash flows from financing (3)
activities
5.2 Land and buildings held
for sale
Certain land and
buildings have been
classified as
held for sale. A reversal
of impairment amounting
to
R11 million was
recognised at 30
September 2007.
Land and 44
buildings held
for sale
6. Operating profit
After charging:
Depreciation and amortisation 1 044 542
Operating lease charges 190 208
7. Financial income
Dividends received 1 1
Fair value gain on cross- 442
currency swap contracts
Fair value gain on interest 65
rate swaps
Foreign exchange gains (net) 104
Interest received 158 120
328 563
8. Financial expenses
Fair value loss on cross- 115
currency swap contracts
Foreign exchange losses (net) 454
Fair value loss on interest 85
rate swaps
Interest paid 2 348 951
2 463 1 490
9. Taxation
Taxation of R99 million
includes a credit of R372
million due to the release of
deferred tax as a result of
the 2% reduction in the UK
tax rate.
10. Abnormal items
Share-based payment expense - 65
HPFL
11. Commitments
Capital commitments 1 007 1 054
Operating lease commitments 5 413 3 352
12. Contingent liabilities
(guarantees and suretyships)
South Africa 236 263
United Kingdom 112 147
348 410
Salient features for the year ended 30 September
2007 2006
Selected ratios
Operating profit margin (%) 16,1 14,1
Operating profit return on net assets (%) 8,0 7,7
Return on shareholders` equity (%) 26,6 19,9
Debt/equity ratio (%) 351,1 499,8
Interest cover (times) 1,4 1,9
Share statistics
Ordinary shares
Total shares in issue (million) 1 245 1 183
Weighted average number of shares (million) 1 230 1 448
Diluted weighted average number of shares (million) 1 293 1 469
Market price per share (cents) 1 193 1 240
Currency conversion guide (R:GBP)
Closing exchange rate 14,03 14,53
Average exchange rate for the year 14,13 11,90
Average exchange rate from GHG acquisition date (12 13,04
May 2006 - 30 September 2006)
Segment report for the year ended 30 September
2007 2006 %
Rm Rm change
INCOME STATEMENT
Revenue* 18 607 11 152 66,8
South Africa 8 869 7 720 14,9
Hospitals and Trauma 7 782 6 907 12,7
Primary care 1 087 813 33,7
United Kingdom 9 738 3 432 183,7
EBITDA* 4 034 2 120 90,3
South Africa 1 685 1 494 12,8
Hospitals and Trauma 1 584 1 403 12,9
Primary care 101 91 11,0
United Kingdom 2 411 504 378,4
Other (62) 122
Operating profit* 2 990 1 578 89,5
South Africa 1 406 1 238 13,6
Hospitals and Trauma 1 328 1 171 13,4
Primary care 78 67 16,4
United Kingdom 1 646 218 655,0
Other (62) 122
Net interest paid* 2 190 831 163,5
South Africa 456 152 200,0
United Kingdom 1 734 679 155,4
BALANCE SHEET
Total assets* 50 220 50 538** (0,6)
South Africa 7 387 7 155 3,2
Hospitals and Trauma 6 934 5 520 25,6
Primary care 453 1 635 (72,3)
United Kingdom 42 833 43 383 (1,3)
Debt net of cash* 30 130 31 168 (3,3)
South Africa 5 246 5 444 (3,6)
United Kingdom 24 884 25 724 (3,3)
*Excludes disposal group and assets held for sale except for the 2006
balance sheet.
**This figure has been restated as a result of adjustments to the
provisional accounting for business combinations. Refer to note 2.
Commentary
Network Healthcare Holdings Limited (Netcare), an investment holding company
listed on the JSE Limited, operating through its subsidiaries, the largest
private hospital networks in South Africa and the United Kingdom (UK), announces
audited group results for the year ended 30 September 2007. The results have
been prepared in accordance with International Financial Reporting Standards
(IFRS).
The results include General Healthcare Group (GHG), our 50,1% UK subsidiary, for
the full year compared to the four-and-a-half month period from 12 May 2006
included in the prior year. It is anticipated that our 50% investment in Ampath
will be sold and in terms of IFRS 5: Non-current Assets Held for Sale and
Discontinued Operations, it has accordingly been treated as a discontinued
operation. In the 2006 financial year, the capital costs relating to the
reorganisation of long-term debt on the acquisition of GHG were excluded in
determining headline earnings. In terms of Circular 8/2007 : Headline Earnings
issued by the South African Institute of Chartered Accountants in July 2007 such
costs are no longer excluded in the calculation of headline earnings.
Accordingly, the 2006 headline earnings per share (HEPS) has been restated from
56,2 cents to 44,3 cents and the fully diluted HEPS has been restated from 53,9
cents to 43,7 cents.
Financial review
Group operating revenue from continuing operations increased 66,8% to R18 607
million, driven by strong revenue growth of 14,9% in South Africa to R8 869
million. Group operating profit from continuing operations increased by 89,5% to
R2 990 million with South African operating profit growth of 13,6% to R1 406
million and UK operating profit of R1 646 million. The group operating profit
margin expanded from 14,1% to 16,1% as a result of the full year consolidation
of GHG with comparatively higher margins than those in South Africa. Included in
group operating profit is net expenditure of a non-recurring nature of R62
million largely relating to impairments of NHS projects of R40 million (GBP2,8
million) compared to net income of R122 million in the prior year.
Group headline earnings per share increased 75,2% to 77,6 cents per share. The
South African basic headline earnings per share increased by 18,3% from 65,2
cents (restated) to 77,1 cents per share. As expected, GHG reduced headline
earnings per share by 15,3 cents to 61,8 cents per share before considering the
credit to income arising from the change in the UK corporate tax rate. The tax
credit improved headline earnings per share by 15,8 cents to 77,6 cents.
Adjusted* group headline earnings per share increased by 26,6% from 48,8 cents
to 61,8 cents.
Consolidated net financial expenses increased from R927 million to R2 135
million largely as a result of the inclusion of GHG for the full 12-month
period. The Group was effectively hedged against increasing interest rates in
the UK and recognised fair value gains of R65 million in financial income and R1
112 million (including minority interests) directly in equity on the interest
rate swap derivatives.
The change in the UK company tax rate from 30% to 28% resulted in a credit to
income of approximately R372 million (GBP27 million). Excluding the impact of
the change in the UK corporate tax rate, the group`s effective tax rate was
28,3%.
Cash generated from operating activities increased from R2 129 million to R3 974
million which was utilised to fund the reduction of capital of R347 million,
capital expenditure of R1 389 million and taxation payments of R286 million. Net
debt decreased by 3,3% to R30 130 million due to a reduction of R198 million in
the South African debt to R5,246 million and the strengthening of the Rand
against the Pound on conversion of the UK debt. R24 884 million of the net debt
relates to GHG, which is secured against the assets in the UK without recourse
to Netcare`s South African business.
Business review
South Africa
Demand for private healthcare in South Africa remains strong, fuelled by new
growth in the medically insured population. This growth is being supported by
the Government Employee Medical Scheme (GEMS) initiative, and a growing self-pay
market. Strong organic growth was evidenced by a 5,9% increase in the number of
patients admitted into hospital or treated in our casualties during the year to
over 1 million. Patient days increased by 4,5%. The 13,0% growth in self-pay
hospital revenue alongside strong growth in casualty and maternity admissions,
demonstrates the willingness of the medically uninsured to purchase healthcare.
In our efforts to ensure private healthcare remains affordable, our average
effective price increase in the hospital business was 5,7% for the year, in line
with consumer and medical inflation in the same period.
Netcare 911 experienced similar growth with a 5,1% increase in patients
transported and a 42,7% increase in air ambulance hours flown.
Netcare is meeting the growing market demand through continued capital
investment and this year we opened two new hospitals in South Africa, Alberlito
Hospital in KwaZulu-Natal and Blaauwberg Hospital in the Western Cape, adding
219 beds. During the period we made significant investments in new facilities
including the ICU units at Parklane, Linksfield and Akasia, trauma units at
Pretoria East and Sunward Park, a neuro vascular unit at Unitas, cardiac
catheterisation laboratories at St Augustines and St Annes and upgrades to
several of our facilities, adding a further 120 beds. Total registered beds
increased 4,7% to 7 604 in our 44 owned hospitals at year end. In October 2007,
we have expanded our network through the acquisition of the remaining interest
in Community Hospital Group from our black empowerment partners, adding five new
hospitals and a further 682 beds.
Significant progress has been made in building our primary care network in South
Africa, expanding it by 33,2% to 3 300 participating doctors. Managed care lives
increased by 36,5% to 177 400 as Prime Cure secured several new contracts and
continued to experience good growth in GEMS membership. We experienced a 9,4%
growth in GP and dentist visits to 3,6 million across the 100 Medicross and
Prime Cure facilities. Our average effective price increase for primary care
visits was 2,6% well below medical inflation. As an accredited managed care
organisation we have demonstrated our ability to deliver cost effective medical
care according to evidenced based medicine formularies and protocols with lower
admissions per thousand and shorter length of stays, coupled with reduced costs.
The South African business delivered strong results with revenue from continuing
operations up 14,9% to R8 869 million boosted by a particularly strong last
quarter, the increased contribution from Prime Cure and the inclusion of the two
new hospitals. Operating profit from continuing operations was up 13,6% to R1
406 million whilst the operating profit margin remained relatively flat at 15,9%
compared to 16,0% in 2006. The operating leverage was offset by the start-up
operating losses of R16 million from the two new hospitals opened during the
year, an increase in training expenditure, as well as increasing nursing
salaries and staffing levels.
United Kingdom
Over the past year, GHG has undergone significant restructuring to ensure that
the business is well positioned to adapt to a changing healthcare environment
and deliver accelerated revenue growth. Excellent progress has been made in
implementing several of Netcare`s operating models including nursing models,
which have resulted in improved balancing of resources based on patient needs.
Further changes are currently underway, including improved allocation of nursing
resources in operating theatres and outpatient facilities and shared
administration services.
The overall case load in the UK grew by 1,7% year-on-year with outpatient and
self pay volumes both increasing by 3,1%. As expected the NHS cases reduced
following the completion of the NHS general surgery contracts in 2006. Having
successfully commenced the transformation of the business into an efficient,
compliant network with standardised processes, there is increased focus on
driving sales and marketing initiatives across the organisation to stimulate
higher growth in future admissions, both from private medical insurers and the
NHS.
Netcare UK opened a surgical unit in Stracathro, the first Independent Sector
Treatment Centre (ISTC) in Scotland and together with the surgical centre in
Manchester and the mobile cataract units, 12 166 procedures were performed for
the NHS during the year. In February 2007 we opened our first primary care
Commuter Walk-in-Centre (CWIC) in Leeds, seeing close on 13 000 patients in the
period. In April 2007 we opened a diagnostics centre in London. Netcare UK has
now been fully integrated into GHG resulting in a reduction of back office and
corporate office functions.
The Department of Health for England (DH) has formally confirmed by public
announcement that three of the Phase 2 NHS procured schemes in which Netcare UK
was participating have been terminated, or substantially amended. The Cumbria &
Lancashire (C&L) CATS, and the North East Yorkshire and North Lincolnshire
(NEYNL) CATS schemes have both been terminated and the Manchester `A` scheme has
been significantly downsized and Netcare UK will not be participating further in
that scheme.
Revenue from the UK business was R9 738 million (GBP689 million) for the year
ended 30 September 2007. Operating profit for the year was R1 646 million
(GBP116 million) and the operating profit margin was 16,9%. Operating profit was
negatively impacted by GBP5,6 million of non-recurring costs. These included
restructuring and retrenchment costs of GBP2,4 million, transaction costs of
GBP1,8 million and NHS mobilisation and bid costs of GBP1,4 million. Excluding
these abnormal costs, GHG`s core operating profit was R1 724 million (GBP122
million) with a core operating profit margin of 17,7% and core earnings before
interest, taxation, depreciation and amortisation (EBITDA) was R2 489 million
(GBP176 million). The significant progress made in transforming the business is
evidenced by the 14,3% growth in core EBITDA against the comparative 12-month
period.
Direct investment in UK real estate, which experienced record high levels in
2006, has come under pressure as concerns over the sub prime market have
resulted in wider spreads and reduced liquidity across debt markets.
Accordingly, we continue to focus on the strategic and operational aspects of
operating hospitals and will seek to monetise the properties at a time when
maximum value can be realised.
Sustainability review
Netcare recognises the need to improve access to quality healthcare at
affordable levels in South Africa and our contribution extends to assisting
government to provide healthcare access to those that cannot afford it. In the
past year we have contributed to various corporate social investment initiatives
at a total cost of R29 million in South Africa, including the provision of
emergency assistance by Netcare 911 to over 15 300 indigent patients at a cost
of R18 million.
Netcare remains concerned about the shortage of skills within the local
healthcare sector and consider this a major obstacle to providing increased
healthcare access and to our future growth. As the largest private nursing
training institution in Southern Africa, we continue to play our part in
addressing this critical shortage. Netcare Education trained 3 200 nurses in
the year, an increase of over a 1 000 from 2006. 500 paramedics qualified
from the Netcare 911 School of Emergency and Critical Care in courses ranging
from basic to advanced life support. Our total training cost for the year was
R100 million.
Netcare remains committed to the finalisation of the Health Sector Charter
process and has been accredited by Empowerdex as a level 5 contributor in
terms of the Department of Trade and Industry`s (DTI) Codes of Good Practice for
Broad-based Black Economic Empowerment. We are aiming to achieve a level 4 in
2008.
Outlook
In South Africa, the strong growth experienced in private healthcare in both
the insured and self-pay markets is expected to continue. However, capacity
constraints at a number of our facilities are necessitating a review of our
operating practices. We continue to restructure our pricing model and intend
to convert a substantial portion of our fee-for-service pricing model into an
alternative reimbursement and risk sharing model with funders, and are working
with government to formulate the National Health Reference Price List. Netcare
remains a committed partner to government in the transformation of healthcare,
and in finding viable new delivery models that address the critical need to
broaden access to quality affordable healthcare in South Africa.
In the UK, we have successfully transferred much of Netcare`s South African
intellectual property and delivered meaningful savings in GHG ahead of our
initial business plan, creating an efficient platform to deliver future growth.
Despite a flat private medical insurance market, long-term demographics remain
attractive and management is focused on capitalising on this growth opportunity
through various initiatives. Although the past year has seen several new
entrants to the market, GHG is committed to maintaining its leadership position
in an increasingly competitive sector. While the rollout of NHS central
procurement contracts has been disappointing, GHG is well positioned through
its extensive national network to benefit in the future from the NHS Patient
Choice programme and continued local NHS procurement from the private sector.
Directorate
On 9 November 2007, Dr RN Noach resigned as an executive director effective 14
December 2007. N Weltman`s status as an executive director changed to non-
executive director from 1 September 2007.
Declaration of reduction of capital number 17
In accordance with the authority given to the directors by way of an ordinary
resolution passed on 26 January 2007, the board of directors declared on
Thursday, 15 November 2007 a final reduction of capital (number 17) out of share
premium of 18 cents per ordinary share, payable on Monday, 21 January 2008, to
shareholders recorded in the register of the Company as at Friday, 18 January
2008.
In compliance with the requirements of Strate, the following dates are
applicable:
Last date to trade "cum" the reduction
of capital ("LDT") Friday, 11 January 2008
Date trading commences "ex" the reduction
of capital Monday, 14 January 2008
Record date Friday, 18 January 2008
Date of payment Monday, 21 January 2008
Share certificates may not be dematerialised nor rematerialised between Monday,
14 January 2008 and Friday, 18 January 2008, both dates inclusive.
On behalf of the board
Michael I Sacks
Chairman
Dr Richard Friedland
Chief Executive Officer
Peter Nelson
Chief Financial Officer
Sandton
16 November 2007
Note regarding forward-looking statements
The Company advises investors that any forward looking statements or projections
made by the Company, including those made in this announcement, are subject to
risk and uncertainties that may cause actual results to differ materially from
those projected. Factors that may affect the Group`s operations are described
under "Risk Factors" on the investor relations website www.netcareinvestor.co.za
Executive Directors:
Dr RH Friedland (Chief Executive Officer)
PG Nelson (Chief Financial Officer)
IM Davis, Dr VLJ Litlhakanyane
Non-executive Directors:
MI Sacks (Chairman), Dr APH Jammine, JM Kahn, HR Levin
Prof TR Mokoena, Adv KD Moroka SC, Dr AA Ngcaba, Dr JA van Rooyen, N Weltman
Company Secretary: J Wolpert
Registered Office:
76 Maude Street (corner West Street), Sandton 2196 Private Bag X34, Benmore 2010
Transfer Secretaries: Link Market Services South Africa (Proprietary) Limited 11
Diagonal Street, Johannesburg, 2001 PO Box 4844, Johannesburg, 2000
Sponsors: Merrill Lynch South Africa (Proprietary) Limited Registration number
1995/001805/07 138 West Street, Sandown, Sandton 2196
Investor Relations
Belinda Williams
+27 11 301 0211
belinda.williams@netcare.co.za
www.netcareinvestor.co.za
Date: 19/11/2007 07:00:01 Supplied by www.sharenet.co.za
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