Publications
Partners
Johannesburg - Healthcare group Netcare says that the need for healthcare will continue, even in the harsh trading conditions traumatising economies globally.
"It's difficult to predict the impact of the prevailing conditions on the economies of both SA and the UK, but the requirement for healthcare continues despite changes in economic cycles," it said in a statement on Monday when it released its annual results to end-September 2008.
The group reported a 16.8% increase in revenue to R21.7bn with the SA business contributing 48% and the UK business contributing 52%. diluted headline earnings per share fell 18% from 73.8c to 60.5c. A capital distribution of 18c/share was declared.
"Performance was driven by organic and acquisitive growth in both countries and the impact of the increased average rand-pound exchange rate during the year," it said.
Group operating profit rose 12.7% to R3.37bn, while the group operating profit margin declined from 16.1% to 15.5%, which according to Netcare was a result of sub-optimal tariff levels in SA, underwriting costs in one of its divisions - primary care - and non-recurring costs in both SA and UK amounting to R132m.
Group profit for the year fell 11.1% to R877m.
Its SA operation's revenue grew 17.1% to R10.4bn, boosted by the acquisition of Community and Linkwood Clinic, as well as the increased revenue contribution from its primary care unit and the incorporation of two newly built hospitals, Alberlito and Blaauwberg.
Organic revenue growth in SA was 13.2%, while earnings before interest, tax, depreciation and amortisation (Ebitda) increased by 3.2% to R1.739bn.
"Netcare remains confident that the demand for private healthcare will be sustained in SA. This is underpinned by a financially sound and growing medical scheme market," it said.
"We are hopeful that real opportunities to partner and assist government in the improvement of access to healthcare may also be forthcoming."
The SA division's operating profit rose 1.9% to R1.4bn at an operating profit margin of 13.8%. Capital expenditure for the year Was R687m, which included investments in hospital infrastructure, new medical equipment, and plant and equipment.
"SA's operating performance was adversely impacted by sub-optimal tariff levels across all divisions, inflationary cost pressures, higher underwriting costs - including approximately R20m relating to the prior year - in the primary care unit, together with restructuring costs of R12m".
SA's hospitals division had a 13% growth in total patient bed days, of which 3% was organic, and 10% was as a result of the Community and Linkwood acquisitions as well as the newly built Alberlito and Blaauwberg hospitals.
Average weekday occupancy increased to 73%, including Alberlito and Blaauwberg, and the average revenue per patient day was up 6.2%.
However, Netcare had said that its SA revenue was impacted by its decision to honour the request by the former Minister of Health - Manto Tshabalala-Msimang - to hold tariff increases for several months of the calendar year despite the higher inflationary environment, it said.
Another factor weighing on Netcare's bottom line and increasing the group's costs is the shortage of skills, but the group said it was mitigating this as it "now trains 25% of all nurses in the country", although it only manages 7% of total private and public beds in the country.
Its primary care division, which comprises two primary clinic networks - Medicross and Prime Cure - recorded 3.7 million patient visits in the period, up 8% on the prior year, while its emergency services division, Netcare 911, attended to over 214 000 calls during the year.
"The increased number of indigent patients served, compounded by high fuel prices and other cost pressures have necessitated a review of the business model to mitigate these operational costs".
In the UK, revenue rose 16.6% to R11.35bn, while operating profit incresed R20.2% to R1.979bn.
- Fin24.com
