Sale of old hospital helps cushion Netcare results

Johannesburg – The sale of an old hospital helped cushion the blow of Netcare group’s low revenue. 

According to the group’s interim results for the six months ended March 31, the group’s revenue fell more than 10% to R16.9bn. The adjusted headline earnings per share were down 11.4% to 80.6c. However profit increased 46.1% to R1.9bn compared to the same period in 2016 and an interim dividend of 38c was declared.

This increase in profit has been attributed to non-trading activities, including the sale of the old Christiaan Barnard Memorial Hospital and the mark-to-market revaluation of the UK Retail Price Index.

Excluding these items, group Earnings Before Interest Taxation Depreciation and Amortisation (Ebitda) declined 13.1% to R2.3bn, according to the results statement.

The group also said the results were impacted by the exchange rate. “While our group revenue in local currencies is growing, both in South Africa and the United Kingdom, the appreciating rand has negatively impacted on the translation of our UK results,” said chief executive Dr Richard Friedland.

Operations in South Africa managed to grow revenue by 2.3% to R9.2bn, despite the low growth environment, explained Friedland.

Excluding the sale of the hospital, Ebitda decreased 2.1% (R1.9bn). Operating profit similarly decreased 3.6% to R1.5bn.

Friedland expects private healthcare to “remain resilient” over the medium to long term. “However, in the near term, economic pressures and medical scheme interventions may weigh on demand for our services,” he warned.

So far capital expenditure came to R744m. This is expected to grow to R1.7bn as the group further develops the new Netcare Christiaan Barnard Memorial Hospital medical precinct, as well as the expansion of Netcare Milpark Hospital.

In the UK, revenue increased 3.2% to £458m (R7.8bn). National Health Services (NHS) volumes have contributed to the growth. Friedland expects growth in NHS-funded patients being treated at private facilities.

However, the Private Medical Insurance (PMI) market is not expected to improve in the short term, its caseload had declined 3.6% in the period.

Its BMI Healthcare network will spend £52m (R891m) on capital projects. 

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