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Trading Statement
NETCARE LIMITED
(Registration number 1996/008242/06)
JSE ordinary share code: NTC
ISIN: ZAE000011953
JSE preference share code: NTCP
ISIN: ZAE000081121
("Netcare")
TRADING STATEMENT
Netcare is in the process of finalising its audited results for the year ended 30 September 2017
(“FY2017 Results”), which will be released on the Stock Exchange News Service of the JSE on Monday,
20 November 2017.
In terms of paragraph 3.4 (b) of the JSE Listings Requirements, companies are required to publish a
trading statement as soon as they become reasonably certain that the financial results for the period
to be reported upon next will differ by at least 20% from that of the previous corresponding period.
Netcare issued a pre-close trading update to the market on 28 September 2017. The performance of
Netcare’s South African operations remains in line with this feedback.
In the United Kingdom, trading conditions were challenging during 2017, particularly in the second
half of the financial year, where the acceleration of demand management initiatives implemented by
both the National Health Services (“NHS”) and private medical insurers affected patient activity, in
combination with lower tariffs for NHS work effective from 1 April 2017 and further change in case
mix in favour of more day cases.
The combination of the weaker trading results and contractual rental commitments resulted in a
review of the carrying value of property, plant and equipment and goodwill, as well as a consideration
of onerous lease obligations. The assessment of these factors required the application of judgment in
the context of the difficult trading environment and a conservative approach was adopted.
Consequently, non-cash accounting adjustments in the aggregate of R5 563 million (£316.3 million)
have been recognised in the FY2017 Results, allocated to the impairment of property, plant and
equipment, onerous lease provisions and the impairment of goodwill. The property, plant and
equipment impairment and onerous lease provisions will be reviewed at each reporting period in light
of any changes to the operating environment and may be adjusted or reversed as appropriate. In
terms of International Financial Reporting Standards (“IFRS”), an impairment of goodwill may not be
reversed under any circumstances.
The FY2017 Results also include a large non-cash fair value accounting profit of R937 million (£57.2
million) arising from the mark-to-market valuation of BMI Healthcare’s Retail Price Index (“RPI”) swap
instruments related to existing long-term leases.
Shareholders are reminded that the above accounting entries, which are required in terms of IFRS,
have no commercial effect on the financial status of Netcare as they are non-cash in nature.
As a result of the weaker trading performance of the UK operations and the non-cash accounting
impacts of the impairment of property, plant and equipment and goodwill, and the recognition of
onerous lease provisions, partially offset by an unrealised mark-to-market profit on the RPI swap
instruments, Netcare’s Earnings per Share (“EPS”) in the FY2017 Results will fall below those of the
prior corresponding period by at least 20%.
As such, Netcare’s earnings are anticipated to be between 130.0% and 135% lower (R2 158 million
and R2 241 million) and EPS between 130.0% and 135.0% lower (159.4 cents and 165.5 cents) than
those for the previous financial year of R1 660 million and 122.6 cents, respectively.
The impairment of property, plant and equipment and goodwill are excluded from headline earnings,
which are anticipated to be between 5.0% and 10.0% lower (R81 million and R161 million) and
headline earnings per share between 5.0% and 10.0% lower (5.9 cents and 11.9 cents) than those for
the previous financial year of R1 611 million and 119.0 cents, respectively.
Investors are advised that comprehensive details and analysis of the FY2017 Results will be made
available within the audited Group results and related commentary and presentations that will be
released to the market on Monday, 20 November 2017.
The information provided in this trading statement has not been reviewed or reported on by Netcare’s
external auditors.
Johannesburg
14 November 2017
Sponsor
Deutsche Securities (SA) Proprietary Limited
Date: 14/11/2017 05:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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