CHIEF executive Dr Richard Friedland says Netcare has managed its cost base despite the sluggish economy. Nokuthula Mbatha African News Agency (ANA)
CHIEF executive Dr Richard Friedland says Netcare has managed its cost base despite the sluggish economy. Nokuthula Mbatha African News Agency (ANA)

Netcare to spend R1.4bn in capex in coming year

By Sandile Mchunu Time of article published Nov 19, 2019

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JOHANNESBURG - Private hospital group Netcare is to spend R1.4billion in capital expenditure during the 2020 financial year as part of its ongoing expansion programme.

The group said the funds would be spent on finalising the expansion of the Milpark and St Augustine’s hospitals, construction of the replacement 427-bed Netcare Alberton, a new 36-bed Akeso facility in Richards Bay, and a new 72-bed Akeso facility in Port Elizabeth.

The group said the expansion would continue despite muted patient-day growth of 0.8percent, and 1.2percent projected for the next financial year, with the first half negatively influenced by the 2019 hospital network arrangements.

It said these would impact performance in first quarter of 2020.

In the results for the year to the end of September, Netcare reported a 4.2percent increase in revenue from continuing operations to R21.59bn, while normalised earnings before interest, tax, depreciation and amortisation (Ebitda) increased 4.3percent to R4.39bn.

Adjusted headline earnings per share from continuing operations rose 3percent to 171.2cents a share. The group declared a final dividend of 64c a share, which was up by 6.7percent compared with last year.

Chief executive Dr Richard Friedland said Netcare managed its cost base despite the sluggish economy and challenges in the healthcare sector. He said the group’s targeted efficiency initiatives had gained traction.

“We remain fully committed to our quadruple aim of delivering the best clinical outcomes, ensuring the best patient experience, delivering healthcare at an affordable cost, and improving the well-being of healthcare delivery teams,” Friedland said.

Netcare said revenue in the hospital and emergency services division increased 4.1percent to R20.81bn, with patient days growing 3.7percent.

Normalised Ebitda rose to R4.26bn, with an Ebitda margin of 20.5percent. Normalised operating profit improved 2.3percent to R3.57bn.

Acute hospital patient days declined 1.4percent, but the group said this was offset by strong growth from Akeso, a network of mental health facilities acquired in March last year.

The group said the demand for mental healthcare remained strong, as Akeso experienced total patient day growth of 17.9percent.

“This has been boosted by contributions from two new hospitals opened in 2017 and 2018, and the expanded and refurbished Akeso George facility, which re-opened in March 2019,” the group said.

The group’s primary care division achieved strong revenue growth of 10.9percent, driven by the expansion of its occupational health offering, resulting in revenue of R795million.

Its Ebitda increased by 8.3percent to R118m, with an Ebitda margin of 14.8percent and operating profit increased by 8.5percent to R64m.

Netcare shares rose 5.16percent on the JSE yesterday to close at R18.55.


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