Update on FY 2019 trading NETCARE LIMITED (Registration number 1996/008242/06) JSE ordinary share code: NTC ISIN: ZAE000011953 JSE preference share code: NTCP ISIN: ZAE000081121 ("Netcare") UPDATE ON FY 2019 TRADING The purpose of this announcement is to provide shareholders with an update on Netcare’s trading for its financial year ending 30 September 2019 (“FY 2019”). HOSPITALS AND EMERGENCY SERVICES Total growth in patient days of approximately 3.7% is expected for FY 2019, exceeding the full-year guidance of 3.0% to 3.5% provided at the time of Netcare’s interim results. This includes the contribution from Akeso Clinics (acquired effective 27 March 2018) as well as a decline of approximately 1.4% in acute hospital patient days (excluding the Netcare Rand and Bell Street hospitals that are held-for-sale). The decline in acute patient days in FY 2019 is primarily attributed to the creation of new hospital networks by funders effective January 2019 and ongoing funder case management activity that started in 2018, most notably in the medical respiratory disciplines. Demand for mental health remains strong. Akeso experienced total patient day growth of approximately 20.0% over the comparative base period (which was prior to the Netcare acquisition). This has been boosted by the contributions from two new hospitals that were opened in 2017 and 2018, respectively, and the expanded and refurbished Akeso George Hospital, which re-opened in March 2019. Up to August 2019, full week occupancy levels within acute hospitals (excluding Netcare Rand and Bell Street hospitals) were at 66.0%, compared to 66.6% in the 2018 financial year (“FY 2018”). Acute hospital revenue per patient day increased by 4.3% to the end of August 2019. Netcare continues to attract specialists and a net 100 doctors were granted admission rights at acute and mental health facilities during the 11 months to August 2019. Guidance provided at the time of Netcare’s interim results in respect of the EBITDA margin for FY 2019 was a range of 20.0% to 20.3%. Full-year EBITDA margins are expected to be at the higher end of this range, due to stronger traction on our cost efficiency initiatives. A total of 57 mental health beds were added during the year under review, including the expanded and refurbished Akeso George Hospital. There were no acute hospital beds added during FY 2019. In line with Netcare’s focus on improving asset utilisation, ten under-utilised acute hospital beds were converted to high demand haematology beds in January 2019 and a further 19 beds were converted to higher demand disciplines in September 2019. Of the 100 beds transferred from Netcare Rand Hospital to Netcare Milpark Hospital, 48 beds were opened in mid-September, a few weeks ahead of schedule. PRIMARY CARE The Primary Care division has delivered solid revenue growth for FY 2019 driven by the expansion of its occupational health offering. EBITDA margins for the full year are expected to increase from the 13.3% reported at the half-year. DIGITISATION Excellent progress has been made in achieving Netcare’s journey of implementing fully mobile digitised patient and clinical records in terms of the strategy to deliver person-centred health and care, which is digitally enabled and data driven. The blue-printing phase of the project has been completed and the pilot programme at Netcare Milpark Hospital was successfully launched in early September 2019. The pilot will be conducted in three wards before being rolled out across the hospital in early 2020. The hospital is now the first in Africa to be able to electronically prescribe medication with a fully integrated pharmacy dispensing system. The system is also integrated with IBM Watson Micromedex, which allows automated drug safety and interaction checks to improve medication safety during prescribing and administration. SUSTAINABILITY Netcare’s environmental sustainability initiatives continue to deliver value to the business and have been recognised internationally through the prestigious 2019 Association of Energy Engineers (AEE) Corporate Energy Management Award for the Sub-Saharan Africa region. Netcare is the first healthcare company in Africa to receive this global award. This follows the receipt of four Climate Champion Awards presented to Netcare in August 2019, including three gold awards in the categories of Greenhouse Gas Emission Reduction, Climate Resilience and Climate Leadership and a silver award for Renewable Energy. These awards place Netcare second in the world among over 28 000 hospitals. Over the past six years Netcare has reduced its energy intensity by 21% through these initiatives and is on track to reduce its energy footprint by 30%. REGULATORY UPDATE National Health Insurance (“NHI”) The amended draft NHI Bill published on 8 August 2019 paves the way for the establishment of a NHI Fund, which will purchase services from accredited public and private healthcare providers. Certain elements of the Bill remain unclear to the market and Netcare is actively participating in engagements with policymakers on the detail of the Bill and will participate in the parliamentary process. Given the inequality of access to quality healthcare and the scarcity of resources, Netcare strongly supports an inclusive approach to improving accessibility and quality of care. Netcare believes that the broader healthcare delivery system can be constructively leveraged to create a healthier society. The information provided in this update on FY 2019 trading has not been reviewed or reported on by Netcare’s external auditors. Netcare will be releasing its audited Group results for the year ended 30 September 2019 on Monday, 18 November 2019. 27 September 2019 Sponsor Nedbank Corporate and Investment Banking Date: 27/09/2019 03:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.