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NETCARE LIMITED - Trading statement

Release Date: 21/05/2020 17:00
Code(s): NTC NTCP     PDF:  
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Trading statement

(Registration number 1996/008242/06)
JSE ordinary share code: NTC
ISIN: ZAE000011953
JSE preference share code: NTCP
ISIN: ZAE000081121

                                         TRADING STATEMENT

In terms of paragraph 3.4 (b) of the JSE Listings Requirements, a listed company is required to publish
a trading statement as soon as it is satisfied that a reasonable degree of certainty exists that the
financial results for the period to be reported upon next will differ by at least 20% from those of the
previous corresponding period.

Netcare will be releasing its unaudited interim Group results for the six months ended 31 March 2020
(“H1 2020”) on Monday, 25 May 2020.

The results for H1 2020 have been affected by the following factors:

Broad-based Black Economic Empowerment transaction
On 15 October 2019, Netcare approved a further allocation of 61 110 000 previously unallocated
Netcare shares that were available under its Health Partners For Life Broad-based Black Economic
Empowerment (“B-BBEE”) scheme concluded in 2005. The shares were allocated to 20 350 Netcare
employees (excluding executives), of which 80% are black and 65% are black women, as part of
Netcare’s commitment to the imperative of building a transformed South Africa characterised by
values of social and economic equality and inclusion for all. The transaction further enabled Netcare
to strengthen the ownership component of its empowerment rating.

A once-off, non-cash share-based payment expense of R348 million arising from the implementation
of this B-BBEE transaction, has been recognised in the H1 2020 results and equates to a charge of 26.0
cents against Earnings per Share (“EPS”) and Headline Earnings per Share (“HEPS”) respectively.
However, it is excluded from the calculation of adjusted HEPS, which is the primary measure used by
management to assess Netcare’s underlying financial performance.

IFRS 16: Leases
Netcare adopted the new accounting standard IFRS 16: Leases with effect from 1 October 2019. Under
this new accounting standard leases are brought onto the statement of financial position through the
capitalisation of a right-of-use asset and recognition of a related lease liability. Rental payments are
no longer expensed through the statement of profit and loss, but are applied to reduce the lease
liability. The right-of-use asset is depreciated over the lease period, creating an additional depreciation
charge, while an interest charge is recognised on the balance of the lease liability. As Netcare has
elected to apply the modified approach for the adoption of IFRS 16, comparative figures for the six
months ended 31 March 2019 (“H1 2019”) have not been restated. Accordingly, the H1 2020 results
are not directly comparable to the comparative period results which were not prepared under IFRS
16. The adoption of IFRS 16 has resulted in a reduction in EPS, HEPS and adjusted HEPS of 7.3 cents
per share in the H1 2020 results.

The non-recurring, non-cash share-based payment expense on the B-BBEE transaction and the
adoption of IFRS16: Leases will have the following impact on earnings in H1 2020:
   • EPS for H1 2020 is anticipated to be between 39.5 cents and 47.3 cents, representing a
     decrease of between 40% and 50% from the 78.9 cents per share reported for H1 2019.
   • HEPS for H1 2020 is anticipated to be between 40.4 cents and 48.4 cents, representing a
     decrease of between 40% and 50% from the 80.7 cents per share reported for H1 2019.
   • Adjusted HEPS from continuing operations for H1 2020 is anticipated to be between 67.4
     cents and 75.9 cents, representing a decrease of between 10% and 20% from the 84.3 cents
     per share reported for H1 2019.
   • However, excluding the impact of IFRS 16: Leases from the H1 2020 results, thereby reporting
     on a directly comparable basis against the H1 2019 results, adjusted HEPS for H1 2020 is
     expected to be between 75.9 cents and 84.3 cents, representing a decrease of between 0%
     and 10% from the 84.3 cents per share reported for H1 2019.

The information provided in this trading statement has not been reviewed or reported on by Netcare’s
external auditors.

21 May 2020
Nedbank Corporate and Investment Banking

Date: 21-05-2020 05:00:00
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