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NTC
NTC
NTC - Netcare Limited - Unaudited Group interim results for the six months
ended 31 March 2011
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 Group interim results for the six months ended 31 March 2011
Basic headline earnings per share (cents) 2011: 48.0 cents
2010: 41.5 cents
Free cash flow (Rm) 2011: R1 586 million
2010: R1 264 million
Distributions per share (cents) 2011: 22.0 cents
2010: 19.0 cents
Commentary
Group financial review
Overview
For the six months ended 31 March 2011, earnings attributable to shareholders
increased by 15.0% to R666 million from R579 million in the prior year.
Headline earnings per share (HEPS) increased by 15.7% to 48.0 cents. A strong
performance in South Africa (SA) offset weaker results in the United Kingdom
(UK), which were negatively impacted by the challenging economic environment.
The Group continued to focus on operational efficiency, cost containment and
the implementation of business improvement plans to support robust and
sustainable businesses. Netcare`s financial position is underpinned by strong
cash generation with free cash flow increasing by 25.5% from the prior year.
Financial performance
In the respective local currencies, revenue grew in SA and the UK. On a
constant currency basis, Group revenue rose by 7.1% compared to the same
period last year, while reported revenue increased 3.2% to R11 392 million
(2010: R11 038 million).
Group operating profit decreased by 7.9% to R1 698 million (2010: R1 843
million). Currency conversion accounted for 3.0% of this reduction with the
balance largely attributable to lower profits in the UK.
Net financial expenses decreased by R57 million to R948 million, driven by
strong cash generation in SA and the UK, reduced interest rates in SA and a
lower average exchange rate on UK borrowing costs. Financial expenses were
negatively affected by a R61 million non-cash charge, representing the
ineffective portion of the fair value adjustment on the interest rate swaps
for the period. The interest rate swaps are hedge accounted and fair value
adjustments are recognised directly in equity to the extent that the hedging
is effective.
Group taxation of R54 million, represents an effective tax rate of 7.2%. This
arises from the favourable impact of a deferred tax release of R155 million
in the UK, following a further 1% reduction in the UK tax rate to 26%.
Excluding the impact of the rate change, the Group`s effective tax rate was
27.8%.
Financial position and cash flow
Net debt reduced to R23 838 million (R24 197 million at 30 September 2010),
due to a lower closing exchange rate and debt repayments in the UK.
Equity increased by R1 484 million from 30 September 2010. This was mainly
due to favourable non-cash mark-to-market fair value adjustments on the UK
interest rate swaps recognised in the cash flow hedge accounting reserve, as
well as profit of R699 million for the period.
Free cash flow improved by 25.5% to R1 586 million (2010: R1 264 million)
reflecting the Group`s focus on cash generation. During the period, capital
expenditure including intangible assets, of R461 million (2010: R449 million)
was invested to ensure that future demand for services can be met. Capital
expenditure of R1 433 million had been committed at 31 March 2011.
Divisional review
South Africa
Revenue grew 7.6% to R6 472 million from R6 014 million, and operating profit
rose 20.3% to R1 021 million (2010: R849 million). The operating profit
margin improved from 14.1% to 15.8%. The SA operations contributed 95.2%
(2010: 86.5%) to basic HEPS.
Cash generated in SA increased by 28.6% to R949 million (2010: R738 million),
bolstered by exceptional inventory and trade receivables management. Capital
expenditure including intangible assets was R242 million (2010: R278 million)
of which R142 million was spent on expanding our operations.
Netcare won the Metropolitan Oliver Empowerment Awards for Top Empowered
Company of the Year, Top Empowered Big Business and Healthcare and
Pharmaceuticals sector. In the Financial Mail`s Top Empowerment Companies
Survey for 2011, Netcare was ranked the most empowered company in the JSE`s
healthcare sector for the third year in a row. Netcare was also named a Level
1 Gold Community Contributor by the National Department of Social
Development, recognising our commitment to uplifting the communities in which
we operate. Accelerating transformation is one of Netcare`s strategic pillars
and it is humbling to be recognised among SA`s best companies for our
progress in this regard.
We are pleased to advise that on 24 March 2011 the JSE Limited and SRI Index
Advisory Committee reinstated Netcare to the SRI Index for 2011. This
followed representations by the Company to the JSE regarding the organ
transplant matter.
Netcare is committed to good corporate governance as the foundation for
building trust among all our stakeholders. The Board has adopted the
governance principles espoused by the Code of Corporate Practices (King Code)
and has undertaken a thorough review of the revised King Code (King III).
Enhanced sustainability is a key strategic imperative for Netcare`s executive
committee. It is supported by a dedicated Sustainability Committee, which
manages our efforts to embed sustainability principles into our daily
business practices. The disclosure of material sustainability issues and
performance against appropriate key performance indicators in Netcare`s
Integrated Report for the year ending 30 September 2011, will be overseen by
the Board and relevant committees.
Hospitals and Emergency services
Revenue from Hospitals and Emergency services grew 9.5% to R5 844 million
(2010: R5 336 million), and EBITDA rose 15.7% to R1 191 million (2010: R1 029
million). The division grew patient days by 2.8%, with a 6.7% increase in net
revenue per patient day.
The Hospital division continued to invest in infrastructure. We upgraded the
existing catheterisation laboratory at Netcare Sunward Park Hospital to a new
hybrid catheterisation theatre for cardiac and general vascular procedures.
This enables less invasive procedures leading to faster results, reduced
hospitalisation and significant cost savings. It utilises the latest in
robotic technology to improve treatment capabilities. Operating theatres at
Netcare Parklane and Garden City hospitals were renovated and the paediatric
wards at Netcare Unitas and St. Anne`s hospitals were also refurbished.
In conjunction with our empowerment partners, the construction of the 132-bed
private hospital in Waterfall, Midrand, is progressing well and we anticipate
its opening in July 2011. The construction of the 425-bed Lesotho Hospital,
part of the Lesotho Public Private Partnership (PPP), remains on track and is
scheduled to open in October 2011. The three primary care clinics that form
part of the overall PPP delivery model are performing at expected levels with
very good clinical outcomes.
Primary Care
The division continued its return to profitability. Revenue decreased by 7.4%
to R628 million (2010: R678 million), mainly due to a 22.4% contraction in
managed care lives in Prime Cure. Operating profit improved to R8 million
from the R5 million operating loss in the prior period. This was due to
stringent cost control measures and a strategy to reduce the proportion of
full risk lives under managed care.
The division improved access to affordable primary healthcare services
through its national footprint of `one stop` Medicross family medical and
dental centres (Medicentres). In conjunction with the Prime Cure clinics,
approximately 1.6 million patient visits were managed during the period.
United Kingdom
General Healthcare Group (GHG) experienced a difficult trading period
characterised by severe recessionary pressures and proposals for far-reaching
regulatory changes in the healthcare sector. As anticipated, recessionary
pressures constrained privately funded caseload in both the Private Medical
Insurance (PMI) and self-pay markets. A higher VAT rate also added to GHG`s
costs, as it is unable to claim input VAT.
However, GHG remains the leading private healthcare player in the UK, with
its geographic presence and range of services providing a distinct
competitive advantage in challenging conditions.
Overall caseload grew 19.4% year-on-year, driven largely by growth in NHS
activity through the Choose and Book (C&B) programme. However, growth in this
market segment was tempered by NHS funding constraints and caution as the UK
Department of Health seeks to clarify issues related to implementing its
White Paper reforms. The recently acquired Abbey hospitals and our investment
in the Transform cosmetic surgery business contributed to volume growth, but
this was offset by volume decline as the NHS Independent Sector Treatment
Centre (ISTC) contracts wind down. Case mix was also negatively affected by
an increase in day-case surgery versus inpatient admissions.
Revenue from the UK operations rose by 6.5% to GBP445.8 million (2010:
GBP418.7 million) for the period. However, the fall in private volumes and
the growing partnership between the private sector and the NHS through the
higher volume, lower margin C&B programme has changed the business mix. This
has resulted in an 18.2% decline in EBITDA to GBP90.1 million (2010: GBP110.1
million). Operating profit for the period of GBP55.9 million (2010: GBP79.2
million) was 29.4% lower, impacted by increased VAT costs as well as winding
down of the profitable ISTC contracts. A major rationalisation process is
underway to significantly reduce the cost base of the business with
restructuring and redundancy costs of GBP4.3 million incurred in this period.
Related cost savings will only materialise in the second half of the year.
Financial expenses were adversely affected by a GBP5.4 million (2010: GBP3.0
million) non-cash charge, representing the ineffective portion of the
movement in the fair value of the interest rate swaps. A tax benefit of
GBP14.0 million was recognised at half-year, following a 1% reduction in the
UK statutory company tax rate to 26%. Profit after tax amounted to GBP7.1
million (2010: GBP15.3 million).
Capital expenditure including intangible assets amounted to GBP19.9 million
compared to GBP14.3 million in the prior period. The business continues to
invest in strategic projects that will yield future growth and maintain its
market-leading hospital infrastructure and facilities.
Net debt reduced by GBP20 million to GBP1 855 million from September 2010,
reflecting the benefits of stringent working capital management. This was
driven by improved cash collection processes introduced to manage the impact
of the industry-wide shift in business mix to higher NHS caseload at longer
payment cycles. Cash balances increased to GBP90 million from GBP80 million
in the prior period. Following the sale of the hospital land and buildings at
the BMI Duchy Hospital in Harrogate in January 2011, GBP11 million of debt
was repaid. GHG successfully met all financial covenants with sufficient
headroom relating to its UK debt facilities, which are without recourse to
the SA operations.
Outlook
Netcare remains confident that the demand for private healthcare services at
primary and tertiary levels will be sustained in SA over the medium and long
term. Our capital investment in expansion will boost growth in SA.
The fundamentals of the UK private healthcare sector remain sound and the
proposed White Paper reforms are positive for the private sector in the long
term. The success of the NHS C&B programme is expected to entrench the
private healthcare sector as a key partner to the NHS in delivering national
healthcare needs. GHG is well placed to play a significant role in this
regard. In the short term, however, recessionary pressures in the UK economy
are expected to prevail for at least the remainder of this year, constraining
growth in the PMI and self-pay markets. Growth in C&B activity is expected to
continue, although this may be disrupted by NHS funding pressures and the
uncertainty around the White Paper reforms.
Board and management changes
Thevendrie Brewer was appointed as an independent non-executive director with
effect from 24 January 2011. The Board welcomes Thevendrie and looks forward
to her contribution.
Lynelle Bagwandeen was appointed Company Secretary with effect from 1 March
2011, following the resignation of Bert Kok on 28 February 2011. The Board
expresses its gratitude to Bert for his significant contribution to Netcare
and welcomes Lynelle to the Group.
Michael Sacks has advised the Board that he will be retiring as a non-
executive director effective 30 September 2011.
Declaration of interim dividend number 4
Notice is hereby given that interim dividend number 4 of 22.0 cents per
ordinary share (2010: capital reduction out of share premium of 19.0 cents
per ordinary share), has been declared for the six months ended 31 March
2011.
In accordance with the provisions of STRATE, the electronic settlement and
custody system used by the JSE Limited, the relevant dates for the dividend
are as follows:
Last day to trade cum dividend Friday, 15 July 2011
Trading ex dividend commences Monday, 18 July 2011
Record date Friday, 22 July 2011
Payment date Monday, 25 July 2011
Share certificates may not be dematerialised nor rematerialised between
Monday, 18 July 2011 and Friday, 22 July 2011, both days inclusive.
On Monday, 25 July 2011, the dividend will be electronically transferred to
the bank accounts of all certificated shareholders where this facility is
available. Where electronic funds transfer is either not available or not
elected by the shareholder, cheques dated Monday, 25 July 2011 will be posted
on that date. Holders of dematerialised shares will have their accounts
credited at their participant or broker on Monday, 25 July 2011.
On behalf of the Board
Jerry Vilakazi Chairman
Richard Friedland Chief Executive Officer
Vaughan Firman Chief Financial Officer
Sandton
12 May 2011
Group statement of financial position
Unaudited Unaudited Audited
31 Mar 31 Mar 30 Sep
Rm Note 2011 2010 2010
Assets
Non-current assets
Property, plant and equipment 23 534 23 538 23 852
Goodwill 13 057 13 235 13 153
Intangible assets 324 337 331
Associated companies,
investments and loans 2 249 182 180
Financial asset - Derivative
financial instruments 13 26
Deferred taxation 1 071 1 040 1 446
Total non-current assets 38 248 38 332 38 988
Current assets
Investments and loans 2 45 52 45
Financial asset - Derivative
financial instruments 8 6
Inventories 689 677 652
Trade and other receivables 3 322 3 661 3 290
Cash and cash equivalents 1 384 1 094 1 378
5 448 5 484 5 371
Assets held for sale 3 8 6 13
Total current assets 5 456 5 490 5 384
Total assets 43 704 43 822 44 372
Equity and liabilities
Capital and reserves
Ordinary share capital and
premium 577 819 624
Treasury shares (741) (767) (767)
Option premium on convertible
bond 164 169 164
Other reserves 104 (11) (496)
Retained earnings 4 968 3 966 4 632
Equity attributable to owners
of the parent 5 072 4 176 4 157
Preference share capital and
premium 644 644 644
Non-controlling interest 2 297 2 177 1 728
Total shareholders` equity 8 013 6 997 6 529
Non-current liabilities
Long-term debt 21 199 23 613 21 630
Financial liability -
Derivative financial
instruments 2 579 2 739 4 113
Post-retirement benefit
obligations 182 288 179
Deferred lease liability 49 119 122
Deferred taxation 4 235 4 617 4 430
Provisions 32 39 30
Total non-current liabilities 28 276 31 415 30 504
Current liabilities
Trade and other payables 3 173 2 841 3 118
Short-term debt 3 807 1 920 3 852
Taxation payable 219 226 276
Bank overdrafts 216 423 93
Total current liabilities 7 415 5 410 7 339
Total equity and liabilities 43 704 43 822 44 372
Group income statement
Audited
Unaudited year
six months ended ended
% 30 Sep
change 2010
31 Mar 31 Mar
Rm Note 2011 2010
Revenue 11 392 11 038 3.2 22 474
Cost of sales (6 681) (6 404) (12 893)
Gross profit 4 711 4 634 1.7 9 581
Other income 177 118 255
Administrative and other
expenses (3 190) (2 909) (6 128)
Operating profit 4 1 698 1 843 (7.9) 3 708
Financial income 5 26 24 106
Financial expenses 6 (974) (1 029) 5.3 (2 084)
Attributable earnings of
associates 3 16 24
Profit before taxation 753 854 (11.8) 1 754
Taxation (54) (185) (294)
Profit for the period 699 669 4.5 1 460
Attributable to:
Owners of the parent 642 551 1 233
Preference shareholders 24 28 53
Profit attributable to
shareholders 666 579 1 286
Non-controlling interest 33 90 174
699 669 1 460
Earnings per share (cents)
Basic 50.2 43.4 15.7 97.0
Diluted 48.7 41.8 16.5 94.6
Distributions per share
(cents)
Capital reduction 19.0 25.5
Dividend 22.0 21.0
22.0 19.0 15.8 46.5
Group statement of comprehensive income
Audited
Unaudited year
six months ended ended
30 Sep
2010
31 Mar 31 Mar
Rm Note 2011 2010
Profit for the period 699 669 1 460
Other comprehensive income/(loss),
net of tax 1 089 (540) (1 519)
Actuarial gains on defined benefit
plans 29
Effect of cash flow hedge
accounting
Change in the fair value of cash
flow hedges 1 130 (129) (1 118)
Recycling of cash flow hedge 5 & 6
accounting reserve (net) 1 (5) (10)
Effect of translation of foreign
entities (42) (406) (420)
Total comprehensive income/(loss)
for the period 1 788 129 (59)
Attributable to:
Owners of the parent 1 209 268 441
Preference shareholders 24 28 53
Non-controlling interest 555 (167) (553)
1 788 129 (59)
Headline earnings
Unaudited Audited
six months ended year ended
% 30 Sep
Rm change 2010
31 Mar 31 Mar
2011 2010
Reconciliation of headline
earnings
Profit for the period 699 669 4.5 1 460
Less:
Preference shareholders (24) (28) (53)
Non-controlling interest (33) (90) (174)
Earnings used in the
calculation of basic earnings
per share 642 551 16.5 1 233
Adjusted for:
Impairment of goodwill 9
Impairment of investments 8
Impairment of property, plant
and equipment 19
Reversal of impairment of
property, plant and equipment (1) (1) (1)
(Profit)/loss on disposal of
property, plant and equipment (55) (1) 1
Gain on bargain purchase (44) (81)
Tax effect of headline
adjusting items 8
Non-controlling share of
headline adjusting items 19 22 38
Headline earnings 613 527 16.3 1 226
Headline earnings per share
(cents)
Basic 48.0 41.5 15.7 96.5
Diluted 46.5 40.0 16.3 94.1
Group statement of cash flows
Unaudited Audited
six months ended
year ended
31 Mar 31 Mar 30 Sep
Rm 2011 2010 2010
Cash flows from operating activities
Cash received from customers 11 349 10 664 22 518
Cash paid to suppliers and employees (9 365) (8 770) (17 584)
Cash generated from operations 1 984 1 894 4 934
Interest paid (902) (993) (1 981)
Taxation paid (346) (302) (565)
Capital reductions paid (83) (279) (521)
Ordinary dividends paid (269)
Ordinary dividends paid by
subsidiaries (1) (1) (1)
Preference dividends paid (24) (28) (53)
Distributions to beneficiaries of the
HPFL Trusts (38)
Net cash from operating activities 321 291 1 813
Cash flows from investing activities
Purchase of property, plant and
equipment (436) (423) (1 284)
Proceeds on disposal of property,
plant and equipment 144 46 19
Additions to intangible assets (25) (26) (86)
Decrease/(increase) in investments
and loans 85 (34) (29)
Additions to derivatives (32)
Interest received 26 18 93
Dividends received 1 2
Increase in equity interest in
subsidiaries (2)
Acquisition of subsidiaries and
businesses, net of cash acquired (19) 21
Net cash from investing activities (206) (437) (1 298)
Cash flows from financing activities
Proceeds from issue of ordinary
shares 36 33 80
Proceeds on disposal of treasury
shares 62
Long-term liabilities (repaid)/raised (286) 2 883
Short-term liabilities
(repaid)/raised (37) 128 (825)
Net cash from financing activities (225) 163 138
Net (decrease)/increase in cash and
cash equivalents (110) 17 653
Translation effects on cash and cash
equivalents of foreign entities (7) (60) (82)
Cash and cash equivalents at
beginning of the period 1 285 714 714
Cash and cash equivalents at end of
the period 1 168 671 1 285
Consisting of:
Cash on hand and balances with banks 1 384 1 094 1 378
Short-term money market borrowings
and bank overdrafts (216) (423) (93)
1 168 671 1 285
Group statement of changes in equity
Ordinary
share Option
capital premium on
and Treasury convertible
Rm premium shares bond
Balance at 30 September 2009 1 065 (767) 169
Shares issued during the period 33
Capital reduction (279)
Share-based payments reserve
movements
Other reserve movements
Preference dividends paid
Dividends paid by subsidiaries
Total comprehensive income for the
period
Balance at 31 March 2010 819 (767) 169
Shares issued during the period 47
Capital reduction (242)
Repurchase of convertible bond (5)
Share-based payments reserve
movements
Other reserve movements
Capital gains tax on capital
reductions attributable
to treasury shares
Preference dividends paid
Acquisition of shares in subsidiary
Total comprehensive income for the
period
Balance at 30 September 2010 624 (767) 164
Shares issued during the period 36
Capital reduction (83)
Disposal of treasury shares 26
Share-based payments reserve
movements
Other reserve movements
Capital gains tax on capital
reductions attributable
to treasury shares
Preference dividends paid
Dividends paid
Dividends paid by subsidiaries
Distributions to beneficiaries of the
HPFL Trusts
Total comprehensive income for the
period
Balance at 31 March 2011 577 (741) 164
Foreign
currency
Cash flow translation Other
Rm hedge reserve reserves
Balance at 30 September 2009 (1 216) 976 471
Shares issued during the period
Capital reduction
Share-based payments reserve 12
movements
Other reserve movements 29
Preference dividends paid
Dividends paid by subsidiaries
Total comprehensive income for
the period (66) (217)
Balance at 31 March 2010 (1 282) 759 512
Shares issued during the period
Capital reduction
Repurchase of convertible bond
Share-based payments reserve 14
movements
Other reserve movements 25
Capital gains tax on capital
reductions attributable
to treasury shares
Preference dividends paid
Acquisition of shares in
subsidiary
Total comprehensive income for
the period (508) (16)
Balance at 30 September 2010 (1 790) 743 551
Shares issued during the period
Capital reduction
Disposal of treasury shares
Share-based payments reserve 14
movements
Other reserve movements 19
Capital gains tax on capital
reductions attributable
to treasury shares
Preference dividends paid
Dividends paid
Dividends paid by subsidiaries
Distributions to beneficiaries
of the HPFL Trusts
Total comprehensive income for
the period 588 (21)
Balance at 31 March 2011 (1 202) 722 584
Equity Preference
Retained
Rm earnings
attributable share
to owners capital and
of the parent premium
Balance at 30 September 2009 3 446 4 144 644
Shares issued during the 33
period
Capital reduction (279)
Share-based payments reserve 12
movements
Other reserve movements (31) (2)
Preference dividends paid (28) (28)
Dividends paid by
subsidiaries
Total comprehensive income
for the period 579 296
Balance at 31 March 2010 3 966 4 176 644
Shares issued during the
period 47
Capital reduction (242)
Repurchase of convertible
bond 2 (3)
Share-based payments reserve
movements 14
Other reserve movements (26) (1)
Capital gains tax on capital
reductions attributable
to treasury shares (7) (7)
Preference dividends paid (25) (25)
Acquisition of shares in
subsidiary
Total comprehensive income
for the period 722 198
Balance at 30 September 2010 4 632 4 157 644
Shares issued during the
period 36
Capital reduction (83)
Disposal of treasury shares 36 62
Share-based payments reserve
movements 14
Other reserve movements (28) (9)
Capital gains tax on capital
reductions attributable
to treasury shares (7) (7)
Preference dividends paid (24) (24)
Dividends paid (269) (269)
Dividends paid by
subsidiaries
Distributions to
beneficiaries of the HPFL
Trusts (38) (38)
Total comprehensive income
for the period 666 1 233
Balance at 31 March 2011 4 968 5 072 644
Non- Total
controlling shareholders`
Rm interest equity
Balance at 30 September 2009 2 345 7 133
Shares issued during the period 33
Capital reduction (279)
Share-based payments reserve movements 12
Other reserve movements (2)
Preference dividends paid (28)
Dividends paid by subsidiaries (1) (1)
Total comprehensive income for the period (167) 129
Balance at 31 March 2010 2 177 6 997
Shares issued during the period 47
Capital reduction (242)
Repurchase of convertible bond (3)
Share-based payments reserve movements 14
Other reserve movements (1)
Capital gains tax on capital reductions
attributable to treasury shares
(7)
Preference dividends paid (25)
Acquisition of shares in subsidiary (63) (63)
Total comprehensive income for the period (386) (188)
Balance at 30 September 2010 1 728 6 529
Shares issued during the period 36
Capital reduction (83)
Disposal of treasury shares 62
Share-based payments reserve movements 14
Other reserve movements 15 6
Capital gains tax on capital reductions
attributable to treasury shares
(7)
Preference dividends paid (24)
Dividends paid (269)
Dividends paid by subsidiaries (1) (1)
Distributions to beneficiaries of the HPFL
trusts (38)
Total comprehensive income for the period 555 1 788
Balance at 31 March 2011 2 297 8 013
Notes
1. Basis of preparation and accounting policies
The interim financial information for the six months ended 31 March 2011 has
been prepared in accordance with the measurement and recognition criteria of
International Financial Reporting Standards (IFRS) and complies with IAS 34
Interim Financial Reporting, the Listings Requirements of the JSE Limited and
the Companies Act of South Africa.
The accounting policies applied in the preparation of the interim financial
statements are consistent with those applied for the year ended 30 September
2010, except for the adoption of Improvements to International Financial
Reporting Standards 2010 (certain improvements have been adopted earlier than
required).
The implementation of these changes had no impact on the financial position
or performance of the Group.
Unaudited Audited
six months ended
year ended
31 Mar 31 Mar 30 Sep
2011 2010 2010
Rm
2. Associated companies, investments
and loans
Non-current
Associated companies* 224 149 151
Available-for-sale investments 22 22 22
Other loans 3 11 7
249 182 180
Current
Loans 45 52 45
294 234 225
* Directors` valuation of
associated companies 412 304 369
3. Assets held for sale
Certain land and buildings were
classified as held for sale.
No reversal of impairment was
recognised in the current year
(March and September 2010:
R1 million). 8 6 13
4. Operating profit
After charging:
Depreciation and amortisation 568 557 1 157
Operating lease charges 176 199 420
5. Financial income
Dividends received 1 2
Foreign exchange gains (net) 1
Interest received 26 18 93
Recycling of cash flow hedge 5 10
accounting reserve (net)
26 24 106
6. Financial expenses
Fair value loss on financial asset 7
Foreign exchange losses (net) 1
Ineffectiveness recognised in the
income statement arising from
cash flow hedges (net) 61 36 103
Interest paid 904 993 1 981
Recycling of cash flow hedge
accounting reserve (net) 1
974 1 029 2 084
7. Commitments
Capital commitments 1 433 745 1 392
South Africa 1 310 461 1 213
United Kingdom 123 284 179
Operating lease commitments 3 089 3 090 3 048
South Africa 1 151 1 312 1 212
United Kingdom 1 938 1 778 1 836
8. Contingent liabilities (guarantees
and surety ships)
South Africa 669 656 645
United Kingdom 13
682 656 645
Condensed segment report
The Group operates in two geographical regions, South Africa (SA) and the
United Kingdom (UK). SA has two further segments, Hospital and Emergency
services and Primary Care, which are separately monitored for decision-making
purposes. The UK segment results are impacted by fluctuations in the Rand
relative to the Pound Sterling on translation. The impact of foreign currency
fluctuations were removed from the UK segment for decision-making purposes.
Unaudited % Audited
six months ended change
year ended
31 Mar 31 Mar 30 Sep
Rm 2011 2010 2010
Income statement
Revenue
South Africa 6 472 6 014 7.6 12 541
Hospitals and Emergency
services 5 844 5 336 9.5 11 167
Primary Care 628 678 (7.4) 1 374
United Kingdom 4 920 5 024 (2.1) 9 933
UK adjusted1 5 349 5 024 6.5 9 933
Exchange rate impact (429)
Group reported 11 392 11 038 3.2 22 474
Exchange rate impact 429
Group adjusted1 11 821 11 038 7.1 22 474
EBITDA
South Africa 1 212 1 035 17.1 2 249
Hospitals and Emergency
services 1 191 1 029 15.7 2 220
Primary Care 21 6 250.0 29
United Kingdom 998 1 319 (24.3) 2 571
UK adjusted1 1 081 1 319 (18.0) 2 571
Exchange rate impact (83)
Capital items 56 46 21.7 45
South Africa 9 1 (34)
UK adjusted1 52 45 79
Exchange rate impact (5)
Group reported 2 266 2 400 (5.6) 4 865
Exchange rate impact 88
Group adjusted1 2 354 2 400 (1.9) 4 865
Operating profit
South Africa 1 021 849 20.3 1 899
Hospitals and Emergency
services 1 013 854 18.6 1 893
Primary Care 8 (5) 260.0 6
United Kingdom 621 948 (34.5) 1 764
UK adjusted1 670 948 (29.3) 1 764
Exchange rate impact (49)
Capital items 56 46 21.7 45
South Africa 9 1 (34)
UK adjusted1 52 45 79
Exchange rate impact (5)
Group reported 1 698 1 843 (7.9) 3 708
Exchange rate impact 54
Group adjusted1 1 752 1 843 (4.9) 3 708
Net interest expense
South Africa 162 200 19.0 367
United Kingdom 716 775 7.6 1 521
UK adjusted1 780 775 (0.6) 1 521
Exchange rate impact (64)
Group reported 878 975 9.9 1 888
Exchange rate impact 64
Group adjusted1 942 975 3.4 1 888
Statement of financial
position
Debt net of cash
South Africa 3 713 4 212 11.8 3 706
United Kingdom 20 125 20 650 2.5 20 491
UK adjusted1 20 459 20 650 0.9 20 491
Exchange rate impact (334)
Group reported 23 838 24 862 4.1 24 197
Exchange rate impact 334
Group adjusted1 24 172 24 862 2.8 24 197
1 The March 2011 UK numbers have been recalculated to remove the impact of
foreign currency fluctuations since the March 2010 results.
Salient features
Unaudited Unaudited Audited
31 Mar 31 Mar 31 Mar
2011 2010 2010
Share statistics
Ordinary shares
Shares in issue net of treasury
shares (million) 1 277 1 271 1 277
Weighted average number of shares
(million) 1 279 1 269 1 271
Diluted weighted average number of
shares (million) 1 318 1 318 1 303
Market price per share (cents) 1 450 1 320 1 384
Currency conversion guide (R:GBP)
Closing exchange rate 10.85 11.03 10.93
Average exchange rate for the period 11.02 12.00 11.63
Registered office: 76 Maude Street (corner West Street), Sandton
2196,Private Bag X34, Benmore, 2010
Executive RH Friedland (Chief Executive Officer),
directors: VE Firman (Chief Financial Officer),VLJ
Litlhakanyane
Non-executive SJ Vilakazi (Chairman), T Brewer, APH Jammine,
directors: JM Kahn, MJ Kuscus, HR Levin, KD Moroka,
MI Sacks, N Weltman
Company Secretary: L Bagwandeen
Sponsor: Nedbank Capital, a division of Nedbank Group
Limited
Transfer Link Market Services (Proprietary) Limited,
secretaries: 11 Diagonal Street, Johannesburg, 2001
Investor relations: ir@netcare.co.za; www.netcareinvestor.co.za
Date: 16/05/2011 07:05:14 Produced by the JSE SENS Department.
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