| Mon 18 May 2009, 8:00 | | NTC - Netcare Limited - Unaudited group interim results for the six months |
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NTC
NTC
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 Produced by the JSE SENS Department.
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