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NETCARE LIMITED - Unaudited interim group results for the six months ended 31 March 2015

Release Date: 18/05/2015 08:00
Code(s): NTC     PDF:  
Wrap Text
Unaudited interim group results for the six months ended 31 March 2015

Netcare Limited
("Netcare", "the Company" or "the Group")
Registration number: 1996/008242/06
(Incorporated in the Republic of South Africa)
JSE share code: NTC
ISIN code: ZAE000011953



UNAUDITED INTERIM GROUP RESULTS for the six months ended 31 March 2015


FINANCIAL HIGHLIGHTS

Group EBITDA up 14.6% to R2 344 million

Cash generated from operations up 27.5% to R1 820 million

Adjusted HEPS up 19.6% to 90.8 cents

Interim dividend per share up 18.8% to 38.0 cents

COMMENTARY

Overview

The Group grew adjusted headline earnings per share (adjusted HEPS) by 19.6% to 90.8 cents (2014: 75.9 cents). A strong performance from our operations
in South Africa (SA) and further improvement from BMI Healthcare in the United Kingdom (UK) underpinned this result.

The accounting policies applied in preparing the unaudited Group interim financial statements are consistent in all material respects with those applied in the audited
financial statements for the year ended 30 September 2014.

Group financial review

Financial performance

Group revenue rose 5.8% to R16 304 million (2014: R15 411 million), with both SA and the UK delivering local currency revenue growth. Currency conversion
accounted for R268 million of the increase. The average exchange rate of R17.76 to the Pound Sterling (Pound), used to convert UK income and expenditure, was
3.6% weaker than the average rate of R17.15 for the six months ended 31 March 2014. However, the closing exchange rate of R17.97 at 31 March 2015, used to
convert assets and liabilities, strengthened marginally by 1.7% from R18.29 at 30 September 2014.

Group earnings before interest, tax, depreciation and amortisation (EBITDA) grew 14.6% to R2 344 million (2014: R2 046 million). Currency conversion accounted for
only R11 million of the increase. EBITDA before rent paid to the GHG Property Businesses of R1 276 million (2014: R1 202 million) increased by 11.5% to R3 620
million (2014: R3 248 million). Operating profit improved by 18.0% to R1 758 million (2014: R1 490 million).

Net financial expenses were R298 million (2014: R183 million). This included a non-cash fair value accounting charge of R107 million (£5.9 million) relating to a
mark-to-market revaluation of the RPI (Retail Price Index) swaps that are related to some of BMI Healthcare's property leases. The sharp decline in UK inflation
expectations and the European stimulus actions pushed RPI to record low levels. Excluding the RPI swaps, net financial expenses increased marginally to R191
million.

Profit before tax was up 13.8% to R1 527 million (2014: R1 342 million). The Group's tax expense increased to R426 million (2014: R393 million), representing an
effective tax rate of 27.9% (2014: 29.3%). Profit after tax rose by 16.0% to R1 101 million (2014: R949 million).

Financial position and cash flow

Total shareholders' equity increased to R12 450 million at 31 March 2015 from R12 172 million at 30 September 2014, notwithstanding a negative currency conversion
impact of R87 million.

At 31 March 2015, Group net debt was R5 543 million (March 2014: R5 562 million). Net debt to EBITDA strengthened to 1.2 times (March 2014: 1.4 times), while
interest cover improved to 9.6 times (March 2014: 8.4 times).

SA net debt at 31 March 2015 was R3 574 million (March 2014: R3 653 million). The increase from R2 967 million at 30 September 2014 was in line with normal
seasonality and after funding requirements for capital expenditure, tax and dividend payments. Collectively these payments amounted to R2 026 million (March 2014:
R1 595 million) during the period.

UK net debt at 31 March 2015 was £109.6 million (March 2014: £108.9 million), unchanged from 30 September 2014. BMI Healthcare remains fully compliant with
the covenants of its debt facilities.

Group cash generated from operations rose 27.5% to R1 820 million (2014: R1 428 million), supported by stringent management of working capital.

The Group invested R747 million (2014: R624 million) in capital expenditure, including intangible assets, and paid R710 million (2014: R543 million) to shareholders in
ordinary dividends.

Divisional review

South Africa

The division delivered a strong performance. Sustained demand for private healthcare services, notwithstanding the pressures in the general SA economy, supported
growth that was largely organic. Strict cost management combined with operational and process efficiencies resulted in a further improvement in operational
leverage.

Revenue grew by 7.3% to R8 307 million (2014: R7 740 million) and EBITDA by 14.2% to R1 893 million (2014: R1 658 million) at an EBITDA margin of 22.8% (2014:
21.4%). Operating profit rose 15.0% to R1 640 million (2014: R1 426 million) and adjusted HEPS by 18.4% to 86.8 cents (2014: 73.3 cents). Cash generated from
operations was 27.0% higher at R1 506 million from R1 186 million. Capital expenditure, including intangible assets, was R531 million (2014: R422 million).

The division is on track to meet its goals for the full year in terms of the quality leadership balanced scorecard, which monitors over 300 measures across all SA
operations.

Stringent quality assurance and sustained system improvements that meet the Triple Aim objectives of best patient outcome, best patient experience and cost-
effective care, continue to support the division's pursuit of quality leadership.

Load shedding has become prevalent in the past six months as a result of national electricity supply constraints. Netcare has taken substantial steps to insulate itself
from these events and has equipped its facilities to ensure continuity of care and patient outcomes. In line with our long-term strategy to mitigate the impact of
ongoing power interruptions and rising utility costs, a number of energy efficiency and sustainability projects are underway across the entire network.

Netcare was the recipient of the following accolades during the period under review:

- The 2015 RobecoSAM Bronze Class Sustainability Award for excellent sustainability performance. Netcare has also been included in the 2015 RobecoSAM's 'The
Sustainability Yearbook', the world's most comprehensive publication on corporate sustainability.

- The 2015 PMR.africa Diamond Arrow Award for Corporate Social Responsibility Initiatives in the category for private hospital and clinic groups, for corporate social
responsibility initiatives. This is the third consecutive year that Netcare has received the highest recognition by PMR.africa.

- The 2014 Trialogue Strategic CSI Award for our Sexual Assault Centres located at 36 Netcare hospitals and the sustained programme over 17 years to holistically
assist survivors of sexual assault.

Hospitals and Emergency Services

The demand for private hospital services and the benefits from business improvement projects resulted in a strong contribution from the Hospitals and Emergency
Services division.

Revenue grew 7.3% to R7 749 million (2014: R7 221 million) driven by patient day growth of 1.4%, off a high base of over 2.2 million patient days per annum.
Revenue per patient day increased by 6.2%, which is largely in line with historic trends. EBITDA was up 13.9% to R1 847 million (2014: R1 621 million) and the
EBITDA margin widened to 23.8% (2014: 22.4%) as a result of management actions to extract efficiencies. Operating profit grew by 14.7% to R1 611 million (2014:
R1 405 million).

The division added 32 new beds during the period with the acquisition of the Ceres Private Hospital in the Western Cape in November 2014 accounting for 28 of
these beds. Furthermore, Netcare disposed of its interest in the 12 bed Optimed Clinic during the period under review.

At 31 March 2015, the division had a total of 9 444 registered beds (2014: 9 296 beds). Plans to add approximately 510 new beds in total by the end of the financial
year are firmly on track. Brownfield expansion projects will add 212 new beds at existing facilities. The new 100-bed hospital in Pinehaven, west of Johannesburg,
and the new 170-bed hospital in Polokwane, are both expected to be commissioned by 30 September 2015. The new Netcare Christiaan Barnard Memorial Hospital
in Cape Town is progressing well.

Primary Care

Our national network of Medicross family medical and dental centres experienced stable demand in patient visits and scripts dispensed, while Prime Cure's
managed healthcare administration business grew its customer base. Revenue was 7.5% higher at R558 million (2014: R519 million) and EBITDA was up by 24.3% to
R46 million (2014: R37 million). The EBITDA margin improved to 8.2% from 7.1% due to structural and operational refinements to the business model. Operating
profit grew by 38.1% to R29 million (2014: R21 million).

SA private healthcare market inquiry

The Competition Commission commenced its inquiry into the functioning of the private healthcare market in 2014. In October 2014 Netcare made comprehensive
submissions to the Inquiry panel on the Competition Commission Statement of Issues. The non-confidential versions of these submissions were released on 5
February 2015 resulting in Netcare submitting a comprehensive response to these public submissions as part of Phase II of the process, 'Initial Analysis'.

United Kingdom

BMI Healthcare delivered an improved performance in a persistently challenging environment.

While total inpatient and day case volumes were up 2.5%, the economic recovery has not filtered through to the Private Medical Insurance (PMI) market. However,
strong growth of 14.8% in National Health Service (NHS) procedures offset the decline in PMI caseload. Patient choice and waiting list pressures are driving the
increase in NHS procedures, which accounted for 38.9% of total caseload (2014: 34.8%). Self-pay caseload grew marginally in the period. Outpatient activity
continued to grow in line with the increasing range of outpatient services.

Revenue increased by 0.8% to £450.2 million (2014: £446.8 million). EBITDA before GHG Property Business rentals and non-recurring costs was up by 4.2% to
£103.3 million (2014: £99.1 million) at a margin of 22.9% (2014: 22.2%). EBITDA before non-recurring restructuring costs improved by 8.6% to £31.5 million (2014:
£29.0 million). In the period, non-recurring expenses of £6.1 million were incurred in restructuring the business to compensate for the margin compression from the
shift in business mix from PMI to NHS cases. Management continues to restructure the business, re-engineer patient pathways and drive greater process efficiency
across a range of business streams. Reported EBITDA increased by 13.4% to £25.4 million from £22.4 million and operating profit improved by 86.1% to £6.7 million
(2014: £3.6 million). Adjusted HEPS, which excludes non-recurring costs and the non-cash fair value adjustment on the RPI swaps, improved by 53.8% to 4.0 cents
from 2.6 cents.

Capital expenditure, including intangible assets, of £12.3 million (2014: £11.6 million) was invested in projects to enhance revenue generation and maintain the
hospital portfolio.

GHG Property Businesses

The General Healthcare Group (GHG) Property Businesses comprise GHG PropCo 1, made up of 35 hospital properties acquired in 2006, and GHG PropCo 2,
consisting of 6 remaining hospital properties acquired in 2008.

Attributable earnings from GHG PropCo 2 amounted to a loss of £0.1 million (2014: profit of £0.3 million). This was as a result of non-recurring interest rate swap
cancellation charges of £0.5 million incurred in January 2015 on the refinancing of its debt facility.

Arrangements to conclude the restructuring of the £1.5 billion GHG PropCo 1 debt facility are well progressed. The lender groups, comprising junior, senior and swap
counterparties, have signed up to a global restructuring agreement and a consent solicitation memorandum was issued to noteholders on 10 April 2015. Sufficient
consents to allow the restructuring to progress were obtained by the early voting deadline of 22 April 2015. The debt maturity date has been extended to 15 June
2015 and we anticipate that the restructuring will be completed ahead of this date.

The investment in GHG PropCo 1 was impaired to zero in prior years and no further losses have been accounted for. The debt of GHG PropCo 1 is ring-fenced from
BMI Healthcare and GHG PropCo 2 and there is no recourse to Netcare and its SA operations in this regard.

Outlook

We expect the weakness in the SA economy to persist. Notwithstanding the low levels of growth in formal employment, demand for private healthcare should remain
resilient. We will continue to concentrate on growth projects and initiatives to drive operational excellence and quality improvement, in line with our commitment to best
outcomes, best experience and cost-effective care for our patients. We expect to extract further efficiency benefits from our IT optimisation projects in the years
ahead. We continue to evaluate international opportunities.

In the UK, demand for healthcare services remains robust. In the face of a slower recovery in PMI membership, we expect that this will place increasing pressure on a
capacity constrained NHS resulting in sustained demand for private hospital capacity. Programmes are in place to mitigate the impact of the margin compression
associated with the increased volume in public patients and the challenges of industry wide clinical staff shortages.

Board changes

Mr Jerry Vilakazi, the non-executive Chairman of Netcare, has informed the Board of his intention to retire at the end of May 2015. Mr Vilakazi served as Chairman of
the Board from June 2008 and the Board expresses its gratitude for his valued contribution to the Group. Mr Meyer Kahn, a non-executive director of the Netcare
Board, has been appointed as acting Chairman until such time as the Board appoints a permanent replacement.

Declaration of interim dividend number 12

Notice is hereby given that a gross interim dividend of 38.0 cents per ordinary share is declared in respect of the six months ended 31 March 2015. The dividend has been
declared from income reserves and is payable to shareholders recorded in the register at the close of business on Friday, 19 June 2015. The number of ordinary shares 
(inclusive of treasury shares) in issue at date of this declaration is 1 479 553 333. The dividend will be subject to a local dividend withholding tax at a rate of 15%, 
which will result in a net interim dividend to those shareholders not exempt from paying dividend withholding tax of 32.3 cents per ordinary share and 38.0 cents per 
ordinary share for those shareholders who are exempt from dividend withholding tax.

The Board has confirmed by resolution that the solvency and liquidity test as contemplated by the Companies Act 71 of 2008 has been duly considered, applied and
satisfied.

The salient dates applicable to the interim dividend are as follows:

Last day to trade cum dividend                            Thursday, 11 June 2015
Trading ex dividend commences                               Friday, 12 June 2015
Record date                                                 Friday, 19 June 2015
Payment date                                                Monday, 22 June 2015

Share certificates may not be dematerialised nor rematerialised between Friday, 12 June 2015 and Friday, 19 June 2015, both days inclusive.

On Monday, 22 June 2015, the dividend will be electronically transferred to the bank accounts of all certificated shareholders. Holders of dematerialised shares will
have their accounts credited at their participant or broker on Monday, 22 June 2015.

Netcare Limited's tax reference number is 9999/581/71/4.


On behalf of the Board


Meyer Kahn
Acting Chairman


Richard Friedland
Chief Executive Officer


Keith Gibson
Chief Financial Officer


Sandton
14 May 2015


Group income statement

                                                        Unaudited
                                                     six months ended                  Year ended
                                                  31 March     31 March          %   30 September
Rm                                       Notes        2015         2014     change           2014
Revenue                                             16 304       15 411        5.8         31 783
Cost of sales                                       (9 213)      (8 777)                  (18 227)
Gross profit                                         7 091        6 634        6.9         13 556
Other income                                           217          157                       350
Administrative and other expenses                   (5 550)      (5 301)                  (10 653)
Operating profit                             3       1 758        1 490       18.0          3 253
Investment income                            4         125           96                       213
Financial expenses                           5        (309)        (274)                     (564)
Other financial losses - net                 6        (114)          (5)                      (80)
Attributable earnings of associates                     47           18                        39
Attributable earnings of joint ventures                 20           17                        36
Profit before taxation                               1 527        1 342       13.8          2 897
Taxation                                     7        (426)        (393)                     (801)
Profit for the period                                1 101          949       16.0          2 096
Attributable to:
Owners of the parent                                 1 111          943                     2 107
Preference shareholders                                 24           23                        46
Profit attributable to shareholders                  1 135          966       17.5          2 153
Non-controlling interest                               (34)         (17)                      (57)
                                                     1 101          949       16.0          2 096
Cents
Earnings per share (cents)
Basic                                                 82.6         70.6       17.0          157.5
Diluted                                               80.7         68.9       17.1          154.2
Dividend per share (cents)                            38.0         32.0       18.8           80.0

Group statement of comprehensive income
                                                                                     Unaudited
                                                                                  six months ended        Year ended
                                                                                31 March     31 March   30 September
Rm                                                                                  2015         2014           2014
Profit for the period                                                              1 101          949          2 096
Items that may not subsequently be reclassified to profit or loss                      -            -            (13)
Remeasurement of defined benefit obligation                                            -            -            (18)
Taxation on items that may not subsequently be reclassified to profit or loss          -            -              5
Items that may subsequently be reclassified to profit or loss                       (113)         450            694
Effect of cash flow hedge accounting                                                  (7)         (18)           (39)
  Amortisation of cash flow hedge accounting reserve                                  17          (18)             -
  Change in the fair value of cash flow hedges                                       (25)           -            (39)
  Reclassification of cash flow hedge accounting reserve                               1            -              -
Effect of translation of foreign entities                                           (109)         463            732
Taxation on items that may subsequently be reclassified to profit or loss              3            5              1
Other comprehensive (loss)/income for the period                                    (113)         450            681
Total comprehensive income for the period                                            988        1 399          2 777
Attributable to:
Owners of the parent                                                               1 042        1 191          2 469
Preference shareholders                                                               24           23             46
Non-controlling interest                                                             (78)         185            262
                                                                                     988        1 399          2 777
Group statement of financial position

                                                                  Unaudited
                                                            31 March    31 March     30 September
Rm                                                 Notes        2015        2014             2014
ASSETS
Non-current assets
Property, plant and equipment                                 11 677      10 702           11 504
Goodwill                                                       3 819       3 727            3 879
Intangible assets                                                379         454              437
Equity-accounted companies, loans and receivables      8       2 202       1 843            2 015
Financial assets                                       9          45          34               45
Deferred taxation                                              1 513       1 355            1 419
Total non-current assets                                      19 635      18 115           19 299
Current assets
Loans and receivables                                  8          64          41               26
Inventories                                                    1 088       1 042              987
Trade and other receivables                                    5 172       4 759            4 688
Taxation receivable                                                -          18                5
Cash and cash equivalents                                      2 092       2 107            1 712
                                                               8 416       7 967            7 418
Non-current asset held for sale                                    8           -                -
Total current assets                                           8 424       7 967            7 418
Total assets                                                  28 059      26 082           26 717

EQUITY AND LIABILITIES
Capital and reserves
Ordinary share capital and premium                               970         947              962
Treasury shares                                                 (711)       (748)            (735)
Other reserves                                                 2 522       2 411            2 560
Retained earnings                                              6 208       5 185            5 859
Equity attributable to owners of the parent                    8 989       7 795            8 646
Preference share capital and premium                             644         644              644
Non-controlling interest                                       2 817       2 798            2 882
Total shareholders' equity                                    12 450      11 237           12 172
Non-current liabilities
Long-term debt                                        10       6 026       5 721            4 939
Financial liabilities                                  9         213          16               97
Post-retirement benefit obligations                              269         237              260
Deferred lease liability                                          80          79               74
Deferred taxation                                              1 502       1 347            1 360
Provisions                                                       118         121              138
Total non-current liabilities                                  8 208       7 521            6 868
Current liabilities
Trade and other payables                                       5 775       5 317            5 726
Short-term debt                                       10       1 609       1 660            1 739
Financial liabilities                                  9           -           3                3
Taxation payable                                                  17          56              203
Bank overdrafts                                                    -         288                6
Total current liabilities                                      7 401       7 324            7 677
Total equity and liabilities                                  28 059      26 082           26 717

Group statement of cash flows

                                                                                   Unaudited
                                                                                six months ended          Year ended
                                                                              31 March     31 March     30 September
Rm                                                                                2015         2014             2014
Cash flows from operating activities
Cash received from customers                                                    15 744       15 068           31 456
Cash paid to suppliers and employees                                           (13 924)     (13 640)         (27 074)
Cash generated from operations                                                   1 820        1 428            4 382
Interest paid                                                                     (309)        (274)            (545)
Taxation paid                                                                     (610)        (518)            (822)
Ordinary dividends paid by subsidiaries                                             (6)          (1)              (3)
Ordinary dividends paid                                                           (710)        (543)            (973)
Preference dividends paid                                                          (24)         (23)             (46)
Distributions to beneficiaries of the HPFL trusts                                 (163)         (85)            (154)
Net cash from operating activities                                                  (2)         (16)           1 839
Cash flows from investing activities
Purchase of property, plant and equipment                                         (744)        (613)          (1 902)
Proceeds on disposal of property, plant and equipment and intangible assets          6            8               80
Additions to intangible assets                                                      (3)         (11)             (43)
Decrease in investments and loans                                                 (128)         (27)            (103)
Interest received                                                                   61           41               96
Dividends received                                                                   5           15               18
Proceeds from disposal of businesses                                                 3            -               46
Acquisition of business                                                             (6)           -              (19)
Cash related to acquisition of business                                              5            -                -
Increase in equity interest in subsidiaries                                         (4)         (12)               -
Net cash from investing activities                                                (805)        (599)          (1 827)
Cash flows from financing activities
Proceeds from issue of ordinary shares                                               8           13               28
Proceeds on disposal of treasury shares                                            191           71              121
Acquisition of non-controlling interests                                             -            -               (4)
Settlement of derivatives                                                            2            -                -
Long-term debt raised/(repaid)                                                   1 125          259             (614)
Short-term debt (repaid)/raised                                                   (120)         453              535
Net cash from financing activities                                               1 206          796               66
Net increase in cash and cash equivalents                                          399          181               78
Translation effects on cash and cash equivalents of foreign entities               (13)          96              125
Cash and cash equivalents at the beginning of the period                         1 706        1 542            1 503
Cash and cash equivalents at the end of the period                               2 092        1 819            1 706
Consisting of:
Cash on hand and balances with banks                                             2 092        2 107            1 712
Short-term money market borrowings and bank overdrafts                               -         (288)              (6)
                                                                                 2 092        1 819            1 706

Condensed Group statement of changes in equity

                                                    Ordinary                                                                      Equity    Preference
                                                       share               Cash flow        Foreign                         attributable         share
                                                     capital                   hedge       currency                            to owners       capital          Non-          Total
                                                         and   Treasury   accounting    translation      Other   Retained         of the           and   controlling  shareholders'
Rm                                                   premium     shares      reserve        reserve   reserves   earnings         parent       premium      interest         equity
Restated balance at 30 September 2013                    934       (766)           -          1 778        368      4 846          7 160           644         2 611         10 415
Shares issued during the period                           13          -            -              -          -          -             13             -             -             13
Sale of treasury shares                                    -         18            -              -          -         32             50             -             -             50
Share-based payments reserve movements                     -          -            -              -         17          -             17             -             -             17
Tax recognised in equity                                   -          -            -              -          -         (2)            (2)            -             -             (2)
Preference dividends paid                                  -          -            -              -          -          -              -           (23)            -            (23)
Dividends paid                                             -          -            -              -          -       (543)          (543)            -            (1)          (544)
Distributions to beneficiaries of the HPFL trusts          -          -            -              -          -        (85)           (85)            -             -            (85)
Increase in equity interest in subsidiaries                -          -            -              -          -         (6)            (6)            -             3             (3)
Total comprehensive income for the period                  -          -           (7)           255          -        943          1 191            23           185          1 399
Balance at 31 March 2014                                 947       (748)          (7)         2 033        385      5 185          7 795           644         2 798         11 237
Shares issued during the period                           15          -            -              -          -          -             15             -             -             15
Sale of treasury shares                                    -         13            -              -          -         37             50             -             -             50
Share-based payments reserve movements                     -          -            -              -         20          -             20             -             -             20
Tax recognised in equity                                   -          -            -              -          2          4              6             -             -              6
Preference dividends paid                                  -          -            -              -          -          -              -           (23)            -            (23)
Dividends paid                                             -          -            -              -          -       (430)          (430)            -            (2)          (432)
Distributions to beneficiaries of the HPFL trusts          -          -            -              -          -        (69)           (69)            -             -            (69)
Increase in equity interest in subsidiaries                -          -            -              -          -        (19)           (19)            -             9            (10)
Total comprehensive income for the period                  -          -          (12)           139          -      1 151          1 278            23            77          1 378
Balance at 30 September 2014                             962       (735)         (19)         2 172        407      5 859          8 646           644         2 882         12 172
Shares issued during the period                            8          -            -              -          -          -              8             -             -              8
Sale of treasury shares                                    -         24            -              -          -        133            157             -             -            157
Share-based payments reserve movements                     -          -            -              -         15          -             15             -             -             15
Tax recognised in equity                                   -          -            -              -         16        (15)             1             -             -              1
Preference dividends paid                                  -          -            -              -          -          -              -           (24)            -            (24)
Dividends paid                                             -          -            -              -          -       (710)          (710)            -            (6)          (716)
Distributions to beneficiaries of the HPFL trusts          -          -            -              -          -       (163)          (163)            -             -           (163)
Increase in equity interest in subsidiaries                -          -            -              -          -         (7)            (7)            -            19             12
Total comprehensive income for the period                  -          -           (9)           (60)         -      1 111          1 042            24           (78)           988
Balance at 31 March 2015                                 970       (711)         (28)         2 112        438      6 208          8 989           644         2 817         12 450


Headline earnings
                                                                                     Unaudited
                                                                                  six months ended                 Year ended
                                                                               31 March     31 March         %   30 September
Rm                                                                                 2015         2014    change           2014
Reconciliation of headline earnings
Profit for the period                                                             1 101          949      16.0          2 096
Less:
  Dividends paid on shares attributable to the Forfeitable Share Plan                (3)          (3)                      (5)
  Preference shareholders                                                           (24)         (23)                     (46)
  Non-controlling interest                                                           34           17                       57
Earnings used in the calculation of basic earnings per share                      1 108          940      17.9          2 102
Adjusted for:
  Profit on disposal of investments (net)                                            (1)           -                      (10)
  Fair value gain on investment on acquisition of control                           (12)           -                        -
  (Profit)/loss on disposal of property, plant and equipment and intangible assets   (1)           -                       27
  Bargain purchase on acquisition of subsidiary                                      (1)           -                        -
  Impairment of property, plant and equipment                                         -            -                        1
  Tax effect of headline adjusting items                                              -            -                       (5)
  Non-controlling share of headline adjusting items                                   -            -                       (4)
Headline earnings                                                                 1 093          940      16.3          2 111
Headline earnings adjusted for:
  Fair value losses on derivative financial instruments                             125            5                       77
  Reversal of loan impairment                                                         -            -                       (4)
  Competition Commission costs                                                       27          108                      145
  Restructure costs                                                                 109            -                        -
  Site closure costs                                                                  -           31                       31
  Tax effect of adjusting items                                                     (55)         (30)                     (56)
  Non-controlling share of adjusting items                                          (81)         (43)                     (66)
Adjusted headline earnings                                                        1 218        1 011      20.5          2 238
Headline earnings per share (cents)                                                81.4         70.6      15.3          158.2
Diluted headline earnings per share (cents)                                        79.6         68.9      15.5          154.9
Adjusted headline earnings per share (cents)                                       90.8         75.9      19.6          167.8

Condensed segment report
                                                                                                 United
                                                                      South Africa              Kingdom      Group
                                                         Hospitals
                                                               and
                                                         Emergency      Primary                     BMI
Rm                                                        services         Care        Total       OpCo
31 March 2015
Income Statement
Revenue                                                      7 749          558        8 307      7 997     16 304
Attributable earnings of associates and joint ventures          51            -           51         16         67
EBITDA                                                       1 847           46        1 893        451      2 344
Operating profit                                             1 611           29        1 640        118      1 758
Segment assets and liabilities
Total assets                                                                          15 430     12 629     28 059
Total liabilities                                                                     (8 003)    (7 606)   (15 609)
31 March 2014
Income Statement
Revenue                                                      7 221          519        7 740      7 671     15 411
Attributable earnings of associates and joint ventures          17            -           17         18         35
EBITDA                                                       1 621           37        1 658        388      2 046
Operating profit                                             1 405           21        1 426         64      1 490
Segment assets and liabilities
Total assets                                                                          13 285     12 797     26 082
Total liabilities                                                                     (7 065)    (7 780)   (14 845)
30 September 2014
Income Statement
Revenue                                                     15 171        1 102       16 273     15 510     31 783
Attributable earnings of associates and joint ventures          35            -           35         40         75
EBITDA                                                       3 499           98        3 597        807      4 404
Operating profit                                             3 045           65        3 110        143      3 253
Segment assets and liabilities
Total assets                                                                          13 694     13 023     26 717
Total liabilities                                                                     (6 710)    (7 835)   (14 545)


Condensed notes to the unaudited interim Group financial statements

1. Basis of preparation and accounting policies

The condensed unaudited interim Group financial statements for the six months ended 31 March 2015 have been prepared in compliance with the Listings
Requirements of the JSE Limited, the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS),
the requirements of International Accounting Standard (IAS) 34, Interim Financial Reporting, SAICA Financial Reporting Guidelines as issued by the Accounting
Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and the Companies Act, No. 71 of 2008. These
condensed unaudited interim financial statements were compiled under the supervision of Mr KN Gibson (CA) SA, Group Chief Financial Officer.

The accounting policies applied in the preparation of these results are in accordance with IFRS and are consistent in all material respects with those applied in the
audited financial statements for the year ended 30 September 2014.

The interim results have not been reviewed or audited by the Group's independent external auditors, Grant Thornton.

2. Impact of the application of new and revised standards

The following standards and amendments to standards which are relevant to the Group have had no material effect on the presentation and disclosure for these
condensed unaudited interim Group financial statements, unless expressed otherwise.

IAS 32: Offsetting Financial Assets and Financial Liabilities (Amendment)

Amendments require entities to disclose gross amounts subject to rights of set-off, amounts set off in accordance with the accounting standards followed, and the
related net credit exposure. This information will assist investors in understanding the extent to which an entity has applied set-off in its statement of financial position
and the effect of rights of set-off on the entity's rights and obligations. The adoption of the amendments on the Group's performance and financial position will result
in additional presentation.

The amended standard becomes applicable to the Group for the financial year ending 30 September 2015.

IAS 36: Recoverable Amount Disclosures for Non-Financial Assets (Amendment)

Amendments will reduce the circumstances in which the recoverable amount of assets or cash-generating units is required to be disclosed, clarify the disclosures
required, and introduce an explicit requirement to disclose the discount rate used in determining impairment (or reversals) where the recoverable amount (based on
fair value less costs of disposal) is determined using a present value technique. The adoption of the amendments on the Group's performance and financial position
will result in additional presentation.

The amended standard becomes applicable to the Group for the financial year ending 30 September 2015.

                                                                                                     Unaudited
                                                                                                  six months ended          Year ended
                                                                                               31 March      31 March     30 September
     Rm                                                                                            2015          2014             2014

3.   OPERATING PROFIT
     After including:
     Depreciation and amortisation                                                                 (586)         (556)          (1 151)
     Operating lease charges                                                                     (1 706)       (1 533)          (3 070)
       GHG Property Businesses                                                                   (1 276)       (1 202)          (2 464)
       Other                                                                                       (430)         (331)            (606)

4.   INVESTMENT INCOME
     Expected return on retirement benefit plan assets                                                -             -               70
     Interest on bank accounts and other                                                            125            96              143
                                                                                                    125            96              213
5.   FINANCIAL EXPENSES
     Amortisation of arrangement fees                                                                 -            (5)              (6)
     Interest on bank loans and other                                                              (164)         (133)            (206)
     Interest on promissory notes                                                                  (133)         (126)            (262)
     Retirement benefit plan interest cost                                                          (12)          (10)             (90)
                                                                                                   (309)         (274)            (564)
6.   OTHER FINANCIAL LOSSES - NET
     Amount reclassified from the cash flow hedge accounting reserve                                 (6)            -                -
     Fair value losses on inflation rate swaps (not hedge accounted)                               (107)           (5)             (78)
     Fair value gains on interest rate swaps (not hedge accounted)                                    -             -                1
     Ineffectiveness losses on cash flow hedges                                                      (1)            -               (3)
                                                                                                   (114)           (5)             (80)
7.   TAXATION
     South African normal and deferred taxation
     Current year                                                                                  (443)         (382)            (819)
     Prior years                                                                                      4             -               (4)
     Capital gains tax                                                                                -             -               (6)
                                                                                                   (439)         (382)            (829)
     Dividend tax                                                                                     -             -               (1)
     Foreign normal and deferred taxation
     Current year                                                                                    13           (11)             (16)
     Prior years                                                                                      -             -               45
                                                                                                     13           (11)              29
     Total taxation per the income statement                                                       (426)         (393)            (801)

8.   EQUITY-ACCOUNTED INVESTMENTS, LOANS AND RECEIVABLES
     Non-current
     Associated companies                                                                           665           662              602
     Joint ventures                                                                                 167           150               76
     Loans and receivables                                                                        1 370         1 031            1 337
                                                                                                  2 202         1 843            2 015
     Current
     Loans and receivables                                                                           64            41               26
                                                                                                  2 266         1 884            2 041
     
     Included in loans and receivables is an investment of R1 133 million (March 2014: R981 million; September 2014: R1 087 million)
     relating to a contractual economic interest in the debt of BMI Healthcare.

9.   DERIVATIVE FINANCIAL INSTRUMENTS
     Derivative financial assets
     Interest rate swaps
     South African Rand                                                                              21            30               23
     Inflation rate swaps
     South African Rand                                                                               -             3                2
     Foreign currency                                                                                 -             1                -
                                                                                                     21            34               25
     Non-derivative financial instrument
     Investment in Cell Captive                                                                      24             -               20
                                                                                                     45            34               45
     Derivative financial liabilities
     Interest rate swaps
     South African Rand                                                                             (12)           (6)              (8)
     Inflation rate swaps
     South African Rand                                                                             (24)           (9)              (7)
     Foreign currency                                                                              (177)           (4)             (85)
                                                                                                   (213)          (19)            (100)
     Included in:
     Non-current liabilities                                                                       (213)          (16)             (97)
     Current liabilities                                                                              -            (3)              (3)
                                                                                                   (213)          (19)            (100)

     Fair value hierarchy
     Financial instruments measured at fair value are grouped into the following levels based on the significance of the inputs used in
     determining fair value:

     Level 1: Fair value is derived from quoted prices (unadjusted) in active markets for identical instruments.
     Level 2: Fair value is derived through the use of valuation techniques based on observable inputs, either directly or indirectly.
     Level 3: Fair value is derived through the use of valuation techniques using inputs not based on observable market data.

     The table below analyses the level applicable to financial instruments measured at fair value:

     Rm                                                                                                    Level 2       Level 3           Total
     31 March 2015
     Derivative financial assets
     Interest rate swaps                                                                                        21             -              21
     Non-derivative financial asset
     Cell Captive                                                                                               24             -              24
                                                                                                                45             -              45
     Derivative financial liabilities
     Interest rate swaps                                                                                       (12)            -             (12)
     Inflation rate swaps                                                                                      (24)         (177)           (201)
                                                                                                               (36)         (177)           (213)
     31 March 2014
     Derivative financial assets
     Interest rate swaps                                                                                        30             -              30
     Inflation rate swaps                                                                                        -             4               4
                                                                                                                30             4              34
     Derivative financial liabilities
     Interest rate swaps                                                                                        (6)            -             (6)
     Inflation rate swaps                                                                                        -           (13)           (13)
                                                                                                                (6)          (13)           (19)
     30 September 2014
     Derivative financial assets
     Interest rate swaps                                                                                        23             -             23
     Inflation rate swaps                                                                                        2             -              2
     Non-derivative financial asset
     Cell Captive                                                                                               20             -             20
                                                                                                                45             -             45
     Derivative financial liabilities
     Interest rate swaps                                                                                        (8)            -             (8)
     Inflation rate swaps                                                                                       (7)          (85)           (92)
                                                                                                               (15)          (85)          (100)

     The Group has no financial instruments categorised as Level 1.
     The reconciliation of the movements in the derivative financial assets and liabilities categorised in Level 3 is presented below:
     
                                                                                                           Unaudited                                                                                                  
                                                                                                    31 March        31 March      30 September
    Rm                                                                                                  2015            2014              2014
    Inflation rate swaps
    Balance at beginning of the period                                                                   (85)             25                25
    Fair value movement recognised in the cash flow hedge accounting reserve                               -             (30)              (32)
    Fair value movement recognised in the income statement                                               (93)              -               (76)
    Ineffectiveness on the cash flow hedges                                                                -              (6)                -
    Derecognition of interest rate swap                                                                    1               -                 -
    Translation of foreign entities                                                                        -               2                (2)
                                                                                                        (177)             (9)              (85)
10. DEBT
    Long-term debt                                                                                     6 026           5 721             4 939
    Short-term debt                                                                                    1 609           1 660             1 739
    Total debt                                                                                         7 635           7 381             6 678
    Comprising:
    Debt in South African Rand
      Secured liabilities                                                                                552               -                 -
      Finance leases                                                                                      15              42                23
      Promissory notes and commercial paper in issue                                                   4 400           4 154             3 567
      Other                                                                                                4               -                 -
      Unsecured liabilities                                                                                -               1                 -
                                                                                                       4 971           4 197             3 590
    Debt in foreign currency
      Secured liabilities                                                                              2 300           2 943             2 743
      Finance leases                                                                                     285             172               292
      Accrued interest                                                                                    90              85                67
      Arrangement fees                                                                                   (11)            (16)              (14)
                                                                                                       2 664           3 184             3 088
                                                                                                       7 635           7 381             6 678
    Maturity profile
                                                                                                                                    1-2         2-3        3-4
    Rm                                                                                               Total       <1 year           years      years      years   >4 years
    31 March 2015
    Debt in South African Rand                                                                       4 971         1 053           1 258      1 604        557        499
    Debt in foreign currency                                                                         2 664           556              48        411      1 558         91
                                                                                                     7 635         1 609           1 306      2 015      2 115        590
    31 March 2014
    Debt in South African Rand                                                                       4 197           764           1 011      1 259        607        556
    Debt in foreign currency                                                                         3 184           896             433         29        381      1 445
                                                                                                     7 381         1 660           1 444      1 288        988      2 001
    30 September 2014
    Debt in South African Rand                                                                       3 590         1 178             992        258        602        560
    Debt in foreign currency                                                                         3 088           561             467        418        423      1 219
                                                                                                     6 678         1 739           1 459        676      1 025      1 779


                                                                                                           Unaudited
                                                                                                   31 March        31 March         30 September
    Rm                                                                                                 2015            2014                 2014

11. COMMITMENTS
    Capital commitments                                                                               3 107           1 919                2 600
      South Africa                                                                                    3 014           1 505                2 399
      United Kingdom                                                                                     93             414                  201
    Operating lease commitments                                                                      52 095          47 788               55 542
      South Africa                                                                                    3 048           1 033                4 326
      United Kingdom                                                                                 49 047          46 755               51 216

12. CONTINGENT LIABILITIES
    South Africa                                                                                        132             406                  171

13. EVENTS AFTER THE REPORTING PERIOD
    The directors are not aware of any matters or circumstances arising since the end of the reporting period, not otherwise dealt with in
    the Group's unaudited interim financial statements, which significantly affect the financial position at 31 March 2015 or the results of its
    operations or cash flows for the period then ended.


Salient features
                                                                                                         Unaudited
                                                                                                   31 March       31 March      30 September
                                                                                                     2015           2014              2014
Share statistics
Ordinary shares
Shares in issue (million)                                                                             1 479          1 476             1 478
Shares in issue net of treasury shares (million)                                                      1 343          1 333             1 337
Weighted average number of shares (million)                                                           1 342          1 332             1 334
Diluted weighted average number of shares (million)                                                   1 373          1 365             1 363
Market price per share (cents)                                                                        4 170          2 334             3 161
Currency conversion guide (R:£)
Closing exchange rate                                                                                 17.97          17.53             18.29
Average exchange rate for the period                                                                  17.76          17.15             17.49


Disclaimer


Certain statements in this document constitute 'forward-looking statements'. Forward-looking statements may be identified by words such as 'believe', 'anticipate',
'expect', 'plan', 'estimate', 'intend', 'project', 'target', 'predict' and 'hope'. By their nature, forward-looking statements are inherently predictive, speculative and involve
risk and uncertainty because they relate to events and depend on circumstances that will occur in the future, involve known and unknown risks, uncertainties and
other facts or factors which may cause the actual results, performance or achievements of the Group, or the healthcare sector to be materially different from any
results, performance or achievement expressed or implied by such forward-looking statements. Forward-looking statements are not guarantees of future performance
and are based on assumptions regarding the Group's present and future business strategies and the environments in which it operates now and in the future. No
assurance can be given that forward-looking statements will prove to be correct and undue reliance should not be placed on such statements.


Forward-looking statements apply only as of the date on which they are made, and Netcare does not undertake other than in terms of the Listings Requirements of
the JSE Limited, to update or revise any statement, whether as a result of new information, future events or otherwise.

Registered office
76 Maude Street (corner West Street), Sandton 2196, Private Bag X34, Benmore 2010


Executive directors
RH Friedland (Chief Executive Officer), KN Gibson (Chief Financial Officer), J Watts


Non-executive directors
SJ Vilakazi (Chairman - retiring 31 May 2015), JM Kahn (Acting Chairman), T Brewer, APH Jammine, MJ Kuscus, KD Moroka, N Weltman


Company Secretary
L Bagwandeen


Sponsor
Nedbank Limited


Transfer secretaries
Link Market Services South Africa (Proprietary) Limited, 13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein 2001


Investor relations
ir@netcare.co.za


Date: 18/05/2015 08:00:00 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
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