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NTC - Netcare Limited - Unaudited group interim results for the six months

Release Date: 18/05/2009 08:00
Code(s): NTC
Wrap Text

NTC - Netcare Limited - Unaudited group interim results for the six months ended 31 March 2009 Netcare 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") Unaudited group interim results for the six months ended 31 March 2009 +12% Revenue 2009: R11 619 million 2008: R10 343 million +15% Operating profit 2009: R1 822 million 2008: R1 584 million +14% Capital reduction 2009: 16,0 cents 2008: 14,0 cents Commentary Netcare Limited announces unaudited group interim results for the six months ended 31 March 2009. These results have been prepared in accordance with International Financial Reporting Standards (IFRS) and are in compliance with IAS 34 Interim Financial Reporting, the Listings Requirements of the JSE Limited (JSE) and the South African Companies Act, 1973, as amended. Netcare is an investment holding company operating the largest private hospital network in South Africa (SA) and the United Kingdom (UK). The company has been listed on the JSE since 1996. In SA, Netcare operates a portfolio of private hospitals, a primary care network and medical emergency services. In the UK, through the General Healthcare Group (GHG), Netcare operates as a private acute care hospital provider and an independent service provider to the National Health Service (NHS). Group financial highlights - Revenue up 12% to R11 619 million - EBITDA up 13% to R2 474 million - Basic headline earnings per share up 41% to 33.3 cents - Completed sale of 50% interest in Ampath Holdings Trust - Repurchased and cancelled 436 million treasury shares - Interim capital reduction up 14% to 16 cents per share Group business highlights - Solid operational performance in both SA and UK - Community Hospital Group acquisition cleared by Competition Appeal Court - Port Alfred Hospital PPP opened in February 2009 - Commenced construction of Lesotho Hospital PPP in March 2009 - Further enhanced GHG footprint in London and across other key regions in the UK - Rated the most empowered JSE-listed company in the healthcare sector Introduction The global economic downturn continues to affect the business climate and the Group`s operating environment remains challenging, particularly the UK. Netcare is therefore pleased to report a solid overall performance with operating regions either meeting or exceeding management guidance provided in November 2008. Group financial performance Group revenue rose 12,3% to R11 619 million, supported by strong demand for private healthcare services in SA, solid core activity in the UK and the inclusion of hospitals acquired from Nuffield for the full six months. Group operating profit was up 15,0% to R1 822 million with the operating profit margin increased from 15,3% to 15,7%. In SA, strong patient volumes and improved hospital margins were tempered by underwriting costs and higher doubtful debt provisions in the Primary Care division. In the UK, efficiency improvements and cost savings resulted in improved operating profit margins. The Group results were positively impacted by the sale of Netcare`s 50% interest in Ampath Holdings Trust (Ampath) following Competition Commission approval of the transaction on 24 February 2009. The sale realised gross proceeds of R1 027 million. The profit from the disposal amounted to R588 million, after capital gains tax of R90 million, which is included in profit from discontinued operations. Group net financial expenses were 5,7% higher at R1 252 million. This was mainly due to the acquisition of the Nuffield hospitals, which were financed by raising additional debt of R1 210 million (GBP82 million) in February 2008. The interest benefit arising from the Ampath sale proceeds will only be realised in the second half of the financial year. Basic earnings per share rose 213,8% to 79.4 cents from 25.3 cents in the prior period. Basic headline earnings per share of 33.3 cents were up 40,5% on the 23.7 cents achieved a year before. The earnings growth is in line with the Group`s trading statement issued on 6 May 2009. An interim capital reduction of 16,0 cents per share has been declared, reflecting an increase of 14,3% over the prior period. Net debt at 31 March 2009 of R30 361 million was 6,8% lower than the R32 589 million at 30 September 2008, mainly as a result of the appreciation of the Rand against the British Pound (GBP) and the net cash proceeds of R852 million from the Ampath disposal. Equity decreased by R1 706 million arising from unfavourable non-cash mark-to-market fair value adjustments on the UK interest rate swaps recognised in the cash flow hedge accounting reserve. Cash generated from operations increased 13,2% to R1 788 million from R1 579 million in the prior period as a result of the improved operating performance. The Group converted 72,3% of its EBITDA into cash which remains unchanged year- on-year. Pressure on working capital in the UK impacted negatively on cash flows, largely due to an increase in NHS debtors from the higher volumes of NHS patients seen. Capital expenditure of R592 million was incurred, compared to R606 million for the six months ended 31 March 2008. During the reporting period, 436 million treasury shares, representing 23% of the shares in issue, were repurchased and cancelled. This has simplified the Group`s capital structure significantly, providing the opportunity for a potential repurchase of additional shares in future. South Africa The South African operations performed solidly. Driven by an increased demand for private healthcare services, the results reflect almost entirely organic growth. The Hospital division has now implemented extensive changes to its business model which underpinned the excellent results achieved in the six month period. The results of the Primary Care division were impacted by prior year factors that have now largely been resolved. Netcare was independently rated as the most empowered firm in the JSE`s healthcare sector and the eleventh most empowered listed company in SA in the Financial Mail`s Top Empowerment Companies 2009 survey. The company was rated third overall in skills development and training. In November 2008 the Competition Appeal Court overruled the Competition Tribunal ruling on the merger with Community Hospital Group (Community), allowing for the full integration of the Community hospitals into Netcare. Financial performance SA revenue grew 14,4% to R5 616 million from R4 907 million, while operating profit rose 18,9% to R756 million. The operating margin improved from 13,0% to 13,5%. SA`s operating performance reflects strong patient volumes and improved efficiencies. Working capital was well managed and hospital debtor collections in March were at record levels. A cash conversion ratio of 83,9% was achieved compared to 52,6% in the same period in 2008. The SA balance sheet strengthened with a 29,7% year-on-year reduction in net debt to R4 255 million. Hospitals and Emergency services The Hospital division recorded a 6,3% increase in patient days and occupancy increased across the hospital network. The medically insured population has also grown gradually over the last five years from 6.9 million to 7.8 million lives. Year-on-year revenue growth was further boosted by the timing of the Easter Holiday period, which fell in April this year and therefore outside the reporting period. Pharmacy operations continued to grow with a 5,3% increase in dispensed scripts. Costs in the division have been tightly controlled and working capital management has improved substantially. Netcare continues to invest in capital infrastructure to meet growing demand while ensuring that facilities and equipment are maintained to the highest standards. Several projects are currently underway which will significantly enhance the division`s service offering. Netcare continues to maintain the highest standards of patient care and safety. A further six hospitals received international ISO 9001:2000 accreditation through UK-based CHKS Healthcare Accreditation and Quality Unit (HAQU). This brings the total number of accredited facilities to 16 hospitals. Netcare has continued to foster strong relationships with government through Public Private Partnerships (PPP). The 91-bed Port Alfred Hospital PPP, with 60 public and 31 private beds, was opened in February 2009 and the 249-bed Grahamstown Hospital is scheduled for completion in July 2009. After several challenges, the 214-bed Universitas/Pelonomi Hospital PPP has shown growth and a significantly better operating performance. Financing for the construction of the Lesotho Hospital PPP has been finalised and construction of this 425- bed referral hospital and the refurbishment of four primary care clinics commenced in March 2009. The Emergency services division, Netcare 911, recorded growth in managed lives and continued to assist government by servicing indigent patients. The Aeromedical unit was negatively affected by unforeseen maintenance requirements on both fixed wing aircraft. Primary Care The Primary Care division posted strong revenue growth of 17,6% driven by solid demand in both Prime Cure (managed care division) and Medicross (GP, dental and pharmacy network). Prime Cure`s lower income managed care lives grew by 15,6% year-on-year to over 240 000 lives. Medicross patient visits to GPs were up 5,6% to 1,4 million and dental visits increased to over 250 000. The Primary Care division`s results were severely impacted by significant provisions taken against prior year patient debtors in Medicross, as well as the increased provision for underwriting and servicing costs in Prime Cure. Consequently the division reported an operating loss of R25 million, compared to a profit of R43 million in the prior period. Within Prime Cure, the revised accounting reports and standards have been implemented and actuarial reporting significantly enhanced in line with best practice. Management is confident that accurate reporting and assessment of insurance risk are being appropriately monitored. During the reporting period, Medicross was restructured to realign its regional operating structures. Notwithstanding the poor half-year results, Netcare is committed to continue providing these essential services through the Primary Care division. Health sector developments The appointment of Dr Aaron Motsoaledi as SA`s new Minister of Health is welcomed and the launch of the Department`s Strategic Plan to 2012 is another positive indicator of the progress made to date. Debate on the introduction of National Health Insurance (NHI) is expected to intensify with possible legislation to this effect promulgated as early as 2011. United Kingdom Netcare owns a 50,1% stake in GHG which has 56 hospitals operating under the BMI brand name, in addition to an NHS outsourcing division known as Netcare UK. GHG acquired the Woodlands Hospital in Darlington and City Medical consulting suites in London in October 2008 as well as the Fitzroy Square Hospital in London in April 2009. GHG`s organic growth, coupled with an effective acquisition strategy, has continued to extend the Group`s geographic footprint in the UK, resulting in further cost and revenue efficiencies and a corresponding improvement in profitability. Financial performance Revenue from the UK operations rose 10,4% to R6 003 million (GBP407.4 million). The inclusion of the Nuffield hospitals for the full six months contributed 3,4%, to the revenue increase, while higher average exchange rates during the period resulted in an additional 2,1% in Rand denominated revenue. Operating profit was up 14,5% to R1 068 million (GBP72.4 million), which includes non-recurring items amounting to R51 million (GBP3.5 million) compared to R59 million (GBP4.1 million) in the prior period. Adjusted for these items, operating profit for the half-year amounted to R1 119 million (GBP75.9 million) compared to R992 million (GBP67.9 million) in 2008. Capital expenditure for the period was R299 million (GBP25 million), up from R292 million (GBP22 million) in 2008. Net debt rose by GBP34 million during the six months from GBP1 880 million at September 2008 to GBP1 914 million at March 2009. The combined effect of increased NHS volumes and associated delays in payments, as well as the introduction of the shared services function has increased working capital funding. The necessary measures have been implemented to rein in the additional investment in working capital, although certain structural factors will take some months to address. GHG continues to meet its financial covenants and has sufficient headroom for the rest of the financial year, even taking into account the challenging economic climate. Without any incremental EBIDTA growth, all covenants are fully met for the term of the debt. Hospitals (BMI) The overall caseload in the UK grew by 14,9% year-on-year. Continued decline in self pay patients was experienced, largely offset by a significant increase in NHS cases. With the formal introduction of the National Free Choice Network (FCN) Programme, the NHS is expected to be a key partner in delivering future caseloads, as the public through their GPs are able to select private facilities for their treatment. Effective negotiations will ensure that the work we undertake remains sufficiently profitable. Operational costs were tightly controlled and the business delivered a further improvement in operating margin. A plan to contain costs has been introduced and is set to deliver a saving of GBP13 million for the full financial year. Planned savings of GBP3,8 million were delivered in the reporting period. Netcare UK Netcare UK continues to service existing Independent Sector Treatment Centre (ISTC) contracts such as the Greater Manchester Surgical Centre, the Commuter Walk-in-Centre in Leeds and the surgical initiative with the Scottish NHS in Stracathro. The five-year mobile ophthalmic contract to provide cataract operations was successfully completed in April 2009. Outlook It remains difficult to predict the impact of various factors on the Group in the current volatile global economic environment. However, as the Group`s half- year results show, the demand for healthcare does not necessarily abate in an economic downturn. Netcare remains confident that the demand for private healthcare will be sustained in SA, supported by a financially sound and growing medical scheme market. Netcare is hopeful that the positive approach by government, as outlined in the Strategic Plan announced by the Department of Health, will result in greater collaboration between the private and public sectors. In the UK, the recessionary environment is expected to continue to impact out- of-pocket spending on private healthcare. However, we expect this to be largely offset by growth in NHS activity through the purchasing of healthcare services by NHS Primary Care Trusts. Changes in directorate Vaughan Firman was appointed Chief Financial Officer of the Netcare Group and Financial Director of Netcare Limited with effect from 12 February 2009, following the resignation of Peter Nelson on 5 December 2008. Declaration of capital reduction number 20 In accordance with the authority given to the directors by way of an ordinary resolution passed on 30 January 2009, the board of directors declared on 14 May 2009 an interim capital reduction (number 20) out of share premium of 16 cents per ordinary share (2008:14 cents), payable on 27 July 2009, to shareholders recorded in the register of the Company as at 24 July 2009. In compliance with the requirements of Strate, the following dates are applicable: Last date to trade "cum" the capital reduction ("LDT") Friday, 17 July 2009 Date trading commences "ex" the capital reduction Monday, 20 July 2009 Record date Friday, 24 July 2009 Date of payment Monday, 27 July 2009 Share certificates may not be dematerialised nor rematerialised between Monday, 20 July 2009 and Friday, 24 July 2009, both dates inclusive. On behalf of the board Jerry Vilakazi Chairman Dr Richard Friedland Chief Executive Officer Vaughan Firman Chief Financial Officer Sandton 15 May 2009 Group balance sheet Rm Note Unaudited Unaudited Audited 31 March 31 March 30 September 2009 2008 2008
ASSETS Non-current assets Property, plant and 27 818 32 291 29 732 equipment Goodwill 16 271 18 800 17 555 Intangible assets 397 319 355 Associated companies and 4 90 125 104 loans Financial asset - Derivative 973 558 financial instruments Deferred taxation 638 517 689 Total non-current assets 45 214 53 025 48 993 Current assets Loans and receivables 4 67 91 75 Inventories 643 668 638 Trade and other receivables 3 963 3 774 3 274 Cash and cash equivalents 618 960 1 202 5 291 5 493 5 189 Assets held for sale 5 4 617 304 Total current assets 5 295 6 110 5 493 Total assets 50 509 59 135 54 486 EQUITY AND LIABILITIES Capital and reserves Ordinary share capital and 1 240 1 776 1 601 premium Treasury shares (767) (5 561) (5 555) Option premium on 175 172 172 convertible bond Other reserves (98) 1 914 1 685 Retained earnings 2 982 6 153 6 590 Ordinary shareholders` 3 532 4 454 4 493 equity Preference share capital and 644 644 644 premium Minority interest 2 070 3 690 3 714 Total shareholders` equity 6 246 8 788 8 851 Non-current liabilities Long-term debt 29 056 34 923 31 530 Financial liability - 3 914 1 459 1 654 Derivative financial instruments Post-retirement benefit 132 123 126 obligations Deferred lease liability 98 73 91 Deferred taxation 5 866 7 096 6 463 Total non-current 39 066 43 674 39 864 liabilities Current liabilities Trade and other payables 2 982 3 094 3 161 Short-term debt 1 871 2 494 2 021 Taxation payable 292 477 268 Bank overdrafts 52 377 240 5 197 6 442 5 690 Liabilities in disposal 5 231 81 group held for sale Total current liabilities 5 197 6 673 5 771 Total equity and liabilities 50 509 59 135 54 486 Group income statement Unaudited Audited six months ended year ended
Rm Note 31 March 31 March % 30 September 2009 2008 change 2008 CONTINUING OPERATIONS Revenue 11 619 10 343 12,3 21 735 Cost of sales (6 833) (6 067) (12 842) Gross profit 4 786 4 276 8 893 Other income 111 127 256 Administrative and other (3 075) (2 819) (9,1) (5 779) expenses Operating profit 6 1 822 1 584 15,0 3 370 Financial income 7 66 250 279 Financial expenses 8 (1 318) (1 435) (2 706) Attributable 10 (3) 2 earnings/(losses) of associates Profit before taxation 580 396 46,5 945 Taxation (142) (85) (68) Profit for the period from 438 311 40,8 877 continuing operations DISCONTINUED OPERATION Profit for the period from 5 634 50 105 discontinued operation Profit for the period 1 072 361 197,0 982 Attributable to: Ordinary shareholders 1 002 319 801 Preference shareholders 37 32 67 Profit attributable to 1 039 351 868 shareholders Minority interest 33 10 114 1 072 361 982 Earnings per share (cents) Basic 79,4 25,3 213,8 63,5 'Continuing operations 29,2 21,3 37,1 55,2 'Discontinued operation 50,2 4,0 8,3 Diluted 79,3 24,7 221,1 62,6 'Continuing operations 29,1 20,8 39,9 54,4 'Discontinued operation 50,2 3,9 8,2 Capital reduction per share 16,0 14,0 14,3 32,0 (cents) Group cash flow statement Unaudited Audited six months ended year ended Rm 31 March 31 March 30 September 2009 2008 2008
Cash flows from operating activities Cash received from customers 10 976 9 871 21 099 Cash paid to suppliers and employees (9 188) (8 292) (16 436) Cash generated from operations 1 788 1 579 4 663 Interest paid (1 321) (1 234) (2 558) 'Continuing operations (1 316) (1 231) (2 550) 'Discontinued operation (5) (3) (8) Taxation paid (247) (115) (290) 'Continuing operations (241) (115) (268) 'Discontinued operation (6) (22) Ordinary dividends paid (3) Preference dividends paid (37) (32) (67) Capital reductions paid (227) (227) (407) Net cash from operating activities (47) (29) 1 341 'Continuing operations (44) (59) 1 352 'Discontinued operations (3) 30 (11) Cash flows from investing activities Purchase of property, plant and (592) (606) (1 268) equipment 'Continuing operations (581) (591) (1 240) 'Discontinued operations (11) (15) (28) Proceeds on disposal of property, plant 5 236 708 and equipment Additions to financial assets (49) Additions to intangible assets (53) (6) (148) Decrease/(increase) in investments and 30 (9) 128 loans Proceeds from disposal of subsidiaries, 852 2 15 net of cash Interest received 65 64 134 Realised gain on cross-currency swap 324 Dividends received 1 39 44 Acquisition of subsidiaries and (9) (2 084) (2 112) businesses, net of cash acquired Net cash from investing activities 299 (2 413) (2 175) 'Continuing operations 307 (2 398) (2 147) 'Discontinued operations (8) (15) (28) Cash flows from financing activities Proceeds from issue of ordinary shares 3 14 48 Repurchase of shares (3) Long-term liabilities (repaid)/raised (532) 1 802 974 Short-term liabilities (repaid)/raised (95) 235 (133) Net cash from financing activities (627) 2 051 889 'Continuing operations (623) 2 040 899 'Discontinued operations (4) 11 Net (decrease)/increase in cash and (375) (391) 55 cash equivalents Translation effects on cash and cash (21) 75 (32) equivalents of foreign entities Cash and cash equivalents at beginning 962 900 900 of the period Cash flows in disposal group held for (1) 39 sale Cash and cash equivalents at end of 566 583 962 period Group statement of recognised income and expense Unaudited Audited six months ended year ended Rm 31 March 31 March 30 September 2009 2008 2008
Effect of translation of foreign (116) 1 031 130 entities Fair value gains on investments 86 93 Effect of cash flow hedge accounting (1 706) (1 207) (427) Dividends paid (3) Actuarial losses on defined benefit (24) plans Movement in contingency reserve (9) Acquisition of shares in subsidiary 5 Movement in employee share trust 30 reserve Other reserve movements (3) (20) Net loss recognised directly in equity (1 825) (88) (227) Profit for the period 1 072 361 982 Total recognised (loss)/income for the (753) 273 755 period Attributable to: Ordinary shareholders 854 357 780 Preference shareholders 37 32 67 Minority interest (1 644) (116) (92) (753) 273 755 Headline earnings Unaudited Audited six months ended year ended
Rm 31 March 31 March %change 30 September 2009 2008 2008 Reconciliation of headline earnings Profit for the period from 438 311 40,8 877 continuing operations Less: Preference shareholders (37) (32) (67) Minority interest (33) (10) (114) Earnings used in the calculation 368 269 36,8 696 of basic earnings per share from continuing operations Adjusted for: Impairment of goodwill 1 Impairment of investments 1 Impairment of land and buildings 10 1 1 Reversal of impairment of (17) property, plant and equipment Profit on disposal of property, (4) (21) (28) plant and equipment (Profit)/loss on disposal of (3) 2 subsidiaries/investments Tax effect of headline adjusting 1 3 6 items Minority share of headline 10 adjusting items Headline earnings from continuing 375 249 672 operations Earnings from discontinued 634 50 105 operation Adjusted for: Profit on disposal of property, (1) (2) plant and equipment Profit on disposal of (678) discontinued operation Tax effect of headline adjusting 90 items Headline earnings from 46 49 103 discontinued operations Headline earnings 421 298 41,3 775 Headline earnings per share (cents) Basic 33,3 23,7 40,5 61,5 'Continuing operations 29,7 19,8 50,0 53,3 'Discontinued operation 3,6 3,9 (7,7) 8,2 Diluted 33,3 23,1 44,2 60,5 'Continuing operations 29,7 19,3 53,9 52,5 'Discontinued operation 3,6 3,8 (5,3) 8,0 Notes 1. Basis of preparation and accounting policies The interim financial information for the six months ended 31 March 2009 has been prepared in accordance with International Financial Reporting Standards (IFRS) and are in compliance with IAS34 Interim Financial Reporting, the Listings Requirements of the JSE Limited and the South African Companies Act, 1973, as amended. The accounting policies applied are consistent with those applied for the year ended 30 September 2008. 2. Acquisition of businesses The following business combinations took effect during the period: 2.1 Effective 1 October 2008, the Group acquired 50% of the shares in The Thornbury Radiosurgery Centre Limited in the United Kingdom. 2.2 With effect from 17 October 2008, the Group acquired 100% of the shares in City Medical Limited in the United Kingdom. 2.3 On 31 October 2008, the Group acquired 100% of the business, excluding certain assets, of Woodlands Hospital in the United Kingdom for a nominal consideration. A lease agreement was entered into with the seller for the rental of the premises and use of the excluded assets. From the dates of acquisition to 31 March 2009, the following amounts have been included in the Group`s income statement: Rm Woodlands City The Hospital Medical Thornbury Limited Radiosurgery Centre Limited
Revenue 40 3 4 47 Operating profit 2 1 3 The following table reflects the fair values at acquisition: Rm City Medical The Limited Thornbury Radiosurgery Centre Limited
Property, plant and equipment 15 Trade and other receivables 1 Cash and cash equivalents 1 4 Long-term debt (15) Trade and other payables including short- (5) term debt Fair value of net assets acquired (3) 4 Goodwill 10 3 Purchase consideration 7 7 Cash and cash equivalents in acquiree (1) (4) Cash outflow on acquisition 6 3 The fair values reflected above are equal to the carrying values at acquisition. 3. Reclassification of comparative information In line with the treatment at 30 September 2008, the option on convertible bond has been separately disclosed on the face of the balance sheet. In addition, the following reclassifications to the 30 September 2008 balance sheet have been made: Rm As previously Adjustments As reported reclassified Assets Deferred taxation 907 (218) 689 Trade and other receivables 3 500 (226) 3 274 Liabilities Deferred taxation 6 681 (218) 6 463 Trade and other payables 3 387 (226) 3 161
Rm Unaudited Unaudited Audited 31 March 31 March 30 September 2009 2008 2008 4. Associated companies and loans Non-current Associated companies* 70 117 89 Other loans and receivables 20 8 15 90 125 104
Current Loans and receivables 67 91 75 157 216 179 *Directors` valuation of associated 292 181 282 companies 5. Disposal group and assets held for sale Assets Assets in disposal group - Ampath 326 295 Holdings Trust Asset held for sale - Gerrards Cross 291 Hospital Land and buildings held for sale 4 9 4 617 304 Liabilities Liabilities in disposal group - (72) (81) Ampath Holdings Trust Liabilities held for sale - Gerrards (159) Cross Hospital (231) (81)
5.1 Discontinued operation - Ampath Holdings Trust Sale of our interest in Ampath Holdings Trust was completed in February 2009, following Competition Commission approval. The sale of our units and claims amounted to R1 027 million. Our 50% share of the discontinued operation was as follows: Revenue 267 263 563 Other income 2 2 Administrative and other (198) (192) (426) expenses Operating profit 69 73 139 Financial expenses (5) (3) (8) Profit before taxation 64 70 131 Taxation (18) (20) (26) Profit for the period before 46 50 105 profit on disposal Profit on disposal of 588 discontinued operation, net of tax Profit for the period from 634 50 105 discontinued operation The profit on the sale of Ampath Holdings Trust can be reconciled as follows: Rm Sale of units and claims 1 027 Less: Carrying value (349) 'Claims settled (174) 'Net asset value (175) Profit on disposal 678 Less: Capital gains tax (90) Profit on disposal of discontinued operation, net of 588 tax Rm Unaudited Unaudited Audited 31 March 31 March 30 September 2009 2008 2008 The assets and liabilities of the disposal group are as follows: Property, plant and equipment 56 71 Goodwill 72 72 Investments and loans 6 11 Inventories 10 10 Trade and other receivables 127 116 Cash and cash equivalents 55 15 Long-term debt (4) (8) Post-retirement benefit (9) (9) obligation Trade and other payables (49) (56) Taxation payable (3) (4) Short-term debt (7) (4) The cash flows are as follows: Net cash from operating (3) 30 (11) activities Net cash from investing (8) (15) (28) activities Net cash from financing (4) 11 activities 5.2 Asset held for sale - Gerrards Cross Hospital Following discussions with the Office of Fair Trading, Gerrards Cross Hospital which forms part of the Nuffield Hospital Group in the United Kingdom was sold in April 2008 for R336 million (GBP23 million). The assets and liabilities of the hospital held for sale are as follows: Property, plant and equipment 267 Inventories 5 Trade and other receivables 19 Trade and other payables (11) Financial liability - (2) Derivative financial instruments Short-term debt (146) Rm Unaudited Unaudited Audited 31 March 31 March 30 September 2009 2008 2008
6. Operating profit After charging: Depreciation and amortisation 652 602 1 244 Operating lease charges 197 173 345 7. Financial income Dividends received 1 1 Fair value gain on cross-currency 186 136 swap contracts Fair value gain on interest rate 8 swaps Interest received 65 64 134 66 250 279
8. Financial expenses Foreign exchange losses (net) 199 156 Fair value loss on interest rate 2 5 swaps Interest paid 1 316 1 231 2 550 1 318 1 435 2 706 9. Commitments Capital commitments 951 814 753 'South Africa 401 353 258 'United Kingdom 550 461 495 Operating lease commitments 3 345 5 926 4 496 'South Africa 1 115 425 1 460 'United Kingdom 2 230 5 501 3 036 10. Contingent liabilities (guarantees and suretyships) South Africa 601 104 253 United Kingdom 109 129 118 710 233 371 The Group has guaranteed R410 million covering the obligations of pathologists to a banking institution following the sale of Ampath. Segment report Unaudited Audited six months ended year ended Rm 31 March 31 March % 30 September 2009 2008 change 2008 INCOME STATEMENT Revenue 11 619 10 343 12,3 21 735 South Africa 5 616 4 907 14,4 10 385 'Hospitals and Emergency services 4 873 4 275 14,0 9 020 'Primary care 743 632 17,6 1 365 United Kingdom 6 003 5 436 10,4 11 350 EBITDA 2 474 2 186 13,2 4 614 South Africa 927 803 15,4 1 739 'Hospitals and Emergency services 943 751 25,6 1 735 'Primary care (16) 52 (130,8) 4 United Kingdom 1 549 1 368 13,2 2 885 Capital items (2) 15 (10) 'South Africa (1) 17 20 'United Kingdom (1) (2) (30) Operating profit 1 822 1 584 15,0 3 370 South Africa 756 636 18,9 1 401 'Hospitals and Emergency services 781 593 31,7 1 414 'Primary care (25) 43 (158,1) (13) United Kingdom 1 068 933 14,5 1 979 Capital items (2) 15 (10) 'South Africa (1) 17 20 'United Kingdom (1) (2) (30) Net interest paid 1 251 1 167 7,2 2 416 'South Africa 272 249 9,2 518 'United Kingdom 979 918 6,6 1 898 BALANCE SHEET Total assets 50 505 58 518 (13,7) 54 182 'South Africa 11 245 11 135 1,0 10 878 'United Kingdom 39 260 47 383 (17,1) 43 304 Debt net of cash 30 361 36 834 (17,6) 32 589 'South Africa 4 255 6 051 (29,7) 4 837 'United Kingdom 26 106 30 783 (15,2) 27 752 CASH FLOW Cash generated from operations 1 788 1 579 13,2 4 663 'South Africa 778 422 84,4 1 974 'United Kingdom 1 010 1 157 (12,7) 2 689 The segment report excludes the disposal group and assets held for sale, except for the cash flow. Salient Features Unaudited Audited Six months ended Year ended 31 March 31 March 30 September 2009 2008 2008
Share statistics Ordinary shares Total shares in issue (million) 1 263 1 260 1 262 Weighted average number of shares 1 262 1 260 1 261 (million) Diluted weighted average number of shares 1 264 1 292 1 280 (million) Market price per share (cents) 799 855 825 Currency conversion guide (R:GBP) Closing exchange rate 13,64 16,08 14,76 Average exchange rate for the period 14,73 14,40 14,65 Executive Directors: Dr RH Friedland (Chief Executive Officer), VE Firman (Chief Financial Officer), IM Davis, Dr VLJ Litlhakanyane Non-executive Directors: SJ Vilakazi (Chairman), Dr APH Jammine, JM Kahn, MJ Kuscus, HR Levin, Adv KD Moroka SC, Dr AA Ngcaba, MI Sacks, N Weltman Company Secretary: J Wolpert Registered Office: 76 Maude Street (corner West Street), Sandton 2196, Private Bag X34, Benmore 2010 Sponsors: Nedbank Capital, a division of Nedbank Limited. Registration number: 1951/000009/06, 135 Rivonia Road, Sandown, 2196 Investor relations: +27 11 301 0212; ir@netcare.co.za,www.netcareinvestor.co.za Our complete interim financial results are available at www.netcareinvestor.co.za 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 Johannesburg 18 May 2009 Sponsor - Nedbank Capital Date: 18/05/2009 08:00:04 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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