Investor update NETCARE LIMITED (Registration number 1996/008242/06) JSE ordinary share code: NTC ISIN: ZAE000011953 JSE preference share code: NTCP ISIN: ZAE000081121 ("Netcare") INVESTOR UPDATE Today in Cape Town, South Africa, Netcare is hosting an investor day for institutional investors and analysts. The following points are among the most salient details we will explore. • The South African healthcare sector continues to be constrained, given the country’s underlying macro-economic landscape. • Competition in the healthcare market remains resilient, and we continue to see growth in the number of beneficiaries covered by different product and price offerings, specifically with regard to low cost hospital network options. • In November 2019 we correctly guided that H1 2020 acute activity would be negatively impacted by 2019 hospital network arrangements. • We have also experienced higher than expected and ongoing pressure in respiratory admissions and a tightening of conditions on an existing Designated Service Provider (DSP) network for the 2020 calendar year. • While acute patient days to date are lower compared to the same time last year, we have experienced some recovery in activity in the new calendar year. We are also expecting a positive impact, although weighted towards to H2 2020, because of our participation as an anchor provider in new restricted hospitals networks. • EBITDA margins (measured before the impact of IFRS 16) within the core hospital business are in line with FY 2019 levels, which is as a result of the ongoing cost containment and efficiencies that are being successfully introduced. • The implementation of CareOn, which is the introduction of electronic patient health records in our hospitals, remains on track and is within budget. The digitisation of all other Netcare divisions also remains on track. • Demand for Akeso’s mental health services remains strong. • Akeso is on track to open its 36-bed facility in Richards Bay by the end of FY 2020, and is also building a new 72-bed facility in Port Elizabeth. Together with local B-BBEE partners, the business will be developing a new 150-bed psychiatric hospital in Polokwane. • As announced in October 2019, Netcare’s B-BBEE ownership transaction has resulted in the recognition of a once-off, non-cash IFRS 2 charge of R347 million. This accounting charge will be excluded from adjusted HEPS. • As previously reported, Netcare has adopted the new IFRS 16 statement on leases from 1 October 2019 and provided detailed guidance in the most recent annual results statements, which were released on SENS on 18 November 2019. These statements indicated a reduction in EPS and HEPS of between 14.9 and 18.6 cents per share on an annualised basis. • The completion of the sale of the six UK hospital properties owned by GHG PropCo 2 has been successfully concluded. This allows Netcare to complete its exit from the UK and commence with the final wind up of the UK structure, which will enable a repatriation of the net proceeds after the settlement of debt and related expenses. We expect to realise cash proceeds of approximately R500 million, well in excess of the carrying value of Netcare’s 56.9% interest in GHG PropCo 2 of R226 million. • In line with guidance given to the market, Netcare has executed the buyback and cancellation of 12.7 million shares at an average price of R19.60 a share for approximately R250 million. • Netcare instituted a 24/7 dedicated communicable disease call line in 2014 during the Ebola virus outbreak. This has effectively enabled Netcare to take a leadership role in collaborating with the Department of Health and the National Institute of Communicable Diseases in managing the risk and preparedness of South Africa for any possible outbreak of the Corona virus. There are no confirmed cases of the Corona virus in South Africa to date. • Netcare will host a call prior to its closed period in late March 2020 where a full operational update for H1 2020 will be provided. The information provided in this update on FY 2020 trading has not been reviewed or reported on by Netcare’s external auditors. 18 February 2020 Sponsor Nedbank Corporate and Investment Banking Date: 18-02-2020 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.