| Thu 4 Mar 2004, 14:37 | | EXPANSION OF NETCARE'S INTERNATIONAL ACTIVITIES |
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Netcare - Expansion Of Netcare"s International Activities
Network Healthcare Holdings Limited
Incorporated in the Republic of South Africa
(Registration number 1996/008242/06)
("Netcare")
JSE Share Code: NTC
ISIN number: ZAE000011953
EXPANSION OF NETCARE"S INTERNATIONAL ACTIVITIES
Introduction
Netcare is pleased to announce that its International Division, through Netcare
Healthcare (UK) Limited (Netcare UK), has concluded a Memorandum of
Understanding with Fidelidade Mundial, S.A. (FMSA), a leading insurance
institution in Portugal, for the joint expansion and development of FMSA"s
private healthcare subsidiary, Hospitais Privados de Portugal S.G.P.S. (HPP).
FMSA enjoys approximately 22% of the Portuguese healthcare insurance market
covering 350 000 lives.
FMSA is owned by Caixa Geral de Depositos Group (CGD), a Portuguese Government
owned enterprise which is the largest financial institution in Portugal, having
assets in excess of Euro66 billion.
Research into the selection of a strategic partner for the HPP project commenced
during June 2003 and Netcare was selected from amongst numerous international
healthcare providers who satisfied the qualifying criteria prescribed by HPP.
HPP has subsidiaries operating in Northern, Central and Southern Portugal. The
HPP Group currently operates five hospitals with 299 beds, located in Lisbon,
Porto and the Algarve, with another two hospitals presently being planned for
construction. The hospital businesses are complemented by ancillary healthcare
services providing primary care, radiology and pathology.
Netcare Healthcare UK
Netcare has previously reported on its successful progress as contractor and
preferred bidder for selected National Health Service (NHS) provider contracts
in the United Kingdom, having a potential aggregate value of R1,4 billion over
five years. Having regard to these compelling developments, an operational
infrastructure has now been established in the UK and Group Chief Operating
Officer, Dr Richard Friedland, has temporarily relocated to the UK to manage and
expand the Group"s international operations, which will include, for the time
being, those activities both in the UK and Portugal.
Rationale
Following on from Netcare UK"s success with the NHS, the Group has seen
significant interest in public/private partnerships ("PPP") by several
Governments in Europe. As a result thereof, Netcare"s International Division has
embarked on a deliberate strategy to secure partnerships with several strategic
healthcare enterprises to tender for PPP"s.
Given the similarities in strategy indicated by the ultimate shareholder in HPP,
CGD, it is the intention of the parties that Netcare UK will, subject to
confirmation of the transaction by the South African Reserve Bank, invest and
become a strategic shareholder in HPP in order to partner CGD in initially
expanding the Group and tendering for PPP projects throughout Portugal. It is
further contemplated that the transaction will include Netcare UK entering into
a service level agreement for the provision of selected value adding products
and services for the HPP Group.
This investment presents a formidable opportunity for Netcare UK due, inter
alia, to the following key factors:
- HPP"s key competitive advantages are the support provided by its
shareholders" financial and insured markets and also the track record of
creating and supplying a distinguished quality service.
- The impressive management expertise and local knowledge within the HPP
group and its shareholders.
- The Portuguese Government"s progressive and practical PPP plan to launch 10
projects over a 3 year period (2 new and 8 replacement facilities). These
projects are anticipated to have an infrastructural value in excess of Euro750m,
with the aggregate for clinical services amounting to almost Euro4.5bn over a 10
year period.
- CGD has indicated its intention to jointly invest with Netcare in expanding
into selected European markets as well as other Portuguese speaking regions.
Financial effects
The financial effects of Netcare"s relationship with HPP are, at this stage, not
significant on a pro-forma basis. However, the successful implementation of
Netcare"s service level commitments, as well as the potential returns on
Netcare"s investment in HPP and its expanded operations should impact positively
on the Netcare Group in future.
Further announcements regarding the status and progress of Netcare UK will be
published from time to time.
Sandton
4 March 2004
Netcare Sponsor
Merrill Lynch South Africa (Pty) Limited
Date: 04/03/2004 01:15:03 PM Produced by the JSE SENS Department
