Netcare. Picture: FINANCIAL MAIL
Netcare. Picture: FINANCIAL MAIL

Netcare booked R5.6bn in accounting losses for its 2017 financial year, resulting in a net loss of R2.7bn for the year to end-September from a profit of R1bn in its 2016 financial year.

Despite reporting a net loss, Netcare maintained its final dividend at 57c, holding its dividend for its 2017 financial year level at 95c.

Its share price fell as much as 7% to R21.44 after the results were released on Monday morning.

The private hospital operator reported revenue declined by 9.6% to R34bn.

The rand strengthening against the pound reduced revenue by R3.65bn. Netcare said its average exchange rate during its 2017 financial year was R16.94/£, making the rand 19.5% stronger than the average rate of R21.04/£ during its 2016 financial year.

But revenue also suffered from "funder-led demand management initiatives in both geographies". Patient-day volumes in SA fell. In the UK, the overall caseload volume rose, but the growth came from day cases while higher-revenue in-patient cases fell.

Netcare wrote the goodwill of its UK investment down by R2.4bn. It booked a loss for its UK hospitals’ "onerous lease provisions" of R1.7bn and a R1.5bn impairment of their property, plant and equipment.

"The overall performance of the UK operations has been disappointing," CEO Richard Friedland said in the results statement.

The UK operations suffered from "the acceleration of demand management initiatives implemented by both the National Health Services (NHS) and private medical insurers affected patient activity, in combination with lower tariffs for NHS work effective from April 1, and further change in case mix in favour of more day cases".

Netcare said revenue from its South African hospitals and emergency services grew by 3.9% to R18bn.

"The current year results were negatively impacted by a noncash accounting error of R81m in the emergency services division. This error relates to the prior year but has been corrected in the 2017 results," Netcare said.

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