Netcare - Effect Of Circular 7/2005 Relating To Op
Netcare - Effect Of Circular 7/2005 Relating To Operating Leases On The
Financial Results Of Netcare
Network Healthcare Holdings Limited
(Co. Reg. No. 1996/008242/06)
Code: NTC
ISIN number: ZAE000011953
("Netcare")
EFFECT OF CIRCULAR 7/2005 RELATING TO OPERATING LEASES ON THE FINANCIAL RESULTS
OF NETCARE
In accordance with Circular 7/2005 released by the South African Institute of
Chartered Accountants ("SAICA"), the method by which South African companies
should account for operating leases with fixed escalation clauses has been
clarified, necessitating adjustments to the financial statements of those
companies affected.
Payments made under operating leases are recognised in the income statement on a
straight-line basis over the term of the lease. Past practice, whereby operating
lease payments were expensed on a payments basis, was based on an interpretation
of IAS 17(AC 105) - Leases, that was generally accepted in the South African
community. The move towards full compliance with International Financial
Reporting Standards ("IFRS") has led to the view that the entity is obliged to
adopt the straight-line basis of accounting for all lease payments. The
adjustment has been made as required by the International Accounting Standards
Board ("IASB") with the necessary restatement of comparative figures. The
effects of the restatement on the financial statements are summarised below:
R"000
Effect on Retained Earnings
30 September 2003 (141,461)
Effect on 2004 EBITDA (11,467)
Effect on 2005 EBITDA (6,565)
EBITDA is defined as Earnings before Interest, Tax, Depreciation and
Amortisation.
Netcare has assessed the impact of the change in interpretation and, in light of
the fact that it owns the vast majority of its hospitals and other medical
facilities, it advises that the impact is not material on a year on year basis.
JOEL WOLPERT
Group Company Secretary
Tel No: (011) 301-0213
Fax No: (011) 301-0481
E-mail: joel.wolpert@netcare.co.za
Sponsor
Merrill Lynch South Africa
Date: 06/10/2005 01:49:25 PM Produced by the JSE SENS Department
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