Group operating revenue increased by 54.2% to R11 616 million driven by the acquisitive growth of R3 159 million from GHG and solid organic growth of 11.3% in South Africa. Operating profit increased by 29.6% to R1 568 million (R1 209.6 million) and was favourably impacted by the release of an R85 million deferred lease liability relating to the Umhlanga hospital (previously leased) which was purchased during the year. However, operating profit was in turn negatively impacted by the R65 million IFRS 2 share-based payment expense relating to the Health Partners for Life transaction, costs of R280 million relating to the GHG restructuring and NHS bid costs of R39 million. The growth in operating profit was partially offset by the substantial increase in the consolidated net financial expense of R825 million, resulting in a slight increase in basic headline earnings per share before the HPFL BEE transaction charge to 60.7c (60.2c).
Capital distribution
In accordance with the authority given to the directors by way of an ordinary resolution passed on 27 January 2006, the board of directors declared on Monday, 13 November 2006 a final capital distribution out of share premium of 15cps, payable on Monday 22 January 2007, to shareholders recorded in the register of the company as at Friday, 19 January 2007.
Outlook
Given the government's contractual commitment for GEMS, its support for initiatives such as LIMS, as well as the continually increasing demand for private healthcare, prospects within South Africa remain strong. The negative impact on Medicross and Netcares retail pharmacy operations due to the finalised Single Exit Pricing (SEP) should be partially offset by recapturing market share previously lost due to the differential in the pricing structure within Medicross and the retail pharmacies. Netcare stands to benefit in 2007 and in the future from the sizeable share buybacks executed during this year. In the United Kingdom the restructuring and reengineering of GHG is continuing. Management is confident of the growth potential and contribution to the group over the medium to long term. In the short-term however, the impact is likely to be dilutive on earnings. The year ahead will see a renewed focus on delivering on the group's strategy to ensure quality healthcare services off a sustainable platform for growth within both markets.
Profile Group (Pty) Ltd. has taken care in preparing all information on this website, but does not accept any liability for errors or out-of-date information.
