Netcare profits decline

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Healthcare group Netcare (NTC) has reported an 18% decline in diluted headline earnings per share to 93.6 cents for the year ended September 2012 from 114.2 cents a year ago.

Group revenue was up 11.5% to R25.17 billion‚ while SA profit after tax was up 21.5% to R1.646 billion.

Performance was driven by strong operating performance in SA and also benefited from currency conversion‚ it said.

Adjusted HEPS from continuing operations were up 8.7% to 113.2 cents and SA HEPS were up 19.6% to 121.0 cents

The final dividend per share was up 9.7% to 34.0 cents

Netcare said the financial results had seen a strong and improved contribution from South Africa‚ but the United Kingdom (UK) experienced a weaker trading result from operations due primarily to the challenging macro-economic environment.

The results were impacted by certain material‚ non-cash adjustments relating to the General Healthcare Group (GHG) portfolio of 35 UK hospital properties initially acquired in 2006 (GHG PropCo 1). The debt of GHG PropCo 1 is ring-fenced from the UK operating business (BMI OpCo) and GHG PropCo 2 (six remaining hospital properties acquired from Nuffield Hospitals in 2008) and is non-recourse to Netcare and its SA operations‚ the group said.

Looking ahead the group said it 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.

“We believe there is opportunity for collaboration between the private and public health sectors. Netcare’s UK experience‚ where approximately 30% of patients treated in BMI hospitals are public sector patients‚ demonstrates that there are sustainable models for private provision of publically funded healthcare‚” it added.

The refinancing of GHG PropCo 1 debt in the UK remains a focus. While Netcare reiterates that it is not the underwriter of last resort‚ it will together with its other shareholders continue to act responsibly in attempting to bring resolution to this matter‚ it added..

“Due to the economic uncertainty persisting within the Eurozone‚ the impact of austerity measures on the UK economy‚ in conjunction with budgetary and structural uncertainties in the NHS‚ we expect the next 12 months to remain challenging for BMI OpCo. Given the strong cash balance at year end and the low levels of net debt‚ Netcare believes there may be opportunities to optimise the capital structure of BMI OpCo‚” it added. - I-Net Bridge


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