Full options

Transcription

Full options

76 Maude Street, Sandton, 2196
Johannesburg, South Africa
www.netcare.co.za
N E T W O R K H E A LT H C A R E H O L D I N G S L I M I T E D
ANNUAL REPORT 2003
GROWING
WITH
PEOPLE
Network Healthcare Holdings Limited
Annual Report 2003 / contents
Milestones achieved in 2003
2
Financial highlights
4
Corporate structure
6
Chairman’s statement
8
Chief executive officer’s review
16
Chief operating officer’s review
24
Human resources report
38
Netpartner report
42
Financial overview
48
Seven-year tables
52
Summary of statistics and
Stock Exchange performance
54
Value-added statement
55
Analysis of shareholders
56
Corporate governance
57
Corporate and social review
62
Directorate
68
Directorate and administration
70
Financial table of contents
71
Annual financial statements
71
Directory of facilities
www.netcare.co.za
104
2
Annual Report 2003 / milestones achieved in 2003
HOUSE OF COMMONS
C O M M E N DAT I O N
Signed the single largest
Public Private Partnership of
its kind with the Free State
Health Department
Received commendation in the
British House of Commons for
Operation Cataract. Subsequently
awarded three further contracts
by other local NHS trusts
JANUARY 2 0 0 3
NOVEMBER 2 0 0 2
P U B L I C P R I VAT E PA RT N E R S H I P
OCTOBER 2 0 0 2
Focused development and a
competitive edge resulted in
another year of solid organic
growth for the Group.
C A R D I AC I N S T I T U T E
FOR AFRICA
Launched the Walter
Sisulu Paediatric
Cardiac Centre for
Africa at Sunninghill
Hospital
N E T PA RT N E R
INVESTMENTS
Issued Netpartner
prospectus to healthcare
professionals on a
national basis
SEPTEMBER 2 0 0 3
AUGUST 2 0 0 3
Annual Report 2003 / milestones achieved in 2003 / continued
JUNE 2 0 0 3
3
N H S T R E AT M E N T C E N T R E S
Nominated as preferred bidder by the NHS on the
Opthalmic Chain Initiative and by the Manchester
Strategic Health Authority for the operation of a
treatment centre
O P E R AT I O N
JOINT VENTURE
Began contract for the
Southport & Ormskirk
Hospital NHS Trust for
the provision of over
320 hip and knee joint
replacements
Pretoria East Hospital –
New medical centre, ICU, maternity
and theatre
St Augustines Hospital – New ICU
High Care units, transplant unit,
CCU, pharmacy and medical centre
E X PA N S I O N O F C O R E
H O S P I TA L I N F R A S T RU C T U R E
THROUGHOUT 2 0 0 3
Sunninghill Hospital –
New maternity unit, doctors’ suites,
pharmacy upgrade and coffee shop
4
Annual Report 2003 / financial highlights
Profitability performance measures
reflect meaningful growth
across the board
revenue
2002
24,9%
2003
Rm 4 812,3
Rm 6 012,6
EBITDA
2002
28,4%
2003
Rm 942,9
Rm 1 210,4
headline earnings
2002
23,6%
2003
Rm 529,9
Rm 655,2
headline earnings per share
2002
2003
25,1%
36,7 cents
45,9 cents
5
Annual Report 2003 / financial highlights / continued
2003
2002
Change
%
50
45
40
35
Trading (Rm)
Revenue
6 012,6
4 812,3
24,9
25
Operating profit before depreciation
and amortisation (EBITDA)
1 210,4
942,9
28,4
Operating profit (EBIT)
1 017,9
783,1
30,0
655,2
529,9
23,6
Headline earnings
30
20
15
10
5
0
Ordinary share performance (cents)
Headline earnings per share (HEPS)
45,9
36,7
25,1
Cash equivalent earnings per share
58,7
49,6
18,3
Capital distributions per share
Net equity per share
Share price at 30 September
15,0
11,5
30,4
200,0
150,6
32,8
410
295
39,0
97
98
99
00
01
02
03
headline earnings
per share (cents)
1 300
1 200
1 100
Financial ratios
1 000
900
Interest cover (times)
6,5
7,5
Debt : equity ratio (%)
28,7
34,3
EBITDA margin (%)
20,1
19,6
Operating profit return on net assets (%)
29,2
30,4
400
Return on ordinary shareholders’ equity (%)
25,0
28,1
300
800
700
600
500
200
100
0
97
98
99
00
01
02
03
operating profit before depreciation
and amor tisation (ebitda) (Rm)
60
6-year compound annual growth rates
%
55
50
45
Revenue
37,0
EBITDA
43,3
EBIT
46,2
40
35
30
25
20
15
10
HEPS
36,2
5
0
97
98
99
00
01
02
cash equivalent earnings
per share (cents)
03
6
Annual Report 2003 / corporate structure
The Group has invested strategically in
full service acute care hospitals
and carefully selected ancilliary
healthcare enterprises which augment
the core hospital infrastructure.
SPECIALISED
ADMINISTRATION AND
LOGISTICAL SERVICES
HOSPITALS
( TERTIARY CARE)
EMERGENCY MEDICAL
SERVICES
DIALYSIS
CENTRES OF
EXCELLENCE
DIAGNOSTICS
NETCARE HOSPITAL
GROUP
SPECIALISED MEDICAL
SERVICES
PUBLIC PRIVATE
PARTNERSHIPS
HOSPITALS
50%
NRC (3) – 50%
TRAUMANET
RADIOLOGY
UNIVERSITAS
STORKS NEST
LODOX (1) – 30%
COMMUNITY
HOSPITAL GROUP (1)
– 43,75%
PELONOMI
BRONKHORSTSPRUIT
ENDOMETRIOSIS
INSTITUTE
AMPATH (3) – 50%
EMS
TOGA – 50%
BREAST CARE
CENTRE
EPILEPSY
MONITORING UNIT
GENEPATH
10%
10% (1)
GENECARE
40%
MENOPAUSE
CLINIC
PRIMARY CARE
RADIOTHERAPY
MEDICROSS
80%
PHARMACY
PHARMACROSS
TRANSPLANT
80%
HIVCARE
DIALYSIS
INTERNATIONAL
RADIOLOGY
7
Annual Report 2003 / corporate structure / continued
A platform for future expansion and growth.
INTERNATIONAL
INFORMATION
TECHNOLOGY
NETCARE UK
TRIDATA
NETDOC UK
DHS (2) – 18%
STRATEGIC HEALTHCARE
INVESTMENTS
EDUCATION
TSHEPO PHARMACEUTICALS (3) – 50%
NETCARE
TRAINING ACADEMY
NETPARTNER (1) – 48%
NURSING
EMS
PROMETHEUS
CME
HOSPITAL
ADMINISTRATION
Note: unless otherwise stated, 100% owned
(1) Equity accounted
(2) Investment accounted
(3) Proportionately consolidated
(4) Varying interests held or management and logistical services provided
PROPERTY SERVICES
TENANT RENTALS
COMMISSIONING &
DEVELOPMENT
CLINICAL PARTNERS
TRAVEL CLINICS – 74%
NETCARE
MIDDLE EAST (4)
MANAGED CARE
8
Annual Report 2003 / chairman’s statement
MICHAEL I SACKS / CHAIRMAN
The Group delivered exceptional results in
introduction / I have great pleasure in setting
out my report for the 2003 financial year. Netcare
both its core operations and its more
has once again performed exceptionally well
and has recorded good progress in a year often
recent international activities.
beset by unpredictable economic and industry
uncertainties.
corporate review / Creative thinking and
strong commitment towards an ultimate goal are
what turn companies like Netcare from a small
business into a market leader, a leader that has
the initiative and enterprise to remain the best.
It is seven years since the Netcare Group was first
constituted in 1996. Despite South Africa’s
transforming socio-political and socio-economic
landscape as well as private healthcare industry
challenges, Netcare has not only become South
Africa’s
largest
publicly-owned
healthcare
institution, but also its public ownership has
evolved to comprise a typical profile of South
African citizenship, which includes many of South
Africa’s leading investment and broad-based
empowerment and community institutions.
The growth and progress of the Netcare Group
since its inception have resulted in Netcare
Creative thinking and strong commitment towards
an ultimate goal have positioned Netcare at the
forefront of the Private Healthcare Industry.
services and healthcare products being regarded
as an integral part of South African society, a
status recognised with a deep sense of honour
and responsibility.
9
Annual Report 2003 / chairman’s statement / continued
The 2003 financial year was a year of sound
Furthermore, Netcare will strive for above average
growth in both the Group’s core operations and
results and seek to attain the highest goals in
its more recent international activities. It was also
efficiency and patient care. Netcare, consistent
a year of significant investment in industry-
with our principal doctrine, will continue to work
related opportunities, all of which were pursued to
in partnership with doctors and patients to
ensure Netcare’s place at the forefront of
provide effective solutions that meet their
requirements. We will also create partnerships
healthcare delivery.
with our employees, recognising their commit-
financial performance / Netcare’s growth in
ment, stimulating their imagination and will be
market share, its growing contributions from
guided by their ideas and insights.
strategic business units (excluding Traumanet this
Finally, we will constantly monitor developments
year) and the improved earnings of associates, all
in
translated into a growth in headline earnings per
standards, systems, treatments and medical
share of 25,1% for the year under review.
technology which we see as an integral feature of
Profits attributable to ordinary shareholders
increased by 24,9% from R526,0 million to
R657,1 million.
the
info-tech
domain,
new
generation
our deliberate objectives for good governance,
success, leadership and entrepreneurial spirit.
the economic debate / During the year,
private
continuing strategy / Apart from the
hospital
groups
continuously
faced
challenges regarding increases in hospital costs.
Group’s core hospital business, Netcare has for
The challenges were substantially rooted in
several years followed a strategy of investing in
medical scheme reports that the increased spend
service
its
on hospital services were a material cause of
integrated healthcare delivery model and which
increased healthcare premiums. The reports,
support the core hospital business. Having
however, failed to concede that the increases were
substantially developed and completed the
not necessarily pricing related, but were rather the
broader framework of this model during the year
result of more people being admitted to hospital
with the constitution of Netpartner Investments
for plausible reasons.
Limited, the Group will now progress in elevating
These reasons include greater utilisation by an
the character and quality of the Group’s products
aging insured population and the already high and
and standards as well as its management and
escalating incidence of trauma-related hospital
application.
admissions.
components
complementary
to
10
In addition, because of a myriad of “cheaper”
should the proposed pricing structures undermine
products, often with inadequate cover for
existing levels of reward, some turbulence could
preventative care, patients, when admitted to
be experienced in healthcare markets until
hospital, are now generally more seriously ill and
methods for equalisation of income have been
require more intensive and costly treatment. It
achieved.
should be noted that hospitals provide very few
services without instruction and authorisation
from
healthcare
professionals
and
medical
schemes respectively.
Having regard to Netcare’s early appreciation of
the unsustainable nature of existing fee-forservice reimbursive models, Netcare has pioneered
and promoted the greater use of “per diem” tariffs
With increases in Netcare hospital tariffs for 2003
for hospitalisation. It is pleasing to record that the
of approximately 10%, the general assertions of
use and application of these tariffs by medical aid
increases
being
schemes increased significantly during 2003 to
attributable to increased hospital costs, are
the extent that from November 2003, nearly 70%
simplistic and misguided analyses. Healthcare
of Netcare’s hospital billing to funders will be
(medical aid insurance) premiums nevertheless
effected on this basis.
in
healthcare
premiums
continued to escalate at rates of between 14%
and 20% against average healthcare provider
inflation of approximately half these rates.
According to Medical Schemes Council reports,
apart from allocations required for “reserving”, the
HIV/AIDS / The HIV/AIDS pandemic poses
major challenges for civil society in South Africa in
general but, more particularly, imposes an
immense burden and responsibility on the
government of our country.
increased premiums seem to be absorbed by
soaring costs of administration and in many cases
uneconomical case management superintendence
Government and donor agencies should include
private sector provider networks for the effective
implementation of any proposed distribution and
and marketing commissions.
dispensing processes. Netcare, with its extensive
During the past year, private hospital groups also
national footprint, is well positioned to form part
grappled with the potential consequences and
of such a provider network.
uncertainties
posed
amendments
expected
by
several
to
be
regulatory
implemented
during 2004.
It is encouraging that there seems to be a gradual
but growing trend for private sector institutions,
corporates and employers, suffering the impact of
At the time of writing this report, the regulations
HIV/AIDS in their own operational productivity, to
applicable to single exit pricing on pharmaceuticals
move
had not yet been announced. It is expected that,
medication as part of their labour equity policies.
towards
providing
treatment
and
11
special highlights this year / Netcare has
Health. Netcare has since been awarded several
an impressive record of annually posting a number
more “Waiting List” initiatives, the proficient
of unique achievements. This year is no exception
fulfilment of which have positioned Netcare for
and I would like to briefly highlight some of these
contracts in the more recent NHS Independent
special accomplishments:
Sector Treatment
● During the 2001 financial year, Netcare
programme. I am proud to record that Netcare
acquired the Medicross Healthcare Group, a
is the preferred bidder in two significant ISTC
network at the time of 53 family healthcare
contracts, the aggregate value of which could
centres,
be in excess of R1,4 billion (£114m) over a
which
had
consistently
incurred
Centre
(“ISTC”)
tender
significant losses throughout its 11 years of
period of five years.
existence. Netcare together with Medicross
My congratulations to the entire UK Project
management swiftly addressed the issues
Team, but more especially to my colleague,
within the Medicross business model and
Dr Richard Friedland, who has selflessly devoted
elevated the Group’s status as a superior
himself to this most compelling assignment.
facilitator within the healthcare delivery chain. I
● After several years of engagement with
am therefore pleased to report an EBITDA profit
Provincial
for 2003 of R63,9 million by the Medicross
association
Group in its first settled financial year of
partner, Community Healthcare, concluded a
operations under Netcare’s ownership.
Public Private Partnership (“PPP”) with the Free
I thank Dr Elbert Steyn and his team for their
State Department of Health for the co-location
special efforts in the transformation of this
of certain private healthcare facilities at
business unit and congratulate them on their
Universitas
excellent results.
Bloemfontein. Phase I of the project has
● During November 2002, the Group’s United
Health
with
and
executives,
its
black
Pelonomi
Netcare,
in
empowerment
Hospitals
in
recently been completed, with the reciprocal
Kingdom subsidiary, Netcare UK Limited,
public and private benefits already evident.
secured a contract to perform approximately
I take this opportunity to congratulate and
1 000 cataract procedures for patients of the
compliment the Premier and MEC for Health of
National Health Service (“NHS”). The successful
the Free State for their vision and courage in
execution of this contract resulted in an official
promoting the project. The project is the first of
record in the British House of Commons, that
its kind in South Africa and an example of what
Netcare’s model for such healthcare services be
can be done by embracing the support and
adopted as Best Practice by its Department of
good faith of private healthcare providers.
12
Netpartner’s stakeholders
● Perhaps the most important highlight of the
will ensure a more
year has been the conception and successful
incorporation
affordable quality private
healthcare service to
of
Netpartner
Investments
Limited (“Netpartner”) at the end of the
financial year. Having been invited by the South
African Managed Care Co-operative (“SAMCC”)
to participate in the Netpartner project,
Netcare has played a significant facilitating role
more people in South Africa.
in its formation.
The Netpartner project was initially motivated
by the leadership of the SAMCC wishing to
address the unsustainable nature of South
Africa’s present fee-for-service reimbursement
model. The SAMCC concluded that the present
model not only inhibits membership growth
from all communities, but more particularly
undermines the career prospects and long-term
professional security of medical professionals in
South Africa.
The positive response by medical professionals
to the private placement of Netpartner shares
was
remarkable
opportunities
and
presented
the
by
compelling
Netpartner’s
stakeholders should ensure a more affordable
quality private healthcare service to more
people in South Africa.
Netpartner is a significant development for
South
African
private
healthcare
and
I
compliment my colleague and the Chief
Executive Officer of Netcare, Dr Jack Shevel, for
his vision, energy and formidable leadership in
this matter.
13
black economic empowerment / Netcare
community activities and charitable fund-raising
is committed to promoting and encouraging the
endeavours. At the heart of these activities is our
participation of previously disadvantaged South
desire to live our values and to make a
Africans in the healthcare industry. To this end,
contribution to communities where Netcare
Netcare has promoted the establishment of a
operations are located and beyond. Netcare has
black-owned
group,
always believed in enriching the communities
Community Healthcare Holdings (“CHH”). CHH
which are served and strives to instil this tradition
has in a relatively short time assembled not only
within the executive management as a standard
an impressive and profitable group of six hospitals,
of good corporate citizenship.
including the PPP in Bloemfontein, but now also
We believe it is important to be continuously
has interests, with Netcare’s support, in Lodox,
aware of our corporate role in South Africa, and to
Tshepo
Hospital
contribute towards maintaining and developing
other
the welfare of our society. This sense of
Products
private
Pharmaceuticals,
and
healthcare
Phambili
Netpartner.
Several
propositions are currently being considered.
responsibility runs through the whole Netcare
Black economic empowerment receives high
Group.
priority in all aspects of Netcare’s business
Our contribution to indigent patients through our
operations and several initiatives are currently in
medical emergency services business, Netcare 911
process to expand black economic empowerment
(“Traumanet”), is an example of our sense of
in procurement criteria, joint ventures and in
obligation to the community. Notwithstanding
models for equity participation.
the losses incurred through the provision of these
During the year, as part of Netcare’s Corporate
emergency services, the prompt response, the
and Social Responsibility programme, Netcare’s
quality and the reliability of this utility will remain
Corporate Finance team voluntarily provided
the emblems and ethos of our responsibility.
support and consultancy services in several black
Corporate citizenship at Netcare is based broadly
empowerment ventures. Encouragingly, the launch
on three primary principles:
of Netpartner resulted in 32% of the initial
● Living our vision and values in everything
subscriber
base
being
from
previously
disadvantaged communities. This amounts to an
effective BEE shareholding in Netpartner in the
order of 25%.
corporate citizenship / Netcare recognises
we do;
● Empowering our executive management to
make a difference in their communities; and
● Protecting the environment as a responsible
member of the global community.
that it has broad responsibilities about how it
More detailed information on Netcare’s corporate
manages itself as a company. In this regard,
citizenship
Netcare has facilitated a wide range of important
separately on pages 62 to 67.
and
responsibility
is
provided
14
where to from here / Netcare does not
our hospitals, our clinics and our family health
intend to change its objective of service
facilities.
excellence. At the same time, the business is
evolving not only as a result of its substantial
value in capital assets but more as a consequence
Their loyalty and support of the Netcare Group is
gratefully
acknowledged
and
sincerely
appreciated.
of its intellectual capital. Given the advantages
and the opportunities arising from both of these
asset classes, each will be effectively employed in
the years ahead.
In addition to our medical professionals, we have
outstanding
nursing
staff
who
perform
exceptional work in our wards, theatres, trauma
units and other centres of excellence. In paying
Consistent with Netcare’s culture of passion and
energy, innovation and technology will continue
to be the means and thrust by which Netcare will
model its future growth and strategy.
Notwithstanding all of this, Netcare is mindful
that challenges abound in every area of our
industry. We will face them with confidence and
will continue to maintain our differentiating
culture of patient care, our operational efficiencies
and our commitment to stakeholder value.
tribute to our nurses, I also express my heartfelt
gratitude to an excellent Netcare operational and
management staff for their valuable efforts during
the year and for their loyalty and commitment to
the business.
In conclusion, I take pleasure in conveying my
sincere thanks to my colleagues on the board of
directors for their productive efforts and beneficial
contributions to this year’s successful results, with
a special word of appreciation to our Chief
With the intended introduction of Statemed in
Executive Officer, Dr Jack Shevel, for his inspired
2005 signalling a move towards mandatory cover
operational leadership and enterprise. I also wish
for all employed people, we are certainly entering
to thank our Netcare non-executive directors for
an exceptionally exciting period in private
their effective analyses, their wisdom and
healthcare in South Africa.
informed judgements in all corporate deliberations
acknowledgements / The Netcare Group is
and board participation.
at the forefront of the private healthcare industry
in South Africa, and the health services provided
are a fundamental feature of the human
experience. Accordingly, Netcare recognises its
privileged status of having respected medical
practitioners, specialists and medical associates
Michael I Sacks
who provide those extraordinary services within
Chairman
15
Annual Report 2003 / key leadership strategy # 1 – best patient care
16
Annual Report 2003 / chief executive officer’s review
DR JACK SHEVEL / CHIEF EXECUTIVE OFFICER
The Group is well positioned to compete
The year ended 30 September 2003 has been a
optimally in the evolving healthcare
completion of the supply chain infrastructure that
environment in South Africa, and in
selected markets abroad.
watershed period for Netcare, characterised by the
feeds into our hospital network, effectively
enhancing the core business and providing
opportunities to extract maximum value from our
investments. With all components of a full service
provider network in place, the Group is now well
positioned to compete optimally in the evolving
healthcare environment in South Africa. Not only
does Netcare have the capacity and scope to offer
the people of South Africa access to affordable,
high quality private healthcare facilities, but the
Group also has the critical mass to play a leading
role in the transformation of the sector.
At the close of the period, Netcare’s business
comprised the ownership and management of
45 full service acute-care high-tech hospitals;
18 same-day surgical units; 61 specialised medical
units; 92 Medicross primary healthcare and dental
facilities (including owned and contracted); and
the private emergency medical assistance service
provider, Netcare 911. The Group also owns or
has interests in 38 renal dialysis units; seven
● Market share growth across all divisions
● Netpartner completes Integrated
Healthcare strategy
● Netcare International establishes UK
platform
● Netcare receives highest quality rating
radiotherapy centres; 11 SAA Netcare Travel
Clinics and 88 retail pharmacy outlets. Pathology
is facilitated by Ampath’s national network while
radiology is offered in all hospitals and selected
Medicross centres.
The Group, its subsidiaries and associates employ
approximately 18 800 people and are supported
by an estimated 2 500 specialists, collectively
treating more than 20 million patients every year.
17
Annual Report 2003 / chief executive officer’s review / continued
completing the puzzle / The single most
London office was established last year, and
important development during the reporting period
positioned the Group well to tender for initiatives
was the formation of Netpartner Investments
launched by the United Kingdom’s National
Limited (“Netpartner”) – South Africa’s first multi-
Health Service (“NHS”). The initiatives aim to
disciplinary managed care provider network
address the long list of patients waiting for
comprising doctors, specialists and dentists across
specialist treatments by contracting the services
the
of external healthcare providers.
country.
Netpartner,
which
owns
approximately 7% of Netcare and a 20% equity
stake in Medicross, will benefit from full access to
the Medicross infrastructure and the Group’s
management capabilities. Netcare has a 48,4%
equity interest in Netpartner.
Our bids for four of the short-term NHS Overseas
Clinical Teams initiatives were successful, with the
contracts for three of them being completed
during the reporting period. The fourth contract
commenced in October 2003 and is scheduled for
By leveraging economies of scale, Netpartner
plans to offer medical schemes innovative
managed care products to both their existing
members and to presently uninsured markets,
bringing “Better Care to More People”. Further
details of the history and full strategy of
Netpartner are provided on pages 42 to 47.
completion in April 2004.
The Group is also the preferred bidder on
independent sector five-year contracts for two of
the NHS’ Independent Sector Treatment Centres
(“ISTC’s”). These modern, patient-centred surgical
centres, will deliver scheduled care in a nonemergency environment over a five-year period.
Importantly, the higher patient volumes emanating
from Netpartner should warrant reduced tariffs and
administrative costs, which will facilitate the
delivery of first world medicine at affordable prices.
Netcare anticipates further opportunities in the UK
market going forward as the NHS is committed to
increase its healthcare spend from £63 billion to
£87 billion over the next three years.
From Netcare’s perspective, Netpartner represents
the final piece of the strategy to offer a
comprehensive range of services. As such, the
venture has cemented the foundation phase in
Netcare’s
development,
ensuring
a
strong
platform from which to launch our new,
innovative managed care products.
strong performance overall / With the
exception of Traumanet (owner of the Netcare 911
brand), every division within the Netcare Group
turned in a solid performance and contributed to
Group profits during the year under review.
As a result, the Group once again achieved
substantial organic growth, leading to a compound
pioneering a profitable path to the
annual growth rate in EBITDA of 43,3% since
global market / Another key development this
1997. Headline earnings per share rose by 25,1%
year involved the realisation of our ambition to
to 45,9 cents with a six-year compound annual
take the Netcare brand of care abroad. Netcare’s
growth rate of 36,2%.
18
Ongoing improvements in hospital operating
efficiencies led to further increases in hospital
division operating margins from 18,6% to 20,0%,
contributing to this year’s operating profits for the
93% of all funds paid to providers.
A determination to be the leader in three aspects of
the private healthcare sector overlays the Group’s
strategy. This is given substance through the
Group increasing by 30,0% to R1 017,9 million
application of three value disciplines to everything
(2002: R783,1 million). Earnings attributable to
we do – namely customer intimacy (doctor
ordinary
relationships), best and safest product (patient
shareholders
rose
by
24,9%
to
R657,1 million.
care and leaders in technology) and operational
Our debt : equity ratio of 28,7% was well below
efficiencies (lowest cost provider of quality care) –
the Group’s self-imposed limit of 50%. This was
all of which are supported by a fanatical attention
despite our significant investment activities,
to detail.
most of which relate to expansion/upgrade
projects at our tertiary healthcare facilities in
high growth areas to ensure that world-class
standards are maintained. Capital expenditure
for the year, including maintenance and renovation
projects, amounted to R425,1 million (2002:
● Customer intimacy
Our quest to forge strong relationships built on
trust with our supporting doctors underpinned
Netcare’s
integral
establishment
of
involvement
Netpartner. This
in
the
initiative
acknowledges the pivotal role played by general
R366,1 million).
practitioners in delivering appropriate and costeffective
value
disciplines
augment
healthcare:
in
essence,
general
strategic
practitioners are the gatekeepers for containing
focus / Since the Group’s inception, Netcare’s
healthcare costs while keeping patients healthy,
focused strategy has been to become an
and deserve to be rewarded more appropriately.
integrated healthcare services organisation by
Netpartner also aims to retain both GPs and
investing in all elements of healthcare that
specialists in South Africa.
directly or indirectly support our core hospital
With this in mind, Netpartner will utilise the
business. The fulfilment of this strategy has
experience
resulted in a national footprint of comprehensive
Medicross and Netcare to expand capitated
hospital services and an associated network of
products beyond the current 40 000 lives presently
healthcare providers who offer the full continuum
offered by ten medical schemes, by reaching low
of healthcare services.
income earners in the corporate sector. This, in
The net result is an integrated delivery model
turn, will enhance Netcare’s significant investment
with the potential to continually increase the
Group’s product offering and supply a greater
and
technology
developed
by
in the private healthcare sector and position the
Group to offer a full range of services.
percentage of the healthcare rand spend. At year-
Likewise, several initiatives have been put in place
end, Netcare was in a position to contract for
to expand the Medicross concept. These include:
19
● A virtual Medicross model that delivers
was maintained at 93% throughout the reporting
administrative services to general practitioner
period. The score for nursing, 93,8%, was the
group practices. Approximately 114 doctors
highest among the various aspects of customer
have taken advantage of the service to date and
satisfaction
now form part of the Medicross network.
independent comparative survey conducted by
● Developing an external dental network to
being
rated.
Furthermore,
an
TWIG SA ranked Netcare above its peers in all
facilitate the delivery of Medicross’ managed
aspects of nursing care.
care products over a larger geographic area.
The major contributor to these achievements is
153 dentists are part of the network, and are
Netcare’s exclusive GoldCare Service Excellence
reaping the benefits of shared buying power.
programme (“GoldCare”), which was launched in
Medicross is currently developing an external
our hospitals during February 2002 and has since
general practitioner network in conjunction with
been rolled-out across the Group. A world-first,
existing Independent Practitioner Associations
GoldCare was developed by behaviour modification
(“IPAs”)
the
experts with the objective of recognising,
Netcare/Medicross managed care products on a
motivating and rewarding staff for delivering best
broader national basis.
patient care. The programme is run independently
to
facilitate
the
delivery
of
An additional 95 specialists relocated their
by the developers to ensure its objectivity.
practices to Netcare hospitals during the year. To
More than 98% of our staff have joined the
further
our
GoldCare programme since its inception and over
partnership between Netcare and the doctor
90% have received GoldCare rewards. The
network, we have established a physician advisory
enthusiasm with which GoldCare has been
board
has
embraced and the consistently high satisfaction
representation at hospital, regional and national
ratings resulting from the programme, have
level. The PAB plays an important role in ensuring
confirmed our belief that investing in people is
high ethical and nursing standards for the delivery
vital to the Group’s success.
of quality healthcare.
We also believe that people perform to their
enhance
(“PAB”)
communication
infrastructure
and
that
● Best and safest product
As a Group, Netcare strives to be differentiated in
the marketplace through the delivery of “Best
Patient Care” to the patients treated within our
healthcare facilities. We monitor our progress
towards achieving this ideal through independent
research surveys that use diverse media channels.
potential when motivated and fully equipped to
do so. Accordingly, we invested R84 million during
the year in training and skills development
initiatives and continually encourage our staff to
further their education so as to enjoy personal and
career growth. In addition, we consciously
endeavour to keep pace with technological
advancements in medicine and this year invested
Building on the dramatic improvement of the
more
prior year, our overall customer satisfaction rating
technology and medical equipment.
than
R230
million
in
leading-edge
20
Best and safest product,
● Operating efficiencies
customer intimacy and
We continue to focus on optimising operational
efficiencies within our hospitals to maximise the
return on our investment. Innovative use of
operational excellence form
advancing technology plays a key role in realising
this ambition, with information technology and its
associated electronic communication abilities and
the cornerstone of the way
control mechanisms having vastly improved
efficiency levels throughout the Group.
we conduct our business.
As Netcare’s business model has a predominately
fixed cost element, incremental volumes result in
higher margins. Netcare has always been prepared
to exchange part of this additional margin in
response to higher utilisation.
While certain activities, such as purchasing, are
centralised, the divisional structure is decentralised
to allow for devolution of responsibility and
accountability to the lowest levels. A range of
devices and processes are, however, in place to
facilitate daily management of issues within a
total admissions
controlled framework.
8,6%
2002
2003
Conscious effort is made to identify problem areas
as well as new developments that may leverage
greater improvements in operational efficiency.
Among the initiatives piloted during the reporting
778 459
845 614
period were the linking of our biometric hand
reader, Chronos time-keeping system, Vision
payroll system and our hospital information
patient care rating
92,8%
system so as to measure the correct acuities and
skills mix more efficiently. This will generate
additional savings in the future.
Activity based costing will be implemented during
the course of next year to provide valuable data as
we adopt an increasing percentage of alternative
re-imbursive payment methods.
21
Together with initiatives introduced in prior years
and Netcare. The venture entails the co-location
and increased volumes, these new projects have
of public and private healthcare facilities at the
contributed to further growth in the hospital
Free State Department of Health’s Universitas and
division’s EBITDA margins from 21,8% in 2002 to
Pelonomi Hospitals in Bloemfontein.
23,2% in 2003.
CHH’s current 5% interest in Netpartner, together
governance / The Group is committed to
upholding the sanctity of life and exceeding the
with almost a third of Netpartner’s shares being
owned by previously disadvantaged individuals,
bodes well for Netpartner’s strategy going forward.
expectations of each and every patient, whose
care is our primary concern.
outlook / The foundation of Netcare’s vision,
Netcare adheres strictly to the principles of
strategy and operating philosophy has always
corporate governance advocated by the King II
been that “pre-emption is better than cure”.
Report
notably
The Group’s capacity to not only anticipate trends
integrity, transparency and accountability, and
with reasonable accuracy but also to proactively
on
Corporate
Governance,
prides itself on the highest ethical standards.
develop structures and solutions to maximise its
participation in the changing market, continues to
Our principal strengths are our medical specialists
position the group favourably.
and our staff whom we value highly and will strive
to support in their personal and professional
development. Honesty and integrity, teamwork,
consultation and respect for others are the core
human values which are apparent in our dealings.
Netcare’s evolutionary development over the seven
years since listing on the JSE has not waivered
from the path chosen at the outset, namely to
develop an integrated healthcare delivery model
around the core hospital business to:
empowerment partners / Netcare is com-
● Deliver best patient care;
mitted to the promotion of black empowerment
● Attract new insured lives;
enterprises within the healthcare sector and
remains integrally involved with Community
Healthcare Holdings (“CHH”), South Africa’s first
● Change the re-imbursive method;
● Offer a full range of services; and
● Align the interests of all parties.
Having
wholly-owned black healthcare group.
CHH has continued to make considerable progress
during the reporting period.
acquired
or
launched
the
various
components required for such a model, the Group
has set the stage for sustainable growth in the
future. The key drivers for this growth include
CHH’s growth strategy includes actively pursuing
opportunities to expand our business internationally
Public Private Partnerships (“PPP”) opportunities
by consolidating and building on our relationship
through
provincial
with the NHS, and continuing to market and
authorities and participation in standard tender
utilise our intellectual capital in emerging private
procedures. These efforts were rewarded during the
healthcare
year with the award of the first true healthcare PPP
governments are seeking to establish partnerships
in South Africa to a consortium comprising CHH
with the private sector.
discussions
with
various
markets
and
in
areas
where
22
Within South Africa’s borders, the advent of
The inefficient fee-for-service model is gradually
Netpartner has realised Netcare’s long-stated
being replaced with alternative re-imbursive
desire to institute a national network of providers.
models, which Netcare has pioneered with great
The initiative provides vast opportunities to
success through its capitated products in Medicross
deliver improved levels of healthcare to more
and the integrated model of Clinical Partners.
people at more affordable prices, with inherent
In
benefits to patients, private and public healthcare
professionals, the Group can now offer a full range
providers and funders. The Netpartner model and
of healthcare services to almost 80% of the insured
its potential to change the reimbursement
population on a national basis. This favourable
methods, will benefit all stakeholders in the
positioning will see the development of numerous
healthcare industry.
preferred provider products in the future with the
The new management team in place at Traumanet
will focus its attention on Netcare 911 in the year
ahead to reduce the losses and achieve a break-
partnership
with
Netpartner
healthcare
ultimate objective of making private healthcare
more affordable to more people of South Africa.
The proposed implementation of Statemed during
2005, with approximately 1 million new, uninsured
even position over the next two years.
public sector employees and their dependants,
As in prior years, advancements in information
technology are expected to yield good growth
going forward. The convergence of electronic and
digital technology is already paying dividends,
with good progress having been made by Netcare
in terms of e-billing since August 2001. At yearend, 41% of the Group’s claims (valued for the
year at just over R1,4 billion) were transacted
electronically
with
ten
medical
presents the Group with a significant opportunity
for growth.
Netcare remains confident that, as with other
healthcare reforms introduced over the past seven
years, it will adapt its model and continue to
provide acceptable shareholder returns without
compromising on its delivery of exceptional
service to its patients and customers.
scheme
administrators.
prospects / With the solvency of Medical Aid
Schemes being better than ever and single
digit provider medical inflation anticipated to be
the lowest in a decade, the private healthcare
Accordingly, in the absence of any unforeseen
circumstances, the Group believes that its business
model is balanced and sound and that Netcare will
continue to generate satisfactory increases in
earnings in the year ahead, with meaningful
returns for all stakeholders.
sector is well positioned to benefit from
increasing numbers of insured lives. Several new
legislative changes will be implemented, with
single exit pricing on ethicals due to be finalised
Dr Jack Shevel
by May 2004.
Chief Executive Officer
23
Annual Report 2003 / key leadership strategy # 2 – customer intimacy
24
Annual Report 2003 / chief operating officer’s review
DR RICHARD FRIEDLAND / CHIEF OPERATING OFFICER
The Group’s strong performance was
The Netcare Group delivered significant organic
growth during the period under review. Operating
largely underpinned by growth in market
share and the introduction of effective
operational efficiencies.
profit improved in all divisions with the exception
of Traumanet. This Group performance was
delivered despite pressure on margins due to
improved staff benefits and the deflationary
impact of the stronger rand on the hospital
division. Substantial gains in market share were
also recorded, notably in the hospital operations,
Medicross, the diagnostics division (which includes
Ampath), Netcare 911 (“Traumanet”), SAANetcare Travel Clinics and National Renal Care.
Patient care levels continued to improve due to
renewed focus on our Best and Safest Product
leadership strategy.
The development of opportunities in the United
Kingdom
has
confirmed
the
potential
for
significant growth offshore in the medium- to
long-term.
The core hospital division continues to be the
The number of doctors associated with the
Netcare hospitals grew meaningfully over the
past year, confirming the direct and measurable
benefit of Netcare’s doctor-centric strategy.
major contributor to the Group, both in terms of
revenue and EBITDA. In 2003, the division contributed 76,9% of revenue (2002 Proforma: 78,2%)
and 88,5% of EBITDA (2002 Proforma: 87,2%).
25
Annual Report 2003 / chief operating officer’s review / continued
core hospital operations / During the year
The growth in operations led to strong financial
Netcare’s Hospital Division cared for more than
results during the year with revenue increasing by
845 000
comprises
15,8% and operating profit rising 24,6%. EBITDA
63 hospitals and clinics owned and managed by
margins expanded from 21,8% in 2002 to 23,2%
the Group. The hospitals are equipped with more
in the current year.
patients.
The
division
than 7 200 beds (over 15% of which are high care
and intensive care), 319 operating theatres,
34
accident
and
emergency
units
and
Continued focus on operational efficiencies,
including an ongoing review of key processes
and
efforts
to
maximise
the
benefits
of
61 specialised medical units, and are supported by
digitisation, produced considerable cost-savings.
approximately 2 500 medical specialists.
These include:
● The successful integration of the “Hands on”
strong
performance,
operationally
and
financially / The operational performance of the
hospital division remained strong, with all key
activity indicators reflecting encouraging growth
in a static insured market.
Total casualty patients treated in the Group’s
accident and emergency units increased by
11,1%. Total in-patient admissions increased by
1,8% with admissions increasing by 2,4% into
general wards, 6,0% into maternity and by
time and attendance management system,
with a new Human Resources system, “Vision”,
across the hospital division. This is aimed at
reducing absenteeism levels, improving the
nursing skills mix and enhancing the accuracy
and integrity of the payroll; and
● Restructuring of the management team and
regional structures yielding a more streamlined
coastal division (comprising KwaZulu-Natal and
the Cape).
8,0% into ICU/High Care while the number of
Increased compensation and benefits for nurses
births increased by 7,4%. This resulted in the
together with reduced SETA refunds and the
average length of stay (“LOS”) increasing by 1,9%
chronic shortage of ICU personnel resulted in
from 3,14 days to 3,20 days. The overall net result
was an encouraging 3,5% increase in patient days.
unexpected interim salary increases.
The change in case mix, greater productivity,
The number of doctors associated with the
improved payroll management in the latter six
Netcare hospitals grew meaningfully over the past
months and the effects of improved buying
year, confirming the direct and measurable benefit
strategies had a positive impact on EBITDA margins.
of Netcare’s doctor-centric strategy.
26
Capital expenditure amounted to R425,1 million
specific needs. Good progress has been made in
for the year, 66% of which was invested in
this regard, with alternative reimbursement
revenue-generating
facilities.
Importantly,
models scheduled to be in place for nearly 70% of
R41,2
spent
Information
the funders before the end of 2003.
million
was
on
Technology, the details of which are discussed
later in this report. For selected information on
medicross / The Medicross brand of primary
the specific expansion areas, please refer to the
healthcare is a household name across South
Property Division section contained on page 37 of
Africa, and comprises multi-disciplinary primary
this report.
care and dental centres around the country
complemented in selected cases by pharmacies
focusing on best and safest product / Patient care
and day-theatres. The professional resource base
levels have improved significantly, resulting in
associated with the brand comprises 325 general
patient satisfaction levels increasing to 92,8%.
practitioners and 145 dentists.
Several upgrade projects were undertaken at
The past year saw the roll-out of the Medicross
various hospitals during the year, adding a further
strategy to increase the number of practitioners
nine operating theatres, four specialist units,
and offer its administrative services without
157 beds and 95 doctors’ consulting suites to the
incurring the capital expenditure associated
Group’s offering. Among the more significant
with new buildings or centres. Medicross now
developments was a multi-component R41,6 million
comprises 92 centres owned and administered,
refurbishment
Sunninghill
which includes 153 dentists and 114 general
Hospital, north of Johannesburg, designed to offer
practitioners in 36 practices benefitting from
patients increased access to superior levels of
Medicross’s systems.
and
upgrade
at
cardiac and maternity care.
The Netcare GoldCare programme was launched
alternative reimbursement models / The results
at Medicross during March 2003 in a quest to
of one-to-one pricing negotiations between
improve customer service levels and yielded an
Netcare and each of the funders in the healthcare
increase in overall national patient care results
industry, became effective in January 2003.
from 89% to 91%.
The
process
provided
the
opportunity
to
financial turnaround continues / The financial
accelerate alternative reimbursement models with
turnaround of Medicross since its acquisition by
the various funders, tailored according to their
Netcare in 2001 has continued during the reporting
27
period. The organisation has again outperformed
● Netcare Managed Care Direct (the Network
expectations by posting a 16,3% increase in
Company) – a managed care company which
revenue and an increase of 36,7% in EBIT.
will implement and administer new managed
These results highlight the growth experienced
across the organisation during the period as well
care products and services for medical aid
schemes.
as improved operational efficiencies. Patient visits
This contract will enable Medicross to increase its
grew by 16,7% to 2,75 million for the period,
service offering to a bigger and broader customer
with dispensed prescriptions rising by 11,9%.
base. The expected entry of approximately
Importantly, the number of generic scripts increased
480 000 civil servants into the private healthcare
from 32% to 39%. The number of capitated lives
domain during 2005 also offers encouraging
managed by the organisation grew by 21,0% to
prospects for Medicross, through its management
40 121 across ten medical aid schemes.
of Netcare Managed Care Direct.
The ongoing financial benefits realised through
Medicross is targeting that a further 18 practices
the rationalisation of Medicross’ former regional
with 55 doctors utilise the services of the
office infrastructure; centralisation of the finance
organisation during 2004.
and administration functions; and decentralisation
emergency services division / Traumanet
of day-to-day management to the individual
(the owner of the Netcare 911 brand) offers fully
Medicross Family Medical and Dental Centres
integrated, world-class pre-hospital emergency
have been sustained over the past year. Access to
medical assistance, evacuation by road or air and
the buying power of Netcare’s Central Procuretelephonic medical advisory services.
ment Division has also bolstered operating margins.
exponential growth and community responsibstrategic growth opportunities / Based on the
ility to indigent patients / The number of insured
strength of the organisation’s experience in the
principal members grew 64% during the year,
management of doctor and dentist practices as
rising from 5,2 million to over 8,5 million by
well as pharmacies, Medicross has procured the
September 2003.
management contracts for:
Netcare 911 continues to perform a significant
● Netpartner Investments – an investment holding
community responsibility in providing vital and
company which intends investing in healthcare
often life-saving assistance to indigent patients.
and healthcare related enterprises; and
Increased brand awareness (082 911) as well as
28
Netcare 911 continues to
the lack of resources and budgetary constraints in
perform a significant
the state sector resulted in indigent, non-paying
patient transfers increasing by 79% during the
year. This reflects 24% of total response calls and
community responsibility in
translates into a loss of more than R39 million. The
Board, however, considers this to be a humane and
providing vital and often
important responsibility and will continue this
practice. To date, while no agreement has been
reached to recover these losses from the Provinces,
life-saving assistance to
Netcare has deemed it prudent to write-off the
above amounts as irrecoverable.
indigent patients.
The number of emergency cases attended
increased by 50% to a record 133 848 compared
to the previous year while the distance travelled by
patient-carrying transportation grew to 12 million
kilometres. Approximately 897 000 inbound calls
were received by the Global Response Call Centre
in Midrand, prompting expansion and investment
in related technology.
number of principal members – Netcare 911
2002
63,5%
2003
Netcare 911’s operational infrastructure expanded
simultaneously by 32% and additional resources
completed Netcare 911’s national footprint of
highly trained personnel and emergency vehicles.
5,2 m
8,5 m
service levels intact despite exponential growth /
Despite the higher workload, overall service levels
remained high. The first emergency ambulance was
emergency cases – Netcare 911
2002
2003
49,5%
on scene within 12 minutes in at least 90% of the
time-critical (Priority 1, red code) cases across
metropolitan regions. TWIG SA market research,
conducted monthly among Netcare 911’s user
89 530
133 848
base, revealed positive service satisfaction indices
and over-all experience ratings of 92%.
29
financial impact of exponential growth, sub-
employment and their company benefits. They are
optimal tariffs and indigent patients / The
then able to return to South Africa and inject the
continued, rapid expansion of the business, a
skills and lessons learnt back into their respective
reimbursement tariff that is both sub-optimal in
hospitals.
that it lagged the inflationary cost of providing
emergency services and is structured in an
inadequate manner to compensate for the level
and nature of services provided, coupled with an
increase in indigent patients, resulted in Netcare
911 reporting an operating loss of R33 million for
nhs projects awarded to netcare / Netcare
successfully
completed
three
Waiting
List
Initiatives for the NHS during the reporting
period and is presently engaged in a fourth
project. These have included Operation Cataract,
in which 929 cataract operations were performed;
the year under review.
Operation Joint Initiative in which 338 hip and
A new management team has been put in place
to restore the division to profitability, which is
expected to be achieved over the next two years.
netcare international division / united
kingdom / Netcare has investigated the potential
healthcare
opportunities
within
the
United
Kingdom since early-2002. After due diligence
knee joint replacements were undertaken; and
London Choice in which Ear Nose and Throat
(“ENT”) operations were performed every six weeks
over the year. Operation Portsmouth, which is
currently underway, involves 1 000 orthopaedic
operations and is due for completion in
March 2004.
studies and in-depth assessments of several
Netcare is the likely preferred bidder on two
business opportunities, a strategy of partnering
Independent Sector Treatment Centre (“ISTC”)
with the UK’s National Health Service (“NHS”),
contracts with the NHS. These contracts, which
the largest provider and purchaser of healthcare in
span a five-year period, offer guaranteed patient
the UK, has been implemented. In addition,
volumes and have a combined contract value of
Netcare has undertaken several Waiting List
£114 million.
Initiatives to gain experience in the UK market and
Financially, these contracts have been structured
to better understand the workings of the NHS.
to minimise risk and avoid large exposure to rand-
Importantly, this offshore expansion represents a
denominated costs. The total capital investment
valuable human retention strategy for Netcare.
required is £2,7 million over the five years, with
Staff are able to participate on short rotations
rand costs representing less than one-third of the
without
aggregate expense budget.
compromising
their
security
of
30
In the context of the NHS’ commitment to
netcare diagnostics / The professional practices
increase its spend from £63 billion to £87 billion
served by Ampath have gained further market
over the next three years, the UK initiatives
share,
represent a meaningful opportunity to develop a
growing more than 3,7% to an average of about
platform for growth in the United Kingdom and
15 000 requisitions per working day, which translates
Europe. They will also provide important lessons
into an estimated 64 000 procedures per working
for managing risk and disease outcomes in the
day. Importantly, the number of tests per requisi-
South African healthcare setting.
tion declined, ensuring that the commensurate
with
the
number
of
requisitions
cost to funders did not increase on a similar basis.
middle east / Following the war in Iraq, Netcare
International’s activities in the Middle East have
been limited to projects that were initiated in the
The Ampath-serviced practices remain the only
pathology group in South Africa with a truly
national footprint. The network grew in the year
early part of the year. As a precautionary measure,
under review through the establishment of
Netcare personnel were repatriated from the
operations in Bloemfontein and the expansion of
region and the contracts in Saudi Arabia and
pathology facilities and services in the Western
Bahrain
and Eastern Cape.
were
converted
to
consultancy
agreements.
In keeping with its ambition to deliver the
The continued volatility of the region has
highest possible quality product, Ampath has
compelled the Middle East Division to redirect its
implemented an accreditation process. By year-
focus to other emerging markets where Netcare,
end, more than 80% of the Group’s laboratories
together with appropriate strategic partners, can
had achieved accreditation by South African
provide professional services to both the public
National Accreditation Society (“SANAS”).
and private healthcare markets.
Staff competence and capacity have also been
enhanced by the implementation of Continuing
netpartner / Albeit that this initiative was
Professional Development (“CPD”) facilities on the
only consummated at the end of the financial
Ampath Intranet, aimed at training and upgrading
year, the benefits are expected to materialise in
technicians and technologists. The success of the
the not too distant future. A comprehensive
intervention has resulted in Ampath registering
report
intellectual property rights in respect of this
on
Netpartner
pages 42 to 47.
can
be
found
on
e-learning platform.
31
national renal care (“nrc”) / NRC remains
Besides routine genetic testing and screening
the leading Total Renal Disease Management
services, emphasis is placed on cutting-edge
Company in the private renal dialysis market
research that will provide a strong platform to
in South Africa, focusing on cost-effective
generate income from both routine diagnostics
quality renal care and outcome management,
and contract research, conducted in association
benchmarked against international standards. Six
with various academic institutions in South Africa.
additional NRC dialysis units were opened during
Genecare’s strong research component played a
the year, bringing the total number of NRC units
major role in its successful application for product
in Southern Africa to 38.
development funding to the value of R4,5 million
During the year, revenue grew by 19,2% and
from the Cape Biotech Initiative (submitted in
operating profit rose by 19,6% largely as a result
March 2003). Only seven of the 55 projects
of improved operational efficiencies introduced
submitted by various organisations were selected
during the period.
to participate in the initiative.
Start
Sample referrals rose significantly and Genecare has
Programme and its associated “Are You At Risk?”
embarked on several new initiatives which include:
campaign
● A pre-travel screening service;
The
Company’s
that
world-class
targets
Healthy
high-risk
patients,
continue to produce good results. More than
● Two off-site Genecare Counselling Clinics; and
1 000 patients have been referred to the
● A Nutrigenomics Clinic.
programme
and
benefit
from
continuous
improvement in line with new developments in
clinical partners / The healthcare management
renal medicine, evidenced by a rise in patient
model developed by Clinical Partners continues to
satisfaction levels to 96%.
deliver excellent results, as evidenced by the
Netcare Medical Scheme. The scheme’s reserves
genecare molecular genetics (“genecare”) /
far exceed statutory requirements while member
Although
development,
premium increases remain below the market
Genecare has shown good growth over the past
norm. The performance-based reimbursement
year. It is driven by a clear vision to empower
mechanism at the centre of the scheme’s
health-care professionals with the tools and
relationship
knowledge to apply genetic principles to everyday
consistently higher than BHF reimbursement rates
medicine.
for all participants.
in
early
phase
of
with
doctors
has
resulted
in
32
Strategic divisions augment
ElectCare medical scheme, which targets low
the performance of
income, uninsured employees, has experienced
significant membership growth since its inception
the core hospital business.
in July 2003. With Netcare as the preferred,
hospital provider, Electcare’s members enjoy the
most competitive contributions in the market
while the scheme’s statutory reserve requirements
are maintained. Excellent results have also been
achieved with the contracted Anglo Platinum
medical
scheme, membership
of
which
is
restricted to the mining group’s employees.
New
preferred
provider
agreements
were
concluded during the year with the Odyssey
Health, Umed and Tiger Brands medical schemes.
The Clinical Partners’ model, which was developed
in anticipation of future risk-sharing agreements
with funders, is the subject of discussions with
number of employees
various interested parties.
± 18 800
The business is expected to be not only debt-free
but also profit-generating within the first quarter
of the next financial year.
saa – netcare travel clinics / The 11 retail
SAA-Netcare Travel Clinics around South Africa
have maintained their position as leaders in a
patients seen – Medicross
2002
2003
16,7%
highly competitive market that has seen the
emergence of a large number of new entrants.
The division posted a 44,3% increase in revenue
for the year.
2,4 million
2,8 million
33
Infectious disease management and occupational
By offering direct access to the specialist services
health services to companies remain key focus
offered by the various divisions in the Netcare
areas, along with a consulting and treatment
Group, as well as its affiliate interests, all the
service to the travel and tourism industries.
workplace strategies designed by HIV Care can be
Contracts to provide medical and occupational
health services to large projects in Richards Bay
fulfilled within Netcare, ensuring clients of
maximised cost-, time- and service-efficiencies.
and Mozambique contributed significantly to the
A new HIV Care model was implemented at
division’s financial performance during the year.
Netcare during the year, with initiatives including
These projects, which vary in duration, will
the revision of the Group’s HIV Policy and its
generate revenue amounting to R39,6 million and
population among employees through Imbizo
included the Mozal and Hillside Smelter Expansion
workshops and other communication media.
Projects for BHP Billiton, the Sasol Mozambique
Natural Gas Project and the newly-acquired Sasol
Petroleum Temane Project.
development of holistic and comprehensive
programmes
HIV/AIDS-related initiatives, HIV Care has been
instrumental in updating the Sexual Assault
hiv care / Central to the HIV Care offering is the
HIV/AIDS
Working collaboratively with Netcare’s other
tailored
to
specific
industry sectors and individual businesses. These
programmes focus on the prevention of HIV/AIDS,
as well as care and support interventions for
people living with HIV/AIDS and their families.
Every effort is made to ensure synergy between
business and employee wellness objectives, as
Clinics Protocols on post exposure prophylaxis
(“PEP”) provision. Voluntary counselling and testing
(“VCT”) services are currently being piloted
through three Netcare hospitals and a 24-hour
HIV help-line has also been established through
Netcare 911. In addition, HIV Care has collaborated
with Medicross to offer HIV/AIDS services in the
private primary healthcare setting, including the
compilation of HIV treatment protocols.
well as national and global requirements for the
Despite ambitious targets and diligent efforts, HIV
management of HIV/AIDS within the workplace.
Care failed to secure significant volumes of new
Emphasis is also placed on achieving a balance
business during the year. The obstacles to progress
between the cost and the long-term benefits of
have been identified and include a general
perceived future risks.
corporate denial of the HIV epidemic, competition
34
in the corporate market, and the perceived high
In addition to facilitating transplantation, the
cost of HIV management relative to the
division is also an active participant in the Change
unquantified returns. The government’s recent
Transplant Support Group, which provides for the
approval and support for the treatment of
pre-, intra- and post-transplant emotional needs
patients living with HIV/AIDS in State hospitals is
of the transplant patient and their family.
welcomed and should pave the way for a greater
involvement
of
the
private
sector
going
radiotherapy / Netcare offers Oncology services
at seven of its facilities throughout South Africa.
forward.
These services include radiation therapy, cranial
netcare transplant division / As the leading
radio surgery and chemotherapy.
provider in the field of private transplantation,
A strong emphasis is placed on the training of
Netcare Transplant Division continues to facilitate
radiographers and physicists. Importantly, given
the range of transplantation options currently
the
available and is dedicated to mitigating the
psychological counselling is offered and units are
trauma of a transplantation episode.
kept open beyond the normal business hours to
The Transplant Division follows special policies
and procedures in accordance with relevant
emotional
nature
of
these
services,
enable treatment to be conducted at the patients’
convenience.
guidelines, government regulations as well as the
Most
Human Tissue Act.
integrated technology with verification, treatment
This
year,
the
division
co-ordinated
245 transplants and procured 168 solid organs,
108 of which led to transplantation in one of the
five Netcare Transplant Centres of Excellence, with
the remaining organs being distributed to the
state sector and other private institutions.
of
the
units
boast
state-of-the-art
planning, simulation, MRI and/or CT linked
cadplan and multi leaf collimators.
lodox / LODOX has made significant strides since
its entry into the USA market during the year. The
first LODOX unit was installed in the Shock
Trauma Unit at the University of Maryland’s
Milpark Hospital is the only facility in South Africa
Medical
offering an active lung transplant programme,
additional
successfully performing seven lung transplants
Creighton University Medical Center, the Littleton
this year, including the first bilateral sequential
Adventist Hospital and the Richland Memorial
lung transplant.
Hospital.
System
orders
in
Baltimore, while
were
received
from
three
the
35
LODOX is working with the University of
Limited (“CHH”), a 100% black owned company.
Cape Town and Groote Schuur Hospital to
CHG now owns facilities on a national basis with
enhance the unit’s functionality, develop new
exciting expansion and acquisition prospects
applications for the current technology, and
planned.
develop new products.
aggregated basis in excess of R250 million per
In a short time, LODOX has positioned the
CHG
generates
revenue
on
an
annum with an EBIT margin of 16,0%.
Company’s technology as an international leader in
Given the gearing levels of approximately
the imaging field. This, together with a dedicated
R160 million within CHG, the current declining
sales force and able research and development
interest
teams, ensures that the Company is well positioned
profitability and cash generation going forward.
rate
climate
makes
for
improved
in the trauma imaging markets going forward.
The prospects for CHG are encouraging given the
LODOX was recently awarded the Best New
Technology Award in the USA by Popular Science
Magazine.
opportunities within healthcare in SA and Netcare
and CHH’s combined commitment towards working
with government on a national scale in providing
meaningful healthcare assistance and solutions.
biopure / Despite fulfilling all marketing and
regulatory obligations for Hemopure, Biopure
Corporation has sought to terminate its marketing
agreement with Tshepo Pharmaceuticals. The matter
is now subject to legal resolution. As Hemopure is
not yet registered with the United States’ Food
and Drug Administration (FDA), pricing, sales and
marketing activities seem to have been suspended
world-wide. Netcare has not been adversely
affected in any way as a result of this development.
information
technology
/
Netcare
has
increasingly adopted IT as a key enabler in the
Group’s pursuit of customer intimacy, quality
care, and operational excellence. Today, IT is the
backbone of a digital nervous system that links
Netcare, Medicross and Netcare 911, and is
increasingly being connected with other doctors,
casualty units, specialists, funders and suppliers in
the healthcare community.
community healthcare / The Group’s strategy
The Netcare IT division achieved a number of
towards
milestones over the year:
the
empowerment
of
previously
disadvantaged communities has proved successful
● Implementation of a newer and faster Linux
with the strong performance of Community
operating system across Netcare’s Hospital
Hospital Group (“CHG”), which is the hospital
Information System. This project is scheduled
division of Community Healthcare Holdings (Pty)
for completion by December 2003.
36
We are committed to
● Implementation
working with
of
new
tariff
structures,
including the “per diem” billing system thereby
simplifying and speeding-up the accounts
Government on a national
scale in providing
management process.
● Completion of the roll-out of “Mymarket”
electronic procurement system at the larger
Netcare hospitals and at selected Medicross
sites. The system enhances efficiencies in the
meaningful healthcare
assistance and solutions.
hospital and clinic supply chains.
● Increasing the digitisation of Netcare’s casualty
units and Medicross facilities, by implementing
the Prometheus healthcare software system at
several large casualty units and selected
Medicross facilities by year-end.
● Implementation
of
a
centralised
Human
Resources management information system to
facilitate management, reporting, and support
functions. It is also focused on the development
of clinical best practices, flexible nurse staffing
models,
and
optimisation
of
employee
productivity and quality patient care; and
● Opening of new regional IT training centres in
Pretoria, Durban and Cape Town. To date, over
3 000 nurses, unit managers, doctors, specialists,
pharmacists, employees and front-office staff
have received IT training at these centres.
37
property division / Netcare Property Division offers a complete turnkey service to the facilities within and
outside the Group, both locally and abroad, including renovations, alterations, and new extensions.
The division has continued to grow and develop during the reporting period, allocating a capital expenditure
budget in excess of R140 million to upgrading Netcare facilities. The major projects completed this financial year
included:
Pretoria Region
Femina Hospital
Refurbishment of 2nd, 3rd and 4th floor wards, alterations to maternity and CSSD
R8,7 million
Pretoria East Hospital
ICU, maternity, theatres and doctors’ suites
R50,2 million
Gauteng Region
Olivedale Hospital
New NICU and two new theatres
R4,5 million
Sunninghill Hospital
Maternity, doctors’ suites, coffee shop, pharmacy and foyer
R41,6 million
Milpark Hospital
Two new theatres and renovations to San Souci
R6,0 million
KwaZulu-Natal Region
St Augustine’s Hospital
New ICU/High Care, transplant unit, CCU, parking deck, doctors’ suites and pharmacy
R26,1 million
Cape Region
Greenacres Hospital
Doctors’ suites and parking
R9,1 million
In support of Netcare’s involvement in Public Private Partnerships, the Property Division was integrally involved in
establishing private facilities at the Universitas and Pelonomi Hospitals in Bloemfontein.
Richard H Friedland
Chief Operating Officer
38
Annual Report 2003 / human resources report
HUMAN RESOURCES REPORT
We are extremely proud of again being
Good progress has been made during the past year
in building on our solid foundation in areas such as
voted one of the top 40 companies to
developing human capital, providing sustainable
remuneration and employee benefit structures, as
work for in South Africa by the Corporate
well as mechanisms to encourage, recognise and
reward excellent service and performance.
Research Foundation.
remuneration and benefits / Our remuneration structures are designed to acknowledge the
long and often unsociable hours of service delivery
required in the healthcare industry.
Having completed its third full year of operation,
Netcare’s in-house medical aid scheme – the
Netcare Medical Scheme – has increased its
reserves to more than 30% of contributions. This
has been achieved off a base of conservative
increases to employee and employer premiums of
only 9% for the second consecutive year.
Contribution increases for 2004 are expected to
be in the order of 7,5%.
Nursing and services-related training expenditure
for the year exceeded R84 million. A significant
number of our people benefited from this spend
through training courses aimed at improving skills
and service levels, which will in turn ensure the
continued delivery of excellent care in an efficient
The Group is focused on expanding training and
development at all levels in the organisation to
improve service levels, encourage personal growth
and facilitate expansion.
and friendly manner.
A tailor-made performance evaluation system,
introduced throughout the business, has provided
staff and management with the tools to identify
39
Annual Report 2003 / human resources report / continued
and measure progress towards realising key
nursing: best patient care / Independent
objectives. The system has enabled the Group to
research results show that patients consider the
base annual increases on performance-oriented
nursing care provided by Netcare superior to that of
criteria in a transparent and equitable manner.
other hospital groups. We believe this is a reflection
of a number of benefits we offer our nurses,
international experience opportunities /
The UK NHS Overseas Clinical Teams (“OCT”)
initiatives have presented superb opportunities for
many of our nursing staff to gain further
experience and share their considerable expertise
including more appropriate rotation of shifts.
Confirming that happier nurses make happier
patients, the nursing scores in our internal
customer satisfaction index surveys averaged
93,8% for the reporting period.
in several key projects.
Careful attention is also paid to Nursing Sensitive
These initiatives have also served as a staff retention
Quality Indicators that measure the quality of
mechanism as those selected to participate retain
nursing outcomes – such as infection rate,
their current positions and continue to receive
development of pressure sores and other negative
corporate benefits while they are abroad.
incidents. All indicators monitored during the year
The doctors, nurses and support personnel travel
were well within internationally accepted norms.
to the UK on a rotational basis, thereby giving as
Our standing in this regard was reinforced by the
many people as possible the opportunity to gain
excellent outcomes achieved in the UK NHS
this invaluable experience.
projects, particularly in ophthalmology and
orthopaedics.
rewards, recognition and results / The
year,
ongoing nursing shortage / The high
continues to recognise and reward staff members
quality of patient care delivered belies the
GoldCare
programme,
launched
last
for performance in areas ranging from outstanding
patient care to excellent operational performance
that leads to improved efficiencies.
continued shortage of nursing staff, notably in
specialist facilities such as Intensive Care and
Neonatal
Units.
On
average,
we
source
approximately 2 000 (almost 20%) of our nursing
Overall staff turnover decreased by 25% from the
prior year, attributable directly to the combination
workforce every month from overtime or from
agencies. It is nevertheless encouraging to note
of flexible and innovative remuneration strategies;
that annual nursing staff turnover levels have
excellent development and career opportunities;
reduced to 9%; furthermore nursing vacancy
tangible employee benefits and a working
levels have also dropped.
environment that rewards performance.
imbizo project / HIV/AIDS is one of the
For the fourth consecutive year, Netcare was
biggest threats facing the world today. In 2001,
selected as one of the “Best companies to work
Netcare took up the challenge and the first
for in South Africa” by the Corporate Research
Netcare HIV/AIDS Imbizo was launched in July of
Foundation survey.
that year.
40
Annual Report 2003 / human resources report / continued
Since then 390 Imbizo representatives have been
● Establish a working collaboration between
trained nationally to conduct in-house Imbizo’s at
employees and employer in the implementation
their hospitals, reaching over 2 000 Netcare
of HIV/AIDS management in the workplace.
employees to date. Imbizo is a Zulu word that
● Extend the project to Netcare’s patients and
means “people coming together to discuss and find
neighbouring communities as a form of
a solution to an issue of grave concern”.
Corporate Social Investment, called the IMBIZO
The strategic focus of the Imbizo Project is to
CHALLENGE.
reinforce ongoing education and training to staff
and the company on the importance of HIV/AIDS
and its management. The project raises awareness
on the impact of HIV/AIDS on the individual, the
workplace and community at large. The objectives
nurse training / A substantial investment
has again been made in nurse training through the
Netcare Training Academy (“NTA”), reflected in a
67% upsurge in enrolments to 1 860 students
(2002: 1 112 students), for the three basic nurse
therefore include:
● To educate employees generally about HIV/AIDS
and socio-economic factors pertaining to
training courses offered by the academy for the
2003 academic year. There has also been strong
uptake for the academy’s additional training
HIV/AIDS.
● To educate employees about the interventions
that are implemented within the company as
options
in
critical
care,
trauma,
theatre,
neonatology and orthopaedics.
well as other support projects in the community.
The training programmes offered by NTA for the
● To provide sufficient information to staff so
new categories of health personnel identified by
that they can examine their own attitudes and
Netcare have yielded pleasing results:
prejudices with regards to HIV/AIDS.
● The first students on the Clinical Engineering
● To offer a basic understanding of the scientific
and
medical
facts
around
transmission,
legislation
framework
graduated
mid-2003
and
have
been
incorporated into our hospitals where they
treatment and prevention.
● To implement an HIV/AIDS Policy in line with
the
Technician’s Assistants (ICU Technicians) course
and
promote
destigmatisation of the work environment.
The desired outcomes include:
● Change in behavioural patterns to prevent new
infections and further transmission.
● Reach a significant proportion of the employees
by the end of financial year 2004.
are relieving nurses of specific non-nursing
duties.
● The first group of 26 students enrolled for the
two-year Surgical Technologist course entered
their second year of study early in the new
financial year.
In addition, Netcare sponsored 76 nursing
students enrolled for the four-year basic nursing
● Implement policies and relevant interventions
programme at five universities in South Africa.
to reduce the impact of HIV/AIDS on the
These students are contracted to work for the
individual and the business.
Group on completion of their studies.
41
Annual Report 2003 / key leadership strategy # 3 – operational excellence
42
Annual Report 2003 / netpartner report
NETPARTNER REPORT
“Better care to
more people.”
In what is arguably one of the most significant
developments in healthcare in South Africa, Netcare,
together with the South African Managed Care Cooperative (“SAMCC”), initiated and launched
Netpartner Investments Limited (“Netpartner”)
during the year.
netcare and netpartner – the rationale /
Netcare’s stated strategy has always been to
develop an integrated healthcare platform and to be
the lowest cost provider of quality healthcare. The
current fee-for-service model, which provides cover
for those fortunate enough to afford it, has
unsustainable elements, and therefore Netcare has
been committed to developing strategies to change
this reimbursive system. Netpartner is seen as key
to achieving this objective with the overall intention
of ensuring that private healthcare will be more
sustainable, affordable and accessible, while offering
the new South Africa a new healthcare solution.
The establishment of Netpartner heralds a new era
for healthcare in SA and its success will certainly:
● Introduce alternative reimbursive models on a
meaningful basis;
● Provide a meaningful basis for increasing the
number of insured lives;
● Offer a comprehensive solution for those Public
Sector employees who are currently uninsured;
and most importantly,
● Be a positive advance in retaining quality
healthcare professionals in our country.
The success of the first phase in Netpartner’s
● The new SA needs a new healthcare solution
establishment bears testimony to the support by
● “A stroke of healthcare genius” – Sector Analyst
of Netpartner, namely bringing “BETTER CARE TO
healthcare professionals for the primary objective
MORE PEOPLE”.
43
Annual Report 2003 / netpartner report / continued
introduction and purpose / Netpartner is an
The Network Company will initially offer primary
investment holding company that intends to:
care capitated products to existing members and
● Phase I
low income earners of corporates who are seeking
Develop a portfolio of strategic investments in
healthcare and healthcare-related enterprises
as well as establish the Netpartner Foundation.
● Phase II
to offer healthcare cover equality within the
workplace. It is intended that this Company will be
well suited to providing healthcare solutions for the
Statemed Medical Scheme members expected to be
covered from mid-2005.
Form an integrated Managed Care Network
Company which will initially offer capitated
primary care products and then broaden these
products to the full spectrum of healthcare
services.
The Network Company will contract with doctors,
dentists, specialists and other healthcare providers
in relation to the provision of managed care
products and services in order to create a national
network of healthcare providers. The Network
● Phase III
Company aims to become the country’s lowest-
Expand its administrative capability and
cost provider of quality healthcare. It is expected
product and service offerings.
that
● Phase IV
Explore
new
insured
lives
from
emerging
communities are likely to be attracted to this
new
business
opportunities
in
healthcare.
● Phase V
List on the JSE or its alternative market, AltX.
accessible and affordable healthcare delivery
model.
For the purposes of ensuring proper standards of
healthcare delivery the SAMCC will primarily be
involved in ensuring the following:
incorporation, nature of business and
future prospects / Netpartner was founded as
an investment holding company with the intention
of investing in healthcare and healthcare-related
enterprises. The Netpartner investment policy is
primarily to invest in sound healthcare businesses in
order to create value and provide specialised
services for and to its stakeholders.
In pursuit of Phase II of Netpartner’s development,
the Netcare Direct Managed Care Company (“the
Network Company”) has been formed as a
managed care company to implement and
● The
accreditation
and
credentialing
of
providers; and
● The establishment and application of strict
clinical guidelines, ethical standards, quality
assurance,
peer
review
and
continuing
professional development.
In this regard, it is noteworthy that a number of
Independent Practitioners Associations (“IPAs”)
affiliated to the SAMCC have already been
successful in delivering managed care capitated
models and curbing spiralling inflation.
administer managed care principles in terms of new
Netpartner, through the Network Company, will
products and services which will be offered to
therefore be able to provide accredited healthcare
medical aid schemes. This operating entity will
professionals with significant practice benefits
promote innovative primary healthcare solutions for
through new patient pools and contracts with
the provision of quality and cost-effective managed
medical aid schemes embracing managed care
care to the broader Southern African community.
principles.
44
The Network Company is expected to enjoy
Phase IV will be to develop and/or acquire
significant economies of scale and standardisation,
businesses which complement the activities of
the substantial benefits of which will be passed
Netpartner. Areas which have been identified as
through to medical aid scheme members.
being potentially beneficial and synergistic to
The Network Company’s ability to provide high
these
quality affordable healthcare will be further
procurement, importation, as well as a business
enhanced by its access, through one of its
entity
principal shareholders, to Netcare, and its BEE
implementing treatment protocols for people
partner Community Healthcare Group’s private
living with HIV/AIDS.
objectives
to
be
include
involved
in
clinical
trials,
developing
and
hospital presence, capacity and supply chain of
vision / Netpartner aspires to establish and
specialised and associated services. Access to all of
maintain a national integrated provider network in
these services will provide those scheme members
order
who contract with the Network Company with
clinically-supported
the most comprehensive range of health services
healthcare delivery and products that can be applied
presently available in South Africa. It is important
in a variety of benefit alternatives or managed care
to note that an investment by a medical
plans on a regional and national basis.
professional is neither conditional nor intended to
interfere with either the medical practitioner or
the patients’ freedom of choice. In addition, all
parties will be free to contract with other
The Network Company will be managed by, and
intends to outsource certain managed care
administrative functions to, Medicross.
The potential of this initiative is enhanced by
various IPAs (GP Net, DFPA, NIMPA, SAMDP)
which, together with the SAMCC, have over 8 000
affiliated GPs on a national basis who will
augment the network offering.
satisfactory
progress
of
provide
cost-effective,
and
appropriate,
academically-endorsed
guiding principles / Netpartner was established
with the following guiding principles:
● To ensure that all medical, dental and other
related healthcare professionals associated with
providers in the healthcare chain.
On
to
Phase
II
of
Netpartner’s expansion, the Company will seek to
develop its administrative capability (Phase III)
and offer managed care services for a more
comprehensive range of healthcare services. This
will be achieved through complementing existing
administrative processes and contracting with
various medical aid schemes. Preliminary steps
have already been taken to lay the groundwork for
the company manage, conduct and provide
medical services to patients in their sole and
absolute discretion and in the best interests of
patients;
● To adhere to strict ethical guidelines as well as
to the Medical Schemes Act 1998, as amended,
and amendments pertaining to managed care
principles;
● To uphold the sanctity of life and exceed the
expectations of each and every patient;
● To
create
partnerships
synergy
with
by
those
forming
who
strong
share
in
Netpartner’s values;
● To establish standards of excellence which
exceed the benchmark of industry practice;
● To challenge problems and solve them with
creativity and innovation;
this further expansion pursuant to interaction
● To treat patients, staff, medical, dental and
with four large administrators on behalf of their
other healthcare-related professionals with
medical aid schemes.
respect and dignity;
45
● To hold integrity and honesty as most
Patients / Netpartner acknowledges the rights of
important values, and to strive to perform to
patients and strives to exceed their expectations
the highest ethical standards;
of quality care, service and outcomes.
● To strive for continuous improvement; and
Professional Care / Netpartner values high-
● to re-invest in the communities the Company
quality clinical care and services that have
serves.
values
Partners / Netpartner’s principal strengths will be
through the medical, dental and other healthcarerelated professionals associated with it. Honesty and
integrity, teamwork, consultation and respect for
others are the core human values the Company
advocates.
group structure
*Trading on the BJM OTC market.
measurable outcomes and are both cost-effective
and appropriate.
Empowerment / Netpartner is committed to
actively promote ownership, knowledge transfer
and management responsibility among previously
disadvantaged individuals.
46
Netpartner aspires to
black economic empowerment / It is
establish a national
estimated that more than 32% of Netpartner’s
initial subscribers are from previously disadvantaged
integrated provider network
communities which, together with other BEE groups
presently engaged in securing further investment
funding, will result in more than 25% of
with products and
services in a variety of
Netpartner’s
equity
being
owned
by
BEE
shareholders.
It is the intention of the Netpartner Board to
invite other BEE investors to enable them to
acquire an additional interest in Netpartner,
benefit alternatives and
thereby strengthening Netpartners’ position as
the broadest BEE-based healthcare company
serving all communities in South Africa.
managed care plans.
netpartner
foundation
/
Netpartner’s
Corporate and Social responsibility endeavours
include the incorporation of The Netpartner
Foundation, a section 21 company, formed for
purposes of separately procuring and applying funds
percentage of Netpartner shareholders from previously
disadvantaged communities
32%
for, inter alia, various health awareness and
education initiatives, programmes to assist in
dealing with the HIV/AIDS pandemic and the
establishment of and support for community
healthcare centres. Netpartner has approved an
initial contribution to The Netpartner Foundation of
R1 million to facilitate the commencement of its
mandate.
GP and specialist subscribers
>4 000
results of the private placing / As an
overwhelming vote of confidence for this initiative,
the private placement of Netpartner shares was
oversubscribed resulting in the issue of the
maximum subscription level of R450 million. This
was 50% more than the expected R300 million level
of capitalisation.
47
More than 4 000 general practitioners and
specialists and 2 200 dentists, pharmacists,
optometrists and other shareholders invested
through a private placing. This resulted in
Netpartner being well capitalised and favourably
positioned to roll out its business development
In addition to the aforementioned:
– Dr Moshabi Lazarus Malete has been appointed,
as the SAMCC designate, to the Board of
Medicross. Dr Malete is the Vice-Chairperson of
the ODI IPA and a member of the SAMCC
Management Committee; and
strategy with approximately R600 million in
– the Health Professions Council of South Africa
assets (including R100 million in cash resources).
has been offered observer status at Netpartner
governance / Given the nature of the
Board meetings.
organisation, the governance of Netpartner is of
paramount importance. In bolstering the already
otc listing and potential listing of
formidable board of directors comprising well
netpartner on the jse / A suitable OTC
known industry specialists, the following pre-
market has been established with Barnard Jacobs
eminent individuals have accepted appointments as
Mellet (“BJM”) to facilitate trade in Netpartner
non-executive directors to complement the current
shares. Trade on this OTC market commenced on
Netpartner Board:
Monday, 27 October 2003. As at the date of
– Dr Barry Kistnasamy, the Dean of the Faculty
of the Nelson Mandela School of Medicine,
publication of this report, the share was trading at a
40% premium to its issue price of 100 cents.
KwaZulu-Natal. Dr Kistnasamy is a specialist in
As the level of shareholders and funds raised
community health with further training in
exceeded expectations, the Company is well
Health
(York
positioned to apply for an introduction to the JSE
&
Securities Exchange South Africa (“JSE”) or its
Occupational Health (University of Michigan,
Alternative Exchange (“AltX”), subject to the
USA).
requisite
Netpartner
Board
obtained,
Netpartner
meeting
Economics
University,
UK)
and
and
Planning
Environmental
– Mrs Ina Wilken, the vice-chairperson of the
South African
National
Consumer
Union
(“SANCU”). Given Netpartner’s objectives and
in order to represent consumers’ interests at
the highest level, SANCU has accepted a seat
on the Netpartner Board to represent the best
interests of consumers and to ensure best
practice and quality at all times.
approval
the
being
Listings
Requirements of the JSE or the AltX, and
sufficiently
favourable
market
prevailing at the time (Phase V).
conditions
48
Annual Report 2003 / financial overview
SR (BOBBY) FAVISH / CHIEF FINANCIAL OFFICER
● Organic growth in revenue amounted to
operating results / Netcare’s revenue for the
year increased by 24,9% to R6 012,6 million
17,9%
(2002: R4 812,3 million), with the Group’s interests
in diagnostics and imaging administration and
● EBITDA margins increased to 20,1%
management services, including its 50% interest
in the Ampath Trust (“Ampath”) (collectively
(2002: 19,6%)
referred to as “Netcare Diagnostics”) being
proportionately consolidated for the first time.
● EBIT margins increased to 16,9% (2002:
16,3%).
Organic growth in revenue amounted to 17,9%.
EBITDA margins increased to 20,1% (2002:
19,6%), while EBIT margins have increased to
16,9% (2002: 16,3%). Headline earnings per share
(“HEPS”) increased by 25,1% to 45,9 cents per
share (2002: 36,7 cents per share). Since 1997, the
six-year compound annual growth in HEPS has
amounted to 36,2%. The results have led to a
return on ordinary shareholders’ equity (“ROE”) of
25,0% which, after adjustments for past goodwill
write-offs, amounts to a more modest 19,3%.
The Group has several business units with the
South African hospital division being its core
business. Consequently, no detailed information
for the other business units is required in terms of
accounting standards on segmental reporting.
However, an analysis of revenue, EBITDA and EBIT
Since 1997, the six-year compound annual
growth in HEPS has amounted to 36,2%.
for certain of the Group’s larger business units is
set out below.
49
Annual Report 2003 / financial overview / continued
Segmental reporting
REVENUE
(Rm)
%
2002 Change
2003
EBITDA
(Rm)
2003
EBIT
(Rm)
%
2002 Change
2003
%
2002 Change
Hospitals
4 625,1 3 992,6
15,8 1 070,9
869,5
23,2
923,7
741,6
Other businesses
1 387,5 1 114,7
24,5
139,5
127,5
9,4
94,2
86,2
24,6
9,3
63,9
52,8
21,0
42,1
30,8
36,7
Medicross
569,3
489,6
16,3
Netcare Diagnostics
324,5
295,0
10,0
67,7
54,1
25,1
58,8
44,7
31,5
Traumanet
219,3
163,0
34,5
(32,2)
8,0
N/A
(33,0)
5,1
N/A
59,1
31,6
87,0
6,2
(1,5)
N/A
4,8
(1,6)
215,3
135,5
58,9
33,9
14,1
140,4
21,5
7,2
198,6
17,7 1 210,4
997,0
21,4 1 017,9
827,8
23,0
International
Other
6 012,6 5 107,3
Total
N/A
It should be noted that the comparative figures
capital expenditure programme amounting to
have been adjusted on a proforma basis to take
R425,1 million (2002: R366,1 million); a share
account of the proportionate consolidation of
repurchase of R79,8 million; capital distributions
Netcare Diagnostics. In previous years these
of R183,1 million (2002: R137,4 million), and the
businesses
as
net cash inflow of R106 million on the Netpartner
associates. This change has no effect on
transaction as set out below. Notwithstanding the
attributable earnings.
above, interest cover remains at a satisfactory 6,5
were
largely
accounted
for
While the core hospital business, which represents
76,9% and 88,5% of Group revenues and EBITDA
respectively, reported solid results for the period
under review, the reported loss at Traumanet was
times (2002: 7,5 times). The current declining
interest rate climate, with rates having been
significantly reduced during the past six months,
bodes well for reduced finance charges in the future.
These factors, as well as the proportionate
extremely disappointing.
consolidation
borrowings
and
financing
costs /
contributed
of
to
Netcare
net
Diagnostics,
have
interest-bearing
debt
Financing costs increased to R157,6 million (2002:
increasing to R899,4 million (2002: R752,1
R104,7 million) due primarily to the cash
million) and the net debt : equity ratio reducing to
resources
28,7% (2002: 34,3%).
being
cost-effectively
applied
in
reducing creditor financing, and the Netcare
Diagnostics inclusion. Material cash flows during
credit rating / During the year Netcare
the period include: investment in the Group’s
achieved a credit rating upgrade by Global Credit
50
The group has a
Ratings to A1 for its short-term debt and A
high credit quality,
(previously A-) in respect of its long-term debt.
This confirms that the group has a high credit
sound protection factors and
high certainty of
quality, sound protection factors and high
certainty of timely payments.
accounting
policies
/
The
financial
statements are prepared in accordance with and
timely payments.
comply with South African Statements of
Generally Accepted Accounting Practice. The
principal accounting policies as set out in the
2002 annual report have been consistently
applied, except for the change in policy as detailed
below.
During the year the Group applied AC133 relating
to the Recognition and Measurement of financial
instruments. The Group has elected to account for
the changes in fair value of financial instruments
cash generated from operations
2002
26,3%
2003
regarded as “available for sale” through changes in
equity and not through the income statement.
The adoption of AC133 has resulted principally in
an increase in opening reserves of R46,1 million,
Rm 941,2
Rm 1 189,0
and a positive impact on equity in the current
year to the extent of R118,6 million.
capital distributions
2002
2003
30,4%
balance sheet / The group balance sheet now
incorporates Netcare’s proportionate share of
Netcare Diagnostics, which renders the prior
years’ balance sheet not strictly comparable.
11,5 cents
15,0 cents
51
corporate transactions / During the year
These transactions resulted in Netcare raising a
the group implemented a specific repurchase of
net amount of approximately R106,0 million at
52,7 million Netcare shares for an effective
year-end and Netpartner becoming a significant
consideration of R79,8 million. The attractive
associate of the Group.
terms at which the Group completed this
transaction related to the Group’s reservation of
rights to acquire certain Netcare shares which
were placed with investors when Fedsure Life
Assurance Limited (“Fedsure”), (previously the
largest shareholder in Netcare), indicated in 2000
its intention to dispose of its holding of Netcare
shares.
This
enabled
Netcare
to
acquire
52,7 million shares at a cost based on Fedsure’s
selling price of 110 cents per share and certain
capital distributions / In accordance with
the authority given to the directors by way of an
ordinary resolution passed on 24 January 2003,
the Board of directors has declared a final capital
distribution out of share premium of 9,0 cents per
ordinary share, payable to shareholders recorded
in the register of the Company as at Friday,
6 February 2004. Taken together with the interim
distribution of 6,0 cents per share, the total
distribution paid and to be paid in respect of the
holding and ancillary costs.
2003 financial year amounts to 15,0 cents (2002:
At the end of the financial year, a transaction
11,5 cents) per ordinary share, an increase of
between the Group and Netpartner Investments
30,4% over the prior period.
Limited (“Netpartner”) was implemented in terms
of which:
● Netpartner was established as an investment
company with the purpose of creating a
S R Favish
comprehensive healthcare provider network;
● The Group sold a 20% stake in Medicross for a
price of R50,0 million to Netpartner;
● Netcare
issued
100
million
shares
to
Netpartner at a price of 274 cents per share;
and
● Netcare invested R218,0 million in Netpartner
in consideration for a 48,4% stake in Netpartner.
Chief financial officer
52
Annual Report 2003 / seven-year tables
Balance sheets
2003
Rm
2002
Rm
2001
Rm
2000
Rm
1999
Rm
1998
Rm
1997
Rm
2 202,8
1 936,1
1 864,0
1 785,2
1 339,8
31,2
114,0
643,2
455,7
Assets
Non-current assets
Property, plant and equipment
2 704,0
2 413,0
Intangible assets
169,6
89,8
(61,2)
Investments and loans
488,6
181,6
139,7
94,5
78,8
148,7
1,7
41,5
41,5
34,1
33,6
32,0
—
—
Other financial assets
426,7
183,1
183,1
124,8
106,8
—
—
Total non-current assets
3 830,4
2 909,0
2 498,5
2 220,2
2 195,6
2 577,1
1 797,2
Total current assets
1 536,4
1 087,6
1 004,2
750,9
674,8
670,3
475,1
5 366,8
3 996,6
3 502,7
2 971,1
2 870,4
3 247,4
2 272,3
3 061,6
2 187,7
1 580,2
1 334,2
1 283,5
1 629,7
1 177,2
71,8
7,7
132,1
209,3
198,7
170,2
168,3
Total shareholders’ equity
3 133,4
2 195,4
1 712,3
1 543,5
1 482,2
1 799,9
1 345,5
Net interest-bearing debt
899,4
752,1
677,2
702,5
748,8
775,8
546,7
268,1
128,6
94,0
56,2
43,3
2,0
—
1 065,9
920,5
1 019,2
668,9
596,1
669,7
380,1
5 366,8
3 996,6
3 502,7
2 971,1
2 870,4
3 247,4
2 272,3
200,0
150,6
118,1
100,6
97,3
137,9
139,4
Deferred taxation
Total assets
Equity and liabilities
Ordinary shareholders’ equity
Minority interest
Non-current liabilities
Deferred taxation
Non-interest-bearing current
liabilities
Total equity and liabilities
Net equity per share (cents)
6 600
750
6 000
625
5 400
4 800
500
4 200
3 600
375
3 000
2 400
250
1 800
1 200
125
600
0
97
98
99
00
01
revenue (Rm)
02
03
0
97
98
99
00
01
02
03
attributable earnings (Rm)
53
Annual Report 2003 / seven-year tables / continued
Six-year
compound
growth % p.a.
2003
Rm
2002
Rm
2001
Rm
2000
Rm
1999
Rm
1998
Rm
1997
Rm
Revenue
37,0
6 012,6
4 812,3
3 687,7
2 848,8
2 566,1
2 097,3
909,4
Operating profit before
depreciation and amortisation (EBITDA)
Depreciation and amortisation
43,3
1 210,4
(192,5)
942,9
(159,8)
692,6
(126,5)
541,1
(91,0)
478,8
(91,0)
393,0
(73,9)
139,5
(35,3)
46,2
1 017,9
(157,6)
—
(202,5)
0,4
(1,1)
783,1
(104,7)
—
(170,6)
20,5
(2,3)
566,1
(89,8)
(32,3)
(124,9)
25,9
(22,6)
450,1
(96,5)
(10,0)
(88,9)
22,3
(36,4)
387,8
(162,5)
(7,0)
(50,5)
19,9
(28,5)
319,1
(131,6)
(13,7)
(50,7)
20,4
(18,0)
104,2
(56,7)
—
(11,7)
—
(11,6)
Attributable earnings
657,1
526,0
322,4
240,6
159,2
125,5
24,2
Headline adjustments
Headline earnings
(1,9)
655,2
3,9
529,9
29,2
351,6
10,0
250,6
7,0
166,2
9,0
134,5
—
24,2
46,0
45,9
36,4
36,7
24,1
26,3
18,0
18,8
13,1
13,6
11,0
11,8
7,2*
7,2*
15,0
11,5
8,5
5,0
4,0
1,0•
1,0•
2003
Rm
2002
Rm
2001
Rm
2000
Rm
1999
Rm
1998
Rm
1997
Rm
1 189,0
(310,2)
(157,6)
(153,6)
941,2
(116,9)
(104,7)
(130,5)
686,0
118,8
(89,8)
(87,4)
528,0
(36,8)
(96,5)
(44,2)
472,4
4,0
(162,5)
(9,7)
380,6
(11,0)
(131,6)
(2,5)
139,5
19,7
(54,7)
(1,3)
Cash inflow from operating activities
Capital distributions paid
567,6
(183,1)
589,1
(137,4)
627,6
(82,9)
350,5
(99,1)
304,2
—
235,5
(7,5)•
103,2
(4,4)•
Net cash retained
Other investing and financing activities
Net cash resources/(debt) assumed on
acquisition of businesses
384,5
(455,4)
451,7
(525,6)
544,7
(531,0)
251,4
(205,1)
304,2
(277,2)
228,0
(254,3)
98,8
(122,6)
(76,4)
(1,0)
11,6
—
—
(202,8)
(522,9)
Movement in net interest-bearing debt
At beginning of year
(147,3)
(74,9)
25,3
46,3
27,0
(229,1)
(546,7)
(752,1)
(677,2)
(702,5)
(748,8)
(775,8)
(546,7)
At end of year
(899,4)
(752,1)
(677,2)
(702,5)
(748,8)
(775,8)
Income statements
Net finance charges
Abnormal items
Taxation
Attributable earnings of associates
Minority interest
Earnings per share (cents)
Attributable – basic
Headline – basic
Capital distributions to shareholders (cents)
36,2
*Annualised
•Dividends paid
Cash flow statements
Cash generated from operations
Working capital movements
Net finance charges
Taxation paid
•Dividends paid
—
(546,7)
54
Annual Report 2003 / summary of statistics and stock exchange performance
Share performance
Attributable earnings per share
basic
fully diluted
Headline earnings per share
basic
fully diluted
Attributable cash flow per share
Cash realisation rate
Capital distribution to shareholders
per share
Capital distribution cover
Tangible net equity per share
Stock exchange performance
Market prices per share
year-end
high
low
Weighted average price traded
Number of share transactions
Value of share transactions
Volume of shares traded
Number of shares in issue
Volume traded to issued
Market capitalisation
Earnings yield†
Price : earnings ratio†
*Annualised
†Based on year-end price
•Dividends paid
2002
2001
2000
1999
1998
1997
46,0
43,9
36,4
34,5
24,1
23,3
18,0
18,0
13,1
N/A
11,0
N/A
7,2*
N/A
(cents)
(cents)
(%)
45,9
43,8
39,7
58,7
67,6
36,7
34,8
40,8
49,6
82,3
26,3
25,5
43,9
37,5
117,1
18,8
18,8
22,9
24,3
94,2
13,6
N/A
20,9
19,9
105,0
11,8
N/A
17,2
16,2
106,2
7,2*
N/A
25,1
16,5
152,1
(cents)
(times)
(cents)
(cents)
15,0
3,1
200,0
188,9
11,5
3,2
150,6
144,4
8,5
3,1
118,1
122,7
5,0
3,8
100,6
98,3
4,0
3,4
97,3
88,6
1,0•
11,8
137,9
83,4
1,0•
7,2
139,4
85,4
(%)
20,1
19,6
18,8
19,0
18,7
18,7
15,3
(%)
(%)
29,2
24,1
30,4
26,6
27,8
20,6
22,7
17,5
17,7
16,2
15,4
13,3
5,5
6,0
(%)
(%)
(%)
25,0
19,3
23,6
28,1
19,9
25,0
24,1
15,8
26,3
19,1
12,4
25,1
11,4
9,2
22,4
9,6
9,3
27,7
2,1
2,0
24,6
(%)
(times)
28,7
6,5
34,3
7,5
39,5
6,3
45,5
4,7
50,5
2,4
43,1
2,4
40,6
1,8
(cents)
(cents)
Returns and productivity
EBITDA margin
Operating profit return on net assets
as reported
adjusted for past goodwill write-offs
Return on ordinary shareholders’ equity
as reported
adjusted for past goodwill write-offs
Effective tax rate
Solvency and liquidity
Debt : equity ratio
Interest cover
2003
(cents)
(cents)
(cents)
(cents)
(R’000)
(million)
(million)
(%)
(R million)
(%)
(times)
410
295
199
91
60
82
172
440
330
225
113
128
265
262
265
183
72
55
57
67
115
337
270
137
82
95
170
198
16 614
14 749 11 551
6 638
8 774
9 551 12 471
1 769 701 1 553 938 774 485 278 702 380 891 399 506 261 370
525,0
575,2
566,0
340,1
401,9
235,2
131,9
1 530,7
1 452,9 1 337,7 1 326,2 1 319,7 1 182,2
844,7
34,3
39,6
42,3
25,6
30,5
19,9
15,6
6 275,9
4 286,1 2 662,0 1 206,8
791,8
969,4 1 452,9
11,2
12,4
13,2
20,7
22,7
14,4
4,2
8,9
8,0
7,6
4,8
4,4
6,9
23,9
55
Annual Report 2003 / value-added statement
The value-added statement reflects the total wealth created by the group in rendering healthcare services and shows
how the wealth has been distributed both to meet obligations and to reward those responsible for its creation.
2003
Rm
2002
Rm
%
%
Revenue
6 012,6
4 812,3
Less: Payments to suppliers of materials and services
2 773,3
2 247,6
Wealth created
3 239,3
100
2 564,7
100
2 036,8
63
1 621,4
63
157,6
5
104,7
4
183,1
6
137,4
5
1,1
—
2,3
—
202,5
6
170,6
7
Profit retained
465,7
14
368,5
15
192,5
6
159,8
6
3 239,3
100
2 564,7
100
Shared as follows:
Employees
Salaries, wages and other benefits
Providers of loan capital
Finance charges paid
Shareholders
Capital distributions
Minority interest
Government
Income tax
Re-invested in the Group
net distribution of wealth created
2003
2002
6%
6%
14%
Employees
15%
Providers of loan capital
Shareholders
6%
6%
7%
Government
63%
Profit retained
5%
63%
5%
4%
56
Annual Report 2003 / analysis of shareholders
Breakdown
of shares
Number of
shareholders
Percentage of
shareholders
Number of shares
millions
Percentage of
issued shares
1 000
2 635
34,7
0,7
0,1
1 001 –
50 000
3 890
51,3
36,4
2,4
50 001 –
100 000
315
4,2
23,0
1,5
100 001 – 10 000 000
713
9,4
660,4
43,1
10 000 001 – 250 000 000
28
0,4
810,2
52,9
7 581
100,0
1 530,7
100,0
Number of
shareholders
Percentage of
shareholders
Number of shares
millions
Percentage of
issued shares
Individuals
6 725
88,7
450,2
29,4
Companies
186
2,5
280,7
18,3
Investment and trust companies
479
6,3
657,1
42,9
22
0,3
26,8
1,8
169
2,2
115,9
7,6
7 581
100,0
1 530,7
100,0
Holdings
1–
Totals
Category
Nominee companies
Other corporate bodies
Totals
Share ownership at 30 September 2003
Major individual holdings (excluding directors: for directors’ shareholdings see directors’ report on pages 75 and 76).
According to the register of shareholders and information provided to the directors or established from enquiries, and,
pursuant to the provisions of Section 140A of the Companies Act, 1973, as amended, beneficial shareholdings at
30 September 2003 which represent 5,0% or more of the total issued shares of the company were:
Number of shares
millions
Percentage of
issued shares*
The Public Investment Commissioner
151,4
9,89
The Netcare Trust
116,1
7,58
78,5
5,13
Momentum Life
Note
Shareholder spread
Other than directors (12 shareholders holding in aggregate 11,82% of the Company’s shares), there were no “non-public”
shareholders holding in excess of 10,0% of the share capital of the Company.
7 568 Public shareholders held 87,17% of shares issued and 13 non-public shareholders held 12,83% of shares issued.
*Percentages are based on shares in issue less shares repurchased by wholly owned subsidiaries of Netcare (1 530 724 277 ordinary shares).
57
Annual Report 2003 / corporate governance
similarly acknowledge their responsibility to ensure that
Netcare’s corporate governance philosophy
In seeking excellence in corporate governance, Netcare
endeavours to maintain a healthy balance between the
legitimate interests of management, the Board and all
stakeholders. Netcare’s philosophy is to ensure the
the principles of good corporate governance are observed,
and the directors collectively and individually acknowledge
their responsibilities in terms of the JSE Securities
Exchange South Africa Listings Requirements.
promotion of business success without any sacrifice of
Corporate
Governance
principles.
The
Board
has
established the appropriate corporate tone and culture,
Board of directors – composition, role and
functions
relevant rules of conduct and behaviour as well as
The Board currently comprises four non-executive and ten
acceptable standards of oversight and accountability.
executive directors.
Most elements of the Code of Corporate Practices and
Two of the four non-executive directors are classifiable as
Conduct contained in the King Report on Corporate
independent.
Governance for South Africa 2002 (“King II”) are either
The names and credentials of the directors appear on
formally or informally in place. Netcare believes that
pages 68 and 69.
corporate governance checks and balances must ensure
relevant compliance while not restricting management’s
flexibility to meet business challenges.
As recommended in the Code, the Board intends
introducing a formal procedure for the assessment of the
performance of the Board, individual members thereof and
Netcare’s corporate governance target is to maintain a
Board committees. A Board Charter, which seeks to
high quality Board coupled with an effective management
formalise many of the principles and practices currently in
team that can pursue business success but also understand
place, is in the process of being formulated, which will
and respect the responsibilities and limits of integrity,
define the Board’s responsibilities for:
ethics and transparency. The Board consists of individuals
● Approving corporate philosophy, vision, mission and
with the requisite specialist skills, sound business
management
experience
and
industry
knowledge,
collectively bringing a healthy sensitivity in ensuring
ethical values;
● Approving strategic plans, operating policies and
implementing organisation structure;
appropriate norms of corporate behaviour.
● Monitoring and evaluating performance against plans;
The Netcare Group remains fully committed to the
● Ensuring compliance with relevant laws/regulations and
principles of effective corporate governance and the
application of the highest ethical standards in the conduct
corporate policy;
● Approving
internal
and
external
communication
of its business. The Group, at all levels, subscribes to the
protocols and monitoring relations with shareholders
values of good corporate governance as set out in King II
and other stakeholders;
and accepts the need to conduct the enterprise with
● Implementing risk management and internal control;
integrity, transparency and equal opportunity. The Board,
● Establishing appropriate Board committees; and
its Committees, all other Officers and senior management,
● Selecting, monitoring, advising and evaluating directors.
58
Annual Report 2003 / corporate governance / continued
No executive director has a service contract exceeding two
years. Generally, directors have no fixed term of
appointment but retire by rotation every three years and,
if available, are considered for re-appointment at the
Annual General Meeting.
Professional advice
The directors are also entitled to seek professional advice
about the affairs of the Group and have unrestricted
access to all company information, records, documents
and property.
Although the roles of Chairman and CEO are separated,
the Board presently considers it to be in the Group’s
interest to maintain the office of Executive Chairman. The
Board is cognisant of the need to develop the
Appointment mechanisms
All proposed appointments are considered by the full
Board of directors.
‘independence’ component of its membership, and is
conducting an ongoing search for recruitment in this
Board subcommittees
regard.
Board Risk Committee
The Board retains full and effective control over the
organisation and decisions on material matters are
reserved by the Board. The Board meets at least four times
This committee was established during the 2002 financial
year (for details of membership, see pages 68 and 69).
annually and more frequently if circumstances or decisions
Four directors, three of whom are executive directors,
require. Standing subcommittees of the Board have been
comprise
appointed, details of which are set out below, while ad hoc
independent non-executive director.
this
committee. The
Chairperson
is
an
subcommittees are created as and when necessary.
Executive Management Committee
Company Secretary
All directors have access to the advice and services of the
Group’s Company Secretary who is responsible to the
Board.
The Company Secretary provides the Board as a whole and
directors individually with detailed guidance as to how
their responsibilities should be properly discharged in the
best interests of the Company. The Company Secretary
provides a central source of guidance and advice to the
Board, and within the Company, on matters of ethics and
good corporate governance.
The executive directors meet on a regular basis to
consider, inter alia, major investment and capital
expenditure proposals, general operational matters, and
various issues of strategic importance to the Group.
Board Remuneration Committee
The Board Remuneration Committee is responsible for
approving the remuneration of executive directors.
Independent external studies and comparisons are used to
ensure that remuneration is market related and is linked to
both individual and Company performance. Membership of
the Remuneration Committee comprises two non-
The Company Secretary is qualified to perform his
executive directors and the Board Chairman. One of the
duties in accordance with the applicable legislation
non-executive Directors is the Chairperson of the
and is considered by the Board to be fit and proper for
committee. Refer to pages 68 and 69 for details of
the post.
membership.
59
Board Audit Committee
The Audit Committee is responsible for overseeing on
behalf of the Board and reporting to the Board on the
Audit Committee Meetings
11 Nov
Director
’02
19 Mar
’03
9 May
’03
1 Aug
’03
financial reporting process, the audit thereof, the internal
SR Favish
√
√
√
√
control of the business and its review. (For details of
HR Levin (Chairperson)
√
*
√
√
membership refer to pages 68 and 69).
MI Sacks
√
√
√
√
The Audit Committee is constituted as a subcommittee of
APH Jammine
the Board and comprises four directors. The chairperson is
(Appointed to Audit
a non-executive director. The Audit Committee meets
Committee w.e.f.
formally four times per annum to consider financial
19 March 2003)
reporting issues and to advise the Board on a range of
SV Zilwa
N/A
√
√
√
●
N/A
N/A
N/A
matters, including corporate governance practices, internal
control policies and procedures, and internal and external
audit management. The external auditors attend the Audit
Committee meetings and also have unrestricted access to
Remuneration Committee meetings
11 Dec
’02
Director
the Chairperson of the Audit Committee. Fees in respect of
Dr APH Jammine
√
non-audit services are reviewed by the Audit Committee.
HR Levin (Chairperson)
√
MI Sacks
√
P Warrener
√
Attendance at Board/committee meetings
Board meetings
Director
1 Oct 12 Nov 26 Mar 12 May
’02
’02
’03
’03
1 Sept
’03
Risk Committee meetings
Director
6 Nov 11 June
’02
’03
RH Bush
√
√
√
√
√
IM Davis
√
√
√
√
√
SR Favish
√
√
SR Favish
√
√
√
√
√
RH Friedland
√
√
RH Friedland
√
√
√
*
*
JM Kahn (Chairperson)
√
√
√
√
√
APH Jammine
√
√
√
√
√
√
√
MI Sacks
√
√
I Kadish
JM Kahn
√
√
*
√
√
SV Zilwa
●
N/A
HR Levin
√
√
*
√
√
√ Indicates attendance
PJ Lindeque
√
√
*
√
√
* Indicates absence with apology
C Rossolimos
*
*
√
√
√
MI Sacks
(Chairman)
√
√
√
√
√
J Shevel
√
√
√
√
√
JA van Rooyen
*
*
√
√
√
P Warrener (resigned
23 September 2003) √
√
*
√
√
process of identifying and managing the risk factors across
N Weltman
√
√
√
√
√
the Group, and the implementation of appropriate
SV Zilwa (resigned
17 February 2003)
●
●
N/A
N/A
N/A
● Indicates leave of absence
Risk management
The Board, in conjunction with senior executives, is
responsible for the overall risk management, which is a
systems of internal control to mitigate risks to an
acceptable level.
60
The Group has an independent risk management department
Internal control and internal audit
which is involved in the implementation and monitoring of
The Board is responsible for ensuring that appropriate
processes designed to incorporate a risk management
internal control systems are maintained to ensure that
philosophy into the day-to-day activities of the Group.
company assets are safeguarded and managed, and losses
An ongoing process for identifying, evaluating and
managing the significant risks faced by the Group has been
in place for the year under review and up to the date of
arising from fraud and or other illegal acts are minimised.
Control systems are continually monitored and improved
in accordance with generally accepted best practices.
The internal audit department is a function established at
approval of the Annual Report and Financial Statements.
Group level, reporting to the Audit Committee, to assist
Furthermore, in the event of the occurrence of a disastrous
executive management and the Audit Committee in the
incident, there is a documented and tested process in
effective discharge of their respective responsibilities, by
place that will allow the continuity of critical business
means of independent financial, internal control and
processes.
operational systems reviews.
Nothing has come to the attention of the Board of
Financial statements
directors to indicate that any breakdown in the
functioning of the abovementioned internal controls and
The Board is responsible for preparing the financial
statements and other information presented in reports to
systems has occurred during the year under review, which
could have a material impact on the Group.
shareholders in a manner that fairly presents the state of
affairs and results of the Group’s business operations. The
Closed periods
external auditors are responsible for carrying out an
The Company operates a closed period between its interim
independent examination of the financial statements in
accordance with South African Auditing Standards.
The annual financial statements are prepared in terms of
and year-end reporting dates and the publication of its
interim and final results, and also at times cautionary
notices are in existence.
During these periods, directors, officers and other
the Companies Act and JSE Securities Exchange South
designated members of Group management who may
Africa (“JSE”) Listings Requirements and comply with
have access to price-sensitive information, are precluded
South African Statements of Generally Accepted Accounting
from dealing in the Company’s shares.
Practice, and are based on appropriate accounting policies
All director’s and manager’s share dealings require the
which have been consistently applied and are supported
prior approval of the Chairman.
by reasonable and prudent judgements and estimates.
Going concern
Investor relations
The Board has an established Investor Relations (“IR”) unit,
with responsibility being delegated to a senior executive.
The financial statements have been prepared on a going
Strict protocols are in place to control the nature, scope
concern basis and there is no reason to believe that the
and frequency of Group communications with analysts
Group will not continue as a going concern in the next
and financial institutions in particular and the investment
financial year.
community in general.
61
In addition, the IR unit consults regularly with the Groups’
Ethics
Sponsor to the JSE in ensuring that all regulations and
The Group strives to ensure that directors and employees
guidelines are strictly adhered to.
maintain the highest ethical standard of business
practices, which extend to the selection of the Group’s
Stakeholder communication
The Board considers that regular communication of the
Group’s activities to stakeholders is essential and
endeavours to present information timeously when
business partners and suppliers. In any instance where
ethical
standards
are
called
into
question,
the
circumstances are investigated and, where necessary, dealt
with by an appropriate executive.
appropriate.
The Company adopts a pro-active stance in disseminating
appropriate operational information to stakeholders
through print and electronic news releases and the
statutory publication of the Group’s financial performance.
All reports to stakeholders present a comprehensive and
The Group is mindful of the professional codes which
govern the conduct and ethics of health professionals in
South Africa. The Group supports the Health Professions
Council of South Africa in all its endeavours to enforce any
breaches of its code, its principles and its values.
objective assessment of the Group so that all relevant
stakeholders with legitimate interests in the Group’s affairs,
Environmental management, health and safety
operations and conduct, are apprised of a complete, fair
In accordance with the Occupational Health and Safety
and responsible account of its performance and impact.
Act, 1993 (Act No 85 of 1993), as amended, including the
regulations, Netcare is committed to providing an
Human capital development
occupational health and safety service for all Netcare
(See Human Resources Report on pages 38 to 40.)
employees that will protect and promote the health and
The Group believes that the importance of developing its
safety of all our staff; and a safety and awareness
people effectively cannot be over-emphasised and
programme that will protect the safety of our patients and
represents a key factor in Netcare’s success. The human
members of the public entering Netcare hospitals.
resource policies in operation are directed by a broad
In addition, the Group adopts best practice processes in
framework of corporate values and are driven by the need
to ensure effective utilisation and investment in human
the disposal of medical waste and is alert to other
environmental issues relevant to the Group’s business.
resources. Merit and competence are the two criteria for
advancement in the Group, although the diversity of the
cultures in the Group is acknowledged and appreciated.
The Group continually seeks to address historical
Corporate citizenship
The Group intends where applicable, to fulfil the
imbalances so that all employees can compete on equal
requirements enshrined in King II and to implement the
terms. The Group also operates a share incentive scheme
appropriate sustainability initiatives and related “Triple
to enable employees to participate, on merit, in the equity
Bottom Line Reporting” (see Corporate and Social Review
of the Company.
on pages 62 to 67).
Netcare’s corporate governance
target is to maintain a high
quality Board coupled with an
effective management team that
can pursue business success
but also understand and respect
the responsibilities and limits of
integrity, ethics and transparency.
62
Annual Report 2003 / corporate and social review
To uphold the sanctity of life and exceed
Netcare
recognises
that
good
corporate
citizenship begins with ethical conduct and
the expectations of each and every
patient whose care is our primary
concern.
strong moral values. Netcare subscribes to a
stated code of conduct and values that are
applied across the entire Netcare Group. These
Values and Guiding Principles of Conduct are set
out below:
values
1. We value the medical professionals and the
staff at our hospitals and strive to support
them in their personal and professional
development.
2. Honesty and integrity, teamwork, consultation
and respect for others are our core human
values.
3. We acknowledge the rights of our patients and
strive to exceed their expectations of quality
care, service and outcomes.
4. We value high-quality clinical care and services
which have measurable outcomes and are
both cost-effective and appropriate.
Netcare’s benevolent activities are deeply rooted
in the values of our senior management and
carried out in the hearts and willing hands of
associates at all levels of our company.
5. We value our shareholders and seek to provide
them with above-average returns on their
investment
through
efficient management.
loyalty, fidelity
and
63
Annual Report 2003 / corporate and social review / continued
principles of conduct
Having a presence in virtually all major regions,
1. To uphold the sanctity of life and exceed the
centres and communities across the country,
expectations of each and every patient, whose
Netcare
enjoys
the
privilege
of
regularly
care is our primary concern.
sponsoring national and regional fund-raisers and
2. To attract premier physicians and specialists to
community projects, as well as events that create
our facilities and in partnership to better serve
higher standards of cultural opportunities for local
the healthcare needs of our communities.
communities. Netcare resources often make
3. To
create
synergy
by
forming
strong
partnerships with those who share our values.
events possible where they would not otherwise
take place without Netcare’s support.
4. To establish standards of excellence which
The support we provide is wide-ranging, with a
exceed the benchmark of industry practice.
deliberate focus on health and healthcare-related
5. To challenge problems and solve them with
social and community undertakings. Our strength
creativity and innovation.
and capacity within this domain enable us to
6. To apply quality leadership and management
principles
to
foster
continual
employee
development.
7. To treat our patients, our staff, our medical
specialists and our partners with respect and
dignity.
8. To strive for continuous improvement in
make a greater difference to the healthcare
services for and treatment of underprivileged
people.
We endeavour to respond to all community needs
in and outside our hospitals through a generous
budget. In addition, we provide support to a
number of non-profit healthcare organisations. We
everything we do.
have a strong community focus and participate in
9. To re-invest in the communities we serve.
corporate citizenship / As a responsible
South African institution committed to the
country and its people, we recognise the
importance of giving back to the individuals,
entities and communities that have contributed to
our success, status and reputation.
Providing support to a wide range of charitable and
community causes requires more than money.
volunteer programmes, particularly those that
assist the needs of the aged, the disadvantaged
and the infirm.
Netcare
has
also
long
considered
high
environmental standards critical to running its
business. We are equally committed to taking a
leadership
protection
role
in
making
compatible
with
environmental
economic
Netcare’s benevolent activities are deeply rooted
development. A healthy environment not only
in the values of our senior management and
improves the quality of our lives, but also serves
carried out in the hearts and willing hands of
as a basis for the sustainable economy on which
associates at all levels of our company.
our business depends.
64
Among the numerous causes and beneficiaries of
child welfare and community service
Netcare’s pledge on corporate and social matters,
organisations / Netcare 911 provides hospital
certain of the more meaningful contributions for
2003 are set out below.
netcare
911
–
and inter-hospital cover for all children in the care
of several child welfare organisations. In addition,
emergency
medical
services (ems) / Our national emergency
service, Netcare 911, prides itself on a policy of
responding to any request for emergency
Netcare
911
provides
regular
educational
development programmes and public awareness
guidelines to local fire departments and police
assistance, placing the sanctity of life and ethical
personnel
patient care as a foremost priority. 24% of
activities.
on
Emergency
Medical
Service
patients transported and treated by Netcare 911
during 2003 were indigent (uninsured without
national disaster management / Netcare
fixed income) and as such unable to pay for the
911 provides access and accommodation facilities
emergency care and transportation rendered. The
for Rescue SA in Netcare’s 24-hour Global
cost
of
providing
these
medical
services
amounted to approximately R39 million in 2003.
Netcare 911 offers fully integrated, world-class
pre-hospital
emergency
medical
assistance,
Response Call Centre. Rescue SA is a Section 21
Company which monitors the readiness and
sustainability of the recognised National Rescue
evaluation by road or air and telephonic medical
Team for National Disaster Management. In this
advisory services.
regard, Netcare 911 led and assembled, in
conjunction with the SAMHS, a composite
eastern cape ems / Netcare 911 embarked
on
a
social
investment
project
to
assist
medical and rescue team of volunteers for
dispatch to the Algerian earthquake disaster.
impoverished Eastern Cape communities with an
emergency medical services infrastructure by
sponsoring, in association with Daimler Chrysler SA,
two Mercedes Benz Sprinters with ambulance
conversions.
school of emergency and critical care /
Netcare 911 facilitates and provides community
awareness programmes to several communities on
HIV/AIDS, CPR, first aid, rape and comprehensive
cricket world cup 2003 / Netcare 911 was
information
one of the major sponsors that provided medical
Association, Heart Foundation, Organ Foundation,
and emergency assistance services to the Cricket
relating
to
the
Blood
Donor
Life Line and other crisis centre services.
World Cup 2003.
As an integral component of this sponsorship,
Netcare 911 ensured the transfer of skills in major
event management and operational planning to
sa rugby spineline / Netcare 911 provides
treatment, transportation and medical advice to
Black Economic Empowerment entities within the
rugby teams on a national basis at all schools,
private ambulance industry.
clubs and provincial rugby events where players
65
may have sustained head or spinal injuries. This
South Africa who require a mastectomy cannot
trauma management system is provided in
afford breast reconstruction as it is either not
conjunction with the Chris Burger/Petro Jackson
covered by certain medical scheme options or
Players Fund.
they do not have medical aid.
This
organ donor register / Netcare participated
in establishing, with Wills Database International,
an initiative designed to grow the future organ
project
aims
underpriviledged
to
women
provide
needy
or
who
require
a
mastectomy the chance to undergo breast
reconstructive surgery.
donor base in South Africa by constituting the
National Organ Donor Register.
organ
procurement
skills
gardens
/
Netcare
provides regional organ procurement skills training
for doctors, nurses and paramedics, designed to
increase the knowledge and skills of medical
attendants by promoting the subject of organ
donation and transplantation.
of
remembrance
/
Netcare
Transplant Division established one of South
Africa’s first Gardens of Remembrance dedicated
to those who have donated the “gift of life”. The
Division is also an active participant in the Change
Transplant Support Group which provides for the
pre-, intra- and post-transplant emotional needs
of transplant patients and their families.
netcare prostheses initiative / Often
women who develop breast cancer have to
undergo a mastectomy as part of their treatment.
For most of these patients, the loss of a breast is a
severe emotional loss as well.
netcare atalanta football club / Netcare
sponsors the Netcare Atalanta Football Club
which comprises teams from the under-14
category through to its senior side. The Club is
based in Soweto, Johannesburg, and participates in
Reconstruction of a breast that has been removed
due to cancer or other disease is one of the most
rewarding surgical procedures available today.
New medical techniques and devices have made
certain leagues and fixtures affiliated to the South
African Football Association. The senior side “Here
come the doctors” won its league in 2002 and
was promoted to Reserve League III during 2003.
it possible for surgeons to create a breast that can
come close in form and appearance to matching a
healthcare education to rural areas /
natural breast.
Netcare
Breast reconstruction is an expensive procedure
healthcare education unit equipped with big
and apart from the surgeon’s fee there is the
screen TV, DVD, video recorder and sound system
added cost of a silicone prosthesis which can
which travels to tribal villages throughout the
amount to thousands of rand. Many women in
North West Province broadcasting and distributing
provides
and
sponsors
a
mobile
66
We recognise that
information on basic healthcare, family planning
corporate giving
and HIV/AIDS. The material for this project is
supported by the Faculty of Health Sciences at
enhances our esteem in the
eyes of employees,
the University of Pretoria and is endorsed by the
Royal Bafokeng Nation.
medical
education
bursary
fund
/
Netcare is a founding member and significant
donor to the Manto Tshabalala-Msimang Health
customers, investors and
the general public.
Professionals
Bursary Trust, which
currently
provides bursaries for 40 students from previously
disadvantaged communities wishing to pursue
careers in medicine. In addition, Netcare sponsors
nursing students at universities each year
providing them with opportunities for practical
experience in hospitals and employment contracts
on completion of their studies.
community based education / Netcare
continued its support for the School of Medicine,
Faculty of Health Sciences at the University of
Pretoria, providing a Chair in Community Based
Education. This includes the Departments of
Family Medicine, Public Health and para-medical
which trains students in community settings
(nursing, physiotherapy, occupational therapy,
radiography and human nutrition).
university of pretoria – netcare fund / A
significant donor contract was concluded with the
University of Pretoria to promote, foster and
advance the interests of the University in
establishing practical teaching activities and
creating a practical education and research
environment
within
Netcare
facilities.
67
A further benefit has been the subsidisation of the
families, towards cultural and charitable causes in
employment of medical students in the teaching
communities in which they work and live.
environment.
chair of emergency medicine / Netcare
has donated funds to the University of the
Witwatersrand for the creation of a Division and a
Chair within the Department of Medicine to be
known as “The Netcare Chair of Emergency
conclusion / As a responsible corporate citizen,
Netcare is aware that its success depends on its
ability to help people and organisations grow and
prosper. Netcare finds greater meaning in its work
because of its involvement and participation with
the community.
Medicine”. The sponsorship contract is for an
We recognise that corporate giving enhances our
initial period of five years and at the discretion of
esteem in the eyes of employees, customers,
the Faculty Committee, certain funds may also be
investors and the general public. People like
used for bursaries and scholarships for deserving
working for and dealing with companies that
medical students or registrars.
demonstrate compassion. Netcare’s goal is to
continue investing to help people and community
netcare team / The Netcare “team” effort also
organisations most in need.
includes a contribution of thousands of hours of
At Netcare this is what it means to be an ethical
volunteer work each year by many of our 18 800
business, a successful healthcare institution and a
staff and associates, and in many cases their
good corporate citizen worthy of the public’s trust.
68
Annual Report 2003 / directorate
Executive Directors
Dr Ian Kadish (41)
MBBCh MBA
Dr Jack Shevel (46)
Michael Sacks✥*†(60) / Chairman
MBBCH
CTA CA(SA) AICPA (ISR)
With more than 18 years of experience in
the healthcare industry, Dr Shevel is known
for his exceptional entrepreneurial flair and
in-depth knowledge of this industry. The
results of his pre-defined strategy for
establishing a healthcare provider model
bear testament to his ability and vision.
Michael Sacks acted as an independent
corporate advisor for 25 years prior to his
appointment as Chairman of Netcare. He
has served and continues to serve as a nonexecutive director of a number of listed
companies and Empowerment Committees.
Mr Sacks is also an Officer of the International Association of Political Consultants.
Dr Kadish has extensive experience in
hospital management and healthcare
management consulting in the United
States and Canada. Dr Kadish is responsible
for Information Technology (“IT”) and
Managed Care at Netcare and holds
directorships in various private IT and
managed care related companies in which
Netcare has interests.
Piet Lindeque (40)
CA(SA)
Ingrid Davis (50)
Dip Pharm (MPS)
Dr Richard Friedland† (42) / Chief
Operating Officer
BVSc MBBCh Dip Fin Man MBA
Richard Friedland practiced as a Veterinary
Surgeon in South Africa and the United
Kingdom. After studying medicine and a
short term in practice, he joined Medicross
and was responsible for overall operations
and establishing the medical centres on a
national basis. Dr Friedland joined Netcare
in early 1997 to lead the transformation
and re-engineering of the businesses.
Ingrid Davis has 21 years’ experience as a
qualified pharmacist in the private hospital
industry. Ingrid owns and manages the
pharmacy concessions at Netcare hospitals,
working in conjunction with the division
contracted to provide infrastructural,
administration and logistical support
services. Ingrid is also responsible for
managing various hospitality and allied
divisions within the group.
Piet Lindeque has more than eight years’
healthcare experience and is currently the
Regional Director for the Gauteng East
region.
Dr Sam Rossolimos (51)
MBBCh (DMS) Dip Bus M Prac Acc
Dr Rossolimos has been involved in the
healthcare industry since 1982, with a focus
on design, development and management
of hospitals. Since September 1999,
Dr Rossolimos has been involved with
projects in the Middle East and other
globalisation initiatives.
Bobby Favish (47)✥†
Chief Financial Officer
CA(SA) MBA
Bobby Favish has nine years’ experience as
chief financial officer for JSE listed
companies, as well as ten years’ experience
in merchant banking where he was involved
in a wide range of high-level corporate
finance activities.
✥ Board Audit Committee
* Board Remuneration Committee
† Board Risk Committee
69
Annual Report 2003 / directorate / continued
Dr Azar Jammine✥* (54)
BSc(Hons) BA(Hons) MSC PhD
Dr Jammine has been a Director and Chief
Economist of Econometrix (Pty) Limited
since 1985 and a non-executive director of
many other companies, including Federated
Employers Mutual, Iron Fireman, African
Merchant Bank and Heckett MultiServ.
Dr Reg Bush (48)
MBBCh DCH (SA) Dip Bus Ad
Dr Bush has 14 years’ experience in hospital
operations and healthcare corporate
development. He currently oversees the
Group’s involvement in Ampath, Radiology
and Medicross. He is chairman of MedEmas
(Pty) Limited, serves on the board of
trustees of the Ampath Holdings Trust, and
is a non-executive director of a number of
companies, including DHS (Pty) Limited
and the IMP Group.
Dr Johannes van Rooyen (48)
MBBCh M Med (Clin Path)
Non-Executive Directors
Dr van Rooyen has significant medical and
commercial pathology experience and is
currently the national pathology director of
The Ampath Trust.
Meyer Kahn† (64)
Norman Weltman (55)
CA(SA)
Norman Weltman has been with the Group
since 1993. His portfolios include funder
negotiations and relations, managed
healthcare, radiotherapy and nursing
budgets. He is a director of the Hospital
Association of South Africa.
BA(Law) MBA DCom(hc) SOE
Mr Kahn is the former managing director
and currently the chairman of SAB Miller
plc. He served two-and-a-half years as Chief
Executive of the South African Police
Service. He is also a director of various other
companies and trustee of numerous
organisations.
Hymie Levin✥* (58)
BCom LLB LLM H Dip Tax Law H Dip Co Law
Hymie Levin is a specialist corporate and
tax lawyer. He is the senior partner of HR
Levin Attorneys and his experience spans
more than thirty years. He is also a nonexecutive director of various companies
listed on the JSE.
✥ Board Audit Committee
* Board Remuneration Committee
† Board Risk Committee
70
Annual Report 2003 / directorate and administration
Executive Directors
Business Address and Registered Office
MI Sacks (60)
Registration number 1996/008242/06
76 Maude Street
Sandton 2196
Private Bag X34, Benmore 2010
Telephone +27 (0) 11 301 0000
www.netcare.co.za
CTA CA(SA) AICPA (ISR)
Chairman
Dr J Shevel (46)
MBBCh
Dr RH Friedland (42)
BVSc MBBCh Dip Fin Man MBA
Transfer Secretaries
Chief Operating Officer
Chief Financial Officer
Ultra Registrars (Pty) Limited
11 Diagonal Street, Johannesburg 2001
P O Box 4844, Johannesburg 2000
Telephone +27 (0) 11 832 2652
Dr RH Bush (48)
Principal Bankers
SR Favish (47)
BCom CA(SA) MBA
MBBCh DCH (SA)
IM Davis (50)
Dip Pharm (MPS)
Dr I Kadish (41)
MBBCh MBA
PJ Lindeque (40)
CA(SA)
Dr C Rossolimos (51)
MBBCh (DMS) Dip Bus M Prac Acc
N Weltman (55)
Nedcor Bank Limited
Investec Bank Limited
Citibank, N.A.
Joint Auditors
Fisher Hoffman PKF (Jhb) Inc
Chartered Accountants (SA)
Registered Accountants and Auditors
FHS House, 15 Girton Road, Parktown 2193
Private Bag X30500, Houghton 2041
CA(SA)
Independent Non-executive Directors
Dr APH Jammine (54)
BSc(Hons) BA(Hons) MSC PhD
JM Kahn (64)
BA(Law) MBA DCom(hc) SOE
Non-executive Directors
Grant Thornton
Grant Thornton Office Park
137 Daisy Street, Sandown, Sandton 2196
Private Bag X28, Benmore 2010
Attorneys
HR Levin Attorneys
Kentgate, 64 Kent Road (cnr Oxford Road)
Dunkeld 2196
P O Box 52235, Saxonwold 2193
HR Levin (58)
B Com LLB LLM H Dip Tax Law H Dip Co Law
Sponsor
Dr JA van Rooyen (48)
Merrill Lynch South Africa (Pty) Limited
138 West Street, Sandown, Sandton 2196
MBBCh MMed (Clin Path)
JSE Information
Company Secretary
J Wolpert (59)
CA(SA) FCMA FCIS
Netcare
JSE share code: NTC
ISIN code: ZAE000011953
71
Network Healthcare Holdings Ltd
Annual Report 2003 / financial statements
Directors’ approval of the
Annual financial statements
72
Certificate by company secretary
72
Report of the independent auditors
73
Directors’ report
74
Balance sheets
80
Income statements
81
Cash flow statements
82
Statements of changes
in shareholders’ equity
83
Notes to the financial statements
84
Annexure a – investment in
principal subsidiaries
102
Annexure b – interest in principal
associated entities
and joint ventures
www.netcare.co.za
103
annual financial
statements
a
n
n
u
a
l
f
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
72
Annual Report 2003 / directors’ approval of the annual financial statements / for the year ended 30 September 2003
The
Limited
The annual financial statements are prepared on a going-concern
are responsible for the preparation and integrity of the
directors
of
Network
basis and in accordance with South African Statements of
annual
financial
the
Generally Accepted Accounting Practice. These financial statements
Group.
The
to
are examined by our auditors in conformity with South African
statements
Group’s
external
Healthcare
of
Holdings
the
Company
auditors
are
and
engaged
express an independent opinion on these annual financial
statements.
In order to fulfil this responsibility, the Group maintains internal
Auditing Standards.
The annual financial statements were approved by the board
of directors on 17 November 2003 and are signed on their behalf by:
accounting and administrative control systems designed to provide
reasonable assurance that assets are safeguarded and that
transactions are executed and recorded in accordance with the
Group’s policies and procedures.
The directors are satisfied that such accounting and administrative
control systems have been maintained during the year.
Michael I Sacks
Chairman
Sandton
certificate by company secretary / for the year ended 30 September 2003
I hereby certify that, in accordance with section 268(G)(d) of the
Companies Act 1973, as amended, the Company has lodged with
the Registrar of Companies all such returns as are required of a
public Company in terms of the Act and that such returns are true,
correct and up to date.
J Wolpert CA(SA) FCMA FCIS
Company Secretary
Sandton
17 November 2003
Dr Jack Shevel
73
Annual Report 2003 / report of the independent auditors / for the year ended 30 September 2003
To the shareholders of
NETWORK HEALTHCARE HOLDINGS LIMITED
Audit opinion
In our opinion, the annual financial statements fairly present, in all
material respects, the financial position of the Company and the
We have audited the annual financial statements and Group
Group at 30 September 2003 and the results of their operations
annual financial statements of Network Healthcare Holdings
and cash flows for the year then ended in accordance with South
Limited set out on pages 74 to 103 for the year ended
African Statements of Generally Accepted Accounting Practice and
30 September 2003. These annual financial statements are the
in the manner required by the Companies Act in South Africa.
responsibility of the Company’s directors. Our responsibility is to
express an opinion on these annual financial statements based on
our audit.
Fisher Hoffman PKF (Jhb) Inc
Scope
We conducted our audit in accordance with Statements of South
African Auditing Standards. These standards require that we plan
and perform the audit to obtain reasonable assurance that the
annual financial statements are free of material misstatement. An
audit includes:
● Examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements;
● Assessing the accounting principles used and significant
estimates made by management; and
Grant Thornton
● Evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
Johannesburg
opinion.
17 November 2003
74
Annual Report 2003 / directors’ report / for the year ended 30 September 2003
Your directors have pleasure in presenting their report on the
activities of the Company and of the Group for the year ended
30 September 2003.
Nature of business
Netcare is an investment holding Company and through its
subsidiaries carries on the business as South Africa's largest surgical
and medical private hospital group, providing an extensive range of
general and specialised medical care services throughout the
country.
Financial results
The results of the Group’s operations for the year are set out in the
income statement on page 81.
Aggregate profits and losses of subsidiaries, associates
and joint venture interests
The aggregate profits and losses of the subsidiaries, associates and
joint ventures attributable to the holding Company are:
2003
Rm
2002
Rm
Profits after taxation
658,8
549,1
Losses
(26,1)
(20,7)
Net
632,7
528,4
Special resolutions adopted by subsidiary companies
Subsidiaries, associates and joint ventures
The statutory information relating to special resolutions passed by
subsidiary companies is available from the registered office on
request.
All the minority interests in a subsidiary which holds the
Mulbarton Hospital were acquired during the year. The impact of
this acquisition on the results for the period under review is
immaterial.
Share capital
At the end of the financial year, a transaction between the Group
and Netpartner Investments Limited (“Netpartner”) was
implemented in terms of which:
Details of the authorised and issued share capital of the Company
are reflected in note 9 to the annual financial statements.
– Netpartner was established as an investment company with
the purpose of creating a comprehensive healthcare provider
network;
Issued during the year
Authorised and issued
130 458 498 (2002: 115 254 803) ordinary shares were issued as
follows:
– The Group sold a 20% stake in Medicross for a price of
R50,0 million to Netpartner;
– Netcare issued 100 million shares to Netpartner at a price of
274 cents per share; and
– Netcare invested R218,0 million in Netpartner in consideration
for a 48,4% stake in Netpartner.
These transactions resulted in Netcare raising a net amount of
approximately R106,0 million at year-end
and Netpartner
becoming a significant associate of the Group.
The Group’s 50% investment in the Ampath Trust (“Ampath”),
which was previously accounted for as an associate, is now
accounted for as a joint venture and is proportionately
consolidated.
Details of interests in subsidiaries, associates and joint ventures are
shown on pages 102 and 103.
Date
Number
of shares
2003
Issue
price
R
1. Mulbarton minorities
January 2003
3 000 000
2,95
2. Employee Share
Incentive Scheme
Various
27 458 498
1,19
3. Netpartner
Investments
September 2003 100 000 000
2,74
Details
2003
Total shares issued
130 458 498
Note
1. Acquisition of all the minority interests in Mulbarton Hospital.
2. Exercise of share options during the year under review.
3. Issue to Netpartner Investments Limited on 30 September
2003.
The total amount of share premium arising from the above share
issues was R314,3 million.
75
Annual Report 2003 / directors’ report / continued / for the year ended 30 September 2003
Details
Number
of shares
2002
Date
Issue
price
R
Meeting giving the directors general authority to permit the
Company or a subsidiary of the Company to acquire its own shares.
Treasury shares acquired
2002
1. Clinics minorities
2. Employee Share
Incentive Scheme
3. Mulbarton minorities
Total shares issued
October 2001
98 505 040
2,00
During the year, a subsidiary company acquired 52,7 million
ordinary shares at an effective cost of R79,8 million.
Various
January 2002
10 988 271
5 761 492
0,80
2,39
Directorate
Changes in the Board of Directors are reflected hereunder.
115 254 803
Note
1. Acquisition of all the shares held by minorities in Clinic Holdings
Limited.
2. Exercise of share options during the year under review.
3. Acquisition of additional minority interests in Mulbarton Hospital.
The total amount of share premium arising from the above share
issues was R218,4 million.
Resigned
Mrs SV Zilwa resigned as a non-executive director with effect from
17 January 2003.
Mr P Warrener resigned as an executive director on 23 September
2003.
Retiring directors
Messrs RH Bush, JM Kahn, HR Levin, PJ Lindeque and N Weltman
retire in accordance with the Company’s Articles of Association at
the Annual General Meeting to be held on 23 January 2004, but
offer themselves for re-election.
Acquisition of Company's own shares
Authority
Interests of directors
In terms of the Company’s Articles of Association, members will be
requested to consider a special resolution at the Annual General
The beneficial and non-beneficial interests of the directors of
Netcare in Netcare shares were as follows:
Name of director
Beneficial
number of shares
Direct
Indirect
Non-beneficial
number of shares
Direct
Indirect
Total
number of
shares held
% of
issued
share capital
2003
Executive directors
Ml Sacks
3 600 000
2 591 528
46 291 400
52 482 928
3,43
Dr J Shevel
1 600 000
3 013 750
87 370 394
91 984 144
6,01
Dr RH Friedland
4 587 332
1 724 861
6 312 193
0,41
SR Favish
4 109 100
22 222
4 131 322
0,27
Dr RH Bush
2 334 082
22 222
2 356 304
0,15
IM Davis
3 632 773
1 835 972
5 468 745
0,36
Dr I Kadish
1 204 392
44 444
1 248 836
0,08
2 124 052
0,14
PJ Lindeque
22 222
Dr C Rossolimos
1 439 543
N Weltman
2 360 000
2 101 830
111 111
1 439 543
0,09
2 471 111
0,16
10 937 974
0,72
181 039
0,01
181 138 191
11,83
Non-executive directors
HR Levin
JA van Rooyen
Total
10 937 974
114 372
66 667
35 919 568
9 454 999
135 763 624
76
Interests of directors (continued)
Name of director
Beneficial
number of shares
Direct
Indirect
Non-beneficial
number of shares
Direct
Indirect
Total
number of
shares held
% of
issued
share capital
2002
Executive directors
Ml Sacks
2 000 000
1 500 000
46 191 400
49 691 400
3,42
Dr J Shevel
2 000 000
1 500 000
85 370 394
88 870 394
6,12
Dr RH Friedland
4 587 332
1 500 000
SR Favish
4 109 100
Dr RH Bush
2 334 082
IM Davis
3 160 773
Dr I Kadish
1 204 392
1 500 000
PJ Lindeque
2 101 830
6 087 332
0,42
4 109 100
0,28
2 334 082
0,16
4 660 773
0,32
1 204 392
0,08
2 101 830
0,14
Dr C Rossolimos
1 439 543
1 439 543
0,10
P Warrener
1 000 000
1 000 000
0,07
N Weltman
1 520 000
1 520 000
0,10
10 937 974
10 937 974
0,76
114 372
114 372
0,01
174 071 192
11,98
HR Levin
JA van Rooyen
Total
34 407 568
6 000 000
133 663 624
Notes:
1. Directors holding in excess of 1% in Netcare are: Dr J Shevel 6,01% (2002: 6,12%) and Mr Ml Sacks 3,43% (2002: 3,42%).
2. Network Healthcare Holdings Limited holds 48,4% of Netpartner Investments Limited which, in turn, holds 100 000 000 shares in Network
Healthcare Holdings Limited. The number of shares held by Network Healthcare Holdings Limited directors indirectly through Netpartner
Investments Limited at 30 September 2003, have been reflected in the holdings set out above.
77
Directors’ share options
The following share options were held by the directors at 30 September 2003.
Share options at
30 September
2002
Name of director
Dr RH Bush
IM Davis
SR Favish
Dr RH Friedland
Dr I Kadish
PJ Lindeque
Dr C Rossolimos
Ml Sacks
Dr J Shevel
N Weltman
Total
Exercise
price
(cents)
Number
Share options
exercised during the year
Number
Market
price at
exercise
date
(cents)
Share options at
30 September
2003
Benefit
arising on
exercise
of options
(R)
Number
100
636 000
—
636 000
62
1 200 000
—
1 200 000
265
500 000
—
500 000
100
120 000
80 000
413
250 400
40 000
62
2 800 000
1 400 000
413
4 914 000
1 400 000
265
1 500 000
600 000
413
888 000
900 000
100
80 000
40 000
390
116 000
40 000
62
1 200 000
400 000
390
1 312 000
800 000
265
500 000
200 000
390
250 000
300 000
100
80 000
80 000
62
2 320 000
2 320 000
265
1 500 000
1 500 000
100
120 000
80 000
431
264 800
40 000
62
1 800 000
400 000
431
1 476 000
1 400 000
265
750 000
100
636 000
318 000
390
922 200
318 000
62
150 000
50 000
390
164 000
100 000
265
500 000
200 000
390
250 000
300 000
100
2 000 000
2 000 000
62
200 000
200 000
265
500 000
500 000
100
200 000
62
4 000 000
265
1 500 000
100
120 000
62
3 200 000
265
1 500 000
750 000
200 000
1 600 000
365
4 848 000
2 400 000
1 500 000
120 000
1 600 000
365
4 848 000
1 600 000
1 500 000
100
80 000
40 000
365
106 000
40 000
62
62
1 600 000
400 000
400 000
308
365
984 000
1 212 000
800 000
265
750 000
32 042 000
750 000
7 808 000
22 805 400
24 234 000
78
Directors’ share options (continued)
1. No share options were granted during the year under review.
2. The share option exercise terms are detailed on page 79.
3. P Warrener resigned as an executive director on 23 September 2003 – his details are as follows:
Share options at
30 September 2002
Number
Share options
exercised during the year
Exercise
price
(cents)
120 000
100
1 600 000
62
500 000
265
2 220 000
Number
Share options at
30 September 2003
Market
price at
exercise
date
(cents)
40 000
40 000
400 000
400 000
200 000
312
391
312
391
391
1 080 000
Benefit
arising on
exercise
of options
(R)
Exercise
price
(cents)
Number
84 800
116 400
1 000 000
1 316 000
252 000
Not applicable at
30 September 2003 –
resigned as Director on
23 September 2003
2 769 200
Directors’ emoluments
Emoluments paid to directors of the Company by the Company and its subsidiaries (excluding gains on share options exercised) for the year to
30 September 2003, are set out below:
2003
Executive directors (R000)
Dr J Shevel
Ml Sacks
Dr RH Bush
IM Davis
SR Favish
Dr RH Friedland
Dr I Kadish
PJ Lindeque
Dr C Rossolimos
P Warrener (resigned 23 September 2003)
N Weltman
Dr APH Jammine
JM Kahn
HR Levin
JA van Rooyen
SV Zilwa (resigned 17 January 2003)
Retirement
Salary contributions
Performance
bonus
Other
allowances
2003
Total
2002
Total
1 961
1 650
1 164
1 244
1 139
1 708
1 305
784
896
1 044
915
—
80
86
90
96
144
105
60
74
84
82
1 500
750
300
750
400
1 000
450
203
250
350
450
—
10
101
64
130
10
10
166
133
10
108
3 461
2 490
1 651
2 148
1 765
2 862
1 870
1 213
1 353
1 488
1 555
2 800
2 200
1 500
1 900
1 600
2 500
1 500
1 100
1 200
1 200
1 200
13 810
901
6 403
742
21 856
18 700
Fees
(R000)
Fees
(R000)
92
82
92
72
—
58
56
67
54
54
338
289
79
Contracts
Employee Share Incentive Scheme
The following directors are restrained from competing with the
The Network Healthcare Holdings Limited Share Incentive Scheme
Group and have entered into service agreements with the
has been established for the purpose of facilitating the acquisition
Company for periods not exceeding one year:
of shares in the Company by the Group's employees. At
IM Davis, SR Favish, Dr RH Friedland, Dr I Kadish, Dr J Shevel.
30
September
2003
approximately
90,0
million
(2002:
123,0 million) shares had been “reserved” from the capital of
Company secretary
Netcare in respect of options granted to employees to acquire
The office of company secretary was held by J Wolpert during the
shares in the Company. 15,7 million options are exercisable at
period under review. The secretary's business, postal and e-mail
R1,00 per share in five equal annual tranches from 1 June 2000,
addresses are as follows:
24,0 million options are exercisable at R0,62 per share in five equal
Business address
Postal address
76 Maude Street
Private Bag X34
Sandton 2196
Benmore 2010
annual tranches from 1 June 2001 and 50,3 million options are
exercisable at R2,65 per share in five equal annual tranches from
1 June 2002. The options expire after a period of ten years from
issue date. A summary of share option movements during the year
E-mail address
is reflected in note 9.
jwolpert@ho.netcare.co.za
Events after the balance sheet date
The directors are not aware of any matter or circumstance
Details of the capital distributions for the year are:
Interim distribution of 6,0 cents
(2002: 4,5 cents) per share paid
on 14 July 2003
Final distribution of 9,0 cents
(2002: 7,0 cents) per share payable
on 9 February 2004
occurring between the balance sheet date and the date of this
2003
Rm
2002
Rm
84,6
65,2
137,8
98,5
222,4
163,7
Capital distributions are accounted for on the date of declaration.
As a result, the final capital distribution of 9,0 cents per share is
not reflected in the financial statements for the year ended
30 September 2003.
report that materially affects the results of the Group for the year
ended 30 September 2003 or the financial position at that date.
80
Annual Report 2003 / balance sheets / at 30 September 2003
GROUP
COMPANY
Notes
2003
Rm
2002
Rm
3
2 704,0
2 413,0
—
—
Intangible assets
4
169,6
89,8
—
—
1 065,3
1 281,7
488,6
181,6
283,6
16,1
2003
Rm
2002
Rm
Assets
Non-current assets
Investments in subsidiaries
5
6
Deferred taxation
12
41,5
41,5
—
—
28
426,7
183,1
—
—
3 830,4
2 909,0
1 348,9
1 297,8
Total non-current assets
Current assets
Inventories
7
376,5
233,6
—
—
Accounts receivable
8
1 159,9
854,0
12,0
—
1 536,4
1 087,6
12,0
—
5 366,8
3 996,6
1 360,9
1 297,8
Total current assets
Total assets
Equity and liabilities
Capital and reserves
Share capital and premium
Reserves
9
901,7
849,1
1 021,4
903,5
10
2 159,9
1 338,6
467,2
392,9
3 061,6
2 187,7
1 488,6
1 296,4
71,8
7,7
—
—
3 133,4
2 195,4
1 488,6
1 296,4
899,4
752,1
921,5
597,2
Minority interest
11
Long-term
Short-term
(131,0)
—
(2,6)
—
419,9
365,5
(442,0)
(210,6)
12
268,1
128,6
0,6
—
Accounts payable
13
824,1
715,4
2,7
3,2
Provisions
14
47,0
34,3
—
—
—
13,3
—
—
194,8
157,5
—
0,8
Total current liabilities
1 065,9
920,5
2,7
4,0
5 366,8
3 996,6
1 360,9
1 297,8
Net equity per share (cents)
200,0
150,6
Cash and cash equivalents
—
(131,0)
—
(2,6)
Deferred taxation
Current liabilities
Vendors for acquisition
Taxation payable
81
Annual Report 2003 / income statements / for the year ended 30 September 2003
GROUP
Notes
2003
Rm
COMPANY
2002
Rm
Revenue
15
6 012,6
4 812,3
Net operating costs before depreciation and amortisation
16
(4 802,2)
(3 869,4)
Operating profit before depreciation
and amortisation (EBITDA)
1 210,4
(192,5)
942,9
(159,8)
—
2002
Rm
—
25,0
(1,6)
25,0
(1,6)
—
—
17
Net finance charges
18
(157,6)
860,3
678,4
25,0
(2,2)
19
(202,5)
(170,6)
(0,6)
(0,2)
657,8
507,8
24,4
(2,4)
0,4
20,5
—
658,2
528,3
24,4
Profit before taxation
Taxation
Profit after taxation
Attributable earnings of associates
Profit after taxation including associates
Minority interest
1 017,9
(1,1)
Earnings attributable to ordinary shareholders
783,1
2003
Rm
(104,7)
(2,3)
657,1
526,0
25,0
(1,6)
—
(0,6)
—
—
(2,4)
—
24,4
(2,4)
Earnings per share (cents)
Attributable earnings
20.1
46,0
36,4
Fully diluted attributable earnings
20.3
43,9
34,5
Headline earnings
20.2
45,9
36,7
Fully diluted headline earnings
20.3
43,8
34,8
Capital distributions (cents)
Interim
6,0
4,5
6,0
4,5
Final
9,0
7,0
9,0
7,0
82
Annual Report 2003 / cash flow statements / for the year ended 30 September 2003
GROUP
Notes
2003
Rm
21.1
1 189,0
21.2
(310,2)
COMPANY
2002
Rm
2003
Rm
2002
Rm
941,2
(2,5)
(1,6)
(116,9)
(12,5)
(1,8)
(15,0)
(3,4)
878,8
824,3
(157,6)
(104,7)
—
(0,6)
(153,6)
(130,5)
(0,8)
0,3
567,6
589,1
(15,8)
(3,7)
(183,1)
(137,4)
(197,6)
(143,0)
384,5
451,7
(213,4)
(146,7)
(760,7)
(533,7)
(215,8)
(199,9)
21.4
(144,5)
(153,7)
Investment to expand operations
21.5
(531,0)
(230,4)
(213,8)
(3,7)
Net investment in businesses
21.6
(5,4)
(149,6)
(2,0)
(196,2)
Cash generated from operating activities
Net finance charges
Taxation paid
21.3
Capital distributions paid
Net cash retained
Cash utilised in investment activities
Investment to maintain operations
—
—
Share buyback by subsidiary
(79,8)
—
—
—
Cash effects of financing activities
305,3
8,1
557,6
416,2
305,3
8,1
315,5
218,9
—
—
242,1
197,3
Net equity movements
Movements in subsidiary companys’ loans
21.7
(70,9)
(73,9)
128,4
69,6
(76,4)
(1,0)
—
—
(147,3)
(74,9)
128,4
69,6
(752,1)
(677,2)
2,6
At end of year
(899,4)
(752,1)
131,0
Net cash resources assumed on acquisition of businesses
(Increase)/decrease in net interest-bearing debt
(67,0)
2,6
83
Annual Report 2003 / statements of changes in shareholders’ equity / for the year ended 30 September 2003
GROUP
COMPANY
2003
Rm
2002
Rm
2003
Rm
2002
Rm
849,1
767,6
903,5
827,6
52,6
81,5
117,9
75,9
1,3
1,1
1,3
1,1
Share premium
314,3
218,4
314,3
218,4
Share buyback
(79,8)
—
—
—
(0,1)
(0,6)
(0,1)
(0,6)
(183,1)
(137,4)
(197,6)
(143,0)
901,7
849,1
1 021,4
903,5
Balance at beginning of year
Share capital and premium movements
Issue of shares
Share issue and listing expenses
Balance at end of year
Non-distributable reserves
Adjustment to opening balances on adoption of AC133 (note 27)
Surplus on sale of subsidiary
Foreign currency translation reserves
Fair value surplus on available for sale investments net of tax
Contingency reserve
—
—
403,2
403,2
46,1
—
—
—
—
—
23,7
—
(7,9)
—
—
—
118,6
—
49,9
—
7,4
—
—
—
164,2
—
476,8
403,2
1 338,6
812,6
(10,3)
(7,9)
657,1
526,0
24,4
(2,4)
—
—
(23,7)
—
1 995,7
1 338,6
(9,6)
Retained earnings
Transfer to non-distributable reserves
(10,3)
84
Annual Report 2003 / notes to the financial statements / for the year ended 30 September 2003
1.
Principal accounting policies
Basis of presentation
The annual financial statements are prepared on the historical cost basis and incorporate the following principal accounting policies which
are consistent with those of the previous year, save for the change set out in note 27, and comply with South African Statements of
Generally Accepted Accounting Practice.
Basis of consolidation
The Group annual financial statements incorporate those of the Company, its subsidiaries, contracted entities and a proportionate share
of the annual financial statements of joint ventures. Results of associates are equity accounted.
The results of subsidiaries or joint ventures acquired are included from the effective dates of acquisition to the effective dates of disposal.
Inter-company transactions and balances have been eliminated.
Intangible assets
Intangible assets are recognised only when the cost can be measured reliably and the future expected benefits attributable to the asset
are assured.
Goodwill is the excess of the cost of an acquisition over the interest in the fair value of the identifiable assets and liabilities acquired at
acquisition date.
Intangible assets are carried at cost less amortisation and any accumulated impairment losses.
Amortisation is provided on all intangible assets to write down the cost on the straight-line basis over their estimated economic lives as
follows:
Goodwill
Not exceeding 20 years
Development expenditure
3 to 10 years
Intangible assets are further written down to the extent that the unamortised balances will in all probability no longer be recovered from
expected future economic benefits.
Expenditure on research is expensed as incurred.
Impairment
The carrying value of assets is reviewed at balance sheet date to assess whether there is any indication of impairment. If any such
indication exists, the recoverable amount of the asset is estimated. Where the carrying value exceeds the estimated recoverable amount,
such assets are written down to their recoverable amounts.
Subsidiaries
Subsidiaries are enterprises controlled by the Company. Control is achieved where the Company has the power to govern the financial and
operating policies of an investee enterprise so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective
date of acquisition up to the effective date of disposal.
The identifiable assets and liabilities of enterprises acquired are assessed and included in the balance sheet at their fair values at the date
of acquisition.
A schedule of the Group’s principal subsidiaries is set out in Annexure a.
Contracted entities
Contracted entities are entities that provide components of the comprehensive healthcare services which are provided by the Group on
an outsourced basis.
Investment in associates
An associate is an enterprise in which the Group has significant influence and which is neither a subsidiary nor a joint venture.
Investments in associates are accounted for under the equity method in the preparation of the Group annual financial statements,
adjusted for impairment losses.
Details of the Group’s principal associates are set out in Annexure b.
Joint ventures
A joint venture is a contractual arrangement between the Company and another party to undertake an economic activity which is subject
to agreed sharing of control. Interests in joint ventures are stated at cost less any provision for impairment. In the consolidated financial
statements, interests in joint ventures are accounted for using the proportionate consolidation method.
Additional details about the Group’s principal joint ventures are reflected in Annexure b.
85
Annual Report 2003 / notes to the financial statements / continued / for the year ended 30 September 2003
1.
Principal accounting policies (continued)
Land is stated at cost and is not depreciated.
The depreciation charge for medical instruments is the estimated average level of expenditure required to maintain their operating
capability and approximates a straight-line write-down over five years.
All other assets are depreciated on either the straight-line or reducing balance bases at rates calculated over the following estimated useful lives:
Buildings
up to 50 years from date of acquisition
Plant and equipment
three to ten years
Borrowing costs and certain direct costs relating to major capital projects are capitalised during the period of construction.
Initial supplies of medical instruments acquired when establishing or expanding a hospital, as well as replacements of instruments, are
stated at cost.
Finance leases
Assets held under finance leases are capitalised. At the commencement of the leases, these assets are recorded at their cash cost
equivalent and the related liability is recognised at an equivalent amount. Finance charges are charged over the periods of the leases
based on the effective rates of interest.
Foreign currencies
Transactions and balances
Transactions denominated in foreign currencies are translated at the rate of exchange ruling at the transaction date. Monetary items
denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. Gains or losses arising on
translation are credited to or charged against income.
Foreign entities
All foreign subsidiaries are classified as foreign entities for the purposes of foreign currency translation. The financial statements of foreign
entities are translated into South African Rand as follows:
● assets, including intangibles such as goodwill and liabilities, at rates of exchange ruling at balance sheet date; and
● income, expenditure and cash flow items at weighted average rates.
All resulting exchange differences are reflected in a foreign currency translation reserve as part of shareholders’ equity. On disposal, such
translation differences are recognised in the income statement as part of the cumulative gain or loss on disposal.
Inventories
Inventories, comprising medical consumables held by contracted entities, are valued at the lower of cost and net realisable value
determined on the first-in, first-out basis.
Other consumables, including crockery, cutlery, linen and soft furnishings are valued at average cost and written-down with regard to their
age and condition.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, for which it is probable
that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount
of the obligation can be made.
Revenue and income recognition
Revenue comprises the amount charged for accommodation, theatre fees and medical consumables, but excludes value added tax.
Revenue within the Group is eliminated on consolidation. Revenue also includes administration fees charged to third parties.
Revenue from charges to patients is recognised when the service giving rise to this revenue is rendered.
Interest is recognised on a time proportion basis that takes into account the effective yield on the asset.
Dividends are recognised when the shareholders’ right to receive payment is established.
Retirement benefits
Retirement funds
Current contributions to the Group’s defined contribution retirement funds are based on current service and current salary and are
recognised in the results for the year.
Medical funds
Medical aid contributions are recognised as an expense in the period during which the employees render services to the Group. In
addition, provision is made for post-employment medical obligations based on the net present value of the liability for services rendered
to date. These obligations were valued in 2002 by C A Scott, an independent, qualified actuary. It is envisaged that re-valuations will be
implemented when appropriate, but at intervals no greater than four years.
86
1.
Principal accounting policies (continued)
Taxation
Deferred taxation is provided using the balance sheet liability method. Full provision is made for all temporary differences between the
taxation base of an asset or liability and its balance sheet carrying amount. Deferred taxation assets are raised in respect of assessed
losses where it is probable that future taxable profits will be available to utilise these losses in the foreseeable future.
Financial instruments
Initial recognition and measurement
Financial instruments are recognised when the Group becomes a party to the transaction. Initial measurement is at cost, which includes
transaction costs. Subsequent to initial recognition, financial instruments are measured as follows:
Investments
Financial investments, other than held-to-maturity investments, are measured at fair value. Fair value represents the current market value
where a regulated market exists. Otherwise fair value is determined utilising appropriate methodology including discounted cash flow
models. If fair values cannot be measured reliably, the financial instrument is valued at cost less impairment.
Changes in the fair value of held-for-trading investments are recognised in the income statement in the period in which they arise.
Changes in the fair value of available-for-sale investments are deferred in equity and recognised in the income statement on disposal.
Held-to-maturity investments are shown at amortised cost using the effective interest rate method.
Investments in subsidiaries, joint ventures and associated companies are stated at cost less impairments in the holding company’s
financial statements.
Provisions are made for any impairment in the value of investments.
Trade and other receivables
Trade and other receivables originated by the enterprise are stated at fair value of consideration received less provision for doubtful debts.
Cash and cash equivalents are measured at fair value.
Financial liabilities
Financial liabilities are recognised at amortised cost, namely original debt less principal payments and amortisations, except for derivatives
which are subsequently measured at fair value.
Derivative instruments
Derivatives are measured at fair value. Gains and losses on subsequent measurement are recognised as follows:
– No hedging relationship
Gains and losses arising from the fair value measurement of financial instruments that are not part of a hedging relationship are
included in the results of the period in which they arise.
– Fair value hedges
Gains and losses from measuring fair value hedging instruments are recognised immediately in the results of the period in which they arise.
– Cash flow hedges
Gains and losses arising from the fair value measurement of the hedging instruments are initially recognised directly in equity. If the
forecast transaction results in the recognition of an asset or liability, then the cumulative amount recognised in equity is adjusted
against the initial measurement of the asset or liability. For other cash flow hedges, the cumulative amount recognised in equity is
included in net profit or loss in the period when the forecasted transaction affects profit or loss.
Foreign exchange contracts, financial futures, options and warrants
Foreign exchange contracts, financial futures, options and warrants are revalued to fair value at the balance sheet date and both realised
and unrealised profits and losses are accounted for in the income statement for the period.
Cost of sales
Cost of sales consist of the cost of inventories which have been expensed during the year, together with personnel costs and related
overheads which are directly attributable to the provision of goods and services.
Treasury shares
Treasury shares held by subsidiary companies are deducted from share capital and premium. These shares are not included in the number
of shares in issue for purposes of calculating earnings per share and certain other performance ratios.
2.
Definitions
Netcare Group or “the Group”
Network Healthcare Holdings Limited and its subsidiaries, contracted entities, associates and incorporated joint ventures.
Netcare
Network Healthcare Holdings Limited.
87
2.
Definitions (continued)
Issued share capital, share premium and reserves.
Ordinary shareholders’ equity divided by the number of shares in issue at the year-end date.
Tangible net equity per share
Net equity per share adjusted for intangible assets.
Earnings per share
Earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year.
Headline earnings
This comprises the earnings attributable to ordinary shareholders after adjusting for profits and losses on items of a capital nature in
accordance with the guidelines set out in AC306 and Circular 7/2002.
Return on ordinary shareholders’ equity
Headline earnings attributable to ordinary shareholders divided by average ordinary shareholders’ equity.
Ordinary shareholders’ equity and minority interest.
Interest cover
Operating profit divided by interest paid.
NACM
Nacm represents an interest rate expressed as “nominal annual compounded monthly”.
Debt : equity ratio
Net interest-bearing debt to total shareholders’ equity.
Debt net of cash and cash equivalents.
Operating profit return on net assets
Operating profit and pre-tax income from associates divided by average capital employed.
Capital employed
Total shareholders’ equity and net interest-bearing debt.
EBIT
Earnings before interest and taxation.
EBITDA
Earnings before interest, taxation, depreciation and amortisation.
Attributable cash flow per share
Cash inflow from operating activities after adjusting for minority interests divided by the weighted average number of shares in issue
during the year.
Cash equivalent earnings
This comprises the earnings attributable to ordinary shareholders after adjusting for attributable non-cash charges and credits, including
equity accounted retained earnings divided by the weighted average number of shares in issue during the year.
Cash realisation rate
This is the rate at which cash equivalent earnings are actually realised and is derived by dividing attributable cash flow per share by cash
equivalent earnings per share.
The JSE
The JSE Securities Exchange South Africa.
Effective tax rate
Taxation expressed as a percentage of headline net income before tax.
Earnings yield
Headline earnings per share divided by the closing share price on the JSE.
Price : earnings ratio
The closing share price on the JSE divided by the headline earnings per share.
88
GROUP
3.
COMPANY
2003
Rm
2002
Rm
2 173,1
2 006,8
3.1
Land and buildings
– Cost or valuation
– Accumulated depreciation
– Impairment loss
Carrying value of land and buildings
3.1.1
(126,6)
(101,7)
(26,0)
(26,0)
2 020,5
1 879,1
1 763,2
1 405,4
Land and buildings are stated at cost or valuation less
impairment losses.
Mills Fitchet Valuation Surveyors carried out an external valuation
of the Group’s properties based on open market value
effective 1 October 2001.
This valuation, taken together with subsequent additions valued
at cost less accumulated depreciation has resulted in an aggregate
value of land and buildings of R2 701,2 million at year end.
The revaluation surplus has not been recognised in the
financial statements.
Properties are valued at intervals not exceeding five years.
3.1.2
A register containing details of land and buildings is available
for inspection at the registered office of the Company.
3.1.3
Land and buildings having a book value of R1 227,9 million
(2002: R1 162,4 million) are encumbered by bonds in terms
of various outstanding liabilities referred to in note 11.3.
3.2
Plant and equipment
Plant and equipment
– Cost
– Accumulated depreciation
Carrying value of plant and equipment
3.2.1
(871,5)
683,5
533,9
2 704,0
2 413,0
Plant and equipment is encumbered per details reflected
in note 11.1
Carrying value of property, plant and equipment
3.3
(1 079,7)
Movement in property, plant and equipment
Land and buildings:
1 879,1
1 719,7
Additions
Net book value at beginning of year
166,3
181,5
Depreciation
(24,9)
(22,1)
Net book value at end of year
2 020,5
1 879,1
Plant and equipment:
Net book value at beginning of year
533,9
483,1
Additions
310,3
186,3
Disposals
Depreciation
Net book value at end of year
—
(1,7)
(160,7)
(133,8)
683,5
533,9
2003
Rm
2002
Rm
89
GROUP
4.
2003
Rm
2002
Rm
90,7
(65,5)
2003
Rm
2002
Rm
1 338,1
1 336,1
Intangible assets
4.1
Goodwill
Cost at beginning of year
Hindsight adjustments
Acquisitions
Cost at end of year
4.2
—
51,5
80,6
104,7
171,3
90,7
Accumulated amortisation at beginning of year
(3,0)
0,9
Amortisation current year
(6,9)
(3,9)
Accumulated amortisation at end of year
(9,9)
(3,0)
Net carrying value at end of year
161,4
87,7
Development expenditure
Cost at beginning of year
3,8
3,8
Amounts capitalised
6,5
—
Cost at end of year
10,3
3,8
Accumulated amortisation at beginning of year
(1,7)
(0,4)
Amortisation current year
(0,4)
(1,3)
Accumulated amortisation at end of year
(2,1)
(1,7)
8,2
2,1
169,6
89,8
Net carrying value at end of year
Total intangible assets
5.
COMPANY
5.1
Shares at cost less amounts written off
Amounts owing to
(535,5)
(341,9)
Amounts owing by
262,7
287,5
1 065,3
1 281,7
5.2
A portion of the loan account of a certain subsidiary
amounting to R104,5 million (2002: R104,5 million) has been
subordinated in favour of other creditors.
5.3
A schedule of the Group’s principal subsidiaries is set out
in Annexure a.
90
GROUP
2003
Rm
6.
COMPANY
2002
Rm
2003
Rm
2002
Rm
6.1
Interest in associated entities and joint ventures
6.1.1
Associated entities (unlisted)
6.1.2
Investments
268,6
—
267,9
—
Loans
105,3
138,4
—
—
373,9
138,4
267,9
—
3,1
—
—
115,4
40,1
15,7
16,1
488,6
181,6
283,6
16,1
488,6
282,4
283,6
16,1
330,7
201,9
—
—
45,8
31,7
—
—
376,5
233,6
—
—
Joint ventures (unlisted)
6.2
(0,7)
Other investments and loans
Unlisted investments and non-current loans
Directors’ valuation of investments and loans
Details of the Group’s principal associated entities
and joint ventures are set out in Annexure b.
7.
Inventories
Medical consumables
Crockery, cutlery, linen, soft furnishings and other consumables
8.
9.
Accounts receivable
Trade debtors
924,8
700,2
—
—
Other debtors and prepayments
235,1
153,8
12,0
—
1 159,9
854,0
12,0
—
25,0
25,0
25,0
25,0
“N” ordinary shares of 0,01 cent each
—
0,1
—
0,1
“N” cumulative convertible preference
shares of 0,01 cent each
—
0,1
—
0,1
9.1
Authorised share capital
2 500 000 000 ordinary shares of 1,0 cent each
91
GROUP
9.
COMPANY
2003
Rm
2002
Rm
2003
Rm
2002
Rm
16,4
15,1
16,4
15,1
(143,2)
(63,4)
—
—
1 005,0
888,4
Share capital and premium (continued)
9.2
Issued share capital
1 641 859 275 ordinary shares of 1,0 cent each
(2002: 1 511 400 777)
Treasury shares held
111 134 998 (2002: 58 479 452) ordinary shares
acquired by subsidiaries, representing 6,8%
(2002: 3,9%) of the Company’s issued share capital
The treasury shares held do not carry voting rights
and are not taken into account in the calculation
of earnings per share
Share premium
Arising on share issues
Share issue expenses
9.3
1 028,5
897,4
897,4
314,3
(183,1)
(0,1)
817,0
218,4
(137,4)
(0,6)
Total share capital and premium
2003: 1 530 724 277 ordinary shares (2002: 1 452 921 325
ordinary shares)
901,7
849,1
1 021,4
903,5
Unissued ordinary shares (number of shares – million)
Under control of the directors
Reserved for the Employee Share Incentive Scheme
768,1
90,0
865,6
123,0
768,1
90,0
865,6
123,0
Unissued ordinary shares at 30 September 2003
858,1
988,6
858,1
988,6
888,4
314,3
(197,6)
(0,1)
813,6
218,4
(143,0)
(0,6)
The unissued ordinary shares are under the control of the
directors until the next Annual General Meeting.
9.4
9.5
Reconciliation of issued shares (million)
In issue at beginning of year
Issued during year
Share buyback (treasury shares)
1 452,9
130,5
(52,7)
1 337,7
115,2
—
1 511,4
130,5
—
1 396,2
115,2
—
In issue at end of year
1 530,7
1 452,9
1 641,9
1 511,4
Reconciliation of share options (million)
Options at beginning of year
Options granted
Options exercised or lapsed
Options unexercised at end of year
123,0
—
(33,0)
95,1
54,0
(26,1)
123,0
—
(33,0)
95,1
54,0
(26,1)
90,0
123,0
90,0
123,0
92
GROUP
COMPANY
2002
Rm
2003
Rm
2002
Rm
—
(7,9)
164,7
7,4
—
—
—
—
426,9
—
49,9
—
403,2
—
—
—
164,2
—
476,8
403,2
Retained earnings
1 995,7
1 338,6
Total reserves
2 159,9
1 338,6
467,2
392,9
2003
Rm
10. Reserves
10.1
10.2
Non-distributable reserves
Surplus on disposal of subsidiaries
Foreign currency translation reserves
Fair value surplus on available for sale investments
Contingency reserve
(9,6)
(10,3)
11. Net interest-bearing debt
11.1
Secured liabilities
Secured in terms of suspensive sale agreements over
plant and equipment having a book value of R467,3 million
(2002: R351,3 million). The liabilities bear variable interest
rates currently between 10,2% and 15,9% nacm (2002: between
12,7% and 15,6% nacm), and are repayable in monthly
instalments or in terms of banking facilities.
434,3
299,3
—
—
11.2
Unsecured long-term loans
Interest rates currently between 11,1% and 13,1% nacm
(2002: between 13,7% and 14,3% nacm).
359,9
123,6
—
—
11.3
Secured long-term financial instruments
Fair value of financial instruments issued by the Group.
The term of the instruments is over a period ending in
2009, although arrangements are in place for early
redemption from 2007. The liability incurs a floating
interest rate, currently at 11,8% nacm (2002: 13,7% nacm).
Secured by covering bonds registered over properties with
a book value of R1 227,9 million (2002: R1 162,4 million),
and a pledge of shares in certain subsidiaries.
425,5
539,8
—
—
1,7
—
—
—
11.4
Unsecured short-term loans
11.5
Moneymarket promissory notes
11.6
Promissory notes bearing interest at a rate of 11,7% nacm
Repayable as follows:
Within one year
One to two years
Two to three years
Three to four years
Over four years
120,0
—
—
—
(442,0)
(210,6)
(131,0)
(2,6)
899,4
752,1
(131,0)
(2,6)
419,9
219,7
352,8
114,0
235,0
365,5
252,6
144,3
85,1
115,2
1 341,4
(442,0)
962,7
(210,6)
—
(131,0)
—
(2,6)
899,4
752,1
(131,0)
(2,6)
—
—
—
—
—
—
—
—
—
—
93
GROUP
COMPANY
2003
Rm
2002
Rm
2003
Rm
2002
Rm
87,1
59,9
Deferred tax liability
Deferred tax asset
128,6
(41,5)
94,0
(34,1)
Movement:
Hindsight adjustments
Other temporary differences
0,2
—
139,3
(0,9)
(7,4)
35,5
0,6
—
226,6
87,1
0,6
—
Deferred tax liability
Deferred tax asset
268,1
(41,5)
128,6
(41,5)
0,6
—
—
—
Analysis of closing balance:
Other temporary differences
Assessable losses
25,4
242,7
(41,5)
25,2
103,4
(41,5)
—
0,6
—
—
—
—
226,6
87,1
0,6
—
470,8
353,3
341,3
374,1
—
2,7
—
3,2
824,1
715,4
2,7
3,2
43,4
3,6
31,4
2,9
—
—
—
—
47,0
34,3
—
—
4 625,1
569,3
392,2
426,0
3 992,6
489,6
42,5
287,6
6 012,6
4 812,3
3 855,7
946,5
3 179,7
689,7
—
(25,0)
—
1,6
4 802,2
3 869,4
(25,0)
1,6
12. Deferred taxation
13. Accounts payable
Trade creditors
Other payables
14. Provisions
Post-retirement medical aid obligations
Anticipated shortfall on insurance claims
15. Revenue
Hospitals
Primary Care Clinics (“Medicross”)
Joint ventures
Other*
16. Net operating costs
Cost of sales
Other net operating costs
*Comprises revenue generated predominantly by Traumanet, Netcare International and SAA-Netcare Travel Clinics.
94
GROUP
COMPANY
2003
Rm
2002
Rm
2003
Rm
2002
Rm
8,8
—
23,7
—
—
(1,7)
—
—
—
3,8
—
17. Operating profit
Operating profit is stated after taking into account:
Income
Profit on disposal of investments
Profit on disposal of plant and equipment
Fair value adjustments on held for trading assets
14,2
Charges
Amortisation of development expenditure
0,4
1,3
Amortisation of goodwill
6,9
3,9
Auditors’ remuneration
6,5
5,3
Current year
5,6
5,1
Prior year
0,6
—
Fees for other services
0,3
0,2
185,6
155,9
3,0
—
Total employee costs
2 036,8
1 621,4
Employee costs
1 948,0
1 545,6
88,8
75,8
Operating lease charges
100,0
90,8
Land and buildings
78,8
74,8
Other
21,2
16,0
47,7
33,6
21,9
18,7
21,9
18,7
0,3
0,3
22,2
19,0
Depreciation – property, plant and equipment
Foreign exchange losses
Retirement benefit contributions
Technical, managerial and secretarial services
Directors’ emoluments
Executive directors
Paid by subsidiaries
Basic remuneration, bonuses, retirement and
medical benefits
For services as directors
Details of directors’ emoluments are reflected on page 78.
95
GROUP
COMPANY
2003
Rm
2002
Rm
2003
Rm
2002
Rm
Interest paid
234,4
171,4
—
1,0
Finance income received
(76,8)
(66,7)
—
(0,4)
157,6
104,7
—
0,6
200,0
139,9
18. Net finance charges
19. Taxation
19.1
South African normal taxation
Current
Prior years
—
—
(9,7)
(4,1)
—
0,2
11,4
Deferred taxation
Current
35,4
0,6
—
—
(0,6)
—
—
0,8
—
—
—
202,5
170,6
0,6
0,2
30,0
30,0
Permanent differences
(4,2)
(2,1)
Prior year adjustments
(1,1)
(0,6)
Utilisation of assessed losses
(1,2)
(2,3)
Effective rate
23,5
25,0
198,5
207,3
Prior years
Secondary tax on companies
Net taxation for the year
19.2
Reconciliation of rate of taxation (%)
Standard rate
Adjusted for:
19.3
Estimated taxation losses
Unused tax losses available for set-off against
future taxable income (Rm)
20. Earnings per share
20.1
Attributable earnings per share
Earnings (cents)
Weighted average number of shares (millions)
20.2
36,4
1 444,8
Headline earnings per share
Earnings (cents)
45,9
36,7
1 428,8
1 444,8
Attributable earnings – fully diluted (cents)
43,9
34,5
Headline earnings – fully diluted (cents)
43,8
34,8
1 428,8
1 444,8
67,7
79,1
1 496,5
1 523,9
20.3
46,0
1 428,8
Fully diluted earnings per share
Dilutive effect of employee share options (millions)
96
GROUP
COMPANY
2003
Rm
2002
Rm
657,1
526,0
6,9
3,9
(8,8)
—
2003
Rm
2002
Rm
20. Earnings per share (continued)
20.3.1 Reconciliation between attributable earnings
and headline earnings
Amortisation of goodwill
Profit on disposal of investment
Headline earnings
20.4
529,9
567,6
589,1
1 428,8
1 444,8
39,7
40,8
657,1
526,0
192,5
159,8
Attributable cash flow
Attributable cash flow per share (cents)
20.5
655,2
Adjusted for:
Deferred taxation
Other non-cash flow items
Equity accounted retained earnings of associates
11,4
34,8
(21,4)
(1,7)
(0,4)
(2,1)
839,2
716,8
1 428,8
1 444,8
58,7
49,6
1 017,9
783,1
25,0
192,5
159,8
—
—
—
—
21. Cash flow statements
21.1
Operating profit
(1,6)
Adjustments:
Profit on disposal of plant and equipment
Profit on disposal of investment
Other non-cash flow items
—
(1,7)
(8,8)
—
(23,7)
—
(12,6)
—
(3,8)
—
941,2
(2,5)
(1,6)
—
—
1 189,0
21.2
Increase in inventories
(142,9)
(46,9)
Increase in accounts receivable
(305,9)
(87,6)
(12,0)
—
121,4
11,2
(0,5)
(1,8)
17,2
6,4
—
—
Increase/(decrease) in accounts payable
Adjustment in respect of subsidiaries acquired
(310,2)
(116,9)
(12,5)
(1,8)
97
GROUP
COMPANY
2003
Rm
2002
Rm
Amounts payable at beginning of year
(157,5)
(152,2)
(0,8)
(0,3)
Normal taxation charged to the income statement
(190,3)
(135,8)
—
(0,2)
—
2003
Rm
2002
Rm
21. Cash flow statements (continued)
21.3
Taxation paid
Adjustments in respect of subsidiaries acquired
Secondary tax on companies
Amounts payable at end of year
21.4
Replacement of plant and equipment
Proceeds on disposal of plant and equipment
21.6
—
—
(0,8)
—
—
—
194,8
157,5
—
0,8
(153,6)
(130,5)
(0,8)
0,3
—
Investment to maintain operations
Additions to land and buildings
21.5
0,2
(27,2)
(43,7)
(117,3)
(113,4)
—
3,4
(144,5)
(153,7)
Additions to land and buildings
(116,0)
(137,8)
—
Additions to plant and equipment
(164,6)
(71,2)
—
Increase in investments and loans
(235,1)
(21,4)
Increase in capitalised expenditure
(6,5)
—
—
—
Adjustment in respect of businesses acquired
(8,8)
—
—
—
Investment to expand operations
(213,8)
—
(3,7)
(531,0)
(230,4)
(51,5)
(1,7)
—
—
0,2
—
—
—
(17,2)
(6,4)
—
—
76,4
1,0
—
—
(213,8)
(3,7)
Net investment in businesses
The fair value of assets acquired and liabilities
assumed were as follows:
Taxation
Working capital
Investments
Purchase of additional shares in businesses
Investment in subsidiaries
21.7
8,8
37,9
—
(12,4)
—
—
—
—
—
(2,0)
Goodwill on acquisitions
(46,7)
(1,6)
—
—
Vendor for acquisition
(13,3)
(128,5)
—
—
(5,4)
(149,6)
(2,0)
—
(196,2)
(196,2)
Net equity movements
Share issues
306,7
8,7
315,6
219,5
Share issue and listing expenses
(0,1)
(0,6)
(0,1)
(0,6)
Other
(1,3)
—
—
—
8,1
315,5
218,9
305,3
98
GROUP
2003
Rm
COMPANY
2002
Rm
22. Leases
The Group has entered into various operating lease
agreements on premises and vehicles.
22.1
Premises
Leases on premises are contracted for periods of between one
and 20 years with renewal options of between 2 and 10 years.
Rental escalations on properties vary between 8,0% and 11,0%
per annum.
22.2
Vehicles
Vehicle leases are contracted for periods of between 18 and 60
months with interest rates of 1,5% below prime
(2002: average 15% per annum).
22.3
At 30 September 2003 future non-cancellable minimum
lease rentals are payable during the following financial years:
Premises
Within one year
85,8
57,0
One to five years
382,4
238,0
Five to ten years
427,3
223,4
Over ten years
195,3
218,6
Within one year
1,0
8,1
One to five years
0,7
2,9
Vehicles
23. Contingent liabilities
23.1
Guarantees
The Company has guaranteed the obligations of certain
subsidiaries of Community Hospital Group (Pty) Limited
(“Community”) to the extent of R86,0 million
(2002: R78,4 million). Community is a black empowerment
hospital group, in which the Group has a minority interest.
The Company has provided guarantees in respect of
securing certain subsidiaries’ loan finance obligations.
The Company has also guaranteed certain educational
loan obligations of employees amounting to
R16,0 million (2002: R5,4 million)
23.2
23.3
The Company has stood surety to the extent of R51,0 million for
certain performance obligations of one of its subsidiaries
relating to the construction of hospital buildings for the
Free State Health Department.
General
Litigation, current or pending, is not considered likely to
have a material adverse effect on the Group.
2003
Rm
2002
Rm
99
GROUP
COMPANY
2003
Rm
2002
Rm
46,3
88,6
Land and buildings
93,7
88,3
Plant and equipment
45,4
29,5
185,4
206,4
185,4
206,4
Opening provision for unfunded obligations
31,4
21,5
Current year charge to income
12,0
9,9
Closing provision
43,4
31,4
12,0
12,0
9,3
9,3
24. Capital commitments
Contracted
Land and buildings
Approved
This expenditure will be financed from internally generated funds
and existing banking facilities
To be expended
Within one year
25. Retirement benefits
Post-employment benefits – pensions
The Group contributed to several retirement funds, all of which
are governed by the Pension Funds Act, 1956. The funds cover
substantially all of its employees in terms of defined contribution
schemes. Contributions paid by Group companies are charged
against income as incurred.
Post-retirement medical aid benefits
The Group provides post-retirement medical benefit
subsidies to certain pensioners.
Provision for post-retirement medical aid obligations
Key actuarial assumptions (%)
Discount rate
Healthcare cost inflation
2003
Rm
2002
Rm
100 Network Healthcare Holdings Limited
26. Borrowing powers
In terms of the Company’s Articles of Association, borrowing powers are unlimited.
27. Change in accounting policy
The application of AC133 relating to the recognition and measurement of financial instruments has resulted in an adjustment to opening
reserves of R46,1 million and a current fair value adjustment of R69,5 million to non-distributable reserves.
28. Financial instruments
The Group’s other financial assets consist of the value of interest rebates anticipated under certain long-term financing arrangements. The
rebates are expected to arise from the acitivites of The Netcare Trust, an entity formed to facilitate the sale of Netcare shares to selected
business associates. The sale of these shares was structured in such a way that surpluses arising on the sale of shares are received by the
Group by way of interest rebates on the finance charges under the long-term loan.
The carrying value of this financial asset at 30 September 2003 is R426,7 million (2002: R183,1 million).
Interest rate risk
Interest rate risk is the risk that fluctuations in interest rates adversely impact on the Group’s earnings and capital. The Group has entered
into various interest rate derivatives to manage interest rate volatility.
At 30 September 2003, the Group was exposed to fixed interest rates on long-term borrowings of R102,0 million at an interest rate of
12,2% nacm (2002: R403,0 million) with interest on the remaining debt payable at floating rates. However, there exists an interest rate
cap in respect of long-term debt aggregating currently to R425,5 million and reducing to R275,0 million by October 2005. Interest rates
on this debt will be capped at no more than 16,5% nacm in the event of the three-month Johannesburg Inter Bank Acceptance Rate
exceeding 14,0%.
In addition, in terms of certain interest rate hedges a further R216,7 million of long-term debt (amortising over a period to July 2006) will
be fixed at rates varying between 10,2% and 10,7% nacm from no later than January 2004 until the repayment of such debt occurs.
Liquidity risk
The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate unutilised borrowing facilities are
maintained. Short-term cash surpluses are placed on call with major financial institutions.
At 30 September 2003 the Group had the following undrawn banking facilities:
2003
2002
Long-term (Rm)
256,0
200,0
Short-term unsecured (Rm)
434,0
278,0
690,0
478,0
Short-term undrawn facilities are of a general nature and are thus subject to review from time to time. Undrawn long-term facilities may
also be reviewed if not drawn down.
Credit risk
The principal area of credit risk consists of trade accounts receivable which are governed by clearly defined credit and collection policies
and consist of a large number of individual patient accounts. It is Group policy to obtain confirmation in respect of those accounts where
patients have medical insurance, which comprises the majority of the patient accounts. In other cases indebtedness is secured by advance
deposits from patients. Credit risk is also mitigated by developments in the medical aid industry resulting in the imposition of
requirements on medical aids relating to the buildup of reserves, accreditation and quarterly reporting.
Currency exposures
The Group’s major currency risk is indirect exposure to risk through local South African suppliers, who provide the Group with certain
medical equipment and medical consumables, which have initially been imported. The Group’s risks are generally mitigated by recovering
the bulk of imported cost increases from customers.
The Group held uncovered foreign currency monetary assets of R24,7 million at 30 September 2003 (R20,2 million at 30 September 2002).
The foreign currencies held were US Dollars and GB Pounds and the exchange rates used were R6,93 per US Dollar (2002: R10,40 per US Dollar)
and R11,51 per GB Pound (2002: R16,29 per GB Pound).
29. Related parties
Related party relationships exist within the Group, all of which are on commercial arms length terms. Details of certain transactions with
related parties not disclosed elsewhere in the financial statements are set out below.
29.1
During the year certain subsidiaries of the Group, in the ordinary course of business, entered into various rental arrangements
with its joint venture, the Ampath Trust. These arrangements are on terms no less favourable than those arranged with third
parties. The amount of rental received by the Group amounted to R5,8 million (2002: R5,5 million).
29.2
Certain relatives of executive directors entered into consultancy arrangements with Group companies on commercial terms with
a total value of R0,6 million (2002: R0,6 million).
29.3
One of the non-executive directors is the Company’s legal counsel. Services rendered are billed on a commercial arm’s length
basis and amounted to R0,5 million for the year.
29.4
Certain administrative and logistic services are provided by the Group to a pharmacy purchasing and dispensing organisation
which is owned by one of the executive directors. Such services are contracted on an arm’s length basis.
30. Segmental reporting
30.1
Business segments
The Group’s South Africa hospital division, by far generates the greater part of revenue and employs the major portion of net
assets. Details of the Group’s hospital division and other business units are set out below.
Hospitals
Other
Total
2003
Rm
2002
Rm
2003
Rm
2002
Rm
2003
Rm
2002
Rm
4 625,1
3 992,6
1 387,5
819,7
6 012,6
4 812,3
Operating profit
923,7
741,6
94,2
41,5
1 017,9
Interest paid net
(120,4)
(97,6)
(37,2)
(7,1)
0,4
20,5
(13,7)
(9,6)
Revenue
Total external revenue
Segment result
Income from associates
Income tax
—
(188,8)
—
(161,0)
(157,6)
0,4
(202,5)
783,1
(104,7)
20,5
(170,6)
Other information
Segment assets
3 726,9
3 229,7
1 151,3
585,3
4 878,2
3 815,0
112,5
46,6
376,1
135,0
488,6
181,6
3 839,4
3 276,3
1 527,4
720,3
5 366,8
3 996,6
Current liabilities
695,9
605,5
370,0
315,0
1 065,9
920,5
530,0
625,1
637,5
255,6
1 167,5
880,7
1 225,9
1 230,6
1 007,5
570,6
2 233,4
1 801,2
Capital expenditure
397,0
350,3
28,1
15,8
425,1
366,1
147,2
127,9
45,3
31,9
192,5
159,8
Segment liabilities
30.2
Geographical segments
The Group operates mainly in South Africa with no other geographical area qualifying as a geographical segment.
31. Comparative figures
Details of reclassified comparative figures are:
Included in trade debtors in 2002 was an amount of R21,0 million now re-classified under other investments and loans.
Annual Report 2003 / annexure a
Investment in Principal Subsidiaries
Netcare owns, directly or indirectly, 100% of the shares in the following companies unless otherwise stated.
Principal subsidiaries
Nature of business
Clindeb Investments (Proprietary) Limited
Clinical Partners (Proprietary) Limited
Clinic Holdings Limited
Constantia Clinic (Proprietary) Limited (50%)
Constellation Investments (Proprietary) Limited (80%)
Femina Properties (Proprietary) Limited
Kingsway Hospital (Proprietary) Limited
Kroon Hospitaal (Eiendoms) Beperk (80%)
Linksfield Grove (Proprietary) Limited
Medicross Healthcare Group (Proprietary) Limited
(80%: 2002: 100%)
Mulbarton Hospital Limited (100,0%: 2002: 76,1%)
N1 City Hospital (Proprietary) Limited
Netcare Cape (Proprietary) Limited
Netcare Finance Company (Proprietary) Limited
Netcare Gauteng One (Proprietary) Limited
Netcare Gauteng Two (Proprietary) Limited
Netcare Gauteng Three (Proprietary) Limited
Netcare Gauteng Four Limited
Netcare Healthcare UK Limited (Note 5)
Netcare Health Systems (Proprietary) Limited
Netcare Hospital Group (Proprietary) Limited
Netcare Hospital Management (Proprietary) Limited
Financing
Medical aid marketing
Investment holding
Hospital/healthcare services
Investment holding
Property owning
Property owning
Property owning
Healthcare services
Financing
Healthcare management services
Investment holding
Hospital group
management services
Netcare International Holdings Limited (Note 4)
Healthcare services
Netcare International SA (Proprietary) Limited
Investment holding
Netcare KwaZulu (Proprietary) Limited
Netcare Management (Proprietary) Limited
Netcare group
management services
Netcare Prefshare Holdings (Proprietary) Limited
Investment holding
Netcare Pretoria One (Proprietary) Limited
Netcare Pretoria Two (Proprietary) Limited
Optiklin (Proprietary) Limited
Park Lane Clinic (Proprietary) Limited
Property owning
SAA-Netcare Travel Clinics (Proprietary) Limited (74%) Travel Clinics
Taylam (Proprietary) Limited
Property owning
Trauma Link (Proprietary) Limited
Pre-hospital emergency services
Traumanet (Proprietary) Limited
Investment holding
Umhlanga Medical Centre Limited
Amount of
issued capital
2003
2002
Rm
Rm
Book value of interest
Shares
Indebtedness
2003
2002
2003
2002
Rm
Rm
Rm
Rm
(232,4)
7,9
7,9
0,1
0,5
0,1
0,5
0,2
0,2
0,2
0,2
1 336,2
0,3
1 335,8
0,3
(89,8)
(71,0)
102,6
129,0
(113,6)
(78,4)
(5,1)
—
1,5
(6,7)
(94,5)
156,2
2,3
0,2
—
(168,1)
156,2
2,3
0,2
Note 1: All Companies are incorporated in South Africa unless otherwise stated.
Note 2: Information in respect of subsidiaries as required in terms of paragraphs 69 and 70 of the Fourth Schedule to the Companies Act is set out in
respect of only those subsidiaries, the financial position or results of which are material for a proper appreciation of the affairs of the Group.
Note 3: A register disclosing full details of all Companies in which the Group has investments is available for inspection during business hours at the
registered office of the Company by members or their duly authorised agents.
Note 4: Incorporated in Mauritius.
Note 5: Incorporated in the United Kingdom.
Annual Report 2003 / annexure b
Interest in Principal Associated Entities and Joint Ventures
Carrying value
Owned
Year-end
2003
Rm
2002
Rm
2003
%
2002
%
Note 1
30 September
0,5
1,1
50,0
50,0
Notes 2 and 3
28 February
1,9
—
50,0
—
Note 4
30 September
(1,1)
0,3
50,0
50,0
Nature of
business
Joint ventures
National Renal Care (Pty) Limited
The Ampath Trust
Parklands Stereotactic Radiosurgery
(Pty) Limited
Associates
Community Hospital Group (Pty) Limited
The Ampath Trust
Note 5
31 March
96,3
36,2
43,8
43,8
Notes 2 and 3
28 February
—
64,3
—
50,0
Note 6
30 September
267,9
—
48,4
—
Netpartner Investments Limited
Note 1: Providers of acute and chronic renal care throughout South Africa.
Note 2: Administration and logistical services to high technology pathology laboratories (previously an associate).
Note 3: Amounts owing from the Ampath Trust have been pledged as security for certain loan financing obligations of the Ampath
Trust Group.
Note 4: Providers of stereotactic radiosurgery.
Note 5: Providers of hospital/healthcare services
Note 6: Investment company created to establish a comprehensive healthcare provider network and containing investments in Medicross
Healthcare Group (Pty) Limited and Netcare.
The Group's effective share of income statement and balance sheet items in respect of principal associates and joint ventures is as follows:
Associates
Joint ventures
2003
Rm
2002
Rm
2003
Rm
2002
Rm
Revenue
59,9
379,9
392,2
42,5
Profit from operations
10,8
41,3
61,3
3,4
(13,6)
(12,0)
(16,3)
0,6
(2,8)
29,3
45,0
4,0
0,8
(8,8)
(4,1)
(0,2)
(2,0)
20,5
40,9
3,8
226,4
161,2
12,5
Income statements
Financing costs
Profit before taxation
Taxation
Net profit for the year
Balance sheets
Total assets
339,7
Capital and reserves
262,9
54,8
46,4
6,1
Interest-bearing debt
46,0
126,3
73,3
0,7
Deferred taxation
9,9
—
—
—
Current liabilities
20,9
45,3
41,5
5,7
339,7
226,4
161,2
12,5
Annual Report 2003 / directory of facilities
Name
Address
Telephone number
Total
beds
Total
theatres
Cape
Netcare
Christiaan Barnard Memorial Hospital
181 Longmarket Street, Cape Town
(021) 480-6111
247
Cuyler Clinic
34 Cuyler Street, Uitenhage
(041) 991-1331
156
16
5
Greenacres Hospital
Cnr Cape & Rochelle Roads, Greenacres
(041) 390-7000
240
11
N1 City Hospital
Louwtjie Rothman Street, Goodwood
(021) 590-4444
228
7
Southern Cross Hospital
Cnr Main & Maynard Roads, Wynberg
(021) 799-3000
103
5
6
1
6
1
16
1
Medicross
Algoa Park
50 St Leonards Road, Algoa Park, Port Elizabeth
(041) 456-1551
BarkleyMed
4 Waterboer Street, Barkley West
(053) 531-0319
Bellville
21 Van der Stel Street, Bellville
(021) 948-5721
Brackenfell
21 Roslyn Street, Brackenfell
(021) 981-5542
Cape Road
171 Cape Road, Mill Park, Port Elizabeth
(041) 391-8700
Da Nova
2 De Cama Street, Denouwa, Mosselbay
(044) 691-3114
Delpoortshoop
Hanekom Street at T Junction with Delport Street
(053) 561-0214
East London
Cnr Lukin & Pearce Roads, Berea
(043) 721-0105
Fish Hoek
23-5th Avenue, Fish Hoek
(021) 782-3506
Gardens
Gardens Shopping Centre, Circular Drive,
Lorraine, Port Elizabeth
(041) 368-6031
Greenacres
Room 319, 3rd Floor, Greenacres Hospital
Cnr Ring & Cape Roads, Greenacres
(041) 363-1988
Heiderant
Cnr Melkhout Street & Louis Fourie Road,
Heiderant, Mosselbay
(044) 693-1470
Kenilworth
67 Rosmead Avenue, Kenilworth
(021) 683-5867
Kimberley
48 Long Street, Kimberley
(053) 833-2731
Langeberg
Arcadia Centre, Cnr Brighton & Kipling Street,
Kraaifontein
(021) 987-1690
Mossel Bay
111 Montagu Street, Mossel Bay
(044) 690-3545
Northpine
Northpine Drive, Northpine
(021) 981-3640
Paarl
373 Hoof Street, Paarl
(021) 872-3867
Paarlmed
Paarlmed, Patriot Plein, Paarl
(021) 872-0565
Park Road
8 Park Road, Kimberley
(053) 832-7245
Parow
8 McIntyre Road, Parow
(021) 930-5580
Protea Heights
Protea Medipark, Protea Road, Protea Heights,
Brackenfell
(021) 981-8050
Saldana
54 Saldanha Road, Saldanha
(022) 714-1257
Stelkor
Simonsrust Centre, Cluvner & Helshoogte Road,
Stellenbosch
(021) 887-0206
Stelkor East
34 Piet Retief Street, Stellenbosch
(021) 887-0305
Table View
Table View Medi-Centre, 95 Blaauwberg Road,
Table View
(021) 521-1000
Tokai
Cnr Tokai Road & Keyser River Drive, Tokai
(021) 715-7063
Victoria
59 Victoria Street, George
(044) 874-4184
Annual Report 2003 / directory of facilities / continued
Name
Total
beds
Total
theatres
Address
Telephone number
Vredekloof
69 Vredekloof Boulevard, Vredekloof
(021) 981-6857
Vredenburg
10 Jacob Sadie Road, Vredenburg
(022) 713-1281
Walmer
Cnr Buffelsfontein & 17th Avenues, Miramar
(041) 396-4800
Wellington
38 Jan van Riebeeck Street, Wellington
(021) 873-1057
Westering
541 Cape Road, Westering
(041) 392-7800
Worcester
69 Fairburn Street, Medical Centre –
Room 1, Worcester
(023) 347-2724
Christiaan Barnard Memorial Hospital,
162 Longmarket Sreet, Cape Town
(021) 422-5538
Kuilsriver Hospital
33 Van Riebeeck Road, Kuilsriver
(021) 900-6000
100
4
UCT Private Academic Hospital
Anzio Road, 1st Floor, D-Level, Observatory
(021) 442-1800
124
4
Noordweg, Kroonstad
(056) 215-1881
80
3
Bloemfontein Noordstad
Noordstad Shopping Centre, Eeufees Avenue,
Bayswater, Bloemfontein
(051) 406-0200
Heilbron
53 Bree Street, Heilbron
(058) 852-2032
Koppie
Paradys Centre, 36 Noord Street, Koppies
(058) 852-2032
Parys – Kruisstraat
Cnr Bree & Kruis Streets, Parys
(056) 811-2700
Parys – Phillipstraat
34 Phillip Street, Parys
(056) 811-2852
Riebeeckstad
34 Dvorak Street, Riebeeck Stad, Welkom
(057) 388-1011
127
2
Cape (continued)
Centres of Excellence
Genecare*
Community Hospital Group
Free State
Netcare
Kroon Hospital
Medicross
Community Hospital Management
Pelonomi Private Hospital**
Dr Belcher Road, Heidedal, Bloemfontein
Universitas Private Hospital
Logeman Street, Universitas, Bloemfontein
(051) 444-5502
*Head Office
**Development in progress
Gauteng
Netcare
Bagleyston Day Clinic
400 Louis Botha Avenue, Highlands North
(011) 640-3000
24
3
Clinton Clinic
62 Clinton Road, New Redruth, Alberton
(011) 724-2300
165
6
Constantia Clinic
374 Ontdekkers Road, Florida Park
(011) 472-1478
24
3
Garden City Clinic
35 Bartlett Road, Mayfair West
(011) 495-5000
395
14
Krugersdorp Hospital
9 Burger Street, Krugersdorp
(011) 951-0200
310
10
Linksfield Park Clinic
24 – 12th Avenue, Orange Grove
(011) 647-3400
283
10
Linmed Hospital
5 Hull Road, Rynfield, Benoni
(011) 425-2331
172
5
Milpark Hospital
9 Guild Road, Parktown West
(011) 480-5600
343
10
Mulbarton Hospital
25 True North Road, Mulbarton
(011) 432-3930
96
4
Name
Address
Telephone number
Total
beds
Total
theatres
Gauteng (continued)
Netcare Rehabilitation Hospital
2 Bunting Road, Auckland Park
(011) 489-1111
110
Olivedale Clinic
Cnr President Fouche & Windsor Way, Randburg
(011) 777-2000
275
9
Optiklin Eye Hospital
104 Klein Street, Lakefield, Benoni
(011) 918-5478
14
2
Park Lane Clinic
Cnr Junction Avenue & Park Lane, Parktown
(011) 480-4000
204
11
Protea Day Clinic
Medicross Building, Cnr Luipaard Street &
Paardekraal Drive, Krugersdorp
(011) 660-7224
10
2
Rand Clinic
33 Bruce Street, Berea
(011) 644-2700
151
6
Randburg Day Clinic
77 Conrad Drive, Blairgowrie
(011) 886-1634
12
2
Rosebank Clinic
14 Sturdee Avenue, Rosebank
(011) 328-0500
135
8
Sunninghill Hospital
Cnr Nanyuki & Witkoppen Roads, Sunninghill Park
(011) 806-1500
252
7
Sunward Park Hospital
Cnr Kingfisher Avenue, Aquarius Road &
Bert Lacy Drive, Sunward Park
(011) 897-1600
174
7
Union Hospital
47 Clinton Road, New Redruth, Alberton
(011) 724-2000
222
7
Vaalpark Hospital
40 Karas Street, Vaalpark
(016) 971-1091
68
3
12
1
Medicross
Bellstreet
210 Bell Street, Noordheuwel, Krugersdorp
(011) 954-4455
Benoni
Cnr Kei & Great North Streets, Farramere, Benoni
(011) 425-4000
Boksburg
Cnr Trichardt & Northrand Streets, Boksburg
(011) 898-6500
Brackenhurst
101 Hennie Alberts Street, Brackenhurst
(011) 867-6850
Delmas
1 Fourth Street, Delmas
(013) 665-2101
Edenvale
Cnr 7th Street & van Riebeeck Avenue, Edenvale
(011) 451-9500
Germiston
Cnr Weber & Olivier Roads, Estera, Germiston
(011) 824-7300
12
1
Greymont
Northcliff Plaza, Cnr Long Roads & West Streets,
Greymont
(011) 670-8126
6
1
Hennie Alberts
38 Hennie Alberts Street, Brackenhurst, Alberton
(011) 867-5992
Kembirch
Cnr Olienhout Avenue & Elgin Road, Birchleigh,
Kempton Park
(011) 391-9000
Kempton Park
7 Blockhouse Road, Kempton Park
(011) 975-0218
Krugersdorp
Cnr Luipaard & Paardekraal Roads, Krugersdorp
(011) 953-1700
Meldene
Cnr 3rd Avenue & Main Street, Melville
(011) 482-2291
Middelburg
22 Joubert Street, Middelburg
(013) 282-5272
Monument
82 Monument Road, Nimrod Park, Kempton Park
(011) 970-2428
Murraymed
39 Murray Street, Nelspruit
(013) 753-3358
Nelmed
38 Nel Street, Nelspruit
(013) 755-5000
Potchefstroom
Cnr van Riebeeck & Lombard Streets, Potchefstroom (018) 297-0650
Rant-En-Dal
Rant-En-Dal Shopping Centre, Nightingale Street,
Krugersdorp
(011) 953-1308
Randburg
Cnr Rabie & Hans Strydom Avenues, Randburg
(011) 792-6391
Roodepoort
54 Ontdekkers Road, Ontdekkerspark, Roodepoort
(011) 764-1919
Springs
1 Nigel Road, Selection Park, Springs
(011) 815-4447
The Berg
The Berg Shopping Centre, Gordon Road, Bergbron (011) 673-4150
10
8
1
8
1
Name
Address
Telephone number
Total
beds
Total
theatres
Gauteng (continued)
Triomf
Cnr Edward & Millar Streets, Triomf
(011) 673-1240
Vereeniging
Cnr Nile Drive & The Square, Three Rivers
(016) 423-5494
Voortrekkerweg
364 Voortrekker Road, Monument, Krugersdorp
(011) 954-1284
Witfield
49 Main Street, Witfield
(011) 826-1551/823-4560
Endometriosis Institute
Park Lane Clinic, Cnr Junction Avenue &
Park Lane, Parktown
(011) 480-4226
Epilepsy Monitoring Unit
Milpark Hospital, 9 Guild Road, Parktown West
(011) 480-5964
Executive Health Clinic
Garden City Clinic, 35 Bartlett Road, Mayfair West (011) 495-5181
Centres of Excellence*
Linmed Menopause Clinic
Linmed Hospital, 5 Hull Road, Rynfield, Benoni
(011) 849-1506
National Renal Care
2 Bunting Road, 4th Floor, Netcare Rehabilitation
Hospital, Auckland Park
(011) 726-5206
Netcare 911
49 New Road, Midrand
(011) 254-1911/082 911
Netcare Breast Care Centre of Excellence
Park Lane, Parktown
0860 233 233
SAA-Netcare Travel Clinic
Ground Floor, Sanlam Park South,
9 Fredman Drive, Sandton
(011) 217-7980
Storks Nest
Park Lane, Parktown
(011) 480-4125
7 Tonk Meter Way, Pollack Park, Ext 7, Springs
(011) 365-1400
Durban Oncology Clinic
99 Jan Smuts Highway, Westridge
(031) 261-8221
Kingsway Hospital
607 Kingsway Road, Amanzimtoti
(031) 904-3600
135
6
Margate Private Hospital
24 Wartski Drive, Margate
(039) 317-3201
58
4
Parklands Hospital
75 Hopelands Road, Overport, Durban
(031) 208-8181
188
8
St Anne's Hospital
320 Loop Street, Pietermartizburg
(033) 897-5000
146
6
East Rand N17 Private Hospital
130
5
*Head Offices
KwaZulu-Natal
Netcare
St Augustine's Hospital
107 Chelmsford Road, Berea, Durban
(031) 268-5000
418
15
The Bay Hospital
Krugerrand Road, Richards Bay
(035) 780-6111
160
4
Umhlanga Hospital
323 Umhlanga Rocks Drive, Umhlanga Rocks
(031) 560-5500
177
6
Amanzimtoti
Suite 3, 1st Floor, 22 Rosslyn Road, Amanzimtoti
(031) 903-4377
Bluff
54 Lighthouse Road, Bluff
(031) 466-5030
7
1
Hayfields
Hayfields Mall, Cnr Blackburrow &
Cleland Roads, Hayfields
(033) 386-9208
Hillcrest
Hillcrest Medical Centre, 54 Old Main Road, Hillcrest (031) 765-3344
Malvern
Cnr Ethelbert & Conabor Streets,
Queensburgh, Malvern
(031) 463-2055
9
1
Maritzburg
Victoria Road Medical Centre,
157 Victoria Street, Pietermaritzburg
(033) 345-8010
Medicross
Name
Total
beds
Total
theatres
Address
Telephone number
Meer-en-See
60 Angler’s Road, Meer-en-See, Richards Bay
(035) 753-3671
Northbeach
Summer Square, 37 Sol Harris Crescent,
Northbeach, Durban
(031) 332-6060
Pinetown
Cnr Old Main & Mellor Roads, Pinetown
(031) 709-3070
Richards Bay
3 Lira Link, Richards Bay
(035) 789-1564
Akasia Clinic
Cnr Heinrich & Brits Avenues,
Karenpark Ext 25, Akasia
(012) 522-1000
116
Bronkhorstspruit Hospital
1 Barney Hurwitz Avenue, Bronkhorstspruit
(013) 932-4104
43
3
Femina Clinic
460 Belvedere Street, Arcadia, Pretoria
(012) 328-3838
134
5
Ferncrest Hospital
Moumo Street, Thlabane
(014) 568-4399
163
4
Jakaranda Hospital
213 Middelberg Street, Muckleneuk, Pretoria
(012) 343-2360
130
6
Moot Algemene Hospitaal
572 – 18th Avenue, Rietfontein, Pretoria
(012) 330-0324
92
3
Pretoria East Hospital
Cnr Garsfontein & Seekat Roads,
Moreleta Park, Pretoria
(012) 422-2300
352
17
Unitas Hospital
Clifton Avenue, Lyttelton
(012) 677-8000
470
16
CenturioMed
212 Edward Avenue, Zwartkop, Centurion
(012) 663-8220
Constantia Park
Cnr Chopin & Duvernoy Streets, Garsfontein
(012) 993-9000
Elardus Park
850 Barnard Street, Elardus Park, Pretoria
(012) 345-3006
Eldomed
1286 Willem Botha Street, Wierdapark
(012) 654-4374
Gezina
Gezina Stad Shopping Centre,
Michael Brink Street, Gezina
(012) 404-9000
Hatfield
Hatfield Plaza, 4th Floor, 1122 Burnett Street,
Pretoria
(012) 362-5870
Hazelwood
33 Elandlaagte Road, Hazelwood, Pretoria
(012) 460-8804
Pretoria North
291 Burger Street, Pretoria North
(012) 565-6091
Pretoria West
551 Church Street, Pretoria West
(012) 327-5131
Rooihuiskraal
14 Hofsanger Street, Rooihuiskraal
(012) 661-7221
Rustenburg
152 Klopper Street, Rustenburg
(014) 592-8562
Saxby
1053 Frederik Street, Eldoraigne
(012) 654-6062
Silverton
310 Pretoria Street, Silverton, Pretoria
(012) 804-4356
Unitas
Clifton Avenue, Lytellton, Pretoria
(012) 677-8000
Waverley
Medical Centre, cnr Hertzog and 33rd Avenue,
Waverley, Pretoria
(012) 332-0777
Bougainville Private Hospital
Cnr Jennings & Redlinghuys Streets,
Daspoort, Pretoria
Montana Private Hospital
Cnr Dr Swanepoel & Rooibos Streets, Pretoria
KwaZulu-Natal (continued)
8
Pretoria
Netcare
5
Medicross
8
1
7
1
(012) 379-0264
60
3
(012) 548-0567
158
4
109-IBC-map
12/12/03
3:56 pm
Page 1
Annual Report 2003
BASTION GRAPHICS
At Netcare people are our
passion. “Growing With
People” embodies
the Group’s core leadership
strategies of building
meaningful relationships
with our medical professionals
and staff to ensure that
all our patients get the
very best in patient care.

Full options

Transcription

Similar documents

2013 Annual Report

How to login to the Alberta Netcare Portal Using a Web

chimb.ca

FestusManor Good News Gazette Update

MNRA Healthcare - Nottingham City SPLAT

Our Goal: To Find Just the Person You Need. - Med

Lanvera Borland-Groover Clinic Case Study

TriMedx Fact Sheet

EPS Consumer research info graphicv4

Capped Cost Immediate Savings FINAL.indd